Modeling of shallot supply decisions: The case of Indonesia

To optimize supply chain role, the players of supply chain need to integrate its function. One of the general problems in supply chain was the unbalanced quantity of sales and quantity of supply. This paper focused on modelling a simple method to manage the gap between the demand and the supply. The gap might cause an overstock or a loss. This paper propose a buffer quantity in order to handle the gap by using import decision. The case study was about shallot supply - demand in Indonesia. In this study we model the supply decisions of shallot in Indonesia. While the demand was quite stable over time, the supply was heavily affected by the yield from the farms. The shortage could result in the government importing shallot from other countries. Hence, the government also needed to have a proper buffering mechanism in order to ensure the supply was sufficient and the price was quite stable. The initial model of this research was built by stochastic parameters and the extended model to gain pricing mechanism was built by Shapley value principal with modification. The primary variables were supply quantity, demand quantity, buffer and purchased quantity (stock needed), actual consumption, and price for three players. The validation proved that the result of price at each player presented a significant difference. Therefore, the model could be applied to decide the stock quantity needed and to keep the price stable at each player especially at the end player which would influence the market price.