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Can Biodiesel Industry achieve its target by 2025: an Agent Based Model Exploration

“Change is easy to purpose, hard to implement and especially hard to sustain”

-Andy Hargreaves


As we know, biodiesel or Fatty Acid Methyl Ester (FAME) is one type of biofuel produced as a substitution of diesel fuel. In Indonesia, biodiesel is produced using crude palm oil by trans-esterification process. The usage of crude palm oil is performed because it sees that Indonesia is a nation with the biggest yield of crude palm oil in the Earth. In summation to the potential of its natural resources, the role of biodiesel as a substitute of diesel fuel is caused because it considers the benefits generated by biodiesel itself. Benefits include the so-called “carbon neutral”, the fuel produced biodiesel does not raise the output of carbon dioxide (CO2). The issue occurs because when the oil crop grows, it absorbs CO2 at the same amount as releasing fuel. In addition, biodiesel has biodegradable compounds that are firm and completely non-toxic, having in mind that biodiesel spills have less risk than diesel fuel. Biodiesel also has a higher flash point than diesel fuel, can be determined from its higher cetane value (> 57) than diesel fuel.

Still, the condition of biodiesel production in Indonesia faces complex problems. The concentration of biodiesel has never been fully attained, with the concentration of non-subsidized biodiesel that has not been carried out optimally. There are four major problems facing biodiesel production. Firstly, the concentration of biodiesel production is not maximal, especially in non-subsidized biodiesel production. Second, the condition of Indonesia’s domestic biodiesel production that began to decline from 2014 to 2015 due to lower oil costs. Tierce, the number of business entities that are abundant, but relatively small to fulfill the objective of production capability in 2025 amounted to 10.22 million KL. And the last and most important is the increasing CPO price, condition that causes the Biodiesel Market Index Price to be less frugal. This problem becomes the consideration of the biodiesel industry to continue to sell its biodiesel in Indonesia.

To avoid such problems, agent-based modeling can be used to predict the impact of policies on influential actors to gain a deep understanding of the behavior and decisions made by the biodiesel industry by looking at the types of biodiesel industry in Indonesia that are differentiated by the type of production capacity that can be handled by the biodiesel industry, decision-making that depends on the type of industry, how the biodiesel industry calculates the expenditure and income as well as the learning gained by the biodiesel industry after large-scale production. This agent-based modeling is done with two policy alternatives, namely price determination of biodiesel market index and subsidy of installed capacity of the biodiesel plant.

The results obtained from this agent-based modeling show that the policy of adding the biodiesel plant installed capacity has a good impact in increasing the fulfillment of biodiesel production, the adoption and competition that occurs in the tender, and the profits gained by the biodiesel industry. Even so, the government should count the costs to be incurred and the net income from biodiesel industry, so the biodiesel production targets can be successfully accomplished.

This research is conducted by Vicky Larasvasti Respati and Akhmad Hidayatno


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How Should Indonesia Manage Their Transition to Cleaner Energy Consumption? Reflecting Back

flame-871136_640The threat of fossil energy scarcity due to massive usage over the last few years and the harm of fossil energy to the environment has prompted countries to consider energy transition to their alternative energy (cleaner and renewable energy), to keep the balance of their environment system. Including Indonesia, where 60% of their energy consumption since 2000 lean on the fossil energy, especially in oil energy. Indonesia’s oil consumption has been higher than its consumption since 2004, which cause Indonesia’s to import tons of barrel of oil every year. The crisis of Indonesia’s energy consumption rises when in 2008, global oil prices increase rapidly which shaken most of the world’s energy and economic system.

To handle the crisis, Indonesia since 2007 has successfully executed an energy transition program, named “Conversion Program from Kerosene to LPG (Liquefied Petroleum Gas)” which targeted household and small business consumption. The program has managed to increase the LPG consumption and reduce energy subsidies by 197 million rupiahs by 2012. This program is highlighted since Indonesia has not yet considered being successful in executing similar programs, which is the conversion program from petrol to gas fuel for road transportation.

In the future, Indonesia will be facing lot more transition program, to the cleaner and renewable energy, as can be seen on Indonesia energy mix. This indicates the needs to evaluate the successful and the unsuccessful system of the implemented energy transition program in Indonesia.

SEMS aim to explore the government policy structure which believed has a strong role to support or block people adoption on the conversion program of kerosene to LPG. Using System Dynamic Modelling, researchers propose to design a model which describe the system of conversion program and analyze the interactions among variables within the system of the successful conversion program. Furthermore, the analysis of the research also comparing government policy structure between the successful and the unsuccessful program.

The simulation of system dynamic shows that from the sets of policy intervention on the conversion program kerosene to LPG, kerosene supply withdrawal and the government push to increase production capacity of supporting equipment has a huge influence to support the energy transition program. From the comparison between the successful and the unsuccessful conversion program in Indonesia, researchers can indicate some differences. However, the most importance policy intervention in conversion program of kerosene to LPG, kerosene withdrawal and government push to increase production capacity of supporting equipment, has not yet implemented in conversion program from petrol to gas fuel to for road transportation.

This research is conducted by Theresa Devina and Akhmad Hidayatno


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How to optimize unequal area facility layout to maximize storage

work-1713103_640Facility layout problem, especially with the unequal departmental area (UAFLP), is one of the problems studied in combinatorial optimization and has received the attention of many researchers in the past decade. The goal of UAFLP is to allocate departments into a facility to obtain the most efficient arrangement. The UAFLP study has a final objective to minimize the total cost of material handling between departments.

Competition in today’s business world is inevitable. Increasing the quality of productivity becomes one of the keys to success in facing competition with business management effectively and efficiently. This can happen by maximizing existing resources ie employees, machines, and other facilities. Therefore, the industry needs to be able to optimize production capability and effectiveness to face competitors. The production process becomes the key that needs to be managed effectively to minimize production costs with higher effectiveness.

Facility layout design has a close reinforcement to the size of the physical arrangement of elements in a manufacturing and service system, such as department, machinery, operational tools, and so on. The purpose of the facility layout design is the design with the minimum material handling cost. With proper facility layout, material handling costs can be reduced. In general, material handling contributes about 20-50 percent of the total. Reduction in the company’s operational costs, along with the increased efficiency of the production system becomes a necessity that every industry needs to do.

The problem of facilities layout that is often the researcher’s attention is Unequal Area Facility Layout Problem (UAFLP). Initially, UA-FLP was developed by Armor and Buffa (1963). They explain that there is a rectangular facility with a fixed Width and Height and several (n) departments that need to be allocated to the facility. There are some problems that have not found the optimal solution and require a long computation time. The goal is to reduce non-feasible solutions to reduce the complexity of possible solutions.

This research will develop a mathematical model using Mixed Integer Programming method based on Flexible Bay Structure. Some additional constraint functions will be attempted to be added to the model. Testing is done by comparing the effect of each additional constraint function that has different approaches in cutting the complexity of possible solutions. The comparison result of the combination of the constraint function used indicates which constraint function has a major influence in reducing the computation time of the model.

This research concludes that all simulated problem sets using additional constraints in the model can provide better computation time than before. The effect that occurs can be the value of the solution becomes not optimum or remain optimum. All computational time gives significant improvement.

This research is conducted by Randa Adi Saputra and Komaruddin

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Does the power of Social Media influences E-Commerce Business?

ecommerce-2140603_640Social media has become a great part of someone’s life. People can’t wait to update their social media accounts, or at least get updated about the world simply by watching their timeline. Social media here is defined as every internet-based application that allows you to create and exchange contents with other people around the globe.  The number of Internet users in Indonesia has reached 132.7 million people in 2016. With a number this high, Internet also is seen as a potential business platform. In 2016 the total of e-commerce in Indonesia has reached 26.2 million units, with its biggest selling product is in the fashion segment. Internet is not only giving advantages for companies for their business, but also some threats regarding the tougher competition in the market, especially for e-commerce companies.

A study has found that marketing through social media gave significant effect on increasing trust and loyalty of customers towards a brand. Therefore, companies see social media as a potential marketing medium, to retain their competitiveness in the market. By increasing their customers’ trust and loyalty towards their brand, companies can focus on expanding their market and gaining new customers.

According to several papers that this research was based on, there are five social media marketing (SMM) factors, (1) Website Security, (2) Clear & updated website, (3) Social media tools activity, (4) Online advertisement, and (5) Online interactivity. The result of this research shows that three of those factors, which are (1) Clear & updated website, (2) Online advertisement, and (3) Online interactivity, give significant effect on customer’s brand trust. While brand trust gives significant effect on brand loyalty. Therefore it can be concluded that those 3 factors of SMM give also significant effect in brand loyalty indirectly through brand trust.

We develop a structural equation model (SEM) to see which and how each social media factors influencing the buying behavior of the customer. Our models show that there are 3 factors that must be the focus of the e-commerce sites when using the social media platform.

This research is conducted by Annissa Tayara Callista and Akhmad Hidayatno


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Educating society about energy transition through excitement of a game? Why not!

Transergy WelcomeThe increase of energy consumption especially in the form of oil is being an issue for certain countries including Indonesia. Within the rise of 3.99% of energy consumption annually, transportation sector having the largest portion of energy consumption (Indonesia Outlook Energy, 2016). There are 17.523.967 vehicles in Jakarta, the capital of Indonesia, with 74.66% of the numbers are motorbikes and 18.64% are cars. The use of oil in most land transportation vehicles has lead oil to be the most used fuel by the market share of 32% compared to other type of fuel. Unfortunately, the oil production in Indonesia has been constantly decreased within 4.41% per year. It leads Indonesia to be the net importer of oil and depending on the oil supply by other countries. The condition of being net importer of oil having many effects of short and long run in Indonesia’s economic. Vacation Menuthe respond to the increase of oil consumption, the government releasing an energy diversification program to reduce oil consumption by substitute the oil to other type of fuel like gas, biofuel, renewable energy and many others. One of the diversification plan is the conversion of oil to natural gas program. This program has been conducted since 1987, however until 2011 it only achieved 0.03% conversion rate. Based on the study from Bureau of Oil and Gas, one of the success key for conversion from oil to gas program is through education and socialization to the society. Conversion from oil to gas is a kind of energy transition which is defined by Chappin (2011) as the socio-technical transition in the scale of sector. To do the simulation about energy transition physical and social components from the energy transition system needs to be captured.

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