Decision Making in Inventory Policy Determination for Each Echelon to Stabilize Capsicum Frutescens Price and Increase Farmers Share Value Using Discrete Event Simulation

Capsicum frutescens is one of the vegetable commodities that can affect the dynamics of the national economy. The dynamics of the national economy is due to significant fluctuations in chili prices in Indonesia at all times. Price fluctuations occur due to lack of information either in the form of demand information or Chilean price information about consumers received by farmers for marketing red pepper. Besides, the length of the distribution of red pepper (farmer- the middleman- wholesaler- retailer- consumer) results in significant price changes from farmers to consumers at each echelon or distribution level. Such price changes result in a decline in the farmer’s share. Farmer’s share has a negative relationship with marketing margins. the negative relationship is the higher the marketing margin, the lower the share received by the farmer. from the explanation, the concept shows that the victims of the length of the distribution channel are farmers and consumers. Where farmers will bear a high business risk, and consumers will get high chili prices. The research will discuss how to stabilize the price of red pepper and improve farmer’s share by making the best decision using discrete simulation using Monte Carlo, so it can determine the supply policy by the distribution at each level aimed at reducing the operational cost. Besides, this can also reduce the hoarding activities undertaken by the relevant distribution. The hoarding can disrupt the stability of the existing chili price.