Application of Linear Programming in Determining the Composition of Inland and Offshore Mining Production of Pt Timah (Persero), Tbk

PT Timah (Persero), Tbk operates inland and offshore mining to achieve their annual production targets. In 2009, 2010, and 2011, there was a difference in tin production between inland and offshore mining. It was caused by the differences in equipment operating costs and productivity between the mining methods. From an economical and technical aspect, the amount of inland and offshore mining to produce can be determined to achieve maximum profit. To determine this proportion of tin production in 2012-2015, optimization based on the law of diminishing return was used. Optimal inland mining production was approached using the production in the Nudur 3 and Nudur 4 mines, whereas for offshore mining, production was approached using the production using dredgers. Production cost is calculated based on the equipments used, while the selling price is counted based on the break-even point between revenue and cost. Linear programming is used to determine the optimal production of tin ore in inland and offshore mining. The total value of NPV for the period of 2012 – 2015 is $ 367.384.870, comes yearly from the proportion of inland and offshore mining production of 17.145 tons and 17.308 tons respectively.