Strategy Alternatives to Increase Capacity: Case Study in PT Turmerica, an Herbal Extract Manufacturer

Abstract

The increased global demand of herbal extracts has made PT Turmerica need to re-evaluate its current output capacity. This study aimed to evaluate the most feasible and profitable business solution to solve production capacity gap and meet  the market demand through a combination of technical and financial analyses. Using the TELOS framework and Decision Tree Analysis, three strategic alternatives have been evaluated for consideration: A1 is to invest in a new concentrator machine; A2 is outsourcing; and A3 is extending working hours. From production data from 2023-2025 and expected market growth rates, it can be seen that the current production capacity of 161,915 kg/year is insufficient to meet future demand; the gap to be bridged is estimated as exceeding 17% by 2027. The analysis found that the extractor machine was the main bottleneck in the extraction line, lowering throughput and increasing cleaning and maintenance time. A1 (investment in a new concentrator machine) is the most beneficial alternative, improving capacity by 35.1% as it speeds up extraction concentration, makes extract thickening unnecessary for the extractor, and prevents blockages. In contrast, both A2 (outsourcing) and A3 (additional working hours), have only raised capacity by 8.6% and 24.6% respectively with much higher operational risks and weaker long-term sustainability. Based on TELOS results, A1 offers the most feasible and profitable option based on decision tree analysis which produce higher cash flow.