Capacity Planning Using Linear Programming

3875 Words16 Pages
Company R’s Strategic Capacity Planning
Using Mixed Integer Linear Programming

ABSTRACT
Company R is experiencing 2.07 more days in producing a certain line of hotdogs. Thus, incurring 51.75% more cost of Php 5, 764. 62 per week.
Through work sampling and time study, it was found out that the sealing section of the packaging line is the bottle neck activity with a standard processing time of 2.86 min/kg. Additional machine is needed.
Employing strategic capacity planning through formulation of mixed integer linear programming model, to meet the annual demand, the resulting optimal machine combination was 3: Two single chamber floor model vacuum sealers and one double chamber floor model vacuum sealer. This gives the maximum net
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Furthermore, it is desired to formulate a mixed integer linear programming model that finds the optimal combination of machines and maximizes the net present value of such project subject to budget, demand, and available machines constraints.

V. SCOPE OF THE PROJECT To maximize the impact of the project, the study focused on the hotdog line that comprises almost 73% of the demand being processed every week. Only the packaging line of the hotdog process was dealt with. Data collected were from the outputs of January 2011 to February 2011. Future demands for all hotdog lines were gathered. The company set policies for acquiring and maintaining equipment were also considered. VI. REVIEW OF RELATED WORKS AND LITERATURE
According to Anderson et al, linear programming framework has served many applications in a wide variety of production, finance, marketing, and distribution problems. The authors added that linear programming models can help managers in efficiently maximizing profits or minimizing costs when faced with constrained resource -allocation decisions.
Several applications of linear programming in the business are scheduling, transportation, managerial and cost accounting. Profit-oriented companies greatly evaluate capital investments they are to shelf out, since miscalculations will incur great damage to them and so the more efficient LP models are used. Most applications are
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