Process conditions of a stand-alone machining centre for maximum contribution to profit per unit time

Most existing FMS performance measures assume the existence of some correlation between maximum profit and system performance. In this article the ‘contribution to profit per unit time’ is adopted as a direct measure of system performance. A simple system having one machining centre, for handling n different products is described, which operates under four different production environments. In each case, relationships are developed which enable the scheduler to implement a decision-making procedure that maximizes the contribution to profit per unit time.     

冷冻食品加工企业生产能效评估及节能分析

目前我国多数冷冻食品加工企业能耗费用支出占总产值的比率高于企业利润率,能耗费用高支出成为阻碍企业利润率增长的瓶颈。因为企业生产能耗偏大,所以节能降耗成为企业降低成本提高利润率的有效手段。文章列举实例分析了某速冻车间的能耗与产量现状,进行能效评估,指出了目前我国一些冷冻食品加工企业仅凭增加产量来提高利润率的错误;找出了能效、产量、利润率三者之间的关系和节能降耗的关键;系统地分析了如何节能,并且给予了合理性的建议。     

Joint decision making for production and marketing

The prosperity of a firm depends highly on the functional integration of its various departments, and in particular the cooperation between the production and the marketing departments appears to have a large impact on the well-being of a firm. The aim of this study is to model an aggregate production planning problem that considers the production and marketing functions in a simultaneous manner. The developed multi-period, multi-product model with the objective of profit maximization reflects the characteristics of both departments. Demand for each product in each period is generated through the use of demand functions. The advertising efficiency and price of the products are determined within the model. The cash outflow for advertising expenditures is approximated by a quadratic cost function, and the production cost exhibits economies of scale. Also, stockouts are taken into consideration in the form of backlogging. A solution methodology consisting of two phases is developed, and cases displaying some important characteristics are generated and solved in order to test the performance of the proposed model. This methodology incorporates linear mixed integer programming which is embedded in two different search techniques, along with a dynamic programming-based heuristic procedure.     

Optimisation of multi-stage JIT production-pricing decision: centralised and decentralised models and algorithms

This research studies the optimal decision for product pricing, production lot sizing in a multi-stage serial just-in-time production system with kanban-controlled policy. A decentralised decision model and a centralised decision model of this problem are formulated as a mixed-integer nonlinear programming problem. In order to solve the models, three algorithms are developed. The first one is an approximate procedure which solves the decentralised decision model; the second one is a proximate optimal procedure using two-phase search technique that solves the centralised decision model, and the third one is an approximate method using meta-heuristic technique which is used for both decentralised and centralised models. Numerical example shows that centralised decision can obtain higher economic benefit with lower cost and higher revenue and profit. Meanwhile, when demand is more price sensitive, centralised decision can achieve significant profit enhancement. Computational results attribute to different characteristics of the problem and solution superiority.     

An ABC-based cost model with inventory and order level costs: a comparison with TOC

Activity-Based Costing (ABC) was developed to address the deficiencies of traditional accounting systems in the modern business environment by helping managers understand product and customer profitability and identify priority areas for process improvements. In this study, activity-based costing (ABC) concepts are integrated with a Mixed Integer Program (MIP) for order management and profitability analysis in the case of a firm facing demand in excess of capacity. The model considers unit-level, batch, and order-related costs within a mixed-integer programming model representing the firm's operating structure. The performance criterion of profit and service levels during the 20-period planning horizon is used for model evaluation in a comparison with the results from a Theory of Constraints (TOC) formulation. The analysis of these competing models will provide guidelines for applications of order management models with simultaneous consideration of production planning and profitability analysis, as well as help managers understand product and customer profitability, and identify priority areas for process improvements. The results indicate that the ABC-based model is more effective in increasing profitability and reducing inventory levels when compared with the TOC-based formulation, making better use of overhead cost information in the selection of orders.     

An empirical study of impacts of production mix,product route efficiencies on operations performance and profitability: a reverse logistics approach

This research studies the impact of two reverse logistics business strategies on profitability of the firm through operations management (OM). The study is employed on scrap steel industry. The first strategy is production mix efficiency (PME), which is involved in the process of producing goods. The second strategy is product route efficiency (PRE), which engages in the transportation of goods. Our finding indicates that OM alone does not have a positive impact on profitability. However, the two strategies have a positive effect on profitability, which provides a potential answer to firms trying to improve profitability.     

Economic determination of specification levels and allocation priorities of semiconductor products

We construct and analyze an economically efficient way of pricing and allocating semiconductor chips of which production technology is characterized by persistent quality variations and of which production capacity is exceeded by potential demand. In our model, specification levels and allocation priorities of competing orders from customers are systematically determined for a single profit maximizing producer. In the proposed scheme, the producer offers a 'product line' of priority classes under an allocation rule that always supplies higher priority classes with higher spec, level chips. This product line design and allocation rule enable us to cast the producer's profit maximization problem as a nonlinear programming formulation. Also, we investigate the optimality of the proposed allocation rule and derive conditions under which the profitability of downgrading is determined.     

An alternative approach to computing economic run quantity

Our primary objective is to consider an alternative approach to computing an economic run quantity (ERQ) based on profit maximization. We first develop a general profit function for a firm that includes both production and inventory costs. We then use classical optimization techniques to establish an annual production level that will maximize profit, and use this value to determine an economic run quantity. In comparison to a standard textbook example, our approach leads to a substantial increase in profit. It is also robust over a range of values for production variables. This procedure is a break from the traditional cost minimization approach and may present a more logical methodology for the teaching of inventory management techniques.     

Customer Stratification for an Industrial Distributor With a Service and Repair Business

Abstract

Customer purchasing behavior is not unique. Complex costs to serve make it difficult to manage customers, especially today, when businesses are offering more value-added services. This research study develops a methodology to allow companies with a service or repair component to segment customers, as well as manage relationships and growth. This methodology differs from existing ones by allowing companies to include the full profit contribution derived from billed labor into the customer profitability calculation. By accurately identifying profitability of individual customers, this methodology yields results that are more pragmatic for managers.     

推行清洁生产和循环经济 促进矿业的可持续发展

提出以可持续发展为目标,在企业层次开展清洁生产,在区域和社会层次推行循环经济。通过节约资源和能源、回收及循环利用、减少污染物的产生和排放等手段,获取经济、社会和环境效益的最大化。并以云南磷矿业为例,探讨了矿业可持续发展的一般模式和途径。     

A manufacturer’s production and pricing strategies with a salvage channel

We study a manufacturer’s production quantity and pricing decisions when the manufacturer has an opportunity to sell surplus inventory through a salvage channel. Before sales begin, the manufacturer determines the production quantity without knowing customer demand. After demand is realised, the manufacturer first satisfies the demand through primary channel while charging a fixed price or adjusting price to maximise profit. At the end of the selling season, the manufacturer resells surplus inventory through the salvage channel, which can be either integrated with or independent of the manufacturer. The manufacturer’s optimal production quantity and expected profit are investigated under different salvage channel structures. We show that the salvage channel improves the manufacturer’s profitability as well as the availability of the product to potential customers through both primary and salvage channels.     

Leasing or buying white goods: comparing manufacturer profitability versus cost to consumer

Remanufacturing can create opportunities for companies to become more sustainable while remaining profitable. However, not all companies will be able to profit from moving towards a closed-loop business model. This paper investigates the profitability of leasing and remanufacturing washing machines for a large white goods producer based on data provided by them. A simple analytical model is built to simultaneously estimate the costs for consumers and costs and profits for the manufacturer under the leasing system. The results are compared with the costs and profitability of the linear system where premium, economy, and budget washing machines are sold to consumers. A sensitivity analysis is conducted on important factors such as repair, administration and transport costs. Using the replacement chain method, we show that the consumer costs of budget washing machines in the sales system is significantly higher than the costs for premium washing machines. Consequently, those consumers would benefit most from a circular system in which premium washing machines are leased against acceptable fees. However, the additional costs for the manufacturer make it a challenge to generate the same level of profit as in the linear system. The research discusses important cost components companies will have to address when making a move towards a circular business model with leasing and remanufacturing.     

Quantity discount coordination for allocation of purchase orders in supply chains with multiple suppliers

Studies about supply chain coordination have emphasised maximising the profit of the overall supply chain, but the profit changes of individual members in the supply chain have often been overlooked. It has been shown that profit increment of the whole supply chain may not be beneficial for every individual member. Therefore, the use of quantity discounts to achieve the coordination of a supply chain is discussed in this article. A two-echelon selling system with a single buyer and multiple suppliers is considered to enhance profitability for both sides at the same time. An acceptable quantity discount condition for both the buyer and the suppliers to determine an appropriate order quantity allocation to produce more profits in the supply chain is proposed. Furthermore, the profit distribution between the buyer and each supplier is studied. Finally, the results of the numerical application show that the buyer should focus on managing the procurement costs to decrease the acquiring costs, and the suppliers should focus on the fixed costs of management to reduce the production costs in machine operations.     

Inter-process synchronization in steel production

The development of strategies for sequencing slabs through the reheat furnace and rolling mill of a modern steel production facility is complicated by multiple, and often conflicting production objectives. Optimal energy efficiency through the reheat furnace may lead to inefficient rolling sequences or less than desirable product delivery schedules. Not only is model formulation complicated, but the combinatorial nature of the problem precludes optimal solution. A heuristic procedure for solving this multi-objective product sequencing problem has been developed and tested under production conditions in a Danish steel mill. The methodology, which is based on a modified ‘greedy’ algorithm is presented and results using actual production data are discussed     

Robust stochastic mine production scheduling

The production scheduling of open pit mines aims to determine the extraction sequence of blocks such that the net present value (NPV) of a mining project is maximized under capacity and access constraints. This sequencing has significant effect on the profitability of the mining venture. However, given that the values of coefficients in the optimization procedure are obtained in a medium of sparse data and unknown future events, implementations based on deterministic models may lead to destructive consequences to the company. In this article, a robust stochastic optimization (RSO) approach is used to deal with mine production scheduling in a manner such that the solution is insensitive to changes in input data. The approach seeks a trade off between optimality and feasibility. The model is demonstrated on a case study. The findings showed that the approach can be used in mine production scheduling problems efficiently.     

An improved algorithm for solving the economic lot size problem (ELSP)

A bounded enumeration combining non-linear optimization, heuristic procedure, and mixed integer programming is proposed to solve the capacitated multi-item lot scheduling problem. The combined effect is demonstrated by a better solution to problem data which has been the subject of inquiry and investigation for over 20 years. In addition, the approach avoids the escape from infeasibilily deficiencies of prior solution procedures. The attractiveness of the solution found can be confirmed by the close proximity of the production run frequency to that obtained from the independent solution. Since the independent solution reflects the optimum economic tradeoff between incurring setup costs and inventory carrying costs for each product individually, the advantages of deriving a multi-product production schedule where the frequency of setups conform to these cost relationships are obvious.     

Value chain management for commodities: a case study from the chemical industry

We present a planning model for chemical commodities related to an industry case. Commodities are standard chemicals characterized by sales and supply volatility in volume and value. Increasing and volatile prices of crude oil-dependent raw materials require coordination of sales and supply decisions by volume and value throughout the value chain to ensure profitability. Contract and spot demand differentiation with volatile and uncertain spot prices, spot sales quantity flexibility, spot sales price–quantity functions and variable raw material consumption rates in production are problem specifics to be considered. Existing chemical industry planning models are limited to production and distribution decisions to minimize costs or makespan. Demand-oriented models focus on uncertainty in demand quantities not in prices. We develop an integrated model to optimize profit by coordinating sales quantity, price and supply decisions throughout the value chain. A two-phase optimization approach supports robust planning ensuring minimum profitability even in case of worst-case spot sales price scenarios. Model evaluations with industry case data demonstrate the impact of elasticities, variable raw material consumption rates and price uncertainties on planned profit and volumes.     

A DECOMPOSITION APPROACH TO PROJECT COMPRESSION WITH CONCAVE ACTIVITY COST FUNCTIONS

This article develops a solution methodology for project time compression problems in CPM/PERT type networks with convex or concave activity cost-duration functions. The proposed procedure actually approximates these relationships by piece-wise linear time-cost curves. The solution procedure is based on the Benders decomposition approach and seeks to minimize die total direct cost of a project subject to activity precedence relationships, as well as upper/lower bounds on activity durations. The computational efficiency of the proposed decomposition methodology is also discussed.     

An integrated material flow system approach for determining the economic production quantity (EPQ)

Traditionally, the analysis of material flow systems has focused on each of the individual components of the system separately (i.e. material handling, production lot size, unit load size, flow path, layout, space, etc). Even though each component is difficult to address on its own, it is imperative that they be addressed concurrently due to their interactions. This paper explores the relationships between the components in the material flow system with respect to determining the economic production quantity (EPQ). This is in contrast to the traditional EPQ model, which considers only set-up cost, inventory cost, and demand, while ignoring other material flow system issues. A multi-item economic production quantity model under a storage space limit is considered with respect to material handling equipment selection and requirements, unit load size, and flow path selection. The integrated material flow system problem is mathematically formulated as a large scale, nonlinear integer programming model, and a heuristic solution procedure is developed. The impact of using an integrated approach to determine the EPQ is illustrated and solutions are compared to both a lower bound and a traditional sequential approach. It is found that an integrated approach provides consistent and significant improvement in the overall solution quality.     

Airline planning and scheduling: Models and solution methodologies

The airline industry is a representative industry with high cost and low profitability. Therefore, airlines should carefully plan their schedules to ensure that overall profit is maximized. We review the literature on airline planning and scheduling and focus on mathematical formulations and solution methodologies. Our research framework is anchored on three major problems in the airline scheduling, namely, fleet assignment, aircraft routing, and crew scheduling. General formulation, widely used solution approaches, and important extensions are presented for each problem and integrated problems. We conclude the review by identifying promising areas for further research.