Case Study on Profit Planning of Textile Industry Using Linear Programming Approach
Journal Title: REST Journal on Emerging trends in Modelling and Manufacturing - Year 2016, Vol 2, Issue 1
Abstract
This study deals about the development of linear programming model for Almeda Private Limited, Ethiopian Textile Industry as a case study. Loose of profit of a company, that is expected to gain, is the result of poor profit planning way or limitation of modern profit planning tools which subjects the company to promote more expenses rather than revenue. Linear Programming (LP) is a linear programming model in which there a particular function to be maximized is or minimized subject to several constraints, and in this case it is to maximize profit. So, in pursuit of maximizing profit or minimizing production cost, the linear programming model was developed. The model was developed by taking considerations on market segmentation, interest of workers, utilization of machines and other resources, demand of products by forecasting, and production capacity of the company. To develop the model, data were collected from primary and secondary sources. This study was supported through accessing available and related literatures, company survey and software, and analyzed the information collected using main principles of linear programming technique. All major products and constraints with their values were identified and used for developing the model. The main objective of this study is to increase profit by using linear programming technique and reduce production cost. As a result, the linear programming model was developed which maximizes profit from around 44.46 million ETB to 53.77 million ETB. This was achieved by applying proper product mix strategy as production of 0.25 unit of yarn, 0.25 unit of fabric, 0.76 unit of CM, 8.5 units of knit garment, and 0.25 unit of woven garment product. Increasing profitability and decreasing cost of production is the main challenges of many industries in our country Ethiopia, particularly this affects textile industry. The main cause of these problems is lack of a quantitative technique which enables them to minimize cost of production within the production system.
Authors and Affiliations
Ashish Thakur
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