An application of linear programming for aggregate production planning in a small company

Abstract

The aggregate planning problem is one of determining productionrates and workforce sizes over a planning period such that the productioncosts are minimized.Widespread existence of the problem has led to the development ofa number of approaches for solving it. But, unfortunately reportedexamples of succesful applications are rare.Several explanations to the rare use can be presented. But, thecomplexity and costs of application may be the major reason. (especiallyfor small companies.)In this study, Linear Programming approach Is used to develop anAggregate Production Plannlng for a small company. The allowed ranges ofcost coeffiCients, demand forecasts and overtime constraints aredetermined by Sensitivity Analysis.Finally, the existing production pollcy of the company and thepolicy developed using Linear Programming approach are compared.