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1 – 10 of over 19000Karunamunige Sandun Madhuranga Karunamuni, Ekanayake Mudiyanselage Kapila Bandara Ekanayake, Subodha Dharmapriya and Asela Kumudu Kulatunga
The purpose of this study is to develop a novel general mathematical model to find the optimal product mix of commercial graphite products, which has a complex production process…
Abstract
Purpose
The purpose of this study is to develop a novel general mathematical model to find the optimal product mix of commercial graphite products, which has a complex production process with alternative sub-processes in the graphite mining production process.
Design/methodology/approach
The network optimization was adopted to model the complex graphite mining production process through the optimal allocation of raw graphite, byproducts, and saleable products with comparable sub-processes, which has different processing capacities and costs. The model was tested on a selected graphite manufacturing company, and the optimal graphite product mix was determined through the selection of the optimal production process. In addition, sensitivity and scenario analyses were carried out to accommodate uncertainties and to facilitate further managerial decisions.
Findings
The selected graphite mining company mines approximately 400 metric tons of raw graphite per month to produce ten types of graphite products. According to the optimum solution obtained, the company should produce only six graphite products to maximize its total profit. In addition, the study demonstrated how to reveal optimum managerial decisions based on optimum solutions.
Originality/value
This study has made a significant contribution to the graphite manufacturing industry by modeling the complex graphite mining production process with a network optimization technique that has yet to be addressed at this level of detail. The sensitivity and scenario analyses support for further managerial decisions.
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The purpose of this paper is to develop a model for the production planning decision of a dairy plant in a multi-product setting under supply disruption risk and demand…
Abstract
Purpose
The purpose of this paper is to develop a model for the production planning decision of a dairy plant in a multi-product setting under supply disruption risk and demand uncertainty while determining the optimal product-mix and material planning requirement.
Design/methodology/approach
A mixed-integer nonlinear programming model is proposed to determine the optimal product-mix that maximizes the expected profit of a dairy. The data are collected through visits to the dairy site, conducting brainstorming sessions with the plant manager and marketing head at the corporate office. Disruption data are collected from the India Meteorological Department, Odisha.
Findings
From the analysis, it is recommended that the dairy should not produce curd during the planning period. Moreover, turnover from toned, double toned and baby food is maximum than that of the curd and these products are produced in the planning period. The expected profit increases from its present value when an optimal product-mix is followed. Sensitivity analysis is performed to analyze the effect of demand uncertainty, supply disruption and production quota. The expected profit decreases as the supply failure probability increases.
Research limitations/implications
The model is implemented in a dairy plant under Orissa State Cooperative Milk Producers Federation, Odisha, India. The proposed methodology has not been validated, theoretically. The concerned dairy is based on the Indian context, but the authors believe that the study is highly relevant to other dairies as well.
Practical implications
This study provides a methodology for dairy plant managers to plan production effectively under supply disruption risk with demand uncertainty. It also suggests material requirement planning at different factories of the dairy plant.
Originality/value
This paper develops a mathematical model for the production planning decision of a dairy plant that determines the optimal product-mix, which maximizes the expected profit of a dairy under disruption risk and demand uncertainty (in the Indian context).
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Xu Chen and Xiaojun Wang
In the era of climate change, industrial organizations are under increasing pressure from consumers and regulators to reduce greenhouse gas emissions. The purpose of this paper is…
Abstract
Purpose
In the era of climate change, industrial organizations are under increasing pressure from consumers and regulators to reduce greenhouse gas emissions. The purpose of this paper is to examine the effectiveness of product mix as a strategy to deliver the low carbon supply chain under the cap-and-trade policy.
Design/methodology/approach
The authors incorporate the cap-and-trade policy into the green product mix decision models by using game-theoretic approach and compare these decisions in a decentralized model and a centralized model, respectively. The research explores potential behavioral changes under the cap-and-trade in the context of a two-echelon supply chain.
Findings
The analysis results show that the channel structure has significant impact on both economic and environmental performances. An integrated supply chain generates more profits. In contrast, a decentralized supply chain has lower carbon emissions. The cap-and-trade policy makes a different impact on the economic and environmental performances of the supply chain. Balancing the trade-offs is critical to ensure the long-term sustainability.
Originality/value
The research offers many interesting observations with respect to the effect of product mix strategy on operational decisions and the trade-offs between costs and carbon emissions under the cap-and-trade policy. The insights derived from the analysis not only help firms to make important operational and strategic decisions to reduce carbon emissions while maintaining their economic competitiveness, but also make meaningful contribution to governments’ policy making for carbon emissions control.
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Product mix and the acquisition of the assets needed for their production are interdependent decisions. However, these decisions are frequently evaluated independently of each…
Abstract
Product mix and the acquisition of the assets needed for their production are interdependent decisions. However, these decisions are frequently evaluated independently of each other and with conceptually different decision models. This article expands activity-based costing (ABC) to incorporate the cost of capital. The resulting model traces the cost of capital to products and thereby measures the economic value added (EVA) from their production. The discounted value of a product’s EVA over its life is equivalent to its net present value (Hartman, 2000; Shrieves & Wachowicz, 2001). The discounted EVA of a product also equals the net present value of the assets used to manufacture the product. Consequently, evaluating products with an ABC model incorporating the cost of capital enables product mix and capital budgeting decisions to be evaluated simultaneously. The article also examines the role of ABC when product mix decisions are made at the product and portfolio levels of the firm’s operations.
Thomas O. Stanley, John K. Ford and Sande Richards
Three distinct product areas exist for banks — deposit gathering, customer services and loans. Up until now loans have scarcely been marketed. If they have, they have not been…
Abstract
Three distinct product areas exist for banks — deposit gathering, customer services and loans. Up until now loans have scarcely been marketed. If they have, they have not been viewed in the context of what would create an optimal product mix. Yet a bank's loan mix is a major portion of its product mix and has the same dimensions of width, breadth and consistency as any other product line. It appears that a significant amount of difficulty in developing effective loan mix strategies has been due to the lack of a system to predetermine loan quality objectively. Management's attitude towards risk, the type of community and future economic conditions all play major roles in determining a suitable loan mix. Loan mix strategy should begin with a recognition of attainable goals and end with a defined programme to co‐ordinate the efforts of marketing staff and the loan department. The optimal loan mix will suit customer needs and return the desired levels of profits.
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Robert Kee and Michele Matherly
This paper examines how target costing decisions can be impacted by product and production interdependencies.
Abstract
Purpose
This paper examines how target costing decisions can be impacted by product and production interdependencies.
Design/methodology/approach
Numerical examples are used to investigate the effect that product and production interdependencies have on target costing decisions. Mixed integer programming and simulation are used to model the interrelationships between a product’s cost reduction effort and related decisions such as product mix, pricing, and capacity acquisition. Product and production interdependencies are introduced by evaluating a product with multiple price and demand options, capacity is acquired in large discrete quantities, and resources have economies of scale. Analyses of choices made with and without considering product and production interdependencies are used to evaluate their effects on target costing decisions.
Findings
A product’s cost reduction effort cannot be determined independently of other production-related choices, such as product mix, capacity, and price, in the presence of product and production interdependencies.
Research implications
The findings of this paper underscore the need for additional research to understand the conditions that impair target costing decisions and the economic consequences of suboptimal decisions.
Practical implications
Rather than assessing target costing decisions at the individual product level, these decisions must be evaluated at the portfolio level of the firm’s operations.
Social implications
Suboptimal target costing decisions impact the products and product mix that the firm chooses to offer, which affects the ability of organizations to effectively achieve their strategic goals.
Originality/value
This paper identifies new limitations to target costing that can help managers understand the technique better and lead to improved target costing decisions.
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Examines the applicability of an optional rule for determining ideal product volumes and mixes under various technical and market conditions. Explains an alternative, similar…
Abstract
Examines the applicability of an optional rule for determining ideal product volumes and mixes under various technical and market conditions. Explains an alternative, similar method of estimation for use where data are inadequate. Considers difficulties and areas where the method is of dubious value.
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R.P. Mohanty, D. Mishra and T. Mishra
The purpose of this paper is to study the various modalities of production outsourcing service and compare three different models, namely: standard accounting, theory of…
Abstract
Purpose
The purpose of this paper is to study the various modalities of production outsourcing service and compare three different models, namely: standard accounting, theory of constraints (TOC) and linear programming (LP) enhancement of TOC.
Design/methodology/approach
This is a diagnostic study concerned with accurately describing the characteristics of outsourcing phenomenon and defining clearly the objective function and the associated constraints. The optimization models have been constructed and analyzed in a real‐life situation by collecting data with sufficient precision.
Findings
This paper brings out distinctively different options for outsourcing services and compares the results with the findings available in literature. The significant finding is that it is an imperative to evaluate the outsourcing approaches from a situational perspective governed by internal and external constraints imposed by competitive forces.
Research limitations/implications
This research does not embrace the sensitivity of various cost parameters as well as the fuzziness of the dynamics of competition.
Practical implications
The models and the analyses would facilitate systemic decision support to production, procurement and marketing managers engaged in the competitive value chain. For successful outsourcing, the business goals must be validated with financial justification. Outsourcing is not only carried out in cases of non‐availability of resources internally, or to meet the peak demand, but also it helps in cash infusion, reduction in operating costs and restructuring of resources.
Originality/value
Manufacturing organizations should not only implement outsourcing in an ad hoc manner but should try to innovate on different outsourcing practices and should make attempts to study and analyze methods that are better and the best to attain competitive advantage.
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Majed Alsmadi, Ahmad Almani and Zulfiqar Khan
– The purpose of this paper is to implement an integrated activity-based costing (ABC) and theory of constraints (TOC) approach to enhance decision making in a Lean company.
Abstract
Purpose
The purpose of this paper is to implement an integrated activity-based costing (ABC) and theory of constraints (TOC) approach to enhance decision making in a Lean company.
Design/methodology/approach
Based on the literature, this paper proposes an integrated ABC and TOC approach and applies it to a Lean plastic manufacturing company to improve its product-mix decision.
Findings
The results of the case study show that the current conventional product-mix decision used by the company and the proposed integrated approach can give significantly different results concerning the optimal product-mix and the associated bottlenecks. Moreover, the paper suggests that managers who implement Lean production without utilising a supportive management accounting system may experience disappointing financial results.
Research limitations/implications
The validation of the suggested method is based on a single case study with an action research approach. For future research, the authors suggest the implementation of the approach in different industries.
Practical implications
Overall, the integration of ABC and TOC provides managers with an accurate, timely and reliable tool that can help in making decisions about pricing, production line development, process improvements and product-mix.
Originality/value
This paper contributes to Lean and management accounting literature by demonstrating the value of a method of integrating ABC and TOC. Also a case study is chosen for the empirical aspect of the study as there are no case studies available in the literature that illustrate a real life case of integrating ABC and TOC within Lean companies as an alternative to the current used cost accounting systems.
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