Product Mix Decisions in the Process Industry

Abstract

A resin manufacturer in Korea operates a large plant for synthetic resin products. The production process consists of two stages where a line in the first stage is a bottleneck of the whole process. Some low-profit products have consumed considerable amount of bottleneck capacity, and caused opportunity loss in profit generation. This is due to the traditional management policy that allows several marketing business units to plan their annual target sales individually and independently, without careful consideration of the effective use of the production capacity. Noting such marketing-production misalignment, we developed linear programming models to help determine desirable product mix while coping with market demands and production capacity.

This research was supported by Myongji University and IITA of Korea.