| dc.description.abstract | The aim of this study was to develop a Net Profit Contribution maximisation model that can be
used as a decision tool to aid production managers in determining how best to allocate materials
for fish processing, allocate labour hours, meeting customer demand while also preventing
inventory build-up. The data was obtained from the operations data obtained from the company’s
internal reports availed by management. Analysis was done using the linear programming (LP)
model. LP is a renowned tool for the purposes of optimisation when faced with resource
constraints, yet profits are to be maximised. Two LP models were developed, to determine the
processing allocation that maximises Net profit contribution and examine if it was profitable to
use overtime with the available production capacity. Several assumptions were made, which are
common when formulating LP models. First is that of linearity of variables. The expression to be
optimized and the inequalities are assumed to be linear functions of the variables. Second, it was
assumed that prices are fixed, for the period under consideration, and possible returns were fixed.
The result show that the company stands to realise a high objective value when there is no overtime
(Model 2). This indicates that the costs associated with overtime are not offset with the associated
benefit. As such, in financial terms, it is advisable that the company do away with overtime.
However, management also should consider other factors such as the need to continue providing
products which could be forgone by discontinuing overtime. When overtime is avoided, model 2,
more of product type B is produced and less of product type A. As such, the need to keep the
customers loyal to product type A may compel management to continue with overtime, however at
the expense of a declining objective value. | en_ZW |
