Pergamon

Computers ind. Engng VoL 31, No. 1/2,pp. 363 - 366,1996 Copyright 1996 ElsevierScience Ltd Printed in GreatBrita~ All dghw ~ z r ~ S0360-8352(96) 00152-0 o36o- 8352/96 $15.00 + 0.00

A G O A L P R O G R A M M I N G M O D E L TO E V A L U A T E T H E P R O D U C T I O N D E C I S I O N T H R O U G H THE P R O D U C T I V I T Y O F S U B - S Y S T E M S N . A L P and S . L . M U R R A Y Engineering Management Department, University of Missouri-Rolla, Rolla, MO 65409-0370 U.S.A. ABSTRACT Productivity is concerned with the effective and efficient utilization of resources in producing goods and/or services. In this study, productivity has been viewed in a broader perspective to present the degree of accomplishment of performance objectives, reconciled optimally through goal-programming.

KEYWORDS Goal-Programming, productivity, production, productivity analysis, sub-system.

THE G O A L P R O G R A M M I N G M O D E L The research has been done in an electronics organization (BEKO) in Turkey. The company has six different products. Their products are:

X~: TV Teletext: Xz: TV Nontx: X3: TV Skd Import: X4: TV Skd Export: Xs: Cash Register X6: Audio - Video

The complete assembly TV with teletext The complete assembly TV without teletext The partial assembly import TV The partial assembly export TV

The model has three sub-systems, defined as production, marketing, and materials sub-systems, with different objectives. It was decided to accord the following priorities to goals according to the production level ( Retzlaff
et aL, 1993) :

P~: Achieving that capacity utilization will not violate the upper limit. Products X3, X,, Xs, and X~, will not be produced more than demand. P2: Maximization of turnover and added value. Product XI will satisfy the maximum demand. 1'3: Product X 2 will satisfy the maximum demand. P4: Products XI and X2 will not be produced less than the minimum demand.
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19th International Conference on Computers and Industrial Engineering

Ps: Achieving that energy utilization will not violate the upper limit.
The main priorities to goals are; the capacity utilization and the maximization of turnover and added value are two times more than the other goals. In this case the Goal Programming Model will be as below: Min. Z
=

2Pl.dl*, Pl.dlo +, Pl.d12*, Ppdu , Ppdl~, 2P2.d2", P2.d3-, P2.ds', P3.~',P4.d~', P4.ds , Ps.(d4"+d4)

The goal programming model is subject to the following goal constiaints (Inuiguchi et al., 1991) : The formulations for constraints:

I. Capacity Constraint:
3.11X1+ 2.981X2+ 2.09X3+ 1.56X4+ 0.65Xs+ 0.09X~+d: - d : = 1,636,000

H. Added Value Constraint:

1.7X1+ 1.8X2+ 1.8X3+ 1.75X4+ 1.2X5+ 0.85X~+d2-- @ = 1.287"109

m . Turnover Constraint:
3.8Xt+ 3.65X2+ 3.65X3+ 3.7X4+ 2.83X5+ 1.84X6+d3- -d3 = 2.714"109

IV. Energy Constraint:

5Xt+ 2.2X2+ 2.1X3+ 1,54X4+ 0.75Xs+ 0.50X6+d~- - d : = 10,000

V. Demand Constraint:
300 200 35 0.90 20 <Xl-< <X2-< ' < X 3'< -< X4"< "< Xs < 350, 230 , 40 , 0.95, 25 , X l+ds "= 300, X2+d7" = 200, X 3 - d l o "ffi40 X4 - dl2 *= 0.95 X s - d14 *= 25 X6 -d1~ = 150

Xl

- d~" = 350 X2 - ds" -- 230

130 "< X~'~ 150, Hj, ~", di" are always positive for all i and j. According to the above formulations, there are three different goal programming solutions which has been showed in Table 1.
The production plan o f the first alternative
(x I~X))

PRODUCT CODE X~ X2

The production plan of the second alternative

(x 1,ooo)

The production plan o f the thira alternative (x t,{}00)

299 202 40 0.95 24 150

302 202 40 0.95 24 150

350
150 40 0.95 25 150

X~
X4 X~ X6

Table l.The production plans of the three alternative solutions

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365

THE PRODUCTIVITY

ANALYSIS

The following productivity indices of different sub-systems were calculated to evaluate the three alternative production plans (Sumanth, 1985).

1. Production sub-system:
- Labor utilization

- Asset utilization
Quality - Schedule completion

= = = --

Standard hours / Attendance hours ( Direct labor ) Standard hours / Capitalized cost Value o f flawless product / Value of total product Orders completed in time / Orders scheduled

2. Marketing subsystem:
- Sales = Profit / Sales

3. Personnel sub-system:
Industrial relations Value o f indirect labor Value of direct labor Value of labor = = = = Labor hours worked / Attendance hours Indirect labor / Total labor Direct l a b o r / T o t a l labor Total labor cost / Total labor hours

4. Materials sub-system:
Purchase o f management Inventory control Domestic material ratio Import material ratio = Material payment in time / Total material cost ffi Average material consumption / Average stock = Domestic material cost / Total cost = Import material cost / Total cost

5. Goals & Values sub-system:

- Financial goals - Supplier satisfaction = Profit / Investment = Payments in time / Total payments

In productivity analysis, the key performance areas and expected values have been calculated for three different alternative solutions which has been showed in Table 2. The Productivity Indice of the First Alternative: 0.25 * 0.967 + 0.25 * 1.0 + 0.15 * 0.948 + 0.20 * 0.956 + 0.15 * 0.944 - 0.958 The Productivity Indice o f the Second Alternative: 0.25 * 0.977 + 0.25 * 1.0 + 0.15 * 0.988 + 0.20 * 0.909 + 0.15 * 0.924 = 0.946 The Productivity Indice of the Third Alternative: 0.25 * 0.954+ 0.25 * 1.0 + 0.15 * 0.995 + 0.20 * 0.876 + 0.15 * 0.924 = 0.937 The highest productivity indice is in the first alternative, therefore this production plan is the best for the company among the others.

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19th International Conference on Computers and Industrial Engineering

EXI'Er~-I~I.J V A L U E
WEIGHT UB-SYSTEIV~

PERFORMANCEAREA 3
LABOR UTILIZATION ASS Err ~ Z A T I O N QUALITY SCIIEDULE COMFLETION

VEIOI-l'I a : For the first alternative b : For the second alternative c : For the third alternative
4

REALVALUE 6 0.952 4.67 0.96 2..229 0.466

PRODUCrIoI~ 0.25

0.25 0.35 0.25 0.15 1.0

a.0.977, a.4.66, a.0.972, a.2.24,

5 b.0.974, b.4.65, b.0.979, b.2.23,

c.0.982 c.4.69 c.0.985 c.2.24

X~a~nNO

0.25

SALES

a.0.412, b.0.465, c.0.462

PERSONNEL 0.15

MAa'~X:ALS 0.20

0.30 a . 0 . 7 5 8 , 0.25 a . 0 . 6 9 , 0.25 a.0.308, 0.20 a.62.06~ PURCHASEMANAGEMENT 0.40 a.0.89, INVENTORYCONTROL 0.30 a . l ~ , DOMESTICMATERIALRATK 0.15 a.0.40, ! I~POIRTMATIN~IAL I~.TI0 0.15 a.0.60,
INDUSTRIAL RELATIONS VALUE OF I N D ~ LABOR V A L U E OF DIRECTLABOR VALUI~u/~ LABOK FINANCIAL GOALS

b.0.760, b.0.68, b.0.309, b.66.5r b.0.88, b.l~, b.0.39, b.0.61,

c.0.758 c.0.67 c.0.307 c.68.3 c.0.87 c.1~ c. 0.41 c.0.61 c.0.004 c.0.8

0.780 0.69 0.310 72.33 0.66 85.7 0.3 0.7 0.0042 0.66

0.60 0.40

a.0.003, b.0.004, a.0.8, b.0.8,

C, OALS& VALUES

0.15 SUPpLIERSATISFACTION

Table 2. The sub-systems of the company, their performance areas, and their weights

CONCLUSION Five different constraints: capacity, profit, sales, energy, and material, have been used for the goal programming formulation. Three different production plans have been obtained according to the goal programming. By these production plans, the items which are important for the organization, the subsystems, and the key performance areas have been determined. Through the weightage factors, productivity measurement of each system and sub-system have been calculated. As a conclusion, the highest productivity indice has been obtained in the first alternative solution, therefore this production plan is the best for the organization. This method provide a useful tool to evaluate alternative production plans with respect to productivity gains, and enables plant management to make decisions on different system and sub-system objectives.

REFERENCES Inuiguchi, M., Yasufuni, K. (1991). Goal Programming Problems With Interval Coefficients and Target Intervals, European Journal of Operational Research 52, pp.345-360. Retzlaff, R.L., Morey, D., and Richard, C. (1993). A Goal Programming Method of Stochastic Allocative Data Envelopment Analysis, European Journal of Operational Research 71, pp.379-397. Sumanth, J.D. (1985). Productivity Engineering and Management, Mc.Graw-HiU, pp.57-160.