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See discussions, stats, and author profiles for this publication at: Profit Maximization In A Product Mix Company Using Linear Programming ARTICLE · NOVEMBER 2012 READS 4,805 4 AUTHORS , INCLUDING: Waheed Babatunde Yahya University of Ilorin 34 PUBLICATIONS 33 CITATIONS SEE PROFILE Mohammed Kabir Garba University of Ilorin 8 PUBLICATIONS 4 CITATIONS SEE PROFILE Available from: Waheed Babatunde Yahya Retrieved on: 19 March 2016
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European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 4, No.17, 2012 126 Profit Maximization In A Product Mix Company Using Linear Programming Waheed Babatunde Yahya 1 *, Muhammed Kabir Garba 1 , Samuel Oluwasuyi Ige 2 and Adekunle Ezekiel Adeyosoye 1 1. Department of Statistics, University of Ilorin, P.M.B. 1515, Ilorin, Nigeria. 2. Department of Mathematics and Computer Studies, Federal Polytechnic, Ado-Ekiti, Nigeria. * E-mail of corresponding author: [email protected] Abstract This paper demonstrates the use of linear programming methods as applicable in the manufacturing industry. Data were collected as extracts from the records of KASMO Industry Limited, Osogbo, Nigeria, on four types of sales packages adopted for selling her medicated soap product which include 1 tablet per pack, 3 tablets per pack, 12 tablets per pack and 120 tablets per pack. Information on selling price per pack and on the cost of five basic raw materials used as well as the quantity of each of the raw material held in stock per month for the production of soap tablets were available in the records of the company. Based on the costs of raw materials, the maximum profit that would accrue to the company given the product mix was determined. The results showed that the company would attain optimal monthly profit level of about N271,296 if she concentrates mainly on the unit sales (one tablet per pack) of her medicated soap product, ignoring other forms of sales packages. By this, her sales turn-over per month would be about 18,900 soap tablets. The analysis was carried out with R statistical package ( ) using the library “ lpSolve ”. Key Words : Linear programming, Simplex Method, Objective function, Product mix, R software. JEL Classification : C40, C44, C61 1. Introduction Linear programming (LP) can be defined as a mathematical technique for determining the best allocation of a firm’s limited resources to achieve optimum goal. It is also a mathematical technique used in Operation Research (OR) or Management Sciences to solve specific types of problems such as allocation, transportation and assignment problems that permits a choice or choices between alternative courses of action (Yahya, 2004). Linear programming is a term that covers a whole range of mathematical techniques that is aimed at optimizing performance in terms of combinations of resources (Lucey, 1996).
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