EFFECT OF OPTIMIZATION TECHNIQUES ON MATERIAL REQUIREMENTS PLANNING - Project Topics & Materials - Gross Archive
EFFECT OF OPTIMIZATION TECHNIQUES ON MATERIAL REQUIREMENTS PLANNING
(A STUDY OF NIGERIAN BREWERIES PLC, AMA)
ABSTRACT
This research work Assessed the Effect of Optimization Techniques on Material Requirements Planning:. A study of Nigerian Breweries Plc, Ama. The objectives of the study included to: find out the extent of application of linear programming model on meeting due dates, ascertain the relationship between transportation algorithm and collision of the requirements of production in the organization, determine the effect of network model on meeting the target of organization and examine the relationship between assignment technique and unit produced in the organization. The major instrument of data collection was the questionnaire. The sources of data were the primary and secondary sources. The population of the study was 262, while the sample size of 158 was determined using the Taro Yamane’s formula. The data collected were presented in tables of frequencies and percentages using the five point Likert scale. The hypotheses were tested using the chi-square statistical technique. The findings included that the extent of application of linear programming model has a positive effect on meeting due dates of Nigeria Breweries Plc, Ama, transportation algorithm has a significant positive relationship with rate of collision of the requirements of production in the organization, network model has a positive effect on meeting target of organization and Assignment technique has a significant positive relationship with units produced in the organization. The research concluded that optimization techniques have a positive effect on material requirements planning and it was recommended that the organization should adopt linear programming model as it has a positive effect on resource scheduling, management of organizations should consider transportation algorithm as it has a positive relationship with rate of collision of the requirements of production in the organization, organizations should also consider network model as it has a positive effect on meeting the target of the organization and management of organizations should adopt assignment technique as it has a positive relationship with units produced in the organization.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Statement of Hypotheses
1.6 Significance of the Study
1.7 Scope of the Study
1.8 Limitations of the study
1.9 Historical Background of Nigerian Breweries Plc
1.10 Operational Definition of Terms
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework of the Study
2.1.1 Concept of Optimization
2.1.2 Types of Optimization Techniques
2.1.3 Types of Simulation
2.1.4 Steps of Simulation process
2.1.5 Advantages and Disadvantages of Simulation
2.1.6 Linear Programming
2.1.7 Assumptions of Linear Programming
2.1.8 Advantages of Linear Programming
2.1.9 Limitations of Linear Programming
2.1.10 Application Areas of Linear Programming
2.1.11 Breakeven Analysis
2.1.12 Assignment Problem
2.1.13 Transportation Algorithm
2.1.14 Benefits of Optimization Techniques
2.1.15 Concept of Material Requirements Planning
2.1.16 Objectives of MRP
2.1.17 Organizational Measures for Effective
MRP Implementation
2.1.18 Benefits of Material Requirements Planning
2.2 Theoretical Framework of the Study
2.2.1 Optimal Control Model
2.2.2 Markov Chain Optimization Theory
2.3 Empirical Review
2.3.1 The Effect of Application of Linear
Programming Model on Meeting due Dates of an
Organization
2.3.2 The Relationship between Transportation Algorithm
and Collusion of the Requirements of Production
2.3.3 Effect of Network Model on Meeting the Target of the
Organisation
2.3.4 Relationship between Assignment Technique and
Units produced in an Organisation
2.4 Summary of Empirical Literature
CHAPTER THREE: METHODOLOGY
3.1 Research Design
3.2 Sources of Data
3.2.1 Primary Sources
3.2.2 Secondary Sources
3.3 Area of the Study
3.4 Population of the Study
3.5 Sample Size Determination
3.6 Instruments for Data Collection
3.7 Validity of the Instrument
3.8 Reliability of the Instrument
3.9 Methods of Data Presentation and Analysis
CHAPTER FOUR: DATA PRESENTATION, ANALYSES AND DISCUSSION OF FINDINGS
4.1 Data Presentation and Analysis
4.2 Bio-Data
4.3 Data Relating To Research Questions
4.3.1 Research Question One
4.3.2 Research Question Two
4.3.3 Research Question Three
4.3.4 Research Question Four
4.4 Test of Hypotheses
4.4.1 Test of Hypothesis One
4.4.2 Test of Hypothesis Two
4.4.3 Test of Hypothesis Three
4.4.4 Test of Hypothesis Four
4.5 Discussion of Findings
4.5.1 Discussion Based on Objective One
4.5.2: Discussion Based on Objective Two
4.5.3: Discussion Based on Objective Three
4.5.4 Discussion Based on Objective Four
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
5.4 Contribution to Knowledge
5.5 Suggestions for Further Research
List of References
Appendix
Questionnaire
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Normative economic decision analysis involves determining the action that best achieves a desired goal or objective. This means finding the action that optimizes (that is, maximizes or minimizes) the value of an objective function (McTonyson, 2014:108). For example, in a price-output decision-making problem, we may be interested in determining the output level that maximizes profits. In a production problem, the goal may be to find the combination of inputs (resources) that maximizes the cost of producing a desired level of output. In a capital budgeting problem, the objective may be to select those projects that maximize the net present value of the investment chosen. Bill (2015:72), inform that optimization, tends to produce the maximum yield in any endeavour. It has to do with the general method applicable to produce the best. In other words, it maximizes all the variables that tend to be low, but are vital to the growth of the organization or minimizes those that tend to skyrocket if not controlled.
Ejikeme (2015:75), observes that optimization is a dual process of obtaining the best from any business undertaking. It is purely a management technique of getting the best from any business process. Optimization either maximizes or minimizes all variables of an organization that affect output. Those things to maximize include profit, output, production, employee efficiency, opportunities, corporate governance, business ethics, creativity, globalization, leadership maintenance systems, market stability, mergers and acquisitions, joint ventures, new product development, operations research, public relations business strategy, quality management, technology and firm growth.
Nwafor (2016:23) states that things to minimize in the organization include: time wasting, cost, defectiveness etc. He adds that the methods of optimization include: Linear programming, scheduling, forecasting, queuing, cost-profit analysis, transportation and work assignment.
Mckinnon (2014:93) relates that optimization techniques aim at increasing profit and decreasing cost of production and administration. In other words, in the process of planning for the organization’s profit, managers have to take a very priority position. Commenting further on this, Kure (2015:63) observes that any business venture, especially the manufacturing outfit has to battle with ever increasing costs, that tend to reduce profit as low as possible. This technique places great responsibility on management to plan effectively to improve on profit position. By so doing, the company reduces cost of production as small as possible. These agree with the view of Frank (2016:13), that there is no optimization without cost reduction strategies. So, optimization, according to Frank (2015:39), is a dragnet of forces that tend to maximize profit while minimizing costs. He adds that profit maximization is the better half of cost minimization in any business ventures
Production cannot occur unless the appropriate materials are in place at the right time to do the job. One effective means of handling material issues is the use of materials requirements planning which must be closely coordinated with the master production schedule. Material Requirements Planning (MRP) is a computer based inventory system that projects materials for the goods and services specified in the master schedule and initiates the actions necessary to acquire the materials when needed (Tomson, 2014:811).
MRP systems can handle various types of inventory, but they are particularly adept at dealing with dependent demand inventor, the raw materials, components and sub-assemblies that are used in the production of an end product or service. Many manufacturing organizations in Nigeria have not paid adequate attention on optimization techniques and material requirement planning. Hence, this research wants to assess the effect of optimization techniques on material requirement planning in Nigeria Breweries Plc, Ama.
1.2 Statement of Problem
The consequences of not adopting effective optimization techniques on material requirements planning in an organization has led to lack of inventory management that leads to overstocking and understocking, rescheduling, due to improper service time and service time increases due to unavailability of materials that do not meet due date.
When the appropriate optimization techniques are not used in an organization, the organization finds it difficult to determine the production mix, that maximizes contribution to profit. It is through the optimization techniques like linear programming that an organization would be able to know the production mix to maximize contribution to profit.
Optimization techniques use mathematical models in the solution of allocation, transportation and assignment problems in production and operations management. Also processes require the use of optimization techniques in determining the amount of raw materials needed for a given number of units to be produced. Any organization that does not adopt adequate optimization techniques, might have problems in allocation, transportation and assignment challenges in production.
1.3 Objectives of the Study
The general objective of the study was to assess the effect of optimization techniques on material requirements planning. However, the specific objectives included to:
1. ascertain the effect of application of linear programming model on meeting due dates of Nigeria Breweries Plc, Ama.
2. determine the relationship between transportation algorithm and rate of collision of the requirements of production in the organization.
3. assess the effect of network model on meeting target of organization.
4. examine the relationship between assignment technique and unit produced in the organization.
1.4 Research Questions
Based on the objectives of the study, the following research questions were raised.
1. What is the effect of the application of linear programming model on meeting due dates of Nigeria Breweries Plc, Ama?
2. What is the relationship between transportation algorithm and rate of collision of the requirements of production in the organization?
3. What is the effect of network model on meeting the target of organization?
4. What is the relationship between assignment technique and units produced in the organization?
1.5 Statement of Hypotheses
Based on the research questions, the following hypotheses were formulated.
Hypothesis One
1. The application of linear programming model has a positive effect on meeting due dates of Nigeria Breweries Plc, Ama.
Hypothesis Two
2. Transportation algorithm has a positive relationship with rate of collision of the requirements of production in the organization.
Hypothesis Three
3. Network model has a positive effect on meeting the target of organization.
Hypothesis Four
4. Assignment technique has a positive relationship with units produced in the organization.
1.6 Significance of the Study
So many people will benefit from this study, among them are the management of various manufacturing organizations, the researcher and the university. The management of various manufacturing organizations will benefit from this study as they will be more enlightened on the various optimization techniques to use on material requirement planning. The researcher will benefit from this study as it is a pre-requisite for graduation. The university will benefit as the research work increases its data bank. Finally, the research will serve as reference material for further research on this topic.
1.7 Scope of the Study
This research work covered the effect of linear programming model on resource scheduling, the relationship between transportation algorithm and routing of the requirements of production, the effect of network model on production control and the relationship between assignment technique and production planning. The organization covered by this study is Nigeria Breweries Plc, Ama.
1.8 Limitations of the Study
The researcher encountered some impediments while carrying out this study. Among them were time, finance and uncooperative attitude of the respondents.
Time: Part of this research work were done during lecture period. This made the researcher to miss some lectures.
Finance: The researcher spent some money on transportation to Nigeria Breweries Plc, Ama. Some money were also spent on browsing and printing out relevant materials related to the study.
Uncooperative Attitude of the Respondents: The respondents of Nigeria Breweries Plc, Ama were economical with information but when they confirmed that the research work was purely for academic purpose, they gave out useful information relevant for the study.
1.9 Historical Background of Nigeria Breweries Plc, Ama.
Nigeria Breweries Plc (NB) is the pioneer and largest brewing company in Nigeria. It was incorporated in 1946, under the name, Nigeria Brewery limited. The name was changed on the 7th of January 1957, to Nigerian Breweries limited and therefore to Nigerian Breweries Plc. In 1960 when the companies and Allied matters Act of that year came into effect. Company is a subsidiary of Heineken N.V. of the Netherlands the latter having a 54.10% interest in the equity of Nigerian Breweries Plc. NB recorded a Landmark when the first bottle of STAR lager beer rolled off the bottling lines in its Lagos Brewing in June 1949. This was followed by the Aba Brewery which was commissioned in 1957, Kaduna Brewery in 1963 and Ibadan Brewery in 1982. In September 1993, the Company acquired its fifth brewery sited in Ama Enugu State, was commissioned. Operations in Enugu Brewery were discontented in 2004. Thus, from its humble beginning in 1946, the company now has five operational breweries from which its high quality products are distributed to all parts of the country. Nigeria Breweries (NB) keeps pace with key international developments, thus ensuring that its systems, processes and operational procedures are always in conformity with world-class standard. It is in line with this policy that the company established a research and development centre in 1987 to enhance its research activities on all aspects of brewing operations.
Nigeria Breweries (NB) Principal activities during the period under review include brewing, marketing and selling of lager, stout non-alcoholic malt drinks and soft drinks. As a major brewing company, it encourages the establishment of ancillary businesses. Many of these organizations and individuals depend largely on the company for their means of livelihood. Mese include manufacturers of Bottles, crown corks, plastic crates and such services as Hotels clubs and the company’s key distributors.
1.10 Operational Definition of Terms
Optimization Techniques: These are a powerful set of tools that are important in efficiently managing an enterprises resources and thereby maximizing shareholder wealth.
Material Requirements Planning: Is a computer based inventory system that projects materials for the goods and services specified in the master schedule and initiates the actions necessary to acquire the materials when needed.
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