RESEARCH ARTICLE

The Optimization Problem of Product Mix

and Linear Programming Applications: Case
Study in the Apparel Industry

Gera Workie Woubante*

Bahir Dar University, Bahir Dar, Ethiopia

*Corresponding Author: Gera Workie Woubante: [email protected]

Abstract
Citation:  Woubante  G.  W.  (2017)  
The  Optimization  Problem  of  
Product  Mix  and  Linear   Industrial development strategy is characterized by the efficient
Programming  Applications:  Case   use of resources at every production stage. The analysis and
Study  in  the  Apparel  Industry.  
Open  Science  Journal  2(2).     efficient utilization of resources are made sustainable by
 
 
effective management decision making techniques employed in
th
Received:  6  January,  2017   the industry. A quantitative decision making tool called linear
 
th
Accepted:    20  March,  2017  
programming can be used for the optimization problem of
 
th
product mix. Understanding the concept behind the
Published:  19  June,  2017  
  optimization problem of product mix is essential to the success
Copyright:©  2017  This  is  an   of the industry for meeting customer needs, determining its
open  access  article  under  the  terms  
of  the  Creative  Commons   image, focusing on its core business, and inventory management.
Attribution  License,  which  permits   Apparel manufacturing firms profit mainly depends on the
unrestricted  use,  distribution,  and  
reproduction  in  any  medium,   proper allocation and usage of available production time,
provided  the  original  author  and   material, and labor resources. This paper considers an apparel
source  are  credited.  
  industrial unit in Ethiopia as a case study. The monthly held
Funding:  The  author(s)  received   resources, product volume, and amount of resources used to
no  specific  funding  for  this  work  
  produce each unit of product and profit per unit for each
Competing  Interests:  The  
author  have  declared  that  no  
product have been collected from the company. The data
competing  interests  exists.   gathered was used to estimate the parameters of the linear
programming model. The model was solved using LINGO 16.0
software. The findings of the study show that the profit of the
company can be improved by 59.84%, that is, the total profit of
Birr 465,456 per month can be increased to Birr 777,877.3 per
month by applying linear programming models if customer
orders have to be satisfied. The profit of the company can be
improved by 7.22% if the linear programming formulation does
not need to consider customer orders.

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Keywords: Apparel sector, Linear programming, Lingo, Optimal,

Product mix.

Introduction

Companies in the world, including Ethiopia, have faced problems on

optimization of production inputs. A company’s endurance in a competitive
market closely depends on its ability to produce the highest quality products at
the lowest possible cost (Kumar, 2010). Ezema and Amakom (2012) emphasized
that organizations in the world are challenged by shortages of production inputs
and low capacity utilization that can consequently lead to low production
outputs. Companies have to create a management style to guide their
performances in processing and resource utilization. Apparel manufacturing firm
profit is significantly affected by the cost of resources and resource utilization
(Arefayne and Pal, 2014). Linear programming is an operational research
technique used to allocate optimally production resources for a firm’s best
practices. It is the most widely used tool (Reeb and Leavengood, 1998) to
determine optimal resource utilization. Different products require different
amount of production resources having different costs and revenues at different
stages of production. Thus, the linear programming problem (LPP) technique will
be used to determine the product mix that will maximize the total profit at a
specified time. It is the best method for determining an optimal solution among
alternatives to meet a specified objective function limited by various constraints
and restrictions (Shaheen and Ahmad, 2015). As Reeb and Leavengood (1998)
stated, it is a planning process that allocates resources—labor, materials,
machines, and capital—in the best possible way so that costs are minimized or
profits are maximized. The LPP then becomes a problem of allocating scarce
resources to products in a manner such that profits are at a maximum and/or
costs are at a minimum (Yahya, 2004). However, managers in companies create
gaps in adopting the method to allocate scarce resources among operations and
providing quantitative analysis for each production period due to lack of
awareness.
An industry consists of a number of product lines, which are groups of items
featuring similar characteristics. Together, these product lines comprise the
product mix, which is the total assortment of products the company offers.
Product mix determination is essential to the success of the industry for a
number of important reasons. First, crafting the proper assortment of products
provides the best opportunity of meeting customers' needs. The customers come
to rely on the industry as their primary resource. By carefully monitoring product
mix and seeking feedback from customers, the firm will be able to make
adjustments as the needs of customers change over time. Second, it shapes the
image of the industry and its brand to maintain consistency in the eyes of the
target market. Third, the industry stays focused on its core business. The
industry may be tempted to add more product lines in an effort to reach more
customers. By doing so, it could be in danger of adding products that appeal only
to a fraction of its customer base while alienating the core customers. As a rule,
core customers are the ones who provide about 80 percent of the business, so

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these customers have to be kept in mind when contemplating changes to the

product mix. Finally, the industry probably faces limitations regarding the
number of products it is able to offer. By focusing on providing the optimum
product mix for its customers, it will be able to weed out slow sellers and make
room for more appealing items.
In Ethiopia, the apparel sector is considered as one of the priority areas of
the government‘s industrial development strategy (ETIDI, 2014). However, the
sector has faced many challenges to determine product mix. It is confronted with
inefficient utilization of resources that makes it difficult to ensure the optimal
product mix for maximal profit, which would also fulfill customer needs. As noted
by Samuel (2012), to modernize the apparel sector, performance was insignificant.
Thus, apparel manufacturing companies must adopt operations research
techniques to enhance best resource utilization that would result in optimal
product mix and total profit. Thus, this paper focuses on product mix
determination based on efficient resource utilization for the Ethiopian apparel
sector by considering a garment factory in Ethiopia as a case company. The issue
addressed here was to determine the product mix for optimal profit with
available resources, using the linear programming technique LINGO 16.0, that
the case company should produce for men wear: Polo shirt, basic T-shirt, mock
neck T-shirt, short pants, and singlet. In line with this, the objective of the study
was to suggest linear programming as a decision tool to determine the optimal
product mix for maximum profit with available resources in the apparel sector.

Methodology

The data collection procedure was quantitative in nature and relied on face-
to-face interviews with members of the management and line supervisors in
accordance with existing records and merely amended to finalize the concepts
relevant to the resources held and consumed and the production volume of each
product in the case company. The relevant information on the amount of
resources used per unit of each product during the month is summarized in Table
1.

Table 1: Resources needed per unit of product.

Resource used per unit of products

Products (T-
Overheads

Finishing
Threads

Shirts and
Cutting
(Meter)
(Gram)
Fabrics

Sewing
Labor
(Birr)

(Birr)

(Min)

(Min)

(Min)

Pants)

Polo T-shirts
315 230 11.6 30.6 1.8 22.7 2
Basic T-shirts 200 110 5 19.1 1.1 5.4 1.3
Mock Neck T-
shirts 195 140 6.3 20.1 1.7 10.4 1.9
Singlets 180 100 4.15 16.5 1.1 4.5 1.3

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Short Pants 280 200 7.5 37.5 2.6 20.1 2.6

Source: 2015 Resources used per unit of products of the case apparel company

The ability to use resources (resource utilization) was recorded as the major
constraints in the case apparel manufacturing unit. Seven constraints (fabrics,
thread, labor, overheads, cutting, sewing, and finishing time) and five costumer
orders for T-shirt products have been identified. Out of the resources used by the
case apparel company, the major items held and consumed are shown in Table 2.

Table 2: Average monthly resources held and consumed in quantity/value terms

in Birr.
Resources
Resource Type Measurement Unit Held Value Consumption Value

Fabrics kg 38,665 20,526.871

Threads Meter 26,638,120 132,887

Labor Birr 1,009,008 590,765

Overheads Birr 4,979,414 2,116,525

Cutting h 5,770 2,320.42

Sewing h 44,505 16,705.7

Finishing h 6,195 2,583

The demand and profit earned from each product during the month for the
case apparel company are depicted in Table 3.

Table 3: Demand and profit earned.

Polo T-

Basic T-

Neck T-

Singlets
Shirts

Shirts

Pants
shirts

Short
Mock

Demand 15886 23916 13319 25667 12864

Profit per Unit 4.22 3.62 3.43 3.10 6.75

Model Formulation

In formulating a given decision problem in mathematical form, one should try

to comprehensively understand the problem (i.e., formulate a mental model) by
carefully reading and re-reading the problem statement. While trying to
understand the problem, the decision maker may decide that the model consists
of linear relationships representing a firm’s objectives and resource constraints.
However, the way we approach the problem is the same for a wide variety of
decision making problems, and the size and complexity of the problem may differ.
An LPP model consists of the following parameters:

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Ø Decision variables that are mathematical symbols representing levels of

activity of an operation.
Ø The objective function that is a linear mathematical relationship
describing an objective of the firm, in terms of decision variables, that is
to be maximized or minimized.
Ø Constraints that are restrictions placed on the firm by the operating
environment situated in linear relationships with the decision variables.
Ø Parameters/cost coefficients that are numerical coefficients and constants
used in the objective function and constraint equations.

Basic Assumptions (Properties) of LPP

Technically, there are five additional requirements of an LPP:

1. We assume that conditions of certainty exist; that is, the numbers in the
objective and constraints are known with certainty and do not change
during the period being studied.
2. We also assume that proportionality exists in the objective and
constraints. This means that if production of 1 unit of a product uses 3 h
of a particular scarce resource, then making 10 units of that product uses
30 h of the resource.
3. The third technical assumption deals with additivity, meaning that the
total of all activities equals the sum of the individual activities.
4. We make the divisibility assumption that solutions need not be in whole
numbers (integers). Instead, they are divisible and may take any
fractional value.
5. Finally, we assume that all answers or variables are nonnegative.
Negative values of physical quantities are impossible; we simply cannot
produce a negative number of textile products.

Linear Programming Model Formulation Steps

In this section, we consider the steps involved in the mathematical

formulation of the problem. LPP is a collection of the objective function, the set
of constraints, and the set of nonnegative constraints.

Step 1: Clearly define the decision variables of the problem, X = (x , x ,…, x ).

1 2 n
Step 2: Write the objective function as a linear combination of the decision
variables, Z = f (X).
Step 3: Formulating the constraints of the problem as a linear combination of the
decision variables.

General Form of the Linear Programming Model

In general, if C = (c , c ,…, c ) is a tuple of real numbers, then the function f of

1 2 n
real variables X = (x , x ,…, x ) defined by
1 2 n
f (X) = c x + c x +…+ c x
1 1 2 2 n n

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is known as a linear function. If g is a linear function and b = (b , b ,…, b ) is a

1 2 n
tuple of real numbers, then g(x) = b is called a linear equation, whereas g(x) (≤ ,
≥) b is called a linear inequality. A linear constraint is one that is either a linear
equation or a linear inequality. A linear programming problem (LPP) is one
which optimizes (maximizes or minimizes) a linear function subject to a finite
collection of linear constraints. Formally, any LPP having  𝑛 decision variables
can be written in the following form:

n
Optimize Z = ∑ C j X j
j =1

Subject to
m

∑ a X (≤, =, ≥)b , i = 1, 2,..., m

i =1
ij j i

X j ≥ 0, j = 1, 2,..., n

where C j , aij , bi are constants.

Common terminology for the aforementioned linear programming model can now
be summarized as follows. The function, being optimized (maximized or
minimized), is referred to as the objective function. The restrictions normally are
referred to as constraints. The first m constraints (those with a function of all
the variables, on the left-hand side) are called functional constraints (or
structural constraints). Similarly, the X j ≥ 0, j = 1, 2,..., n restrictions are called
non-negativity constraints (or non-negativity conditions) and the aim is to find
the values of the variables Xj. Any vector 𝑋!  , satisfying the constraint of the
LPP is called a feasible solution of the problem (Fogiel, 1996; Schulze, 1998;
Chinneck, 2000). In this paper, we use the following terminology for the solution.
A feasible solution is a solution for which all the constraints are satisfied. An
infeasible solution is a solution for which at least one constraint is violated. The
problem is to find the values of the decision variables 𝑋! that maximize the
objective function 𝑍 subject to the m constraints and the non-negativity
restriction on the 𝑋! variable. The resulting set of decision variables that
maximize the objective function is called the optimal solution.

Results and Discussion

The information collected from the case company in addition to the sales and
other operating data was analyzed to provide estimates for LPP model
parameters. To set up the model, the first level decision variables on the volume
of products to be produced were set.
x1 = number of Polo T-shirts
x2 = number of basic T-shirts

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x3 = number of mock neck T-shirts

x4 = number of singlets
x5 = number of short pants
Z = total profit during the month
Now, the linear programming model, maximizing the total profit is:

Maximize Z (Birr Profit) = 5.25 x1 + 4.82x2 + 4.85x3 + 3.2x4 + 6.75x5

Subject to
315x1 + 200x2 + 195x3 + 180x4 + 280x5 ≤ 38,665,000 (Fabric)
230x1 + 110x2 + 140x3 + 100x4 + 200x5 ≤ 26,638,120 (Thread)
12.5x1, +5.5 x2 + 6.3x3 + 4.25x4 + 7.5x5 ≤ 1,009,008 (Labor)
31x1 + 19.1x2 + 20.1x3 + 37.5x4 + 20.1x5 ≤ 4,979,414 (Over heads)
1.8x1 + 1.1x2 + 1.7x3 + 1.1x4 + 2.6x5 ≤ 346,200 (Cutting time)
22.7x1 + 5.4x2 + 10.4x3 + 4.5x4 + 40.1x5 ≤ 2,670,300 (Sewing time)
2x1 + 1.3x2 + 1.9x3 + 1.3x4 + 2.6x5 ≤ 371,700 (Finishing time)
x1≥ 15000; x2 ≥ 35800; x3 ≥ 13500; x4 ≥ 12500; x5 ≥ 16100 (Customer
orders)

Model Solution
A powerful linear programming problem solving technique is the simplex
method. Among the various software packages, LINGO 16.0 software was used to
hold the simplex procedures. The global optimal solution report for this model is
as follows.
Objective value: 777877.3
Infeasibilities: 0.000000
Total solver iterations: 2
Elapsed run time seconds: 0.03
Model class: LP
Total variables: 6
Nonlinear variables: 0
Integer variables: 0
Total constraints: 14
Nonlinear constraints: 0
Total nonzeros: 47
Nonlinear nonzeros: 0

Variable Value
Reduced Cost
Z 777877.3 0.000000
x1 15000.00 0.000000
x2 102287.8 0.000000
x3 13500.00 0.000000
x4 12500.00 0.000000
x5 16100.00 0.000000

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Row Slack or Surplus Dual Price

1 777877.3 1.000000
2 0.000000 1.000000
3 4091936. 0.000000
4 5576460. 0.000000
5 0.000000 0.8763636
6 1897867. 0.000000
7 128123.4 0.000000
8 1246957. 0.000000
9 124965.8 0.000000
10 0.000000 5.704545
11 66487.82 0.000000
12 0.000000 0.6710909
13 0.000000 0.5245455
14 0.000000 0.3227273

Here, there was a difference between the LPP solutions obtained to satisfy
customer orders using LINGO 16.0 and actual production in Table 3. In the
former case, the product mix was Polo T-shirts, basic T-shirts, Mock neck T-
shirts, singlets, and short pants with volumes of 15,000.00, 102,287.8, 13,500.00,
12,500.00, and 16,100.00 respectively, and with a total profit of Birr 777,877.3 per
month upon selling. In the latter case, the product mix was Polo T-shirts, basic
T-shirts, mock neck T-shirts, singlets, and short pants with optimal volumes of
15,000.00, 35,800.00, 13,500.00, 12500.00, and 16,100.00 respectively, and with a
total profit of Birr 465,456 per month. At optimality, resources consumed by the
LINGO 16.0 software result were compared with the customer orders during the
month. In this case, the profit of the company could be improved by 59.84 %.
From Table 2, the monthly consumption values of customer orders for each
available resource were gathered from the company’s records. These consumption
values and LPP consumption values are summarized in Table 4. The ratios of
monthly consumption of the resources held were calculated to find the percentage
usage by each T-shirt style.

Table 4: Monthly consumption by LPP techniques and customer order

production.
Resources Held per Month Monthly Resources Percentage (%) of

Consumption Usage

Customer Customer
LPP LPP
Type Unit Value order order

Fabrics Gram 38665000 20,526,871 34573064 53.09

89.42

Threads Meter 26,638,120 13,288,700 21061660 49.89 79.07

Labor Birr 1,009,008 590,765 1,009,008 58.55 100

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Overheads Birr 4979414 2,116,525 3081547 42.51 61.89

Cutting Min 346302 139,225 218076.2 40.20 62.97

Sewing Min 2670336 1,002,344 1423343 37.54 53.30

Finishing Min 371628 154,982 246734.2 41.70 66.38

The study shows that the LPP resource utilization of fabrics, threads, labor,
overheads, cutting, sewing, and finishing can be significantly improved to 89.42%,
79.07%, 100%, 61.89%, 62.97%, 53.30%, and 66.38% respectively. Thus, Figure 1
shows that production based on customer orders lead to inefficient resource
utilization since most of the resources are idle.

100!
90!
80!
70!
60!
50!
LPP!
40!
30!
20! Customer
10! Order!
0!

Figure 1: Comparison of customer order and LPP production resources

utilization.

Here, an analysis has been made without considering customer orders to

develop an LPP model using monthly consumption of resources. The monthly
consumption of each resource values are given under the left-hand side column in
Table 2, which can be used as required for the constraints.

Maximize z = 525/100*X1+482/100*X2+485/100*X3 +32/10*X4+675/100*X5;

Subject to
315*X1+ 200*X2 + 195*X3 + 180*X4+ 280*X5 ≤ 20526871;
230*X1 +110*X2+ 140*X3+ 100*X4+ 200*X5 ≤ 13288700;
125/10*X1+5.5 *X2 + 63/10*X3+ 425/100*X4 + 75/10*X5 ≤ 590765;
31/10*X1+ 191/10*X2+ 201/10 *X3+ 165/10*X4+ 375/10*X5 ≤ 2116525;
18/10*X1+ 11/10*X2+ 17/10 *X3+ 11/10*X4+ 26/10*X5 ≤ 139225;
227/10*X1 + 55/10*X2+ 104/10*X3+ 45/10*X4 + 201/10*X5 ≤ 1002344;
2*X1+ 13/10*X2 + 19/10*X3+ 13/10*X4+ 26/10 *X5 ≤ 154982;
X1≥ 0; X2 ≥ 0; X3 ≥ 0; X4 ≥ 0; X5 ≥ 0.

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The optimal solution values of the decision variables were obtained using the
LINGO 16.0 s software. Table 5 shows the monthly product mix of the actual
system obtained from the factory and that suggested by the LPP model. These
values have been multiplied by their respective unit profits to obtain the profit
per month of each product. In this case where customer orders were not
considered, the product mix suggested by the LPP model was Polo, basic T-
shirt, Mock neck T-shirts, singlets, and short pants at optimal volumes of 0,
330,538.4, 140,265.7, 0, and 28,254.43 respectively with a total profit of Birr
499,058.5 per month. It can be shown then that with the LPP optimal solution,
the profit of the company can be improved by 7.22% (499,058.5 –
465,456/465,456) ×100. Adopting operational research techniques in the
production decision help the company to improve its objective.

Table 5: Comparison of customer order production and LPP values.

Profit Production

per Unit Volume/Month Profit (Birr) /Month

(Birr) Customer Customer

Product Type Orders LPP Orders LPP

Polo T-shirts 5.25 15000 0 78,750 0

Basic T-shirts 4.82 35800 68576.43 172,556 330,538.4

Mock Neck T-

shirts 4.85 13500 28920.76 65,475 140,265.7

Singlets 3.2 12500 0 40,000 0

Short Pants 6.75 16100 4185.841 108,675 28,254.43

Total Profit/Month (Birr) 465,456 499,058.5

Conclusion

Ability to use resources (resource utilization) was recorded as the major

constraint in the apparel manufacturing industry. The profits comparison
between the actual production and production using LPP models show sizeable
differences. From this point of view, it can be concluded that the apparel
company should use quantitative research methods of linear programming to
determine their optimal product mix. Thus, it will be possible to obtain the
following results:
Ø The profit of the company can be improved by 59.84% (from Birr
465,456 per month to Birr 777,877.3 per month).
Ø Denying customer orders and adopting the LPP solution provides only
three types of products but the profit of the company can be improved
by 7.22% (from Birr 465,456 per month to Birr 499,058.5 per month).

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Ø Use of an operational research technique in the production time horizon

helps the company to improve its objective.

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