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Product Mix Optimization in the Manufacturing Industry: A Linear

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ISSN 2636-5332
Journal of Economics and Finance Volume 2 Issue 2 October 2018

Product Mix Optimization in the Manufacturing Industry: A Linear

Programming Approach

1OGBEIDE Darlington Osaremwinda, Ph.D & 2EJECHI Jones Oghenemega, Ph.D

1&2Department of Business Administration, Faculty of Management Sciences,

University of Benin, Benin City, Nigeria.

1E-mail: darlington.ogbeide@uniben.edu

Abstract
This paper examines product mix optimization in the manufacturing industry using linear
programming approach. Guinness Nigeria Plc, Benin was understudied. The company was
chosen because it deals on different products which make the determination of the quantity
combinations of the products produced and sold an important and major management
decision. Thirteen products of the company (Dubic Malt, Guinness Stout (Medium), Harp,
Herbal Malt, Malta Guinness, Orijin Herbs, Orijin Bitters, Orijin Zero, Satzenbrau, Smirnoff
Double Black, Smirnoff Ice, Snap and Tappers) were sampled for the study. Data were
sourced from the records of the company. Linear programming of the operations of the
company was formulated and optimum results derived using Linear Programming Software
(Lips) that employed simplex method. Based on the data collected and analyzed, it was
discovered that, given the amount of materials available, the company should produce all the
products in order to satisfy its customers but more of Satzenbrau should be produced in order
to attain maximum profit because they contribute most to the profit earned. It is therefore
recommended that any product having an adverse effect or contributing losses to the profit
margin of the company can be stopped and the company can focus on those that can generate
more profit.
Keywords: Company, Linear Programming, Maximization, Optimization, Products.
JEL Classification: C44 C61 L69

1. Introduction
Global competition and growth in businesses have forced remarkable pressure on product and
service providers to transform and boost their operations and practices. Businesses are
reacting to this pressure by reengineering and streamlining their operations to serve their
customers better. On the basis of this pressure, management is faced with the difficulty of
finding the optimal levels of planning, organizing and controlling of production in the various
productive industries of the economy. As a result of this, managerial theories of the firm are
initiated to evaluate business environments and resolve practical business problems such as
operational problems originating from and within the business and environmental problems
in which the business operates.
Product mix optimization is one of the fundamental problems in manufacturing industry
(Wang, Sun, Si & Yeng, 2009). Most manufacturing organizations, big or small, private or
public, are persistently confronted with deficiencies of inputs which often manifest in low
capacity utilization and therefore low outputs. Be that as it may, an economy can only
develop if management decisions at the firm level result in boosted output through
optimization (maximization of output or minimization of cost) culminating in increased
production in the real sector (Ezema & Amakom, 2012). Therefore, firms’ managers are
continually looking for ways to make the right decisions in order to achieve their objectives
of either to maximize profit or minimize cost with limited resources. To evaluate these

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decision problems, various theoretical and quantitative techniques have been developed. One
of such techniques is the linear programming model, which uses mathematical method in
seeking for the ideal strategy in any decision situation under the restriction of limited
resources and uncertainties.
Linear Programming (LP) is a subset of mathematical programming that is concerned with
efficient allocation of limited resources to known activities with the objective of meeting a
desired goal of maximization of profit or minimization of cost (Taha, 2011). It is a
mathematical technique useful for the allocation of scarce or limited resources to several
competing activities on the basis of given criterion of optimality (Sharma, 2009). It is used
for solving a broad class of optimization problems and a tool for optimizing decision-making
process.
Historically, ideas from linear programming have propelled a significant number of the focal
concepts of optimization theory such as duality, decomposition and the importance of
convexity and its generalizations. These theories had some elements of ambiguity. In an
allocation problem, when there are a number of activities to be executed, alternative ways of
doing them, and limited resources or facilities for executing each activity in the most
effective way, the management is faced with the problem of how best to combine these
activities and resources in the most suitable manner in order that the overall performance is
maximized. This is known as optimization problem, and can be tackled using linear
programming.
In the light of the above, the study examines product mix optimization in the manufacturing
industry using linear programming approach. Specifically, the study critically examines the
thirteen products produced by Guinness Nigeria Plc, Benin and to effectively estimate which
of these products must be given more attention or produced more in other to maximize profit.
2. Literature Review
2.1 Concept of Product Mix
A product mix (also called a product assortment) is the set of all products and items a
particular seller offers for sale (Kotler & Keller, 2009). A company’s product mix is the
assortment of product lines and individual products offerings that the company sells (Kurtz &
Boone, 2006). It consists of various product lines. The right blend of product lines and
individual products allows a firm to maximize sales opportunities within the limitations of its
resources. A company’s product mix has certain width, length, depth, and consistency (Kurtz
& Boone, 2006; Kotler & Keller, 2009).
The width of a product mix refers to how many different product lines the company carries,
that is, the number of product lines the firm offers. The length of a product mix refers to the
total number of items in the mix. It is the number of different products a firm sell. The depth
of a product mix refers to how many variants are offered of each product in the line. The
consistency of a product mix refers to how closely related to the various product lines are in
end use, production requirements, distribution channels, or some other way.
These four product dimensions permit the company to expand its business in four ways. It
can add new product lines, thus widening its product mix. It can lengthen each product line. It
can add more product variants to each product and deepen its product mix. Finally, a
company can pursue more product line analysis.
2.2 Concept of Linear Programming
Linear Programming (LP) is a subset of mathematical programming that is concerned with
efficient allocation of limited resources to known activities with the objective of meeting a
desired goal of maximization of profit or minimization of cost (Taha, 2011). Sharma
(2009:28) defined Linear Programming as “a mathematical technique useful for the allocation
of scarce or limited resources to several competing activities on the basis of given criterion of

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optimality.” It deals with unique mathematical problems with the aid of developing rules and
relationships that facilitate the distribution of limited resources under the restrictions imposed
by means of either technological or practical factors whilst an attribution decision has to be
made.
The use of LP is of immense benefit in making the optimum use of productive resources. It
also shows how decision-makers can employ their productive factors effectively by selecting
and distributing (allocating) these resources. LP techniques offers feasible and practical
solutions since there may be different constraints operating outside the problem that must be
taken into consideration. It also aids in the reassessment of a fundamental plan for varying
conditions. If conditions vary when the plan is partially achieved, they can be controlled in
order to alter the rest of the plans for optimal results (Ezema & Amakom, 2012).
LP is the most widely used technique of decision making in business and industry and in
various other fields (Sharma, 2009). Industrial applications of LP include solving product mix
problems, production planning problems, assembly line balancing problem, blending
problems and trim loss problems. It can also be applied in solving management related
problems such as portfolio selection problems, profit planning problems, media selection
problems, transportation problems, physical distribution problems, staffing problems,
determination of equitable salaries and job evaluation and selection problems. Other areas
where linear programming has been applied include farm economics, farm management,
agricultural planning, selecting air weapon system, fleet utilization, awarding contracts,
education, hospital administration, capital budgeting and so on (Sharma, 2009).
Although LP has several benefits and applications, it is not free from shortcomings. Sharma
(2009) and Verma (2010) highlighted some of the limitations as follows: LP treats all
relationships among the decision variables as linear. However, generally, neither the
objective functions nor the constraints in real life situations concerning business and
industrial problems are linearly related to the variables. LP model does not take into
consideration the effect of time and uncertainty. Parameters appearing in the model are
assumed to be constant but in real life situations, they are frequently neither known nor
constant. LP also deals with only single objective, whereas in real life situations we may
come across conflicting multi objective problems. In pointing out limitations to its
applicability, Kurtz (as cited in Ezema & Amakom, 2012:40) noted that ”often, very real
organizational issues such as morale, consequences of strikes and internal power struggles are
so difficult to quantify that they are overlooked in the Linear Programming model used.”
Furthermore, considering the technicalities, managers who are familiar with its rigorous
models avoid its usage on the grounds that they do not understand how it could be applied.
2.2.1 Structure of Linear Programming Model
Nahmias (2001) and Sharma (2009) have identified four basic elements or components of LP
model. These include:
(i) Decision variables: The evaluation of various alternatives is guided by the nature of
objective function and availability of resources. For this, certain activities are pursued
(also called decision variables) usually denoted by x1, x2, …, xn. The value of these
activities represents the extent to which each of these is performed. The value of
certain variables may or may not be under the decision-maker’s control. If values are
under the control of the decision maker, then such variables are said to be controllable
otherwise they are said to be uncontrollable. These decision variables are usually
interrelated in terms of consumption of limited resources and also require
simultaneous solutions. In a linear programming model, all decision variables are
continuous, controllable and non-negative.

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(ii) The objective Function: The objective (goal) function of each LP problem is
expressed in terms of decision variables to optimize the criterion of optimality (also
called measure-of-performance) such as profit, cost, revenue, distance amongst
others.
(iii) The constraints: There are always certain limitations (or constraints) on the use of
resources, for instance labour, machine, raw material, money, space and among others
that limit the degree to which an objective can be achieved. Such constraints must be
expressed as linear equalities or inequalities in terms of decision variables. The
solution of a linear programming model must satisfy these constraints.
(iv) Linearity: Optimization problems can be formulated as LP only when the objective
can be expressed as a linear function of the decision variables and all constraints can
be expressed as linear functions of the decision variables. That is, linearity must hold
in the objective function and the constraints.
2.2.2 Assumptions of the Linear Programming Model
Different authors (Agbadudu, 1996; Sharma, 2009; Gupta & Hira, 2011) have identified the
major assumptions of the LP model. These include:
(i) Certainty: In all LP models, it is assumed that all model parameters such as
availability of resources, profit (or cost) contribution of a unit of decision variable and
consumption of resources by a unit of decision variable must be known and may be
constant. In some cases, these may be either random variables, represented by a
known distribution (general or may be statistical), or may tend to change.
(ii) Additivity: The value of the objective function and the total amount of each resource
used (or supplied), must be equal to the sum of the respective individual contributions
(profit or cost) of the decision variables.
(iii)Divisibility (or continuity): The solution values of the decision variables are allowed
to assume continuous values. That is, the decision variables can be fractions.
(iv) Proportionality: The amount of each resource used (or supplied) and its contribution
to the profit (or cost) in objective function must be proportional to the value of each
decision variable.
(v) Deterministic: This means that all model coefficients are known and hence constant in
the period under consideration and therefore having no probabilistic (stochastic)
elements.
(vi) Finite choices: It means a limited number of choices are available to the decision
maker and that the decision variables are interrelated and non-negative.
2.3 Theoretical Framework
This study is based on the Constraint-Based Resource Utilization Theory for optimizing
product-mix decisions. This theory grows out of the work of Eliyahu Goldratt (Goldratt &
Cox, 1992), who studied manufacturing processes and found that standard cost-accounting
procedures led companies to focus on cost-reduction, even when it actually increased costs
and lowered profits. The contribution of the theory of constraints is in its focus on throughput
rather than volume (Chakravorty & Verhoeven, 1996). By throughput, we mean the amount
of contribution margin that is generated by moving products through the value chain, as
opposed to focusing on economies of scale, as is characteristic of volume-oriented resource
utilization approach. Constraints are anything in the system that limits throughput. In the real
world of business, every system is subject to a host of potential constraints-volume
limitations from machine capacity or suppliers, availability of trained labour, raw materials,
and so forth. However, the theory of constraints suggests that managers only focus on the
most limiting constraint when maximizing throughput.

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The theory of constraints shows the impact of the constraint on overall contribution margin
for each potential product mix. This allows managers to select the product mix that will
maximize contribution margin, given the production process and available demand. This is
true whether the system’s constraint is a limited resource, available material, or demand
itself. The constraint-based approach addresses the fact that actual resource availability and
demand inevitably deviate from plan, thus creating constraints that a company must address
by adjusting the product mix to maximize profit.
2.4 Empirical Literature
Various studies have applied LP to solving several problems in the industry and other sectors.
For instance, Susilawati, Litaay and Parsaulian (2002) carried out a study on the application
of linear programming to dormitory development plan at Petra Christian University in
Indonesia to ascertain the number of rooms and area of each facility conceivable considering
the limited space of 4,994.83 square meters and a maximum cash flow of Rp 392,952.00
which is discounted by 17% per annum for seven years. They were able to ascertain the
number and area of facilities such as bathrooms, dining rooms, common rooms, cafeterias,
bookshops, mini- markets, phone booths, sport facilities and parking spaces using special
computer software called SOLVER. The results of the study recommend that all supporting
facilities except garden should be provided.
In another study, Kareem and Aderoba (2008) attempted to demonstrate the effectiveness of
adopting the linear programming model in maintenance and manpower planning using data
from a cocoa processing industry in Akure, Ondo State. The result shows that of the 19
employees, only four maintenance crew were required in that section to adequately carry out
maintenance jobs in the industry.
Fagoyinbo and Ajibode (2010) examined the application of linear programming techniques in
the effective use of resources for staff training in Federal polytechnic IIaro, Ogun state. The
approach employed gave an integer optimum solution to all the models formulated. The data
used did not generate a feasible solution but rather when the model was reformed gave an
optimum solution. However, the study recommends to management of the Federal
Polytechnic Ilaro, the number of staff (junior and senior) to be sent for training program when
there is need for such in the academic and non-academic sections of the institution.
Fagoyinbo, Akinbo, Ajibode and Olaniran (2010) investigated the maximization of profit in
manufacturing industries using linear programming technique in Geepee Nigeria Limited.
The study applied the concept of revised simplex method, an aspect of linear programming to
solving industrial problems with the aim of maximizing profit. The industry specializes in
production of tanks of various types. Four different types of tank were sampled for the study.
These are the Combo, Atlas, Rambo and Jumbo tanks of various sizes. Based on the result of
the study, it was discovered that, given the amount of materials available Polyethylene
(Rubber)and Oxy—acetylene (Gas) used in the production of the different sizes of the
product, Combo tanks assures more objective value contribution and gives maximum profit at
a given level of production capacity.
Similarly, Balogun, Jolayemi Akingbade and Muazu (2012) used linear programming
technique to derive the maximum profit from production of soft drink for Nigeria Bottling
Company Nigeria, Ilorin plant. Linear Programming of the operations of the company was
formulated and optimum results derived using Software that employed Simplex method. The
result showed that two particular items (Coke 50cl and Fanta Orange 50cl) should be
produced in order to attain maximum profit because they contribute mostly to the profit
earned.
Ezema and Amakom (2012) provided empirical evidence on optimizing profit with the linear
programming model with a focus on Golden Plastic Industry Limited in Enugu State, Nigeria.

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The study was carried out to seek and arrive at the optimal product-mix of a productive firm-
the Golden Plastic Industry Limited. The production problem of the firm was formulated as a
linear programming problem and estimated as such. The result shows that only two sizes of
the total eight “PVC” pipes should be produced. From the study, it was discovered that
Golden Plastic Industry Limited should produce 114,317.2 pieces of 25mm by 5.4m conduit
pipes and 7,136.564 pieces of 20mm by 5.4m thick pressure pipes, and zero quantities of the
rest sizes of pressure pipes per month in order to obtain a maximum profit of N1,964,537
given the present level of available funds and the technical coefficients of the products. The
study also showed that only two of the raw materials –tio 2 and labour time- were surplus,
while the other six - resin, calcium carbonate, stabilizer, cast, carbon black and blend - were
scarce in relation to the formulated model.
Anieting, Ezugwu and Ologun (2013) applied linear programming technique to determine
optimum production of Usmer Water Company in Uyo, Nigeria. TORA Software was used in
the analysis of the data using M – method. The result showed that the values of the decision
variables, 𝑥1, x2, 𝑥3, 𝑥4 and 𝑥5 were 95, 0, 5.9, 10 and 17 respectively. Sensitivity analyses of
the problems were also discussed. It was concluded that linear programming method has
proven, given the raw data, the only way the company production problem can be addressed.
Additionally, Muhammad, Oluwafemi & Hafisu (2015) demonstrated the use of linear
programming methods as applicable in the manufacturing industry in Nigeria. Data were
collected as extracts from the records of Bajabure Industrial Complex (Nima Foam), Yola,
Adamawa State, on five types of sales packages adopted for selling their foam product which
includes 15 density, 18 density, 20 density, 25 density and 29 density. Information on selling
price and the cost of basic raw materials used as well as quantity of each of the raw material
held in stock per month for the production of the foam were available in the records of the
company. The analysis was carried out with R statistical package using library “Lp Solve”.
The results showed that the company would attain optimal monthly profit level of about
₦524,369 if she concentrates mainly on the unit sales of her foam product, ignoring other
forms of sales packages.
Ekwonwune and Edebatu (2016) applied linear Programming technique to optimize the
financial portfolio of Golden Guinea Breweries Plc, Nigeria. The study used simplex method
to create a mathematical model that will optimize the production of brewed drinks for Golden
Guinea Breweries Plc, through software model called PHP simplex. The study showed that
Linear Programming Model would give a high profit coefficient of N9,190,862,833 when
compared with the result obtained from the manual computation which gave a profit
coefficient of N7,172,093,375. Also, Bergedoff Lager, Eagle Stout and Bergedoff Malta were
found not to contribute to overall profitability of the company and it was therefore
recommended that their productions should be discontinued. It also recommends that various
quantities of Golden Guinea Lager (1 × 12) and Golden Guinea Lager (1 × 24) should be
produced.
3. Methodology
The study is an applied research which involves solving a specific problem about which a
decision must be reached. Therefore, the study employs the case study research approach.
The study determines the optimization combination of resources that will maximize profit of
Guinness Nigeria Plc, Benin City. Guinness Nigeria Plc, Benin City was chosen for this study
because it deals on different products which make the determination of the quantity
combinations of the products produced and sold an important and major management
decision.
The dataset used for this work was collected as extracts from records of the company. Data
on the three basic raw materials used for manufacturing were available in the internal records

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of the company. These raw materials are calories, carbohydrates and protein. Also,
information on the quantity mix of these basic three raw materials and their costs for effective
manufacturing of product was equally available and obtained from the company’s internal
records. The study also employed the interview question response format in eliciting
necessary information from the manager and staff members.
The quantity combination of the thirteen products of Guinness Nigeria Plc, Benin were
examined. The products include Dubic Malt, Guinness Stout (Medium), Harp, Herbal Malt,
Malta Guinness, Orijin (Herbs), Orijin Bitters, Orijin Zero, Satzenbrau, Smirnoff Double
Black, Smirnoff Ice, Snap and Tappers. The products were described in terms of the three
raw materials (or resources) such as calories, carbohydrate and protein which form the basis
of the linear constraints for the linear programming model. The model was analyzed using the
Linear Programming Software (LiPs). The data collected were analyzed to determine the best
products that will yield maximum profit for the company.
The simplex method (also called iterative method) is used for solving an LP model. It is the
basic workhorse for solving LP problems (Balogun et al, 2012). It is an algorithm that moves
sequentially from one extreme point to another until it reaches the optimal solution. The main
feature of the simplex method is that it solves the LP in iterations (Taha, 2011).
The use of simplex method to LP problem requires that the problem be converted into its
standard form. According to Sharma (2009) and Taha (2011), the standard form of the LP
problem should have the following characteristics.
(i) All the constraints are expressed as equations by adding slack or surplus and/or
artificial variables.
(ii) The right hand side of each constraint is made non-negative if it is not already, this
should be done by multiplying both sides of the resulting constraint by -1.
(iii) All the variables are non-negative.
(iv) The objective function is of maximization or minimization type.
By attempting to obtain the solution of LP problem, it must be expressed in the standard form
as;

(1)

(2)
(3)

(4)
(5)
The standard form of the LP problem can also be expressed in the compact form as follows:

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In matrix notations the standard form is expressed as:

Subject to the constraints

Where
T, b = T
c = is the row vector, x = and s =
are column vectors and A is the m n matrix coefficients of variables
in the constraints.
Simplex method was adopted for this study in solving the linear programming problem of the
understudied company through the use of the Linear Programming software (Lips).
3.1. Model Specification

Subject to

Where;

4. Results and Discussion

The table below show the three basic raw materials used for manufacturing the products and
the quantity available for each raw materials. The information was obtained from the internal
records of the company.
Table 1: Quantity of raw materials available in stock
Raw Materials Quantity Available
Calories 168,048 kcal
Carbohydrates 1,409,325g
Protein 70,848g
Source: Guiness Nigeria Plc, Benin (2018)

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Table 2: Quantity of raw material needed to produce a crate of each product

Product Calories Carbohydrate Protein
Dubic Malt 52.5kcal 12.9g 0.2g
Guinness Stout (Medium) 66kcal 6g 0.2g
Harp 41kcal 3g 0.2g
Herbal Malt 46kcal 11.2g 0.3g
Malta Guinness 57kcal 14g 0.3g
Orijin (Herbs) 55kcal 0g 0g
Orijin Bitters 172kcal 1.17g 0.1g
Orijin Zero 39kcal 9.8g 0.1g
Satzenbrau 43kcal 3.2g 0.3g
Smirnoff Double Black 69kcal 9.7g 0.1g
Smirnoff Ice 70kcal 0g 0g
Snap 54kcal 0g 0g
Tappers 294kcal 6.6 0.1
Source: Guiness Nigeria Plc, Benin (2018)

Table 3: Average Cost Price, Average Selling Price and Profit per crate of each product
Products Average Cost Average Selling
price(₦) price(₦) Profit(₦)
Dubic Malt 1,550 2,300 750
Guinness Stout (Medium) 3,150 3,750 600
Harp 1,510 1,850 540
Herbal Malt 2,250 3,100 850
Malta Guinness 1,850 2,750 900
Orijin (Herbs) 1,750 2,700 850
Orijin Bitters 3,670 4,950 1280
Orijin Zero 1,340 1,700 560
Satzenbrau 1,234 2,150 916
Smirnoff Double Black 2930 3,800 870
Smirnoff Ice 3,750 4,400 650
Snap 3,620 4,400 780
Tappers 1,030 1,950 920
Source: Guinness Nigeria Plc, Benin (2018)

4.1 Model formulation

and

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By simplex method, we introducing the slack variable to convert inequalities to equations, it

gives:
By simplex method, we introduce the slack variable to convert inequalities to equations, it
gives:

Where:
Dubic Malt, Guinness Stout (medium), Harp, Herbal Malt, Malta
Guinness, Orijin Herbs, Orijin Bitters, Orijin Zero, Satzenbrau,
, Snap, Tappers.

The result below represents the linear programming output summary and the sensitivity
analysis of the model stated above

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Optimal solution
Maximum = 3.57981e+006
*** RESULTS - VARIABLES **
╔═════════════╤═════════════╤═════════════╤═════════╗
║ Variable Value Obj. Cost Reduced Cost
╠═════════════╪═════════════╪═════════════╪═════════╣
║ X1 0 750 361.981
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X2 0 600 34656/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X3 0 540 14336/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X4 0 850 5586/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X5 0 900 13512/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X6 0 850 13830/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X7 0 1280 2384
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X8 0 560 11644/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X9 3908.09 916 0
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X10 0 870 599.86
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X11 0 650 36170/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X12 0 780 15924/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ X13 0 920 5342.88
╚═════════════╧═════════════╧═════════════╧═════════╝

*** RESULTS - CONSTRAINTS ***

╔═════════════╤═════════════╤═════════════╤═════════╗
║ Constraint Value RHS Dual Price
╠═════════════╪═════════════╪═════════════╪═════════╣
║ Row1 168048 168048 916/43
╟─────────────┼─────────────┼─────────────┼─────────╢
║ Row2 12505.9 1.40933e+006 │ 0
╟─────────────┼─────────────┼─────────────┼─────────╢
║ Row3 1172.43 70848 0
╚═════════════╧═════════════╧═════════════╧═════════╝
Source: Extracted from Linear Programming Software (2018)

Based on the result, the optimum utilization of resources indicate that the company should
produce 3908 crates of Satzenbrau monthly in order to maximize profit since the product has
a reduced cost of zero. This signifies the equilibrium between the output (profit) and the input
(unit cost of consumed resources or raw materials). Again, this will enable the company to

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reduce cost in the production of Dubic Malt by approximately ₦362, Guinness stout by
₦806(34656/43), Harp by ₦333(14336/43), Herbal Malt by ₦130 (5586/43), Malta Guinness
by ₦314 (13512/43), Origin Herbs by ₦321(13830/43), Origin Bitters ₦2384, Origin Zero
₦271(11644/43), Smirnoff Double Black by ₦600, Smirnoff Ice ₦841 (36170/43), Snap
₦370 (15924/43) and Tappers by ₦5343 respectively.
The optimal solution of the model also shows that the dual price (unit worth of resource),
which is defined as the rate of change in the optimum objective value that results from
making changes in the available amount of resource. It is sometimes referred to as shadow
prices or simplex multipliers. The dual price for raw material (calories) that is row 1 is
approximately ₦21 (916/43). This means that for each additional unit of calories, the
objective (profit) increases by ₦21. The dual price for row 2 (carbohydrates) and row 3
(protein) which are zero indicate that the raw materials are abundant, that is, it is not critical
and therefore have no effect in determining the optimum solution and hence the unit worth of
resource or dual price is zero. That means that the company is not consuming the entire
quantity of carbohydrates and protein at the optimum solution and additional carbohydrates
and protein will not improve profit.
5. Conclusion and Recommendations
This study examines product-mix optimization in the manufacturing industry using the Linear
Programming model. The study used the various product mix produced by Guinness Nigeria
Plc., Benin. Data were collected from the company’s record and analyzed in order to
effectively estimate which of these products must be given more attention or produced more
in other to maximize profit. However, for a firm to compete effectively in the dynamic and
competitive business environment and achieve set goals in term of profitability, high sales
volume and large market share, it must continuously develop products and product lines to
satisfy the constantly changing desires and needs of customers. These organizational
adjustments in response to new customer preferences even make it necessary to modify
existing products, introduce new ones or eliminate products, that are unsuccessful and
maintain or introduce new produce that are determined or needed by customers. This can be a
competitive tool thus giving the company a core advantage over its competitors.
Based on the analysis and the result shown, the company should produce all the products in
order to satisfy its customers but more of Satzenbrau should be produced in order to attain
maximum profit because they contribute most to the profit earned. In the same vein, critical
examination should be carried out on other products on their contribution to the growth or
success of the company. Finally, any product having an adverse effect or contributing losses
to the profit margin of the company can be stopped and the company can focus on those that
can generate more profit.

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