Production Planning Optimization Using Linear Programming: A Case Study of a Packaging Foam Factory

Abstract

This research aims to develop an appropriate production planning approach for a foam and plastic packaging manufacturing company by integrating Linear Programming (LP) with ABC Analysis to enhance inventory management efficiency and reduce production costs. The study utilized one-year historical data, including production costs, production capacity, and inventory holding costs. The results revealed that the proposed model could reduce inventory costs by 86.71% compared with the company’s previous planning method. The integration of ABC Analysis with the Linear Programming model tailored to the specific context of the food packaging foam industry significantly improved warehouse management and production planning efficiency. Moreover, this approach can be applied to other make-to-order industries with similar production characteristics. However, this study is limited by the use of historical data that do not fully capture the fluctuations in future customer demand. Therefore, future research should consider incorporating Demand Forecasting and Multi-Objective Optimization approaches to enhance the flexibility and accuracy of production planning under real-world conditions.