A model for planning and optimizing an engineering company production

Abstract

This article presents a model to plan the annual production of pulleys and gray iron bushings in an engineering company. The proposed model considers sales forecasts and the use of finite mixture distributions to determine the behavior of class A sales items and best service levels. The forecast model parameters and finite mixture distribution sales are calculated via a Monte Carlo simulation. The model provides the annual production planning and inventory, minimizing fixed and variable production, inventory holding and penalty costs for noncompliance. The design is implemented with historical class A sales items, determining that the best service level is 95%. This model expects an additional annual profit of approximately $277,000 Mexican pesos.