Application of Optimization Technique in Managing Labour Productivity for an Automotive Company

Abstract

Sustaining in the new industrial revolution 4.0 requires industries in Malaysia to be dynamic in all aspects towards handling the variations. One of the aspects is well managing their productivity throughout the changes. Four types of elements that can be looked up as measuring the productivity such as labor, capital, material and total factor productivity. While the labour productivity is among of three of the four types which typically important is assessing industry performance. It computes efficiency of the labour to process input into good value of output. Thus, accurate number of labour allocation is essential in producing high labour productivity. Hence, this paper is to provide alternative way to managers or decision makers on managing the labour allocation and analyzing result with the aid of optimization technique to enhance labour productivity. The application of the optimization technique is portrayed on an automotive company situated in Melaka, Malaysia that facing labour allocation issue. The flow of methodology is first by conducting problem identification using Pareto chart to target area of issue. Then, formulating the problem in linear programming (LP) model and finally solving the problem using Simplex method to generate the optimum number of labour based on the set constraints. The generated optimum number of labour is then loaded into the labour productivity formula and the outcome resulting to the betterment of percentage of labour productivity compared to the current approach. In this context, the labour productivity is measured by the unit of number of working hours per number of task perform. This application gives benefit to the industry in ensuring that involved teams in the company able to commit with the company’s project timeline and due with consideration of all important constraints/ limitations occurred from that involved teams. Also, with the aid of this optimization technique, the company can foresee the result of the number of labour allocated without the need of utilizing actual resources in the actual arena.