Production Planning in the New Zealand Dairy Industry

Abstract

From 1977 onwards, D.S.I.R. has been developing an L.P. model to help the largest N.Z. dairy company plan its medium-term production. This time-staged model finds the most profitable daily production schedule of the various powder, casein, cheese and butter products. Computer reports and graphics show Company management how to allocate the milk available in the various farming regions to the Company's factories, and where to send the by-products for further processing. The L.P. models seasonal fluctuations in wholemilk availability and quality, as well as transport costs, factory capacities and costs, and product-yields and prices. Comparison runs have shown that the L.P. increases the profitability of the manual plan by over $5000 per day (because the computer can handle changing yields, factory costs and by-product processing). The model gives management the ability to adjust production plans quickly in response to improved information, new market opportunities and emergencies like plant breakdown.