Optimisation of production and transportation cost of Ashanti Foam Factory Limited, Ghana

Abstract

Increasing global competition in the business world and heightened expectations of customers have forced companies to consider not only the pricing or product quality, but also reliability and timeliness of deliveries. The cost of production is the largest cost component in almost every manufacturing firm followed by transportation and inventory costs. This high cost of production and distribution is a major challenge to the management of Ashanti Foam Factory Limited and needs to make decisions on how to minimise costs so as to maximise profit. This has called for a study to explore ways to effectively manage production and transportation related problems of the company. In this study, Extended Vogel’s Approximation Method was used to determine the feasible solution and the optimality was tested with Modify Distribution Method (MODI). With this, management could reduce production and transportation cost by 12.18 % and 42 % respectively.