Download - Final Report HeroMoto
To optimize the production plan of a two wheeler manufacturing
company having 3 plants and 4 production lines per plant in order
to maximize its profit
INDE 6372
Advance Linear Optimization
Prepared & Submitted By:
Vivek Pabla
Harmandeep Singh
Vaibhav Tyagi
Vishwanath Lingam
Qiang Gao
Abstract
As per the fundamentals of TPM (Total Productive Maintenance), in every manufacturing
unit, to meet the customer demand, maximum emphasis is given on reducing the operating
cost so as to maximize the overall profit. A special care is taken to answer two important
questions-What and Where? , i.e. what product is to be manufactured and where (at which
unit/line). In this project, we have tried to optimize the production plan of a two-wheeler
manufacturing company, Hero MotoCorp limited, having 3 plants and 4 manufacturing lines
per plant, using a mathematical model, so as to maximize profit. Various constraints and
assumptions were considered while designing this mathematical model, so that this model
can be applied to similar problems.
Table of Contents Introduction..............................................................................................................................
Problem Statement .................................................................................................................................
Charts provided...................................................................................................................................
Mathematical Model ..............................................................................................................................
Defining variables: ..............................................................................................................................
Objective function:..............................................................................................................................
Constrains of the problem: ..............................................................................................................
Results and Recommendation ................................................................................................................
Solver Solution................................................................................................................... Excel enclosed
Table 3: Production Plan Solution for Gurgaon Plant .................................................................
Table 4: Production Plan Solution for Dharuhera Plant .............................................................
Table 5: Production Plan Solution for Haridwar Plant ................................................................
Table 6: Final Analysis ................................................................................................................
Introduction Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer
of two-wheelers, based in India. It has 4 globally benchmarked manufacturing facilities. Two
of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in
northern India. The third manufacturing plant is based at Haridwar, in the hill state of
Uttrakhand; the latest addition is the state-of-the-art Hero Garden Factory in Neemrana,
Rajasthan. Product portfolio of Hero MotoCorp Limited consists of 13 models, being
produced in all the plants. Currently, Hero MotoCorp Ltd produces around 675000 two-
wheelers against a yearly demand of 640000, with the help of a strong network of 249
Supply Chain partners.
In 2012 Hero MotoCorp limited challenged the TPM (Total Productive Maintenance) award,
and took the help of a Japanese consultancy JIPM. Enormous amount of work was done on
reducing the operating cost, including the optimization of the production plan of all the
lines in all the plants, which helped in deciding what to produce at which plant, thus
maximizing the profit and simultaneously meeting the demands of the customers.
Problem Statement
• There are 3 manufacturing facilities all across the country.
• There are 4 production lines per plant and 13 different motorcycle models in
demand.
• This project will provide the production plan for 13 different two wheeler
models produced by Hero MotoCorp, in order to maximize the profit.
• Finding the optimized production plan so as to satisfy demand and maximize the
company’s profit.
• The maximum inventory to be taken as a buffer against the actual demand is the
key factor in this model.
Assumptions
The changeover time (time taken to start production of a new model on the
same production line) is supposed to be negligible.
• Manufacturing facility runs 6 days a week and 16 hours per day.
• The calculations will be valid only for the present month for which the demand
data is available.
• Cost of raw material is supposed to be constant over a period of one month.
• No shut downs and other delays during the month.
Charts provided
Table 1: Model wise Profit and Demand details:-
Models Selling Price(INR) Cost Price (INR) Profit (INR) Demand
Splendor 46000 43000 3000 40000
Splendor + 47000 45000 2000 100000
Splendor Pro 43000 41800 1200 40000
Passion + 50000 48790 1210 80000
Passion 42000 40900 1100 40000
Passion Pro 44000 39800 4200 45000
ZMR 110000 105000 5000 30000
R 90000 87600 2400 34000
Glamour 65000 59650 5350 45000
Pleasure 50000 44260 5740 50000
Maestro 65000 61450 3550 54000
CD Dawn 43000 38500 4500 40000
CD Deluxe 42000 39870 2130 38000
Total 636000
Table 2: Production Line wise capacity:-
Defining variables:
X111 = No. of Splendor produced on Line 1 of Plant 1
X121 = No. of Splendor produced on Line 2 of Plant 1
X131 = No. of Splendor produced on Line 3 of Plant 1
X141 = No. of Splendor produced on Line 4 of Plant 1
X112 = No. of Splendor+ produced on Line 1 of Plant 1
X122 = No. of Splendor+ produced on Line 2 of Plant 1
Production Lines Gurgaon Dharuhera Haridwar
Line 1 80000 58900 67896
Line 2 65900 56870 62600
Line 3 53897 72600 46780
Line 4 51890 45670 9200
251687 234040 186476
X132 = No. of Splendor+ produced on Line 3 of Plant 1
X142 = No. of Splendor+ produced on Line 4 of Plant 1
Generalized form:
Xijk = No. of Motorbike Model ‘k’ produced on Line ‘j’ of Plant ‘i’
Objective function:
Here we will be maximizing the profit for Hero Moto Corp. based on the production capacity of different plants.
Maximize Z = 3000 (∑xij1) +2000 (∑xij2) +1200 (∑xij3) +1210 (∑xij4) +1100 (∑xij5) +4200 (∑xij6) +5000 (∑xij7) +2400 (∑xij8) +5350 (∑xij9) +5740 (∑xij10) +3550 (∑xij11) +4500 (∑xij12) + 2130 (∑xij13) Where ∑Xijk: Total number of Model ‘k’ produced at all the locations
Constraints:
1. Demand Constraints (1 to 13):
Total number of motorbikes produced of a particular model (splendor, passion,
ZMR, etc.) should be greater than or equal to its market demand.
x111+x121+x131+x141+x211+x221+x231+x241+x311+x321+x331+x341 ≥
40000 (For Splendor)
Similarly,
∑Xij2 ≥ 100000 (For Splendor +)
∑Xij3 ≥ 40000 (For Splendor Pro)
∑Xij4 ≥ 80000 (For Passion +)
On and on…
∑Xij13 ≥ 38000 (For CD Deluxe)
2. Plant Capacity Constraints (14 to 16):
Each plant has its different capacity of producing number of motorbikes per
month.
∑X1jk ≤ 251687 (For Plant 1)
∑X2jk ≤ 234040 (For Plant 2)
∑X3jk ≤ 186476 (For Plant 3)
3. Production Line Constraints (17 to 28):
Each production line of each plant has different capacity of production per
month.
X11k+X21k+X31k ≤ 206796 (Line 1 of all 3 plants)
X12k+X22k+X32k ≤ 185370 (Line 2 of all 3 plants)
X13k+X23k+X33k ≤ 173277 (Line 3 of all 3 plants)
X14k+X24k+X34k ≤ 106760 (Line 4 of all 3 plants)
4. Maximum Finished Inventory Constraint (29 to 41):
Maximum number of motorbikes of a particular model that can be produced. It
should not be greater than 110% of demand.
x111+x121+x131+x141+x211+x221+x231+x241+x311+x321+x331+x341 ≤
44000 (For Splendor)
Similarly,
∑Xij2 ≤ 110000 (For Splendor +)
∑Xij3 ≤ 44000 (For Splendor Pro)
∑Xij4 ≤ 88000 (For Passion +)
On and on…
5. Individual Line constraint (42 to 53):
The line capacity (given in the data) constraints are as follows:-
X11K ≤ 80000
X12K ≤ 65900
X13K ≤ 53897
X14K ≤ 51890
On and On till:
X34K ≤ 9200
6. Integer Constraint:
All values has to be integer since we are talking about ‘Number’ of Motorbikes.
Xijk = Integer
Results and Recommendation
The result we got from the excel solver, we came to know that:
For GURGOAN PLANT
Table 3
For DHARUHERA PLANT
Table 4
For HARIDWAR PLANT
Table 5
A. Total Production of Gurgaon Plant 1: 251687 Motorbikes B. Total Production of Dharuhera Plant: 234040 Motorbikes C. Total Production Haridwar Plant: 186476 Motorbikes D. Total Production : 672203 Motorbikes (Per Month) E. Now we have total production plan of all 13 Models of Bike.
The result we got from the excel solver, we came to know:
Table 6