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




X112 = No. of Splendor+ produced on Line 1 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



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)




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

final report heromoto

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