ABSTRACT   

Scarce resources must be properly planned and controlled using scientific approaches to control cost of allocating them. The root cause of undue production and high cost of production can neither be easily traced using traditional method nor past experience even computer systems. This study used Linear Programming Model to plan production of Products of Adama Beverages Limited. The aim was to apply Linear Programming Model to determine the products and how many to produce to ascertain Planning and Control of Operational Cost. Secondary Data was collected on supply of products, interview and observation on production process of the company was made, and Linear Programming Model was formulated for the problem. Results were derived using TORA Software. The best products, which will maximize profit, were determined by the model and the company is recommended to embark strictly on scientific approaches to plan production in order to control operational cost.

  TABLE OF CONTENT

TITLE                                                                                                                        PAGE

CERTIFICATION                                                                                                     I

DEDICATION                                                                                                           II

ACKNOWLEDGMENT                                                                                           III

ABSTRACT                                                                                                               IV

TABLE OF CONTENT                                                                                             V

LIST OF TABLES                                                                                                     VII

CHAPTER ONE

1.1       BACKGROUND OF STUDY                                                                      1

1.2       STATEMENT OF THE PROBLEM                                                             2

1.3       AIM AND OBJECTIVES                                                                             3

1.4       JUSTIFICATION OF THE STUDY                                                             3

1.5       SIGNIFICANCE OF THE STUDY                                                              3

1.6       SCOPE OF THE STUDY                                                                              3

1.7       DEFINITION OF TERMS:                                                                           3

CHAPTER TWO

2.1       INTRODUCTION                                                                                         5

2.2       LINEAR PROGRAMMING (LP) MODEL                                                 5

2.3       REVIEW OF EMPIRICAL STUDIES ON LP MODEL                             6

2.4       THE CONCEPT OF PRODUCTION PLANNING AND CONTROL       7

2.5       THE CONCEPT OF OPERATIONAL COST                                              10

CHAPTER THREE

3.1        INTRODUCTION                                                                                          12

3.2        RESEARCH DESIGN                                                                                   12

3.3       METHOD OF DATA COLLECTION:                                                        12

3.4         METHOD OF DATA ANALYSIS                                                              12

3.5      LINEAR PROGRAMMING MODEL FORMULATION                           12

CHAPTER FOUR

4.1       INTRODUCTION                                                                                         14

4.2       DATA PRESENTATION                                                                              14

4.3       ANALYSIS                                                                                                    25

4.4       RESULT OF THE ANALYSIS                                                                    26

4.5       DISCUSSION OF THE RESULT                                                                26

CHAPTER FIVE

5.1       SUMMARY:                                                                                                  27

5.2       CONCLUSION:                                                                                            27

5.5       RECOMMENDATIONS                                                                               27

REFERENCES                                                                                                          29

APPENDIX                                                                                                                30

LIST OF TABLES

TABLE 4.1: JANUARY 2015                                                                                   15

TABLE 4.2: FEBRUARY 2015                                                                                15

TABLE 4.3: MARCH 2015                                                                                       16

TABLE 4.4: APRIL 2015                                                                                          16

TABLE 4.5: MAY 2015                                                                                             17

TABLE 4.6: JUNE 2015                                                                                            17

TABLE 4.7: JULY 2015                                                                                            18

TABLE 4.8: AUGUST 2015                                                                                      18

TABLE 4.9: SEPTEMBER 2015                                                                               19

TABLE 4.10: OCTOBER 2015                                                                                 19

TABLE 4.11: NOVEMBER 2015                                                                             20

TABLE 4.12: DECEMBER 2015                                                                              20

TABLE 4.13: TOTAL MONTHLY DISTRIBUTION IN CARTONS FROM

JANUARY TO JUNE 2015                                                                                       21

TABLE 4.14: FINISHED GOODS STOCK VALUATION                                               22

TABLE 4.15: THE BASIC DATA OF THE WHOLE PRODUCTION                  23

TABLE 4.16: FINAL ITERATION                                                                          25

TABLE 4.17: OPTIMAL SOLUTION                                                                      26