Document Type

Project

Publication Date

Fall 2001

Instructor

Timothy Anderson

Course Title

Operations Research

Course Number

EMGT 540/640

Subjects

Freightliner Corporation -- Management, Linear programming, Operations research, Production scheduling -- Mathematical models

Abstract

Freightliner LLC has been producing innovative products since 1942 for the trucking industry. Following a 1981 acquisition by Daimler-Benz AG, Freightliner has steadily gained market share through acquisition and fleet sales. Following record production in 1999 at maximum yield levels, year 2000 hit the heavy truck market especially hard. High diesel fuel prices, low used truck values, and a slowing economy were just a few reasons for reduced truck sales.

Through Ql of 2001, heavy vehicle production was down 54% compared to 2000 in attempts of lowering inventory amounts. In this new market, capacity is no longer the overall manufacturing constraint. The overriding concern instead is minimizing manufacturing costs to optimize profits

This report details a manufacturing tool created to determine optimal allocation of build quantities at the six Freightliner LLC truck plants. This tool was created using linear programming in Excel with VBA. The four part minimization of 1) direct labor; 2) variable nonmanpower costs; 3) fixed plant costs; and 4) shipping costs along with sales and plant capacity constraints were modeled for twelve quarters of production. The tool was then used to analyze three scenarios, including I) a labor rate increase, II) a non-labor variable rate increase, and III) a shift in production volume.

While this linear program was a simplified model of the actual Freightliner manufacturing system, it is capable of showing trends based on changes in constraints. The goal to create a working manufacturing optimization tool was achieved. This project affirmed the concepts of Linear Programming including model objective, constraints, decision variables, and sensitivity analysis in a real world manufacturing optimization setting.

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Persistent Identifier

http://archives.pdx.edu/ds/psu/24391

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