A microeconomic modelling and analysis methodology for production quantity determination
One of the questions manufacturing decision makers often face is which products to produce in what quantities, and what the profit potential of each product is over the other products produced in their manufacturing system. In this research a relatively quick and simple methodology to determine the best quantities of a product to produce is proposed. The methodology has been formulated by modelling manufacturing as a closed microeconomic system that has parameters of resources and product requirements defined by the owning firm. The methodology uses an iterative search to evaluate the complex system of interdependence between products themselves, their capital resource requirements and output quantities (revenue potential) and opportunity costs, to determine product quantities that provide optimum profit. The methodology has been implemented as an algorithm using the C++ programming language and has been validated using an actual problem from the industry.
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