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Centre for Operations Excellence: Case study

J.S. McMillan Fisheries Ltd.: Optimizing production planning

Abstract

Steve Parkhill, the new president of J.S. McMillan Fisheries Ltd., faces the complex product mix problem of allocating hundreds of thousands of pounds of fresh Pacific salmon among many fresh and frozen products produced in various production lines. The problem must be solved quickly at the start of daily production, and thus, necessitates an automated decision tool. The product mix is constrained by production capacity, storage capacity, raw material quantities, time availability of raw materials, and prior quantity commitments made by the marketing department.

The case describes the production processes and raw material requirements for each product with adequate detail to formulate a linear programming solution. It gives values for product sales prices, product yield per round pound of fish, manufacturing costs, and throughput rates.

The case is rich in complexity and can be analyzed at several levels. It is most appropriate for an advanced undergraduate or beginning graduate course in mathematical programming. With some simplifying assumptions it can be tailored to a first course in management science, operations management, or engineering economics.

The primary purpose of the case is to provide experience formulating a linear program to solve a moderately complex, real world decision problem. The case also motivates the need for sensitivity analysis in math programming solutions, both of model parameters and modeling assumptions. The case study problem can be expanded to include set-up costs that would lead to a mixed integer programming problem.

The case illustrates a number of manufacturing topics including production capacity, line balancing, uncertain supply, random production yield, and quality control. Strategic elements of the case include conflict between marketing and production and supplier reliability.