Title: Manufacturing procurement cost allocation as dominant factor under limited available manufacturing equipment budget

Authors: Basil Olufemi Akinnuli; Peter Kayode Farayibi; Oluwaseun Oluwagbemiga Ojo

Addresses: Department of Industrial and Production Engineering, Federal University of Technology, PMB 704, Akure, Nigeria ' Department of Industrial and Production Engineering, Federal University of Technology, PMB 704, Akure, Nigeria ' Department of Mechanical Engineering, Adeleke University, PMB 250, Ede, Nigeria

Abstract: A production engineer as a decision maker has to setup a plan capable of meeting the needs of the customers and increase company's productivity and profitability knowing the challenges of limited available budget for the equipment procurement. This work identified the strategic decisions required for machinery budget allocation which are: machines, accessories, spare-parts and miscellaneous costs for procurement. Strategic decisions data collected were statistically analysed pre-use for forecasting the allotted required amount for their procurement based on the limited available budget using conventional related models and; optimised the scenario using goal programming model because of its multi-criteria nature of problem. Using a developed software package Java programming language for its implementation. The predicted costs based on the available budget of ₦400,000,000 for the current year were: ₦119,975,000.00, ₦127,968,000.00, ₦134,965,000.00 and ₦33,491,500.00 while their goal targets were: ₦119,975,000, ₦127,968,000, ₦577,655,000 and ₦1.1427 × 10⁹ for machines, accessories, spare-parts and miscellaneous, respectively.

Keywords: cost allocation; manufacturing equipment; procurement; strategic decisions; optimisation; limited budget; goal programming; predicted costs; forecast; scenario.

DOI: 10.1504/IJMOR.2020.109695

International Journal of Mathematics in Operational Research, 2020 Vol.17 No.2, pp.278 - 299

Received: 18 Nov 2018
Accepted: 23 Jun 2019
Published online: 21 Sep 2020 *

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