Title: Production optimisation - case of foundry factory

Authors: Matjaž Novak; Boris Čuk; Rok Strašek

Addresses: University of Primorska, Faculty of Management Koper, Cankarjeva 5, 6000 Koper, Slovenia ' E.G.O. Group – Eta Cerkno, Platiševa 39, 5282 Cerkno, Slovenia ' Faculty of Management Koper, University of Primorska, Cankarjeva 5, 6000 Koper, Slovenia

Abstract: Production optimisation is the major objective of any production process and it is tightly related to long term sustainable development of any production factory. Among production optimisation frameworks the overall equipment efficiency (OEE) methodology is the most popular one. However, this methodology approaches production optimisation only from the technology point of view and ignore the economic perspective of optimisation. This article develops case study approach to compare two different methodological approaches which relate technical and cost efficiency. The first framework is based on econometric techniques and regression analysis. The second one is based on mathematical modelling. Basic difference between both is related to the explanation power of model used. Econometric approach allows error term and consequently only regression relationship between technical and cost efficiency. Mathematical modelling requires definition relationship between technical and cost efficiency. To take the decision of which framework is preferable we apply both methodological approaches in the case of foundry industry. Our results select mathematical modelling with key performance indicator overall cost efficiency (OCE) framework as preferable methodological approach to production optimisation.

Keywords: technical efficiency; overall equipment efficiency; OEE; overall cost efficiency; OCE; econometrics; mathematical modelling; microeconomics; industrial management; sustainable development; sustainability; sustainable use of resources; foundries; regression analysis; foundry efficiency.

DOI: 10.1504/IJSE.2013.056794

International Journal of Sustainable Economy, 2013 Vol.5 No.4, pp.438 - 457

Published online: 18 Aug 2013 *

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