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Managing Inventory and Production in an SME through ABC Categorization and an Optimization Approach

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  • Yarlinie Sukumaran

    (Department of Mathematics and Statistics, Faculty of Applied Sciences and Technology, Universiti Tun Hussein Onn Malaysia, Pagoh Campus, 84600 Pagoh, Johor, Malaysia)

  • Suliadi F. Sufahani

    (Department of Mathematics and Statistics, Faculty of Applied Sciences and Technology, Universiti Tun Hussein Onn Malaysia, Pagoh Campus, 84600 Pagoh, Johor, Malaysia)

Abstract

Small and medium-sized enterprises (SMEs), which make up over 97.2% of all businesses, play a crucial role in Malaysia’s economy by contributing significantly to GDP and employment. For these enterprises to maintain steady growth, production activities must be optimized to maximize resource utilization. This research highlights the vital role of effective production planning in stimulating growth and maximizing profits for SMEs in Malaysia. Acquiring data from a local SME, ABC categorization and optimization approach are employed in this study. A comparative analysis of linear programming and integer linear programming for profit maximization successfully reveals the potency of integer linear programming for profit maximization in real world scenarios, demonstrating a 4.53% increase in annual profit.

Suggested Citation

  • Yarlinie Sukumaran & Suliadi F. Sufahani, 2025. "Managing Inventory and Production in an SME through ABC Categorization and an Optimization Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(4), pages 1750-1763, April.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-4:p:1750-1763
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    References listed on IDEAS

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    1. Feng, Zhong-kai & Niu, Wen-jing & Wang, Wen-chuan & Zhou, Jian-zhong & Cheng, Chun-tian, 2019. "A mixed integer linear programming model for unit commitment of thermal plants with peak shaving operation aspect in regional power grid lack of flexible hydropower energy," Energy, Elsevier, vol. 175(C), pages 618-629.
    2. Jing-Sheng Song & Geert-Jan van Houtum & Jan A. Van Mieghem, 2020. "Capacity and Inventory Management: Review, Trends, and Projections," Manufacturing & Service Operations Management, INFORMS, vol. 22(1), pages 36-46, January.
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