Fuzzy optimization approach for product mix problem in activity based costing systems

Long term survival of the firms depends on the ability to make right decisions on the production activities. One of the most important of these decisions is to determine the product mix that maximizes the profit. In this study, a fuzzy mathematical model has been formed in order to determine the optimum product mix under imprecise capacity and demand circumstances. Two alternatives, usage of an alternative route and outsourcing, have been included in the model respectively to relieve the bottleneck resource. MIP (Mixed Integer Programming), which uses activity based costing (ABC) data, has been used as a basis for modeling. Keywords: Product Mix Problem, Bottlenect Resources, Activity Based Costing, Fuzzy Mathematical Programming, MIP. n