Home  Journals  Finance and Credit  41(617) - 2014 November

Optimal interplant distribution of resources by the case of the GAZ Inc.

Available online: 3 November 2014

Subject Heading: ISSUES ON ECONOMICS

JEL Classification: 

Pages: 25-35

The article considers the inter-industrial interaction of structural subdivisions of an automobile plant. On this basis, the authors have developed a model of inter-company consumption of in-house semi-finished products and sales of automotive components. Using this model, the authors determine the optimal production and sales volumes to achieve the required profitability indicators when planning financial indicators. Although car sales markets tend to increase, the domestic component manufacturers are facing the challenge of competitiveness of their products. The situation is similar in other industries, and this is conditioned on the relevance of the proposed research. The parameters of the model, particularly gross output, are determined by the proceeds from the sale and the coefficients of variables, and indirect costs. According to the accounting policy, an entity makes calculation on fractional costs. Enterprises write off the general business and commercial expenditures on the costs of sold products proportional to the proceeds from the sale of each enterprise unit. In order to solve the task, there is no need to detail the indirect production costs by type of manufactured products. Detailed description of expenditures will be sufficient for that purpose for each enterprise unit. General expenses of production, traditionally considered to be indirect, in this case are direct expenses. General plant and commercial costs constitute indirect costs. To carry out the analysis of break-even operation, the authors have assorted expenditures into variables and constants. In determining the upper bounds of profitability of production, the authors used the approach of weighted average cost of capital. The obtained model of inter-production consumption and sales enables to optimize production for domestic consumption and products sold on the market, in order to produce the required return on sales in the rational structure of the inter-production expenditures. The elaborated algorithm will help to plan the economic performance indicators of a multiple nomenclature production in an optimal way, and it represents a new approach to the planning and cost management of an industrial enterprise.

Keywords: structural, unit, automobile, plant, interplant, cooperation, optimization model, interplant consumption, sale, auto component, capital weighted average cost, earnings yield

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