Linear-programming-based productivity and business strategy analyses in the factory automation era

Despite a century-old history of productivity measurement and analysis, productivity still confuses managers because, even though it improves, profits may become reduced. After discussing the inherent problems with productivity, including the productivity paradox, this paper attempts to solve them by an unconventional use of a linear programming (LP) method. Accommodation of such strategic factors as manufacturing quality and flexibility is emphasized. The LP-based performance analysis also demonstrates that ‘manufacturing’ strategy can be the most important business strategy of a company.