Enhancing Operational Efficiency by Optimizing Working Capital Management of Manufacturing Firms
Arunkumar O N1, Vandana Sonwaney2
1Arunkumar O N, Assistant Professor, Symbiosis Institute of Operations Management (Constituent of Symbiosis International Deemed University), Nashik, Maharashtra, India.
2Vandana Sonwaney, Professor and Director, Symbiosis Institute of Operations Management (Constituent of Symbiosis International Deemed University), Nashik, Maharashtra, India.
Manuscript received on 5 August 2019. | Revised Manuscript received on 11 August 2019. | Manuscript published on 30 September 2019. | PP: 2695-2705 | Volume-8 Issue-3 September 2019 | Retrieval Number: C4953098319/2019©BEIESP | DOI: 10.35940/ijrte.C4953.098319
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: In this paper, we present formulations to improve operational efficiency with optimum utilization of working capital management. A case of manufacturing firm is conducted to discuss the stages of analysis. This paper discussing the method to establish the target values for the firms to optimize the working capital and perform as an efficient firm. The concept is explained with the help of Data Envelopment Analysis (DEA) and Goal Programming (GP) techniques. By using the principles of DEA, the firms are able to identify their slacks in inputs and outputs variables to perform as efficient firms. GP model is formulated in which input and output variables are set as goals and then target values are calculated. GP model solution provides the values of each variable with the efficiency in attaining the goals. Here the analysis is explained with the help of a published dataset obtained from the firm Wheel India Limited. The output of the GP model provides the values to be maintained by input variables. These outputs from GP model are validated using output oriented DEA analysis, by replacing the variables value of Wheels India Ltd. by model value.
Keywords: Working Capital Management, Data Envelopment Analysis, Goal Programming, Slack of Input Variables.
Scope of the Article: Operational Research