A system dynamics model to determine products mix

This paper presents an implementation of system dynamics model to determine appropriate product mix by considering various factors such as labor, materials, overhead, etc. for an Iranian producer of cosmetic and sanitary products. The proposed model of this paper considers three hypotheses including the relationship between product mix and profitability, optimum production capacity and having minimum amount of storage to take advantage of low cost production. The implementation of system dynamics on VENSIM software package has confirmed all three hypotheses of the survey and suggested that in order to reach better mix product, it is necessary to reach optimum production planning, take advantage of all available production capacities and use inventory management techniques.