Production and Inventory Planning in the Beedi Industry

The beedi is a small roll of finely cut tobacco, wrapped in kendu leaf and held together by a thread, smoked mostly by agricultural and industrial workers in south Asia. The beedi production process in India is very labor intensive. The industry is in effect a conglomerate of cottage industries. This study focuses on the aggregate production and inventory planning problem of a contractor whose existing inventory policy for leaves was not based on any systematic analysis. The suggested inventory model resulted in significant cost savings. His plan for increasing production is compared with other alternatives, and it is shown that marginal profit can be increased by adopting a different production plan.