How soon can this be done????

To: MVC Enterprises

From: Student Consulting Group

Subject: Optimum production plan

MVC Enterprises is a Computer Production company which can produce four different models with varying configurations. They are named as Student, Plus, Net and Pro. They have defined their configurations as per the table below:

Also, MVC must satisfy a contract of minimum 100 Net models per week. They have employed 25 workers with average 30 production hours for each worker per week.

Weekly Resource Availability:

Results:

a.

We can solve this problem linear programming problem of maximization of enterprise profit and we get weekly production schedule for each model for profit maximization.

It is the optimum quantity levels for each of the four models to maximize profit subject to given constraints.

b.

From the given constraints, it is much more advisable for MVC to produce Pro models in comparison to Plus models wherever possible due to their similar configuration and high difference in per unit profits. For profit maximization, MVC can produce 100 models of Plus models only. They should not produce more models which can hamper them opportunity cost in terms of lost sales for Pro models. But, for remaining unutilized resources, the minimum price for Plus products should be $70 as MVC can produce Student models for better utilization of their resources. If per unit profits for Plus model is lower than $70 then MVC should not produce Plus models.

c.

If MVC can purchase additional 17” monitors at $15 additional cost with other constraints remaining same, we remove 17” monitors constraints to get maximum possible demand for it. MVC can produce more models with 100 more monitors. This increases their overall costs by $1500 and we get new production plan as per below:

It gives total profits as $145750 with additional cost of $1500. We get Net Profit as $144250 which is higher than first case scenario and hence MVC should explore this opportunity of purchasing additional 17” monitors.

d.

Additional worker can be hired with additional wages of $1000 per week which gives total hours to be 775 instead of 750. But we observe that time is not the binding constraint for this case and additional worker will not increase the production quantity and hence MVC should not employ a new worker.

Recommendations:

MVC enterprises should produce advised quantities of the given models to earn maximum profits. They can explore the option of purchasing 17” monitors to increase their profits by few per cent. Also, in the case analysis, we observe that Celeron processor quantities, 20 GB hard drives, floppy drives, DVD and Tower cases are binding conditions for their production plan. They should explore other opportunities for increasing their resources for above mentioned categories to boost their profits.

References

Lawrence, J. A., & Pasternack, B. A. (2002). Applied management science. New York: Wiley.

Marakas, G. M. (2003). Decision support systems in the 21st century (Vol. 134). ^ eNew Jersey New Jersey: Prentice Hall.

Olson, D. L., & Courtney, J. F. (1992). Decision support models and expert systems. New York: Macmillan.

Stevenson, W. J., & Hojati, M. (2007). Operations management (Vol. 8). Boston: McGraw-Hill/Irwin.

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