Merton Truck Company Case Solution - 940 Words

EMBA 2011-12 MERTON TRUCK COMPANY CASE SOLUTION HARSHID DESAI AMRUT MODY SCHOOL OF MANAGEMEMNT ROLL NO. 03 Merton Truck Company Calculating contribution for each truck, Contribution for model 101 = selling price (direct mat. + direct labour + variable o/h) = 39000 (24000 + 4000 + 8000) = Rs. 3000/Contribution for model 102 = selling price (direct mat. + direct labour + variable o/h) = 38000 (20000 + 4500 + 8500) = Rs. 5000/- Decisions variables: x1 = number of model 101 trucks produced, x2 = number of model 102 trucks produced, The algebraic formulation is: Max. 3000.x1 + 5000.x2, Constrains, 1.x1 + 2.x2 2.x1 + 2.x2 2.x1 + ..+ 3.x2 x1, x2 0. 4000, 6000, 5000, 4500, Page | 1 Q.1 (A) Find best products mix for†¦show more content†¦constrain 1 which is engine assembly machine hour, we can push it in the opposite direction of origin till it passes through intersection point of (line 2 and line 4) 2nd and 4th constrain i.e. stamping and model 102 assembly. To derive that point of intersection we need to calculate as below. Finding the value of x1 and x2 using equation 2.(x1) + 2.(x2) = 6000 So we get, X2 = 1500, and x1 = 1500 3.(x2) = 4500 Page | 5 With the further increase in unit of capacity of engine assembly machine hour (from 4500 to 4501) there is no change in the contribution. So no. of units can be added calculated below, Substituting the value of x1 and x2 in the below equation, = 1.(x1) + 2.(x2) = 1.(1500) + 2.(1500) = 4500 Therefore, unit can be added is (4500 4000 = 500). Page | 6 Q.2 Sol. Company should adopt this alternative as we seen in Q1 (b) and Q (d). increase in one unit of capacity inceases contribution by Rs. 2000/- and company should rent 500 machine hours till which contribution increases after that there is no change in contribution of increased unit in capacity. So it is obvious that company should be willing to pay Rs. 2000/- for a rented machine hour. Q.3 Sol. Decisions variables: x1 = number of model 101 trucks produced, x2 = number of model 102 trucks produced, x3 = number of model 103 trucks produced. The algebraic formulation is: Max. 3000.x1 + 5000.x2 + 2000.x3, Constrains, 1.x1 + 2.x2 + 0.8.x3 2.x1 + 2.x2 + 1.5.x3 2.x1Show MoreRelatedMerton Truck Co2033 Words   |  9 PagesCase Analysis: Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits. In 1988, Merton Truck Company was searching for ways to increase profits and ultimately its poor financial performance. Options being considered included changing their product mix by either removing or adding a product line, or renting capacity. In the following pages, the product mix and capacityRead MoreTheories of Organizational Behavior10512 Words   |  43 PagesIndustrial Revolution when new problems related to the factory system began to appear. 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