XYZ Corporation has a one-year contract to supply motors for all refrigerators produced by the IA Corporation. IA manufactures the refrigerators at four locations around the country: Boston, Dallas, Los Angeles, and St. Paul. Plans call for the following number (in thousands) of refrigerators to be produced at cach location: Boston 100 Dallas 80 Los Angeles 100 St. Paul 70 XYZ's three plants are capable of producing the motors. The plants and production capacities (in thousands) are as follows: Denver 80 Atlanta 200 Chicago 150 Because of varying production and transportation costs, the profit that XYZ carns on cach lot of 1000 units depends on which plant produced the lot and which destination it was shipped to. The following table gives the accounting department estimates of the profit per unit (shipments will be made in lots of 1000 units): Shipped To Produced At Boston Dallas Los Angeles St. Paul Denver 8 18 13 10 Atlanta 20 17 13 Chicago 11 15 16 With profit maximization as a criterion, XYZ's management wants to determine how many motors should be produced at cach plant and how many motors should be shipped from cach plant to cach destination. 1. [Find the optimal solution and the maximum profit. 2. In which plant there will be idle capacity and how many units (in thousands)? 3. Do alternative optimal solutions exist? Justify your answer. 4. If they exist, use the stepping stone algorithm and find the second optimal solution. Present your analysis in a graphically neat manner. Use any drawing technique you like – just make sure it looks fairly professional. 5. Produce the third optimal solution by taking a combination of 20% of the first optimal solution and 80% of the second one. Attach all relevant exhibits from Excel's Solver calculations. Use PrintScrssn, edit/copy/paste, ete. – whatever you like.
Breakeven Analysis
Break Even Analysis is a term used in business, cost accounting and economics. It refers to a point where the total cost incurred becomes equal to the total revenue earned. Break Even Analysis determines the number of units to be sold to earn the revenue required to cover the total costs. Total cost is a sum total of fixed and variable costs.
Process analysis
The term process analysis can be defined as breakdown of production process into different phases that converts inputs into output. A series of routine activities are incorporated using organizational resources with a view to achieve operational excellence.
Can i get help with question 2?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 5 images