In the optimal solution, there are limitations in both Engine Assembly and Metal Stamping. We can test this proposal by simply adding an additional constraint to our linear program. October 18, Re: Real world constraints are not always linear. Secondly, the company should rent additional capacity from an outside supplier.
The metal stamping capacity can also be increased up to an additional machine-hours.
Figure 1 shows the contribution received for producing one truck of Models and One main benefit of using LP in the analysis is that it makes use of all the available resources, while evaluating all the possible alternatives.
Note that for each, this is only true for units before the scenario would require reevaluation see the allowable increase in Exhibit 7. The impact of making only Model was evaluated by determining the capacity using Table A: Data Used in Analysis: Plugging this product mix into our objective equation shows that contribution actually decreases.
The model confirms that doubling Model production allows the fixed overhead of 2. There are a few risk factors Merton Truck Company may choose to consider. Due to our number of constraints, using a linear program will compute exact outputs that will save time and eliminate the risk of human error.
This benefit allows for the company to better utilize their resources, and to determine the optimal product mix. As the Model and life cycle continues, the company should see a reduction in time and costs associated ith every aspect of the truck manufacturing process as a result of learning curves.
After the variables are input into the Solver program, I run the calculation. What if Model is using defective parts and the line becomes halted.
If it is much greater, Merton should consider raising its prices to reduce demand. If Merton can rent capacity for less than the shadow price for either department, it should. Merton should also consider the impact that learning curves and technology may have on their production process. The extreme points corresponding to the non-negativity, Model Assembly, and Model Assembly constraints were easy to identify, and the rest was determined by simultaneously solving the equations of intersecting lines.
Merton also has the option of increasing engine capacity by 2, hours using overtime.
The value of linear programming techniques in evaluating possible solutions is clear, particularly in that it quickly provides clues of other options to consider such as adding additional Engine Assembly Capacity. Technology could also play an important role in reducing the time and costs needed to produce the vehicles, so it is important that Merton maintain a watchful eye on new production methods and machinery.
Merton should also consider the impact that learning curves and technology may have on their production process. Furthermore, linear programming is only useful in solving linear scenarios.
However, fixed OH has not been included in the calculations until afterwards as it does not impact the optimal solution, only the net profit.
The first step was to determine the capacity of producing only Modelwhich is as follows based on Table A: If both are modified, the shadow prices may no longer hold true. Merton Trucks Case Note Abstract We discuss Merton Trucks [Dhe90a] as a case to introduce linear programmingintheMBAprogram.
ThiscaseadaptedfromSherman Motor Company case, was used to introduce Linear Programming formulations as well as duality. Refer to the teaching note [Dhe90b].
Merton Truck Co Essay. Words Apr 4th, 9 Pages. Show More. Case 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.
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Merton Truck Company Case Executive Summary The Problem: Merton Truck Company has been experiencing difficulties related to their financial performance, and they do not know which is the optimal product mix to maximize profits and performance.
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