PLANNING THE PRODUCT MIX AT PANCHTANTRA CORPORATION

GIVEN:THE TWO TYPES OF PRODUCTS BEING PRODUCED: 60*40 LUNGIS & 40*40 SHIRTING THE QUANTITY OF PRODUCTS BEING PRODUCED DEPENDS UPON:1. LOOM CAPACITY (3000 LOOM DAYS) 2. AVAILABILITY OF 40 YARN(2400 KGS) & 60 YARN(480 KGS) 3. SALES (11000m OF LUNGI & 22000m OF SHIRTING)

DATA REQUIRED AS PER THE GIVEN TABLE:-

VARIABLE COST:-WAGES(\M) YARN COST(\M) CONTRIBUTION(\M) PRODUCTION RATE(NO OF METRE PER LOOM DAY) YARN CONSUMPTION(IN GMS/M) A) 40S YARN B) 60S YARN

LUNGI SHIRTIN G 4.50 1.50 5.50 0.90 5 4.50 0.60 12

60 40

100

SOLN: LET THE DECISION VARIABLES BE; X1= TOTAL NO OF METRES OF LUNGIS X2= TOTAL NO OF METRES OF SHIRTING Z=TOTAL PROFIT AT THE END OF THE MONTH THE OBJECTIVE EQUATION WILL BE:-

Z=0.90X1+0.60X2
SUBJECT TO THE FOLLOWING CONSTRAINTS:1. 2. 3. 4. 5. 0<=X1<=11000 0<=X2<=22000 0.2X1+0.0833X2<=3000 0.06X1+0.1X2<=2400 0.04X1<=480

ON SOLVING THE FOLLOWING EQUATIONS, FOR THE MAMIMUM VALUES OF Z WE HAVE:X1= 6667, X2=20000, Z=Rs. 18000.

IN THE PREVIOUS CASE WE HAVE X1=11000(THE MAXIMUM LIMIT) SO, PUTTING THE VALUE OF X1 IN CONSTRAINT 3, WE HAVE:3. 0.2*11000+0.0833X2<=3000 implies, X2<=9600 ON SOLVING WITH THE NEW CRITERIA WE HAVE:Z=Rs. 15660.
(i)

(ii)

SO THE INCREASE IN PROFITS: Rs. 2340. NOW, THE DAILY WAGES OF WEAVERS MUST BE: Rs. 20.50

SO THE ADDITIONAL CONSTRAINT BECOMES: (4.5X1+1.5X2) / (0.2X1+0.0833X2)>=20.50 implies, 0.4X1-0.21X2>=20.50 ON SOLVING THE FOLLOWING EQUATIONS, WE HAVE:Z= Rs. 17090, X1=8350, X2=15960. WAGES EXPENSES IN PREVIOUS CASE: 4.5*6667+1.5*20000=Rs. 60001.50 WAGES EXPENSES IN THIS CASE: 4.5*8350+1.5*15960=Rs. 61515 EXTRA REMUNERATION PAID IN WAGES=Rs. 1513.50

(iii) AGAIN, IT HAS BEEN MENTIONED THAT, THE TOTAL COST MUST NOT EXCEED 1.50 LAKHS. SO THE CONSTRAINT BECOMES: (4.50+5.50)X1+(1.50+4.50)X2<=150000 implies, 10X1+6X2<=150000 ON SOLVING THE FOLLOWING EQUATIONS, WE HAVE:X1= 1800, X2=22000, Z=Rs. 14820.