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# Case Problem: Production Strategy Managerial Report

By Debbie St. George: Student #: 1086941 MC506 Quantitative Methods for Managers - Start Date: July 1, 2003

Analyze the production problem at Better Fitness, Inc. and prepare a report for BFI's president presenting your findings and recommendations. Include (but donot limit your discussion to) a consideration of the following items: 1. The recommended number of BodyPlus 100 and BodyPlus 200 machines to produce.
Let BP100 BP200 Max s.t. 371BP100 = = + the number of BodyPlus 100 machines produced the number of BodyPlus 200 machines produced 461BP200

BP200 80

+ + +
+ ,

## 10BP200 2BP200 .75BP200

12BP200 BP200

600 hrs of machining 450 hrs of painting and finishing time 140 hrs of assembly, testing and packaging. 0 0

## Number of BodyPlus 200

70 60 50 40 30 20 10 0

Assembly, Test, and Packaging Machining and Welding BodyPlus 200 Requirement

10

20

Painting and Finishing BP100 30 40 50 60 70 80 90 100 Number of BodyPlus 100 Optimal Solution

Optimal solution: BP 100 = 50, BP 200 = 50/3 or 16.667, profit = \$26,233.33. See Management Scienc

2. The effect on profits of the requirement that the number of units of the BodyPlus 200 produced must be at least 25% of the total production. If the requirement were reduced to at least 24% of total production, the new optimal solution is BP100 = 1425/28, BP200 = 225/14, with a total profit of \$26,290.18; thus, total profits would increase by \$56.85. In the short run the requirement reduces profits.

## 3. Where efforts should be expended in order to increase profits.

Retain the constraint requiring that the number of units of the BodyPlus 200 produced be at least 25% of total production. Obtain additional machining and welding time to increase profits as the current optimal solution uses the current machining and welding time.

chines to produce.

## 3.33. See Management Science notes.

Management Science Program - LINEAR PROGRAMMING PROBLEM MAX 371BP100+461BP200 S.T. 1) 2) 3) 4) 8BP100+12BP200<600 5BP100+10BP200<450 2BP100+2BP200<140 -0.25BP100+0.75BP200>0

OPTIMAL SOLUTION Objective Function Value = Variable -------------BP100 BP200 26233.333 or \$26,233.33

## Reduced Costs -----------------0.000 0.000

Constraint -------------1 2 3 4

## Dual Prices -----------------43.722 0.000 0.000 -84.889

OBJECTIVE COEFFICIENT RANGES Variable -----------BP100 BP200 Lower Limit --------------307.333 -1113.000 Current Value Upper Limit ----------------------------371.000 No Upper Limit 461.000 556.500

RIGHT HAND SIDE RANGES Constraint -----------1 2 3 4 Lower Limit Current Value Upper Limit ------------------------------------------0.000 600.000 630.000 416.667 450.000 No Upper Limit 133.333 140.000 No Upper Limit -7.500 0.000 15.000

Notes:

Department Frame machining & welding time Frame paint & finish Press machining & welding time Press paint & finish Pec-dec machining & welding time Pec-dec paint & finish Leg press machining & welding time Leg press paint & finish Assembly, testing and packaging

## BP100 4 hrs 2 hrs 2 hrs 1 hr 2 hrs 2 hrs 0 hrs 0 hrs 2 hrs

Production Requirements for BP100 and BP20 Production Tim BP200 5 hrs 4 hrs 3 hrs 2 hrs 2 hrs 2 hrs 2 hrs 2 hrs 2 hrs

## Production Time Requirements Totals for BP100 and BP200

Department Machining & welding time Paint & finish Assembly, testing and packaging Notes & constraints for next production period

BP100 8 hrs * \$20 = \$160 5 hrs * \$15 = \$75 2 hrs * \$12 = \$24 15 hrs = \$259

BP200 12 hrs * \$20 = \$240 10 hrs * \$15 = \$150 2 hrs * \$12 = \$ 24 24 hrs = \$414

## 8BP100 5BP100 2BP100

+ + + Suggested Price

## \$2,400 450 300 250 50 259

\$1,309 \$1,091

Suggested Price
BP100 Frame Press Pec-dec Leg press Assembly/Pack Labor Max 371BP100 \$3,500 650 400 250 200 75 414 +

\$1,989 \$1,511

## 12BP200 10BP200 2BP200

600 hrs of machining 450 hrs of painting and finishing time 140 hrs of assembly, testing and packaging.