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:-

LUNGI SHIRTING
VARIABLE COST:-WAGES(\M) 4.50 1.50
YARN COST(\M) 5.50 4.50
CONTRIBUTION(\M) 0.90 0.60
PRODUCTION RATE(NO OF METRE PER LOOM DAY) 5 12
YARN CONSUMPTION(IN GMS/M)
A) 40S YARN 60 100
B) 60S YARN 40
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. 0<=X1<=11000
2. 0<=X2<=22000
3. 0.2X1+0.0833X2<=3000
4. 0.06X1+0.1X2<=2400
5. 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) SO THE INCREASE IN PROFITS: Rs. 2340.

(ii) 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.