Model 101 Model 102

Current monthly
1000 1500
production
Selling Price per unit $39,000 $38,000
Current monthly profit $1,900,000

Table A Machine-hours: Requirement and Availability

Machine-hours Required per Truck Total Machine-hour

Departments
Model 101 Model 102 Available per Month Current Usage
Engine Assembly 1 2 4000 4000
Metal Stamping 2 2 6000 5000
Model 101 Assembly 2 0 5000 2000
Model 102 Assembly 0 3 4500 4500

Table B Standard Product Costs

Cost Heads Cost Sub-heads Model 101 Model 102
Direct Materials $24,000 $20,000
Direct Labor
Engine Assembly $1,200 $2,400
Metal Stamping $800 $600
Model 101 Assembly $2,000 $0
Model 102 Assembly $0 $1,500
Total Direct Labor $4,000 $4,500
Allocated Overhead
Engine Assembly $2,525 $4,850
Metal Stamping $3,480 $3,080
Model 101 Assembly $6,200 $0
Model 102 Assembly $0 $3,500
Total Allocated Overhead $12,205 $11,430
Cost Contribution $40,205 $35,930

Table C Overhead Budget

Variable Overhead
Departments Total Overhead Fixed Overhead Model 101 Model 102
Engine Assembly $9,800,000 $1,700,000 $2,100 $4,000
Metal Stamping $8,100,000 $2,700,000 $2,400 $2,000
Model 101 Assembly $6,200,000 $2,700,000 $3,500 $0
Model 102 Assembly $5,250,000 $1,500,000 $0 $2,500
Total $29,350,000 $8,600,000 $8,000 $8,500
Microsoft Excel 16.0 Answer Report
Worksheet: [MertonTruckCompanyCaseExhibit-Student.xlsx]LPP
Report Created: 12/2/2019 11:09:34 AM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0.016 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Max)

Cell Name Original Value Final Value
$B$6 TotalProfit -3100000 2400000

Variable Cells
Cell Name Original Value Final Value Integer
$B$2 Production Qty Model 101 1000 2000 Contin
$C$2 Production Qty Model 102 500 1000 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$B$9 Engine Assembly Used 4000 $B$9<=$C$9 Binding 0
$B$10 Metal Stamping Used 6000 $B$10<=$C$10 Binding 0
$B$11 Model 101 Assembly Used 4000 $B$11<=$C$11 Not Binding 1000
$B$12 Model 102 Assembly Used 3000 $B$12<=$C$12 Not Binding 1500
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [MertonTruckCompanyCaseExhibit-Student.xlsx]LPP
Report Created: 12/2/2019 11:09:34 AM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$2 Production Qty Model 101 2000 0 3000 2000 500
$C$2 Production Qty Model 102 1000 0 5000 1000 2000

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$B$9 Engine Assembly Used 4000 2000 4000 500 500
$B$10 Metal Stamping Used 6000 500 6000 500 1000
$B$11 Model 101 Assembly Used 4000 0 5000 1E+030 1000
$B$12 Model 102 Assembly Used 3000 0 4500 1E+030 1500
 Model 101 Model 102
Production Qty 2000 1000

Profit Contribution 3000 5000

Total Fixed Cost 8600000

TotalProfit 2400000 2400000 0=

Resource Used Available

Engine Assembly 4000 4000
Metal Stamping 6000 6000
Model 101 Assembly 4000 5000
Model 102 Assembly 3000 4500
Microsoft Excel 16.0 Answer Report
Worksheet: [MertonTruckCompanyCaseExhibit-Student.xlsx]Sheet3
Report Created: 12/2/2019 11:39:23 AM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Solver Engine
Engine: Simplex LP
Solution Time: 0 Seconds.
Iterations: 3 Subproblems: 0
Solver Options
Max Time Unlimited, Iterations Unlimited, Precision 0.000001, Use Automatic Scaling
Max Subproblems Unlimited, Max Integer Sols Unlimited, Integer Tolerance 1%, Assume NonNegative

Objective Cell (Max)

Cell Name Original Value Final Value
$B$5 TotalProfit Model 101 -8600000 2400000

Variable Cells
Cell Name
$B$2 Production Qty Model 101
$C$2 Production Qty Model 102
$D$2 Production Qty Model 103
Original Value Final Value Integer
0 2000 Contin
0 1000 Contin
0 0 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$B$16 Engine Assembly Used 4000 $B$16<=$C$16 Binding 0
$B$17 Metal Stamping Used 6000 $B$17<=$C$17 Binding 0
$B$18 Model 101 Assembly Used 4000 $B$18<=$C$18 Not Binding 1000
$B$19 Model 102 Assembly Used 3000 $B$19<=$C$19 Not Binding 1500
Microsoft Excel 16.0 Sensitivity Report
Worksheet: [MertonTruckCompanyCaseExhibit-Student.xlsx]Sheet3
Report Created: 12/2/2019 11:39:23 AM

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$2 Production Qty Model 101 2000 0 3000 2000 500
$C$2 Production Qty Model 102 1000 0 5000 1000 2000
$D$2 Production Qty Model 103 0 -350 2000 350 1E+030

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$B$16 Engine Assembly Used 4000 2000 4000 500 500
$B$17 Metal Stamping Used 6000 500 6000 500 1000
$B$18 Model 101 Assembly Used 4000 0 5000 1E+030 1000
$B$19 Model 102 Assembly Used 3000 0 4500 1E+030 1500
 Model 101Model 102Model 103
Productio
2000 1000 0
n Qty
Profit Cont 3000 5000 2000
Total Fixed 8600000
TotalProfit 2400000
Machine-
Machine-hours Required per Truck hour
Departments
Model 101Model 102Model 103 Available
Engine Assembly 1 2 0.8 per
4000 0.8
Metal Stamping 2 2 1.5 6000 1.5
Model 101 Assembly2 0 1 5000 1
Model 102 Assembly0 3 0 4500 0

Resource Used Available

Engine Assembly 4000 4000
Metal Stamping 6000 6000
Model 101 Assembly 4000 5000
Model 102 Assembly 3000 4500