360 Quantitative Analysis for Management Planning The Product Mix at Panchatantra Corporation Ganesh, Projée: Ditector’ for the Kapackunj Intensive Handlaom Development (IHD) Project of the Panchtantes Handlsom Development Corporation, nas preparing the pro ‘action plan for his projectfor the aect month. The [HD pro: ject produced two types of handloom produets—60 X 40 lungis and 40 x 40 shirting, Every month, Ganésh bad to decide on the quantities of each of the produetsto be pro. sdaced after taking into account the loom capacity available in the projet, the avalabily of 10s and sos yarn (both of which ‘were procured ané supplied to the project by the Corpo- ration’ centralized purchasing department), and information regoeding sales from the sales department. Ganesh expected roxid 3,000 inom days of prodction capacity to be available to ls project next month. Xapas, the purchase manzger, had indicated that due to stringent market conditions, at the most '480kg of 6s yarn and 2,400 kg of 40s yarn would be available tothe Kapadkanj project nee month. The sles department of the Corporation hed piled up adequate stocks of faished goods, Hence, the Soles Manager, Baza} did not wantthe pro Auction quantity to exceed the normal sales level of 11,000 m ‘of ungis and 22,000 m of shirting, $0, Ganesh had med ai producing as much ofa a posal: (he had found te order booking for luigi bythe sales department the main limitation ‘othe quantity of hing, produced) and had allocated the remaining loom capacity the production ofshictng. hae edapied this stevtegy since he knew that the contrbution® (in rupees pec mete) ag higher for lungs than for shitting (See Table 8.15), However atthe last meeting of all Project Dtectoss ofthe Panchtsntea Corporation, Ganapathy, the Project Director Taxmikaathe THD Project, bad told Ganesh tha he could linpeove the proftablity of his project by preducing more of shitting materia! and less of luagss. Ganspathy had argued that even though lingis fetched 4 higher contsbation per meter the higher production rate forshirting world oft its lower contribution, thas, naking i mors profitable psc Ganesh was intrigued by the concept, which Garapatiy hid suggested, On tetaraing to his project office, he decided to essere ll dats on production cots contribution, yarn consumption, and production rates Felting to each of the products before deciding the prod uct mix 1 be produced next month. The figures Ganesh callected are howa in Table 8.15, Gra Planning Product Mixat Panchtantra Corporation NO. Sita Meio 1 Selling price (Rs per meter) Re10.80 R560 2 Variable costs: (o) Wages pail to woavers (Re por meter) Re4.50 Bs 1.50 (b) Yarn cost (Rs per meter) 55.50 Rs450 3 Contribution (lis per meter) Rs 0.60 Re0.60 4. Production rate No, of meter per loom day 5m Rn 5 Yarn consumption: in gms per meter (a) 40s yarn 60 gm 100gm (6) 60s yera AG gm *Conriiten = Aversa reeves nsily ze pldto weave ars oi Discussion Questions ‘hat this product mix would generate compared to the 1. Givea the production capacity, yam availability, and sales constraints that Ganesh is faced with, what product mix would you sugges! to him fer the next month in order that hemay maximize his profte, Whar is th increase in profits prodist mix that Ganesh would have arrived at bad he Used his preVious preducton-plaining rule? 2. Ganesh fees that one ofthe cbjectives ofthe THD Project is also to ensure adequate earings 1 the weavers. He feelsTORE Pa TT é Linear Programming Modeling Applications with Computer Anaiyss in Exceland QM for Windows 361 BIBLIOGRAPHY Sethe Bibliography tthe end of Cater 7.