The Minivan Motors of Malaysia produces cars under an agreement with Suzuki of Japan and trucks under an agreement with General Motors of the USA. The company was established in 1972 and now employs approximately 1000 people and can generally produce an average of 25 cars and trucks per day. Capital investment constraints have limited the nature of Anvils manufacturing facilities. Consequently, it is not able to manufacture many of the items required for the assembly of cars and trucks. These items are imported from Suzuki or GM.
However, both Suzuki and GM must limit the quantities of parts shipped to Minivan cause of constraints on their own capacities. Suzuki and GM have guaranteed to provide parts sufficient for 500 cars and 200 trucks respectively per month. GM has Just announced several price increases, which have raised the direct manufacturing cost (which includes all labor and material costs) of a Minivan truck from $800 to $1000 converted to US dollars. Suzuki has not raised prices on purchased parts, so the direct manufacturing cost of a Minivan car has remained stable at $800.
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The Ministry of Economics controls the selling price of Anvils output: cars sell at $4300 and trucks sell at $6000. Anvils vehicles have a reputation as well-made and dependable products, suitable for the Malaysian market. Demand is so great that the company can sell all the cars and trucks it can produce, and the company expects no change in this situation. Minivan presently has unfilled orders (already paid for) for 150 cars and 100 trucks. The manufacturing process for both cars and trucks consists essentially of two departments, which limits the number of vehicles that can be produced during any month.
These departments are fabrication and engine assembly. An agreement with the Ministry of Labor has set the minimum labor usage combined in both apartments to be at 14,000 worker-hours. Different parts on 45 machine tools. A recent analysis has shown that this shop can plan on no more than 12,000 worker-hours of capacity in the coming month. Each car manufactured requires 20 worker-hours of fabrication; each truck requires 40 worker-hours. The assembly department is set up as a conventional assembly line. 10,000 worker- hours of capacity will be available in the assembly department in the coming month.
Each car requires 25 worker-hours of assembly; each truck requires only 10 worker- hours. The fixed overhead costs are estimated at $10,000 in the fabrication department and 12,000 in the assembly department. At this morning’s management meeting, Farad Hormone, the production manager expressed considerable concern over Gem’s price increases. The next month’s production schedule was to be announced tomorrow, and she asked Sunnis Ray, the managing director, whether the cost should affect the currently planned production of 200 cars and 200 trucks.
Mr… Ray replied “l have never been sure if our current plan is the best we can have. If it is, I think we will Just have to absorb the price increase until the Ministry of Economics allows us to increase our selling price. In hat case we will go ahead with the previous plan – 200 cars and 200 trucks”. 1) What is the best product mix for Minivan Motors under the new cost structure? 2) Was the current policy of producing 200 cars and 200 trucks the best for Minivan Motors under the old cost structure? ) If an additional worker-hour in any of the departments will cost the same amount, in which department would you recommend making this additional worker-hour available? 4) If 200 additional worker hours were available in the fabrication department for $3000, should Farad pay this amount and get the additional hours? 5) What are 1000 additional hours in the assembly apartment worth? What about 1100 hours? 6) If the net profit from a truck is decreased by $500 will the best product mix be any different? Will the total profit change? ) An error in record keeping indicates that the number of back-ordered trucks is only 85. Will this change the best product mix? 8) Farad has received word that the Minister of Labor will relax the labor restriction by 2000 worker-hours. Will this change the decision regarding the best product mix? Minivan Motors is considering introducing a new Minivan van. The new model requires 30 hours in the fabrication department and 20 hours in the assembly department. Each Minivan van will give a net profit of $4000. 1) Should any vans be produced? ) How much would it cost in terms of profit if, for some reason, the management insisted that at least one van be made THIS, a handloom cooperative society in Tamil Nadia carries out the marketing, distribution and sales functions for the cooperative societies in the state. THIS collects goods produced by the societies and sells it through outlets all through the Southern states. It has recently opened warehouses to handle the consolidation and distribution of merchandise. The warehouses are located in Cuddlier, Erode, Cameraman, Salem and Velour.
The merchandise has to be distributed monthly from these warehouses to the showrooms in the four states. Goods are packaged and delivered by bales. The monthly availability of the goods at the warehouses (in number of bales) is as given below : Warehouses: Availability: Cuddlier Erode 100 110 Cameraman Salem Velour 120 130 The monthly demand (in number of bales) in the four states is as follows: States: Demand: Tamil Nadia Karakas Kraal Andorra Pradesh 200 105 155 The costs of transporting one bale from a given warehouse to any showroom in a given state are as given in Tablet.
Assume all costs are stated in hundreds of rupees. Table 1 Cuddlier Erode Cameraman Salem Velour Tamil Nadia 350 150 300 250 Karakas 1 oho 650 700 Kraal 1200 850 950 1100 Andorra Pradesh THIS would like to distribute the merchandise as per the availability and demand at the least total cost. How should it plan its distribution? 3. SCHEDULING DECISIONS AT CALL-ME Call-Me Inc. Has a major call center at Achaean that specializes in answering medical billing queries for a few health insurance companies from around the world.
This company has available trained professionals that can answer questions in English, French, German and Japanese, and they operate 24 hours a day, 7 days a week. They estimate the following minimal daily requirements for the trained professionals: Time of Day Period Trained Professionals Required Minimum Number of (24-hour clock) 20 50 6-10 10-14 14-18 18-22 22- 2 2 3 4 5 6 the same for an eight hour stint. What must be the daily schedule so that the requirements above are met? Call-Me is considering the option of scheduling overtime hours using the same pool of professionals that are working for them.
The specific option they are considering is that a professional who is not working in a given time period can give overtime and be paid one and a half times the regular rate. For instance, if period 6 is not covered by a professional during his/her regular schedule, then he/she is eligible to work overtime in this period. If so, he/she will be paid 0. Xix, if x is the regular pay for an 8 hour stint. Is it worthwhile scheduling overtime hours? Why or Why not? 4. FINANCIAL PLANNING Tiles R Us is a large manufacturer of all varieties of flooring tiles.
The company’s cash receivables and payable for the coming 4 periods are as given in the table below. The payable need not be paid at once and may be paid out of future funds. In particular, suppose that a I-period delay in meeting payable meaner that the many must pay RSI. 1. 03 for each Re. 1 owed, and a 2-period delay requires payment of RSI. 1. 07 for each rupee owed. Periods Periods Period 3 Period 4 Cash receipts (in lacks of RSI) 70 Accounts payable (lacks of rupees) Beginning cash on hand is RSI. 0 lacks, and cash receivables feed into cash on hand. Cash carried forward from period to period may be allocated in any desired split between a bank account that pays 1% rate of interest per period and bonds that pay 3% rate of interest every two periods. However, the bonds can only be purchased in Periods 1 and 2, and cannot be cashed in until two periods after purchase. Mr… Sheehan, the owner of Tiles R Us would like to maximize cash on hand at the end of the planning horizon (the amount carried beyond Period 4 after making the payments). ) Define the variables required to help him in his decision. B) Formulate this decision problem be modeled as a linear programming problem? C) Now suppose that the penalty on payments delayed for 2 periods depends on the amount delayed. The company must pay RSI. 1. 07 for each Re. 1 owed up too maximum 10% amount delayed for 2 periods and RSI. 1. 10 thereafter. Define any new variables needed to incorporate this information in your model of part b). Give an appropriate formulation that will help Mr… Sheehan in his decision under this new penalty structure. . REVENUE MANAGEMENT AT LEISURE AIR Leisure Air is a regional airline that provides service for Pittsburgh, Newark, Charlotte, Myrtle Beach, and Orlando. It has two Boeing 737-400 airplanes, one based in Pittsburgh and the other in Newark. Both airplanes have a coach section with a 132- seat capacity. Each morning the Pittsburgh-based plane flies to Orlando with a stopover in Charlotte, and the Newark-based plane flies to Myrtle Beach, also with a stopover in Charlotte. At the end of the day, both planes return to their home bases.
To keep the size of the problem reasonable, we restrict our attention to the Pittsburgh-Charlotte, Charlotte-Orlando, Newark-Charlotte, and Charlotte-Myrtle Beach flight legs for the morning flights. The figure illustrates the logistics of the Leisure Air uses two fare classes: a discount-fare Q class and a full-fare Y class. Reservations using the discount-fare Q class must be made 14 days in advance and must include a Saturday night stay in the destination city. Reservations using the full-fare Y class may be made anytime, with no penalty for changing the reservation t a later date.
To determine the itinerary and fare alternatives that Leisure Air can offer its customers, we must consider not only the origin and the destination of each flight, but also the fare class. For instance, possible products include Pittsburgh to Charlotte using Q class, Newark to Orlando using Q class, Charlotte to Myrtle Beach using Y class, and so on. Each product is referred to as an origin-destination- itinerary fare (DIF). For May 5, Leisure Air has established fares and developed forecasts of customer demand for each of 16 Doffs. These data are shown in Table.
Suppose that on April 4 a customer calls the Leisure Air reservation office and requests a Q class seat on the May 5 flight from Pittsburgh to Myrtle Beach. Should Leisure Air accept the reservation? The difficulty in making this decision is that even though Leisure Air may have seats available, the company may not want to accept this reservation at the Q class fare of $268, especially if it is possible to sell the same reservation later at the Y class fare of $456. Thus, determining how many Q and Y class seats to make available are important decisions that Leisure Air must make in order to operate its reservation system.