You are on page 1of 7

Name of the group ID Number

members
Alexandra CERISIER 5472100519
Chusak Deetrakunwattanapoen 7472100374
Case Study: Red Brand Gopi Krishna Pamula 7462100509
Canners Mohammad Faruk Ahmed 7472100333
Nam Doc Tran 7472100382
Sukana Sasiwachiranggool 7472100291
Varavut Nitistaporn 7472100127

Headings:

• Scope of the problem


• Decision Variables
• LP models formulation and solutions for 1. Optimum solution 2. Cooper’s
solution 3. Myers solution
• Solution for additional 80,000 pounds grade A tomatoes
• Compares of different solutions
• Focus on discussion questions

Scope of the Problem:

Inputs: Two different qualities of tomatoes: Grade A and Grade B

Outputs: Three tomato products: Canned whole tomatoes, Tomato juice, and Tomato
paste

Decision Variables:

Wa - pounds of A-grade tomatoes used to produce whole tomatoes


Wb - pounds of B-grade tomatoes used to produce whole tomatoes
Ja - pounds of A-grade tomatoes used to produce tomato juice
Jb - pounds of B-grade tomatoes used to produce tomato juice
Pa - pounds of A-grade tomatoes used to produce tomato paste
Pb - pounds of B-grade tomatoes used to produce tomato paste

1
LP models formulation and solutions for Optimum solution, Cooper’s
solution and Myers solution

1. OPTIMUM SOLUTION:

Objective Function:

MAXIMIZE PROFIT =
0.0822Wa + 0.0822Wb + 0.066Ja + 0.066Jb + 0.074Pa + 0.074Pb -180000
Calculation in detail:
Using Table 8.8 in the case study,

Maximum profit (excluding tomato cost) = (1.48/18)(Wa + Wb) + (1.32/20)(Ja + Jb)


+ (1.85/25)(Pa + Pb)
[As whole Tomato 18 pounds per case, Tomato Juice 20 pounds per case, Tomato
Paste 25 pounds per case]
Or, Maximum Profit (excluding tomato cost) = 0.0822(Wa + Wb) + 0.066(Ja + Jb) +
0.074(Pa + Pb)
Maximum Profit (excluding tomato cost) = 0.0822Wa + 0.0822Wb + 0.066Ja +
0.066Jb + 0.074Pa + 0.074Pb

Tomato cost = 3,000,000 * $0.06 [Average rate 6 cents per pound from growers]
Total Tomato cost = $180,000

So, MAXIMIZE PROFIT = Profit excluding tomato cost – total tomato cost
= 0.0822Wa + 0.0822Wb + 0.066Ja + 0.066Jb + 0.074Pa + 0.074Pb –180,000

SUBJECT TO:

Quality Constraints:
QUALITY_WHOLE: Wa - 3.0Wb >= 0
QUALITY_JUICE: 3.0Ja – Jb >= 0

Calculation of Quality Constraints:

Product Minimum Point


Average
Whole Tomato (Wa + Wb) 8
Tomato Juice (Ja + Jb) 6
Tomato Paste (Pb) 5

From the above table – For whole tomato,


(9Wa+5Wb)/(Wa+Wb) >= 8
Or, Wa – 3Wb >= 0

For Tomato Juice,


(9Ja + 5Jb)/(Ja + Jb) >= 6
Or, 3Ja – Jb >= 0
Demand Constraints:

2
DEMAND_WHOLE: Wa + Wb <= 14400000 pounds [800,000*18 pounds]
DEMAND JUICE: Ja + Jb <= 1000000 pounds [50,000*20 pounds]
DEMAND_PASTE: Pa + Pb <= 2000000 pounds [ 80,000*25 pounds]

Availability Constraints:
AVAILABILITY_A: Wa + Ja + Pa <= 600000 [20% of the total 3,000,000
tomatoes]
AVAILABILITY_B: Wb + Jb + Pb <= 2400000 [80% of the total 3,000,000
tomatoes]

Non-negativity:
Wa, Wb, Ja, Jb, Pa, Pb >= 0

Optimum Solution:

Whole Tomato Juice Paste


Operat
Wa Wb Ja Jb Pa Pb LHS or RHS
Max. Profit 0.0822 0.0822 0.066 0.066 0.074 0.074 45340
Available Grade A 1 0 1 0 1 0 600000<= 600000
Available Grade B 0 1 0 1 0 1 2400000<= 2400000
Limit of Whole Tomato 1 1 0 0 0 0 700000<= 800000
Demand Whole 1 1 0 0 0 0 700000<= 14400000
Demand Juice 0 0 1 1 0 0 300000<= 1000000
Demand Paste 0 0 0 0 1 1 2000000<= 2000000
Quality Equition1 1 -3 0 0 0 0 3.8848E-07>= 0
-1.6653E-
Quality Equition2 0 0 3 -1 0 0 07>= 0
Solution Values 525000 175000 75000 225000 0 2000000

Total 3,000,000 pounds will be utilized to get max profit $45,340.

Whole Tomato = 525000 (A grade) + 175000 (B grade) = 700000 pounds = 38,888


cases
Tomato Juice = 75000 (A grade) + 225000 (B grade) = 300000 pounds = 15,000
cases
Tomato Paste = 2000000 (B grade only) = 2000000 pounds = 80,000 cases

3
2. SOLUTION BASED ON COOPER’S DATA:

Maximum Profit = (0.12/18)(Wa + Wb) + (-0.09/20)(Ja + Jb) + (0.12/25)(Pa + Pb)


= 0.0067(Wa+Wb) - 0.0045(Ja+Jb) + 0.0048(Pa+Pb)
= 0.0067Wa + 0.0067Wb - 0.0045Ja – 0.0045Jb + 0.0048Pa + 0.0048Pb

Constraints calculation is same as optimum solution.

Cooper’s Solution

Whole Tomato Juice Paste


Wa Wb Ja Jb Pa Pb LHS Operator RHS
Max. Contribution 0.02222 0.02222 0.006 0.006 0.014 0.01445777.7778
Available Grade A 1 0 1 0 1 0 600000<= 600000
Available Grade B 0 1 0 1 0 1 2200000<= 2400000
Limit of Whole Tomato 1 1 0 0 0 0 800000<= 800000
Demand Whole 1 1 0 0 0 0 800000<= 14400000
Demand Juice 0 0 1 1 0 0 0<= 1000000
Demand Paste 0 0 0 0 1 1 2000000<= 2000000
Quality Equition1 1 -3 0 0 0 0 4.4412E-07>= 0
Quality Equition2 0 0 3 -1 0 0 0>= 0
Solution Values 600000 200000 0 0 0 2000000

Total 2,800,000 pounds will be utilized to get max contribution $45,778.

Whole Tomato = 600000 (A grade) + 200000 (B grade) = 800000 pounds


Tomato Juice = 0 pounds
Tomato Paste = 2000000 (B grade only) = 2000000 pounds

4
3. SOLUTION BASED ON MYERS’S DATA:

Maximum Profit = (-0.01/18)(Wa + Wb) + (0.08/20)(Ja + Jb) + (0.55/25)(Pa + Pb)


= - 0.0006Wa - 0.0006Wb + 0.04Ja + 0.04Jb + 0.022Pa + 0.022Pb

Whole Tomato Juice Paste


Wa Wb Ja Jb Pa Pb LHS RHS
Max. Profit -0.0006 -0.0006 0.004 0.004 0.022 0.022 48000
Available Grade A 1 0 1 0 1 0 600000<= 600000
Available Grade B 0 1 0 1 0 1 2400000<= 2400000
Limit of Whole
Tomato 1 1 0 0 0 0 0<= 800000
Demand Whole 1 1 0 0 0 0 0<= 14400000
Demand Juice 0 0 1 1 0 0 1000000<= 1000000
Demand Paste 0 0 0 0 1 1 2000000<= 2000000
Quality Equition1 1 -3 0 0 0 0 0>= 0
-5.5507E-
Quality Equition2 0 0 3 -1 0 0 07>= 0
Solution Values 0 0 250000 750000 350000 1650000

Total 3,000,000 pounds will be utilized to get max contribution $48,000.

Whole Tomato = 0 pounds


Tomato Juice = 250,000 (A grade) + 750,000 (B grade) = 1,000,000 pounds
Tomato Paste = 350,000 (A grade) + 1,650,000 (B grade) = 2,000,000 pounds

SOLUTION FOR ADDITIONAL 80,000 pounds grade A tomatoes

If Red brand would purchased 80,000 pounds more tomatoes at the rate of 8.5
cents per pound, there would be following changes in objective function, constraints
and solution.

MAXIMIZE PROFIT =
0.0822Wa + 0.0822Wb + 0.066Ja + 0.066Jb + 0.074Pa + 0.074Pb –180000 –
(80000*0.085)
= 0.0822Wa + 0.0822Wb + 0.066Ja + 0.066Jb + 0.074Pa + 0.074Pb –186800

AVAILABILITY_A: Wa + Ja + Pa <= 680000

So, the total profit would be $ 45,764.

5
Therefore,, additional profit would be $ 45,764 - $45,340 = $424

Whole Tomato Juice Paste


Wa Wb Ja Jb Pa Pb LHS Oper RHS
ator
Max. Profit 0.0822 0.0822 0.066 0.066 0.074 0.074 45764
Available Grade A 1 0 1 0 1 0 680000 <= 680000
Available Grade B 0 1 0 1 0 1 2400000 <= 240000
0
Limit of Whole 1 1 0 0 0 0 820000 <= 880000
Tomato
Demand Whole 1 1 0 0 0 0 820000 <= 144000
00
Demand Juice 0 0 1 1 0 0 260000 <= 100000
0
Demand Paste 0 0 0 0 1 1 2000000 <= 200000
0
Quality Equition1 1 -3 0 0 0 0 4.5518E- >= 0
07
Quality Equition2 0 0 3 -1 0 0 -1.4427E- >= 0
07
Solution Values 615000 205000 65000 195000 0 200000
0

Compare of Optimum Solution, Cooper’s and Myer’s Solution:

[Tomatoes are in pounds]


Comparison Table

Optimum Cooper’s Myer’s


Whole Grade A 525,000 600,000 0
Tomato Grade B 175,000 200,000 0
Tomato Grade A 75,000 0 250,000
Juice Grade B 225,000 0 750,000
Tomato Grade A 0 0 350,000
Paste Grade B 2,000,000 2,000,000 1,650,000
Total Used 3,000,000 2,800,000 3,000,000
Tomatoes
Max Net Profit $45,340 $45,778 $48,000

DISCUSSION QUESTIONS:

6
1. Structure the problem verbally, including a written description of
constraints and objective. What are the decision variables?

Red Brand Canners is a medium-size company that cans and distributes tomato and
other fruits products. The tomatoes used as raw materials are of two different
qualities and must be combined in proportions that maximize the profitability of the
company and at the same time assure the quality requirements of the prepared
products. Therefore, maximize the profitability for the tomato products is the
objective function.

In this case study, the total amount of tomatoes in pounds is 3 millions where 20%
is grade A and rest is grade B. This availability is a constraint to get maximum
profit.

The demand in the market is forecasted by Sales Manager for three kinds of tomato
products – whole tomato, juice and paste and specified in the case study in table
8.6. This demand is also constraints as RBC should not produce more than the
demand.

The company also uses average minimum quality of tomato in different products – 8
points of whole tomato, 6 points for juice and 5 points for paste, where grade A
averaged 9 points and grade B averaged 5 points. This is also a constraint in
production in term of quality. There is also limit of whole tomato production
(800,000 pounds) due to insufficient of grade A tomatoes.

And finally, all grades of tomatoes must be non-negative.

The decision variables are

• Pounds of A-grade tomatoes used to produce whole tomatoes


• Pounds of B-grade tomatoes used to produce whole tomatoes
• Pounds of A-grade tomatoes used to produce tomato juice
• Pounds of B-grade tomatoes used to produce tomato juice
• Pounds of A-grade tomatoes used to produce tomato paste
• Pounds of B-grade tomatoes used to produce tomato paste

2. Develop a mathemetical formulation for Red Brand’s objective function


and constraints.

This has been already discussed in “LP models formulation and solutions for 1.
Optimum solution 2. Cooper’s solution 3. Myers solution” of this report.
3. Solve the problem and discuss the results.
We have found different results by solving based on Cooper’s and Myers data. We
have also found the different optimum solution for this case study. These results are
described in comparison table before. Actually Cooper and Myers calculated the
tomato cost in wrong way. Red Brand has already signed contract agreement to
purchase 3 millions pounds tomato at a cost of 6 cents average. Cooper and Myers
calculated tomato cost separately for grade A and B which had an impact in his
calculation. This is why their profit varied with the correct solution.