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Graphical Method

Presented By
Prabhat Taneja 221090
Preeti Sharma 221096
Rajdeep Baruah - 221113

INDEX
CASE STUDY : Production Strategy
BETTER FITNESS INC. (BFI)
Page number 85-86

Using graphical method

FORE School of Management

BFI wants to manufacture its two


machines :
BodyPlus 100
BodyPlus 200

FORE School of Management

BodyPlus 100 consists of :


a) Frame Unit
b) Press Station
c) Pec -Dec Station

BodyPlus 200 consists of :


a)
b)
c)
d)

Frame Unit
Press Station
Pec -Dec Station
Leg Press station

FORE School of Management

BodyPlus 100 And BodyPlus 200


There are various activities involved in per unit
manufacturing of body plus 100 and body plus 200 :
Machining and welding
Painting and finishing
Assembling, packaging and testing

These activities take different amount of time.

FORE School of Management

BodyPlus 100
Machine
Painting and
and welding finishing
time(in
time(in hours)
hours)
Frame Unit

Press Station

Pec-Dec Station

Total

FORE School of Management

Assembling,
Testing and
packaging
time(in hours)

Raw
Packa
Material ging
Cost ($) Cost
($)
450

300
250

1000

50

BodyPlus 200
Machine
and
welding
time(in
hours)

Frame Unit

Painting and
finishing
time(in hours)

Pec-Dec Station

Leg-Press Station

Total

12

10

Assembling,
Cost
Testing and
($)
packaging
time(in hours)

Packagi
ng Cost
($)

650

Press Station

FORE School of Management

400
250
200

1500

75

Machine and
Welding Time

Painting and
finishing time

$20

$15

Labor Cost Per


hour

Assembling,
Testing and
Packaging Time

$12

For the next production period management estimates the hours and labour cost :
Total Time(hrs)

Cost per hour ($)

Machine and Welding


Time

600

20

Painting and finishing


time

450

15

Assembling, Testing
and Packaging Time

140

12

FORE School of Management

Calculating Manufacturing Cost


Retail Price of BodyPlus 100 = $2400
Retail Price of BodyPlus 200 = $3500
Labour cost for BodyPlus 100= (20x8)+(15x5)+(12x2)= $259
Labour cost BodyPlus 200 = (20x12)+(15x10)+(12x2)= $414.
Raw material cost for BodyPlus 100 = $1000 +$50 = $1050
(with $50 as assembling ,packaging and testing cost.)

Raw material cost for BodyPlus 200 = $1500 + $75 = $1575


(with $75 as assembling ,packaging and testing cost.)
FORE School of Management

Calculating Retail Cost


Authorized dealers can purchase at 70% of the
suggested price :

BodyPlus 100s price =0.70 x 2400 = $1680

BodyPlus 200s price = 0.70 x 3500 = $2450

This is the price at which it is sold to Dealers.


President stated that the number of units of the
BodyPlus 200 produced must be at least 25 percent of
the total production.
FORE School of Management

Calculating Profit
BP100 :
Total cost= raw material cost + labour cost
=1050 + 259= $1309

Price sold= $1680


Profit

= 1680 1309 = $371


BP200 :

Total cost = raw material cost + labour cost


1575 + 414= $1989
Price sold = $2450
Profit

= 2450 1989 = $461

FORE School of Management

A)Decision Variable involved are :


X1 = Number of units of BodyPlus 100 to be produced.
X2 = Number of units of BodyPlus 200 to be produced.

B)LPP Equation (Profit Maximization Equation) :


Max Z = 371X1 +461X2

C)Constraints :
1) Machine and Welding Hours :
8X1 + 12X2<= 600
2) Painting and Finishing Hours :
5X1 + 10X2 <= 450
3) Assembly and Packaging Hours :
2X1 + 2X2 <= 140
4) X2 >= 0.25(X1 +X2)
5) Non Negative Constraints :
X1 >=0 , X2 >=0
FORE School of Management

Plotted using MATLAB

8X1 + 12X2<= 600; 5X1 + 10X2 <= 450; 2X1 + 2X2 <= 140; X2 >= 0.25(X1 +X2)
FORE School of Management

Boundary points
0,0
0,45
30,30
50,16.66

Max Z = 371X1 +461X2


Optimal solution: X1 = 50, X2 = 50/3 or 16.667, Profit = $26,233.487.
FORE School of Management

Case without constraint of producing at least 25% of


BP200 out of the total production

Using the following 4 constraints we can plot the required


region to check the optimal solution for case 2.

8X1 + 12X2<= 600


5X1 + 10X2 <= 450
2X1 + 2X2 <= 140
X1 >=0 , X2 >=0
FORE School of Management

Boundary
points
0,0
0,45
30,30
60,10
70,0

Max Z = 371X1 +461X2


Optimal solution: X1 = 60, X2 = 10 Profit= $ 26870.000
FORE School of Management

Effect of producing BP100 and BP200 without the constraint


of number of BP200 to be at least 25% of the TOTAL production
Profit margin increases by -> $26870 - $26233.487
$636.513

FORE School of Management

Where should efforts be expended in order to


increase profits?
Arriving at the optimal solution considering the constraint of
producing at least 25% BP200 of the total production, we can
see that machine and welding time is fully utilized.

8*50 + 12*16.66= 600


5*50 + 10*16.667 <= 450 ------ SLACK of 33.33 hours
2*50 + 2*16.667 <= 140 ------ SLACK of 6.68 hours

While there is a slack in the painting and finishing time and


Assembly time. Thus by increasing the Machine and Welding
time , we can successfully increase profits by utilizing the
slack in painting and assembling time.
FORE School of Management

BIBLIOGRAPHY and REFERENCE


An Introduction to Management Science
Quantitative Approaches to Decision Making
MATLAB Preparation of Line Graph
Wolframalpha.com Preparation of Inequality
Graph

FORE School of Management

THANK YOU

FORE School of Management