A seminar was recently attended by the Managing Director of XYZ Manufacturing Company Limited located at...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A seminar was recently attended by the Managing Director of XYZ Manufacturing Company Limited located at Sheffield. The focus of the seminar was "optimising scarce resources utility in a manufacturing setting with particular reference to linear programming". On his return to his base, he called for a meeting with the Management to share his experience from the seminar and the impact this will have on the decision by the Board to produce two major products in the years ahead. A group of external research experts had previously been commissioned and the following represents information from the research carried out by them The expected products are "Best" and "Smart" with expected costs statistics as follows: £ (5kg@£50/kg) 250 Best Material costs Labour costs Machinery time (4 hours @£15/Hr) 60 Other Processing Time (4 hours @£10/hr) 40 Smart (3kg@£50/kg) (2hours @£15/Hr) (5hours@£10/Hr) £ 150 30 50 The applicable pricing policy is based on total cost of production plus 20% mark up on cost. The resources below will be available to the company in the following year. i. Materials 1,800,000kgs ii. Machine time 800,000 hours iii. Other process time 1,400,000 The Company's overhead is expected to be £10,000,000 with normal production of 200,000 units of Best and 100,000 units of Smart and overhead absorbed on the basis of 3 to 2 respectively. Required: a. What is linear programming? Briefly explain the usefulness of the model. (5 Marks) b. Compute the prices that will be adopted by the company for the two products using the company policy. (5 Marks) c. Advise the company on the output that needs to be produced to maximise its total profit, supporting your answer with full financial analysis. (10 Marks) d. i. Explain the meaning of "shadow prices" and comment on the usefulness of it and its limitation. ii. Calculate the shadow prices of the constraints. (5 Marks) (7 Marks) e Assuming the company's position in (c) is maintained for three years with an investment cost of £45,000,000 on the day of commencement of manufacturing business, using a cost of capital of 15%. i. Can this venture be justified for the period? ii. What is the breakdown discount factor for this project? (4 Marks) (4 Marks) (Total 40 Marks) A seminar was recently attended by the Managing Director of XYZ Manufacturing Company Limited located at Sheffield. The focus of the seminar was "optimising scarce resources utility in a manufacturing setting with particular reference to linear programming". On his return to his base, he called for a meeting with the Management to share his experience from the seminar and the impact this will have on the decision by the Board to produce two major products in the years ahead. A group of external research experts had previously been commissioned and the following represents information from the research carried out by them The expected products are "Best" and "Smart" with expected costs statistics as follows: £ (5kg@£50/kg) 250 Best Material costs Labour costs Machinery time (4 hours @£15/Hr) 60 Other Processing Time (4 hours @£10/hr) 40 Smart (3kg@£50/kg) (2hours @£15/Hr) (5hours@£10/Hr) £ 150 30 50 The applicable pricing policy is based on total cost of production plus 20% mark up on cost. The resources below will be available to the company in the following year. i. Materials 1,800,000kgs ii. Machine time 800,000 hours iii. Other process time 1,400,000 The Company's overhead is expected to be £10,000,000 with normal production of 200,000 units of Best and 100,000 units of Smart and overhead absorbed on the basis of 3 to 2 respectively. Required: a. What is linear programming? Briefly explain the usefulness of the model. (5 Marks) b. Compute the prices that will be adopted by the company for the two products using the company policy. (5 Marks) c. Advise the company on the output that needs to be produced to maximise its total profit, supporting your answer with full financial analysis. (10 Marks) d. i. Explain the meaning of "shadow prices" and comment on the usefulness of it and its limitation. ii. Calculate the shadow prices of the constraints. (5 Marks) (7 Marks) e Assuming the company's position in (c) is maintained for three years with an investment cost of £45,000,000 on the day of commencement of manufacturing business, using a cost of capital of 15%. i. Can this venture be justified for the period? ii. What is the breakdown discount factor for this project? (4 Marks) (4 Marks) (Total 40 Marks)
Expert Answer:
Answer rating: 100% (QA)
a What is linear programming Briefly explain the usefulness of the model 5 Marks Linear programming is a mathematical technique used to optimize a given set of constraints and variables to maximize th... View the full answer
Related Book For
Posted Date:
Students also viewed these marketing questions
-
The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a license offer from a company in Osaka. In return for sharing the companys patents and know-how, the Japanese...
-
The president of XYZ Manufacturing Company of Buffalo, New York, comes to you with a license offer from a company in Osaka. In return for sharing the company\\\'s patents and know-how, the Japanese...
-
The Managing Director of Premier Ovens Pty Ltd, Mr. Scott Rose, has always admired the manner in which Wesfarmers Limited has been operated as a Public Listed Company and very impressed by the...
-
Current Attempt in Progress Joseph Taylor recorded the following transactions during the month of April. Apr. 3 16 20 Cash Service Revenue Rent Expense Cash Salaries and Wages Expense Cash 3,020 690...
-
How would you explain the change in Berkshire Hathaway's market-to-book ratio?
-
Find the only nonzero term in the permutation expansion of this matrix. Compute that determinant by finding the signum of the associated permutation. 0010 0101 1010 0100 3323121 2-23-312 1112233...
-
Billing schemes are frauds in which an employee causes the victim organization to issue fraudulent payments by submitting invoices for nonexistent goods or services, inflated invoices, or invoices...
-
Sharon Feldman, president of Allied Company, considers $20,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $15,000 in cash was available at...
-
REQUIRED Calculate the following from the information provided below: 3.1.1 Break-even value using the marginal income ratio 3.1.2 Margin of safety (in units) 3.1.3 Break-even quantity if a sales...
-
A partial trial balance for the Ryman Corporation is presented in the table below. Ryman has recorded some, but not all, of its transactions for the current reporting period, the year ending December...
-
XOM JPM SBUX Date Close Adj Close Date Close Adj Close Date Close Adj Close 5/1/2018 81.24 62.62186 5/1/2018 107.01 92.11655 5/1/2018 56.67 51.20496 6/1/2018 82.73 64.41676 6/1/2018 104.2 89.69765...
-
1. The cylindrical pressure vessel with hemispherical ends has a 5-m diameter and a 20-mm wall thickness. It contains a gas with pressure p = 1 MPa, and the outer wall is subjected to negligible...
-
Mrs. Bear has a home business in which she makes and sells stuffed animals from her home. She primarily makes two products - dolphins and manatees. Each dolphin requires 2 square feet of material, 4...
-
Mauro Products distributes a single product, a woven basket whose selling price is $23 per unit and whose variable expense is $16 per unit. The companys monthly fixed expense is $18,900. Required:...
-
Regulatory obligations are responsibilities which relevant personnel are expected to uphold depending on the setting that they are in . List three ( 3 ) of the applicable regulatory requirements or...
-
A process with no beginning work in process inventory completed and transferred out 81000 units during a period and had 45000 units in the ending work in process inventory that were 30% complete....
-
Job costing and pricing: interior decorating firm Illusions is an interior decorating firm located in Adelaide. The following costs were incurred in the firm's contract to redecorate the local...
-
Ex. (17): the vector field F = x i-zj + yz k is defined over the volume of the cuboid given by 0x a,0 y b, 0zc, enclosing the surface S. Evaluate the surface integral ff, F. ds?
-
One of the products manufactured by the company passes through two separate processes. In each process losses, arising from rejected material, occur. In Process 1, normal losses are 20 per cent of...
-
J plc's business is organized into divisions. For operating purposes, each division is regarded as an investment centre, with divisional managers enjoying. substantial autonomy in their selection of...
-
HKI plc has an Engineering Division and a Motorcycle Division. The Engineering Division produces engines which it sells to 'outside' customers and transfers to the Motorcycle Division. The Motorcycle...
-
Ifa firm wishes to compare the performance of two divisions, why might divisional operating income be a poor basis for comparison?
-
Distinguish between traceable expenses and common expenses. Which are more likely to be controllable at the department level?
-
What is meant by departmental contribution to common expenses? What advantages does this measure have over net income in measuring departmental performance?
Study smarter with the SolutionInn App