TERM PROJECT You are the new manager of a firm. Your job is to achieve the goals presented throughout this document. To be able to do that, you first need to plan a new production site, and then select the right combination of raw materials for high-quality products, and finally decide on your marketing mix to get profit for the firm. Thus, phase 1 of your tasks is about maximizing production capacity, phase 2 is about ensuring the highest possible quality while spending not more than a limited budget, and phase 3 is about maximizing the monthly profit. Phase 1: Careful "production site planning" is important to increase production efficiency which in turn maximizes production capacity. Machines and workers who will use them have to be placed according to avoid time loss, anxiety, incidents, extra costs and so on. Figure 1 The 55 grid in Figure 1 above shows a sample configuration of worker and machine lots. Your job is to reorder the 12 Worker blue lots and 13 Machine (including 1 main machine represented as mM ) black lots to maximize the quality of the layout. The quality of the layout is determined by a points system. Points are awarded as follows: Any column or row that has 5 Worker lots =+5 points Any column or row that has 4 Worker lots =+4 points Any column or row that has 3 Worker lots =+3 points Any column or row that has 5 Machine lots =5 points Any column or row that has 4 Machine lots =4 points Any column or row that has 3 Machine lots =3 points For example, the layout displayed in Figure 1 has a total of 4 points: Points for each column, from left to right =3,4,+3,+3,+3 Points for each row, from top to bottom =+3,+3,3,+4,5 There are some restraints you should pay attention while planning: - At least 1 machine should be available in adjacent cells of a worker cell - At most 6 machines should be available in adjacent cells of a worker cell - No other machines could be located in adjacent cells of the main machine (mM), so the layout in Figure 1 is clearly wrong! You need to maximize the points so that your site has the highest possible production capacity. Final monthly production capacity of your site is calculated as: Monthly Production Capacity =(70+ Points you get by your design )10 units Phase 2: Choosing the right materials for production is an art (and a math skill of course) to ensure quality within a given budget. What you decide to use can determine survival or bankruptey. Table 1 shows all of the items that are available to you that will aid you in production process. Each item has a cost indicated by the red number and each item has quality points indicated by the green number. You must take only one item from each of the four categories (A, B, C, D). To get these items, you can spend maximum 250TL per unit of production. For example, if you produce 700 units in a month, your monthly material budget is 175,000TL(700250). Quality level of your product is calculated by adding all of the quality points together from the items you choose to use in production. Table 1 In order to maximize your product's quality, what is the best combination of items to use? Select 4 items (one from each category A,B,C,D ) and calculate the total quality level of your product to use it as an input for the third and the final phase which is about profit maximization. Phase 3 : You should maximize your profit by using your phase 1 and phase 2 answers as input. Monthly fixed cost is 100,000TL. Your marketing decisions (pricing and advertisement) need to be based on the following info: As a manager, the decisions you make influence whether your year will end with significant profits or in bankruptcy. You need to make the following decisions for the upcoming months: 1.) Selling price ( TL/unit) 2.) Advertise or not 3.) Using special packaging or not A unit can be sold for 2,000TL or 1,600TL. Advertising costs 100,000TL. Using special packaging would add an additional 100TL per unit to the variable cost (total material cost of selected items in phase2). The table below shows the probability of selling all of the products. Probability of selling all of the products (\%) Advertise and use special packaging 100\% Advertise only 90% Use special packaging only 90% Do not advertise and do not use special packaging 80% Expectation of number of units sold (ENOUS) is determined by selling price coefficient (SPC), probability of selling all (PROB) from the table above, monthly production capacity (MPC) in units from phase1, and quality level (QL) from phase2. If selling price is 2,000TL, then SPC is 1 . If selling price is 1,600TL, then SPC is 5/4. The formula is: ENOUS=SPCPROBMPCQL/100 Finally, please calculate your expected profit (according to the formula below by using the figures from your selected strategy) and prove that it is the max you could get in the conditions presented throughout this paper. The way how you prove is all up to you. You may use graphs, charts, or any other methods you find relevant. The important thing here is that the reader should not need to think further to believe you after she/he reads your answer. ExpectedProfit=(SellingPriceTotalVariableCost)ENOUSTotalFixedCost Please note that in case they are available in your selected strategy; Special Packaging Cost should be included in Total Variable Cost (since you apply it only to the units sold not to all units produced) and Advertising Cost should be included in Total Fixed Cost in the formula above. Your paper should provide clear answers to these key questions: - What is your best strategy, leading to max. profit? - What is your worst strategy, leading to min. profit? - Suppose that you don't need to maximize quality level at phase2, so that you can decrease variable cost per unit, would it be possible to outperform your best strategy? Bonus: Run an Excel/R/etc. code to get the distribution of all possible profit levels! Please provide the code and the first 4 moments of that distribution to get full credit