Project for Operations Research

Q1. WELLTYPE Manufacturing Company produces three types of typewriters; Manual typewriters, electronic typewriters and Deluxe Electronic typewriters. All the three models are required to be machined first and then assembled. The time required for the various models are as follows: Types Manual typewriter Electronic typewriter Deluxe Electronic typewriter Machine Time (in hours) 15 12 14 Assembly Time (in hours) 4 3 5

The total available machine time and assembly time are 3000 hours and 1200 hours respectively. The data regarding the selling price and variable costs for the three types are: Manual Selling Price ( ) Labour, material and other variable costs ( ) 4100 2500 Electronic 7500 4500 Deluxe Electronic 14600 9000

The company sells all the three types on credit basis, but will collect the amounts on the first of next month. The labour, material and other variable costs will have to be paid in cash. This company has taken a loan of 40,000 from a co-operative bank and this company will have to repay it to the bank on 1st April 20XI. The TNC bank from whom this company has borrowed approval to renew the loan. The Balance Sheet of this company as on 31.3.20XI as follows: Liabilities Equity Share Capital Capital Reserve General Reserve Assets Land Building Plant & Machinery 60,000 has expressed its

1,50,000 15,000 1,10,000

90,000 70,000 1,00,000

Profit & loss a/c Long term loan Loan from TNC bank Loan from co-op. bank Total

25,000 Furniture & Fixture 1,00,000 Vehicles 60,000 Inventory 40,000 Receivables Cash 5,00,000 Total

15,000 30,000 5,000 50,000 1,40,000 5,00,000

The company will have to pay a sum of

10,000 towards the salary of top

management executives and other fixed overheads for the month. Interest on long term loan is to be paid every month at 24% per annum. Interest on loans from TNC and co-operative banks may be taken to be 1,200 for the month. Also, this

company has promised to deliver 2 manual typewriters and 8 deluxe electronic typewriters to one of its valued customers next month. Also, make sure that the level of operations in this company is subject to the availability of cash month. This company will also be able to sell all their types of typewriters in the market. The senior manager of this company desire to know as to how many units of each typewriter must be manufactured in the factory next month as to maximise the profits of the company. Formulate this as a linear programming problem and solve it by Simplex Method. Q2. IMC manufactures a variety of computing and computing related equipment. One such product is a monitor for use with business computer systems and IMC currently has plants to produce two models of the same monitor: Model A which is the basic, low price monochrome monitor and Model B which is a more sophisticated and expensive colour graphics monitor. The company is not actually involved in manufacture directly but rather buys the various component parts which are required for the two models from outside suppliers. The components are then assembled by IMC to produce Model A and Model B and each unit produced is then thoroughly inspected for quality and performance. IMC then sells the two models under its own brand name. There are, therefore, two basic stages to the production process within the firm the assembly of the product and the inspection

of the final product. Information about the resources required to produce the two models has been obtained from both the production department and the accounts department. Model A requires 28 hours of labour to assemble from component parts, while Model B requires 42 hours. After assembly each computer is then tested in the inspection department to ensure it is working satisfactory. Because of the technical complexity of the product and the firms desire to maintain good quality control the inspection test is time consuming, with Model A requiring 12 hours of inspection although Model B requires only 6 hours as more care and time is taken in assembly stage. At present the company employs 400 people in the assembly department, each working a 7 hour day; 100 people are presently employed in the inspection department but they work an 8 hour day. The company presently operates a 6 day working week. Current wage rates are per hour in assembly and 20

15 per hour in inspection. The accounts department 355 and

has calculated that in terms of the components and parts, Model A costs Model B 565 to produce. Currently the two models sell for

1,295 and

1,745 respectively per unit. An additional aspect of the problem the firm faces is that each model requires a particular component a microchip that forms part of the monitors memory. The supplier of these chips can provide no more than 600 in any one working week. FORMULATE a linear programming problem which allows the production manager to determine how many units of models A and B should be produced weekly in order to maximize profit. Solve it by graphical method and Simplex Method.