Merton Truck Company TABLE A Machine-hours: Requirements and availability Machine-hours Required per Truck Model 101 Model

102 1.0 2.0 2.0 2.0 2.0 3.0

Department Engine assembly Metal stamping Model 101 assembly Model 102 assembly

Total machine-hours Available per Month 4,000 6,000 5,000 4,500

TABLE B Standard Product Costs Direct materials Direct Labour Engine assembly Metal stamping Final assembly Overhead Engine assembly Metal stamping Final assembly Total $2,525 $3,480 $6,200 $12,205 $40,205 $4,850 $3,080 $3,500 $11,430 $35,930 Model 101 $24,000 $1,200 $800 $2,000 $4,000 $2,400 $600 $1,500 $4,500 Model 102 $20,000

Q1

Target Cell (Max) Cell Name $G$3 Obj Function Profit

Original Value 0

Final Value 11000000

Adjustable Cells Cell Name $E$4 Decsion Variables M101 $F$4 Decsion Variables M102

Original Value 0 0

Final Value 2000 1000

Constraints Cell $G$6 $G$7 $G$19 $G$9

Name Engine Assembly Hrs used Metal Stamping Hrs used Engine Assembly Utilised Model 102 Assembly Hrs used

Cell Value 4000 6000 4,001 3000

Formula $G$6<=$I$6 $G$7<=$I$7 $G$19<=$I$19 $G$9<=$I$9

Status Slack Binding 0 Binding 0 Not Binding 1000 Not Binding 1500

Sensitivity Report Q1

Adjustable Cells Cell $E$4 $F$4 Constraints Cell $G$6 $G$7 $G$19 $G$9 Name Engine Assembly Hrs used Metal Stamping Hrs used Engine Assembly Utilised Model 102 Assembly Hrs used Final Value 4000 6000 4,001 3000 Shadow Constraint Price R.H. Side 2000 0 0 1 4000 6000 5000 4500 Allowable Allowable Increase Decrease 500 500 1E+30 1E+30 500 1000 1000 1500 Name Decsion Variables M101 Decsion Variables M102 Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 2000 0 3000 2000 500 1000 0 5000 1000 2000

Q1

Target Cell Name $G$3 Obj Function Profit

Value 11000000

Adjustable Cell Name $E$4 Decsion Variables M101 $F$4 Decsion Variables M102

Value 2000 1000

Lower Target Limit Result 0 5000000 0 6000000

Upper Target Limit Result 2000.000005 11000000.02 1000.000003 11000000.01

Q 1(a) Obj Function Decsion Variables Constraints Engine Assembly Metal Stamping Model 101 Assembly Model 102 Assembly

M101 3000 2000 Hrs req/Unit 1 2 2 0 >=0

M102 5000 1000 2 2 0 3 >=0

Profit 11000000 Hrs used 4000 6000 4000 3000 Relation <= <= <= <= Hr Avl 4000 6000 5000 4500 Unused (hrs) 0 0 1000 1500

Q 1(b) >=0 >=0 Model 101 Model 102 3,000 5,000 1,999 1,001 Required/unit 1 2 0Metal Stamping 6,000 0 2 0 0 3 2,000 >=0 >=0 Model 101 Model 102 3,000 5,000 1,900 1,100 Required/unit 1 2 0Metal Stamping 6,000 0 2 0 0 3 Profit 11,002,000 Machine-hours Relation <= 2 <= <=

Objective function Decision Variables Constraints Engine Assembly

Utilised 4,001 2 3,998 3,003

Maximum available 4,001 6,000 5,000 4,500

Unutilised <= 1,002 1,497

Model 101 assembly Model 102 assembly Worth of extra unit of capacity Q 1(c)

Objective function Decision Variables Constraints Engine Assembly

Profit 11,200,000 Machine-hours Relation <= 2 <= <=

Utilised 4,100 2 3,800 3,300

Maximum available 4,100 6,000 5,000 4,500

Unutilised <= 1,200 1,200

Model 101 assembly Model 102 assembly

Value of 1 additional unit Value of 100 additional unit Q 1(d)

2,000 200000

>=0 Model 101

>=0 Model 102

Profit

Objective function Decision Variables Constraints Engine Assembly

3,000 1,500

5,000 1,500

12,000,000 Machine-hours Relation <= 2 <= <=

Model 101 assembly Model 102 assembly

Required/unit 1 2 1Metal Stamping <= 6,000 2 0 0 3

Utilised 4,500 2 0 3,000 4,500

Maximum available 4,501 6,000 5,000 4,500

Unutilised

2,000 0

Q2 >=0 >=0 Model 101 Model 102 3,000 5,000 1,500 1,500 Required/unit 1 2 2 2 2 0 0 3 Profit 12,000,000 Machine-hours Relation <= <= <=

Objective function Decision Variables Constraints Engine Assembly Metal Stamping Model 101 assembly Model 102 assembly

Utilised 4,500 6,000 3,000 4,500

Maximum available 6,000 5,000 4,500

Unutilised 0 2,000 0

Maximum Machine hours rented

500

Q 3(a) >=0 Model 101 3,000 2,000 >=0 Model 102 5,000 1,000 Required/unit 2 2 0 3 >=0 Model 103 2,000 0 Profit 11,000,000 Machine-hours Utilised Relation 4,000 <= 6,000 <= 4,000 <= 3,000 <=

Objective function Decision Variables Constraints Engine Assembly Metal Stamping Model 101 assembly Model 102 assembly

1 2 2 0

0.8 1.5 1 0

Maximum available 4,000 6,000 5,000 4,500

Unutilised 0 0 1,000 1,500

No they should not produce Model 103

Q 3(b) The contribution of each Model 103 truck has to be increased by $350(See worksheet 3b) before it becomes worthwhile to produce any unit

Q3

Target Cell (Max) Cell Name $H$4 Objective function Profit

Original Value 11,000,000

Final Value 11,000,000

Adjustable Cells Cell Name $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102 $G$5 Decision Variables Model 103

Original Value 2,000 1,000 0

Final Value 2,000 1,000 0

Constraints Cell Name $H$8 Engine assembly constraint Utilised $H$9 Metal stamping constraint Utilised $H$10 Model 101 assembly constraint Utilised $H$11 Model 102 assembly constraint Utilised $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102 $G$5 Decision Variables Model 103

Cell Value 4,000 6,000 4,000 3,000 2,000 1,000 0

Formula $H$8<=$J$8 $H$9<=$J$9 $H$10<=$J$10 $H$11<=$J$11 $E$5>=0 $F$5>=0 $G$5>=0

Status Slack Binding 0 Binding 0 Not Binding 1000 Not Binding 1500 Not Binding 2,000 Not Binding 1,000 Binding 0

Q3

Adjustable Cells Cell Name $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102 $G$5 Decision Variables Model 103 Constraints Cell $H$8 $H$9 $H$10 $H$11 Name Engine assembly constraint Utilised Metal stamping constraint Utilised Model 101 assembly constraint Utilised Model 102 assembly constraint Utilised Final Shadow Constraint Allowable Value Price R.H. Side Increase 4,000 2,000 4000 500 6,000 500 6000 500 4,000 0 5000 1E+30 3,000 0 4500 1E+30 Final Reduced Objective Allowable Value Cost Coefficient Increase 2,000 0 3000 2000 1,000 0 5000 1000 0 -350 2000 350

Allowable Decrease 499.9999999 2000 1E+30

Allowable Decrease 500 1000 1000 1500

Limits Report Q3

Target Cell Name $H$4 Objective function Profit

Value 11,000,000

Adjustable Cell Name $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102 $G$5 Decision Variables Model 103

Value 2,000 1,000 0

Lower Target Limit Result 0 5,000,000 0 6,000,000 0 11,000,000

Upper Target Limit Result 2,000 11,000,000 1,000 11,000,000 0 11,000,000

Q4 >=0 >=0 Model 101 Model 102 3,000 5,000 1,500 1,500 Required/unit 1 2 2 2 0Model 101 assembly 5,000 2,000 0 3 Profit 12000000 Net Profit 1,750,000

Objective function Decision Variables Constraints Engine Assembly Metal Stamping

Utilised 4,500 6,000 2 4,500

Machine-hours Relation Maximum available <= 6,000 <= 6,000 0 3,000 <= 4,500

Unutilised 1,500 <= 0

Model 102 assembly

Overtime is not advisable Since operating overtime reduces the profits (earlier net profit was 2,400,000 now it has reduced to 1,750,000)

Q4

Target Cell (Max) Cell Name $I$4 Objective function Net Profit

Original Value -2,150,000

Final Value 1,750,000

Adjustable Cells Cell Name $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102

Original Value 0 0

Final Value 1,500 1,500

Constraints Cell Name $G$8 Engine assembly constraint Utilised $G$9 Metal stamping constraint Utilised $G$10 Model 101 assembly constraint Utilised $G$11 Model 102 assembly constraint Utilised $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102

Cell Value 4,500 6,000 3,000 4,500 1,500 1,500

Formula $G$8<=$I$8 $G$9<=$I$9 $G$10<=$I$10 $G$11<=$I$11 $E$5>=0 $F$5>=0

Status Slack Not Binding 1500 Binding 0 Not Binding 2000 Binding 0 Not Binding 1,500 Not Binding 1,500

Sensitivity Report Q4

Adjustable Cells Cell $E$5 $F$5 Constraints Cell $G$8 $G$9 $G$10 $G$11 Name Engine assembly constraint Utilised Metal stamping constraint Utilised Model 101 assembly constraint Utilised Model 102 assembly constraint Utilised Final Lagrange Value Multiplier 4,500 0 6,000 600 3,000 0 4,500 67 Name Decision Variables Model 101 Decision Variables Model 102 Final Reduced Value Gradient 1,500 0 1,500 0

Q4

Target Cell Name $I$4 Objective function Net Profit

Value 1,750,000

Adjustable Cell Name $E$5 Decision Variables Model 101 $F$5 Decision Variables Model 102

Value 1,500 1,500

Lower Target Limit Result 0 -50,000 0 -350,000

Upper Target Limit Result 1,500 1,750,000 1,500 1,750,000

Q5

Target Cell (Max) Cell Name $G$4 Objective function Profit

Original Value 11,000,000

Final Value 10,500,000

Adjustable Cells Cell Name $E$5 Decision variables Model 101 $F$5 Decision variables Model 102

Original Value 2,000 1,000

Final Value 2,250 750

Constraints Cell Name $G$8 Engine Assembly Utilised $G$9 Metal Stamping Utilised

$G$11 Model 102 assembly Utilised $G$12 Additional constraint Utilised $E$5 Decision variables Model 101 $F$5 Decision variables Model 102

Cell Value Formula Status Slack 3,750 $G$8<=$I$8 Not Binding 250 6,000 $G$9<=$I$9 Binding 0$G$10 Model 101 assembly Utilised 4,500 $G$10<=$I$10 Not Binding 500 2,250 $G$11<=$I$11 Not Binding 2250 0 $G$12>=$I$12 Binding 0 2,250 $E$5>=0 Not Binding 2,250 750 $F$5>=0 Not Binding 750

Sensitivity Report Q5

Adjustable Cells Cell $E$5 $F$5 Constraints Cell Name $G$8 Engine Assembly Utilised $G$9 Metal Stamping Utilised $G$10 Model 101 assembly Utilised Model 102 assembly Utilised $G$12 Additional constraint Utilised Final Shadow Constraint Allowable Allowable Value Price R.H. Side Increase Decrease 3,750 0 4000 1E+30 250 6,000 1,750 6000 400 6000 4,500 0 5000 1E+30 500 $G$11 2,250 0 4500 1E+30 2250 0 -500 0 1000 1000 Name Decision variables Model 101 Decision variables Model 102 Final Reduced Objective Allowable Allowable Value Cost Coefficient Increase Decrease 2,250 0 3000 2000 4666.666667 750 0 5000 1E+30 2000

Limits Report Q5

Target Cell Name $G$4 Objective function Profit

Value 10,500,000

Adjustable Cell Name $E$5 Decision variables Model 101 $F$5 Decision variables Model 102

Value 2,250 750

Lower Target Limit Result 2,250 10,500,000 0 6,750,000

Upper Target Limit Result 2,250 10,500,000 #N/A #N/A

Q5 >=0 >=0 Model 101 Model 102 3,000 5,000 2,250 750 Profit 10,500,000

Objective function Decision variables Constraints Engine Assembly Metal Stamping

Additional constraint

Machine-hours Required/unit Utilised Relation Maximum available 1 2 3,750 <= 4,000 2 2 6,000 <= 6,000 0Model 101 assembly 2 0 4,500 5,000 500 Model 102 assembly 0 3 2,250 <= 4,500 2,250 1 -3 0 >= 0

Unutilised 250 <=