CASE I: PRODUCT MIX

Geena is the Production manager of Clear Shampoo and she wants to

determine the production mix that will result in maximum profit. She is able to
determine the data necessary for her to make a decision. It will take 5 minutes to
mix 1 case of Men’s shampoo and 10 minutes to mix 1 case of Women’s shampoo
and she has a total of 100 minutes available for the mixing process per day. It will
take 7 minutes to bottle 1 case of Men’s Shampoo and 7 minutes to bottle 1 case of
Women’s shampoo and she has a total of 84 minutes available for the bottling
process per day. It will take 9 minutes to pack 1 case of Men’s shampoo and 5
minutes to pack 1 case of Women’s shampoo and she has a total of 90 minutes
available for the packing process per day. She will earn $6 for every case of Men’s
shampoo produced and $8 for every case of Women’s shampoo produced.
Perform an analysis for Clear shampoo in order to determine how many
cases of Men’s Shampoo and Women’s shampoo should be produced per day to
maximize profits. Prepare a report presenting the objectives, best possible
solutions and recommendations. Include (but do not limit your discussion to) a
consideration of the following:

1. The recommendation number of units to produce to maximize the total

contribution to profit for an 8 hour shift. What reason might management
have for not implementing your recommendation?

2. Suppose the management also states that the number of Men's Shampoo
produced must be at least as great as the number of Women's Shampoo
produced. Assuming that the objective is to maximize the total contribution
to profit for an 8 hour shift, how many units of each shampoo should be
produced?
For each solution that you develop, include a copy of your linear programming
model and graphical solution to your report.

LINEAR PROGRAMMING
MIXING BOTTLING PACKING PROFIT
Man (X) 5 7 9 $6
Woman (Y) 10 7 5 $8
TOTAL 100 84 90 ???

Max = 6x + 8y

5x + 10y ≤ 100
7x + 7y ≤ 84

9x + 5y ≤ 90

1
 I. 5x + 10y ≤ 100 Y=0

X=0 9x + 5 (0) = 90
5 (0) + 10y = 100 9x = 90

10y = 100 9 9
10 10 X = 10
Y = 10 X Y
I 20 10
II 12 12
Y=0 III 10 18
5x + 10 (0) = 100
5x = 100 Graphical Presentation

5 5
X = 20

II. 7x + 7y = 84
X=0
7 (0) + 7y = 84
7y = 84
7 7

Y = 12
X = 12

Max = 6x + 8y
III. 9x + 5y = 90
6 (0) + 8 (10) = 80
X=0
6 (7.5) + 8 (4.5)
9 (0) + 5y = 90
45 + 36 = 81
5y = 90
6 (10) + 8 (0) = 60
5 5
Y = 18

2
ELIMINATION Constraint II Constraint III
METHOD
(7x + 7y ≤ 84) * 9 (5x + 10y ≤ 100) / -2
(9x + 5y ≤ 90) * -7 9x + 5y ≤ 90
Constraint I
(5x + 10y ≤ 100) * 14 -2.5x -5y ≤ -50
63x + 63y ≤ 756
(7x + 7y ≤ 84) * -10 9x + 5y ≤ 90
-63x -35y ≤ -630

70x + 140y ≤ 1400 28y = 126 6.5x = 40

-70x -70y ≤ -840 28 28 6.5 6.5

70y ≤ 560 Y = 4.5 X = 6.15

70 70

7x + 7y ≤ 84 5x + 10y ≤ 100
Y=8 7x + 7 (4.5) = 84 5 (6.15) + 10y= 100

7x + 31.5 = 84 30.75 + 10y = 100

5x + 10y ≤ 100
5x + 10 (8) = 100 7x = 52.5 10y = 69.25
5x + 80 = 100 7 7 10 10

5x = 20 X = 7.5 X = 6.93
5 5

X=4

X Y
Constraint I. 4 8
Constraint II. 7.5 4.5
Constraint III. 6.15 6.93

5x + 10y ≤ 100
7x + 7y ≤ 84
9x + 5y ≤ 90
New constraint to be use: 21x + 22y = 274

3
I. I.
21 (4) + 22 (8) = 274 5 (7.5) + 10 (4.5) ≤ 100
84 + 176 = 274 37.5 + 45 = 100
260 = 274 82.5 = 100
II. II.
21 (7.5) + 22(4.5) = 274 7 (7.5) + 7 (4.5) ≤ 84
157.5 + 99 = 274 52.5 + 31.5 = 84
265.5 = 274 84 = 84
III. III.
21 (6.15) + 22 (6.93) = 274 9 (7.5) + 5 (4.5) ≤ 90
129.15 + 152.46 = 274 67.5 + 22.5 = 90
281.61 = 274 90 = 90
CONSIDERATIONS:
1. The reason why the management can’t implement our recommendation is
because of slack of time (slack variable) of 3 hours and 72 minutes in 8 hours
of shift that they have. There is a waste of time on producing shampoo
which can result in not so greater profit.
Men’s Women’s Minutes Converted to Total hours
Shampoo Shampoo Hours spent (base on
computaion)
Mixing 5 10 100 1 hrs and 67 1 hrs and 38
mins/day min min
Bottling 7 7 84 mins/day 1 hrs and 40 1 hr and
min 40minutes
Packing 9 5 90 mins/day 1 hrs and 50 1 hr and 50
min minutes
Total of hours Total of hours
8 hours - 4 hours and 28 minutes = 3 hours must use = use =
and 72 minutes Slack Time (Variable) 4hrs and 57 4hrs and 28
mins mins

2. For an 8 hour of shift, the Management can produce 7.5 units of men’s
shampoo and 4.5 units for women’s shampoo that’ll yield to P81 of
maximum profit per day.
Max Profit = 6X + 8Y
Max P = 6 (7.5) + 8 (4.5)
Max P = 45 + 36
Max P = P81

4
2.
Men Women
0.35 hour 0.77 hour To produce I unit
Unit produce 7.5 4.5 4.28 hours
? ? 3.72 hours slack time
Profit 6 8

Solution:
= number of units to be produced in 8 hrs shifts
0.35 + 0.37 hrs = 0.72 hrs
Men = 7.5 + 5.17 = 13 units to produce Within 8 3.72/0.72 = 5.17 or 6
Women = 4.5 + 5.17 = 10 units to produce hours shift 6 = mins unit can produce

Max = 6 (13) + 8 (10) Underlying for allocated time for

= 78 + 80 producing unit
5.17 x 0.35 = 1.8095 hour
= 158 5.17 x 0.37 = 1.9219 hour
3 hours and 72 minutes
= in order to maximize the total contribution an additional of

6 units of men of women should be produce.

CASE II: SUPPLY MIX

Raul is the Production Analyst of Dole Pineapple and he wants to determine

the supply mix that will result to minimum cost. He is able to determine the data
necessary for him to make a decision. A barrel of Absolute water can produce 9
cases of sliced pineapple, 8 cases of pineapple chunks and 4 cases of crushed
pineapple. A barrel of Wilkins water can produced 5 cases of sliced of pineapple, 8
cases of pineapple chunks, and 11 cases of crushed pineapple. Lester must
produce at least 90 cases of sliced pineapple, 128 pineapple chunks, and 88 cases
of crushed pineapple per day. Absolute water costs $20 per barrel while Wilkins
water costs $22 per barrel.
Analyse the production problem of Dole Pineapple in order to determine how many
barrels of Absolute and Wilkins should be purchase per day to minimize cost.
Prepare a report presenting the objectives best possible solutions and
recommendations. Include (but do not limit your discussion to) a consideration of
the following:
1. What is the recommended number of sliced pineapple, crushed pineapple
and pineapple chunks to produce in order to maximize profit? (Retail

5
 price of sliced pineapple per case: $50, crushed pineapple per case is $60
and a pineapple chunk per case is $55.
2. Where efforts should be expended in order to increase profits?
For each solution that you develop, include a copy of your linear programming
model and graphical solution to your report.

SLICED PINEAPPLE CRUSHED COST

PINEAPPLE CHUNKS PINEAPPLE
Absolute (X) 9 cases 8 cases 4 cases $20
Wilkins (Y) 5 cases 8 cases 11 cases $22
Demand 90 cases 128 cases 88 cases ???
Retail price $50 $60 $55
per sliced

Objective Function:
Min = 20x + 22y

9x + 5y = 90
8x + 8y = 128

4x + 11y = 88
Graphical Method: 8x + 8y = 128
I. X=0

9x + 5y = 90 8 (0) + 8y = 128
X=0 8y = 128

5y = 90 8 8
5 5 Y = 16

Y = 18 X = 16

III.
Y=0 4x + 11y = 88

9x + 5 (0) = 90 X=0
9x = 90 4 (0) + 11y = 88
9 9 11y = 88
X = 10 11 11

II. Y=8

6
Y=0

4x + 11 (0) = 88

4x = 88
4 4

X = 22

ELIMINATION METHOD -14y = -48

Constraint 1 -14 -14
(9x + 5y = 90) * 8 Y = 3.43

(8x + 8y = 128) * -5 8x + 8 (3.43) = 128

8x + 27.44 = 128

72x 40y = 720 8x = 100.56

-40x -40y = -640 8 8

32x = 80 X = 12.57
32 32
X = 2.5 Constraint 3

(9x + 5y = 90) * 4
9 (2.5) + 5y = 90 (4x + 11y = 88) *-9
22.5 + 5y = 90

5y = 67.5 36x + 20y = 360

5 5 -36x – 99y = -792

Y = 13.5 -79y = -432

-79 -79

Constraint 2 Y = 5.47
8x + 8y = 128 9x + 5 (5.47) = 90

(4x + 11y = 88) * -2 9x + 27.35 = 90

9x = 62.65
8x + 8y = 128 9 9

-8x – 22y = -176 X = 6.96

7
 X Y
I 2.5 13.5
II 12.57 3.43
III 6.96 5.47
9x + 5y ≥ 90

8x + 8y ≥ 128
4x + 11y ≥ 88

21x + 24y ≥ 306

ELIMINATION METHOD:
I. 21 (2.5) + 24 (13.5) ≥ 306

52.5 + 324 ≥ 306

376.5 ≥ 306 III. 21 (6.96) + 24 (5.47) ≥ 306

II. 21 (12.57) + 24 (3.43) ≥ 3062 146.16 + 131.28 ≥ 306

263.97 + 82.32 ≥ 306 277. 44 ≥ 306
346.29 ≥ 306

I. III.
9 (12.57) + 5 (3.43) ≥ 90 4 (12.57) + 11 (3.43) ≥ 88

113.13 + 17.15 ≥ 90 50.28 + 37.73 ≥ 88

130.28 ≥ 90 88.01 ≥ 88

II.
8 (12.57) + 8 (3.43) ≥ 128

100.56 + 27.44 ≥ 128

128 ≥ 128

8
Min = 20x + 22y

20 (0) + 22 (18) = 396

20 (2.5) + 22 (13.5)

50 + 297 = 347
20 (12.5) + 22 (3.5)
250 + 77 = 327

20 (22) + 22 (0) = 440

Sliced Pineapple 90 50 4500 130.28 50 6514

Pineapple chunks 128 60 7680 128 60 7680
Crushed Pineapple 88 55 4840 88 55 4840
17020 19034

RECOMMENDATIONS:
1. In order to maximize profits the recommended number of sliced pineapple
should be greater than or equal to 130.28, while on the pineapple chunks should
be greater than or equal to 128 and for the crushed pineapple should be greater
than or equal to 88.
2. In order for DOLE PINEAPPLE to increase their profits they should exert more
efforts in producing pineapple chunks where in it has largest retail price.

CASE III. PRODUCT MIX 2

Lander is the plant manager of Converse and he wants to determine the

product mix that will result in maximum profit. He is able to determine the data
necessary for him to make a decision. It will take 14 minutes to cut 1 unit of Chuck
and 16 minutes to cut 1 unit of Jack and he has to use up at least 224 minutes of
subcontracted cutting process per day. It will take 18 minutes to sew 1 unit of
Chuck and 8 minutes to sew 1 unit of Jack and he has to use up at least 144
minutes of subcontracted sewing process per day. It will take 10 minutes to adhere
1 unit Chuck and 20 minutes to adhere 1 unit of Jack and he has to use up at least
200 minutes of subcontracted process per day. He will earn $24 for every unit of
Chuck produced and $29 for every unit of Jack produced.
Perform an analysis for Converse in order to determine how many units of
Chuck and Jack should be produced per day to maximize profits. Prepare a report

9
presenting the objectives, best possible solutions and recommendations. Include
(but do not limit your discussion to) a consideration of the following:
1. The recommendation number of units to produce to maximize the total
contribution to profit for a 12 hour shift. What reason might management have for
not implementing your recommendation?
2. Suppose the management also states that the number of Chuck produced
must be at least as great as the number of Jack produced. Assuming that the
objective is to maximize the total contribution to profit for a 12 hour shift, how
many units of each shoe should be produced?
For each solution that you develop, include a copy of your linear
programming model and graphical solution to your report.

Cutting Sewing Adhering

Chuck (X) 14mins 18mins 10mins $24
Jack (Y) 16mins 8mins 20mins $29
224mins 144mins 200mins

Objective Function:
Max P = 24x + 29y
I. 14x + 16y ≤ 224
II. 18x + 8y ≤ 144
III. 10x + 20y ≤ 200

Graphical Method:

14x + 16y ≤ 224

X=0 Y=0
14(0) + 16y ≤ 224 14x + 16(0) ≤ 224
0 + 16y ≤ 224 14x + 0 ≤ 224

16y/16 ≤ 224/16 14x/14 ≤ 224/14

Y ≤ 14 X ≤ 16

18x + 8y ≤ 144 8y/8 ≤ 144/8

X=0 Y ≤ 18

18(0) + 8y ≤ 144
0 + 8y ≤ 144

10
Y=0 18x/18 ≤ 144/18

18x + 8(0) ≤ 144 X≤8

18x + 0 ≤ 144

10x + 20y ≤ 200

X=0 Y=0

10(0) + 20y ≤ 200 10x + 20(0) ≤ 200

0 + 20y ≤ 200 10x + 0 ≤ 200

20y/20 ≤ 200/20 10x/10 ≤ 200/10

Y ≤ 10 X ≤ 20

X Y
CONSTTRAINT `16 14
I
CONSTTRAINT 8 18
II
CONSTTRAINT 20 10
III

ELIMINATION 14 (2.91) + 16y ≤ 2 14 14

METHOD:
40.74 + 16y ≤ 224 X ≤ 4.57
Constraint I
16y ≤ 183.26
14x + 16y ≤ 224
16 16 18(4.57) + 8y ≤ 144
(18x + 8y ≤ 144) * -2
Y ≤ 11.45 82.26 + 8y ≤ 144

Constraint II 8y ≤ 61.74
14x + 16y ≤ 224
18x + 8y ≤ 144 8 8
-36x – 16y ≤ -288
(10x + 20y ≤ 200) *-2/5 Y ≤ 7.72
-22x ≤ -64
Constraint III
-22 -22
18x + 8y ≤ 144 (14x + 16y ≤ 224) *1/4
X ≤ 2.91
-4x – 8y ≤ -80 (10x + 20y ≤ 200) *-1/5

14x ≤ 64 7/2x + 4y ≤ 56

11
-2x – 4y ≤ -40 149.38 + 16y ≤ 224

3/2x ≤ 16 16y ≤ 74.62

X Y
3/2x 3/2x 16 16 CONSTTRAINT `2.91 11.45
X ≤ 10.67 Y ≤ 4.66 I

14(10.67) + 16y ≤ 224 CONSTTRAINT 4.57 7.72

II
CONSTTRAINT 10.67 4.66
III

Checking:
i. 42x + 44y ≤ 568

42 (2.91) + 44 (11.45) ≤ 568

122.22 + 503.8 ≤ 568 iii. 42 (10.67) + 44 (4.66) ≤ 568

626 ≤ 568 448.14 + 205.04 ≤ 568

ii. 42 (4.57) + 44 (7.72) ≤ 568 653.18 ≤ 568

191.94 + 339.68 ≤ 568

532 ≤ 568

Applying the answer to the

constraints:

I. 14x + 16y ≤ 224 II. 10x + 20y ≤ 200

14(4.57) + 16(7.72) ≤ 224 10(4.57) + 20(7.72) ≤ 200
63. 98 + 123.52 ≤ 224 45.7 + 154.4 ≤ 200

187.5 ≤ 224 200 ≤ 200

I. 18x + 8y ≤ 144

18(4.57) + 8(7.72) ≤ 144

82.26 + 61.76 ≤ 144
144 ≤ 144

12
Max P = 24x + 29y

24 (0) + 29 (10) = 290

24 (5) + 29 (11)

120 + 319 = 439

24 (15) + 29 (0) = 360

RECOMMENDATIONS:
1. Since there is a 12 hours shift to maximize the profit. The management must not
implement the said recommendation of total units to produce chuck and jack
because based on the computation above; it can only be done within 9 hours and
28 minutes.

Here’s a table to make it more understandable:

Cutting Sewing adhering

Chuck 14mins. 18mins. 10mins
Jack 16mins. 8mins. 20mins.
Minutes 224mins. 144mins. 200mins.
Total Hours 3hrs. 44mins. 2hrs. 24mins. 3hrs. 20mins.

If there is a shift of 12 hours and an overall total of 9 hours and 28mins, there
will be a slack time of 2hrs. 32mins. which is the reason why the management
cannot implement this recommendation.
2. Since we cannot produce a total units 4.57 and 7.72, and we can’t simply round-
off it. We apply the integer linear programming and cope-up with a total
units/pair of 4 chucks and 8 jacks, that can maximize the profit to a total of
P328.00

Max P= 24x + 29y

24(4) + 29(8)
96 + 232
P= P328.00

24 29 Maximization Profit
0 8 232
1 8 256
2 8 280
3 8 304
4 8 328
5 8 352

13
 That is based on the recommendation but if we are going to maximize the
profit into 12 hours shift here’s the computation

Chuck Jack Total

To produce 1 unit 42mins. 44mins. 86mins/ 1hr.
26mins.
Units produce 4 8 12
Total mins./hrs. 168 mins/ 2hrs. 352 mins./ 5hrs. 520mins/ 8hrs. 40
used 48mins. 52mins. mins.

12 hrs. shift – 8hrs. 40 mins. time to produce those 4 chucks and 8 jacks is
equal to 3hrs. 20 mins. or 200 mins.

(On the recommendation the total hrs used to to produce is 9hrs. 28 mins but
because the units are not in whole number it can be change also the time spent
to produce it.)

The 200 mins. slack time should be distributed to chuck and jack

42mins./86mins. x 200mins. = 98 mins.

44mins./86mins. x 200mins. = 102 mins.
200 mins.

In 98 mins. chuck can produce a total of 2 units. On jack in a span time of 102
mins, it can also produce a total of 2 units.

In total base on 12 hours shift, Converse can produce a total of 16 pairs of

shoes. 6 on Chucks and 10 on Jacks

CASE IV. PRODUCT MIX 4

Lovely is the plant manager of Acer Inc., and she wants to determine the
product mix that will result in maximum profit. She is able to determine the data
necessary for her to make a decision. It will take 20 minutes to fabricate 1 unit of
Aspire and 12 minutes to fabricate 1 unit of Extensa and she has to use at least 240
minutes of the subcontracted fabrication process per day. It will take 16 minutes
to assemble 1 unit of Aspire and 18 minutes to assemble 1 unit of Extensa and she
has to use up at least 288 minutes of the subcontracted assembly process per day.
It will take 6 minutes to test 1 unit of Aspire and 22 minutes to test 1 unit of
Extensa and she has to use up at least 132 minutes of the subcontracted testing
process per day. She will earn $6 for every unit of Aspire produced and $7 for
every unit of Extensa produced.

14
 Perform an analysis for Acer Inc. in order to determine how many units of
Aspire and Extensa should be produced per day to maximize profits. Prepare a
report presenting the objectives, best possible solutions and recommendations.
Include (but do not limit your discussion to) a consideration of the following:
1. The recommendation number of units to produce to maximize the total
contribution to profit for an 8 hour shift. What reason might management have for
not implementing your recommendation?
2. Suppose the management also states that the number of Aspire produced
must be at least as great as the number of Extensa produced. Assuming that the
objective is to maximize the total contribution to profit for an 8 hour shift, how
many units of each computer should be produced?
For each solution that you develop, include a copy of your linear
programming model and graphical solution to your report.

LINEAR PROGRAMMING

FABRICATE ASSEMBLE TEST PROFIT

Aspire (X) 20 16 6 $6

Extensa (Y) 12 18 22 $7

TOTAL 240 288 132 ???

Objective Function: Max = 6x + 7y

Constraints: 20x + 12y ≤ 240

16x + 18y ≤288
6x + 22y ≤ 132

I. 20x + 12y ≤ 240 20x = 240 18 18

X=0 20 20 Y = 16
20 (0) + 12y = 240 X = 12 Y= 0

12y = 240 16x + 18(0) =288

12 12 II. 16x + 18y =288 18y = 288
Y = 20 X=0 16 16

Y=0 16(0) + 18y =288 X = 18

20x + 12(0) = 240 18y = 288 III. 6x + 22y = 132

15
X=0 Y=0 X Y
6(0) + 22y= 132 6x + 22(0) = 132 I 12 20
22y = 132 6x = 132 II 18 16
22 22 6 6 III 22 6
Y =6 X = 22

ELIMINATION METHOD:
Constraint I Constraint II Constraint III
(20x + 12y ≤ 240) * 3 (16x + 18y ≤288) * 11 (20x + 12y ≤ 240) * 11
(6x + 22y ≤ 132) * -2 (6x + 22y ≤ 132) * -9 (6x + 22y ≤ 132) * 6

60x+36y=720 176x=198y=3168 220x=132y=2940

-32x -36y=-576 -54x-198y=-1188 -36x-132y=-792

28x =144 122x = 1980 18x= 1848

28 28 122 122 18 18

X=5.14 X= 16.23 X=10.04

20 (5.14)_+12y=240 16(16.23) + 18y =288 6(10.04) +22y=132

102.8=12y=240 259.68+18y=288 60.24+22y=132
12y=240-102.8 18y=288-259.68 22y = 132-60.24
12y=137.2 18y =28.32 22y = 71.76
12 12 18 18 22 22

Y=11.43 Y = 1.57 Y=3.26

X Y

Constraint I. 5.14 11.43

Constraint II. 16.23 1.57

Constraint III. 10.04 3.26

16
 20x +12y < 240
16x +18y < 288
6x + 22y < 132
42x + 52y < 660

CHECKING:
I. Finding the amount of time spent (8
hours shift) 1hour = 60 minutes
42x + 52y < 660
I.
42x (5.14) + 52 (11.43) < 660
20 (10.04) + 12 (3.26) <240
215.88+ 594.36 < 660
200.80 +39.12 < 240
810.24 = 660
239.92 = 240
239.92 min/60 min = 4 hrs
II.
42x + 52y < 660
II.
42(16.23) + 52(1.57) < 660
16 (10.04) + 18 (3.26) < 288
681.66 +81.64 < 660
160.64 +58.68 < 288
763.30 = 660
219.32= 288
III.
219.32 min/60 min =3.66hrs
42x + 52y < 660
42( 10.04) + 52 (3.26) < 660
III.
421.68 +169.52 < 660
6 (10.04) + 22 (3.26) < 132
591.20 = 660
60.24 + 71.72 < 132
131.96 =132
131.96 min/ 60min= 2.20 hrs

Used time= 4 + 3.66 + 2.20

= 9.86 hrs. ≠ 8 hrs. shift

17
Max = 6x + 8y
=6 (10.04)+7(3.26)
= 60.24 +22.82
= 83.06

ANSWER ON QUESTION
1. The management
would not have
implement the
recommendation since it exceeds the 8 hr shift requirement. This would result
to addition of hours and shift that would increase expense on the wages of
workers.
2.
FABRICATE ASSEMBLE TEST PROFIT

Aspire (X) 20 16 6 $6
0.70 hr/unit

Extensa (Y) 12 18 22 $7
0.87 hr/unit

TOTAL 240 288 132 ???

1.57 hr

Hours available
Total in hours 0.53 0.57 0.47 for producing X
AND Y: 1.57 hr.

Solution
0.70 +0.87=1.57 hr
8hr/1.57= 5.10 minimum units to produce for 8 hrs shift

5.10 x 0.70= 3.57 hours to be consume for aspire

5.10 x 0.87= 4.44 hours to be consume for extensa The number of units to
3.57 + 4.44 = 8.01 hours produce for each
computer must be 5.10
Max= 6(5.10) + 7 (5.10) units in order within the 8
= 66.30 max profit for 8 hrs shift. hour shift.

18
CASE V. TRANSPORT SOLUTION

Charles is the Vice President for Europe of Colgate's Palmolive Shampoo. He

supervises three factories (Madrid, Moscow and Athens) that supply three
warehouses (London, Berlin and Paris) in the region. Madrid can produce 500 cases,
Moscow can produce 300 cases and Athens can produce up to 100 cases per week.
Meanwhile, London's demand is 400 cases; Berlin's demand is 600 cases, and
Paris's demand is 200 cases per week. The shipping cost per case from Madrid to
London $8, to Berlin is $5, and to Paris is $7. The shipping cost per case from
Moscow to London is $3, to Berlin is $9, and to Paris is $11. The shipping cost per
case from Athens to London is $10, to Berlin is $6, and to Paris is $4.
Perform an analysis in order to determine how many cases Charles will ship
from each of the three factories to each of the three warehouses in the region per
week while minimizing shipping costs. Prepare a report presenting the objectives,
best possible solutions and recommendations. Include (but do not limit your
discussion to) a consideration of the following:
1) Over the next 5 years the demand growth of each product increases to 10%
yearly, would you recommend that Europe of Colgate's Palmolive Shampoo
consider plant expansion at this time?

2) The Company wants to explore the possibility of satisfying some of the

customer demand directly from the production plant. What are your
recommendations to management to consider the direct plant to customer
shipments?

TRANSPORT SOLUTIONS
1. NORTHWEST COST CELL METHOD

LONDON BERLIN PARIS SUPPLY

MADRID 400 8 100 5 7 500
MASCOW 3 300 9 11 300
ATHENS 10 100 6 4 100
DUMMY 0 100 0 200 0 200
DEMAND 400 600 200 1200

400 * 8 + 100 * 5 + 300 * 9 + 100 * 6

3200 + 500 + 2700 + 600 = P7000

2. LEAST COST CELL METHOD

LONDON BERLIN PARIS SUPPLY

MADRID 8 500 5 7 500

19
 MASCOW 300 3 9 11 300
ATHENS 10 100 6 4 100
DUMMY 100 0 0 200 0 200
DEMAND 400 600 200 1200

500 * 5 + 300 * 3 + 100 * 6

2500 + 900 + 600 = P4000

3. VOGEL’S APPROXIMATION METHOD

LONDON BERLIN PARIS SUPPLY

MADRID 100 8 400 5 7 500
MASCOW 300 3 9 11 300
ATHENS 10 100 6 4 100
DUMMY 0 100 0 200 0 200
DEMAND 400 600 200 1200

100 * 8 + 400 * 5 + 300 * 3 + 100 * 6

800 + 2000 + 900 + 600 = P4300

METHODS MINIMUM COST

NORTHWEST COS CELL METHOD P7000
LEST COST CELL METHOD P4000
VOGEL’S APPROXIMATION METHOD P4300

RECOMMENDATIONS:
1. We don’t think that the Colgate’s Palmolive shampoo needs to consider plant
expansion over the next five years of the operations. As the demand growth
increasing yearly by 10%, the effect of this is not that material to affect the
operation of the company. Below is the presentation of demand growth over
the next five years.

YEAR TOTAL DEMAND / YEAR

2019 1200
2020 120 + 1200 = 1320
2021 132 + 1320 = 1452
2022 145.2 + 1452 = 1597.2
2023 159.72 + 1597.2 = 1756.92
2024 175.69 + 1756.92 = 1932.61

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 2. The concept of direct plant to customer shipments is quiet good for the
company… the company may receive high ratings on delivering goods
directly to customers. This can also lead to high profit because customers
buy bulk or cases of shampoo.

CASE VI. ASSIGNMENT MODEL

Faye is the Division Head of Standard Chartered for North Africa. Three
branches were just opened and she has to assign one Branch manager for each of
the branches. She has shortlisted four candidates for the new positions and has to
assign them based on minimum cost possible. The cost of assigning a manager to
each of the three branches is determined. It will cost $11,000 to assign Irwin to
Cairo, $20,000 to Dubai, and $15,000 to Algiers. It will cost $12,000 to assign Janet
to Cairo, $13,000 to Dubai and $21,000 to Algiers. It will cost $18,000 to assign
Karlo to Cairo, $14,000 to Dubai, and $22,000 to Algiers. It will cost $19,000 to
assign Liza to Cairo, $17,000 to Dubai, and $16,000 to Algiers.
Perform an analysis in order to determine which manager Faye should assign
to what location. Prepare a report presenting the objectives, best possible solutions
and recommendations. Include but do not limit your discussion to) a consideration
of the following.

1) In case one of the assigned managers resigned from his/her post, what are
your recommendations to management in replacing the resigned manager?

2) Each manager will be provided an annual increase of 10%, Would you

recommend a new assignment for each manager?

Managers
IRWIN JANET KARLO LIZA
Branches

CAIRO 11, 000 12, 000 18, 000 11, 000

DUBAI 20, 000 13, 000 14, 000 17, 000
ALGEIRS 15, 000 21, 000 22, 000 15, 000
DUMMY 0 0 0 0

Branch Manager Cost

Cairo Irwin 11, 000
Dubai Janet 13, 000
Algeries Liza 16, 000
Dummy Karlo -
Min Cost = P40, ooo

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RECOMMENDATIONS:

1. In case of one assigned manager resign from his/her position, we

recommend that the management assign the available manager that doesn’t
assigned on the start of the operation and give the best salary they can offer.
2. Yes, I would recommend assigning new managers and present new possible
cost (salary) per manager that will be assigned. Because if the management
maintain the managers until up to how many years of the operations, the
salary of each manager will increase into 10% and it is not favour to the
company, we guess.

CASE VII. NETWORK MODEL

Kenneth is the Capacity Planner of Manila waters and he is tasked to ensure

the maximum amount of water flows from Water Pump A to Water Pump G. He has
able to determine the capacity of the outflow and inflow of water from one pump
to another in liters per second. The capacity figures are summarized below:

Water Pump Capacity (Liters / Second)

From To Out In
A B 6 1
A D 4 5
B C 5 8
B E 7 4
C D 3 9
C E 2 0
D F 1 7
E F 0 6
E G 8 2
F G 9 3

Prepare a network design in order to determine the total capacity of the

water flow.
OUTFLOW INFLOW

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 OUTFLOW
A–B–E–G 6
A–D–C–E–G 2
A–D–F–G 1
Maximum Flow 9

INFLOW
G–E–B–A 1
G–E–B–C–D–A 1
G–F–D–A 3
Maximum Flow 5

CASE VIII. MARKET SHARE

Izza is the Internal Vice President of BPI and she wants to know the
company's future market share compared to its competitors in the banking
industry. She was able to determine the present number of clients each major
player has at the start of the year and the movement of clients on a monthly basis
from one company to another. The figures are summarized below

No. of Clients Savings Bank Total

BPI BDO RCBC
January 400 500 100 1000
Next Month To Total
From BPI 240 50 110 400
From BDO 100 210 130 500
From RCBC 40 10 50 100
Total 380 330 290 1000
Perform an analysis in order to determine the company's market share in the
long run. Prepare a report presenting the objectives, best possible solutions and
recommendations. Include (but do not limit your discussion to) a consideration of
the following:

1) Provide a recommendation on how to increase market share based on

analysis performed,
2) Identify the company's future market share compared to its competitors in
the banking industry using Gauss-Jordan Method.
i.

No. of Clients Saving Bank Market Share

January
BPI 400 40%
BDO 500 50%
RCBC 100 10%
Total 1000 100%

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 No. of Clients Saving Bank Market Share
Next Month
BPI 380 38%
BDO 330 33%
RCBC 290 29%
Total 1000 100%

1. To increase the market share of BPI Savings Bank they should increase
engagement with customers. Communicate frequently via social media and
email.

- They also need to stay ahead of their competitors; they also make
innovation a part of their marketing strategy in terms of customized
solution, and customer support.

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 380 (30) + 330 (10) + (290) 5

= 11,400 + 3300 + 1450

= 16,150

CASE IX. RECEIVABLE ACCOUNTS

John is the Finance Director of Home cable and he wants to know the
collection efficiency of the company. He was able to determine the actual
collection and aging schedule of accounts receivable for the month of January and
the month of February. The figures are summarized below:

Bills ($) Status Total

Paid Bad <1 1-3 month
month
January 400 200 300 100 1000
Next To Total
Month

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 From Paid 400 0 0 0 400
From Bad 0 200 0 0 200
From <1 150 0 50 100 300
month
From 1-3 50 30 0 20 100
month
Total 600 230 50 120 1000

Perform an analysis in order to determine company’s actual paid and bad

debt. Prepare a report presenting the objectives, best possible solutions and
recommendations. Include (but do not limit your discussion to) a consideration of
the following:
1) Provide a collection strategy to minimize receivables default,

2) In case the actual payment in the end does not realize, do you recommend
to the management to record the uncollectible amount to bad debts?

CASE X. INVENTORY MODEL

Sonny, the Vice president of Longines Wristwatch wants to determine the
most optimum inventory practice for the company. He was able to determine the
demand and inventory costs needed in his analysis. The annual demand is 20,000
units. The cover set up of machinery for production is $40,000 per set up and the
holding cost is $500 per unit per year. The production rate is 100 units per day
and there are 250 working days per year.
Perform an analysis in order to determine company's economic order
quantity and production cycle. Prepare a report presenting the objectives, best
possible solutions and recommendations. Include (but do not limit your discussion
to) consideration of the following:

1) Assuming the production rate increases from 100 units per day to 120
units per day, what is the new economic order point?

2) Assume the annual demand increases to 20%, with the same scenario
above, what is your management recommendation to identify the total
inventory cost?

GIVEN PROBLEM:
Q = Number of pieces per order S = Setup or ordering cost for each
Q* = Optimal ordering size order
D = Annual demand in units for the H = Holding or carrying cost per unit
inventory item per year

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N = Expected number of orders S = $40, 000
T = Expected time between orders N=?
TC = Total annual cost H = $500
Annual setup cost = S T=?
Working days = 250 per year
Annual holding cost = H Production rate = 120

Solving for Q*: Solution:

Q* = √ Q* = √
( )( )
Total Annual Cost: =√
TC = s + H =√
= 2,190.89 or 2,191
Given:
D = 25, 000 units (100*250) TC = s+ H
Q* = ? = ($40, 000) + ($500)
S = $40, 000
N=? = (13.69) ($40, 000) + (1, 096)
($500)
H = $500
T=? = $547, 600 + $547, 750
Working days = 250 per year = $1, 095, 350
Production rate = 100

Solution:
B. (Sa letter A ang BASIS)
Q* = √
Solution:
( )( )
=√ Q* = √
( )( )
=√ =√
= 2,000
=√
TC = s + H
= 2, 400
= ($40, 000) + ($500)
= (12.50) ($40, 000) + (1, 000) TC = s+ H
($500)
= ($40, 000) + ($500)
= $500, 000 + $500, 000
= $1, 000, 000 = (15) ($40, 000) + (1, 200)
($500)
= $600, 000 + $600, 000
A. = $1, 200, 000
Given:
D = 30, 000 units (120*250)
Q* = ?

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