Industry Study

Objective
Introduction Project Network LP Application (Problem, model, optimal solution/tableaus) Other Analysis Conclusion and Recommendation

OCEAN FLOW PURIFIED DRINKING WATER STATION

JANUARY 2008
Date of establishment

RICHARDSON HALILI
Owner

ANGELITO GARCIA
Manager

WATER
Service

Data
Total no. of workers No. of workers per shift 5 5

Total working time

No. of hours per shift Cost of each service Desired profit Actual profit (average) Profit for each service (average)
Customers per day (average) Quota /worker Salary of each worker (average)

8-10 hours
8-10 hours P25 per 5 gal P300,000/month P200,000/month P15/container
260 65 P5,000

Data
Costs (per month) Electricity P16,000

Water
Gas Rent Miscellaneous

P25,000
P12,000 P15,000 P15,000

Total Investment (initial): P2,500,000

Summary of Daily Routine

Clean

the water store upon opening Check the stores supplies for an early order For monitoring, review delivery sheets and call customers for delivery schedules Check the equipment use in the water station such as the pressure gauge Check the motorcycles and multicab used for delivery At the end of the day, review the accounts receivables

Profit Timeline
2009 Php 1.9 M

2010 2011

Php 2.1 M Php 2.4M

Gross Sales based on Financial Statement

- increases every year by 9% to 13% of the previous sales based on their financial statement

Project Network

AON Project Scheduling

Problem How to maximize the profit by adjusting the following variables o quota/month o number of employees o working time/ month

LP Model
Current Profit: deducting all possible expenses P200000-P83000-P25000= P9200 Let: x-quota per month y- total number of employees z- working hours per month

LP Model
Max P: 25x - 5000y - 227z - 30000Q s. t.: Cost of production : 10x + 5000y + 227z + 30000Q <= 192540 x >= 8450------ Quota per month y >= 5------ Total number of employees 208 <= z <= 260------ limit of working time Q = 1------ times of payment per month

Solution
Using micromanager the maximum profit is P123594 (deducting all the possible expenses, with 9033 units, 5 employees, 208h/month (8h/day) and no slacks.

Tableaus

Tableaus

Final Optimal Solution

Forecasting Application
Nave Method: Using stable series the monthly profit in year 2012 should be P200,000.

Using trend method, the monthly profit is either P225,000 or P175,000.

Computation for Trend Method

Computation for Trend Method

Conclusion and Recommendation

An increase of 582 units in the target monthly quota resulted in a maximum value of approximately P31594 more than the stations profit.

Conclusion and Recommendation

Using the Trend Equation, when the maximum profit is attained, it is more likely to get the desired profit in 7.407 years from its starting year and when it is not selling good, the desired profit will be obtained after 18.889 years from the starting year.

Conclusion and Recommendation

Ocean Flow Purified Drinking Water Station only offers refilling services. Because of its location, it is not advisable to sell/refill bottled water. Doing so will lead to a lower mark-up.

Reference