Question: Danish is working with Amazing Paints ( AP ) , a paint manufacturing company having their plant in Kasur and major DC in Lahore. They

Danish is working with Amazing Paints (AP), a paint manufacturing company
having their plant in Kasur and major DC in Lahore. They are producing 200
Gallons a day to fulfill demand, but their plant has a capacity of 500 Gallons a
day. They make 8 types of paints. They make 6 paints in 8 colors and 2 paints
in 10 colors. Danish asked for the rationale of production volume set to 200
Gallons per day. The supervisor mentioned that this is the standard production
for the last 5 years. Danish has carried out demand survey and has estimated
that the demand is way more than 200 Gallons per day (about 390 Gallons/day)
for their customer base and company is losing revenues. Their landed cost of on
SKU of paint is Rs.1600/ Gallon and they sell at the very competitive rate of Rs.
4400/ Gallon. Major brands like Master Paints, ICI paints, and Berger Paints
sell within a range of 9000-15000/ Gallon. They are other local brands which
are selling at about 6000-8000/ Gallon. After running the plant at production
level, he collected data for 10 days which is given as follows. (Both the demand
and forecasts are in gallons).

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