IED Inc. operates two manufacturing plants (A and B) that have the capability to produce three...

 

 

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IED Inc. operates two manufacturing plants (A and B) that have the capability to produce three different products for the aerospace industry: ailerons, elevons, and flaps. Your consulting group "Optimize Consulting" is responsible to determine a production, inventory, distribution, and marketing plan for the next six periods that will ensure profit maximization and provide management with a useful decision-making tool. In order to facilitate your analysis, IED Inc. has gathered the necessary system requirements that will be needed for your model. These include the revenues generated from sales, costs incurred throughout the manufacturing process, as well as projected demand for all periods: Revenues are generated by selling ailerons, elevons, and flaps at the following unit prices: Selling Prices Product Unit Price (S/unit) Aileron $5,000.00 $4,360.00 $5,500.00 Elevon Flap Costs associated with obtaining raw materials, production, storage and shipping are summarized below. Plant A has 1800 hours of regular time labor available per period and plant B has 2800 hours of regular time labor available per period. Overtime hours can be scheduled at both plants if necessary. Your group needs to incorporate special restrictions into the model to ensure that labor in consecutive periods does not differ by more than five percent. The table below shows costs associated with regular and overtime labor for each period. Labor Costs Period Regular Time Labor (S/hour) Overtime Labor (S/hour) 42.00 42.00 46.20 46.20 46.20 46.20 2 3 4 28.00 28.00 30.80 30.80 30.80 30.80 Two types of raw materials are used: 1 and 2. There are 140,000 lbs. of raw material 1 and 4,000 lbs. of raw material 2 available each period. Costs differ between plants because of the proximity of the vendor in relation to each plant. Raw material costs for each plant are: Raw Materials Costs (S/lb.) Raw Material Plant A Plant B 2.25 2.60 5.60 3.10 Once an aileron, elevon, or flap is produced, it is either sent to the distribution center (DC) or stored until the next period. There is a limit on the number of products (units) that can be kept in storage at the end of any given period because of the size of the storage area in each plant. A maximum of 40 units of all products combined can be stored in plant A and 60 units can be stored in plant B. Shipping and inventory costs are shown below. Unit Shipping Costs (S/unit) Product Plant A Plant B Inventory Holding Costs Product Unit Holding Cost (S/unit/period) Aileron 50.00 43.60 55.00 Aileron 10.40 11.20 Elevon 7.40 8.00 Elevon Flap 8.70 9.20 Flap The sales department provided the following production requirements based on customer contracts and agreements that must be met throughout the next six periods of production. Production Requirements for the Six Period Planning Horizon (units/period) Product Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Aileron 60 Elevon 220 Flap 130 Aileron Elevon Flap 100 240 180 Product 140 250 200 Supplemental demand can be created by advertising. Advertising in any given period has an effect on demand in future periods. The unit investment costs below reflect the cost to generate one unit of additional demand in that period plus the demand generated in future periods. IED Inc. had allocated an advertising budget of $100,000 for all six periods. 400.00 300.00 440.00 Aileron Elevon Flap Product Advertising Costs Additional Demand Generated (units/period) Unit Investment (S/unit) Period t Period t+1 0.4 d 0.4 d 0.4 d 160 290 240 d d 180 320 220 8.40 0.00 10.60 Each unit produced has the following requirements based on the type of product (ailerons, elevons, or flaps) and the plant at which it is produced. These requirements are summarized below. 190 190 210 8.50 6.90 10.10 Product Raw Materials and Labor Requirements Plant A Raw Material 1 Raw Material Labor Raw Material (lbs./unit) 2 (lbs./unit) (hrs./unit) 1 (lbs./unit) 184.00 220.00 168.00 Period 1+2 0.2 d 0.2 d 0.2 d 178.00 215.00 160.00 Plant B Raw Material Labor 2 (lbs./unit) ($/hour) 8.20 0.00 9.80 8.10 6.80 9.60 IED Inc. operates two manufacturing plants (A and B) that have the capability to produce three different products for the aerospace industry: ailerons, elevons, and flaps. Your consulting group "Optimize Consulting" is responsible to determine a production, inventory, distribution, and marketing plan for the next six periods that will ensure profit maximization and provide management with a useful decision-making tool. In order to facilitate your analysis, IED Inc. has gathered the necessary system requirements that will be needed for your model. These include the revenues generated from sales, costs incurred throughout the manufacturing process, as well as projected demand for all periods: Revenues are generated by selling ailerons, elevons, and flaps at the following unit prices: Selling Prices Product Unit Price (S/unit) Aileron $5,000.00 $4,360.00 $5,500.00 Elevon Flap Costs associated with obtaining raw materials, production, storage and shipping are summarized below. Plant A has 1800 hours of regular time labor available per period and plant B has 2800 hours of regular time labor available per period. Overtime hours can be scheduled at both plants if necessary. Your group needs to incorporate special restrictions into the model to ensure that labor in consecutive periods does not differ by more than five percent. The table below shows costs associated with regular and overtime labor for each period. Labor Costs Period Regular Time Labor (S/hour) Overtime Labor (S/hour) 42.00 42.00 46.20 46.20 46.20 46.20 2 3 4 28.00 28.00 30.80 30.80 30.80 30.80 Two types of raw materials are used: 1 and 2. There are 140,000 lbs. of raw material 1 and 4,000 lbs. of raw material 2 available each period. Costs differ between plants because of the proximity of the vendor in relation to each plant. Raw material costs for each plant are: Raw Materials Costs (S/lb.) Raw Material Plant A Plant B 2.25 2.60 5.60 3.10 Once an aileron, elevon, or flap is produced, it is either sent to the distribution center (DC) or stored until the next period. There is a limit on the number of products (units) that can be kept in storage at the end of any given period because of the size of the storage area in each plant. A maximum of 40 units of all products combined can be stored in plant A and 60 units can be stored in plant B. Shipping and inventory costs are shown below. Unit Shipping Costs (S/unit) Product Plant A Plant B Inventory Holding Costs Product Unit Holding Cost (S/unit/period) Aileron 50.00 43.60 55.00 Aileron 10.40 11.20 Elevon 7.40 8.00 Elevon Flap 8.70 9.20 Flap The sales department provided the following production requirements based on customer contracts and agreements that must be met throughout the next six periods of production. Production Requirements for the Six Period Planning Horizon (units/period) Product Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Aileron 60 Elevon 220 Flap 130 Aileron Elevon Flap 100 240 180 Product 140 250 200 Supplemental demand can be created by advertising. Advertising in any given period has an effect on demand in future periods. The unit investment costs below reflect the cost to generate one unit of additional demand in that period plus the demand generated in future periods. IED Inc. had allocated an advertising budget of $100,000 for all six periods. 400.00 300.00 440.00 Aileron Elevon Flap Product Advertising Costs Additional Demand Generated (units/period) Unit Investment (S/unit) Period t Period t+1 0.4 d 0.4 d 0.4 d 160 290 240 d d 180 320 220 8.40 0.00 10.60 Each unit produced has the following requirements based on the type of product (ailerons, elevons, or flaps) and the plant at which it is produced. These requirements are summarized below. 190 190 210 8.50 6.90 10.10 Product Raw Materials and Labor Requirements Plant A Raw Material 1 Raw Material Labor Raw Material (lbs./unit) 2 (lbs./unit) (hrs./unit) 1 (lbs./unit) 184.00 220.00 168.00 Period 1+2 0.2 d 0.2 d 0.2 d 178.00 215.00 160.00 Plant B Raw Material Labor 2 (lbs./unit) ($/hour) 8.20 0.00 9.80 8.10 6.80 9.60

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To create an optimized production inventory distribution and marketing plan for IED Inc we can use linear programming techniques Linear programming is ... View the full answer