Make or Buy decision with Linear Programming

This is a Linear Programming formulation and solution assignment. You may look at Excel files available on our BB site for examples solved in the slides.

Please upload both your report containing answers to the given questions, and also your Excel Solver file. You are not allowed to share solutions or files with other groups. You should not consult external resources either. Please adhere to the honesty code in this regard.

The Mealbox Manufacturing Company produces lunchboxes that are made up of three components. The lid, the box and the strap. Due to the rising restaurant prices, more people are bringing home cooked meals to work. The Mealbox Manufacturing Company is forecasting a $5950$ unit demand for their stylish Plazada model during the next quarter. The Plazada lunchbox is assembled from three major components: box, lid, and strap. Until now the Mealbox Manufacturing Company has manufactured all three components. However, the forecast of $5950$ units is a new high in sales volume, and it is doubtful that the firm will have sufficient production capacity to make all the components. The company is considering contracting a local firm to produce at least some of the components. The production time requirements per unit are as follows for the Mealbox Manufacturing Company:

$$Production Stations$$Production Time To Produce

One Unit Lid $($hrs$)$Production Time To Produce

One Unit Box $($hrs$)$Production Time to Produce

One Unit Strap $($hrs$)$Total Available Production Station Time

$($hrs$)$A $0\mathrm{.}030\mathrm{.}02$

B $0\mathrm{.}040\mathrm{.}02$

C $0\mathrm{.}020\mathrm{.}03$

$0\mathrm{.}054100\mathrm{.}053750\mathrm{.}01400$

After considering the firm$$s overhead, material, and labor costs, the accounting department has determined the unit manufacturing cost for each component. These data, along with the purchase price quotations by the contracting firm, are as follows:

Component

Manufacturing Cost $()$

$0\mathrm{.}700\mathrm{.}401\mathrm{.}10$

Purchase Cost $()$

$0\mathrm{.}900\mathrm{.}501\mathrm{.}40$

Lid Box Strap

Suppose that $60$ hours of overtime can be scheduled in production station B$.$

a$.$ What do you recommend?

b$.$ What is the maximum amount in Euros per hour that you are willing to pay for the overtime

labor based on your analysis?