Oakey Wines is considering expanding on from the cafe to build a restaurant that will provide an
Question:
Oakey Wines is considering expanding on from the cafe to build a restaurant that will provide an evening experience of a meal, wine and entertainment. The package will be used to showcase new season wines as well as provide a winemaker to explain the wine throughout the night with a set menu. To ensure the evening is affordable to most people, there will be three levels of packages offered: Deluxe, Royal and Luxury. Each package includes a 3-course meal, entertainment for the night and matching wine. The 3 packages costs are shown below:
Deluxe | Royal | Luxury | |
Selling Price ($) | 65 | 50 | 55 |
Direct material | 21 | 21 | 21 |
Direct labour | 20 | 2 | 2 |
Variable overhead | 6 | 6 | 6 |
Fixed overhead | 3 | 3 | 3 |
All packages include entrée, main, dessert and wine with the Deluxe and Royal including some time with a winemaker. The time requirements per person are below as well as the available time, all in hours.
Constraints | Deluxe | Royal | Luxury | Available hours |
Entrée | 0.3 | 0.25 | 0.25 | 600 |
Main | 1 | 1 | 0.5 | 1200 |
Dessert | 0.5 | 0.3 | 0.25 | 600 |
Wine selection and prep | 0.5 | 0.25 | 0.25 | 200 |
Winemaker | 1 | 0.5 | 0 | 300 |
Required:
a) Formulate a linear program to determine the expected mix of meal packages to ensure the maximum profit will be created. Show all supporting calculations and solve using a computer package (eg solver in Excel) to derive the optimum solution. (5 marks)
b) Upon reviewing the constraints, it has been noticed that the majority of direct labour has been incorrectly allocated to the deluxe package. The manager revised these to:
Deluxe | Royal | Luxury | |
Selling Price ($) | 65 | 50 | 55 |
Direct material | 21 | 21 | 21 |
Direct labour | 20 | 15 | 12 |
Variable overhead | 6 | 6 | 6 |
Fixed overhead | 3 | 3 | 3 |
Formulate a second linear program taking into consideration the changes. (5 marks)
c) Discuss the results from both of the Solver solution. What recommendation or changes do you suggest for Oakey Wines? (10 marks)
International Business Law and its Environment
ISBN: 9781305972599
10th edition
Authors: Richard Schaffer, Filiberto Agusti, Lucien J. Dhooge