Sherpa Sensors Pty Ltd manufactures high-tech temperature sensors for various medical purposes, such as MRI imaging...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sherpa Sensors Pty Ltd manufactures high-tech temperature sensors for various medical purposes, such as MRI imaging equipment and ultrasound scanners, and electronic applications, such as electrical appliances. There are four distribution methods for the temperature sensors, as shown in Table 1. Because of differing distribution and promotional costs, the product's profitability will vary with the distribution method. In addition, the advertising cost and the personal sales effort required will vary with the distribution method. The following table summarises the sensors contribution to profit, advertising cost, and personal sales effort. Distribution Method Medical distributors Electrical distributors National retail stores Online Profit per Unit Sold ($) 900 850 700 820 Advertising Cost per Unit Sold ($) 10 8 9 15 Personal Sales Effort per Unit Sold (minutes) 50 23 25 1 Sherpa Sensors Pty Ltd has set the advertising budget at $65000, and a maximum of 3000 hours of salesforce time is available for the sales effort at the cost of $45/hour. Management also decided to produce exactly 6000 sensors for the current production period. Finally, an ongoing contract with the national chain of retail stores requires that at least 1500 units be distributed through this distribution method. Sherpa Sensors Pty Ltd needs to establish a strategy that will provide for the distribution of the sensors to maximise the overall profitability of the sensor production. Decisions must be made about how many units should be allocated to each of the four distribution methods and how to allocate the advertising budget and salesforce effort to each of the four distribution methods. For the situation given above: a) Determine the decision variables and describe your reasoning. b) Formulate the situation into a Mathematical Programming problem. c) Explain what type of Mathematical Programming problem it is formulated as. d) Find the optimal solution using Microsoft Excel's Solver. Include the answer report in your file. (10 marks) (5 marks) (5 marks) (5 mark) e) Are all the distribution methods used for the solution found in (d)? If not, should management consider removing one of the distribution methods? If yes, what can the management do to improve the profit further? (10 marks) f) What would your recommendation be regarding the contractual commitment to the retail stores for the solution found in (d)? For example, could they be more profitable if they reduced or increased their level of commitment (i e. the minimum number of units sold)? (10 marks) (5 marks) g) List the binding and non-binding constraints for the optimal solution in (d). Sherpa Sensors Pty Ltd manufactures high-tech temperature sensors for various medical purposes, such as MRI imaging equipment and ultrasound scanners, and electronic applications, such as electrical appliances. There are four distribution methods for the temperature sensors, as shown in Table 1. Because of differing distribution and promotional costs, the product's profitability will vary with the distribution method. In addition, the advertising cost and the personal sales effort required will vary with the distribution method. The following table summarises the sensors contribution to profit, advertising cost, and personal sales effort. Distribution Method Medical distributors Electrical distributors National retail stores Online Profit per Unit Sold ($) 900 850 700 820 Advertising Cost per Unit Sold ($) 10 8 9 15 Personal Sales Effort per Unit Sold (minutes) 50 23 25 1 Sherpa Sensors Pty Ltd has set the advertising budget at $65000, and a maximum of 3000 hours of salesforce time is available for the sales effort at the cost of $45/hour. Management also decided to produce exactly 6000 sensors for the current production period. Finally, an ongoing contract with the national chain of retail stores requires that at least 1500 units be distributed through this distribution method. Sherpa Sensors Pty Ltd needs to establish a strategy that will provide for the distribution of the sensors to maximise the overall profitability of the sensor production. Decisions must be made about how many units should be allocated to each of the four distribution methods and how to allocate the advertising budget and salesforce effort to each of the four distribution methods. For the situation given above: a) Determine the decision variables and describe your reasoning. b) Formulate the situation into a Mathematical Programming problem. c) Explain what type of Mathematical Programming problem it is formulated as. d) Find the optimal solution using Microsoft Excel's Solver. Include the answer report in your file. (10 marks) (5 marks) (5 marks) (5 mark) e) Are all the distribution methods used for the solution found in (d)? If not, should management consider removing one of the distribution methods? If yes, what can the management do to improve the profit further? (10 marks) f) What would your recommendation be regarding the contractual commitment to the retail stores for the solution found in (d)? For example, could they be more profitable if they reduced or increased their level of commitment (i e. the minimum number of units sold)? (10 marks) (5 marks) g) List the binding and non-binding constraints for the optimal solution in (d).
Expert Answer:
Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
Posted Date:
Students also viewed these mathematics questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study and answer the question below with a one page response. What does a SWOT analysis reveal about the overall attractiveness of Under Armours situation? Founded in 1996 by former...
-
Assume that global lightning on the Earth constitutes a constant current of 1.00 kA between the ground and an atmospheric layer at potential 260 kV. (a) Find the power of terrestrial lightning. (b)...
-
Identify how to account for warranty costs under the expense warranty accrual method, sales warranty accrual method, and modified cash basis.
-
In Exercises 1 through 16, use LHpitals rule to evaluate the given limit if the limit is an indeterminate form. lim x/x 007-X
-
Using an incremental internal rate of return (IRR) analysis, the decision to replace the "current best" by the "challenger"' is based on what decision rule? a. The internal rate of return of the...
-
Mazor Inc.??s bank statement from Hometown Bank at August 31, 2012, gives the following information. A summary of the Cash account in the ledger for August shows the following: balance, August 1,...
-
Prof. Dimitriou developed the following code to evaluate the expressions A(), B() and CO) but it takes too long to compute even for small values of n. A(int n) if (n <0) return 0; if (n
-
As of December 31, Cookie Creations' year-end, the following adjusting entry data are provided. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. A count reveals that $45 of brochures and posters (supplies) were used....
-
Describe two different mechanisms that lead to overland flow. Contrast the conditions under which these two different processes occur.
-
A small piece of plastic is given a net charge of + 1.17 C. How many more protons than electrons does the piece of plastic now have? (e = 1.602x10-19 C and 1 C = 1.00x10-6 C)
-
If WiseGuy Inc. uses the IRR rule to choose projects, which of the projects will rank highest?
-
The market has the following probability distributions: Probability market 0.3 12% 0.4 4% 0.3 24 Calculate the standard deviation for the market. Explain and how to solve on BA II Plus financial...
-
Ghost Corporation was owned 100% by Caspar. Upon Caspar's death, Ghost was worth $10,000,000. Prior to his death, Caspar's basis in his Ghost Corporation stock was $1,000,000. Caspar's total estate...
-
JPL incurred the following costs relating to an overseas promotional and advertising campaign for the year ended 31 December 2022: $ Stand rental 90,000 Corporate brochures 20,000 Airfares for three...
-
Lawson will award 100,000 shares of its $1 par value common stock through a restricted stock awards (RSA) plan available to its officers and employees. Because officers and employees awarded through...
-
1. Which of the four major types of information systems do you think is the most valuable to an organization? 2. How do you critically associate the ideas of business agility and business efficiency...
-
Coase Farm grows soybeans near property owned by Taggart Railroad. Taggart can build zero, one, or two railroad tracks adjacent to Coase Farm, yielding a net present value of $ 0, $ 9 million, or $...
-
Mr. Jones intends to retire in 20 years at the age of 65. As yet he has not provided for retirement income, and he wants to set up a periodic savings plan to do this. If he makes equal annual...
-
Beckett is a large car dealership that sells several automobile manufacturers new cars (Toyota, Ford, Lexus, and Subaru). Beckett also consists of a Pre- owned Cars Department and a large service...
-
The purchasing officer for The Majestic Emporium has prepared a purchases budget for the financial year ending 31 March 2020, based on the following data. The cost of sales is 65% of sales, and the...
-
Greyt Dog Beds Ltd manufactures dog beds specifically designed for greyhounds and whippets. The company purchases all the required materials from external suppliers and designs and assembles the...
-
Ketton Ltd is in the process of preparing direct labour and factory overhead budgets for the year ending 30 June 2020. Relevant data are set out below. Required (a) Prepare the direct labour budget...
Study smarter with the SolutionInn App