Red Brand Canners
RED BRAND CANNERS REVISITED
Resource allocation report
Decision and Risk analysis
Contents
Executive Summary page 2
Introduction page 2
1 The basic model without the option of additional A tomatoes page 2
2 Additional supply of A tomatoes (AA) page 3
3 Advertising page 3
4 Additional supply of B tomatoes (BB) page 4
5 Closing down production lines? page 4
Appendix 1 - The Basic Model page 5
Appendix 2 Additional Supply of A tomatoes page 7
Appendix 3 Advertising page 8
Appendix 4 Additional supply of B tomatoes page 9
Appendix 5 Closing down production lines? Page 10
Executive Summary
By using resource allocation techniques with the support of Excel Solver, we were able to find an optimal solution that maximizes RBC's profit ($136,300) for this year's tomato crop, taking into consideration the known constrains. Then, using technical reasoning (rather than intuition alone), we were able to recommend the purchase of additional A grade and B grade tomatoes, with optimal allocation of raw materials to the three product lines; we also evaluated the target product and maximum permissible expenditure for an advertising campaign. Finally we analyse the profitability of running the three production lines and recommend the closure of one of the product lines in order to maximize profits.
It is evident that the more the information available to the decision maker, the better prepared he or she is, to make decisions. Very often decision makers are mislead by their intuition (as in the case of Mr.Myers and Mr.Cooper). Hence whenever possible, a quantitative model should be constructed to solve resource allocation problems, minimizing costly errors from decisions made solely by intuitive reasoning.
Introduction
Objective
The objective of this workshop is to assist the management of Red Brand canners in their decisions to purchase and allocate resources effectively and thereby maximise profit.
Resource allocation report
Decision and Risk analysis
Contents
Executive Summary page 2
Introduction page 2
1 The basic model without the option of additional A tomatoes page 2
2 Additional supply of A tomatoes (AA) page 3
3 Advertising page 3
4 Additional supply of B tomatoes (BB) page 4
5 Closing down production lines? page 4
Appendix 1 - The Basic Model page 5
Appendix 2 Additional Supply of A tomatoes page 7
Appendix 3 Advertising page 8
Appendix 4 Additional supply of B tomatoes page 9
Appendix 5 Closing down production lines? Page 10
Executive Summary
By using resource allocation techniques with the support of Excel Solver, we were able to find an optimal solution that maximizes RBC's profit ($136,300) for this year's tomato crop, taking into consideration the known constrains. Then, using technical reasoning (rather than intuition alone), we were able to recommend the purchase of additional A grade and B grade tomatoes, with optimal allocation of raw materials to the three product lines; we also evaluated the target product and maximum permissible expenditure for an advertising campaign. Finally we analyse the profitability of running the three production lines and recommend the closure of one of the product lines in order to maximize profits.
It is evident that the more the information available to the decision maker, the better prepared he or she is, to make decisions. Very often decision makers are mislead by their intuition (as in the case of Mr.Myers and Mr.Cooper). Hence whenever possible, a quantitative model should be constructed to solve resource allocation problems, minimizing costly errors from decisions made solely by intuitive reasoning.
Introduction
Objective
The objective of this workshop is to assist the management of Red Brand canners in their decisions to purchase and allocate resources effectively and thereby maximise profit.