Mexicana

Case Study: Mexicana Wire Works Inc.

Name of the group members

ID Number

Chusak Deetrakunwattanapoen Gopi Krishna Pamula Mohammed Faruk Ahmed Nam Doc Tran Sukana Sasiwachiranggool Varavut Nitistaporn

7472100374 7462100509 7472100333 7472100382 7472100291 7472100127

Headings: •

Scenario in brief

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Problem identification

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Objective function and constraints

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Developing the model based on acquired data

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Plot the model in spread sheet to obtain solution

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Focus on discussion questions

Scenario in brief: •

Mexicana Wire Winding Inc. is a producer of wire winding used in making electrical transformer.

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Production process involves drawing, extrusion, winding, inspection and packaging

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This company is booking more orders than they can fill

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They will expand the plant capacity later but it will not help them in April

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The company wants the optimum profit for the month of April using their limited capacity and resources

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April orders:

----------------------------------------Product W0075C 1400 units Product W0033C 250 units Product W0005X 1510 units Product W0007X 1116 units -----------------------------------------

Identified Problem: •

Booking orders > production using present capacity

Objective function and constraints: Objective Function: Maximum Profit We assume – To make the optimum profit by satisfying the limitations, total units of Product W0075C = X1 Product W0033C = X2 Product W0005X = X3 Product W0007X = X4 Assume that X1, X2, X3, X4 >=0 Constraints: • Meet key customers demand: Product W0075C >= 150 units Product W0007X >= 600 units • Hours Hours Hours Hours

Plant capacity: for Drawing <= 4000 hours for Extrusion <= 4200 hours for Winding <= 2000 hours for Packaging<= 2300 hours

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Received orders constraints: 1400 250 1510 1116

X1 <= X2<= X3 <= X4 <=

Note: Inspection capacity is not a problem; work overtime can be schedule to meet the requirements. Developing the model based on acquired data: Profit calculation for per unit of products: (Currency is US $) Product W0075C W0033C W0005X W0007X

Material Labor Overhead Total Expense 33.00 9.90 23.10 66.00 25.00 7.50 17.50 50.00 35.00 10.50 24.50 70.00 75.00 11.25 63.75 150.00

Selling Price Profit 100.00 34.00 80.00 30.00 130.00 60.00 175.00 25.00

Total Maximum Profit:

Profit for product X1 per unit = 34 Profit for product X2 per unit = 30 Profit for product X3 per unit = 60 Profit for product X4 per unit = 25

34X1+30X2+60X3+25X4 Equation developed using the constraints: Drawing constraint 1X1+2X2+0X3+1X4 <=4000 Extrusion constraint 1X1+1X2+4X3+1X4 <=4200

Plant capacity (Hours) Drawing Extrusion Winding Packaging 4000 4200 2000 2300

Winding constraint 1X1+3X2+0X3+0X4 <=2000

Required hours/Unit Product Drawing Extrusion Winding Pack W0075C 1 1 1 1 W0033C 2 1 3 0 W0005X 0 4 0 3 W0007X 1 1 0 2

Packaging constraint 1X1+0X2+3X3+2X4 <=2300 X1 >= 150; X4 >= 600 X1 <= X2<= X3 <= X4 <=

1400 250 1510 1116

Plot the model in spread sheet to obtain solution: Mexicana Wire Work: Case Study of LP

Object Function (max. profit) DRAWING EXTRUSION WINDING PACKAGING SOLUTION VALUE

W0075C W0033C W0005X W0007X LHS Operator RHS 34 30 60 25 59900 1 1 1 1

2 1 3 0

0 4 0 3

1 1 0 2

1100

250

0

600

Excel file is attached herewith.

Discussion Questions:

2200 <= 1950 <= 1850 <= 2300 <=

4000 4200 2000 2300

Slack

1800 2250 150 0

1. What recommendation should Ron Garcia make with what justification? In April, they following quantities of product should be produced to achieve optimum profit which will satisfy all limitations. W0075C W0033C W0005X W0007X

= 1100 units (which is >= 150) = 250 units = 0 units = 600 units (which is >=600)

Optimum Profit = US $59900 Since packaging hours will be utilized fully, the remaining hours of drawing and extrusion will be unused.

2. Discuss the need for temporary workers in the drawing department. There is no use of hiring the temporary workers in the drawing department, because hours for drawing are un-utilized due to lack of winding and packaging hours. If we don’t have sufficient packaging hours to proceed the product after drawing and extrusion, the finished product will not be come out for delivery.

3. Discuss the plan layout Sequence: drawing  extrusion  winding  inspection  packaging. After inspection good products is packaged and sent to finished product storage. Defective product is stored separately until it can be reworked.