Supply chan modelling and design calculating problem Essay Example

Supplementary Assessment

We have used the Linear Programming Modelling to determine the most optimal solution for the company and to make a final recommendation to the management of the car company. First, we have determined the basic model solution for the company and the annual profit and the net profit generated by the company. We have set the demand and the supply capacities in the model and constraints have been set with respect to the limit on the demand that can be fulfilled.

For instance, the demand for GBs is 1800 units but only 1500 could be supplied due to capacity restrictions. The demand lost for GB goes to Levan and the demand lost for Levan goes to GranCab. This has also been modelled within the basic model. The optimal solution using the solver yields a profit of $ 12594. The total fixed costs for the three plants are $ 7000 which means the current annual net profit for the company is $ 5594 with a profit margin of 44.42%.

After this, we have formulated the retooled model by determining the new demand and the supply quantities. In this model there is limitation placed on the supply side which should not be greater than the demand of the cars. The rest of the problem is formulated in the same manner. The additional profit margin from the retooling of GB and Levan plants has also been included in this model. The optimal solution shows a profit of $ 26714 and the new total fixed costs are $ 14500 which yield a total net profit of $ 12214 with a profit margin of 45.72%. Since, the profit, and margin has increased therefore, it is recommended to go ahead with the retooling of both plants and the company should produce 1800 units of GB, 1250 for Levan and 1000 units for GranCab. This is the optimal solution.