Red Brand Canners Essay

2108 Words Jun 8th, 2007 9 Pages
Resource allocation report

Decision and Risk analysis

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
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It can be seen that for paste, only 100% grade B tomatoes are used, meeting the full demand. For whole tomatoes, Solver has allocated 75% grade A and 25% grade B tomatoes; demand is only partially met. The remainder tomatoes are allocated to juice in the ratio 25% grade A and 75% grade B. Only 30% of the demand is met. In all products, there is no wastage.
We can also see that Solver has exactly matched the Total quality with the required total quality, thereby keeping quality to the minimum requirements. Profit is maximum at $136,300.

The above recommendation is the best possible one since the model is linear; the objective function and all constraints are linear equations. We also indicated this in Solvers' Options (‘assume linear model'). Also in the Options, we set ‘tolerance' to zero. Therefore we know that Solver will yield only the optimal solution. This is further tested, by varying the allocations; we find that any changes from the optimal solution always decreases the profits.

2 Additional supply of A tomatoes (AA)
Appendix 2 shows the modified model incorporating the option of buying up to a total of 80,000 pounds of additional AA tomatoes at 25.5 cents/pound. If we decide to buy the AA tomatoes, we incur an additional

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