Explain the optimal number of cosmeticlogy sets

Assignment Help Operation Management

Reference no: EM132210186

Analysing inventory requirements

An important part of your duties as project officer is to recommend how much of each product to order for SalesGalore!’s monthly stock inventory.

You first priority is to focus on your three most recently acquired products, with the aim to maximise SalesGalore!’s profit. The first product is the set Cosmeticlogy that generates $130 in profit and is overwhelmingly popular with female shoppers up to the age of 34. Due to a current manufacturing shortage crisis however, you are only able to order up to 30 sets per month.Tangerine’s new netbook, the tTouchable, is another high seller which costs SalesGalore! only $110 to purchase yet retails at the bargain price of $385.

The third product is the box set Fragrance by Frankline, the latest fragrance from the English soccer superstar B. Frankline. The fragrance costs SalesGalore! $8.50 to purchase (per box set) and retails on SalesGalore!’s website for $133.50 (per box set).

After reviewing the profit/loss sheets from the previous financial quarter, SalesGalore! has decided to spend no more than $5800.00 per month to acquire these products. Of this amount, a maximum budget of $4,300.00 has been allocated to purchasing the products, and the remaining maximum monthly budget is to be spent on shipping the products from the suppliers to SalesGalore!’s storagewarehouse.

The shipping cost of the B. Frankline fragrance is $11.25 per box set, while the tTouchable shipping cost is $18.50 per computer, which includes a shipping insurance plan of $12.00. It was also determined that a maximum of 45 tTouchables should be purchased from the supplier per month, to avoid an unacceptable increase in shipping costs.

Finally, as SalesGalore! order regularly from Cosmeticlogy Manufacturing, they have been offered a 15% reduction in cost price of the Cosmeticlogy sets, and now pay the manufacturers $11.50 per set, with shipping costs set at $8.50 per set.

Required:

(i) Detail all decision variables together with their associated objective function required to solve this problem.

(ii) The appropriate mathematical formulae to explain all of the constraints applicable to this problem.

(iii) A full Linear Programming solution to the problem. This solution needs to include the model used, the parameters employed and any reports generated.

(iv) Explain the optimal number of Cosmeticlogy sets, tTouchables and B. Frankline box sets to be ordered, sold and the optimal profit in the coming month.

(v) A discussion that responds to the following:

a) the actual total amounts spent on shipping and purchasing the products from the manufacturers.

b) any concerns from parts (i) and (ii) you may have identified when performing the calculations, and its impact on the solution to the linear programming problem.

c) the potential implications on the profit if you double the number ofCosmeticlogy sets ordered, once the manufacturing shortage crisis is over. Also include the maximum possible number of Cosmeticlogy sets you can order, without changing the optimality of the solution originally obtained.

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(vi) Using the results and associated reports from the above set of calculations, detail the potential impact on your answers to (a) to (c) above of a rumour that Tangerine’srival Apple is soon to launch an iNetbook and you are concerned the profit pertTouchable may decrease to $200.

Which of the EXCEL reports helps you answer this question?

Would the solution obtained in part above still be optimal?

Justify your answer fully.

Would the solution of SalesGalore!’s profit change, if at all?

Provide your full EXCEL Solver solution in solving this linear programming problem together with an Answer Report and a Sensitivity Report in a separate Excel file.

EXCEL Instructions: All EXCEL output should bear your student ID. To ensure this, you willneed to save your EXCEL file as ‘599999 SalesGalore!.xls’. In addition, your constraint namesshould begin with your initials, e.g. BC_Max_CosmeticlogySets.

Please refer to Topic 5 in the Excel Booklet or the Linear Programming Supplement to the textbook for detailed instructions on how to set up your spreadsheet and use Solver.

Note: In order to achieve full marks for this question it is essential that you fully explain what you are doing, why you are doing it and the steps involved in providing a final solution. Ensure your answer is not just a set of calculations as 25% of the marks for this question are set aside for your explanation.

this question for QUANTITATIVE METHODS FOR BUSINESS

Reference no: EM132210186

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