Reference no: EM133869614
Case - Shelby Shelving
Shelby Shelving is a small company that manufactures two types of shelves for grocery stores. Model S is the standard model; Model LX is a heavy-duty version. Shelves are manufactured in three significant steps: stamping, forming, and assembly. In the stamping stage, a large machine is used to stamp (i.e., cut) standard metal sheets into appropriate sizes. In the forming stage, another machine bends the metal into shape. Assembly involves joining the parts with a combination of soldering and riveting.
Model S shelves are sold for $1800, and Shelby's LX shelves for $2100. Shelby's operation is relatively small in the industry, and management at Shelby believes it cannot raise prices beyond these levels because of the competition. However, the marketing department believes Shelby can sell as much as it can produce at these prices. The costs of production are summarized in the Accounting Data sheet. As usual, values in blue cells are given, whereas other values are calculated from these.
Management at Shmonth's met to discuss next month's operating plan. Although the company's products are selling well, the company's overall profitability is poor. Doug Jameson, the plant's engineer, suggested that the current production of Model S shelves be"cut back. According to Doug, "Model S shelves are sold for $1800 per unit, but ours are $1839. Even though we only have 400 units a month, we're losing money on each one. We should increase production of Model S." The controller, Sarah Cranston, disagreed. She said the problem was the Model S assembly department trying to absorb a significant overhead with a small production volume. "The Model S units are contributing to overhead. Even if production doesn't cover all the fixed costs, we'd be worse off with lower production."Your job is to deShelby's" LP model of Shelby's problem, run Solver, and finally make a recommendation to Shelby management, with a short verbal argument supporting Doug or Sarah.
3. During 2001, many European markets for mobile phones reached saturation. Because of this, mobile phone operators started to shift their focus from growth and market share to cutting costs. One way to do this is to reduce spending on international calls. These calls are routed through network operating companies called carriers. The carriers charge per call-minute for each destination and often use a discount on total business volume to price their services. A mobile phone operator must decide how to allocate destinations to carriers.
V-Mobile, a mobile phone operator in Denmark, must make such a decision for a T-month planning horizon when it has C carriers to choose from, D customers for its customers' calls, and there are I price intervals for a typical carrier. (The carrier's discounts define a carrier's discount structure.) The inputs include the following:
A binary variable for each carrier c and price interval i combination that equals one if the total call minutes for this carrier (over all destinations and months) falls in price interval i, and equals zero otherwise. Get in touch with us for online assignment help service!
Develop an optimization model that helps V-Mobile allocate its international calls cost-efficiently. Then write a brief memo stating.
How V-Mobile should implement your results for this particular version of the problem, and
How would the model need to be modified for other potential problem parameters?