Identify the optimal solution for the frandec company

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Reference no: EM131888237

Operations Management - Make-or-Buy Decision

Frandec Company manufactures, assembles, and rebuilds material handling equipment used in warehouses and distribution centers. One product, called a Liftmaster, is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec's production schedule calls for at least 5000 Liftmasters to be made next month.

Frandec purchases the motors from an outside supplier, but the frames, supports, and straps may be either manufactured by the company or purchased from an outside supplier. Manufacturing and purchase costs per unit are as follows:

Component	Manufacturing Cost	Purchase Cost
Frame	$38.00	$51.00
Support	$11.50 (2)	$15.00 (2)
Strap	$6.50	$7.50

Three departments are involved in the production of these components. The time (in minutes per unit) required to process each component in each department is as follows:

Component	Cutting	Milling	Shaping
Frame	3.5	2.2	3.1
Support	1.3 (2)	1.7 (2)	2.6 (2)
Strap	0.8	---	1.7

The available capacity (in hours) for the three departments is as follows:

Capacity (hours)

350

420

680

How many of each component should be manufactured and how many should be purchased?

Let FM = number of frames manufactured

FP = number of frames purchased

SM = number of supports manufactured

SP = number of supports purchased

TM = number of straps manufactured

TP = number of straps purchased

Using Microsoft Excel Solver

Solve the problem using Microsoft Excel. Be sure to generate the Sensitivity Analysis report with the solution.

Question #1

Identify the optimal solution for the Frandec Company - how many frames, supports and straps should be manufactured and/or should be purchased to minimize total cost?

Question #2

Identify the total minimum cost of the manufacturing and purchasing plan.

SENSITIVITY ANALYSIS

Question #1

How much should Frandec be willing to pay for an additional hour of time in the shaping department?

Question #2

Another manufacturer has offered to sell frames to Frandec for $45 each. Could Frandec improve its position by pursuing this opportunity? Why or why not?

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Question: Frandec Company manufactures, assembles, and rebui...

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Frandec Company manufactures, assembles, and rebuilds materials handling equipment used in warehouses and distribution centers.

One product, called a Liftmaster, is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec?s production schedule calls for 5000 Liftmasters to be made next month.

Component	Manufacturing Cost	Purchase Cost
Frame	$38.00	$51.00
Support	$11.50	$15.00
Strap	$6.50	$7.50

Three departments are involved in the production of these components. The time (in minutes per unit) required to process each component in each department and the available capacity (in hours) for the three departments are as follows:

		Department
Component	Cutting	Milling	Shaping
Frame	3.5	2.2	3.1
Support	1.3	1.7	2.6
Strap	0.8	---	1.7
Capacity (hours)	350	420	680

Formulate and solve a linear programming model for this make-or-buy application. How many of each component should be manufactured and how many should be purchased?

What is the total cost of the manufacturing and purchasing plan?

How many hours of production time are used in each department?

How much should Frandec be willing to pay for an additional hour of time in the shaping department?

Reference no: EM131888237

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