Optimization

Optimization

Business decisions are often subject to constraints or business rules to solve business problems. Solver can be used for decisions, such as, maximizing profit or reducing costs.

ABCD is a sports equipment manufacturer. They need to find out the ideal number of basketballs and footballs to manufacture to maximize Net Profit. The capacity of production, cost, labor needed, time needed, and other constraints are known as given in the followings:

Production Capability and Constraints:

 Total Machine hours available: Min 39,000 – Max 40,000

 The number of basketballs that could be produced: Min 30,000 – Max 60,000

 The number of footballs that could be produced: Min 20,000 – Max 40,000

 Ratio of basketballs / footballs: 1.5

 Basketball selling Price 14

Optimization

 

 

 

 Football Selling Price 11

 Tax Rate 0.28

 Time to manufacture a Basketball 0.5

 Time to manufacture a Football 0.3

 Cost of labor– 1 machine hour 6

 Cost of material– 1 Basketball 2

 Cost of material– 1 Football 1.25

All unit costs are in $ and time in hour.

Set up your spread sheet for Setting up Excel’s Solver to determine the optimum number of each product [Football/Basketball] to maximize the profit.

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