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- This topic has 5 replies, 2 voices, and was last updated 9 years ago by John Moffat.
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- August 22, 2015 at 6:10 pm #268145
Dear Mr Moffat,
Below question from exam kit that I went through which I have doubts and difficulties to understand the answers provided. Could you kindly help, please?
Questions
LD Co provides two cleaning services for staff uniforms to hotels and similar businesses. One of the services is a laundry service and the other is a dry cleaning service. Both of the services use the same resources, but in different quantities. Details of the expected resource requirements, revenues and cost of each service are shown below:
Laundry Dry Cleaning
$ per service $ per servicesSelling price 5.6 13.20
Cleaning Material ($10.00 per litre) 2.00 3.00
Direct Labour ($6.00 per hour) 1.2 2.00
Variable machine cost ($3.00 per hour) 0.5 1.5
Fixed cost 1.15 2.25
Profit 0.75 4.45
Total annual fixed costs are $32.825The maximum resources expected to be available in December 20×3 are
Cleaning material 5000 litres
Direct labour hours 6000 hours
Machine hours 5000 hours
LD Co has one particular contract which it entered into six months ago with a local hotel to guarantee 1200 laundry services and 2000 dry cleaning services every month. If LD Co does not honour this contract it has to pay substantial financial penalties to the local hotel.
The maximum demand for laundry is expected to be 14000 services and for dry cleaning 9975 services.
Required:a) Assuming that a graphical linear programming solution is to be used to maximise profit:
i) State the constraints and objective functions
II) Determine the maximum profit that can be made.Part I) no problems.
Part II) I don t fully understand how the ISO contribution line has been calculated.
C= 1.9L+6.7D
If C = (1.9X6.7*1000)=12.730 then
if L 6.700, D=0
if D = 1900Optimal solution
L=1200 and 0.167L +0,5D=5000
If L 1200, then D (5000-200) x2=9600
Optimal solution is to carry out 1200 laundry services and 9600 dry cleaning servicesI don t understand where 9600 came from.
Is there another approach that I have use that might make more sense to me?
I did not understand why they use the minimum guarantee to calculate the optimal solution. And why 1200 instead of 2000.Apologies for the long question and I hope it is not too much confusing.
Thanks in advance
Gabbi
August 23, 2015 at 6:50 am #268187I can’t give you a full answer without drawing a graph which obviously I cannot do here.
I assume that you can calculate the contribution per unit for each product separately. For the contribution line you choose any level of total contribution you want – whatever you choose the angle of it will be the same and that is all we need. It doesn’t have to be 12730.
When you move it out the last point you hit in the feasible region will be where the Laundry demand line crosses the machine hours line, and you need to solve the two equations together.
There is no other way of doing it.
The free lecture on linear programming really should help you.
September 1, 2015 at 7:48 pm #269471Dear Mr Moffat
First of all, thanks a lot for your prompt reply and sorry for writing only now.
Am I write to say that 1200 laundry has been used to calculate the optimal solution because the line of the laundry is at the intersection of machine hours?
Thanks again for your help
Best Regards
GabbiSeptember 1, 2015 at 10:43 pm #269499Yes – that is correct 🙂
September 3, 2015 at 10:16 am #269661Thank you
Gabbi
September 3, 2015 at 2:55 pm #269694You are welcome 🙂
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