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Better Product Case

The Better Products Company needs to assign three plants to produce four new products with the following constraints: 1) Product splitting is not permitted, meaning each product can only be produced at one plant. 2) Two plants will each produce one product, while the third plant will produce two products. 3) The assignment must minimize total costs given the unit costs for each product at each plant shown in Table 2.2.

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50 views2 pages

Better Product Case

The Better Products Company needs to assign three plants to produce four new products with the following constraints: 1) Product splitting is not permitted, meaning each product can only be produced at one plant. 2) Two plants will each produce one product, while the third plant will produce two products. 3) The assignment must minimize total costs given the unit costs for each product at each plant shown in Table 2.2.

Uploaded by

nhatue0602
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PRACTICE FOR GROUP WORK WEEK 2-3

BETTER PRODUCT COMPANY

Case 2.1 – ASSIGNING PLANTS TO PRODUCTS WHERE PRODUCT


SPLITTING IS PERMITTED
The Better Products Company has decided to initiate the production of four new
products, using three plants that currently have excess production capacity. The products
require a comparable production effort per unit, so the available production capacity of the
plants is measured by the number of units of any product that can be produced per day, as
given in the rightmost column of Table case 2.1. The bottom row gives the required
production rate (number of units produced per day) to meet projected sales. Each plant can
produce any of these products, except that Plant 2 cannot produce Product 3. However, the
variable costs per unit of each product differ from plant to plant, as shown in the main body
of the table.
Management now needs to make a decision about which plants should produce
which products. Product splitting, where the same product is produced in more than one
plant, is permitted.
Table case 2.1 – The Data for the Better Products Co. Problem

Unit Cost
Product Capacity
1 2 3 4
Plant Available
1 $41 $27 $28 $24 75
2 $40 $29 - $23 75
3 $37 $30 $27 $21 45
Required production 20 30 30 40

Questions: Solve the problem with Excel Solver and QM for Windows and write your
report.
Case 2.2 – ASSIGNING PLANTS TO PRODUCTS IF PRODUCT SPLITTING IS
NOT PERMITTED
The Better Products Co. needs to assign three plants to produce four new products.
The relevant data are given in Table case 2.2. Management had permitted product splitting
(where the same product is produced in more than one plant). However, there are some
hidden costs associated with product splitting that are not reflected in Table case 2.2,
including extra setup, distribution, and administration costs. Therefore, management now
has decided to have the problem analyzed again under the additional restriction that product
splitting is prohibited.
New Problem Statement: Given the data in Table case 2.2, minimize the total cost
of assigning each plant to at least one new product where each product is to be produced
in only one plant (no product splitting). Since there are three plants and four new products,
two plants will produce one new product and a third plant will produce two. Only plants 1
and 2 have the capacity to produce two.
Table case 2.2 – Data for the Better Products Co. Problem

Cost ($/day)
Product Total
1 2 3 4
Plant assignments
1 820 810 840 960
2 800 870 - 920
3 740 900 810 840
Total assigned

Questions:
1. From the information in the case 2.2, fill the column Total assignments and the row
Total assign of the table case 2.2.
2. Use Excel Solver and QM for Windows to solve the problem and write your report.

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