Decision Modelling Case Study -
Production Strategy
Group 11
Anas A (PGP18098)
Anas Ali Jafri (PGP18099)
Arka Roy (PGP18102)
Aswin N (PGP18107)
Ch Tarun Kumar (PGP18112)
Deeppan KS (PGP18115)
Better Fitness, Inc. (BFI)
• Manufactures exercise equipments at its plant in Freeport, Long
Island
• BFI patented technology for two machines recently named
BodyPlus 100 and BodyPlus 200
• Demonstration of machines resulted in significant dealer interest
on both the machines
• Number of orders received at the trade show exceeded their
manufacturing capability
• Management decided to produce both the machines immediately
and wanted to make a production strategy so that they can
maximize their profits
Production hours of two machines
BodyPlus100 BodyPlus200
Stations Hours Stations Hours
Machining and
Machining and Welding 4 5
Welding
Frame Unit Station
Frame Unit Station
Painting and finishing 4
Painting and finishing 2
Machining and
3
Welding
Machining and Welding 2 Press Station
Painting and finishing 2
Press Station
Painting and finishing 1 Machining and
2
Welding
Pec-Dec Station
Painting and finishing 2
Machining and Welding 2
Pec-Dec Station Machining and
2
Welding
Painting and finishing 2 Leg Press Station
Painting and finishing 2
Assembling Testing and
2 Assembling Testing and
Packaging 2
Packaging
Labour cost and Available machine hours
Cost per
Labour Cost Activity Hours
hour in $
Machining and Welding 20 Machining and Welding 600
Painting and finishing 15 Painting and finishing 450
Assembling Testing and
12 Assembling Testing and Packaging 140
Packaging
Production costs of two machines
BodyPlus100 BodyPlus200
Hours Cost per unit Hours Cost per unit
Material : Material :
Frame 650
Frame Cost 450
Press station 400
Press station Cost 300
Pec-dec station 250
Pec-dec station Cost 250
Leg Press station 200
Packaging costs 50
Packaging costs 75
Labour :
Labour :
Machining and Welding 8 160
Machining and Welding 12 240
Painting and finishing 5 75 Painting and finishing 10 150
Assembling Testing and Assembling Testing and
2 24 2 24
Packaging Packaging
Total Cost $ 1309 Total Cost $ 1989
Profit of both the machines
BFI sells it to dealers the machines of 70% to the retail price
Retail price per Dealer price per Total cost per Profit per unit in
Machines
unit in $ unit in $ unit in $ $
BodyPlus100 2400 1680 1309 371
BodyPlus200 3500 2450 1989 461
Qn 1: What is the recommended number of
BodyPlus 100 and BodyPlus 200 machines to produce?
Linear programming model for Qn 1
Let,
BodyPlus 100 units to be produced -> X1
BodyPlus 200 units to be produced -> X2
Objective function
Maximize profits, Z = 371*X1 + 461*X2
subject to,
8*X1 + 12*X2 <= 600 (Machining and Welding Hours)
5*X1 + 10*X2 <= 450 (Painting and finishing Hours)
2*X1 + 2*X2 <= 140 (Assembling, Testing and Packaging Hours)
X2 >= 0.25*(X1 + X2) (BodyPlus 200 units should be at least 25%
of total production)
X1, X2 >= 0
Graphical representation For Qn 1
X2
X1
Solution for Qn 1
• From the graph, we get three extreme points in the feasible region
i.e. A(50,16.67),B(0,45) and C(30,30)
• Profit from the other two points as follows,
Point A Point B Point C
Here the feasible optimal point is Here the feasible optimal point is Here the feasible optimal point
B(50,16.67) C(0,45) is C(30,30)
So X1= 50 ; X2 = 16.67 So X1= 0 ; X2 = 45 So X1= 30 ; X2 = 30
Therefore, (371 * X1) + (461 * X2) Therefore, (371 * X1) + (461 * X2) Therefore, (371 * X1) + (461 *X2)
= (371 * 50) + (461 * 16.67) = (371 * 0) + (461 * 45) = (371 * 30) + (461 * 30)
= (18550 + 7684.87) = (0 + 20745) = (11130 + 13830)
= 26234.87 = 20745 = 24960
• Thus the optimal solution for production is
BodyPlus 100 - 50 units
BodyPlus 200 - 16.67 units
Converting it into integer
• Using Solver in Excel
Point A
Here the feasible optimal point is B(48,18)
So X1= 48 ; X2 = 18
Therefore, (371 * X1) + (461 * X2)
= (371 * 48) + (461 * 18)
= (17808 + 8298)
= 26106
• Thus the optimal solution with integer constraint is,
BodyPlus 100 - 48 units
BodyPlus 200 - 18 units
Qn 2: How does the requirement that number of units
of the BodyPlus 200 produced be atleast 25% of the total
production affect profits?
Linear programming model for Qn 2
Let,
BodyPlus 100 units to be produced -> X1
BodyPlus 200 units to be produced -> X2
Objective function
Maximize profits, Z = 371*X1 + 461*X2
subject to,
8*X1 + 12*X2 <= 600 (Machining and Welding Hours)
5*X1 + 10*X2 <= 450 (Painting and finishing Hours)
2*X1 + 2*X2 <= 140 (Assembling, Testing and Packaging Hours)
X1, X2 >= 0
Graphical representation for Qn 2
X2
X1
Solution for Qn 2
• From the graph, we get four extreme points in the feasible region
i.e. A(60,10), B(0,45), C(30,30) and D(70,0)
• Point B and C are calculated earlier.
• Profit from the points A & D as follows,
Point D Point A
Here the feasible optimal point is B(70,0) Here the feasible optimal point is C(60,10)
So X1= 70 ; X2 = 0 So X1= 60 ; X2 = 10
Therefore, (371 * X1) + (461 * X2) Therefore, (371 * X1) + (461 * X2)
= (371 * 70) + (461 * 0) = (371 * 60) + (461 * 10)
= (25970 + 0) = (22260 + 4610)
= 25970 = 26870
• Thus the optimal solution for production is
BodyPlus 100 - 60 units
BodyPlus 200 - 10 units
• Without the constriant of producing BodyPlus 200 atleast 25% of total, the profit
is increased than the earlier one (i.e $764)
Qn 3. Where should efforts be expended in
order to increase profits
• Without the constraint of BodyPlus 200 producing atleast 25% of the total
production, then the optimal solution and feasible region changes
• New optimal solution with higher profits gives more production number of
BodyPlus 100 and reduces BodyPlus 200
• As stated by the company's President, BodyPlus 200 gives good position in
the market for BFI
• Also BodyPlus 200 has the higher profit margin per unit
• So we recommend BFI to focus more on the process improvement of
BodyPlus 200 in terms of reducing production time or utilising the slack time
available
• Reducing production time increases the number of production which in turn
increases the profit
Slack in production hours
Machining and Welding Hours
8*X1 + 12*X2 <= 600
600 - (8*48 + 12*18) => 600 - (384 + 216) = 0 Slack hours
Painting and finishing Hours
5*X1 + 10*X2 <= 450
450 - (5*48 + 10*18) => 450 - (240 + 180) = 30 Slack hours
Assembling, Testing and Packaging Hours
2*X1 + 2*X2 <= 140
140 - (2*48 + 2*18) => 140 - (96 + 36) = 8 Slack hours
Company can utilise slack hours from Painting and finishing & Assembling, testing and packaging
in Machining and welding hours to increase BodyPlus 200 productions.
Thank You
