Business Decision Analysis/ Linear Programming


Case studies are used to empower you to adduce new concepts, use the tools you enjoy mastered, and amend your technical skills you enjoy attained.  Through the indivisible subject studies you gain unearth for yourself the advantage of imported tenor solving methods, how to adduce them in experience, and their behoof to organizational determination-makers.

In this subject con-over, you gain act as a consultant for a sodality that crushes sunflower seeds to result tall kind accomplished sunflower oil for sale the retail chaffer.  The sodality is looking for you to fashion a warning on the optimal unite of raw symbolicals claimd for its present evolution cycle.  You gain use a reckon of determination decomposition tools including spell round anticipation, rectirectidirect programming, and absorb-profit-compass decomposition to fashion the warning and get decomposition on the useability of the sodality.

You gain be claimd to accede a written recital to government, and to involve the spreadsheet fashions you used to breed appraisement forestalls, optimize the raw symbolical, and a achieve the break-even decomposition.  All decomposition should be done using Excel and the uncertain fashions should be implemented on detached worksheets or in detached workbooks.

 

Scenario:

TourneSol Canada, Ltd. is a resultr of tall kind sunflower oil.  The sodality buys raw sunflower seeds at-once from extensive urban companies, and refines the seeds into sunflower oil that it sells into the retail chaffer.  As a by-result the sodality too results sunflower mash (a paste made from the sweepings of crushed sunflower seeds) that it sells into the chaffer as vile result for lewd delight.

The sodality has a ultimatum input faculty of 150 blunt tons of raw sunflower seeds aggregate day (or 54,750 blunt tons per year).  Of round the sodality cannot run at ample faculty aggregate day as it is claimd to fasten down or classify faculty for subsistence spans aggregate year, and it experiences the interrupted unimpassioned tenor.  The ease is expected to run at 90% faculty aggravate the year (or, on medium 150 x 90% = 135 blunt tons per day).

TourneSol is planning to alienation its accede of raw sunflower seeds from three original growers, Supplier A, Supplier B and Supplier C.  Alienation appraisements gain not set until the mandate are substantially placed so TourneSol gain enjoy to forestall alienation appraisements for the raw symbolical and sales appraisements for the accomplished sunflower oil and mash. The reduce is written such that TourneSol is singly claimd to assign to 70% of aggregate faculty up front.  Any aggregateitys aggravate that can be alienation singly as claimd for the corresponding appraisement.  Literal appraisements for the last 15 year are in the consultation underneath (silence that year 15 is the most prevalent year).

Historical Appraisement Data

Marketing Year

 

Seed

Average Appraisement Index

$/blunt ton

Oil

Average Appraisement Index

$/blunt ton

Mash

Average Appraisement Index

$/blunt ton

1

127.7

317.8

63

2

192.4

465

87

3

242

662.2

105

4

242

668.2

111

5

274

791.3

124

6

242

732

108

7

290

951

134

8

347.2

1123

153

9

436

1297.3

193

10

422.8

1312

187

11

466

1416

193

12

582

1664

247

13

508

1317.4

242

14

428

1182.4

197

15

434

1334.4

210

 

Sunflower oil contains a reckon of fatty cuttings, some which are good in food results and others that are not.  One good fatty cutting is oleic cutting.  TourneSol results tall oleic oil for the retail chaffer, and claims that the oleic cutting pleased be a poverty of 77%.   Sunflower oil too contains delineate aggregateitys of iodine. The chaffer claims that that iodine pleased be a poverty of 0.78% and ultimatum of 0.88%

The oleic cutting and iodine pleased for the sunflower seeds fashion the three suppliers is abandoned in the consultation underneath.

Supplier

Oleic Acid

Iodine

A

72%

0.95%

B

82%

0.85%

C

65%

0.72%

 

For all three suppliers, it is expected that the medium accede of oil from the seeds is 30%.  There is no net privation of symbolical, so the accede of mash from the corresponding accede is expected to be 70%.

Because the oleic cutting and iodine pleased varies opposing the three suppliers, so does the appraisement.  It is expected that the absorb of accede from the suppliers gain be a percentage of the chaffer medium appraisement of seeds.

Supplier

Cost as % of Medium Chaffer Appraisement of Seed

A

85%

B

100%

C

90%

 

The sodality faces an concomitant mutable evolution absorb of $10/blunt ton and an estimated agricultural absorb of $1,750,000 aggravate the upcoming evolution span.

The sodality is search you to get a warning on the aggregateity of raw symbolical it should alienation from each supplier to minimize its absorb of delightstock.

Management is too looking for an decomposition on the useability of the sodality in the present evolution cycle. 

 

Suggested Approach:

This is a fairly tangled tenor. The aftercited bearing is suggested:

  • Use the literal appraisement grounds set as input to a spell round forestall fashion in manage to breed forestalled appraisements for the medium appraisement of sunflower seeds, oil and mash in the present evolution span.  Use fashion measures of fallacy to flow betwixt a three-span tender medium fashion or an exponential smoothing fashion (with α = 0.2).  Use the fashion of fashion for all three spell round forestalls.  That is, if you flow to use the tender medium fashion, use a three-span tender medium fashion fit the bearing grounds for all three round.  Don’t use the tender medium for one spell round and the exponential smoothing fashion for another spell round.

 

  • Formulate a rectirectidirect program to minimize the absorb of raw sunflower seeds.  Use the medium appraisement of seeds forestalled from the foregoing trudge in manage to enumerate supplier appraisements.
  • Perfashion a absorb-volume-appraisement decomposition (retrospect the handout entitled Cost-Volume-Profit Decomposition for details) using the medium absorb per blunt ton medium selling appraisement per blunt ton.
    • you can breed an cogent absorb per blunt ton by dividing the aggregate absorb of accede (from the rectirectidirect program) by the aggregate compass (that you antecedent in the rectirectidirect program).
    • You can breed an cogent selling appraisement per blunt ton from the expected percentage accedes and the forestalled medium appraisement of sunflower oil and mash.
    • Because of the way that the reduce is written, you can exhibit that the alienation of raw sunflower seeds is a mutable absorb (you singly alienation what you claim).

Recall that the absorb-volume-appraisement decomposition claims you to get:

 

  • An algebraic proposition of the enrichment business, and the absorb business;
  • A elaborate break-even chart that involves lines for the enrichment and for the aggregate absorb, agricultural absorb and mutable absorb (a aggregate of for lines); and
  • A vigilance break-even sharp-end explicit in reckon of blunt tons and percent of faculty.

 

Management Report:

Prepare a written government recital that involves, at a poverty, the aftercited sections

  • Purpose of the Report;
  • Description of the Problem;
  • Methodology (which would involve the fashion fashionulation);
  • Findings or Results; and
  • Recommendations or Conclusions.

Be positive to disconduct all bearing sharp-ends, examine any assumptions you are making, exonerate any fashioning exquisites you enjoy made (for issue, the exquisite of spell round forestall fashion), and talllight the aftercited items in your recital:

  • a forestall of the present evolution span’s medium appraisement condemnation for raw sunflower seeds, sunflower oil, and sunflower mash;
  • a warning for the optimal purchasing manoeuvre from the uncertain suppliers;
  • a absorb-volume-use decomposition using for the recommended alienation manoeuvre and the forestalled sunflower oil and mash sales appraisement;
  • a examineion of the risks and uncertainties that are faced by the sodality; and
  • an decomposition and judgment on the useability of the sodality in the present evolution span (accounting for the expected use or privation and the natural risks/uncertainties.

Remember that you are answerableness the recital from the sharp-end of representation of a consultant delay elder government of TourneSol Canada, Ltd. as the purposed assembly. 

 

Evaluation:

The aftercited rubric indicates those areas you should be focusing on in preparing your assignment, and how the educationist gain criticize these components not-absolute to one another.

ACTIVITIES/COMPETENCIES DEMONSTRATEDContent (80%)  
  • Extent to which decomposition discoursees all measurement of subject claimments. 
/30 
  • Extent to which recital subsistences conclusions and demonstrates brains of principles nature analyzes.
/40 
  • Extent to which Introduction and Conclusion subsistence aggravateall decomposition.
/10Communication (20%)  
  • Uses unclouded articulation and right uses topic-specific terminology.
/10 
  • Information systematic intelligently and holistically.
/10   Total/100Assignment Value (15% of round)/15