Merton truck solns

Using a systematic approach, I was able to analyze the current machine hours, standard costs, and overhead budget. When determining the product mix, I took careful consideration of the machine hour constraints that your factory must account for. The following sections will provide further information in regards to my analytical technique, and how I was able to determine these figures. Some other issues to point out are the current capacity levels.

Merton truck solns

Jane Doe, Consultant Date: October 18, Re: The following information in the memo includes the product mix of Model trucks and Model trucks that maximizes monthly contribution.

Bob Mertens Trucking & Sales | Inventory

Merton Truck Company Current Situation: Currently, Merton Truck Company specializes in manufacturing two models of trucks, Model and Model The manufacturing processes of the trucks are grouped into four departments; Engine Assembly, Metal Stamping, Model Assembly, and Model Assembly.

Even though some of the production lines are already operating at full capacity, the financial position of the company is still lacking.

The Model trucks do not seem to be making a profit. Data Used in Analysis: Merton Truck Company provided the data used in the analysis. The data that was found pertinent to this case included: The supplied variable costs per unit and fixed costs per unit were used to calculate the contribution for each model.

Contribution is defined as revenue selling price minus variable costs, for calculations, please refer to appendix 1. The data provided by the company included the fixed costs; however, the fixed costs should not be considered when calculating the contribution for each model.

The company also supplied the capacity limits per month and production requirements per unit.

Merton Truck Company’s Financial Performance and Product Mix | Free Essays - initiativeblog.com

These limits and requirements were used to set the constraints that were used in the calculations to find the optimal product mix. The constraints are total machine-hours available per month and machine-hours required per truck. The method used to analyze the data was Linear Programming LP.

The objective function for Merton Truck Company was to maximize the monthly contribution. The constraints, refer to appendix 2 for list of constraintswere set in order to find the optimal product mix that would satisfy the objective function. The solutions were found by entering the data into a Microsoft Excel spreadsheet.

Once the data had been entered, the Solver function was run. Solver provided the solutions used in the analysis. Based on the results of the analysis, the optimal product mix for Merton Truck Company is to produce 2, Model trucks and 1, Model trucks.

Assuming the equipment can handle additional hours of production time, the company would be able to increase their capacity limits for both the engine assembly department and metal stamping department. The engine assembly capacity can be increased up to machine-hours. The metal stamping capacity can also be increased up to an additional machine-hours.

The production manager had made the suggestion of either purchasing Model or Model engines from an outside supplier in order to relieve the capacity problem in the engine assembly department.

It was also suggested that the company could take responsibility for furnishing the necessary materials and engine components, as well as reimbursing the outside supplier for labor and overhead. The maximum number of hours of capacity that should be rented is The suggestion of producing at least three times as many Model trucks as Model trucks adds an additional restriction to the previous list See Appendix 3 for new constraints.

The result of the analysis provides a new product mix to consider as an optimal solution. Based on the results, Merton Truck Company should produce 2, Model Trucks and Model trucks refer to graph 2. Based on the results of the analysis, the recommended optimal product mix that will maximize the monthly contribution is for Merton Truck Company to produce 2, Model trucks and 1, Model trucks.

This recommendation will maximize the monthly contribution and help to increase the overall financial performance of the company. The company should not consider the option of producing three times as many Model trucks than Model trucks.

Instead of generating revenue for the company, this option would cause the company to loose revenue. One main benefit of using LP in the analysis is that it makes use of all the available resources, while evaluating all the possible alternatives.

This benefit allows for the company to better utilize their resources, and to determine the optimal product mix. There are a few risk factors Merton Truck Company may choose to consider. One such factor includes the demand levels for Model and Model trucks.

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The company may also want to consider the availability of the materials and the labor needed to produce the two models of trucks.Merton Truck Co Essay.

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Merton truck solns

Case Analysis: Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits.

In , Merton Truck Company was searching for ways to increase profits and. Merton Truck Company Case Executive Summary The Problem: Merton Truck Company has been experiencing difficulties related to their financial performance, and they do not know which is the optimal product mix to maximize profits and performance.

Introduction. In response to your report and request regarding Merton’s financial performance and product mix, I have met with your controller, sales manager and production manager, and have provided a solution that will improve the company in these two areas.

Case Analysis: Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits.

Case Analysis: Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits.

In , Merton Truck Company was searching for ways to increase profits and ultimately its poor financial performance. Renting and Merton Truck Company. Renting and Merton Truck Company. 8 August Costs. Data Used in Analysis: Merton Truck Company provided the data used in the analysis. The data that was found pertinent to this case included: Model trucks have a selling price of $39,, while the Model trucks are sold for $38, During the.

Renting and Merton Truck Company - New York Essays