Advanced Production Management

Advanced Production Management

Course Number and Name: MNGT 520 – Advanced Production Management

Frandec Company manufactures, assembles, and rebuilds material handling equipment used in warehouses and distribution centers. One product, called a Liftmaster, is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec’s production schedule calls for 5000 Liftmasters to be made next month. Frandec purchases the motors from an outside supplier, but the frames, supports, and straps may be either manufactured by the company or purchased from an outside supplier. Manufacturing and purchase costs per unit are shown.

Component			Manufacturing Cost			 Purchase Cost 
Frame					$38.00				            $51.00
Support				$11.50					$15.00
Strap					$ 6.50					 $ 7.50   

Three departments are involved in the production of these components. The time (in minutes per unit) required to process each component in each department and the available capacity (in hours) for the three departments are as follows:

Department
Component			Cutting		Milling		Shaping
Frame				3.5			2.2			3.1
Support			1.3			1.7			2.6
Strap				0.8			—			1.7
Capacity (hours)		350			420			680

a. Formulate and solve a linear programming model for this make-or-buy application.
How many of each component should be manufactured and how many should be purchased?
a.	Let	FM	=  number of frames manufactured
			FP	=  number of frames purchased
			SM	=  number of supports manufactured
			SP	=  number of supports purchased
			TM	=  number of straps manufactured
			TP	=  number of straps purchased






Min	38FM	+	51FP	+	11.5SM	+	15SP	+	6.5TM	+	7.5TP		
s.t.													
	3.5FM			+	1.3SM			+	0.8TM			?	21,000
	2.2FM			+	1.7SM							?	25,200
	3.1FM			+	2.6SM			+	1.7TM			?	40,800
	FM	+	FP									?	5,000
					SM	+	SP					?	10,000
									TM	+	TP	?	5,000
FM, FP, SM, SP, TM, TP  ?  0.

		Solution:
	Manufacture	Purchase
Frames	5000	0
Supports	2692	7308
Straps	0	5000