Tools for Business Decisions
• Exercises are due always on the following
• You can return them by dropping them to the
return box on the 1st ﬂoor at Chydenia
Case 1 – Merton Truck Company
• The case is available on the website and in the
binder on the 4th ﬂoor at Chydenia
• Maximum group size is 4.
• Due on February 4th
• Return to the box on 1st ﬂoor at Chydenia
Exercise set 1
• FormulaNon and a graph is not enough
– Answer the ques9on and explain
• Don’t hide the answers in the graph or Excel
– The spreadsheets and graphs jus9fy your result,
but are not the result.
• Two ways to understand the problem
– Both are jus5ﬁed
• Are the plants independent or not?
• Diﬀerent plants: e.g. Finland, Sweden, Estonia
• Parts of a process: e.g. Sawing, Construc5on, Pain5ng
• Big part of problem solving is to understand the
problem and its dynamics
Problem 2 4
• Which side is the 3
feasible one in an
• Test a point! 1
– (0,0) is usually easy and a x1-x2 ! 2
good pick, unless on the 0 1 2 3 4
(0,0): 0 -‐0 = 0 ≤ 2
– If fulﬁlls the inequality, The side point (0,0) belongs to is the
point on the feasible side feasible region (ie. above the line)
• Choose your c1 values carefully.
– Many evaluated points like -‐1,
0, 1, 2, …
– …and missed the cri5cal value
• If the objec5ve func5on’s
coeﬃcient matches that of a
– Whole segment is op5mal!
(not just the two end points of
that segment) 0 1 2 3 4 5 6
The Silver Star Bicycle Company will be
manufacturing men’s and women’s models for its
10 speed bicycles during the next 2 months.
Management wants to develop a producNon
schedule indicaNng how many bicycles of each
model should be produced in each month.
Demand forecasts call for 150 men’s and 125
women’s models to be shipped during the ﬁrst
month and 200 men’s and 150 women’s during
the second month
Silver Star Bicycle Company
Model Produc5on Labor requirements (hrs) Current
Costs Manuf. Assembly Inventory
Men’s $ 120 2.0 1.5 20
Women’s $ 90 1.6 1.0 30
Last month the company used a total of 1000 hours of labor. Company’s
policy will not allow the total hours of labor to increase or decrease by
more than 100 hours from month to month. The company charges
inventory 2% of the produc5on cost. The company would like to have at
least 25 units of each model at the end of the 2 months.
What is the minimum cost produc5on schedule?