I worked in a team of four people to come up with the strategic decisions for one of our manufacturing clients. We used concepts of Business Decision Modeling to pitch our recommendations to earn a higher profit, without sacrificing the current quality of the project. As a part of this project, I performed, Linear Optimization, Non-Linear Optimization, and Monte Carlo Simulation to come up with unique and interesting, obviously useful recommendations for the business to grow further.

1. Strategic Decisions for
Mirza Manufacturer
TEAM 7
Deeksha Ramesh
Milind Jagre
Shrawani Garg
Yashaswini Naik
*
Dec 8, 2017

2. Who is our client?
• Mirza Manufacturing have started making 4 electronic products,
Product A, Product B, Product C and Product D.
• Each product comprises three main materials:
– Magnet
– Wiring
– Casing
• According to the demand, the products are targeted to be shipped
to three distribution centers - North America, Europe, and Asia.

3. What is the problem?
• Client is not sure of their marketing strategy so they need
consultants to help them take those decisions.
• Few things which we will focus on:
– Marketing Strategy
– Break Even Analysis
– Profit Optimization
– Risk Simulation
– Business Recommendations

4. Initial Analysis
• Decision Variables: The company
produces 4 products – A,B,C,D .
Demand of each product in NA,
EU and Asia.
• Parameters: Cost of raw
materials, packaging & shipping
cost and revenue.
• Constraints: Min & Max demand.
• Profit: $5879 with 100%
utilization of Wiring and Casing
and 90% utilization of Magnets.
Tornado chart

5. How to optimize profit?
Magnet Cost Optimization Wire Cost Optimization Casing Cost Optimization
-1500
-1000
-500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Raw Material Marginal Value Comparison
Marginal Value Magnets Marginal Value Wire
Marginal Value Casing
The graph shows:
• per unit increase in value of wire and
casing is tracing almost straight line,
showing negligible effect on profit
• per unit increase in cost of magnet is
affecting profit the most

6. How to optimize profit?
• Cost of Magnet affects profit the
most.
• Slope of cost of magnet is
steepest which tells that
decrease in the cost of magnet
will furnish huge profit.

7. When does profit become 0
Profit becomes 0 for following
cost of unit raw material :
• Magnet - $0.65
• Wiring - $0.41
• Casing - $0.46
0.65
0.41
0.46
Magnet Wiring Casing
Raw Materials Unit Cost for 0 Profit

8. Risk Analysis
Why should we do this?
• To represent uncertainties with Monte Carlo for
probabilistic simulation and sensitivity analysis.
• Transparency by providing a visual interface and
well-documented model structure.
• To allow the company to grow without growing gout
of control.
What are the parameters considered?
• Raw materials cost
• Demand

9. Should we focus on raw material
cost?
• There is a 18% chance that the company
will make 0 profit with risk associated
with Magnet Cost.
• The chances that the company makes
more than $5000 profit is 41%.
$0.00
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
Magnet Casing Wiring When all 3
parameters are
varied
Mean Profit
Mean Profit

10. Recommendations
• Stop Product D export to European Countries.
• Stop Products B and D export to European Countries.
• Stop Products A and D export to European Countries.

11. Recommendations
Under any circumstances, in order to obtain more profit, Mirza
Manufacturer should not
• Stop production of Product D.
• Stop export of Products A and C to European Countries.
• Stop Product C production.
5879.07
-4365.5
-4764.79 -4891.83
Base Case Profit Remove D Remove AC in EU Remove C
Profit Comparison

12. Recommendations
To increase profit by more than 18%, buy magnet which is 1 cent cheaper
than the current rate.