Merton Truck Company Case

In: Business and Management

Submitted By mexpharoah
Words 1741
Pages 7
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. Group 2 was asked to make recommendations and analyze the given situation to eliminate the difficulties and come up with the right product mix and the optimal solutions considering different alternatives and scenarios.

The Solution: Linear Programming was used to analyze the different alternatives to arrive at the optimal solution. The optimal product mix was calculated to be 2000 units of model 101 and 1000 units of model 102. In the next pages you will see the answers to the different questions asked which shows how different alternatives and interpretations could affect the optimal solution and the final decision.

Recommendations and conclusion: We recommend that Merton Truck Company adopt the suggest solutions in our analysis in order to achieve better financial results and impose new policies later on to avoid such setbacks in the future. Following our recommendations, the firm should be able to maximize the profits using the optimal product mix.
Model Description

The Problem
Merton Truck Company is not optimizing contribution from its truck lines especially model 101. The company is contemplating stopping the production of model 101 trucks. Management is in a dilemma on what approach to take in resolving this problem. In addition, two of its production lines are operating at capacity while the other two are operating below capacity.

The Solution Approach Our analysis was done using mathematical models and linear programming. The aim of the analysis was to maximize contribution and allocate truck production in an optimal manner. The mathematical models consist of variables, constraints and an objective function.

Variables…...

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