PLANNING THE PRODUCT MIX AT PANCHTANTRA

CORPORATION

GIVEN:-
THE TWO TYPES OF PRODUCTS BEING PRODUCED: 60*40 LUNGIS & 40*40
SHIRTING
THE QUANTITY OF PRODUCTS BEING PRODUCED DEPENDS UPON:-
1. LOOM CAPACITY (3000 LOOM DAYS)
2. AVAILABILITY OF 40 YARN(2400 KGS) & 60 YARN(480 KGS)
3. SALES (11000m OF LUNGI & 22000m OF SHIRTING)

DATA REQUIRED AS PER THE GIVEN TABLE:-

LUNGI SHIRTIN
G
VARIABLE COST:-WAGES(\M) 4.50 1.50
YARN COST(\M) 5.50 4.50
CONTRIBUTION(\M) 0.90 0.60
PRODUCTION RATE(NO OF METRE PER LOOM 5 12
DAY)
YARN CONSUMPTION(IN GMS/M)
A) 40S YARN 60 100
B) 60S YARN
40
SOLN:
LET THE DECISION VARIABLES BE;
X1= TOTAL NO OF METRES OF LUNGIS
X2= TOTAL NO OF METRES OF SHIRTING
Z=TOTAL PROFIT AT THE END OF THE MONTH
THE OBJECTIVE EQUATION WILL BE:-

Z=0.90X1+0.60X2
SUBJECT TO THE FOLLOWING CONSTRAINTS:-
1. 0<=X1<=11000
2. 0<=X2<=22000
3. 0.2X1+0.0833X2<=3000
4. 0.06X1+0.1X2<=2400
5. 0.04X1<=480
ON SOLVING THE FOLLOWING EQUATIONS, FOR THE MAMIMUM VALUES OF
“Z” WE HAVE:-
X1= 6667, X2=20000, Z=Rs. 18000.

IN THE PREVIOUS CASE WE HAVE X1=11000(THE MAXIMUM LIMIT)

SO, PUTTING THE VALUE OF X1 IN CONSTRAINT 3, WE HAVE:-
3. 0.2*11000+0.0833X2<=3000
implies, X2<=9600
ON SOLVING WITH THE NEW CRITERIA WE HAVE:-
Z=Rs. 15660.
(i) SO THE INCREASE IN PROFITS: Rs. 2340.
(ii) NOW, THE DAILY WAGES OF WEAVERS MUST BE: Rs. 20.50
 SO THE ADDITIONAL CONSTRAINT BECOMES:
(4.5X1+1.5X2) / (0.2X1+0.0833X2)>=20.50
implies, 0.4X1-0.21X2>=20.50
ON SOLVING THE FOLLOWING EQUATIONS, WE HAVE:-
Z= Rs. 17090, X1=8350, X2=15960.
WAGES EXPENSES IN PREVIOUS CASE: 4.5*6667+1.5*20000=Rs.
60001.50
WAGES EXPENSES IN THIS CASE: 4.5*8350+1.5*15960=Rs. 61515
EXTRA REMUNERATION PAID IN WAGES=Rs. 1513.50

(iii) AGAIN, IT HAS BEEN MENTIONED THAT, THE TOTAL COST MUST
NOT EXCEED 1.50 LAKHS.
SO THE CONSTRAINT BECOMES:
(4.50+5.50)X1+(1.50+4.50)X2<=150000
implies, 10X1+6X2<=150000
ON SOLVING THE FOLLOWING EQUATIONS, WE HAVE:-
X1= 1800, X2=22000, Z=Rs. 14820.