Make Buy Total(Make + Buy) Contracted Sales

Make/Buy Quantities Product 1 Product 2 Product 3 2000 1833.333333 0 0 1666.666667 1800 2000 3500 1800 = = = 2000 3500 1800

Make Buy

Make/Buy Cost Product 1 Product 2 2.5 1.75 2.8 2.5

Machine 1 Machine 2

Product 1 0.05 0.02

Product 2 0.04 0.06

Product 3 0.01 0.03

Machine Usage (hrs) 173.3333 150

<= <=

Machine Availabilities (hrs) 200 150

ake/Buy Cost Product 3 2.9 3.25

Make Buy Total

Costs 8208.333 10016.67 18225

Microsoft Excel 12.0 Answer Report Worksheet: [Make or Buy.xlsx]Problem 2 Report Created: 25-09-2010 23:23:35

Target Cell (Min) Cell Name $L$11 Total Costs

Original Value 0

Final Value 453300

Adjustable Cells Cell Name $B$9 Make Product 1 $C$9 Make Product 2 $D$9 Make Product 3 $B$10 Buy Product 1 $C$10 Buy Product 2 $D$10 Buy Product 3

Original Value 0 0 0 0 0 0

Final Value 3000 550 900 0 1450 0

Constraints Cell Name $B$11 Total(Make + Buy) Product 1 $C$11 Total(Make + Buy) Product 2 $D$11 Total(Make + Buy) Product 3 $E$20 Machine 1 (hrs) $E$21 Machine 2 (hrs)

Cell Value 3000 2000 900 9525 5000

Formula $B$11=$B$13 $C$11=$C$13 $D$11=$D$13 $E$20<=$G$20 $E$21<=$G$21

Status Slack Not Binding 0 Not Binding 0 Not Binding 0 Not Binding 475 Binding 0

Company XYZ is into producing three types of products. For the coming MONTH,XYZ has got a contract to supply the three products in the following amounts : Product 1 Product 2 Product 3 2000 3500 1800

Contracted Sales

Company XYZ productions is limited by the availability of processing time in two machines. Each product must be processed in machine 1 and then in machine 2. The following table provides the processing time required by each machine :

Machine 1 Machine 2

Mahine Processing Time Reactor Product 1 Product 2 Product 3 Availablities 0.05 0.04 0.01 200 0.02 0.06 0.03 150

Because of the limited availability of reactor processing time, XYZ has insufficient capacity to meet its demand with in-house production. Consequently, XYZ must purchase some chemicals from vendors having excess capacity and resell them to its own customers. The following table provides each product's in-house production cost and outside purchase cost: Product 1 Product 2 Product 3 In-House Production Cost 2.5 1.75 2.9 Outside Purchase Cost 2.8 2.5 3.25 Company XYZ objective is to fill its customers orders with the cheapest combination of in-house production and outside purchases. In short, XYZ must decide how much of each product to produce inhouse (i.e., make) and how much of each product to purchase outside (i.e.,buy).

Microsoft Excel 12.0 Limits Report Worksheet: [Make or Buy.xlsx]Limits Report 1 Report Created: 25-09-2010 23:23:35

Target Cell Name $L$11 Total Costs

Value 453300

Cell $B$9 $C$9 $D$9 $B$10 $C$10 $D$10

Adjustable Name Make Product 1 Make Product 2 Make Product 3 Buy Product 1 Buy Product 2 Buy Product 3

Value 3000 550 900 0 1450 0

Lower Limit 3000 550 900 0 1450 0

Target Result 453300 453300 453300 453300 453300 453300

Upper Limit 3000 550 900 0 1450 0

Target Result 453300 453300 453300 453300 453300 453300

Microsoft Excel 12.0 Sensitivity Report Worksheet: [Make or Buy.xlsx]Problem 2 Report Created: 25-09-2010 23:23:35

Adjustable Cells Cell $B$9 $C$9 $D$9 $B$10 $C$10 $D$10 Name Make Product 1 Make Product 2 Make Product 3 Buy Product 1 Buy Product 2 Buy Product 3 Final Reduced Objective Value Cost Coefficient 3000 0 50 550 0 83 900 0 130 0 4 61 1450 0 97 0 8 145 Allowable Increase 4 14 8 1E+30 8 1E+30 Allowable Decrease 1E+30 8 1E+30 4 14 8

Constraints Cell $B$11 $C$11 $D$11 $E$20 $E$21 Final Shadow Constraint Allowable Allowable Name Value Price R.H. Side Increase Decrease Total(Make + Buy) Product 1 3000 57 3000 380 2900 Total(Make + Buy) Product 2 2000 97 2000 1E+30 1450 Total(Make + Buy) Product 3 900 137 900 211.1111111 900 Machine 1 (hrs) 9525 0 10000 1.00E+30 475 Machine 2 (hrs) 5000 -7 5000 633.3333333 1100

Utsav Fabricators Make or Buy Problem - Solution

Make Buy Total(Make + Buy) Contracted Sales

Make/Buy Quantities Model 1 Model 2 Model 3 3000 550 900 0 1450 0 3000 2000 900 = = = 3000 2000 900

Make Buy

Make/Buy Cost Model 1 Model 2 50 83 61 97

Machine 1 Machine 2

Processing Time Model 1 Model 2 2 1.5 1 2

Model 3 3 1

Machine Usage (hrs) 9525 5000

<= <=

Machine Availabilities (hrs) 10000 5000

ake/Buy Cost Model 3 130 145

Make Buy Total

Costs 312650 140650 453300

Make or buy problem

Reiff Manufacturing produces fiberglass products and is a leading manufacturer of antenna covers. Antenna covers are purchased by the Federal Aviation Administration to shelter flight instrument arrays. The company recently received a $750,000 order for various quantities of antenna covers. Each antenna cover requires a certain amount of time to mold and spray. The following table summarizes the requirements for the three antenna models.

Number ordered Hours of molding required per unit Hours of resin coating required per unit

Model 1 3000 2 1

Model 2 2000 1.5 2

Cost to Make Cost to Buy

Model 1 50 61

Model 2 83 97

Available

Molding 10000

Spraying 5000

Reiff Mfg. wants to determine the number of antenna covers to make and the number to buy in order to fill the customer ord

g manufacturer of antenna covers. ation to shelter flight instrument arrays. antities of antenna covers. nd spray. The following table

Model 3 900 3 1

Model 3 130 145

make and the number to buy in order to fill the customer order at the least possible cost.