1. Introduction
It is acknowledged that real-world situations could be represented by well structured and formulated Linear Programming models. These mathematical tools contribute significantly to business activities and can be used to tackle problems that constantly arise.
Franco Sounds is a company specialised in manufacturing Hi-Fi Amplifiers of top quality and its main goal, at the moment, is to minimise its overall production and transportation cost.
This report presents a quantitative analysis which has been conducted in order to fulfil the company’s goal. The primary purpose of it is to provide the clients with the best recommendations drawn from the model’s formulation and solution as well as to underline all the crucial assumptions.
The following objectives had been considered:
a. A formulation of the appropriate linear programming model for the optimal solution
b. An analysis and interpretation of the linear model using Microsoft Office Excel’s Solver.
2. Definition of the problem
In three cities of Europe, such as Porto, Bratislava and Vilnius, Hi-Fi Amplifiers, are produced by Franco Sound. Each plant is respectively capacitated with 2500, 1500 and 1000 units per month. The company’s markets are located in ten different European cities as well, each of which has a demand per month. (Table 1 – Appendix A) Its products are transported by road and ferry, via the shortest route, and the unit transportation cost, from each city to each destination is £0.01 per/km.
Despite competing in a broad market environment, JB Hi-Fi is able to outperform its competitor and placed them well ahead in the market gaining a large marker share. JB Hi-Fi tries to achieve its objectives of expanding its market share by adopting 3
As a complement to this methodology, a multiple linear regression model will be proposed and evaluated. This memo includes the approach to the problem, the model reached, the results for
Disclaimer: The following notes are based on a fictitious company and the numbers have no bearing on any real data.
Copyright 2006 The Society of Management Accountants of Canada All rights reserved. No part of this manual may be reproduced in any form without the permission of the copyright holder.
Provide an opportunity for students to apply a technology solution to a business problem in a specific company or organization that adds value to the organization.
Instead of minimizing the demand-weighted distance between the opened facilities and their assigned demand points, the objective of Model III is to minimize the expected maximum demand-weighted distance between the opened facilities and their assigned demand points. Other settings are identical to Model II.
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The categories of modeling techniques presented in this book include all of the following except: preventive models.
The CLV’s for this alternative are shown in Exhibit 2. We assume the Architectural Series will be a leading product in the market and will earn a high retention rate among ultra high-end dealers of 90%. Sonance would also be able to initially attract 50% of these niche dealers they had in 1999 (75 vs. 150 previously). Sonance would have the choice in this scenario to price the Architectural Series at either $875 per pair, based on the advice of their focus group, or $305, based on the internal marketing group’s recommendation. Our assumptions regarding customer mix for this scenario is that Sonance would drop the mass retail market customer to signal they are focused only on the custom and semi-custom installation markets. In addition, Sonance would consider reducing the price of their Original Series Speakers to the Dealers to $90 from $140. This would improve the Dealers’ gross margin to 75%, equal to SpeakerCraft’s, although the margin net of installation costs would still be lower (see Exhibit 2). These assumptions would lead to an increased Retention Rate through the Dealers sales of Original Series Speakers of 85% and a higher growth rate of 10% vs. 5%. Sonance would also increase their Retention Rate with Dealers for the existing iPort product to 85% in this scenario.
Tallink is a ferry operator based out of Tallinn, Estonia. The company started its business sailing between Tallinn and Helsinki, Finland in the years after Estonia left the USSR to become independent once again. Over its history, Tallink has grown and now has a fleet of eight ferries linking Estonia with other cities in the region including Stockholm and St. Petersburg. The company is considering the purchase of a new ferry with a capacity of 2500 passengers, matching the size of the Romantika, its biggest ferry. Tallink needs to decide if it wants to purchase the ferry and if so, should it use the ferry to launch new service to St. Petersburg to take advantage of the growing Russian tourist market and hopefully relaxed Russian visa rules that are scheduled to start with the 2014 Sochi Olympics.
3. Using the data provided by the simulation model presented in the case and your personal assessment, what capital structure would you recommend to Diageo?
Your assignment must consider the three-layer hierarchical model. You are free to make supported assumptions of the applications and services that this organization uses.
After the organization has acquired and retained customers, it will go on to understand the needs and wants of its customers and then differentiate the required products and services on offer respectively. The model acts as a research tool or a facilitator of effective customization as the organization is capable of knowing what constitutes its customers’ needs and wants. This will reduce the costs associated with mass
Master in Business Administration, IPADE Business School, 1996 BSc in Industrial Engineering, Universidad Panamericana, 1994