Order Linear Programming Assignment

Order Linear Programming Assignment
(a) An enquiry has been received from a wholesaler in Kazakhstan who has indicated that he is prepared to take 12,000 units at a price of £16 per unit, with
Submarine Cables paying the carriage and customs charges estimated at
£2000. Submarine Cables has never previously dealt with this wholesaler or
this distant market.
(b) Reduce selling price by 10%. It is thought that this will increase demand to
capacity. However, it will need to be supported by a new system of salesmen’s commissions; these will be 50 pence per unit sold in 2000/2001.
(c) The managing director believes in setting targets and has announced a profit
target of 10% of capital employed. The managing director wants to know
what price increase is necessary to achieve the target with the current level
of sales, and what sales increase is necessary to achieve the target with the
current price per unit.
(d) A machine may be leased at a cost of £15,000 per annum. The machine will
cause variable costs to fall by 50% per unit; it will also increase current capacity by 20%.
For each option (a)–(d), determine whether it is financially worthwhile and comment
on its non-financial aspects.
Order Linear Programming Assignment
2. Didcot is small company that specialises in producing virtual reality (VR)
machines for large international entertainment companies. One of these has
offered Didcot a contract to produce and deliver 1000 identical VR machines over
a 26-week period starting on 1 June 2004.
Each machine requires the following materials:
• 2 square metres of Yalloy: Yalloy is in continuous use by the company and 500
square metres are currently in stock at a book value of £80 per square metre. Future
purchases will cost £90 per square metre.
The following mixture of labour is required:
• Skilled: each VR machine will require 3 hours of skilled labour. Skilled labour is
currently paid £4.80 per hour and will be fully employed on other work during the
next 26 weeks. In order to fulfil the contract a skilled worker will be taken off other
work which will be undertaken by a temporary replacement provided by a local
agency at £6 per hour.
• Semi-skilled: each machine will require 4 hours of semi-skilled labour. The current
rate for semi-skilled labour is £3.50 per hour and sufficient temporary workers can
be recuited for this work