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CASE STUDY: PRODUCTION AT ELECTROCOMP CORPORATION
The ElectroComp Corporation (ECC) was established in 1957 as the first national company that produced pumps and related accessories for industries. For the last several decades, the company has strived to fulfill its mission to provide high quality equipment at affordable costs to its industrial customers. Company has invested a lot in resources to ensure that every aspect of its products including design, procurement of raw materials, manufacturing, warehousing etc. to meet the demands of the customers and ensure that the water supply system of its customers operate reliably.
The ElectroComp Corporation manufactures three products; motors, pumps, and fans. The production process for each is similar in that both require a certain amount of wiring and machining. Each motor takes 3.4 hours of wiring and 2.7 hours of machining. Each pump must go through 2.2 hours of wiring and 1.2 hours of machining. It takes 4.9 hours of wiring and 2.1 hours of machining to produce one fan. During each month, 240 hours of wiring time are available, and up to 160 hours of machining time may be used.
The most important raw material that these products use is stainless steel. The requirement of steel for each motor, pump, and fan is 3.1 kg, 2.2 kg, and 1.8 kg, respectively. The company has made a deal with its supplier Mughal Steel Company to provide them 80 kg of steel every month.
Each pump sold yields a net profit of Rs. 25,000 per pump, for the company. The fan is sold at a price of Rs. 65,000 each, while its total production cost is Rs. 30,000 per fan. Motors are sold by the company through its distributor for a net profit of Rs. 29,000 per motor
The marketing department of ECC works hard to create demand of its products. They have forecasted that there is a huge demand for motors and fans, thus the company will be able to sell any number of motors and fans that they are able to make every month. However, the monthly demand of pumps is estimated to be 45 only.
The company is trying to develop a monthly production plan to determine the quantity of each of the three products it should produce in order to maximize its monthly profit.
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(TOTAL = 50 marks)
The management at ECC has hired your team (DM students at UMT) as consultant to help them achieve their objectives. You analyze the situation and look at the available data, and answer the following questions:
Q. 1 (10 marks) Write a brief note to the ECC Management to convince them that this problem of determining the product mix is too complex to be handled through intuition or with simple mathematical techniques of addition and division, and thus require something more sophisticated such as Linear Programming.
Q. 2 (10 marks) Formulate a Linear Programming Model for the given product mix problem for ECC. (i.e. Define the decision variables, Objective Function, and Constraints)
Q. 3 (20 marks) Use MS Excel SOLVER to solve the above model, and obtain the reports. Use these reports to develop a set of recommendations for the company.
Q. 4 (10 marks) Mughal steel is willing to supply more steel per month to ECC at a premium price. Recommend whether ECC should get more steel or not. If yes, also recommend how much and at what maximum price. Give proper reasoning for your recommendations, using Sensitivity Report.
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INSTRUCTIONS:
1) Use MS Excel to work on this case, using single Excel file with multiple worksheets. Make sure to label each worksheet appropriately according to the Question number, and use proper formatting.
2) The First worksheet should ONLY mention the complete names and ID of all team members, SORTED in ascending order of First Name.
3) The names of your Excel file should use the following format:
FINAL(team members names separated by , and sorted by ascending order of First name)
e.g. FINAL(Bilal Malik, Muhammad Arshad, Nauman Khalid)
4) Your work has to be uploaded on LMS, as well as emailed to me from your official UMT email address, before the deadline.
5) For email, use the “REPLY” option of the same email that you get these instructions in. In case of teams, only one member should upload the Excel file on LMS, and email it to me with CC to all other team members.
6) Read all instructions very carefully and follow them. Failure to follow all instructions may lead to grade reduction or cancellation of your exam
7) DO NOT discuss or share your work with anyone outside your team.
8) DEADLINE: 5:30 PM , Tuesday, 07 July 2020
GOOD LUCK 


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