Description

The case describes a female clothing manufacturer. Women generally buy the majority of the fall
fashions when they first appear in September. The manager of the company, Katherine rally
decided to meet with the production manager to decide upon next months production plan for
the fall line. She must determine the quantity of each clothing item she would produce given the
plants production capacity, limited resource, and demand forecast.

Below are the tables for the clothing requirement and material prices per year

Tables
Clothing item

Material requirements

Tailored wool slacks

3 yard of wool 2 yards

of acetate for lining
1.5 yards of cashmere
1.5 yard of silk
0.5 yard of silk
2 yards of rayon 1.5
yards of acetate for
lining
2.5 yards of wool 1.5
yards of acetate for
lining

Cashmere sweater
Silk blouse
Silk camisole
Tailored skirt

Wool blazer

Price
300 $

Labor and machine

cost
160$

450$
180$
120$
270$

150$
100$
60$
120$

320$

140$

The fall casual fashion includes:

Clothing item
Velvet pants

Cotton sweater
Cotton miniskirt
Velvet shirt
Velvet shirt

Material requirement
3 yards of velvet 2
yards of acetate for
lining
1.5 yards of cotton
0.5 yard of cotton
1.5 yards of velvet
1.5 yards of rayon
Material

Price

Labor and machine

cost
175$

350$

130$
75$
200$
120$

60$
40$
160$
90$
Price per yard

Wool
Acetate
Cashmere
Silk
Rayon
Velvet
Cotton

9.00$
1.50$
60.00$
13.00$
2.25$
12.00$
2.50$

Requirements:
The demand forecast indicate that the wool slacks, tailored skirts, and wool blazers have a great
demand because they are basic items needed in every professional wardrobe. And the demand for
wool slacks is 7000 and the demand for wool blazers is 5000. Katherine wants to meet at least 60
percent of the demand for theses two items in order to maintain her loyal customer and not lose
business in the future. The minimum demands for Wool blazers and tailored skirts are 3000 and
2800 respectively. The maximum demands for the remaining items are as follows:
Item
Velvet Pants
Velvet Shirts
Cashmere Sweaters
Silk Blouses
Silk camisoles

Maximum Demand
5500
6000
4000
12000
15000

Questions:
A) Ted is trying convincing Katherine not to produce any velvet shirts since the demand for
this fashion fad is quite low. He argues that this fashion fad had alone accounts for
$500,000 of the fixed design and other costs. The net contribution (price of clothing item
material cost labor cost) from selling the fashion fad should cover theses fixed costs. Each
velvet shirt generates a net contribution of $22. He argues that given the net contribution,
even satisfying the maximum demand will not yield a profit. What do you think of Teds
argument?
Answer)
With contribution of $22 and a demand of 6000 units. Maximum expected profit will be only
$132,000. This amount will not be enough to cover the $500,000 in fixed costs directly
attributable to this product.

B) Formulate and solve linear programming problem to maximize profit given the
production, resource, and determine constraints?
Answer)
The Problem formulation we chose is as follows:
Xi : Number of items (i) produced >=0
Ci: Profit from selling one item (i)
Ej: Amount of fabric (j) used
Maxj: Maximum amount of fabric (j) available
FPj: Price of one unit of fabric
MinDi: Minimum demand for item (i)
MaxDi: Maximum demand for item (i)
FUij: Amount of fabric j used to make one item (i)

Maximize:

XiCi ( MaxjEj )EPj

i

Subject To:

XiFUij=Ej
i

XiFUij Maxj
i

Xi MaxDi
Xi MinDi

X 3= X 4

X 8=X 9

Check attachment for excel formulation and solution

C) The textile wholesaler informs Katherine that the velvet cannot be sent back because the
demand forecasts show that demand for velvet will decrease in the future. Katherine can
therefore get no refund for the velvet. How does this fact change the production plan?
Answer)
The only change that needs to be applied is on the objective function. The new objective function
is:
Maximize

XiCi ( MaxjEj )EPj

i

: where j 5

Check attachment for excel formulation and solution

D) What is an intuitive economic explanation for the different between the solutions found
in part (b) and (c)?
Answer)
When the company is unable return the excess velvet to the wholesaler for a full refund, the costs
for velvets cannot be recovered. These costs are no longer variable cost but are sunk cost. Selling
more of these items can contribute to recovery of at least some of the fixed costs. Instead of zero
Trendlines produces now velvet pants. Producing these pants affects other products as theres
some acetate needed for them. Since it is not optimal to make full use of the ordered velvet in
part (b) it is clear that the loss in part (c) is bigger than in part (b)

E) The sewing staff encounters difficulties sewing the arms and the lining into the wool
blazers since the blazer pattern has an awkward shape and the heavy wool material is

difficult to cut and sew. The increased labor time to sew a wool blazer increases the labor
and machine cost for each blazer by $80. Given this new cost, how much of each clothing
item should Trendlines produce to maximize profit?
Answer)
Check attachment for excel formulation and solution

F) The textile wholesaler informs Katherine that since another textile customer cancelled
his order, she can obtain an extra 10,000 yards of acetate. How much of each clothing item
should Trendlines now produce to maximize profit?
Answer)
Check attachment for excel formulation and solution

G) Trendlines assumes that it can sell every item that was not sold during September and
October in a big sale in November at 60 percent of the original price. Therefore, it can sell
all items in unlimited quantity during the November sale. (The previously mentioned upper
limits on demand concern only the sales during September and October) what should the
new production plan be to maximize profit?
Answer)
A new set of variables and a new set of parameters need to be introduced to the LP and change
needs to occur to one set of variables.
Xi: is the number of items produced and sold in September and October >=0
Yi: is the number of items produced and sold in November >= 0
Ci: is Profit from selling one item (i) in Sept./Oct.
Di: is Profit from selling one item (i) in November
MinDi: Minimum demand for item (i) in Sept./Oct.
MaxDi: Maximum demand for item (i) in Sept./Oct.
New LP
Maximize

 XiCi + YiDi ( MaxjEj )EPj

i

XiFUij + YiFUij=Ej
i

XiFUij + YiFUij Maxj

i

Xi MaxDi

Xi MinDi
X 3+Y 3= X 4+Y 4

X 8+Y 8=X 9+Y 9

Check attachment for excel formulation and solution

Conclusion:
One of the difficulties in the problem was collecting the information and formulating the
problem. By solving the problem, Trendlines now has a production plan they can follow to
maximize profit from selling clothing. The reason we used Excel to formulate the problem is we
found its a better way to view the output file as the whole problem with the solution can be
printed on one page.