Operation Research Project

Work
Topic: Planning the Product
Mix at Panchtantra
Corporation

Introduction
Mr. Ganesh had to prepare a production plan of
Intensive Handloom Development project for the
next month.
Types of handloom to be produced :
Lungi (60sx40s)
Shirting (40sx40s)

The main objective of Mr. Ganesh was to decide

over how many metres of Lungi and shirting should
be produced in order to maximize the profit
satisfying the various constraints.

Exihibit 1
S.
No.

Parameter

1 Selling Price (Rs. Per metre)

2 Variable Cost
2.a. Wages paid to weavers (Rs. Per
metre)
2.b. Yarn Cost (Rs. Per metre)
3 Contribution (Rs. Per metre)
Production Rate (No. of metre per loom
4 day)
5 Yarn Consumption (grams per metre)

Lungi

Shirting

10.9

6.6

4.5

1.5

5.5

4.5

0.9

0.6

12

5.a. 40s yarn

60

100

5.b. 60s yarn

40

Decision Variables
Mr. Ganesh had to decide over the
product Mix i.e. how many metres of
Lungi and Shirting should be
produced.
Therefore Decision Variable are :
Length of Lungi to be produced (in
metres) = X1
Length of Shirting to be produced (in
metres) = X2

Objective Function
Maximizing the Total Sales Profit
Profit per metre of Lungi = Rs. 0.9
Profit per metre of Shirting = Rs. 0.6
Therefore, Objective Function is :

Max (0.9 X1 + 0.6

X2)

Constraints
Various constraints that affect the production
and the decision variables are listed in
following slides
1. Maximum number of Loom Days available are 3000
Loom Days <= 3000
(X1/5)+(X2/12) <= 3000
12X1 + 5X2 <= 3000 x 60
12X1 + 5X2 <= 180000
--(1)

Constraints (contd.)
2. 60s Yarn available was 480 Kgs.
60s yarn <= 480 kgs.
60s yarn is used only for Lungi at the rate of 40 grams
per metre.

40X1 <= 480x1000

--(2)

3. 40s Yarn available was 2400 Kgs.

40s yarn <= 2400 kgs.
40s yarn is used in Lungi at the rate of 60 grams per
metre and in Shirting at the rate of 100 grams per metre

60X1 + 100X2 <= 240x1000

--(3)

Constraints (contd.)
4. As per sales department, due to piled up
stocks in inventory, production of Shirting
should not be more than 22000 metres.
Sales level of Shirting <= 22000 metres

X2 <= 22000
--(4)
5. As per sales department, due to piled up
stocks in inventory, production of Lungi
should not be more than 11000 metres.
Sales level of Lungi <= 11000 metres

X1 <= 11000

--(5)

Problem #1 - Analysis
Mr. Ganesh wanted to produce as much of lungi
as possible, therefore he would want to use the
entire sales limit of 11000 mts.
Therefore, the constraint #5 would be as :
X1 = 11000 --(5.a)
Mr. Ganphathy was however in favor of
producing only the optimal level of Lungi so that
the rest of the resources can be used for
maximizing the profit.
Therefore, the constraint #5 would be as :
X1 <= 11000 --(5.b)

Problem #1 - Solution
Refer Model_Question1 sheet in the attached Solver Model
excel file.

X1 = Length of Lungi to be produced (in metres)

X2 = Length of Shirting to be produced (in metres)
Total Profit

As per Mr.
Ganesh's plan

As per Mr.
Ganphathy's
plan

11000
9600
15660

6666.67
20000
18000

Hence To optimize the profit, following should be the

production plan for the next month (we should go with Mr.
Ganphaty's Plan):
Length of Lungi to be produced = 6666.67 metres
Length of Shirting to be produced = 20000 metres
Increase in profit in this way will be Rs. 2340 with
optimal profit of Rs. 18000

Problem #2 Additional Constraint

Additional constraint added to ensure that on an
average, the production paid as wages to the
weavers at least Rs. 20.5 per loom day.
Total wages for the production could be given by
4.5X1 + 1.5X2
Total number of loom days used could be given by
(X1/5) + (X2/12)
Therefore
4.5X1 + 1.5X2 >= 20.5 x [(X1/5) + (X2/12)]
(4.5-20.5/5)X1 + (1.5 - 20.5/12)X2 >= 0

0.4X1 0.2083X2 >= 0

-- (6)

Problem #2 - Solution
Refer Model_Question2 sheet in the attached Solver Model
excel file.

X1 = Length of Lungi to be produced (in meters)

X2 = Length of Shirting to be produced (in meters)
Wages to weavers per loom day
Total Profit

Plan suggested
in Q.1

For wages >=

Rs.20.5/loom day

6666.67

8333.33

20000

16000

20

20.5

18000

17100

Hence to satisfy the minimum wage constraint for weavers,

following should be the production plan for next month:
Length of Lungi to be produced = 8333.33 metres
Length of Shirting to be produced = 16000 metres
Increase in wages paid to weavers in this way would be Rs.
0.5 per loom day

Problem #3 Additional Constraint

As informed by Finance Manager, Cash
available with Panchtantra Corporation is
Rs. 1.50 Lakhs
Variable (Wages and Yarn cost) were paid
in cash. Therefore, total variable cost
during production will be :
(4.5+5.5)X1 + (1.5+4.5)X2
Hence, the additional constraint :
(4.5+5.5)X1 + (1.5+4.5)X2 <= 150000
--(7)

Problem #3 Solution
Refer Model_Question3 sheet in the
attached Solver Model excel file.
Hence, by taking the cash constraint into
the consideration, following should be the
production plan for next month:
X1 = Length of Lungi to be produced (in metres)

6970.26

X2 = Length of Shirting to be produced (in metres)

13382.90

Optimal Profit

14302.97

Solver Answer Report

Wages and Cash constraints are binding constraints that
limit the optimal profit.
All the other constraints are having slack which
indicates the possibilities of increased profit if wage or
cash constraints are eased.

Solver Sensitivity Report

End of slides