Production Process Model

Production Process Model

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Production Process Model

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1. MANSCI S01 September 30, 2013 Group G Maranon, Katrina Ng, Katrina Uy, Rykiel Valenzuela, Nikki Production Process Model

2. Often characterized by the fact that some of the products produced are inputs to the production of other products. Production Process Model

3. Repco produces three drugs: A, B, and C and can sell these drugs in unlimited quantities at unit prices P80, P700, and P1,000, respectively. Producing a unit of drug A requires 1 hour of labor. Producing a unit of drug B requires 2 hours of labor and 2 units of drug A. Producing a unit of drug C requires 3 hours of labor and 1 unit of drug B. Any drug A that is used to produce drug B cannot be sold separately, and any drug B that is used to produce drug C cannot be sold separately. A total of 4,000 hours of labor is available. Case: Production Process

4. Task: Use linear programming approach for Repco to maximize its sales revenue. Case: Production Process

5. Facts and Variables: • Decision Variables: A = units of Drug A to produce B = units of Drug B to produce C = units of Drug C to produce 2B = units of Drug A to produce Drug B 1C or C = units of Drug B to produce Drug C

6. Revenue Function: Revenue = 80 (Units of Drug A less those used to produce Drug B) + 700 ( Drug B less those used to produce Drug C) + 1000 Units of Drug C Revenue = 80 (A – 2B) + 700 (B – C) + 1000 C = 80 A – 160 B + 700 B – 700 C + 1000 C = 80 A + 540 B + 300 C

7. Labor hours: 1 A + 2 B + 3 C ≤ 4000 • Units of Drug A to produce Drug B 2 B ≤ A - A + 2 B ≤ 0 • Units of Drug B to produce Drug C C ≤ B - B + C ≤ 0 Constraints:

8. Constraints:

9. Solver Template:

10. Produce 2000 units of Drug A, with a revenue of P160,000. Produce 1000 units of Drug B, with a revenue of P540,000. Produce 0 units of Drug C The maximum revenue that can be derived by REPCO is P700,000. Conclusion:

11. Thank You! 