Department of Management and Marketing Spring 2014′
Quantitative Methods for Decision Making
Professor Belaid Aouni
This project is a group work composed of four students as a maximum and with a
minimum of two students. Each group is expected to prepare a Word report (the hand
writing reports will not be accepted) that includes the following parts: 1) definition of
the decision variables, and b) the linear program (objective function and the
constraints). Your report is due on May 8, 2014 at 8:00 am (in class).
Decision-Making Situation:
The production manager of a manufacturing company in Doha has to prepare a
production plan for one of its products. The forecasted sales for the next 5 months are
as follows: 2500; 4000; 3000; 7000; and 3300 units. The company would like to keep a
safety stock of 500 units at the last month.
There are 20 working days per month and employees are paid on the rate of 50 QAR per
hour for the regular working time (8 hours per day). We can ask those employees to do
overtime up to a limit of 25% of their regular working time by giving them a bonus of
50% of their regular time rate. The average rhythm (rate) of production is 2 units per
hour per employee. Moreover, the company can buy extra units from a competitor at a
cost of 60 QAR per unit for labor expenses. The cost for hiring an employee is 5000 QAR
and the cost of releasing (layoff) of an employee is 4000 QAR. The holding cost is 10
QAR per unit per month. At the end of the month 0, the company employs 10 people
and has 1000 units ofthis product in the inventory.
Let us suppose that the company employs 10 people at month 0 of the production plan,
formulate a linear program that can help the production manager to minimize the total
production cost and meets the forecasted sales.
Quantitative Methods for Decision Making Professor Belaid Aouni This project is a group work composed of four students as a maximum and with a minimum of two students. Each group is expected to prepare a Word report (the hand writing reports will not be accepted) that includes the following parts: 1) definition of the decision variables, and b) the linear program (objective function and the constraints). Your report is due on May 8, 2014 at 8:00 am (in class). Decision-Making Situation: The production manager of a manufacturing company in Doha has to prepare a production plan for one of its products. The forecasted sales for the next 5 months are as follows: 2500; 4000; 3000; 7000; and 3300 units. The company would like to keep a safety stock of 500 units at the last month. There are 20 working days per month and employees are paid on the rate of 50 QAR per hour for the regular working time (8 hours per day). We can ask those employees to do overtime up to a limit of 25% of their regular working time by giving them a bonus of 50% of their regular time rate. The average rhythm (rate) of production is 2 units per hour per employee. Moreover, the company can buy extra units from a competitor at a cost of 60 QAR per unit for labor expenses. The cost for hiring an employee is 5000 QAR and the cost of releasing (layoff) of an employee is 4000 QAR. The holding cost is 10 QAR per unit per month. At the end of the month 0, the company employs 10 people and has 1000 units of this product in the inventory. Let us suppose that the company employs 10 people at month 0 of the production plan, formulate a linear program that can help the production manager to minimize the total production cost and meets the forecasted sales.,
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