Case Study: Fabrics and Fall Fashions

(Labor and Machine)

Range Name Cells ClothingItem Price LMCost
ClothingItem E5:E15 Tailored Wool Slacks (WS) 300 160
Price F5:F15 Cashmere Sweater (CS) 450 150
LMCost G5:G15 Silk Blouse (SB) 180 100
MaterialNeeds I5:O15 Silk Camisole (SC) 120 60
PricePerYard I20:O20 Tailored Skirt (TS) 270 120
MaterialOrder I18:O18 Wool Blazer (WB) 320 140
Lower Q5:Q15 Velvet Pants (VP) 350 175
Upper R5:R15 Cotton Sweater (CT) 130 60
MaterialTotals I16:O16 Cotton Miniskirt (CM) 75 40
Velvet Shirt (VS) 200 160
Button-down Blouse (BB) 120 90
Notes:
1. Upper bounds are marketing estimates of demand, where needed.
2. Katherine (CEO) guesses at least 2,800 TS should be made.
3. Katherine wants to meet at least 60% of WB and WS demand to keep customer base happy.
4. More material cannot be ordered for this season, but leftover material (excluding waste) can be returned at cost.
5. Therefore, with every silk blouse, which produces 0.5 yards of waste, a silk camisole is produced.
We handle this by subtracting 0.5 of the silk required from MaterialNeeds for (SB), since it will be counted under (SC).
6. Also, with every cotton sweater, which produces 0.5 yards of waste, a cotton miniskirt is produced.
We handle this by subtracting 0.5 of the cotton required from MaterialNeeds for CS), since it will be counted under (CM). $3,560,000.00
7. Profits will have to cover fixed costs, which include $860,000 for designers and $2,700,000 for fashion shows.
So total profits are net profits minus this fixed overhead.
What if's:
1. If nothing changes, what is the solution, i.e., the production that maximizes profit? Account for non-integer entries, if they occur.
2. What if Ted's (Production manager) advice to not make any velvet shirts is followed?
(He argues that the fixed design and other costs of this item are about $500,000, which even selling every produced item can't cover.)
3. What if the excess velvet ordered cannot be returned for a refund?
4. What if unexpected manufacturing problems increase wool blazer costs by $80 per unit?
5. What if an extra 10,000 yards of acetate could be obtained?
6. What if all items not sold in Sept-Oct could be sold in unlimited quantities at a 60% reduction in Nov?
7. What if Katherine drops her guess about tailored skirts?
(Labor and Machine) MaterialNeeds
Wool Acetate Cashmere Silk Rayon Velvet Cotton
3 2 0 0 0 0 0
0 0 1.5 0 0 0 0
0 0 0 1.5 0 0 0
0 0 0 0.5 0 0 0
0 1.5 0 0 2 0 0
2.5 1.5 0 0 0 0 0
0 2 0 0 0 3 0
0 0 0 0 0 0 1.5
0 0 0 0 0 0 0.5
0 0 0 0 0 1.5 0
0 0 0 0 1.5 0 0
MaterialTotals
MaterialOrders 45000 28000 9000 18000 30000 20000 30000
PricePerYard 9 1.5 60 13 2.25 12 2.5
1. Upper bounds are marketing estimates of demand, where needed.
2. Katherine (CEO) guesses at least 2,800 TS should be made.
3. Katherine wants to meet at least 60% of WB and WS demand to keep customer base happy.
4. More material cannot be ordered for this season, but leftover material (excluding waste) can be returned at cost.
5. Therefore, with every silk blouse, which produces 0.5 yards of waste, a silk camisole is produced.
We handle this by subtracting 0.5 of the silk required from MaterialNeeds for (SB), since it will be counted under (SC).
6. Also, with every cotton sweater, which produces 0.5 yards of waste, a cotton miniskirt is produced.
7. Profits will have to cover fixed costs, which include $860,000 for designers and $2,700,000 for fashion shows.
1. If nothing changes, what is the solution, i.e., the production that maximizes profit? Account for non-integer entries, if they occur.
2. What if Ted's (Production manager) advice to not make any velvet shirts is followed?
(He argues that the fixed design and other costs of this item are about $500,000, which even selling every produced item can't cover.)
3. What if the excess velvet ordered cannot be returned for a refund?
4. What if unexpected manufacturing problems increase wool blazer costs by $80 per unit?
5. What if an extra 10,000 yards of acetate could be obtained?
6. What if all items not sold in Sept-Oct could be sold in unlimited quantities at a 60% reduction in Nov?
7. What if Katherine drops her guess about tailored skirts?
(Demand Forecasts)
Production Limits
Lower Upper
7000
4000
12000
15000
5000
5500
6000