Question

After eating cookie dough ice cream and mixed berry ice cream for a month,
Cookie Monster has decided that he wants just one ice cream that he can
get that has both cookie dough and mixed berries. Linda and Tony have
decided that they can combine the two ice creams together for their best cus-
tomer. However, they want to make as much money as possible for blending
these two together. They want to charge customers in proportion to how
much they were selling the tubs for as a whole. Therefore, for every scoop
of cookie dough ice cream they add to the new blend, they charge 25 cents,
and for every scoop of mixed berry ice cream they add to the new blend,
they charge 30 cents. However, they can only have at most 40 scoops of ice
cream in a tub, and Cookie Monster still needs to eat at least 2 times as
much mixed berry ice cream as cookie dough ice cream. Finally, since cookie
dough is cookie monster’s favourite flavour, he wants at least 6 scoops of
cookie dough ice cream in the blend.

Part a)Formulate an LP whose solution will tell Tony and Linda how
to maximize their total weekly profit.
Your answer should contain all these items: Definition of decision variables,
the objective function, labeled constrains, and sign constraints if there are
any.

Part b) Draw the feasible region of the problem. Determine the coordi-
nates of all the extreme points of the feasible region.

Part c)Draw one of the isoprofit lines. What is the slope of the isoprofit
lines?

Part d) Using the graphical method, determine the optimal solution for
the problem.

Answer 1

With the help of Porter’s Five Forces, it can determine the level of competition that is present in the business environment and the level of profits it will get.

Competitive Rivalry

            Back then competition is seen negative but it has since changed overtime. Competition is now seen as an advantage by different industries. Competition allows them to work hard and develop products in order to attract their own customers or target audience.

So as we can see the number and size of competition is relatively big and this creates competition between them such as competing against raw materials e.g. milk.

The leading brand is private label.

Followed to that Haagen-Dazs (Subsidiaries of Nestle) .This brand has been created since the 1960s. This particular brand is famous to the public because of its high quality of natural ingredients and no artificial stabilizers or additives. It is also successful that sets the bar high for rich and clean-tasting ice cream.

Ben & Jerry’s (Subsidiaries of Unilever) Ben & Jerry’s is a leading manufacturer of high quality of ice cream which is based in Vermont. There are many more brands that are competing with each other but these two are the most famous brands within the public.

When it comes to targeting the market with their products there is still competition but nothing major. For example ice cream novelties such as ice pops and ice sandwiches which were intended by children became popular with the adults. Haagen-Dazs entered this market and produced products such as Dove Bars.

Threat of Substitutes

Substitutes in the ice cream and frozen desserts industry can include products that have the similar purpose and are often chosen by the consumers

The best source of butterfat is fresh sweet cream which has 50-75% fat. Other fattening sources that are used include dried cream and concentrated sweet cream. Now consumers are very concerned about the fat sources that are being put on ice cream and they believe that it has a negative effect on the diet.

So as we can see American customers are going for the “better for you” products as they are much healthier than regular ice cream.

Threat of New Entrants

When a company wants to set up in this industry from scratch they will have a lot to consider before doing so. Within the industry there are many threats of entry such as brand identity which can result to brand loyalty

Other brands that have a good reputation include Ben & Jerry’s and Haagen-Dazs. So as we can see new ice cream companies will have a hard time on establishing its brand and will have a hard time on getting consumers.

It is also costly to set up a new ice cream company. Companies will have to invest a lot in technology in order to make their ice creams and try to make it different from the others.

Bargaining Power of Suppliers

The power of the suppliers in this particular industry is very weak. An ice cream is created with milk first. Suppliers for milk in America are huge. There are a lot of American dairy farmers. Therefore suppliers do not have power over companies that need these raw materials.

Bargaining Power of Buyers

The power of buyers can either increase or decrease a firm’s profit. Within this industry the power of buyers are high. Consumers have the power to switch to an alternative product, easily, for example they can buy low fat ice cream instead of the regular ice cream that can be unhealthy without high costs.

The other thing that shows us that buyers have a high power within this industry is how they changed their purchasing pattern due to the recession.

As we can see they have the power to purchase or not. This is seen as a threat also as it can reduce profits in the ice cream industry.

Conclusion

The analysis shows us that within the ice cream industry there is a high completion not only when it comes to the consumers, also for raw materials. It also shows us how difficult it would be to set up a new ice cream company due to different factors and how companies changes, profit wise, when consumers have the power