Question

2. Devos Inc. makes desks that are made up of 1 top, 2 sides, and 4 legs. We need to make at least 15,000 desks to fulfill the demand of our customers. The costs are as follow:

Make the top - $7, Buy the top - $10, Make the side - $3, Buy the side - $5, Make a leg - $2, Buy a leg - $3

1) One top requires 4 feet of wood, one side requires 2 feet of wood, and one leg requires 1 foot of wood and we have 180,000 feet of wood available.

2) Each top takes 8 minutes to make a top, each side takes 3 minutes to make, and each leg takes 2 minutes to make. We have 300,000 minutes available.

Each top takes up 2 units of space, each side takes up 2 units of space, and each leg takes up .1 units of space before it is assembled in our inventory. We have 80,000 units of space available.

Answer the following using solver:

1. How many tops should we make? How many tops should we buy? How many sides should we make? How many sides should we buy? How many legs should we make? How many legs should we buy?
2. Without re-running Solver, what happens to our cost if we require that we buy at least one leg?
3. Without re-running solver, what happens to our cost if we need to make 16,000 tops (instead of 15,000)?

Answer 1

We will solve this problem using Excel -> Solver as shown below:

a)

Units to be made or bought as per optimal solution is below:

	Make	Buy
Top	15000	0
Side	0	30000
Leg	50000	10000

Total optimal cost is $3.85,000

b)

For optimal solution we will to buy 10,000 legs hence this constraint will not change the optimal solution and total cost.

c)

Looking at sensitivity report above, to answer this question.

Shadow price is 9 for Top. Hence with 1000 increase in demand for tops there will be impacted on total cost which will increase by 1000*9=$9000