CASE: Merton Truck Company. Quantitative Techniques- II Assignment: 1. Section: F Group number 3. Submitted To: Prof. Bhuvanesh Pareek Submitted By. 12 Dec Free Essay: EMBA MERTON TRUCK COMPANY CASE SOLUTION HARSHID DESAI AMRUT MODY SCHOOL OF MANAGEMEMNT. View Notes – Merton Truck Case Report from FINANCE at Xiamen University. Case Solution Merton Truck Company Submitted by: Group 5(Section G).

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Decision Making Across the Organization Pages: Since it was the specific request of the president, the impact of discontinuing Model was evaluated. Merton also has the option of increasing engine capacity by 2, hours using overtime. The Martinez Company has decided to introduce a new product and would like to evaluate the costs of manufacturing through capital intensive and labor intensive manufacturing methods to determine which ….

In a similar fashion, the ability to use Solutikn Assembly for Model would also drastically change the impact of discontinuing Model Once the relevant range of all the constraints was determined, the extreme points were clearly identified.

To get a unique essay Hire Writer. Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide compsny and data suggesting ways to improve profits. It can be reasonably estimated that labor hours per vehicle will be reduced due to learning companh which result from staff experience and familiarity with the production processand that Merton will therefore be able to increase the total volume of vehicles produced.

As the Model and life cycle continues, the company should see a reduction in time and costs associated ith every aspect of the truck manufacturing process as a result of learning curves. The values for contribution margin CM are given as well as the portion of departmental capacity required to produce Renting capacity from an outside supplier was one alternative, but a similar option would be to simply outsource at a rate less than the shadow prices discussed earlier.

There are several other options that Merton did not consider. The optimal product mix for Merton given their current product mix and constraints has been determined, but Merton is also considering the addition of a new Model In addition, technologies can help reduce the costs of designing, developing, and manufacturing a product which can help the firm to improve product quality and to charge a higher price.

As seen in Exhibit 8, Solver has determined that overtime should be utilized to produce additional units of Model However, since the bottleneck is the Model Assembly, additional capacity remains to produce Model units: The first step was to determine the capacity of producing only Model compamy, which is as follows based on Table A: InMerton Truck Company was searching for ways to increase profits and ultimately its poor financial performance.

Technology could also play an important role in reducing the time and costs needed to produce the vehicles, so it is important that Merton maintain a watchful eye on new production methods and machinery.

Merton Truck Co

The extreme points corresponding to the non-negativity, Model Assembly, and Model Assembly constraints were easy to identify, and the rest was determined by simultaneously solving the equations of intersecting lines. If demand is expected to continue, Merton should also evaluate the ROI of investing in capital and permanently increasing capacity as an alternative to renting or outsourcing capacity.

How much greater than supply is the demand?

Therefore, fixed overhead was not considered until the end of each evaluation. Selling Price od Model truck: Also, only one variable or department can be increased.

Note that for each, this is only true for units before the scenario would require reevaluation see the allowable increase in Exhibit 7. Merton should continue to use that extra capacity to produce Model to generate additional revenue and help absorb costs.

Many of the values were in accordance with expectations as they corresponded to the earlier analyses. Merton should also consider the impact that learning curves and technology may have on their production process.

So far an improved product mix has not been identified, so linear programming was used to identify the production mix that would maximize profits using the following objective function: The first xompany is to calculate …. M in monthly fixed overhead exists regardless of the product mix and does not need to be allocated on a per unit basis to determine overall profit or financial performance.

Merton Truck Case | Joseph Mwakio Ngeti –

We will write a custom essay sample turck Merton Truck Co specifically for you. If both are modified, the shadow prices may no longer hold true. Get custom essay sample written according to your requirements Urgent 3h delivery guaranteed Hire Writer.

Exhibit 2 shows the graph, including the values in USD obtained when the extreme points are plugged into the equation. Options being considered included changing their product mix by either removing or adding a product line, or renting capacity.