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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However, fixed OH has not been included in the calculations until afterwards as it does not impact the optimal solution, only the net profit.

Merton Truck case study

The binding constraints seen in Exhibit 4 are no longer the Model Assemblies s seen with earlier combinations, but are now the Engine Assembly and Metal Stamping departments.

The value of linear programming techniques in evaluating possible solutions is soluton, particularly in casf it quickly provides clues of other options to consider such as adding additional Engine Assembly Capacity. This is a phenomenon known as the death spiral, when the discontinuation of a seemingly unprofitable product causes otherwise profitable products to become unprofitable. Mark Ferguson, President From: Without an increase in sales, discontinuing Model would only result in increasing the fixed costs for Model without increasing the revenue.

Merton Truck Case | Joseph Mwakio Ngeti –

Get custom essay sample written according to your requirements Urgent 3h delivery guaranteed Hire Writer. 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: Capacity Options Given the capacity limitations seen thus far, it is a fair conclusion that increasing capacity may present an opportunity. The optimal product mix for Merton given soluttion current product mix and constraints has been determined, but Merton is also considering the addition of a new Model We use cookies to give you the best experience possible.


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. If Merton can rent capacity for less than the shadow price for either department, it should. 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 impact of making only Model was evaluated by determining the capacity using Table A: The first step is to calculate …. It can be reasonably estimated that labor hours per vehicle will be reduced due to learning curves which result from staff experience cxse familiarity with the production processand that Merton will therefore be able to increase the total volume of vehicles produced.

Merton Truck Co

Therefore, Merton should not assemble engines on overtime under these conditions. Ttruck Martinez Company has decided to meeton 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 Model Assembly for Model would also drastically change the impact of discontinuing Model If demand is expected to continue, Merton should also evaluate the ROI casw investing in capital and permanently increasing capacity as an alternative to renting or outsourcing capacity. 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.

Based on the capacity information, it was determined that Model would require 0. Selling Price od Model truck: This is due to a failed integration of socially accepted goals with ….


Note that for each, this is only true for units before the scenario would require reevaluation see the allowable increase in Exhibit 7. There are several other options that Merton did not consider.

To get a unique essay Hire Writer. 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. Based on the information provided here, further recommendations for Merton would be to 1 immediately change the production mix to Model s and Model s, 2 evaluate anticipated demand and the impact of a capital investment to increase capacity, and 3 seek quotes for capacity rental or outsourcing Engine Assembly.

Merton Truck case study – University Business and Administrative studies – Marked by

Many of the values were in accordance with expectations as they corresponded to the earlier analyses. Therefore, fixed overhead was not considered until the end of each evaluation. Mertno being considered included changing their product mix by either removing or adding a product line, or renting capacity. If it is much greater, Merton should consider raising its prices to reduce demand.

In order to evaluate any alternative, we need to compare to current profit. Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits.