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The document summarizes a linear programming problem for Lakesiden Boatworks. The company manufactures 3 types of boats and wants to determine production levels to break even while minimizing total variable costs. The objective is to minimize costs. Constraints include minimum orders from dealers of 70 bass boats, 50 ski boats, and 50 speedboats. Production is also limited to 120 boats of each type. The break-even constraint calculates required sales to cover fixed costs of $2.8 million. The linear program is solved using a computer to provide an optimal production plan.

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Ang Hui Qian
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762 views8 pages

MS Presentation

The document summarizes a linear programming problem for Lakesiden Boatworks. The company manufactures 3 types of boats and wants to determine production levels to break even while minimizing total variable costs. The objective is to minimize costs. Constraints include minimum orders from dealers of 70 bass boats, 50 ski boats, and 50 speedboats. Production is also limited to 120 boats of each type. The break-even constraint calculates required sales to cover fixed costs of $2.8 million. The linear program is solved using a computer to provide an optimal production plan.

Uploaded by

Ang Hui Qian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Management Science

Group Member

Tan Jo Ann B17080589


Taggy Lian B17080570
Lew Shun Cai B17080553
Xavier Tan Yun Xiang B17080551
Chong Cheah Chun B17080586
Question 10

Lakesiden Boatworks is planning to manufacture three type of molded fiberglass


recreational boats – a fishing (bass) boat, a ski boat, and a small speed boat. The
estimated selling price and variable cost for each type of boat are summarize in
the following table:
Boat Variable Cost ($) Selling Price
Bass 12,500 23,000
Ski 8,500 18,000
Speed 23,700 26,000

The company has incurred fixed costs of $2,800,000 to set up its manufacturing
operation and begin production. Lakeside has also entered into agreements with
several boat dealers in the region to provide a minimum of 70 bass boats, 50 ski
boats, and 50 speedboats. Alternatively, the company is unsure of what actual
demand will be, so it has decided to limit production to no more than 120 of any
one boat. The company wants to determine the number of boats that it must sell
to break even while minimizing its total variable cost.
Linear Programing Model
Decision Variales :
X1 = Number of Bass boat
X2 = Number of Ski boat
X3 = Number of Speed boat

Objective Function : MinimizeZ = 12,500X1 + 85,000X2 + 13,700X3

Subject to Constraint :
X1 >= 70 (Min of Bass boat)
X2 >= 50 (Min of Ski boat)
X3 >= 50 (Min of Speed boat)
X1,X2,X3 <= 120 (Max of each boat)
10,500X1 + 9,500X2 + 12,300X3 = 2,800,000 (Break-even Point)
Calculation of the function of break-even point

Break-even Point = Selling Price – Total Variable Cost


= Selling Price – Total Variable Cost – Total Fixed Cost
= (23,000 – 12,500)X1 + (18,000 – 8,500)X2 +
(26,000 – 13,700)X3 – 2,800,000
= 10500X1 + 9,500X2 + 12,300X3 – 2,800,000
2,800,000 = 10500X1 + 9,500X2 + 12,300X3

Therefore the function of break-even point is:


10500X1 + 9,500X2 + 12,300X3 = 2,800,000
Solve model by using the computer
Answer Report
Sensitivity Report
Limit Report

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