Case Study By: The South Group Mexican Wire Works Case Study By: The South Group

Mexican Wire Works Business Problem Mexican Wire Works is a producer of wire windings used in making electrical transformers. This company has the good fortune of booking more orders then they can fill. The company has ordered new equipment to help in the long term, but they still have a short term issue. In addition, the company is refinancing long term debt and needs profits to be as high as possible to counteract the affects of this refinance. The problem is to select the orders that will make the company the most profitable for the month, while keeping customers happy by filling their minimum requirements.

Mexican Wire Works What can be done to make the company most profitable in the short term of one month? Get profit for each product

Mexican Wire Works 2. Set up Company data in useable format

Mexican Wire Works Define the objective function Objective maximize profit $34P1+$30P2+$60P3+$25P4 Constraints 1P1 + 2P2 + 0P3 + 1P4 <= 4000 Drawing 1P1 + 1P2 + 4P3 + 1P4 <= 4200 Extrusion 1P1 + 3P2 + 0P3 + 0P4 <= 2000 Winding 1P1 + 0P2 + 3P3 + 2P4 <= 2300 Packaging

Mexican Wire Works 4. Start QM for Windows Select Module Menu Select Linear Programming Menu Select File Menu Select New Define Data set for Linear Program

Mexican Wire Works 5. Fill in data grid with problem data 6. Solve the problem by clicking the solve button

Mexican Wire Works 7. The solution can be viewed in the data grid

Mexican Wire Works Check answer in Excel using Solver Step 1 Start Excel and create a new worksheet Step 2 Enter Headings, variables, and coefficients for the objective function Step 3 Enter cells where values of variables will be located, this is where solver will put the solution Step 4 Write formula to compute left side constraints

Mexican Wire Works Step 5 The spread Sheet is now ready to run solver Enter right side constraints The spread Sheet is now ready to run solver

Mexican Wire Works Step 6 Click on Tools then Solver Step 7 Fill in Solver Parameters to match your Spread Sheet layout

Mexican Wire Works Step 8 Review the answer

Mexican Wire Works Discussion question 1 The computer generated solution states we should produce the following mix of products Note: this problem has move then two decision variables so we must rely on the computer software

Mexican Wire Works Discussion Question 2 Discuss the need for temporary workers in the drawing department. The current plant capacity of drawing is 4,000 hours. With the other constraints in place, increasing drawing capacity will only increase cost and decrease profits. As stands, we have excess drawing capacity.

Mexican Wire Works Discussion Question 3 Discuss the plant layout To maximize efficiency the plant layout should be altered to make related functions closer to each other. The packaging department should be moved adjacent to the inspection department and the finished product storage department should be moved next to the packaging department. This is due to the fact that products leaving packaging will be going to the finished product storage.

Mexican Wire Works Before After Finished Product Storage Office Wire Drawing Rework Department Packaging Receiving and Raw Material Storage Winding Rejected Product Storage Extrusion Inspection After Rejected Product Storage Office Wire Drawing Rework Department Extrusion Receiving and Raw Material Storage Winding Finished Product Storage Inspection Packaging