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

2. 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.

3. 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

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

5. 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

6. 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

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

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

9. 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

10. 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

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

12. Mexican Wire Works
Step 8
Review the answer

13. 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

14. 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.

15. 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.

16. 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