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Mexicana WIRE WORKSCASE STUDY

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Case Overview

• Mexican Wire Works Inc. is producer of wirewinding used in electrical transformers.

• Production process departments include:

• Presented with problem in March:

The company is currently booking more orders than theycan fill. They have plans to expand production but needto maximize profits in April before these changes takeeffect.

- Drawing - Extrusion - Winding - Inspection -- Packaging

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Case Overview

• April Orders:

• A promise has been made to a key customer to produce

a minimum of 600 W0007X’s and 150 W00075C’s 

Product Quantity (Units)

W0075C 1400

W0033C 250

W0005X 1510

W0007X 1116

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Standard Cost & Bill of Labor

(Hours/Unit)

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• Objective Function:

 – Maximum Profit: 34X1+30X2+60X3+25X4 

•

Demand: – Product W0075C (X1) >= 150

 – Product W0007X (X4) >= 600

Objective Function and Constraints

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Constraints• Plant Capacity (Hours):

• 1X1+2X2+0X3+1X4 <=4000 Drawing constraint

• 1X1+1X2+4X3+1X4 <=4200 Extrusion constraint

• 1X1+3X2+0X3+0X4 <=2000 Winding constraint

• 1X1+0X2+3X3+2X4 <=2300 Packaging constraint

• Received order parameters:

 – X1 <= 1400

 – X2 <= 250

 – X3 <= 1510

 – X4 <= 1116

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LP Model

Maximize Profit: 

34X1+30X2+60X3+25X4 

Subject to: 1X1 <= 14001X2 <= 250

1X3 <= 1510

1X4 <= 1116

1X1+2X2+0X3+1X4 <=4000 (Drawing constraint)

1X1+1X2+4X3+1X4 <=4200 (Extrusion constraint)

1X1+3X2+0X3+0X4 <=2000 (Winding constraint)

1X1+0X2+3X3+2X4 <=2300 (Packaging constraint)

1X1 >= 150

1X4 >= 600

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Spreadsheet Solution

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• What recommendation should Ron Garcia make withwhat justification?

• To achieve the maximum profit with the above stated

constraints, the company will need to produce theamounts of each product stated below.

Discussion Question

Products W0075C W0033C W0005X W0007X

Units 1100 250 0 600

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• The need for temporary workers in the drawingdepartment.

• Extra workers will not be needed in the drawing

department. The packaging department is alreadyworking at capacity.

• With the other constraints in place, increasing drawingcapacity will only increase cost and decrease profits.

Discussion Question

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• The plan layout

• To increase efficiency, the plant layout should be alteredto make sequential functions closer to each other .

• The packaging department should moved behindinspection department.

• The finished product storage department should bemoved across from the packaging department.

• This will improve of both raw material and finishedgoods.

Discussion Question

Sequence: drawing extrusion winding inspection packaging

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• Before

• After

New Plant Layout

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• What is the maximum profit

• Optimum Profit = $59 900 

• Since packaging hours will be utilized fully, the remaining

hours of drawing and extrusion will be unused.

Discussion Question