MGOC10H3 Lecture Notes - Lecture 5: Variable Cost, Carrying Cost, Trick-Trick

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19 Aug 2016

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MGOC10 Analysis for Decision Making
Lecture 05
Chapter 4 – Applications of LP – Part 2
Operations Management Example – Workforce Assignment – McCormick MFG. Co.
1. Workforce assignment problems occur when production managers make decision about staffing
requirements for a given planning period.
2. Some workers can be assigned to more than one dept. if crossed trained.
Dept. product 1 product 2 total hours available
1 0.65 hr/unit 0.95 hr/unit 6500
2 0.45 0.85 6000
3 1.00 0.70 7000
4 0.15 0.30 1400
profit $10/unit $9/unit
McCormick Manufacturing Co. produces 2 products.
Each product must go through processing in 4 departments.
McCormick has a cross training program that enables some employees to be transferred between
Labor hours may be transferred from one dept to another, cannot be more than max allowed.
Formulate LP model to determine how many product 1 and 2 to produce to max profits.
Operations Management Example –Blending Problem – Grand Strand Oil Company
1. How to blend 2 or more resources to produce one or more product. Resources contain one or
more essential ingredients that must be blended into final products that will contain specific % of
2. Management decides how must of each resource to buy to satisfy production specs and product
demand to min cost.
3. Petroleum industry – blending crude oil to produce different octane gas
Chemical industry – blending chemicals to produce fertilizers and weed killers.
Food industry – blending ingredients to produce soft drinks, soap.
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