CASE: Merton Truck Company. Quantitative Techniques- II Assignment: 1. Section: F Group number 3. Submitted To: Prof. Bhuvanesh Pareek Submitted By. 12 Dec Free Essay: EMBA MERTON TRUCK COMPANY CASE SOLUTION HARSHID DESAI AMRUT MODY SCHOOL OF MANAGEMEMNT. View Notes – Merton Truck Case Report from FINANCE at Xiamen University. Case Solution Merton Truck Company Submitted by: Group 5(Section G).

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Merton Truck Co | Free Essays –

March 10 To: M in monthly fixed overhead exists regardless of the product mix and does not need to be allocated on a per unit basis to determine overall profit or financial performance. In the current analysis, it is assumed that Model Assembly cannot be used for Modela logical assumptionsince Merton specifies the department where Model will be made. If one or both of these was increased, this could have a commpany positive impact on profit.

In order to evaluate any alternative, we need compayn compare to current profit.

We will write a custom essay sample on Merton Truck Co specifically for you. The value of linear programming techniques in evaluating possible solutions is clear, particularly in that it quickly provides clues of other options to consider such as adding additional Engine Assembly Capacity.

Decision Making Across the Organization Pages: Merton Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits. The binding constraints seen in Exhibit 4 are no longer the Model Assemblies s seen with earlier combinations, but are now the Engine Assembly and Metal Stamping departments. To get a unique essay Hire Writer. As seen in Exhibit 8, Solver has determined that overtime should be utilized to produce additional units of Model A limited time offer!

The first step was to determine the capacity of producing only Modelwhich is as follows based on Table A: Get custom essay sample written according to your requirements Urgent 3h delivery guaranteed Hire Writer. Also, only one variable or department can be increased.


Ferguson Foundry Limited Pages: Selling Price od Model truck: Since it was the specific request of the president, the impact of discontinuing Model was evaluated.

Merton Truck case study

Merton also has the option of increasing engine capacity by 2, hours using overtime. There are several other options that Merton compwny not consider.

In the optimal solution, there are limitations in both Engine Assembly and Metal Stamping. If it is much greater, Merton should consider raising its prices to reduce demand. InMerton Truck Company was searching for ways to increase profits and ultimately its poor financial performance.

Technology could also play an important role in reducing the time and costs needed to produce the vehicles, so it is important that Merton maintain a watchful eye on new production methods and machinery.

Based on the information provided here, further recommendations for Merton would be to 1 immediately change the production mix to Model s and Model s, 2 evaluate anticipated demand and the impact of a capital investment to increase capacity, and 3 seek quotes for capacity rental or outsourcing Engine Assembly.

In addition, technologies can help reduce the costs of designing, developing, and manufacturing a product which can help the firm to improve product quality and to charge a higher price. It is also mentioned that at present, demand is great enough that the company aolution selling everything it produces.

The optimal product mix for Merton given their current product mix and constraints has been determined, but Merton is also considering sopution addition of a new Model Renting capacity from an outside supplier was one alternative, but a similar option would be to simply outsource at a rate less than the shadow prices discussed earlier. Exhibit 2 shows the graph, including the values in USD obtained when the extreme points are plugged into the equation.

However, fixed OH has not been included in the calculations until afterwards as it does not impact the optimal solution, only the net profit. Note that for each, this is only true for units before the scenario would ocmpany reevaluation see the allowable increase in Exhibit 7. This is a phenomenon known as the death spiral, when the discontinuation of a seemingly unprofitable product causes otherwise profitable products mertob become casd.


Once the relevant range of all the constraints was determined, the extreme points were clearly identified. Without an increase in sales, discontinuing Model would only result in increasing the fixed costs for Model without increasing the revenue.

Merton Truck Co

The impact of making only Model was evaluated by determining the capacity using Table A: Many of the values were in accordance with expectations as they corresponded to the earlier analyses.

Therefore, fixed overhead was not considered until the end of each evaluation. It can be mefton estimated that labor hours per vehicle will be reduced due to learning curves which result from staff experience and familiarity with the production processand that Merton will therefore be able to increase the total volume of vehicles produced.

The extreme points corresponding to the non-negativity, Model Assembly, and Model Assembly constraints were easy to identify, and the rest was determined by simultaneously solving the equations of intersecting lines. Merton should also consider the impact that learning curves and technology may have on their production process.

Merton Truck Case | Joseph Mwakio Ngeti –

We use cookies to give you the best experience possible. The values for contribution margin CM are given as well as the portion of departmental capacity required to produce Therefore, Merton should not assemble engines on overtime under these conditions.

Based on the capacity information, it was determined that Merhon would require 0.