367 Words2 Pages

ShuzWorld Decision Analysis Case Study
Determining production mix
It's still dark outside when you arrive at Shuzworld's headquarters for a scheduled 6AM Skype session with Dieter Handel. It's 5PM in Shanghai, the close of the business day, but Handel is eager to discuss his latest business challenge with you.
"Here's the situation," he says, staring intently into the webcam. "We're struggling to keep production costs down in the Shanghai plant. I don't want to see us shift any more production to Shuzworld H or F. I have two production mix problems I need your help with."
"I just looked at the schedule for next month's production of Kidshuz shoes and sneakers. We're told the forecasted demand requires us to produce at least 25 batches of Kidshuz shoes and at least 10 batches of Kidshuz sneakers this month."
Handel looks down, scanning some papers in his hand. "Based on my latest figures, the shoes cost me $2,000 per batch to produce and the sneakers cost $1,500 per batch to produce."
"I need a production plan for a total of 50 batches of shoes and sneakers for this period which will meet all requirements and minimize production costs."
Capacity issues
"I have one other issue I'd like to get resolved," Handel continues. "We're producing two versions of loafers: the Kiltie Tassel Loafer and the Classic Penny Loafer."
"The production of these two slip-on products both require processing in our assembly department and our finishing department."
Handel pauses. "I've e-mailed you a table showing how long each batch of loafers takes in the two departments, and the profit per batch."
Product Assembly Department Finishing Department Profit per batch
Batches of Tassel Loafers
2 hours 8 hours $800
Batches of Penny Loafers
6 hours 4 hours $1,200
"I've also sent the available capacity, in hours, for both departments and the

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