1.

Construct the Red Brand Canners decision model in Microsoft Excel

2. Solve your model with Solver. What do you decide? Explain the results

The Excel model in the “Excel object” below answers questions 1 and 2.
Objective:
1. Find the solution that maximizes profits.
Decisions:
1. How much of each type of tomato use to produce each of the three tomato based products in order to
maximize profits.
Constraints:
1. Total usage per quality must be less or equal than the total available quantity per each quality (A or B).
2. Total production should not exceed the expected demand.
3. The quality for each product should be higher than the lower expected quality for each product.
In my excel model I modeled all these relation referring to the data available in the case.

What comes out from the model, after having solved it with Solver, is that with the quantities colored in red
Red Brand Canners will be able to maximize its profits, for a total amount of 136 k£.
Note: variable costs do not take into account the fruit cost. This is not a variable cost, since fruit (in the case,
tomato) has already been bought. I took into account the cost of fruit after calculating the profit in order to get
the total effective profit expected for the year following my suggestions concerning the quantities.

3. Construct the decision model for considering the possibility to purchase the additional grade A tomatoes
and solve. What do you decide? Explain your results.

This new decision model has been created starting from the previous one. Now is possible to purchase any
additional amount of grade “A” tomatoes up to 80.000 pounds.

In this case, though, on the contrary of what happened before, the fruit cost is a variable cost: tomatoes have
not been purchased yet. Additional variable cost for these tomatoes has been taken into account under the
voice “Additional A cost”.
In this second case, using again Solver to maximize profits, the optimal thing to do is to buy all the 80.000
pounds on grade “A” tomatoes for 0,25 £/pound: the additional profit, though, is just around 1700£ for a total
profit of 137.746 £.

Fixed cost for fruit has remained stable.

4. Construct the decision model using Myers’ recommendation for profit for the products and solve. What do
you observe? Explain your results.

Myer’s suggestion, at a first sight, seems very useful since profits go up to 139.000£ not using the whole
tomatoes. Though his suggestion is wrong.
Myers recomputes “A” and “B” tomatoes cost on a quantity and quality basis, not taking into account that the
whole price has already been paid. He cannot change it anymore and thus the recomputed price is just
fictitious.
Profits go up because he uses much less than “A” tomatoes than in the first solution, and with the new prices he
has calculated this is an advantage; but again, this is a wrong approach that leads to a fictitious result.
Moreover, in my model, the expected total profit of 144.000£ for this solution cannot be met because of the
quality constraint on tomato juice quality.

5. Construct the decision model using Cooper’s recommendation for profit for the products and solve. What
do you observe? Explain your results.

With Cooper’s suggestion, total profit is around 170.000£ . But Cooper made the mistake of considering the
fruit cost as a variable cost. As already said, fruit has already been bought and thus has became a fixed cost.
Thus, Cooper’s solution cannot be considered valid.
!V.D :
Xik= peso en libras de la calidad "i"(i=A,B )
para elaborar el producto "k"(k= W,J,P);

!F.O , INGRESO;
MAX=((4.44)*(XAW+XBW)*100/18)+((3.96)*(XAJ+XBJ)*100/20)+
((5.55)*(XAP+XBP)*100/25)-3000000*6;

!S.A;
XAW+XBW<=14400000;
XAJ+XBJ<=1000000;
XAP+XBP <=2000000;

XAW+XAJ+XAP <=600000 ;
XBW+XBJ+XBP<=2400000 ;

XAW- 3*XBW >=0;

3*XAJ - XBJ >=0 ;
XBP >=0 ;

!V.D :
Xik= peso en libras de la calidad "i"(i=A,B )
para elaborar el producto "k"(k= W,J,P);

!F.O , INGRESO;
MAX=((4.44)*(XAW+XBW)*100/18)+((3.96)*(XAJ+XBJ)*100/20)+
((5.55)*(XAP+XBP)*100/25)-3000000*6-80000*25.5/3;

!S.A;
XAW+XBW<=14480000;
XAJ+XBJ<=1000000;
XAP+XBP <=2000000;

XAW+XAJ+XAP <=680000 ;
XBW+XBJ+XBP<=2400000 ;

XAW- 3*XBW >=0;

3*XAJ - XBJ >=0 ;
XBP >=0 ;