Neutra Pharma is a local pharmaceutical company which is operating in Lahore,

Pakistan. They specialize in various salt based herbal medicines. They have
outsourced their production to vendors out of which their best and most reliable
vendor is “The Viegen Group”. The Viegen Group aces in manufacturing high
quality medicines for their clients. Its CEO, Mr. Habib Qadir, has had a great
relationship with the Neutra group for the past 9 years and is producing various
kinds of medicinal and herbal drugs for them. They have multiple production
setups within their factory which produce different drugs. One of these setups is
for specific salt-based drug which is available in the market and is called Y-fol
Plus. Y-fol Plus acts as a supplement for iron deficiency, and symptomatic relief
from anemia. Viegen is now thinking of expansion to get more orders and hence
to make more profit.

Values:
The general demand for the Y-fol Plus tablets is triangularly distributed with
values 15,000, 20,000, and 25,000 as minimum, most likely, and maximum,
respectively. Their operating days (excluding Sundays) are also triangularly
distributed with number of days in a month being 25, 26, and 27 as minimum,
most likely, and maximum, respectively. There are 8 workers that work on
contractual basis on production per day, and the cost of labor of each worker per
day is Rs. 650.

Currently, they are employing a single machine that they use to make different
medicines which fall in the same salt group. Due to the limited production
capacity of the machine(resources?), they sometimes have to decline orders, which
cuts back their potential revenues. The objective is to find the total number of
machines that Viegen needs to buy to increase per month production to earn the
highest amount of profit possible.

The company is forecasting production for 2, 3 and 4 machines in order to reach

a purchasing decision. The cost of each machine is Rs 600,000. This machine will
depreciate in 12 years with straight line depreciation and zero salvage value. The
production quantity (in grams) is triangularly distributed as 42000 minimum,
45000 most likely and 50000 maximum. 1 tablet has a weight of 1 gram therefore
each gram can be considered as one tablet. Hence total tablet production has the
same triangular distribution. Each strip has 20 tablets in it. The production
quantity (in strips) for the existing one machine is triangularly distributed as 2100
minimum, 2250 most likely and 2500 maximum. These values are taken as the
base values to estimate production values for 2,3 and 4 machines. The base values
are assumed to be proportional to the number of machines. For instance, for 2
machines the base values will change to 4200 minimum, 4500 most likely and
5000 maximum.

The days taken by 1 machine to process the production requirements are

triangularly distributed as 2 minimum, 3 most likely and 4 maximum. These
number of days are divided with respect to the number of machines added for
example if there are a total of two machines, then the days would be distributed
as 1, 1.5 and 2. These days are based on the machines production limitations.
The probability that the batch produced by a machine will pass inspection is
90%. Those that do not pass are discarded.

The Company receives orders for the number of strips triangularly distributed as
15000, 20000, 25000 as minimum, most likely and maximum respectively.
Viegen wants to be able to take on these orders multiple times during a month.
To do this, they should be able to produce the entirety of the orders they have
taken on. For this, they make forecasts for 6 orders in a month to see what the
quantity of each order will be and how long will it take to produce that order.
Based on these values, Viegen wants to decide how many orders they will be able
to complete and therefore, how many orders they will accept.

The end objective is to maximize profit by deciding the number of machines to

buy. The cost to the company of producing one strip is Rs.40 and it is sold at a
price of Rs.270 per strip.

Build the suitable model(s) for the problem and provide your suggestions.
(Note: Use assumptions for the parameters/figures not provided or consult the officially
provided facts and figures available on the internet.)

“May all your practice and preparation meet with the best of luck!”