Mexicana WIRE WORKS CASE STUDY

Case Overview
Mexican Wire Works Inc. is producer of wire winding used in electrical transformers. Production process departments include:
- Drawing - Extrusion - Winding - Packaging - Inspection -

Presented with problem in March:

The company is currently booking more orders than they can fill. They have plans to expand production but need to maximize profits in April before these changes take effect.

Case Overview
April Orders:
Product W0075C Quantity (Units) 1400

W0033C W0005X
W0007X

250 1510
1116

A promise has been made to a key customer to produce a minimum of 600 W0007Xs and 150 W00075Cs

Standard Cost & Bill of Labor

(Hours/Unit)

Objective Function and Constraints

Objective Function:
Maximum Profit: 34X1+30X2+60X3+25X4

Demand:
Product W0075C (X1) >= 150 Product W0007X (X4) >= 600

Constraints
Plant Capacity (Hours):

1X1+2X2+0X3+1X4 <=4000 Drawing constraint 1X1+1X2+4X3+1X4 <=4200 Extrusion constraint 1X1+3X2+0X3+0X4 <=2000 Winding constraint 1X1+0X2+3X3+2X4 <=2300 Packaging constraint

Received order parameters: X1 <= 1400 X2 <= 250 X3 <= 1510 X4 <= 1116

LP Model
Maximize Profit:
34X1+30X2+60X3+25X4

Subject to:
1X1 <= 1400 1X2 <= 250 1X3 <= 1510 1X4 <= 1116 1X1+2X2+0X3+1X4 <=4000 (Drawing constraint) 1X1+1X2+4X3+1X4 <=4200 (Extrusion constraint)

1X1+3X2+0X3+0X4 <=2000 (Winding constraint)

1X1+0X2+3X3+2X4 <=2300 (Packaging constraint) 1X1 1X4 >= 150 >= 600

Spreadsheet Solution

Discussion Question
What recommendation should Ron Garcia make with what justification? To achieve the maximum profit with the above stated constraints, the company will need to produce the amounts of each product stated below.
Products W0075C W0033C W0005X W0007X

Units

1100

250

600

Discussion Question
The need for temporary workers in the drawing department. Extra workers will not be needed in the drawing department. The packaging department is already working at capacity. With the other constraints in place, increasing drawing capacity will only increase cost and decrease profits.

Discussion Question
The plan layout To increase efficiency, the plant layout should be altered to make sequential functions closer to each other .
Sequence: drawing extrusion winding inspection packaging

The packaging department should moved behind inspection department. The finished product storage department should be moved across from the packaging department. This will improve of both raw material and finished goods.

New Plant Layout

Before

After

Discussion Question
What is the maximum profit Optimum Profit = $59 900 Since packaging hours will be utilized fully, the remaining hours of drawing and extrusion will be unused.