Production Budget & Sensitivity Analysis
Added on 2020-05-11
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Running head: QUALITATIVE RESEARCHQualitative ResearchName of the Student:Name of the University:Author’s Note:
1QUALITATIVE RESEARCHTable of ContentsAnswer to Question 1:.....................................................................................................................2Requirement a:.............................................................................................................................2Requirement b:.............................................................................................................................3Formulation of the Linear Programming:................................................................................3Sensitivity Report:...................................................................................................................5Requirement c:.............................................................................................................................6Introduction:............................................................................................................................6Analysis of Sensitivity Report:................................................................................................6Conclusion:..............................................................................................................................6Bibliography:...................................................................................................................................8
2QUALITATIVE RESEARCHAnswer to Question 1:Requirement a:Jake manufactures two types of automobile with a limited production capacity. There is ashortage of steel supply in the region due to the scarcity of steel mills. Moreover, as per thegovernment regulations for fule efficiency, the avergae mpg of all the vehicles, manufactured byJake, should be above 40 mpg.Apart from the manufacturing and other operating costs, Jake has to incur additional costsfor holding the inventory in the factory parking lot. Moreover, the company also incurs extraexpenses for the change in the production volume from earlier quarter. Incusch scenario, Jake requires to determine the optimum production volumes of SUVand cars in each quarter through which he can maximise his profits after deducting inventoryholding cost and cost for change in prodcution volume.To determine the optimum production level, it is assumed.X = Optimum Production Volume of SUVY = Optimum Production Volume of Cari = Nos. of QuartersOn the basis of the above assumptions, the optimum production levels, which can help toachieve maximum profit are as follows:(ΣXi x 2000) + (ΣYi x 150) = Maximum
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