Project #78520 - ECON Statistics Linear Programming

Case Study #2

Nutty Nuts Company produces three nut mixers: Regular, Deluxe and Holiday.  Currently Nutty Nuts has purchased the following shipments of nuts at the prices shown

Type of Nut                            Shipment Amount (lbs)                   Cost per Shipment

Almond                                                      6000                                                            7500

Brazil                                         7500                                                            7125

Filbert                                       7500                                                            6750

Pecan                                        6000                                                            7200

Walnut                                                       7500                                                            7875

The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts.  The Deluxe Mix consists of 20% of each type of nuts, the Holiday Mix consists of 25% almonds, 15% Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts.  Nutty Nuts’ accountant analyzed the cost of packaging materials, sales price per pound, and so forth, and determined that the profit contributions per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the Holiday Mix.  These figures do not include the cost of specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets.  Nutty Nuts already received orders of 10,000 pounds of Regular Mix, 3000 pounds of Deluxe Mix and 5000 pounds of Holiday Mix.

Because demand is running high, Nutty Nut expects to receive many more orders than can be satisfies.  Nutty Nuts is committed to using the available nuts to maximize profit over the fall season; nuts not used will be given to the Free Store.  Even if it is not profitable to do so, Nutty Nut president indicated that the orders already received must be satisfied.

Managerial Report

Perform analysis of Nutty Nuts’ product mix problem, and prepare a memo (no more than 2 pages) for Nutty Nuts’ president that summarizes your findings and recommendations.  In the Appendix, be sure to include your analysis on the following:

1.     The cost per pound of the nuts included in the Regular, Deluxe and Holiday mixes.

2.     The optimal product mix and the total profit contribution

3.     Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts can be purchased

4.     A recommendation as to whether Nutty Nuts should purchase an additional 1000 pounds of almonds for $1000 from a supplier who overbought

5.     Recommendations on how profit contribution could be increased (if at all) if Nutty Nut does not satisfy all existing orders.

Subject Business
Due By (Pacific Time) 08/11/2015 05:00 pm
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