Executive Summary of Shelby Shelving 
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Assignment 2 Shelby Shelving
From Ayşe Gül Vural
Date March 02,2015
Executive Summary
Shelby Shelving is a manufacturing firm who produces shelves for grocery stores. They have two types of shelves named Model S and Model LX. These two models have three main steps in production which are: Forming, Stamping and Assembly. Forming and Stamping departments can produce both models on same line whereas Assembly lines are different for each model. Firm’s problem is to determine how much to produce monthly Model S and Model LX in order to maximize the profit. The decision depends on the optimal quantity that must be produced for each model. The key issue is the marketing department of the company and the controller of the firm have conflicts about Model S. The marketing department think that they should cut back Model S production because its’ cost is higher than the selling price which make them having losses but Controller disagreed and he argues that they will be worse-off with lower production because Model S has a contribution to make overhead. The solution is the optimal quantity to produce each model at which the total profit will be the maximum.
Model
Decision: How much to produce Model S and Model LX
Objective: To find optimal production for each Model which gives the maximum profit by using resources
Assumptions:
Machine requirements hours per unit: Model S: (Stamping-0,3/Forming-0,25) Model LX: (Stamping-0,3/Forming-0,5) are given and known,
Hours spent in departments: Model S: (Stamping-570hrs/Forming-475hrs) Model LX: (Stamping-195hrs/Forming-325hrs),
Unit Selling Price: Model S: $1800 and Model LX: $2100 are given and constant
Assembly Capacity: Model S: 1900 units and Model LX: 1400 units
Forming and Stampnig Capacities: 800hrs
Current Montly production: Model S:400 and Model LX:1400 and accounting data based on this production level is also
Assignment 2 Shelby Shelving
From Ayşe Gül Vural
Date March 02,2015
Executive Summary
Shelby Shelving is a manufacturing firm who produces shelves for grocery stores. They have two types of shelves named Model S and Model LX. These two models have three main steps in production which are: Forming, Stamping and Assembly. Forming and Stamping departments can produce both models on same line whereas Assembly lines are different for each model. Firm’s problem is to determine how much to produce monthly Model S and Model LX in order to maximize the profit. The decision depends on the optimal quantity that must be produced for each model. The key issue is the marketing department of the company and the controller of the firm have conflicts about Model S. The marketing department think that they should cut back Model S production because its’ cost is higher than the selling price which make them having losses but Controller disagreed and he argues that they will be worse-off with lower production because Model S has a contribution to make overhead. The solution is the optimal quantity to produce each model at which the total profit will be the maximum.
Model
Decision: How much to produce Model S and Model LX
Objective: To find optimal production for each Model which gives the maximum profit by using resources
Assumptions:
Machine requirements hours per unit: Model S: (Stamping-0,3/Forming-0,25) Model LX: (Stamping-0,3/Forming-0,5) are given and known,
Hours spent in departments: Model S: (Stamping-570hrs/Forming-475hrs) Model LX: (Stamping-195hrs/Forming-325hrs),
Unit Selling Price: Model S: $1800 and Model LX: $2100 are given and constant
Assembly Capacity: Model S: 1900 units and Model LX: 1400 units
Forming and Stampnig Capacities: 800hrs
Current Montly production: Model S:400 and Model LX:1400 and accounting data based on this production level is also