Herculite Suitcase Company Case

Herculite Suitcase Company makes four models of suitcases: Standard, Deluxe, Luxury and Exquisite. Each suitcase goes through four production stages: (1) Cutting and coloring, (2) Assembly, (3) Finishing, and (4) Quality and Packaging. The total number of hours available in each of the departments is 730, 700, 808, and 235, respectively.

Each Standard suitcase requires 0.7 hours of cutting and coloring, 0.5 hours of assembly, 1 hour of finishing and 0.1 hours of quality and packaging. Each Deluxe suitcase requires 1 hour of cutting and coloring, 0.83 hours of assembly, 0.67 hour of finishing and 0.25 hours of quality and packaging. Each Luxury suitcase requires 1 hour of cutting and coloring, 0.67 hours of assembly, 0.9 hours of finishing and 0.4 hours of quality and packaging. Each Exquisite suitcase requires 1.2 hours of cutting and coloring, 0.75 hours of assembly, 0.8 hours of finishing and 0.55 hours of quality and packaging.

The hourly cost of labor for each department is: Cutting and coloring $10; Assembly $6; Finishing $9; and Quality and packaging $8.

Material costs for each type of suitcase is as follows: Standard $6.25; Deluxe $7.50; Luxury $8.50 and Exquisite $9.50.

The sales revenue for each type of suitcase is as follows: Standard $36.50; Deluxe $39.50; Luxury $43.30 and Exquisite $55.10.

Marketing has indicated that it can sell as many units as possible of all models and must have at least 10 Deluxe models available for a favored customer

Management would like to determine how many of each type of suitcase should be produced in order to maximize profit.

1. Use the information given to formulate the appropriate quantitative model to address the problem

2. Enter relevant data, set up in Excel spreadsheet and use Excel Solver to solve the problem and generate Sensitivity and Answer reports.

3. Use the Excel Sensitivity and Answer reports to answer the following questions:

Report complete answers in your spreadsheet

a. What is the optimal solution and the maximum objective achievement?

b. How much does the profit have to increase for Luxury models in order for them to be produced?

c. What would be the effect on profit if 14 Deluxe models were required?

d. If Herculite could obtain more time in the Assembly department, what would be its value?

e. Herculite is able to obtain more labor time in the Cutting & coloring department at a cost of $1.00 per hour. Should they go ahead and add the C & C labor time? Why or why not?