Macpherson

Refrigeration Limited
Case Solution

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Team Members
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- Akash Vora
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- Garima Patidar
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- Nikhil Ghodki
- Nupur Mungikar
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- Sankaran Gopalakrishnan
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 Macpherson Refrigeration Limited: IVEY, 9A93D021
Group 06
Q.1. Provide a linear programming formulation to find the best production plan
Solution:
Definition of variables:
Xi= Workers in a given month i, where i=1,2,3,4,5,6,7,8,9,10,11,12
Yi= Total inventory at the end of the given month i, where i=1,2,3,4,5,6,7,8,9,10,11,12
Zij= Workers at regular time in the given month i, where i=1,2,3,4,5,6,7,8,9,10,11,12
Wij= Workers at overtime in month i, where i=1,2,3,4,5,6,7,8,9,10,11,12
Uij= Workers hired in month i, where i=1,2,3,4,5,6,7,8,9,10,11,12
Vij= Layoff expenses of workers in month i, where i=1,2,3,4,5,6,7,8,9,10,11,12

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Objective function:

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Find the Minimum value of the formula:

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2400*(Z1j+Z2j+Z3j+Z4j+Z5j+Z6j+Z7j+Z8j+Z9j+Z10j+Z11j+Z12j) +3300*(W1j+W2j+ W3j+ W4j+

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W5j+ W6j+ W7j+ W8j+ W9j+ W10j+ W11j+W12j) +8*(Y1+ Y2+ Y3+ Y4+ Y5+ Y6+ Y7+ Y8+ Y9+
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Y10+ Y11+ Y12) +1800*(U1j+ U2j+ U3j+ U4j+ U5j+ U6j+ U7j+ U8j+ U9j+ U10j+ U11j+ U12j)
+1200*(V1j+ V2j+ V3j+ V4j+ V5j+ V6j+ V7j+ V8j+ V9j+ V10j+ V11j+ V12j)
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Functional Constraints:
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Xi=Zij+Wij, i=1,2,3,4,5,6,7,8,9,10,11,12
X1=160+U1jV1j
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X2=X1+U2jV2j
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X3=X2+U3jV3j
X4=X3+U4jV4j
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X5=X4+U5jV5j
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X6=X5+U6jV6j
X7=X6+U7jV7j
X8=X7+U8jV8j
X9=X8+U9jV9j
X10=X9+U10jV10j
X11=X10+U11jV11j
X12=X11+U12jV12j

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 Macpherson Refrigeration Limited: IVEY, 9A93D021
Group 06
Z1j*40+W1j*80+240=4400+Y1
Z2j*40+W2j*80=4400+Y2
Z3j*40+W3j*80=6000+Y3
Z4j*40+W4j*80=8000+Y4
Z5j*40+W5j*80=6600+Y5
Z6j*40+W6j*80=11800+Y6
Z7j*40+W7j*80=13000+Y7
Z8j*40+W8j*80=11200+Y8
Z9j*40+W9j*80=10800+Y9

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Z10j*40+W10j*80=7600+Y10

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Z11j*40+W11j*80=6000+Y11

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Z12j*40+W12j*80=5600+Y12

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Non negativity constraints:
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Xi>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
Yi>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
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Zij>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
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Wij>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
Uij>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
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Vij>=0, i=1,2,3,4,5,6,7,8,9,10,11,12
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 Macpherson Refrigeration Limited: IVEY, 9A93D021
Group 06
Q. 2. Provide an intermediate production plan other than the three plans given in the case.

Solution:
The strategies discussed by Linda had their own advantages and disadvantages:

i. The first plan of holding production level and the workforce constant throughout the year at a
sufficient level although helps in providing a protection against unforeseen demand changes, It
leads to high inventory costs as well as outdated inventoried product

ii. The second plan of stable workforce and variable & fluctuating work time would solve the issue
of not dealing with inventory costs but it will result in lower efficiency as well as no unforeseen
demands of the product
iii. The third option of fluctuating workforce and constant rehiring and layoff will result in limited labor
market for the company as well as extra cost to deal with.

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We suggest a mixed strategy to be adopted by the company of a level production with a stable working
force introducing variable working hours to meet the demand with the lowest cost possible:

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This will include Forecasting production to anticipate unforeseen demand as well as a balancing act
between a stable workforce with distributed working hours.

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Production plan for MacPherson Refrigeration Limited
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Productivity (units per worker per month) 40
Regular time wage ($ / worker / month) $2400
Overtime wage ($ / worker / month) $3300
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Hiring cost per worker hired $1800

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Layoff cost per worker laid off $1200

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Inventory Holding Cost / Month $8

Month
Production
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plan Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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Shipment Forecast 4400 4400 6000 8000 6600 11800 13000 11200 10800 7600 6000 5600
Production
Plan 6400 6400 6400 6400 7360 10750 10750 10750 10750 7600 6000 5800
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Shipments 4400 4400 6000 8000 6600 11800 13000 11200 10800 7600 6000 5600
Inventory 240 2,240 4,240 4,640 3,040 3,800 2,750 500 50 0 0 0 200
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 Macpherson Refrigeration Limited: IVEY, 9A93D021
Group 06

Totals
Shipment
Forecast 95,400
Production
Plan 95,360
Shipments 95,400
Inventory 21,460

Extra Labor Costs

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Hiring Cost 109 * 1800 = $195750
Layoff Costs 124 * 1200 = 148500
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Inventory Holding Costs 21460 * 8 = 171680

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Labor Costs
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Regular 2384*2400 = 5721600

Overtime 0 * 3300 = 0
Total Cost = 6237530
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Total Cost is $6237530 with

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● 200 appliances in last inventory

● 145 workers for next year
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