Kamdhenu Case free essay sample

DECISION ANALYSIS CASE STUDY Kamdhenu Case GROUP 5 Abhijeet Mahajan Amit Vijay Bishakha Majumdar Gaurav Khatri Sahil Sambyal Sakshi Makkar Vaibhav Rastogi Introduction: The Kamdhenu Dairy is a cooperative of the dairy farmers – located in Sanand, a small town in one of the western states of India. Set up with a goal to ensure a steady market and revenue for the small dairy farmers, the Kamdhenu Dairy supplies pasteurized milk to the State Government – in a fixed quantity (75000 litres/day), throughout the year. However, the production of milk has wide seasonal variations – with production of milk in winter being 250 % of that in summer. The additional milk is used for producing other milk products. The problems before the KD are as follows: 1. Finding the optimum product mix. 2. Deciding if they should continue with the loss making products – cheese and baby food. Question 1: Should Cheese be dropped from the product line ass suggested by Mr. We will write a custom essay sample on Kamdhenu Case or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Ramaswamy? Answer: After the analysis, as is clearly visible from the value of the shadow price of the Cheese, it’s both positive and large than the values of other products. Hence, we should continue with the production of cheese. Microsoft Excel 14. 0 Sensitivity Report| | | | | | Worksheet: [DA Kamdhenu. lsx]Sheet2| | | | | | Report Created: 8/26/2011 3:52:39 AM| | | | | | | | | | | | | | | | | | | | | | Variable Cells| | | | | | | Â  | Â  | Final| Reduced| Objective| Allowable| Allowable| | Cell| Name| Value| Cost| Coefficient| Increase| Decrease| | $B$18| Solution x1| 7. 5957| 0| 503| 407| 55| | $C$18| Solution x2| 0| -55| 448| 55| 1E+30| | $D$18| Solution x3| 0| -366| 544| 366| 1E+30| | $E$18| Solution x4| 0| -555| 355| 555| 1E+30| | $F$18| Solution x5| 2. 4743| 0| 910| 923| 45| | $G$18| Solution x6| 0| -165| 745| 165| 1E+30| | $H$18| Solution x7| 0| -45| 865| 45| 1E+30| | $I$18| Solution x8| 0| -277| 633| 277| 1E+30| $J$18| Solution x9| 1. 83| 0| 1833| 1E+30| 223| | $K$18| Solution x10| 0| -223| 1610| 223| 1E+30| | $L$18| Solution x11| 0| -151| 759| 151| 1E+30| | $M$18| Solution x12| 0| -278| 632| 278| 1E+30| | | | | | | | | Constraints| | | | | | | Â  | Â  | Final| Shadow| Constraint| Allowable| Allowable| | Cell| Name| Value| Price| R. H. Side| Increase| Decrease| | $N$10| Cheese Constraint Total| 1. 83| 923| 1. 83| 2. 4743| 1. 83| | $N$11| Raw Milk Procurement Total| 11. 9| 910| 11. 9| 2. 615355172| 2. 4743| | $N$12| FA Milk Govt Supply Total| 7. 5957| -407| 7. 5957| 2. 4743| 2. 615355172| | $N$6| Butter Constraint Total| 2. 951592| 0| 10| 1E+30| 7. 0048408| | $N$7| Ghee Constraint Total| 0| 0| 2. 5| 1E+30| 2. 5| | $N$8| Milk Powder Constraint Total| 3. 587735| 0| 7. 38| 1E+30| 3. 792265| | $N$9| Baby Food Constraint Total| 0| 0| 5. 36| 1E+30| 5. 36| x1| x2| x3| x4| x5| x6| x7| x8| x9| x10| x11| x12| FA Milk + Butter| FA Milk + Ghee| SMP + Butter| SMP + Ghee| WMP + Butter| WMP + Ghee| Baby Food + Butter| Baby Food + Ghee| Cheese + Butter| Cheese + Ghee| SM + Butter| SM + Ghee| Question 2: What should be the production program for the Dairy if it had no contractual obligations to supply FA Milk to the State Milk Scheme? Answer1: The production scheme for both the summer as well as the winter months can be found out from the two tables by just looking at the final values. For Summer Months (May to August) Microsoft Excel 14. 0 Sensitivity Report| | | | | | Worksheet: [DA Kamdhenu. xlsx]Sheet2| | | | | | Report Created: 8/26/2011 11:46:17 AM| | | | | | | | | | | | | | | | | | | | | | Variable Cells| | | | | | | Â  | Â  | Final| Reduced| Objective| Allowable| Allowable| | Cell| Name| Value| Cost| Coefficient| Increase| Decrease| | $B$18| Solution x1| 0| -362| 503| 362| 1E+30| $C$18| Solution x2| 0| -417| 448| 417| 1E+30| | $D$18| Solution x3| 0| -352. 0344828| 544| 352. 0344828| 1E+30| | $E$18| Solution x4| 0| -541. 0344828| 355| 541. 0344828| 1E+30| | $F$18| Solution x5| 5. 089655172| 0| 910| 1E+30| 45| | $G$18| Solution x6| 0| -165| 745| 165| 1E+30| | $H$18| Solution x7| 4. 980344828| 0| 865| 45| 106| | $I$18| Solution x8| 0| -232| 633| 232| 1E+30| | $J$18| Solution x9| 1. 83| 0| 1833| 1E+30| 223| | $K$18| Solution x10| 0| -223| 1610| 223| 1E+30| | $L$18| Solution x11| 0| -106| 759| 106| 1E+30| | $M$18| Solution x12| 0| -233| 632| 233| 1E+30| | | | | | | | Constraints| | | | | | | Â  | Â  | Final| Shadow| Constraint| Allowable| Allowable| | Cell| Name| Value| Price| R. H. Side| Increase| Decrease| | $N$10| Cheese Constraint Total| 1. 83| 968| 1. 83| 4. 980344828| 0. 379655172| | $N$11| Raw Milk Procurement Total| 11. 9| 865| 11. 9| 0. 379655172| 4. 980344828| | $N$6| Butter Constraint Total| 7. 575451034| 0| 10| 1E+30| 2. 424548966| | $N$7| Ghee Constraint Total| 0| 0| 2. 5| 1E+30| 2. 5| | $N$8| Milk Powder Constraint Total| 7. 38| 31. 03448276| 7. 38| 7. 2215| 0. 5505| | $N$9| Baby Food Constraint Total| 4. 80344828| 0| 5. 36| 1E+30| 0. 379655172| Microsoft Excel 14. 0 Sensitivity Report| | | | | | Worksheet: [DA Kamdhenu. xlsx]Sheet2 (3)| | | | | Report Created: 8/26/2011 11:47:17 AM| | | | | | | | | | | | | | | | | | | | | | Variable Cells| | | | | | | Â  | Â  | Final| Reduced| Objective| Allowable| Allowable| | Cell| Name| Value| Cost| Coefficient| Increase| Decrease| | $B$18| Solution x1| 0| -140. 5624082| 503| 140. 5624082| 1E+30| | $C$18| Solution x2| 0| -184| 448| 184| 1E+30| | $D$18| Solution x3| 0| -386. 7825206| 544| 386. 7825206| 1E+30| | $E$18| Solution x4| 0| -390. 839891| 355| 390. 7839891| 1E+30| | $F$18| Solution x5| 5. 089655172| 0| 910| 1E+30| 51. 98678414| | $G$18| Solution x6| 0| -51. 98678414| 745| 51. 98678414| 1E+30| | $H$18| Solution x7| 5. 36| 0| 865| 1E+30| 102. 2026432| | $I$18| Solution x8| 0| -102. 2026432| 633| 102. 2026432| 1E+30| | $J$18| Solution x9| 1. 83| 0| 1833| 1E+30| 118. 5653451| | $K$18| Solution x10| 0| -118. 5653451| 1610| 118. 5653451| 1E+30| | $L$18| Solution x11| 3. 172259861| 0| 759| 58. 42079208| 127| | $M$18| Solution x12| 3. 548084966| 0| 632| 127| 58. 42079208| | | | | | | | | Constraints| | | | | | Â  | Â  | Final| Shadow| Constraint| Allowable| Allowable| | Cell| Name| Value| Price| R. H. Side| Increase| Decrease| | $N$10| Cheese Constraint Total| 1. 83| 1096. 565345| 1. 83| 3. 857694581| 1. 83| | $N$11| Raw Milk Procurement Total| 19| 632| 19| 1. 268870718| 3. 548084966| | $N$6| Butter Constraint Total| 10| 186. 4904552| 10| 2. 416245862| 0. 864100959| | $N$7| Ghee Constraint Total| 1. 841456098| 0| 2. 5| 1E+30| 0. 658543902| | $N$8| Milk Powder Constraint Total| 7. 38| 113. 7839891| 7. 38| 5. 169056106| 7. 38| | $N$9| Baby Food Constraint Total| 5. 36| 103. 2026432| 5. 36| 3. 103892192| 5. 6| For Winter Months (September to April) As can be seen from the above analysis, we will supply the following products -: Winter Months – 5. 09, 4. 98 and 1. 83 units for WMP + butter, Baby Food + butter and Cheese + Butter respectively. Summer Months – WMP + Butter 5. 09, Baby food + butter 5. 38, Cheese + butter 1. 83, Standardized Milk + butter 3. 17, Standardized Milk + Ghee 3. 54 units Question3: In case you were negotiating a contract with the state, what qua ntity of FA Milk would you commit to supply? Answer: As seen by the analysis done above, the quantity of FA milk is 0. Hence, the assumption that FA Milk is the most profitable product stands invalidated. However, we have an obligation to supply to the government as the main objective of the dairy is to supply to the government. So, we will only supply the bare minimum quantity. This will never exceed the lowest value (the value for June). However, if there is no such obligation, we will not supply any milk as it is not profitable to do so. Question4: In case the dairy was planning to expand its butter churning and powder drying capacity, how much money should it invest in this expansion? Answer: The amount of money which can be spent should be less than the profit which we can make from this. Profit which can be made = shadow price * increase in capacity (till the allowable increase limit) Also, there should not be any slack i. e. excess capacity for the products. If there is already excess capacity available, we would not be expanding. Thus, the amount which can be spent for expansion of butter storage capacity = 186. 5 * 0. 864 = Rs. 161. 136 The amount which can be spent for expansion of Powder drying capacity = 113. 8 * 7. 38 = Rs. 839. 844