For example, producing a pound of Product 1 requires six hours of labor and 3.2 pounds of raw material. ![]() Row 4 in Figure 27-1 shows the hours of labor needed to produce a pound of each product, and row 5 shows the pounds of raw material needed to produce a pound of each product. ![]() Production of each product requires labor and raw material. Let’s say we work for a drug company that produces six different products at their plant. You can find the solution to this problem in the file Prodmix.xlsx, shown in Figure 27-1. Let’s now solve the following example of the product mix problem. We can’t produce more of a product during a month than demand dictates, because the excess production is wasted (for example, a perishable drug). There is a limited demand for each product. Product mix can’t use more resources than are available. Product mix must usually adhere to the following constraints: ![]() ![]() In its simplest form, the product mix problem involves how to determine the amount of each product that should be produced during a month to maximize profits. How can I determine the monthly product mix that maximizes profitability?Ĭompanies often need to determine the quantity of each product to produce on a monthly basis. This article discusses using Solver, a Microsoft Excel add-in program you can use for what-if analysis, to determine an optimal product mix.
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