For the Lodi Winery, you have been asked by management to examine the data collected and analyzed in the previous modules.
business
Description
| III. Optimizing Performance | |||||||
| For
the Lodi Winery, you have been asked by management to examine the data
collected and analyzed in the previous modules. The objective is for you to
help management decide on the right mix of wine bottles to sell based on
newly derived profit information while considering the limitations of the
particular types of grapes available for production. While doing more research on wine production, you realize that it takes 3.5 pounds of grapes to make a bottle of wine. In addition, you already were provided the price per bottle that the distributors are paying for each variety of wine: |
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| Price for Red Wine ($) | Price for White Wine ($) | Price for Organic Wine ($) | |||||
| 7.5 | 8 | 12 | |||||
| After discussing wine production with the operations manager, you also learn that the wineries that supply the grapes to produce the above types of wine can produce up to a total of 200,000 pounds of grapes for a six-month supply of wine bottles for the three markets, with the following expected distribution constraints based on types of grapes. Note that current market demand will not support more than the below constraints for each type: | |||||||
| Red wine ceiling | 22,000 bottles | ||||||
| White wine ceiling | 24,000 bottles | ||||||
| Organic wine ceiling | 12,000 bottles | ||||||
| Note that the production cost per bottle remains the same as before, that is, 32% of sales or revenue for red wine, 42.5% of sales for white wine, and 52.5% for organic wine. With additional information you have gathered, you are now ready to determine the optimum production mix to maximize profit. | |||||||
