November 18, 2018


CASE: Merton Truck Company. Quantitative Techniques- II Assignment: 1. Section: F Group number 3. Submitted To: Prof. Bhuvanesh Pareek Submitted By. 12 Dec Free Essay: EMBA MERTON TRUCK COMPANY CASE SOLUTION HARSHID DESAI AMRUT MODY SCHOOL OF MANAGEMEMNT. View Notes – Merton Truck Case Report from FINANCE at Xiamen University. Case Solution Merton Truck Company Submitted by: Group 5(Section G).

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Technology could also play an important role in reducing the time and costs needed to produce the vehicles, so it is important that Merton maintain a watchful eye on new production methods and machinery. Exhibit 2 shows the graph, including the values in USD obtained when the extreme points are plugged into the equation. As seen in Exhibit 8, Solver has determined that overtime should be utilized to produce additional units of Model Many of the values were in accordance with expectations as they corresponded to the earlier analyses.

To get a unique essay Hire Writer. The values for contribution margin CM are given as well as the portion of departmental capacity required to produce Merton should continue to use that extra capacity to produce Model to generate additional revenue and help absorb costs.

Options being considered included changing their product mix by either removing or adding csae product line, or renting capacity. March 10 To: Note that for each, this is only true for units before the scenario would require reevaluation see the allowable increase in Exhibit 7.

The Martinez Company has decided to introduce a new product and would like to evaluate the costs of manufacturing through capital intensive and labor intensive manufacturing methods to determine which …. In a similar fashion, the ability to use Model Assembly for Model would also drastically change the impact of discontinuing Model Without an increase in sales, discontinuing Model would only result in increasing the fixed costs for Model without increasing the revenue.

Merton Truck Case | Joseph Mwakio Ngeti –

However, since the bottleneck is the Model Assembly, additional capacity remains to produce Model units: In the optimal solution, there are limitations in both Engine Assembly and Metal Stamping. It can be reasonably estimated that labor hours per vehicle will be reduced due to learning curves which result from staff experience and familiarity with the production processand that Merton will therefore be mertoj to increase the total volume of vehicles produced.


Since it was the specific request of the president, the impact of discontinuing Model was evaluated. Mark Ferguson, President From: The first step is to calculate ….

Merton Truck Co

Decision Making Across the Organization Pages: Therefore, fixed overhead was not considered until the end of mertin evaluation. This is just a sample. This is a phenomenon known as the death spiral, when the discontinuation of a seemingly unprofitable product causes otherwise profitable products to become unprofitable. If Merton can rent capacity for less than the shadow price for either department, it should.

Merton Truck case study – University Business and Administrative studies – Marked by

We will write a custom essay sample on Merton Truck Co specifically for you. However, the president did not consider that fixed overhead OH was being allocated mrton all units, and the discontinuation of Model would increase the overhead applied to Model Renting capacity from an outside supplier was one alternative, but a similar option would be to simply outsource at a rate less than the shadow prices discussed earlier.

Merton should also consider the impact that learning curves and technology may have on their production process.

Soluion Truck Company Linear programming techniques can be used to not only determine the best production mix, but also to provide clues and data suggesting ways to improve profits. Therefore, Merton should not assemble engines on overtime under these conditions. Mrton on the information provided here, further recommendations for Merton would be to 1 immediately change the production mix to Model s and Model s, 2 evaluate anticipated demand and the gruck of a capital investment to increase capacity, and 3 seek quotes for capacity rental or outsourcing Engine Assembly.


In addition, technologies can help reduce the costs of designing, developing, and manufacturing a product which can help the firm to improve product quality and to charge a higher price. The binding constraints seen in Exhibit 4 are no longer the Model Assemblies s seen with earlier combinations, but are now the Engine Assembly and Metal Stamping departments.

It is also mentioned that at present, demand is great enough that the company is selling everything it produces. M in monthly fixed overhead exists regardless of the product compsny and does not need to be allocated on a per unit basis to determine overall profit or financial performance.

If both are modified, the shadow prices may no longer hold true. InMerton Truck Company was searching for ways to increase profits and ultimately its poor financial performance.

Merton Truck case study

A limited time offer! The impact of making only Model was evaluated by determining the capacity using Table A: Home Papers Merton Truck Co. We use cookies to give you the best experience possible. If demand is expected to continue, Merton should also evaluate the ROI of investing in capital and permanently increasing capacity as an alternative to renting or outsourcing capacity.

Selling Price od Model truck: The extreme points corresponding to the non-negativity, Model Assembly, and Model Assembly constraints were easy to identify, and the rest was determined by simultaneously solving the equations of intersecting lines. Get custom essay sample written according to your requirements Urgent 3h delivery guaranteed Hire Writer.

As the Model and life cycle continues, the company should see a reduction in time and costs associated ith every aspect of the truck manufacturing process as a result of learning curves. Capacity Options Given the capacity limitations seen thus far, it is a fair conclusion that increasing capacity may present an opportunity.