Decision Support System

User Generated

zhzngebbqv

Computer Science

Description

Hello,

  • Choose a Decision Support System (DSS) tool for implementing proposed model (choice has to be justified)
  • Design a simple test plan aiming at finding the best solution along with the best parameters of the model (If Applicable)
  • Implement the proposed model

Notes:

I uploaded the document to help you to complete the tasks based on it.

Please don't make the question as complete until I check the solution first.

A report of 1500 words at most is to be submitted.

Thank you,

Unformatted Attachment Preview

Table of Contents 1. The problem .............................................................................................................................................. 2 2. Explanation of the problem ...................................................................................................................... 2 3. A model representing the problem; variables and relationships between them..................................... 3 4. Assumptions of the linear program solution ............................................................................................ 5 5. A solution to the model using a different technique ................................................................................ 6 6. References ................................................................................................................................................ 7 1. The problem Companies across the world face the problem of product diversification in order to stay competitive in the market. The market is volatile with the customer demands and preferences changing every day and with the changing technology, more companies are joining the production sector since technology has improved productivity, the efficiency of operations and enabled innovation of new ways of making products. Companies, therefore, are met with the problem of manufacturing more than one product so that they reduce the risk of being eliminated from the market by competitors. A single product can prove to be costly if it fails in the market and the company is forced to halt the production process or produce other products that will have a demand in the market. The problem with producing more than one product is the costs associated with the production since when production increases, the factors of production such as human resources, raw materials, and capital need to be increased also. Companies have to use the available resources to make multiple products and assume that the factors of production will remain constant and that the required profit will be met. 2. Explanation of the problem When a company has limited resources for producing multiple products, for example, diesel fuel and liquid petroleum gas, the products may not perform the same in the market with one performing better than the other when the market conditions are constant. The products share the same production processes but do not bring the same profits. The primary objective of manufacturing companies is to make a profit and therefore they are faced with the problem of determining the production runs for both multiple products so that there is profit maximization (Rios, McConnell, and Brue, 2013). If the products are produced differently using different production lines, there will be increased costs and the company will operate below the accepted capacity which will lead the company not maximizing profits. The company is therefore faced with the challenge of deciding the production units for the products that will be economical in terms of minimizing the costs and maximizing the profits. The costs involve inventory holding costs, therefore, the product that is not sold in the market increases the costs of the company. Oil producing companies in the Middle East produce a variety of products from crude oil which is a lot in the Arab region. The companies noticed that they get more profits from selling diesel fuel than from the sale of liquid petroleum gas. But both products have to be produced to reduce the risks that may arise from the failure of one product in the market. The company has to employ a product mix of both diesel fuel and liquid petroleum that will be supported by the limited resources and produce quantities of the products that will enable it to maximize profits. Producing both diesel fuel and liquid petroleum will enable the company to reduce costs and it will be able to maximize profits creating a room for expansion. 3. A model representing the problem; variables and relationships between them Linear programming model will help the company to come up with accurate data on the production levels of diesel fuel and liquid petroleum gas. The accurate volumes will enable the oil companies to produce the required units that will achieve maximum profit in the market when the company’s resources are used completely. The company takes raw oil as input and the two products are diesel fuel and liquid petroleum gas. The two products will be manufactured at different rates with tonnes per hour: diesel fuel, 200 and liquid petroleum gas 140. They also have different profitability’s where: profit per ton for diesel fuel is $ 25 and the profit per ton of liquid petroleum gas is $30. The problem is the company has limited resources which can be employed in the production process. With the available resources, the maximum volume of diesel fuel that can be produced is 6,000 tons while the maximum volume of liquid petroleum gas is 4,000. The maximum production hours that the process can take is 40 hours per week (Williams, 2013). The decision that the companies need to make is to decide what volumes of diesel fuels and what volumes of liquid petroleum gas they should produce with the available resources and give the best profits. We know the values of the production rates for the two products and the values the profits they bring to the company. The quantities of the volumes of diesel fuel and liquid petroleum gas that need to be produced at the optimal level are the unknown variables which influence the decision of the company on how to maximize profits. This model helps to show the profits and production functions as the formulas involving the variables that can the needed volumes at maximum profits can be determined systematically. Using the model, the formula, the total number hours of production and the total profit is (profit per ton of diesel fuel) A+ (profit per ton of liquid petroleum gas produced) B. That means our aim is to maximize 25A+30B. So adding this together will give us the linear program maximize 25A+30B which is subject to (1/200) A+ (1/140) B ≤4 0 0 ≤ A ≤ 6000 0≤ B ≤ 4000. This linear program can be solved through a number of ways but the results will give the same results. To solve the linear program, we take the profit per ton and multiply by the tons per hour so that we get the profit per ton of diesel fuel and liquid petroleum gas. Therefore 200x25 we have $5,000 as the profit per hour and for the liquid petroleum gas, we have 140x130 which is $ 4,200. Clearly, the production quantities that will give maximum profit is the production of the maximum volume of diesel fuel which is 6,000 tins using 30 hours and then the remaining 10 hours to be used in producing liquid petroleum gas which will be 1,400 tons. The profit is ($25x6, 000 tons) + ($30x1400tons) which is $192,000 (Dantzig, 2016). This is the maximum profit that the oil companies can make if they use the model to evaluate the quantities the different products they should produce in order simultaneously. With this model, the companies can maximize the use of the available resources without incurring additional costs of production. The dependent variables are the quantities or volumes of the diesel fuel and the liquid petroleum gas that are required to be produced to achieve maximum profit. The independent variables are the tons per hour of the diesel fuel and the liquid petroleum gas produced. The variables have a linear relationship in that if the tons per hour produced increases, the profit per ton increases and vice versa all factors constant. If the tons per hour of the liquid petroleum gas increase, the profit per ton increases and vice versa all other factors constant. 4. Assumptions of the linear program solution The assumptions are that the resources used in the production of both products remain the same throughout the process, no additional resources will be added to the production process. The oil from which the diesel fuel and the liquid petroleum gas are made is the same throughout the production process. Another assumption is that the diesel fuel and the liquid petroleum gas are the only products that are being produced by the oil companies. If the companies produce another product, the products variables can be included in the linear program and the solution will provide the combined quantities of three products that can be produced to achieve maximum profits with the available resources. The third assumption is that the production technology that is used in the production of both products remains the same throughout the production process (Fuss, and McFadden, 2014). No special equipment is used to produce the diesel fuel and the liquid petroleum gas. The last assumption is that the resources available are used in an efficient way to achieve maximum profit. This means that the factors of production are used in the best costeffective way. 5. A solution to the model using a different technique The graphical representation can also be used to solve the linear program that can be used to get the units that will give the maximum profits for the products. The vertical axis represents the volume of the liquid petroleum gas produced while the horizontal axis represents the volume of the diesel fuel produced. The available production hours are constant at 40 hours If the quantities are presented in a graph as shown, the vertical line represents that production limit for diesel fuel while the horizontal axis represents the production limit for production of liquid petroleum gas. Any point in the feasible region provides a solution for the variables. The diagonal line represents the limitation of the number of hours available. The solution is the lower corner where the lines intersex and corresponds to the production of 6,000 tons of diesel fuel and 1,400 tons of liquid petroleum gas at a profit of $192,000 which is the same as in the first techniques. 6. References Williams, H. P. (2013). Model building in mathematical programming. John Wiley & Sons. Dantzig, G. (2016). Linear programming and extensions. Princeton university press. Rios, M. C., McConnell, C. R., & Brue, S. L. (2013). Economics: Principles, problems, and policies. McGraw-Hill. Fuss, M., & McFadden, D. (Eds.). (2014). Production Economics: A Dual Approach to Theory and Applications: Applications of the Theory of Production (Vol. 2). Elsevier.
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

hello, kindly find the attached completed work. Thank you

Insert Surname 1

Professor’s name
Student’s name

Course title

Date

Decision Support System

The purpose of this system is to assist the practitioners in making decisions for
assessment of risks and to select strategy of management. The system has a schedule that
provides questions to the maker of the choices. The purpose of the issues is used to measure
different risk factors and selection of strategies for management which are appropriate. Answers
are produced among every question which is made possible by use of set rules. Decision support
is system is evaluated by use of different case studies from literature and industry.

In broad, decision support system is set of manual or computerized system tools which
help in activities involving decision making. In the present business environment, decision
support system is commonly known to be computerized management information system (MIS)
which is designed to assist the owners of a business, executives, and managers in resolving
complicated problems or questions within the industry. A sound decision support systems help

Insert Surname 2
people in a trade to perform a wide variety of functions which include analysis of cash flow, a
ranking of concept, improvement in product performance, and study in the allocation of
resources. Although the decision support system was in the past years seen as a tool for
companies that are big but in the present, they have been proven to be valuable for small
business enterprises too. For the DSS to be used correctly, there are those components that need
to be considered to make correct use of it. The first one is to create a consideration of data which
is collected by the one making a decision. The other com...


Anonymous
Excellent resource! Really helped me get the gist of things.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags