Statement of the problem: The Amazing Fruits and Preserves is producing a

variety of fruit candies and preserves. The problem is to determine the optimal product mix and optimal daily profit to obtain the maximum profit from sales of four varieties of fruit candies and preserves.

Background Information: Amazing Fruits and Preserves is producing a variety

of fruit candies and preserves, namely, Jam, Candy, Sweet, and Salty. Its production manager, Juan Markus, wants to produce fruit candies and preserves at a constant rate in order to increase the output efficiency of the production operation. Although he is the production manager, he has no power outside his production area and that the planning of proper quantities of the products to be produced were determined by another group. For example, he did not have the authority to double production on type of candy this week and produce none the next. Juan Markus is currently pursuing a Master in Management program in UP Mindanao which one of his subject is M201 where he had been exposed to linear programming. Linear programming helps firms to determine the output mix that maximizes the firm's total profit subject to the many constraints that the firm usually faces. He finds this subject as an effective tool in dealing with this kind of problem.

Areas of Consideration: The most important factor Jan Markus has to consider
is the profit of each product. The profit is simply the difference of Selling Price and the Variable Cost. Other essential factors that need to be considered are the building capacity, raw materials, moulds, inspection machine, and the final inspection capacity. These factors will form as the constraints or the limits in the production of fruit candies and preserves.

Alternative Courses of Action and Possible Scenarios:

In order to obtain the company's objective, that is to have a maximum profit from sales of four varieties, the company should produce only two out of four varieties, and these two are the Jam and Salty, with 34 and 33 batches per day, respectively. In case the management rejects the proposal, Juan Markus may opt to do the other way around. He may propose to produce all the varieties of fruit candies and preserves at a minimize cost subject to the minimum requirement constraints that it faces.

Quantitative Analysis: The model used is Linear Programming.

The profit rates of each product were used as an objective function for revenue maximization. The

Company's limitations as well as daily build capacity, available raw materials, production moulds, inspection machines, and final inspection capacity were set as constraints in the production. Using the POM-QM software, the result would tell us that a maximize profit of 1,800 will be obtain if we produce 33.33 Jam and 33.33 Salty. There is a non-binding constraint or slack of 1,233.33 in raw materials constraint and 513.33 in inspection time. On the other hand, there is a shadow price of 36 with a binding constraint or zero slack in moulds.

Analysis of Results/Conclusion: Based on the Linear Programming model

used by Juan Markus, in order to have a maximum profit from sales of four varieties of fruit candies and preserves, the company has to produce a product mix of 33.33 Jam and 33.33 Salty. A change in the value of constraint in raw materials and inspection machine would not make any substantial impact since the shadow prices of these two constraints are set to zero. On the other hand, a change in the value of constraint of production moulds will have an impact to the optimal objective value. The company should produce a 33.33 Jam and 33.33 Salty at a constant rate in order to have a maximum profit of 1,800.

Appendix:

Juan Markus should emphasize the company's objective that is to have a maximum profit from sales of four varieties of fruit candies and preserves subject to the different constraints due to limitations and resource requirements. Juan Markus can utilize the duality theory in linear programming. He can present the problem in two faces. First, a profit maximization which serves as a primal problem and the other one is the cost minimization which serves as a dual problem. In case the management rejects the proposal, he might opt to consider cost minimization or he can have a sensitivity analysis by assessing the impact of potential changes to the parameters of Linear Programming model. He might propose to increase the constraint of production moulds in order to increase the profit.