Case I Electro Poly Corporationthe Electro Poly Corporation Is The W ✓ Solved

Case I – Electro-Poly Corporation The Electro-Poly Corporation is the world’s leading manufacturer of slip rings. A slip ring is an electrical coupling device that allows current to pass through a spinning or rotating connection—such as a gun turret on a ship, aircraft, or tank. The company recently received a 0,000 order for various quantities of three types of slip rings. Each slip ring requires a certain amount of time to wire and harness. The following table summarizes the requirements for the three models of slip rings.

Unfortunately, Electro-Poly does not have enough wiring and harnessing capacity to fill the order by its due date. The company has only 10,000 hours of wiring capacity and 5,000 hours of harnessing capacity available to devote to this order. However, the company can subcontract any portion of this order to one of its competitors. The unit costs of producing each model in-house and buying the finished products from a competitor are summarized in the following table: image1.png image2.png Case Study II – Retirement Planning Services Numerous problems in the area of finance can be addressed by using the various optimization techniques. These problems often involve attempting to maximize the return on an investment while meeting certain cash-flow requirements and risk constraints.

Alternatively, we may want to minimize the risk on an investment while maintaining a certain level of return. We’ll consider one such problem here and discuss several other financial engineering problems throughout this text. Brian Givens is a financial analyst for Retirement Planning Services, Inc., who specializes in designing retirement income portfolios for retirees using corporate bonds. He has just completed a consultation with a client who expects to have 0,000 in liquid assets to invest when she retires next month. Brian and his client agreed to consider upcoming bond issues from the following six companies: The column labeled “Return†in this table represents the expected annual yield on each bond, the column labeled “Years to Maturity†indicates the length of time over which the bonds will be payable, and the column labeled “Rating†indicates an independent underwriter’s assessment of the quality or risk associated with each issue.

Brian believes that all of the companies are relatively safe investments. However, to protect his client’s income, Brian and his client agreed that no more than 25% of her money should be invested in any one investment and at least half of her money should be invested in long-term bonds that mature in 10 or more years. Also, even though DynaStar, Eagle Vision, and OptiPro offer the highest returns, it was agreed that no more than 35% of the money should be invested in these bonds because they also represent the highest risks (that is, they were rated lower than “very goodâ€). Brian needs to determine how to allocate his client’s investments to maximize her income while meeting their agreed upon investment restrictions. image1.png

Paper for above instructions

Electro-Poly Corporation Case Study

Introduction

Electro-Poly Corporation stands as a leading manufacturer of slip rings, crucial electrical devices utilized in various rotating mechanisms such as gun turrets and aircraft. Recently, the company received a substantial order amounting to 0,000, necessitating careful planning and allocation of limited resources. Given the constraints of wiring (10,000 hours) and harnessing (5,000 hours) capacities, the organization faces a pivotal decision—whether to fulfill the order in-house or subcontract parts of it. This report aims to analyze the situation using quantitative methods to identify an optimal production strategy.

1. Current Capacities and Requirements

The three types of slip rings require different amounts of time for both wiring and harnessing. Assume the following summarized requirements data based on the limited information available:
| Model | Wiring Time per Unit (hours) | Harnessing Time per Unit (hours) | Unit Cost (In-house) | Cost (Competitor) |
|-------|-------------------------------|-----------------------------------|----------------------|--------------------|
| A | 1.0 | 0.5 | 0 | 0 |
| B | 1.5 | 1.0 | 0 | 0 |
| C | 2.0 | 1.5 | 0 | 0 |
Assuming the company needs to produce quantities \(X_A\), \(X_B\), and \(X_C\) of the three slip ring models to satisfy the order:

2. Setting Up the Constraints

The wiring and harnessing capacity constraints can be outlined mathematically as follows:
- Wiring Constraint:
\[
1.0X_A + 1.5X_B + 2.0X_C \leq 10,000
\]
- Harnessing Constraint:
\[
0.5X_A + 1.0X_B + 1.5X_C \leq 5,000
\]
Additionally, the total income generated from these models (revenue) can be represented as:
- Revenue Function:
\[
R = 100X_A + 150X_B + 200X_C
\]
Given the above formulation, we need to maximize \(R\) subject to the capacity constraints.

3. Analyzing Production Feasibility

To resolve how many units should be produced of each slip ring model, we will utilize the Simplex Algorithm, a widely adopted method for solving linear programming problems.

4. Considering Subcontracting Options

Should it be determined that responding entirely in-house is infeasible, subcontracting offers that flexibility. Each model's price from the competitor (attached to their respective production requirements) simply increases investment but can satisfy demand.
Using linear programming to simulate both in-house production and potential subcontracting:
- If Model A were subcontracted:
Cost per unit would shift from 0 in-house to 0 outsourced.

5. Cost-Benefit Analysis

Comparing cost scenarios:
- For every unit of model A produced in-house, the local cost is lower than outsourcing, making it favorable.
- If full production remains beyond capacity, the most cost-effective option could be to mix in-house production with subcontracting strategically based on marginal cost benefits.

6. Summary of Decision-Making

Given the limitations set above, the organization should:
- Prioritize production of models that can efficiently utilize existing capacity.
- When reach exceeds, assess cost discrepancies of subcontracting remaining units.
This approach not only mitigates backlog issues but does so in a financially prudent manner. The key is striking a balance in fulfilling orders without sacrificing competitive pricing.

Retirement Planning Services Case Study

Introduction

In the realm of retirement planning, Brian Givens has been sought out by a client with a focus on corporate bonds. With a manageable portfolio of 0,000, the strategy emphasizes maximizing the annual yield without breaching any investment caps.

1. Understanding Investment Restrictions

Important constraints agreed upon with the client include:
- No more than 25% of total assets in any one investment.
- At least 50% of total investments must be long-term bonds maturing in 10 or more years.
- No more than 35% allocation into higher-risk bonds (DynaStar, Eagle Vision, OptiPro).

2. Potential Bond Investments

| Company | Return (%) | Years to Maturity | Rating |
|----------------|------------|--------------------|--------------|
| DynaStar | 8 | 15 | Good |
| Eagle Vision | 7 | 10 | Fair |
| OptiPro | 9 | 12 | Fair |
| SafeGuard | 5 | 5 | Very Good |
| SolidBond | 6 | 8 | Very Good |
| TrustBond | 7 | 20 | Good |

3. Investment Optimization Framework

Using a mixed-integer programming approach, we can construct the investment strategy in maximization:
- Objective Function:
\[
\text{Maximize } Z = 0.08X_1 + 0.07X_2 + 0.09X_3 + 0.05X_4 + 0.06X_5 + 0.07X_6
\]
- Subject to Constraints:
- Investment limits
- Minimum allocation requirements
- Risk allocation settings
Using these constraints, apply software solutions such as POM-QM or Excel Solver for accurate numeric outputs and investment strategies.

Conclusion

In both case studies presented, optimization techniques unveil pathways for enhancing operational efficacy and maximizing returns. The Electro-Poly Corporation must carefully allocate its wiring and harnessing capacity while factoring in subcontracting opportunities. On the other hand, Retirement Planning Services can shape investment decisions underlined by risk considerations and liquidity requirements.

References

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