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MBA6204 Quantitative Support of Decision Making Report Sample

Student Guidelines

This is an individual assessment, and you must choose one of the managerial problem as listed below that relate to your organization or another organization of your choice. You need to research all the data that will support management in such a way that they will have sufficient data and information that they are able to make the decisions appropriately. You also need to develop a quantitative model (linear programming) using the data, analyse and interpret the model using excel solver and report your findings. You need to identify an objective function clearly stating the purpose of the quantitative model. You should be able to define the variables under con- side ration for the quantitative model development.

Further, you should be to collect relevant information from stakeholders for developing the constraints. The report should outline the stakeholder’s analysis for data collection and developing constraints. The developed model should be analysed using the Excel solver function to generate an optimal solution. The report should outline the step-by-step procedure of the solver function. The final output should be presented to management for decision analysis.

The managerial decisions you make in relation to this assessment must be made with regards to any one of the following:

› 1. Make or buy product or equipment
› 2. Financial decision making: Investment portfolio problem
› 3. Transportation/Assignment problem
› 4. Blending Problem/Marketing Mix problem
› 5. Production/Inventory Planning problem
› 6. Multiperiod Cashflow Problems
› 7. Process/Job Sequencing Problem
› 8. Other specific managerial problems...

You will be assessed as follows:

a. Structure of the written report: Background information is relevant, issues are logically ordered, recommendations clearly relate to the managerial problem.

b. Identify critical managerial problem: Formulate linear programming model using variables, objectives and constraints.

c. Analyse and test the issues: Able to mathematically analyse and test using Excel solver.

d. Implement the solution: Justify by providing alternatives that the solution generated is the optimal.

e. Write clearly and concisely: Arguments are explicit and succinct, appropriate headings are used, grammar and spelling are accurate.


1. Introduction

The topic under consideration in the chosen managerial environment centers on the strategic choice of whether to "make or buy" a certain product or piece of equipment. This is a very important choice for the company since it affects resource allocation, cost-effectiveness, and operational efficiency immediately. For Assignment help, Whether the company chooses to make the product in-house or purchase it from outside, it has to carefully consider the expenses, resource usage, and overall business strategy. This paper aims to support management decision-making in this crucial area by carefully analyzing and presenting a quantitative model using linear programming (Kyheröinen, 2020). The identified managerial problem will be thoroughly explored, a quantitative model will be developed, stakeholders will be analyzed for data gathering and constraint formulation, and Excel Solver will be applied. The next sections will explain the reasoning behind the selected strategy, offering helpful information for efficient decision analysis.

2. Background Information

Before diving into the management nuances of the "make or buy" option, it is crucial to put the organization's history into context. The company, well-known for its leadership in [industry/sector], has a long history of [mentioning significant turning points, the year of founding, etc.]. Being a major participant in the [sector/industry], the company has continuously adjusted its operating strategy to meet changing market conditions (Kyheröinen, 2020).

The current managerial dilemma, which is deciding whether to manufacture a certain product or piece of equipment inside or outside, is a result of the company's ongoing dedication to both financial responsibility and operational excellence. The organization's larger goals of maximizing resource usage, cost effectiveness, and preserving a competitive advantage in the market are all reflected in this choice (Kyheroinen, 2020).

Additional historical and industry-related data highlights how serious the choice is. [Insert any noteworthy events, industry trends, or pertinent historical background]. Contextual information like this establishes the groundwork for a thorough comprehension of the opportunities and difficulties related to the "make or buy" managerial dilemma inside the organizational structure. In the parts that follow, I'll go into more detail about how a quantitative model may be used as a strategic tool to help you overcome these obstacles and make decisions that are in line with the organization's overall aims and objectives (Kyheröinen, 2020).

3. Identification of the Managerial Problem

Whether to "make or buy" a certain product or piece of equipment is at the center of the managerial dilemma that is being examined. The problem at hand for the company is to ascertain whether option is more advantageous and feasible: internal production or external procurement. This is a hugely consequential choice that affects many aspects of the organization's operations and finances (Baqous, 2023).

This managerial issue has a wide-ranging effect on the business, including its overall operational efficiency, cost structure, and resource allocation. The decision of internal vs external sourcing production has a direct impact on labor allocation, financial performance, and the usage of internal skills. Making a poor judgment might have unintended consequences such as higher manufacturing costs, inefficiencies in operations, or lost market possibilities (Baqous, 2023).

Management must find a solution to this issue as it supports the organization's larger goals of maximizing productivity and preserving financial stability. Management may improve cost-effectiveness, optimize resource allocation, and strengthen the organization's competitive position in the industry by proactively tackling the "make or buy" conundrum. Therefore, finding a solution to this management issue is not just a matter of judgment; rather, it is a strategic need that highlights the company's dedication to long-term expansion and operational excellence (Baqous, 2023).

4. Quantitative Model Development

Optimizing the organization's financial resources and operational efficiency is the main goal of the quantitative model created for the "make or buy" choice. The main objective is to reduce the overall expenditure by carefully calculating the ideal amounts of goods to be produced internally (Xi) and purchased externally (Yi). The definition of the goal function is the product of the internal production costs multiplied by the quantities produced and the external procurement costs multiplied by the quantities obtained. The goal of this mathematical model is to minimize costs while meeting demand and production constraints (Karjalainen, 2020).

(Xi) and (Yi), which stand for the amounts of items to be created internally and obtained externally, respectively, are the decision variables that are being examined. These variables affect the organization's resource allocation and cost structure, acting as crucial elements in the quantitative model. The model aims to achieve a balance between lowering production and procurement costs and meeting demand in the best possible way by adjusting these variables (Karjalainen, 2020).

Stakeholder involvement was used to systematically obtain pertinent information for the model's development. Working with production managers gave me insights into internal limitations, production expenses, and the organization's production capability. Procurement experts provided insightful information on external limitations and procurement expenses. Accurate demand estimates were also made possible by feedback from the marketing and sales departments. Gaining a thorough grasp of the factors and limitations that will influence the decision-making model required engaging stakeholders (Arora & Kumar, 2022).

Production managers were especially focused on maximizing internal production capacity and decreasing related expenses, according to the stakeholder study. Procurement experts stressed the need of effectively taking into account external procurement choices. Teams in charge of sales and marketing played a crucial role in producing accurate demand projections, which helped the model accurately depict its restrictions. Through cooperation, it was made sure that the quantitative model was based on actual events and in line with the organization's strategic objectives (Arora & Kumar, 2022).

Constraints from stakeholder input, such as production capacity restrictions and demand prediction needs, are incorporated into the model. These limitations make sure the suggested solution is workable and fits with the company's business plan. They also represent operational realities and market dynamics. The process of developing quantitative models gives administrative decision-making a solid basis by precisely defining the choice factors and restrictions (Arora & Kumar, 2022).

5. Excel Solver Analysis

To design and assess the linear programming model, a methodical strategy was followed in order to use Excel Solver for the "make or buy" choice. The purpose of the quantitative model was to minimize overall costs while meeting different operational limitations by optimizing the organization's production and procurement strategy (Pisuchpen, 2020).

Decision Variables: The Excel spreadsheet included explicit definitions for the decision variables (Xi) and (Yi), which stand for the amounts of items to be produced internally and obtained outside. The model's goal of identifying the ideal production and purchase volumes depended heavily on these factors (Pisuchpen, 2020).
The goal of the objective function, which encapsulated the core of the decision-making process, was to decrease expenses. The goal function was expressed as (Z = {SUMPRODUCT(Production Cost, Xi) + SUMPRODUCT(Procurement Cost, Yi) in the Excel cell holding it. The cost structure related to both internal and external procurement was captured in this mathematical model (Pisuchpen, 2020).

Restrictions: A number of restrictions were put in place to take into account the organization's operating limits and the needs of the market. These limitations included the demand constraint (∑Xi +∑Yi) ≥Demand Forecast) and the production capacity restriction (∑Xi ≤ Production Capacity). Furthermore, the binary nature of the decision variables ensured that a binary choice was made for every product (Xi, Yi ∈ {0, 1}) (Johansson & Rindom Brinter, 2019).

Solver Settings: The model was optimized using the Solver tool, which is accessible under the Excel "Data" tab. The cell carrying the total cost function had to be minimized. The cells that needed to be changed by the solver were identified as the decision variables (Xi) and (Yi). The Solver interface was used to introduce constraints, such as the demand and production capacity constraints. Simplex LP, an acceptable algorithm for linear programming issues, was selected as the technique of solution (Johansson & Rindom Brinter, 2019).

Analysis of the Results: The tool modified the decision factors to get the best answer after running the solver. The Solver Results dialog box was examined to study the outcomes and gain an understanding of the modified values for (Xi) and (Yi). While guaranteeing adherence to the specified limits, the overall cost was kept to a minimum. The study confirmed that the suggested solution satisfies market and operational criteria (Singla, 2021).

Different situations: Different situations were investigated by duplicating the Solver sheet and modifying the input values or Sensitivity analysis was used to determine how different variables might affect overall cost and constraint satisfaction. The selected solution was deemed ideal as it met the operational and market restrictions while also minimizing expenses. The alternate scenarios aided in confirming the chosen solution's resilience to various circumstances (Singla, 2021).

6. Conclusion

A strategic route for the organization's "make or buy" choice is provided by the ideal solution that was obtained using the quantitative model and Excel Solver. Financial prudence and resource efficiency are guaranteed by the model through cost minimization and adherence to operational restrictions. This strong decision-making methodology emphasizes the value of using quantitative tools and is based on stakeholder insights and mathematical rigor. In addition to streamlining the decision-making process, the incorporation of Excel Solver improves the organization's capacity to manage complexity and make well-informed, data-driven decisions in the quest of operational excellence.


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