The paper “ The Markowitz Model Selecting an Efficient Investment Portfolio” is a worthy variant of the assignment on finance & accounting. AutoPower Company Distribution plan has information about what amount of supplies they should make to each destination. The distribution plan has enough supplies but needs to determine the number of motors to send from their harbors. The cost of sending motors from one harbor to specific destinations is given per motor. In any business operation, business managers in any department would want to utilize the minimum cost possible.
In this distribution section, it will be part of the cost of production of which is minimized, increases the chances of maximizing profit. The main aim, therefore, is to send the motors to their destinations in the most cost-efficient way. The company can consider the cheapest way in terms of cost or the cheapest way in terms of the number of routes used in total. From the spreadsheet model, there are five options from which the company can determine the number of motors to send from each harbor to specific destinations.
Option A and Option D (£ 121450) give the cheapest way of sending the motors, followed by Option C (£ 124000), then option B (£ 124850) and lastly option E (£ 125 950). RecommendationThe most cost-efficient way of sending the motors is by use of the routes presented in option A and D in the spreadsheet. The two options give the lowest costs of sending the motors and do not involve a lot of routes. The models show that in each distribution plan, six routes are to be used except for option C which has seven routes. There are two possible distribution plans that the company can use, however, the company has to choose one.
From the two given possibilities, that is Option A and D, it is not easy to determine the best option. Both have only one route to Nancy from Antwerp making distribution easy. Option D has one route that completes the supply of what is required in Liege, Belgium, and one route that supplies the demand in Tilburg, unlike option A which has Tilburg’ s demand supplied through two routes.
Beste, A., Leventhal, D., Williams, J., Lu, Q. (2002). The Markowitz Model Selecting an Efficient Investment Portfolio.
Fabozzi, F. J. and Markowitz, H. (2002). Vol. 94. The Theory and Practice of Investment Management. John Wiley and Sons.