Interpretation of the ResultsAutoPower Company Distribution plan has the information about what amount of supplies they should make to each destination (Provided in the appendix). The distribution plan has enough supplies but needs to determine the number of motors to send from their harbours. The cost of sending motors from one harbour 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 cost of production of which if minimized, increases the chances of maximizing profit.
The main aim therefore is to send the motors to their destinations by 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 spread sheet model, there are five options from which the company can determine the number of motors to send from each harbour 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 the option A which has Tilburg’s demand supplied through two routes. Option A also has one route that completes the supply of what is required in Liege, Belgium and one route that completes the supply required in Leipzeg, Germany.
The company can therefore use either of the two options (A and D) considering the lower costs that the routes have as compared to the other supply routes. Selection of the best spread sheet model to use can further be determined by considering other factors that affect distribution from the harbours to the destination areas. All the data is given in the spread sheet model which also has graphs revealing the interpretation.
Question 2Markowitz asset features: According to Markowitz, assets are defined by mean variance parameters which define them as either risky of non risky. The mean variance produces the risks related to investment in a group of assets (Fabozzi & Markowitz, 2002). He formulated the formula of obtaining expected return for a portfolio which has another form as: w1μ1 + w2 μ2……wn μn = The portfolio’s expected return.