Better Fitness, Inc - Managerial Report - Case Study Example

Analyzing the Problem at Better Fitness Inc Analyzing the Problem at Better Fitness Inc The Report This report discusses various ways of ensuring that Better Fitness Inc. identifies the best model that will aid in achieving maximum profit. In the process of striving for the increase in profits, limited resources should be applied in the manufacturing. The report also indicates the effect of applying the 25% restriction on the production of B (BodyPlus 200). This follows the company president’s belief that Better Fitness Inc.

is capable of becoming one of the best producers of fitness equipment. The report is subdivided into questions and followed by answers to help in understanding how the problem at Better Fitness can be handled. 1. What is the recommended number of BodyPlus 100 and BodyPlus 200 machines to produce? The recommended quantities of BodyPlus 200 and BodyPlus 100 are 17 units and 50 units respectively. These numbers have been determined after evaluating various ways of achieving maximum profit using the Linear Programming technique. 2. How does the requirement that the number/quantity of units of the BodyPlus 200 produced be at least 25 % of the total production affect profits?

Valuing the number of produced Body-Plus 200 at 25% of the entire production affects the realized considering two instances of profit maximization. Firstly, when the 25% constraint is applied in the production, the total cost will be (1989*17) + (1309*50) = 99,263; the total revenue will be (2450*17) + (1680*50) = 126,650; and total profit will be (461*17) + (351*50) = 26,387 (approximately 26,233 when rounded off to the nearest error of accuracy). The estimated value of profit relies on the condition that the total amount of A is 50 while the total amount of B is 17.

The change or increase in profit will be insignificant in the case whereby the 25% constraint is removed on B. That is, the total quantity of A is assumed 60 and that of B as 10. In such a situation, the profit will increase by a mere 1.01 times or 26870/26387. This is different from the situation where the 25% constraint on B is included in the efforts of optimizing the profits. Graphical representations of the effects of including or removing the 25% constraint on B indicate the shifts (increase or decrease in the size of the feasible region).

The feasible region without the 25% constraint is marked by a reduction of profits to $483 while that of the representation with the 25% constraint is maintained at 26,233. 3. Where should efforts be expended in order to increase profits? To increase profits, constraint on B (which is 25%) should be removed, and sales conducted directly. Using this model, the profit will be maximized by 80570/26387 (or 3.05 times). The increase in profits follows the condition that the constraint is five and distributors are assumed to use A = 50 and B = 17.

Other options that are important in the process of maximizing the profits include the decision to conduct direct sales to the retailers without involving distributors. Using the 25% constraint on B and applying direct sales to the retailers, profits increase by 3.04%. On the other hand, profits increase by 3.05% when direct sales are conducted and that the 25% constraint on B is removed.