AppleMax produces two computers: Max and MultiMax. Each Max can be sold by $400 and each MultiMax can be sold by $800.

Both computers are produced on the same production line requiring testing and assembly. Testing and assembly are limited resources. There is a maximum of 5000 hours of testing capacity available per month. Each Max requires 3 hours and each MultiMax requires 5 hours. There is a maximum of 3000 hours of assembly capacity available per month. Each Max requires 1 hour and each MultiMax requires 4 hours.

Due to production lead time, the production department of AppleMax relies heavily on the sales forecasted to arrange its production plan. Typically, the production plan is based on the forecasted maximal possible sales on the two computers. To be more specific, if the marketing department has forecasted that the maximal possible sales in the coming month for Max and MultiMax is 750 units and 400 units, then the production department won’t produce Max more than 750 unit and MultiMax more than 400 units. The historical actual maximal possible sales for Max and MultiMax are listed in the “Data” sheet.

Download the template file from the link below, set up the model, do the analysis and address the questions required.

OnlinePractice_Q1.xlsx

1. In “Data” sheet, forecast the maximal possible sales of Month 14 for Max and MultiMax. For Max, use 3-month moving average method; for MultiMax, use exponential smoothing method. Calculate the forecast accuracies using the available data.
2. In “Model” sheet, use the forecasted maximal possible sales of Month 14 in “Date” sheet, set up a linear programming model. Name the ranges based on the requirements of Solver and paste the range names. Configure the Solver to find out the best production plan.
3. Use Solver to generate the sensitivity report. Based on the sensitivity report, answer the following questions:
   1. Should AppleMax increase/decrease its testing capacity? Why? If decrease, how many it can decrease without hurting the profit? If increase, how many profits can be created for each unit of additional capacity? Up to what level can AppleMax increase its testing capacity with the same profit increment rate?
   2. Should AppleMax increase/decrease its assembly capacity? Why? If decrease, how many it can decrease without hurting the profit? If increase, how many profits can be created for each unit of additional capacity? Up to what level can AppleMax increase its assembly capacity with the same profit increment rate?