Profit Maximisation Problem

Key Material covered in Operating Research Classes (year 1)

Lecture 1

Profit maximisation problem: i.e. making the maximum amount of profit in every given situation.

• Information needed:
  • Product details: The different types of items being made
  • Cost of Item:
    • The amount of time each type takes
    • The different physical inputs utilised
    • Any restrictions or constraints
  • Selling price information

• Steps
  • Decision variables applicable:
    • eg. unit numbers being produced
  • Restrictions / Constraints
    • Limits on time , physical inputs, willingness, finances
  • Objective function:
    • What is it that you are wanting to do?
      • Minimise or maximise what?
        • Profit .

Possible uses:

• Manufacturing order Go / No-Go Decisions
• Profit calculations