Linear Programming

Linear Programming

The objective of any business is to maximize the profit generated from its operations. To attain desirable profits requires the firm to make optimal decisions, those that reduces the costs incurred and increases the revenues generated. An organization uses appropriate measures to ensure the resources available are used in the best possible way to result to optimal results.
To improve the profits of the organization and the utilization of the inventory, there is the need for change in the percentage per bag. To achieve this, the firm should reduce the percentage per bag used in the production of the regular and deluxe mix. The surplus of the peanut, cashew and pecan need to be reduced and more of the almonds and walnut obtained in the organization to facilitate an increase in the sales level of the supreme mix. The percentages used in the production should be reduced to decrease the cost incurred and ensure the maximum utilization of the resources. The increase in the percentage employed in the supreme will result in the total sales and optimal utilization of the inventory.
The nuts I would buy are the Almonds and the walnuts. An additional lb of Almonds increases the profits by $ 8.5, and the Walnuts would increase by $ 1.5. Hence, this will have a positive effect on the viability level of the association. The increase will also be useful in the production of the supreme mix to cover the debt of $ -0.175.
Perishable inventory, this inventory takes a short time to expire.

The inventory exposes the business to many undesirable situations. The longer the products stay in the store, the higher the chances of the products perishing. With these, the organization suffers from the loss of sales. It not only loses the initial cost but also holding and the ordering costs incurred by the company. The profits are also lost from the sale lost. The disposal cost incurred by the firm of the perished products is too high. Management needs to balance the level of the inventory and the demand this exposes the firm to an undesirable situation. For instance, the estimates of the firm may not be appropriate; the demand may surpass the portfolio level leading to loss of sales. Keeping more than the demand leads high wastage (Steinker & Hoberg, 2013).
It is vital for the management to be aware of the effects of all the decisions they undertake. The decisions made have a great impact on the well-being of the organization in their desire to achieve a sound financial position and in ensuring continued growth of the organization. Therefore, this requires careful consideration of all the decisions undertaken by the firm to ensure they have a positive impact on the organization. For an organization to increase the income from sales, it may decide for instance to increase the prices charged or increase the level of sales significantly. The two instances have different repercussions; increasing the prices means the company will lose the customer base. The result is a decline in the revenue generated from sales. Contrary this can lead to an increase in the revenue and a reduction in the costs incurred as the higher prices cover it.
Loss of the market may hinder the well-being of the organization in the market in case the other competitors use the price variance to lure the customers. The organization decision to hold more inventories also needs keen consideration. Where shortage is expected in the future, acquiring more inventories is desirable this takes advantage of the current low prices. However, more inventory means the company will incur more costs, in their storage, holding and in insuring them. There is also another risk of the company’s failure to convert the same to sales due to unforeseen circumstances. Any organization thus ought to take keen consideration in ensuring there is a balance between the market desires and the organization objective.

Reference
Steinker, S. & Hoberg, K. (2013). The impact of inventory dynamics on long-term stock returns – An empirical investigation of U.S. manufacturing companies. Journal of Operations Management, 31(5), 250-261. http://dx.doi.org/10.1016/j.jom.2013.05.002