UAMS - IBS Moscow Executive MBA Program Management Decision Methods Control Homework#1_1 (стр. 3 )

Pentagonal Pictures produces motion pictures in Hollywood and distributes them nationwide. Currently, it is considering 10 possible films; these include dramas, comedies, and ac­tion adventures. The success of each film depends somewhat on both the strength of the subject matter and the appeal of the cast. Estimating the cost of a film and its potential box office draw is inexact at best: still, the studio must rely on its experts' opinions to help it evaluate which projects to undertake.

The following table lists the films currently under consideration by Pentagonal Pictures, including the projected cost and box office gross receipts

			No-Name Cast	Big Star Cast
Film	Rating	Type	Cost	Box Office Gross	Cost	Box Office Gross
Two-Edged Sword	PG-13	Action	$ 5M	$ 8M	$10M	$15M
Lady in Waiting	R	Drama	$12M	$20M	$25M	$35M
Yesterday	PG	Drama	$ 8M	$10M	$12M	$26M
Golly Gee	PG	Comedy	$ 7M	$12M	$15M	$26M
Why I Cry	PG-13	Drama	$15M	$30M	$30M	$45M
Captain Kid	PG	Comedy	$10M	$20M	$17M	$28M
Oh Yes!	R	Comedy	$ 4M	$ 7M	$ 8M	$12M
Nitty Gritty	PG	Comedy	$11M	$15M	$14M	$20M
The Crash	R	Action	$20M	$28M	$40M	$65M
Bombs Away	R	Action	$25M	$37M	$50M	$80M

In addition to these production costs, each movie will have a $1 million advertising budget, which will increase to $3 million if the movie is to have a "big star" cast. Assume that the studio receives 80% of a film's gross receipts. The company would like to maximize its net profit (gross profit — production costs - advertising costs) for the year.

Pentagonal has a production budget of $100 million and an advertising budget of $15 million. In addition, it would like to adhere to the following restrictions:

1. At least half the films produced should have a rating of PG or PG-13.

2. At least two comedies are to be produced.

3. If The Crash is produced, Bombs Away will not be.

4. At least one drama is to be produced.

5. At least two films should have big name casts.

6. At least two PG films should be produced.

7. At least one action movie with a big name cast should be produced.

Prepare a report for Pentagonal Pictures that recommends which films should be produced and with which casts. Detail how the budgets will be spent. Include in your report a sensitivity analysis that considers how varying budgets for both production costs and advertising (while spending at most a total of $115 million) would affect your recommendation.

Finally, discuss the effects of Pentagonal's seven restrictions and report the effect of requiring only six of the seven, five of the seven, and four of the seven to hold.

Ferroconcrete Buildings Inc. has 5 plants (P1,P2,…P5) and 3 warehouses (W1, W2, W3) in the region. The company usually produces items on the order, but sometimes uses warehouses for temporary storage. At the moment the company has an order from some building company for 1050 ferroconcrete blocks, which have to be delivered to 7 building sites. Transportation costs for delivery from every plant to every building site are presented in the table 1.

Table 1

	Site1	Site 2	Site 3	Site 4	Site 5	Site 6	Site 7
P 1	80	35	40	80	60	60	65
P 2	60	45	30	20	30	20	30
P 3	60	15	30	65	45	45	45
P 4	35	30	55	60	40	50	40
P 5	30	20	40	40	20	30	20

The building company orders the delivery in 2 stages: 545 blocks in 2 weeks and 505 blocks – in 4 weeks from now. The amount of blocks in every order to every site are presented in the table 2.

Table 2

	Site 1	Site 2	Site 3	Site 4	Site 5	Site 6	Site 7
Order 1	90	65	45	75	95	100	75
Order 2	55	45	70	75	40	35	185

Ferroconcrete Buildings Inc. considers it is more profitable to make the whole order in one run, after which the equipment will be setup for another order. Thus, the first part of this run (545 blocks) will be set immediately to the building sites, the other part (505 blocks) will be stored in the warehouses and after 2 weeks will be sent to the building sites. Transportation costs for delivery from every plant to every warehouse are presented in the table 3. Transportation costs for delivery from every warehouse to every building site are presented in the table 4

Table 3

ед	W 1	W 2	W 3
P 1	90	15	40
P 2	45	60	60
P 3	70	10	20
P 4	60	45	15
P 5	40	40	10

Table 4