Question:

Meal Outsourcing

Mr. Eiríksson was recently hired as the head of operations at Icelandic Air. As a graduate of a top American MBA program he is more than familiar with the potential impact that data driven decision making can have. The first target of Mr. Eiríksson´s efficiency campaign is the in-flight meal production plan. Currently they produce most of their salads, soups, and deserts in-house but outsource the main entrees to local kitchens that have sprung up after the most recent wave of layoffs. The five kitchens Icelandic Air has been using are Anna's, Bjorn's, Dora's, Egils's, Fanney's and Gunnar's. All kitchens can produce salads, soups and deserts, but Anna’s and Egil’s are not set up for entrée production.

The table below has the cost per serving for both the in-house kitchen and the local kitchens (the costs per serving for the local kitchens includes all transportation costs).

Each of the small kitchens has limited production capacity (per week), which is given in the last column in the table above, and the in-house kitchen can serve up to 60,000 servings a week. In any given week Icelandic Air needs 25,000 salads servings, 26,000 servings of soup, 28,000 desserts and 28,000 entrees.

1. Specify the decision variables.
2. Specify the objective (as a function of the decision variables and/or intermediate variables and/or other parameters).
   
3. Specify the constraints (as a function of the decision variables and/or intermediate variables and/or other parameters).
4. List any intermediate variables/calculations you utilized above (if any).
5. Implement your model in Excel. What is the optimal solution (please specify both the objective and the values of your decision variables)? Include Exhibit 1-1 of your implemented model that is clearly labelled (with row and column headings) and shows the formulas.

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document