CHOCOLATIER LTD: CASE STUDY ONE A Research Paper Submitted to Enrico Cordoba of the Decision Science Department Ramon V. Del Rosario College of Business De La Salle University In Partial Fulfilment of the Requirements For the Course Management Science By Agbada, Patricia Lagasca, Gregory Lim, Patricia Militante, Isabella Padilla, Francesca Roxas, Raeven Santiago, April Sebollena, Bianca Tan, Patrick Viceral, Paolo July 4, 2013 The two then realized that they should create a new line. Gomez was also concerned about whether they had adequate supply for the new recipes and if it’s a good move to go with an inferior candy that might destroy their respectable image. sales were beginning to diminish in some stores.00. Gomez discovered that cost per pound of candy was increasing with each newly opened outlet. The two decided to split the tasks among themselves but agreed that overall planning and major decisions should be overseen by both of them.00 and Chocomer P54. To analyze and understand the current situation of Chocolatier Ltd. There was a new low-priced competitor in town.00”. The two have yet to decide on Gomez’s memo and were set to meet again in a few days. In reviewing costs. which was priced lower yet had the same quality as their premium products. He said. Gomez did not believe that the new lines would make good business. To identify the decision variables and the constraints by creating a mathematical model of the problem . while Chocodant will yield only P63. Objectives of the Study The objectives of the group in analyzing this case are: 1. They were successful and had an advantage over the competition. was started ten years ago by Miguel Dizon and Raul Gomez.I. They have decided to sell the chocolates at a medium-high price range. Furthermore. “every 100 pounds of the premium line now yields P86. Summary Chocolatier Ltd. Gomez discovered two new recipes could be developed that could be sold at a lower price: Chocodant and Chocomer. II. 2. so they decided to open 20 retail outlets. Mathematical Model Let : X1= Number of pounds of Premium Line X2= Number of pounds of Chocodant X3= Number of pounds of Chocomer Max.3. To determine which one of the alternative ways contains the optimal solution by using Linear Programming 5. But if the new lines did become successful. but does not give the optimal solution to the problem. in introducing these new lines. To come up with a recommendation based on the solutions on whether the owners of Chocolatier Ltd. the company incurs more costs to their operating value chain.63x2 + 0. Gomez and Mr. However. Z= 0. To find the alternative ways of action that the owners of Chocolatier Ltd. 000 6x1 + 4x2 + 3x3 + 1s1 + 0s2 + 0s3 ≤ 2640 . through the use of introducing new cheaper chocolate lines. IV. they seek out to address a financial crisis. Another solution they can do is that they must minimize costs by making their equipments more efficient and also they must find an alternative/substitute ingredient for their present ingredients or better yet. Gomez. the company will again have an edge against the competitor. In the case of Mr..86x1 + 0. 543 300x2 + 500x3 ≤ 150. can take to maximize profit 4. Dizon’s Chocolatier Ltd. According to Mr. the company’s image as a ‘premium’ chocolate provider.54x3 Subject to: 6x1 + 4x2 + 3x3 ≤ 2640 633x2 + 271x3 ≤ 171. should sell the new products III. they must find ways to utilize it much better by cutting off their usage of ingredients by formulating more recipes. might put their brand name at risk because of the new variants of chocolates. Alternative Courses of Action Alternative Courses of Action are possible solutions. Solution If Chocolatier Ltd. Sensitivity Analysis . 000 V. they will be able to maximize profit by Php 411.40. 543 0x1 + 300x2 + 500x3 + 0s1 + 0s2 + 1s3 ≤ 150. produces 290 pounds of the Premium line chocolate and 300 pounds of Chocomer. VI.0x1 + 633x2 + 271x3 + 0s1 + 1s2+ 0s3 ≤ 171. Chocolatier Ltd. Chocolatier Ltd. In response to their dilemma. . will reduce the cocoa beans in producing the Premium Line in half and distributing the other half in producing the Chocomer variant.VII. should produce Premium Line and Chocomer to maximize profit. By doing so. Recommendations The Company faces a low-cost competitor that is entrenching them by stealing sales normally for Chocolatier Ltd.