Fabric and Fall Fashion Case Study

CASE 4.
1
INTRODUCTION TO OPERATIONS RES
HILLIER/LIEBERMAN
7E
Quantitative Tech
Semester 3
ITBM 09-11
CASE 4.1
TO OPERATIONS RESEARCH
ER/LIEBERMAN
7E
ve Techniques
mester 3
M 09-11
From the tenth floor of her office building, Katherine Rally watches the swarms of New Yorkers fight their way through the stre
stands. On this sweltering July day, she pays particular attention to the fashions worn by the various women and wonders what
random musings; they are critical to her work since she owns and manages TrendLines, an elite women’s clothing company.
Today is an especially important day because she must meet with Ted Lawson, the production manager, to decide upon next m
the quantity of each clothing item she should produce given the plant’s production capacity, limited resources, and demand fo
sales since the items produced next month will appear in stores during September, and women generally buy the majority of th
She turns back to her sprawling glass desk and looks at the numerous papers covering it. Her eyes roam across the clothing patt
requirements for each pattern, and the lists of demand forecasts for each pattern determined by customer surveys at fashion s
designing the fall line and presenting it at fashion shows in New York, Milan, and Paris. Ultimately, she paid her team of six des
of hiring runway
models, hair stylists, and makeup artists, sewing and fitting clothes, building the set, choreographing and rehearsing the show,
her an additional $2,700,000.
She studies the clothing patterns and material requirements. Her fall line consists of both professional and casual fashions. She
the quality and cost of material, the cost of labor and machining, the demand for the item, and the prestige of the TrendLines b
The fall professional fashions include:
Clothing Item Materials Requirements Price Machine Cost

Tailored wool slacks 3 yards of wool 300 160
2 yards of acetate for lining
Cashmere sweater 1.5 yards of cashmere 450 150
Silk blouse 1.5 yards of silk 180 100
Silk camisole 0.5 yard of silk 120 60
Tailored skirt 2 yards of rayon 270 120
1.5 yards of acetate for lining
Wool blazer 2.5 yards of wool 320 140
The fall casual fashions include:

Velvet pants 3 yards of velvet 350 175
Cotton sweater 1.5 yards of cotton 130 60
Cotton miniskirt 0.5 yard of cotton 75 40
Velvet shirt 1.5 yards of velvet 200 160
Button-down blouse 1.5 yards of rayon 120 90
She knows that for the next month, she has ordered 45,000 yards of wool, 28,000 yards of acetate, 9,000 yards of cashmere, 1
velvet, and 30,000 yards of cotton for production. The prices of the materials are:
She knows that for the next month, she has ordered 45,000 yards of wool, 28,000 yards of acetate, 9,000 yards of cashmere, 1
velvet, and 30,000 yards of cotton for production. The prices of the materials are:
Material Price per yard

Wool 9
Acetate 1.5
Cashmere 60
Silk 13
Rayon 2.25
Velvet 12
Cotton 2.5
Any material that is not used in production can be sent back to the textile wholesaler for a full refund, although scrap material
production of both the silk blouse and cotton sweater leaves leftover scraps of material. Specifically, for the production of one
cotton, respectively, are needed. From these 2 yards, 1.5 yards are used for the silk blouse or the cotton sweater and 0.5 yard i
material, so she plans to use the rectangular
scrap of silk or cotton to produce a silk camisole or cotton miniskirt, respectively. Therefore, whenever a silk blouse is produced
cotton sweater is produced, a cotton miniskirt is also produced. Note that it is possible to produce a silk camisole without prod
producing a cotton sweater.
The demand forecasts indicate that some items have limited demand. Specifically, because the velvet pants and velvet shirts ar
only 5,500 pairs of velvet pants and 6,000 velvet shirts. TrendLines does not want to produce more than the forecasted deman
company cannot sell them. TrendLines can produce less than the forecasted demand, however, since the company is not requi
limited demand because it is quite expensive,
and TrendLines knows it can sell at most 4,000 cashmere sweaters. The silk blouses and camisoles have limited demand becau
TrendLines projects that it can sell at most 12,000 silk blouses and 15,000 silk camisoles.
The demand forecasts also indicate that the wool slacks, tailored skirts, and wool blazers have a great demand because they ar
Specifically, the demand for wool slacks is 7,000 pairs of slacks, and the demand for wool blazers is 5,000 blazers. Katherine wa
two items in order to maintain her loyal customer base and not lose business in the future. Although the demand for tailored s
make at least 2,800 of them.
ht their way through the streets infested with yellow cabs and the sidewalks littered with hot dog
s women and wonders what they will choose to wear in the fall. Her thoughts are not simply
men’s clothing company.
ager, to decide upon next month’s production plan for the fall line. Specifically, she must determine
d resources, and demand forecasts. Accurate planning for next month’s production is critical to fall
nerally buy the majority of the fall fashions when they first appear in September.
roam across the clothing patterns designed almost six months ago, the lists of materials
ustomer surveys at fashion shows. She remembers the hectic and sometimes nightmarish days of
she paid her team of six designers a total of $860,000 for their work on her fall line. With the cost
ng and rehearsing the show, and renting the conference hall, each of the three fashion shows cost
onal and casual fashions. She determined the prices for each clothing item by taking into account
e prestige of the TrendLines brand name.
9,000 yards of cashmere, 18,000 yards of silk, 30,000 yards of rayon, 20,000 yards of
nd, although scrap material cannot be sent back to the wholesaler. She knows that the
y, for the production of one silk blouse or one cotton sweater, 2 yards of silk and
otton sweater and 0.5 yard is left as scrap material. She does not want to waste the
ever a silk blouse is produced, a silk camisole is also produced. Likewise, whenever a
a silk camisole without producing a silk blouse and a cotton miniskirt without
vet pants and velvet shirts are fashion fads, TrendLines has forecasted that it can sell
than the forecasted demand because once the pants and shirts go out of style, the
ce the company is not required to meet the demand. The cashmere sweater also has
have limited demand because many women think silk is too hard to care for, and
eat demand because they are basic items needed in every professional wardrobe.
5,000 blazers. Katherine wants to meet at least 60 percent of the demand for these
gh the demand for tailored skirts could not be estimated, Katherine feels she should
(a) Ted is trying to convince Katherine not to produce any velvet shirts since the demand for this fashion fad is quite low. He
other costs. The net contribution (price of clothing item - materials cost - labor cost) from selling the fashion fad should cove
argues that given the net contribution, even satisfying the maximum demand will not yield a profit. What do you think of Te
b) Formulate and solve a linear programming problem to maximize profit given the production, resource, and demand const
Before she makes her final decision, Katherine plans to explore the following questions independently except where otherw
(c) The textile wholesaler informs Katherine that the velvet cannot be sent back because the demand forecasts show that th
refund for the velvet. How does this fact change the production plan?
(d) What is an intuitive economic explanation for the difference between the solutions found in parts (b) and (c)?
(e) The sewing staff encounters difficulties sewing the arms and lining into the wool blazers since the blazer pattern has an a
increased labor time to sew a wool blazer increases the labor and machine cost for each blazer by $80. Given this new cost, h
(f ) The textile wholesaler informs Katherine that since another textile customer canceled his order, she can obtain an extra 1
produce to maximize profit?
(g) TrendLines assumes that it can sell every item that was not sold during September and October in a big sale in November
quantity during the November sale. (The previously mentioned upper limits on demand concern only the sales during Septe
profit?
hion fad is quite low. He argues that this fashion fad alone accounts for $500,000 of the fixed design and
e fashion fad should cover these fixed costs. Each velvet shirt generates a net contribution of $22. He
What do you think of Ted’s argument?
ource, and demand constraints.
ntly except where otherwise indicated.
nd forecasts show that the demand for velvet will decrease in the future. Katherine can therefore get no
ts (b) and (c)?

e blazer pattern has an awkward shape and the heavy wool material is difficult to cut and sew. The
80. Given this new cost, how many of each clothing item should Trend-Lines produce to maximize profit?
she can obtain an extra 10,000 yards of acetate. How many of each clothing item should TrendLines now
in a big sale in November at 60 percent of the original price. Therefore, it can sell all items in unlimited
ly the sales during September and October.) What should the new production plan be to maximize
PROFESSIONAL FASHIONS
Production Plan Tailored Wool Cashmere Silk Blouse Silk Camesole Tailored Skirt
Slacks Sweater
Ans b 4200.00 4000.00 7000.00 15000.00 8067.00
Ans c - I 4200.00 4000.00 7000.00 15000.00 8064.00
Ans c - II 4200.00 4000.00 7000.00 15000.00 3177.78
Ans e 4200.00 4000.00 7000.00 15000.00 10065.00
Ans f 4200.00 4000.00 7000.00 15000.00 14733.00
Ans g 4200.00 6000.00 7000.00 15000.00 8067.00
CASUAL FASHIONS
Cotton Button-down
Wool Blazer Velvet Pants Cotton Sweater Velvet Shirt
Miniskirt Blouse
4999.00 0.00 0.00 60000.00 6000.00 9243.00
5000.00 2.00 0.00 60000.00 6000.00 9248.00
5000.00 3666.67 0.00 60000.00 6000.00 15762.96
3001.00 0.00 0.00 60000.00 6000.00 6579.00
5000.00 0.00 0.00 60000.00 6000.00 356.00
4999.00 0.00 0.00 60000.00 6000.00 9243.00
Gain/Loss w.r.t
Gross Profit Original Solution
$3,793,914.75 (Optimal Solution)
$3,530,090.00 -$263,824.75
$3,633,922.22 -$159,992.53
$3,503,884.75 -$290,030.00
$4,512,331.50 $718,416.75
$3,853,914.75 $60,000.00
Fixed costs will not change with withholding dresses made from Velvet from production. Fixed costs are for the entire collecti
product from production plan unless the product's net contribution Is in the negitive.
costs are for the entire collection and must not be made the basis of deciding on dropping a
Wool Acetate Cashmere Silk
Price Per Yard 9 1.5 60 13

Quantity Available 45000 28000 9000 18000
Tailored Wool Slacks 3 2 0 0
PROFESSIONAL
Cashmere Sweater 0 0 1.5 0

FASHION
Silk Blouse 0 0 0 1.5

Silk Camesole 0 0 0 0.5
Tailored Skirt 0 1.5 0 0
Wool Blazer 2.5 1.5 0 0
Velvet Pants 0 2 0 0
Cotton Sweater 0 0 0 0
FASHIONS
CASUAL
Cotton Miniskirt 0 0 0 0
Velvet Shirt 0 0 0 0
Button-down Blouse 0 0 0 0

PROFESSIONAL
Cashmere Sweater 0 0 6000 0

FASHION
Silk Blouse 0 0 0 10500

Silk Camesole 0 0 0 7500
Wool Blazer 12497.5 7498.5 0 0
FASHIONS
CASUAL
Total Material Used 25097.5 27999 6000 18000
Rayon Velvet Cotton
2.25 12 2.5
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375
Total Produced Selling Price L&M Cost

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
16134 0 0 8067 270 120
0 0 0 4999 320 140
0 0 0 0 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
13864.5 0 0 9243 120 90
29998.5 9000 30000
Designer Fee = $860,000.00

Fashion Show Costs = $2,700,000.00
Total Fixed Costs = $3,560,000.00
Manufacturing Limits
Profit on Product Total Profit Upper limit Lower Limit
110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 1155597.75 2800
155.25 776094.75 5000 3000
136 0 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 246094.875
Total Revenue = $16,706,930.00

Fixed Cost = $3,560,000.00
L&M Cost = $9,844,142.63
Returns Cost= $491,127.38
Gross Profit= $3,793,914.75 (Maximize)

PROFESSIONAL

FASHION

FASHIONS
CASUAL

PROFESSIONAL

FASHION

Tailored Skirt 0 12096 0 0
Wool Blazer 12500 7500 0 0
FASHIONS
CASUAL
Total Material Used 25100 28000 6000 18000
Rayon Velvet Cotton
2.25 12 2.5 Remaining velvet is not used in poduction in this
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375
Total Produced Price L&M Cost

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
16128 0 0 8064 270 120
0 0 0 5000 320 140
0 6 0 2 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
13872 0 0 9248 120 90
30000 9006 30000

G. Profit w/o Waste Mat. Cost=
Waste Material Cost =
g velvet is not used in poduction in this case.
110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 1155168 2800
155.25 776250 5000 3000
136 272 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 246228

Fixed Cost = $3,560,000.00
L&M Cost = $9,844,822.00
G. Profit w/o Waste Mat. Cost= $3,662,018.00 (Maximize)
Waste Material Cost = $131,928.00
Gross Profit= $3,530,090.00 (Optimized)

PROFESSIONAL

FASHION

FASHIONS
CASUAL

PROFESSIONAL

FASHION

Wool Blazer 12500 7500 0 0
Velvet Pants 0 7333.333333 0 0
FASHIONS
CASUAL
Rayon Velvet Cotton
2.25 12 2.5 Remaining velvet is used in poduction in this ca
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
6355.555556 0 0 3177.7777777778 270 120
0 0 0 5000 320 140
0 11000 0 3666.6666666667 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
23644.44444 0 0 15762.962962963 120 90
30000 20000 30000

ng velvet is used in poduction in this case.
110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 455216.666666667 2800
155.25 776250 5000 3000
136 498666.666666667 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 419688.888888889

Fixed Cost = $3,560,000.00
L&M Cost = $10,618,066.67

PROFESSIONAL

FASHION

FASHIONS
CASUAL

PROFESSIONAL

FASHION

Wool Blazer 7502.5 4501.5 0 0
FASHIONS
CASUAL
Rayon Velvet Cotton
2.25 12 2.5
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
20130 0 0 10065 270 120
0 0 0 3001 320 220
0 0 0 0 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
9868.5 0 0 6579 120 90
29998.5 9000 30000

110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 1441811.25 2800
75.25 225825.25 5000 3000
136 0 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 175165.875

Fixed Cost = $3,560,000.00
L&M Cost = $9,759,547.63

PROFESSIONAL

FASHION

FASHIONS
CASUAL

PROFESSIONAL

FASHION

Wool Blazer 12500 7500 0 0
FASHIONS
CASUAL
Total Material Used 25100 37999.5 6000 18000
Rayon Velvet Cotton
2.25 12 2.5
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
29466 0 0 14733 270 120
0 0 0 5000 320 140
0 0 0 0 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
534 0 0 356 120 90
30000 9000 30000

110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 2110502.25 2800
155.25 776250 5000 3000
136 0 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 9478.5

Fixed Cost = $3,560,000.00
L&M Cost = $9,859,399.25
CONSIDE


PROFESSIONAL

FASHION

FASHIONS
CASUAL

PROFESSIONAL

FASHION

Wool Blazer 12497.5 7498.5 0 0
FASHIONS
CASUAL
CONSIDE
Quantity Available 19902.5 1 3000 0
PROFESSIONAL Tailored Wool Slacks 0 0 0 0
FASHION Cashmere Sweater 0 0 3000 0
Silk Blouse 0 0 0 0
Tailored Skirt 0 0 0 0
Wool Blazer 0 0 0 0
FASHIONS
CASUAL
Product Total Produced

Tailored Wool Slacks 4200
Cashmere Sweater 6000
Silk Blouse 7000
Silk Camesole 15000
Tailored Skirt 8067
Wool Blazer 4999
Velvet Pants 0
Cotton Sweater 0
Cotton Miniskirt 60000
Velvet Shirt 6000
Button-down Blouse 9243
CONSIDERING PRODUCTION FOR FALL PERIOD
Rayon Velvet Cotton

2.25 12 2.5
Rayon Velvet Cotton

30000 20000 30000 T Mat. Cost
0 0 0 30
0 0 0 90
0 0 0 19.5
0 0 0 6.5
2 0 0 6.75
0 0 0 24.75
0 3 0 39
0 0 1.5 3.75
0 0 0.5 1.25
0 1.5 0 18
1.5 0 0 3.375
Total Produced Selling Price L&M Cost

0 0 0 4200 300 160
0 0 0 4000 450 150
0 0 0 7000 180 100
0 0 0 15000 120 60
16134 0 0 8067 270 120
0 0 0 4999 320 140
0 0 0 0 350 175
0 0 0 0 130 60
0 0 30000 60000 75 40
0 9000 0 6000 200 160
13864.5 0 0 9243 120 90
29998.5 9000 30000

CONSIDERING PRODUCTION FOR SALE PERIOD

Rayon Velvet Cotton
1.5 11000 0 Total Produced Selling Price L&M Cost
0 0 0 0 300 160
0 0 0 2000 450 150
0 0 0 0 180 100
0 0 0 0 120 60
0 0 0 0 270 120
0 0 0 0 320 140
0 0 0 0 350 175
0 0 0 0 130 60
0 0 0 0 75 40
0 0 0 0 200 160
0 0 0 0 120 90
0 0 0
Revenue from Sale=
Returns Cost=
Profit from Sale =
Profit from Fall = $3,793,914.75

Profit from Sale = $60,000.00
Gross Profit = $3,853,914.75 (Optimized)
110 462000 7000 4200
210 840000 4000
60.5 423500 12000
53.5 802500 15000
143.25 1155597.75 2800
155.25 776094.75 5000 3000
136 0 5500
66.25 0
33.75 2025000
22 132000 6000
26.625 246094.875

Fixed Cost = $3,560,000.00
L&M Cost = $9,844,142.63
Profit from Fall= $3,793,914.75 (Maximize)
Profit on Product Total Profit
-10 0
30 60000.0000000001
-11.5 0
5.5 0
35.25 0
27.25 0
-4 0
14.25 0
3.75 0
-58 0
-21.375 0
Revenue from Sale= $60,000.00

Returns Cost= $0.00
Profit from Sale = $60,000.00 (Maximize)
Tailored wool slacks 3 yards of wool 300 160
Cashmere sweater 1.5 yards of cashmere 450 150
Silk blouse 1.5 yards of silk 180 100
Silk camisole 0.5 yard of silk 120 60
Tailored skirt 2 yards of rayon 270 120
Wool blazer 2.5 yards of wool 320 140

Velvet pants 3 yards of velvet 350 175
Cotton sweater 1.5 yards of cotton 130 60
Cotton miniskirt 0.5 yard of cotton 75 40
Velvet shirt 1.5 yards of velvet 200 160
Button-down blouse 1.5 yards of rayon 120 90
Material Price per yard

Wool 9
Acetate 1.5
Cashmere 60
Silk 13
Rayon 2.25
Velvet 12
Cotton 2.5

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CASE 4.

The fall professional fashions include:

Clothing Item Materials Requirements Price Machine Cost

The fall casual fashions include:

Clothing Item Materials Requirements Price Machine Cost

Material Price per yard

ource, and demand constraints.

ntly except where otherwise indicated.

ts (b) and (c)?

Wool Acetate Cashmere Silk

Cashmere Sweater 0 0 1.5 0

Silk Blouse 0 0 0 1.5

Tailored Wool Slacks 12600 8400 0 0

Cashmere Sweater 0 0 6000 0

Silk Blouse 0 0 0 10500

Rayon Velvet Cotton

Total Produced Selling Price L&M Cost

Designer Fee = $860,000.00

Total Revenue = $16,706,930.00

Wool Acetate Cashmere Silk

Cashmere Sweater 0 0 1.5 0

Silk Blouse 0 0 0 1.5

Tailored Wool Slacks 12600 8400 0 0

Cashmere Sweater 0 0 6000 0

Silk Blouse 0 0 0 10500

Rayon Velvet Cotton

Total Produced Price L&M Cost

Designer Fee = $860,000.00

Total Revenue = $16,707,740.00

Wool Acetate Cashmere Silk

Cashmere Sweater 0 0 1.5 0

Silk Blouse 0 0 0 1.5

Tailored Wool Slacks 12600 8400 0 0

Cashmere Sweater 0 0 6000 0

Silk Blouse 0 0 0 10500

Rayon Velvet Cotton

Total Produced Price L&M Cost

Designer Fee = $860,000.00

Total Revenue = $17,452,888.89

Wool Acetate Cashmere Silk

Cashmere Sweater 0 0 1.5 0

Silk Blouse 0 0 0 1.5

Tailored Wool Slacks 12600 8400 0 0

Cashmere Sweater 0 0 6000 0

Silk Blouse 0 0 0 10500

Rayon Velvet Cotton

Total Produced Price L&M Cost

Designer Fee = $860,000.00

Total Revenue = $16,287,350.00

Wool Acetate Cashmere Silk

Cashmere Sweater 0 0 1.5 0

Silk Blouse 0 0 0 1.5

Tailored Wool Slacks 12600 8400 0 0

Cashmere Sweater 0 0 6000 0

Silk Blouse 0 0 0 10500

Rayon Velvet Cotton

Total Produced Price L&M Cost

Designer Fee = $860,000.00

Total Revenue = $17,440,630.00