The development of linear programming has been ranked among the most important scientific advances of the mid 20th century. Its impact since the 1950’s has been extraordinary. Today it is a standard tool used by some companies (around 56%) of even moderate size. Linear programming uses a mathematical model to describe the problem of concern. Linear programming involves the planning of activities to obtain an optimal result, i.e., a result that reaches the specified goal best (according to the mathematical model) among all feasible alternatives.
Linear Programming as seen by various reports by many companies has saved them thousands to even millions of dollars. Since this is true why isn’t everyone using Linear Programming? Maybe the reason is because there has never been an in-depth experiment focusing on certain companies that do or do not use linear programming. My main argument is that linear programming is one of the most optimal ways of resource allocation and making the most money for any company today.
I used (in conjunction with another field supporter – My Dad) the survey method to ask 28 companies that were in Delaware, New Jersey, and Pennsylvania whether they were linear programming users. In addition, I wanted to examine the effect of the use of linear programming across three different but key decision support areas of the participating companies to include (1) Planning (2) Forecasting and (3) Resource Allocation. The companies were selected randomly from the Dunn & Bradstreet Database of companies and also from the CNN and Yahoo Databases of company performances. All these data sources are available free of charge.
The three key measures that I wanted to use to examine the impact of LP on company results were EPS, (Earnings per Share; explained later) the ROI%, (Rate on Investment or the Rate of Return; explained later) and Profit. I used these three measures as they are key measures that Wall Street Investors look at when they examine a company’s performance.
This research is limited to understanding how Linear Programming (i.e., Optimization) has affected the results of companies generally, if at all, and is based on my own view (in this case my hypothesis) that companies that do use LP actually derive some benefit from doing so.
Introduction
The development of linear programming has been ranked among the most important scientific advances of the mid 20th century and I must agree with this assessment.
That leaves us with three relevant measures: IRR, NPV, and Profitability Index. Among the three NPV will be preferred to the IRR and
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
The Dupont analysis includes the asset turnover ratio, the profit margin percantage, return on shareholder’s equity percentage, return on assets, and the equity multiplier (Spiceland, Sepe, and Nelson 258-264). The asset turnover ratio is the amount of revenue received for every one dollar of assets, it reveals how efficiently the company is distributing assets. Apple’s asset turnover ratio is 60.43 which means for every one dollar Apple has in assets, they receive approximately sixty cents (Apple Inc). Microsoft’s asset turnover ratio is 13.17 so for every dollar they only receive about thirteen cents (Microsoft Inc). Apple is doing significantly better in this category. The profit margin is just how much of a company’s sales they keep as a profit. Apple’s profit margin is 21.67% while Microsoft has a 28% profit margin so Microsoft is accumulating more profit off each sale but their sales are lower. The return on shar...
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
Firstly, based on the profitability, P&G has earned higher profit from each dollar of revenue which is 13.4% compared to C-P 12.9% for the recent year 2013. In addition, P&G also has higher EPS of US$4.04 compare to C-P US$2.41. In contrast, C-P register a Gross Profit of 58.7% and Return on Equity of 91.0% as opposed to P&G’s 49.6% and 17.0% respectively. C-P seems to rely heavily on debt and this has helped to improve the Return of Equity. P&G also has its downside in asset turnover ratio (0.62) and fixed turnover
The times interest earned ratio uses a company’s income statement to assess its ability to meet long-...
This study assessed that an effective ratio with near optimal interpretation results in feasible investment decisions, corporate solvency and profit potential and a track down impact on economic growth .The basic objective of financial statements is simply to supply relevant and decision helpful information and facts to individuals who considered necessary such information in a manner competent to satisfy their aims as well as such objectives need to drive the method of measurement. Accounting information need to always point to making sure that users of the information receive the absolute minimum level of information and facts that is related and useful, reliable,
Zikmund, W., Babin, B.J., Carr, J.C., & Griffin, M. (2010). Business research methods (8th ed.). Mason, OH: Thomson/South-Western
• Hitt, Michael A; Hokisson, Robert E.; Ireland, RD. Strategic Management. 6th Ed., Masson, Ohio: Souht. Wester 2005.
To test the financial feasibility and plan acceptability, there must be information on the magnitude, and share of estimated project cost that are reimbursable. This information can be derived from cost allocation. Also where cost sharing is required in the multipurpose planning process cost allocation can be applied. Cost allocation also provides information necessary for allocating the real expenditures ensuring that the cost account are maintained in line with plan formulation and allocation principles during the subsequent c...
“Apply the concepts of marginal utility theory, product differentiation, and revenue/profit maximization to some event in your personal, daily lives.” [1]
In their 1973 article they declared that the ways for solving problems by linear method for problem solving are over and this is the effect of the change in the modern society and increasing social complexities which makes it difficult to define the problems and also that the dependency is based on political reasoning. [ 1] According to the complexities involved in the problem, and methodologies used for solving the problems, planning problems can be categorized into three categories, Tame problems, Wicked problems and Super wicked problems.... ... middle of paper ... ...
Making an analysis of the profitability of the shareholder can be seen that although both companies have similar returns, the source of this return is different.
OLLIER-MALATERRE, ARIANE; ROTHBARD, NANCY P.; BERG, JUSTIN M. Academy of Management Review (Oct2013), Vol. 38 Issue 4
Fortunately, during under-graduation, I got an opportunity to detect the optimum path of a process through my project “Design and Development of PCB Dual Head Drilling Machine”. Additionally, I became aware of a new subject called Six Sigma which aided me in intertwining new optimization techniques into my project to make the process effective. I optimized the creation...