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The Boys

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Submitted By kingofnorth26
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Nicholas Revano 5/6/2015
Optimization Helps Shermag Gain Competitive Edge

Shermag Inc. is a furniture company that manufactures and sells its own products in Canada. For years the company has thrived making a name for itself in the furniture business. However, like many companies, Shermag must deal with the rising costs of materials needed to make their products. In this case for Shermag it is the rising costs of wood which is vital for making furniture and since Asian manufacturers can produce the same quality for cheaper Shermag is losing more and more business as time passes. Another issue is the poor coordination between the business and supply chain sectors are not synched up causing for demand to rise and supply to fail thus resulting in a deep loss of profits due to delays and costs to increase. For Shermag Inc. to succeed in the changing market they must analyze and figure out ways to figure out how they will better profit while competing with the other companies that could hurt their business. In Quantitative Finance many types of methods were introduced on how to help and improve companies. For the sake of Shermag Inc. the most effective method that would help is linear programming. First, they can use linear programming and figure out the optimization to either maximize its total profits or minimize total costs. Linear programming seems to be the most obvious selection since they have to figure out ways to generate more revenue due to an increase in prices and the Asian competitors. By using linear programming they can figure out how to minimize total costs whether its use less of a certain material or exchange it for a cheaper quality, as well as where to limit the time on certain parts of the total process such as the kiln. to reduce time therefore getting rid of inventory and its expensive costs. Shermag Inc. has figured out

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