TBUS 301 Brown & Haley Case Study
On I-5, you see the bright pink Almond Roca sign. You know about Almond Roca, but you wonder if they have ever
thought about Brazil Roca, or Cashew Roca. It turns out they have, and this Tacoma company has a long history and
offers a variety of products.
You can discover more about their products and history here:
https://www.brown-haley.com/roca-history
Current Issues
One of the biggest issues facing this company is the rise in prices of raw materials, especially the iconic almond, which
due to drought in California has seen a price rise in recent years. In order to diversify their product line, Brown & Haley
has started to expand its repertoire to including other nuts, such as cashews and macadamia nuts. They also have a
project underway to test a new product line of packaged mixed nuts. Note that this scenario is fictional and the details
do not represent actual operations of Brown & Haley.
The Scenario
The company is considering three nut mixes for inclusion in the new product line: Regular Mix, Deluxe Mix, and Holiday
Mix. Each mix is made from 5 nuts in different combinations:
- The Regular Mix consists of 15% almonds, 25% Brazil nuts, 25% filberts, 10% pecans, and 25% walnuts
- The Deluxe Mix consists of 20% of each type of nut
- The Holiday Mix consists of 25% almonds, 15% Brazil nuts, 15% filberts, 25% pecans, and 20% walnuts
An accountant at Brown & Haley completed a cost analysis and determined that the profit contribution per pound is
$1.65 for the Regular Mix, $1.90 for the Deluxe Mix, and $2.35 for the Holiday Mix.
Different nuts come from different suppliers. They are shipped in bulk containers and ordering a partial container is not
possible. The currently available container sizes and costs are as follows:
Type of Nut
Container Size (pounds)
Cost per Container
Almond
6000
$7800
Brazil
7500
$7350
Filbert
7500
$7150
Pecan
6000
$7200
Walnut
7500
$7450
One container of each of the types of nuts has been ordered and is on the way.
The sales and marketing teams have projected that initial demand for the different types of mixes will be as follows:
Type of Mix
Orders (pounds)
Regular
10,000
Deluxe
5,000
Holiday
3,000
The president of Brown & Haley wants to commit to producing enough of the various mixes to meet the projected initial
demand, even if not immediately profitable, in order to introduce these new mixes to the market.
The Analysis Required
The President would like to see a PowerPoint presentation of no more than 10 slides that answers the following
questions:
- Based on current cost information, what is the cost per pound of the nuts included in the Regular, Deluxe, and
Holiday mixes? - How much of each type of mix should be made using only the nuts already ordered and keeping in mind the
President’s requirement to meet the initial demand for each type of mix? What is the resulting optimized
profit? - Sometimes small amounts of certain types of nuts become available in secondary markets. Which types of nuts
should be pursued in order to increase profit? - A supplier has offered us 1000 pounds of almonds for $1000. Should these almonds be purchased? If yes, how
much would profits increase? - A supplier has offered us 1200 pounds of filberts for $950. Should these filberts be purchased? If yes, how
much would profits increase? - The marketing department is proposing an upgrade to the packaging of the Holiday Mix that would decrease the
profit contribution from $2.35 to $2.29 per pound. Would the number of pounds of each type of mix be
changed in the optimal solution? (Note that the President would be impressed if you did not need to rerun
Solver to answer this question) - If the President’s requirement to meet the initial demand for each type of mix were eliminated would
profitability be impacted? If so, by how much?
If you use Solver to answer a question, be sure to reference the specific Solver output that supports your answer.
