Performing Linear Programming to Guide Julia Robertson Venture - Essay Example

Performing Linear Programming to Guide Julia Robertson Venture Performing Linear Programming to Guide Julia Robertson Venture Introduction Linear programming is performed in order to develop an optimal relationship among the independent and dependent variables. The process of linear programming is an opposite one from the method of linear regression because the former one is used to determine the level of dependent variable by inputting the values of independents into a linear equation whereas, the latter one allows the user to input the value of dependent in a linear multinomial equation in order to get the corresponding values of independent constructs (Torabi & Hassini, 2008). The human obsession with figures and data has led to the development of these methods and they are applied in multiple fields from applied physics to management sciences (Chen & Wang, 1997). Julia Robertson faces a challenge of knowing the probable number of units she should sell before making a profit of $1000. She is planning to sell one piece of hot dog and pizza for $1.50 while, she is looking to vend barbecue sandwich for $2.25 and her total budget is $1500. The pizza, hotdog and sandwich will cost her $0.75, $0.45 and $0.90 respectively. Following is the tentative linear model that will be applied in order to determine the number of units of each merchandise type that should be sold to make 1000 bucks in each game. 1.50 (X) + 1.50 (Y) + 2.25 (Z) – 0.75(X) – 0.45(Y) – 0.90(Z) > = 2100 = 0.75 (X) + 1.05 (Y) + 1.35 (Z) > = 2100 Q.1 According to the results obtained by running a solver “Add in” in Excel, it was found that Julia is required to sell 100,000 units of all merchandise before she can think about earning 1000 bucks. The goal of Julia is just too large for a business of vending edible products during a football match. The audience is going to be just more than the target number of customers and therefore, the opening of a booth will be a risky endeavor to say the least. The competition which Julia’s booth will be facing is also going to be immense in nature because Tech Athletic Department will also be selling drinks and food items in the stadium. The customers shall prefer to purchase items from the same install rather than wandering around seeking stalls of different natures (Baron & Tang, 2011). The Tech manages matches as events and it can be understandable that they must have obtained substantial sponsorships. The provision of food items is not a proper business but it is provided out of sponsors’ money. So opening a booth in order to sell food items is not a feasible business venture and Julia will be better off if she decides to knock the idea off from the table and search other options of financing for her studies. Q.2 Julia’s consideration for taking loan from a friend in order to enhance her venture’s profitability is not a good idea as well because she will miserably fail to raise sufficient revenues to pay her debt back. In this way, her own money will have to put in to get even and it can also happen that she would not be able to payback (Honig, 2004 ). Additionally, Julia will not have enough time to sell all of her stock and the items are extremely perishable without virtually any resale value. Julia has to think about other methods of raising funds to sponsor her education. However, she must find a part-time job or should go for cheap educational loans and if she is committed to open a business then she is required to put her degree on hold so that she can devote sufficient time to her business. Nevertheless, her best bet is to get a loan because this is the only way, which allows her to continue studies. Secondly, part-time employment is not going to pay her well while, doing business will not allow her to complete the studies in time. Q.3 Again, the same instrument must be played to answer the question, the hiring suits a business that is on the journey of making a substantial profit. Julia must understand that she will never be able to finance her education from selling fast food items. She needs a permanent income source in order to get what she wants. Julia needs to make 2100 bucks in profits before generating a saving of 1000 and it is apparently looking as a plan of getting rich overnight. What Julia is trying to accomplish includes with a thousand bucks by putting a significantly less amount. Simply, it is not going to work because law of diminishing returns apply that states that when one puts something into a process then he or she will get less than what the individual was aiming for. Additionally, Julia is failing to plan and that is why, she is indeed planning to fail. What Julia needs is the development of unshakable faith in God himself and keep herself breathing and she never knows what might come up when tide will turn. Q.4 The risks are immense but Julia is continuing with her eyes closed like a pigeon. Her closed eyes are not going to make the trouble go away. However, they will ignite the problem. The business planning is a practice of developing a case in favor of starting a business and taking provisions for risks and the risks such as shortage of liquidity and debt coverage will cause downfall of the business. Besides them no risk is needed to be analyzed because they are going to be fatal alone. Conclusion This paper has been written in order to develop a business plan for Julia’s booth but the operations did not appear feasible in the light of linear program which was conceptualized during the writing of the plan. The financial goals are too high which do not correspond effectively with the scope of the planned activity. Finally, the plan of Julia is not going to be successful because it is not economically feasible while, getting loan and hiring a friend are out of question. References Baron, R., & Tang, J. (2011). The role of entrepreneurs in firm-level innovation: Joint effects of positive affect, creativity, and environmental dynamism. Journal of Business Venturing Vol 26 (1), 49–60. Chen, M., & Wang, W. (1997). A linear programming model for integrated steel production and distribution planning. International Journal of Operations & Production Management Vol 17 (6), 592 - 610. Honig, B. (2004 ). Entrepreneurship Education: Toward a Model of Contingency-Based Business Planning . Academy of Management Learning and Education Vol 3 (3), 258-273. Torabi, S. A., & Hassini, E. (2008). An interactive possibilistic programming approach for multiple objective supply chain master planning. Fuzzy Sets and Systems Vol 169 (2), 193–214. Read More