(Solved Homework): Explain how the Decision Making Model is used in solving the Product Mix Problem. How…

Decision making model is a model, wherein one can look at setting criteria for the various product variants. For example if I am a marketing manager for a Global Tea company–I would like to connect with the team of products and decide the various product lines that we need to decide for the festive season. It could be maybe looking at allocating 1000 $ in launching various global teas. The tea sizes variants could include–10 mg, 20 mg, 25 mg variants. So a typical decision making model would mean the following:

1. Lengthen the product line: Add new product lines (widen the product mix) Focus on various product variants–Jasmine Tea, Chamomile Tea, or any new tea variant . For a price range of 30$, I would like to manufacture various tea options. There could be around 10 tea options that could be manufactured.

2. Product Mix Depth: The decision matrix would look at whether there needs to be 10 units of Jasmine Tea, 20 Units of Chamomile Tea, and 30 units of Green Tea , in every 100 units of tea manufactured.

3. Product Mix Consistency: The focus should be on having consistent reputation. Should the branding, advertising, commercial be able to stay consistent for each new product. Would the packaging be consistent. Would the packaging be able to follow the mission of the company.

4. Focus on demand side estimation. When we look at making an estimation on the demand side–we can focus on a particular product. Determine the various margins that each product would would earn. Is the margin on a particular product good to help improve the production. So if Chamomile Tea net contribution is around 7$ per package–one can calculate the total number of units that one need to manufacture. Suppose the production costs are 21,000 $. The decision model would calculate how many units of tea should one produce. Around (21000/7)= 3000 units to break even…Again this decision could be based on the decision model.

The decision model would be able to determine:

1. The product variants (SKUs)

2. The Product packaging

3. The product color

4. Product Consistency

5. Production Estimation