(1)

ADM 3301
Sample Mid-term Exam
Duration: 2.5 hours
Student name:_______________________ Student No.__________________
INST!"TI#NS:
1- Write down the exam copy number (that exists at the top right corner of this page) on the identification white
card next to your name.
2- erify that your exam has ! pages (inc"uding this tit"e page).
#- $nswer a"" %uestions on your examination copy. !$e t%e oppo$ite (&lan') $ide( i) ne*e$$ar+. $nswers or
ca"cu"ations written on the sheet of notes wi"" not be e&a"uated.
'- (ustify a"" answers with proper arguments and)or ca"cu"ations. *e precise+ c"ear and concise: ambiguous or
&ague statements wi"" be considered fa"se. ,"ease write "egib"y.
5- -his is a c"osed-boo. exam: howe&er+ one doub"e sided sheet (/.50 x 110) of notes and a ca"cu"ator are
permitted for arithmetic use on"y. T%e $%eet o) note$ mu$t &e %anded o,er -it% t%e exam *op+ at t%e end
o) t%e exam period( or el$e +our *op+ -ill not &e mar'ed.
1- N# "#MM!NI"ATI#N DE.I"ES MA/ 0E 1IT2IN SI32T D!IN3 T2E E4AM 5EI#D.
5ro&lem$ De$*ription Mar'$ e$ult
1. 2mith 3achine ,arts
2. 4ndependent 5uestions
#. ,roduct 6
'. 2easide 4nc.
5. -ri-bi.e
1. -ransportation -ab"e
-ota"
7orecasting
7orecasting
7orecasting
$ggregate ,"anning
-ransportation
-ransportation
(6)
7ue$tion 1: 8ore*a$tin9 (: mar'$)
8ach 7riday+ 2mith 3achine ,arts (23,) 9-D has to forecast the next wee.:s demand for brac.ets ;#5<+
;#5/ and ;#5!. 7or many years+ this has been done reasonab"y we"" by (oe 2mith+ who recent"y retired.
When as.ed how he made his forecasts+ (oe said (between puffs on his corn cob pipe)+ =We""+ 4 "oo.s at the
bubb"es on me beer+ and 4 rubs me "uc.y rabbit foot+ and the forecast comes to me maid.> 23, has as.ed
three of its ana"ysts to propose scientific forecasting systems to rep"ace o"d (oe. -he forecasters and the
proposed methods are as fo""ows:
$. $""en: three-wee. mo&ing a&erage
*. *"ac.: exponentia" smoothing with ? @.2
A. A"ar.: simp"e "inear regression using the pre&ious 1 wee.s of data
8ach of the three forecasters has been assigned one brac.et. -he demand for the past six wee.s (in
thousands of brac.ets) is gi&en be"ow+ as we"" as the forecasts obtained with the three suggested methods:
*rac.et ;#5< (three-wee. mo&ing a&erage):
*rac.et ;#5/ (exp. smoothing with ? @.2):
Wee. ; Demand 7orecast Wee. ; Demand 7orecast
1
2
#
'
5
1
#
'
5
12
1@
-
-
-
5
<
1
2
#
'
5
1
12
1@
15
1#
1/
12.@@
12.@@
12.'@
11.!2
12.1#
*rac.et ;#5! ("inear regression):
Wee. ; Demand 7orecast 8rror
1
2
#
'
5
1
1
15
15
2'
#1
21
/.2/1
12.<<1
21.<'#
21.22!
#@.<15
-2.2/1
2.22!
2.25<
'.<<1
-'.<15
4n each of the three tab"es abo&e+ two &a"ues are missing: you are re%uired to find the missing &a"ues.
(3)
7ue$tion 6: 8ore*a$tin9 (; mar'$)
(a) Bapem 8"ectrica" has ca"cu"ated forecast errors to chec. on the accuracy of a particu"ar set of
demand forecasts. -he errors were consistent"y positi&e. Cow do you interpret this fact in terms of
comparing the actua" demand with the forecast demandD
(b) 8nro""ment in a particu"ar c"ass for the "ast four semesters has been 12@+ 121+ 11@ and 1#@.
2uppose a one-semester mo&ing a&erage is used to forecast enro""ment (this is sometimes referred
to as a nai&e forecast). -hus+ the forecast for the second semester wou"d be 12@+ the forecast for
the third semester wou"d be 121+ and the forecast for the fourth semester wou"d be 11@. What
wou"d the 3$D be for this situationD
8nro""ment 7orecast
12@ -
121 12@
11@ 121
1#@ 11@
(c) 4n order to chec. the accuracy of a forecast+ a student had the idea of running a regression with the
demand as the exp"anatory &ariab"e and the forecast as the dependent &ariab"e. -he coefficient of
determination was @.!1. What does this te"" you about the accuracy of the forecastsD
(d) What is the idea behind the De"phi techni%ueD Ahoose one of the fo""owing
- geographic dispersionE
- in&o"&ement of different types of participantsE
- feedbac. processE
- use of staff to faci"itate data ana"ysisE
- %uestionnaire administration.
(<)
7ue$tion 3: 8ore*a$tin9 (; mar'$)
(a) -he %uarter"y sa"es for ,roduct 6 are subFect to seasona" f"uctuations: the c"assica" mu"tip"icati&e
decomposition mode" (with "inear trend) was chosen to ma.e forecasts. -he fo""owing resu"ts were
obtained:
,eriod 2eason Demand 7orecast 8rror
1
2
#
'
5
1
<
/
!
1@
11
12
1#
1'
15
11
1
2
#
'
1
2
#
'
1
2
#
'
1
2
#
'
125
1#!
21@
1!1
1<#
1<1
2!5
22#
2@<
1//
#'@
2/#
25/
2#/
'@1
##@
1#2.'#2
12/.2'@
221.122
1/1.!11
1<#.#<2
115.@'@
2/@.!12
2##.//1
21'.#12
2@1./'@
#'@.#@2
2/@./@1
255.252
2#/.1'@
#!!.1'2
#2<.<21
-<.'#2
1@.<1@
-11.122
'.@#'
-@.#<2
1@.!1@
1'.@#/
-1@.//1
-<.#12
-1#./'@
-@.#@2
2.1!'
2.<'/
[email protected]'@
1.#5/
2.2<'
(error)
2
? [email protected]//11.
-he "inear regression parameters (a+ the y-intercept+ and b+ the s"ope)+ obtained from the
deseasona"iGed demand+ were a ? 1#<.# and b ? 11.5. Hi&en the abo&e information+ prepare a
forecast for period 1<. (' mar.s)
2int: -hin. about the &arious steps of the mu"tip"icati&e decomposition method: how was the
07orecast0 co"umn obtained in this tab"eD What information can be obtained from that co"umn and
the regression "ine parameters a and bD
(=)
(b) Ising the space pro&ided be"ow+ draw a contro" chart of the error terms associated to the mode"
used in part (a)+ at a !5J "e&e" (i.e. contro" "imits at K2). 3a.e sure the points on the graph are
easy to see. What are your conc"usionsD (' mar.s)
(>)
7ue$tion <: A99re9ate 5lannin9 (1= mar'$)
$ manager of 2easide 4nc. is attempting to put together an aggregate p"an for the coming year. 2he has
obtained a forecast of expected demand for the p"anning horiGon. *asica""y the p"an must dea" with demand
which is high"y seasona" as can be seen in the fo""owing forecasts:
3onth 1 2 # ' 5 1 < / ! 1@ 11 12 -ota"
7
t
1!@ 2#@ 21@ 2/@ 21@ 1<@ 11@ 11@ 22@ 25@ 21@ 1/@ 2+5<@
-he department current"y has 2@ fu""-time wor.ers+ each of whom can produce 1@ units of output per
month at a cost of L1@ per unit. 4n&entory carrying cost is L5 per unit per month and bac."og cost is L1@
per unit per month. -he manager is considering a p"an that wou"d in&o"&e hiring 2 additiona" wor.ers to
start wor.ing in month 1: one permanent wor.er+ who wou"d wor. a"" 12 months+ and one temporary
wor.er who wou"d wor. the first fi&e (5) months. -his wou"d cost L1+@@@ (p"us the unit production costs).
$ssume there is no initia" in&entory and that no fina" in&entory is needed at the end of the p"anning horiGon.
(a) Determine the tota" cost of the p"an+ inc"uding production+ in&entory and bac.order costs. Mou may
customiGe the tab"e be"ow to suit your needs: you don:t ha&e to use a"" the co"umns. (5 mar.s)
3onth Demand
1
2
#
'
5
1
<
/
!
1@
11
12
1!@
2#@
21@
2/@
21@
1<@
11@
11@
22@
25@
21@
1/@
-ota" 2+5<@
(b) Aonsider a p"an where on"y one permanent wor.er is hired+ but where o&ertime production is
a""owed. Cow many units wou"d need to be produced in o&ertime o&er the p"anning horiGonD
(?)
During what month(s) shou"d these o&ertime units be produced to minimiGe costsD (ustify brief"y
your answer. (2 mar.s)
(c) $ssuming that it costs L!@ to produce one unit in o&ertime+ and that hiring costs amount to L25@
per emp"oyee+ whi"e the cost of firing an emp"oyee is L5@@+ find the fo""owing ,reference
-hresho"ds: (/ mar.s)
(i) 4d"e time &ersus firing and hiring: how "ong can an emp"oyee remain id"e before it becomes
more ad&antageous to fire him (her)+ and then hire another emp"oyee "ater+ when neededD
(ii) bui"ding in&entory &ersus firing and hiring: how "ong can an emp"oyee be .ept bui"ding
in&entory before it becomes more ad&antageous to fire him (her)+ and then hire another
emp"oyee "ater+ when neededD
(ii) o&ertime &ersus hiring and firing: how many units can the company bui"d on o&ertime
before it becomes more ad&antageous to hire an emp"oyee+ and the fire him (her) when no
"onger neededD
(iii) bac."ogs &ersus o&ertime: is it more ad&antageous to bui"d an unit in o&ertime+ or to
bac."og that unit for one monthD
7ueation =: Tran$portation (= mar'$)
-ri-*i.e is a fami"y-based company specia"iGed in the assemb"y of tricyc"es for senior citiGens. (oe De"do+
the o"dest son and manager of the company+ is in receipt of the forecast demand for the next three months
(No&ember+ December and (anuary): 55@ units+ 1+@@@ units and 15@ units+ respecti&e"y. -he a&erage time
re%uired to assemb"e a tricyc"e is 5 hours.
-he company emp"oys #@ emp"oyees who each wor. 1@@ hours per month for a sa"ary of L1@)hour. -he
emp"oyees are therefore paid at a rate of L1+@@@ per month+ regard"ess of the number of tricyc"es
manufactured. (oe may a"so opt for o&ertime at a cost of L15)hr and)or subcontracting at a cost of
L!@)unit. *ac."ogs are accepted but cost L1@ per month per unit. 2torage costs are L2 per month per unit.
$t the beginning of No&ember+ (oe De"do had an in&entory of 1@@ tricyc"es and he prefers to ha&e the same
number of tricyc"es at the end of (anuary in order to p"an against future f"uctuations in demand.
9imits on subcontracting are: No&ember 5@ units+ December 1@ units+ and (anuary <@ units. 9imits on
emp"oyee o&ertime: each emp"oyee cannot wor. more than 15 hours per month.
7ormu"ate the prob"em as a -ransportation 3ode". Do not so"&e itO
(;)
7ue$tion >: Tran$portation (= mar'$)
(a) Ising the -ransportation -ab"e be"ow+ find an optima" $ggregate ,"an using t%e intuiti,e
lo-e$t *o$t approa*%. D# N#T E-1ITE T2E 5#D!"TI#N 5@AN: A
S#@!TI#N IN T2E TA0@EA! IS S!88I"IENT. (1 mar.)
(b) Hi&en the data of this prob"em and based on your so"ution to part (a)+ answer the fo""owing
%uestions: (' mar.s)
(i) What is the tota" cost of your so"utionD
(ii) What is the ho"ding cost per unit per monthD
(iii) What is the in&entory "e&e" at the end of month 1D
(i&) What is the in&entory "e&e" at the end of month 2D
(:)
1 2 # ' 8xcess Aap. Aapacity
*eginning @ 2 ' 1 @
4n&entory 1@@
3onth 1 1@ 12 1' 11 @
(Pegu"ar) 5@@
3onth 1 /@ /2 /' /1 @
(Q&ertime) 5@
3onth 1 !@ !2 !' !1 @
(2ub Aont.) 12@
3onth 2 1@ 12 1' @
(Pegu"ar) 5@@
3onth 2 /@ /2 /' @
(Q&ertime) 5@
3onth 2 !@ !2 !' @
(2ub Aont.) 12@
3onth # 1@ 12 @
(Pegu"ar) 5@@
3onth # /@ /2 @
(Q&ertime) 5@
3onth # !@ !2 @
(2ub Aont.) 1@@
3onth ' 1@ @
(Pegu"ar) 5@@
3onth ' /@ @
(Q&ertime) 5@
3onth ' !@ @
(2ub Aont.) 1@@
Demand 55@ <@@ <5@ 15@ !@ 2+<'@
(10)
ADM 3301
Sample Mid-term Exam
Solution$
7ue$tion 1: 8ore*a$tin9
8ach 7riday+ 2mith 3achine ,arts (23,) 9-D has to forecast the next wee.:s demand for brac.ets ;#5<+
;#5/ and ;#5!. 7or many years+ this has been done reasonab"y we"" by (oe 2mith+ who recent"y retired.
When as.ed how he made his forecasts+ (oe said (between puffs on his corn cob pipe)+ =We""+ 4 "oo.s at the
bubb"es on me beer+ and 4 rubs me "uc.y rabbit foot+ and the forecast comes to me maid.> 23, has as.ed
three of its ana"ysts to propose scientific forecasting systems to rep"ace o"d (oe. -he forecasters and the
proposed methods are as fo""ows:
$. $""en: three-wee. mo&ing a&erage
*. *"ac.: exponentia" smoothing with ? @.2
A. A"ar.: simp"e "inear regression using the pre&ious 1 wee.s of data
8ach of the three forecasters has been assigned one brac.et. -he demand for the past six wee.s (in
thousands of brac.ets) is gi&en be"ow+ as we"" as the forecasts obtained with the three suggested methods:
*rac.et ;#5< (three-wee. mo&ing a&erage):
*rac.et ;#5/ (exp. smoothing with ? @.2):
Wee. ; Demand 7orecast Wee. ; Demand 7orecast
1
2
#
'
5
1
;
#
'
5
12
1@
-
-
-
5
<
<
1
2
#
'
5
1
12
1<
1@
15
1#
1/
12.@@
12.@@
12.'@
11.!2
16.=3>
12.1#
*rac.et ;#5! ("inear regression):
Wee. ; Demand 7orecast 8rror
1
2
#
'
5
1
1
15
15
2'
#1
21
/.2/1
12.<<1
1?.6=?
21.<'#
21.22!
#@.<15
-2.2/1
2.22!
-6.6=?
2.25<
'.<<1
-'.<15
4n each of the three tab"es abo&e+ two &a"ues are missing: you are re%uired to find the missing &a"ues.
(11)
7ue$tion 6: 8ore*a$tin9
(a) Bapem 8"ectrica" has ca"cu"ated forecast errors to chec. on the accuracy of a particu"ar set of
demand forecasts. -he errors were consistent"y positi&e. Cow do you interpret this fact in terms of
comparing the actua" demand with the forecast demandD
T%e 8ore*a$t$ are $+$temati*all+ lo-er t%an t%e a*tual demand
(b) 8nro""ment in a particu"ar c"ass for the "ast four semesters has been 12@+ 121+ 11@ and 1#@.
2uppose a one-semester mo&ing a&erage is used to forecast enro""ment (this is sometimes referred
to as a nai&e forecast). -hus+ the forecast for the second semester wou"d be 12@+ the forecast for
the third semester wou"d be 121+ and the forecast for the fourth semester wou"d be 11@. What
wou"d the 3$D be for this situationD
8nro""ment 7orecast Error A&$olute Error
12@ - - -
121 12@ > >
11@ 121 -1> 1>
1#@ 11@ 60 60
MAD A (> B 1> B 60) C 3 A 1<
(c) 4n order to chec. the accuracy of a forecast+ a student had the idea of running a regression with the
demand as the exp"anatory &ariab"e and the forecast as the dependent &ariab"e. -he coefficient of
determination was @.!1. What does this te"" you about the accuracy of the forecastsD
Not%in9: t%e )ore*a$t *ould la9 &e%ind t%e trend( or e,en )ollo- t%e oppo$ite pattern to t%e
demand( and $till t%e *oe))i*ient o) determination -ould &e %i9%.
(d) What is the idea behind the De"phi techni%ueD Ahoose one of the fo""owing
- geographic dispersionE
- in&o"&ement of different types of participantsE
- )eed&a*' pro*e$$D
- use of staff to faci"itate data ana"ysisE
- %uestionnaire administration.
(16)
7ue$tion 3: 8ore*a$tin9
(a) -he %uarter"y sa"es for ,roduct 6 are subFect to seasona" f"uctuations: the c"assica" mu"tip"icati&e
decomposition mode" (with "inear trend) was chosen to ma.e forecasts. -he fo""owing resu"ts were
obtained:
,eriod 2eason Demand 7orecast 8rror
1
2
#
'
5
1
<
/
!
1@
11
12
1#
1'
15
11
1
2
#
'
1
2
#
'
1
2
#
'
1
2
#
'
125
1#!
21@
1!1
1<#
1<1
2!5
22#
2@<
1//
#'@
2/#
25/
2#/
'@1
##@
1#2.'#2
12/.2'@
221.122
1/1.!11
1<#.#<2
115.@'@
2/@.!12
2##.//1
21'.#12
2@1./'@
#'@.#@2
2/@./@1
255.252
2#/.1'@
#!!.1'2
#2<.<21
-<.'#2
1@.<1@
-11.122
'.@#'
-@.#<2
1@.!1@
1'.@#/
-1@.//1
-<.#12
-1#./'@
-@.#@2
2.1!'
2.<'/
[email protected]'@
1.#5/
2.2<'
(error)
2
? [email protected]//11.
-he "inear regression parameters (a+ the y-intercept+ and b+ the s"ope)+ obtained from the
deseasona"iGed demand+ were a ? 1#<.# and b ? 11.5. Hi&en the abo&e information+ prepare a
forecast for period 1<.
2int: -hin. about the &arious steps of the mu"tip"icati&e decomposition method: how was the
07orecast0 co"umn obtained in this tab"eD What information can be obtained from that co"umn and
the regression "ine parameters a and bD
T1? A 13?.3 B 11.= 1? A 336.;D
T1 A 13?.3 B 11.= A 1<;.;( and S1 A 136.<36 C 1<;.; A 0.;::
81? A 336.; 0.;: A 6:>.1:6.
(13)
(b) Ising the space pro&ided be"ow+ draw a contro" chart of the error terms associated to the mode"
used in part (a)+ at a !5J "e&e" (i.e. contro" "imits at K2). 3a.e sure the points on the graph are
easy to see. What are your conc"usionsD
MSE A 10>1.>=;;1> C 1> A >>.3=3>?>( $o A ;.1=( and 6 A 1>.3.
-20
-15
-10
-5
0
5
10
15
20
1 3 5 7 9 11 13 15
All error$ )all &et-een t%e *ontrol limit$( and t%e error$ loo' random.
7ue$tion <: A99re9ate 5lannin9
$ manager of 2easide 4nc. is attempting to put together an aggregate p"an for the coming year. 2he has
obtained a forecast of expected demand for the p"anning horiGon. *asica""y the p"an must dea" with demand
which is high"y seasona" as can be seen in the fo""owing forecasts:
3onth 1 2 # ' 5 1 < / ! 1@ 11 12 -ota"
7
t
1!@ 2#@ 21@ 2/@ 21@ 1<@ 11@ 11@ 22@ 25@ 21@ 1/@ 2+5<@
-he department current"y has 2@ fu""-time wor.ers+ each of whom can produce 1@ units of output per
month at a cost of L1@ per unit. 4n&entory carrying cost is L5 per unit per month and bac."og cost is L1@
per unit per month. -he manager is considering a p"an that wou"d in&o"&e hiring 2 additiona" wor.ers to
start wor.ing in month 1: one permanent wor.er+ who wou"d wor. a"" 12 months+ and one temporary
wor.er who wou"d wor. the first fi&e (5) months. -his wou"d cost L1+@@@ (p"us the unit production costs).
$ssume there is no initia" in&entory and that no fina" in&entory is needed at the end of the p"anning horiGon.
(1<)
(a) Determine the tota" cost of the p"an+ inc"uding production+ in&entory and bac.order costs. Mou may
customiGe the tab"e be"ow to suit your needs: you don:t ha&e to use a"" the co"umns.
3onth Demand "apa*it+ In,entor+ 0a*'lo9 In,. "o$t 0. "o$t 5rod.
"o$t
1
2
#
'
5
1
<
/
!
1@
11
12
1!@
2#@
21@
2/@
21@
1<@
11@
11@
22@
25@
21@
1/@
660
660
660
660
660
610
610
610
610
610
610
610
30
60
-
-
-
-
60
?0
>0
60
-
-
-
-
60
;0
?0
30
-
-
-
-
30
-
E1=0
E100
-
-
-
-
E100
E3=0
E300
E100
-
-
-
-
E600
E;00
E?00
E300
-
-
-
-
E300
-
E13(600
E13(600
E13(600
E13(600
E13(600
E16(>00
E16(>00
E16(>00
E16(>00
E16(>00
E16(>00
E16(>00
-ota" 2+5<@ 6(=?0 660 630 E1(100 E6(300 E1=<(600
Total *o$t: E1(100 B E6(300 B E1=<(600 B E1(000 A E1=;(>00.
(b) Aonsider a p"an where on"y one permanent wor.er is hired+ but where o&ertime production is
a""owed. Cow many units wou"d need to be produced in o&ertime o&er the p"anning horiGonD
During what month(s) shou"d these o&ertime units be produced to minimiGe costsD (ustify brief"y
your answer.
e9ular time *apa*it+: 610 16 A 6(=60 unit$: =0 unit$ $%ould &e manu)a*tured in #T.
Mont% Demand "apa*it+ In,entor+ 0a*'lo9
1
6
3
1:0
630
6>0
610
610
610
60
-
-
-
-
=0
=0 unit$ $%ould &e produ*ed in #T( durin9 mont% 3.
(c) $ssuming that it costs L!@ to produce one unit in o&ertime+ and that hiring costs amount to L25@
per emp"oyee+ whi"e the cost of firing an emp"oyee is L5@@+ find the fo""owing ,reference
-hresho"ds: (/ mar.s)
(i) 4d"e time &ersus firing and hiring: how "ong can an emp"oyee remain id"e before it becomes
more ad&antageous to fire him (her)+ and then hire another emp"oyee "ater+ when neededD
"o$t o) )irin9 and %irin9 A E=00 B E6=0 A E?=0D
*o$t o) idle time A E>0 10 A E>00 per mont%.
(1=)
It i$ more ad,anta9eou$ to )ire and %ire i) an emplo+ee %a$ to remain idle more t%an
?=0 C >00 A 1.6= mont%$.
(iii) bui"ding in&entory &ersus firing and hiring: how "ong can an emp"oyee be .ept bui"ding
in&entory before it becomes more ad&antageous to fire him (her)+ and then hire another
emp"oyee "ater+ when neededD
"o$t o) )irin9 and %irin9 A E=00 B E6=0 A E?=0D
"o$t o) &uildin9 in,entor+ A E= per unit A E=0 per mont%F$ produ*tion.
G mont%$ In,. "o$t "o$t o) 2C8
1 E=0 E?=0
6 E1=0 E?=0
3 E300 E?=0
< E=00 E?=0
= E?=0 E?=0
It i$ &etter to )ire and %ire i) an emplo+ee %a$ to &e 'ept &uildin9 in,entor+ )or more
t%an = mont%$
(i&) o&ertime &ersus hiring and firing: how many units can the company bui"d on o&ertime
before it becomes more ad&antageous to hire an emp"oyee+ and the fire him (her) when no
"onger neededD
"o$t o) %irin9 and )irin9 A E6=0 B E=00 A E?=0D
*o$t o) o,ertime A E30 per unit on top o) re9ular produ*tion *o$t.
It i$ more ad,anta9eou$ to %ire and )ire more t%an ?=0 C 30 A 6= unit$ %a,e to &e &uilt
on o,ertime.
(&) bac."ogs &ersus o&ertime: is it more ad&antageous to bui"d an unit in o&ertime+ or to
bac."og that unit for one monthD
"o$t o) &a*'lo9$ A E10 per unit on top o) re9ular produ*tion *o$tD
*o$t o) o,ertime A E30 per unit on top o) re9ular produ*tion *o$t.
0a*'lo9$ are *%eaper.
(1>)
7ue$tion =: Tran$portation
-ri-*i.e is a fami"y-based company specia"iGed in the assemb"y of tricyc"es for senior citiGens. (oe De"do+
the o"dest son and manager of the company+ is in receipt of the forecast demand for the next three months
(No&ember+ December and (anuary): 55@ units+ 1+@@@ units and 15@ units+ respecti&e"y. -he a&erage time
re%uired to assemb"e a tricyc"e is 5 hours.
-he company emp"oys #@ emp"oyees who each wor. 1@@ hours per month for a sa"ary of L1@)hour. -he
emp"oyees are therefore paid at a rate of L1+@@@ per month+ regard"ess of the number of tricyc"es
manufactured. (oe may a"so opt for o&ertime at a cost of L15)hr and)or subcontracting at a cost of
L!@)unit. *ac."ogs are accepted but cost L1@ per month per unit. 2torage costs are L2 per month per unit.
$t the beginning of No&ember+ (oe De"do had an in&entory of 1@@ tricyc"es and he prefers to ha&e the same
number of tricyc"es at the end of (anuary in order to p"an against future f"uctuations in demand.
9imits on subcontracting are: No&ember 5@ units+ December 1@ units+ and (anuary <@ units. 9imits on
emp"oyee o&ertime: each emp"oyee cannot wor. more than 15 hours per month.
7ormu"ate the prob"em as a -ransportation 3ode". Do not so"&e itO
(1?)
Mont% 1 Mont% 6 Mont% 3 End In,. Ex*e$$ "apa*it+
0e9. 0 6 < > 100
In,.
T 0 6 < > >00
Mont% 1
#T ?= ?? ?: ;1 :0
Mont% 1
Su& ". :0 :6 :< :> =0
Mont% 1
T 10 0 6 < >00
Mont% 6
#T ;= ?= ?? ?: :0
Mont% 6
Su& ". 100 :0 :6 :< >0
Mont% 6
T 60 10 0 6 >00
Mont% 3
#T := ;= ?= ?? :0
Mont% 3
Su& ". 110 100 :0 :6 ?0
Mont% 3
Demand ==0 1(000 >=0 100 =0 6(3=0
(1;)
7ue$tion >: Tran$portation
(a) Ising the -ransportation -ab"e be"ow+ find an optima" $ggregate ,"an using t%e intuiti,e
lo-e$t *o$t approa*%. D# N#T E-1ITE T2E 5#D!"TI#N 5@AN: A
S#@!TI#N IN T2E TA0@EA! IS S!88I"IENT.
(b) Hi&en the data of this prob"em and based on your so"ution to part (a)+ answer the fo""owing
%uestions:
(i) What is the tota" cost of your so"utionD
E1>?(:>0
(ii) What is the ho"ding cost per unit per monthD
E6
(iii) What is the in&entory "e&e" at the end of month 1D
130 unit$
(i&) What is the in&entory "e&e" at the end of month 2D
100 unit$
(1:)
1 2 # ' 8xcess Aap. Aapacity
*eginning @ 2 ' 1 @
4n&entory 100 1@@
3onth 1 1@ 12 1' 11 @
(Pegu"ar) <=0 =0 5@@
3onth 1 /@ /2 /' /1 @
(Q&ertime) =0 5@
3onth 1 !@ !2 !' !1 @
(2ub Aont.) 30 :0 12@
3onth 2 1@ 12 1' @
(Pegu"ar) =00 5@@
3onth 2 /@ /2 /' @
(Q&ertime) =0 5@
3onth 2 !@ !2 !' @
(2ub Aont.) =0 ?0 12@
3onth # 1@ 12 @
(Pegu"ar) =00 5@@
3onth # /@ /2 @
(Q&ertime) =0 5@
3onth # !@ !2 @
(2ub Aont.) 100 1@@
3onth ' 1@ @
(Pegu"ar) =00 5@@
3onth ' /@ @
(Q&ertime) =0 5@
3onth ' !@ @
(2ub Aont.) 100 1@@
Demand 55@ <@@ <5@ 15@ !@ 2+<'@