DEBRE BIRHAN UNIVERSITY

College of Business and Economics

Department Of Management
Master of Business Administration
Operational Research (MBA-641)
Group Assignment Report Three
Submitted to: - Lemma Nigusie (Ph.D. Scolars)
Submitted by: - Section- Two Group Three Members
1. Abraham Regassa ID.No: PGBEE/01/08
2. Getacher Ademikew ID.No: PGBEE/64/08
3. Henok Asaminew ID.No: PGBEE/67/08
4. Samuel Befikadu ID.No: PGBEE/78/08
5. Alemayehu Bete ID.No: PGBEE/79/08
6. Gebrewold Tadiwos ID.No: PGBEE/80/08

June 2016

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 DBU
1. MOHA Soft Drink Company is distributing its products from its three factories

located at Bure, Dessie and Hawassa to four demanding centers: Addis Ababa,
Mekelle, Dire Dawa and Adama. The demand pattern for a product at four consumer
centers: Addis Ababa, Mekelle, Dire Dawa and Adama are 5000 bottles, 7000 bottles,
4000 bottles and 2000 bottles respectively. The supply for these centers is from
three factories Bure, Dessie and Hawassa. The capacities for the factories are 3000
bottles, 6000 bottles and 7000 bottles respectively. The unit transportation cost in
Birr from a factory to consumer center is given below in the matrix.

FROM TO
Addis Ababa Mekell Dire Dawa Adam
e a
Bure 8 9 12 8
Bessie 3 4 3 2
Hawassa 5 3 7 4

A. Find initial feasible solution using North West Method.

B. Find initial feasible solution using Least Cost Method.
C. Find the basic feasible solution by using Vogel’s approximation method.
D. Test for optimality using the stepping stone method?
E. Test for optimality using the modified distribution method?

SOLUTION
Given

FROM TO supply
Addis Ababa Mekelle Dire Dawa Adama
Bure 8 9 12 8 3000
Bessie 3 4 3 2 6000
Hawass 5 3 7 4 7000
a
Demand 5000 7000 4000 2000 16000
18000

2
Sine total demand is greater than total supply by 2000 units, add a dummy row with 0
unit cost and 2000 units of supply. See the following table

FROM TO supply
Addis Ababa Mekelle Dire Dawa Adama
Bure 8 9 12 8 3000
Bessie 3 4 3 2 6000
Hawass 5 3 7 4 7000
a
Dummy 0 0 0 0 2000
Demand 5000 7000 4000 2000 18000
18000
Then the demand and supply are balanced.
 To find initial feasible solution using North West Method.

FROM TO supply
Addis Ababa Mekelle Dire Dawa Adama
Bure 3000 8 9 12 8 3000
Bessie 2000 3 4000 4 3 2 6000
Hawass 5 3000 3 4000 7 4 7000
a
Dummy 0 0 0 2000 0 2000
Demand 5000 7000 4000 2000 18000
18000
m + n-1= 4+4-1 = 7 the number of occupied cells. But here the number of occupied
cells are 6 it is degenerate and impossible to

To find initial feasible solution using Least Cost Method

FROM TO supply
Addis Ababa Mekelle Dire Dawa Adama
Bure 8 9 3000 12 8 3000
Bessie 4000 3 4 3 2000 2 6000
Hawass 1000 5 5000 3 1000 7 4 7000
a
Dummy 0 2000 0 0 0 2000
Demand 5000 7000 4000 2000 18000
18000

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 m + n-1= 4+4-1 = 7 the number of occupied cells. But here the number of
occupied cells are 6
Total transportation cost =

Find the basic feasible solution by using Vogel’s approximation method

TO suppl penality
Addis Ababa Mekelle Dire Dawa Adama y
Bure 8 3000 12 8 3000 1,1,1,1,1,1,1
9
Dessie 5000 3 1000 3 2 6000 1,1,1,2---
4
Hawassa 5 2000 3000 7 2000 4 7000 1,1,1,1,1,1--
3
Dummy 0 2000 0 0 2000 0-------
0
Demand 5000 7000 4000 2000 18000
18000
penality 3 1 3 2
3 1 3 2
3 1 3 2
3 1 5 2
- 1 - 2
1
m + n-1= 4+4-1 = 7 the number of occupied cells. But here the number of
occupied cells are 6
Total transportation cost =

2. GONZE Company has four factories that supply to five warehouses. The variable
cost of manufacturing and shipment of one ton of product from each factory to each
warehouse are shown in the matrix given below, Factory capacities and warehouse
requirements are shown in the margin.

Warehouse Cost in Birr per unit

A B C D E Supply
W 17 9 14 10 14 75

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 X 13 6 11 11 12 45
Y 6 17 9 12 12 30
Z 15 20 11 14 6 50
Demand 40 20 50 30 40

A. Find initial feasible solution using North West Method.

B. Find initial feasible solution using Least Cost Method.

C. Find the basic feasible solution by using Vogel’s approximation method.
D. Test for optimality using the stepping stone method?
E. Test for optimality using the modified distribution method.

Solution
Given :-

Since the above given problem is not balanced, we add a dummy column; i.e Sine
total supply is greater than total demand by 20 units, add a dummy column with 0 unit
cost and 20 units of demand. See the following table
To find the initial feasible solution using North West Method.

From Warehouse Cost in Birr per unit

Supply
A B C D E Dummy
column
W 40 20 15 75
17 9 14 10 14 0
X 35 10 45
13 6 11 11 12 0
Y 20 10 30
6 17 9 12 12 0
Z 30 20 50
15 20 11 14 6 0
Demand 40 20 50 30 40 20 200
200
Total transportation cost = ( 40*17) + ( 20*9 ) +( 15*14 ) + ( 35*11) + ( 10*11)+ ( 20*12 )
+( 10*12) + ( 30*6) + ( 20*0)
= 680+ 180+ 385 + 110+ 240 + 120 + 180 + 0
= 2105

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 To find the initial feasible solution using Least Cost Method

From Warehouse Cost in Birr per unit

Supply
A B C D E Dummy
column
W 10 15 30 14 20 75
17 9 14 10 0
X 20 25 11 45
13 6 11 12 0
Y 30 30
6 17 9 12 12 0
Z 10 40 50
15 20 11 14 6 0
Demand 40 20 50 30 40 20 200
200

Total transportation cost = ( 17×10 ) + ( 14*15 ) +( 10*30 ) + ( 20*0) + ( 20*6 )+ ( 11*25 )

+( 30*6) + ( 10*11) + ( 40*6)
= 170+ 210+ 300 + 0+ 120 + 275 + 180 + 110 +240
= 1605

To find the basic feasible solution by using Vogel’s approximation method.

From Warehouse Cost in Birr per unit

A B C D E Dummy Supply
column
W 10 15 30 14 20 75 9,1,1,1,1,1,1
17 9 14 10 0 ,1
X 20 25 11 45 6,6,6,6,1,--
13 6 11 12 0
Y 30 30 6,6,----
6 17 9 12 12 0

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 Z 10 40 50 6,6,1,4,4,--
15 20 11 14 6 0
Demand 40 20 50 30 40 20 200
200
7 3 2 1 6 0
7 3 2 1 6 -
2 3 2 1 2 -
2 - 2 1 -
2 2 1
2 5 1
2 - 1
- 1

Total transportation cost = ( 17×10 ) + ( 14*15 ) +( 10*30 ) + ( 20*0) + ( 20*6 )+ ( 11*25 )

+( 30*6) + ( 10*11) + ( 40*6)
= 170+ 210+ 300 + 0+ 120 + 275 + 180 + 110 +240
= 1605
3. Five jobs are to be assigned to five machines to minimize the total time required to
process the jobs on machines. The times in hours for processing each job on each
machine are given in the matrix below. By using the Assignment Algorithm make the
assignment for minimizing the time of processing.

Machines (Time in hours)

V W X Y Z
JOBS
A 2 4 3 5 4
B 7 4 6 8 4
C 2 9 8 10 4
D 8 6 12 7 4
E 2 8 5 8 8

4. Consider the following information carefully and do as per the instruction given

under the table below.

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 ACTIVITY Immediate Optimistic Pessimistic Most Probable

Predecessor Time Time Time

A - 6 14 7
B - 8 12 10
C A 2 4 3
D A 6 8 7
E B,C 5 7 6
F B,C 5 9 7
G D,E 4 6 5
H F 2 4 3
I G,H 4 6 5

A. Construct PERT network and calculate Earliest Start (ES), Earliest Finish

(EF), Latest Start (LS) and Latest Finish (LF) time of the project.

B. Identify the Critical Path of the project.

C. How long will it take to complete this project?

D. Can activity A be delayed without delaying the whole project? If so, how

many days?

E. Can activity B be delayed without delaying the whole project? If so, how

many days?

8 7 D 15

8 2 4

0
6 7
1
B F
3
5

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5. Three strategies and three states of nature are given and payoffs represent profits.

State of nature
N1 N2 N3
Strategy
S1 47 49 33
S2 32 25 41
S3 51 30 14

A. What is the optimal strategy if we apply the criterion of pessimism?

B. What is the optimal strategy if we apply the criterion of optimism?
C. Develop a regret matrix and apply the Minimax regret criterion to identify
the optimal strategy.