YARDSTICK INTERNATIONAL COLLEGE

ONLINE PROGRAM
QUANTITATIVE ANALYSIS FOR MANAGEMENT
DECISIONS
ASSIGNMENT TWO

Submitted by - ABEL DANIEL (ID

MBAO/5206/15A)

Submitted to- Instructor Dr. B Dayal

FEB, 2023
Quantitative Analysis for Management
Decisions
Assignment 02

Course Instructor: Dr B Dayal

Q1. A manufacturing firm has discontinued production of a certain unprofitable product

line. This created considerable excess production capacity. Management is considering to
devote this excess capacity to one or more of three product 1,2 and 3. The available capacity
on the machines which might limit output are given below:

Machine type Available time

(in machine hours per week)
Milling
machine 250

Lathe 150

Grinder 50

The number of machine hours required for each units of the respective product is given
below;
Machine type Productivity (in machine hours/unit)
Product 1 Product 2 Product 3
Milling 8 2 3
Lathe 4 3 0
Grinder 2 0 1

The unit profit would be 20 birr, 6 birr and 8 birr for products 1,2 and 3. Find how much of
each product the firm should produce in order to maximize profit? Solve the problem by
simplex method.
Solution:-
The mathematical program for this problem will be
Maximize Z = 20 X1 + 6 X2 + 8 X3

8 X1 + 2 X2 + 3 X3 ≤ 250
4 X1 + 3 X2 + 0 X3 ≤ 150
2X1 + 0 X2 + 1 X3 ≤ 50
X1, X2, X3 ≥ 0
Converting into equation form by introducing slack variables
8 X1 + 2X2 + 3 X3 + S1 = 250
4 X1 + 2 X2 + S2 = 150
2 X1 + 1 X3 + S3 = 50
And Z – 20 X1 – 6 X2 – 8 X3 + 0S1 + 0S2 + 0S3 = 0
 X1 X2 X3 S1 S2 S3 bi ratio
S1 8 2 3 1 0 0 250 125/4
S2 4 3 0 0 1 0 150 75/2
S3 2 0 1 0 0 1 50 25
Zj- Cj -20 -6 -8 0 0 0 0
The table after first iteration

X1 X2 X3 S1 S2 S3 bi ratio
S1 0 2 -1 1 0 -4 50 25
S2 0 3 -2 0 1 -2 50 50/3
X1 1 0 1/2 0 0 1/2 25 -
Zj- Cj 0 -6 2 0 0 10 500

The table after second iteration

X1 X2 X3 S1 S2 S3 bi ratio
S1 0 0 1/3 1 -2/3 -8/3 50/3 50
X2 0 1 -2/3 0 1/3 -2/3 50/3 -
X1 1 0 1/2 0 0 1/2 25 50
Zj- Cj 0 0 -2 0 2 6 600

The table after third iteration

X1 X2 X3 S1 S2 S3 bi ratio
S1 0 0 0 1 -1/2 -3 25
X2 1 1 0 0 1/4 0 75/2
X3 2 0 1 0 0 1 50
Zj- Cj 2 0 0 0 2 8 625

Since all elements in the bottom row are positive, it is an optimal solution.
Therefore maximum Z = 625 with X1 = 0, X2 = 75/2, and X3 = 50.
Q2. Write the dual of following problems:
(a) Maximize Z = 7X1 + 5X2

Subject to:
X1 + 2X2 ≤ 6 4
X1 + 3X2 ≤ 12
X1, X2 ≥ 0
Solution:-

Maximize W = 6Y1 + 12Y2

Subject to constraints:
Y1 + 4Y2 ≥ 7
2Y1 + 3Y2 ≥ 5
Y1, Y2 ≥ 0

(b) Maximize Z= 3X1 + 4X2

Subject to:
5X1 + 4X2 ≤ 200

3X1 + 5X2 ≤ 150

8X1 + 4X2 ≥ 80
X1, X2 ≥ 0

Solution:-
Maximize W = 200Y1 + 150Y2 +80Y3

Subject to constraints:
5Y1 + 3Y2 + 8Y3 ≥ 3
4Y1 + 5Y2 + 4Y3 ≥ 4

Y1, Y2 ,Y3 ≥ 0

Q3. Obtain an initial basic feasible solution to the following transportation problem using
Vogel’s approximation method.
D1 D2 D3 D4
A 5 1 3 3 34
B 3 3 5 4 15
C 6 4 4 3 12
D 4 -1 4 2 19
21 25 17 17 80
Solution:-

  D D2 D3 D4   RD RD RD RD RD
1

A 5(6) 1(6) 3(17) 3 34(28)(22)(5)(0) 2 2 2 0 0

B 3(15) 3 5 4 15(0) 1 1 x x x
C 6 4 4 3(12) 12(0) 1 1 1 1 1
D 4 (-1)(19) 4 2 19(0) 3 x x x x
  21(6)(0) 25(6)(0) 17(0) 17(12)(0) 80          
CD 1 2 1 1          
CD 2 2 1 1          
CD 1 3 1 0            
CD 1 x 1 0            
CD x x 1 0            

So the total transportation cost associated with this method is calculated as follows;
Total cost = 5*6+3*15+1*6+-1*19+3*17+3*12=140

Q4. Four jobs are to be done on four different machines. The cost in rupees of producing i th on
the jth machine is given below. Assign the jobs to different machines so as to minimize the total
cost.

Jobs M1 M2 M3 M4
J1 15 11 13 15
J2 17 12 12 13
J3 14 15 10 14
J4 16 13 11 17
Solution:-
Preparing the raw Matrix
Jobs M1 M2 M3 M4
J1 4 0 2 4
J2 5 0 0 1
J3 4 5 0 4
J4 5 2 0 6

Preparing the column Matrix

Jobs M1 M2 M3 M4
J1 0 0 2 3
J2 1 0 0 0
J3 0 5 0 3
J4 1 2 0 5

Assign Raw and Column Wise

Jobs M1 M2 M3 M4
J1 0X 0 2 3
J2 1 0X 0X 0
J3 0 5 0X 3
J4 1 2 0 5
So since all classes assigned, the solution will be
J1 to M2 11
J2 to M4 13
J3 to M1 14
J4 to M3 11

Q5. In a small town, there are two discount stores ABC and XYZ. They are the only stores that
handle the festival goods. The total number of customers is equally divided between the two
because the price and quality of goods sold are equal. Both stores have good reputations in the
community, and they render equally good customer services. Assume that a gain of customer by
ABC is a loss to XYZ and vice versa.
Both stores plan to run annual pre-Christmas sale during the first week of December. Sales are
advertised through the local newspaper, radio and television media. With the aid of advertising
the payoff for ABC store is constructed and given below.

XYZ store
News paper radio Television
News paper 30 40 -80
ABC radio 0 15 -20
Television 90 20 50
Find optimal strategies for both stores and the value of the game.
Solution:-

Strategy ABC Strategy XYZ

New paper Radio Television Raw Min.
Newspaper 30 40 -80 -80
Radio 0 15 -20 -20
Television 90 20 50 20
Col. Max 90 40 50

Strategy XYZ
Strategy ABC
New paper Radio Television Raw Min.
Newspaper 30 40 -80 -80
Radio 0 15 -20 -20
Television 90 20 50 20 Maxmin value
Col. Max 90 40 50  
Minimax value
Minimax value isnot equal to Maxmin Value so we don’t have saddle point

Raw reduction using dominance strategy

 Strategy XYZ
Strategy ABC New paper Radio Television Total
Newspaper 30 40 -80 -10
Radio 0 15 -20 -5 Minimum value
Television 90 20 50 160
Radio for strategy ABC is eliminated because Radio @ ABC=< Television @ABC

Column Reduction using dominance property

Strategy XYZ  
Strategy ABC New paper Radio Television  
Newspaper 30 40 -80  
Television 90 20 50  
Total 120 60 -30
Highest value
Newspaper @ XYZ >= Television @XYZ so Newspaper is eliminated

Raw Reduction using dominance property

Strategy ABC Strategy XYZ
  Radio Television oddments
Newspaper 40 -80 30
Television 20 50 120
Oddments 130 20  

probabilities of ABC
Newspaper = 30/(30+120) Television = 120/(30+120)
= 1/5 = 4/5
ABC(1/5,0,4/5)

Probabilities of XYZ
Radio = 130/(130+20) Television = 20/(130+20)
=0.866666667(13/15) =0.133333333(2/15)
XYZ(0,0.867,0.134)
Value of the game is
V= ((40*30)+(20*120))/(30+120)
V= 24
thus the optimal strategies are
  Newspaper Radio Television
For ABC 1/5 0 4/5
For XYZ 0 13/15 2/15