Ethio-Lens College

MBA program
Course Name: Quantitative Analysis for Management Decision
Making
Assignment
Deadline to submit on may 31, 2020
1. A company owns 2 oil mills A and B which have different production capacities
for low, high and medium grade oil. The company enters into a contract to supply
oil to a firm every week with 12, 8, 24 barrels of each grade respectively. It costs
the company birr 1000 and birr 800 per day to run the mills A and B. On a day A
produces 6, 2, 4 barrels of each grade and B produces 2, 2, 12 barrels of each
grade. Formulate an LPP to determine number of days per week each mill will be
operated in order to meet the contract economically and solve by using
graphically method
2. A company has 3 operational departments weaving, processing and packing with
the capacity to produce 3 different types of clothes that are suiting, shirting and
woolen yielding with the profit of birr 2, birr 4 and birr 3 per meters respectively.
1m suiting requires 3mins in weaving 2 mins in processing and 1 min in packing.
Similarly 1m of shirting requires 4 mins in weaving 1 min in processing and 3
mins in packing while 1m of woolen requires 3 mins in each department. In a
week total run time of each department is 60, 40 and 80 hours for weaving,
processing and packing department respectively. Formulate a LPP to find the
product to maximize the profit and solve by using simplex method.

3. The ABC Company produces two basic types of plastic pipe. Three resources
are crucial to the output of pipe: extrusion hours, packaging hours, and a special
additive to the plastic raw material. The following data represent next week’s
situation. All data are expressed in units of 100 feet of pipe.
PRODUCT
Resource Type 1 Type 2 Resource
 Availability
Extrusion 4 hr 6 hr 48 hr
Packaging 2 hr 2 hr 18 hr
Additive 2 lb 1 lb 16 b
mix
4. The contribution to profits and overhead per 100 feet of pipe is $34 for type 1
and $40 for type 2.
a. Formulate a linear programming model for this problem.(5 points)
b. Solve this model by using graphical analysis. (5 points)
4. Consider the following transportation problem

to Store 1 Store 2 Store 3 Supply

From
Warehouse A 12 20 15 50
Warehouse B 9 11 4 15
Warehouse C 20 14 8 55
Demand 25 50 45 120

a. Develop an initial feasible solution using the northwest-corner method. Compute

the total cost for this solution.(2 points
b. Evaluate the Evaluation using MODI (4 points)
c. Obtained an improved solution and evaluate it using MODI. Is it optimal?(4
points)
d. What is the total cost for your optimal solution? (2 points)

5. A manager has prepared the following table, which shows the costs for various
combinations of job-machine assignments.

Machine
A B C
Job 1 20 35 22
 2 42 18 25
3 6 23 15

a. What is the optimal (minimum –cost) assignment for this problem?(5 points)
b. What is the total cost for the optimum assignment? (3 points)

6. In a job shop operation, four jobs may be performed on any of four machines.
The hours required for each job on each machine are presented in the following
table. The plant supervisor would like to assign jobs so that total time is
minimized. Find the best solution.

JOB MACHINE
I II III IV
A1 10 14 16 13
A2 12 13 15 12
B2 9 12 12 11
B10 14 16 18 16

7. Even though independent gasoline stations have been having a difficult time,
Susan Solomon has been thinking about starting her own independent gasoline
station. Susan’s problem is to decide how large her station should be. The
annual returns will depend on both the size of her station and a number of
marketing factors related to the oil industry and demand for gasoline. After a
careful analysis, Susan developed the following table:

SIZE OF FIRST Good Market Fair Market Poor market

STATION $ $ $
Small 50,000 20,000 -10,000
Medium 80,000 30,000 -20,000
Large 100,000 30,000 -40,000
Very large 300,000 25,000 -160,000
 For example, if Susan constructs a small station and the market is good, she
will realize a profit of $50,000.
(a) Develop a decision table for this decision.
(b) What is the maximax decision?
(c) What is the maximin decision?
(d) What is the equally likely decision?
(e) What is the criterion of realism decision? Use an ᵅ value of 0.8.
(f) Develop an opportunity loss table.
(g) What is the minimax regret decision?
If the probability for Good Market is 0.4, Fair Market is 0.5 and poor market is 0.1
(h) What is the best decision for Jason Megley? Use EMV as the decision criterion
(I) Calculate the EVPI
8. Megley Cheese Company is a small manufacturer of several different cheese
products. One of the products is a cheese spread that is sold to retail outlets.
Jason Megley must decide how many cases of cheese spread to manufacture
each month. The probability that the demand will be six cases is 0.1, for 7 cases
is 0.3, for 8 cases is 0.5, and for 9 cases is 0.1. The cost of every case is $45,
and the price that Jason gets for each case is $95. Unfortunately, any cases not
sold by the end of the month are of no value, due to spoilage. How many cases
of cheese should Jason manufacture each month?
9. A technician monitors a group of five computers that run an automated
manufacturing facility. It takes an average of 15 minutes (exponentially
distributed) to adjust a computer that develops a problem. The computers run
for an average of 85 minutes (Poisson distributed) without requiring
adjustments. What is the

(a) Average number of computers waiting for adjustment?

(b) Average number of computers not in working order?

(c) Probability the system is empty?

(d) Average time in the queue?