ACCT-4103 Mid Preparation
ACCT-4103 Mid Preparation
Question No. 1
a) What do you understand by Quantitative approach to management? How does this approach assist management in
decision making?
Quantitative approach to management deals with measurement and calculation of numerical values of different variables
using statistical, mathematical, optimization models, information models, computer simulations and other tools that used
for making decision in organization.
The main purpose of the quantitative approach is to make an optimal decision by using mathematical and statistical
models in a situation when the probability of all outcomes is uncertain.
1. Achieving objectives: quantitative techniques consist of certain mathematical and statistical tools which are
useful for achieving objectives like profit maximization, cost minimization, production etc.
2. Solve a complex problem: this approach allows a decision maker to solve a complex problem involving multiple
variables much more quickly than that if he had to compute them using traditional methods.
3. Basic for scientific analysis: quantitative approach provides a scientific method for tackling various problems of
modern business. It provides various tools from mathematics, economics, statistics which helps the manager to
provide a more precise description and solution of the problem.
4. Solution for various business problems: quantitative approach provides solution to many business problems like
in production, marketing, inventory, banking, finance etc. It provides answers to various questions like
(a) how many units should be produced so as to maximize profit?
(b) how should the production be matched to demand so as to minimize the cost of inventory?
5. Optimum allocation of resources: it enables a manager to optimally allocate the resources of a business so that
a given level of output being produced at minimum cost or maximum output is being produced at a given cost.
6. Selection of an optimal strategy: it helps the manager to select the optimal strategy from alternative course of
action
7. Production management: quantitative approach helps in selecting the location site for the plant, scheduling and
sequencing production by adequate preventive maintenance with optimum product mix, controlling the movement
of raw material and finished goods etc.
8. Personnel management: quantitative approach helps in finding out the optimum manpower planning, number of
employees to be enrolled full/ part time, persons to be kept in a work pool intended for meeting the
absenteeism, in studying labour turnover etc.
9. Marketing management: quantitative approach helps in determining warehouse distribution point, their size,
location, etc. It also helps in the optimum allocation of sales budget direct advertising and bidding strategies.
10. Financial management: quantitative approach is useful in finding long range capital requirements, determining
optimum replacement policies, working out a profit plan for the firm etc
b) Solve the following linear programming problem by using the graphical method:
Maximize Z=5x1 + 3x2
Subject to: 2x1+ x2 ≤ 1000
x1 ≤ 400
x2 ≤ 700
x1, x2 ≥ 0
Solution:
Let us first consider the structural constraint on equation,
2x1+ x2 =1000………………(1)
x1 = 400…………………..(2)
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x2 = 700…………………(3)
from equation (1)
1000-x2
x1 =
2
1000-0
for, x2=0, x1 = = 500
2
Again,
x2 =1000-2x1
for x1=0, x2=1000-2×0 =1000
From Above Equation, the coordinate of equation,
(x1,x2) = (500,0);(0,1000)
A (x1,x2) = (400,0)
D (x1,x2) = (0,700)
1000
600
400
B(400,200)
200
0
0 100 200 300 A(400,0)
400 500 600 700 800 900 1000
Axis Title
In the graph. The polygon ABCDO is the feasible region. The optimum solution lies at the corner point of the polygon.
From the graph paper, we get the following coordinates, A (400,0), B (400,200), C (150,700), D (0,700).
Point B and C are the intercept point of equation 1 & 2; 1& 3 respectively.
Now, we calculate the objective function from the following table:
Coordinate (x1, x2) Z=5x1 + 3x2
A (400,0) 2000
B (400,200) 2600
C (150,700) 1350
D (0,700) 2100
From the table, we see that Z is maximize at B point which coordinates x1=400 and x2= 200.The maximize value of Z is
2600.
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c) Explain the following concepts in relationship to graphical method of linear programming:
i. Feasible region; ii) Unbound solution; iii) Multiple optimal solution; iv) Redundancy in constraints; v) non-negativity
constraint
Feasible region:
A common area which satisfies all the constraints. All possible solutions to the problem lie in the feasible region.
Unbound solution:
An unbounded solution of a linear programming problem is a situation where objective function is infinite. A linear programming
problem is said to have unbounded solution if its solution can be made infinitely large without violating any of its constraints in the
problem. there is no real applied problem which has infinite returns; hence an unbounded solution always represents a problem that
has been incorrectly formulated. This condition applies only to the maximisation problem, because of non-negativity
constraints. In this case region of LP problem is unbounded and can move the objective function line infinitely without
reaching the end of the feasible region. For example, in a maximization problem at least one of the constraints must be 'less than
or equal to' ( ≤) type.
1200
A
1000
800
600
400
200
0
0 100 200 300 400 500 600 700 800 900 1000
Infeasibility
If there is no region satisfying all the constraints at a time in LP problem, then there is no feasible solution and known as
infeasibility.
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The multiple optimal solutions are called the alternate basic solution. multiple optimal solutions occur in LP problem when the
objective function line is parallel to one of the binding constraints lines or objective function line and constraint line have the same
slope.
Non-negativity constraint:
Non-negativity restriction indicates that all decision variables must take on values equal to or greater than zero.
The conditions x ≥ 0, y ≥ 0 are called non-negative restrictions.
11th Batch-2019
Question No.1.
a) "Management science is a very powerful tool and analytical process that results in and offers an optimal solution, in
spite of its limitations." Discuss the importance and implications of this statement.
Management Science (MS) can be defined as:
"A problem-solving process used by an interdisciplinary team to develop mathematical models that represent simple-to-
complex functional relationships and provide management with a basis for decision-making and a means of uncovering
new problems for quantitative analysis".
The major features of this approach are as follows:
1. Management is regarded as the problem-solving mechanism with the help of mathematical tools and techniques.
2. Management problems can be described in terms of mathematical symbols and data. Thus, every managerial activity
can be qualified.
3. This approach covers decision-making, systems analysis, and some aspects of human behaviour.
4. Operations research, mathematical tools, simulation, models, etc., are the basic methodologies to solve managerial
problems.
Management science helps identify the processes, which work, notice the areas of weakness, and realize the future
possibilities and needs of the organization's consumer base. The approach makes the utilization of resources easier,
since the framework can notice the availability of resources and the proper use of them.
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1000x1 +1000x2 =16000 --------2
2000x1 + 6000x2 = 48000------3
x1, x2 ≥ 0
30
A(0,24)
25
20
15 B(4,12)
10
C(12,4)
5 D(24,0)
0
0 5 10 15 20 25 30
Feasible area lies on the shaded area. From the graph paper, we get the following coordinates, A (0,24), B (4,12), C (12,4),
D(24,0)
Point B is the intercept point of equation 1& 3 .
Now, we calculate the objective function from the following table:
Coordinate (x1, x2) Z = 600x1 + 400x2
A (0,24), 9,600
B (4,12), 7,200
C (12,4), 8,800
D (24,0) 14,400
From the table, we see that Z is minimize at B point which coordinates x1=4 and x2= 12. The minimize value of Z is 7,200.
10th Batch-2018
Question No 1.
a) Narrate the role of quantitative technique in the field of business and industry. Give examples in support of your
answer.
b) Define Multiple optimum solution, Cases of infeasible solutions. Unbounded solutions, and Redundancy in constraints.
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c) A 747 Jumbo Jet can carry 400 passengers. Each first-class ticket sold brings a profit of Tk.800 and each economy
class ticket brings a profit of Tk.600. There are 100 first class seats. However, if necessary, the economy class seats can
be converted into first class seats. The airline has determined that at least 40 tickets will be sold for the first class in any
given flight.
It has also been determined that at least four times as many passengers prefer to travel by economy class than the first
class.
Determine how many tickets of each type must be sold in order to maximize the profit of the airline.
Let's assume that First class ticket sold be X and economy class ticket sold be Y.
Maximize Profit Z =800 x+600y
Subject to constraints,
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450
400 400 400
400
350
300 300
A(40,300)
300
C(75,300)
250
200
150
B(40,160)
100
50
0 0 0
0
0 50 100 150 200 250 300 350 400 450
In the graph. The polygon ABC is the feasible region. The optimum solution lies at the corner point of the polygon. From
the graph paper, we get the following coordinates, A (40,300), B (40,160), C (75,300)
Now, we calculate the objective function from the following table:
Coordinate (x, y) Z =800 x+600y
A (40,300) 1,88,000
B (40,160) 1,28,000
C (75,300) 2,40,000
From the table, we see that Z is maximize at c point which coordinates x=75 and y= 300.The maximize value of Z is
2,40,000.
Therefore, at least 75 first class and 300 economic class tickets of each type must be sold in order to maximize the profit of
the airline
9th Batch-2017
Question No. 1.
a) What do you understand by quantitative approach to management? How does this approach assist management
in decision making?
b) Explain the following concepts in relation to graphical method of linear programming: -
(1) Feasible region; (ii) Optimal solution; (iii) Unbounded solution; (iv) Redundancy in constraints; (v) Infeasible
solution.
c) Use the graphical method to solve the following linear programming problem and check if it is an unbounded solution:
Maximize z =10x1 + 15x2
Subject to x1 ≥5
x2 ≤ 10
x2 + 2x2 ≥ 10
x1, x2 ≥
0
Let us first consider the structural constraint on equation,
x1 = 5----------1
x2 = 10----------2
x1 + 2x2 = 10----3
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From equation 1, the corresponding coordinate is (x1, x2) = (5,0)
From equation 2, the corresponding coordinate is (x1, x2) = (0,10)
From equation 3, the corresponding coordinate is (x1, x2) = (0,5); (10,0)
Question No 2.
a) What do you understand the term "Sensitivity Analysis"?
Sensitivity Analysis deals with finding out the amount by which we can change the input data for the output of our linear
programming model to remain comparatively unchanged.
Sensitivity Analysis is the process of investigating the effects of changes in parameters of a linear programming model on
the optimal solution. Also known as the past optimality analysis, it is concerned with the extent to which the optimal
solution value changes when one or more following alternations are made to the system.
1. The profit or cost structure of the decision variables changes, that is changes in the co-efficient of the co-
efficient of the objective function.
2. The right-hand side values, of the constraint are changed.
3. Changes in the coefficient of the left-hand side variables of the constraints.
4. New variables are added to the system.
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2x1- x2 ≤ 3
Or, 2 x3-2x4-x5+x6 ≤3
and
2x1- x2 ≥ 3
Or, x2 -2x1 ≤ -3
Or, x5-x6-2x3+2x4 ≤ -3
Subject to
x1 + x2 + s1 = 1
2x1 + x2 + s2 =1
x1; x2; s1;s2 ≥ 0
Tableau-1
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Cj 3 5 0 0 Qty Minimum
Cb Basis x1 x2 s1 s2 Ratio
0 s1 1 1 1 0 1 1/1
0 s2 2 1 0 1 1 1/1
Zj 0 0 0 0 0
Zj-Cj -3 -5 0 0
The pivotal element is 1
Tableau-2
Cj 3 5 0 0 Qty Minimum
Cb Basis x1 x2 s1 s2 Ratio
5 x2 1 1 1 0 1
0 s2 1 0 -1 1 1
Zj 5 5 5 0 0
Zj-Cj 2 0 0 0 5
As there is no negative value in Zj-Cj row, no further improvement is possible and the optimum solution has been obtained at x1=0,
x2= 1, Maximize Z=5. As the slack s2 has the optimum solution in at 1, thus idle capacity is 1.
Example:
There are three products A, B, C which are processed through Three Machine- M1, M2, M3 before they are inspected and shipped.
The processing on this machine is sequentially in nature so that each product goes through machine M1 then M2 and M3.A product
requires 3 hours of M1, 2 hours of M2 and 1 hour of M3.
Time requirement of product B and C respectively- 4 and 2 hours for M1; 1 and 2 hours of M2; 3 and 2 hours for M3. The total
number of hours available on M1, M2, M3 are 60, 40, 80.
The number of products A, B and C produced during a given period of time and the profit per unit of A, B, C is Tk. 2, 4, 3 respectively.
Requirements:
1. Formulate the problems as a linear problem.
2. Solve the above problem using graphical Method
3. Solve the above problem using Simplex Method
4. Set Dual equation of the problem
5. Test the sensitivity analysis by following changing.
a. Changes in co-efficient of Objective function.
i. Non-basis variable
ii. Basis Variable
Reqirement-1
Let, x1, x2, x3 are the number require to produce to maximize profit respectively of product A, B, C.
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Maximize Z= 2x1+ 4x2 +3x3
Subject to constraint
3x1 + 4x2+ 2x3 ≤ 60
2x1 + x2 + 2x3 ≤ 40
x1 + 3x2 + 2x3 ≤ 80
x1; x2; x3 >= 0
Reqirement-2
Reqirement-3
By adding slack variable S1, S2, S3 to the constraint, we change them to equations
Maximize Z= 2x1+ 4x2 +3x3 + 0. S1 + 0. S2 + 0. S3
Subject to constraint
3x1 + 4x2+ 2x3 +S1 = 60
2x1 + x2 + 2x3 + S2 = 40
x1 + 3x2 + 2x3 + S3 = 80
x1; x2; x3, S1; S2; S3 >= 0
Developing the first matrix of simplex Tableau for this problem.
Tableau -1
Cj 2 4 3 0 0 0 Minimum
Cb Qty
Basis X1 X2 X3 S1 S2 S3 Ratio
0 S1 3 4 2 1 0 0 60 15
0 S2 2 1 2 0 1 0 40 40
0 S3 1 3 2 0 0 1 80 80/3
Zj 0 0 0 0 0 0 0
Zj-Cj -2 -4 -3 0 0 0
Tableau-2
Cj 2 4 3 0 0 0 Minimum
Cb Qty
Basis X1 X2 X3 S1 S2 S3 Ratio
4 X2 3/4 1 1/2 1/4 0 0 15 30
0 S2 5/4 0 3/2 - 1/4 1 0 25 50/3
0 S3 -5/4 0 1/2 - 3/4 0 1 35 70
Zj 3 4 2 1 0 0 60
Zj-Cj 1 0 -1 1 0 0
Tableau-3
Cj 2 4 3 0 0 0 Minimum
Cb Qty
Basis X1 X2 X3 S1 S2 S3 Ratio
4 X2 1/3 1 0 1/3 - 1/3 0 20/3
3 X3 5/6 0 1 - 1/6 2/3 0 50/3
0 S3 -5/3 0 0 - 2/3 - 1/3 1 80/3
Zj 23/6 4 3 5/6 2/3 0 230/3
Zj-Cj 11/6 0 0 5/6 2/3 0
Comment:
There is no-negative value at Zj-Cj at tableau 3, The solution is the optimal with production will be-
For product B= 20/3 unit;
Product C= 50/3 unit
And the maximum profit will be Z = 230/3
Requirement -4
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Primal-
Maximize Z (x) = 2x1+ 4x2 +3x3
Subject to constraint
3x1 + 4x2+ 2x3 <= 60
2x1 + x2 + 2x3 <= 40
x1 + 3x2 + 2x3 <= 80
x1; x2; x3 >= 0
Dual
Minimize Z (y) = 60 y1 + 40 y2 + 80 y3
Subject to constraint
3y1 + 2y2+ 1y3 >= 2
4y1 + y2 + 3y3 >= 4
2y1 + 2y2 + 2y3 >= 3
y1; y2; y3 >= 0
Requirements -5
i. Changes in co-efficient of Objective function.
(Non-basis variable)
Cj 2 4 3 0 0 0 Minimum
Cb Qty
Basis X1 X2 X3 S1 S2 S3 Ratio
4 X2 1/3 1 0 1/3 - 1/3 0 20/3
3 X3 5/6 0 1 - 1/6 2/3 0 50/3
0 S3 -5/3 0 0 - 2/3 - 1/3 1 80/3
Zj 23/6 4 3 5/6 2/3 0 230/3
Zj-Cj 11/6 0 0 5/6 2/3 0
Considering x3
Cb Basis X1 X2 X3 S1 S2 S3
3 X3 5/6 0 1 - 1/6 2/3 0
Zj-Cj 11/6 0 0 5/6 2/3 0
(Zj-Cj)/x2 11/5 - 0 -5 1 -
i. Basis
S3 is the basis variable.
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This means 80/3 hours are wasted. So, Machine -3 should be reduced hours and would no effect on the optimal solution.
ii. Non-Basis
S1 and S2 are the non-basis that means the number of hours of the machine M1 and M2 are fully utilized.
If changes made,
Considering M1,
Considering M1, Considering M2,
Dual
Minimize Z (y) = 60 y1 + 40 y2 + 80 y3
Subject to constraint
3y1 + 2y2+ 1y3 >= 2
4y1 + y2 + 3y3 >= 4
2y1 + 2y2 + 2y3 >= 3
y1; y2; y3 >= 0
From ,tableau -3,
Y1=5/6; y2= 2/3; y3= 0
(Slack এর মান y এর মান হ ব, যিদ -dual করা হয়)
From the first constraint,
3y1 + 2y2+ 1y3 >= 2
5 2
Or, (3+ ∆) + 2× + 1×0 ≥ 2
6 3
15+5 ∆ 4
Or, + +0≥2
6 3
15+5 ∆+8
Or, ≥2
6
Or, 23+5 ∆ ≥ 12
Or, 5 ∆ ≥ 12 - 23
Or, 5 ∆ ≥ -11
-11
Or, ∆ ≥
5
-11
The change should be less than
5
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11 26 -11
Thus, it indicate that if per unit requirement is reduced by to =( 3- ),it would be advisable to introduce the variable in
5 5 5
the basis.
Converting to Dual
Minimize Z (y) = 60 y1 + 40 y2 + 80 y3
Subject to constraint
3y1 + 2y2+ 1y3 >= 2
4y1 + y2 + 3y3 >= 4
2y1 + 2y2 + 2y3 >= 3
2y1 + y2 + 3y3 >= C4
y1; y2; y3 >= 0
Mid-1
Section: B
Determine the rate of production of each model which will be maximized the total profits, given that the estimated profits per car
are 20 pounds, 30 pounds, and 40 pounds respectively. Which division is not utilized to its maximum capacity, interpret.
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Solution
Let, x1; x2; x3 units need to produce for Product A; B; C respectively for
maximize profit. Division x1 x2 X3 Capacity
Maximization Z= 20x1 +30x2 +40x3 Engine Division 9 9 6 9000
Subject to constraint, Body Division 3 6 6 5000
9x1 +9x2 +6x3 ≤ 9000 Assembly Division 3 6 9 6000
3x1 +6x2 +6x3 ≤ 5000
3x1 +6x2 +9x3 ≤ 6000
By adding slack variable S1; S2 ; S3 for Engine, Body and Assembly Division respectively, to the constraint, we change them into
equation as follows-
Maximization Z= 20x1 +30x2 +40x3 + 0. S1 + 0. S2 +0. S3
Subject to constraint,
9x1 +9x2 +6x3 + S1 = 9000
3x1 +6x2 +6x3 + S2 = 5000
3x1 +6x2 +9x3 + S3 = 6000
Developing the first matrix of simplex tableau for the above problem, we get the following tableau as –
Tableua-1
Cb Cj 20 30 40 0 0 0 Qty Minimum
Basis x1 x2 x3 S1 S2 S3 Ratio
0 s1 9 9 6 1 0 0 9000 1500
0 s2 3 6 6 0 1 0 5000 2500/3
0 s3 3 6 6 0 0 1 6000 1000
Zj 0 0 0 0 0 0 0
Ci-Zj 20 30 40 0 0 0
Tableau-2
Cj 20 30 40 0 0 0 Minimum
Cb Qty
Basis x1 x2 x3 S1 S2 S3 Ratio
0 s1 6 3 0 1 -1 0 4000
40 x3 1/2 1 1 0 1/6 0 2500/3
0 s3 0 0 0 0 -1 1 1000
Zj 20 40 40 0 20/3 0 1,00,000/3
Ci-Zj 0 -10 0 0 - 20/3 0
Comment:
There is no-positive value at Cj-Zj at tableau 2, The solution is the optimal with production will be-
For product c= 2500/3 cars= 833.33 cars
And the maximum profit will be Z = 100,000/3= 33,333 pound
Thus, Engine and assembly division is not fully utilized to its maximum capacity. 4000 hours for Engine division and 1000 hours for
assembly division will be wasted.
A section Homework
Page 15 of 15
Compute the following requirements:
a. calculate the initial table
b. write the original L.P.P
c. what is the initial basis? Does this basis correspond to origin?
d. For the next iteration which variable should enter the basis and which variable should leave?
e. what is the value of objective function at this initial solution?
f. How many units of entering variables will be in the next solution, what do you think the value of the objective function will be after
the first iteration?
g. find the optimum solution.
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