Sample lab test.

FUNDAMENTALS OF OPERATIONS RESEARCH

QMT342
LAB TEST

QUESTION 1

A machine shop owner is attempting to decide whether to purchase a Product A, Product B,

or Product C. The return from each will be determined by whether the company succeeds in
getting a government military contract. The profit or loss from each purchase and the
probabilities associated with each contract outcome are shown in the following payoff table:

Alternative States of Nature

Contract (0.4) No contract (0.6)
Product A RM 46,000 -RM 8,000
Product B RM 23,000 RM 4,000
Product C RM 11,000 RM 9,000

The machine shop owner is considering hiring a military consultant. There is a 50% chance
that the military consultant would issue a favorable result. By talking to other machine shop
owners and obtaining past data, the owner has estimated the following probabilities:

P (Contract | Favorable) = 0.75

P (No Contract | Unfavorable) = 0.81

a) Use a decision tree to analyze the problem and determine the best decision for the
owner.
(13 marks)

b) Compute the maximum fee the owner should pay the consultant for his service.
(2 marks)

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QUESTION 2

Solve the following linear programming model by using graphical methods. If there exists any
special case, state the case and explain how it is identified.

Maximize : 𝑍 = 12𝑋1 + 20𝑋2

Subject to : 10𝑋1 + 15𝑋2 ≤ 250

16𝑋1 + 5𝑋2 ≤ 120
4𝑋1 + 5𝑋2 ≤ 80
𝑋2 ≤ 6
𝑋1 , 𝑋2 ≥ 0
(5 marks)
QUESTION 3

SOCAS assembles three types of toys-trains, trucks, and cars-using three operations. The
daily limits on the available times for the three operations are 430, 460 and 420 minutes,
respectively, and the revenues per unit of toy train, truck, and car are RM3, RM2, and RM5,
respectively. The assembly times per train at the three operations are 1, 5, and 1 minutes,
respectively. The corresponding times per train and per car are (2, 0, 5) and (2, 2, 0) minutes
(a zero time indicates that the operation is not used).

Letting X1, X2, and X3 represent the daily number of units assembled of trains, trucks,
and cars, respectively, the associated LP model is given as:

Maximize Z = 3X1 + 2X2 + 5X3

Subject to:
X1 + 2X2 + 2X3 ≤ 430 (Operation 1)
5X1 + 2X3 ≤ 460 (Operation 2)
X1 + 5X2 ≤ 420 (Operation 3)
X1, X2, X3 ≥ 0
a) Find the final simplex tableau for the above linear programming model.
(3 marks)

b) What is the best production mix and the optimal profit?

(1 marks)

c) Are any operations not fully utilized in the solution? If so, how much of each operation is
underutilized?
(2 marks)
d) What are the shadow prices for the resources? (2 marks)

e) A suggestion is made to increase the available times for Operation 1 from 430 to 600. Is
this suggestion advisable? Explain. (2 marks)

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QUESTION 4

Scania Bike Sdn. Bhd, is a major manufacturer of sports bicycle. The company has three
distribution centers which are located at Kuala Terengganu, Shah Alam, and Johor Bahru.
For the coming month, the company has to distribute the sports bicycle to four major
customers at four location; Kuala Lumpur, Melaka, Kedah, and Pahang. The data on the
supply available at each distribution center and the customer demand are as follows:
Distribution Center Production Capacity (units)

Kuala Terengganu 500

Shah Alam 600
Johor Bahru 250

Location Demand (units)

Kuala Lumpur 600

Melaka 400
Kedah 200
Pahang 250

The transportation costs of producing and distributing the product from each distribution center
to each customer at four locations is shown in the following table:
Kuala Lumpur Melaka Kedah Pahang

Kuala Terengganu 3 6 7 5
Shah Alam 7 5 9 9
Johor Bahru 4 6 5 8

i. Find the initial solution for the above problem by using least cost method.
(2 marks)

ii. Solve the transportation problem above to achieve the minimum cost. What is the minimum
total cost?.

(5 marks)

iii. Is there any alternative solution? Why?

(2 marks)

iv. Name which customer with shortage and state the shortage value.
(1 mark)

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