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School of Business and Economics

EXAMINATION Version: N.A.

Course : QMIII skills Code: EBS2027

Coordinator(s): C.P.M. van Hoesel
Date : 23-01-2021 Time: 09.30-11.30 hours
Location : Online

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This examination consists of: (please check if you received all pages, before you start
answering)
7 Pages (Front page included)
20 Questions

You are allowed to make use of:

Non-programmable pocket calculator: only Casio FX82 or Casio FX85
English-English dictionary

Norm:
Always passed with at least 14 points

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Case Questions 1-5

Sunco processes crude oil into aviation fuel and heating oil. Crude oil can be purchased at a cost of
$65,000 per 1,000 barrels; each 1,000 barrels can be distilled to yield 500 barrels of aviation fuel and
500 barrels of heating oil. The output from the distillation can either be sold directly, or processed
further in the catalytic cracker. If sold directly after distillation without further processing, aviation fuel
sells for $80,000 per 1,000 barrels, and heating oil sells for $65,000 per 1,000 barrels. It takes 1 hour
to process 1,000 barrels of aviation fuel in the catalytic cracker, and these 1,000 cracked barrels can
then be sold for $145,000. It takes 45 minutes to process 1,000 barrels of heating oil in the cracker, and
these 1,000 cracked barrels can then be sold for $125,000. Each day at most 20,000 barrels of crude
oil can be purchased and distilled, and 8 hours of cracker time are available. Sunco can sell any desired
amount of its outputs at the stated prices, and wants to maximize its daily profit.

Model this decision problem as a linear program. Use exactly the following 4 decision variables:
• A the amount of uncracked aviation fuel to be produced for selling
• H the amount of uncracked heating oil to be produced for selling
• CA the amount of cracked aviation fuel to be produced for selling
• CH the amount of cracked heating oil to be produced for selling
All amounts are represented in units of 1,000 barrels.

1. How many decision variables have a non-zero coefficient in the objective function?
a) 1
b) 2
c) 3
d) 4

2. Which of the following constraints is a correct constraint of the model?

a) CA + 45*CH <= 480

b) CA + 0.75*CH <= 8
c) A + CA + 0.45*H + 0.45*CH <= 8
d) CA + 0.75*CH >= 8

3. Which of the following constraints is a correct constraint of the model?

a) A – CA + H – CH <= 0
b) A + CA – H – CH >= 0
c) A + CA – H – CH = 0
d) A – CA + H – CH = 0

4. Recall, that we say that a <= or >= constraint has slack at the optimal solution, if the left hand side
is not equal to the right hand side. The constraint A + H + CA + CH <= 20 models the restriction that
we cannot use more crude oil than available. Thus, in this case there is slack if the values of A, H,
CA and CH in the optimal solution add to less than 20. What can be said about this constraint at the
optimal solution?

a) It will be violated.
b) Whether the constraint has slack or no slack at the optimal solution cannot be determined in
advance; only by actually solving the model.
c) It will definitely have slack at the optimal solution.
d) It will definitely have no slack at the optimal solution.
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5. Suppose, the cracker time can be extended from 8 hours to 9 hours per day, and we compute an
optimal solution for this changed situation. What can be said about the optimal objective function
value of the new solution in comparison to the old situation with 8 hours cracker time?

a) It will definitely decrease.

b) It may decrease or stay the same.
c) It will stay the same.
d) It may increase or stay the same.

Case Questions 6-10

The manager of a consultancy company has to assign two teams to 10 small consultancy projects for
the coming month. Every project has to be assigned to exactly one of the two teams. Based on past
experience, he knows for each team how many days it will take this team to finish any of the projects.
The times are given in the following table.

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
Team 1 5 9 2 3 4 6 7 3 6 8
Team 2 3 4 7 5 4 8 5 6 5 6

The total available time for each team in the coming month is 22 days. The manager wants to minimize
the total time it takes to complete all projects. Formulate a mathematical model and answer the
following questions. The model should use exactly 20 binary variables, named P1T1, P1T2, P2T1,
P2T2, etc., where PxTy is equal to 1 if project x is assigned to team y, and equal to 0 otherwise. It
should have exactly 12 constraints (without the binarity constraints of the variables).

6. Where appears the number 22 in this model?

a) As a coefficient on the left-hand-side of exactly one constraint.

b) As a coefficient in the objective function.
c) As RHS of exactly two constraints.
d) As RHS of exactly one constraint.

7. Where appears the number 9 as a coefficient in this model?

a) As a coefficient in exactly one constraint and as a coefficient in the objective function.

b) As a coefficient in 3 constraints, and nowhere else.
c) Not at all.
d) As a coefficient in the objective function and as a coefficient in 2 constraints.

8. Suppose the manager assigns each project to the team that is fastest to perform this project, thus
project 1 to team 2, project 2 to team 2, project 3 to team 1 and so on. What can be said about this
solution?

a) It is not feasible.
b) It is feasible but not optimal.
c) It is feasible and optimal.
d) None of a), b) and c) is correct.

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9. The manager thinks that if team 1 is assigned to project 1, it should also be assigned to project 2.
However, if team 2 is assigned to project 1, he is indifferent whether team 1 or 2 are doing project 2.
Also it is fine for him, if team 1 does only project 2. How can this be modeled?

a) P1T1 – P2T1 >= 0

b) P1T1 + P2T1 >= 1
c) P1T1 + P2T1 – P1T2 – P2T2 <= 1
d) P1T1 – P2T1 <= 0

10. The manager was informed that project 3, 4 and 5 have much in common. In order to give both
teams experience with this kind of projects, he wants to assign to each of the two teams at least one
out of the three projects. Which of the following extensions of the model is the correct way to model
this requirement?

a) Add the constraints

P3T1 + P4T1 + P5T1 >= 2
P3T2 + P4T2 + P5T2 <= 1
b) Add the constraints
P3T1 + P4T1 + P5T1 <= 2
P3T2 + P4T2 + P5T2 >= 1
c) Add the two constraints
P3T1 + P4T1 + P5T1 <= 2
P3T2 + P4T2 + P5T2 <= 2
d) Add the constraints
P3T1 + P4T1 + P5T1 <= 1
P3T2 + P4T2 + P5T2 >= 1

Case Questions 11-16

Electronic Communications Inc. manufactures portable radio systems that can be used for two-way
wireless communication. The company’s new product, which has a range of up to 25 miles, is
particularly suitable for use in a variety of business and personal applications. The distribution
channels for the new radio are as follows:

1. Marine equipment distributors

2. Business equipment distributors
3. National chain of retail stores
4. Direct mail

Because of differing distribution and promotional costs, the profitability of the product will vary with
the distribution channel. In addition, the advertising cost and the personal sales effort required will
vary with the distribution channels. The table below summarizes the contribution to profit,
advertising cost (already incorporated in the profit), and personal sales effort data pertaining to the
Electronic Communications problem.

PROFIT, ADVERTISING COST, AND PERSONAL SALES TIME DATA

Distribution Channel Profit per unit Advertising cost per Personal Sales Effort
sold (Euros) unit sold (Euros) per Unit sold (hours)
Marine distributors 90 10 2
Business distributors 84 8 3
National retail stores 70 9 3
Direct mail 60 15 0

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The firm set the advertising budget at $5000, and a maximum of 1800 hours of salesforce time is
available for allocation to the sales effort. Management also decided to produce at most 600 units for
the current production period. Finally, an ongoing contract with the national chain of retail stores
requires that at least 150 units be distributed through this distribution channel.
Electronic Communications is now faced with the problem of establishing a strategy that will provide
for the distribution of the radios in such a way that overall profitability of the new radio production
will be maximized. Decisions must be made as to how many units should be allocated to each of the
four distribution channels, as well as how to allocate the advertising budget and salesforce effort to
each of the four distribution channels.

Model this problem by the following 4 decision variables :

M = the number of units produced for the marine equipment distribution channel
B = the number of units produced for the business equipment distribution channel
R = the number of units produced for the national retail chain distribution channel
D = the number of units produced for the direct mail distribution channel

The “variables part” of the sensitivity table of the problem, after solving, is given below.

Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$C$5 Variables M 25 90 1E+30 6
$D$5 Variables B 425 84 6 34
$E$5 Variables R 150 70 17 1E+30
$F$5 Variables D 0 -45 60 45 1E+30

11. In which interval lies the objective value?

a) (30000, 35000]
b) (35000, 40000]
c) (40000, 45000]
d) (45000, 50000]

12. What can you say for sure about the reduced cost of variable M?
a) It is negative
b) It is positive
c) It is zero
d) One can not say for sure that one of the other three alternatives is correct.

13. What is the effect on the optimal solution and its value of adding the constraint M+R ≥ 200 to the
model?

a) The optimal solution of the original model is still feasible, but possibly no longer optimal: the
new optimal solution will have the same or lower cost than the original one.
b) The optimal solution of the original model is still feasible, but possibly no longer optimal: the
new optimal solution will have the same or higher cost than the original one.
c) The optimal solution of the original model is still feasible, and also guaranteed to be still
optimal.
d) The optimal solution of the original model is not feasible anymore.

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The “constraints part” of the sensitivity table of the problem, after solving, is given below.

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$8 Advertising budget LHS 5000 3 5000 850 50
$G$9 Salesforce availability LHS 1775 0 1800 1E+30 25
$G$10 Production level LHS 600 60 600 3,57143 85
$G$11 Retail stores requirement LHS 150 -17 150 50 150

14. What will be the effect on the optimal objective value of an increase of the Advertising budget
with 10?
a) The change in the optimal objective value lies in the interval [-10,10]
b) The change in the optimal objective value lies in the interval [-300,-10]
c) The change in the optimal objective value lies in the interval [10,100]
d) The change in the optimal objective value lies in the interval [100,300]

15. The Personal Sales Effort, in hours, for Marine distributors should not exceed the Personal Sales
effort for the Business distributors plus the Personal Sales effort for the National retail stores.
Which of the following constraints enforces this?
a) 𝑀≤𝐵+𝑅
b) 3𝐵 ≤ 2𝑀 + 3𝑅
c) 3𝑅 ≤ 2𝑀 + 3𝐵
d) 2𝑀 + 3𝐵 + 3𝑅 ≤ 180

16. A fifth distribution channel, House visits, say H, has coefficient 12 in the advertising budget
constraint, coefficient 2 in the Salesforce availability constraint. Its unit profit is 75. What is its
reduced cost?
a) The reduced cost is in the interval (0, 100]
b) The reduced cost is 0
c) The reduced cost is in the interval [-30,0)
d) The reduced cost is in the interval [-100,-30)

Case Questions 17-20

You are given the following information about a project consisting of six activities:

Immediate
Activity Duration
Predecessors
1 – 4
2 1 4
3 1 5
4 2, 3 3
5 2, 3 2
6 4, 5 3

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For all activities, compute the earliest start and earliest finish times, the latest start and latest finish
times, and then answer questions 17-18.
Note: The earliest start time of all activities with no immediate predecessors is assumed to be 0.

17. The earliest finish time of activity 6 is …?

a) 12
b) 13
c) 14
d) 15

18. The latest finish time of activity 2 is …?

a) 8
b) 9
c) 10
d) 11

Extension of the Case for Question 19-20

The current project duration seems unacceptable to you. Therefore you consider adding personnel to
activities 3, 4, and 5, in order to shorten the duration of these activities. Activity 3 can be shortened
by at the most 3 time units, at a cost of 120 per time unit; activity 4 can be shortened by at the most 2
time units, at a cost of 150 per time unit; activity 5 can be shortened by at the most 1 time unit, at a
cost of 160 per time unit.

You want to shorten the project duration by 2 time units, and are searching for a plan to achieve this
goal at minimum cost. Set up the linear programming model by which you can determine such a plan.
Use the following decision variables:
ES1, ES2, ES3, ES4, ES5, ES6, for the earliest start times of activities 1 up to 6, respectively. R3,
R4, and R5 for the time units by which activities 3, 4, and 5 should be shortened, respectively. Then
answer questions 19 and 20.

19. Which of the following constraints is a correct constraint of the model?

a) ES4 <= ES3 + 5 – R4

b) ES4 >= ES3 + 5 + R4
c) ES4 >= ES3 + 5 – R3
d) ES4 <= ES3 + 5 – R3

20. In how many constraints (apart from its non-negativity constraint) does the variable ES4 have
non-zero coefficient?

a) 1
b) 2
c) 3
d) 4

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