MN2032
Management Science Methods
Candidates should answer FOUR of the following EIGHT questions. All
questions carry equal marks. If you answer more than four questions ONLY the
first four will be marked.
Please find questions on the following page.
© University of London 2024 Page 1 of 7
1. (a) Describe Soft Systems Methodology (SSM), in particular stating the
assumptions underlying SSM.
(15 marks)
(b) Apply SSM to one problem with which you are familiar.
(10 marks)
2. A company X uses Markov theory to try and understand how its market share
changes over time. The company has two main competitors (Y and Z) and past
estimates of the probability of a customer making a transition between
companies each year are:
To company
X Y Z
X 0.67 0.03 0.30
From company Y 0.61 0.31 0.08
Z 0.71 0.05 0.24
Here, for example, the probability that a customer switches from company Y to
company Z is 0.08. The current market shares are 88%, 4% and 8% for
companies X, Y and Z respectively.
(a) Copy the following table and fill in the market shares for these
companies after two years and in the long-run.
X Y Z
After two years (%, 2dp)
Long-run (%, 2dp)
(18 marks)
Company X is considering merging with company Y to create a new company
(XY). In this case they estimate that the matrix for the probability of a customer
making a transition between companies will be:
To company
XY Z
XY 0.85 0.15
From company
Z 0.40 0.60
Here, for example, the probability that a customer switches to company Z from
company XY is 0.15.
(b) Copy the following table and fill in the market shares for these
companies in the long-run.
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XY Z
Long-run (%, 2dp)
(7 marks)
3. You have been given the pairwise comparison matrix for three objectives
shown below.
Objective
1 2 3
1 1 6 3
Objective 2 - 1 4
3 - - 1
Here, for example, the judgement as to objective 1 as compared with
objective 3 is rated 3.
(a) Are the judgements made with respect to these objectives
reasonably consistent or not? Assume the value of RI for
n=3 is 0.58.
(16 marks)
(b) The relative judgement of two possible courses of action (A
and B) with respect to the above three objectives is:
A B
A 1 6
Objective 1 B - 1
A B
A 1 -
Objective 2 B 8 1
A B
A 1 3
Objective 3 B - 1
Assuming that the judgements made with respect to the three
objectives are reasonably consistent, which course of action (A
or B) should be taken?
(5 marks)
(c) What are two criticisms that have been made of the analytic
hierarchy process?
(4 marks)
4. Company Y has a number of branches (A to F). Company Y acts as an
outsourced contractor for government X. They deal with clients seeking
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information as to social/employment benefits that government X offers to
citizens. The data the government have collected for these branches as
operated by company Y is shown below.
Branch Number of clients Cost (£’m) Number of employees
A 8680 18.4 78
B 6288 13.4 92
C 8872 14.4 74
D 8074 19.8 92
E 7400 19.2 68
F 7476 13.0 92
For example, branch B (in the last full financial year) had 6288 clients (people
seeking advice as to social/employment benefits), cost the government £13.4m
and (on average over the year) had 92 employees.
The government insists that performance of these branches is to be evaluated
using data envelopment analysis (DEA) based on two ratios:
Number of clients per £’m of cost
Number of clients per employee.
(a) Using the ratios given above which branch(s) have efficiency 100% when
analysed using DEA? Explain clearly in your answer why these specific
branch(s) have efficiency 100%
(8 marks)
(b) By making use of the above ratios and DEA an external consultant has
calculated the efficiencies of branches D, E and F. These have been
calculated as 73%, 91% and 93% for D, E, and F respectively. If you were
an employee of company Y and had overall managerial responsibility for
these three branches what questions might be raised in your mind as a
direct result of this analysis?
(5 marks)
(c) You have been asked to provide advice to government X as to what they
should do to enable them to better analyse and manage the performance
of company Y over time. What would you advise?
(6 marks)
(d) Outline the steps associated with starting a DEA study. (6 marks)
5. Describe what you understand by the following in relation to methodological
issues that arise in Operational Research/Management Science:
(a) Optimisation (14 marks)
(b) Cost versus decision quality (11 marks)
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6. (a) A newsvendor buys a weekly magazine from a publisher for a unit price of
£7 and sells it to members of the public for £7.90. Any magazines left over
at the end of the week are returned to the publisher and for each
magazine returned the newsvendor receives £0.35. Past experience
indicates that the demand for this magazine from members of the public is
expected to have a rectangular (uniform) distribution with demand lying
between 200 and 300 copies. What would be your advice as to how many
copies the newsvendor should order from the publisher?
(5 marks)
(b) The newsvendor also sells packets of chewing gum that he orders from a
supplier. He pays his supplier £1.80 for each packet. Currently he sells
(on average) 465 packets per week. He estimates that the costs
associated with making an order are £4.30 and interest rates are currently
4% per annum. His supplier offers a quantity discount such that if he were
to order 2,500 packets or more each time he orders he would get a 12%
discount. Assuming that there are 52 weeks in a year and the newsvendor
works 5 days a week what advice can you offer the newsvendor?
(9 marks)
(c) The newsvendor reads the financial news in the daily papers whilst he
waits for customers and has seen many newspaper articles suggesting
that interest rates are going to fall in the near future. He is concerned that
this means he may have to change the size of his order for chewing gum
from his supplier. What advice can you offer the newsvendor?
(4 marks)
(d) The supplier of chewing gum has offered the newsvendor daily deliveries,
so that he can order at the end of one day and receive the gum at the
start of the next day. What advice can you offer the newsvendor as to
whether he should accept this offer or continue ordering as you advised in
part (b) above?
(7 marks)
7. (a) The payoff table below shows for a company the final year end profits
expected (£’m) from four possible choices (A, B, C and D) with respect
to three possible scenarios (S1 to S3 respectively) for the forthcoming
year.
S1 S2 S3
A -5 1 2
B 4 -22 13
C 1 8 9
D 2 13 3
Here, for example, if the company makes choice B (and it can only
choose one of A, B, C or D) and the scenario for the forthcoming year
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turns out to be S3 then it makes a profit of £13m. The company
estimates that the probabilities associated with scenarios S1, S2 and S3
occurring are 0.30, 0.40 and 0.30 respectively.
Copy the following table and fill in the choice that should be made under
each criterion and the associated value.
Criteria Choice Associated value (£’m) 2dp
Optimistic
Conservative
Regret
Equally likely
EMV
Based on your analysis which choice from A, B, C or D would you
recommend the company makes? Clearly state the single major reason
for the choice that you are recommending.
(13 marks)
(b) For a single server queueing system illustrate the basics of discrete-
event simulation by performing a simulation using the (randomly
generated) values given below. Your answer should clearly state any
relationships that you are using between factors in your simulation.
Customer Interarrival time Service time
(minutes) (minutes)
1 9 4
2 9 9
3 5 2
4 6 8
5 4 4
6 9 9
7 6 10
8 10 1
Here, for example, customer 4 has an interarrival time of 6 minutes and a
service time of 8 minutes.
(12 marks)
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8. Briefly explain each of the following topics from the viewpoint of Operational
Research/Management Science:
(a) GP (7 marks)
(b) SCM (9 marks)
(c) Kendall's notational system for classifying queueing systems
(9 marks)
Your answer to this question should be limited to 2 pages for each of
the three parts (so at most 6 pages in total).
End of paper
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