Name:……………....................... Roll No……………………………………..

Invigilator’s Signature : ………………………

Indian Institute of Management, Kozhikode

End-Term Exam, EPGP-13
OPERATIONS RESEARCH

Max Time: 3 Hours + 15 minutes (buffer) Date : June 12, 2021

Max Marks: 65 Instructor : P N Ram Kumar

Instructions:
1. This is an OPEN BOOK, PAPER-PEN based examination.
2. Except Question No. 7, all the other questions carry 10 marks each.
3. Except calculator, the usage of any other electronic device is forbidden.
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1. A cargo plane has three compartments for storing cargo: front, centre, and back. These
compartments have capacity limits on both weight and space, as summarized below:
Compartment Weight capacity Space capacity
(tons) (Cubic feet)
Front 12 7000
Center 18 9000
Back 10 5000
Furthermore, the weight of the cargo in the respective compartments must be the same proportion of
that compartment’s weight capacity to maintain the balance of the airplane. The following four cargoes
have been offered for shipment on an upcoming flight.

Cargo Weight (tons) Volume (Cubic Profit ($/ton)

feet/ton)
1 20 500 320
2 16 700 400
3 25 600 360
4 13 400 290
Any portion of these cargoes can be accepted. Formulate a linear programming problem to maximize the
total profit for the flight.
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2. A senior executive of a public sector company recently quit his job under the VRS with a hefty
packet of INR 1 Crore. The reputed Narada Chit Fund Company has offered the following investment
scheme for the benefit of such retired people:
"Invest a certain sum (in lakhs of rupees) in any month, invest half of that amount in the next month.
In the subsequent month, one would get twice the amount invested originally in the first month.
This scheme is available only for the next six months (Encashment is possible on 181st day). Returns
received at the end of any month can be used immediately for reinvesting either as a fresh investment
or as a follow-up investment”
Develop a mathematical model to determine the investment schedule that maximizes the returns on the
181st day.

3. The ABC Company has two manufacturing plants on opposite sides of India. Each of these plants
produces the same two products and then sells them to wholesalers within its half of the country. The
orders from wholesalers have already been received for the next 2 months (February and March), where
the number of units requested are shown below (The company is not obligated to completely fill these
orders but will do so if it can without decreasing its profits).

Plant 1 Plant 2
Product February March February March
1 1800 3150 2450 2100
2 2250 2700 2505 3000

Each plant has 20 production days available in February and 23 production days available in March to
produce and ship these products. Inventories are depleted at the end of January, but each plant has
enough inventory capacity to hold both the two products if an excess amount is produced in February for
sale in March. In either plant, the cost of holding inventory in this way is $3 per unit of product 1 and $4
per unit of Product 2.

Each plant has the same two production processes, each of which can be used to produce either of the
two products. The production cost per unit produced of each product is shown below for each process in
each plant.
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Plant 1 Plant 2
Product Process 1 Process 2 Process 1 Process 2
1 $62 $59 $61 $65
2 $78 $85 $89 $86
The production rate for each product (number of units produced per day devoted to that product) also is
given for each process in each plant.

Plant 1 Plant 2
Product Process 1 Process 2 Process 1 Process 2
1 100 140 130 110
2 120 150 160 130
The net sales revenue (selling price minus normal shipping costs) the company receives when a plant sells
the products to its own customers (to wholesalers in its half of the country) is $83 per unit of Product 1
and $112 per unit of Product 2. However, it is also possible (and occasionally desirable) for a plant to make
a shipment to the other half of the country to help fill the sales of the other plant. When this happens, an
extra shipping cost of $9 per unit of product 1 and $7 per unit of Product 2 is incurred.

The manager Mr. Anees P M, who happens to be an IIMK graduate and also the Chief Technology
Officer, needs to determine how much of each product should be produced by each production process
in each plant during each month, as well as how much each plant should sell each product in each month
and how much each plant should ship of each product in each month to the other plant’s customers. The
objective is to determine the optimal plan that would maximize the total profit (total net sales revenue
minus the sum of the production costs, inventory costs, and extra shipping costs). Formulate this
aggregate production planning problem as a transportation problem (Transportation table is NECESSARY
and SUFFICIENT)

4. In an IT company, a project manager needs to assign four projects to four different and
independent teams. Any team can handle only one project and vice-versa. Based on his past experience,
he has developed the following table that gives information about the time (in months) that is likely to be
taken by each of the teams to complete different projects. Set up a linear programming model to
determine the optimal assignment of projects to teams so as to complete all the projects in the least
possible time with a) parallel processing of projects and b) No parallel processing
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Project
Team 1 2 3 4
1 10 9 7 8
2 6 8 10 12
3 12 15 6 9
4 9 11 13 10

5. You are trying to get the cheapest airfare that you can. You just found on makemytrip.com that
the ticket home will cost $400, and it cannot be refunded or exchanged. You also have the option of buying
a ticket for $450, which can be refunded for $350 (and thus costs you $100). The price of tickets is
expected to change in one week, and you will have one more chance to buy a ticket. There is a 50% chance
that the ticket would cost $300, and a 50% chance that it would cost $600. Assuming you are a rational
decision maker, construct a decision tree and determine the best course of action to minimize the
expected expense of travel (NOT TRAVELING AT ALL IS NOT A CHOICE!).

6. A project has the following characteristics.

Immediate
Activity Duration (days)
Predecessors

A - 1

B A 4

C A 2

D A 2

E D 3

F D 3

G E 2

H F,G 1

I C,H 3

J B 2
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Compute the project completion time and identify the critical/non-critical activities with their slack values.

7. Explain the working of AHP by considering at least one qualitative and one quantitative criteria
while considering a real-life scenario. Assume hypothetical values for Eigen value computations.

*****END OF QUESTION PAPER*****