Sample Paper
This is a sample paper and students should;
by no means consider this as a representative sample.
not confine themselves only to this paper.
also expect reproduction of questions given in the text book or examples
discussed in class.
Linear Programming
1. Consider the following LP Model:
Max.: P = 12X1 + 15X2
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i.
ii.
iii.
iv.
v.
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s.t:
2. Solve the following LP model i.e. find the optimal values of the objective function and
decision variables.
---------------- 1
---------------- 2
---------------- 3
---------------- 4
---------------- 5
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i. Coefficient of y
iii. Left hand side
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Interpret:
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It is further given that the objective of the model is maximization and optimal values of X2
and X3 are zero. Determine optimal value of X1.
5. Thriftem Bank is in process of devising a loan policy that involves a maximum of $12 million.
The following table provides the pertinent data about available types of loans:
Type of Loan Interest rate Bad-debt ratio
Personal
0.140
0.10
Car
0.130
0.07
Home
0.120
0.03
Farm
0.125
0.05
Commercial
0.100
0.02
Bad-debts are unrecoverable and produce no interest.
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Competition with other financial institutions requires that the bank allocate at least 40% of
the funds to farm and commercial loans. To assist the housing industry in the region, home
loans must be equal to at least 50% of the personal, car and home loans. The bank also has
a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 4%.
[Source: Operations Research, 8th edition by Hamdy Taha.]
Model:
Variables:
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Constraints:
X1 + X2 + X3 + X4 + X5 12
X4 + X5 0.4(X1 + X2 + X3 + X4 + X5)
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X3 0.5(X1 + X2 + X3 + X4 + X5)
0.1X1 + 0.07X2 + 0.03X3 + 0.05X4 + 0.02X5 0.04(X1+X2+X3+X4+X5)
6. A federal agency has a budget of $1 billion in the form of grants for innovative research in
the area of energy alternatives. A management review team consisting of scientists and
economists has made a preliminary review of 200 applications, narrowing the field to 6
finalists. Each of the six finalists projects have been evaluated and scored in relation to
potential benefits expected over the next ten years. These estimated benefits are shown in
the table below. They represent the net benefits per dollar invested in each alternative.
Project
Solar-1
Solar-2
Synthetic fuels
Coal
Nuclear
Geothermal
Requested level of
funding ($ in million)
220
180
250
150
400
120
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Above table also shows the requested level of funding. These figures represent the
maximum amount, which can be awarded to any project. The agency can award any amount
up to the indicated maximum for a given project. Similarly, the president has mandated that
the nuclear project should be funded to al least 50% of the requested amount. The agencys
administrator has a strong interest in solar projects and has requested that the combined
amount awarded to the two projects should be at least $300 million.
Apart from above, following constraints should also be considered.
i.
ii. The amount awarded for the synthetic fuel project should be at least as much as that
awarded for the coal project.
iii. Combined funding for the geothermal project and synthetic project should be at least
$30 million.
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iv. Funding for the nuclear project should be at least 40% greater then the funding for the
geothermal project.
v. Funding for the Solar-2 should be no more than 80% of the funding for Solar-1.
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Model
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Constrains: X1 + X2 + X6 1000
X1 220 X6 120 [Six Constraints]
X5 0.5400
X1 + X2 300
X1 0.2(220) X6 0.2(120) [Six Constraints]
X3 X4
X3 + X6 30
X5 1.4X6
X2 0.8X1
[Nineteen Constraints]
3
7. The real estate company owns 800 acres of undeveloped land and the president of the
company is studying the possibility of developing a housing project on it. Apart from homes,
the project will also include the area for roads, utilities and recreation. He estimates that
15% of the acreage will be consumed in the roads and utilities.
Following Government Regulations are applicable in this region.
i.
Only single, double and triple-family homes can be constructed, with the single family
homes accounting for at least 50% of the total.
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ii. The lot size of 2, 3 and 4 acres are required for single, double and triple-family homes,
respectively.
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iii. Recreation area of one acre each must be to be established at the rate of one area per
200 families.
The availability of water for the project is limited to 200,000 gallon per day. The per unit
water consumption and net returns from the different housing units are as under:
Single
400
10,000
Double
Triple Recreation
600
840
450
15,000 20,000
-
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Model
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Variables:
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Reduced Cost
0
2.948
1.149
0
16.667
0
3.736
0
Dual Value Slack/Surplus
0.58
0
0.557
0
0
26.54
0.463
0
Original Val
7
9
15
13
Original Val
125
175
82
300
Lower Bound
- infinity
7.02
11.517
3.529
Lower Bound
59.029
170.918
55.46
223.529
Upper Bound
9.948
11.927
18.345
17.04
Upper Bound
151
212.242
Infinity
307.273
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Variable
X1
X2
X3
X4
Constraint
Constraint 1
Constraint 2
Constraint 3
Constraint 4
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8.
ii.
iii.
Which resources and by how much should be increased in order to improve the
optimal solution.
iv.
Which resources and by how much should be decreased without causing a change in
optimal solution.
v.
vi.
Determine effects on profit due to increase/decrease of the resources as per part iii and
iv above.
vii.
Determine the range of coefficients of objective function within which optimal solution
does not change.
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i.
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Which resources and by how much should be increased in order to improve the
optimal solution.
ii.
Which resources and by how much should be decreased without causing a change
in optimal solution.
iii.
iv.
v.
vi.
vii.
viii. Company may like to increase one resource at a time; develop a priority list for
decision making.
Variable
X1
X2
X3
Constraint
Constraint 1
Constraint 2
Constraint 3
Constraint 4
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Solution
R1
R2
R3
76.923
26.923
100.000
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i.
Quantity
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Resources
Resources
R4
Quantity
97.982
iii.
Resource - 1
0.218
Resource - 2
0.414
Resource - 3
0.347
Resource 4
0
iv.
Resource - 1
39.661
Resource - 2
75.319
Resource - 3
63.130
Resource 4
0.000
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ii.
v.
-1.368
vii.
X1
9.907 < Cx1 < 18.974
viii.
First
R2
vi.
-3.421
Second
R3
X3
8.089 < Cx3 < 21.6
X2
9.7 < Cx2 < 14.815
Third
R1
Fourth
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Markov Analysis
1. A business school is running a four-year degree program. Students enrolled in
the program are classified as freshman (first year), sophomore (second year),
junior (third year) and senior (forth year).
An analysis of the historical data reveals the following results:
Graduate rate: 90% of senior will graduate
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Sophomore:
Junior:
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Freshman:
Currently, the school has 600 freshmen, 520 sophomore, 460 juniors and
420 seniors.
Construct transition matrix.
Sophomore
0.65
0.10
0.00
0.00
0.00
0.00
Junior
0.00
0.75
0.05
0.00
0.00
0.00
Senior
0.00
0.00
0.85
0.05
0.00
0.00
Dropouts
0.20
0.15
0.10
0.05
1.00
0.00
Graduate
0.00
0.00
0.00
0.90
0.00
1.00
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Freshman
Sophomore
Junior
Senior
Dropouts
Graduate
Freshman
0.15
0.00
0.00
0.00
0.00
0.00
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Solution