MBA-program

Worksheet - Quantitative analysis for management decision

Individual Assignment

1. JOY leather, a manufacturer of leather Products, makes three types of belts A, B and C
which are processed on three machines M1, M2 and M3. Belt A requires 2 hours on machine
(M1) and 3 hours on machine (M 2) and 2 hours on machine (M 3). Belt B requires 3 hours on
machine (M1), 2 hours on machine (M2) and 2 hours on machine (M3) and Belt C requires 5
hours on machine (M2) and 4 hours on machine (M3). There are 8 hours of time per day
available on machine M1, 10 hours of time per day available on machine M2 and 15 hours
of time per day available on machine M3. The profit gained from belt A is birr 3.00 per unit,
from Belt B is birr 5.00 per unit, from belt C is birr 4.00 per unit. What should be the daily
production of each type of belt so that the profit is maximum?
a) Formulate the problem as LPM
b) Solve the LPM using simplex algorithm.
c) Determine the range of feasibility, optimality and insignificance
d) Interpret the shadow prices

2. A manufacturing firm has discontinued production of a certain unprofitable product line.

This has created considerable excess production capacity. Management is considering to
devote this excess capacity to one or more of three products: product 1, 2 and 3. The
available capacity on the machines which might limit output is summarized in the
following table:
Machine Type Available Time
(in Machine- hours per Week)
Milling Machine 250
Lather 150
Grinder 50
The number of machine-hour required for each unit of the respective product is as follows
Machine Type Productivity in Machine-hours per Unit)
Product 1 Product 2 Product 3
Milling Machine 8 2 3
Lathe 4 3 0
Grinder 2 - 1

The profit per unit would be Birr 20, Birr 6, and Birr 8 respectively for product 1, 2 and 3. Find
how much of each product the firm should produce in order to maximize profit.

1|Page
 a) Formulate the problem as LPM
b) Solve the LPM using simplex algorithm.
c) Determine the range of feasibility, optimality and insignificance
d) Interpret the shadow prices
3. Determine an initial basic feasible solution to the following transportation problem by
using (a) the least cost method, and (b) Vogel’s approximation method. Based the initial
basic feasible solution that is relatively small conduct a modified distribution method to
determine the optimum solution to the problem.

Source Destinations Supply

D1 D2 D3 D4
S1 1 2 1 4 30
S2 3 3 2 1 50
S3 4 2 5 9 20
Demand 20 40 30 10

4. Determine an initial basic feasible solution to the following transportation problem by

using (a) NWCM, (b) LCM. And (c) VAM. (b) Based the NWCM solution, carryout a
stepping stone method of post optimality analysis to arrive at the optimum solution.

D1 D2 D3 D4 Supply
A 11 13 17 14 250
Source B 16 18 14 10 300
C 21 24 13 10 400
Demand 200 225 275 200

5. A farmer is attempting to decide which of three crops he should plant on his 100 acre farm.
The profit from each crop is strongly dependent on the rainfall during the growing season.
He has categorized the amount of the rainfall as substantial, moderate or light. He estimates
his profit for each crop as shown in the table below:

Rainfall Estimated Profit (Br)

Crop A Crop B Crop C
Substantial 7,000 2,500 4,000
Moderate 3,500 3,500 4,000
Light 1,000 4,000 3,000
6. Based on the weather in previous seasons and the current projection for the coming season,
he estimates the probability of substantial rainfall as 0.2, that of moderate rainfall as 0.3
and that of light rainfall as 0.5.

(a) From the available data, determine the optimal decision as to which crop to plant under
condition of uncertainty (use alpha = 60%)
(b) From the available data, determine the optimal decision as to which crop to plant under
condition of risk EMV and EOL

2|Page
 7. Six salesmen are to be allocated to six sales regions so that the cost of allocation of the job
will be minimum. Each salesman is cable of doing the job at different costs in each region.
The cost (in birr) matrix is given below.
Region Salesmen
I II III IV V VI
A 15 35 0 25 10 45
B 40 5 45 20 15 20
C 25 60 10 65 25 10
D 25 20 35 10 25 60
E 30 70 40 5 40 50
F 10 25 30 40 50 15

a. Find the allocation to give minimum cost. What is the minimum?

b. If the figures given in the above table represent the earning of each salesman at each
region, then find an allocation so that the earning will be maximum. Also workout this
maximum possible earning.
8. Consider the following transportation problem:
To:
From: Store 1 Store 2 Store 3 Supply

Warehouse A 12 20 15 50
Warehouse B 9 11 4 15
Warehouse C 20 14 8 50
Demand 25 50 45

a. Develop the initial feasible solution using the northwest corner method. Compute the
total cost for this solution.
b. Evaluate the solution using the stepping stone method? Is the solution is optimal?
Explain?
c. Evaluate the solution using the using the stepping stone method?
d. Develop the initial feasible solution using the least cost method as well as Vogel’s
approximation method. Compute the total cost for this solution? Evaluate your
solution by stepping stone method.

3|Page
 9. A project manager needs to assign three project coordinators (1, 2, and 3) to three different
project sites (A, B, and C) at different locations. The transportation cost for each of the
project coordinators to each of the three sites is given below as:

Project Sites:
Project Coordinators A B C
1 $11 $14 $6
2 8 10 11
3 9 12 7
Required:
a. Present the assignment problem in linear programming form stating the objective
function, supply constraints and demand constraints.
b. Optimize the problem using the Hungarian method.

4|Page