2. Three months ago, the executive board of a company authorized the development of a new product. If marketed at its current stage of development, the product has probabilities of 0.50 of returning a large pay-o\ufb00 (Rs. 2, 00,000), 0.30 for a medium (Rs. 1, 00,000) pay-o\ufb00, and 0.20 for a small (Rs. 20,000) pay-o\ufb00. These pay-o\ufb00s are net pro\ufb01t after expenses and \ufb01rst-stage development costs. The board believes that if an additional Rs. 30,000 is spent on second stage development, reducing each pay-o\ufb00 by Rs. 30,000, and the further development is successful, the probabilities of the large, medium and small pay-o\ufb00s will be changed to 0.80, 0.15 and 0.05 respectively. However, the \ufb01rst-stage probabilities will apply if further development is not successful. The board believes the probability, is 0.60 that second-stage development will be successful. By tee diagram analysis, determine whether the board should authorize further development or market the product as its current stage of development.
3. A company manufacturers two kinds of machines, each requiring a di\ufb00erent man- ufacturing technique. The deluxe machine requires 18 hours of labour, 9 hours of testing, and yields a pro\ufb01t of Rs. 400. The standard machine requires 3 hours of labour, 4 hours of testing, and yields a pro\ufb01t of rs. 200. There are 8 hours of labour and 600 hours of testing available each month. A marketing forecast has shown the monthly demand for the standard machine to be no more than 150. Management wants to know the number of each model to produce monthly that will maximize total pro\ufb01t. Formulate and solve this as a linear programming problem.
4. The Acme Company has four factories that ship products to \ufb01ve warehouses. The shipping costs, requirements, capacities, are shown in table. Find the initial solution using vogels approximation method. What is the total cost of the optimal solution?
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