INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Term: I (EPGP-04/EEPGM-11) Subject: Operations Research

Assignment Questions

Note: Develop Linear Programming models and solve the problems using Excel Solver. At least solve THREE problems and submit your LP models along with solver reports. For any clarification, please contact me through email. My email address: gtmani@iimk.ac.in

1) Sunshine Electronics Ltd: A product mix problem Sunshine assembles 3 types of PCBs (Printed Circuit Boards) used in personal computers such as mother boards, graphics cards memory cards. The company wants to determine how much each of these boards should be produced next month. The component parts are placed on the board by a computer controlled insertion machine called DynaAssembler. The assembled boards are connected to Test Rig to verify all the functioning of the boards. All the 3 types of boards must be processed and tested. The time required for these two processes for each of the product are given below. Table 1: Production Processing Time Production Mother board Equipment (minutes per board) DynaAssembler 5 Test Rig 600

Graphics Card (minutes per board) 3 720

Memory Card (minutes per board) 4 560

To assemble these 3 products next month, there are 65 hours of DynaAssembler time and 4800 hours of Test Rig time are available. It is not necessary to use all the available time but it should not exceed the available hours. As per accounting department, the direct production cost of using DynaAssembler is Rs. 360 per hour and for Test Rig is Rs. 12 per hour (no matter what product is being produced in these machines).The material cost and revenue of each these products are given below.

Table 2: Revenues and Material Costs Mother board (Rs. Per board) Revenue 750 Material Cost 250

Graphics Card (Rs. Memory Card per board) per board) 650 600 210 200

(Rs.

Sunshine faces tremendous demand for its products and is confident that it can sell everything it produces at the prices that are given. However at least 20 graphics cards be produced in the next planning period (next month). The marketing department wants to ensure that Sunshine should produce at least one memory expansion card be produced for every 20 mother boards that are produced next month. Determine production plan that determine how many mother boards, graphics cards, memory cards to produce next month.

2) Kings Trust Corporation: Portfolio Selection Problem: Kings Trust Corporation has about ` 10 million available for investing. It has examined a number of investment opportunities and has identified 5 alternatives for investment. The relevant characteristics of each these investments are given below. Investment Opportunities Annual Rate of Risk Score Return (%) 5% 2.5 8% 1.8 10% 0 12% 1.5 16% 2.8 Growth Potential (%) 15% 8% 0 0 20%

Premium Stocks Mutual Funds Bank Deposit Corporate Bonds Real Estate

The corporation has specified certain conditions on their investment options. Invest up to 10 million No more than 30% into any one investment At least 45% into Premium stocks and Mutual Funds Limit overall risk to no more than 2.0 The average growth potential must be at least 12% What portfolio do you recommend for Kings Trust Corporation?

3) Country Vista Club: Media Selection Problem Country Vista Club is a private club based in India and having head office in Bangalore. They offer variety of recreational sports facilities to its members. The activities may include golf, tennis, swimming and holiday resorts etc. The company wants to increase its membership base through advertisements. 2

It has a monthly advertisement budget of Rs. 5 lakhs. The customers shall be reached through their advertisements in TV, Newspaper, Radio and Sending Bulk SMS to 50000 mobile phones. The new members that the club could get per media advertisement are given below. TV - 6000 Newspaper 4500 Radio 2400 Bulk SMS 1200 The club has provided some restrictions on the maximum number of ads per month for each of the media is given below. TV - 6 Newspaper 10 Radio 40 Bulk SMS 70 30 seconds advertisement on TV will cost Rs. 50000, Half page advertisement in a local paper will cost Rs. 25000, one 20 seconds slot in Radio will cost Rs. 15000 and one time bulk SMS will cost Rs. 10000. The club has decided to have balanced approach in advertisement and hence provided some additional restrictions. At least 10% advertisements should come in TV. Not more than 40% in Radio Not exceeding 50% in bulk SMS What is the optimal allocation of budget among the four media? What is the total new memberships possible?

4) Technik Engineering Company: Production-Inventory Problem: Technik Engineering Company produces a special purpose pump for chemical applications. The sales department received orders of 2200, 1800, 3200 and 2400 pumps for each of the next four months. The company can meet the demand both by producing pumps and using inventory as well. The production cost per pump for the next four months is Rs. 7300, Rs. 7200, Rs. 7000 and Rs. 6600. The changes in production cost every month are due to variations in their labour mix of using regular and contract employees. The production capacity can not exceed 3800 pumps in a month. The inventory holding cost is Rs. 150 per month per pump. The summarized data is shown below. 3

Month 1 2 3 4

Demand 2200 1800 3200 2400

Production per pump 7300 7200 7000 6600

Cost Inventory pump 150 150 150 150

Cost

per

The beginning inventory at the start of the first month is 1200 pumps. The inventory at the end of 4th month must be at least 1500 pumps to cover the future demand requirements. Formulate a production plan for Technik Engineering Company to minimize their total cost over the next four months.

..ooOoo..