Final Exam Trial Set 1

Question 1 (20 marks)

A company has factories at F1, F2 and F3 which supply to warehouses at W1, W2 and W3.
Weekly factory capacities, weekly warehouse requirement and unit shipping costs (in RM) are
as follows:

Factory Supply Warehouses Requirement

F1 200 W1 180
F2 160 W2 120
F3 90 W3 150

W1 W2 W3

F1 16 20 12

F2 14 8 18

F3 26 24 16

(a) What is the objective function for this problem?

(3 markah/marks)
(b) What are the constraints for the supply and requirement?
(6 markah/marks)
(c) Find initial basic feasible solution for given problem by using North-West corner method
(5 markah/marks)
(d) Final optimal solution using stepping stone or MODI
(6 markah/marks)

Question 2 (20 marks)

a) A group of friends are planning a recreational outing and have constructed the following
payoff table to help them decide which activity to engage in. Assume that the payoffs represent
their level of enjoyment for each activity under the various weather conditions. Suppose that
the probability of cold, warm and rainy are equal.
 Weather

Cold Warm Rainy

S1 S2 S3

Bike: A1 10 8 6
Hike: A2 14 15 2
Fish: A3 7 8 9

i. Compute the expected value for each decision and select on the best one.
(2 markah/marks)
ii. Construct an opportunity loss table.
(2 markah/marks)

iii. Determine Expected Opportunity Loss (EOL) and the best decision.
(2 markah/marks)

iv. What is the expected value of perfect information?

(2 markah/marks)

b) The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary
workers. He estimates that net revenues (in thousands) will vary with how well taxpayers
comply with the new tax code. However, the probabilities of having low, medium and high
compliance are unknown. Determine the best decision using the following criteria:

i. Maximax
(2 markah/marks)
ii. Maximin
(2 markah/marks)
iii. Equal likelihood
(2 markah/marks)
iv. Hurwicz with coefficient of optimism 0.6
(2 markah/marks)

v. Develop an opportunity loss table.

(2 markah/marks)

vi. Develop an appropriate decision table to determine the best decision.

(2 markah/marks)

Question 3 (20 marks)

a) Briefly explain the definition of the following terms in the contexts of Waiting Line Model:
i. Arrival rate
ii. Service rate
(4 markah/marks)

b) A single-bay car wash with a Poisson arrival rate and an exponential service time has cars
arriving an average of 4 in one hour. It takes approximately 9 minutes to wash a car.
i. Determine the probability of no car in the queuing system.
(2 markah/marks)
ii. Determine average number of cars in the queuing system.
(2 markah/marks)
iii. Determine average number of cars in the waiting line.
(2 markah/marks)
iv. Determine average time a car spends waiting in line.
(2 markah/marks)
v. Determine the utilization rate of the washing bay
(2 markah/marks)
vi. The manager is considering adding another two washing bay. Would this have a significant
impact on waiting time in line?
 (6 markah/marks)

Question 4 (20 marks)

A newsboy sells newspapers and his goal is to maximize profit. He kept a record of his sales
for 125 days with the following result:

Newspapers sales Number of

per day days Probability
15 10 0.08
16 20 0.16
17 42 0.336
18 31 0.248
19 12 0.096
20 10 0.08
Total 125

A newspaper costs the carrier RM 0.50 and he sells it for RM1.00. Unsold papers are sold the
next day for RM 0.80. However, the revenue from the unsold units is included in the revenue
of its selling day for accounting purposes.

a) Simulate trials for 10 days using random number from the 7th column of table in textbook.
(15 markah/marks)
b) What is the average number of sales per day over the 10 days period?
(2 markah/marks)
c) What is the potential profit?
(3 markah/marks)

Question 5 (20 marks)

Sally has been running the following number of ads in the local newspaper to help attract
customers into her store. She has also been keeping track of customers who have come into
the store as a result of the ads, as well as the amount of money they spend.
This is the data from the last 4 weeks:

a) Sally believes that number of ads will increase the sales. Develop a simple regression
equation for this data.
(12 markah/marks)
b) If Sally runs 15 ads, how much will sales increase?
(3 markah/marks)
c) Compute the coefficient of determination for this problem, and explain its meaning as it
relates to this problem.
(5 markah/marks)

END OF QUESTIONS