Bachelors in Business Administration and Finance and Accounting

Subject: Optimization and Simulation for Business

Year 2013/2014
May 23rd 2014 – Final Exam

1. (5 points) A shipping port makes use of three different systems to load four types of products:
perishable, chemical, mineral, and manufactured. During the current month, the port requires to
load a minimum of 1.800 tons of perishable, 1.500 tons of chemical, 2.000 tons of mineral, and 1.300
tons of manufactured products. The following table shows the number of tons per hour that each
system is able to handle, as well as the availability per hour of operations and the operating costs
of each system.

Loading Efficiency (t/h) Availability Cost

System Perishable Chemical Mineral Manufactured (hours) (e/h)
1 50 100 50 20 50 30.05
2 20 - 20 20 50 18.30
3 20 50 50 20 100 36.06

Notice that loading system 2 cannot load chemical products.

a) (1.5 points) Write down a model which allows programming the loading needs at a minimum
cost.
b) (1 point) Solve using Excel the model in 1a.
c) (1 point) Assume that the port manager is studying how to improve the efficiency of the loading
system. In order to do that, there is a plan to increase by 200 tons the minimum loading amount
for only one of the products. Determine which product involves the higher costs and, therefore,
is the most unadvisable to impose this minimum amount condition.
d ) (1.5 points) Assume now that it is possible (if convenient) to increase the number of available
hours of one (and only one) of the three loading systems. The cost is e12 per hour up to a
maximum of 15 additional hours. Write down and solve the modified problem.

2. (5 points) You are studying different options to provide maintenance for some complex equipment
in your company. The number of units to maintain is equal to 4. Currently, if a unit fails then
the manufacturer is called to fix it. This company charges a price related to the seriousness of the
breakdown.
From your historical information, you are willing to assume that each unit has a probability of failing
and needing a repair equal to 0.5 in one year. We assume (to simplify the problem) that at most one
failure per unit may happen in a year. In the case of having any failure, the repair cost per failure is
assumed to follow a normal distribution with mean e12000 and standard deviation equal to e3000.
You have received an offer from a maintenance company. They are prepared to take care of any
breakdowns in your units up to a maximum of 2 failures per year, for a fixed fee of e18000 per year
(this fee would be paid even if there are no failures during the year). Any additional breakdowns
beyond two would be repaired at a fixed rate of e14000 per breakdown.
Answer the following questions using samples of size 50.

a) (2 points) Generate an Excel spreadsheet to estimate the expected cost of keeping your current
arrangements with the manufacturing company (that is, the cost without the maintenance
contract). Provide an absolute error estimate at a 95 % confidence level.
b) (2 points) Estimate the expected cost of the new maintenance arrangement. Provide a rela-
tive error estimate at a 99 % confidence level. Is it worth for the company to sign the new
maintenance contract?
c) (1 point) Compute the sample size that you would need to reduce both errors in the preceding
estimates below 1 %.