Sheet 2

Northern Border University Course : Engineering Management
College of engineering Course No.: 1405 -203

Industrial Engineering Department Report #. 2
Year : 2020-2021,1st Term Dr. Yehya Mesalam
1. A small building contractor has recently experienced two successive years in

which work opportunity exceeded the firm’s capacity. The contractor must
now make a decision on capacity for next year. Estimated profits under each of
the two possible states of nature are as shown in the table below. Which
alternative should be selected if the decision criterion is:
a. Maximax.
b. Maximin
c. Laplace
d. Minimax regret (opportunity loss).
Next year’s demand(Profit in thousand $)
Alternative
Low High
Do nothing 100 160
40 90
Expand
60 120
Subcontract
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2. You must decide whether to buy new machinery to produce product X or to

modify existing machinery. You believe the probability of a prosperous economy
next year is 0.6 and of a recession is 0.4. Prepare a decision tree and use it to
recommend the best course of action. The applicable payoff table of profits (+)
and losses (–) is:
N 1 : Prosperity ($) N 2 : recession ($)
A 1 (Buy new) +950,000 -200,000
A 2 (Modify) +700,000 +300,000
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3. The following matrix gives the payoff of different strategies S1,S2, and S3
against different conditions N1,N2, N3, and N4.
Decision Alternatives State of Nature
N1 N2 N3 N4
S1 4,000 -100 6,000 18,000
S2 20,000 5,000 400 0
S3 20,000 15,000 -2,000 1,000
(a) Indicate the decision taken under the following approaches:
(i) Pessimistic
(ii) Optimistic
(iii) Regret
(iv) Equal probability.
(b) Explain briefly the principle involved in each approach.
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4. A toy manufacturer makes stuffed kittens and puppies which have relatively
lifelike motions. There are three different mechanisms which can be installed
in these "pets." These toys will sell for the same price regardless of the
mechanism installed, but each mechanism has its own variable cost and setup
cost. Profit, therefore, is dependent upon the choice of mechanism and upon
the level of demand. The manufacturer has in hand a forecast of demand that
suggests a 0.2 probability of light demand, a 0.45 probability of moderate
demand, and a probability of 0.35 of heavy demand. Payoffs for each
mechanism-demand combination appear in the table below.
Demand Wind-up action Pneumatic action Electronic action

Light $250,000 $90,000 -$100,000
Moderate 400,000 440,000 400,000
Heavy 650,000 740,000 780,000
(a) Construct the appropriate decision tree to analyze this problem. Use standard
symbols for the tree.
(b) Analyze the tree to select the optimal decision for the manufacturer.
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5. You are considering three investment alternatives for some spare cash: Old
Reliable Corporation stock (A 1 ), Fly-By-Nite Air Cargo Company stock (A 2 ),
and a federally insured savings certificate (A 3 ). You expect the economy will
either “boom” (N 1 ) or “bust” (N 2 ), and you estimate that a boom is more likely
(p 1 = 0.6) than a bust (p 2 = 0.4). Outcomes for the three alternatives are expected
to be (1) $2,000 in boom or $500 in bust for Old Reliable Corporation; (2) $6,000
in boom, but –$5,000 (loss) in bust for Fly-By-Nite; and (3) $1,200 for the
certificate in either case. Set up a payoff table (decision matrix) for this problem,
and show which alternative maximizes expected value.
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6. Following are the records of demand of an item for the past 300 days:
Demand in units Numbers of days
10,000 18
11,000 90
12,000 120
13,000 60
14,000 12
sum 300
(i) What is the expected demand?
(ii) It costs $15 to make an item which sells for $20 normally but at the end of
the day any surplus to be disposal of at $10 per item. What is the optimum
output?
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7. Your company has proposed to produce a component for an automobile plant, but
it will not have a decision from that plant for six months. You estimate the
possible future states and their probabilities as follows: Receive full contract (N1,
with probability p1 = 0.3); receive partial contract (N2 , p2 = 0.2); and lose award
(no contract) (N3 , p3 = 0.5). Any tooling you use on the contract must be ordered
now. If your alternatives and their outcomes (in thousands of dollars) are as shown
in the following table, what should be your decision?
N1 N2 N3
A 1 (Full tooling) 800 400 (400)
A 2 (Minimum tooling) 500 150 (100)
A 3 (No tooling (400) (100) 0
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8. The New England Bombers professional basketball team just missed making
the playoffs last season and believes it only needs to sign one very good free
agent to make the playoffs next season. The team is considering four players:
Jamelle Morris, Rayneal O’Neal, Marvin Jackson, and Michael Gordon. Each
player differs according to position, ability, and attractiveness to fans. The
payoffs (in $ millions) to the team for each player based on their contract,
profits from attendance, and team product sales for several different seasonal
outcomes are provided in the following table.
Season Outcome
Player
loser competitive playoffs
Morris $ -3.2 $ 1.3 $ 4.4
O'Neal -5.1 1.8 6.3
Jackson -2.7 0.7 5.8
Gordon -6.3 -1.6 9.6
Determine the best decision using the following decision criteria.
a. Maximax b. Maximin c. Hurwicz (_α = .25)
d. Equal likelihood
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9. The director of career advising at Grand Valley Community College wants to

use decision analysis to provide information to help students decide which two-
year degree program they should pursue. The director has set up the following
payoff table for six of the most popular and successful degree programs at
GVCC that shows the estimated five-year gross income ($) from each degree
for four future economic conditions:
Determine the best degree program in terms of projected income, using the following
decision criteria:
a. Maximax b. Maximin
c. Equal likelihood d. Hurwicz (_ α=0.35)
Page 9 of 21
10.You operate a small wooden toy company making two products: alphabet blocks
and wooden trucks. Your profit is $30 per box of blocks and $40 per box of
trucks. Producing a box of blocks requires one hour of woodworking and two
hours of painting; producing a box of trucks takes three hours of woodworking but
only one hour of painting. You employ three wood workers and two painters, each
working 40 hours per week. How many boxes of blocks and trucks should you
make each week to maximize profit? Solve graphically as a linear program.
Page 10 of 21
11.A commercial orchard grows, picks, and packs apples and pears. A peck (quarter
bushel) of apples takes four minutes to pick and five minutes to pack; a peck of
pears takes five minutes to pick and four minutes to pack. Only one picker and
one packer are available. How many pecks each of apples and pears should be
picked and packed every hour (60 minutes) if the profit is $3.00 per peck for
apples and $2.00 per peck for pears? Solve graphically as a linear program and
confirm analytically.
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12.A doctor tells a sick freshman to add bananas and oranges to his diet for Vitamin
A, Vitamin B, and Vitamin C. A pound of bananas contributes 8 grams of Vitamin
A, 6 grams of Vitamin B, and 2 grams of Vitamin C, while a pound of oranges
contributes 2 grams of Vitamin A and 6 grams of Vitamin B. A pound of bananas
costs $3.5 and a pound of oranges costs $5.4. The student has to meet a minimum
requirement of 23 grams of Vitamin A, 37 grams of Vitamin B, and 6 grams of
Vitamin C. He should avoid taking more than 50 grams of Vitamin A and 70
grams of Vitamin B to avoid side effects such as nausea. Formulate a linear
programming problem to help the poor freshman choose the ideal fruit mix for
recovery.
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13.A factory situated along the River Ganges discharges two types of pollutants from
its tanning and dyeing manufacturing processes into the river. To remove the
pollutants from its effluents, the factory installed “minimum discharge”
technology, which costs $25 and $10 to process a ton of tanning wastes and a ton
of dyeing wastes respectively. The technology removes 0.1 tons of pollutant 1
from a ton of tanning waste and removes 0.2 tons of it from a ton of dyeing waste.
In the case of pollutant 2, it removes 0.3 tons of dyeing waste and 0.08 tons of
tanning waste from every ton of each of the wastes processed. Since tanning
wastes are more harmful than dyeing wastes, the factory plans to process more
tanning wastes than dyeing wastes. The current policy is that the tons of tanning
waste processed is at least twice as much as the tons of dyeing waste processed.
The factory has to remove at least 25 tons of pollutant 1 and at least 35 tons of
pollutant 2. Formulate a linear programming problem to minimize cost.
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14.A furniture manufacturer makes wooden tables and chairs. The production process
involves two types of labor: carpentry and finishing. A table requires 2 hours of
carpentry and 1 hour of finishing, and a chair requires 3 hours of carpentry and 1/2
hour of finishing. The profit is $35 per table and $20 per chair. The manufacturer's
employees can supply a maximum of 108 hours of carpentry work and 20 hours of
finishing work per day. How many tables and chairs should be made each day to
maximize the profit?
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15.A small manufacturer employs 5 skilled men and 10 semi - skilled men and makes
an article in two qualities, a deluxe model and an ordinary model. The making of a
deluxe model requires 2 hours’ work by a skilled man and 2 hours’ work by a
semi - skilled man. The ordinary model requires 1 hour by a skilled man and 3
hours by a semi - skilled man. By work rules no man can work more than 8 hours
per day. The manufacturers clear profit of the deluxe model is $10 and of the
ordinary model $8. How many of each type should be made in order to maximize
his total daily profit.
Page 15 of 21
16.The Manager of an oil refinery has to decide on the optimal mix of two possible
blending processes of which the inputs and outputs per production run as follows:
Process Input Output

Crude A Crude B Gasoline X Gasoline Y
1 5 3 5 8
2 4 5 4 4
The maximum amount available crude A and B are 200 units and 150 units
respectively. The market requirement shows that at least 100 units of gasoline X and
80 units of gasoline Y must be produced. The profit per production run from process
1and process 2 are 3$ and 4$ respectively. Formulate the problem as linear
programming problem.
Page 16 of 21
17.Solve the following linear programming model graphically:

Maximize Z = 4x 1 + 5x 2
Subject to
x 1 + 2x 2 ≤ 10
6x 1 + 6x 2 ≤ 36
x1≤4
x1,x2≥0
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Subject to
3x 1 + 2x 2 ≤ 18
x1+ x2≥5
x1≤4
x1,x2≥0
Page 18 of 21

Subject to
3x 1 + 5x 2 ≤ 50
2x 1 + 4x 2 ≤ 40
x1≤8
x 2 ≤ 10
x1,x2≥0
Page 19 of 21

Maximize Z = 6.5x 1 + 10x 2
Subject to
2x 1 + 4x 2 ≤ 40
x 1 + x 2 ≤ 15
x1≥8
x1,x2≥0
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Minimize Z = 8x 1 + 6x 2
Subject to
4x 1 + 2x 2 ≥ 20
-6x 1 + 4x 2 ≤ 12
x1+ x2≥6
x1,x2≥0
Page 21 of 21

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Northern Border University Course : Engineering Management

College of engineering Course No.: 1405 -203

1. A small building contractor has recently experienced two successive years in

2. You must decide whether to buy new machinery to produce product X or to

Demand Wind-up action Pneumatic action Electronic action

9. The director of career advising at Grand Valley Community College wants to

Process Input Output

17.Solve the following linear programming model graphically:

18.Solve the following linear programming model graphically:

19.Solve the following linear programming model graphically:

20.Solve the following linear programming model graphically:

21.Solve the following linear programming model graphically:

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