YOM POST GRADUATE COLLEGE

MBA PROGRAM

Individual Assignment for the Course Quantitative Techniques for Management

Decisions (MBA 541)
Weight: 30%
Deadline for submission: 03/09/2021

Instruction: Go through the workout questions given below, read them carefully, and solve
them using appropriate mathematical techniques with all necessary steps involved.

1. A production planner in a soft drink plant is faced with the following problem. He has 2
bottling machines A and B. A is designed for 8-ounce bottles and B for 16-ounce bottles.
However, each can be used on both types with some loss of efficiency. The following data
is available:

Machines 8-Ounce bottles 16-Ounce bottles

A 100/minute 40/minute
B 60/minute 75/minute

Each machine can be run 8 hours per day, 5 days per week. Profit on a 8-ounce bottle is
25 cents and on a16-ounce bottle is 35 cents. Weekly production of the drink cannot exceed
300, 000 ounces and the market can absorb 25,000 8-ounce bottles and 7,000 16-ounce
bottles per week. The planner wishes to maximize his profit subject, of course, to all the
production and marketing restrictions. Formulate this as a linear programming problem to
find the product mix than can maximize the profit (4 points).

2. Domestic cows can be bought for $200 each but Hybrid cows cost $500 each. The domestic cows
produce 30 gallons of milk per week and the Hybrid ones produce 50 gallons of milk per week. A
gallon of milk can be sold for $3. A cow costs $100 per week to feed. If the financial constraint is
to spend $8000 for cows and the capacity constraint is that total number of cows to be bought cannot
exceed 20 cows. Formulate a linear programming model for this problem, and find the optimal
combination of domestic and hybrid cows that maximize the total profit earned using the graphic
Method (4 Points).

3. The doctor advises a patient visited him that the patient is weak in his health due to shortage of two
vitamins, i.e., vitamin A and vitamin D. He advises him to take at least 40 units of vitamin A and
50 units of Vitamin D every day. He also advises that these vitamins are available in two tonics X
and Y. Each unit of tonic X consists of two units of vitamin A and three units of vitamin D. Each

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 unit of tonic Y consists of four units of vitamin A and two units of vitamin D. Tonic X and Y are
available in the medical shop at a cost of Birr three per unit of X and Birr 2.50 per unit of Y. The
patient has to fulfill the need of vitamin by consuming X and Y at a minimum cost. (4 Points)
a. Formulate the primal linear programming model for the patient’s problem and solve the
problem using the simplex method
b. Indicate the range over which objective function coefficient of basic decision variables can
change without changing their optimal values.
c. Determine range over which the right hand side quantities of constraints can change without
affecting the shadow price of resources.
d. Formulate the dual model for the medical shop man’s problem, solve the problem using the
simplex method and write its economic interpretation.

4. Pearl Corporation has four manufacturing plants: A, B, C and D, each of which can produce any
one of four products PI, PII, PIII, and PIV. The net contribution from each plant-product assignment
is given below. Considering the data below, answer the questions that follow. [5 points]

Products
Plants PI PII PIII PIV
A 7 5 8 2
B 7 8 9 4
C 3 5 7 9
D 5 5 6 7

Required:

a. Obtain which product each plant should produce to maximize the profit.
b. Calculate the maximum profit to be earned.
c. If plant D is unable to operate (totally unavailable due to unexpected shutdown), what will
be the revised set of assignment.
5. Emnet EtFruit is a small private firm working on the marketing of several farm produces with red
palm fruit on top of its retail priorities. Even though it is required by many business customers
throughout the year, its demand is documented to be on its peak during the Ramadan fasting season.
Emnet Etfruit is contemplating to acquire the fruit from its loyal and dependable supplier, Dalol
Fruits Farming SC., operating in Afar region. Emnet Etfruit is well informed that the fruits must be
ordered three days in advance from its supplier in order to obtain the amount it requires. Although
Ramadan is fast-approaching sales are almost entirely eleventh-hour, impulse purchases. Advance
sales are so small that the firm has no way to estimate the probability of low (25 kg), medium (60
kg), or high (130 kg) demand for red palm fruits on the day of Ramadan. The firm buys the fruits
for $15/kg and sells them for $40/kg. Considering the information given above, do the following:
(5 points)

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 a. Construct a payoff table for the problem
b. Which decision is indicated by each of the following decision criteria?
 Maximax
 Maximin
 Minimax regret
 The Hurwicz criterion (assume α=0.6)
6. Jaguar Private Limited Company is engaged in the production of power transformers. Currently,
the management team of the company is trying to decide whether to release a new highly innovative
power transformer, or whether to continue testing it. Releasing the product immediately would
ensure good sales, as no other manufacturers had anything like it. However, this would be at an
estimated 10% risk of serious problems which would result in halving the revenue. Another six
months testing would reduce the chance of problems to 5%, but at an estimated 8% risk of a
comparable power transformer being introduced by the competition. The company decided to use
a Decision Tree to calculate the Expected monetary value. The sales (payoff values) associated with
each strategy-state of nature combination is provided in the following table (3 points)

Sales (in $)
Problems (sales-50%) No problems
Release now 50,000 100,000
Test more
Competition (sales-20%) 40,000 80,000
No competition 50,000 100,000
Required

a. Set up a decision tree for the company’s situation

b. What will be the optimal strategy the company should consider under the EMV approach?
c. How much expected monetary value would the company secure as a result of the chosen
(optimum) strategy?
7. Addis Ababa City Administration’s Development Authority is contemplating to undertake
several construction projects. Many of these projects involve construction of huge multi-
level flyovers and the organizations involved in the work do not have adequate prior
experience of constructing similar flyovers. Moreover, the process is riddled with
considerable uncertainty due to administrative and public interference. Consequently,
although estimation of activities is possible, estimation of the duration of the project is
difficult. The Table below gives the list of activities, and the three possible time estimates
for the activities. Use this information to analyse the problem of uncertainty by answering
the following questions (5 points):

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Activity Predecessor (s) Optimistic time Most likely time Pessimistic time
(months) (months) (months)
A --- 2 4 9
B --- 2 3 8
C B 4 7 14
D A 4 5 16
E B 5 7 12
F C,D 2 4 8
G C,D 6 8 14
H E,F 6 7 14
I G,H 2 3 9

a. Draw the network diagram of the project and identify alternative paths in the network.
b. Compute the expected duration of the project and identify the critical path.
c. What is the probability of completing the project by 36 months?
d. If the organization wants to ensure 80% probability of completion, what date should it set
for project completion?