Department of Industrial and Systems Engineering

Examination
July 2021

Module code and subject name: BON 410 –Operations Research

Time : 08h00 to 11h00 Date: 13 July 2021

Duration: 180 Minutes

Lecturer and Examiner: Professor VSS Yadavalli (University of Pretoria)

External Examiner : Dr Pravesh Debba ( CSIR)

• Answer ALL the questions.

• Please note that all questions do not carry the same marks.
• This paper has 5 pages, and, 9 questions.
• Intermediate steps are necessary. You may receive marks for the
method used, not for the correct answer only.
• There are Graduate Attributes (GA) from ECSA evaluated for the
Section A
• You must submit the solutions for this examination only via clickUP.
Email, whatsapp or any other ways of submissions are strictly not
accepted.
• No programmable calculator can be used.
• There will be an additional time of 15 minutes given for the student to
submit via clickUP. Any submissions after these 15 minutes will be
strictly not accepted

Marks: 100

1
Section A

Question 1 [ 9 ]

People arrive at a theatre ticket booth in a Poisson fashion with the arrival rate 20 per hour.
Service time is a constant at the rate of 2 minutes. Calculate (i) the mean number of
customers in the system (ii) the mean waiting time in the queue (iii) expected number of
customers in the queue given that there are more than one customers in the waiting line.
Question 2 [ 8 ]
A man leaves his house at the same time every morning and the time taken to journey to
work has following probability density function: less than 30 minutes, zero, between 30
minutes and 60 minutes, uniform with density k; between 60 minutes and 70 minutes,
uniform with density 2k; and more than 70 minutes, zero. Find the value of k, and the
cumulative distribution function. What is the conditional probability that the man will have
the journey for less than 55 minutes given that it is more than 35 minutes?

2
Question 3 [ 10 ]

A Markov {X0 , X1 , . . . } has state space Z = {1, 2, 3} and transition probability matrix

0.2 0.2 0.6

P = [0.4 0.4 0.2]
0.3 0.2 0.5

Assuming the initial distribution P [X0 =1] = 0.4, P [X0 =2] = 0.3, P [X0 =3] = 0.3, determine
P [X2 = 1] and P [X3 = 3, X2 = 2]. Determine P [X2 =2, X1 =3│X0 =1]. Find the mean first
passage time from state 3 to state 1.

Question 4 [ 12 ]
The annual demand for a product is 5000 units. The cost of storage per unit per year is
10% the unit cost. The ordering cost is R1800 for each order. The unit cost depends upon
the amount ordered. The range of amount ordered and the unit cost price are as follows:
Range of amount ordered: 0 ≤ q1 < 1000 1000 ≤ q2 < 2000 2000 ≤ q3 < 3000 3000 ≤ q4
Unit cost: R250 R248 246 244

Find the optimum order quantity.

3
 Section B
Question 5 [ 10 ]
Assume that two firms are competing for market share for a particular product. Each firm
is considering what promotional strategy to employ for the coming period. Assume that
the following pay-off matrix describes the increase in market share of Firm A and the
decrease in market share for Firm B. Determine the optimum strategies for each firm and
the value of the game. Which firm should be winner in terms of market share?
Firm B
No Promotion Moderate Promotion Much promotion
No Promotion 3 -1 -3
Firm A Moderate Promotion -3 3 -1
Much Promotion -4 -3 3

Question 6 [ 18 ]
(i) A vegetable market sells the Tomatoes at the rate of R30 per kg., on the day of
their arrival. If the market fails to sell on the same day, it pays for storage at the
rate of R1.80 per kg., and the price fetched is R27 per kg., on the next day. Past
record shows that there is an unlimited demand for one-day old Tomatoes. The
problem is to ascertain how much Tomatoes (in kilograms) should be procured
every day so that the total expected cost is minimum. It has been found from the
past records that daily demand follows an exponential distribution with
probability density
f(x) = 0.02 e-0.02x ; x > 0
(ii) The demand for an item is deterministic and constant over time and it is equal to
6000 units per year. The unit cost if the item is R500 while the cost of placing
an order is R50. The inventory carrying cost is 20% of the cost of inventory per
annum and the cost of shortage is R10 per month. Find the optimal order quantity
when back-orders are permitted. How much additional cost will the company

4
 have to incur on inventory if the company does not permit back-orders? What
quantity of the product should the company allow to be back-ordered?

Question 7 [ 12 ]
Ships arrive at a port at the rate of one in every 4 hours with exponential distribution of
inter-arrival times. The time a ship occupies a berth for unloading has an exponential
distribution with an average of 10 hours. If the average queuing delay of ships waiting for
berths is to be kept below 14 hours, how many berths should be provided at the port?
Question 8 [ 11 ]
Fit a trend function ut = a + bt +ct2 for the following data describing the annual production
(‘000 tonnes) of an agricultural product in a country from the period 2011 – 2017:
Year: 2011 2012 2013 2014 2015 2016 2017
Annual Production: 804 879 961 1042 1137 1242 1357
Also find the trend values, and use this model fitted to predict the production for the years
2018 and 2019 [y is the total annual production and x is the number of years since 2010].

Question 9 [ 10 ]

Consider the following transition probability matrix for brand switching, where there are
three brands A, B and C.

0.75 0.15 0.10

[0.20 0.35 0.45]
0.35 0.20 0.45

The manufacturers of brand C are considering a marketing strategy to attract brand B

customers. It is estimated that this strategy will: (a) increase the customer’s switch from
B to C by 20%, (b) decrease the customer’s switch from C to B by 10%, and (c) decrease
the customer’s switch from A to C by 25%. Should the new strategy be used? Give the
reasons.

---END---

5
6
7