Department of Industrial and Systems Engineering

Examination
July 2020

Module code and subject name: BON 410 – Operations Research

Duration: 150 Minutes Date: 7 July 2020 Time: 8h00

External Examiner : Dr Pravesh Debba (CSIR)

Internal Examiner: Professor VSS Yadavalli (University of Pretoria)
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 Answer ALL THE questions.

 Please note that all questions do not carry the same marks.
 Intermediate steps are necessary and you will receive the marks for intermediate steps
 Section A will be assessed based on Graduate Attributes (GA) [GA 1: Problem
solving at Development Level; GA 2: Applied and Scientific knowledge at exit level)
 Questions in both sections will be given in a randomised order. When Section A is
completed, you will start questions in Section B. You cannot submit Section A
solutions once the time is over for Section A. We already included 15 minutes extra
time in Section A. Similarly we already included 20 minutes extra time in Section B.
There will be no additional time given after these extra times.
 The marks for each question are given in parentheses.

Marks: 85

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 Section A (1 hour)
Question 1 [ 14 ] (This problem to answer should take approximately 25 minutes)

Suppose that a new product was introduced into the market by three companies at the same
time. When they were introduced, each company had an equal share in the market, but during
the first year the following changes took place:
(i) Company A retained 85% of its customers, and lost 5% to B
(ii) Company B retained 70% of its customers, and lost 10% to A
(iii) Company C retained 80% of its customers, and lost 10% to A
Assuming that no changes in the buying habits of the customer occur,
(i) What are the market shares of the three companies at the end of second year? (6)
(ii) What are the long-run market shares of the three companies? (5)
(iii) If I choose company A now, how many years will it take before I go company B? (3)

Question 2 [ 6 ] (This problem to answer should take approximately 10 minutes)

Cars arrive at a petrol pump with exponential inter arrival times having mean 5 minutes. The
attendant takes an average of 3 minutes per car to supply petrol, the service times being
exponentially distributed. Determine the
(i) average number of cars in the system (2)
(ii) average waiting time in the queue (2)
(iii) expected number of customers in the queue of a non-empty queue. (2)

Question 3 [ 8 ] ( This problem to answer should take approximately 15 minutes)

The annual demand for a component is 7200 units. The carrying cost is R500 per unit per year,
the ordering cost is R1500 per order and the shortage cost is R2000 per unit per year. Find the
optimal values of
(i) economic order quantity, (2)
(ii) maximum inventory (2)
(iii) maximum shortage quantity (1)
(iv) cycle time (1)
(v) inventory period and (1)
(vi) shortage period. (1)

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 Section B ( 2 hours)

Question 4 [ 8 ] ( This problem to answer should take approximately 15 minutes)

Find the optimal strategies for players A and B, and hence find the value of the game, for the
following payoff matrix. Player A is a maximising player.

Player B

I II III IV V

I 10 81 32 43 93

II 79 89 39 69 73
Player A
III 71 20 5 27 84

IV 34 34 44 44 69 (8)

Question 5 [ 9 ] ( This problem to answer should take approximately 15 minutes)

Suppose that during rainy season in Polokwane the length of the shower has an exponential
distribution, with parameter 2, time being measured in minutes.
(i) What is the probability that a shower will last more than three minutes? (Give the
answer up to four digits) (2)
(ii) If a shower has already lasted for 2 minutes, what is the probability that it will last for
at least one more minute? (Give the answer up to four digits) (2)
(iii) What is the probability that a shower will last at most 2.5 minutes? (Give the
answer up to four digits) (2)
(iv) Find the value of x, such that probability that a shower time will be at most x is given
to be 20%. (Give the answer up to four digits) (3)

Question 6 [ 19 ] (This problem to answer should take approximately 30 minutes)

(a) Annual demand for an item is 6000 units. Ordering cost is R600 per order. Inventory
carrying cost is 18% of the purchase price per unit per year. The price break-ups are as
shown below:
Quantity Price per unit (in Rands)

0 ≤ q1 < 2000 20
2000 ≤ q2 < 4000 15
4000 ≤ q3 9

Find the optimal order quantity. (11)

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 (b) The daily demand for Brown bread follows a discrete distribution as given in the
following table:

Serial No.: 1 2 3 4 5 6 7 8 9 10 11
Demand: 25 26 27 28 29 30 31 32 33 34 35
Probability: 0.20 0.11 0.10 0.09 0.08 0.12 x 0.05 0.04 0.04 0.03

The purchase price of the Brown bread is R15 per packet. The selling price is R17 per
packet. If the bread packets are not sold within the day of purchase, they are sold at
R12 per packet to hotels for secondary use. Find the value of x and the optimal order
quantity of the Brown bread. (8)

Question 7 [ 9 ] (This problem to answer will take approximately 15 minutes)

Below are given annual profits ( millions of Rands) in an industrial concern:

Year: 1997 1998 1999 2000 2001 2002 2003

Profit: 80 90 92 83 94 98 93

Fit a straight line trend and its trend values. If the present trend continues what is the
estimated profit in the year 2005? (9)

Question 8 [ 12 ] ( This problem to answer will take approximately 25 minutes)

Petroleum company ABC is considering expansion of its one unloading facility at its refinery.
Due to random variations in weather, loading delays and other factors, ships arriving at the
refinery to unload crude oil arrive at a rate of 5 ships per week. The service rate is 10 ships
per week. Assume arrivals follow a Poisson process and the service time is exponential.
(i) Find the average time a ship must wait before beginning to deliver its cargo to the
refinery (2)
(ii) If a second berth is rented, what will be the average number of ships waiting before
being unloaded? (5)
(iii) What would be the average time a ship would wait before being unloaded with two
berths? (2)
(iv) What is the average number of idle berths at any specified time? (3)