JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY

BIT 2212: BUSINESS SYSTEMS MODELLING

DATE: AUGUST 2016 TIME 2 HOURS

INSTRUCTIONS: Answer question one (compulsory) any other two questions

QUESTION ONE (30 MARKS)

(a) Discuss three ways in which Operation research can be used in organizational management
(6 marks)
(b) Discuss the entire queuing system or process (10 marks)
(c) Discuss the differences between Program Evaluation Review Technique (PERT) and Critical
Path Method (CPM) (8 marks)
(d) Giapetto's makes wooden soldiers and trains. Each soldier sells for $27, uses $10 of raw
materials and takes $14 of labor & overhead costs. Each train sells for $21, uses $9 of raw
materials, and takes $10 of overhead costs. Each soldier needs 2 hours finishing and 1 hour
carpentry; each train needs 1 hour finishing and 1 hour carpentry. Raw materials are unlimited,
but only 100 hours of finishing and 80 hours of carpentry are available each week. Demand for
trains is unlimited; but at most 40 soldiers can be sold each week. How many of each toy should
be made each week to maximize profits? Set up a maximization problem (Do not solve).
(6 Marks)
QUESTION TWO (20 MARKS)

(a) Outline the three steps of calculating Modified Internal Rate of Return (MIRR)
(6 marks)
(b) Discuss the assumptions in linear programming problems (6 marks)
(c) Outline the algorithm of the spanning tree problem (4 marks)
(d) A specialty steel manufactures produces two types of steel g1 and g 2 .Type I requires 2
hours of melting,4 hours of rolling and 10 hours of cutting .Type 2 requires 5 hours of
melting ,1 hour of rolling and 5 hours of cutting .40 haves are available for melting,20 for
 rolling and 50 for cutting. The profit margin for Type I is 24; for Type 2 is 8. Determine the
output mix that will maximize the profits. Set up the LP and do not solve. (4 marks)

QUESTION THREE (20 MARKS)

(a) Discuss the merits and the demerits of the profitability index (10 marks)
(b) A number of cottages on an estate need to be connected together, to provide electricity.

Their distances, in meters, from each other are as shown on the map: find the minimum
spanning tree, and hence the minimum length of cable required. (10 marks)

QUESTION FOUR (20 MARKS)

(a)State and briefly discuss the four ways in which customer behavior is classified (8 marks)
(b) A Researcher, Kibet Kiprop is given the following list of activities and sequencing requirements
along with expected time for various activities related to the completion of his thesis ;

Activity List Pre-requisite Expected time

activity (week)
A Search of literature None 6
B Deciding the title None 5
C Committee selection B 2
D Formal proposal C 2
E University approval A,D 2
F Progress report D 1
G Formal research A,D 6
H Data collection E 5
I Analysis G,H 6
J Conclusions I 2
K Draft G 4
L Final copy J,K 3
M Oral examination L 1

(a) Draw a network diagram for the above information

(b) What is the minimum time to complete the thesis
(c) State the critical path pointing out the various bottle neck activities (12 marks)