DEPARTMENT OF MATHEMATICAL & PHYSICAL SCIENCES

UNIT CODE: BMA3201 UNIT TITLE: OPERATIONS RESEARCH

DATE: MAY – AUGUST 2021 C.A.T. II JULY 2021

Instruction:
 Answer ALL the Questions
 All working must be clearly shown
 The CAT II MUST be submitted on or before 16TH JULY, 2021 at 9:00P.M.
 All students will be expected to do both CAT I & II

TOTAL MARKS FOR CAT II = 15 Marks

Question One
A company plans to consume 700 pieces annually of a particular component. Past records
indicate that its purchasing department spent $12,500 for placing 15,000 purchase orders. The
average inventory was valued at $50,000 and the total storage cost was $7,500, which included
wages, rent, taxes, insurance etc. related to store department. The company borrows capital at 10
per cent a year. If the cost of the component is Rs. 12 and lot size is 10, determine the;
a) Purchase price/year
b) Purchase expenses/year
c) Storage expenses/year
d) Capital cost /year
e) Total cost/year

Question Two
The R and D department is planning to bid on a large project for the development of a new
communication system for commercial planes. The accompanying table shows the activities,
times and sequences required.
Activity Immediate Predecessor Time (Weeks)
A - 3
B A 2
C A 4
D A 4
E B 6
F C, D 6
G D, F 2
H D 3
I E, G, H 3
Question Three
i. Explain important characteristics of situations to which linear programming method can
be successfully applied. Assume a suitable example
ii. A firm manufactures three products A, B, and C. Time to manufacture product A is twice
that for B and thrice that for C and if the entire labour is engaged in making product A,
1,600 units of this product can be produced. These products are to be produced in the
ratio 3:4:5. There is demand for at least 300, 250 and 200 units of products A, B and C
and the profit earned per unit is sh. 90, sh. 40 and sh. 30 respectively.
Table
Raw material Requirement per unit of product (kg) Total availability
A B C (kg)
P 6 5 2 5,000
Q 4 7 3 6,000

Formulate the problem as a linear programming problem.

Question Four
a)
Maximize Z = 5x1 + 8x2,
Subject to 3x1 + 5x2 = 18
5x1 + 3x2 = 14
x1, x2 ≥0

b) A company is considering the feasibility of changing suppliers for coupling hardware.

Presently, the company has an optimal purchasing policy with Ace Hardware at a
discount of 1%. Current yearly purchases are $81,000 and the Administrative Charges are
$125 per purchase and the carrying charges are 25% of the average inventory level.
Bids received from other suppliers are: Nutz Co. offers 5% discount if ordered twice a
year and Grabbers Co. offers 3% discount if ordered four times a year. Should the
company retain the present supplier or accept the proposed offers and, if so, which offer?