Quiz 2 – TPK / 2021

1. A gravel supplier company has plants in three locations and is currently working
on three major construction projects located at different sites. The shipping cost
per truckload of gravel , plant capacities , and project requirements are provided in
the following table:

To: Project A Project B Project C Plant Capacity

From :
Plant 1 $ 10 $4 $ 11 70
Plant 2 $ 12 $5 $8 50
Plant 3 $9 $7 $6 30
Project 40 50 60 !50
Requirement
How should the company arrange the transportation of gravel from their plants to
the projects to achieve the total minimum cost ? How much is this minimum
transportation cost ?

2. A management consultant in New Jersey , USA, wants to assign three (3) recently
hired fresh graduates, Jones, Smith, and Wilson to regional offices at Omaha,
Dallas, and Miami , with transportation cost as shown in the table below.
But the consultant also has an opening in New York and would send one of the three
fresh graduates to this city if it were more economical than a move to Omaha, Dallas
or Miami. It will cost $1,000 to relocate Jones to New York, $800 to relocate Smith to
New York, and $1,500 to move Wilson to New York.

To: Omaha Miami Dallas

Fresh graduates:
Jones $ 800 $ 1,100 $ 1,200
Smith $ 500 $ 1,600 $ 1,300
Wilson $ 500 $ 1,000 $ 2,300
What is the optimal assignment of personnel to these offices ?

3. A manufacturer of a product is trying to find the shortest route from the location
of their manufactur at city A to city F. They have some possible routes from A to F
as shown in the figure below :

300
250 B
200
100 D
BA 150 100 F
400 150
E
275
C
 Determine the shortest routes from A to F that this company can choose !

4. A real estate developer is planning to supply clean water to their 6 new clusters
( B, C, D , E , F, and G ) from their water treatment system at the location of A as
shown in the figure below:
D
700

300 distace : in feet

F
1000
A
100 C 500 200

Water Treatment System 600 800

1,100
E

400

B
900
G

The developer is not obliged to lay the water lines ( main pipes ) beside the roads, so that
they want to lay the total shortest lines ( pipes ) but all their new clusters will get clean water.
Determine the optimal solution to this problem and calculate the minimum length of the lines /
pipes !

5. PAM ( Perusahaan Air Minum ) at a small city flow drinking water from their water
treatment central at A to I as shown in the figure below. The capacity of each branch of
pipe is also shown in this figure ( in m 3 / second = cubic meter per second ). The manager
wants to know the capacity of their pipe network to flow the water from A to I.
4 D 7

8 B 3
G
6 10
A E I
Central of Water Treatment 14 5 5

8 12
C
6 4 H
F
Find the maximum flow of water from A to I !
6. Consider a small project that involves the following activities :
Immediate Duration
( days ) :
Activity : Predessesor Optimistic
Most Pessimistic
: likely
a - 5 6 7
b - 4 5 18
c a 4 15 20
d b, c 3 4 5
e a 16 17 18
a. Determine the expected value and variance of the completion time for each activity !
b. Find the critical path and calculate project duration !
c. Assuming that normal distribution applies, determine the probability that project
duration will take between 18 and 26 days to complete !

7. A company wants to open new gasoline station. Their problem is to decide how large
their station should be. The annual returns will depend on both size of thew station and
number marketing factors related to the oil industry and demand for gasoline. After a
careful analysis , they can develop following payoff table :

Size of Good Fair market Poor

Station market ( $ ) ($) market
($)
Small 50,000 20,000 -10,000
Medium 80,000 30,000 -20,000
Large 100,000 30,000 -40,000
Very Large 300,000 25,000 -160,000

a. What is the Maximax decision ?

b. What is the Maximin decision ?
c. What is the Minimax Regret decision ?
d. What is the Criterion of Realism ( Hurwicz ) decision , if α= 0.8 ?
e. What is the Criterion of Equal Likelihood ( Laplace ) decision ?

8. A financial advisor has recommended two possible mutual funds for investment: Fund A
and Fund B. The return that will be achieved by each of these depends on the economic
condition. A payoff table has been constructed to illustrate the situation :

Investment: Good Fair Economy ( Poor Economy

Economy ( $ ) $) ($)
Fund A 10,000 2,000 -5,000
Fund B 6,000 4,000 0
Probability 0.2 0.3 0.5
a. Draw the decision tree diagram to represent this situation !
b. Perform the calculation to determine which of the two muatual funds is better.
Which one should you choose to maximize the expected value ( EV ) ?
c. What is your decision based on the “ Expected Opportunity Loss “ ( EOL ) ?