INDIAN INSTITUTE OF MANAGEMENT SIRMAUR

End Term Examination

Exam Duration: 1 hour 15 mins Total Marks: 30
Name of the Programme : MBA
Batch : 2022
Name of the Course : QAM 2
Term : Term 2
Name of the Course Faculty : Amit Sachan
Open/Closed Book : Open

Instructions:
Write correct answers of Question 1 in google form
Answer Question 2 & 3 in the answer sheet.

Question 1: The ABC department of a large company makes three products (A, B and C). the
department is preparing its final run for production next week. The manager wants to use up
existing stocks of the three raw materials used to fabricate products A, B and C. the LP
model is developed and solved using MS Excel Solver. Answer and Senstivity reports are
given below. [Marks 10*1 =
10]
Decision variables A, B and C are the quantity of product A, B and C Respectively.
There are three constraints Material 1, 2 and 3
Answer following questions based on answer and sensitivity report in google form only
Google Form Link: https://forms.gle/TjMVfTXomfLEyq3t5
A. What is optimal value of Z
B. What is optimal value of A
C. What should be coefficient of B so that B takes value in final answer.
D. Which material constraint is Not binding (write 1,2 or 3 in google form)
E. What is slack of material 3 constraint
F. If coefficient of A in objective function is 13 instead of 12 what will be new value of
Z.
G. If RHS of material 1 constraint is 820 what will be new value of Z.
H. If RHS of material 1 constraint is 620 what will be new value of Z.
I. If RHS of material 3 constraint is 650 what will be new value of Z.
J. If RHS of material 3 constraint is 630 what will be new value of Z.

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Answer Report
Objective Cell (Max)
Cell Name Original Value Final Value
$G$7 41 2016

Variable Cells
Cell Name Original Value Final Value Integer
$D$7 A 1 112 Contin
$E$7 B 1 0 Contin
$F$7 C 1 48 Contin

Constraints
Cell Name Cell Value Formula Status Slack
$G$9 Material 1 720 $G$9<=$I$9 Binding 0
$G$10 Material 2 368 $G$10<=$I$10 Not Binding 232
$G$11 Material 3 640 $G$11<=$I$11 Binding 0

Sensitivity Report
Variable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$D$7 A 112 0 12 2 2.285714286
$E$7 B 0 -3.2 15 3.2 1E+30
$F$7 C 48 0 14 18 2

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$9 Material 1 720 0.4 720 560 240
$G$10 Material 2 368 0 600 1E+30 232
$G$11 Material 3 640 2.7 640 320 280

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Question 2: The owner of a cab company wants to determine location for cab waiting points.
He has gathered following information.

Location Can serve areas Cost per day (Rs)

1 A, E 400
2 A, C, D 500
3 B, C, E 450
4 B, D 440
5 D, E 430

The owner wants to be sure that all areas can be served, yet he wants this as little cost as
possible. [Marks 7+3]
1. Formulate this as Linear programing problem.
2. Determine the choice of location that will accomplish these goals.

Question 3: A group of investors are contemplating opening a number of restaurants in a

large metropolitan. Some will offer full service and some takeout service only. The group has
identified five potential locations for takeout restaurant, of which it will select at least three.
And it has identified 6 potential locations for full-service restaurant, of which it will select at
least two. Operating cost per month will be Rs 15,000 per month for takeout restaurant and
Rs 25,000 per month for the full-service restaurant. The group has monthly budget of Rs
195,000 for operating Cost. Estimated profits are 5,000 per month for takeout service and Rs
7,000 per month for full-service restaurant. The group needs to know how many of each type
restaurant to select and the profit that will be generated.
[Marks 5+3+2]
1. Formulate a model for this problem
2. Solve for the optimal solution.
3. How much of the operating budget will be unused?

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