Set A

VANCOUVER ISLAND UNIVERSITY

MBAA 544 Operations Management

Exam #
MIDTERM EXAMINATION – fall 2021
Time: 90 minutes

PLEASE READ THE FOLLOWING:

1. Save this file as “your last name _ first name _ MBAA544_F21W70_MIDTERM” and
after completing the exam please send it to me at: Anupam.das@viu.ca
2. This examination consists of 12 pages including this cover page. Please check to
ensure this paper is complete.
3. Keep your zoom video on during the exam.
4. Detailed work must be shown to receive credit. Show all work for non-multiple choice
questions on this exam paper in the space provided. No credit for answers only!
5. CLOSED BOOK EXAM; Non-graphing, non-programmable calculators permitted
(graphing calculators like the TI 83 etc are not permitted).

LAST NAME: Kumar FIRST NAME: Nitya

STUDENT NUMBER:657984530

Problem Maximum Possible Marks Awarded

Part 1 (MCQ) 15
2 58
3 17
Total 90

Problem 1 (Choose the best answer) (15 marks)

(All questions are1 mark each)

Please complete this part in the course website in VIU Learn > Assessment > quizzes > Mid
Term Exam (MCQ) Part 1 Section F21W70

(You must complete this part within first 30 minutes of the exam.)

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Problem 2 (60 marks)
Homemade fruit pie
A retired couple supplements their income by making fruit pies, which they sell to a local grocery
store. During the month of September, they produce apple and grape pies. The apple pies are sold
for $5.20 and the grape pies are sold for $4.50 to the grocer. The couple is able to sell all of the pies
they produce owing to their high quality. They use fresh ingredients. Flour and sugar are purchased
once each month. For the month of November, they have 1,200 cups of sugar and 2,500 cups of
flour. Each apple pie requires 2 cups of sugar and 3 cups of flour, and each grape pie requires 1.5
cups of sugar and 3 cups of flour. Each cup of sugar costs 20 cents and each cup of flour costs 10
cents. If the couple working together can make an apple pie in 4.5 minutes and a grape pie in 4
minutes. They plan to work no more than total 50 hours.

The couple is interested in maximizing profit and hired you to advise them about how many apple
pies and grape pies should be produced to obtain the largest possible profit. Please provide them
with a linear programming model in graphical form to accomplish their objective.

(a) Please complete the graph below and find the Optimal Solution (10 marks)
a. Label all the constraints (except non-neg) by name), ISO-Profit, and optimal solution.
b. Shade and identify the feasible region.
c. Label all the corner points of feasible region with a, b, c, d, ----

900 Homemade fruit pie

850
800
grape pie

750
700
650
600
550
500
450
400
350
300
250
200
150
100
50
0
0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850
Apple pie
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(b) If the couple requests you to develop the algebraic model, what equations you will provide
him?
Let X= number of apple pies to produce
Y= number of grape pies to produce

i. What would be the profit per unit of apple pie and grape pie? (2 marks)

Profit Calculation: = 240*4.5+480*3.9

= 1080+1872= $2952

Apple pie:

Grape pie:

ii. What would be the objective function? (2 marks)

Max. profit – 4.5x+3.9y

iii. What would be the constraints equations? (4 marks)

Sugar – 2x+1.5y<= 1200

Flour – 3x+3y<=2500

Time – 4.5x+4y<=3000 (in minutes)

Non-negativity – x,y>=0

iv. Identify number of apple pies and grape pies will be produced and the total profit
at the corner point a, b, c, d, - -? (4 marks)

A(0,0) – 4.5*0+3.9*0= $0
B(0,750)- 4.5*0+3.9*0= $2925
C(240,480)- 4.5*240+3.9*480= $2952
D(600,0)- 4.5*600+3.9*0= $2700
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(c) With respect to the primary decisions facing the couple, what recommendation would you
provide? (1 mark)

The couple must produce 240 apple pies and 480 grape pies to maximize their profits

(d) How much profit will the couple realize if they operate at the optimal solution? (1 mark)

Your Answer: $2952

(e) How much sugar, flour and labour hours they can use according to this solution? (9 marks)

i) Sugar for producing apple pies (1 mark)

Your Answer: 480 cups

ii) Sugar for producing grape pie (1 mark)

Your Answer: 720 cups

iii) Flour for producing apple pies (1 mark)

Your Answer: 720 cups

iv) Flour for producing grape pie (1 mark)

Your Answer: 1440 cups

v) Labour minutes for producing apple pie (1 mark)

Your Answer: 1080 minutes

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vi) Labour minutes for producing grape pie (1 mark)

Your Answer: 1920 minutes

vii) Which constraint(s) is/are binding and which is/are non-binding? (3 marks)
Binding – Sugar and Time
Non-Binding - Flour

(f) Determine the allowable increase and allowable decrease of the profit from apple pie. (4
marks)

(g) How much profit would increase if the couple could increase his labour hour by 1 extra
hour? (4 marks)
4.5x+4y=3060 ------- *4
2x+1.5y=1200 ------*9

 18x-16y=12240
 18x+13.5y=10800
Therefore, 2.5 y=1440 => y=576

Putting value of Y in equation above to solve X

2x=1200-864
Therefore, x= 168

New profit= 4.5*168+3.9*576= $3002.4

Old profit = $2952
Profit increase = $50.4 (New-old)
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Your Answer: $50.4

(h) Determine the allowable increase for the Labour hour constraint. (2 marks)

Your Answer:

(i) Determine the allowable decrease for the labour hour constraint? (2 marks)
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Your Answer:

(j) In an effort to increase profit, should the couple try and get more labour hours to produce
more apple pies and grape pies? Circle the correct response and explain. (2 marks)

Yes No Cannot tell

Explain: As labour hour or time is a binding constraint, any and/or every increase
in it will result in increased profits

(k) How much profit would increase if the couple could increase sugar by 1 extra unit? (3
marks)
4.5x+4y=3000 ------- *9
2x+1.5y=1201 ------*4

 18x+16y=12000
 18x+13.5y=10809
Therefore, 2.5 y=1191 => y= 476.4

Putting value of Y in equation above to solve X

2x=1201-714.6
Therefore, x= 243.2

New profit= 4.5*243.2+3.9*476.4= $2952.36

Old profit = $2952
Profit increase = $0.36 (New-old)
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Your Answer: $0.36

(l) Determine the allowable increase for the sugar constraint. (2 marks)

Your Answer:
(m) Determine the allowable decrease for the sugar constraint? (2 marks)
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Your Answer:

(n) In an effort to increase profit, should the couple try and get more sugar to produce more
apple pies and grape pies? Circle the correct response and explain. (2 marks)

Yes No Cannot tell

Explain: As with each increase in sugar the profit will increase by $0.36

(o) If the couple could add 5 extra hours (300minutes) of labour or 100 cups of sugar, which
option should he choose? How much will profit increase? (2 marks)

Current profit - $2952

Additional 5 hours = $3120
Additional 100 cups of sugar = $2988

Therefore, the couple should go for adding an additional 5 hours of labour

as the profit will increase by $168 (3120-2952)
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Problem 3 (18 marks)

Note: The story below is a similar version of the Manufacturing problem. The problem
complete with a correct Excel formulation and correct Sensitivity Report is given below.
Read this problem carefully to make sure that you fully understand this revised
problem.

Frandec Company manufactures and assembles material handling equipment used in

warehouses and distribution. One product, called a Liftmaster, is assembled from four
components: a frame, a motor, three supports and a metal strap. Frandec’s production
schedule calls for at least 5,000 Liftmasters to be made next month. Frandec purchases
the motors from an outside supplier, but Frandec can either Make (manufacture) the
frames, supports and straps or Buy (purchase) from an outside supplier. Manufacturing
and purchase costs per unit are as follows:

Component Manufacturing Cost Purchase Cost

Frame $50.00 $53.00
Support $12 $16.00
Strap $7 $9

Three departments are involved in the manufacture of these components. The time (in
minutes per unit) required to make each component in each department and the
available capacity (in hours) for the three departments are as follows:

Time
Department Production Time per unit (minutes)
Available
Frame Support Strap Hours
Cutting 3.6 1.75 0.9 400
Milling 2.6 1.9 0 350
Shaping 3.2 2.8 1.5 300

This problem was correctly formulated as a linear programming problem in Excel and
solved using Solver. The solved model with an optimal solution and Sensitivity Report
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are attached. Use these printouts to answer the questions on the following pages. You
may assume that Frandec will use this solution.

To receive full marks, be sure to include your units when answering the following
questions.

QUESTIONS ARE INDEPENDENT.

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(a) How many Liftmasters should be assembled next month? (1 mark)

Your Answer: 5000 units

(b) How many Frames will be manufactured next month? (1 mark)

Your Answer: 0 units

(c) What is the total manufacturing cost for the Liftmasters? (1 mark)

Your Answer: $77,142.86

(d) How many Liftmasters can be assembled using only parts that were purchased? (1
mark)

Your Answer: 2857 units

(e) Which manufacturing department(s) are limiting the manufacturing volume? (1 mark)

Your Answer: shaping

(f) Of all the Straps manufactured, how many will be attached to the frames that are
manufactured? (2 marks)
Your Answer:

(g) Suppose the manufacturing cost for Frames decreased by $3.00. Would this change
encourage Frandec to buy more Frames? Circle the best response and explain. (2
marks)

Yes No Cannot tell with information provided

Explain: As the allowable decrease for the farme is $5000, a $3 decrease will not
effect/change the optimal solution

(h) Suppose Frandec could get an additional 5 hours (300 minutes) of shaping Time at the
regular cost. What can you say about the effect this change will have on: (2 marks)

i. The Target Cell? As the shadow price for the milling department is -$1.4 and
allowable increase is 12947.37 mins.
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ii. Optimal solution. Explain

iii. Would change because the shaping constraint is binding

(i) Suppose the cost of the extra shaping Time in the question directly $1.00 above the
regular cost. What specific effect would this have on the value of the Target Cell? (2
marks)

Target will be reduced by -$4

(j) If the amount of Milling time reduced by 10 hours (600 minutes), would the optimal
solution change? Circle the correct response and explain. (2 marks)

Yes No Don’t know

Explain: as milling is non binding constraint

(k) Suppose Frandec can obtain extra 60 hours (3600 minutes) (or nothing) of shaping
time for $4000. Should they do this? Provide convincing evidence. (2 marks)

Yes