Graduate School of Business

University/Academy: Arab Academy for Science & Technology and Maritime Transport
College: Graduate School of Business
Program: MBA in Business Administration
Course: Operations Management
Group: Alex .D.E. midterm exam
Lecturer: Dr. Abdulfatah Salem
Final exam Time: 4 hrs Feb 4, 2022

Question 1 (answer T/F) , justify your answers

1) The Finished products considered as inventory
2) The cost of inspection is a carrying cost
3) The inventory Periodic counting System helps to order best quality
4) Many small retailers use the Periodic counting system in Inventory
5) Operations Research is a synonymous term of the Management strategy
6) In the Economic Production Quantity model we take into consideration the quantity discount
7) Economic Production Quantity model valid only for one product
8) Quantity Discount model take into consideration the Production cost
9) In the reactive strategy we alter demand to match capacity
10) The conventional approach take into considerations the new environment of the problem
11) The linear model requires to write the objective and constraints in terms of the decision variables
12) In the linear model all the constraints must be equations
13) Economic Order Quantity model assume constant ordering cost
14) The optimal solution is the value of the variable x y which satisfy the feasible area and the
objective function
15) Using production low order quantity leads to increasing in inventory carrying cost
16) Cost of inspecting goods upon arrival is considered as carrying cost
17) In inventory the lead time is the time between issuing the order and receiving the goods
18) The graphical solution is valid to solve only the problems with 1 variable.
19) In the proactive strategy we use the part to match capacity
20) Proactive and Reactive aggregate planning strategies are best associated with:
(a) Input and Output
(b) Make and Buy
(c) Quantitative and Qualitative
(d) Exact and Approximate
(e) All of the above
(f) Non of the above

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 Graduate School of Business

Question 2
The Higher Technical Institute located at Upper Egypt uses 2,304 colored pencils per month, and work
200 teaching days per year. The cost of ordering and receiving one lot is 36 Egyptian pounds, and it
costs 6 Egyptian pounds to carry one colored pencils annually.
I. Calculate the total annual inventory cost
II. Calculate the length of the order.
III. Calculate the effect on the total annual cost as a result of the following:
a. Increased order cost by 2 Egyptian pounds
b. Reducing the annual holding cost of a colored pencil by 1.5 Egyptian pounds
c. increasing the Annual usage by 1,000 colored pencils.

Question 3
A nutritionist advises an individual who is suffering from iron and vitamin B deficiency to take at
least 2400 milligrams (mg) of iron, 2100 mg of vitamin B1, and 1500 mg of vitamin B2 over a period of
time.
• Two vitamin pills are suitable, brand-A and brand-B.
• Each brand-A pill costs 6 cents and contains 40 mg of iron, 10 mg of vitamin B1, and 5 mg of
vitamin B2.
• Each brand-B pill costs 8 cents and contains 10 mg of iron and 15 mg each of vitamins B1 and B2.
Use the graphical method of solving LP model to determine the combination of pills should the individual
purchase in order to meet the minimum iron and vitamin requirements at the lowest cost?

Question 4
Belhana Restaurant Company operates a chain of branches at Alexandria and they like to
start a new branch at north coast. The demand will be low, medium, or high; with probabilities are 0.2,
0.3 and 0.5, respectively.
If they start a small branch that sells only take away sandwiches, the associated net payoffs are
EGP 25,000; 30,000; and 80,000 for low, medium, and high demand. If the company chooses an
expanded facility that offers take away sandwiches and fast foods, it must build a new building and rent
additional area. The net payoffs for an expanded facility are EGP (80,000), (27,000), and 48,000.
Required:
 Draw a decision tree for this case
 What should the company do to maximize the net payoff?

with my best wishes

Dr. Abdulfatah Salem