Lecture (8)

Quantitative Methods
Previous lecture assignment:
Example (1)
A company has three factories (A1, A2, and A3) and its production is
distributed to three markets (B1, B2, and B3). The following table shows
the supply and demand amounts and the cost of transporting the unit from
each factory to each market:
B1 B2 B3 Supply
A1 6 5 2 70
A2 8 4 1 85
A3 4 3 5 65
Demand 90 60 70 220
By using Least Cost Method to find the initial solution, answer the
following points:
1. Number of units in cell A1 B1 will be:
2. Number of units in cell A1 B2 will be:
3. Number of units in cell A1 B3 will be:
4. Number of units in cell A2 B1 will be:
5. Number of units in cell A2 B2 will be:
6. Number of units in cell A2 B3 will be:
7. Number of units in cell A3 B1 will be:
8. Number of units in cell A3 B2 will be:
9. Number of units in cell A3 B3 will be:
10.Transportation cost will be:
………………………………………………………………
By using the stepping stone method for testing the initial solution, answer
the following points:
11.The effect on cost in cell A1 B2 will be:
12.The effect on cost in cell A1 B3 will be:
13.The effect on cost in cell A2 B2 will be:
14.The effect on cost in cell A3 B3 will be:
15.The cell must be chosen will be:
16.Number of units in the chosen cell will be:
17.Amount of cost reduction after adjustment will be:
18.The new cost after adjustment will equal:

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 Solution
Least cost Method:

B1 B2 B3 Supply

A1 6 5 2 70
70 ---- ------
A2 8 4 1 Start 85
15 ---- 70
A3 4 3 5 65
5 60 -----
Demand 90 60 70 220
Transportation cost = 6×70 +8×15 +4×5 +3×60 +1×70 = 810
Testing the initial solution:
Empty cells Effect on cost Decision
A1B2 5-3+4-6=0 ----
A1B3 2-6+8-1=3 Reject
A2B2 4-8+4-3 =-3 Accept
A3B3 5-1+8-4=8 Reject
Selected cell: A2B2
The number will inserted in this cell = 15
4-8+4-3
15 60
Least number in negative
Cost reduction = 3×15=45
Cost after reduction = 810-45=765

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 Example (2)
- Northwest corner Method:
B1 B2 B3 Supply

A1 1 Start 2 5 60
60 -- --
A2 2 3 8 60
20 40 --
A3 7 6 5 80
30 50
Demand 80 70 50 200
Transportation cost = 1×60 +2×20 +3×40 +6×30 +5×50 = 650
Testing the initial solution:
Empty cells Effect on cost Decision
A1B2 2-1+2-3=0 ----
A1B3 5-1+2-3+6-5=4 Reject
A2B3 8-3+6-5 =6 Reject
A3B1 7-2+3-6=2 Reject
No negative effect on cost, then the previous table is considered as
an optimal table.

Selected cell: ----

Number of units in the chosen cell will be:--
Cost reduction : ---
Cost after reduction : 650
…………………..

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 - Least cost Method:
B1 B2 B3 Supply

A1 1 Start 2 5 60
60 -- --
A2 2 3 8 60
20 40 --
A3 7 6 5 80
30 50
Demand 80 70 50 200
Transportation cost = 1×60 +2×20 +3×40 +6×30 +5×50 = 650
Testing the initial solution:
Empty cells Effect on cost Decision
A1B2 2-1+2-3=0 ----
A1B3 5-1+2-3+6-5=4 Reject
A2B3 8-3+6-5 =6 Reject
A3B1 7-2+3-6=2 Reject
No negative effect on cost, then the previous table is considered as
an optimal table.

………………………..

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 Example (3)
- Northwest corner Method:
B1 B2 B3 Supply

A1 3 Start 4 6 150
100 50 --
A2 4 3 2 80
-- 50 30
A3 5 1 4 70
-- -- 70
Demand 100 100 100 300
Transportation cost = 3×100 +4×50 +3×50 +2×30 +4×70 = 990
Testing the initial solution:
Empty cells Effect on cost Decision
A1B3 6-4+3-2=3 Reject
A2B1 4-3+4-3=2 Reject
A3B1 5-3+4-3+2-4=1 Reject
A3B2 1-4+2-3= -4 Accept
Selected cell: A3B2
1-4+2-3
70 50
Number of units in the chosen cell will be: 50
Cost reduction = 50 units×4 = 200
Cost after reduction = 990-200=790

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 - Least cost Method:
B1 B2 B3 Supply

A1 3 4 6 150
100 30 20
A2 4 3 2 80
-- -- 80
A3 5 1 Start 4 70
-- 70 --
Demand 100 100 100 300

Transportation cost = 3×100 +4×30 +6×20 +2×80 +1×70 = 770

Testing the initial solution:
Empty cells Effect on cost Decision
A2B1 4-3+6-2=5 Reject
A2B2 3-2+6-4=3 Reject
A3B1 5-3+4-1=5 Reject
A3B3 4-1+4-6=1 Reject
No negative effect on cost, then the previous table is considered as
an optimal table.
………………………….

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 Games Theory assignment

Example(1):

( )
Solution
- Identify the least value for each row and the highest value for each
column
Player(B) Row Minimum
3 6 3
Player(A)
-2 -3 -3
Column Maximum 3 6

- Pure strategy game, which means that both players will play
with a single strategy.
- The game value (saddle point) = 3 (positive value).
- As 3 is positive, results are for player (A) and against player
(B).
………………………………………….

Example(2):

( )
Solution
- Identify the least value for each row and the highest value for each
column
Player(B) Row Minimum
6 0 0
Player(A) -2 3 -2
Column Maximum 6 3

- There is no saddle point.

- This is a mixed strategy game, which means that each player will
play with the two strategies by distributing time among
strategies.
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- Calculate the differences between numbers:
Dif 8 3
6 6 0
5 -2 3
- Transpose the positions of the differences(matrix transpose):

Dif 3 8
5 6 0
6 -2 3
- Find probability values by dividing by the sum(11):

3/11=0.27 8/11=0.73
5/11=0.45 6 0
6/11=0.55 -2 3
Game value =
(6×0.27×0.45+0 -2×0.27×0.55+3×0.73×0.55)= 1.64
(Positive value).
- As 1.64 is positive, results are for player (A) and against
player (B).
………………………………

8
 PERT(TIME)

Activities Path O M P Expected time

A 1-2 9 15 21 ?
B 1-3 10 13 16 ?
C 2-4 8 12 16 ?
D 3-4 14 16 30 ?
E 3-5 13 15 17 ?
F 4-6 7 11 15 ?
G 5-6 40 44 48 ?
Answer the following points:
 Expected time of (A) will equal:
 Expected time of (B) will equal:
 Expected time of (C) will equal:
 Expected time of (D) will equal:
 Expected time of (E) will equal:
 Expected time of (F) will equal:
 Expected time of (G) will equal:
 Critical path will be:
 Critical path length will be:
 Slack time of (A) will equal:
 Slack time of (B) will equal:
 Slack time of (C) will equal:
 Slack time of (D) will equal:
 Slack time of (E) will equal:
 Slack time of (F) will equal:
 Slack time of (G) will equal:

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 Solution

Activities Path O M P Expected time

A 1-2 9 15 21 15
B 1-3 10 13 16 13
C 2-4 8 12 16 12
D 3-4 14 16 30 18
E 3-5 13 15 17 15
F 4-6 7 11 15 11
G 5-6 40 44 48 44

Expected time: (O + 4M+ P)/6

A= (9+4×15+21)÷6= 15
B= (10+4×13+16)÷6= 13
C= (8+4×12+16)÷6= 12
D= (14+4×16+30)÷6= 18
E= (13+4×15+17)÷6= 15
F= (7+4×11+15)÷6= 11
G= (40+4×44+48)÷6= 44

2
A C
15 12 4 F 6
11
1
B D 18 G
13 E 44
3 15 5

Paths:
BEG=13+15+44=72 Critical path
BDF=13+18+11=42
ACF=15+12+11=38

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 15 49

2
A C 31 61 72 72

0 0 15 12 4 F 6
11
1
B 13 13
D 18 28 28
G
13 E 44
3 15 5

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 Slack time:
Activities Expected Earliest Latest Slack
time ES EF(3) LS(4) LF (5-3)
(1) (2) (1+2) (5-1) (5) Or
(4-2)
A 15 0 15 34 49 34
B 13 0 13 0 13 0
C 12 15 27 49 61 34
D 18 13 31 43 61 30
E 15 13 28 13 28 0
F 11 31 42 61 72 30
G 44 28 72 28 72 0
Step(1) Graph Graph

1st square 2 nd square

Note:
- Slack time for critical path activities =0
- Slack time should be equaled to the differences between paths:
=72-42 = 30
=72-38=34
……………………………

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