Yardstick International College

Masters of Business Administration(MBA) Online Program

Quantitative Analysis for Management Decision
Assignment 01

Prepared by: Takele Abate

ID: MBAO/2405/14B

Submitted to Instructor: Dr. B Dayal

December 11,2022
Addis Ababa, Ethiopia
QUESTION No 1: To Develop Linear Programming Model
Step 1: Definition of the problem
To determine the amount of each food required to maintain a balance diet of a person given
that the restriction at minimum cost.
Step 2: Representation of a variable.
Let x1 ………………………. units of product A produced
Let x2 ………………………...units of product B produced
Let x3 ………………………...units of product C produced
Let x4 ………………………...units of product D produced
Let x5 ………………………...units of product E produced
Let x6 ………………………...units of product F produced
Step 3: Objective function
To determine the amount of each food required to maintain a balance diet of a person given
that the restriction at minimum cost.
Min c = 2X1+3X2+5X3+6X4+8X5+8X6
Step 4: Identification of constraints
Protein = 20x1+30x2+40x3+40x4+45x5+30x6 ≥70
Carbohydrates= 50x1+30x2+20x3+25x4+50x5+20x6 ≥100
Fat = 4x1+9X2+11x3+10x4+9x5+10x6 ≥ 20
X1,x2,x3,x4,x5,x6 ≥0
Step 5: summary of the model
Min c = 2x1+3x2+5x3+6x4+8x5+8x6
Subject to - System constraints:
Protein = 20x1+30x2+40x3+40x4+45x5+30x6 ≥70
Carbohydrates= 50x1+30x2+20x3+25x4+50x5+20x6 ≥100
Fat = 4x1+9X2+11x3+10x4+9x5+10x6 ≥ 20 and
X1,x2,x3,x4,x5,x6 ≥0 non- negativity constraints

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QUESTION No 2
Let X1 is the number of product I produced in the manufacturing firm
X2 “ “ “ II “ “ “
X3 “ “ “ III “ “ “
X4 “ “ “ IV “ “ “
Objective is to maximize profit= Max Z=360x1+240x2+360x3+480x4
Subject to: 3x1+2x2+2x3+4x4 ≤ 480
Machine Hours: X1+x2+2x3+3x4 ≤ 400
Polishing Hours: 2x1+x2+2x3+x4 ≤ 400
X1 ≥ 50

X1+x2 ≥ 100
X4 ≤ 25

QUESTION No 3: To Develop Linear Programming Model

Step 1: Definition of the problem
To know the amount of product 1 and product 2 to be produced so as to maximize profit
Step 2: Representation of a variable
Let x1 be …...Product 1
Let x2 be …...Product 2
Step 3: Objective function
Profit Maximization: Max Z= 3x1+5x2
Step 4: Identification of constraints
X1+2x2 ≤ 860
3x1+2x2≤1200
x1, x2 ≥0
Step 5: summary of the model
Max Z= 3x1+5x2
Subject to the constraints:

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 X1+2x2 ≤ 860
3x1+2x2≤1200
X1, x2 ≥0……………non-negativity constraints
Equation When X1=0 When X2=0 Points (x, y) on the line
X1+2x2 X2=430 X1=860 (0,430), (860,0)
3x1+2x2 X2=600 X1=400 (0,600), (400,0)
Simplex approach
Step 1: Standardization of the model
Max Z= 3x1+5x2+0s1+0s2
Subject to: x1+2x2+S1=860
3x1+2x2+S2=1200
x1, x2 ≥0
Step 2: Create the initial Table.

CJ 3 5 0 0
Variable(x) X1 X2 S1 S2 RHSV

0S1 1 2 1 0 860/2=430

0S2 3 2 0 1 1200/2=600

ZJ 0 0 0 0 0

CJ-ZJ 3 5 0 0 //

N.B: The shading column is the pivot column and

The shading raw is leaving variable raw/ pivot raw
To arrive at optimal solution in case of pure maximization case the CJ-ZJ raw must be 0 and
below zero or negative. If there is a positive number in CJ-ZJ raw the solution is not optimal. So
that a number having largest positive number is interring to the solution basis column and a
number having a lowest replacement ratio become leaving variable.
RR (Replacement Ratio) =RHSV (Right hand side value)/Pivot column
Product 1=RR=860/2= 430 this is leaving variable because it has smallest positive number.

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Product 2=RR=1200/2=600
The intersection between pivot raw and pivot column is called pivot element, it must be
changed to one and the rest become zero (pivot column).
New raw 1=1/2 (1, 2, 1, 0,860)
NR 1=1/2, 1, 1/2, 0, 430
NR 2=2NR1+old R2
NR2=2(1/2, 1, 1/2, 0,430)
NR2= -1, -2, -1, 0, -860
+ 3, 2, 0, 1, 1200
NR2 = 2, 0, -1, 1, 340
Then create table two interring variable

. 3 5 0 0
X1 X2 S1 S2 RHSV

5x2 -1/2 1 ½ 0 430/1/2=860

0S2 2 0 -1 1 340/2=170

ZJ 5/2 5 5/2 0 2150

CJ-ZJ ½ 0 -5/2 0 //

Still the solution is not optimal because there is positive number in the CJ-ZJ raw. So follow the
same process till the solution is optimal.
NR2=1/2 (2, 0, -1, 1, 340)
NR1 = (1, 0, -1/2, 1/2, 170)
NR1=-1/2 NR2+old R1
NR1 =-1/2(1, 0, -1/2, 1/2, 170)
= -1/2, 0, 1/4, -1/2, -85
+ 1/2, 1, 1/2, 0, 430
NR1= 0, 1, 3/4, -1/2, 345

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 CJ 3 5 0 0
variable X1 X2 S1 S2 RHTV

5x2 0 1 ¾ -1/2 345

3x1 1 0 -1/2 1/2 170

ZJ 3 5 9/4 4 2235

CJ-ZJ 0 0 -9/4 -4 //

Now the solution is optimal, because there is no positive number in CJ-ZJ raw. Therefore,
X1=170
X2=345 and unused resource S1=0 and S2=0.
Interpretation The firm must produce 170 amount of product one (x1) and 345 amount of
product two (x2) so as to maximize its profit given that the restriction or constraints in that it
generates a profit of 2,235 Rupee with achieving its objective effectively. But it is not efficient
because the firm can generate such amount of profit with the usage of the overall allotted
budget.

QUESTION No 4
I will take commercial bank of Ethiopia, which is I worked in is the largest commercial bank in
Ethiopia. Commercial bank of Ethiopia (CBE) is the state-owned financial institution, with total
assets of 1.1 trillion birr as of February 13/2022.
.
The following are the important reasons or functions of quantitative techniques commercial
bank of Ethiopia uses:
A. To facilitate the decision making process.
B. To provide tools for scientific research.
C. To select an appropriate strategy.
D. To help in reduction of cost.
E. To have proper deployment of resources.
F. To help in minimizing the time required for completing the task.
G. To help production and operational functions of the bank
H. To facilitate marketing function and areas of the bank
I. To facilitate the distributional functions of goods and materials of the bank.

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As it is the business and profit oriented organization role of quantitative techniques in this bank
mentioned as follow:

To be Solution for various Business problems

Quantitative techniques help in the field of marketing, finance and other activities of business
of the bank. It is answer to such type of
problems:
1. How to employ man power?
2. How much time customers wait for a service?
3. Can business deliver service on time?
4. How effectively businesses use its resources

To Select an appropriate strategy

Every business is having a motive to increase its market share from its competitors by observing
the strategies of the others. Some Game theory comes handy in this situation where
commercial bank of Ethiopia can minimize cost or maximize profit.
Used as a Base for scientific analysis
Quantitative techniques enforce disciplined thinking about organizational problems. They
provide precise description of the cause and effect relationship and risk elimination.
Quantitative techniques replace subjective and intuitive approach with analytical an objective
approach of the bank.

To Reduce costs and minimizing waiting time

Time is essence in service industry. It is rightly said that a good decision if taken at right time
then outcome of that decision will automatically good. There is gap between service delivery
time and capacity so serve. So; queuing theory helps in minimizing waiting time and wastage of
resources. It provides a base for bank to take a correct and profitable decision.

To Help in inventory management

The inventory management is deal with planning and control of inventory in the organization. If
inventory holds for large time and in large quantity, then this idle resource and create losses for
the bank. On the other hand, if there is shortage of inventory then it also negative impacts on
profitability of the organization. So; quantitative techniques maintain balance between holding
the inventory or not. These; enables management to decide when to buy and how much to buy.
To Facilities in decision making
Decision making is an essential part in bank management process. Thus, the decision maker in
the present business must understand the scientific methodology of making decisions. In real
life, some decision making situations are simple while other are not. The decision is
multidimensional response which includes production, cost quality, price of the product etc.
The quantitative techniques help in decision making process in the way that identifies the
factors which influence the decisions and quantify them. It becomes easier to resolve the

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complexity of the decision making. Some of the quantitative techniques such as decision theory
and simulation work best in complex decisions.
To Help in human Resource Management practice
Human resource is main asset of the business. Today, it becomes a challenge for business to
find out best talent and how to retain this. Quantitative techniques helpful in studying personal
recruitment process, selection criteria, accident rates and labor turnover etc. These useful to
the human resource management due to following reasons:
1. Proper manpower planning
2. How much work pool needed to cater labor absenteeism
3. Routing and sequencing of human resources in variety of jobs.

Question No 5: Solution
The data of 225 employees of “Commercial Bank of Ethiopia” Aykel Branch 120 and Chilga
Branch 105 employees summarized as follows using tools such as (pie chart, Bart charts).

From the above charts we can summarize the data as follows:

Commercial Bank of Ethiopia, Aykel Branch and Chilga Branch have more male employees than
female employees. This demonstrate that there is Except for the fact that the bank is still male
dominated and have challenging work situation. Having balanced male and female employee
will help the bank to have more diverse perspectives, more innovative and creative approaches
and solutions, more balanced organizational management, improved team productivity.

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Regarding on the engagement on management positions; the factory is highly dominated by
male category. But the bank need to bring them leadership positions for the following reason:

1. Women leaders will paint the future easily than males

2. They can bring Unique transformational ideas will be brought to the front
3. Encourage enhancement of teamwork
4. Women demonstrate superior leadership values
5. Business-wide communication can be enhanced
6. Achieve a better financial outcome and
7. Fresh new outlooks and perspectives
Concerning employee work performance management female employees do better than male
employees and However monthly income of those female employees of the bank did not take
their good performance in to consideration.
Top management of the factory have to give their emphasis on the salary, bonus, recognition,
promotion and other financial and
non-financial benefit and motivational packages for female employees.

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