1.

A pharmacy has determined that a healthy person should receive 70 units of

proteins, 100 units of carbohydrates and 20 units of fat daily. If the store carries
the six types of health food with their ingredients as shown in the table below,
what blend of foods satisfies the requirements at minimum cost to the
pharmacy? Make a mathematical model for the given problem.

Foods Protein units Carbohydrates units Fat units Cost per unit
A 20 50 4 2
B 30 30 9 3
C 40 20 11 5
D 40 25 10 6
E 45 50 9 8
F 30 20 10 8

Solution:-

Minimize Z=2x1+3x2+5x3+6x4+8x5+8x6
Constraints: 20x1+30x2+40x3+40x4+45x5+30x6 ≥70
50x1+30x2+20x3+25x4+50x5+20x6 ≥100
4x1+9x2+11x3+10x4+9x5+10x6 ≥20

Introducing artificial variables

Min Z=2x1+3x2+5x3+6x4+8x5+8x6+0S1+0S2+0S3+MA1+MA2+MA3

Subject to
20x1+30x2+40x3+40x4+45x5+30x6-S1+A1≥ 70
50x1+30x2+20x3+25x4+50x5+20x6-S2+A2≥ 100
4x1+9x2+11x3+10x4+9x5+10x6-S3+A3=20
x1,x2,x3,x4,x5,x6,A1,A2,A3≥0
Key element

Iter. 1 Cj 2 3 5 6 8 8 0 0 0 M M M Min ratio

CB XB X1 X2 X3 X4 X5 S1 S1 S2 S3 A1 A2 A3 XB/CB
A1 M 70 20 30 40 40 45 -1 -1 0 0 1 0 0 1.5555
A2 M 100 50 30 20 25 50 0 0 -1 0 0 1 0 2
A3 M 20 4 9 11 10 9 0 0 0 -1 0 0 1 2.22222
Z=190 Zj 74M 69M 71M 75M 104M -M -M -M -M M M M
M Zj-Cj 74M-2 69M-3 71M-5 75M-6 104M-8 -M -M -M -M 0 0

Key column key raw

Cj-co-efficient objective function. - The departing raw is A1.

 Key element

Iter. Cj 2 3 5 6 8 8 0 0 0 M M Min
2 ratio
CB XB X1 X2 X3 X4 X5 S1 S1 S2 S3 A2 A3 XB/CB
X5 8 1.555 0.444 0.666 0.888 0.888 1 0.666 -0.022 0 0 0 0
A2 M 22.22 27.778 -0.333 -24.444 -19.444 0 -13.333 1.111 -1 0 1 0 3.5
A3 M 6 0 3 3 2 0 4 0.2 0 -1 0 1 0.8
Zj 27.777 - - - 8 -9.333M+5.333 1.311M- -M -M M M
Z=28.222

2.1444+7.
+12.444

M+3.55 0.333+ 111 17.444 0.177

5 5.333 M+7.1
11
M Zj-Cj 27.777+ - - - 0 -9.333- 1.311M-. -M -M 0
1.555 0.333 21.444 17.444 2.666 0177
M+2.3 M+2.1 M+1.1
33 11 11

Key column key raw

Key element

Iter. Cj 2 3 5 6 8 8 M Min ratio

3 XB/CB
CB XB X1 X2 X3 X4 X5 X6 A3
B 8 1.2 0 0.72 1.28 1.2 1 0.88 0 1.3636
XB 2 0.8 1 -0.12 -0.88 -0.7 0 -0.48 0 0
X1 M 6 0 3 3 2 0 4 1 1.5
Zj 2 3M+5.52 3M+8.48 2M+8.2 8 4M+6.08 M
A3

Z=6 Zj-Cj 0 3M+2.52 3M-3.48 2M+2.2 0 4M-1.92 0

M-
11.2
Key column key raw
Iter. Cj 2 3 5 6 8 8 0 0 0 M Min
4 ratio
B CB XB X1 X2 X3 X4 X5 X6 S1 S2 S3 A3 XB/CB
X6 8 1.3636 0 0.8182 1.4545 1.3636 1.1364 1 -0.0455 0.0182 0 0
X1 2 1.4545 1 0.2727 -0.1818 -0.0455 0.5455 0 0.0182 0.0273 0 0
A3 M 0.5455 0 -0.2727 -2.8182 -3.4545 -4.5455 0 0.3818 -0.0727 -1 1 80
Zj 2 - - - - 8 0.3818M -0.0727M- -M M 1.4286
Z=0.5455

2.8182M+
0.2727M+ 11.2727 3.4545 4.5455M -0.3273 0.3273
7.0909 M+10.8 +10.1818
182
M

Zj-Cj 0 - - - - 0 0.3818M 0.3818M- -M 0

0.2727M+ 2.8182 3.4545 4.5455M +0.0909 0.3273
4.0909 M+6.2 M+4.81 +2.1818
727 82
Key element

Key column key raw

Key element

Iter. Cj 2 3 5 6 8 8 0 0 0 Min
5 ratio
B CB XB X1 X2 X3 X4 X5 X6 S1 S2 S3 XB/X3
X5 8 1.428 0 0.7857 1.119 0.9524 0.5952 1 0 0.0095 -0.119 1.2766
6
A2 2 1.428 1 0.2857 -0.0476 0.119 0.7619 0 0 -0.0238 0.0476
6
A3 0 1.428 0 -0.7143 -7.381 -9.0476 -11.9048 0 1 -0.1905 -2.619
6
Zj 2 6.8571 8.8571 7.8571 6.2857 8 0 0.0286 -0.8571
2+12.44
Z=28.22

M Zj-Cj 0 3.8571 3.8571111 1.8571111 0 0 0 0.0286 -0.8571

Key column Key raw

 Key element

Iter. Cj 2 3 5 6 8 8 0 0 0 Min ratio

6 XB/X2
B CB XB X1 X2 X3 X4 X5 X6 S1 S2 S3
X3 8 1.2766 0 0.7021 1 0.8511 0.5319 0.8936 0 0.0085 -0.1064 1.8182
X1 2 1.4894 1 0.3191 0 0.1596 0.7872 0.0426 0 -0.0234 0.0426 4.6667
A3 0 10.851 0 4.4681 0 -2.766 -7.9787 6.5957 1 -0.1277 -3.4043 2.4286
1
Zj 2 4.1489 5 4.5745 4.234 4.5532 0 -0.0043 -0.4468
S1

Z=9.3 Zj-Cj 0 1.1489 0 -1.4255 -3.766 -3.4468 0 -0.0043 -0.4468

615

Key column Key raw

Iter. 7 Cj 2 3 5 6 8 8 0 0 0 M M Min
B CB XB X1 X2 X3 X4 X5 X6 S1 S2 S3 A A ratio
2 3 XB/C
B
X2 3 1.8182 0 1 1.4242 1.2121 0.7576 1.2727 0 0.0123 -0.1515 0 0
A1 2 0.9091 1 0 -0.4545 -0.2273 0.5455 -0.3636 0 -0.0273 0.0909 1 0
S1 0 0.7273 0 0 -6.3636 -8.1818 -11.3636 0.9091 1 -0.1818 -2.7273 0 1
Z=7.2727 Zj 2 3 3.3636 3.1818 3.3636 3.0909 0 -0.0182 -0.2727 M M

M Zj-Cj 0 0 -1.6364 -2.8182 -4.6364 -4.9091 0 -0.0182 -0.2727 0

2.A local manufacturing firm produces four different metal products, each of
which must be machined, polished and assembled. The specific time
requirements (in hours) for each product are as follows:

Machining hours Polishing hours Assembling hours

Product I 3 1 2
Product II 2 1 1
Product III 2 2 2
Product IV 4 3 1

The firm has available to it on weekly basis, 480 hours of machining time, 400 hours of polishing time
and 400 hours of assembling time. The unit profits on the product are Birr 360, Birr 240, Birr 360 and
Birr 480, respectively. The firm has a contract with a distributor to provide 50 units of product I, and
100 units of any combination of products II and III each week. Through other customers the firm can
sell each week as many units of products I, II and III as it can produce, but only a maximum of 25 units
of product IV. How many units of each product should the firm manufacture each week to meet all
contractual obligations and maximize its total profit? Make a mathematical model for the given
problem. Assume that any unfinished pieces can be finished the following week.

Solution:-
3. A firm manufactures two products; the net profit on product 1 is Rupees 3 per
unit and Rupees 5 per unit on product 2. The manufacturing process is such that
each product has to be processed in two departments D1 and D2. Each unit of
product1 requires processing for 1 minute at D1 and 3 minutes at D2; each unit
of product 2 requires processing for 2 minutes at D1 and 2 minutes at D2.
Machine time available per day is 860 minutes at D1 and 1200 minutes at D2.
How much of product 1 and 2 should be produced every day so that total profit
is maximum. Make the mathematical model for the given problem.

Solution:-

                              D1           D2

                            (Min.)     (Min.)

Product 1 (a)          1               3

Product 2 (b)          2              2            

Availability            860        1200

Maximize z = 3 x + 5y    

Constraint:

1x + 2y ≤ 860

3x + 2y ≤ 1200

x ≥ 0  ;  y ≥ 0  

We multiply the first raw by 3 to get the value of Y 3*X+2Y=860 and subtract the second equation from
it.

3X+2Y=2580

-3X+2Y=1200

4Y=1380

Y=345

3X+2(345)=1200

3X=1200-790

3X=510

X=170
So we will substitute the amount of X & Y in the equation.

Z= 3*170+5*345

Z=510+1725

Z=2,235

4. Discuss few areas for application of quantitative analysis in your organization or

organization you are familiar with for decision making.

The name of my Organization is HKB Construction PLC, which is grade One Construction company
working on Water Supply, Irrigation and Civil work construction Projects.

As the construction sector needs careful management of every of its functions there are different area
of applications of Quantitative analysis. Starting from project identification for bidding up to execution
and handover of projects we utilize Qualitative analysis techniques.

For example during bidding process most of projects announced for bid by government offices are
evaluated based on 70/30 evaluation method. Which implies 30% of weight is given for financial offer of
the bidders and 70% weight is given for technical offer of bidders.

Accordingly as a company we focus on improving our technical documents and capability so that we can
succeed in the extreme competition of the construction sector.

Based on this overall frame work our technical teams’ first work in bidding process is to identify the
criteria that are given more weight in the evaluation criteria of the client. Accordingly criteria that are
given more weight will be given due consideration and time by every member of the team working on
the bid.

The other area of application of quantitative analysis is during project execution, where project
engineers are preparing construction materials according to project agreements. For example during
preparation of concrete for civil work structures, the order give to the project engineer is to prepare a
quantity of concrete with different material ratios.

For example an engineer may be ordered to prepare 100 quintal of concrete with material ratio of
1:1.5:3 (cement, sand, aggregate) in a day.

Based on the above ratio the engineer will do mathematical calculations to decide the amount of
Cement, sand and aggregate that is required to prepare the mentioned amount of concrete with the
given ratio in a day.

Accordingly the prescribed concrete mix ratio 1:1.5:3 indicates that 1 cubic meter of the concrete must
contain 1 part cement, 1.5 part sand and 3 part aggregate. Based on these the total volume of cement,
sand and aggregate required for the day calculated in detail.

These are some of the areas of applications of quantitative analysis in our company
5.Take the data of the output of your organisation summarise them with some tool (like bar chart, pie
chart, etc.) and discuss the result. Give your opinion to improve the results in the future.

HKB Construction PLC, a construction company working in water supply, Irrigation and Civil work
projects, is a company I am working in as Administrative and Financial manager. I have taken Five
Years financial data of my company and tried to summarise them with some tool s (like bar chart, pie
chart, etc.) and I will discuss the result with improvement suggestions.

Historical Financial Data (HKB Construction PLC)

Type of Financial
information Historic information for previous four years,
In (currency) (amount in currency, currency, exchange rate, ETB equivalent)

1st Years (2008) 2ndYears 3rd Years 4th year 5th Year

(2009) (20010) (2011) (2012)

Statement of Financial Position (Information from Balance Sheet )

Total Assets (TA) 2,950,414.49 3,987,033.17 7,327,168.30 6,513,454.05 21,169,328.40

To End
Total Liabilities (TL) 548,605.34 855,854.75 3,978,962.41 4,283,487.57 4,283,487.57

Working 2,099,372.83 2,871,018.95 2,383,625.21 2,229,966.48 2,229,966.48

Capital(WC)
Information from Income Statement

Total Revenue (TR) 98,925,

24,074,746.61
54,925,417.91 81,357,824.21 97,124,789.24 673.14

Profits Before Taxes

(PBT) 836,426.55 939,630.91 835,312.29 2,007,996.35 2,366,958.53

Cash Flow Information

Cash Flow from 956,000 2,000,000 2,915,867.98 2,672,523.46 6,672,523.46

Operating Activities

Accordingly I will present the total revenues and Profit before taxes and average annual turnover data
of the company for the last five years and analyse the trend of these financial data. As it can be
observed from the table the Total revenue of company had improved over time since 2009 EC.
 Historical Financial data of HKB Construction PLC
120,000,000.00

100,000,000.00

80,000,000.00

60,000,000.00

40,000,000.00

20,000,000.00

0.00
2008 EC 2009 EC 2010 EC 2011 EC 2012 EC

Total Revenue Profit Before Tax Total Asset

It was evident from the charts that the total revenue had fallen from 54,925,417.91 ETB in the year
2008EC to 24,074,746.61 ETB in the year 2009 EC. As an insider to the company this fall of revenue
happens due to absence of sufficient projects during the year. Starting from the year 2009, up to 2012
the company annual turnover has grown from 24,074,746.61ETB to 98,925,673.14 ETB with varying
rate of increments.
Accordingly the Profits Before tax and Total asset of the company had shown a steady increment
from year to year.
From the above data it can be observed that the percentages of revenue retained as profit by the
company is very limited as compared to the financial standards in the business.

Year % Revenue Retained as Profit

2008 7%
2009 14%
2010 5%
2011 5%
2012 5%

For example as it can be shown from the above table, the company had retained only 7 % of its
revenue. In 2009 the company had retained 14% of its total revenue as a profit which is relatively
better performance by the company. In the remaining consecutive years the company had retained
very limited percentage of it total revenue as Profit.

This can be more elaborated in the following charts.

Tital Revenue vs Profi t Tital Revenue vs Profi t

Before Tax 2008 Before Tax 2009
Total Revenue Profit before Tax Total Revenue Profit before Tax

7% 14%

93% 86%

Tital Revenue vs Profi t Tital Revenue vs Profi t

Before Tax 2010 Before Tax 2011
Total Revenue Profit before Tax Total Revenue Profit before Tax

5% 5%

95% 95%

Based on the above data analysis it can be concluded that the company is retaining only small amount
of its revenue as its annual profit, and this an indicator of some problem with in the company.

This is Financial ratio indicates that the company have two main problems that needs improvement.
The first is the ratio indicates that the company is not utilizing its fixed asset properly to maximize
profit. This implies that the company needs to improve the efficiency and effectiveness of its fixed
asset. This can be achieved through proper fixed asset management, machine assignment and
minimization of down time.

The second problem may arise due to excessive cost incurred for purchase of supplies, and other
expenses. Hence the company must minimize its costs and expenses associated with every functions
and departments.