November 2021 2101228/PMSM33E SECTION B — (5  5 = 25 marks)

Answer any FIVE questions.

Time : Three hours Maximum : 75 marks
13. Explain the decision making environments.

SECTION A — (10  1 = 10 marks) 14. A small project involves 7 activities, and their time estimates
are listed in the following table. Activities are identified by their
Answer any TEN questions. beginning (i) and ending (j) node numbers.
Activity Estimated Duration (weeks)
1. Define decision making under risk. (i – j) Optimistic Most Likely Pessimistic
1–2 1 1 7
2. Define the decision node.
1–3 1 4 7
3. What is merge event? 1–4 2 2 8
2–5 1 1 1
4. Define Independent float. 3–5 2 5 14
4–6 2 5 8
5. What is meant by buffer inventory? 5–6 3 6 15
6. List out the main factors decisions regarding the size and
(a) Draw the network diagram of the activities in the project. (b)
timing of replenishment of stock are influenced?
Find the expected duration and variance for each activity. What
7. What is meant by balking? is the expected project length? (c) Calculate the variance and
standard deviation of the project length.
8. State Markovian property of interarrival times.
15. Each unit of an item costs a company Rs 40. Annual holding
9. Define individual replacement? costs are 18 per cent of unit cost of the item due to
miscellaneous changes: 1 per cent for insurance, 2 per cent
10. Write the formula for present worth factor. allowances for obsolescence, Rs 2 for building overheads, Rs
11. What is Expected Monetary value? 1.50 for damage and loss, and Rs 4 miscellaneous costs. The
annual demand for the item is constant at 1,000 units.
12. What is critical path? Placing each order costs the company Rs 100. (a) Calculate
EOQ and the total costs associated with stocking the item. (b) If
 the supplier of the item will only deliver batches of 250 SECTION C — (4  10 = 40 marks)
units, how are the stock holding costs affected?
Answer any FOUR questions.
16. Arrivals at telephone booth are considered to be Poisson with
an average time of 10 minutes between one arrival and the 20. An investor is given the following investment alternatives
next. The length of phone calls is assumed to be distributed and percentage rates of return.
exponentially, with a mean of 3 minutes. (a) What is the States of Nature (Market Conditions)
probability that a person arriving at the booth will have to
wait? (b) The telephone department will install a second Low Medium High
booth when convinced that an arrival would expect waiting Regular Shares 7% 10% 15%
for at least 3 minutes for a phone call. By how much should Risky Shares –10% 12% 25%
the flow of arrivals increase in order to justify a second Property –12% 18% 30%
booth? (c) What is the average length of the queue that
forms from time to time? Over the past 300 days, 150 days have been medium
market conditions and 60 days have had high market
17. An engineering company is offered a material handling increases. On the basis of these data, state the optimum
equipment A. It is priced at Rs 60,000 including cost of investment strategy for the investment.
installation. The costs for operation and maintenance are
estimated to be Rs.10,000 for each of the first five years, 21. The following network diagram represents activities
increasing every year by Rs 3,000 in the sixth and associated with a project:
subsequent years. The company expects a return of 10 per Activities: A B C D E F G H I
cent on all its investment. What is the optimal replacement Optimistic time, t0: 5 18 26 16 15 6 7 7 3
period?. Pessimistic time, tp: 10 22 40 20 25 12 12 9 5
Most likely time, tm: 8 20 33 18 20 9 10 8 4
18. Explain the Laplace criterion and regret criterion.

19. Explain the procedure about forward pass method.

 waiting to be serviced, average time a customer spends in
the system, and average waiting time for a customer.
Calculate how many hours each week does a tax adviser
spend performing his job. What is the probability that a
customer has to wait before he gets service? What is the
expected number of idle tax advisers at any specified time?

24. Let the value of the money be assumed to be 10 per cent per
year and suppose that machine A is replaced after every three
years, whereas machine B is replaced every six years. The
yearly costs (in Rs) of both the machines are given below:
Determine the following: (a) Expected completion time and Year : 1 2 3 4 5 6
variance of each activity (b) The earliest and latest expected
completion times of each event. (c) The critical path. Machine A : 1,000 200 400 1000 200 400
Machine B : 1,700 100 200 300 400 500
22. The demand for an item in a company is 18,000 units per
year, and the company can produce the item at a rate of
3,000 per month. The cost of one set-up is Rs 500 and the Determine which machine should be purchased.
holding cost of one unit per month is 15 paise. The shortage 25. Describe A producer of boats has estimated the following
cost of one unit is Rs 240 per year. Determine the optimum distribution of demand for a particular kind of boat:
manufacturing quantity and the number of shortages. Also
determine the manufacturing time and the time between No. demanded: 0 1 2 3 4 5 6
set-ups.
Probability: 0.14 0.27 0.27 0.18 0.09 0.04 0.01
23. A tax consulting firm has 4 service counters in its office for
receiving people who have problems and complaints about Each boat costs him Rs 7,000 and he sells them for Rs 10,000
their income, wealth and sales taxes. Arrival’s average 80 each. Boats left unsold at the end of the season must be disposed
persons in an 8-hour service day. Each tax adviser spends an of for Rs 6,000 each. How many boats should be in stock so as to
irregular amount of time servicing the arrivals, which have maximize his expected profit?
been found to have an exponential distribution. The average
service time is 20 minutes. Calculate the average number of
customers in the system, average number of customers
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