MGMT 2012- Introduction to Quantitative MethodsGraded Assignment One

S1- 2016-17- Due November 5 11.55 PM 10 percent of Final

Grade

Question 1 A
OECS Motorcycles (OM) manufacturers two lightweight motorcycles designed for easy
handling and safety. The EZ-Rider model has a new engine and a low profile that make it easy to
balance. The Lady-Sport model is slightly larger, uses a more traditional engine, and is
specifically designed to appeal to women riders. OECS produces the engines for both models at
its St Vincent, plant. Each EZ-Rider engine requires 6 hours of manufacturing time and each
Lady-Sport engine requires 3 hours of manufacturing time. The St Vincent plant has 2100 hours
of engine manufacturing time available for the next production period. OECSs motorcycle
frame supplier can supply as many EZ-Rider frames as needed. However, the Lady-Sport frame
is more complex and the supplier can only provide up to 280 Lady-Sport frames for the next
production period. Final assembly and testing requires 2 hours for each EZ-Rider model and 2.5
hours for each Lady-Sport model. A maximum of 1000 hours of assembly and testing time are
available for the next production period. The companys accounting department projects a profit
contribution of $2400 for each EZ-Rider produced and $1800 for each Lady- Sport produced.
a. Formulate a linear programming model that can be used to determine the number of units of
each model that should be produced in order to maximize the total contribution to profit.
b. Solve the problem graphically. What is the optimal solution?
c. Solve in excel using the template provided.

Question 1 B

CWD Agro Inc. produces two pepper sauces, Spicy Diablo and Red Baron. These sauces are both
made by blending two ingredients, A and B. A certain level of flexibility is permitted in the formulae
for these products. The allowable percentages, along with revenue and cost data, are given in the
following table. Up to 80 quarts of A and 60 quarts of B could be purchased. CWD can sell as much
of these sauces as it produces.
Sauce
Spicy Diablo

Ingredient A
At least 25 %

Ingredient B
At least 40 %

Sales price per quart

4.0

Red Baron
Cost per Quart

At most 75%
At most 50%
1.7
2.5

3.0

Formulate an LP whose objective is to maximise the net profit from the sale of the sauces. 20 marks

Question 2
ABC Manufacturing makes three components for sale to refrigeration companies. The
components are processed on two machines: a shaper and a grinder. The times (in minutes)
required on each machine are as follows:

The shaper is available for 120 hours, and the grinder is available for 110 hours. No more than
200 units of component 3 can be sold, but up to 1000 units of each of the other components can
be sold. In fact, the company already has orders for 600 units of component 1 that must be
satisfied. The profit contributions for components 1, 2, and 3 are $8, $6, and $9, respectively.
.

Answer the following questions (a-i) using the output below please be brief. If there are two possible
answers one will suffice. Where necessary a range analysis must be shown.(hint convert to minutes)

a) What is the optimal solution (in words? (2 marks)

b) An additional 4 hours of shaper time became available. Evaluate the effect? Explain- ( 3
marks)
c) Two hours of Grinder time was lost. Evaluate the effect? (3 marks)
d) An additional 20 units of component 3 was requested. Evaluate the effect (3 -marks
e) The demand for component 2 decreased by 30 units. Evaluate the effect (3 marks)
f) Suppose that the profit contribution of component 1 increases to $9.00.
What is the new optimal solution? 2 marks
g) Suppose that the profit contribution of component 3 decrease by $2.00 . Would the
optimal solution change 3 marks
h) Is the problem degenerate? Explain! (2 marks)
i) Are there alternative optima in this problem? Explain (2 marks)
Microsoft Excel 14.0 Answer Report
Report Created: 10/16/2015 2:52:09 AM
Result: Solver found a solution. All Constraints and optimality conditions are satisfied.
Objective Cell (Max)
Cell
$E$3

Name
Profit

Original Value
0

Final Value
10800

Variable Cells
Cell
$B$2
$C$2
$D$2

Name
number of units c1
number of units c2
number of units c3

Original Value
0
0
0

Final Value
Integer
600 Contin
700 Contin
200 Contin

Constraints
Cell
Name
$E$10 C1 minimum
$E$5 Shaper
$E$6
$E$7

Grinder
C3 maximum

$E$8

C1 maximum

$E$9

C2 maximum

Cell Value
Formula
Status
600 $E$10>=$G$10 Binding
7200 $E$5<=$G$5
Binding
Not
6300 $E$6<=$G$6
Binding
200 $E$7<=$G$7
Binding
Not
600 $E$8<=$G$8
Binding
Not
700 $E$9<=$G$9
Binding

Slack
0
0
300
0
400
300

Microsoft Excel 14.0 Sensitivity Report

Worksheet: [Assignment 1 S1 2015-16 solutionB.xlsx]Q2 LP formulation MAX
Variable Cells
Final Reduced Objective Allowable
Allowable

Cell
$B$2
$C$2
$D$2

Name
number of units c1
number of units c2
number of units c3

Value
600
700
200

Cost

Coefficient
0
8
0
6
0
9

Final
Value
600
7200
6300
200
600
700

Shadow
Price
-1
1.5
0
3
0
0

Increase
Decrease
1
1E+30
3 0.666666667
1E+30
3

Constraints
Cell
$E$10
$E$5
$E$6
$E$7
$E$8
$E$9

Name
C1 minimum
Shaper
Grinder
C3 maximum
C1 maximum
C2 maximum

Constraint Allowable
Allowable
R.H. Side
Increase
Decrease
600
400 85.71428571
7200
240
2800
6600
1E+30
300
200
700
100
1000
1E+30
400
1000
1E+30
300

Question 3 A
In a single pump petrol station, it was observed that the inter-arrival times and service times are as given
in the table.

a) Compute the midpoints for arrival and service times and construct the appropriate
random number mappings for the random variables starting from 00. (3 marks)

b) Simulate 15 customers arriving at the using the random numbers given below. (12
marks)
c) What is the average time a customer waits for service? (1 mark)
d) What is the average time a customer is in the system (wait plus service time) (2 marks)
e) What is the percent of time the clerk is busy with customers? (2 marks)

Customer

Random Numbers To Be Used in the Simulation

2
3
4
5
6
7
8
9
10 11

12

13

14

15

Interarrival time

0.08

0.87

0.15

0.04

0.52

0.46

0.96

0.1

0.02

0.76

0.32

0.1

0.62

0.25

0.9

Service Time

0.72

0.46

0.96

.00

0.27

0.73

0.76

0.25

0.11

0.47

0.28

0.83

0.52

0.39

0.68

Use the following headings to complete the simulation

Time
Wait
Customer RN
Between
Arrival Begin
for
Arrivals

Time

Service

service

RN

Service

End

Time
in

Time

Service

System

Question 3B
CWD Electronics sells computers , which it orders from the USA. Because of shipping and
handling costs, each order must be for 12 units . Because of the time it takes to receive an order,
the company places an order every time the present stock drops to 6 units. It costs $120 to place
an order. It costs the company $75 in lost sales when a customer asks for a computer and the
warehouse is out of stock. It costs $5 to keep each computer stored in the warehouse. If a
customer cannot purchase a computer when it is requested, the customer will not wait until one
comes in but will go to a competitor. The demand for computers and the time required to
receive an order once it is placed (lead time) has the following probability distribution:

Lead time (weeks)

Probability

Demand/
week

Probability

0.20

0.10

0.65

0.45

0.15

0.30

0.15

The company has 10 computers in stock. Orders are always received at the beginning of the
week. Note that a lead time of 2 weeks imply that an order placed at the end of week one will
arrive at the beginning of week 4.(
Required
a) Construct the appropriate random number mappings for the random variables starting
with .00. (2.5 marks for demand and 1.5 mark for lead time)
b) Simulate CWD's ordering and sales policy for 15 weeks. (12 marks)
c) Compute the average cost of the policy( 4 marks)
demand

.49

.67

.06

.30

.95

.01

lead time

.84

.79

.35

.56

.64

.21

.10

.70

.80

.66

.69

.76

.86

.56

.84

Use the following headings

Week OI

U R A I RN

D F EI

SO order RN

leadtime

SOC OC TC
IC

Question 4
CWD Business systems maintains a successful Telecom sales department for Top up call credit
in which a clerk takes orders by telephone. If the clerk is occupied on one line, incoming phone
calls to the department are answered automatically by an answering machine and asked to wait.
As soon as the clerk is free, the party that has waited the longest is transferred and answered first.
Calls come in at a rate of about 15 per hour. The clerk is capable of taking an order in an average
of 3 minutes. Calls tend to follow a Poisson distribution, and service times tend to be
exponential. The clerk is paid $15 per hour, but because of lost goodwill and sales, CWD loses
about $30 per hour of customer time spent waiting for the clerk to take an order.
Part A
Answer the following questions:

a. What is the probability that no customers are in the system (Po)? 2 marks
b. What is the average number of customers waiting for service ( Lq)? 3 marks
c. What is the average number of customers in the system (L)?-2 marks
d. What is the average time a customer waits for service(Wq)? 3 marks
e. What is the average time in the system (W) ?-3 marks
f. What is the probability that a customer will have to wait for service (Pw)?-2 marks
g What is the probability that there is exactly 2 customers in the system- 2 marks
h) What is the probability that there are more than 3 customers in the system-3 mark
Part B
CWD is considering adding a second clerk to take calls. The store would pay that person the
same $15 per hour.
Using appropriate formula for the multiple channel model, answer the following questions:
a. What is the probability that no customers are in the system (Po)? 3 marks
b. What is the average number of customers waiting for service (Lq)? 2 marks
c. What is the average number of customers in the system (L)? 3 marks
d. What is the average time a customer waits for service (Wq)? 2 marks
e. What is the average time in the system (W)? 2 marks
f. What is the probability that a customer will have to wait for service (Pw)? 2 marks
g. What is the probability that there is exactly 2 customers in the system 2 marks
h. Should it hire another clerk? Explain by showing the cost savings - 4 marks