Indian Education Society’s

Management College and Research Centre, Mumbai

(FINAL EXAMINATION)

Date : 25/04/2017 Day: Tuesday Time: 10.30 am To 01.30 pm Duration: 3 Hrs.

Course : PGDM-1st Year Term: III Sub: Operations Research for Management Max. Marks: 60
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Instructions: 1) First Question is compulsory. Attempt any Four from remaining.
2) All questions carry equal marks.
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Q.1.
Objective
Cell (Max)
Original
Cell Name Value Final Value
obj func value
$C$12 x1 0 6250

Variable
Cells
Original
Cell Name Value Final Value Integer
$C$14 var value x1 0 137.5 Contin
$D$14 var value x2 0 25 Contin
$E$14 var value x3 0 0 Contin

Constraints
Cell Name Cell Value FormulaStatus Slack
Not
$G$17 <= Res utility 400 $G$17<=$G$8 Binding 500
$G$18 <= Res utility 400 $G$18<=$G$9 Binding 0
$G$19 <= Res utility 600 $G$19<=$G$10 Binding 0

A steel rod manufacturer produces three grades of steel rod. And these three grades of rods need
different processing and raw material. The data below gives the availability of the three types of
resources needed for producing these rods and maximum availability of resource 1 is 900 units,
resource II is 400 units, resource III is 600 units, and profit per unit of steel rod grade A is 40 INR, Grade
B is 30 INR and Grade C is 20 INR. (2*6=12 Marks)
Operation ( Hours )
Steel rods Resource I Resource II Resource III
Grade A 2 2 4
Grade B 5 5 2
Grade C 10 3 2
i. Formulate the LPP.
ii. On the basis of the excel table enclosed, suggest how many units of each grade of steel rods should be
produced to maximize the total profit and what will be the maximum profit.
iii. Write the dual and give its economic interpretation.
iv. Will the optimal product mix be affected, when per unit profit of steel rod grade A increases from 40 to
50 and grade C is increases from Rs 20 to Rs 25. What is the change in Profit?
v. What would be the effect on profit, If the manufacturer manages to get 100 extra units of each resource.
If given a choice to further increase the profit by increasing 100 more units of any of the three
resources, which one will you choose as a manager.
vi. A client is insisting upon delivering 100 units of steel rod of grade C and therefore 100 units are
manufactured, How will this affect the profit.

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Q.2. Aesthetics Limited are into the manufacturing of metal vases and metal frames and have three factories
at different locations. Looking at the demand of these vases and frames, they supply the products to
three different showrooms at different locations. The transportation costs per unit from factories to
showroom are given the table below:
Showroom
Factory 1 2 3 Supply
1 10 12 7 180
2 14 11 6 100
3 9 5 13 160
4 11 7 9 120
Demand 240 200 220
The information has come, wherein it’s been found that due to metro construction few of the routes are
blocked and therefore nothing can’t be transported from factory 1 to Showroom 1 and from Factory 3
to showroom 3. Solve the problem and determine the transportation schedule and transportation cost
using VAM.
Can the transportation cost found through VAM be further minimised. If yes, to what value, what would
be schedule leading to minimum cost (refer excel table attached). (8+4 =12 Marks)
Objective
Cell (Min)
Cell Name Original Value Final Value
$C$11 TC Showroom 1 4300 4300
Variable
Cells
Cell Name Original Value Final Value Integer
$C$14 Factory1 showroom1 0 0 Contin
$D$14 Factory1 showroom2 0 0 Contin
$E$14 Factory1 showroom3 180 180 Contin
$C$15 Factory2 showroom1 60 60 Contin
$D$15 Factory2 showroom2 0 0 Contin
$E$15 Factory2 showroom3 40 40 Contin
$C$16 Factory3 showroom1 0 0 Contin
$D$16 Factory3 showroom2 160 160 Contin
$E$16 Factory3 showroom3 0 0 Contin
$C$17 Factory4 showroom1 80 80 Contin
$D$17 Factory4 showroom2 40 40 Contin
$E$17 Factory4 showroom3 0 0 Contin
$C$18 Factory5 showroom1 100 100 Contin
$D$18 Factory5 showroom2 0 0 Contin
$E$18 Factory5 showroom3 0 0 Contin

Constraints
Cell Name Cell Value Formula Status Slack
Requirement
$C$19 showroom1 240 $C$19>=$C$8 Binding 0
Requirement
$D$19 showroom2 200 $D$19>=$D$8 Binding 0
Requirement
$E$19 showroom3 220 $E$19>=$E$8 Binding 0
$F$14 Factory1 Availability 180 $F$14<=$F$3 Binding 0
$F$15 Factory2 Availability 100 $F$15<=$F$4 Binding 0
$F$16 Factory3 Availability 160 $F$16<=$F$5 Binding 0
$F$17 Factory4 Availability 120 $F$17<=$F$6 Binding 0
$F$18 Factory5 Availability 100 $F$18<=$F$7 Binding 0
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Q.3. Herbal Life Ltd has introduced a new baby care product line and are getting into aggressive sales and
distribution so that the products can reach the customers widely. They have three salesmen having
expertise in their areas and three sales territories to be assigned to them. On the basis the sales figures
given below, answer the following:
Sales territories
I II III IV
Sales A 200 150 170 220
representatives B 160 120 150 140
C 190 195 190 200
D 180 175 160 190
Suggest the optimal assignment and total maximum sales increase per month.
If for certain reason salesman B cannot be assigned to territory III, will the optimal assignment schedule
be different? If so, find that schedule and the effect on total sales. (6*2=12 Marks)

Q.4. A company has developed a new product in its R and D lab. The company has the option of setting up
production facility to market this product straight away. If the product is successful, then over the three
years, the returns will be Rs 120 lakh with the probability of .70 . if the market does not respond
favourably, then the returns will be only Rs 15 lakh with probability of .30.
The company is considering whether it should test market this product building asmall pilot plant. The
chance that the test market will yield favourable response is .80. if the test market gives favourable
response, then the chance of successful total market improves to .85.
As the test market gives poor response then the chance of success in the total market is only .30. as
before the returns from successful market will be Rs 120 lakhs and from an unsuccessful market is only
Rs 15 lakh. The installation cost of setting up production facility is Rs 40 lakhs and the cost of test
marketing is Rs 5 lakh. (12 Marks)

Q.5. Taskbob services Ltd. is into the installation and repairs of kitchen appliances and is planning to expand
its services in tier II cities. Each centre needs one technician, so the decision is to be made for hiring of a
technician with substantial experience of 10 + year or a technician with 5+ years of experience. It is
known that technician to be hired to repair appliances that breakdown, following poison process with
average rate of 4/ hr. the cost of non-productive appliances is Rs 9/hr. the company has the option to
choose either a technician with 10 + years of experience or 5 + years of experience. Technician with 10+
years of experience charges Rs 7/hr and will repair kitchen appliances at an average of 7/hr. The
Technician with 5+ years of experience charges Rs 4/hr and will repair appliances at an average of 5/
hr. Which technician should be hired by the company? (12 Marks)

Q.6. Bajaj Ltd is into the manufacturing of bikes and manufactures around 200 bikes. Depending upon the
availability of raw materials and other conditions, the daily production has been varying from 196 bikes
to 204 bikes, whose probability distribution is given below:
Production/ day: 196 197 198 199 200 201 202 203 204
Probability: .05 .09 .12 .14 .20 .15 .11 .08 .06
The finished bikes are transported in a specially designed three storeyed lorry that can accommodate
only 200 bikes. Using the following 15 random numbers:
82 89 78 24 53 61 18 45 23 50 77 27 54 and 10, simulate the bikes waiting in the factory?
i. What will be the average number of bikes waiting in the factory?
ii. What will be the number of empty spaces in lorry? (12 Marks)

Q.7. A microwave oven costing 9000 Rs has a maintenance cost of 200 in the first year of its operation which
rises by Rs 2000, in each of the successive years. Assuming that the machine replacement can be done
only at the end of the year, determine the best age at which machine be replaced.
There is an offer to replace machine M1, by another machine M2 which costs Rs 8000. The machine M2
needs Rs 2000 to be spent on installation, has no salvage value and requires Rs 400 on maintenance in
the first year followed by an increase of Rs 800 per annum in the yearly expenditure on maintenance.
Should the machine M1 be replaced by machine M2? Justify. (12 Marks)

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Q.8. The sales manager of domestic products limited was informed by the company’s R & D department
about the completion of the prototype of a particular product. He consulted the production manager on
the time taken to produce the first batch of the product, which is needed for demonstration in his sales
promotion program. He also decided to invite a few industrial representatives to the demonstration of
this new product and through them to launch it in the market. The various activities involved in this
marketing project, estimated duration ( in days) and immediate predecessors are given in the following
table:
a. Draw the network diagram for the project. (5+5+2=12 Marks)
b. Identify the critical path.
c. Name the activities where float is allowed.
Immediate
Activity Time(days)
Activity Description Predecessor
P Collect data on specifications and capabilities 8 -
Q Prepare operation manual 7 -
R Chart out promotion program 6 P
S Make copies of manual and promotion material 8 Q
T Produce first batch 4 Q
U Prepare list of press representatives 8 Q
V Chief executive conference 5 R,S
W Promotional meetings 6 T
X Product demo 6 U
Y Press representatives return home 10 V,W,X

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