Code No: 23MBA NR-R5-R7

M.B.A. II Semester Regular Examinations, Jul/Aug 2008

QUANTITATIVE ANALYSIS FOR BUSINESS DECISIONS
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Time: 3 hours Max Marks: 60
Answer any FIVE Questions
All Questions carry equal marks
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1. What are the essential characteristics of Operations Research?

2. Three months ago, the executive board of a company authorized the development
of a new product. If marketed at its current stage of development, the product
has probabilities of 0.50 of returning a large pay-off (Rs. 2, 00,000), 0.30 for a
medium (Rs. 1, 00,000) pay-off, and 0.20 for a small (Rs. 20,000) pay-off. These
pay-offs are net profit after expenses and first-stage development costs. The board
believes that if an additional Rs. 30,000 is spent on second stage development,
reducing each pay-off by Rs. 30,000, and the further development is successful, the
probabilities of the large, medium and small pay-offs will be changed to 0.80, 0.15
and 0.05 respectively. However, the first-stage probabilities will apply if further
development is not successful. The board believes the probability, is 0.60 that
second-stage development will be successful. By tee diagram analysis, determine
whether the board should authorize further development or market the product as
its current stage of development.

3. A company manufacturers two kinds of machines, each requiring a different man-

ufacturing technique. The deluxe machine requires 18 hours of labour, 9 hours of
testing, and yields a profit of Rs. 400. The standard machine requires 3 hours of
labour, 4 hours of testing, and yields a profit of rs. 200. There are 8 hours of labour
and 600 hours of testing available each month. A marketing forecast has shown the
monthly demand for the standard machine to be no more than 150. Management
wants to know the number of each model to produce monthly that will maximize
total profit. Formulate and solve this as a linear programming problem.

4. The Acme Company has four factories that ship products to five warehouses. The
shipping costs, requirements, capacities, are shown in table. Find the initial solution
using vogels approximation method. What is the total cost of the optimal solution?

Shipping Cost Per Case to Warehouse

Factory W1 W2 W3 W4 W5 Capacity
F1 Rs.1 Rs.3 Rs.4 Rs.5 Rs.6 80,000
F2 Rs.2 Rs.2 Rs.1 Rs.4 Rs.5 60,000
F3 Rs.1 Rs.5 Rs.1 Rs.3 Rs.1 60,000
F4 Rs.5 Rs.2 Rs.4 Rs.5 Rs.4 50,000
Demand 60,000 70,000 50,000 30,000 40,000 250,000

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Code No: 23MBA NR-R5-R7
5. (a) For the following pay-off matrix, determine the best strategies and the value
of the game:

Y
J K L
X p 60 50 40
q 70 70 40
r 80 60 75
(b) Briefly explain the limitations of game theory.

6. A box-office ticket window is manned by single server. Customers arrive to purchase

tickets according to a poisson input process with a mean rate of 30 per hour. The
time required to serve a customer has an exponential distribution with mean of 80
seconds. Determine the following:

(a) Fraction of time the server is busy

(b) The probability of having more than 12 customers in the system.
(c) The average number of customers queuing for more than 3 minutes.

7. At Dr. Raju’s clinic, patients arrive with an average duration of 12 minutes between
one arrival and next. The average service time (treatment) is assumed to be 28 min.
Simulate the system till 11am assuming to be starting from 9.00 am immediately
after the clinic is opened. Also calculate the average waiting per patient.

8. Explain in brief: Pert, CPM, Crashing, dummy activities and lead time with ref-
erence to project management.

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