AMITY UNIVERSITY, UTTAR PRADESH

AMITY INTERNATIONAL BUSINESS SCHOOL

MBA – IB/3CMBA
ASSIGNMENT No. 3
OPERATIONS RESEARCH

Last date of submission: 1st Apr 2010

Notes:
1. The assignment is for two chapters – Decision theory (6 numericals), Queuing
theory (9 numericals).
2. The assignment must be hand written and should not be copied from another
student’s assignment.
3. The assignment must be done individually by each
student and submitted to the class representative
4. The first sheet of the
assignment should be a computer print out and must indicate the section, name and
roll number of the student and should contain chapter-wise tables giving question
numbers in one column. There should be another column where a tick should be
put against the question numbers that the student has done. If the question has
more than one part, then the second column must indicate the number of parts
attempted. The total number of questions done by the student should be indicated
in the last row of the sheet.
5. The class representative must obtain a copy of the list of students from the
office, tick the names of those students who have submitted the assignment, put a
cross against the names of those who have not submitted, indicate the total
number of questions done against the name of each student, sign this list and hand
it over along with all the assignments on or before the last date mentioned above
DECISION THEORY - NUMERICAL 1

AN AUTOMOBILE COMPANY REQUIRES 5000

CONDENSERS PER MONTH FOR A PARTICULAR MODEL
OF CAR. IF IT IS PURCHASED, THE COST IS RS 120 EACH.
IF IT IS MANUFACTURED IN COMPANY’S FACTORY, FIXED
COST IS RS 7.50 LAKHS AND THE VARIABLE COST IS RS
110 EACH. SHOULD THE COMPANY MAKE OR BUY THE
CONDENSERS?
DECISION THEORY - NUMERICAL 2

A GROCER BUYS LOAVES OF BREAD AT THE RATE OF

Rs 120 PER DOZEN AND SELLS THEM FOR Rs 168 PER
DOZEN. LOAVES OF BREAD NOT SOLD ON THE DAY OF
PURCHASE ARE SOLD THE NEXT DAY AT RS 108 PER
DOZEN. RECORD OF SALES OF PAST 50 DAYS IS GIVEN
BELOW. PREPARE THE PAY OFF TABLE, REGRET TABLE,
EXPECTED PAY OFF VALUE TABLE, EXPECTED REGRET
VALUE TABLE, IN ORDER TO DETERMINE HOW MANY
DOZENS OF LOAVES OF BREAD SHOULD HE BUY THE
NEXT DAY TO MAXIMIZE HIS PROFIT BASED ON EACH OF
THESE TABLES. ALSO DETERMINE EPPI AND EVPI.

DAILY DEMAND 2 3 4 5 6
DOZ OF LOAVES PER DAY
FREQUENCY 10 15 12 8 5
NO. OF DAYS
 DECISION THEORY - NUMERICAL 3

USING DATA PROVIDED IN NUMERICAL 2, DETERMINE THE

COURSE OF ACTION THAT THE GROCER SHOULD ADOPT
USING VARIOUS MODELS FOR UNCERTAIN CONDITIONS –
LAPLACE PRINCIPLE, MAXI-MIN PRINCIPLE, MAXI-MAX
PRINCIPLE, HURWICZ PRINCIPLE AND SAVAGE PRINCIPLE,
IN EACH CASE WITHOUT TAKING INTO CONSIDERATION
THE PROBABILITIES OF OCCURRENCE OF THE EVENTS.
 DECISION THEORY - NUMERICAL 4

THE MUNICIPAL CORPORATION OF DELHI HAS PROPOSED

AN INCREASE IN PROPERTY TAX FOR PROVIDING
ADDITIONAL CIVIC AMENTIES.
IT WAS FOUND THAT 40 PERCENT OF THE PROPERTY
OWNERS AND 80 PERCENT OF THE NON PROPERTY
OWNERS FAVOURED THE PROPOSAL.
IF 70 PERCENT OF THE VOTERS IN DELHI ARE
PROPERTY OWNERS, DETERMINE THE PROBABILITY
THAT A VOTER SELECTED AT RANDOM FAVOURS
PROPERTY TAX INCREASE, USING BAYES’ THEOREM,
POSTERIOR PROBABILITY TABLE AND DECISION TREE.
 DECISION THEORY - NUMERICAL 5
MANUFACTURER ‘A’ HAS 30 PERCENT OF THE MARKET SHARE OF
COLOUR TVs. MANUFACTURER ‘B’ HAS 70 PERCENT MARKET SHARE
OF COLOUR TVs. MANUFACTURER ‘A’ HAS A 90 PERCENT CHANCE OF
INTRODUCING A NEW MODEL. IF ‘A’ INTRODUCES A NEW MODEL
THERE IS 70 PERCENT CHANCE THAT ‘B’ WOULD ALSO INTRODUCE A
NEW MODEL. IF BOTH ‘A’ AND ‘B’ INTRODUCE NEW MODELS, THEN
THERE IS 20 PERCENT CHANCE THAT ‘A’ WILL HAVE 80 PERCENT
MARKET SHARE, 20 PERCENT CHANCE THAT ‘A’ WILL HAVE 60
PERCENT MARKET SHARE, AND 60 PERCENT CHANCE THAT ‘A’ WILL
HAVE 40 PERCENT MARKET SHARE.
IF ‘A’ INTRODUCES A NEW MODEL BUT ‘B’ FAILS TO INTRODUCE A
NEW MODEL, THEN THERE IS 80 PERCENT CHANCE THAT ‘A’ WILL
HAVE 80 PERCENT MARKET SHARE AND 20 PERCENT CHANCE THAT
‘A’ WILL HAVE 50 PERCENT MARKET SHARE. THERE WILL BE NO
CHANGE IN THE MARKET SHARE IF ‘A’ FAILS TO INTRODUCE A NEW
MODEL. WHAT IS THE PROBABILITY THAT ‘A’ WOULD HAVE 60
PERCENT OR MORE SHARE OF THE MARKET?
 DECISION THEORY- NUMERICAL 6
A DEALER OF A REPUTED COMPUTER COMPANY HAS ESTIMATED FOLLOWING
PROBABILITIES OF WEEKLY DEMAND FOR A LOW COST MODEL OF LAPTOP.
DEMAND≤4 5 6 7 8 9 10 ≥11
PROBABILITY 0 0.05 0.10 0.15 0.35 0.30 0.05 0
IF A LAPTOP OF THIS MODEL IS NOT SOLD IN A PARTICULAR WEEK, THEN IT IS
SOLD NEXT WEEK AND THE LOSS BY WAY OF INVENTORY CARRYING COST IS
Rs200 PER LAPTOP. IN CASE DEMAND IS NOT MET DUE TO A STOCKOUT, THE
DEALER LOSES A POTENTIAL PROFIT OF Rs 1000.
PREPARE THE PAY OFF TABLE, REGRET TABLE, EXPECTED PAY OFF VALUE
TABLE, EXPECTED REGRET VALUE TABLE, IN ORDER TO DETERMINE THE SIZE OF
THE ORDER FOR NEXT WEEK. CALCULATE EPPI AND EVPI.
ALSO DETERMINE THE SIZE OF THE ORDER USING VARIOUS MODELS FOR
UNCERTAIN CONDITIONS – LAPLACE PRINCIPLE, MAXI-MIN PRINCIPLE, MAXI-MAX
PRINCIPLE, HURWICZ PRINCIPLE AND SAVAGE PRINCIPLE, IN EACH CASE
WITHOUT TAKING INTO CONSIDERATION THE PROBABILITIES OF OCCURRENCE
OF THE EVENTS.
QUEUING THEORY – NUMERICALS DONE IN THE CLASS

NUMERICALS 1-8
 ASSN NUMERICAL SEC D

AN AIRPORT HAS TWO RUNWAYS, ONE FOR LANDING AND ONE FOR TAKING OFF. PLANES ARRIVE
DURING ALL 24 HOURS OF THE DAY AT AN AVERAGE RATE OF 10 PER HOUR AND OCCUPY THE
RUNWAY, ON AN AVERAGE, FOR 5 MINUTES PER LANDING. BOTH ARRIVAL AND LANDING HAVE
MARKOVIAN PROPERTY. THE COST OF A PLANE CIRCLING OVER THE AIRPORT WAITING FOR ITS
TURN TO LAND IS Rs 24,000 PER HOUR. WHAT IS THE ANNUAL COST INCURRED BY VARIOUS
AIRLINES USING THIS AIRPORT DUE TO WAITING TIME FOR LANDING? ALSO DETERMINE ALL THE
CHARACTERISTICS OF THE QUEUING SYSTEM (SEE NEXT SLIDE). THERE IS A PROPOSAL TO BUILD
TWO MORE RUNWAYS ONE FOR LANDING AND ONE FOR TAKE OFF. THE ADDITIONAL RUNWAY FOR
LANDING WILL BRING DOWN THE WAITING TIME TO ABOUT HALF THE PRESENT WAITING TIME. THE
COST PER RUNWAY IS ESTIMATED AS Rs 100 CRORES AND THE AIRPORT AUTHORITY WOULD MAKE
THE INVESTMENT ONLY IF ROI IS MORE THAN 18 PERCENT PER ANNUM. SHOULD ANOTHER RUNWAY
FOR LANDING BE CONSTRUCTED?

PROBABILITY THAT THERE WILL BE UPTO 3 ARRIVALS IN THE NEXT 12 MINUTES

PROBABILITY THAT EXACTLY 2 PLANES WILL LAND IN THE NEXT 10 MINS
PROBABILITY THAT THE SYSTEM IS BUSY AT A GIVEN POINT IN TIME
PROBABILITY THAT THE SYSTEM IS IDLE AT A GIVEN POINT IN TIME
IDLE PERIOD FOR THE RUNWAY DURING A 24 HOUR PERIOD
THE PROBAB THAT A PLANE ARRIVING AT THE AIRPORT WILL i) GET CLEARANCE TO
LAND IMMEDIATELY, ii) BE FIRST IN THE QUEUE, iii) BE SECOND IN THE QUEUE
AVERAGE NUMBER OF PLANES IN THE SYSTEM
AVERAGE NUMBER OF PLANES IN EMPTY OR NON EMPTY QUEUES
AVERAGE NUMBER OF PLANES IN NON EMPTY QUEUES
AVERAGE TIME THAT A PLANE WILL SPEND IN THE QUEUE
AVERAGE TIME THAT A PLANE WILL SPEND IN THE SYSTEM
PROBABILITY THAT WAITING TIME IN THE SYSTEM IS MORE THAN 30MINUTES
PROBABILITY THAT WAITING TIME IN THE QUEUE IS MORE THAN 20 MINUTES