AMITY UNIVERSITY, UTTAR PRADESH

AMITY INTERNATIONAL BUSINESS SCHOOL

MBA – IB/3CMBA
ASSIGNMENT No. 2
OPERATIONS RESEARCH

Last date of submission: 8th March 2010

Notes:
1. The assignment is for three chapters – Inventory (8 numericals), decision theory
(6 numericals) game theory (21 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 and 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
INVENTORY – NUMERICALS DONE IN THE CLASS

NUMERICALS 1-4
 INVENTORY – ASSN. NUMERICALS
Q. NO. 1
THE INVENTORY MANAGER IN A LARGE RETAIL
STORE HAS TO DECIDE THE INVENTORY LEVELS FOR
1 KG PACKETS OF A PARTICULAR BRAND OF
DETERGENT POWDER. THE ANNUAL DEMAND IS
ESTIMATED TO BE 40,000 PACKETS. THE PRICE PER
PACKET IS RS 80. THE COST OF PROCUREMENT PER
ORDER IS RS 600. INVENTORY CARRYING COST IS 15
% PER ANNUM. THE STORE IS OPEN 300 DAYS IN A
YEAR. LEAD TIME IS 6 WORKING DAYS.
FIND THE ECONOMIC ORDER QUANTITY, REORDER
LEVEL, INVENTORY CYCLE TIME, ANNUAL TOTAL
COST, NUMBER OF ORDERS PER YEAR, VALUE OF
OPTIMAL ORDER QUANTITY, RUPEE VALUE OF
AVERAGE INVENTORY, QUANTITY TO BE STOCKED IN
THE MAIN IB AND THE AUXILIARY BIN AT THE
BEGINNING OF THE INVENTORY CYCLE IN THE TWO
BIN SYSTEM.
INVENTORY - ASSN. NUMERICALS

Q. NO. 2.
WHAT IS THE EFFECT ON
ANNUAL TOTAL COST IF THE
VENDOR OFFERS A DISCOUNT
OF Rs 5 PER PACKET, PROVIDED
THE QUANTITY ORDERED IS
MINIMUM 4000 Nos. SHOULD
THE OFFER BE ACCEPTED?
INVENTORY - ASSN. NUMERICALS

Q. NO.3
IF THE VENDOR AGREES TO
DELIVER 150 PACKETS PER DAY
AT NO EXTRA COST, WHAT
SHOULD BE THE ECONOMIC
ORDER QUANTITY? ALSO
DETERMINE THE ANNUAL TOTAL
COST.
INVENTORY - ASSN. NUMERICALS

Q. NO. 4
IF COST OF SHORTAGE PER ITEM
IS 25 PERCENT OF THE ANNUAL
INVENTORY CARRYING COST PER
ITEM, DETERMINE THE EOQ AND
THE ANNUAL TOTAL COST
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 COMPANY IS MARKETING THREE TYPES OF TOILET SOAPS - SONA, SONA DELUX AND SONA SUPER. A
MARKET RESEARCH COMPANY HAS GIVEN FOLLOWING ESTIMATE OF DEMAND FOR THE THREE VARIETIES FOR THE
NEXT MONTH. THE COMPANY HAS ESTIMATED THE PROFIT (PAY OFF) FOR VARIOUS LEVELS OF DEMAND AS GIVEN
BELOW. DETERMINE WHICH PRODUCT SHOULD THE COMPANY MAKE IN THE NEXT MONTH TO MAXUIMISE ITS PROFIT.

TYPE OF PROBABILITY OF PAY OFF (Rs

SOAP LAKHS) FOR
LOW MEDIUM HIGH LOW MEDIU HIGH
LEVEL LEVEL LEVEL LEVEL M LEVEL
DEMAN DEMAN DEMAN DEMAN LEVEL DEMAN
D D D D DEMAN D
D
SONA 0.10 0.20 0.70 1.00 2.00 3.00
SONA 0.20 0.30 0.50 2.00 3.00 6.00
DELUX
SONA 0.10 0.50 0.40 (- 10.00 4.00
GAME THEORY – NUMERICALS DONE IN THE CLASS

NUMERICALS 1-15
 ASSN NUMERICAL 1 SEC B
TWO PERSON, ZERO SUM, MIXED STRATEGY 2x2 GAME

FIND THE OPTIMAL STRATEGIES FOR A AND B IN

THE FOLLOWING GAME WHICH GIVES PAY OFF
FROM A’s PERSPECTIVE AND ALSO DETERMINE THE
VALUE OF THE GAME

A’S STRATEGIES
B’s STRATEGIES
b1 b2
a1 6 8

a2 10 4
 ASSN NUMERICAL 2 SEC B
TWO PERSON, ZERO SUM mxn GAME
THE PAYOFF MATRIX (A’s GAIN) FOR A GAME INVOLVING TWO PLAYERS IS GIVEN
BELOW. SOLVE IT USING THE DOMINANCE RULE.

B’s
STRATEGIES
A’S STRATEGIES
b1 b2
b3
a1 1 6 5

a2 0 4 3

a3 4 6 0

a4 -2 3 4
 ASSN NUMERICAL 3 SEC B
TWO PERSON, ZERO SUM 2xn GAME
THE PAYOFF MATRIX (A’s GAIN) FOR A GAME INVOLVING TWO PLAYERS IS GIVEN
BELOW. SOLVE IT USING THE SUB GAME RULE.

A’S STRATEGIES
B’s
STRATEGIES
b1 b2
b3
a1 -3 -1 6

a2 5 3 2
 ASSN NUMERICAL 4 SEC B
TWO PERSON, ZERO SUM 2xn GAME

THE PAYOFF MATRIX (A’s GAIN) FOR A GAME INVOLVING TWO PLAYERS
IS GIVEN BELOW. SOLVE IT USING THE GRAPHICAL METHOD.

A’S STRATEGIES
B’s
STRATEGIES
b1 b2
b3
a1 2 5 6

a2 7 3 4
 ASSN NUMERICAL 5 SEC B
TWO PERSON, ZERO SUM mxn GAME
THE PAYOFF MATRIX (A’s GAIN) FOR A GAME INVOLVING TWO PLAYERS IS GIVEN
BELOW. SOLVE IT USING BROWN’S ALGORITHM

B’s
STRATEGIES
b1 b2
A’S STRATEGIES

b3
a1 5 4 3

a2 8 9 7

a3 6 4 8
 ASSN NUMERICAL 6 SEC B
TWO PERSON, ZERO SUM 2xn GAME
THE PAYOFF MATRIX (A’s GAIN) FOR A GAME INVOLVING TWO PLAYERS IS GIVEN
BELOW. REFORMULATE IT AS A LPP AND SOLVE IT USING THE GRAPHICAL
METHOD AND THE SIMPLEX METHOD

A’S STRATEGIES
B’s
STRATEGIES
b1 b2 b3
a1 4 -1 0

a2 -1 4 2