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St. Francis fnsfitute of Mana ement & Research

MMS I-SEMESTER II PRIL 2OIT
Date: 2ll04l17
Subject: Operations Research

Max Marks: 60
1) Qt." Duration: 3hrs
2) Attempt any four from the remaining (10 marks each)

Q' 1 The ABC furniture company manufactures tables,

chairs, desks, and bookcases. A table requires
10 feet of softwood and 12 feet of hardwood, and 20
takes 4 hours or ruuo, to produce. A chair
requires 7 foot of softwood, l0 feet of hardwood,
and 5 hours orruu*; uJesk requires 12 feet of
softwood, 18 feet of hardwood, and l0 hours of labor;
finally, a bookcase requires l0 feet of
softwood, L2 footof hardwood, and 9 hours of labor
to produce.
The company has the availability of only 1000 feet
of softwood, and 1500 feet of hardwood. The
factory employs 70 people, each of which works 8
hours per day; overtime is not permitted. These
products can be sold for the following prices:
table, $60/u nft; ;hair, siiii"it;desk, $90/unit;
bookcase, $1OO/unit. and

,1. Formulate the problem as an Lpp

2. Obtain the solution from the reports
3. Explain the term Reduced costi with respect to the given question
4'Determine whether and how the curent solution would
be sensitive to the following
changes?

An additional 100 feet of softwood

A reduction of 30 feet of hardwood
A decrease of20 rs in profit ofBookcases?
5' suppose one customer wants to buy 10 units ofDesks. would you recommend
6' By how much would profit increase if an additional 00 hrs of labour could it? Explain.
be obtained?
7 ' Suppose that the department
wants to introdlcg u n"* ptoduct say o *qririrg
of
. softwood, 10 feet of hardwood and 8 hrs of labour. rvri.r.et analysis shows that12thefeetnew
product D's estimated unit contribution is
Rs. 85. would it be worthwhile producing this
new product D?
Q.2
A firm prodr*es f*ur pr*d*afs. Ifrsre are fcur
nperalors w*o
ffues* fourpr*ducfs, rhg-rracessing firfie v#resfro,!ry
ae mpablaof pruduelng any o{ 10
opu"roi fo operafcn Ths fkmrecords g
hours a day and afjsw ss rntnfffes f*r tun*h. ?fta processlrg inrye rn ffririlfss and
each of theprodurfs are giv*nbel*w;
ffis prafrt far

Find tks *p{imaf asslg rl{netlt *f producfs fs, #ft#r&tfrrr-,

7,TT
Q.3 Lincoln General Hospital is trying to determine the nursing schedule of the pediatric department. The l0
nursing staff consists of full time nurses who work eight-hour shifts and part time mrses who work four
hour shifts. The supervisor of nurses divides the day into six four-hour periods. In each period, a
different level of demand (number of cases to be treated) is expected, which requires different numbers
of nurscs ro
to be hired. Th
De nrre(r. r ne requfeo ber of
ired numDer htitlme perlod
OI nUrSeS IOr eaon tS glven
iod is below: .
eiven bel
Time Period Index Time Period Required number of Nurses
I 7 amto l1 am 7
2 11 amto 3 pm 9
a
J 3pmtoTpm l2
4 7 pmto 11 pm 5
5 llpmto3am 4
6. 3 amto 7 am a
J
It is also required that there must be at least 2 full time nurses at each time periodand the number of
part time nurses cannot exceed the number of full time nurses in any time period. The full time nurses
get paid $160 per shift, while the part time nurses get paid $50 per shift. The normal shifts can begin at
the start ofany four-hour periods.
Formulate it as a linear programming problem

Q.4 A company has factories at A, B and C which supply warehouses at D, E and F.

Weekly factory capacities are 200, 160 and 90 units respectively. Weekly warehouse requirements 10
(demands) are 180, t20 and 150 units respectively. Unit shipping costs (in Emalangeni) are as follows:

Determine the optimum distribution for this company to minimize shipping costs.
a) Explain the term reduced cost from the report.
b) Explain the term shadow price from the report
c) Using the shadow price information from the solution, provide a recommendation to the
company for capacity expansion at their warehouses

Q.5 A company is currently involved in negotiations with its union on the upcoming wage contract. With '.)
the aid of n outside mediator, the table below was constructed by the management group. The pluses
are t6 be interpreted as proposed wage increases while a minus figure indicates that a wage reduction is
proposed. The mediator informs the management group that he has been in touch with the union and
that they have constructed a table that is comparable to the table developed by the management. Both
the company and the union must decide on an overall strategy before negotiations begin. The
management group understands the relationship of company strategies to union strategies in the
following table but lacks specific knowledge of game theory to select the best strategy for them. Assist
the management on this problem. What game value and strategies are available to the opposing group

Company Union strategies

strategies
IJ1 IJ2 u3 IJ4

CI +0.25 +0.27 +0.35 -0.02

s4,
 C2 +0.20 +0.1 6 +0.09 +0.08

C3 +0.14 +4.12 +0.15 +0.1 3

C4 +0.30 +at4 +0. lg 0.00

Find the optimal strategies for both Cqmpany and the union and the value of the game
Q.6 Jenny Lind is a writer of romance novels. A movie company and a TV network both want exclusive l0
rights to one of her more popular works. If she signs with the network, she will receive a single lump
sum, but if she signs with the movie company, the amount she will receive depends on the market
response to her movie. What should she do?

I Movie company Payouts

n Small box office - $200,000
tr Medium box office - $1,000,000
tr Large box office - $3,000,000
I TV Network Payout
tr Flat rate - $900,000
I Probabilities
tr P(Small Box Office):0.3
tr P(Medium Box Office):0.6
tr P(Large Box Office):0.1
I What would be her decision based on:
E Maximax?
E Maximin?
E Expected Return?
E Minimax regret approach
E Hurwicz criterion (o:0.8)
Q.7 The oil India corporations is considering whether to go for offshore drilling contract to be awarded
in
Bombay high. If they bid, value would be rs 600 million with 65 %o chanceof gaining the contract.
The 10
corporation may set up a new drilling operation or move already existing opeiation,-which has proved
successful to new site. The probability of success and expected returns ur" ur follows:

Outcome New drilling operation Existing operation

Expected value (Rs Expected value (Rs

Probability Probability
in million) in million)
Success 0.7 5 800 0.85 700
Failure 0.25 200 0.15 3s0

If the corporation does not bid or loose the contract they can use Rs 600 million to modernize their
operation. This would result in a return of either 5o/o or 8%o onthe sum invested with prob 0.45 and
0.55 respectively.
(a) Construct a decision tree for the problem showing clearly courses of action
(b) By applying an appropriate decision criterion recommended whether or not the corporation
should bid the contract

3(3