Quantitative

techniques

Assignment

Prateek Bhati

FB 1 Roll No 46
ANSWERS

A:1
Linear programming is a quantitative technique for selecting an optimum plan. It is an
efficient search procedure for finding the best solution to a problem containing many
interactive variables. The desired objective is to maximize some function e.g., contribution
margin, or to minimize some function, e.g., costs. Determination of the optimum objective
is usually subject to various constraints or restrictions on possible alternatives. These
constraints describe availabilities, limitations, and relationships of resources to alternatives.

The key assumption is linearity, which prevails in two respects. First, the contribution
margin or cost associated with with one unit of product or activity is assumed to be the
same for all identical units. Second, resource inputs per unit of activity are assumed to be
the same for all units. Another assumption inherent in linear programming is that all factors
and relationships are deterministic.

Accounting data such as the contribution margin or cost factors would be used in
determining the objective -  to maximize the contribution margin or to minimize cost.
Accounting data would also be used to establish the constraints. Such constraints might
include one or more of the following: machine capacity, labor force, quantity of output
demanded, time, or capital.

Once the data are available, the linear programming model (equations) might be solved
graphically, if no more than two variables are involved, or by the simplex method. When the
model contains many variables and constraints, the solution may require the use of a
computer.
A2:
In linear programming problems, the unit cost refers to the directly traceable variable cost
rather than the total cost.

A3:
(a = 0, b = 20); $3(0) + $4(20) = $80 CM
(a = 20, b = 10); $3(20) + $4(10) = $100 CM - Maximum CM
(a = 30, b = 0); $3(30) + $4(0) = $90 CM

A4:
The Simplex method is an iterative process which approaches an optimum solution in such a
way that an objective function of maximization or minimization is fully reached. Each
iteration in this process shortens the distance (mathematically and graphically) from the
objective function.

A5:
CM = 2a + 5b + 4c
Assembling: 2a + 3b + 2c ≤ 30,000
Painting: 1a + 2b + 2c ≤ 38,000
Finishing: 2a + 3b + 1c ≤ 28,000

A6:
C = 25a + 10b
Subject to: a +b = 50; a ≥ 20; b ≤ 40

A7:
Components of a simplex tableau:

 The objective row contains the coefficients of the objective function.

 The variable row contains the variables of the problem, including slack variables.
 The problem row contains the coefficient of the variables in the constraints with one
row for each constraint. Variable not included in a constraint are assigned zero
coefficients. New problem rows are computed with each iteration.
 The objective column represents the contribution margin per unit of the variables in
the solution, and receives different entries at each iteration.
 The variable column contains the variables used to find the solution. In the first
tableau, only slack and artificial variables are entered in this column, since a no-
production situation is the starting point of the iteration process.
 The quantity column shows the constant values of the constraints in the first tableau,
it shows the solution mix.
 The index row contains values which indicate whether an optimum solution has been
reached; if there are any negative numbers in it, an optimum solution has not yet
been reached. The value in the objective column represents the total contribution
margin.

A8:
The slack variable is a fictitious variable that takes up the slack in the inequalities.
Mathematically speaking, slack variables are treated like other variables and their fictitious
character disappears in the solution process. Slack variables enter the objective function but
receive a coefficient of zero and do not influence the final result.
A9:
(a) The index row is computed as follows:
 

Step 1 and 2: Step 3:

4(7) + 4(0) = 28 28 - 0 = 28

2 /3(7) + 4/3(0) = 14/3 14/3 - 6 = -4/3

1(7) + 0(0) = 7 7 -7 = 0

1/3(7) + [-1/3(0)] = 7/3 7/3 - 0 = 7/3

0(7) + 1(0) = 0 0 -0 = 0

(b) An optimum solution has not been reached because a negative figure, -4/3, still remains
in the index row. Hence, the contribution margin can be increased by introducing x into
solution

(c) Product y would be reduced by 1/3 of a unit.

A10:
The artificial variable is a computational device allowing two types of restrictions to be
treated: the equality type (=) and the greater-than-or-equal-to type (≥).

A11:
 

(a) $14 (1/2) = $7

  $12 (-1/4) = -3
        ------
        $4
        ====
(b) (1) (2)
Product Units S2 S2
  x 3 3/4 4*
  y 2 -1 / 2 -4
*Maximum decrease over which shadow price of S2 is valid

A12:
 

(a) 4 (b) 3 (c) 3

(d) 4 (e) 3 (f) 3
(g) 2    
 A13: Dynamic programming involves breaking a problem into a set of smaller problems and
then reassembling the result. It is best suited for decisions that must be in sequence and that
influence future decisions in sequence.

A14: Let us first write the sample space S of the experiment.

S = {1,2,3,4,5,6}

 Let E be the event "an even number is obtained" and write it down.

E = {2,4,6}

 We now use the formula of the classical probability.

P(E) = n(E) / n(S) = 3 / 6 = 1 / 2

A15:

The sample space S is given by.

S = {(H,T),(H,H),(T,H),(T,T)}

 Let E be the event "two heads are obtained".

E = {(H,H)}

 We use the formula of the classical probability.

P(E) = n(E) / n(S) = 1 / 4

A16::
A17:

a) The sample space S of two dice is shown below.

S = { (1,1),(1,2),(1,3),(1,4),(1,5),(1,6)
         (2,1),(2,2),(2,3),(2,4),(2,5),(2,6)
         (3,1),(3,2),(3,3),(3,4),(3,5),(3,6)
         (4,1),(4,2),(4,3),(4,4),(4,5),(4,6)
         (5,1),(5,2),(5,3),(5,4),(5,5),(5,6)
         (6,1),(6,2),(6,3),(6,4),(6,5),(6,6) }

 Let E be the event "sum equal to 1". There are no outcomes which correspond to
a sum equal to 1, hence

P(E) = n(E) / n(S) = 0 / 36 = 0

 b) Three possible ouctcomes give a sum equal to 4: E = {(1,3),(2,2),(3,1)}, hence.

P(E) = n(E) / n(S) = 3 / 36 = 1 / 12

 c) All possible ouctcomes, E = S, give a sum less than 13, hence.

P(E) = n(E) / n(S) = 36 / 36 = 1

A 18:

 The sample space S of the experiment described in question is as follows

S = { (1,H),(2,H),(3,H),(4,H),(5,H),(6,H)
           (1,T),(2,T),(3,T),(4,T),(5,T),(6,T)}

 Let E be the event "the die shows an odd number and the coin shows a head".
Event E may be described as follows

E={(1,H),(3,H),(5,H)}

 The probability P(E) is given by

P(E) = n(E) / n(S) = 3 / 12 = 1 / 4

A 19:

a) x = 80 , z = (80 - 70)/10 = 1

Probablity for grade to be greater than 80 = 1 - 0.8413 = 0.1587

b) x = 50 , z = (50 - 70)/10 = -2

Probablity for grade to be less than 50 = 0.0228

c) The z-scores for x = 50 and x = 80 have already been calculated above.

Probablity for grade to be between 50 and 80 = 0.8413 - 0.0228 = 0.8185

d) 0.1587 * 1000 = 159 (rounded to the nearest unit)