QUESTION ONE

a) In a bank, 20 customers on the average are served by a casher in an hour. If the service
time has exponential distributions, what is the probability that;
i) It will take more than 10 minutes to serve a customer?
ii) A customer shall be free within 4 minutes?

b) ABC Manufacturing Company purchases 9,000 parts of a machine for its annual
requirement, ordering one month’s usage at a time. Each part costs Kshs. 20. The
ordering cost per order is Kshs. 15 and the carrying charges are 15% of the average
inventory per year. You have been asked to suggest a more economical purchasing
policy for the company. What advice would you offer and how much would it save the
company per year?
c) The following data for the activities of a project are available:
ACTIVITY IMMEDIATE DURATION (DAYS)
PREDECESSOR
A - 6
B - 4
C - 7
D A,B,C 5
E A,B,C 6
F D 9
G E 4
H F,G 8
I F,G 6
J H 7

Required:
i. Draw the network, number the nodes, find the project completion time and
calculate total, free and independent floats for the activities
ii. When the activity duration of G is doubled, identify the critical path

a) Consider the two person zero sum game between players A and B given the
following pay-off table:
  Player B Strategies
    1 2 3 4
Player A 1 2 2 3 -1
Strategies 2 4 3 2 6
Required:
i) Using the maximin and minimax values, is it possible to determine the value of
the game? Give reasons.
ii) Use graphical methods to determine optimal mixed strategy for player A and
determine the value of the game.

QUESTION TWO
a)
b) The milk plant at a city distributes its products by trucks, loaded at the loading
dock. It has its own fleet of trucks plus trucks of a private transport company. This
 transport company has complained that sometime its trucks have to wait in line and
thus the company loses money paid for a truck and driver that is only waiting. The
company has asked the milk plant management either to go in for a second loading
dock or discount prices equivalent to the waiting time. The following data are
available:
Average arrival rate (all trucks) = 3 per hour
Average service rate = 4 per hour
The transport company has provided 40% of the total number of trucks. Assuming that
these rates are random according to Poisson distribution, determine;
i. The probability that a truck has to wait
ii. The waiting time of a truck that waits
iii. The expected waiting time of company trucks per day

QUESTION THREE
a)
b) A particular item has a demand of 9,000 units per year. The cost of one
procurement is Kshs. 100 and the holding cost per unit is Kshs. 2.40 per year. The
replacement is instantaneous and no shortages are allowed. Determine:
i. The economic lot size
ii. The number of orders per year
iii. The time between orders
iv. The total cost per year if the cost of one unit is Kshs. 1.00