Demand per day

Payoff Matrix 18 19 20 21 22 23
18 900 900 900 900 900 900
19 850 950 950 950 950 950
Quantity to be stocked 20 800 900 1000 1000 1000 1000
21 750 850 950 1050 1050 1050
22 700 800 900 1000 1100 1100
23 650 750 850 950 1050 1150

Demand per day

Payoff Matrix 18 19 20 21 22 23 MaxMin Maximax
18 900 900 900 900 900 900 900 900
19 850 950 950 950 950 950 850 950
Quantity to be stocked 20 800 900 1000 1000 1000 1000 800 1000
21 750 850 950 1050 1050 1050 750 1050
22 700 800 900 1000 1100 1100 700 1100
23 650 750 850 950 1050 1150 650 1150
Maximum Earning
Potential 900 1150
Decision: 18 23

Demand per day

Regret Matrix 18 19 20 21 22 23
18 250 250 250 250 250 250
19 300 200 200 200 200 200
Quantity to be stocked 20 350 250 150 150 150 150
21 400 300 200 100 100 100
22 450 350 250 150 50 50
23 500 400 300 200 100 0
CP of diaries: 100 Per copy Profit: 50
SP of diaries: 150 Per copy Loss: 50
Scrap: 50 Per copy

Conditions:
If D=S S*Profit
If D>S S*Profit
If D<S D*Profit-(S-D)*Loss

0.6
Laplace Hurwicz
900 900
933 910
950 920
950 930
933 940
900 950

950 950
20 or 21 23
A businessman has two independent investments A and B available to him, but he lacks the capital to undertake both of them simultaneously. He can choos
or if A is successful then take B, or vice versa. The probability of success on A is 0.7, while for B it is 0.4. Both investments require an initial capital outlay of R
nothing if the venture is unsuccessful. Successful completion of A will return Rs. 3,000 (over cost), successful completion of B will return Rs. 5,000 (over cost
determine the best strategy.

Solution:
Failure 0.3 2,000

EMV= Failure 0.6

EMV= 800 2,000
1500 Success 3
1
D2 5,000
Accept A 0.7 Success 0.4
3000 0
Stop
D1 EMV= Do nothing
1500 Success
Success 0.7 3000
4
Accept B 0.4
D3
5000 Failure 0.3 2000
EMV= 2 0
800 Stop
2000

Failure 0.6
multaneously. He can choose to take A first and then stop,
an initial capital outlay of Rs. 2,000, and both return
return Rs. 5,000 (over cost). Draw the decision tree and
 Random no. table for Supply
Supply Demand Supply

start of end of
Availability No. of Demand No. of Availabilit No. of days Cum. Freq. random random
(kgs) days (kgs) days y (kgs) no of days
no no

10 40 10 50 10 40 40 0 39
20 50 20 110 20 50 90 40 89
30 190 30 200 30 190 280 90 279
40 150 40 100 40 150 430 280 429
50 70 50 40 50 70 500 430 499

CP = 20 ₹ SP = 30 ₹ profit =
AVAILABILITY
No of No of loss
Random Random days days (unearned Items to be
Supply Demand supply demand Buys at ₹ Sells at ₹ profit) discarded sales ₹ profit ₹
31 18 10 10 200 300 0 N.A. 300 100
63 84 20 20 400 600 0 N.A. 600 200
15 79 10 20 200 600 80 N.A. 600 120
7 79 10 20 200 600 80 N.A. 600 120
43 75 20 20 400 600 0 N.A. 600 200
81 27 20 10 400 300 0 10 300 100
 Random no. table for Demand
Demand

Cum. start of end of

Equivalent Demand No. of Freq. no random random Equivalent
availibity (kgs) days availibity
of days no no

10 10 50 50 0 49 10
20 20 110 160 50 159 20
30 30 200 360 160 359 30
40 40 100 460 360 459 40
50 50 40 500 460 499 50

10 ₹
The average time between successive arrivals at an automobile service station, which works 8 hours a day, is 30 minutes. The service station has one mechanic who ca
repair the incoming vehicles at an average rate of 3 per hour. The mechanic is paid Rs. 140 per day while the cost of waiting time, in terms of customer dissatisfaction
lost goodwill, is Rs. 20 per hour of the time spent waiting in the queue. The owner is contemplating to replace the mechanic by another one who demands Rs. 180 per
and who can repair 4 vehicles on the average. Under conditions of the single server model, calculate the total cost per day at present and the total cost per day if the p
mechanic is replaced. Is it advisable to replace the existing mechanic.

Solution:
Mechanic 1 Mechanic 2
Arrival rate = λ = 2 vehicle/hr Arrival rate = λ = 2 vehicle/hr
Service rate = μ = 3 vehicle/hr Service rate = μ = 4 vehicle/hr
Mechanic Wage 140 Rs. Mechanic Wage 180 Rs.
Shift Time 8 Shift Time 8

No. of vehicles waiting in the No. of vehicles waiting in the system =

system = LS = λ/(μ-λ) = 2 vehicle/hr LS = λ/(μ-λ) = 1 vehicle/hr
Average time machine waiting in Average time machine waiting in the
the system = WS = LS/λ = 1 Hour system = WS = LS/λ = 0.5 Hour
Cost of idle time for 8 hours 320 Cost of idle time for 8 hours 160
Total cost for 8 hours shift 1440 Total cost for 8 hours shift 1600

Conclusion: Since the cost of mechanic 1 is less, mechanic 2 should be replaced.

 has one mechanic who can
customer dissatisfaction and
who demands Rs. 180 per hour
e total cost per day if the present
 Strategy of XYZ
Newspaper Radio Television Row Minima
Newspaper 30 40 -80 -80
Strategy of ABC
Radio 0 15 -20 -20 20
Television 90 20 50 20
Column
Maxima 90 40 50
40
Since, Max(RM) is not equal to min(CM)
Saddle point does not exists

Strategy Newspaper will not be used as it yields maximum losses. Therefore Newspaper will be eliminated.
Strategy of XYZ
Radio Television
Newspaper 40 -80
Radio 15 -20
Strategy of ABC
Television 20 50

Since Radio is the weakest strategy as compared to Newspaper and Television, it will not be used.

Strategy of XYZ
Radio Television a11 a12
Strategy of ABC
Newspaper 40 -80 a21 a22
Television 20 50

Now applying the formula, we get:

P1 0.20 Strategy of XYZ

P2 0.80 Strategy of ABC B1 B2
 P1 A1 a11 a12
Q1 0.87 P2 = 1 - P1 A2 a21 a22
Q2 0.13

V= 24
Age 1 2 3 4 5
Operating
Cost (Rs.) 10,000 12,000 15,000 18,000 20,000

Solution:
Purchase Price: 60,000 Rs

Operating Cum.
Age Cost (Rs.) Operating
Cost Resale Value Capital Cost Total Cost Average Cost
1 10,000 10,000 54000.00 6,000.00 16,000.00 16000
2 12,000 22,000 48600.00 11,400.00 33,400.00 16700
3 15,000 37,000 43740.00 16,260.00 53,260.00 17753.333333
4 18,000 55,000 39366.00 20,634.00 75,634.00 18908.5
5 20,000 75,000 35429.40 24,570.60 99,570.60 19914.12
6 36,000 111,000 31886.46 28,113.54 139,113.54 23185.59
7 42,000 153,000 28697.81 31,302.19 184,302.19 26328.883714
8 48,000 201,000 25828.03 34,171.97 235,171.97 29396.495925
9 54,000 255,000 23245.23 36,754.77 291,754.77 32417.19674
10 60,000 315,000 20920.71 39,079.29 354,079.29 35407.929359

Decision: Replace the machine after a year.

 Crashing
Duration Months Normal Possibility(d Cost slope
Predece Cost ays)
Activity Crash Cost
ssors
Normal Crash (Rs ’00)
A - 4 3 60000 90000 1 30000
B - 6 4 150000 250000 2 50000
C - 2 1 38000 258000 1 220000
D A 5 3 150000 250000 2 50000
E C 2 2 100000 100000 0 0
F A 7 5 115000 175000 2 30000 400,000
G D, E, B 4 2 100000 240000 2 70000
713000

Total Cost
Project Total Normal Crashing of the
Activity P1 P2 P3 P4 Duration Cost Indirect cost cost project
11 13 8 10 13 713000 400000 0 1113000
Crash A by 1 day 10 12 8 10 12 713000 250000 50000 1013000
Crash D by 2 days 10 10 8 10 10 713000 100000 100000 913000
Crash G by 1 days 10 9 7 9 10 713000 100000 70000 883000

Since Further crashing is not economical the project duration is 13 months

and optimal project cost is 8,83,000.
 PERT variance
Most Most
Most pessimist average
Activity Preceding optimistic likely time (te)
activity time(to) time(tm) ic
time(tp)
A None 2 4 12 5 2.777778
B None 10 12 26 14
C A 8 9 10 9
D A 10 15 20 15 2.777778
E A 7 7.5 11 8
F B,C 9 9 9 9
G D 3 3.5 7 4 0.444444
H E,F,G 5 5 5 5 0
Variance 6

PERT Average project duration 29 weeks

Variance = 6 weeks
Standard deviation= 2.45 weeks
-3σ -7.3484692
+3σ 7.34846923

Expected project duration if probability of completion is 90%

Corresponding Z = 1.28

1.28=(D-29)/2.45

D= 32 weeks

If the project manager wants to be 90% sure that the project is completed on the schedule date,
he should start the project work 32 weeksbefore that date