K. J.

SOMAIYA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,

Vidyavihar, Mumbai- 400077

Program: PGDM - I year Trim II Div B

Subject: Data Model Applications (Management Science)

(Endterm Examination)(In Computer lab)

Maximum Marks: 50
Duration: 3 hours Date: Jan, 2014

Instructions

1. Use excel where required and save your file (only one file, with your roll no and batch)
and follow on-the –spot instructions for transfer to any specified location.

2. Please write the formulations and answers in the answer sheet. Your answer sheet will
be the primary document for evaluation duly supported by working in Excel.

3. Neat and clear development of the model in Excel is important and carries marks
appropriately within marks allotted for each question.

Answer minimum five questions. Question 1 is compulsory. All questions carry equal
marks.

MMarks
1 “Linear programming has proven to be one of the most successful quantitative 10
approaches to decision making.” Discuss its role with examples from (1) Marketing
Research (2) Media Selection and
(3) Portfolio Selection.
OR

Discuss the steady state characteristics of: (1) Single Channel and (2) Multi
Channel Waiting Line Models. How does the manager use these to improve service
levels?

2 Write Short Notes on any four of the following: (2.5 each)

a. Payoff Tables
b Causal forecasting
c. Steps involved in simulated sampling (Monte Carlo Methods)
d. Use of Simulation in developing an inventory policy
e. What if analysis
f. Forgetfulness property of Poisson Distribution

3 Consider the following linear programming problem:

Max: 3A+2B
s.t.
1 A + 1 B ≤ 10
3 A + 1 B ≤ 24
1 A + 2 B ≤ 16
A, B ≥ 0

1
 MMarks
6
a. Use the graphical method to find the optimal solution.
b. Assume that the objective function coefficient for A changes from 3 to 5. Does 2
the optimal solution change? Use the graphical solution procedure to find the
new optimal solution.
c. Assume that the objective function coefficient for A remains at 3, but the 2
objective function coefficient for B changes from 2 to 4. Does the optimal
solution change? Use the graphical solution procedure to find the new optimal
solution.
d. The computer solution for the linear programme provides the following
objective coefficient range information.

Variable Obj. Coefficient Allowable increase Allowable Decrease

A 3.00000 3.00000 1.00000
B 2.00000 1.00000 1.00000

Use this objective function coefficient range information to answer parts (b) and (c)
above.

4 Tri-county Utilities Inc. supplies natural gas to customers in a three-county area. The
company purchases natural gas from two companies: Southern Gas and Northwest
Gas. Demand forecasts for the coming winter season are Hamilton County, 400 units;
Butler County, 200 units, and Clermont County, 300 units. Contracts to provide the
following quantities have been written: Southern Gas, 500 units; and Northwest Gas,
400 units. Distribution costs for the counties vary, depending upon the location of the
suppliers. The distribution costs per unit (1000 dollars) are as follows:
To
From Hamilton Butler Clermont
Southern Gas 10 20 15
Northwest Gas 12 15 18

a. Develop a network representation of this problem. 2

b. Develop a linear programming model that can be used to determine the plan that 3
will minimise total distribution costs.
c. Describe the distribution plan and show the total distribution cost 2
d. Recent residential and industrial growth in Butler County has the potential for 3
increasing demand by as much as 100 units. Which supplier should Tri-County
contract with, to supply the additional capacity?

5 A market research firm’s three clients, each requested that the firm conduct a sample
survey. Four available statisticians can be assigned to these three projects; however,
all four statisticians are busy, and therefore each can handle only one client. The
following data show the number of hours required for each statistician to complete
each job; the differences in time are based on experience and ability of the
statisticians.
Client
Statistician A B C
1 150 210 270
2 170 230 220
3 180 230 225
4 160 240 230

a. Formulate and solve a linear programming model for this problem. 6

2
 MMarks

b. Suppose that the time statistician 4 needs to complete the job for client A is
increased from 160 to 165 hours, what effect will this change have on the
solution? ( 4)

6 a. Explain the steps involved in computing seasonal indices from monthly time 3
series data.
b. The following are weekly data on Commodity Futures for 10 periods. Compute 4
the exponential forecast for the 11th week using the smoothing constant α = 0.2:
7.35, 7.40, 7.55, 7.56, 7.60, 7.52, 7.52, 7.70, 7.62, 7.55
c. Repeat the forecast with α = 0.3. 3
Which exponential smoothing model provides a better forecast?
Use the mean square error to back your conclusion.

7 Southland Corporation’s decision to produce a new line of recreational products

resulted in the need to construct either a small plant or a large plant. The best
selection of plant size depends on how the marketplace reacts to the new product line.
To conduct an analysis, the management has decided to view the possible long-run
demand as low, medium, or high. The following payoff table shows the projected
profit in millions of dollars:
Long-Run Demand
Plant Size Low Medium High
Small 150 200 200
Large 50 200 500

a. What is the decision to be made, and what is the chance event for Southland’s 2
problem?
b. Construct an influence diagram. 2
c. Construct a decision tree. 2
d. Recommend a decision based on the use of the (1) Optimistic, 4
(2) Conservative and (3) Minimax Regret approaches.

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