Quantitative Analysis for Management

Decisions
Assignment 2

Mekidelawit Tamrat

MBAO9550/14B
 Solution for Question Nor 1
Let the company manufacture x units of X, y units of Y and z units of Z

Inequalities: Equations:

Maximize Z = 20x + 6 y + 8z S.T Maximize Z = 20x + 6 y + 8z S.T

8 x+ 2y + 3z ≤ 250 8 x+ 2y + 3z+1S1 = 250

4x + 3y ≤ 150 4x + 3y+1S2 = 150

2x + z ≤ 50 and 2x + z+1S3 =50 and

All x, y and z are ≥ 0 x, y and z all ≥ 0

Simplex format: Maximize Z = 20x + 6 y + 8z + 0S1 + 0S2 + 0S3 S.t.

8 x+ 2y + 3z + 1S1 + 0S2 + 0S3 = 250

4x + 3y + 0S1 + 1S2 + 0S3 = 150

2x + z + 0S1 + 0S2 + 1S3 = 50

And all x, y, z, S1, S2, S3 are ≥ 0

Linear Programming Models: Solution by Simplex Method

Table I. x = 0, y = 0, z = 0, S 1 = 250 S 2 = 150 S 3 = 50. Profit Z = Rs. 0

Program Profit capacit Cj=6 15 20 0 0 0 Replacement Check

y ratio Column
X Y Z S1 S2 S3

S1 0 250 8 2 3 1 0 0 250/8=31.25 264

S2 0 150 4 3 0 0 1 0 150/4=37.5 158

S3 0 50 2 0 1 0 0 1 50/2=25 54

Net 20 6 8 0 0 0
Evaluation

{Note: The check column is used to check the correctness of arithmetic calculations. The check
column elements are obtained by adding the elements of the corresponding row starting from
capacity column to the last column (avoid the elements of replacement ration column). As far as
treatment of check column is concerned it is treated on par with elements in other columns. In
the first table add the elements of the row as said above and write the elements of check column.
In the second table onwards, the elements are got by usual calculations. Once you get elements,
add the elements of respective row starting from capacity column to the last column of identity,
then that sum must be equal to the check column element.}

Table: II. x = 0, y = 0, z = 25 units, S 1 = 150, S 2 = 50, S 3 = 0 and Z = Rs. 20 × 50 = Rs. 1 ,000.

Program Profit capacit Cj=6 15 20 0 0 0 Check Replacement

y Column ratio
X Y Z S1 S2 S3

S1 0 150 0 1 1 1 0 -1 152 152

S2 0 50 0 1 -2 0 1 -2 48 48

X 20 25 1 0 0.5 0 0 0.5 50 50

Net 0 0 2 0 0 0
Evaluation

Profit at this stage = Rs. 20 × 50 = Rs. 1,000.

Table: III. x = 0, z = 48, x = 25, S 1 = 110, S 2 = 0, S 3 = 0 and Z = Rs=. 884

Program Profit capacit Cj=6 15 20 0 0 0 Check Replac

y Column ement
X Y Z S1 S2 S3 ratio

S1 0 110 0 1 1 1 0 0 118

Z 8 48 0 0.125 -0.25 0 1 -0.25 49.25

X 20 25 1 0 0.311 0 0 0.626 50

Net 0 -0.27 0 0 -0.61 -0.63

Evaluation

As all the elements of Net evaluation row are either zeros or negative elements, the solution is
optimal. The firm has to produce 150 units of Y and 174.4 units of Z. The optimal profit = 8 × 48 +
20 × 25= Rs. 884
 Solution for Question Nor 2
A/ Primal Write the dual of above
problem

Max. Z=7X1 + 5X2 Min C =6Y1 +12Y2

Subject to; X1+2X2 <6 Subject to; Y 1+4Y2 >7

4X1+3X2 <12 2Y 1+3Y2 >5

X1, X2,>0 Y 1, Y2,>0

B/ Primal Write the dual of above

problem

Max. Z=3X1 + 4X2 Min C =200Y1 +150Y2+80Y3

Subject to; 5X1+4X2 <200 Subject to; 5Y 1 +3Y2+8Y3,>3

3X1+5X2 <150 4Y 1
+5Y2+4Y3,>4

8X1+4X2 >80

X1, X2,>0 Y 1,
Y2,>0

Solution for Question No 3

Step1: developing the penalty cost and the penalty cost is the difference between of the smallest
cell cost next smallest cost.

Step 2: identify the largest penalty, it can be either from row penalty or

Step 3: assign the cell with the smallest cell cost in the row/column with the largest penalty.

Step 4: Make adjustment and develop new transportation table

Step 5: Repeat step 1-4 until the assignment will be made.

Developing the Penalty Cost

D1 D2 D3 D4 SS Penalty

A 5 1 3 3 34 2

B 3 3 5 4 15 1

C 6 4 4 3 12 1

D 4 -1 4 2 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Identify the largest penalty cost

D1 D2 D3 D4 SS Penalty

A 5 125 3 3 34 2

B 3 3 5 4 15 1

C 6 4 4 3 12 1

D 4 -1 4 2 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Identify the next largest penalty cost

D1 D2 D3 D4 SS Penalty

A 5 125 3 3 34 2

B 315 3 5 4 15 1

C 6 4 4 3 12 1
 D 4 -1 4 2 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Identify the next largest penalty cost

D1 D2 D3 D4 SS Penalty

A 5 125 3 3 34 2

B 315 3 5 4 15 1

C 6 4 4 312 12 1

D 4 -1 4 2 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Identify the next largest penalty cost

D1 D2 D3 D4 SS Penalty

A 5 125 3 3 34 2

B 315 3 5 4 15 1

C 6 4 4 312 12 1

D 46 -1 48 25 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Identify the next largest penalty cost

D1 D2 D3 D4 SS Penalty
 A 5 125 39 3 34 2

B 315 3 5 4 15 1

C 6 4 4 312 12 1

D 46 -1 48 25 19 1

DD 21 25 17 17 80

Penalty 1 0 1 1

Min C= 25*1+9*3+15*3+12*3+6*4+8*4+5*2

=25+27+45+36+24+32+10

=199

Solution for Question No 4

Row Reduction
Jobs M1 M2 M3 M4

J1 15-11=4 11-11=0 13-11=2 15-11=4

J2 17-12=5 12-12=0 12-12=0 13-12=1

J3 14-10=4 15-10=5 10-10=0 14-10=4

J4 16-11=5 13-11=2 11-11=0 17-11=6

Opportunity cost
Jobs M1 M2 M3 M4

J1 4 0 2 4

J2 5 0 0 1
 J3 4 5 0 4

J4 5 2 0 6

Column Reduction
Jobs M1 M2 M3 M4

J1 4-4=0 0-0=0 2-0=2 4-1=3

J2 5-4=1 0-0=0 0-0=0 1-1=0

J3 4-4=0 5-0=5 0-0=0 4-1=3

J4 5-4=1 2-0=2 0-0=0 6-1=5

Opportunity cost

Jobs M1 M2 M3 M4

J1 0 0 2 3

J2 1 0 0 0

J3 0 5 0 3

J4 1 2 0 5

J1=11
J2=13
J3=14
J4=11
49

Solution for Question No 5

The game matrix, with row minima and column maxima, is reproduced below:

Strategy of Strategy of XYZ Row

ABC Minima

Newspaper Radio Television

Newspaper 30 40 -80 -80

Radio 0 15 -20 -20

Television 90 20 50 20

Column Maxima 90 40 50

Evidently, saddle point does not exist. Now, it may be observed that row 3 dominates row 2, and column
3 dominates column 1. Deleting R2 and C1, the game reduces to the order 2 × 2, as shown below:

Radio Television

Newspaper 40 -80

Television 20 50

With usual meaning of the symbols used, we have

X= 50-20 ÷ (40+50)-(-80+20) = 1/5

Y= 50 - (-80) ÷ (40+50)-(-80+20) = 13/15

Z= (40*50) + (80*20) ÷ (40+50)-(-80+20) = 24

Thus, optimal strategies are

Newspaper Radio Television

For ABC 1/5 0 4/5

For XYZ 0 13/15 2/15

Value of the game = 24.