STUDENT ID NO

MULTIMEDIA UNIVERSITY

FINAL EXAMINATION

MARKING SCHEME
TRIMESTER 2, 2020/2021

BDS 4614 MANAGEMENT DECISION SCIENCE

(All Sections/Groups)
BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

QUESTION 1

Fresh Farms is into organic farming and has 200 acres of farmland in Cameron
Highlands, which are suitable for cultivating crops X1, X2, and X3. The costs for
cultivating crops X1, X2, and X3 are RM40, RM50 and RM30 per acre respectively.
Fresh Farms has a maximum of RM18,000 as funds for crop cultivation. Crops, X1,
X2, and X3 require 20, 30 and 15 hours of labour per acre respectively, and the
maximum number of labour hours available are 4,200. The farm expects to make a
profit of RM70, RM90 and RM50 per acre on crops X1, X2 and X3 respectively.

a. Formulate the given problem as a Linear Programming Problem.

[4 marks]
b. Set up the initial simplex tableau by including the necessary slack variables.
[2 marks]
Given the following final table

Cj 70 90 50 0 0 0
Solution X1 X2 X3 S1 S2 S3 Quantity
Mix
70 X1 1 0 1.5 3 0 -0.1 180
0 S2 0 0 -5 -20 1 -1 9,800
90 X2 0 1 -0.5 -2 0 0.1 20
Zj 70 90 60 30 0 2 14400
Cj - Z j 0 0 -10 -30 0 -2
S1 – slack for land constraint
S2 – slack for the budget constraint
S3 – slack for labor constraint

c. What is the optimal solution and the maximum value?

[2 marks]
d. What are the shadow prices of the three constraints and explain what do they
mean?
[2 marks]
e. Over what range can the profit contribution of crop X2 vary before a new solution
point becomes optimal? [4
marks]
f. Determine the range for the right hand side of the third constraint without
changing the dual price.
[2 marks]
g. Should Fresh Farms increase the budget for crop cultivation or increase the labour
hours ? Why ? [2
marks]
h. If Fresh Farms were to hire an additional worker for 30 hours at RM1 per hour, how
much additional profit would it make, if any ?
[2 marks]

ANSWER

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

a. Maximize Profit = 70 X1 + 90 X2 + 50 X3

Subject To:
X1 + X2 + X3 ≤ 200
40X1 + 50 X2 + 30 X3 ≤ 18000
20X1 + 30 X2 + 15 X3 ≤ 4 200
X1 , X2 , X3 ≥ 0
[4m]

b.

Cj 70 90 50 0 0 0
Solution X1 X2 X3 S1 S2 S3 Quantity
Mix
0 S1 1 1 1 1 0 0 200
0 S2 40 50 30 0 1 0 18000
0 S3 20 30 15 0 0 1 4200
Zj 0 0 0 0 0 0 0
Cj - Z j 70 90 50 0 0 0

c. 180 acres of crop X1, 20 acres of crop X2 and 0 acres of crop X3 should be
cultivated. Maximum profit is RM 14,400.
d. Shadow prices for constraint 1, constraint 2 , constraint3 are RM30, RM0,
RM2 respectively.
For every unit increase in the resource, the total profit increase by the amount
of the shadow price.

Cj 70 90 +  50 0 0 0
Solution X1 X2 X3 S1 S S3 Quantity
Mix 2
70 X1 1 0 1.5 3 0 -0.1 180
0 S2 0 0 -5 -20 1 -1 9,800
90 +  X2 0 1 -0.5 -2 0 0.1 20
Zj 70 90 +  60 -0.5  30-2 0 2+ 0.1 14400 +
20
Cj - Z j 0 0 -10+0.5 -30+2 0 -2-0.1

-10+0.5 ≤ 0 ; -30+2 ≤ 0 ; -2-0.1 ≤ 0

-20 ≤  ≤ 15

70 ≤ C2 ≤ 105

e.

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

S3 Quantity Ratio
-0.1 180 -1800
-1 9800 -9800
0.1 20 200
Range is (4000, 6000)

f. Fresh farms should increase the labour hours, not the budget since RM9,800
of the budget has not been utilized.

g. Shadow price for the labor hours is RM2,if the Fresh farms hire an additional
worker for 30 hrs at RM 1 per hour, the total profit will increase by RM30.
[Total 20 marks]
QUESTION 2

a. Penang state has three major electronic companies (A, B and C). During the
months of peak demand, these companies are authorized to pool their excess
supply and to distribute it to smaller independent electronic companies that do not
have enough capacity to handle the demand. The following table shows the
demand and supply and the cost per unit to four small companies in cities W, X,
Y, Z:

TO
W X Y Z SUPPLY
FROM
A RM12 4 9 5 550
B 8 1 6 6 450
C 1 12 4 7 300
DEMAND 400 200 500 200

i. Use VAM to find an initial solution and then apply the MODI
technique to find the least-cost distribution system. Determine the
minimum total cost.
ii. Is there any alternate optimal solution? If yes , state the alternate
optimal shipping schedule.

a. The following table shows the projected profits for all possible combinations
of four workers and jobs awaiting for processing. Find the optimal assignment
that will yield maximum profit.

Job
Worker 1 2 3
A $500 400 450
B 800 300 200
C 700 400 500
D 900 500 799

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

[8 marks]

[Total: 20 marks]
ANSWER

a.
h. Initial solution using VAM method is

TO
W X Y Z SUPPLY
FROM
A 350 200 550
B 100 200 150 450
C 300 300
DEMAND 400 200 500 200 1300
MODI :

For all the occupied squares; Ri + Kj = Cij

R 1 + K3 = 9
R 1 + K4 = 5
R 2 + K1 = 8
R 2 + K2 = 1
R 2 + K3 = 6
R 3 + K1 = 1

Set R1 = 0; gives
R2 = -3 ; R3 = -10 ; K1= 11; K2= 4; K3= 9; K4= 5;

Improvement index Iij = Cij – Ri - Kj

I11 = +1 ; I12 = +0 ; I241 = +4 ; I32 = +18 ; I33 = +5 ; I34 = +12

Since all the improvement indices are greater than or equal to zero, the
initial solution using VAM is optimal.

The total minimum cost is RM 6350.

ii. Zero index indicates an alternate optimal solution. The alternate shipping
assignment is

TO
W X Y Z SUPPLY
FROM
A 200 150 200 550
B 100 350 450
C 300 300
DEMAND 400 200 500 200

b. Step 0

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

Job
Worker 1 2 3 dummy
A 400 500 450 0
B 100 600 700 0
C 200 500 400 0
D 0 500 101 0

Step 1 (Row and column opportunity cost table) & Step 2

Job
Worker 1 2 3 dummy
A 400 0 349 0
B 100 100 599 0
C 200 0 299 0
D 0 0 0 0

Since the number of straight line covering the zeros is less than 4 the above
table is not optimal.

Step 3

Job
Worker 1 2 3 dummy
A 300 0 249 0
B 0 100 499 0
C 100 0 199 0
D 0 100 0 100

Since the number of straight line covering the zeros is 4 the above table is
optimal.

The optimal assignment is :

Assigned
Worker to Profit
A JOB 2 400
B JOB 1 800
C NONE
D JOB 3 799
Total 1999

[Total 20 marks]

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

QUESTION 3

ABC University is planning to offer a new programme in 2022. To ensure that the
programme can be offered in 2022, ABC University has identified a list of activities
to be completed. The list of activities and the time estimates associated with the
activities is as follows:
Activity Immediate Time (weeks)
Activity Optimistic Most Likely Pessimistic
A - 4 6 8
B - 8 9 10
C - 5 6 7
D A, B 9 10 11
E B, C 8 10 12
F D 7 8 15
G E 3 6 9
H A, F 3 5 7
I C, G 9 10 11
J H 2 5 8
K I, J 6 8 10

a. Draw a network diagram to represent the problem.

[5 marks]
b. Compute the expected time and variance for each of the activities.
[4 marks]
c. Determine the critical path.
[4 marks]
d. Calculate the expected completion time and variance of the problem.
[4 marks]
e. What is the probability the ABC University will use more than 48 weeks to
prepare the new programme?
[3 marks]
[Total: 20 marks]
ANSWER
a.
A H J

D F

B K
Start Finish

E G

C I

[5 m]

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

b.
(b) (c)
[4 m] [3 m]
t 𝝈𝟐 ES EF LS LF Slack
A 6 0.4444 0 6 3 9 3
B 9 0.1111 0 9 0 9 0
C 6 0.1111 0 6 6 12 6
D 10 0.1111 9 19 9 19 0
E 10 0.4444 9 19 12 22 3
F 9 1.7778 19 28 19 28 0
G 6 1.0000 19 25 22 28 3
H 5 0.4444 28 33 28 33 0
I 10 0.1111 25 35 28 38 3
J 5 1.0000 33 38 33 38 0
K 8 0.4444 38 46 38 46 0

c. B-D-F-H-J-K [1 m]
d. Completion time = 46 Weeks [2 m]
𝜎 2 = 3.8888 [2 m]
48−46
e. 𝑃(𝑋 > 48) = 𝑃 (𝑍 > )
√3.888
= 𝑃(𝑍 > 1.01) [2 m]
= 0.1563 [1 m]
[Total 20 marks]
QUESTION 4

Hana Home Furniture (HHF), has an annual demand of 1,000 units for a cupboard. The
cost of the cupboard is RM200. The carrying cost is estimated to be 10% of the unit
cost per cupboard per year and the ordering cost is RM30 per order. The stock is
received 3 working days after an order has been placed. HHF operates for 6 days in a
week and 52 weeks a year.

a. To minimize cost, how many cupboards should HHF order at a time?

[ 4 marks]
b. How many orders per year would be placed?
[ 2 marks ]
c. Based on the optimum order quantity, determine the reorder point.
[ 3 marks ]
d. What is the total annual inventory cost?
[ 4 marks ]

e. The cupboard supplier had offered to HHF, that if they order 200 or more
cupboards, they can get a 8% discount on the cost of the cupboard. Should HHF
take the discount?
[ 7 marks ]
[Total: 20 marks ]

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

ANSWER

a. 1000, 𝐶 = 𝑅𝑀200, 𝐶0 = 𝑅𝑀30, 𝐶ℎ = 0.1𝑋200 = 𝑅𝑀20, 𝐿 = 3 𝑑𝑎𝑦𝑠

2𝐷𝐶𝑜 2(1000)(30)
𝑄=√ =√
𝐶ℎ 20
= 54.77 cupboards
𝐷 1000
b. 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 = 𝑄 = 54.77 = 18.26 𝑜𝑟𝑑𝑒𝑟𝑠
1000
c. 𝑅𝑂𝑃 = 𝑑𝑋𝐿 = (6𝑋52)(3)
= 9.62 𝑐𝑢𝑝𝑏𝑜𝑎𝑟𝑑𝑠
𝐷 𝑄 54.77
d. 𝑇𝐶 = 𝐷𝐶 + 𝑄 𝐶0 + 2 = 1000(200) + 18.26(30) + (20)
2
= 𝑅𝑀201,095.50

e. 𝐶(𝑤𝑖𝑡ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡) = (0.92𝑋200) = 𝑅𝑀184

𝐶ℎ (𝑤𝑖𝑡ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡) = (0.1)(184) = 𝑅𝑀18.40
2(1000)(30)
𝑄(𝑤𝑖𝑡ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡) = √ = 57.10 cupboards
18.40
#𝑄(𝑤𝑖𝑡ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡) = 200 𝑐𝑢𝑝𝑏𝑜𝑎𝑟𝑑𝑠

1000 200
𝑇𝐶(𝑤𝑖𝑡ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡) = (1000)(184) + (30) + (18.40)
200 2
= 𝑅𝑀185,990

Therefore, HHF should take the discount.

[Total 20 marks]

QUESTION 5

Mellissa has been thinking about opening her own cafe at a piece of vacant land. Her
problem is to decide how large her cafe should be. The construction costs (in RM
Thousand) for small, medium, large, and very large cafe are RM100, RM140,
RM200,and RM250 respectively. The annual revenues will depend on both the
size of her caféand the condition of the economy. The alternatives, economy
conditions, and annual revenues (in RM Thousand) are summarized in the
following table:

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

Good Fair Poor

Size of Cafe
Economy Economy Economy
Small 125 105 88
Medium 166 141 115
Large 240 188 160
Very Large 295 240 205
Probability 0.3 0.5 0.2

a. What is the best decision based on maximax criterion?

[4 marks]
b. What is the best decision based on maximin criterion?
[4 marks]
c. Determine the best strategy using Equally Likely.
[4 marks]
d. Compute the criterion of realism decision and use α = 0.8.
[4 marks]
e. What is the minimax regret decision?
[4 marks]

[Total: 20marks]
Solution
i.
Good Fair Poor Max
Size of Cafe
Economy Economy Economy
Small 125 105 88 125
Medium 166 141 115 166
Large 240 188 160 240
Very Large 295 240 205 295
Probability 0.3 0.5 0.2

Maximax decision : Very large cafe

ii.
Size of Good Fair Poor
Max
Cafe Economy Economy Economy
Small 125 105 88 88
Medium 166 141 115 115
Large 240 188 160 160
Very Large 295 240 205 205
Probability 0.3 0.5 0.2 125

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BDS 4614 MANAGEMENT DECISION SCIENCE MARCH 2021

Maximin decision : Very large cafe

iii.
Size of Good Fair Poor
EMV
Cafe Economy Economy Economy
Small 125 105 88 106
Medium 166 141 115 104.67
Large 240 188 160 196
Very
295 240 205 246.67
Large
Probabilit
0.3 0.5 0.2
y

Equally Likely: Very large cafe

iv.
For small cafe
= 0.8(125) + 0.2(88)
= 117.6
For medium cafe
= 0.8(166) + 0.2(115)
= 115.8
For large cafe
= 0.8(240) + 0.2(160)
= 224
For very large cafe
= 0.8(295) + 0.2(205)
= 277
Realism decision: Very large cafe
v.
Opportunity loss Table
Good Fair Poor Max
Size of Cafe
Economy Economy Economy
Small 170 135 117 170
Medium 129 99 90 129
Large 55 52 45 55
Very Large 0 0 0 0
Probability 0.3 0.5 0.2

Minimax regret: Very large cafe

[Total 20 marks]

AA/NN 11