JigJIga University

College of Business and Economics

Department of Management
Group Assignment for the Course Operation Research
Maximum Weight: 25%
Submission Date: During Final Examination Date
Group Size: maximum of 5 Students per Group
Principles of Group Formation: Full Student Control
1. Construct the CPM network described by the following set of activities, compute the

length of each path in the network, and indicate the critical path.

Activity Time (months)

1–2 4
1–3 7
2–4 8
2–5 3
3–5 9
4–5 5
4–6 2
5–6 6
3–6 5

Step 1: Identify All Paths

We will list all paths from 1 to 6 and compute the total duration for each:

1. Path: 1→2→4→6
Duration: 4+8+2=14 months
2. Path: 1→2→4→5→6
Duration: 4+8+5+6=23 months

3. Path: 1→2→5→6

Duration: 4+3+6=13 months

 4. Path: 1→3→5→6
Duration: 7+9+6=22 months

5. Path: 1→3→6
Duration: 7+5=127 + 5 = 12 months

Step 2: Determine the Critical Path

The critical path is the longest path in the network because it determines the minimum time
required to complete the project.

Path Durations:

 1→2→4→6: 14 months
 1→2→4→5→6: 23 months
 1→2→5→6: 13 months
 1→3→5→6: 22 months
 1→3→6: 12 months

Result:

 Critical Path: 1→2→4→5→6

 Project Duration: 23 months

2. Getahun, an individual investor, has $70,000 to divide among several investments. The

alternative investments are bonds with an 8.5% annual return, CD with a 5% return,

treasury bills with a 6.5% return, and a growth stock fund with a 13% annual return. The

investments are all evaluated after one year. However, each investment alternative has a

different perceived risk to the investor; thus, it is advisable to diversify. Getahun wants to

know how much to invest in each alternative in order to maximize the return.

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 The following guidelines have been established for diversifying the investments and

lessening the risk perceived by the investor.

1. No more than 20% of the total investment should be in Bonds.

2. The amount invested in CD should not exceed the amount invested in the other

three alternatives.

3. At least 30% of the investment should be in treasury bills and CD.

4. To be safe, more should be invested in CDs and treasury bills than in bonds and the

growth stock fund by a ratio of 1.2 to 1.

Finally, it is indicated that Getahun wants to invest the entire $70,000.

Required:
Required: Formulate the standard linear programming model (only the model).

Define the Decision Variables

Let:

 x1 = Amount invested in Bonds

 x2 = Amount invested in CD
 x3 = Amount invested in Treasury Bills
 x4 = Amount invested in Growth Stock Fund

2. Objective Function

The goal is to maximize the total return from the investments:

 Bonds return = 8.5%

 CD return = 5%

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  Treasury Bills return = 6.5%
 Growth Stock Fund return = 13%

The objective function is:

Maximize Z=0.085x1+0.05x2+0.065x3+0.13x4

3. Constraints

1. No more than 20% of the total investment in Bonds

x1≤0.2(70,000) or x1≤14,000
2. The amount invested in CD should not exceed the amount invested in the other
three alternatives
x2≤x1+x3+x4
3. At least 30% of the investment should be in Treasury Bills and CD

x2+x3≥0.3(70,000) or x2+x3≥21,000
4. More should be invested in CDs and Treasury Bills than in Bonds and the
Growth Stock Fund by a ratio of 1.2 to 1

x2+x3≥1.2(x1+x4)
5. The total investment should equal $70,000

x1+x2+x3+x4=70,000
6. Non-Negativity Constraints

x1≥0, x2≥0, x3≥0, x4≥0

4. Standard Linear Programming Model

Maximize:

Z=0.085x1+0.05x2+0.065x3+0.13x4

Subject to:

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x1≤14,000(Bonds limit constraint)

x2≤x1+x3+x4(CD limit constraint)

x1+x2+x3+x4=70,000(Total investment constraint)

x1,x2,x3,x4≥0(Non-negativity constraints)

3. Given this LPM and its final simplex tableau:

1 2 3
Z max: 10 x + 6 x + 5 x

Sub to:

1 2 3
2 x + 3 x + 4 x  25

1 2 3
x + 3 x + 2 x  22

1 2 3
6 x + 3 x + 4 x  32

1,, 2,, 3
x x x > 0

j
C 10 6 5 0 0 0

1 2 3 1 2 3
RHSV
Basis x x x S S S
1 8/5 -4/5 -1/5
S 0 0 0 1 1

2 8/15 2/5 -1/15

x 6 0 1 0 20/3

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 3 2/5 -1/5 1/5
x 10 1 0 0 2
36/5 2/5 8/5
Z 10 6 0 60

i i -11/5 2/5 -8/5

C -Z 0 0 0 -

Required:
a) Determine the range of feasibility for each constraint equations?

b) What would happen to the optimal solution if the right hand side value of the third

constraint is increased by 7 units?

c) Find and interpret the shadow price?

a) Range of Feasibility for Each Constraint

The range of feasibility determines how much the right-hand side (RHS) of each constraint
can vary without changing the current basis (the basic variables in the optimal solution). For
each constraint, we calculate the allowable range by analyzing the RHS sensitivity.

Constraints:
1
1. 2x1+3x2+4x3≤25 → S
2
2. x1+3x2+2x3≤22 → S
3
3. 6x1+3x2+4x3≤32→ S

In the final tableau, the RHS values for these constraints are:

 S1=20/3
2
 x2=2 (basic variable replacing S )
3
 x3=60 (basic variable replacing S )

Range for Feasibility:

Feasibility:

The range of feasibility is determined by ensuring that the RHS changes do not make any
non-basic variables enter the basis or make any basic variables become negative.

To calculate the allowable increase or decrease for each RHS value, you must:

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  Identify how sensitive the RHS value is to maintaining the current basis.
 Use the corresponding shadow prices (dual prices).

These can be formally computed through the dual simplex conditions or from shadow prices
provided in the tableau. However, since detailed information for matrix manipulation isn't
fully specified here, we summarize that:

 The allowable range for each RHS (constraint) involves:

1. S1: From its shadow price.
2. S2: Limited by x2 (basic variable).
3. S3: Limited by x3 (basic variable).

b) What Happens if the RHS of the Third Constraint Increases by 7 Units?

The third constraint is:

6x1+3x2+4x3≤32
 The RHS value increases by 7 units: 32+7=39.

Steps to Analyze:

1. Check Shadow Price: From the simplex tableau, the shadow price for the third
constraint (S3) is 8/5. This shadow price tells us the increase in the objective function
Z for a unit increase in the RHS of the third constraint.
2. Calculate Impact on Optimal Value:
The increase in Z is:

Increase in RHS×Shadow Price=7×8/5=56/5=11.2

Therefore, the optimal value of Z will increase by 11.2 units.

3. Basis Stability: The increase in the RHS of constraint 3 must remain within the
feasibility range; otherwise, the basis may change. If the range of feasibility allows for
a 7-unit increase, the current solution remains optimal.

Conclusion:

 The optimal solution remains feasible (assuming a 7-unit increase is within range).
 The new optimal Z value will increase by 11.2 units.

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c) Find and Interpret the Shadow Prices
Shadow Price Definition:
Definition:

The shadow price of a constraint measures the change in the objective function value (Z) for
a 1-unit increase in the RHS of the corresponding constraint, assuming all other factors
remain constant.

From the final simplex tableau:

 The shadow prices correspond to the values in the Ci - Zi row for the slack variables
1 2 3
S ,S ,S .

Shadow Prices:

1. For Constraint 1 (S1):

Shadow price = 0
Interpretation: Increasing the RHS of the first constraint by 1 unit does not affect the
optimal value of Z.
2. For Constraint 2 (S2):
Shadow price = 2/5
Interpretation: Increasing the RHS of the second constraint by 1 unit increases the
optimal value of Z by 0.4 units.

3. For Constraint 3 (S3):

Shadow price = 8/5
Interpretation: Increasing the RHS of the third constraint by 1 unit increases the
optimal value of Z by 1.6 units.

4. GY Truck Rental firm has accumulated extra trucks at three of its truck leasing outlet, as

shown below.

Leasing Outlet Extra Trucks

1. Nazareth 70

2. Addis 115

3. Dire 60

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The Company also has four outlets with shortages of rental trucks, as follows.

Leasing outlet Truck Shortage

A. Awassa 80

B. Bahir Dar 50

C. Mekele 90

D. Harar 25

The company wants to transfer trucks from those outlets with extras to those with short ages

at the minim total costs. The following costs of transporting these trucks from city to city

have been determined.

From To

A B C D

1 $70 80 45 90

2 120 40 30 75

3 110 60 70 80

Required: a). Find the initial solution using the minimum cell cost method?
b). Evaluate each unoccupied cells using Stepping Stone Method?

++++++++++++
++++++++++

To solve this transportation problem for GY Truck Rental, we will systematically determine
the initial feasible solution using the Minimum Cell Cost Method and then evaluate the
unoccupied cells using the Stepping Stone Method. Below is a step-by-step outline of the
solution.

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Problem Data
Truck Availability and Demand

Leasing Outlet Extra Trucks Shortage Outlet Truck Shortage

Nazareth (1) 70 Awassa (A) 80

Addis (2) 115 Bahir Dar (B) 50

Dire (3) 60 Mekele (C) 90

25

Harar (D)

Transportation Costs (Matrix)

From \ To A (Awassa) B (Bahir Dar) C (Mekele) D (Harar)

1 (Nazareth) $70 $80 $45 $90

2 (Addis) $120 $40 $30 $75

3 (Dire) $110 $60 $70 $80

Step 1: Initial Solution using Minimum Cell Cost Method

The Minimum Cell Cost Method involves the following steps:

1. Identify the cell with the lowest cost in the transportation cost matrix.
2. Allocate as many units (trucks) as possible to that cell while satisfying the supply and
demand constraints.
3. Adjust the availability and shortage for the respective rows and columns.
4. Repeat steps 1-3 until all supply and demand are satisfied.

Initial Solution Process

Step Selected Cell Allocation Remaining Supply Remaining Demand

1 2 → C ($30) 90 Addis = 25 Mekele = 0

2 2 → B ($40) 25 Addis = 0 Bahir Dar = 25

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Step Selected Cell Allocation Remaining Supply Remaining Demand

3 3 → B ($60) 25 Dire = 35 Bahir Dar = 0

4 1 → A ($70) 70 Nazareth = 0 Awassa = 10

5 3 → A ($110) 10 Dire = 25 Awassa = 0

6 3 → D ($80) 25 Dire = 0 Harar = 0

Initial Allocations Table

From \ To A (Awassa) B (Bahir Dar) C (Mekele) D (Harar) Supply

1 (Nazareth) 70 0 0 0 70

2 (Addis) 0 25 90 0 115

3 (Dire) 10 25 0 25 60

Demand 80 50 90 25

Step 2: Evaluating Unoccupied Cells Using Stepping Stone Method

The Stepping Stone Method involves calculating the opportunity cost for each unoccupied
cell to determine whether the current solution is optimal. The opportunity cost is calculated
as:

Opportunity Cost=Cost of Unoccupied Cell−(Sum of Allocated Cells in the Loop)

Steps to Evaluate Unoccupied Cells:

1. Identify an unoccupied cell.

2. Form a closed loop by tracing a path through allocated cells (moving horizontally and
vertically).
3. Alternate between adding and subtracting the costs of the allocated cells along the
loop.
4. Calculate the opportunity cost.
5. If all opportunity costs are greater than or equal to zero, the solution is optimal.

Opportunity Costs Calculation

1. Cell (1, B):
B): Cost = $80

 Form the closed loop: (1, B) → (1, A) → (3, A) → (3, B).

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  Opportunity Cost = 80−(70−110+60)=80−20=60

2. Cell (1, C): Cost = $45

 Form the closed loop: (1, C) → (2, C) → (2, B) → (1, B).

 Opportunity Cost = 45−(90−25+80)=45−145=−100

3. Cell (1, D): Cost = $90

 Form the closed loop: (1, D) → (3, D) → (3, A) → (1, A).

 Opportunity Cost = 90−(25−10+70)=90−85=5

4. Cell (2, A): Cost = $120

 Form the closed loop: (2, A) → (1, A) → (1, B) → (2, B).

 Opportunity Cost = 120−(70−80+25)=120−15=105

5. Cell (2, D):

D): Cost = $75

 Form the closed loop: (2, D) → (3, D) → (3, B) → (2, B).

 Opportunity Cost = 75−(25−25+60)=75−60=15

6. Cell (3, C):

C): Cost = $70

 Form the closed loop: (3, C) → (2, C) → (2, B) → (3, B).

 Opportunity Cost = 70−(90−25+25)=70−90=−20

Step 3: Optimality Check

The solution is not optimal because some unoccupied cells (e.g., (1, C) and (3, C)) have
negative opportunity costs. This means we can improve the current solution by reallocating
trucks through the identified loops

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5. The approximate travel times (in hours) for officiating crews for Unity University College

Basket ball games for four games scheduled for next weekend are shown in the following

table:

Game site
Crew Bure Meda Guto Meda Chefe Meda Jalemeda

A 1.2 1.4 0.2 1.5

B 1.0 2.0 0.5 1.0
C 1.2 3.4 2.4 0.5
D 2.1 3.1 1.1 0.8

Required:

a) What set of crew assignments will minimize travel time?

b) What is the optimal travel time required for optimal assignment?

Here:

 Rows = Crews A,B,C,DA, B, C, DA,B,C,D

 Columns = Game sites Bure Meda,Guto Meda,Chefe Meda,Jalemeda

Solution Using the Hungarian Algorithm

Step 1: Subtract Row Minimum

1. Find the minimum value in each row and subtract it from all elements in that row.

Crew \ Game Site Bure Meda Guto Meda Chefe Meda Jalemeda

A 1.0 1.2 0.0 1.3

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Crew \ Game Site Bure Meda Guto Meda Chefe Meda Jalemeda

B 0.5 1.5 0.0 0.5

C 0.7 2.9 1.9 0.0

D 1.3 2.3 0.3 0.0

Step 2: Subtract Column Minimum

1. Find the minimum value in each column and subtract it from all elements in that
column.

Crew \ Game Site Bure Meda Guto Meda Chefe Meda Jalemeda

A 0.5 0.0 0.0 1.3

B 0.0 0.3 0.0 0.5

C 0.2 2.4 1.9 0.0

D 0.8 1.8 0.3 0.0

Step 3: Cover All Zeros

1. Cover all zeros in the matrix using a minimal number of lines (horizontal or vertical).

By inspection:

 A minimum of two vertical lines and two horizontal lines are needed.

Since the number of lines equals the size of the matrix (4x4), the current solution is optimal.

Step 4: Optimal Assignment

From the modified matrix, the zeros indicate the potential assignments:

1. Assign Crew A → Chefe Meda (0.0).

2. Assign Crew B → Bure Meda (0.0).

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 3. Assign Crew C → Jalemeda (0.0).
4. Assign Crew D → Guto Meda (0.0).

Results
a) Optimal Assignments

Crew Game Site

A Chefe Meda

B Bure Meda

C Jalemeda

D Guto Meda

b) Optimal Travel Time

To compute the optimal travel time, sum up the travel times corresponding to the
assignments:

Total Travel Time=0.2+1.0+0.5+1.4=3.1 hours.

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