Arsi University
College of Business and Economics
Department of Management
MBA Program
Quantitative Techniques for Management Decisions
Worksheet
Instructor: Edo Rago, PhD
Directions:
Solve the following problems by showing all necessary steps. Quetions #2, #3, # 5
and #7 are individual assignments to be submitted before the final exam.
1. A company manufactures two types of products, A and B. Each product uses two
processes, I and II. The processing time per unit of product A on process I is 6 hours and
on the process II is 5 hours. The processing time per unit of product B on process I is 12
hours and on process II is 4 hours. The maximum number of hours available per week on
process I and II are 75 and 55 hours respectively. The profit per unit of selling A and B
are Br.12 and Br.10 respectively.
i. Formulate a linear programming model so that the profit is maximized.
ii. Solve the problem graphically and determine the optimum values of product A and
B. (use extreme point approach). What is the optimal profit?
2. A nutrition scheme for babies is proposed by a committee of doctors. Babies can be given
two types of food (I and II) which are available in standard sized packets, weighing 50
gms. The cost per packet of these foods are Br.2 and Br.3 respectively. The vitamin
availability in each type of food per packet and the minimum vitamin requirement for
each type of vitamin are summarized in the table given.
Vitamin availability per product
Minimum Daily
Vitamin Food Food requirement
Type I Type II
1 1 1 6
2 7 1 14
Cost/Packet (Birr) 2 3
i. Develop a linear programming model to determine the optimal combination of food
type.
ii. Solve the problem graphically and determine the minimum cost such that the
minimum requirement of vitamin for each type is satisfied. (use extreme point
approach). What is the optimal cost?
3. A metal fabricator manufactures three types of windows. Each of the windows needs four
processes. The time taken on various machines differ due to the size of windows. The
time taken and available hours are given in the table below:
Window Type Cutting Heat Treating Forging Grinding
A 5 7 1 4
B 7 4 4 6
C 4 8 6 2
Available time 20 24 28 22
(Hrs)
The profit contribution for windows A, B and C are Br.3.00, Br.4.00 and Br.5.00
respectively.
1. Formulate the problem.
2. Solve the problem using simplex method to maximize the profit.
3. Determine the excess time available in each process and by how much.
4. Solve the following linear program using simplex method:
Min 84x1 + 4x2 + 30x3
s.t.
8x1 + 1x2 + 3x3 ≤ 240
16x1 + 1x2 + 7x3 ≥ 480
8x1 - 1x2 + 4x3 ≥ 160
x1, x2, x3 ≥ 0
5. A cement company has three factories which manufacture cement which is then
transported to four distribution centers. The quantity of monthly production of each
factory, the demand of each distribution centre and the associated transportation cost per
quintal are given in the table below:
Distribution Centers Monthly production in
Factory A B C D quintals
I 10 8 5 4 7000
II 7 9 15 8 8000
III 6 10 14 8 10000
Monthly Demand in
quintals 6000 6000 8000 5000 25000
Required: Determine the initial basic feasible solution using VAM and run the test for
optimality using MODI method. How much the total cost i the initial solution? What
is the optimal cost of this problem?
6. Five employees of a company are to be assigned to five jobs which can be done by any
one of them. Because of different number of years with the firm, the workers get different
wages per hour. These are: Br. 15 per hour for A, B and C each, and Br. 13 per hour for
D and E each. The amount of time taken (in hours) by each employee to do a given job is
given in the following table:
Employee
Jobs V W X Y Z
A 7 9 3 3 2
B 6 1 6 6 5
C 3 4 9 10 7
D 1 5 2 2 4
E 6 6 9 4 2
Required: (a) Determine the assignment pattern of this problem, and
(b) Compute the minimum total cost of getting the five jobs done.
7. A manufacturer’s requirement for a raw material is 2,000 units per year. The ordering
costs are Br. 10 per order while carrying costs are 16 cents per year per unit of an average
inventory. The purchase price of raw material is Br. 1 per unit.
Required: (a) Find the Economic Order quantity, and
(b) Compute the minimum total inventory cost.
(c). If a discount of 5% is available for orders of 1,000 units, should the
manufacturer accept this offer? (The carrying cost per unit per annum
remains unchanged.)
8. Beauty Bar Soap is produced on a production line that has an annual capacity of 60,000
cases. The annual demand is estimated at 26,000 cases, with the demand rate essentially
constant throughout the year. The cleaning, preparation, and setup of the production line
cost approximately Br.135. The manufacturing cost per case is Br. 4.50, and the annual
holding cost is figured at a 24% rate. Thus, Ch IC 0.24(Br.4.50) Br.1.08. What is the
recommended production lot size?
N.B. For the final read the following areas:
Concept of LP and its applications
Concepts and applications of Transportation and Assignment problems
Concept and applications of imventory control models, and
Concept and applications of Queuing models
Happy reading!