GAME THEORY

1. Solve the following game using dominance property

Player B
B1 B2 B3 B4
Player A A1 3 2 4 0
A2 3 4 2 4
A3 4 2 4 0
A4 0 4 0 8
2. Solve the following game
Player B
B1 B2 B3 B4
A1 8 10 9 14
Player A2 10 11 8 12
A3 13 12 14 13
3. Solve the following game
3 2 5
-4 1 -6
4. Solve the following game
1 2
2 4
5. Solve the following payoff matrix
Player B
Player A B1 B2 B3
A1 -2 12 -4
A2 6 4 8
6. Solve the following 3X5 matrix using dominance property
Player B
Player A 1 2 3 4 5
1 2 5 10 7 2
2 3 3 6 6 4
3 4 4 8 12 1
7. Determine the value of the following game
Player B
Player A B1 B2
A1 -2 -4
A2 3 8
8. Using the graphical technique find the optimal mixed strategies for both players A &
B and the value of the game for the following competitive situation
Player B
Player A B1 B2 B3 B4 B5
A1 5 -1 11 -3 13
A2 -3 9 -5 3 1
9. Solve the following game graphically
Player B
Player A 1 2 3 4 5
1 3 0 6 -1 7
2 -1 5 -2 2 1
10. Solve the game with the following pay off matrix
-2 12 -4
1 4 8
-5 2 3
 Inventory
Demand and lead time are constant and production rate is infinite:
1) For an item the production is instantaneous. The storage cost of one item is Rs one per
month & the set up cot is Rs 25 per run. If the demand is 200 units per month. Find
the optimum quantity to be produced per setup and hence determine the total cost of
storage and setup per month
2) A manufacture has to supply his customers 600 units of his products per year.
Shortage is not allowed and inventory carrying cost amount to Re.0.60 per unit per
year. The setup cost per run is Rs.80.Find EOQ, the minimum average yearly cost,
optimum number of order per year.
3) A certain item cost Rs.235 per tone, the monthly requirements are 5 tones and each
time is refinished there is a setup cost of Rs1000. The cost of carrying inventory has
been estimated at 10 % of the inventory cost per year. What is the optimum order
quantity?
4) The production department for a company requires 3600 Kg of raw materials for
manufacturing particular item per year. It has been estimated that the cost of placing
an order is Rs.36 and cost of carrying inventory is 25 % on the investment in the
inventory. The price is Rs10 per Kg. The purchase manager wishes to determine an
ordering policy for raw materials.
5) A company uses annually 4800 units of raw materials costing Rs.1.20 per unit facing
each order Rs.45 and inventory carrying cost are 15 % for the year for average
inventory value.
a. Find EOQ
b. Suppose that the company follows the EOQ policy, it operates 300 days a year
and procure time is 12 days and safety stock is 500 units. Find the reorder
level maximum inventory, minimum inventory and average inventory.
6) Yokesh keeps his inventory in special containers each container occupies 10 sq.feet of
store space; only 5000 sq.feet of storage space is available. The annual demand for the
inventory item 9000 container priced at Rs8 per container. The ordering cost is Rs.40
per order and annual carrying cost amount to 25% of inventory value. Would you
recommend to Yokesh to increase his storage space, if so how much to increase
should he increase?
7) The demand rate for a particular item is 12000 units per year. Ordering cost is Rs.100
per order and holding cost is 0.80 per item. If no shortage are allowed and
replacement is instantaneous. Determine EOQ and time between orders.
8) The production department of a company requires 7200Kg of raw materials for
manufacturing a particular item per year. It has been estimated that the cost of placing
an order is Rs72 and the cost of carrying inventory is 25% of the investment in the
inventories. The price is Rs20 per Kg. The purchase manager wishes to determine an
ordering policy for raw material
9) A factory uses Rs.32000 worth of a raw material per year. The ordering cost per order
is Rs50 & the carrying cost is 20% per year of the average inventory. if the company
follows EOQ policy calculate the reorder point, maximum inventory, minimum
inventory and average inventory. It is given that the factory works for 360 days a
year, the replacement time is 9 days and safety stock is worth Rs.300
10) The annual demand for a product is 10000 units. Each unit costs Rs100. The annual
inventory holding cost is 10% of the value of the item and ordering cost is Rs500 per
order. Determine the order quantity and total number of orders per annum.
11) A manufacturing company purchases 9000 parts of a machine for its annual
requirements, ordering one month’s requirement at a time. Each part costs Rs20. The
 ordering cost per order is Rs15 & the carrying charges are 15% of the average
inventory per year. Calculate EOQ & order cycle time
12) An aircraft manufacturing company uses rivets at an approximately uniform rate of
7500 per year. The cost of rivet is Rs2 each and company estimates that its cost Rs20
to place an order. If the annual carrying cost is 15% of the value of the inventory.
How frequently should the orders be placed and what should be the order size? If the
actual costs are Rs50 to place an order and 12% for carrying cost would the optimal
policy change?
Demand and lead time are constant and production rate is finite.
1) The demand rate for an item in a company is 18000 units per year. The company can
produce at rate of 3000 per month and the setup cost is Rs.500 per year and holding
cost is 0.15 per unit per year. Find
a. Optimum manufacturing quantity
b. Maximum inventory
c. Time between orders
d. Numbers of orders.
2) An item produced at the rate of Rs50 per day. The demand occurs at the rate of 25
items per day. If the setup cost is Rs.100 per set up and holding cost Rs0.01 per unit
of item per day. Find the EOQ for one run, assuming shortages are not permitted also
find the time of the cycles and minimum cost for one run.
3) A contractor has to supply 10000 bearing per day to an automobile manufacturer. He
finds that when he starts production run, he can produce 25000 bearing per day. The
cost of holding a bearing in stock for a year is Rs2 and setup cost of production run is
Rs180. What is optimum lot size? How frequently the production run be made?
4) A company has a demand of 12000 units per year for an item and it can produce 2000
item per month. The cost of one setup is Rs.400 and holding cost per unit per month
Rs0.015. Find optimum lot size and time interval between orders.
5) A product is sold at the rate of 50 pieces per day and is manufacturing at the tare of
250 pieces per day. The setup cost of the machine is Rs.1000 and storage costs are
found to be 0.0015 per piece per day. Find EOQ?
6) Amit manufactures 50000 bottles of tomato ketch-up in a year. The factory cost per
bottle is Rs.6, the setup cost per production run is estimated to be Rs.90. and the
carrying cost on finished goods inventory amount to 20% of the cost per annum. The
production rate is 600 bottles per day and sales amount to 150 bottles per day. What
are the optimal production lot size and the number of production run?

Demand and lead time is constant, production rate is infinite and shortages are
allowed.
1) The demand of an item uniform at a rate of 25 units per month. The fixed cost is Rs15
each time a production run is made. Production cost is Re.1 per item and inventory
carrying cost is Re.0.30 per item per month. If the shortage cost is Rs1.50 per item per
month. Find EOQ and time interval between orders.
2) The demand for an item is 18000 units per year. Holding cost is Rs1.20 and cost of
shortage is Rs5. The set up cost is Rs400. Assuming the replacement rate is
instantaneous. Determine optimum order quantity.
3) The demand for an item is 12000 per year and shortages are allowed. If the unit cost is
Rs15 and the holding cost is Rs20 per year per unit. Determine the optimum total
yearly cost. The cost of placing one order is Rs6000. Cost of one shortage is Rs100
per year.
 4) A commodity is to be supplied at a constant rate of 200 units per day. Supplies of any
amount can be had at any required time, but each ordering cost Rs.50; cost of holding
the commodity in inventory is Rs.2.00 per unit per day while the delay in the supply
of the item induces a penalty of Rs.10 per unit per day. Find the optimal policy (Q,t),
where t is the reorder cycle period.
5) A manufacturer has to supply his customer 24,000 units of his product per year. This
demand is fixed and known. The customer has no storage space and so the
manufacturer has to ship a day’s supply each day. If the manufacturer fails to supply,
the penalty is Rs.0.20 per unit per month. The inventory holding cost amounts to
Rs.0.10 per unit per month and the setup cost is Rs.350 production run. Find the
optimum lot size for the manufacturer?
6) The demand of an item is uniform at a rate of 200 units per day. The fixed cost is
Rs.15 each time a production run is made. The production cost is Rs.1 per item and
the inventory carrying cost is Rs.0.30 per item per month. If the storage cost is Rs1.50
per item per month, determine how often to make a production run and of what size it
should be?
EOQ with single price break:
1) The monthly demand for the product is 200 units, the cost of shortage is 2% of the
unit and cost of ordering is Rs.350.00
0 < Q < 500 10.00
500 ≤ Q 9.25
2) Find the optimum order quantity for a product the price breaks are as follows
0 < Q < 800 1
Q ≥ 800 0.98
The yearly demand for the product is 1600 per year cost of placing an order is Rs5
cost of storage is 10% per year.
3) The monthly demand for the product is 250 units, cost of placing an order is Rs300,
cost of storage is 2% of the unit cost. Find the optimum order quantity for a product
the price breaks are as follows
0 < Q < 500 15
Q ≥ 500 14
4) Annual demand of a product is 10000units each unit cost Rs100 if orders placed
in quantities below 200 units but for orders of 200 above the price is 95. The
annual inventory holding cost is 10% of the value of the item and the ordering
cost is Rs5 per order find EOQ
5) A manufacturer of engines is required to purchase 2400 castings for 12 months. This
requirement is assumed to be fixed and known. The manufacturer is given a lower
price for quantity purchased within certain ranges. The problem is to determine the
optimal order quantity
Ordering cost = Rs350
Carrying cost= 2% of unit cost
0 < Q < 500 10
Q ≥ 500 9.25
7) Find the optimal order quantity for which the price breaks are as follows
Unit Cost (Rs) Quantity
Rs10.00 0 < Q <500
Rs9.25 500 ≤ Q
The monthly demand for a product is 200 units, the cost of storage is 2% of unit cost
and the cost of ordering is Rs350
EOQ with double price break:
1) The manager of a company manufacturing car parts has entered into a contract of
supplying 100nos per day of a particular part to a car manufacturer. He find s that his
plant has a capacity of p[producing 2000numbers per day of the part. The cost of the
part is Rs50 cost of holding stock is 12%per annum and setup cost per production run
is Rs100. What should be run size for each production run and total optimum cost per
month? How frequently should production rums be made? Shortage is not possible
2) A shopkeeper has a uniform demand of an item at the rate of 50 items per month. He
buys from the supplier at a cost of Rs6 per item and the cost of ordering is Rs10 each
item. If the stock holding costs are 20% per year of the stock value. How frequently
should he replenish his stocks if the supplier offers a 5% discount on orders 200 &
999 items and a 10% discount on orders exceeding or equal to 1000
3) Annual demand for an item is 6000 units. Ordering cost is Rs600 per order. Inventory
carrying cost is 8% of the purchase cost per unit per year. The price breaks are as
shown below. Find the optimal order size
Quantity Price per unit
0 < Q1 < 2000 20
2000 ≤ Q2 < 4000 15
4000 ≤ Q3 9
4) Find EOQ for the following data
Demand = 64000/year
Ordering cost = 10Rs
Carrying cost = 20% of unit cost
Quantity Price per unit
0 < Q1 <1000 10
1000 ≤ Q2<5000 9.80
5000 ≤ Q3 9.50
5) Annual demand for an item is 5400 units. Ordering cost is Rs600 per order. Inventory
carrying cost is 30% of the purchase cost per unit per year. The price breaks are as
shown below. Find the optimal order size
Quantity Price per unit
0 < Q1 < 2400 12
2400 ≤ Q2 < 3000 10
3000 ≤ Q3 9
6) Monthly demand for an item is 400 units. Ordering cost is Rs25 per order. Inventory
carrying cost is 20% of the purchase cost per unit per year. The price breaks are as
shown below. Find the optimal order size
Quantity Price per unit
0 < Q1 <100 20
100 ≤ Q2 <200 18
200 ≤ Q3 16
7) Monthly demand for an item is 200 units. Ordering cost is Rs350 per order. Inventory
storage cost is 2% of the purchase cost per unit. The price breaks are as shown below.
Find the optimal order size
Quantity Price per unit
0 < Q1 <500 10
500 ≤ Q2 < 750 9.25
750 ≤ Q3 8.75
8) Monthly demand for an item is 400 units. Ordering cost is Rs50 per order. Inventory
carrying cost is 20% of the purchase cost per unit per year. The price breaks are as
shown below. Find the optimal order size
Quantity Price per unit
 0 < Q1 <100 200
100 ≤ Q2 <200 180
200 ≤ Q3 160
9) Soft drinks manufacturing company buys a large number of pallets every year which
it uses in the warehousing of its bottled products. A local vendor has offered the
following schedule for pallets
Order Qty Unit price
1.499 10
500-749 9.25
750 & above 8.75
The average yearly replacement is 2400 pallets. The cost per order is Rs100 and
Its carrying costs are 12% of the average inventory. What quantity should be
ordered?
EOQ with three price break:
10) Find the optimum order quantity for a product for which the price breaks are as
follows
Quantity Unit cost (Rs)
1.499 25
500-1499 24.80
1500-2999 24.60
Over 3000 24.40
Ordering cost is Rs180 per order, carrying cost is 10% of average inventory. Demand
is 500 units per year. Also find the minimum inventory cost.
11) India Pistons Ltd. required at the rate of 60 per day. Cost of ordering is Rs50 per order
& the carrying cost is 0.15. Assume that there are 300 working days in a year. The
pricing schedules are given below. Calculate
a. What is the optimal order quantity?
b. What is the minimum inventory cost?
Quantity ordered Unit price (Rs)
1.1999 65
2000.4999 60
5000-10000 55
Over 10000 50
Probabilistic Inventory
12) A baking company sells cake by kilogram weight. It makes profit of Rs5 a Kg on each
Kg sold. It disposes of all cakes not sold on the date it is baked at a loss of Rs1.20 per
Kg. If the demand is known to be rectangular between 2000Kg and 300Kg determine
the optimal daily amount baked.
13) In a railway private canteen, the daily demand for packed meals follows uniform
distribution as presented below:
P(x) = 1/ (250 – 150), 150≤ x ≤ 250.
The cost of production per packed meals is Rs9. The selling price is Rs15 per
packed meals. The surplus packets on each day are sold at Rs7 in a nearby public
place. Find the optimal number of packets of meals to be prepared on each day.
14) Explain the factors affecting inventory control.
15) What is EOQ? Distinguish between deterministic and probabilistic models.
16) What are the features of inventory system?
17) What are the reasons for keeping inventory in an organization? What are the types of
inventory?
18) What are the costs associated with inventory.
19) What are the general assumptions of deterministic inventory model