SECTION A: Answer all five questions. Each question carries two marks [5x2=10].

1. Solve the following two-player-zero-sum game, and interpret the solution:

B1 B2
A1 4 -2
A2 -1 5

2. Solve the following LPP graphically.

max z = 3x1 + 2x2

st. 2x1+ x2  60
x1 + 2x2  90
x1, x2  0

3. Using the sensitivity analysis below, assess what would happen to the optimal objective function
value if the RHS of the first constraint is decreased by 10 units, the RHS of the second constraint
is increased by 5 units, and the RHS of the third constraint is increased by 15 units.

Adjustable Cells
    Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$3 x1 30 0 2 1 1
$C$3 x2 20 0 3 3 1

Constraints
    Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$D$7 constr1 50 1.5 50 0 20
$D$8 constr2 80 0 80 1E+30 0
$D$9 constr3 90 0.5 90 60 0

4. Customers arrive at an M/M/1 queueing system on an average every three minutes. What should
be the service rate so that the average waiting time of a customer in the queue would be at most 5
minutes?

5. Find an initial basic feasible solution for the following transportation problem using the Vogel
approximation method (note that some of the routes are restricted):

12 - 10 8 40
- 8 7 10 40
12 18 25 25

SECTION B: Answer three questions. Each question carries five marks [3x5=15].

1. A company produces two types of hats. Each hat of the first type requires twice as much labour
time as that of the second type. If all the hats are of the second type only, the company can
produce a total of 500 hats per day. The market limits the daily sales of the first and second type to
150 and 250 hats, respectively. Assuming that the profits per hat are Rs. 8 for the first type and Rs.
5 for the second type, formulate the company's problem as an LPP, and determine the number of
 hats of each type to be produced so as to maximise total profit, and find the dual values, RHS
ranges, reduced costs, and coefficient ranges.

2. A company has three factories at Amethi, Baghpat and Gwalior; and four distribution centres at
Allahabad, Mumbai, Calcutta and Delhi. The production costs at the three factories are
respectively Rs. 120, Rs. 170, and Rs. 150 (per tonne), while the selling prices at the four
distribution centres are respectively Rs. 250, Rs. 325, Rs. 300, and Rs. 275 (per tonne). The
production capacity at each of the three factories is 5,000 tonnes, while the demand at the four
distribution centres is 4,000 tonnes; 3,500 tonnes; 2,000 tonnes and 2,500 tonnes respectively. The
transportation costs (in Rs. per tonne) from different factories to different centres are given below:

Distribution centre
Factory
Allahabad Mumbai Calcutta Delhi
Amethi 30 25 50 65
Baghpat 50 50 25 30
Gwalior 25 50 45 25

Suggest the optimum transportation schedule and find the optimal total profit.

3. Solve the following maximisation assignment problem using the Hungarian assignment method:

W X Y Z
A 32 40 - 37
B 30 - 31 32
C 38 - 29 -
D - 33 37 32
E 34 36 38 -

4. An inventory system is characterised by the following data: the initial inventory is100 units, the
cost per unit is Rs. 50, the inventory carrying cost is Rs. 2.50 per unit per day, the shortage cost is
Rs. 5 per unit per day, the re-order level is 35 units, the re-order quantity is 75 units, the lead time
is one day, and the distribution of daily demand is given below:

daily demand 20 25 30 35 40
probability 0.3 0.3 0.2 0.1 0.1

Simulate the system using the following random numbers: 88, 57, 86, 80, 34, 58, 99, 49, 61, 68,
07, 75, 28, 79, 41, and compute the total inventory cost for the simulated system.

SECTION C: Answer four questions. Each question carries ten marks [4x10=40].

1. Solve the following LPP using the two-phase method:

max z = 2x1 + 3x2

st. x1 + 2x2  50
x1 – x2  10
3x1 + x2 = 60
x1, x2 0

2. A bank has five ATM’s. The cost of operating an ATM is Rs. 75 per hour. The cost per customer
in the system per hour is Rs. 50. If the arrival rate is 100 customers per hour, and the service rate
is 40 customers per hour, what is the optimum number of ATM’s the bank should use? What if the
cost of operating an ATM were reduced to Rs. 50 per hour?
3. Solve the following crew assignment problem:

Bangalore - Madurai Madurai - Bangalore

Route Departure Arrival Route Departure Arrival
A 0600 1500 P 0500 1400
B 1000 1900 Q 1200 2100
C 1700 0200 R 1900 0400
D 2000 0500 S 2200 0700
minimum layover time = 4 hours

4. Solve the following maximisation traveling salesman problem using the Hungarian assignment
method (note that some of the assignments are restricted):

A B C D E
A - 25 30 - 28
B 32 - 28 28 29
C 25 30 - 31 -
D 28 29 - - 27
E 26 27 29 30 -

5. An organization has three alternative projects A, B, and C under consideration:

project A: A capital investment of Rs. 50,000 is required. If the project is completed on time, the
organization will receive Rs. 1,00,000 as revenue. If not completed on time, a penalty of Rs. 5,000
will be charged, with a maximum penalty of Rs. 15,000. The probabilities of delay are estimated
as follows:

DAYS DELAYED PROBABLILITY

zero days delay 0.65
one day delay 0.20
two days delay 0.10
three or more days delay 0.05

project B: A capital investment of Rs. 75,000 is required. After the first phase is completed, the
organization will make a net profit of Rs. 20,000. If the first phase is completed within two days,
the organization will get a follow-up project, requiring an expenditure of Rs. 25,000, and entailing
revenues of Rs. 60,000 with 40% chance, Rs. 70,000 with 50% chance, and Rs. 80,000 with 10%
chance. If the first phase takes more than two days to complete, the follow-up project is not
available. The probability of completing the first phase within two days is 35%.
project C: A capital investment of Rs. 1,00,000 is required. The probability of success of the
project is 75%. If the project succeeds, the revenue is expected to be Rs. 1,75,000; on the other
hand, if the project fails, no revenue will be generated.

(a) Represent the decision problem as a decision tree.

(b) Find the maximin, maximax, and maximum EMV solutions for the problem.
(c) Which project should be recommended to the organization? Justify your answer
 SECTION D: Answer the following compulsory question. [1x35=35].
Relax-and-Enjoy Lake Development Corporation is developing a lakeside community at a privately
owned lake. The primary market for the lakeside lots and homes includes all middle- and upper-income
families within approximately 100 miles of the development. Relax-and-Enjoy has employed the
advertising firm of Boone, Phillips and Jackson (BP&J) to design the promotional campaign.
After considering possible advertising media and the market to be covered, BP&J has recommended
that the first month's advertising be restricted to five media. At the end of the month, BP&J will then
reevaluate its strategy based on the month's results. BP&J has collected data on the number of potential
customers reached, the cost per advertisement, the maximum number of times each medium is available,
and the exposure quality rating for each of the five media. The quality rating is measured in terms of an
exposure quality unit, a measure of the relative value of one advertisement in each of the media. This mea -
sure, based on BP&J's experience in the advertising business, takes into account factors such as audience
demographics (age, income, and education of the audience reached), image presented, and quality of the
advertisement. The information collected is presented in Table below.
Relax-and-Enjoy provided BP&J with an advertising budget of $30,000 for the first month's
campaign. In addition, Relax-and-Enjoy imposed the following restrictions on how BP&J may allocate
these funds: At least 10 television commercials must be used, at least 50,000 potential customers must be
reached, and no more than $18,000 may be spent on television advertisements.

Table: ADVERTISING MEDIA ALTERNATIVES FOR THE RELAX-AND-ENJOY

LAKE DEVELOPMENT CORPORATION
Number of
Maximum Times Exposure
Potential Cost ($) per
Advertising Media Available per Quality
Customers Advertisement
Month* Units
Reached
1. Daytime TV (1 min), station WKLA 1000 1500 15 65
2. Evening TV (30 sec), station WKLA 2000 3000 10 90
3. Daily newspaper (full page), The
1500 400 25 40
Morning Journal
4. Sunday newspaper magazine (1/2
2500 1000 4 60
page color), The Sunday Press
5. Radio, 8:00 A.M. or 5:00 P.M. news
300 100 30 20
(30 sec), station KNOP
* The maximum number of times the medium is available is either the maximum number of times the
advertising medium occurs (e.g., four Sundays per month or the maximum number of time BP&J
recommends that the medium be used).

The sensitivity report generated was as follows:

Adjustable Cells
    Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
$B$3 DTV 10 0 65 25 65
$C$3 ETV 0 -65 90 65 1E+30
$D$3 DN 25 0 40 1E+30 16
$E$3 SN 2 0 60 40 16.6667
$F$3 R 30 0 20 4.43431E+15 14
Constraints
    Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$H$7 availability of DTV 10 0 15 1E+30 5
$H$8 availability of ETV 0 0 10 1E+30 10
$H$9 availability of DN 25 16 25 5 5
$H$10 availability of SN 2 0 4 1E+30 2
$H$11 availability of R 30 14 30 20 20
$H$12 total budget 30000 0.06 30000 2000 2000
$H$13 min. TV ads 10 -25 10 1.3333 1.3333
$H$14 TV ad budget 15000 0 18000 1E+30 3000
$H$15 customer reach 61500 0 50000 11500 1E+30

a) Formulate the above media mix problem as an LPP.

b)Interpret the report above, and make suitable recommendations to management.