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

1. Solve the following LPP graphically:

max z = 2x1 + 3x2

st. x1 + 2x2  50
x1 – x2  10
x1  35
x1, x2 0

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

B1 B2 B3
A1 5 -1 -3
A2 -3 3 4

3. Set up the initial simplex tableau for the following LPP under the two-phase method:

max z = 2x1 + 3x2 + x3

st. 3x1 + 2x2 + x3  120
x1 – x2 + x3  20
x1, x2, x3  0

4. Customers arrive at an M/M/1 queueing system on an average every one and a half minutes. If the
service rate is 50 per hour, find the percentage of time the system is idle, the average queue length,
and the average waiting time of a customer in the queue.

5. Find an initial basic feasible solution for the following transportation problem using the least cost
method:

12 11 10 8 30
9 12 6 10 30
6 8 7 10 40
25 25 25 25

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

1. A textile unit has received an order of 10,000 garments to be delivered within a month. The selling
price of each garment is Rs. 120. Currently the unit has raw materials sufficient to produce 6500
garments, and labour-time sufficient to produce only 6000 garments. The cost of production of
each garment is Rs. 85. In addition, the textile unit can buy garments from local textile producers.
The market price of these local garments is Rs. 100, of which the unit avails a 5% discount. All
garments must be labeled and packed before delivery, and this costs the unit Rs. 10 per garment.
Formulate the textile unit’s problem as an LPP, and solve graphically, to find the optimum profit.

2. A new shopping mall is considering setting up an information desk manned by one employee.
Based upon information obtained from similar information desks, it is believed that people will
arrive at the desk at the rate of 15 per hour. It takes an average of two minutes to answer a
question. It is assumed that arrivals are Poisson and answer times are exponentially distributed.
Find:
(a) the probability that the employee is idle.
(b) the proportion of the time that the employee is busy.
 (c) the average number of people receiving and waiting to receive some information.
(d) the average number of people waiting in line to get some information.
(e) the average time a person seeking information spends at the desk.
(f) the expected time a person spends just waiting in line to have his question answered.

3. Solve the following TSP:

A B C D E
A - 12 15 18 17
B 13 - 16 10 9
C 12 10 - 14 8
D 7 11 16 - 12
E 9 11 13 15 -

4. Assume that two firms are competing for market share for a particular product. Each firm is
considering what promotional strategy to employ for the coming period. Assume that the
following payoff matrix describes the increase in market share for firm A and decrease in market
share for firm B. Determine the optimal strategies for each firm.

Firm B
No Promotion Moderate Much
Promotion Promotion
No Promotion 5 0 -10
Moderate
Firm A 10 6 2
Promotion
Much
20 15 10
Promotion

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
x1  35
3x1 + x2 = 60
x1, x2 0

2. A bank has two counters: one for deposits, the other for withdrawals. Both counters take 1½
minutes on an average to serve a customer. Depositors arrive at a rate of 30 customers per hour,
while withdrawers arrive at a rate of 25 customers per hour.
a. Assuming that each counter has a separate queue, find the average queue lengths and the
average waiting times of customers in the queues.
b. Assuming that both counters can handle either type of transaction, without affecting the
service rates, and a combined queue is formed, find the average queue length and the
average waiting time of a customer in the queue.

3. Solve the following transportation problem with the following data:

From/ To E F G H Supply
A 3 3 3 6 200
 B 4 5 3 5 400
C 4 4 4 6 300
D 5 2 3 7 200
Demand 350 450 200 100

Is the optimal solution unique?

4. A manufacturer of complex electronic equipment has just received a sizable contract and plans to
subcontract the job. He has solicited bids for 6 subcontracts from 5 firms. Each job is sufficiently
large that any one firm can take only 1 job. The table below shows the bids and the cost estimates
(in Rs.10,000’s) for doing the jobs . Find the optimal assignment minimizing the total cost.

Firm\Job J1 J2 J3 J4 J5 J6
F1 48 72 36 52 50 65
F2 44 67 41 53 48 64
F3 46 69 40 45 45 68
F4 43 73 37 51 44 62
F5 50 65 35 50 46 63

1. Railway authorities have decided to install vending machines for the purchase of Platform tickets.
Each platform ticket is sold for Rs.3/-. A person can come to the vending machine and ask for
either for one, two or three tickets at a time. It was observed that the probability of a person asking
for one ticket is 50%, for two tickets 40% and for three tickets is 10%. The vending machine can
detect the coins that the customer is giving which could consist of Re 1/- , Rs. 2/- or Rs. 5/-.
If a customer wants one ticket he could pay as follows:

1 Re 2 coin and
Payment method 3 One rupee coins 2 Two Rupee coin 1 Rs. 5 coin
1 Re 1 coin
Probability 20% 10% 20% 50%

If a customer wants two tickets he pays as follows:

2 Re 2 coins and 3 Two Rupee 1 Rs.5 coin and 1

Payment method 6 One rupee coins 2 Rs. 5 coins
2 Re 1 coins coins Rs2 coin
Probability 5% 10% 10% 40% 35%

If a customer buys 3 tickets he pays as follows:

1 Re 5 coins and
1Rs5 coin and
Payment method 1 Re 2 coins and 2 Rs. 5 coin
2 Rs. 2 coins
2 Rs. 1 coin
Probability 20% 5% 75%

Once a customer pays by a method as stated above , the vending machine identifies the amount of
payment paid and returns back the change to the customer with the highest denomination coin first
and then onwards the next lower denomination coins. If the highest denomination coin is not
available in the machine, it gives the next lowest denomination, and so on. If the machine does not
have any coin left to return the customer it gives back the original amount paid by the customer
and does not issue any tickets and gives a message saying “Collect the ticket from the manual
counter.” The problem for the railway authorities is to find out how many number of coins of each
denomination should they keep in the machine each day.
a) Explain how you would use random numbers to simulate the situation described above
b) Simulate this problem for the first 10 customers assuming that three coins of each denomination
has been put in the machine initially. Use the following random numbers: 31, 27, 56, 03, 78, 82,
21, 56, 87, 92, 25, 45, 27, 83, 46, 65, 78, 23, 24, 45.
SECTION D: Answer the following compulsory question. [1x35=35].
Nisarga Developers has $30 million available for investment. It wishes to invest over the next six months
in such a way that it will maximize the total interest earned over the six month period as well as have at
least $15 million available at the end of the sixth month for a project in which it will be participating. For
the time being, Nisarga wishes to invest only in 2-month government bonds (earning 4% over the 2-month
period) and 3-month construction loans (earning 7% over the 3-month period). Each of these is available
each month for investment. Funds not invested in these two investments are liquid and earn 1% per month
when invested in savings. Further, in accordance with company policies, at no time does Nisarga wish to
have more than $10 million in either government bonds or construction loans.

The Sensitivity Report for Nisarga’s investment plan is given in the attached tables.

Sensitivity Report of Nisarga Developers investment plan

  Final Reduced Objective Allowable Allowable

Coefficien
Variable Value Cost t Increase Decrease
G1 10.00 0.00 0.04 infinity 0.00
G2 0.00 0.00 0.04 0.00 infinity
G3 10.00 0.00 0.04 infinity 0.00
G4 0.00 0.00 0.04 0.00 0.02
G5 2.46 0.00 0.04 0.01 0.01
G6 7.54 0.00 0.04 0.01 0.01
C1 10.00 0.00 0.07 infinity 0.00
C2 0.00 0.00 0.07 0.00 0.00
C3 0.00 0.00 0.07 0.00 infinity
C4 0.00 -0.01 0.07 0.01 infinity
C5 0.00 -0.01 0.07 0.01 infinity
C6 10.00 0.00 0.07 infinity 0.01
S1 10.00 0.00 0.01 0.00 infinity
S2 10.10 0.00 0.01 0.00 infinity
S3 10.60 0.00 0.01 0.00 0.01
S4 21.41 0.00 0.01 0.02 0.00
S5 29.56 0.00 0.01 0.02 0.00
S6 12.32 0.00 0.01 0.02 1.01

  Final Shadow Constraint Allowable Allowable

Constraint Value Price R.H. Side Increase Decrease
1 30.00 0.07 30.00 2.39 7.31
2 0.00 0.06 0.00 2.41 7.39
3 0.00 0.05 0.00 2.44 7.46
4 0.00 0.04 0.00 2.46 7.54
5 0.00 0.03 0.00 2.49 7.61
 6 0.00 0.02 0.00 2.51 7.69
7 15.00 -0.01 15.00 7.76 2.54
8 10.00 0.00 10.00 infinity 0.00
9 10.00 0.02 10.00 0.00 10.00
10 10.00 0.00 10.00 0.00 7.54
11 10.00 0.02 10.00 7.69 0.00
12 2.46 0.00 10.00 infinity 7.54
13 10.00 0.02 10.00 7.69 2.51
14 10.00 0.00 10.00 0.00 10.00
15 10.00 0.00 10.00 infinity 0.00
16 10.00 0.04 10.00 0.00 0.00
17 0.00 0.00 10.00 infinity 10.00
18 0.00 0.00 10.00 infinity 10.00
19 10.00 0.05 10.00 7.69 2.51

Questions
1. Formulate Nisarga Developer’s investment plan as a linear programming problem.
2. Interpret the final solution, and find Nisarga’s total interest earnings in the six month period.
3. Interpret the reduced costs associated with C4 and C5.
4. If government bonds yielded 3% over a two-month period rather than 4%, would the optimal
solution change? Explain.
5. Interpret the shadow prices of constraints 1 and 7.