Department of Finance

Jagannath University
BBA 11th Batch 3rd Year 1st Semester 2nd Midterm- 2019
Course Title: Operations Research Course Code: FIN-3104
Time: 1 Hours Marks: 10

1. “Limitations of one forecasting method lead to the emergence of another improved method”- 3
What do you think? Explain this statement in relation to different forecasting methods.
2. The directors of IDLC must choose one of three mutual funds in which to invest $2 million. 7
The staff of the Research Department has estimated the expected return in one (1) year for each
of three mutual funds on the basis of bear, normal, or bull performance of the DSI, as follows:

Bear Normal Bull

Probability
0.30 0.60 0.10
MF 1 50000 75000 100000
MF 2 25000 50000 150000
MF 3 40000 60000 175000

For the above decision situation, the utility of the smallest payoff of $25,000 is set to 0 and that
of the largest payoff of $175,000 is set to 100. An interview process with management has
resulted in utilities for the remaining payoffs that can be approximated by the following utility
function:
𝐔𝐭𝐢𝐥𝐢𝐭𝐲 𝐨𝐟 𝐱 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝 𝐝𝐨𝐥𝐥𝐚𝐫𝐬 = −𝟎. 𝟎𝟎𝟒𝟑𝟒 − 𝟎. 𝟎𝟗𝟓𝟎𝟒𝐱 + 𝟎. 𝟎𝟎𝟑𝟖𝟏𝒙𝟐

Compute the optimal decision in terms of utility (not in $ value) and associated utilities each of
the following criteria:
i. Optimistic
ii. Pessimistic
iii. Hurwicz’s (with 𝛼 = 0.65)
iv. Minimax regret
v. Probabilistic with the given values
vi. Compute the expected value of perfect information and interpret its meaning in this context.

1
 Jagannath University
Department of Finance
BBA 3rd Year 1st Semester Final Examination- 2019
Course Title: Operations Research Course Code: FIN-3104
Time: 3 Hours Marks: 60
[Answer any four (04) questions of the following. Different sections of each question have to be
answered in sequential order.]

1. A. What is Operations Research? Explain the phases of Operations Research (OR). 05

B. Explain the different models used in Operations Research. 05
C. “Much of success of OR in past few decades is due to computers”. Discuss. 05

2. A. Mention the applications of PERT. 03

B. A project has the following times schedule 12

Times in
Activity Activity Times in weeks
weeks
(1 − 2) 4
(1 − 3) 1 (5 − 7) 8
(2 − 4) 1 (6 − 8) 1
(3 − 4) 1 (7 − 8) 2
(3 − 5) 6 (8 − 9) 1
(4 − 9) 5 (8 − 10) 8
(5 − 6) 4 (9 − 10) 7
Construct the network and compute
i. TE and TL for each event;
ii. Float for each activity;
iii. Critical path and its duration

3. A. “Slack variables are associated with minimization problems whereas surplus variables are related 02
to maximization problems”- critically evaluate this statement.
B. Making Money Investments (MMI) has been authorized by one of its new clients to invest up to 13
$1.2 million in two funds: a stock fund and a money market fund. Each unit of the stock fund
costs $50 and provides an annual rate of return of 10%; each unit of the money market fund costs
$100 and provides an annual rate of return of 4%. The new client wants to minimize the risk
subject to the requirement that the annual income from the investment be at least $60,000.
According to MMIS’s risk measurement system, each unit invested in the stock fund has a risk
index of 8, and each unit invested in the money market fund has a risk index of 3; the higher risk
index associated with the stock fund simply indicates that it is the riskier investment. MMI’s new
client wants at least $300,000 be invested in the money market fund. The following LP model is
proposed, where S is the number of units purchased in the stock fund and M is number of units
purchased in the money market fund:

Minimize 𝟖𝐒 + 𝟑𝐌
Subject to
50S + 100M ≤ 1,200,000
5S + 4M ≥ 60,000
M ≥ 3,000
S, M ≥ 0

2
 Requirements:

i. Solve the problem graphically using Algebra and determine the optimal number of units
to purchase of each type of fund and the corresponding rate of return for the portfolio.
Explain the optimal solution and objective function value in the context of the problem.

ii. Graphically and algebraically determine the sensitivity range of each objective function
coefficient at the optimal solution of the linear program. Explain the meaning of each
range in the context of the problem.

iii. For each constraint that holds with equality at the optimal solution of the linear program
in the original program, perform the following:

a) Graphically and algebraically determine the sensitivity range of the right-hand-side

value.

b) Calculate, using Algebra, the shadow price associated with each sensitivity range found
in part

c) Explain the meaning of the shadow price in the context of the problem.

4. A. “Limitations of one forecasting method lead to the emergence of another improved method”- 02
What do you think? Explain this statement in relation to different forecasting methods.
B. The management of BD Auto Parts is having a meeting to plan the operating budgets for next 13
year. The Senior Vice-President of Sales, Mr. Fakrul, knows that a large portion of the company’s
income is derived from sales of their lifetime batteries. He has asked you, Manager of Production,
to prepare an estimate of the revenues the company can expect in each of the four quarters of next
year (2019) from lifetime batteries. To prepare your forecast, you have contacted Mr. Zabir in the
Accounting Department, who has provided you with the following sales figures (in $ thousands)
in each quarter of the previous 3 years:
Year Q-1 Q-2 Q-3 Q-4
2016 275 150 205 300
2017 300 160 190 310
2018 285 155 180 325

Requirements:
Use seasonal exponential smoothing with trend (Holt’s) model for forecasting the quarterly
revenue from batteries. Use the RMSE performance measure for selecting the best model.
Use the best model you obtained in requirement 1 to forecast revenues from lifetime batteries in
each of the four (4) quarters that follow. Create 95% confidence intervals for each forecast.
Use the following linear fit model using time as the independent variable to forecast deseasonal
sales of batteries in next four quarters: Deseasonal Sales = 231.38+0.46* Time. Forecast the
reseasonal sales for each quarter. Create 95% confidence intervals for each forecast given MSE
= 103.85.

Hints:
NORM.S.INV (0.95) = 1.64485 or NORM.S.INV (0.975) = 1.95996; Alpha = 0.50; Beta = 0.50;
ŷt+1 = ∝ yt + (1 − α)ŷt ; ŷt+k = Lt + k. Tt;
𝐿𝑡 = ∝ yt + (1 − α)(𝐿𝑡−1 + 𝑇𝑡−1 ); 𝑇𝑡 = 𝛽 (𝐿𝑡 − 𝐿𝑡−1 ) + (1 − 𝛽)𝑇𝑡−1

5. A. “The information has some maximum value that represents the limit of what the decision maker 02
would be willing to spend”- Do you agree? What is the method to calculate this maximum value?

3
 B. The directors of Bayshore Funds must choose one of three mutual funds in which to invest $2 08
million. The staff of the Research Department has estimated the expected return in one (1) year
for each of the three mutual funds on the basis of poor, moderate, or excellent performance of the
Dow Jones average, as follows:

Dow Jones Expected Return

Probability
Performance Fund-1 Fund-2 Fund-3
Poor 30% $50,000 $25,000 $40,000
Moderate 60% $75,000 $50,000 $60,000
Excellent 10% $100,000 $150,000 $175,000

Use the appropriate payoff table to compute the optimal decision and associated payoff using
each of the following criteria:
i. Maximax
ii. Maximin
iii. Hurwicz’s (with 𝛼 = 0.65)
iv. Minimax regret
v. Probabilistic with the given values
vi. Compute the expected value of perfect information and interpret its meaning in this
context.

C. The general partners of Bayshore Funds in the above problem (B) want to conduct a survey of 05
independent money managers to find out if the managers believe the economic climate in the
upcoming year will be favorable (I1 ) or unfavorable (I2 ). The staff of the Research Department
estimates that the survey would cost $5,000. The staff also believes that if the Dow Jones
performance will be poor, the likelihood of the survey resulting in I1 is 5%. If the Dow Jones
performance will be moderate, indicator I1 is likely to occur 40% of the time. If the Dow Jones
performance will be excellent, the probability of getting indicator I1 is 75%.
i. Determine whether or not the survey should be conducted and at what cost.
ii. Determine the efficiency of the survey and interpret its meaning in this context.
iii. Determine the optimal strategy of Bayshore Funds if they decide to conduct the survey.

6. A. “Average number of arrivals per time period must be less than average number served per time 02
period”- do you agree? Rationalize your response.
B. During registration at Finance Department, Jagannath University in every semester, students must 13
have their courses approved by the section officer. It takes the section officer an average of 2
minutes to approve each schedule, and students arrive at the administrative office at the rate of 28
per hour.
i. Compute L, Lq , W, Wq and U.
ii. The chairman of the department has received a number of complaints from students
about the length of time they must wait to have their schedules approved. The chairman
feels that waiting 10.00 minutes to get a schedule approved is not unreasonable. Each
assistant the chairman assigns to the administrative office will reduce the average time
required to approve a schedule by 0.25 minute, down to a minimum time of 1.00 minute
to approve a schedule. How many assistants should the chairmen assign to the section
officer?
iii. The chairman of the department is considering the addition of a second section officer
in the department administrative office to serve students waiting to have their schedules
approved. This new administrative officer could serve the same number of students per
hour as the present section officer. Determine L, Lq , W and Wq for this improved system.
As a student, would you recommend adding the new section office?

4
 Department of Finance
Jagannath University
BBA 11th Batch 3rd Year 1st Semester 1st Midterm- 2019
Course Title: Operations Research Course Code: FIN-3104
Time: 1 Hours Marks: 10

1. The Portfolio Manager of Bayshore Financial has been asked to invest $1,000,000 of a large pension fund. The 3
Investment Research Department has identified six mutual funds with varying investment strategies, resulting
in different expected returns and associated risks, summarized in the following table.

Mutual Fund MF-1 MF-2 MF-3 MF-4 MF-5 MF-6

Price ($/share) 45 76 110 17 23 22
Exp. Return (%) 30 20 15 12 10 7
Risk Category High High High Medium Medium Low

One way to control the risk is to limit the amount of money invested in the various funds. To that end, the
management of Pension Planners, Inc. has specified the following guidelines: 1. The total amount invested in
high-risk funds must be between 50% and 75% of the portfolio. 2. The total amount invested in medium-risk
funds must be between 20% and 30% of the portfolio. 3. The total amount invested in low-risk funds must be
at least 5% of the portfolio.

A second way to control risk is to diversify- that is, to spread the risk by investing in many different alternatives.
The management of Pension Planners, Inc. has specified that the amount invested in the high-risk Funds 1, 2
and 3 should be in the ratio 1:2:3, respectively. The amount invested in the medium risk Funds 4 and 5 should
be in the ratio 1:2.

With these guidelines, formulate a single LP model to maximize the expected dollar return.

2. Dhaka Oil Company can buy two types of crude oil; light oil at a cost of $25 per barrel and heavy oil at $22 per 7
barrel. Each barrel of crude oil, when refined, yields three products: gasoline, jet fuel and kerosene. The
following table indicates the quantities in barrels of gasoline, jet fuel and kerosene produced per barrel of each
type of crude oil:

Types Gasoline Jet Fuel Kerosene

Light Crude 0.45 0.18 0.30
Heavy Crude 0.35 0.36 0.20

The refinery has contracted a fuel wholesaler to deliver 1,260,000 barrels of gasoline, 900,000 barrels of jet
fuel and 300,000 barrels of kerosene. The Production Manager has proposed the following LP model, where L
is the number of barrels of light crude oil to purchase and H is the number of barrels of heavy crude oil to
purchase:
Minimize 25L + 22H
S.t.
i. 0.45L + 0.35H ≥ 1260000
ii. 0.18L + 0.36H ≥ 900000
iii. 0.30L + 0.20H ≥ 300000
L, H ≥ 0

a. Solve the problem graphically using Algebra and determine the number of barrels of each product. Explain the
optimal solution and objective function value in the context of the problem.
b. Graphically and algebraically determine the sensitivity range of each objective function coefficient at the
optimal solution of this linear program. Explain the meaning of each range in the context of the problem.
c. For each constraint that holds with equality at the optimal solution of the linear program, perform the following:
✓ Graphically and algebraically determine the sensitivity range of the right-hand-side value for
constraint (i) and (ii)
✓ Calculate, using Algebra, the shadow price associated with sensitivity range found for constraint (i)
and (ii). Explain the meaning of these shadow prices.

5
 Jagannath University
Department of Finance
BBA 3rd Year 1st Semester Final Examination - 2018
Course Title: Operations Research; Course Code: FIN-3104
Full Marks: 60 Time: 3 hours
N.B: Answer any FOUR from the following questions. Present the answers in
Chronological manner. Figure in right alignment indicates full marks.

1. a. Short Notes: Zero- Sum Game; payoff; Saddle point; redundant constraints; PERT; Sensitivity 7
analysis; Unbounded Solution
b. Characteristics of queuing Model. 2
c. Max: 4A + B 6
Subject to: 10A + 2B ≤ 30
3A + 2B ≤ 12
2A + 2B ≤ 10
A, B ≥ 0

Requirements:
i. Write the problem in standard form.
ii. Solve the problem using the graphical method.
iii. What are the values of three stock variables at the optimal solution?

2. a. 7
Daily
Product 1 Product 2
availability
Machine 1 2 hours 1 hours 8 hours
Machine 2 1 hours 2 hours 8 hours
Unit Profit Tk. 300 Tk. 200

What will be the shadow price of machine 1 and machine 2 if daily capacity (availability) of both
machines is increased by one hour, remaining all other thing constant?
b. Define linear programming and explain the application of linear programming. 5
c. Explain the limitations of CPM 3

3. The following estimates of activity times (in days) are available for a small project.
Activity Optimistic Most Probable Pessimistic
A 5 6.0 7
B 9 10.0 11
C 8 8.5 12
D 8 10.0 11
E 7 8.0 10
F 6 7.0 8

a. Compute the expected activity completion times and the variance for each activity. 9
b. An analyst determined that the critical path consists of activities B-D-F. Compute the expected 6
project completion time and variance.

6
4. A transportation problem involves the following costs, supply and demand.

To
From 1 2 3 4 Supply
1 $500 $750 $300 $450 24
2 650 800 400 600 34
3 400 700 500 550 22
Demand 20 20 20 20 80

a. Find the initial solution using the Northwest corner method, the Minimum cell cost method. and 9
Vogel’s approximation model (VAM). Compute total cost for each.
b. Using the VAM initial solution, find the optimal solution using the Modified Distribution Method 6
(MODI).
Requirements:
i. Find out Maximin Value
ii. What is the value of the game?
iii. Saddle point?
iv. Is the game fair?
v. Optimal strategy for both players.
c. 6
Player B
B1 B2 B3 B4 B5
A1 4 6 5 10 6
Player A
A2 7 8 5 9 10
A3 8 9 11 10 9
A4 6 4 10 6 4

Requirement:
i. Find out the value of game applying dominance rule followed by Algebraic method.
ii. Probability of both players.

6. a. 10
i. ii. iii. iv. Supply
X 3 1 7 4 250
Y 2 6 5 9 350
Z 8 3 3 2 400
Demand 200 300 350 150

Requirement: Find out initial feasible solution (optimal cost) using UV method.

b. 5
Job
A B C D E
Machine
M1 8 10 6 7 11
(hours)
M2 5 6 2 3 4
M3 4 9 8 6 5

Requirements:
i. Sequence the jobs.
ii. Minimum time required to accomplish the job.
iii. Idle time for three machines.

7
 Jagannath University
Department of Finance
BBA 3rd Year 1st Semester Final Examination- 2014

Course Title: Operations Research Course Code: FIN-3104

Time: 3 hrs Marks: 60
Answer any four Questions from the following alternatives. All parts of a question should be answered in
consecutive order.

1. a) Define operation research. Discuss the phases of operations research. 5

b) Describe the procedure of formulating linear programming model. 5
c) Show the relationship between operation research and decision making. 5

2. a) Rin Soap Company wishes to make a new detergent from two of its current soaps: 7
Soap A and Soap B. The company wants the new detergent to contain at least 20 ounce of cleaning
ingredient D. Each pound of Soap A costs $0.20 and contains five ounces of D, whereas each
pound of soap B costs $0.25 and contains one ounce of D. Furthermore, for ecological reasons the
amount of soap A must be no more than that of soap B. Finally, the new mixture must weigh
exactly 12 pounds. How many pounds of each soap should be used in the mixture in order to meet
these requirements at a minimum cost? What is this minimum cost? (Solve graphically)
b) Find the value of θ by using simplex method and state the value of the variables that make θ 8
maximum. It is to be assumed that all variables must be nonnegative.
θ = 5𝑥1 + 8𝑥2
Subject to:
x1 + x2 ≤ 13,
x1 + 2x2 ≤ 22,
2x1 + x2 ≤ 20

3. a) What is ‘Duality’? 2
b) Minimize 𝑧 = 6𝑥1 + 8𝑥2 + 𝑥3 8
Subject to:
3𝑥1 + 5𝑥2 + 3𝑥3 ≥ 20,
𝑥1 + 3𝑥2 + 2𝑥3 ≥ 9,
6𝑥1 + 2𝑥2 + 5𝑥3 ≥ 30,
𝑥1 , 𝑥2 , 𝑥3 ≥ 0
Find the optimal solution of the above problem. Use the dual problem technique.
c) What are the different methods of solving transportation problem? Explain precisely. 5

4. a) What is assignment problem? 2

b) A taxi hire company has one taxi at each of five depots a, b, c, d and e. A customer requires a taxi 9
in each town, namely A, B, C, D and E. Distances (in kms) between depots (origins) and towns
(Destinations) are given in the following distance matrix:

a b c d e
A 140 110 155 170 180
B 115 100 110 140 155
C 120 90 135 150 165
D 30 30 60 60 90
E 35 15 50 60 85

How should taxis be assigned to customers so as to minimize the distance travelled?

c) What is Game theory? Explain two person zero sum game briefly? 4

5. a) What is Network in operations research? How it is constructed? 3

8
 b) RentCar is developing a replacement policy for its car fleet for a 4-year planning horizon. At the 6
start of each year, a decision is made as to whether a car should be kept in operation or replaced.
A car must be in service a minimum of 1 year and a maximum of 3 years. The following table
provides the replacement cost as a function of the year a car is acquired and the number of years
in operation.

Equipment Replacement cost ($) for given year in

acquired at operation
start of year 1 2 3
1 4000 5400 9800
2 4300 6200 8700
3 4800 7100 -
4 4900 - -

Instruction:
Formulate the route network model and find out the shortest route i.e., lowest cost route for this
car replacement problem.
c) What is CPM and PERT? Explain. 6

6. a) A small project is composed of activities whose time estimates are listed in the table below: 12
(Activities are identified by their beginning (i) and ending (j) node numbers)

Activity Estimated Duration (weeks)

i-j Optimistic Most Likely Pessimistic
1-2 1 1 7
1-3 1 4 7
1-4 2 2 8
2-5 1 1 1
3-5 2 5 14
4-6 2 5 8
5-6 3 6 15

Instructions:
i. Find the expected duration and variance for each activity.
ii. Draw the project network using expected duration. What is the expected project length?
iii. Calculate the variance and standard deviation of the project length. What is the
probability that the project will be completed?
1) At least 4 weeks earlier than expected?
2) No more than 4 weeks than expected time?
iv. If the project due is in 19 weeks, what is the probability of meeting the due date?

P- Values of Z- Scores requires in this problem given below:

Z .5 .67 1.00 1.33 2.00
P 0.1913 .2486 .3413 .4082 .4772
b) What is simulation analysis? How it is help to analyze the business scenarios? 3

9
 Jagannath University
Department of Finance
BBA 3rd Year 1st Semester Final Examination- 2017
Module Name: Operations Research Duration: 3hrs
Module Code: FIN-3104 Marks: 60
[Answer 4 (Four) questions from the following alternatives. Different sections of each question have to be
answered in cluster form]

1. a) What is Operations Research? What are the objectives of Operations Research? 4

b) What are the properties of linear programming? A factory manufactures two articles A and B. To manufacture
the article A, a certain machine has to be worked for 1 hour and 30 minutes and in addition a craftsman has
to work for 2 hours. To manufacture the article B, the machine has to be worked for 2 hours and 30 minutes
and in addition the craftsman has to work for 1 hour and 30 minutes. In a week the factory can avail of 80
hours of machine time and 70 hours of craftsman’s time. The profit on each article A is Tk. 5 and that on
each article B is Tk. 4. If all the articles produced can be sold away, find how many of each kind should be
produced to earn the maximum profit per week. Formulate the problem as a linear programming problem. 6
c) Using graphical method,
Maximize z = 0.25x1 + 0.45x 2
Subject to the constraints,
x1 + 2x2 ≤ 300
3x1 + 2x 2 ≤ 480
𝑥1 , 𝑥2 ≥ 0 5

2. a) Maximize 𝑧 = 2𝑥1 + 𝑥2 + 3𝑥3

Subject to the constraints,
−𝑥1 + 𝑥2 − 𝑥3 ≥ −6
2𝑥1 − 3𝑥2 ≥ −12
𝑥1 , 𝑥2 , 𝑥3 ≥ 0
Is this problem of maximization in standard format of Linear Programming? If not, convert the system in to
the standard problem and then write the initial table of simplex method of solution. From the initial table,
indicate which method of Simplex need to use for solving the problem? Indicate the pivot element of the
initial table. 4
b) Solve the following linear programming problem by simplex method:
Maximize 𝑧 = 6𝑥1 − 8𝑥2 + 𝑥3
subject to the constraints
3x1 + x2 ≤ 10
4x1 − x2 ≤ 5
x1 + x2 − x3 ≥ −3
x1 ≥ 0, x2 ≥ 0, x3 ≥ 0 7
c) Minimize z = 2𝑥1 + 3𝑥2
Subject to
2𝑥1 + 𝑥2 ≥ 6,
𝑥1 + 2𝑥2 ≥ 4,
𝑥1 + 𝑥2 ≥ 5,
𝑥1 , 𝑥2 ≥ 0
Find the dual of the minimum problem. 7

3. a) What is Assignment Problem? Briefly explain Hungarian Method. 4

b) A taxi hire company has one taxi at each of five depots a, b, c, d and e. A customer requires a taxi in each
town, namely A, B, C, D and E. Distances (in kms) between depots (origins) and towns (Destinations) are
given in the following distance matrix:

a b c d e
A 140 110 155 170 180
B 115 100 110 140 155
C 120 90 135 150 165
D 30 30 60 60 90
E 35 15 50 60 85

10
 How should taxis be assigned to customers so as to minimize the distance travelled? 7
c) What is Game theory? Consider the following two-person, zero-sum game. Payoffs are the winning for Player
A. Identify the pure strategy solution. What is the value of the game? 4
Player B
b1 b2 b3
a1 8 5 7
Player A
a2 2 4 10

4. a) Describe the three classification of inventory and indicate the purpose for holding each type. 5
b) ABC Garden Centers sells 25,000 bags of lawn fertilizer annually. The optimal safety stock (Which is on
hand initially) is 150 bags. Each bag costs ABC $4.00, inventory carrying costs are 20%, and the cost of
placing an order with its supplier is $25.00.
i. What is the economic ordering quantity (EOQ)?
ii. What is the total inventory cost at the EOQ level?
iii. What is the maximum inventory of fertilizer?
iv. What will ABC’s average inventory be?
v. How often must the company order? 10

5. A transportation problem involves the following costs, supply and demand.

To
From 1 2 3 4 Supply
1 $500 $750 $300 $450 12
2 650 800 400 600 17
3 400 700 500 550 11
Demand 10 10 10 10 40

a) Find the initial solution using the Northwest corner method, the Minimum cell cost method. and Vogel’s
approximation model (VAM). Compute total cost for each. 9
b) Using the VAM initial solution, find the optimal solution using the Modified Distribution Method (MODI). 6

6. a) Differentiate between PERT and CPM. 5

b) A small project is composed of activities whose time estimates are listed in the table below: (Activities are
identified by their beginning (i) and ending (j) node numbers)

Activity Estimated Duration (weeks)

i-j Optimistic Most Likely Pessimistic
1-2 1 1 7
1-3 1 4 7
1-4 2 2 8
2-5 1 1 1
3-5 2 5 14
4-6 2 5 8
5-6 3 6 15

Instructions:
v. Find the expected duration and variance for each activity.
vi. Draw the project network using expected duration. What is the expected project length?
vii. Calculate the variance and standard deviation of the project length.
viii. If the project due is in 19 weeks, what is the probability of meeting the due date?
ix. What should be the scheduled completion times for the probability of completion are 90%
confidence? 10

11
 BBA 7th Batch 1st Midterm Examination, 2015
Course: FIN-3104 (Operations Research)
Time: 50 minutes; Marks: 10

Answer the following questions

1. Define (i) objective function (ii) feasible solution (iii) optimal solution (2)
2. What are the advantages of simple method? (2)
3. Let, Walton Ltd. produces air-cooler and refrigerator. These are 300 units of raw materials, and 110
hours of labor available. It takes 30 units of raw materials and 5 hours to make an air-cooler, and
20 units of raw materials and 10 hours to make a refrigerator respectively. Then how many air-
cooler and refrigerator should be produced? (6)

BBA 7th Batch 2nd Midterm Examination, 2015

Course: FIN-3104 (Operations Research)
Time: 50 minutes; Marks: 10

Answer the following questions

1. Find the dual of the minimum problem (5)
Minimize z = 2x − 1 + 3x2
subject to the constraints
2x1 + x2 ≥ 6,
x1 + 2x 2 ≥ 4,
x1 + x 2 ≥ 5,
x1 ≥ 0, x2 ≥ 0.
and find its optimal solution.
2. An office has four workers, and four tasks have to be performed. Workers differ in efficiency and
tasks differ in their intrinsic difficulty. Time each worker would take to complete each task is given
in the effectiveness matrix. How the tasks should be allocated to each worker so as to minimize the
total man-hour?
(5)
Workers
I II III IV
A 5 23 14 8
Tasks
B 10 25 1 23
C 35 16 15 12
D 16 23 21 7

12
 2nd In-course Examination
Course Title: Operations Research Time: 50 Minutes

1. Four persons A, B, C and D are to be assigned four jobs I, II, III and IV. The cost matrix is given
as under, find the proper assignment.

Man
A B C D
/Jobs
I 8 10 17 9
II 3 8 5 6
III 10 12 11 9
IV 6 13 9 7

2. Determine an initial public basic feasible solution using Vogel’s method by considering the
following transportation Problem.

D1 D2 D3 D4 Supply
O1 21 16 15 3 11
O2 17 18 14 23 13
O3 32 27 18 41 19
Demand 6 10 12 15 43

3. Write down the 7 steps procedure of Project Evaluation and Review Technique. (PERT)

13
 Jagannath University
Department of Finance
BBA 3rd Year 1st Semester Final Examination- 2015
Module Name: Operations Research Duration: 3hrs
Module Code: FIN-3104 Marks: 60
[Answer 4 (Four) questions from the following alternatives. Different sections of each question have to be
answered in cluster form]

1. a) Define operations research? Briefly explain different techniques/tools used in operations research. 05
b) ‘Operations research increases the creative capabilities of a decision maker.’ Explain how operation
research and management decision making is related. 05
c) Define with examples (i) decision variables, (ii) constraint set, (iii) objective function, (iv) feasible
solution, (v) optimal solution, (vi) slack variables 05

2. a) Kiean Soap Company wishes to make a new detergent from two of its current soaps: Soap A and Soap
B. The company wants the new detergent to contain at least 20 ounces of cleaning ingredient D. Each
pound of Soap A costs $0.20 and contains five ounces of D, whereas each pound of soap B costs $0.25
and contains one ounce of D.
Furthermore, for ecological reasons, the amount of soap A must be no more than that of Soap B. Finally,
the new mixture must weigh exactly 12 pounds. How many pounds of each soap should be used in the
mixture in order to meet these requirements at a minimum cost? What is this minimum cost? (Solve
graphically) 07
b) Find the value of θ by using simplex method and state the value of the variables that make θ maximum.
It is to be assumed that all variables must be nonnegative.
θ = 5𝑥1 + 8𝑥2
Subject to:
x1 + x2 ≤ 13
x1 + 2x2 ≤ 22
2x1 + x2 ≤ 20 08

3. a) Define dual problem and primal problem. When a minimum problem is said to be in standard form? 03
b) Solve the following linear programming problem using simplex method. Find the value of z (let, Z =
profit) and state the value of the variables that make z maximum.
Max z = 3x1 + 4x2
subject to the conditions
2x1 + 4x2 ≤ 120
2x1 + 2x2 ≤ 80
x1 ≥ 0, x2 ≥ 0 06
c) Find the dual of the minimum problem and find its optimal solution.
Minimize z = 2x − 1 + 3x2
subject to the constraints
2x1 + x2 ≥ 6,
x1 + 2x2 ≥ 4,
x1 + x2 ≥ 5,
x1 ≥ 0, x2 ≥ 0. 06

4. a) Define transportation problem. 02

b) Describe Vogel’s approximation method. 03
c) A dairy firm has three plants located throughout a state. Daily milk production at each plant is as follows
Plant 1….6 million liters
Plat 2….1 million liters
Plat 3….10 million liters
Each day the firm must fulfill the needs of its distribution centres. Minimum requirement at each centre
is as follows:
Distribution centres 1: 7 million liters
Distribution centres 2: 1 million liters
Distribution centres 3: 2 million liters

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 Cost of shipping one million liters from each plant to each distribution centre is given in following table
as 100 of dollars:
Distribution Centres
1 2 3 4
1 2 3 11 7
Plants
2 1 0 6 1
3 5 8 15 9

Formulate the problems as an LP problem and find its initial basic feasible solution by North-West
Corner rule method. 10

5. a) Define Game theory. Briefly explain two persons zero sum game. 05
b) A taxi hire company has one taxi at each of five depots a, b, c, d and e. A customer requires a taxi in 10
each town, namely A, B, C, D and E. Distances (in kms) between depots (origins) and towns
(Destinations) are given in the following distance matrix:

a b c d e
A 140 110 155 170 180
B 115 100 110 140 155
C 120 90 135 150 165
D 30 30 60 60 90
E 35 15 50 60 85

How should taxis be assigned to customers so as to minimize the distance travelled?

6. a) Define CPM and PERT. How network is constructed in operations research? 05

b) A furniture maker is going to produce a new wooden framed settee with cloth-covered foam cushions. 10
These are the tasks that have to be done by the furniture maker and his assistants and the times they will
take:

Activity Duration (in days)

A make wooden arms and legs 3
B make wooden bag 1
C make wooden base 2
D cut foam for back and base 1
E make covers 3
F fit covers 1
G put everything together 1

Each activity can only be undertaken by one individual. The following list gives the order in which the
jobs must be done:

B must be after C
A must be after B and C
D must be after B and C
E must be after D
F must be after E
G must be after A, B, C, D, E and F

Construct an appropriate activity network to illustrate this information.

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 Jagannath University
Department of Finance
BBA 8th Batch 1st Semester Final Examination- 2016
Course Code: FIN-3104 Course Title: Operation Research
Full Marks: 60 Time: 3 Hours

[Instruction: Answer any FOUR of the following questions in chronological manner.

Numbers in the right alignment indicate full marks]

1. a) Define operations research? Briefly explain different techniques/tools used in 5

operations research.
b) ‘Operations research increases the creative capabilities of a decision maker.’ 5
Explain how operation research and management decision making is related.
c) Define with examples (i) decision variables, (ii) constraint set, (iii) objective 5
function, (iv) feasible solution, (v) optimal solution, (vi) slack variables

2. For the linear program 15

Max 5A + 5B
s.t.
1A + 2B ≤ 6
5A + 3B ≤ 15
A, B ≥ 0

Find the optimal solution using the graphical solution procedure. What is the value of
the objective function at the optimal solution?

3. The following estimates of activity lines (in days) are available for a small project.

Activity Optimistic Most Probable Pessimistic

A 4 5.0 6
B 8 9.0 10
C 7 7.5 11
D 7 9.0 10
E 6 7.0 9
F 5 6.0 7
a) Compute the expected activity completion times and the variance for each 9
activity.
b) An analyst determined that the critical path consists of activities B-D-F. 6
Compute the expected project completion time and the variance.

4. a) Describe the three classifications of inventory and indicate the purpose for 5
holding each type.
b) ABC Garden Centers sells 25,000 bags of lawn fertilizer annually. The optimal 10
safety stock (Which is on hand initially) is 150 bags. Each bag costs ABC $4.00,

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 inventory carrying costs are 20%, and the cost of placing an order with its
supplier is $25.00.
i. What is the economic ordering quantity (EOQ)?
ii. What is the total inventory cost at the EOQ level?
iii. What is the maximum inventory of fertilizer?
iv. What will ABC’s average inventory be?
v. How often must the company order?

5. A transportation problem involves the following costs, supply and demand

To
From Supply
1 2 3 4
1 $500 $750 $300 $450 12
2 650 800 400 600 17
3 400 700 500 550 11
Demand 10 10 10 10 40

a) Find the initial solution using the Northwest corner method, the Minimum cell 9
cost method, and Vogel’s approximation model (VAM). Compute total cost for
each.
b) Using the VAM initial solution, find the optimal solution using the Modified 6
Distribution Method (MODI).

6. a) Define Game theory. Briefly explain two persons zero sum game. 5
b) A taxi hire company has one taxi at each of five depots a, b, c, d and e. A 10
customer requires a taxi in each town, namely A, B, C, D and E. Distances (in
kms) between depots (origins) and towns (Destinations) are given in the
following distance matrix:

a b c d e
A 140 110 155 170 180
B 115 100 110 140 155
C 120 90 135 150 165
D 30 30 60 60 90
E 35 15 50 60 85

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