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MSM Section C and D Term II

The document contains a mid-term exam for a management course. It consists of 5 questions related to linear programming models. Question 1 deals with determining an optimal investment portfolio. Question 2 involves assigning aircraft to routes. Question 3 formulates a machine tool production problem. Question 4 asks the student to complete a simplex table and proceed with iterations. Question 5 asks questions about interpreting a given simplex table.

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pgpm20 SANCHIT GARG
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39 views3 pages

MSM Section C and D Term II

The document contains a mid-term exam for a management course. It consists of 5 questions related to linear programming models. Question 1 deals with determining an optimal investment portfolio. Question 2 involves assigning aircraft to routes. Question 3 formulates a machine tool production problem. Question 4 asks the student to complete a simplex table and proceed with iterations. Question 5 asks questions about interpreting a given simplex table.

Uploaded by

pgpm20 SANCHIT GARG
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Management Development Institute, Gurgaon

Programme: Post Graduate Programme in Management


Course: Management Science Models
Batch: 2020-22 (Sections C & D) Term: II
Examination: Mid-Term Duration: 2 Hours
Date: 03.12.20 Max Marks:30

(Open Book Examination. Open Book means your own copy of the prescribed text book and your own
class notes – no photocopies, no loose papers, no sharing of any material. Attempt all five questions. All
Questions carry equal marks. This question paper has 3 pages.)
Answers should be handwritten

Question 1
A leading Chartered Accountant is attempting to determine a “best” investment portfolio and is
considering six alternative investment proposals. The following table indicates estimates for the price
per share, the annual growth rate in the price per share, the annual dividend per share and a measure of
the risk associated with each investment.
Portfolio Data
Shares under Consideration
A B C D E F
Current Price per Share (Rs) 80 100 160 120 150 200
Projected Annual Growth Rate 0.08 0.07 0.10 0.12 0.09 0.15
Projected Annual Dividend per Share (Rs) 4.00 4.50 7.50 5.50 5.75 0.00
Projected Risk in Return 0.05 0.03 0.10 0.20 0.06 0.08
The total amount available for investment is Rs 25 lakhs and the following conditions are required to be
satisfied:

i) The maximum rupee amount to be invested in alternative F is Rs2,50,000.


ii) No more than Rs 5,00,000 should be invested in alternatives A and B combined.
iii) Total risk should not be greater than 0.10 where
∑(Amount invested in alternative i) (Risk of Alternative i)
Total Weighted Risk = (Total Amount Invested in all the Alternatives)
iv) For the sake of diversity, at least 100 shares of each stock should be purchased
v) Al least 10% of the total investment should be in Alternatives A and B combined.
vi) Dividends for the year should be at least Rs 10,000

Rupee return per share of stock is defined as price per share one year hence less current price per share
plus dividend per share. If the objective is to maximize total rupee return, formulate a linear
programming model for determining the optimal number of shares to be purchased in each type of
share under consideration. You may assume that the time horizon for investment is one year.

1
Question 2

Consider the problem of assigning aircraft to four routes according to the following data:

Aircraft Capacity Number of Number of Daily Trips made by assigned aircraft on Route
Type (Passengers) Aircraft 1 2 3 4
1 50 5 3 2 2 1
2 30 8 4 3 3 2
3 20 10 5 5 4 2
Daily Number of Passengers 1000 2000 900 1200

The associated costs, including the penalties for losing customers because of space unavailability, are:

Aircraft Type Operating Cost ($) per trip on Route


1 2 3 4
1 1000 1100 1200 1500
2 800 900 1000 1000
3 600 800 800 900
Penalty ($) per lost customer 40 50 45 70

Formulate a linear programming model for optimum allocation of aircraft to routes.

Question 3

A machine tool shop produces a single product that consists of three subcomponents that are
assembled to form the product. Each of the three components is manufactured in an operation that
involves a lathe machine and a press. The production time (in minutes per unit) for each machine for the
three components is as follows:
Production Time (min)
Machine Component 1 Component 2 Component 3
Lathe 10 8 6
Press 9 21 15

There are two lathe machines and three presses in the shop. Each of the two lathes processes the same
number of components and also each of the presses process the same number of components at the
end of a day. In addition, the machine tool shop wishes to balance the daily loading among a lathe
machine and a press such that none of these two machines are operated more than 1 hour per day
longer than the other. Each machine in the shop operates 8 hours per day.

The firm also wishes to produce a quantity of components that will result in completely assembled
products, without any partial assemblies left over at the end of a day. The objective is to maximize the
number of units of assembled product per day.

2
Formulate the above as a linear programming problem.

Question 4

Complete the following simplex table given below and proceed with the simplex iterations for obtaining
the final tableau. Comment on the special nature of the problem.

X1 X2 S1 S2 S3 a1 a2
Basis CB 1 1 0 0 -M bi
a1 -M 8 0 -1 0 3 1 -3 12
S2 0 -4 0 0 1 -3 0 3 24
X2 0 1 0 0 1 0 1/2 2
Zj -8M 1 M 0 -M 3M+1/2 -12M+2
Cj-Zj 8M+1 0 -M 0 0

Question 5

The following is a simplex table for a linear programming problem:

X1 X2 X3 X4 S1 S2 S3 S4
Basis CB 60 50 45 50 0 0 0 0 bi
S1 0 0 1 0 0 1 0 0 0 20
X4 50 0 0 0 1 0 1 0 0 15
X1 60 1 1/2 0 0 0 0 1/10 0 12
S4 0 0 0 8 0 0 -6 0 1 45
Zj 60 30 0 50 0 50 6 0 1470
Cj - Zj 0 20 45 0 0 -50 -6 0

Answer the following questions pertaining to the table:


a) What are the values of the decision variables?
b) What are the values of the slack variables?
c) What does Cj-Zj value of “20” in the “X2” column mean?
d) Is the solution shown optimal? Why? If the solution is not optimal, set up the table for the next
iteration and encircle the pivotal element.

*********************************

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