Quantitative Analysis for Management Decisions Individual Assignment II

Name: -Semere Tesfaye

Id No: -MBAO/8977/14B

Submitted To: - Dr B Dayal

February 2023
1. A manufacturing firm has discontinued production of a certain unprofitable product line.
This created considerable excess production capacity. Management is considering to devote
this excess capacity to one or more of three product 1,2 and 3. The available capacity on the
machines which might limit output are given below:
Machine type Available time (in machine hours per week)

Milling machine 250

Lathe 150
Grinder 50

The number of machine hours required for each units of the respective product is given below;
Machine type Productivity (in machine hours/unit)
Product 1 Product 2 Product 3
Milling 8 2 3
Lathe 4 3 0
Grinder 2 0 1

The unit profit would be 20 birr, 6 birr and 8 birr for products 1,2 and 3. Find how much of each
product the firm should produce in order to maximize profit? Solve the problem by simplex
method.

Solution:-To Maximize Profit 20x1+6x2+8x3

Where x1,x2, and x3 are the number of unit of products 1,2 and 3 produced respectively the
constraints are given by the machine hours
 8x1+4x2+2x3<=250(Milling Machine)
 3x1+3x2<=150(Lathe)
 1x3<=50(Grinder)
And non-negative constraints, X1+X2+X3
Once the LP problem is set up, the simplex method can be used to find the optimal solution by
iteratively finding a feasible solution that improves the objective function until it reaches a
maximum.
The optimal solution represents the number of units of each product that should be produced to
maximize profit.
2. Write the dual of following problems:
(a) Maximize Z = 7X1 + 5X2
Subject to:
X1 + 2X2 ≤ 6
4X1 + 3X2 ≤ 12
X1, X2 ≥ 0
Solution:- Zmin=6X1+12X2
X1+4X2>=7
2X1+3X2>=5
X1,X2>=0

(b) Maximize Z= 3X1 + 4X2

Subject to:
5X1 + 4X2 ≤ 200
3X1 + 5X2 ≤ 150
8X1 + 4X2 ≥ 80
X1, X2 ≥ 0
Solution:- Zmin=200X1+150X2+80X3
5X1+3X2+8X3>=3
4X1+5X2+4X3>=4
X1,X2,X3>=0

3. Obtain an initial basic feasible solution to the following transportation problem using Vogel’s
approximation method
D1 D2 D3 D4
A 5 1 3 3 35
B 3 3 5 4 15
C 6 4 4 3 12
D 4 -1 4 2 19
21 25 17 17 80

Solution:-
D1 D2 D3 D4 S
A 5 |2| 1|25| 3 3|7| 35(33)(8) 2 2 2 0 0
B 3 3 5|15| 4 15(0) 0 0 1 1 -
C 6 4 4|2| 3 12(10)(0) 1 1 1 1 1
D 4 |19| -1 4 2 19(0) 3 - - - -
Demand 21(2)(0) 25(0) 17(2)(0) 17(10)(0) 80
1 2 1 1
2 2 1 0
- 2 1 0
- - 1 0
- - 1 0
TC=5x2+19x4+1x25+5x15+4x2+3x7+3x10
10+76+25+75+8+21+30
245

4. Four jobs are to be done on four different machines. The cost in rupees of producing ith on the
jth machine is given below. Assign the jobs to different machines so as to minimize the total
cost.

Jobs M1 M2 M3 M4
J1 15 11 13 15
J2 17 12 12 13
J3 14 15 10 14
J4 16 13 11 17

Solution:-
Jobs M1 M2 M3 M4 Row minimum
J1 15 11 13 15 11
J2 17 12 12 13 12
J3 14 15 10 14 10
J4 16 13 11 17 11

Jobs M1 M2 M3 M4
J1 4 0 2 4
J2 5 0 0 1
J3 4 5 0 4
J4 5 2 0 6
Column 4 0 0 1
Minimum

Jobs M1 M2 M3 M4
J1 0 0 2 3
J2 1 0 0 0
J3 0 5 0 3
J4 1 2 0 5

J1 , M2=11
J2 , M4=13
J3 , M1=14
J4 , M3=11
Total minimum cost= 49

5. In a small town, there are two discount stores ABC and XYZ. They are the only stores that
handle the festival goods. The total number of customers is equally divided between the two
 because the price and quality of goods sold are equal. Both stores have good reputations in
the community, and they render equally good customer services. Assume that a gain of
customer by ABC is a loss to XYZ and vice versa. Both stores plan to run annual pre-
Christmas sale during the first week of December. Sales are advertised through the local
newspaper, radio and television media. With the aid of advertising the payoff for ABC store
is constructed and given below

XYZ Store
News Paper Radio Television
ABC News Paper 30 40 -80
Radio 0 15 -20
Television 90 20 50

Solution:-
XYZ Store
News Paper Radio Television
ABC News Paper 30 40 -80
Radio 0 15 -20
Television 90 20 50
Column 90 40 50
Maximum

Evidently saddle point does not exist now it may observe that row 3 dominates row 2 and
column 3 dominates column 1 deleting R2 and C1 the game reduces to the order 2x2 as shown
below
Radio Television
News Paper 40 -80
Televisión 20 50

With usual meaning of symbol used we have

X=A22-A21 =50-20 =30 =1
(A11+A22) -(A12+A21) (40+50)-(-80+20) 150 5
Y=A22 -A12 = 50-(-80) =130 =13
(A11+A22)-(A12+A21) (50+40)-(-80+20) 150 15
V=(A11xA22)-(A12xA21) = (40x50)-(80x20) = 3600 =24
(A11xA22)-(A12xA21) (40+50)-(80x20) 150

Thus, optimal Strategies are

News Paper Radio Television
For ABC 1/5 0 4/5
For XYZ 0 13/15 2/15