Haramaya University

Department of Management
MBA program
Group Assignment Questions for Quantitative Methods for Management Decisions
Question1. Assume that the following is the linear programming formulation for a company to
maximize its profit.
Maximize Z= 24X + 40Y
Subject to:
10X + 8Y < 260
5X + 12Y < 480
X, Y > 0
Required:
a) How many units of X and Y should be produced to maximize the profit of the firm? (Use the
graphical approach)
b) What is the maximum profit level?

Question 2. Given the objective function maximize Z= 24X + 40Y

Subject to:
10X + 8Y < 260
5X + 12Y < 480
X, Y > 0

Required:
a) Determine the change on the value of the objective function if resource 1 changes by a unit.
b) Determine the change on the value of the objective function if resource 2 changes by a unit.

Question 3. Assume that a Company wants to produce two products X and Y. Each unit of X
and Y when produced and sold they will contribute to the revenue of a firm each birr 80 and 100,
respectively. A unit of X requires 60 units of wood, 30 units of labor and 20 units of metal. A
unit of Y requires 50 units of wood, 40 units of labor and 20 units of metal. The company has
440, 360 and 400 units of wood, labor, and metal, respectively.
a) Formulate the above problem in to a linear programming problem
b) Convert your formulation in (a) in to a standard simplex format.

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27/11/2016

c) What are the entering and leaving variables respectively?

d) What is the value of the pivot element in the initial tableau?
e) What are the values of the variables at the final (optimal) simplex tableau?

Question 4. Given the following primal

Minimize Z= 20X + 12Y
Subject to
30X + 50Y > 500
90X + 50Y > 800
X, Y > 0
Convert the above primal problem into its dual form.
Question5. The manager of AG Company approached you as to which alternative actions to
choose under different events. Profit payoffs are assigned for each event and alternative as
shown in the following table.
Event

Alternative 1

Alternative 2

Alternative 3

Event1
680
550
980
Event2
950
750
850
Event3
850
580
860
Event4
680
880
760
Please advise the manager which alternative to select under the following assumptions.
a)
b)
c)
d)

Maximin
Maximax
La Place
Hurwicz principle (alpha 0.6)

Question6. A company has three factories at X, Y, and Z locations and four distribution centers at
A, B, C and D. With identical costs of production at the three factories the only variable cost
involved is transportation cost. The production at the three factories is 5,000 tones; 6000, tones; and
2,500 tones, respectively. The demand at the four distribution centers is 6,000 tones; 4000 tons and
3,500 tones, respectively. The transportation costs in birr per ton from different factories to different
centers are given below.
Factory
X
Y
Z

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A
6
7
2

Distribution center
B
C
2
7
5
8
12
4

D
6
9
5

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I) Using the least cost method (LCM),

a) Please suggest the optimum transportation schedule and find the minimum cost of
transportation.
b) How many units should be shipped from each destination from each source?
c) Calculate the level of transportation cost of shipping from each source to each destination.
II) Using the VAM method
d) Please suggest the optimum transportation schedule and find the minimum cost of
transportation.
e) How many units should be shipped from each destination from each source?
f) Calculate the level of transportation cost of shipping from each source to each destination.

Question7. A company produces two products; product A and B. To produce product A, 1.5 machine
hours are required. In addition a craftsman has to work for two hours. To produce product B, the
machine has to operate for 2.5 hours and the craftsman has to work for 1.5 hours. In a week the
company can avail 80 hours of machine time and 70 hours of craftsman time. The profit from each
unit of product A and B is birr 5 and 4 birr respectively.
Required
a) Formulate the above problem as a linear programming problem
b) Solve it using the graphical method
c) Solve it using the simplex method
d) How many units of A and B will maximize the profit for the company?

Deadline for submission is Monday December 12, 2016 (before 5:00 p.m.)

Workneh

27/11/2016