Quantitative Analysis

Q A Final Exam
Problem 1 [Total Grade : 40
]

ESLSCA Computer Company is in the process of

selecting the best location of its headquarter in Cairo
City. After careful research and study, the company
decision-makers developed three decisions based on
three locations : D1: Location A, D2: Location B and
D3: and Location C.
The Success of the selection process depends on the
study of the market economical situation.
The company's experts found that there are three
states of nature, which yield the following profit ( in
thousands of pounds ) to the firm.

State of Nature
Poor Market Average Strong
Market Market
Strategies S1 S2 S3
D1 = 20 30 28
Location A
D2 = 16 36 24
Location B

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Quantitative Analysis

D3 = 12 32 42
Location C

a)If the company's experts know nothing about Grade:

the probabilities of the three states of 9
nature, what is the recommended decision
that will maximize their profit using
optimistic, conservative and regret
criteria approaches?
b) Now, if the company got some information Grade:
about the probabilities of the demands and 6
found the probability of S1 to be 0.4 and that
of S2 to be 0.2 . What is the recommended
strategy using the expected value approach?
c)Construct the decision tree for this problem Grade:
showing the optimal decision strategy in a 6
graphical representation.
d) Write the problem in its standard format Grade:
4
e)What is the expected Value of Perfect Grade:
Information? 2
f) If Eslsca must decide whether or not to Grade:
purchase a marketing survey from a 5
marketing consultant for $1,000 The result

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Quantitative Analysis

of the survey are:

I1 = favourable or I2 = unfavourable,
The conditional probabilities are
P(I1/S1)=0.2, P(I1/S2)=0.5 and
P(I1/S3)=0.9.

Construct the new decision tree with the

adjusted probabilities of each state of nature
and find the expected value of the sample
information.

Should Eslsca have the survey performed by

the consultant?
g) What is the efficiency of the survey? Grade:
Answer only Two of Three Coming Problems

Problem [2] [Total

Grade : 20 ]

ESLSCA Computer Company specialized in high

quality computers is ------ introducing a new designed
computer version, the company wants to compute the
------ number of units (X) required achieving the
break-even point. the company prod------- financial
analysis and they found that the total cost consists of
tow parts:

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Quantitative Analysis

a) Fixed cost that is found to be constant and equal$

2500.
b) Variable cost which consists of the manufacturing
cost and processing cost p-------- costs are not known
for certain but can represented by the following
distribution:
Manufacturi Prob. Processing Prob. Selling Price
ng Cost Cost (PC) (Sp) per unit
(MC) per unit
per unit
125 0.20 200 0.25 $750
150 250 0.35 $1000
200 0.35 300 $1250
250 0.15 350 0.1

a)Construct the objective function of X Units that

achieves the break-even point for this new
computer version.
b) Use the following random numbers to simulate 6
trials of the profit per unit.
52, 06, 50, 88, 53, 30, for manufacturing cost
37, 28, 02, 74, 93, 24, for processing cost
39, 49, 71, 99, 32, 75, for selling Price
What is the average simulated X units ?

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Quantitative Analysis

Problem [3] [Total

Grade : 20 ]

ESLSCA is a small theater with only one ticketing

counter , The customers arrive at the ticketing
counter lane with mean arrival rate of 15 customer
per hour. the following two service alternatives are
being considered :
1- One checkout with only one employee serving the
customers with a mean service rate 2.5 minutes
per customer.
2- A two ticketing counters with two employees with
a mean service rate 2.5 minutes per customer for
each employee in each channel.

a)Assuming Poisson arrivals and exponential service

rates compute the following waiting line
characteristics for each alternative :
P0 , Lq , L , Wq , W and Pw.

[Note : use the formulas provided at the end of

these she...... .
b) Service goals dictate that an arriving customer
should not wait for service more than an average of
3 minutes. Which alternative satisfies this
requirement ?
c)Customers waiting time is valued at LE 35 per
hour to reflect that waiting time is costly to the

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Quantitative Analysis

bank management . The cost of service for each

employee is LE 20 per hour. Which alternative
should choose to ensure an economical cost for
servicing customers?

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Quantitative Analysis

Problem [4] [Total

Grade : 20 ]

For the following Project : ( Time in days )

Activity Intermediat a m B
e
Predecessor
s
A --- 3 5 7
B --- 2 4 6
C A, B 5 6 7
D A, B 7 9 11
E B 2 4 6
F C 1 2 3
G D 6 8 10
H G, F 6 9 12
I E,H 3 4 5

a)Construct Pert network for this problem.

b) Determine the expected completion time and
variance for each activity
c)determine ES, EF, LS, LF, and Slack ( TF ).
d) Determine the total expected project time and its
standard deviation.

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Quantitative Analysis

Question 1
a) Optimistic = 42 = d3, conservative = 20 = d1, regret = 8 =
d3
b) EVWOPI = 28 = d3
c) EVWPI = 32
d) EVPI = 4
e) If I1 occurs
P(I1Sj) = 0.54 & P(Sj/I1) = Aprox. S1 0.15, S2 0.18, S3 0.67
f) If I2 occurs
P(I2Sj) = 0.46 & P(Sj/I2) = Aprox. S1 0.70, S2 0.22, S3 0.08
g) If I1 occurs
choose d3 with EV 35.7
h) If I2 occurs
choose d1 with EV 22.84
i) EVWSI = 29.4064
j) EVSI = 1.4064 and as this value equals 1406.4 pounds
>survey fees (1000 pounds) then we recommend the
company to buy the survey
k) EFSI = 35.16%

Question 2
The picture missing Sales Price probabilities, I make
assumptions to enable us to complete the solution, I assumed
$ 750 Prob. 0.2 & $ 1000 Prob. 0.5 & $ 1250 Prob. 0.3

By these assumptions the solution will be as follows:

a) Objective function is:

SP(X) MC(X) PC(X) =2500
b) Average gross profit = 679.17 & Average simulated X
units = 3.68

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Quantitative Analysis

Question 3

=15 =60/2.5=24
Alternative 1
P0 = 0.375
Lq = 1.042
L = 1.667
Wq = 0.069
W = 0.11
Pw = 0.625
TC = 78.345

Alternative 2
P0 = 0.28
Lq = 0.036
L = 0.661
Wq = 0.0024
W = 0.044
Pw = 0.079
TC = 63.135

Question 4
Total expected time = 35 + 1.5588 OR from 33.4412 to
36.5588
The critical path is A, D, G, H, I

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