UNIVERSITY OF MORATUWA

FACULTY OF BUSINESS
DEPARTMENT OF DECISION SCIENCES
BACHELOR OF BUSINESS SCIENCE (BBSC.)
SEMESTER IV EXAMINATION
DA2430 Operations Research I

Time allowed: 3 Hours June 2021

INSTRUCTIONS TO CANDIDATES:

This paper contains 5 questions on 5 pages.

This examination accounts for 60% of the module assessment.
This is an OPEN BOOK ONLINE assessment. You are required to upload your answers to the
relevant LMS / Moodle window as specified in the examination guidelines.
Answer ALL FIVE (05) questions.
All questions carry equal marks.
Clearly state any assumptions made on the script.
If you have any doubt as to the interpretation of the wording of a question, make your own
decision, but clearly state it on the script.

ADDITIONAL MATERIALS: None

Continued.
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 DA2430

Question 1
Assume that you have been hired by a large apparel company to analyze its supply chain network. A
high-level visualization of the supply chain is shown in Figure 1.

Figure 1. Supply chain network stages

Markets/Demand nodes (any number of nodes) can be supplied by multiple warehouses (any number
of nodes). Similarly, more than one plant (any number of nodes) can send products to warehouses
depending on the movements of the quantities. A supplier (any number of nodes) provides materials to
more than one plant. For computational simplicity, make uniform flow unit adjustment across the
network. That is, assume one unit of supply side input can produce one unit of the output (finished
product).
This company seeks your expert advice to minimize fixed (example : setup cost) and variable costs
across the supply chain network by optimally identifying the plant and warehouse locations. Assume
this company operates in a deterministic environment.
You are required to:
a) Define all indices, parameters and decision variables. [06 marks]
b) Write a formula for the objective function that minimizes the total fixed costs and variable costs
of the supply chain. [08 marks]
c) Write formulae for the following constraints:
i. Input-output balance constraint equation for the plant. [02 marks]
ii. Input-output balance constraint equation for the warehouse. [02 marks]
iii. Demand constraint for the market. [02 marks]
[Total marks for Question 1 = 20]

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Question 2

a) Briefly explain the difference between feasible solution, infeasible solution, and optimal solution.
[06 marks]
b) Suppose that Apple Inc. has set up a new manufacturing plant in India, which is in the process of
producing 13” and 14” Apple MacBook laptop series aimed at economically disadvantaged
consumers from developing countries. Assume that each product must go through a two-stage
manufacturing process. The first stage involves assembling the hardware which is followed by
the second stage which involves the creation of compatible software. The data for the above
problem are given below in Table 1.

Table 1. Profitability and Manufacturing Stages

13” Laptop 14” Laptop Hours Available
(per laptop) (per laptop)
Profit Contribution $7 $5
Hardware (Hourly 3 hours 4 hours 2400
Requirement)
Software (Hourly 2 hours 1 hour 1000
Requirement)

When interviewed by the local media, the CEO of this new plant emphasized on the current
limitations faced by the manufacturing plant. Currently the plant does not have adequate
infrastructure and thus has resulted in the plant not being able to make more than 45014” laptops.
In addition, multiple internal documents have reported that at least 100 ,13” laptops- should be
manufactured.

i. Formulate a linear programming model for the given problem. [02 marks]
ii. Solve by using the graphical method to find the number of 13” and 14” laptops that need to
be manufactured to get the maximum profit. Use both the Iso-profit function line method and
Extreme (corner) point solution method to obtain your answer. [10 marks]
iii. Discuss the impact on the optimal solution in the event of the maximum hours available for
producing software is increased by 500 hours. [02 marks]
[Total marks for Question 2 = 20]

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Question 3

a) A manufacturer produces three types of plastic fixtures; A, B, and C. The time required for
molding, trimming, and packaging is given in Table 2 (Times are given in hours per dozen
fixtures).
Table 2. Time required for molding, trimming, and packaging
Process Type A Type B Type C Total time available
Molding 1 2 3/2 12000
Trimming 2/3 2/3 1 4600
Packaging 1/2 1/3 1/2 2400
Profit $11 $16 $15
coefficient/contribution

i. Formulate a Linear programming model for the given problem. [05 marks]
ii. Using simplex method determine the how many dozen of each type of fixture should be
produced to obtain a maximum profit? [10 marks]

b) Tesla Inc. manufactures luxury cars and trucks. The company believes that its most likely
customers are high-income women and men from the US. To reach these groups, Tesla Inc. has
embarked on an ambitious TV advertising campaign and has decided to purchase 1-minute
commercial spots on two types of programs: Tele Drama shows and basket-ball matches. Each
basket-ball match comedy commercial is seen by 7 million high-income women and 2 million
high-income men. Each Tele Drama commercial is seen by 2 million high-income women and
12 million high-income men. A 1-minute comedy ad costs $50,000 and a 1-minute Tele Drama
ad costs $100,000. Tesla Inc. would like the commercials to be seen by at least 28 million high-
income women and 24 million high-income men. Formulate a mathematical model for Tesla Inc.
that can meet its advertising requirements at minimum cost. [05 marks]
[Total marks for Question 3 = 20]

Question 4

Climate change is a change in the statistical properties of the climate system (oceans, land surfaces and
ice sheets) that persists for several decades or longer. Climate change may be caused due to natural
processes or due to human influences. Suppose that the objective of the Intergovernmental Panel on
Climate Change (IPCC) is to check the maximum greenhouse gas emissions (z) by each country around
the globe, in order to reduce it and avoid climate catastrophe. Some of the variables that cause
greenhouse gas emissions are burning fossil fuels (x1 ), deforestation and tree-clearing (x2 ), and
agriculture and farming (x3 ). There needs to be a maximum reduction in all three variables. The IPCC
has the following model which they require to be solved.

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 DA2430

Maximize 𝑧 = 2𝑥1 + 3𝑥2 + 𝑥3

Subject to,
𝑥1 + 𝑥2 + 𝑥3 ≤ 40
2𝑥1 + 𝑥2 − 𝑥3 ≥ 10
−𝑥1 + 𝑥3 ≥ 10
𝑥1 , 𝑥2 , 𝑥3 ≥ 0

a) Express the problem in equation (standard) form. [05 marks]

b) Determine the optimal solution using the two-phase simplex method. [15 marks]
[Total marks for Question 4 = 20]

Question 5

Big Daddy’s is a liquor store chain operating in Christchurch area. It has four stores in Blenheim road,
Eastgate, Shirley and Parklands. Suppose the owner purchases 6 crates of wine per week and distributes
among each store. Assume that it is not possible to split crates between stores. Any store can receive
zero (0) allocations. Table 3 shows the estimated profits (in NZ$ 100) at each store with different levels
of allocation of wine crates.
Table 3. Profitability at each store for crate allocation
Store No/Location
1, Blenheim Road 2, Eastgate 3, Shirley 4, Parklands
0 0 0 0 0
1 4 2 6 2
No. of crates

2 6 4 8 3
3 7 6 8 4
4 7 8 8 4
5 7 9 8 4
6 7 10 8 4

Determine the optimal allocation of 6 crates that gives maximum profit to the owner.
[Total marks for Question 5 = 20]

- End of Question Paper -

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