1.

The Maintenance cost and the resale price of a machine A whose cost Rs 10000
are given as follows:
Year
M.C. (in
Rs)
R.P. (in
Rs)
i)
ii)

1
1500

2
1900

3
2300

4
2900

5
3600

6
4500

7
5500

5000

25000

1250

600

400

400

400

Suggest the optimal period for replacement of the machine

When this machine is 2 years old, another machine B, which is new
model of machine A, is available. The optimal period for replacement of
this machine B is 4 years, with an average cost of Rs. 3600. Should we
change machine A with B? If so when?

2.The number of output ABC company manufactures is 30 units /day. The sale of
these items depends upon demand which has the following distribution:
Daily
Sales
Prob.

27

28

29

30

31

32

0.1

0.15

0.2

0.35

0.15

0.05

The cost of production and sale price of each unit are Rs. 40 and Rs. 50
respectively. Any unsold product is to be disposed off at a loss of Rs 15
per unit. There is a penalty of Rs. 5 per unit if the demand is not met.
Using the following random numbers, estimate the total profit/loss for
the company for next 10 days:
10,

99,

65,

99,

95,

01,

79,

11,

16,

20

If the company decides to produce 29 units /day, what is the advantage or

disadvantage of the company?