Linear Programming : Solution by Graphical Method

Q.1 XYZ firm is engaged in breeding pigs. The pigs are fed on various products grown on the farm.
Because of the need to ensure certain nutrient constituents, it is necessary to buy additional one or two
products, which we shall call A and B. The nutrient constituents (vitamins and proteins) in each unit of
the product are given below:

Nutrient Nutrient constituent in the product Minimum requirement

constituents A B of nutrient constituents
1 36 6 108
2 3 12 36
3 20 10 100
Product A costs Rs.20 per unit and product B costs Rs.40 per unit. Determine how much of products A
and B must be purchased so as to provide the pigs nutrients not less than the minimum required, at the
lowest possible cost. Solve the LP problem graphically.

Q.2 A firm makes two products- X and Y- and has a total production capacity of 9 tonnes per day, X and
Y requiring the same production capacity. The firm has a permanent contract to supply at least 2 tonnes
of X and at least 3 tonnes of Y per day to another company. Each tonne of X requires 20 machine hours
production time and each tonne of Y requires 50 machine hours of production time. The daily maximum
possible number of machine hours is 360. All the firm’s output can be sold, and the profit made is Rs.80
per tonne of X and Rs. 120 per tonne of Y. It is required to determine the production schedule for
maximum profit and to calculate this profit. Solve graphically.

Q.3 The manager of an oil refinery must decide on the optimal mix of two possible blending processes
of which the inputs and outputs per production run are as follows:

Process Input (units) Output

Grade A Grade B Gasoline X Gasoline Y
1 5 3 5 8
2 4 5 4 4

The maximum amount available of crudes A and B are 200 units and 150 units respectively. Market
requirements show that at least 100 units of gasoline X and 80 units of gasoline Y must be produced.
The profits per production run for process 1 and process 2 are Rs.300 and Rs.400 respectively. Solve the
LP problem by the graphical method.

Q.4 A manufacturer produces two different models, X and Y, of the same product. The raw materials r1
and r2 are required for production. At least 18 kg of r1 and 12 kg of r2 must be used daily. Also at most
34 hrs of labour are to be utilized. 2 kg of r1 are needed for each model X and 1 kg of r1 for each model
Y. For each model of X and Y, 1 kg of r2 is required. It takes 3 hrs to manufacture a model X and 2 hrs
to manufacture a model Y. The profit is Rs.50 for each model X and Rs.30 for each model Y. How
many units of each model should be produced to maximize the profit? Solve the LP problem by the
graphical method.
Q.5 A person requires 10, 12 and 12 units of chemicals A, B and C respectively for his garden. A liquid
product contains 5, 2 and 1 units of A, B and C respectively per jar. A dry product contains 1, 2 and 4
units of A, B and C per carton. If the liquid product sells at Rs.3 per jar and dry product sells for Rs.2
per carton, how many of each should be purchased in order to minimize cost and meet the requirement?
Solve graphically.

Q.6 A furniture manufacturer makes two products: chairs and tables. Processing of these products is
done on two machines A and B. A chair requires 2 hrs on machine A 6 hrs on machine B. A table
requires 5 hrs on machine A and no time on machine B. There are 16 hrs per day available on machine
A and 30 hrs on machine B. Profit gained by the manufacturer from a chair and a table is Rs.2 and Rs.10
respectively. What should be the daily production of each of the two products? Solve graphically.
 Linear Programming : Solution by Simplex Method

Q.1 A manufacturer produces four products A, B, C and D, each of which is processed on three
machines X, Y and Z. The time required to manufacture one of each of the four products and the
capacities of each of the three machines are indicated in the following table:

Processing time
Product Machine X Machine Y Machine Z
A 1.5 4 2
B 2 1 3
C 4 2 1
D 3 1 2
Capacity (hrs) 550 700 200

The profit contribution per unit of the four products A, B, C and D is Rs.4, 6, 3 and 1 respectively. The
manufacturer wants to determine its optimal product mix:

(a) Formulate the above as a linear programming problem.

(b) Solve it with the simplex method.

(c) Find out the optimal product mix and the total maximum profit contribution.

(d) Which machine(s) has (have) excess capacity available? How much?

(e) If the profit contribution from product B increases by Rs.2 per unit, will the optimal product mix
change?

(f) What are the shadow prices of the machine hours on the three machines?

(g) If machine A is to be shut down for 50 hrs due to repairs, what will be the effect on profits?

(h) If the company whishes to expand the production capacity, which of the three machines should be
given priority?

Q.2 A firm produces three products A, B and C each of which passes through three departments:
Fabrication, Finishing and Packaging. Each unit of product A requires 3, 4 and 2; a unit of product B
requires 5, 4 and 4, while each unit of product C requires 2, 4 and 5 hours respectively in the three
departments. Everyday, 60 hrs are available in the fabrication department, 72 hrs in the finishing
department and 100 hrs in the packaging department.

The unit contribution of product A is Rs. 5, of product B is Rs.10 and the product C is Rs.8.

Formulate the problem as an LPP and determine the number of units of each of the products that should
be made each day to maximise the total contribution. Also determine if any capacity would remain
unutilized.
Q.3 Maximise Z = 3x1 + 2x2

Subject to

x1 + x2 ≤ 15

2x1 + x2 ≤ 28

x1 +2x2 ≤ 20

x1, x2 ≥ 0

Solve using Simplex Method.

Q.4 Solve the following LPP

Maximize Z = 2x1 + 4x2

Subject to

2x1 + x2 ≤ 18

3x1 + 2x2 ≥ 30

x1 +2x2 = 26

x1, x2 ≥ 0

Q.5 A company sells a fertilizer which is made from two chemical compounds, nitrate and phosphate.
The mixture is sold in 50 kg bags. The fertilizer is widely used in agriculture. It has been established
based on scientific studies that the nitrate content should be at least 20 kgs and the phosphate content
should be not more than 40 kgs in a bag of 50 kgs. The nitrate compound costs Rs. 10 per kg and
phosphate costs Rs. 25 per kg. The company desires to determine the mixture such that the costs of the
ingredients in the mixture is minimum.

Q.6 The WG company produces high quality glass products including windows and glass doors. It has
three plants, A, B and C. Aluminium frames and hardware are made in plant A, wooden frames are
made in plant B and plant C produces the glass and assembles the final products. Production capacities
of A, B and C are 4, 12 and 18 hrs respectively.

The top management has decided to revamp the product line in order to improve the earnings.
Unproductive products are being discontinued and two new products having large sales potential are
launched. These are product P1 and product P2.Profit per batch of P1 and P2 is Rs.3000 and Rs. 5000
respectively. One batch of P1 requires 1 and 3 hrs in plants A and C respectively, but none in plant B.
one batch of product P2 needs 2 hrs each in plant B and C. The marketing division has concluded that
both products could be produced by these plants. But, because both products would be competing for the
same production capacity in plant C, it is necessary to determine the product mix which would be most
profitable.

Q.2 Use the simplex method to solve the following LP problem.

Maximize Z= 10x1+15x2

Subject to constraints

2x1+ x2 ≤ 26

2x1 + 4x2 ≤ 56

-x1 + x2 ≤ 5

And x1, x2, ≥ 0

Q.2 Solve the linear programming problem by simplex method:

Maximize Z = 3x1 + 5x2 + 4x3

Subject to constraints

2x1 + 3x2 ≤ 8

2x2 + 5x3 ≤ 10

3x1 +2x2 + 4x3 ≤ 15

x1, x2, x3 ≥ 0
 Transportation Problem

Q.1 A company has three factories, say F1, F2 and F3 that are feeding 5 zones- North, South, Eastern,
Western and Central whose monthly demands are 20, 30, 25, 25 and 20 thousand units respectively. The
cost of transporting one unit from each factory to each destination is given below:

Factory Zones
North South Eastern Western Central
F1 5 4 7 10 12
F2 13 10 7 5 6
F3 12 9 8 7 10
If the factory capacities are 40, 30 and 50 thousand units respectively then find the optimal shipping
schedule.

Q.2 The following table gives the cost of transporting material from supply point A, B, C, and D to
demand points E,F,G,H and I.

To
E F G H I
A 8 10 12 17 15
From B 15 13 18 9 9
C 14 20 6 13 13
D 13 19 7 12 12

Find the optimal solution. If in the above problem, the transportation cost from A to G is reduced to 10,
what will be the new optimal schedule.
Q.3 A cement company has three factories which manufacture cement which is then transported to four
distribution centres. The quantity of monthly production of each factory, the demand of each distribution
centre and the associated transportation cost per quintal are given as follows:

Distribution Centres Monthly

Production (in
W X Y Z Quintal)

A 10 8 5 4 7000

Factories B 7 9 15 8 8000

C 6 10 14 8 10000

Monthly
Demand
(in
Quintals) 6000 6000 8000 5000
(i) Suggest the optimum transportation schedule.

(ii) Is there any other transportation schedule which is equally attractive? If so, write that.

Q.4 A product is produced by three factories A, B & C. Their production capacities are: Factory A- 50,
B- 80 & C-110 (in 100’units). These factories supply product to 4 stores, demand of which are 40, 60,
80 and 60 thousand units respectively. Per unit transportation cost in 100’Rs. from each factory to each
store is given in table.

1 2 3 4

A 2 3 4 5

B 5 4 3 1

C 1 3 3 2

Determine the extent of deliveries from each of the factories to each of the stores so that the total
transportation cost is minimum. Use VAM for initial solution.

Q.5 A company has factories A, B and C with supply warehouses at D, E, F and G. Monthly factory
capacities are 160, 150 and 190 units respectively. Monthly warehouse requirements are 80, 90, 110 and
160 units respectively. Unit shipping costs (in rupees) are as follows:

To
D E F G
A 42 48 38 37
From B 40 49 52 51
C 39 38 40 43
Determine the optimum distribution for this company to minimize shipping costs.

Q.6 The following table shows all the necessary information on the availability of supply to each
warehouse, the requirement of each market and unit transportation cost (in Rs.) from each warehouse to
each market.

Market Supply
P Q R S
Warehouse

A 6 3 5 4 22
B 5 9 2 7 15
C 5 7 8 6 15
7 12 17 9
The shipping clerk has worked out the following schedule from experience: 12 units from A to Q, 1 unit
from A to R, 9 units from A to S, 15 units from B to R, 7 units from C to P and 1 unit from C to R.

i) Check and see if the clerk has the optimal schedule.

 ii) Find the optimal schedule and minimum total transportation cost.

Q.7 A company has factories at F1, F2 and F3 which supply warehouses at W1, W2 and W3. Weekly
factory capacities are 200, 160 and 90 units respectively. Weekly warehouse requirements are 180, 120
and 150 units respectively. Unit shipping costs (in rupees) are as follows:

W1 W2 W3 Supply
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150 350

Determine the optimal distribution for this company to minimize shipping costs.

Q.8 Determine an initial basic feasible solution to the following transportation problem using Vogel’s
approximation method. Also test for the optimality using MODI method and find the optimal solution.
(8 marks)

Destination

D1 D2 D3 D4 Supply

S1 1 2 1 4 30

Source S2 3 3 2 1 50

S3 4 2 5 9 20

Demand 20 40 30 10
 Game Theory

Q.1 Two breakfast food manufacturers, ABC and XYZ are competing for an increased market share.
The payoff matrix, shown in the following table, shows the increase in market share for ABC and
decrease in market share of XYZ.

XYZ
ABC Give Coupons Decrease Price Maintain Present Increase
Strategy Advertisement
Give Coupons 2 -2 4 1
Decrease Price 6 1 12 3
Maintain Present -3 2 0 6
Strategy
Increase Advertisement 2 -3 7 1
Find the optimal strategies for both the manufacturers and value of the game.

Q.2 Two companies A and B are competing for the same product. The different strategies are given in
the following payoff matrix:

Company B
Company A B1 B2 B3
A1 3 -4 2
A2 1 -3 -7
A3 -2 4 7
Determine the best strategy for both the players.

Q.3 Use dominance to reduce the size of the following game to 2x2 game and hence find the optimal
strategies and value of the game.

Player A Player B
B1 B2 B3 B4 B5
A1 2 4 3 8 4
A2 5 6 3 7 8
A3 6 7 9 8 7
A4 4 2 8 4 3

Q.4 Given the following payoff matrix of a zero sum game, determine the optimal strategies for the
players and the value of the game:

Player A Player B
B1 B2 B3 B4
A1 5 -4 5 8
A2 6 2 0 -5
A3 7 12 8 7
A4 2 8 -6 5
 Inventory Management

Q.1 A stockist has to supply 400 units of a product every month to his customers. He gets the product at
Rs.100 per unit from the manufacturer. The cost of ordering and transportation from the manufacturer is
Rs. 75 per order. The cost of carrying inventory is 8% per year of the cost of product. Find the economic
lot size and the total optimum cost including capital cost. Also find the interval between orders and
frequency of orders per unit time.

Q.2 For one of the A class items, the following data are available:

Annual demand = 1000; Ordering cost = Rs.400; Holding cost = 40% and cost per unit = Rs.20.

The following three strategies are available for the procurement:

(i) Place four orders of equal size every year.

(ii) Place the order for 500 units at a time and avail a discount of 10% on the cost of items.
(iii) Follow the EOQ policy.
Which of the above strategy do you recommend? Justify your answer.

Q.3 A hardware store procures and sells hardware items. Information on an item is given here:

Expected annual sales = 8000 units

Ordering cost = Rs 180 per order

Holding cost = 10 % of the average inventory value

The item can be purchased according to the following schedule:

Lot size Unit Price (Rs)

1 – 999 22.00

1000 – 1499 20.00

1500 – 1999 19.00

2000 and above 18.50

You are required to determine the best order size.

 PERT and CPM

Q.1 For a small project of 13 activities, the details are given below:

Activity Duration Preceding activity

A 4 E
B 2 A
C 1 B
D 12 K
E 14 -
F 2 E
G 3 F
H 2 F
I 4 F
J 3 I,L
K 4 C,G,H
L 2 D
M 2 I,L

i) Construct the network diagram and find the earliest occurrence time and latest occurrence
time.
ii) Indicate the critical path and calculate the project completion time.
iii) For each non-critical activity, find the total float, free float, interfering float and independent
float

Q.2 For a small project of 12 activities, the details are given below:

Activity Duration Preceding activity

A 9 -
B 4 -
C 7 -
D 8 B,C
E 7 A
F 5 C
G 10 E
H 8 E
I 6 D,F,H
J 9 E
K 10 I,J
L 2 G

a) Construct the network diagram and find the earliest occurrence time and latest occurrence time.
 b) Indicate the critical path and calculate the project completion time.
c) For each non-critical activity, find the total float, free float, interfering float and independent
float.

Q.3 The owner of a chain of fast food restaurants is considering a new computer system for accounting
and inventory control. A computer company sent the following information about the system
installation:

Activity Description Immediate To Tm Tp

Predecessor
A Select the computer model _ 4 6 8
B Design input/output system A 5 7 15
C Design monitoring system A 4 8 12
D Assemble computer h/w B 15 20 25
E Develop the main programs B 10 18 26
F Develop the input/output C 8 9 16
routines
G Create database E 4 8 12
H Install the system D, F 1 2 3
I Test and implement G, H 6 7 8
a) Obtain in earliest and latest scheduling times of the various activities.
b) Construct an arrow diagram for this problem, determine the critical path and state the expected
project completion time.
c) Determine the probability that the project will be completed in 55 days.
d) If the company wants to be 90 % sure that the system will be installed by a certain due date , how
many days prior to that should it start the work?
e) Suppose the company agrees to install the computer system in 50 days, failing which it would
pay a penalty of Rs.500 per day. What is the probability that a penalty but not exceeding Rs.
2000 will be paid?
.

Q.4 Following table gives the list of various activities involved in the launch of a new CREDIT CARD
service by a company, their immediate predecessors and their expected durations (in days):

Activity Immediate Expected Duration

Predecessor
To Tm Tp
A - 10 12 14
B A 14 15 17
C B 2 3 4
D C 4 6 8
E C 10 12 14
F E 20 25 27
G C 10 17 20
H F 5 6 7
I D 7 12 14
J H, I 14 17 20
K C 1 2 3
L K 10 15 20
M L 3 5 7
N M, J 13 15 17
O N 20 21 22
P O 7 9 14
Q P 2 3 4
R Q 2 2 2
S P 7 10 13
T S 5 7 9
U T, R, G 4 8 12
a) Draw an arrow diagram for the project.
b) Find the expected project completion time
c) Determine the probability of completing the project in 165 days.

Q.5 A project consists of nine activities whose time estimates (in weeks) and other characteristics are
given below?

Activity Preceding Activity Time estimates (weeks)

To Tm Tp
A - 2 4 6
B - 6 6 6
C - 6 12 24
D A 2 5 8
E A 11 14 23
F B, D 8 10 12
G B, D 3 6 9
H C, F 9 15 27
I E 4 10 16
a) Draw the network diagram
b) Identify the critical activities
c) What is the expected project completion time and its variance?
d) What is the probability of completing the project one week before the expected time.
e) A penalty of Rs.15000 per week is to be imposed on the contractor if the project is not completed
in 36 weeks. What is the probability that he has to pay a penalty? A penalty of Rs.45000?