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MBA 2020

VU 2nd Semester Examination

Paper Code: MBA- 205

Subject: Operations Research

Total Marks: 100

Read the following case study and answer the questions given below in your
own words.
Capital Foods is a great believer in the concept of ‘Global Food Culture’. They are committed
to helping people get a taste of global flavours by selecting, perfecting and integrating global
foods through our various food brands. They are one of India’s fastest-growing food
companies with a strong presence in the highly populated Indian diaspora market of the world.
The company offer food products and food ingredients to meet a variety of cooking needs.
They were also the first to identify and label the unique cuisine ‘desi Chinese’, which is native
to India but universally loved, i.e. across the USA, Canada, Australia, the UK, and Singapore.

Capital Foods is trying to resolve multiple problems to ensure smooth operation of business.

The company is planning for an advertisement campaign of Ching’s Instant Noodles which is
newly launched in the market. It has decided to advertise through 3 media as of now: Print, TV
& Social Media. The company has made a careful analysis of the three available media and has
compiled the following set of relevant data.

Media
Target Audience Characteristics Print TV Social Media
Age: 25- 35years 70% 85% 65%
Education Level: Graduation and above 85% 75% 70%
Income: Rs. 20000 and above 70% 60% 50%

Media
Print TV Social Media
Maximum Number of Ads 60 40 30
Minimum Number of Ads 25 10 10
The reach obtained for each advertisement in print, RV and Social Media is 3 lakh, 5 lakh and
4 lakh respectively. Cost of each ad in Print, TV and Social Media is Rs. 1 lakh, Rs. 2 lakh and
Rs. 50000 respectively. The company has a budget of Rs. 2 crore to spend for this campaign.

Capital Foods has to ensure smooth supply of the products from manufacturing units located at
Vapi,Nashik & Gandhidham (having production capacity of 1000 cases, 1200 cases and 800
cases respectively) to distribution centres located at Mumbai, Pune, Nagpur & Aurangabad
(requiring 950 cases, 800 cases, 650 cases & 400 cases respectively). The transportation cost
per case (in Rs.) from different factories to distribution centres is given below. The company
must arrive at an optimum transportation schedule.

Distribution Centres
Factories
Mumbai Pune Nagpur Aurangabad
Vapi 13 12 17 16
Nashik 17 15 12 13
Gandhidham 12 15 14 13

The company has four zones (named as I, II, III and IV) open in Pune and four salesmen
available for assignment of zones. The zones are not equally rich in their sales potential. It is
estimated that a typical salesman operating in each zone would bring the following annual
sales (in lakhs of rupees). The criterion of assignment is to maximize annual sales.

Salesman I II III IV
Ramesh 20 30 40 25
Sujit 15 25 30 30
Akash 40 30 45 15
Akshay 30 40 25 40

While calculating the projected optimal order quantity Capital goods found the following data
with regards to each of their manufacturing units:

Vapi Nashik Gandhidham


Demand 25000 units/ year 20000 units/ year 18000 units/ year
Purchase Cost Rs. 20 per unit Rs. 15 per unit Rs. 12 per unit
Ordering Cost Rs. 50 per order Rs. 35 per order Rs. 30 per order
Holding Cost 25% 20% 25%

In order to increase sales, Capital Foods have decided to position their newly launched product
in Modern trade. They have successfully tied up with Big Bazaar and positioned their products.
Generally there are 4 to 5 executives in the billing counter of Big Bazaar (Phoenix Mall).
However, this week there is only one counter sales representative processing bills. It is noticed
that customer arrival follows a Poisson distribution with a mean arrival rate of 20 per hour. The
representative serves 2 customers in every 5 minutes and the service rate is exponentially
distributed.
Answer any EIGHT of the following questions. (Each carry 10 Marks –8
x10=80 Marks)

Q.1.Discuss the advantages and drawbacks of OR Models

Q.2.Formulate a linear programming problem to maximize total exposure and write its
standard form.

Q.3.Assuming that Capital Foods decide to advertise only on Print & Television media, solve
the LPP to determine the number of advertisements given in those two media.

Q.4.Explain different types of inventory. Discuss ABC Analysis in detail.

Q.5.What is duality? Write the steps of converting primal to dual problem.

Q.6.Find the optimum transportation schedule and cost of transportation.

Q.7.What is Economic Ordering Quantity (EOQ)? What is back ordering? What are its causes?
Explain all types of inventory cost in brief.

Q.8.Find the optimum assignment and determine the total sales to be achieved by four
salesmen.

Q.9.Discuss the terminologies and notations used in a decision tree. Write the applications of
decision tree.

Q.10.Determine the optimal inventory policy at each of the manufacturing units in Capital
Foods.

Q.11.What is traffic intensity? Discuss about customer behaviour, queuing discipline and
service channels.

Q.12.Find:

a. Traffic intensity
b. Probability that the representative in Big Bazaar would remain idle
c. Probability that there are 5 customers standing in the queue at any given point of time.
d. Average length of the queue
e. Average waiting time in the queue

[Internal Assessment: 20 Marks]

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