MIT School of Business (MITSOB)

Post Graduate Diploma in Management (PGDM)

32nd Batch
Semester II
Term End Examination
Subject:- Operations Research
Total Marks:- 50
Duration:- 2 Hrs.
Instructions:
1) Formulate the problems in the answer sheet.
2) Students should write the steps and formulae used in the cells along with the final answer, in
the answer sheet so that examiner will be able to evaluate the answers.
3) No marks will be given in case only the final answer is written in the answer sheet.
4) Only MS Excel is to be used. No other software/packages are to be used.
5) Assume suitable data/method, if necessary and mention the assumptions, wherever made.
6) Only the text book issued, i.e., Operations Research and Quantitative Techniques by
Prof (Gp Capt) D.P. Apte is permitted to be referred during the examination. No other
material is permitted.
______________________________________________________________________________
Section A: Solve following case

(20 marks)

Q1: The president of a solar tubes manufacturing company is in the business of manufacturing
solar tubes for last six years. Following data shows sales for last six years. The president is
concerned about forecasting future sales. He asked his newly appointed manager to forecast for
the seventh year. He has following observations on time series.
Year
Sales

1
7293

2
8283

3
9322

4
9835

5
10346

6
11379

1. The manager decided to use smoothing methods for forecasting. He used 2-yearly
moving average method for finding forecasted value for seventh year.
What is the forecasted value for seventh year?
2. Also he wants to find accurate method for forecasting future sales. He then used
exponential smoothing method for forecasting future value. He decided to take smoothing
constant as 0.3 and 0.6 and compare which is giving better results. Calculate forecasts
using = 0.3 and = 0.6.
Now he has three methods for comparison: 2 yearly-MA, exponential smoothing with
= 0.3 and exponential smoothing with = 0.6. Use mean absolute deviation as measure
of error. Which method out of these three is better according to you? Why? What do you
understand by measure of error in forecasting?
3. He then decided to use trend projection and compare forecasts by trend projection with
above three methods. Develop linear trend projection equation for above time series and
forecast sales for years 7th, 8th and 9th. Compare trend projection method with above three
smoothing methods.
4. Young manager observed that the sales are fluctuating as per the season. He studied the
sales of last six years as per the season. Following are the observations.
Set 3

Year
1
2
3
4
5
6

Summer
3135
3562
4009
4229
4449
4893

Winter
2553
2899
3263
3442
3621
3983

Rainy
1605
1822
2050
2164
2276
2503

5. Compute seasonal indices of three seasons. Comment on the seasonal indices you have
calculated.
Section B: Solve any TWO problems (9 marks each)

18 marks

Q2: A machining enterprise, True Value Machining, has two machines I and II, which are used
to process different parts. The completion time of these parts on both the machines is dynamic
and is subject to variation. Carry out simulation for 15 units, using the given random numbers
and find the expected total product completion time for every unit for machine I and II. The
probabilities of processing time of the products on both the machines are given in the following
table.
Process time Machine I
Machine II
(minutes)
Probability
Probability
6
0.1
0.21
7
0.12
0.35
8
0.23
0.17
9
0.35
0.12
10
0.12
0.08
11
0.05
0.05
12
0.03
0.02
Following random numbers are given for Machine I and Machine II.
Unit no.

Random no.
(Machine I)
04
Random no.
(Machine II) 37

10

11

12

13

14

15

51

99

97

17

56

92

58

84

45

83

30

62

52

06

80

08

01

74

24

55

55

44

23

56

03

46

24

29

Q3: Amrut cafe employs one cashier at its counter. The average arrival rate of the customers at
the counter is 8 customers in every 10 minutes interval, while the cashier can serve 12 customers
in 10 minutes. Assuming Poisson distribution for the arrival rate and exponential distribution for
the service time, find
1. The utilization factor of the system.
2. The average queue length.
3. The average system length.
4. The average waiting time in a queue.
5. The average time the customer spends in a system.
6. The probability of arrival of 6 customers in a 10 minute interval.
7. What is the probability that the customer has to wait for the service?

8. The cafe owner will appoint a second cashier if he founds that the customer has to wait
for at least 10 minutes in a queue for getting the service. By how much should flow of
customers to be increased in order to justify an appointment of second cashier?
Q4: The captain of the cricket team has to allot five batting positions to five batsmen. The
average runs scored by each batsman at these positions are as follows.
Batsman
Amol
Bipin
Chetan
Dheeraj
Puneet

I
50
52
60
30
56

II
30
40
58
29
67

Batting Position
III
IV
45
35
36
35
50
60
30
28
58
59

V
60
37
60
35
55

Find the assignments of the batsmen to positions to maximize the runs.

Another batsman Sunay is under consideration for inclusion in the team. Should he be included
in the team, if the following scores are observed? Who will be replaced by Sunay?
Batting position
Average runs

I
65

II
67

III
42

IV
58

V
59

Section C: Solve any TWO problems (6 marks each)

12 marks

Q5: A company manufactures four products, A, B, C, and D. All the products require machining
on three machines. Product A requires 1.5 hours on Machine I, 4 hours on Machine II and 2
hours on Machine III. Product B requires 2 hours on Machine I, 1 hour on Machine II and 3
hours on Machine III. Product C requires 4 hours on Machine I, 2 hours on Machine II and 1
hour on Machine III. Product D requires 3 hours on Machine I, 1 hour on Machine II and 2 hours
on Machine III. Machine I is available for 550 hours, Machine II for 700 hours and Machine III
for 200 hours. The profits generated by the products A, B, C, and D, are Rs. 400, Rs. 600, Rs.
300, and Rs. 100, respectively.
1. What is the optimal product mix as well as the total contribution?
2. If we wish to expand the production capacity, which of the three machines should be
given priority? Justify your answer.
3. If the product contribution from Product A increases from Rs. 400 to Rs. 500, will it
affect the product mix?
Q6: City Super Market keeps five different patterns of a particular size of readymade garment for
sale. There are four manufacturers available to the super market manager to whom he can order
the required quantity. The demand for the coming season and the maximum quantity that can be
produced by a manufacturer are as follows:
Pattern
Demand

U. Cut
200

P. Form
150

Maxi
200

Mini
150

Midi
300

Manufacturer
A
B
C
D
Capacity
200
300
250
250
How should the super market manager place the order if the following quotations have been
submitted by the manufacturers for different patterns?

Manufacture
r
A
B
C
D
Selling price

U. Cut
Rs. 1000
Rs. 1000
Rs. 1150
Rs. 1250
Rs. 1200

P. Form
Rs. 1300
Rs. 1200
Rs. 1400
Rs. 1450
Rs. 1500

Pattern
Maxi
Rs. 1600
Rs. 1500
Rs. 1550
Rs. 1400
Rs. 1700

Mini
Rs. 700
Rs. 750
Rs. 800
Rs. 600
Rs. 800

Midi
Rs. 1400
Rs. 1300
Rs. 1200
Rs. 1250
Rs. 1400

Q7: The supervisor of a manufacturing process believed that assembly line speed (feet/minute)
affected the number of defective parts found during on-line inspection. To test this theory,
management had the same batch of parts inspected visually at a variety of line speeds. The
following data were collected.
Line speed
20
20
40
30
60
40
45

No. of
defectives
21
20
15
16
12
16
15

Line speed
50
45
35
25
55
40
60

No. of
defectives
13
14
16
19
14
16
19

1. Use the least squares regression method to derive a forecasting equation.

2. Forecast the number of defectives if the speed is 32 feet/minute.