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# DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING

## MBA651: QUANTITATIVE METHODS FOR DECISION MAKING

1st MID-SEMESTER EXAMINATION [2011-2012, SEMESTER I]

## NOTE THE FOLLOWING

1) Total time for this paper is 120 minutes (2 hours).
2) Total marks is 100 and individual marks are mentioned along side each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) You are allowed to use the statistical tables and the calculator only.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams and use the concept of set theory where ever necessary.

## Question # 1: [15 + 5 + 5(=25) marks]

(a) Suppose you have a circuit as shown below. The probability of closing of each relay of
the circuit is . Assume all the relays of the circuit function independently. Then what is the
probability that current will flow between and .

1 2

A B

3 4

## Solution # 1 (a) (15 marks)

Let , = 1,2,3,4 denote the event that the relay is closed, and let be the event that
current flows between point A and B.
Then = {(1 2 ) (3 4 )}. This means that only when (i) 1 and 2 or (ii) 3 and 4 or
(iii) 1, 2, 3 and 4 are closed will the current flows.
Hence
() = {(1 2 ) (3 4 )}
= (1 2 ) + (3 4 ) {(1 2 ) (3 4 )}

Page 1 of 100
= (1 2 ) + (3 4 ) (1 2 3 4 )
= 2 + 2 4 = 22 4

(b) An urn has 6 red, 4 white and 5 blue balls. Three balls are drawn successively from the
box. Given this information find the probability that the balls are drawn in the order where
you have red, followed by white and the last one is blue, (i) with replacement, (ii) without
replacement.

## Solution # 1 (b) (5marks)

Let us define the events as, R: drawing the red ball, W: drawing the white ball and B:
drawing the blue ball. What we require is ( )
6 4 5 8
(i) ( ) = () (|) (| ) = 6+4+5 6+4+5 6+4+5 = 225
6 4 5 4
(ii) ( ) = () (|) (| ) = 6+4+5 5+4+5 5+3+5 = 91

(c) Find the probability of a 2 turning up at most once in two tosses of a fair die. Remember
at most means that it (i.e., number 2) may not come also. You can definitely assume that the
rolling of one dice does not affect the outcome of the other dice.

## Solution # 1 (c) (5marks)

Let us define
1 : As the event that 2 comes as the face when you toss the first dice.
2 : As the event that 2 comes as the face when you toss the second dice.

## Given this we need to find the probability of {(1 2 ) (1 2 ) (1 2 )}.

Remember that
Thus: is or and is and
{(1 2 ) (1 2 ) (1 2 )} = (1 2 ) + (1 2 ) + (1 2 )
{(1 2 ) (1 2 )}
{(1 2 ) (1 2 )}
{(1 2 ) (1 2 )}
+{(1 2 ) (1 2 ) (1 2 )}

Page 2 of 100
1 5 5 1 5 5
{(1 2 ) (1 2 ) (1 2 )} = 6 6 + 6 6 + 6 6 0 0 0 + 0 =
35
36

## Question # 2: [15 + 15(=30) marks]

(a) Suppose that the p.d.f (remember what p.d.f means) of a random variable (r.v.), is as
follows:
1
(9 2 ) 3 +3
() = 36
0
Sketch the p.d.f. neatly and determine the values of the following: (i) ( < 0), (ii)
(1 +1) and (iii) ( > 2). Here means probability or what we have
discussed in class.

## Solution # 2 (a) (15 marks)

To verify the fact that the () is actually a p.d.f let us find (+3) = { +3}, i.e.,
+3
+3 1 1 3 1 27 27
(3 +3) = 3 (9 2 ) = 9 = 36 27 + 27 =1
36 36 3 3 3 3

## PDF of the function given as (1/36)*(9-x 2)

0.25

0.2

0.15
f(x)

0.1

0.05

0
-3 -2 -1 0 1 2 3
X Values

+3
+3 1 1 3 1 27 92 1
(i) ( < 0) = 0 (9 2 ) = 9 = 36 27 = =2
36 36 3 0 3 36
+1
+1 1 1 3 1 1 1 52
(ii) (1 +1) = 1 (9 2 ) = 9 = 36 9 3 + 9 3 = 108 =
36 36 3 1
13
27
= 0.481

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(iii) ( > 2) = 1 ( 2)
+2
+2 1 1 3
= 1 3 (9 2 ) = 1 9
36 36 3 3
1 8 27 1 54 8 81 27
= 1 36 18 3 + 27 3
= 1 36 3 3 + 3
3

36 1 54 8 81 27 8 2
= 36 36 3 3 + 3
3
= 108 = 27 = 0.0741

## Note the answer in (iii) could also be obtained by calculating

+3
+3 1 1 3 1 27 8
( > 2) = +2 (9 2 ) = 9 = 36 27 18 + 3
36 36 3 +2 3

1 81 27 54 8 8
= 36 3 3
3
+ 3 = 108 = 0.074

(b) Suppose that the p.d.f (remember what p.d.f means) of a random variable (r.v.), is as
follows:

1 0 < < 1
() = (1)2
0
(i) Find the value of the constant and then sketch the p.d.f. neatly
1
(ii) Find the value of 2. Here means probability or what we have discussed in

class.

## Solution # 2 (b) (15 marks)

(i) We know one of the important properties of pdf is ( ) = 1. Hence:
1
(0 1) = 0 1 = 1, in case 1 = , then using simple integration we have
(1)2
1
= 2 (0 1) = 1, thus = 2
1
1 1 1
Hence the p.d.f. is of the form () = 2 1 = 2 (1 )2
(1)2

Page 4 of 100
2.4

2.2

1.8

1.6
f(x)

1.4

1.2

0.8

0.6

0.4
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
X Values

1 1
1 1 1
(ii) 2 = 2 02(1 )2 = 1
2

## Question # 3: [15 + 15(=30) marks]

(a) Two persons A and B play a gamble with a fair dice. In case numbers 1 or 2 appears, then
gives Rs. 30 to person , otherwise gets Rs. 12. The two persons play the game (rolling
the dice is considered as a game) 10 times, then find the probability mass function assuming
the random variable, , denotes the outcome for person . Find the (i) expected value and (ii)
variance of .

## Solution # 3 (a) (15 marks)

2 4
A game is a simple example of ~(, ), where = 6, = 6, = 10 and is the random

variable which denotes the outcome of the game pertaining to the number being equal to 1
10 2 10 4
or 2. Hence the p.m.f is given by () = = 10 6 6 .

Now remember that the actual outcome is the outcome from the rolling of the dice, . To this
corresponds different realized values of the net amount gained/lost by , which we denote
using ()

## Utilizing this concept we have:

(i) ( ) = {()}
= 10
=0 ()()

Page 5 of 100
10 2 10 4
= 10
=0{12 30(10 )} 10 6 6

## where as already mentioned () = {12 30(10 )} is the amount won/lost by in

each of the outcomes of the dice, starting from = 0, ,10.

## (ii) ( ) = {()2 } [{()}]2

10 2 10 4
= 10 2
=0{12 30(10 )} 10 6 6
2
10 2 10 4
10
=0{12 30(10 )} 10 6 6

To solve this problem refer to the table given below (refer the last page)

(b) A blood test developed by a pharmaceutical company for detecting a certain disease is
98% effective in detecting the disease, given that the disease is in fact present in the
individual being tested. The test yields a false positive result (meaning a person without the
disease is in-correctly indicated as having the disease) for any 1% of the disease free persons
tested. If an individual is randomly chosen from the population and tested for the disease, and
given that 0.1% of the population actually has the disease, then what is the probability that
the person tested actually has the disease if the test result is positive (which means that the
disease is indicated as being present by the test).

## Solution # 3 (b) (15 marks)

Let define the event that the test result is positive and let be the other event which means
that the individual actually has the disease. Then given the data we have: (|) = 0.98,
() = 0.001 and (| ) = 0.01. We are required to find, (|), which is given as:
(|)() 0.980.001
(|) = = 0.980.001+0.010.999 = 0.089
(|)()+

## Question # 4: [15 marks]

Super Computer Company which is a retailer store sells all things related to computer,
starting from computer, printer, cartridges, flash drives, CDs, DVDs, etc. The number of
computers and printers sold on any given day varies, with the probabilities of the various
possible sales outcomes being given below in the following table

Page 6 of 100
Solution # 4 (15 marks)
Number of computer sold

0 1 2 3 4

## 0 0.03 0.03 0.02 0.02 0.01 =0, =0,1,2,3,4

Nu = 0.11
1 0.02 0.05 0.06 0.02 0.01 =1, =0,1,2,3,4
mbe
= 0.16
r of
2 0.01 0.02 0.10 0.05 0.05 =2, =0,1,2,3,4
prin = 0.23
ters 3 0.01 0.01 0.05 0.10 0.10 =3, =0,1,2,3,4

sold = 0.27
4 0.01 0.01 0.01 0.05 0.15 =4, =0,1,2,3,4
= 0.23
1.00

1.00

=0,1,2,3,4, =0 0 = 0.08

=0,1,2,3,4, =1 1 = 0.12

=0,1,2,3,4, =2 2 = 0.24

=0,1,2,3,4, =3 3 = 0.24

=0,1,2,3,4, =4 4 = 0.32

Denote the printer with and computer with , then each cell denotes , = = , =

## }. Then the and togather with ,

define the joint distribution of and . It is

## very easy to verify and also intuitive to see that , = 1.

Now for any fixed , let ,0 = , and for any fixed let 0, = , . Then (i)

{ = , +} = = , = = ,0 and (ii)

+, = , } = = , = = 0,

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= ,=
Moreover: = = = = , and = = =
(= ) ,0

= ,=
= ,
= 0,

## With respect to our problem we have:

( , ) = = , , = 0,1,2,3,4 and

## = 0,1,2,3,4, where denotes printer and denotes computer.

Thus we have
,
= ( |
0,

)
,
= ( |
,0

With the information given above answer the following (show detailed calculations for
each in order to get credit):
(i) What is the probability that more than two computes will be sold on any given day?
=0,1,2,3,4, =3 3 + =0,1,2,3,4, =4 4 = 0.24 + 0.32 = 0.56

(ii) What is the probability that more than two printers will be sold on any given day?
=3, =0,1,2,3,4 3 + =4, =0,1,2,3,4 4 = 0.27 + 0.23 = 0.50

(iii) What is the probability of selling more than two printers GIVEN that more than two
computers are sold?

=3 =3 + =3 =4 +=4 =3 + =4 =4
=3,4 =,3,4 = =
=3 + =4
(0.10+0.10+0.05+0.15) 5
(0.24+0.32)
= 7 = 0.7143

(iv) What is the probability of selling more than two computers AND more than two
printers on a given day?
=3 =3 + =3 =4 + =4 =3 + =4 =4
= 0.10 + 0.10 + 0.05 + 0.15 = 0.40

(v) What is the probability that the company has no sales on a given day?

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=0 =0 = 0.03

(vi) Given that the company sells no computers, what is the probability that it sells no printers
also on a given day?
=0 =0 0.03 0.03 3
=0 =0 = = (0.03+0.02+0.01+0.01+0.01) = 0.08 = 8 = 0.375
=0

Page 9 of 100
Solution for problem # 3 (a)

2 { ()}2
(1 2) _ _ _ () () 2 () ()
10 0 -300 -300 0.00 -0.005 90000 1.524 1.328
9 12 -270 -258 0.00 -0.087 66564 22.545 19.185
8 24 -240 -216 0.00 -0.658 46656 142.222 117.104
7 36 -210 -174 0.02 -2.829 30276 492.218 385.567
6 48 -180 -132 0.06 -7.511 17424 991.459 713.777
5 60 -150 -90 0.14 -12.291 8100 1106.173 669.166
4 72 -120 -48 0.23 -10.925 2304 524.408 178.444
3 84 -90 -6 0.26 -1.561 36 9.364 50.984
2 96 -60 36 0.20 7.023 1296 252.840 611.809
1 108 -30 78 0.09 6.763 6084 527.529 832.740
0 120 0 120 0.02 2.081 14400 249.718 339.894
1 -20 4320 3920

{()} {()}

{()} = 20

## {()} = 3920 = 4320 (20)2 = 3920

Page 10 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
2nd MID-SEMESTER EXAMINATION [2011-2012, SEMESTER I]
NOTE THE FOLLOWING
1) Total time for this paper is 90 minutes (1 hours).
2) Total marks is 75 and individual marks are mentioned alongside each question.
3) Total number of questions is 3 (with sub-parts) and you are required to answer ALL of
them.
4) You are allowed to use the statistical tables and the calculator only.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking may be there.
6) Draw diagrams very clearly and legibly, use the concept of set theory where ever
necessary, use tables where necessary.

## Question # 1: [10 + 15 (=25) marks]

a) Assume you are the shop floor manager of a lathe machine work shop and you know that
the working life (in years) of lathe machines follow an exponential distribution with E(X) = 5
years. You also know that any of the lathe machines will survive for at least 2 years. Given
this information find out what is the probability that a particular lathe machine will survive
for 4 or more years? Draw the pdf and cdf of the exponential distribution very clearly/legibly
but separately.

b) Let X be the life in hours of a radio tube which is normally distributed with mean = 20
and variance 2. If a purchaser of such a radio tubes requires that at least 90% of the tubes
have life exceeding 150 hours then what is the largest value of for which the purchaser is
still satisfied?

## Solutions # 1 (a): 10 marks

Assume you are the shop floor manager of a lathe machine work shop and you know that the
working life (in years) of lathe machines follow an exponential distribution with () = 5
years. You also know that any of the lathe machines will survive for at least 2 years. Given
this information find out what is the probability that a particular lathe machine will survive

Page 11 of 100
for 4 or more years? Draw the pdf and cdf of the exponential distribution very clearly/legibly
but separately.

Let be the random variable which denotes the life of the lathe machines in years, such that
( 2)
1
~( = 2, = 5), i.e., () = 5 5 , 2.

Given this information we are required to find the probability that a particular machine will
survive for 4 or more years which is given by
( 2) ( 2) 2
1
{ > 4} = 5 4 5 = 5 = 5 = 0.67032
4

0.16
0.14
0.12
0.1
0.08
0.06 f(x)

0.04
0.02
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

## Exponential pdf when = 2 and = 5

0.8
0.7
0.6
0.5
0.4
0.3 F(x)
0.2
0.1
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

## Solutions # 1 (b): 15 marks

Let be the life in hours of a radio tube which is normally distributed with mean = 20 and
variance 2. If a purchaser of such a radio tubes requires that at least 90% of the tubes have

Page 12 of 100
life exceeding 150 hours then what is the largest value of for which the purchaser is still
satisfied?

20
As given we consider ~( = 20, 2 ). Now we have { > 150} = 0.90, i.e.,
>
15020 30 30

= 0.90 from which we have 0.1 = 1.28 =
, which implies = 1.28 = 24

## Question # 2: [10 + 15 (=25) marks]

a) The height, X, of boy studying in class II of any school in the city of Kanpur, is normally
distributed with mean (=125 cms) and variance 2(=100 cms). We also know the heights (in
cms) of 5 such boys who have been selected as the sample are, 120, 100, 110, 140 and 130,
then what is the probability that the height of any boy selected at random ((i) from the whole
population and (ii) from this sample) will be between 120 cms and 130 cms.

b) To find whether the lathe machine is working properly you take a sample of 25 finished
products and check the dimension of each of the finished product. You find the average
dimension of the sample to be 65 mm, while the standard error is 15 mm. Then what would
your comment be regarding whether the machine is in order or out of order if you knew that
the actual dimension should be 66 mm. Assume =5%.

## Solutions # 2 (a): 10 marks

The height, , of boy studying in class II of any school in the city of Kanpur, is normally
distributed with mean (=125 cms) and variance 2(=100 cms). We also know the heights (in
cms) of 5 such boys who have been selected as the sample are, 120, 100, 110, 140 and 130,
then what is the probability that the height of any boy selected at random ((i) from the whole
population and (ii) from this sample) will be between 120 cms and 130 cms.

2
Consider ~( = 125, 2 = 100) and more over 5 ~ = 125, 5 = 20, where =

## 5, 5 = 120. Using this information we calculate the following:

120125 120125
(i) {120 130} = 10
10
= {0.5 0.5} = 0.383

120125 120125
(ii) {120 5 130} = 10 5 10 = {1.12 5
5 5

1.12} = 0.7372

Page 13 of 100
Solutions # 2 (b): 15 marks
To find whether the lathe machine is working properly you take a sample of 25 finished
products and check the dimension of each of the finished product. You find the average
dimension of the sample to be 65 mm, while the standard error is 15 mm. Then what would
your comment be regarding whether the machine is in order or out of order if you knew that
the actual dimension should be 66 mm. Assume = 5%.

## First let us frame out hypothesis 0 : = 66 vs 0 : = 66

()

2 2

Based on the information one would reject 0 : = 66 if | | 1, holds, i.e.,
2

1, or + 1, is true.
2 2

Before we solve the problem we need to find 1, and the value is 1.711. Utilizing the set
2

## of values given we have:

15 15
65 66 25 1.711 or 65 66 + 25 1.711, i.e., 66 60.867 or 66 71.133

As both of them are false hence we cannot reject 0 : = 66, which means that there is no
significant difference and hence machine is in order.

## Question # 3: [10 + 15 (=25) marks]

a) A food inspector examines 10 jars of certain brand of butter and obtained the following
percentages of impurities, the values of which are, 2.3, 1.9, 2.1, 2.8, 2.3, 3.5, 1.8, 1.4, 2.0 and
2.1. Form a 95% level of confidence for the estimate of the mean of the impurity level,

Page 14 of 100
where you can assume the population distribution of the level of impurity as normal, i.e.,
(
X ~ N , 2 . )

b) Consider we have a biased dice (with six faces, marked 1, 2, 3, 4, 5 and 6), such that
P[X=i] i. First find out the pmf and then draw the pmf as well as the cdf on the same graph
very clearly and legibly. After that find the value of E(X) and V(X).

## Solutions # 3 (a): 10 marks

A food inspector examines 10 jars of certain brand of butter and obtained the following
percentages of impurities, the values of which are, 2.3, 1.9, 2.1, 2.8, 2.3, 3.5, 1.8, 1.4, 2.0 and
2.1. Form a 95% level of confidence for the estimate of the mean of the impurity level,
where you can assume the population distribution of the level of impurity as normal, i.e.,
(
X ~ N , 2 . )

From the data given one can easily find the following which are: = 10, 10 = 2.22,
10 = 0.5789, using which our confidence interval is

1, + 1, = (1 )
2 2

0.5789 0.5789
i.e., 2.22 10
1.833 2.22 + 10
1.833 = 0.95

## Solutions # 3 (b): 15 marks

Consider we have a biased dice (with six faces, marked 1, 2, 3, 4, 5 and 6), such that P[X=i]
i. First find out the pmf and then draw the pmf as well as the cdf on the same graph very
clearly and legibly. After that find the value of E(X) and V(X).

## Given the information we have: ( = ) = , from which we obtain (1 + 2 + 3 + 4 +

1
5 + 6) = 1, thus = 21

## Hence the pmf and cdf are:

= 1,2,3,4,5,6
() = 21
0

Page 15 of 100
0 < 1
1
1 < 2
21
3 2 < 3
21
6
() = 3 < 4
21
10
21 4 < 5
15
21 5 < 6
1 6

1 2 3 4 5 6
() = 6=1 () = 1 21 + 2 21 + 3 21 + 4 21 + 5 21 + 6 21 = 4.333

## () = 6=1{ ()}2 () = ( 2 ) {()}2

1 2 3 4 5 6
= 1 21 + 4 21 + 9 21 + 16 21 + 25 21 + 36 21 4.3332 = 2.22

0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
1 2 3 4 5 6

PDF of () = 21

Page 16 of 100
21/21

15/21
10/21
()
6/21
3/21
Left point
discontinuous
1/21

0 1 2 3 4 5 6

++++++++++++++++END OF QUESTION PAPER ++++++++++++++++

Page 17 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
FINAL SEMESTER EXAMINATION [2011-2012, SEMESTER I]

## NOTE THE FOLLOWING

1) Total time for this paper is 180 minutes (3 hours).
2) Total marks is 100 and individual marks are mentioned alongside each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) You are allowed to use the statistical tables, formulae sheet and the calculator only.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams accurately/neatly/legibly, and use the concept of set theory where ever
necessary.
7) Remember to write your formulations and do your calculations legibly and clearly.

## Question # 1: [15 + 10 (=25) marks]

a) Tarun Goel is a doctor and he measures the weights at birth (in kg.) for 15 babies born in a
city hospital. The weights are as given below
2.79 3.01 3.19 3.10 3.38 2.56 2.16 3.06 3.42 3.51 3.64
2.25 2.61 3.55 3.82
which the mean weight at birth for all such babies should lie depending on which he can
prescribe medical care as required for children whose weights are below the lower limit.
Consider = 0.05.
Question # 1: [15 + 10 (=25) marks]
a) Tarun Goel is a doctor and he measures the weights at birth (in kg.) for 15 babies born in a
city hospital. The weights are as given below
2.79 3.01 3.19 3.10 3.38 2.56 2.16 3.06 3.42 3.51 3.64
2.25 2.61 3.55 3.82
which the mean weight at birth for all such babies should lie depending on which he can
prescribe medical care as required for children whose weights are below the lower limit.
Consider = 0.05.
Page 18 of 100
b) A slip of paper is given to Abhishek Malaviya, who marks it with either a plus (+) or
1
minus sign and the probability of him writing a plus sign is 3. Abhishek then passes on

the slip to Anveeksha Verma, who may either leave it along or change the sign before passing
it on to Kanwardeep Singh. Next, Kanwardeep passes the slip to Monica Agrawal and while
doing so Kanwardeep may or may not change the sign. Monica further on passes it on to
Raksha Agrawal who further on hands over the slip to Saptarshi Sarkar who again passes it
over to Harshil Shah, who finally gives it to the class representative Deepak Gaur. In
handing over the slip to their next partner, Anveeksha, Kanwardeep, Monica, Raksha,
Saptarshi and Harshil all of them may or may not change the sign written on the slip, and
2
their respective probabilities of changing the sign is 3. Deepak sees a plus (+) written on the

slip, then find the probability that the sign marked by Abhishek was also plus (+).

## Solution # 1 (a): 15 marks

Tarun Goel is a doctor and he measures the weights at birth (in kg.) for 15 babies born in a
city hospital. The weights are as given below
2.79 3.01 3.19 3.10 3.38 2.56 2.16 3.06 3.42 3.51 3.64
2.25 2.61 3.55 3.82
which the mean weight at birth for all such babies should lie depending on which he can
prescribe medical care as required for children whose weights are below the lower limit.
Consider = 0.05.

In case is the random variable which denotes the weights of the babies then ~(, 2 ).
2
Moreover in case is the sample size then ~ , . As per the information we do not

know but still we are required to find the lower and higher levels of weights given the
value as 0.01.
From the data = 15, 15 = 3.07, 15 = 0.5071, 14,0.025 = 2.145

Hence:

C.I. is formulated as 1, + 1, = (1 )
2 2

Thus

Page 19 of 100
0.5071
= 1, = 3.07 2.145 = 2.7891
2 15
0.5071
= + 1, = 3.07 + 2.145 = 3.3509
2 15

## Solution # 1 (b): 10 marks

A slip of paper is given to Abhishek Malaviya, who marks it with either a plus (+) or minus
1
sign and the probability of him writing a plus sign is 3. Abhishek then passes on the slip

to Anveeksha Verma, who may either leave it along or change the sign before passing it on to
Kanwardeep Singh. Next, Kanwardeep passes the slip to Monica Agrawal and while doing so
Kanwardeep may or may not change the sign. Monica further on passes it on to Raksha
Agrawal who further on hands over the slip to Saptarshi Sarkar who again passes it over to
Harshil Shah, who finally gives it to the class representative Deepak Gaur. In handing over
the slip to their next partner, Anveeksha, Kanwardeep, Monica, Raksha, Saptarshi and
Harshil all of them may or may not change the sign written on the slip, and their respective
2
probabilities of changing the sign is 3. Deepak sees a plus (+) written on the slip, then find

the probability that the sign marked by Abhishek was also plus (+).

## The slip of paper goes in this way

Abhishek Malaviya
1st pass
Anveeksha Verma
2nd pass
Kanwardeep Singh
3rd pass
Monica Agrawal
4th pass
Raksha Agrawal
5th pass
Saptarshi Sarkar
6th pass
Harshil Shah
7th pass
Deepak Gaur

Page 20 of 100
Define the events as follows
1
: Abhishek Malaviya wrote a plus (+) sign and () = 3
2
: Abhishek Malaviya wrote a minus sign and ( ) = 3

## : Deepak Gaur sees a plus (+) sign

Now as Deepak Gaur sees the sign as plus (+) and Abhishek Malaviya also marked a plus
(+) sign
(){|}
Hence we are required to find the following probability {|} =
(){|}+

## To find {|} we note that the following would have happened

No change of sign: The number of ways is 60 and the corresponding probability is
1 6 2 0
3 3

Change of sign two times: The number of ways is 62 and the corresponding probability
1 4 2 2
is 3 3

Change of sign four times: The number of ways is 64 and the corresponding
1 2 2 4
probability is 3 3

Change of sign six times: The number of ways is 66 and the corresponding probability
1 0 2 6
is 3 3

## To find { } we note that the following would have happened

Change of sign one time: The number of ways is 61 and the corresponding probability
1 5 2 1
is 3 3

Change of sign three times: The number of ways is 63 and the corresponding
1 2 2 3
probability is 3 3

Change of sign five times: The number of ways is 65 and the corresponding
1 1 2 5
probability is 3 3

Page 21 of 100
Utilizing these we have:

{|} =
1 1 6 2 0 1 4 2 2 1 2 2 4 1 0 2 6
60 +62 +64 +66
3 3 3 3 3 3 3 3 3
1 1 6 2 0 1 4 2 2 1 2 2 4 1 0 2 6 2 6 1 5 2 1 1 2 2 3 1 1 2 5
0 +2 +4 +6 + 1 +3 +65
6 6 6 6 6
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

1 1 1 1 1
+154 6 +1516 6 +64 6
3 36
{|} = 1 1 1 1
3
1 2
3
1
3
1 1 =
+154 6 +1516 6 +64 6 + 62 6 +208 6 +632 6
3 36 3 3 3 3 3 3 3

## 1+60+240+64 365 365

1+60+240+64+2(12+160+192)
= 365+728 = 1093 = 0.3339

## Question # 2: [15 + 10 (=25) marks]

a) Kaushik Choudhury is a student in the Quantitative Techniques for Decision Making
course, which is compulsory for MBA students at IIT Kanpur. He has approached you with
the following problem which he is unable to solve. Help him to draw (accurately, neatly and
legibly) both () and () of the function. Remember () is given below.
0 < 2
0.2 2 < 0
() =
0.7 0 < 2
1 2

## b) Two experimenters, Navpreet Singh and Nimisha Raveendran, take repeated

measurements of the length of a copper wire. On the basis of the data obtained by them,

which are given below, test whether Navpreets measurement is more accurate (think what

## 12.77 11.86 12.46 12.39

Page 22 of 100
11.96 12.25 11.98

## Solution # 2 (a): 15 marks

Kaushik Choudhury is a student in the Quantitative Techniques for Decision Making course,
which is compulsory for MBA students at IIT Kanpur. He has approached you with the
following problem which he is unable to solve. Help him to draw (accurately, neatly and
legibly) both () and () of the function. Remember () is given below.
0 < 2
0.2 2 < 0
() =
0.7 0 < 2
1 2

()

1.0

0.7

0.2

-2 0 +2

Page 23 of 100
Hence () is
()

0.5

0.3
0.2

-2 0 +2

## Solution # 2 (b): 10 marks

Two experimenters, Navpreet Singh and Nimisha Raveendran, take repeated measurements

of the length of a copper wire. On the basis of the data obtained by them, which are given

below, test whether Navpreets measurement is more accurate (think what accuracy means

## 12.78 12.29 12.22

Given the data let us denote and as the random variables which denote the distribution of

## measurement made by Navpreet and Nimisha, such that ~( , 2 ) and ~( , 2 ).

Page 24 of 100
More we also know that: (i) = 10, = 10 = 12.2850, = 0.333042 and (ii)

= 8, = 8 = 12.2675, = 0.178786

To test the hypothesis or statement that Navpreets measurement is more accurate than

## Nimishas and = 0.05 our hypothesis is as follows:

0 : 02 = 0: 2 2 vs 0 : 02 0: 2 2

2
The rule is reject 0 if 2 1, 1,1 is true.

Now we have

2 1 1 2
10 = 0.110917, 82 = 0.031964, 9,7,10.05 = = 3.29 = 0.3040, thus =
7,9,0.05 2

0.110917
0.031964 = 3.470019 0.3040 is FALSE, hence we cannot reject the null hypothesis

## that 0 : 02 = 0: 2 2 , which means that there is significantly no difference in Navpreets

1 1
Remember: 9,7,10.05 = as ,,1 =
7,9,0.05 , ,

## Question # 3: [15 + 10 (=25) marks]

a) Saurabh Awasthi is testing the tensile strength of a particular alloy. The sample average is

13.71, while the standard deviation of the sample is 3.55. What should be the minimum

sample size Saurabh should collect such that the confidence interval within which the

population mean would lie is 3.14? As Saurabh was finishing his task, Nitin Bharadwaj

comes running and says that the standard deviation is not of the sample but of the population.

In that case what is the new sample size, considering all other information is correct. How

many extra observations did Saurabh already collect or need to collect, based on Nitins

## information? Consider = 0.05.

Page 25 of 100
b) Mohan Kumar K. is measuring the surface finish of crank shaft his production unit is

manufacturing. Depending on the quality of surface finish, the crank shafts can be either

good or bad. Mohan checks a sample of size 85 and finds 10 of them to be bad. Help Mohan

to formulate a 95% confidence interval and find for him the lower and upper limits of the

confidence interval.

## Solution # 3 (a): 15 marks

Saurabh Awasthi is testing the tensile strength of a particular alloy. The sample average is

13.71, while the standard deviation of the sample is 3.55. What should be the minimum

sample size Saurabh should collect such that the confidence interval within which the

population mean would lie is 3.14? As Saurabh was finishing his task, Nitin Bharadwaj

comes running and says that the standard deviation is not of the sample but of the population.

In that case what is the new sample size, considering all other information is correct. How

many extra observations did Saurabh already collect or need to collect, based on Nitins

## information? Consider = 0.05.

Case I
1 1 1
1 1 1, 1 + 1 1, , i.e., 2 1 1, is the length of
2 1 2 1 2

confidence interval. Now from the information we have 1 = 13.71, 1 = 3.55, hence

1 1 1,0.025 3.14
2 1 1,0.025 = 3.14, i.e., = 3.552 = 0.44225
1 1

## Now check the distribution tables and from that we have:

1 1,0.025 2.120
1 1 = 16, 1 = 17, 16,0.025 = 2.120, i.e., = = 0.5142
1 17

1 1,0.025 2.110
1 1 = 17, 1 = 18, 17,0.025 = 2.110, i.e., = = 0.4973
1 18

1 1,0.025 2.101
1 1 = 18, 1 = 19, 18,0.025 = 2.101, i.e., = = 0.4820
1 19

Page 26 of 100
1 1,0.025 2.093
1 1 = 19, 1 = 20, 19,0.025 = 2.093, i.e., = = 0.4680
1 20

,. .
= , = , ,. = . , i.e., = = .

,. .
= , = , ,. = . , i.e., = = .

1 1,0.025 2.074
1 1 = 22, 1 = 23, 22,0.025 = 2.074, i.e., = = 0.4325
1 23

The value of 1 which satisfies this is between 21 and 22, and we will consider 1 = 22.

Case II

2 2 + , i.e., 2 is the length of confidence
2 2 2 2 2 2

interval. Now from the information given we have 1 = 13.71, = 3.55, hence 2
2

= 3.14, = 1.96, i.e., 2 = 19.64 20
2 2

## Solution # 3 (b): 10 marks

Mohan Kumar K. is measuring the surface finish of crank shaft his production unit is

manufacturing. Depending on the quality of surface finish, the crank shafts can be either

good or bad. Mohan checks a sample of size 85 and finds 10 of them to be bad. Help Mohan

to formulate a 95% confidence interval and find for him the lower and upper limits of the

confidence interval.

10 75
From the information given we have: = 85, = 85 = 0.1177, = 85 = 0.8823. Now

using normal distribution concept we have P (1 )
= (1 ), as
2 2

## (1) (1) (1) (1)

~ , , such that ( ) = = , ( ) = 2 = = , i.e., =
2

Page 27 of 100
Hence the 95% confidence interval is:

(1) (1)
+ = (1 )
2 2

0.1177 1.96 85
0.1177 + 1.96 85
= 0.95

## Question # 4: [15 + 10 (=25) marks]

a) Mayank Singh who is a DJ and the group leader of IIT Kanpur music club is very health

conscious about himself and his group members. Remember it is a large music group with

many members and all the group members follow a strict diet regime. They are only allowed

to take special variety of mixed salad and a specially prepared paneer kofta as advised by

their nutritionist Arjun Ravindra Khular. They use at least 800 kgs of this combined special

food daily. Yes we do agree the amount is huge but remember the group members like to eat.

The nutrient contents and the costs are given below in the chart.

Kg per kg of food
Type of food Protein Fibre Cost (Rs.)
Paneer kofta 0.60 0.06 0.90

The dietary requirement of this special type of food entails an intake of at least 30% protein

and at most 5% fibre. Solve the problem and help Arjun (who has no clue of how to solve an

optimization problem) such that the aim to minimize the total cost is met.

b) Sumit Kumar is a high profile person who has just become the CEO of Ghotala Bank Inc.

in India, after completing his MBA from IIT Kanpur with flying colours. He is in the process

Page 28 of 100
of devising a loan policy for his bank and the amount involves a maximum of Rs.120 crores.

The following table provides the pertinent data about the available types of loans.

## Type of Loan Interest Rate Bad Debt Ratio

Personal 0.140 0.10
Car 0.130 0.07
Home 0.120 0.03
Farm 0.125 0.05
Commercial 0.100 0.02
Note

## Bad debts are unrecoverable and produce no interest revenue.

Competition with other banks requires that Ghotala Bank Inc. allocates at least 40% of

## the funds to farm and commercial loans.

To assist housing industry in the country home loans must equal at least 50% of the

## personal, car and home loans.

The bank also has a stated policy of not allowing the overall ratio of bad debts on all

## Solution # 4 (a): 15 marks

Mayank Singh who is a DJ and the group leader of IIT Kanpur music club is very health

conscious about himself and his group members. Remember it is a large music group with

many members and all the group members follow a strict diet regime. They are only allowed

to take special variety of mixed salad and a specially prepared paneer kofta as advised by

their nutritionist Arjun Ravindra Khular. They use at least 800 kgs of this combined special

food daily. Yes we do agree the amount is huge but remember the group members like to eat.

The nutrient contents and the costs are given below in the chart.

Kg per kg of food
Type of food Protein Fibre Cost (Rs.)
Paneer kofta 0.60 0.06 0.90

Page 29 of 100
The dietary requirement of this special type of food entails an intake of at least 30% protein

and at most 5% fibre. Solve the problem and help Arjun (who has no clue of how to solve an

optimization problem) such that the aim to minimize the total cost is met.

2 : Paneer kofta

## Hence the optimization problem is as follows

min . + . (1)

s.t.: + (2)

. + . . ( + ) (3a)

. . (3b)

. + . . ( + ) (4a)

. . (4b)

, (5a, 5b)

Page 30 of 100
(Eqn: 5a)

(Eqn: 4)

(Eqn: 1)

(Eqn: 3)

B (Eqn: 2)

(Eqn: 5b)

0,0 1

Figure 1

Find points A and B and find the objective functions at A and B and then find the minimum

value

## Solution # 4 (b): 10 marks

Sumit Kumar is a high profile person who has just become the CEO of Ghotala Bank Inc. in

India, after completing his MBA from IIT Kanpur with flying colours. He is in the process of

devising a loan policy for his bank and the amount involves a maximum of Rs.120 crores.

The following table provides the pertinent data about the available types of loans.

Page 31 of 100
Type of Loan Interest Rate Bad Debt Ratio
Personal 0.140 0.10
Car 0.130 0.07
Home 0.120 0.03
Farm 0.125 0.05
Commercial 0.100 0.02
Note

## Bad debts are unrecoverable and produce no interest revenue.

Competition with other banks requires that Ghotala Bank Inc. allocates at least 40% of

## the funds to farm and commercial loans.

To assist housing industry in the country home loans must equal at least 50% of the

## personal, car and home loans.

The bank also has a stated policy of not allowing the overall ratio of bad debts on all

## Let the decision variables be:

1 : Personal loans

2 : Car loans

3 : Home loans

4 : Farm loans

5 : Commercial loans

Given these we have the optimization problem is such that where we maximize difference

## between total interest and bad debts, where

Total interest is

= 0.14 0.91 + 0.13 0.932 + 0.12 0.973 + 0.125 0.954 + 0.1 0.985

## = 0.1261 + 0.12092 + 0.11643 + 0.118754 + 0.0985

Page 32 of 100
= 0.11 + 0.072 + 0.033 + 0.054 + 0.025

## Maximize 0.0261 + 0.05092 + 0.08643 + 0.068754 + 0.0785

s.t.:

1 + 2 + 3 + 4 + 5 12 (1)

4 + 5 0.4(1 + 2 + 3 + 4 + 5 ) (2a),

i.e.,

i.e.,

## 0.061 + 0.032 0.013 + 0.014 + 0.025 0 (4b)

1 , 2 , 3 , 4 , 5 0 (5)

## ++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 33 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
1st QUIZ [2012-2013, SEMESTER I]
NOTE THE FOLLOWING
1) Total time for this paper is 60 minutes (1 hour).
2) Total marks is 40 and individual marks are mentioned alongside each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams and use the concept of set theory where ever necessary.

## Question # 1 [10 marks]

Determine the probability of three 6's in five tosses of a fair die.

## Solution # 1 [10 marks]

Let the tosses of the die be represented by the five (5) spaces as ____, ____, ____, ____,
____. Then in each of the space we will have the events as 6 or 6 , where 6 means the
complement which are 1,2,3,4,5. For example, three (3) 6's and two (2) 6 s can occur as
1 1 5 1 5
6,6, 6 , 6, 6 and corresponding probability is 6
6 6 6 6 since the concept of

independence holds true between any two tosses. Now the total number of such placements
5!
of these three (3) 6's and the two (2) 6 s can happen in 53 = 3!2! ways. Hence the
1 1 5 1 5 5! 1 3 5 2 125
probability is 53 6 6 6 6 6 = 3!2! 6 6 = 3888 = 0.03215

## Question # 2 [10 marks]

A community has 2% people suffering from tuberculosis. The X-ray test which may be used
to detect the disease is also not totally reliable. If a person is affected by tuberculosis then
there is 95% chance that the X-ray result will be positive. On the other hand, there may be a
false alarm so that there is 1% chance that the X-ray test will show a positive result even
when the person is not affected by tuberculosis. Given that a person have a positive X-ray
result what is the probability thet he is affected by tuberculosis?

Page 34 of 100
Solution # 2 [10 marks]
Let us define the events as given below:
A: The person is affected by tuberculosis
B: The X-ray shows a positive result
Then
AC: The person is not affected by tuberculosis

This gives us the values of P(A) = 0.02 and P(AC) = 0.98. Furthermore the event B can be
broken down into set which are disjoint in the sense the property of exclusiveness and
exhaustiveness will hold, such that (|) = 0.95 and (| ) = 0.01.
Hence () = ( ) + ( ) = (|) () + (| ) ( ) = 0.95
0.02 + 0.01 0.98 = 0.0288
Furthermore the probability that a person has tuberculosis given that he/she has a positive X-
() (|)() 0.020.95
ray result is given by (|) = = = = 0.66
() () 0.0288

## Question # 3 [10 marks]

Box I contains 3 red and 2 blue marbles while Box II contains 2 red and 8 blue marbles. A
fair coin is tossed. If the coin turns up heads (H) then a marble is chosen from Box I, while if
the tail (T) comes then a marble is chosen from Box II. Find the probability that a red marble
is chosen.

## Solution # 3 [10 marks]

Let R denote that a red marble is chosen, while I and II denote the events that Box I and Box
II are chosen respectively. Since red marble can result buy choosing either Box I or Box II,
hence we can use the result which is as follows and can be understood from the figure below

A B

Here = ( ) ( ). This can be extended for more than 1 set of B, such that

Page 35 of 100
= ( 1 ) ( 2 ) ( 3 ) . ( ), where = , = 1,2, , and
= 0 for = 1,2, , .

## Moreover taking probability for A we have

() = ( 1 ) + ( 2 ) + ( 3 ) + . +( ) ( 1 2 )
. ( 1 ) + ( 1 2 3 ) + + ( 2 1 )
. +(1)1 ( 1 2 . ). But note here all the terms after ( 1 ) +
( 2 ) + ( 3 ) + . +( ) are zeros.
1 3 1
Hence using this concept we have () = ()(|) + ()(|) = 2 3+2 + 2
2 2
2+8 = 5

## Question # 4 [10 marks]

Four letters are written and four matching envelopes are prepared. The letters are placed in

the envelopes at random. What is the probability that at least one of the letters is placed into

## Solution # 4 [10 marks]

Suppose A1, A2, A3 and A4 represent the events that the 1st, 2nd, 3rd and the 4th letter are
placed in the correct envelopes respectively. Then 1 2 3 4 represents the event
that at least one of the letters is placed in the right envelope. Furthermore using simple set
theoretic notation we can easily visualize the illustration given below such that the following
would hold true

A1 A2

A3 A4

Page 36 of 100
(1 2 3 4 ) = (1 ) + (2 ) + (3 ) + (4 ) (1 2 ) (1 3 )
(1 4 ) (2 3 ) (2 4 ) (3 4 ) + (1 2 3 ) + (1 2
4 ) + (1 3 4 ) + (2 3 4 ) (1 2 3 4 )

Now:
1
(1 ) = (2 ) = (3 ) = (4 ) = 4

1 1 1 1
(1 2 ) = (1 ) (2 |1 ) = 4 (2 |1 ) = 4 3 = 12
1 1 1 1
(1 3 ) = (1 ) (3 |1 ) = 4 (3 |1 ) = 4 3 = 12
1 1 1 1
(1 4 ) = (1 ) (4 |1 ) = 4 (4 |1 ) = 4 3 = 12
1 1 1 1
(2 3 ) = (2 ) (3 |2 ) = 4 (3 |2 ) = 4 3 = 12
1 1 1 1
(2 4 ) = (2 ) (4 |2 ) = 4 (4 |2 ) = 4 3 = 12
1 1 1 1
(3 4 ) = (3 ) (4 |3 ) = 4 (4 |3 ) = 4 3 = 12

(1 2 3 ) = (1 2 ) (3 |1 2 ) = (1 ) (2 |1 )
1 1 1 1
(3 |1 2 ) = 4 3 2 = 24

(1 2 4 ) = (1 2 ) (4 |1 2 ) = (1 ) (2 |1 )
1 1 1 1
(4 |1 2 ) = 4 3 2 = 24

(1 3 4 ) = (1 3 ) (4 |1 3 ) = (1 ) (3 |1 )
1 1 1 1
(4 |1 3 ) = 4 3 2 = 24

(2 3 4 ) = (2 3 ) (4 |2 3 ) = (2 ) (3 |2 )
1 1 1 1
(4 |2 3 ) = 4 3 2 = 24

(1 2 3 4 ) = (1 2 3 ) (4 |1 2 3 ) = (1 2 )
(3 |1 2 ) (4 |1 2 3 ) = (1 ) (2 |1 ) (3 |1 2 )
1 1 1 1
(4 |1 2 3 ) = 4 3 2 1 = 24
1 1 1 1
Thus: (1 2 3 4 ) = 4 4 12 6 + 24 4 24 = 0.625

Page 37 of 100
++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 38 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
1st MID-SEMESTER EXAMINATION [2012-2013, SEMESTER I]
NOTE THE FOLLOWING
1) Total time for this paper is 120 minutes (2 hours).
2) Total marks is 100 and individual marks are mentioned alongside each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) You are allowed to use the statistical tables and the calculator only.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams and use the concept of set theory where ever necessary.

## Question # 1 [10 + 15 (=25 marks)]

(a) The probabilities that Banait Chandan Ambadas will expend a high, medium or low
amount of effort in studying for the MBA651 1st mid-semester examination are 50%, 30%
and 10%, respectively. Given that Banait expends a high, medium or low amount of effort,
the respective conditional probabilities of getting marks of 70 or above in MBA651 1st mid-
semester examination, are: 90%, 40% and 5% respectively. Find (i) the probability that
Banait will get marks of 70 or above in MBA651 course and (ii) that provided he has
obtained marks of 70 or above, then what is the probability that Banait spends medium effort
for studying for MBA651 1st mid-semester examination.

(b) Consider that there are n persons in the MBA651 class. Then (i) what is the probability
that at least two of you will have the same birthday?, (ii) calculate this probability for n = 52
and (iii) how large need n be for this probability to be greater than 0.5? Please do not
consider leap year.

## Answer # 1 (a) [10 marks]

The probabilities that Banait Chandan Ambadas will expend a high, medium or low amount
of effort in studying for the MBA651 1st mid-semester examination are 50%, 30% and 10%,
respectively. Given that Banait expends a high, medium or low amount of effort, the
respective conditional probabilities of getting marks of 70 or above in MBA651 1st mid-
semester examination, are: 90%, 40% and 5% respectively. Find (i) the probability that
Page 39 of 100
Banait will get marks of 70 or above in MBA651 course and (ii) that provided he has
obtained marks of 70 or above, then what is the probability that Banait spends medium effort
for studying for MBA651 1st mid-semester examination.

## Given the problem let us define the events as follows

H: Banait Chandan Ambadas expends high amount of effort
M: Banait Chandan Ambadas expends medium amount of effort
L: Banait Chandan Ambadas expends low amount of effort
A: Banait Chandan Ambadas gets a mark of 70 or above
AC: Banait Chandan Ambadas gets a mark of less than 70

(i) Thus from the data given we know the following: () = 0.5, () = 0.3, () = 0.1.
We also have (|) = 0.90. (|) = 0.40 and (|) = 0.05
Furthermore:
() = ( ) + ( ) + ( ), as H, M and L are mutually exclusive and
exhaustive events
() () ()
() = () + () + ()
() () ()

## () = (|) () + (|) () + (|) ()

() = 0.90 0.5 + 0.40 0.3 + 0.05 0.1 = 0.575

## (ii) Given the information above we are required to find

( )
() () (|)()
( )
(|) = = = .
() ()+()+() (|)()+(|)()+(|)()
0.400.3
Thus (|) = 0.900.5+0.400.3+0.050.1 = 0.2087

## Answer # 1 (b) [15 marks]

Consider that there are n persons in the MBA651 class. Then (i) what is the probability that
at least two of you will have the same birthday?, (ii) calculate this probability for n = 52 and
(iii) how large need n be for this probability to be greater than 0.5? Please do not consider
leap year.

Each of you can have your birthday on any one of the 365 days (ignoring leap year). Let be
the event that no two persons amongst you have the same birthday. To find this, order the

Page 40 of 100
students who are in MBA651 course from 1 to , such that you may choose a possible
sequence of length of birthdays each chosen as one of the 365 possible dates. There are 365
possibilities for the first element of the sequence, and for each of these choices there are 365
for the second, and so forth. Hence there are 365 number of total outcomes which are
possible. But remember that we must find the number of these sequences that have no
duplication of birthdays (i.e., no two persons amongst you have the same birthday). For such
a sequence, we can choose any of the 365 days for the first element, then any of the
remaining 364 for the second, 363 for the third, and so forth, until we make choices. Thus
for the choice, there will be 365 + 1 possibilities. Hence, the total number of
sequences with no duplications of birthdays (i.e., no two persons amongst you have the same
birthday) is {365 364 363 . (365 + 1)}.
365364363.(365+1)
Assuming that each sequence is equally likely we have = ,
365

where is the probability that we will have number of MBA651 students who have no
duplication of their birthdays.
(i) Using this, the probability that at least two of the students will have the same birthday is
365364363.(365+1)
given by 1 = 1 .
365
365364363.(36552+1)
(ii) When = 52, then 1 = 1 = 1 0.0219 = 0.978
365 52
365364363.(365+1)
(iii) Let = , then 1 = 1 0.5. Using simple Excel
365

## Question # 2 [15 + 10 (=25 marks)]

(a) Consider three persons Praveen Srinivasan, Tulika Awasthi and Ruchik Sunilbhai Vin are

playing a game where a wheel which has numbers marked 1, 2,.., 100 on its circumference

is spun. When the wheel stops spinning, the number i, which is closest to a certain pointer

(which is fixed and kept next to the wheel) is said to be the outcome for that particular spin.

Hence the outcomes are 1, 2,.., 100. Now if the outcome is less than or equal to 40, then

Praveen Srinivasan gets Rs. 40 from Tulika Awasthi; if it is more than or equal to 61, then

Ruchik Sunilbhai Vin gets Rs. 40 from Tulika Awasthi and if the outcome is anything else

then Tulika Awasthi gets Rs. 60 each from Praveen Srinivasan and Ruchik Sunilbhai Vin

Page 41 of 100
respectively. The probability of any particular number being the outcome is uniform. Find the

expected value (in Rs.) Tulika Awasthi wins/losses after 3 such games are played, if we

## consider a game to be the spinning of the wheel only once.

(b) Help Sunny Goyal with the following problem where he has been told to draw F(x), as
well as f(x) on the same graph, where:
F (x) = 0 if x < 0

= 1 e ( x ) if x 0.
Remember > 0. Help Sunny calculate f(x) and also obtain P[a X b] for any given
numbers a and b.

## Answer # 2 (a) [15 marks]

Consider three persons Praveen Srinivasan, Tulika Awasthi and Ruchik Sunilbhai Vin are

playing a game where a wheel which has numbers marked 1, 2,.., 100 on its circumference

is spun. When the wheel stops spinning, the number , which is closest to a certain pointer

(which is fixed and kept next to the wheel) is said to be the outcome for that particular spin.

Hence the outcomes are 1,2, . . ,100. Now if the outcome is less than or equal to 40, then

Praveen Srinivasan gets Rs. 40 from Tulika Awasthi; if it is more than or equal to 61, then

Ruchik Sunilbhai Vin gets Rs. 40 from Tulika Awasthi and if the outcome is anything else

then Tulika Awasthi gets Rs. 60 each from Praveen Srinivasan and Ruchik Sunilbhai Vin

respectively. The probability of any particular number being the outcome is uniform. Find the

expected value (in Rs.) Tulika Awasthi wins/losses after 3 such games are played, if we

## consider a game to be the spinning of the wheel only once.

Denote the three persons Praveen Srinivasan, Tulika Awasthi and Ruchik Sunilbhai Vin as
PS, TA and RS respectively. Let us consider the problem from TAs point of view. If the
random number denotes the amount of money won/lost by TA, then for = 0,1,2,3, which
denotes the number of wins by TA in the three games played, we have = {120

Page 42 of 100
80 4
(3 )40}. Furthermore the probability of her losing is = = 5, while the probability of
100
20 1
her winning is = 100 = 5. Thus when 3 games are played it is a simple example of a
1 4
binomial distribution where = 3, = 5 and = 5 and = {120 (3 )40}.

Hence
() = 3=0 () = 3=0{120 (3 )40} 3 3
3! 1 0 4 3 3! 1 1 4 2 3! 1 2
= 120 3! 5 5 + 40 2!1! 5 5 + 200 1!2! 5

4 1 3! 1 3 4 0
5 + 360 3! 5 5
3!20
= {64 + 16 + 20 + 3} = 24.00
53

## Answer # 2 (b) [10 marks]

Help Sunny Goyal with the following problem where he has been told to draw F(x), as well as
f(x) on the same graph, where:
F (x) = 0 if x < 0

= 1 e ( x ) if x 0.
Remember > 0. Help Sunny calculate f(x) and also obtain P[a X b] for any given
numbers a and b.

It is given that:
() = 0 for < 0
= 1 () for 0

Thus:
()
() = =0 for < 0

()
= = () for 0

To draw the graph consider for simplicity = 0 and = 1. Thus the pdf and cdf are of the
form 1 and and the graphs are as follows

Page 43 of 100
0.7

0.6

0.5

0.4
f(x)
0.3
F(x)
0.2

0.1

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

To find [ ], we find [ ] = 1 () 1 () =
() () , which is also shown in the graph above. We can also find [
] =

## Question # 3 [(5 + 5) + 15 (=25 marks)]

(a) Help Tarunava Das solve the following problem, where the probability of closing of the ith

relay in the circuits (Fig I and Fig. II), shown below, is given by p1=1/2, p2=1/3, p3=1/4,

p4=1/5 and p5=1/6. If all relays function independently, then what is the probability that

current flows between A and B for the respective circuits (Fig I and Fig. II).

Page 44 of 100
1 2 3

Fig I
A B

4 5

1 4

Fig II
A 3 B
2
5

(b) Tanveer Singh Mahajan and his team and Minaz and her team are asked to separately
design a new product within a month. From past experience we know that the probability that
team Tanveer Singh Mahajan is successful is 2/3, the probability that team Minaz is
successful is , and the probability that at least one team is successful is 3/4. Assuming that
exactly one successful design is produced, what is the probability that it was designed by
Minaz and her team?

## Answer # 3 (a) [(5 + 5) marks]

Help Tarunava Das solve the following problem, where the probability of closing of the ith

relay in the circuits (Fig I and Fig. II), shown below, is given by p1=1/2, p2=1/3, p3=1/4,

p4=1/5 and p5=1/6. If all relays function independently, then what is the probability that

current flows between A and B for the respective circuits (Fig I and Fig. II).

Page 45 of 100
1 2 3

Fig I
A B

4 5

1 4

Fig II
A 3 B
2
5

Consider Figure I
Let , = 1,2,3,4,5 be the even when the is on and it connects the circuit. Hence current
can flow when we have 1,2,3 are closed, 4,5 are closed and 1,2,3,4,5 are closed, i.e., the
events are:
1 2 3 = 1,2,3 are closed

1 2 3
A B
4 5

1 2 3
A B
4 5

Page 46 of 100
1 2 3
A B
4 5

## Thus current flows if

{(1 2 3 ) (4 5 )} = (1 2 3 ) + (4 5 ) (1 2
3 4 5 )
1 1 1 1 1 1 1 1 1 1
= 234+5623456
30 24 1 53
= 720 + 720 720 = 720 = 0.073611

Consider Figure II
Let , = 1,2,3,4,5 be the even when the is on and it connects the circuit. Hence current
can flow when we have the following scenarios

## Answer # 3 (b) [15 marks]

Tanveer Singh Mahajan and his team and Minaz and her team are asked to separately design
a new product within a month. From past experience we know that the probability that team
Tanveer Singh Mahajan is successful is 2/3, the probability that team Minaz is successful is
, and the probability that at least one team is successful is 3/4. Assuming that exactly one
successful design is produced, what is the probability that it was designed by Minaz and her
team?

## Question # 4 [10 + 15 (=25 marks)]

(a) Sagar Bhardwaj selects a number at random from (1, 2, . , 100). Given that the number
selected by him is divisible by 2, help him to find the probability that it is also divisible by 3
or 5.

(b) Suppose Vinayak Gangwar randomly select 5 cards without replacement from an ordinary
deck of playing cards. What is the probability of him getting exactly 2 red cards (i.e., hearts
or diamonds)?

## Answer # 4 (a)[10 marks]

Page 47 of 100
Sagar Bhardwaj selects a number at random from (1, 2, . , 100). Given that the number
selected by him is divisible by 2, help him to find the probability that it is also divisible by 3
or 5.

## Answer # 4 (b) [15 marks]

Suppose Vinayak Gangwar randomly select 5 cards without replacement from an ordinary
deck of playing cards. What is the probability of him getting exactly 2 red cards (i.e., hearts
or diamonds)?

## x = 2; since 2 of the cards we select are red.

We plug these values into the hyper-geometric formula as follows which is given as () =

26 26
2 3
, = 0,1, . , . Thus we have () = 52
= 0.32513.

5

## ++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 48 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
FINAL SEMESTER EXAMINATION [2012-2013, SEMESTER I]

## NOTE THE FOLLOWING

1) Total time for this paper (which consists of 3 pages) is 180 minutes (3 hours).
2) Total marks is 100 and individual marks are mentioned alongside each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) You are allowed to use the statistical tables, formulae sheet and the calculator only.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams accurately/neatly/legibly, and use the concept of set theory where ever
necessary.
7) Remember to write your formulations and do your calculations legibly and clearly.

## Question # 1(a): [15 marks]

(a) There are n objects marked 1, 2,, n and also n places marked 1, 2,, n. The objects are
distributed over these n places, such that one object is allotted to each place. Find the
probability that none of the objects occupies the place corresponding to itself, i.e., ith object is
not in the ith place. Also find the value when n is very large.

## Answer # 1(a): [15 marks]

Let us define Ai the event that the object numbered i occupies the place numbered i, i = 1,

2,., n. It is quite intuitive and obvious to note that Ais, i = 1, 2,., n are not mutually

exclusive events. Now these n objects may distributed over these n places in a total of n! (i.e.,
n
Pn) ways, which may be assumed to be equally likely. So now we have Ai occurs when the

ith place is occupied by the ith object, while the remaining (n-1) places is to be occupied by the

remaining (n-1) objects in any arbitrary order. Hence this total number of ways is (n-1)! (i.e.,

( 1)! 1
n-1
Pn-1), hence ( ) = !
= for each i. Again both Ai and Aj (ij) occur when the ith

Page 49 of 100
and the jth places are occupied by the corresponding objects, while the other (n-2) places are

( 2)! 1
filled up with the remaining (n-2) objects, so now we have = !
= (1),

## for each i and j, where i<j.

1
In the same logic we have: (1 2 ) = !. Now using the theorem of general

probability we have:
1 1 1
(1 2 ) = 1 2 ( 1) + 3 ( 1)(2) . +(1)(1)

1 1
!, which implies we have n number of terms in the above expansion, where 1 =

1
which has 1 terms, 2 = ( 1) which has 2 number of terms and so on till the last term

1
= ! which has (1)(1) number of terms, hence we have:

1 1 1 1
(1 2 ) = 1! 2! + 3! . +(1)(1) !. From which we can easily

1 1 1
derive the required probability as: 1 (1 2 ) = 1 1! 2! + 3!

1
. +(1)(1) !. Just note that when n is very large we have

1 (1 2 ) = exp(1) 0.36788

Note: In case one wants to find the probability that that at least one of the objects occupies

the place corresponding to itself, i.e., ith object is in the ith place then the corresponding

## Question # 1(b): [10 marks]

For the above problem, i.e., # 1 (a), find the probability that there is exactly m number of

such matches when we place these n number of objects in these n number of places?

## Answer # 1(b): [10 marks]

Page 50 of 100
First consider the probability that m specified events, marked A1, A2,, Am (here Ai are

defined as we have done for solution # 1(a)) occur while the others do not. Let us furthermore

define =
=1 and = = +1 then the probability we are interested to find is

## given by: () = () (|).

( )!
Now we know and can also find if required that () = !
, while

(|) = 1 = +1 | ,= +1 | + . .

Now = =+1 = = +1 , which would immediately lead us to the fact that:

(|) = 1 = +1 |.

( 1)!
But: | = ( )!
, for j = m+1, m+2,, n

( 2)!
Thus: | = ( )!
for j,k = m+1, m+2,, n and so on.

Hence:

( 1)! ( 2)!
(|) = 1
1
( )!
+
2
( )!

1
( ) = ! ( )!
1
( 1)! +
2
( 2)!

Hence the required probability is the sum of such probabilities, and since the specified

## group of m events may be any one of groups formed.

So we finally have:
1
! ( )!
1
( 1)! +
2
( 2)!

1 1 1 1
= ! 1 1! + 2! + (1)( ) ( )!

## Question # 2(a): [15 marks]

Gangaredgy Papaigari & Company manufactures bars of steel and the company claims that
the average breaking strength of its product is not less than 52. Nishu Navneet is the

Page 51 of 100
Controller General of quality and to test the breaking strength of this product he samples 15
such bars from the factory of Gangaredgy Papaigari & Company and notes down the
breaking strength. Those values are as given as: 51.3 52.1 50.3 50.2 51.9 50.0 52.5
50.7 49.3 49.3 48.3 48.1 48.2 47.8 47.5. Examine if Gangaredgy Papaigari &
Companys claim is supported by these data.

## Answer # 2(a): [15 marks]

As per the information provided in the problem the hypothesis will be framed keeping in

mind that we will always try to disapprove the statement made by the person, hence we

always try to reject 0 , which results in the following formulation, i.e., 0 : = 0 52. If

that is the case, then we should have the following hypothesis to test, which is:

0 : = 0 52 vs : = < 52

s
i.e., if the following, X n < 0 tn 1, n , is true then we reject 0
n

Now for the sample (here the sample size is 15) given we can easily calculate that =

1 1
= 49.8333 and 2 = ( )2 = 2.7124. For the problem consider
=1 ( 1) =1

= 0.05, i.e., (1 ) = 0.95. Hence from the table we have 1, = 14,0.05 = 1.761.

1.6469
Hence the RHS is 0 1, = 52 1.761 15
= 51.25117. Now 49.833 is

always less than 51.25117, and as this is true we reject 0 , i.e., the claim of the

## Question # 2(b): [10 marks]

Three plants hereby marked C1, C2 and C3 produce respectively 10, 50 and 40 percent of a
companys output. Although plant C1 is small, Rajat Bhakri who is the general manager and
is in charge of all these three plants, firmly believes that this plant produces good quality of
products and on an average only 1% of the corresponding products produced are defective.
While for plant C2, 97 percent of the goods produced are of good quality, and for plant C3 the
percent of bad products produced is 4%. All the products from these three plants are

Page 52 of 100
dispatched to the central warehouse for final inspection and subsequent dispatch. Find the
probability that if an item or product is picked up at random that it will be defective. Also
calculate that if the item is found to be defective, then what is the conditional probability that
it was produced in plant C2.

## Answer # 2(b): [10 marks]

For this problem we use Bayes theorem. Before that let us define the events as follows:

## D = product is defective and it can be produced in one of the three plants

Thus with this notational concept we derive the following, given the information from the

problem:

0.04 = 0.032

## Now using Bayes Theorem we have

(2 |)(2 ) 0.50.03
(2 |) = )+(
= 0.10.01+0.50.03+0.40.04 = 0.46875
(1 |)(1 2 |)(2 )+(3 |)(3 )

## Question # 3(a): [15 marks]

C x
Consider the logarithmic distribution with the probability mass function (p.m.f), f ( x) =
x
C
, for x = 1, 2, .., where 0 < < 1. Show that, for this distribution the mean () =
(1 )

1
and variance (2) = .
(1 )

Page 53 of 100
(i) () = 2 2
=1 () = =1 = ( + + . . ) = (1 + + + . . )

## Now let us consider

1 = 1 + + 2 + ..
1 = + 2 + ..
1
Hence: 1 (1 ) = 1, i.e., 1 = (1). Substituting we have () = (1)

(ii) () = ( 2 ) {()}2 . Hence first let us calculate ( 2 ).
( 2 ) = 2 2 3 2
=1 () = =1 = ( + 2 + 3 . . ) = (1 + 2 + 3 + . . )

## Now let us consider

2 = 1 + 2 + 3 2 + 4 3 . ..
2 = + 2 2 + 3 3 ..
1 1
Hence: 2 (1 ) = 1 + + 2 + 3 = 1 = (1). Hence 2 = (1)2
(1) 1
( 2 ) = (1)2
, such that () = (1) 2 = 1

## Question # 3(b): [10 marks]

Consider the two sided confidence interval for the mean when is known, which is given

by xn z1 xn + z 2 , where 1+2=. If 1=2=/2, then we have the usual
n n
100(1-)% confidence interval (C.I.) for . In the above formulation when 12 the interval

is not symmetric about and the length of the interval is L =

(
z1 + z 2 . Prove that the )
n
length of the interval L is minimized when 1=2=/2.

## Answer # 3(b): [10 marks]

Given is known we have the confidence interval as given 1

2

where 1 = 2 = 2 . Hence the actual C.I length, is

= 1 + 2

Page 54 of 100
Now to find the minimum length we must have

1
= 1 + 2 (remember we could have also differentiated wrt to 2
1

Thus:

2 2
1
= 1+ = 0, i.e., = 1
1 1

(1)

## Also remember that:

1 2 = 2 ()
1

2
1 2 = 0 (2)
1

Using both the equations (1) and (2) we have 1 = 2 , i.e., 1 = 2 as normal

distribution is symmetric. Moreover it is given that 1 + 2 = , hence 1 = 2 = 2

## Question # 4(a): [15 marks]

Harpreet Singh & Associates produces both interior and exterior paints from two raw
materials M1 and M2. The following table provides the basic data for the problem.
Raw Material Tons of raw material per ton of Maximum daily
Exterior Paint Interior Paint availability (tons)
M1 6 4 24
M2 1 2 6
Profit per ton 5 4
( )
A marketing survey has revealed that the daily demand for interior paint cannot exceed that
of exterior paint by more than 1 ton, also the maximum daily demand of interior paint is 2
tons. Harpreet Singh & Associates had attended the MBA651 class rarely, hence is unable to
solve the problem. Help him to solve this optimization problem using simple method (tableau
based solution only). Please note no graphical method solution technique will be
considered.

## Answer # 4(a): [15 marks]

The starting tableau is as give
Step # 1

Page 55 of 100
Basic z x1 x2 s1 s2 s3 s4 Solution
Z 1 -5 -4 0 0 0 0 0
s1 0 6 4 1 0 0 0 24
s2 0 1 2 0 1 0 0 6
s3 0 -1 1 0 0 1 0 1
s4 0 0 1 0 0 0 1 2
Thus the calculations yields
2 1 2 5
(1, 5, 4,0,0,0,0,0) (5) 0,1, , , 0,0,0,4 = 1,0, , , 0,0,0,20
3 6 3 6
1 2 1
(0,6,4,1,0,0,0,24) = 0,1, , , 0,0,0,4
6 3 6
2 1 4 1
(0,1,2,0,1,0,0,6) 1 0,1, , , 0,0,0,4 = 0,0, , , 1,0,0,2
3 6 3 6
2 1 5 1
(0, 1,1,0,0,1,0,1) (1) 0,1, , , 0,0,0,4 = 0,0, , , 0,1,0,5
3 6 3 6
2 1
(0,0,1,0,0,0,1,2) (0) 0,1, , , 0,0,0,4 = (0,0,1,0,0,0,1,2)
3 6

These calculations would be used for the 2nd tableau which is given below

Step # 2
Basic z x1 x2 s1 s2 s3 s4 Solution
Z 1 0 -2/3 5/6 0 0 0 20
x1 0 1 2/3 1/6 0 0 0 4
s2 0 0 4/3 -1/6 1 0 0 2
s3 0 0 5/3 1/6 0 1 0 5
s4 0 0 1 0 0 0 1 2
Thus the calculations yields
2 5 2 1 3 3 3 1
1,0, 3 , 6 , 0,0,0,20 3 0,0,1, 8 , 4 , 0,0, 2 = 1,0,0, 4 , 2 , 0,0,21
2 1 2 1 3 3 1 1
0,1, 3 , 6 , 0,0,0,4 3 0,0,1, 8 , 4 , 0,0, 2 = 0,1,0, 4 , 2 , 0,0,
4 1 3 1 3 3
0,0, 3 , 6 , 1,0,0,2 4 = 0,0,1, 8 , 4 , 0,0, 2
5 1 5 1 3 3 3 5 5
0,0, 3 , 6 , 0,1,0,5 3 0,0,1, 8 , 4 , 0,0, 2 = 0,0,0, 8 , 4 , 1,0 2
1 3 3 1 3 1
(0,0,1,0,0,0,1,2) (1) 0,0,1, , , 0,0, = 0,0,0, , , 0,1,
8 4 2 8 4 2

These would be used for the 3rd tableau which is given below

Page 56 of 100
Step # 3
Basic z x1 x2 s1 s2 s3 s4 Solution
z 1 0 0 0 0 21
x1 0 1 1 - 0 0 3
x2 0 0 1 -1/8 0 0 3/2
s3 0 0 0 3/8 -5/4 1 0 5/2
s4 0 0 0 1/8 -3/4 0 1

3 5 1
Maximum value is 21, 1 = 3, 2 = 2, 1 = 0, 2 = 0, 3 = 2, 4 = 2

## Question # 4(b): [10 marks]

Ankita Hemant Sahare Industries, a nationally known manufacturer of clothing, produces
four varieties of ties. One is an expensive, all-silk tie, one is an all-polyester tie, and two are
blends of polyester and cotton. The following table illustrates the cost and availability (per
monthly production planning period) of the three materials used in the production process:
Material Cost/meter (XYZ units) Material Available/Monthly
(meters)
Silk 21 800
Polyester 6 3,000
Cotton 9 1,600
The firm has some fixed contracts with several major department store chains to supply ties.
The contracts require that Ankita Hemant Sahare Industries supply a minimum quality of
each tie but allow for a larger demand if Ankita Hemant Sahare Industries chooses to meet
that demand, subject to a condition that it should not exceed the maximum requirement. The
following table summarizes the contract demand for each of the four styles of ties, the selling
price per tie, and the fabric requirements of each variety.
Variety of S.P. per tie Monthly Monthly Material Type of
Tie (XYZ units) contract contract requirement Material
(Minimum) (Maximum) per tie requirement
All Silk 6.70 6,000 7,000 0.125 100% silk
All polyester 3.55 10,000 14,000 0.080 100% ploy
Poly cotton 4.31 13,000 16,000 0.100 50% poly

Page 57 of 100
Blend 1 and 50%
cotton
Poly cotton 4.81 6,000 8,500 0.100 30% poly
Blend 2 and 70%
cotton
Formulate the optimization problem for Ankita Hemant Sahare Industries. You are not
required to solve it.

## Answer # 4(b): [10 marks]

Let us define the following
x1= number of all silk ties produced per month
x2= number of polyester ties produced per month
x3= number of blend 1 poly-cotton ties produced per month
x4= number of blend 2 poly-cotton ties produced per month
First the firm must establish the profit per tie
For all silk ties (x1), each requires 0.125 yard of silk, at a cost of 21/yard. Therefore, the
cost per tie is 2.62. The selling price per silk tie is 6.70, leaving a net profit of (6.70-
2.62)=4.08 per unit of x1.
For all polyester ties (x2), each requires 0.080 yard of polyester, at a cost of 6/yard.
Therefore, the cost per tie is 0.48. The selling price per polyester tie is 3.55, leaving a
net profit of (3.55-0.48)=3.07 per unit of x2.
For all blend 1 poly cotton ties (x3), each requires 0.050 yard of polyester, at a cost of
6/yard and 0.050 yard of cotton, at a cost of 9/yard. Therefore, the cost per tie is 0.75.
The selling price per polyester tie is 4.31, leaving a net profit of (4.31-0.75)=3.56 per
unit of x3.
For all blend 2 poly cotton ties (x4), each requires 0.030 yard of polyester, at a cost of
6/yard and 0.070 yard of cotton, at a cost of 9/yard. Therefore, the cost per tie is 0.81.
The selling price per polyester tie is 4.81, leaving a net profit of (4.81-0.81)=4.00 per
unit of x4.

## Hence the optimization problem is as follows

: 4.081 + 3.072 + 3.563 + 4.004
. . : 0.1251 800

Page 58 of 100
0.082 + 0.053 + 0.034 3000
0.053 + 0.074 1600
6000 1 7000
10000 2 14000
13000 3 16000
6000 4 8500

## ++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 59 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
FIRST EXAMINATION [2013-2014, SEMESTER I]

## Question # 1 (a): [5 marks]

Given the data: 23, 45, 65, 78, 76, 23, 9, 12. Find the mean and standard deviation

## Answer # 1 (a): [5 marks]

The mean is given by
1 1
() = =1 = 8 (23 + 45 + 65 + 78 + 76 + 23 + 9 + 2) = 40.125

## The variance is given by

1 1
() = =1{ ()}2 = 8 {(23 40.125)2 + (45 40.125)2 + (65 40.125)2 +

## (78 40.125)2 + (76 40.125)2 + (23 40.125)2 + (9 40.125)2 + (2

40.125)2 } = 796.6094

## Question # 1 (b): [10 marks]

You toss an unbiased coin repeatedly till you get head (H) the first time. Then draw the
probability mass function as well as the distribution function (in the same graph) for this
problem.

## Answer # 1 (b): [10 marks]

As discussed and also derived in class the distribution is called the Geometric Distribution
such that ~(), where is the probability of success of getting the head, H, while
= (1 ) is the corresponding probability of getting the tail, T. Hence
() = , where = 0,1, is he randon variable denoting the case where we are
interested to find the number of tails coming before the 1st head. The corresponding () =
1 +1 . Here = = 0.5. With = 0, ,20 (as an example) the pmf and cdf are shown
below

Page 60 of 100
1

0.8

0.6
f(x)
0.4
F(x)
0.2

0
0 5 10 15 20 25

## Question # 1 (c): [10 marks]

The probability density function (p.d.f) of he random variable X is given by

0 < < 4
() = . Given this find (i) P(X<1/4) and (ii) draw the p.d.f
0
and c.d.f clearly and legibly on the same graph.

## Answer # 1 (c): [10 marks]

The pdf is () = and considering the fundamental properties of distribution function we

1
4 1 1 1 1 1 1
have 0 = 1, hence = 4. Now he value of 4 = 4 04 = 4. Finally the

## pdf and cdf graphs are as shown below

1
0.9
0.8
0.7
0.6
0.5 f(x)
0.4
F(x)
0.3
0.2
0.1
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41

## Question # 2 (a): [15 marks]

Page 61 of 100
A and B play a game in which they alternatively toss a pair of dice. The one who is first to
get a total of 7 wins the game. Find the probability that (i) the one who tosses first will win
the same, (ii) the one who tosses second will win the game.
Answer # 2 (a): [15 marks]
(i) The probability of getting a number 7 on a single toss of a pair of dices assumed to be fair)
1
is given by 6. Remember 7 can be formed by the following combinations which are: (1,6),

(2,5), (3,4), (4,3), (,2) and (6,1). If we suppose that A is the first to toss then A will win in any
one of the following mutually cases with the following indicated associated probabilities as
shown below
1
Case 1: A wins he 1st toss and probability is 6
5 5 1
Case 2: A loses on 1st toss, then B loses and then A wins and probability is 6 6 6

Case 3: A loses on 1st toss, then B loses, then again A loses followed by Bs loss and finally
5 5 5 5 1
A wins and probability is 6 6 6 6 6

## and so on as it goes till infinity.

1 5 5 1 5 5 5 5 1 6
Then the probability that A wins is given by 6 + 6 6 6 + 6 6 6 6 6 + = 11.

(ii) Now consider B wins (which is to do with the part (ii) of the problem), then the
5 1 5 5 5 1 5 5 5 5 5 1 5
corresponding probability is: 6 6 + 6 6 6 6 + 6 6 6 6 6 6 + = 11

## Question # 2 (b): [15 marks]

Prove for any set of events A1, A2,.., Ak, (1 2 . . ) (1 ) + (2 ) +
+ ( ). Hint: You cannot use Venn diagram or any illustrative/diagrammatic method.

## Answer # 2 (b): [15 marks]

Use method of induction and he schematic diagram is shown below

First let us illustrate this with the simple Vein diagram for the ease of understanding, but the
proof will be given mathematically

Ai

A1 A2 A4

An An-1
Page 62 of 100
Consider there are only two events, i = 1, 2, namely A1 and A2. In that case we can write
A1 A2 = A1 + ( A2 A1 ) , where events A1 and ( A2 A1 ) both belong to A and they are

## Hence P( A1 A2 ) = P( A1 ) + P( A2 A1 ) P( A1 ) + P( A2 ) , since ( A2 A1 ) A2 for the fact that

the probability function P is monotone (increasing). Or better still for a clear understanding
we can state that 0 P[A1 ( A2 A1 )] 1 always holds, hence P( A1 A2 ) P( A1 ) + P( A2 )

Now considering the number of events is n, i.e., the events can now be denoted as A1, A2,.,
An such that one can write

A1 A2 An = ( A1 A2 An1 ) An , i.e.,

## = ( A1 A2 An1 ) + {An ( A1 A2 An1 )} . Here again we divide

the whole set of events in to separate class of events one being ( A1 A2 An1 ) and

Thus:

## P[( A1 A2 An1 ) {An ( A1 A2 An1 )}]

P( A1 A2 An 1 ) + P{An ( A1 A2 An 1 )}

( A1 A2 An1 ) and {An ( A1 A2 An1 )} are disjoint (same logic can be used

here as for i = 1, 2)

## Hence using similar logic we obtain:

P( A1 A2 An ) P( A1 A2 An1 ) + P( An )

## Similarly we would have

Page 63 of 100
P( A1 A2 An ) P( A1 A2 An 2 ) + P( An 1 ) + P( An )
P( A1 A2 An ) P( A1 A2 An3 ) + P( An2 ) + P( An1 ) + P( An )
P( A1 A2 An ) P( A1 A2 An4 ) + P( An3 ) + P( An2 ) + P( An1 ) + P( An )

n
n
P( A1 A2 An ) P( A1 ) + P( A2 ) + + P( An ) , i.e., P Ai P( Ai )
i=1 i=1

## Question # 3: [20 marks]

(i) Find the probability that ( 365) number of persons selected at random will have
different given birthdays.
(ii) Determine how many people are required in problem # 3(a) to make the probability of
distinct birthdays less than .

## Answer # 3: [20 marks]

(i) We assume that there are only 365 days in a year and that all birthdays are equally
probable (this assumption is not true in reality). Then the first of the people has of course
365
some birthday with probability 365
= 1. If the second person is to have a different birthday
364
then it is 365 . Using this logic the person has a birthday different from the others and the
(365+1)
associated probability is given by . Thus we have the following
365
365 3651 (365+1) 1
( ) = 365 365
= 1 365
365
2 1
1 365 1 365

(ii) Denoting the given probability by and taking the natural logarithms we find
1 2 1
= 1 365 + 1 365 + + 1 365

2 3
Now we are aware from simple calculus that (1 ) = . Utilizing this
2 3

we have:
1+2++(1) 1 12 +22 ++(1)2
= 2
365 365 2
(1) ( 1)(21)
=
730 12365 2

Page 64 of 100
(1)
For 365 we neglect the higher terms, hence = .
730
1 ( 1) 1
If now = 2 (as per the information give) then we get = = 2 = 0.693.
730

## Solving the quadratic equation in we get, 2 506 = 0. Thus ( 23)( + 22) = 0

from which we get = 23. With this one can conclude that if is larger than 23 then we can
give better than even odds that at least two people will have the same birthday.
++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 65 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
FINAL SEMESTER EXAMINATION [2013-2014, SEMESTER I]

## Question # 1: [15 + 15 (=30) marks]

(a) As a detective you are searching for clue and it can be presumed that it is equally likely

that the crime has been committed by any one of the three persons you are investigating. Let

(1 ) denote the probability that the crime has been committed by the person where

= 1,2,3. Then what is the conditional probability that the crime has been committed by the

person, given that investigating, person 1 did not prove fruitful, = 1,2,3?

1
(b) Suppose is a random variable and its probability mass function is ( = 1) = 2,

1 1
( = 2) = 3 and ( = 3) = 6. Given this information first find () and on the same

## Answer # 1: [15 + 15 (=30) marks]

(a) Let , = 1,2,3, be the event that the person has committed the crime. Moreover let

be the event that after investigating person you pass the verdict that the person is not

(1 ) (|1 ) (1 )
guilty. From Bayes formula: we obtain (1 |) = = 3 =
() =1 (| ) ( )

1
1 1
3
1 1 1 = , while for = 2,3 we have: = 3 =
1 +1 +1
3 3 3
1 +2 =1 (| ) ( )

1
1 1
3
1 1 1 =
1 +1 +1 1 +2
3 3 3

1 1 1
(b) Given ( = 1) = 2, ( = 2) = 3 and ( = 3) = 6 the cdf is given below:

Page 66 of 100
0 < 1
1
1 2
2
() = 5 . Utilizing this we draw the pmf and cdf as give:
2 3
6
1 3

1.2
1
0.8
0.6 f(x)
0.4 F(x)
0.2
0
1 2 3

## Question # 2: [15 + 15 (=30) marks]

(a) Suppose that is a continuous random variable whose probability density function is

given by
2)
() = (4 2 0 < < 2 . Find (), () and draw the pdf and cdf on the same
0

graph.

(b) The time, in hours, it takes to locate and repair an electrical breakdown in a certain

## factory is a random variable, say , whose density function is given by

1 0 < < 1
() = . If the cost involved for a breakdown of duration is given by 3 ,
0

## Answer # 2: [15 + 15 (=30) marks]

2
(a) Form the properties of distribution function we must have: () = 0 (4 2 2 ) =

3 + 3 2
1. From this we obtain = 8. Now by formulae: (i) () = () = 8 0 (4 2

Page 67 of 100
+ 3 2
2 3 ) = 1, while (ii) () = { ()}2 () = 8 0 ( 1)2 (4 2 2 3 ) =

1
5

1
0.9
0.8
0.7
0.6
0.5 f(x)
0.4 F(x)
0.3
0.2
0.1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

(b) Letting = 3 denote the cost, so we first calculate its distribution function (remember it
1
is the cdf and NOT pdf/pmf) which is as follows: () = ( 3 < ) = < 3 =

1
1
3
0 = 3 . Let us now differentiate () with respect to to obtain (). Thus () =

2 2 1
1 + 1 1 1 1 1
3
3 for 0 1. Thus: () = () = 3 0 3 = 3 0 3 = 4

## Question # 3: [20 + 10 + 10(=40) marks]

(a) Civil engineers believe that , the amount of weight (in units of 1,000 kgs) that a certain

span of a bridge can withstand without structural damage resulting, is normally distributed

with mean 400 and standard deviation 40. Suppose that the weight (again, in units of 1,000

kgs) of a car is a random variable with mean 3 and standard deviation .3. How many cars

would have to be on the bridge span for the probability of structural damage to exceed 0.1?

(b) The manufacturer of a new fiberglass tyre claims that its average life will be at least

40,000 kms. To verify this claim a sample of 12 tyres is tested, with their lifetimes (in 1,000s

Page 68 of 100
of kms) being as follows: 36.1,40.2,33.8,38.5,42.0,35.8,37.0,41.0,36.8,37.2,33.0 and 36.0.

## Test the manufacturers claim at the 5 percent level of significance.

(c) A sample of 100 transistors is randomly chosen from a large batch and tested to determine

if they meet the current standards. If 80 of them meet the standards, then formulate an

approximate 95 percent confidence interval for , the fraction of all the transistors.

## Answer # 3: [20 + 10 + 10(=40) marks]

(a) Let denote the probability of structural damage when there are n cars on the bridge.
That is {1 + + }, where is the weight of the car, = 1, , . Now it
follows from the central limit theorem that =1 ~(3, 0.09). As is independent of
, hence =1( ) is also normal with certain mean and variance.
{=1( )} = 3 400 and
{=1( )} = (=1 ) + () = 0.09 + 1600
Utilizing these in the concept of standard normal distribution we obtain:
1 ++ (3400 ) 0(3400 )
{1 + + 0} = . Thus = +1.28.
0.09+1600 0.09+1600
4003
Hence 1.28, thus 117
0.09+1600

(b) To determine whether the foregoing data are consistent with the hypothesis that the mean
life is at least 40,000 km, we will test he following hypothesis

## : 4000 vs : < 4000

1 1
From the data we have: 12 = 12 12 2 12
=1 = 37.2883, while = 121 =1{ 12 } =

7.4633. More over we need to use t-distribution and from the table we have 11,0.05 =
12 (37.2883 40)
1.796. Furthermore from the values he t value comes ou to be = =
7.4633

3.4448. Since this value of t is less than 11,0.05 = 1.796 which gives us the answer that
the null hypothesis, , is rejected at the 5 percent level of significance

Page 69 of 100

(c) We have the formulae as given: = (1 ), which ones
2 (1) 2

(1)
simplified considering the fact that = yields us +
2

(1)
= (1 ). Putting the values gives us:
2

0.80.2 0.80.2
0.8 1.96 100
, 0.8 + 1.96 100
= (0.7216,0.878).

## ++++++++++++++++++++END OF QUESTION PAPER++++++++++++++++++++

Page 70 of 100
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
1st QUIZ EXAMINATION [2014-2015, SEMESTER I]

## Question # 1: [10 + 15 =(25) marks]

(a) A certain brand of cigarette is used by smokers of three states A, B and C. It is estimated

that 60% of the sales takes place in state A, 30% in state B and 10% state C. It is also

estimated that 70% of the smokers of state A, 5% of the smokers of state B and 50% of the

smokers of state C smoke that particular brand. Given a person is smoking that particular

brand what are the probabilities that he/she is from states A, B and C respectively?

(a) Let us define the following events which are as stated below

(|3 ) = 0.50,

## Hence using Bayes Theorem we get

(1 ) (|1 )
(1 |) =
(1 ) (|1 ) + (2 ) (|2 ) + (3 ) (|3 )

0.60 0.70
= = 0.87
0.60 0.70 + 0.30 0.05 + 0.10 0.50

## Question # 1: [10 + 15 =(25) marks]

Page 71 of 100
(b) A perfect coin and a perfect die are thrown repeatedly in that order. What is the

probability of a head appearing before a/an/the (i) six, (ii) even number and (iii) sum is

exactly 12.

(b) Part I

We shall first obtain the probability of the complementary event, i.e., the probability that no

head will appear before the first six. If this complementary event is denoted by , then

may occur in one of the following mutually exclusive forms as stated below

## (i) In the first pair of throws tail appears as well as six.

(ii) In the first pair of throws tail appears but not six, in the second pair of throws tail

## appears as well as six.

(iii) In the first pair of throws tail appears but not six, similarly in the second pair of throws

tail appears but not six, while in the third pair of throws tail appears as well as six.

## This continues as stated above

Now if denotes the appearance of tail in the throw of the coin and that of six in the

## throw of the die, then we may write

= (1 1 ) + (1 1 2 2 ) + (1 1 2 2 3 3 ) + .

( ) = (1 1 ) + (1 1 2 2 ) + (1 1 2 2 3 3 ) +

## + (1 )(1 )(2 )(2 )(3 )(3 ) +

)
1 1 1 5 1 1 1 5 1 5 1 1 1 5 5 2
( = + + += 1 + +
2 6 2 6 2 6 2 6 2 6 2 6 12 12 12

1 5 1 1 6
( ) = 12 1 12 = 7, hence () = 7

Page 72 of 100
(b) Part II

We shall first obtain the probability of the complementary event, i.e., the probability that no

head will appear before the even number. If this complementary event is denoted by ,

then may occur in one of the following mutually exclusive forms as stated below

(i) In the first pair of throws tail appears as well as even number.

(ii) In the first pair of throws tail appears but not even number, in the second pair of throws

## tail appears as well as even number.

(iii) In the first pair of throws tail appears but not even number, similarly in the second pair

of throws tail appears but not even number, while in the third pair of throws tail appears as

## This continues as stated above

Now if denotes the appearance of tail in the throw of the coin and that of even

## number in the throw of the die, then we may write

= (1 1 ) + (1 1 2 2 ) + (1 1 2 2 3 3 ) + .

( ) = (1 1 ) + (1 1 2 2 ) + (1 1 2 2 3 3 ) +

## + (1 )(1 )(2 )(2 )(3 )(3 ) +

)
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2
( = + + + = 1 + +
2 2 2 2 2 2 2 2 2 2 2 2 4 4 4

1 1 1 1 2
( ) = 4 1 4 = 3, hence () = 3

## (b) Part III

Page 73 of 100
We shall have a set of outcomes for exactly 12 as sum the minimum being 6 + 6 and the

maximum being when we have 1 + 1+.. 12 times. Using this combination and the fact that

we have to formulate the problem as complementary cases we can get the answer.

## Question # 2: [10 + 15 =(25) marks]

(a) Show that the distribution function F defined by
F (x) = 0 if x < 0

= 1 e ( x ) if x 0.
Here > 0. With this information sketch the graph of F(x) and f(x) on the same graph, and
obtain P[a X b] for any given numbers a and b.

()
(a) We all know the relation between () and (), i.e., = (), thus we get

## F (x) = 0 if x < 0 () = 0 if x < 0

= 1 e ( x ) if x 0 () = () if x 0

In order to facilitate the drawing assume = 1 (which we assume for simplicity), and = 0
then the diagrams are as follows for
F (x) = 0 if x < 0 () = 0 if x < 0

= 1 if x 0 () = if x 0

1.2

0.8

0.6 f(x)
F(x)
0.4

0.2

0
0 0.5 1 1.5 2 2.5 3 3.5

By formulae we have ( ) = () () = (1 ) (1 ) =

= 2 3 , if = 2 and = 3

Page 74 of 100
Question # 2: [10 + 15 =(25) marks]
(b) There are four urns containing (i) 1 white, 1 black, (ii) 2 white, 2 black, (iii) 3

white, 3 black and finally (iv) 4 white, 4 black balls respectively. One ball is taken from

each urn at random, then, what is the probability that (i) two balls are white & two balls are

black and (ii) one ball is white & three balls are black?

(i) Two balls are white & two balls are black

The combination of getting two white and two black is obtained as follows: BBWW,

BWBW, BWWB, WWBB, WBWB, WBBW. Now the combination of one is given as
1 2 3 4 1 2 3 4
,
1 + 1 2 + 2 3 + 3 4 +4 1 + 1 2 + 2 3 + 3 4 + 4

1 2 3 4 1 2 3 4
,
1 + 1 2 +2 3 + 3 4 + 4 1 + 1 2 + 2 3 + 3 4 + 4

1 2 3 4 1 2 3 4
,
1 + 1 2 +2 3 + 3 4 + 4 1 + 1 2 +2 3 + 3 4 +4

1 2 3 4 1 2
Combine them to get the result as: +
1 + 1 2 + 2 3 + 3 4 + 4 1 + 1 2 + 2

3 4 1 2 3 4 1 2 3 4
+ + +
3 +3 4 + 4 1 + 1 2 +2 3 + 3 4 + 4 1 + 1 2 +2 3 + 3 4 + 4

1 2 3 4 1 2 3 4
+
1 + 1 2 + 2 3 + 3 4 + 4 1 + 1 2 + 2 3 + 3 4 + 4

## (ii) one ball is white & three balls are black

The combination of getting one white and three blacks is obtained as follows: WBBB,

## BWBB, BBWB, BBBW. Now the combination of one is given as

1 2 3 4 1 2 3 4
,
1 + 1 2 + 2 3 +3 4 + 4 1 + 1 2 + 2 3 + 3 4 +4

1 2 3 4 1 2 3 4
,
1 + 1 2 + 2 3 +3 4 + 4 1 +1 2 + 2 3 + 3 4 + 4

Page 75 of 100
1 2 3 4 1 2
Combine them to get the result as: +
1 + 1 2 + 2 3 + 3 4 + 4 1 + 1 2 + 2

3 4 1 2 3 4 1 2 3 4
+ +
3 +3 4 + 4 1 + 1 2 +2 3 + 3 4 + 4 1 + 1 2 +2 3 + 3 4 + 4

## ++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 76 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
1st MID-SEMESTER EXAMINATION [2014-2015, SEMESTER I]

## Question # 1: [10 + 15 =(25) marks]

(a) Suppose there are three chests and each chest has two drawers. One of the chests has a

gold coin in each of its drawers, the next chest has one gold coin in one of its drawer and one

silver coin in the other drawer, while the last chest has a silver coin in each of its drawers.

One of the chests is drawn at random and then one of its drawers is opened at random and a

gold coin is found in that drawer. Then what is the probability that this chest contains a gold

## Answer # 1: [10 + 15 =(25) marks]

Let the state of nature/event be denoted as given:
1 : Chest with gold coin in both the drawers
2 : Chest with one gold coin in one drawer and a silver coin in the other drawer
3 : Chest with silver coin in both the drawers
: The coin found in the randomly opened drawer in a randomly drawn chest is gold
1
Thus: (|1 ) = 1, (|2 ) = 2 and (|3 ) = 0 and also (1 ) = (2 ) =
1
(3 ) = 3. With this information we are required to find (|1 ), which is given by the
1
(|1 ) (1 ) 1 2
formulae: (1 |) = = 3
1 1 1 1 =3
(|1 ) (1 )+ (| 2 ) (2 )+ (| 3 ) (3 ) 1 + +0
3 2 3 3

## (b) In a population of ( + 1) individuals, a person, called a progenitor, sends out an email at

random to different individuals, each of whom in turn again forwards the email to other

individuals and so on. That is at each step, each of the recipients of the email forwards it to

of the other individuals at random. Then what is the probability of the email not being

## relayed back to the progenitor even after steps of circulation.

Page 77 of 100
Answer # 1: [10 + 15 =(25) marks]
In a population of ( + 1) individuals a person, called the progenitor sends out an email at
random to different individuals, each of whom in turn again, forwards the email at random
to other individuals and so on. That is at every step, each of the recipients of the email
forwards it to of the other individuals at random. We are interested in finding the
probability of the email not relayed back to the progenitor even after steps of circulation.
The number of possible recipients for the progenitor is . The number of possible choices

each one of these recipients has after the first step of circulation is again , and thus the

number of possible ways this first stage recipients can forward the email equals

= . Therefore after the second step of circulation the total number of possible
1+
configurations equals . Now there are = 2 many second stage recipients each
2
one of whom can forward the email to possible recipients yielding a possible many
1++ 2
third stage recipients after 3 steps of circulation and many total possible
configuration. Proceeding in this manner one can see that after the email has been circulated
through 1 steps, at the step of circulation the number of senders equals 1 who can
1
collectively make many choices. Thus the total number of possible configurations
1
1++ 2 ++ 1
after the email has been circulated through steps equals = 1 . Now
the email does not come back does not come back to the progenitor in any of these steps, if
and only if none of, starting from the recipients of the progenitor after the first step of
circulation to the 1 recipients after 1 steps of circulation, send to the progenitor, or in
other words each of these recipients/senders at every step makes a choice of forwarding the
email to individuals from a total of 1 instead of the original . Thus the number of
ways the email can get forwarded the second, third, .., step avoiding the progenitor
1
+ 2 + 1 1
equals 1 = 1

1 = 1

1 The number of choices for the

progenitor remains . Thus the number of possible outcomes favorable to the event of

1

1
interest equals 1

1
, yielding the probability of interest as
=

( 1)! !()! 1 1 1
!(1)! !
=
= 1

Page 78 of 100
Question # 2: [10 + 15 =(25) marks
1
(a) Suppose is a random variable and its probability mass function is ( = 1) = 2,
1 1
( = 2) = 3 and ( = 3) = 6. Given this information first find () and on the same

## Answer # 2: [10 + 15 =(25) marks]

1 1 1
Given ( = 1) = 2, ( = 2) = 3 and ( = 3) = 6 the cdf is given below:

0 < 1
1
1 2
2
() = 5 . Utilizing this we draw the pmf and cdf as give:
2 3
6
1 3

1.2
1
0.8
0.6 f(x)
0.4 F(x)
0.2
0
1 2 3

## Answer # 2: [10 + 15 =(25) marks]

(b) A cubic die is thrown number of time, and is the total number of spots shown. Find

( ), ( ). Also state Chebyshevs inequality and find an such that 3.5 >

0.1 0.1.

## Answer # 2: [10 + 15 =(25) marks]

Let = =1 , where is the number of spots on the throw. One should remember
that the random variables, , are independent and identically distributed with ( = ) =
1 1
6
, where = 1,2,3,4,5,6. Hence ( ) = =1 ( = ) = 6 (1 + 2 + 3 + 4 + 5 + 6) =

Page 79 of 100
7 1 7 2 7 2 7 2 7 2 7 2 7 2 35
2
, ( ) = 6 1 2 + 2 2 + 3 2 + 4 2 + 5 2 + 6 2 = 12 .
7 35
Thus ( ) = 2
and ( ) = 12
from where Chebychevs inequality is given by
1 ( )
{| ( )| 1 ( )} 2 , i.e., {| ( )| 2 } . This equivalent
1 22

## form can be derived very simply

Now we are given 3.5 > 0.1 0.1 (1)
( ) 35 1 1750
i.e., (| 3.5| > 0.1) (0.1)2
= 12
0.01 2 = 6
(2)
1750
Comparing equation (1) and (2) we have 6
0.1, i.e., 2920

## Question # 3: [10 + 15 =(25) marks

(a) Consider the switching network shown in the figure below. It is equally likely that a
switch will or will not work. Find the probability that a closed path will exist between
terminals A and B.
S1

A B

S3

S2 S4

## Answer # 3: [10 + 15 =(25) marks]

1
We are given the probabilities of 1 , 2 , 3 , 4 as (1 ) = (2 ) = (3 ) = (4 ) = 2.

1
Which means that (1 ) = (2 ) = (3 ) = (4 ) = 2.

Now for a closed path to exist between A and B we should have the following:

( ) = 1 ( )

Now we need to know how many such paths are there such that no connection exits between

## A and B. They are:

1 1 1
1 and 2 are open, while 3 and 4 are closed such that the probability is 2 2 2
1 1
2
= 16

Page 80 of 100
1 1 1 1 1
1 , 2 and 3 are open, while 4 is closed such that the probability is 2 2 2 2 = 16
1 1 1 1 1
1 , 2 and 4 are open, while 3 is closed such that the probability is 2 2 2 2 = 16
1 1 1 1 1
1 , 3 and 4 are open, while 2 is closed such that the probability is 2 2 2 2 = 16
1 1 1 1 1
1 , 2 , 3 and 4 are open such that the probability is 2 2 2 2 = 16

1 1 1
Hence the total probability that there is no connection between A and B is 16
+ 16 + 16 +

1 1 5
16
+ 16 = 16 . We simply add are these paths are mutually exclusive

5 11
( ) = 1 16 = 16

1
(b) The random variable with probability density function () = (1)!
, > 0 and

= 1,2, ., is called an Erlang distribution with and as the two parameters. Calculate
both () and () and sketch both the pdf and cdf for = 2 and = 3.

## Answer # 3: [10 + 15 =(25) marks]

1
is the random variable for which the probability density function is given by () = (1)!

which is the Erlang distribution. One should remember that +, = 1,2, .. and > 0.

() = 0 ()

= 0 (1)!

= (1)! 0

Now you can solve this problem using either by parts integration, which is lengthy as we use basic

By parts

() = (1)! 0

1
= (1)! + 0 1
0

Page 81 of 100
1 1 (1) 2
= (1)! + 0
0 2 0 2

1 1 (1) 2 !
= (1)!
0 2 0 3 0 +1 0

!
= (1)! =
+1

## Using gamma function

We know that () = 0 1 = 0 1 and hence using this we have

(+1) !
() = (1)! 0 = (1)! +1
= (1)! =
+1

() = 0 { ()}2 ()

= (1)! 0 +1 {()}2

(+1)! 2 (+1) 2
= (1)! 2 = =
+2 2 2 2

Now when = 2 and = 3, the density function is of the form () = 4 2 2 , while its

distribution function is () = 0 4 2 2

Let us calculate the distribution () = 0 4 2 2 . Though conceptually to draw the graph very

sketchily we need not derive it but still we want to draw the graph nicely/neatly and legibly. First let

## us derive the following

1
() = 0 (1)!

= (1)! 0 1

1 1 2 (1)(2) (1)!
= (1)! 1 3
0 2 0 3 0 0

1 1 2 (1)(2) (1)!
= (1)! 1 3 . +0+0+
2 3

(1)!
.+

Page 82 of 100
1 1 2 (1)(2)
= 1 (1)! 1 + (1)! + (1)! 3 +
2 3

(1)!
. + (1)!

2 2 1 1
= 1 1 + + + .+ (1)!

1! 2!

1 ( )
= 1 =0 !

## With = 2 and = 3, we have

(2) 4 2
() = 1 2 2=0 !
= 1 2 1 + 2 + 2!

f(x)
F(x)

0.1 0.3 0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 3.1 3.3 3.5 3.7 3.9 4.1 4.3 4.5 4.7 4.9

## ++++++++++++++++ END OF QUESTION PAPER ++++++++++++++++

Page 83 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
2nd QUIZ EXAMINATION [2014-2015, SEMESTER I]

## Question # 1: [15 + 10 =(25) marks]

(a) The data given relates to the per cent shrinkage in nylon fibre as a result of temperature tests at

125C and 150C. Test whether the shrinkage at 150C is greater than that at 125C and assume

shrinkage is normally distributed in each of the two populations pertaining to the two different

## temperatures. Consider = 0.10.

125C

3.48 3.58 3.54 3.61 3.57 3.65 3.49 3.61 3.67 3.62 3.69 3.50

150C

3.88 3.72 3.96 4.01 3.59 3.81 3.45 4.06 3.65 4.08

(a) Consider and are the random variables which denote the shrinkage for 125 and 150,

## respectively hence 125,12 = 3.58417 and 150,10 = 3.82100. Moreover ,125,12

2
= 0.004954 and

2
,150,10 = 0.045921

## Now our hypothesis is as stated below

0 : = 0 vs 0 : > 0

0 : = 0 vs 0 : > 0

Where as one can easily understand that = () and = () are the actual or population

## Thus one would reject 0 is we have

2 2 ,150 ,10
150,10 125,12 > + 12+102,0.05 ,125
12
,12
+ 10
, else accept the hypothesis 0 .

## Moreover under 0 we must remember = 0. Thus:

Page 84 of 100
150,10 125,12 = 3.82100 3.58417 = 0.2368, = 0 (under 0 ), 20,0.05 = 1.725,

## 2 ,125 ,12 2 ,150 ,10 0.004954 0.045921

+ = + = 0.0707. Using these value we have
12 10 12 10

## 0.2368 > 0.1220 which is true, hence we reject 0

(b) A manufacturer of bars of steel claims that the average breaking strength of his product is not less

than 52. The breaking strength of each bar in a sample of 15 is noted as given as: 51.3 52.1 50.3

50.2 51.9 50.0 52.5 50.7 49.3 49.3 48.3 48.1 48.2 47.8 47.5. Given this

data we are to examine if the manufacturers claim is supported by these data. Assume = 0.05.

(b) As per the information provided in the problem the hypothesis will be framed keeping in mind that

we will always try to disapprove the statement made by the person, hence we always try to reject 0 ,

which results in the following formulation, i.e., 0 : = 0 52. If that is the case, then we should

## have the following hypothesis to test, which is:

0 : = 0 52 vs : = < 52

sn
i.e., if the following, X n < 0 tn 1, , is true then we reject 0
n
1
Now for the sample (here the sample size is 15) given we can easily calculate that = =1 =

1
49.8333 and 2 = (1) =1( )2 = 2.7124. For the problem consider = 0.05, i.e.,

(1 ) = 0.95. Hence from the table we have 1, = 14,0.05 = 1.761. Hence the RHS is 0

1.6469
1, = 52 1.761 = 51.2249. Now 49.833 is always less 51.2249, hence we
14

## Question # 2: [15 + 10 =(25) marks]

(a) Two experimenters, Shruti Mittal and Parva Goyal, take repeated measurements of the length of a

copper wire. On the basis of the data obtained by them, which are given below, test whether Shrutis

measurement is more accurate (think what accuracy means here) than Parvas. Consider =0.05.

Page 85 of 100
(in mm) (in mm)

## 12.78 12.29 12.22

(b) Given the data let us denote and as the random variables which denote the distribution of

## measurement made by Shruti and Parva, such that ~( , 2 ) and ~( , 2 ).

More we also know that: (i) = 10, = 10 = 12.2850, = 0.333042 and (ii) = 8,

= 8 = 12.2675, = 0.178786

To test the hypothesis or statement that Shrutis measurement is more accurate than Parvas and

## = 0.05 our hypothesis is as follows:

0 : 02 = 0: 2 2 vs 0 : 02 0: 2 2

2
The rule is reject 0 if 2 1, 1,1 is true.

Now we have

2 1 1 2 0.110917
10 = 0.110917, 82 = 0.031964, 9,7,10.05 = = = 0.3040, thus 2
= =
7,9,0.05 3.29 0.031964

3.470019 0.3040 is FALSE, hence we cannot reject the null hypothesis that 0 : 02 = 0: 2

## respect to Parva s measurements/readings.

1 1
Remember: 9,7,10.05 = as ,,1 =
7,9,0.05 , ,

(b) Ashish Jindal is testing the tensile strength of a particular alloy. The sample average is 13.71,

while the standard error is 3.55. What should be the minimum sample size Ashish should collect

such that the confidence interval within which the population mean would lie is 3.14? As Ashish was

Page 86 of 100
finishing his task, Ankur Jhavery comes running and says that the value 3.55 if not the standard

error but the standard deviation. In that case what is the new sample size, considering all other

information is correct. How many extra observations did Ashish already collect or need to collect,

## based on Ankurs information? Consider =0.05.

(b) Case I

1 1 1
1 1 + , i.e., 2 1 1, is the length of confidence
1 1, 2 1 1 1, 2 1 2

1
interval. Now from the information we have 1 = 13.71, 1 = 3.55, hence 2 1 1,0.025 =
1

1 1,0.025 3.14
3.14, i.e., = = 0.44225
1 3.552

## Now check the distribution tables and from that we have:

1 1,0.025 2.120
1 1 = 16, 1 = 17, 16,0.025 = 2.120, i.e., = = 0.5142
1 17

1 1,0.025 2.110
1 1 = 17, 1 = 18, 17,0.025 = 2.110, i.e., = = 0.4973
1 18

1 1,0.025 2.101
1 1 = 18, 1 = 19, 18,0.025 = 2.101, i.e., = = 0.4820
1 19

1 1,0.025 2.093
1 1 = 19, 1 = 20, 19,0.025 = 2.093, i.e., = = 0.4680
1 20

,. .
= , = , ,. = . , i.e., = = .

,. .
= , = , ,. = . , i.e., = = .

1 1,0.025 2.074
1 1 = 22, 1 = 23, 22,0.025 = 2.074, i.e., = = 0.4325
1 23

The value of 1 which satisfies this is between 21 and 22, and we will consider 1 = 22.

Case II

2 2 + , i.e., 2 is the length of confidence interval. Now
2 2 2 2 2 2

from the information given we have 1 = 13.71, = 3.55, hence 2 = 3.14, = 1.96,
2 2 2

i.e., 2 = 19.64 20

## Hence the extra observations collected is 2

Page 87 of 100
DEPARTMENT OF INDUSTRIAL & MANAGEMENT ENGINEERING
MBA651: QUANTITATIVE METHODS FOR DECISION MAKING
FINAL EXAMINATION [2014-2015, SEMESTER I]

## NOTE THE FOLLOWING

1) Total time for this paper (which consists of 3 pages) is 180 minutes (3 hours).
2) Total marks is 100 and individual marks are mentioned alongside each question.
3) Total number of questions is 4 (with sub-parts) and you are required to answer ALL of
them.
4) You are ONLY allowed to use the calculator and the statistical tables.
5) Marks will be there for correct formulation of the problem, rather than only the final
answer. Hence step wise marking is also there.
6) Draw diagrams accurately/neatly/legibly, and use the concept of set theory where ever
necessary.

## Answer # 1 (a) [10 marks]

(a) Romeo and Juliet have a date at a given time, and each will arrive at the meeting place with a
delay between 0 and 1 hour, with all pairs of delays being equally likely. The first to arrive will wait
for 15 minutes and will leave if the other has not yet arrived. What is the probability that they will
meet?

Let us use as sample space the unit square, whose elements are the possible pairs of delays for the two

of them. Our interpretation of equally likely pairs of delays is to let the probability of a subset of be

equal to its area. This probability law satisfies the three probability axioms. The event that Romeo and

Juliet will meet is the shaded region as shown in the figure below, and its probability is calculated to
1 3 3 1 3 3 9 7
be 1 = 1 = .
2 4 4 2 4 4 16 16

Page 88 of 100

## Answer # 1 (b) [15 marks]

Suppose you are on a game show, and you are given the choice of three doors: Behind one
door is a car; behind the others, goats. You pick a door, say # 1 [but the door is not opened],
and the host, who knows what is behind the doors, opens another door, say # 3, which has a
goat. He/She then says to you, "Do you want to pick door # 2?" Is it to your advantage to

## Total Stay Switch

Probability
1 1 1 1
2
Door # 2 3
2 = 6 Car Goat

1 1 1 1
Door # 1 2
Door # 3 3
2 = 6 Car Goat

1
3

1 1 1
3
Door # 2 Door # 3 3
1=3 Goat Car

1 1 1
3
Door # 3 Door # 2 3
1=3 Goat Car

Tree showing the probability of every possible outcome if the player initially picks Door # 1.

Consider the discrete random variables, all taking values in the set of door numbers as

{1,2,3}.

Page 89 of 100
Let

## H: Denotes the door opened by the host

Then, if the player initially selects Door # 1, and the host opens Door # 3, then the

## probability of winning by switching is given by

1
(=3|=2,=1)(=2|=1) 1 2
3
( = 2| = 3, = 1) = 3 = 1 1 1 1 =3
=1 (=3|=,=1)(=|=1) +1 +0
2 3 3 3

## Answer # 2 (a) [10 marks]

(a) Priyanka Chopra is a student in the Quantitative Techniques for Decision Making course,
which is compulsory for MBA students at IIT Kanpur. She has approached you with the
following problem which she is unable to solve. Help her to draw (accurately, neatly and
legibly) both () and () of the function. Remember () is given below.
0 < 3
0.3 3 < 0
() =
0.8 0 < 4
1 4
Utilizing the distribution function we have

1.0

0.8

()
Left point discontinuous

0.3

-3 0 +4

Page 90 of 100
Hence () is
()

0.5

0.3
0.2

-3 0 +4

## Answer # 2 (b) [15 marks]

A random variable (r.v) X is said to have a Weibull distribution with parameters and ( > 0 and

> 0) if the pdf of is given by (; , ) = 1 , > 0. Then find (i)

## (; , ); (ii) ; (iii) and (iv) . Draw the graphs of (; , ) and, (; , ) when = 1.

drew has already been studied and discussed in class in details].

It is given that the pdf is (; , ) = 1 , where > 0, hence our first task is to

x
show that f X (x; , )dx = x 1 exp dx = 1 .
0 0

x x 1
Put = y , which means that dx = dy . Thus we have:

(
f X ( x; , )dx = e y dy = e y )

0 = 1 , which proves that it is a legitimate pdf.
0 0

## (i) Now to find the cdf, we consider:

x
1
x x
FX (x; , ) = f X (x; , )dx = x exp dx
0 0

Page 91 of 100

x x 1
Again using the same substitution where = y , which means that dx = dy , we have

x
x
( )

FX ( x; , ) = e y
= 1 exp

0

## (ii) To calculate the mean, i.e., = , we have

x
x
E ( X ) = xf X (x; , )dx = x x 1 exp dx = x exp dx
0 0
0

x x 1
Substitute = y , which means that dx = dy . Thus the expected value is given by

1
1
E ( X ) = y e y dy = 1 + , where we use the concept of gamma function which is
0

1
( z ) = e t t z 1dz . Thus = 1 +
0

## (iii) To calculate the median, i.e., = , we have

e

e x x

FX (e ; , ) = f X (e ; , )dx = x 1 exp
1
0 0

dx = . Substitute = y , which
2

e e e
x 1
( )

y 1 1
means that e = , i.e., 1 e
y

dx = dy . Thus we have: dy = e
= . Which
0
0
2 2

mean e = {log e 2} .
1

## (iv) To calculate the mode, i.e., = , we should first find

df X ( ; , ) d 1

x

=
x exp
dx dx

Thus:

df X ( ; , ) 1 d x x d 1
= x exp + exp x
dx dx dx

Page 92 of 100

x 1 x
= x 1 exp x + ( 1)x exp
2

1
( 1)
Equating this to zero yields: x x 1 + ( 1) = 0 , i.e., o = .

1
(1) 2 2 (;, ) 2 (;, )
Which mean = , provided 2
< 0. First let us find 2
, i.e.,
=

1 1 + ( 1) 2

2
i.e.,

22 + ( 1) 2

2
i.e.,

22 + ( 1) 2 .

2
i.e., (2 2) 21 + ( 1) ( 2) 1

i.e., ( 1) 1 2 ( 2). This is always < 0 for the case

1
(1) 2
when 1 and some similar conditions, thus = is the mode.

x
When = 1, then the pdf is of the form f X ( x; = 1, ) =
1
exp , which is the one

x
parameter exponential distribution we all know where FX ( x; = 1, ) = 1 exp , > 0.

## then the graphs are given below.

Page 93 of 100
1
0.9
0.8
0.7
0.6
0.5 f(x)
0.4 F(x)
fX(x), 0.3
FX(x) 0.2
0.1
0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40

## Answer # 3 (a): [10 mark]

(a) The Police of Kanpur compiles data on robbery and property crimes and publishes the
information for the public to see. A simple random sample of pickpocket offenses yielded the
losses, in INR, shown below. Use the data (given below) to find a 95% confidence interval
for the mean loss, due to pickpocket offenses. The data is as follows: 447, 207, 627, 430, 883,
313, 844, 253, 397, 214, 217, 768, 1064, 26, 587, 833, 277, 805, 653, 549, 649, 554, 570, 223
and 443.

Let us consider normal distribution of data. From the data we have = 0.05 and = 25. We
are required to use the t-distribtion so we note its dof (degree of freedom) as 24 (=25-1). The

confidence interval for is , .
2
1
From the data and the table we have: 25 = 25 25
=1 = 513.32, 24,0.025 = 2.064, 24 =

1
25 { 25 }2 = 262.23, utilizing which we have the lower limit and upper limit
24 =1

## Answer # 3 (b): [15 mark]

(b) A manufacturer of bars of steel claims that the average breaking strength of his product is

not less than 52. The breaking strength of each bar in a sample of 15 is noted as given as:

Page 94 of 100
51.3, 52.1, 50.3, 50.2, 51.9, 50.0, 52.5, 50.7, 49.3, 49.3, 48.3, 48.1, 48.2, 47.8 and 47.5. We

are to examine if the manufacturers claim is supported by these data. Consider here = 5%.

As per the information provided in the problem the hypothesis will be framed keeping in mind that we

will always try to disapprove the statement made by the person, hence we always try to reject 0 ,

which results in the following formulation, i.e., 0 : = 0 52. If that is the case, then we should

## have the following hypothesis to test, which is:

0 : = 0 52 vs : = < 52

sn
i.e., if the following, X n < 0 tn 1, , is true then we reject 0
n
1
Now for the sample (here the sample size is 15) given we can easily calculate that = =1 =

1
49.8333 and 2 = (1) =1( )2 = 2.7124. For the problem consider = 0.05, i.e.,

(1 ) = 0.95. Hence from the table we have 1, = 14,0.05 = 1.761. Hence the RHS is 0

1.6469
1, = 52 1.761 = 51.2249. Now 49.833 is always less 51.2249, hence we
14

## Answers # 4 (a): [10 marks]

(a) A manufacturer produces three types of plastic fixtures. The time required for molding,
trimming, and packaging are given below and they are in hours per dozen fixtures. How
many fixtures of each type should be produced to obtain maximum profit?
Process Type A Type B Type C Total time available
Molding 1 2 3 12000
2
Trimming 2 2 1 4600
3 3
Packaging 1 1 1 2400
2 3 2
Profit 11 16 15 ____

Page 95 of 100
Let number of type A, type B and type C be , and respectively, then the profit function
is
11 + 16 + 15
3
s.t: + 2 + 2 12000
2 2
3
+ 3 + 4600
1 1 1
2
+ 3 + 2 2400

, , 0
11 + 16 + 15 + 01 + 02 + 03
3
s.t: + 2 + 2 + 1 = 12000
2 2
3
+ 3 + + 2 = 4600
1 1 1
2
+ 3 + 2 + 3 = 2400

, , , 1 , 2 , 3 0

## Using this we have the solution as shown:

Variables 1 2 3 ()
-11 -16 -15 0 0 0 0
1 1 2 3/2 1 0 0 12000
2 2/3 2/3 1 0 1 0 4600
3 1/3 0 0 1 2400

Variables 1 2 3 ()
-3 0 -3 8 0 0 96000
1 3/4 0 0 6000
2 1/3 0 1/2 -1/3 1 0 600
3 1/3 0 1/4 -1/6 0 1 400

Variables 1 2 3 ()
0 0 -3/4 13/2 0 9 99600
0 1 3/8 0 -3/2 5400
2 0 0 -1/6 1 -1 200

Page 96 of 100
1 0 3/4 -1/2 0 3 1200

Variables 1 2 3 ()
0 0 0 6 3 6 100200
0 1 0 1 -3/2 0 5100
0 0 1 -2/3 4 -4 800
1 0 0 0 -3 6 600

## Maximum value is 11 600 + 16 5100 + 15 800 = 100200 which is as shown in the

last tableau
Slacks can be found from the constraints and they are
3
600 + 2 5100 + 2 800 + 0 = 12000, i.e., 1 = 0 as also shown in the tableau
2 2
3
600 + 3 5100 + 800 + 0 = 4600, i.e., 2 = 0 as also shown in the tableau
1 1 1
2
600 + 3 5100 + 2 800 + 0 = 2400, i.e., 3 = 0 as also shown in the tableau

## Answers # 4 (b): [15 marks]

(b) Greenberg Motors, Inc., manufactures two different electrical motors for sale under contract to
Drexel Corp., a well-known producer of small kitchen appliances. Its model GM3A is found in many
Drexel food processors, and its model GM3B is used in the assembly of blenders. Three times each
year, the procurement officer at Drexel contracts Irwin Greenberg, the founder of Greenberg Motors,
to place a monthly order for each of the coming four months. Drexels demand for motors varies each
month on its own sales forecasts, production capacity, and financial position. Greenberg has just
received the January-April order and must begin their own four-month production plan. The demand
of motors is shown as
Models January February March April
GM3A+GM3B 8800 8700 8500 8600
One should also remember the following for the company as per policy and they are: (i) The
desirability of producing the same number of each motor each month. This simplifies planning and
the scheduling of workers and machines, (ii) The necessity to keep down inventory carrying, or
holding, cost. This suggests producing in each month only what is needed in that month, (iii)
Warehouse limitations that cannot be exceeded without great additional storage costs and (iv) The
companys no-layoff policy, which has been effective in preventing a unionization of the shop. This
suggests a minimum production capacity that should be used each month. Moreover production costs
are currently \$10 per GM3A motor produced and \$6 per GM3B unit. A labor agreement going into

Page 97 of 100
effect on March 1 will raise each figure by 10%, however. Furthermore each GM3A motor held in
stock costs \$0.18/month, and each GM3B has a carrying cost of \$0.13/month. Greenbergs
accountants allow monthly ending inventories as an acceptable approximation to the average
inventory levels during the month. The carrying cost structure is as follows:
Model January February March April
GM3A 800 700 1000 1100
GM3B 1000 1200 1400 1400
Suppose that Greenberg is starting the new four-month production cycle with a change in design
specifications that left no old motors in stock on January 1. Greenberg also want to have on hand an
additional 450 GM3As and 300 GM3Bs at the end of April. Storage area of Greenberg Motors can
hold a maximum of 3,300 motors of either type (they are similar in size) at any one time. Greenberg
has a base employment level of 2.240 labor hrs/month such that capacity is 2,240 hrs/month. In a busy
period, though, the company can bring two skilled former employees on board (they are now retired)
to increase capacity to 2,560 hrs/month. Each GM3A motor produced requires 1.3 hrs of labor, and
each GM3B takes a worker 0.9 hrs to assemble. With this information formulate a LP accordingly,
you are NOT required to solve it.

## Variables for the problem

XA,i = number of model GM3A motor produced in month i, (i=1, 2, 3, 4 for January to April)
XB,i = number of model GM3B motors produced in month i, (i=1, 2, 3, 4 for January to April)
IA,i = level of on-hand inventory for GM3A motors at end of month i, (i=1, 2, 3, 4 for January
to April)
IB,i = level of on-hand inventory for GM3B motors at end of month i, (i=1, 2, 3, 4 for January
to April)

## Objective function which has production costs

Production costs plus the fact that labor agreement would raise it by 10%, would give us the
production cost function as
10XA1+10XA2+11XA3+11XA4+6XB1+6XB2+6.60XB3+6.60XB4 (Eqn 1)

## Objective function which has inventory costs

Considering the fact that inventory carrying costs also come we have the inventory carrying
cost function as
0.18IA1+0.18IA2+0.18IA3+0.18IA4+0.13IB1+0.13IB2+0.13IB3+0.13IB4 (Eqn 2)

Page 98 of 100
Objective function which has both production and inventory costs
Combining (Eqn 1) and (Eqn 2) we have the total cost which is the objective function and it
is shown below

10XA1+10XA2+11XA3+11XA4+6XB1+6XB2+6.60XB3+6.60XB4+0.18IA1+0.18IA2+0.18IA3+0.18
IA4+0.13IB1+0.13IB2+0.13IB3+0.13IB4 (Eqn 3)

## Constraints related to inventory quantities

Inventory constraints set the relationship between closing inventory this month, closing
inventory last month, this months production, and sales this month. Thus:
[Inventory at the end of this month]=[Inventory at the end of this month] + [current months
production]-[sales to Drexel this month] (Eqn 4)
XA1-IA1=800, which is January demand for GM3A
XB1-IB1=1000, which is January demand for GM3B
XA2+IA1-IA2=700, which is February demand for GM3A
XB2+IB1-IB2=1200, which is February demand for GM3B
XA3+IA2-IA3=1000, which is March demand for GM3A
XB3+IB2-IB3=1400, which is March demand for GM3B
XA4+IA3-IA4=1100, which is April demand for GM3A
XB4+IB3-IB4=1400, which is April demand for GM3B
IA4=450, ending inventory for GM3A
IB4=300, ending inventory for GM3B

## Constraints related to inventory space utilization

[Inventory space utilized by motor type A]+[Inventory space utilized by motor type
B][Total space] (Eqn 5)
IA1+IB13300, total combined inventory space utilization for GM3A and GM3B for January
IA2+IB23300, total combined inventory space utilization for GM3A and GM3B for February
IA3+IB33300, total combined inventory space utilization for GM3A and GM3B for March
IA4+IB43300, total combined inventory space utilization for GM3A and GM3B for April

## Constraints related to employment utilization

[Minimum utilization of labor for GM3A and GM3B][Actual utilization of labor for GM3A
and GM3B][Maximum utilization of labor for GM3A and GM3B] (Eqn 6)
Page 99 of 100
1.3XA1+0.9XB12240, Minimum worker hrs/month in January
1.3XA1+0.9XB12560, Maximum worker hrs/month in January
1.3XA2+0.9XB22240, Minimum worker hrs/month in February
1.3XA2+0.9XB22560, Maximum worker hrs/month in February
1.3XA3+0.9XB32240, Minimum worker hrs/month in March
1.3XA3+0.9XB32560, Maximum worker hrs/month in March
1.3XA4+0.9XB42240, Minimum worker hrs/month in April
1.3XA4+0.9XB42560, Maximum worker hrs/month in April

## Constraints related to demand quantities

[Demand for GM3A in one month]+ [Demand for GM3B in one month][Required demand
value in that month] (Eqn 7)
XA1+XB18800
XA2+XB28700
XA3+XB38500
XA4+XB48600

## Utilizing (Eqn 1) to (Eqn 7) we formulate the problem.

++++++++++++++++++++END OF QUESTION PAPER++++++++++++++++++++