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INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

END-OF-SEMESTER EXAMINATION
SEMESTER 1, 2013/2014 SESSION

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES

Programme : ENM/BBA/BACC/BECS/BIT/BENGG/KOS Level of Study : 3 - 4

Time : 9.00 a.m. 12.00 noon Date : 9/1/2013

Duration : 3 Hr(s) 0 Min(s)

Course Code : MGT 3050/K Section(s) : 1, 2, 5, 6, 7 & 8

Course Title : Decision Science

(This Examination Paper Consists of 10 Printed Pages Including A Cover Page With 3 Parts)

INSTRUCTION(S) TO CANDIDATES:

DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO

Answer all the questions. Write answers of all the questions (including true/false and
multiple choice) in the answer booklet.

Any form of cheating or attempt to cheat is a serious offence which may lead to
dismissal.

APPROVED BY:

BR. YUSOF ISMAIL

Covering Head, Department of Business Administration
Kulliyyah of Economics and Management Sciences

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 PART I. TRUE OR FALSE

Each question carries one mark.

1. In order to transform a minimization LPP problem into a maximization LPP, we use the
following relation Min Z = Max ( Z ) .

2. In simplex method the pivot element cannot be a negative number.

3. One has at least two methods for finding a starting feasible solution in transportation
simplex method.

4. In transportation problem, if the total demand is larger that total supply, in order to
transform the problem into a balanced one, we need to introduce a dummy origin.

5. A LPP may have an infinite number of optimal solutions.

6. A transportation problem can be formulated into a linear programming problem.

7. In graphical method for solving LPP a redundant constraint is a constraint that can be
deleted without affecting the optimal solution.

8. In sensitivity analysis, the range of optimality is defined as the range where a constraint
right hand side value can change without affecting the optimal solution.

9. A LPP has at least one solution.

10. In simplex method non basic variables are always different from zero.

11. In transportation simplex method, before applying MODI method we have to check if
m+n-1= Total demand.

12. In inventory discount model, set up cost is part of the total cost.

13. In inventory, the cycle time is the time between any two orders.

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14. Shura is a decision making tool for Muslims.

15. When we are about to make a decision whose outcome will be known in the future, we
need to perform salat al istikhara.

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 PART II. MULTIPLE CHOICE

Each question carries one mark.

16. Assume that a LPP problem involves the following two constraints

x1 + 2 x 2 + x3 5
2 x1 + 3 x 2 + 2 x3 2

In the standard for of the problem the two constrains will have the forms

A.
x1 + 2 x 2 + x3 s1 + a1 = 5
2 x1 + 3 x 2 + 2 x3 s 2 + a 2 = 2
B.
x1 + 2 x 2 + x3 + s1 = 5
2 x1 + 3 x 2 + 2 x3 + s 2 a 2 = 2
C.
x1 + 2 x 2 + x3 s1 + a1 = 5
2 x1 3 x 2 2 x3 + s 2 = 2
D.
x1 + 2 x 2 + x3 + a1 = 5
2 x1 + 3 x 2 + 2 x3 s 2 + a1 = 2

17. We say that a transportation problem is unbalanced if

A. The number of destinations is larger than the number of origins
B. The number of origins is larger than the number of destinations
C. Total demand is equal to total supply
D. Total supply is different from total demand.

18. In assignment problem if the number of employees is larger than the number of jobs,
one needs to
A. Adjust the time completion of some jobs
B. Add one dummy job with zero completion time for all employees
C. Calculate the difference between the number of employees and the number of
jobs, then add a number of dummy jobs equal to that difference. The completion time of
dummy jobs should be zero for all employees.
D. None of the above.

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19. In transportation simplex method, it is necessary to verify the condition
Total supply=total demand
A. After MODI Method
B. After stepping stone method
C. After calculating the starting solution
D. None of the above.

20. In transportation simplex method, if the optimal solution is reached and one non
occupied cell has a 0 net evaluation, this means that
A. The solution is degenerate
B. The problem has unbounded solution
C. The corresponding cell has to enter the basis.
D. Another optimal solution exists.

21. Assume that the constraints of a LPP problem are as follows

x1 + 2 x 2 + x3 5
2 x1 + 3 x 2 + 2 x3 3
x1 , x 2 0
Which of the following points belongs to the feasible region?
A. (1,1,1)
B. (1,0,2)
C. (1/2,1/3,1/2)
D. None of the above.

22. When appropriate, the optimal solution to a maximization linear programming problem
can be found by graphing the feasible region and
A. finding the profit at every corner point of the feasible region to see which one gives the
highest value.
B. moving the isoprofit lines towards the origin in a parallel fashion until the last point in
the feasible region is encountered.
C. locating the point that is highest on the graph.
D. none of the above.

23. If one changes the contribution rates in the objective function of an LP,
A. the feasible region will change.
B. the slope of the isoprofit or iso-cost line will change.
C. the optimal solution to the LP is sure to no longer be optimal.
D. all of the above

24. Which of the following is a basic assumption of linear programming?

A. The condition of uncertainty exists.
B. Independence exists for the activities.
C. Proportionality exists in the objective function and constraints.
D. Divisibility does not exist, allowing only integer solutions.

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25. The C j - Z j row of a simplex tableau gives
A. the number of units of each basic variable that must be removed from the solution if a
new variable is entered.
B. the gross profit or loss given up by adding one unit of a variable into the solution.
C. the net profit or loss that will result from introducing one unit of the variable indicated
in that column into the solution.
D. the maximal value a variable can take on and still have all the constraints satisfied.

26. The amount by which an objective function coefficient can change before a different set of
values for the decision variables becomes optimal is the
A. optimal solution.
B. dual solution.
C. range of optimality.
D. range of feasibility.

27. Which one of the following is not generally a determinant of the reorder point?
A. rate of demand
B. purchase cost
C. lead time variability
D. stockout risk

28. Which one of the following is implied by an "annual" service level of 95 percent?
A. Approximately 95 percent of demand during lead time will be satisfied.
B. The probability is 95 percent that demand will exceed supply during lead time.
C. The annual service level is usually greater than the cycle service level, and thus the risk
of a stockout during lead time is much smaller than 5 percent.
D. The probability is 95 percent that demand will not exceed supply during lead time.

29. In the single-period inventory model with probabilistic demand,

A. surplus items are allowed to be carried in future inventory.
B. co = cu.
C. probabilities are used to calculate expected losses.
D. All of the alternatives are correct.

30. A solution to a transportation problem that has less than m + n -1 cells with positive
allocations in the transportation tableau is
A. an optimal solution.
B. an initial feasible solution.
C. a minimum-cost solution.
D. a degenerate solution.

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 PART III. PROBLEMS

QUESTION 31

Eleena, the owner of Eleena Enterprise has formulated a linear programming model to
determine the coming week production of two models of its products, Super and Premium.

The linear programming model is as follows.

Max Z = 20x + 30y

Subject to:
4x + 9y 72
10x + 11y 110
17x + 9y 153
x, y 0

You have been appointed by Eleena to determine the number of Super and Premium models
to be produced in the coming week so that the profit is maximized.

a. Determine the optimal solution using corner point, Graphical Method

[9 Marks]

QUESTION 32

a. Solve the following LPP using Simplex method

Max. Z= 120 x 1 + 80 x 2 + 14 x 3
s.t.
4 x 1 + 8x 2 + x 3 200
2x 2 + x 3 300
32 x 1 + 4x 2 +2 x 3 = 400
x1, x2, x3 0

b. Does the problem have an alternative optimal solution? Justify (what is the condition
to have alternative optimal solution).
[16+2=18 Marks]

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QUESTION 33

Consider the following final simplex tableau of a LPP

x1 x2 x3 x4 s1 s2 s3 Sol.
Basis C B 4 6 3 1 0 0 0
x3 3 3/60 0 1 1/2 3/10 0 -6/30 125
s2 0 195/60 0 0 -1/2 -5/10 1 -1 425
x2 6 39/60 1 0 1/2 -1/10 0 12/30 25
Zj 81/20 6 3 9/2 3/10 0 54/30 525
C j -Z j -1/20 0 0 -7/20 -3/10 0 -54/30

The original right hand side values were b 1 =550, b 2 =700 and b 3 =200.

a. Calculate the range of feasibility of b 1 .

b. Calculate the range of optimality of C 3 .
c. If C 3 = 20, does the solution remain optimal? If not which variable has to enter into
column Basis?
[3+4+2=9 Marks]

QUESTION 34

Westside Auto purchases a component used in the manufacturing of automobile generators

directly from the supplier. Westsides generator production operation, which is operated at a
constant rate, will require 1000 components per month throughout the year. Assume that the
ordering costs are $25 per order, the unit cost is $2.50 per component, and annual holding
costs are 20% of the value of the inventory. Westside has 250 working days per year and a
lead time of 5 days.

Answer the following inventory policy questions.

a. What is the EOQ for this component?

b. What is the reorder point?
c. What is the cycle time?
d. What are the total annual holding and ordering costs associated with your recommended
EOQ?
[2+3+3+2=10 Marks]

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QUESTION 35

MS Industries Corporation is producing hard disk drives to be supplied to four distribution

warehouses in Manila, Bangkok, Jakarta and Singapore. It has three manufacturing plants,
located in Hyderabad, Yangon and Shanghai that supply the warehouses. The current
shipping cost per unit (in $) from each plant to the respective warehouses, the demands at
each warehouse, and the production capacity at each manufacturing plants are shown in the
table below;

Manila Bangkok Jakarta Singapore Supply

Hyderabad 4 7 9 11 2000
Yangon 7 5 8 10 2500
Shanghai 9 8 6 9 2200
Demand 1000 2000 2000 1200

The company has appointed you to plan the most economical shipping cost from each
manufacturing plants to the respective warehouses.

a. Using the North West Corner Rule, find the initial solution to this problem.
b. Starting with the initial solution obtained by north-west corner rule in (a), use MODI
(Modified Distribution) and Stepping Stone Method to find the optimal solution. Write
down the optimal solution and minimum cost.

[2+15= 17 Marks]

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QUESTION 36

Mael Consultancy has secured four consultancy jobs from MRT Holdings. The jobs are
Corporate Service, Business Planning, Financial Analysis, and Marketing Planning. The firm
has three lead consultants to lead the job: they are Arman, Bradly, and Cindy. The following
table shows the completion time (in weeks) to complete each job by the respective lead
consultant.

Consultancy Jobs
Consultant
Corporate Business Financial Marketing
Arman 9 5 4 4
Bradly 12 6 3 5
Cindy 11 6 5 7

a. Using Hungarian Method, find the optimal assignment and the total time to complete
the jobs.
b. Which consultancy job should be outsourced?
[6+1=7 Marks]

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