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2. Three months ago, the executive board of a company authorized the development
of a new product. If marketed at its current stage of development, the product
has probabilities of 0.50 of returning a large pay-off (Rs. 2, 00,000), 0.30 for a
medium (Rs. 1, 00,000) pay-off, and 0.20 for a small (Rs. 20,000) pay-off. These
pay-offs are net profit after expenses and first-stage development costs. The board
believes that if an additional Rs. 30,000 is spent on second stage development,
reducing each pay-off by Rs. 30,000, and the further development is successful, the
probabilities of the large, medium and small pay-offs will be changed to 0.80, 0.15
and 0.05 respectively. However, the first-stage probabilities will apply if further
development is not successful. The board believes the probability, is 0.60 that
second-stage development will be successful. By tee diagram analysis, determine
whether the board should authorize further development or market the product as
its current stage of development.
4. The Acme Company has four factories that ship products to five warehouses. The
shipping costs, requirements, capacities, are shown in table. Find the initial solution
using vogels approximation method. What is the total cost of the optimal solution?
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Code No: 23MBA NR-R5-R7
5. (a) For the following pay-off matrix, determine the best strategies and the value
of the game:
Y
J K L
X p 60 50 40
q 70 70 40
r 80 60 75
(b) Briefly explain the limitations of game theory.
7. At Dr. Raju’s clinic, patients arrive with an average duration of 12 minutes between
one arrival and next. The average service time (treatment) is assumed to be 28 min.
Simulate the system till 11am assuming to be starting from 9.00 am immediately
after the clinic is opened. Also calculate the average waiting per patient.
8. Explain in brief: Pert, CPM, Crashing, dummy activities and lead time with ref-
erence to project management.
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