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Master of Business Administration - MBA Semester 2

MBA205 - Operations Research

SET - I

Q1. Explain the process of Operation Research.

Process of Operation Research 10

Answer. Process of Operations Research

OR provides an integrated framework for making various business decisions. Therefore, it is of
utmost importance for an organisation to have a clear understanding of this framework for solving
various business problems. The integrated framework

Q2. Write short note on:

a. Concept of Duality in Linear Programming problem. 2.5
b. North-West Corner Method in Transportation problem 2.5
c. Benefits of holding inventory 2.5
d. Economic Order Quantity (EOQ) model 2.5

Answer. Duality in Linear Programming Problems:

For every Linear programming Problem, there is a corresponding unique problem involving the same
data and it also describes the original problem. The original problem is called primal programme and
the corresponding unique problem is

Q3. ABC Pvt. Ltd. is currently using a machine that was purchased for Rs 36,000. The resale value of
the machine is Rs 12,000. Maintenance cost of machine is 3,000 Rs for first year and then increases
by 500 Rs every year. Calculate total and average cost for 12 Years and find the best time to
replace the machine.
Calculation of Total and Average cost 8
Replacement Year 2

Answer. Machine cost is C= 36,000

SET - 2

Q1. a. Define the meaning of assignment problem in operation Research.

b. A Departmental head has four subordinates and four task to be performed. The subordinates
differ in efficiency and the tasks differ in their intrinsic difficulty. His estimate of the times each
man would take to perform each task is given in the following matrix-
 Tasks Subordinates
I II III IV
A 8 26 17 11
B 13 28 4 26
C 38 19 18 15
D 19 26 24 10

How should the tasks be allocated to subordinates to minimize the total man-hours?
A Description of assignment problem
Optimum allocation through Hungarian method

Answer. a) An assignment problem is a special type of transportation problem. In an assignment

problem, the same number of facilities (sources of supply) needs to be allocated to the same number
of jobs (points of destinations) so that the transportation cost is minimized or the profit is

Q2. Define following criteria’s used for decision making under Uncertainty
a. Optimism (maximax or minimin) criterion
b. Pessimism (maximin or minimax) criterion
c. Equal probabilities (Laplace) criterion
d. Coefficient of optimism (Hurwicz) criterion
e. Regret (salvage) criterion

Answer. a) Optimism (maximax or minimin) criterion: Here, the decision maker tries to achieve the
largest possible profit (Maximax) or minimum possible cost (minimin). If the entries in the payoff
matrix are the one which the decision maker wants as large as possible, for example, profits or sales
revenue, he/she selects the alternative that represents the maximum of the maximum

Q3. a. Explain the importance and utility of the replacement model in business organizations.
b. The maintenance cost and re-sale value per year of a machine whose purchase price is Rs. 7000
is given below-

Year 1 2 3 4 5 6 7 8
Maintenance cost (Rs.) 900 1200 1600 2100 2800 3700 4700 5900
Resale value (Rs.) 4000 2000 1200 600 500 400 400 400

Importance and utility of the replacement model Replacement Year

Answer. a) In an organization, replacement problems arise when fixed assets, such as machines,
equipment, and other tools, need to be replaced due to reduced efficiency, failure or breakdown.
Sometimes, replacement takes place when more efficient equipment is available in the market or the
maintenance of the existing equipment is incurring a huge cost on an organization

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