INDIAN INSTITUTE OF MANAGEMENT CALCUTTA

PGP-I: TERM II, 2018-19

Operations Research, End-Term Examination

Name:____________________________________ Roll /Reg No_________

Instructions
• Exam duration: 2 hours
• Closed book, closed notes.
• State your assumptions clearly (whenever required).
• Maximum marks = 25. Number of problems = 12.

• Answer in the space provided in the question paper.

• Use blank pages/extra rough sheets or space provided after each question for your derivation/rough work
in each Part. Derivations for one Part shown in the other Part will not be checked. Detailed workouts will
be seen only in case of discrepancy of answers or against a review requested by the participant.
• Marks for each question/part are indicated in parenthesis or in appropriate places.
• Use of laptops, class notes is not allowed, however use of calculator is permitted.

C1 C2 C3 C4 C5 C6 C7 DQ1 DQ2 DQ3 DQ4 DQ5 Total

Maximum Marks 1 1 1 1 1 1 1 3 3 6 3.5 2.5 25

Marks Obtained

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1 Multiple Choice Questions (1 × 7 = 7 marks)
Multiple Choice1. Analytic hierarchy process (AHP)
(a) computes the criteria weights based on pairwise comparisons of criteria.
(b) provides a mechanism for structuring large and complex decision trees.
(c) is simpler than the goal programming.
(d) is a multi-attribute utility theory approach whereas the goal programming is not.

Multiple Choice2. The relationship between stages of a dynamic programming problem is called
(a) state.
(b) stage.
(c) value iteration.
(d) transition.
(e) none of the above.

Multiple Choice3. Which of the following is one of the assumptions of PERT?

(a) Total project completion time follows a normal probability distribution.
(b) Activity times are dependent and correlated.
(c) Project completion time follows a t-distribution.
(d) Activity times are known with certainty.
(e) All of the above are assumptions of PERT.

Multiple Choice4. Which of the following, if any, may not be one of the questions answered by PERT
(a) When will the entire project be completed?
(b) What is the probability that the project will be completed by a specic date?
(c) What are the critical activities in the project?
(d) none of the above
(e) (a), (b) and (c)

Multiple Choice5. Pairwise comparisons of alternatives in AHP

(a) are performed for all possible pairs of alternatives with respect to only the most important criterion.
(b) produce pairwise comparison matrices, whose corresponding entries across the main diagonal are reciprocals
and whose main diagonal entries consist of zeros.
(c) produce pairwise comparison matrices, which are square matrices with the number of rows (or columns)
being the same as the number of criteria.
(d) are typically based on a scale from 1/9 to 9 where 1 represents the equal preference between two alternatives.

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Multiple Choice6. If a project is to be crashed at minimum possible additional cost, then the rst activity
to be crashed must be
(a) on the critical path.
(b) the one with shortest activity time.
(c) the one with the longest activity time.
(d) the one with the lowest cost.

Multiple Choice7. Three decision criteria (or factors) are considered for a decision process. It is desired to
have Criterion 1 (F1 ) weighted as 6 times the Criterion 2 (F2 ) weight. F2 should be 3 times the Criterion 3 (F3 )
weight. What importance of priorities (weights) should be used for a multi-criteria evaluation (decision making)
process? It can be assumed that the preferences of criteria are proportional. Here, W (F1 ) means the priority of
Criterion 1.
(a) W(F1 ) = 0.6, W(F2 ) = 0.3, W(F3 ) = 0.1.
(b) W(F1 ) = 18/22, W(F2 ) = 3/22. W(F3 ) = 1/22.
(c) W(F1 ) = 1/22, W(F2 ) = 18/22, W(F3 ) = 3/22.
(d) W(F1 ) = 3/22, W(F2 ) = 1/22, W(F3 ) = 18/22.
(e) None of the above.

2 Descriptive Questions (3 + 3 + 6 + 3.5 + 2.5 = 18 Marks)

Question1. A retailer (she) is engaged in purchasing and then further selling identical products. She operates
from a warehouse that can hold 500 products. At the beginning of each month, she takes the following two
decision:
(a) how many quantities to purchase?
(b) how many quantities to sell?
The product purchasing cost and the product selling price are provided below:

Table 1: Production plan

Time(in months) Purchase Costs (in Rupees) Selling Price (in Rupees)
1 25 30
2 28 27
3 24 26
4 25 27

To determine a production plan for the retailer, formulate a dynamic programming problem which maximizes
the total prot cost over a 4-month period. Clearly write down the stage, state, action/decision, transition
relation and value iteration function? [0.5 + 0.5 + 0.5 + 0.5 + 1 = 3 Marks]

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ANSWER Q1

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Question2. A small rm buys a new production machinery costing 12000 rupees. In order to decrease main-
tenance costs, it is possible to sell the machinery second-hand and buy a new one. The maintenance costs and
possible gains derived from selling the machinery second-hand are given below (for the next 5 years):

Table 2: A
Age(years) Costs (in 1000 Rupees) Gains(in 1000 Rupees)
0 2 -
1 3 7
2 5 6
3 9 2
4 12 1

To determine a renewal plan for the machinery, formulate a dynamic programming problem which minimizes
the total operation cost over a 5-year period. Clearly write down the stage, state, action/decision, transition
relation and value iteration function? [0.5 + 0.5 + 0.5 + 0.5 + 1 = 3 Marks]

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Question3. Basanti area in Sundarban, West Bengal gets its new power substation to improve its current
electricity situation. The following table gives the activities of the power substation project and other relevant
information:

Table 3: Activity description and precedence relationships

Immediate Time estimates (in weeks)
Activity Name
Predecessor Optimistic Most likely Pessimistic
A - 9 12 15
B A 1 4 7
C A 12 15 48
D B 14 20 26
E B 4 7 16
F B 4 7 16
G D,E 5 8 11
H C 2 8 14
I F,G,H 9 12 15
J I 1 4 7

(a) Find the expected time, standard deviation and variance for each activity.
(b) What is the expected time of completion and variance of the project?
(c) What is the probability of completing the project in 56 weeks?
(d) What is the probability of starting the activity I by the beginning of 41st week?
[1 + 1 + 1 + 1 + 2 = 6 Marks]

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ANSWER Q3

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ANSWER Q3

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ANSWER Q3

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Question4. DLF builds and operates shopping mall around India. The rm has identied three potential
sites around Kolkata for its latest project: Newtown, Esplanade, and Saltlake. The company has identied four
primary criteria on which it will compare all the sites.
• C1: the customer market base (including overall market size and population at dierent age levels);
• C2: income level;
• C3: infrastructure (including utilities and roads); and
• C4: transportation (i.e., proximity to interstate highways for supplier deliveries and customer access).
The overall objective of DLF is to select the best site. Use the following rating scale for doing the pairwise
comparison (Compared to the second alternative, the rst alternative is):

Table 4: Rating scale (relative importance) for pairwise comparison

Importance Level Numerical Rating Scale
Equally preferred 1
Equally to moderately preferred 2
Moderately preferred 3
Moderately to strongly preferred 4
Strongly preferred 5
Strongly to very strongly preferred 6
Very strongly preferred 7
Very strongly to extremely preferred 8
Extremely preferred 9

To determine the best site, DLF made the following judgments with regard to this criterion:

Table 5: Judgment values for the pairwise comparison

C1 C2 C3 C4
C1 Moderately Moderately to strongly
preferred preferred
C2 Strongly Extremely Very strongly preferred
preferred preferred
C3 Equally to moderately
preferred
C4

Also, DLF made the following judgments with regard to Criterion 1 (customer market base) and Criterion 2
(income level) :

Table 6: Judgment values for Criterion 1 (customer market base)

C1 (customer market base) Newtown Esplanade Saltlake
Newtown Moderately Equally to moderately
preferred preferred
Esplanade
Saltlake Strongly
preferred

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 Table 7: Judgment values for Criterion 2 (income level)
C2 (income level) Newtown Esplanade Saltlake
Newtown Strongly to very strongly
preferred
Esplanade
Saltlake Moderately Extremely preferred
preferred

(a) Determine the normalized matrix and the priority vector for the decision criteria and ll the following table.
[1.5 Mark]

Table 8: Normalized matrix

C1 C2 C3 C4 Priority

C1

C2

C3

C4

(b) Determine the priorities for each site using Criterion 1 (customer market base) and Criterion 2 (income level)
and ll the following table: [1 Mark]

Table 9: Priorities for each site using all criteria

C1 C2 C3 C4

Newtown 0.179 0.1561

Esplanade 0.6850 0.6196

Saltlake 0.1360 0.1360

(c) Determine the overall priority for each site and recommend the best site. [1 Mark]

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Question5. The following table gives the activities in a construction project and other relevant information:

Table 10: Activity description and precedence relationships

Immediate Normal estimates Crash estimates
Activity Name
Predeces- Time (weeks) Cost (lakhs) Time (weeks) Cost (lakhs)
A sor - 12 1 9 2.5
B A 4 0.15 3 0.55
C A 20 - 20 -
D B 20 5 14 6.5
E B 8 0.1 4 0.3
F B 8 0.1 4 0.3
G D,E 8 0.5 4 1
H C 8 0.4 5 1
I F,G,H 12 3 9 4

The project manager wants to expedite the project and hence, investigate how much extra it would cost to
reduce the expected project duration down to 54 weeks. What is the least expensive way of attempting to meet
the target completion time (54 weeks)? [1 + 1.5 = 2.5 marks]

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SPACE FOR ROUGH WORK

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SPACE FOR ROUGH WORK

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SPACE FOR ROUGH WORK

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