Numerical Problems for the Practice

© Lal Prasad Aryal

Unit -3: Product and Service Design

Waiting Line Theory
Problem 1
The manager of a grocery store in the retirement community of Sunnyville is interested in providing
good service to the senior citizens who shop in her store. Currently, the store has a separate checkout
counter for senior citizens. On average, 30 senior citizens per hour arrive at the counter, according the
Poisson distribution, and are served at an average rate of 35 customers per hour, with exponential
service times. Find the following operating characteristics:

a. Probability of zero customers in the system.

b. Average utilization of the checkout clerk.

c. Average number of customers in the system.

d. Average number of customers in line.

e. Average time spent in the system.

f. Average waiting time in line.

[Ans: a. = 0.1429, b. = 0.8571, c. = 6, d. = 5.1429, e. = 0.20, and f. = 0.1714]

Problem 2
Assume a drive-up window at a fast-food restaurant. Customers arrive at the rate of 25 per hour. The
employee can serve one customer every two minutes. Assume Poisson arrival and exponential service
rates.

Determine:

i. What is the average utilization of the employee?

ii. What is the average number of customers in line?

iii. What is the average number of customers in the system?

iv. What is the average waiting time in line?

[Ans: i. = 49.8, ii. = 4.16  4 customers, iii. = 5 customers, and iv. = 0.16 hours]
Problem 3
What are the characteristics of queuing system? Students arrive at the Administrative Services Office at
an average of one every 15 minutes, and their requests take on average 10 minutes to be processed.
The service counter is staffed by only one clerk, Mr. Ramesh Karki, who works eight hour per day.
Assume Poisson Exponential service times.

i. What percentage of time is Ramesh idle?

ii. What is the probability that an arriving student will find at least one other student waiting in line?

[Ans: i. = 0.33 hours or 20 minutes, ii. 0.67 hours or 40 minutes]

Problem 4
At a certain Bank, customers arrive in a Poisson fashion with an average time of 5 minutes between
arrivals. The interval between services at the Bank follows exponential pattern and the mean time for
the purpose comes to 4 minutes. In the light of above information determine:

i. The expected number of customers in the systems

ii. The expected number of customers in the queue.

iii. The time spent on average by a customer in the system

iv. The proportion of time the system remains idle.

v. The probability at least one customer in the system.

[Ans: i. = 4 customers, ii. = 3.2 customers, iii. = 0.3 hours or 18 minutes,

iv. = 0.2 hours or 12 minutes, and v. = 0.8 hours or 48 minutes]

Problem 5
Customers come to client service desk at an average of one every 12 minutes and their requests take an
average of 8 minutes to be processed. Client service desk is staffed by only one employee, who works
eight hours in a day. Assume Poisson arrival and Exponential service pattern, find out the following;

i. Average number waiting in line

ii. Utilization of client service desk

iii. Average time waiting in line

iv. Probability that there are at least 2 customers waiting in line when a customer arrives

[Ans: i. = 1.3 customers, ii. = 0.67 hours or 40 minutes, iii. = 0.26 hours or 16 minutes and iv. = 0.45
hours or 27 minutes]
 Unit-5 Linear Programming Problems

A. Simplex Table Method of LPP

Problem – 1: Solve the linear programming using simplex method.
i. Maximize Z = 5X1 + 3X2 ii. Maximize Z = 10X1 + 5X2
Subject to Subject to
5X1 + 3X2 ≤ 30 4X1 + 5X2 ≤ 100
X1 + 2X2 ≤ 18 5X1 + 2X2 ≤ 125
and X1, X2 ≥ 0 and X1, X2 ≥ 0
[Ans. x1 = 25, x2 = 0, Max (Z) = 250]
[Ans. x1 = 6, x2 = 0, S2 = 12 Max (Z) = 30]
iii Maximize Z = X1 + X2 + 3X3 iv. Maximize Z = 50X1 + 60X2
Subject to Subject to
3X1 + 2X2 + X3 ≤ 3 2X1 + 3X2 ≤ 1,500
2X1 + X2 + 2X3 ≤ 2 3X1 + 2X2 ≤ 1,500
and X1, X2, X3 ≥ 0 X1 ≤ 450
[Ans. x1 = 2, x2 = 1, Max (Z) = 3] and X1, X2, X3 ≥ 0
[Ans. x1 = 300, x2 = 300, Max (Z) = 33,000]

Problem – 2
Bajaj manufacturing company manufactures two different motorcycles Pulsar and Discover whose profit
contributions are Rs. 10 and Rs. 20 respectively. Pulsar requires 5 hours on machine I, 3 hours on machine
II and 2 hours on machine III. The requirement of Discover is 3 hours on machine I, 6 hours on machine II
and 5 hours on machine III. The available capacities for the planning period for machine I, II and III are 30,
36 and 20 hours respectively. Find the optimal product mix.
[Ans: X = 4.8, Y = 3.6, S2 = 9 and Zmax = Rs. 120

Problem – 3
A manufacturer makes two products P1 and P2 using two machines M1 and M2. Profit margin from P1
and P2 is Rs. 2 and Rs. 10 per unit respectively. Product P1 requires 5 hours on machine M1 and no
time on machine M2, product P2 requires 1 hour on machine M1 and 3 hours on machine M2. There are
16 hours of time per day available on machine M1 and 30 hours on M2. What should be the daily
production mix to maximize profit?
[Ans. P1 = 1.2, P2 = 10, Max (Z) = 102.40]

Problem – 4
A dealer wishes to purchase a number of fans and electric iron. He has only Rs. 5,760 to invest and
has space for at most 20 items. A fan cost him Rs. 360 and an electric iron Rs. 240. His expectation is
that he can sell a fan at a profit of Rs. 22 and electric iron at a profit of Rs. 18. Assuming that he can
sell all the items the he can buy, how should he invest his money in order to maximize his profit?
 [Ans. Fans = 8, Irons = 12, Max (Z) = 392]

Problem – 5: Solve the following problems by simplex method

i. Minimize Z = 60x + 80y ii. Minimize Z = 8X1 + 5X2
Subject to Subject to
20x + 30y ≥ 900 20X1 + 12X2 ≥ 200
40x + 30y ≥ 1200 8X1 ≥ 40
where 6X2 ≥ 30
x, y ≥ 0 and X1, X2, ≥ 0
[Ans. x = 15, y = 20, Min (Z) = 2500] [Ans. x1 = 7, x2 = 5, Min (Z) = 81]

Problem – 6
Bajaj Company combines factor A and B to manufacture Pulsar which must weight exactly 150 kgs. Factor
A costs Rs. 2 per unit and B costs Rs. 8 per unit. At least 14 units of B and no more than 20 units of A must
be used. Each unit of A weights 5 kgs and each unit of B weights 10 kgs. How much each type of raw
materials should be used for each unit of Pulsar, if company wishes to minimize cost?
[Ans: A = 2 kgs, , B = 14 kgs, S1 = 18 and Zmax = Rs. 116]

Problem – 7
An animal feed company must produce exactly 200 kg of mixture consisting of ingredients X1 and X2.
The ingredients X1 cost Rs. 3 per kg and X2 cost Rs. 5 per kg. Not more than 80 kg of X1 can be used
and at least 60 kg of X2 must be used. Find minimum cost mixture.
[Ans. x1 = 80kg, x2 = 120kg, Min (Z) = Rs. 840]

B. Assignments Method of LPP

Problem – 1
A project work consists of four major jobs for which four contractors have sub-mitted tenders. The
tender amounts quoted in lakhs of rupees are given in the matrix below:
Job
Contractor
A B c d
1 10 24 30 15
2 16 22 28 12
3 12 20 32 10
4 9 26 34 16

Find the assignment which minimizes the total cost of project [each contract has to be assigned and
only one job.] [Ans: Rs. 71 lakhs]

Problem – 2
Coley’s Machine Shop has four machines on which to do the three jobs. Each job can be assigned to one
and only one machine. The cost of each job on each machine is given in the following table.
Machine
Job
P Q R S
A $18 $24 $29 $35
B 8 13 17 19
C 10 19 15 22

What are the job assignments which will minimize cost?

[Ans: $46]
Problem – 3
A department has four subordinates and four tasks to be performed. The subordinates differ in
efficiency and the tasks differ in their intrinsic difficulty. The estimates of the profit in rupees each
man would earn is given in the effectiveness matrix below. How should the tasks be allocated, one to
each man, so as to maximize the total earnings? [T.U. 2066]
Tasks
1 2 3 4
(Subordinates) 1 5 40 20 5
2 25 35 30 25
3 15 25 20 10
4 15 5 30 15

[Ans: Rs. 110]

Problem – 4
There are four machines on which to do three jobs. The costs of each job on each machine are given in
the following table. [T.U. BBA 2006]
Job/Machine M1 M2 M3 M4
A 18 24 28 32
B 8 13 17 19
C 10 15 19 22

Assign jobs to each machine in order to minimize cost. [Ans. Rs. 50]

Problem – 5
Mrs. Sharma, a marketing manager of XYZ Airways wishes to assign four counters A, B, C and D to
four different sales people W, X, Y and Z. The yield matrix is as follows: [T.U. BBA 2012]
Counters
Sales People
A B C D
W 7 12 37 18
X 25 27 18 25
Y 16 3 17 23
Z 10 25 14 9

Give the assignment for maximizing the sale. [Ans. Rs. 110]

C. Transportation
Problem – 1
A Company provided the following cost information: [T.U. BBA 2008]
Warehouse
Factory Supply
W1 W2 W3 W4
F1 6 4 1 5 14
F2 8 9 2 7 16
F3 4 3 6 2 5
Demand 6 10 15 4 35

Required: Suggest an optimum transportation plan with a view to minimize cost.

[Ans. Rs. 114]
Problem – 2
Solve the following Transportation Problem. The table below shows the details about the unit
transportation cost, supply and demand accordingly. [T.U. BBA 2011]
To
From Supply (Units)
A B C
P 120 100 80 40
Q 80 90 110 65
R 100 140 120 75
Demand (Units) 50 60 70 180

[Ans. Rs. 17,100]

Problem – 3
Solve the following transportation problem using VAM:
Warehouse
Plant Capacity
San Antonio Hot Springs Sloux Falls
Phoenix 5 6 5.4 400
Atlanta 7 4.6 6.6 500
Requirements 200 400 300 900

[Ans. Rs. 4580]

Problem – 4
Find optimal transportation schedule to minimize cost from the following information. [TU 2055]
Stores
Plants Capacities
S1 S2 S3 S4 S5
P1 7 10 5 4 12 45
P2 3 2 0 9 1 70
P3 8 13 11 6 14 125
Order size 10 20 30 80 100 240

[Ans. Rs. 1415]

Problem – 5
The cost per shipment of cooking gas in rupees to three major consuming cities of Nepal from the
three boarder entry points are shown in the table below along with the respective demand in the cities
and the supply capacity of the entry points. Solve the problem to get the minimum cost using Vogel’s
Approximation Method (VAM).

Destinations Entry Points Kathmandu Pokhara Dharan Capacity

Jogbani 5000 6000 3000 250
Birgunj 2000 3000 5000 150
Sunauli 3000 2000 4000 200
Demand 400 250 100

[Ans: Rs. 1750]

Unit-7 Inventory Management

Problem – 1 : The ABC company requires 1000 units per month through the year at constant
rate. If ordering cost are Rs 250 per order, unit cost of the item is Rs 25 and annual inventory
holding cost are charged at 20%, their determine the EOQ for the item. [Ans: EOQ = 1095.45]
Problem – 2 : Alina Bakery uses an average of 20 kg wheat per day. It operates 300 days a year.
Storage and handling costs for the wheat are Rs 5 per year per kg and it costs approximately Rs
150 to order and receive a shipment of wheat. Calculate:
i. EOQ
ii. Total annual cost
iii. Reorder level if desired safety stock 400 kg, lead time 10 days.
[Ans: EOQ = 600 units, Total Annual Cost = Rs. 3,000, and ROL = 600 units]

Problem – 3: Assume you have a product with the following parameters:

❖ Demand = 360
❖ Holding cost per year = $ 1.00 per unit
❖ Order cost = $ 100 per order
❖ Delivery lead time = 15 days
What is the EOQ? Assuming a 300-day work year; how many orders should be processed per
year? What is the expected time between orders? What is the total cost for the inventory
policy? What may be ROL?
[Ans: EOQ = 268 items, Number of orders = 1.34 per year, Expected time between the order =
224 days, Total cost = $268 and ROL = 18 units]

Problem – 4 : For a given item of constant demand rate, the yearly demand is 70,000 units. The
price of the item per units is Rs. 50. The ordering cost is Rs. 200 per order and the inventory
carrying cost is 40% p.a. What is the optimal ordering policy? The vendor offers 1% discount if
1500 units are purchased at a time. Do you accept the discount offer?
[Ans: Discount offer should be accepted]
Problem – 5 : For a given item, there is constant demand rate. Annual demand is 60,000 nos.
the price per item is Rs. 30. The ordering cost is estimated as Rs. 300 per order and inventory
carrying cost is 30% per annum. What should be the optimal ordering quantity? If 3000 units
purchased at time, a discount of 5% on unit price, is offered by the supplier. Do you accept this
offer?
[Ans: EOQ = 2000 units, Discount offer should be accepted]
Problem – 6: We need 1,000 electric drills per year. The ordering cost for these is $100 per
order and the carrying cost is assumed to be 40% of per unit cost. In orders of less than 120,
drills cost $78; for orders of 120 or more, the cost drops to $50 per unit. Should we take
advantage of the quantity discount?
[Ans: Optimum order quantity = 120 units with total and minimum cost of Rs. 52, 033]

Problem –7: A supplier for St. LeRoy Hospital has introduced quantity discounts to encourage
larger order quantities of a special catheter. The price schedule is:

Order Quantity Price per unit

0 to 299 $60.00

300 to 499 $58.80

500 or more $57.00

The hospital estimates that its annual demand for this item is 936 units, its operating cost is
$45.00 per order, and its annual holding cost is 25 percent of the catheter’s unit price. What
quantity of this catheter should the hospital order to minimize total costs? Suppose price for
quantities between 300 and 499 is reduced to $58.00. Should the order quantity change?
[Ans: EOQ = 77 units, TC75 = $57,284, EOQ = 76 units, TC300 = $57,382, EOQ60 = 75 units, TC500 =
$56,999, optimum order quantity = 500 units, Order Quantity change to 300 units]

Problem – 8: ABC company proposes to buy an item for which the annual demand is 2,000
units. The ordering cost is estimated at Rs. 25 per order and the inventory carrying costs are
charged at 30% p.a. The price schedule quoted by the supplier is as below:

Order Quantity Price per Unit (Rs.)

1 to 99 50

100 to 499 45

500 & above 40

  What is the optimal order quantity?
[Ans: Optimum order quantity = 500 units and TC500 = Rs 83,100]

Unit 8: Quality System

Statistical Process Control Charts
Problem –1 : A machine is set to deliver packets of a given weight 10 samples of size 5 each were
recorded. Below are given the relevant data:
S.No. 1 2 3 4 5 6 7 8 9 10
Mean (X) 15 17 15 18 17 14 18 15 17 16
Range (R) 7 7 4 9 8 7 12 4 11 5

Draw mean and Range charts and the comment the results.
– –
[Ans: UCLx = 20.49, LCLx = 11.91, UCLR = 15.614, LCLR = 0,]

Problem – 2: The Watson Electric Company produces incandescent light bulbs. The following data on
the number of lumens for 40-watt light bulbs were collected when the process was in control.
Observations
Samples
1 2 3 4
1 604 612 588 600
2 597 601 607 603
3 581 570 585 592
4 620 605 595 588
5 590 614 608 604

a. Calculate the control limits for an R-chart and a Mean-chart.

b. Since these data were collected, some new employees were hired. A new sample obtained the
following readings: 570, 603, 623, and 583. Is the process still in control?
[Ans: a) UCLR = 51.12, LCLR = 0, UCL–x = 614.53, LCL–x = 581.87; ]

Problem – 3: The Operations manager of the booking services department of Hometown Bank is concerned
about the number of wrong customer account numbers recorded by Hometown personnel. Each week a
random sample 2,500 deposits is taken, and the number of incorrect account numbers is recorded. The results
for the past 12 weeks are shown in the following table. Is the booking process out of statistical control? Use
three-sigma control limits.

Sample Number Wrong Account Numbers Sample Number Wrong Account Numbers
1 15 7 24
2 12 8 7
3 19 9 10
4 2 10 17
5 19 11 15
6 4 12 3
 [Ans: The process is out of control]

Problem – 4: In a production process 15 samples of 100 items each were taken from its daily production
and number of defectives in each sample was recorded as given below in the table.
Sample no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Sample 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
size
No. of 20 15 8 20 8 18 40 16 32 15 21 10 9 12 15
defects

Develop a p-chart for 95% confidence. Based on the plotted date comment on the performance of
production process? [Ans: The process is not under control]

Problem – 5: Following are the figure of defectives in 12 lots each containing 2,000 rubber belts.
425, 430, 216, 341, 225, 322,
402, 216, 264, 126, 409, 193,
Draw control chart for fraction defective and comment on the state of control of the process.

Problem – 6: Valley traffic was reported following death records from the accidents. Comment it with
suitable chart:
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Incidence 7 9 7 4 7 9 7 10 8 11 10 8

Best of Luck
Note: If you got any problem, please feel free to contact me. Thank You
Lal Prasad Aryal
9851124309 (5PM -7PM)
[email protected]