1. Assume that two firms are competing for the market share for a particular product.

Each
firm is considering what promotional strategy to employ for the coming period. Assume that
the following payoff matrix describes the increase in market share of Firm A and the
decrease in market share for Firm B.
Determine the optimal strategies for each firm.

Firm B
Firm A No Promotion Moderate Promotion Much Promotion
No Promotion 50 - 10
Moderate 10 6 2
Promotion
Much 20 15 10
Promotion

(i) Which firm would be the winner, in terms of market share?

(ii) Would the solution strategies necessarily maximize the profits for either of the firms?
(iii) What might the two firms do to maximize their profits?

2. The XYZ and ABC are both a chain of chinese foods restaurants located in Delhi. Both chains
are financially strong enough to expand. The only viable manner in which this may be
accomplished is for each chain to open stores in other cities. The following payoff (in Rs)
tables provide the anticipated average profit levels over the next five years for the various
courses of action.

XYZ’s Profits
ABC doesn’t expand ABC expands
XYZ doesn’t expand 5,00,000 – 2,00,000
XYZ expands 8,00,000 2,00,000

ABC’s Profits
ABC doesn’t expand ABC expands
XYZ doesn’t expand 4,00,000 5,00,000
XYZ expands – 4,00,000 60,000
(a) Is this situation a zero-sum game? Explain.
(b) Find the equilibrium courses of action, if any.
(c) If the two firms can cooperate, what course of action would each prefer

3. A soft drink company calculated the market share of two of its products against its major
competitor, which has three products. The company found out the impact of additional
advertisement in any one of its products against the other.

Company B
Company A B1 B2 B3
A1 6 7 15
A2 20 12 10
What is the best strategy for the company as well as the competitor?
What is the payoff obtained by the company and the competitor in the long run? Use the graphical
method to obtain the solution.
 4. Obtain the strategies for both players and the value of the game for two-person zero-sum
game whose payoff matrix is given as follows:
(a)
Player B
Player A B1 B2 B3
A1 1 3 11
A2 8 5 2

(b)
Player B
Player A B1 B2 B3 B4 B5 B6
A1 1 3 –1 4 2 –5
A2 –3 5 6 1 2 0

5. Use the graphical method for solving the following game and find the value of the game.
Player B
Player A B1 B2 B3 B4
A1 2 2 3 –2
A2 4 3 2 6

6. At what average rate must a clerk at a super market work in order to ensure a probability of
0.90 so that the customer will not have to wait longer than 12 minutes? It is assumed that
there is only one counter at which customers arrive in a Poisson fashion at an average rate
of 15 per hour. The length of service by the clerk has an exponential distribution.

7. Telephone users arrive at a booth following a Poisson distribution with an average time of 5
minutes between one arrival and the next. The time taken for a telephone call is on an
average 3 minutes and it follows an exponential distribution. What is the probability that the
booth is busy? How many more booths should be established to reduce the waiting time to
less than or equal to half of the present waiting time.

8. A sample of 100 arrivals of customers at a sales depot is according to the following

distribution
Time 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
between
arrivals(min
)
Frequency 2 6 10 25 20 14 10 7 4 2

9. A management college wants to fill in six seats in the first year for a two-year post graduate
diploma in management and the process is to conduct document verification followed by
personal interview. The document verification is done first and then personal interview is
conducted. The time required in minutes for each of the candidate is given in the table.
If a second year management student decides to use the principles of sequencing, how
should he go about it? What is the total elapsed time?
Process / Candidate A B C D E F
Document verification 14 18 15 20 17 10
 Personal interview 7 12 11 8 10 9

10. Find the sequence that minimizes the total elapsed time and processing time in hours
required to complete the following jobs:
Job : 1 2 3 4 5 6
Machine A : 43 8 3 6 7 5
Machine B: 6 3 3 7 2 8

11. Six jobs go over machine I first and then over II. The order of the completion of jobs has no
significance. The following table gives the machine times in hours for six jobs and the two
machines.
Job : 1 2 3 4 5 6
Machine I : 5 9 4 7 8 6
Machine II: 7 4 8 3 9 5
Find the sequence of the jobs that minimizes the total elapsed time for completing the jobs.
Find the minimum time by using Gantt Chart or by any other method.

12. Find the sequence that minimizes the total time required in performing the following jobs on
three machines in the order ABC. Processing times (in hours) are given in the following table:
Job : 1 2 3 4 5
Machine A: 8 10 6 7 11
Machine B : 5 16 2 3 14
Machine C : 4 19 8 6 15

13. Using the graphical method, calculate the minimum time needed to process jobs 1 and 2 on
five machines A, B, C, D and E, i.e. for each machine find the job that should be done first.
Also, calculate the total time needed to complete both jobs.
Machines
Job 1 Sequence : A B C D E
Time (hrs) : 6 8 4 12 4
Job 2 Sequence : B C A D E
Time (hrs) : 10 8 6 4 12

14. A book store wishes to carry a particular book in stock. The demand of the book is not
certain and there is a lead time of 2 days for stock replenishment. The probabilities of
demand are given below:
Demand (units/day) : 0 1 2 3 4
Probability : 0.05 0.10 0.30 0.45 0.10
Each time an order is placed, the store incurs an ordering cost of Rs 10 per order. The store
also incurs a carrying cost of Re 0.5 per book per day. The inventory carrying cost is
calculated on the basis of stock at the end of each day. The manager of the book store
wishes to compare two options for his inventory decision.
A : Order 5 books when the present inventory plus any outstanding order falls below 8
books.
B : Order 8 books when the present inventory plus any outstanding order falls below 8
books.
Currently (beginning of 1st day) the store has a stock of 8 books plus 6 books ordered two
days ago and are expected to arrive the next day. Carryout simulation run for 10 days to
recommend an appropriate option. You may use random numbers in the sequences, using
the first number for day one. 89, 34, 78, 63, 61, 81, 39, 16, 13, 73
 15. A firm has a single channel service station with the following arrival and service time
probability distributions:

Interarrival Time Probability Service Time Probability

(minutes) (minutes)
10 0.10 1 5 0.08
15 0.25 10 0.14
20 0.30 15 0.18
25 0.25 20 0.24
30 0.10 25 0.22
30 0.14
The customer’s arrival at the service station is a random phenomenon and the time between the
arrivals varies from 10 to 30 minutes. The service time varies from 5 minutes to 30 minutes. The
queuing process begins at 10 a.m. and proceeds for nearly 8 hours. An arrival immediately, goes to
the service facility if it is free. Otherwise it waits in a queue. The queue discipline is first-come first-
served.
If the attendant’s wages are Rs 10 per hour and the customer’s waiting time costs Rs 15 per hour,
then would it be an economical proposition to engage a second attendant? Answer using Monte
Carlo simulation technique.

16. The Investment Corporation wants to study the investment projects based on three factors,
namely, market demand in units price per unit minus cost per unit, and investment required.
These factors are believed to be independent of each other. In analyzing a new consumer
product, the Corporation estimates the following probability distributions:

Annual Demand Price minus Cost per Investment Required

Unit
Units Probability Rs Probability Rs Probability
20,000 0.05 3.00 0.10 17,50,000 0.25
25,000 0.10 5.00 0.20 20,00,000 0.50
30,000 0.20 7.00 0.40 25,00,000 0.25
35,000 0.30 9.00 0.20
40,000 0.20 10.00 0.10
45,000 0.10
50,000 0.05

Using the simulation process, repeat the trial 10 times, compute the return on investment for each
trial taking these three factors into account. What is the most likely return?