CONFIDENTIAL*

1 SMK AIR PUTIH, KUANTAN. Section A [45 marks] Answer all questions.

1. Ah Chong invests a lump sum of RM15,000 for 15 years at an annual interest rate of 5%, compounded monthly. (a) Find the final value of the investment. [3 marks] (b) After how many months will the value exceed RM20,000? [3 marks] 2. The monthly total revenue and monthly total cost functions of a firm are given as follows:

where R(x) = total revenue in ringgit C(x) = total cost in ringgit x = number of units produced and sold (a) Find the number of units that will maximize profit. (b) What is this maximum profit? (c) What is the price per unit at this level of production? 3. Consider the linear programming model Maximize P = x + 3y Subject to 2x + 3y 8 x + 6y 10 x 0, y 0 (a) Construct the initial tableau for the linear programming model above. (b) Using the simplex method, determine the values of x, y and P.

[4 marks] [1 mark] [3 marks]

[2 marks] [5 marks]

4. Sakinah Company sells vacuum cleaners at RM1500 each. The annual demand is estimated to be 2400 units. The holding cost is RM8 per unit per year, while the cost of ordering is RM40 per order. Currently, the company makes 1 order per month with 200 units per order. The company operates 300 days a year. The lead time is 5 days. (a) What is the annual inventory cost for the current policy? [2 marks] (b) If the company uses the optimal inventory policy, find (i) the optimal order quantity. [2 marks] (ii) the number of orders per year . [2 marks] (iii) the reorder point. [2 marks] 5. Mary and James play a two-person zero-sum game. The following pay-off matrix summarises the winnings (RM) of the plays. James Strategy P Strategy Q Strategy R Strategy A 4 3 -1 Mary Strategy B 1 1 4 Strategy C 1 0 2 (a) Determine the optimal mixed strategy of each player. [5 marks] (b) Find the value of the game and interpret the result. [2 marks]

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CONFIDENTIAL*

6. The network below shows the inter-relationships among eight activities and their respective duration, in days for a project. A 3 D 4 F START C 1 3 H 1 FINISH

G 2 B 2 E 2

Activity Label Earliest start time

Activity duration Latest start time

(a) Determine the critical activities and the minimum completion time of the project.[2 marks] (b) Calculate the total float for each of the non-critical activities. [1 mark] (c) Draw a Gantt chart for the project. [3 marks] (d) Given that each activity requires one worker, draw a schedule to determine the minimum number of workers required to complete the project in the critical time. State the minimum number of workers. [3 marks] Section B [15 marks] Answer any one question in this section. 7. The A & M Hobby shop which carries a line of radio-controlled model racing cars decides to operate with a backorder inventory policy for its product. Demand for the cars is assumed to be constant at a rate of 50 cars per month. The car costs RM60 each and ordering costs are RM15 per order, regardless of the order size. The annual holding cost rate is 20%. Backorder costs are estimated to be RM20 per unit per year. The shop operates 320 days per year. (a) Determine the optimal order quantity. [2 marks] (b) Determine the maximum number of backorders and the maximum inventory level. [3 marks] (c) Calculate the time between orders. [2 marks] (d) How long does the shop have inventory on hand? [3 marks] (e) Find the reorder point if the lead time is 6 days. [2 marks] (f) Sketch a graph of inventory level as a function of time. [3 marks] 8. Mathew wishes to borrow RM300,000 from a bank to help finance the purchase of an asset. His banker has offered him the following plans. In Plan A, he has 30 years to repay the loan in monthly installments with interest on the unpaid balance charged at 6.09% per annum compounded monthly. In Plan B, the loan is to be repaid in monthly installments over 15 years with interest on the unpaid balance charged at 5.76% per annum compounded monthly. (a) Find the monthly repayment for each plan. [6 marks] (b) What is the difference in total repayments made under each plan? [5 marks] (c) Using the answer in part (b) to deduce the interest saved if Mathew chose Plan B instead of Plan A? [2 marks] (d) If the reducing balance rate of depreciation is 30%, calculate the book value of the asset after 10 years. [2 marks] 950/3