MBA I SEMESTER I MID IMPORTANT QUESTIONS

QUANTITATIVE ANALYSIS FOR BUSINESS DECISION

1. Write an Algorithm for HUNGARIAN METHOD (or) ASSIGNMENT METHOD with a
suitable example?
2. Find the starting solution in the following Transportation problem by using any one
method
(a) North-West Corner method
(b) Least cost method
(c) VOGEL’S approximation method.
Also obtain the optimum solution by using the best starting solution:
D1 D2 D3 D4 SUPPLY
S1 3 7 6 4 5
S2 2 4 3 2 2
S3 4 3 8 5 3
DEMAND 3 3 2 2 10

3. Explain about the Terminologies involved in the game theory with suitable examples?
4. A) Distinguish between correlation and regression.
B) Derive two regression lines and explain with suitable examples.

1. Write an Algorithm for HUNGARIAN METHOD (or) ASSIGNMENT METHOD with

a suitable example?

The Funny Toys Company has four men available for work on four separate jobs. Only one
man can work on any one job. The cost of assigning each man to each job is given in the
following table. The objective is to assign men to jobs in such a way that the total cost of
assignment is minimum.
Job
Person 1 2 3 4
A 20 25 22 28
B 15 18 23 17
C 19 17 21 24
D 25 23 24 24
Solution.
This is a minimization example of assignment problem. We will use the Hungarian
Algorithm to solve this problem.
 Step 1
Identify the minimum element in each row and subtract it from every element of that row.
The result is shown in the following table.
"A man has one hundred dollars and you leave him with two dollars, that's subtraction." -
Mae West
Table
Job
Person 1 2 3 4
A 0 5 2 8
B 0 3 8 2
C 2 0 4 7
D 2 0 1 1
Step 2
Identify the minimum element in each column and subtract it from every element of that
column.
Table

Job
Person 1 2 3 4
A 0 5 1 7
B 0 3 7 1
C 2 0 3 6
D 2 0 0 0
Step 3
Make the assignments for the reduced matrix obtained from steps 1 and 2 in the following
way:
 For each row or column with a single zero value cell that has not be assigned or
eliminated, box that zero value as an assigned cell.
 For every zero that becomes assigned, cross out (X) all other zeros in the same row and
the same column.
 If for a row and a column, there are two or more zeros and one cannot be chosen by
inspection, choose the cell arbitrarily for assignment.
 The above process may be continued until every zero cell is either assigned or crossed
(X).
Step 4
An optimal assignment is found, if the number of assigned cells equals the number of rows
(and columns). In case you have chosen a zero cell arbitrarily, there may be alternate optimal
solutions. If no optimal solution is found, go to step 5.
Table
 Job
Person 1 2 3 4
A 5 1 7
B 3 7 1
C 2 3 6
D 2
Step 5 Draw the minimum number of vertical and horizontal lines necessary to cover all the
zeros in the reduced matrix obtained from step 3 by adopting the following procedure:
 Mark all the rows that do not have assignments.
 Mark all the columns (not already marked) which have zeros in the marked rows.
 Mark all the rows (not already marked) that have assignments in marked columns.
 Repeat steps 5 (ii) and (iii) until no more rows or columns can be marked.
 Draw straight lines through all unmarked rows and marked columns.
You can also draw the minimum number of lines by inspection.
Table

Step 6 Select the smallest element (i.e., 1) from all the uncovered elements. Subtract this
smallest element from all the uncovered elements and add it to the elements, which lie at the
intersection of two lines. Thus, we obtain another reduced matrix for fresh assignment.
Table
Job
Person 1 2 3 4
A 0 4 0 6
B 0 2 6 0
C 3 0 3 6
D 3 0 0 0
Final Table: Hungarian Method
Job
Person 1 2 3 4
A 4 6
B 2 6
C 3 3 6
D 3
 Since the number of assignments is equal to the number of rows (& columns), this is the
optimal solution.
2. Find the starting solution in the following Transportation problem by using any one
method
(d) North-West Corner method
(e) Least cost method
(f) VOGEL’S approximation method.
Also obtain the optimum solution by using the best starting solution:
D1 D2 D3 D4 SUPPLY
S1 3 7 6 4 5
S2 2 4 3 2 2
S3 4 3 8 5 3
DEMAND 3 3 2 2 10
3. Explain about the Terminologies involved in the game theory with suitable examples?

What is 'Game Theory'

Game theory is a framework for hypothetical social situations among competing players. In some
respects, game theory is the science of strategy, or at least the optimal decision-making of
independent and competing actors in a strategic setting. The key pioneers of game theory were
mathematicians John von Neumann and John Nash, as well as economist Oskar Morgenstern
Game Theory Definitions
Any time we have a situation with two or more players that involves known payouts or
quantifiable consequences, we can use game theory to help determine the most likely outcomes.
Let's start out by defining a few terms commonly used in the study of game theory:
 Game: Any set of circumstances that has a result dependent on the actions of two of more
decision-makers (players)
 Players: A strategic decision-maker within the context of the game
 Strategy: A complete plan of action a player will take given the set of circumstances that
might arise within the game
 Payoff: The payout a player receives from arriving at a particular outcome. The payout
can be in any quantifiable form, from dollars to utility.
 Information set: The information available at a given point in the game. The term
information set is most usually applied when the game has a sequential component.
 Equilibrium: The point in a game where both players have made their decisions and an
outcome is reached.
Assumptions Used in Game Theory
As with any concept in economics, there is the assumption of rationality. There is also an
assumption of maximization. It is assumed that players within the game are rational and will
strive to maximize their payoffs in the game.
When examining games that are already set up, it is assumed on your behalf that the payouts
listed include the sum of all payoffs associated with that outcome. This will exclude any "what
if" questions that may arise.
The number of players in a game can theoretically be infinite, but most games will be put into
the context of two players. One of the simplest games is a sequential game involving two
players.
4. A) Distinguish between correlation and regression.

B) Derive two regression lines and explain with suitable examples.

A) Distinguish between correlation and regression.

COMPARISON TABLE
Now let us see some of the differences between CORRELATION and REGRESSION below
given table.
CORRELATION REGRESSION
The main purpose of correlation analysis is to The main purpose of regression analysis is to
predict which are the most dependable predict or estimate the unknown variable with
forecasts. the help of known variable.
Scope
Correlation analysis has limited applications. Regression analysis has wider applications.
Nature of variables
In correlation both the variables are mutually In regression one variable is dependent and other
dependent. variable is independent.
Range
Correlation coefficients can range from -1.00
In regression anlysis if byx > 1, then bxy < 1.
to +1.00.
Responding Nature
The regression coefficient is independent of the
The correlation coefficient is independent of
change of Origin but dependent on the change of
the change of Origin or change of Scale.
Scale.
Nature of Coefficient
The correlation coefficient is symmetrical and
Regression coefficient is not symmetrical.
also mutual.
Exceptional Cases
Sometimes there may exist Non-sense There is no such thing as a Non-sense regression
correlation in the correlation analysis. in regression analysis.
Measures
CORRELATION REGRESSION
Regression describes the fundamental level the
Correlation measures the degree to which two
nature of any linear relationship between two
variables move together,
variables.
Association
The correlation coefficient measures the extent
Linear regression allows us to describe one
and direction of a linear association between
variable as a linear function of another variable.
two variables.
Relationship
Correlation is confined to the linear Regression studies linear and Non-linear
relationship between variables only. relationships also.

B) Derive two regression lines and explain with suitable examples.

Answer will be explained in class room

MBA I SEMESTER II MID IMPORTANT QUESTIONS

QUANTITATIVE TECHNIQUES FOR BUSINESS DECISIONS

1. Write an algorithm for graphical method in LPP.

2. Explain about the decision making process.
3. Briefly discuss about the replacement models.
4. Explain about Networking Analysis with an example.

1. Write an algorithm for graphical method in LPP.

Steps in Graphical Method Algorithm for Solving LPP

1. Formulate the mathematical model of the given linear programming problem (LPP).
2. Treat inequalities as equalities and then draw the lines corresponding to each equation and
non-negativity restrictions.
3. Locate the end points (corner points) on the feasible region.
4. Determine the value of the objective function corresponding to the end points determined in
step 3.
5. Find out the optimal value of the objective function.
The following examples illustrate the method.
Linear Programming Graphical Method Examples
Example 1
Maximize z = 18x1 + 16x2
subject to
15x1 + 25x2 ≤ 375
24x1 + 11x2 ≤ 264
x1, x2 ≥ 0
Solution.
If only x1 and no x2 is produced, the maximum value of x1 is 375/15 = 25. If only x2 and no x1 is
produced, the maximum value of x2 is 375/25 = 15. A line drawn between these two points (25,
0) & (0, 15), represents the constraint factor 15x1 + 25x2 ≤ 375. Any point which lies on or below
this line will satisfy this inequality and the solution will be somewhere in the region bounded by
it.
Similarly, the line for the second constraint 24x1 + 11x2 ≤ 264 can be drawn. The polygon oabc
represents the region of values for x1 & x2 that satisfy all the constraints. This polygon is called
the solution set.
The solution to this simple problem is exhibited graphically below.

The end points (corner points) of the shaded area are (0,0), (11,0), (5.7, 11.58) and (0,15). The
values of the objective function at these points are 0, 198, 288 (approx.) and 240. Out of these
four values, 288 is maximum.
The optimal solution is at the extreme point b, where x1 = 5.7 & x2 = 11.58, and z = 288.
2. Explain about the decision making process.

Decision making is the process of making choices by identifying a decision, gathering

information, and assessing alternative resolutions.
Using a step-by-step decision-making process can help you make more deliberate, thoughtful
decisions by organizing relevant information and defining alternatives. This approach increases
the chances that you will choose the most satisfying alternative possible.
Step 1: Identify the decision
You realize that you need to make a decision. Try to clearly define the nature of the decision you
must make. This first step is very important.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision: what information is needed,
the best sources of information, and how to get it. This step involves both internal and external
“work.” Some information is internal: you’ll seek it through a process of self-assessment. Other
information is external: you’ll find it online, in books, from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if you carried out each
of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or
resolved through the use of each alternative. As you go through this difficult internal process,
you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching
your goal. Finally, place the alternatives in a priority order, based upon your own value system.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems to be
best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may
very likely be the same or similar to the alternative you placed at the top of your list at the end of
Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alternative you
chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether or not it has resolved
the need you identified in Step 1. If the decision has not met the identified need, you may want to
repeat certain steps of the process to make a new decision. For example, you might want to
gather more detailed or somewhat different information or explore additional alternatives.
3. Briefly discuss about the replacement models.

In fact, in any system the efficacy (efficiency) of an item deteriorates with time. In such cases,
either the old item should be replaced by a new item, or some kind of restorative action
(maintenance) is necessary to restore the efficiency of the whole system.
The cost of maintenance depends upon a number of factors, and a stage comes at which the
maintenance cost is so large that it is more profitable to replace the old item. Thus, there is a
need to formulate the most effective replacement policy.
The purpose of this chapter is to show what replacement models look like.
Replacement models are concerned with the problem of replacement of machines, individuals,
capital assets, etc. due to their deteriorating efficiency, failure, or breakdown.
It is evident that the study of replacement is a field of application rather than a method of
analysis. Actually, it is concerned with methods of comparing alternative replacement policies.
Alternatives: "May be it's in the basement, let me go up stairs and check." - M. C. Escher
The various types of replacement problems can be broadly classified in following categories:
 Replacement of items whose efficiency deteriorates with time, e.g., machine, tools, etc.
 Replacement of items that fail suddenly and completely like electric bulbs & tubes.
 Replacement of human beings in an organisation or staffing problem.
 Replacement of items may be necessary due to new researches and methods; otherwise,
the system may become outdated.
Replacement Theory in Operations Research – An Algorithm using MS-Excel
The Replacement Theory in Operations Research is used in the decision making process of
replacing a used equipment with a substitute; mostly a new equipment of better usage. The
replacement might be necessary due to the deteriorating property or failure or breakdown of
particular equipment. The ‘Replacement Theory’ is used in the cases like; existing items have
out-lived, or it may not be economical anymore to continue with them, or the items might have
been destroyed either by accident or otherwise. The above discussed situations can be solved
mathematically and categorised on some basis like:
 Items that deteriorate with time e.g. machine tools, vehicles, equipment buildings etc,
 Items becoming out-of-date due to new developments like ordinary weaving looms by
automatic, manual accounting by tally etc.
 Items which do not deteriorate but fail completely after certain amount of use like
electronic parts, street lights etc (Group Replacement) and
 The existing working staff in an organization gradually diminishing due to death,
retirement, retrenchment & otherwise (Staff Replacement).
Replacement Policy for Equipments which Deteriorate Gradually
Let us see the first case of gradual failure of items with time. Consider the example of a Motor
Vehicle; the pattern of failure here is progressive in nature i.e. as the life of vehicle increases; its
efficiency decreases. This results in additional expenditure in running or maintaining this vehicle
and at the same time its resale value (also called as scrap value) also keeps on decreasing. The
above case makes this situation a typical case for applying ‘Replacement Theory’

4. Explain about Networking Analysis with an example.

Answer will be explained in class room