1st M2 2310-1 PRACTICE EXAM

QUESTION 1
In one of the little-known battles of the Civil War, General Tecumseh Beauregard lost the Third
Battle of Bull Run because his preparations were not complete when the enemy attacked. If the
critical path method had been available, the general could have planned better. Suppose that the
following planning network, with activity times (bottom part of each circle) in days, had been
available:
Determine the earliest and latest activity times and the activity slack for the network. Indicate the
critical path and the time between the general's receipt of battle orders and the onset of battle.
The general wants to shorten the plan by 3 days.

a) What activities will be shortened and at what optimal cost?
b) Determine the critical paths.
Activity Normal Time Crash Time Normal Cost Crash Cost

1 2 1 4,800 6,300
2 2 1 9,100 15,500
3 5 3 3,000 4,000
4 4 3 3,600 5,000
5 4 3 6,400 12,000
6 3 1 1,500 2,000
7 1 1 1,800 1,800
8 3 2 2,200 2,200
9 1 1 2,300 2,300
10 3 2 3,000 3,500
11 2 1 5,000 7,000
12 1 1 4,000 4,000
1
QUESTION 2
Electronic Village stocks and sells a particular brand of personal computer. It costs the store $450
each time it places an order with the manufacturer for the personal computers. The annual cost of
carrying the PCs in inventory is $170. The store manager estimates the annual demand for the PCs
will be 1,200 units. The store works 300 days a year.
a) Determine the optimal order quantity and the total minimum inventory cost. What is the cycle
time
b) Assume that shortages are allowed and that the shortage cost is $600 per unit per year.
Compute the optimal order quantity and the total minimum inventory cost. What is the
inventory and shortage cycle times
QUESTION 3
The Farmer's American Bank of Leesburg is planning to install a new computerized accounts
system. Bank management has determined the activities required to complete the project, the
precedence relationships of the activities, and activity time estimates, as shown in the following
table:
Activity Time Estimates (weeks)
Activity Predecessor Optimistic Most Probable Pessimistic

a 5 8 17
b 3 12 15
c a 4 7 10
d a 5 8 23
e b, c 1 1 1
f b, c 1 4 13
g d,e 3 6 9
h d,e 1 2.5 7
i h 1 1 1
j f, g 2 2 2
k g,i 5 8 11
An amount of $25,000 bonus for finishing the project in 40 weeks has been assigned. Determine:
a. Expected activity times (1 decimal point)

b. Earliest and latest activity times and activity slack
c. Critical path(s)
d. Expected project duration and variance (1-decimal point)
e. The probability of earning the bonus (2 decimal points)
2
QUESTION 4
The Wood Valley Dairy makes cheese to supply to stores in its area. The dairy can make 250
pounds of cheese per day, and the demand at area stores is 180 pounds per day and it works 250
days a year. Each time the dairy makes cheese, it costs $125 to set up the production process. The
annual holding cost is 30% and it costs $4.00 to produce a pound of cheese . The company can
buy the cheese from a supplier at the following prices where ordering cost is $50 per order.
Order Quantity Price per pound

0 - 199 $6.25
200 - 499 $5.00
500 and more $3.95
Determine the optimal cost difference for your recommendation.
QUESTION 5
Harry's Hardware sells all the ordinary hardware items. One of the most popular items is Great
Glue HH, a glue that is made just for Harry's Hardware. The selling price is $4 per bottle, but
unfortunately, the glue gets hard and unusable after one month. The cost of the glue is $1.20.
During the past several months, the mean sales of glue have been 60 units, and the standard
deviation is 7.
a) How many bottles of glue should Harry's Hardware stock? Assume that sales follow a
normal distribution?
b) What should the selling price and order quantity be, if he wishes to have a stockout of
less than 5%?
QUESTION 6
Ross White's machine shop uses 2,500 brackets during the course of a year, and this usage is
relatively constant throughout the year. These brackets are purchased from a supplier 100 miles
away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or
10% of the unit cost) and the ordering cost per order is $18.75. There are 250 working days per
year.
• What is the Reorder point?
Ross White recognizes that although he knows that lead time is 2 days and demand per day
averages 10 units, the demand during the lead time often varies. Ross has kept very careful records
and has determined lead time demand is independent and is normally distributed with a standard
deviation of 1.5 units.
a. What safety stock should Ross maintain if he wants a 98% service level (non-stockout)?
b. What is the adjusted Reorder point for the brackets?
c. What is the annual holding cost for the safety stock?
Ross White is also considering switching to a one-month periodic review method. He has calculated
the demand during the review period plus lead time is 230 units with a standard deviation of.6 units.
• Determine the change in the average inventory and also safety stock level, using the same
98% service level.
3
AREAS FOR THE STANDARD NORMAL DISTRIBUTION
z 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

0 0 0.004 0.008 0.012 0.016 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.091 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.148 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.17 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.195 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.219 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.258 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.291 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.334 0.3365 0.3389
1 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.377 0.379 0.381 0.383
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.398 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.437 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 .4 7 44 0.475 0.4756 0.4761 0.4767
2 0.4772 0.4778 .4 783 .4 788 0.4793 .4 798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.483 0.4834 0.4838 0.4842 0.4846 0.485 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.489
2.3 0.4893 0.4896 0.4898 0.4901 .4 904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.492 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.494 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.496 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.497 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.498 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.499 0.499

1st M2 2310-1 PRACTICE EXAM

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QUESTION 1

The general wants to shorten the plan by 3 days.

Activity Normal Time Crash Time Normal Cost Crash Cost

Activity Time Estimates (weeks)

Activity Predecessor Optimistic Most Probable Pessimistic

a. Expected activity times (1 decimal point)

Order Quantity Price per pound

Determine the optimal cost difference for your recommendation.

z 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

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