By Ram Naresh Roy
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Extra info for A Modern Approach to Operations Management
The correct choice depends largely upon future demand, which may be low, medium, or high. 4. A cost analysis reveals the effect upon profits that is shown in Table 1. 4) A = Arrange for subcontracting 10 50 50 B = Begin overtime production – 20 60 100 C = Construct new facilities – 150 20 200 (a) State which course of action would be taken under a criterion of (i) maximax, (ii) maximin, (iii) maximum probability, and (iv) maximum expected value. (b) Show this decision situation schematically in the form of a decision tree.
Usually, the areas with an A closeness are shown first and are connected with 4 straight lines, then E with 3 straight lines, and so on. When an activity has to be close to several other areas, it can be stretched out or distorted. The areas may be moved around and interchanged until a final acceptable arrangement is obtained. It is helpful to imagine the straight lines as stretched rubber bands and the jagged lines as coiled springs representing varying attraction and repulsion forces. So, an A rating would imply 4 rubber bands pulling the areas together while an I rating would imply only 2 rubber bands [Turner et al].
9 shows supply on the horizontal rows, demand on the columns, and unit transportation cost ($) in the small boxes of the matrix. The initial allocation by the NWC method is made as follows: • Assign as many units as possible to the NW-corner cell AX from the total available in row A. Given the 20 units available in row A and the 40 unit demand in column X, the maximum number of units that can be assigned to cell AX is 20. This is shown in the circle as initial allocation. 8. Initial solution to DLP matrix Production Plants X A Y Z Supply (units)    20    30   40 20 90 20 B 20 C 10  20 Demand (units) 40 20 30 • Assign additional units of supply from row B (or other rows) until the demand in column X is satisfied.