SUGGESTED SOLUTIONS

A1 – QUANTITATIVE TECHNIQUES
NOVEMBER 2023

ANSWER 1

(a) Multiple Choices

(i) B
(ii) A
(iii) B
(iv) B
(v) A
(vi) B
(vii) D
(viii) C
(ix) A
(x) D

(c) TRUE & FALSE

(i) TRUE
(ii) FALSE
(iii) TRUE
(iv) FALSE
(v) FALSE

(b) Matching Items

(i) J
(ii) C
(iii) B
(iv) D
(v) F

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ANSWER 2

(a) SOLUTION

i. Slack variable: This is a variable that is added to an inequality constraint to

transform it into equality.

ii. Surplus variable: This is a variable that is subtracted to an inequality constraint

to transform it into equality.

iii. Feasible region: This is the set of points that satisfies every inequality in a
system of inequality.

iv. Feasible solution: these are all point within feasible region obtained for the
system of inequality.

v. Bounded solution: A solution that lies within a finite region of the feasible
region defined by the constraints.

(b) SOLUTION

Let
• x be the number of units of X produced in the current week.
• y be the number of units of Y produced in the current week.

then the constraints are:

45x + 22y ≤ 40(60) machine A time

30x + 32y ≤ 35(60) machine B time

x ≥ 70 – 30;

x ≥ 40 so, production of x ≥ demand (70) – initial stock (30), which ensures we meet
demand.

y ≥ 95 – 90;

y ≥ 5 so, production of y ≥ demand (95) – initial stock (90), which ensures we meet
demand.

The objective is: maximize: (x + 30 – 70) + (y + 90 – 95) = (x + y – 45)

i.e., to maximize the number of units left in stock at the end of the week.

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 (c) SOLUTION

It is true that the Monte Carlo simulation includes a lot of variability and uncertainty,
which has been achieved by the use of random numbers as a remedy.

ANSWER 3

(a) Two applications of calculus in business.

(i) Helps us in finding the rate at which one quantity changes with respect to the
other.
(ii) Helps in solving problems of finding maximum profit or minimum cost.
(iii) Helps in finding total revenue.

(b) Definition of the following functions as used in business calculus:

(i) Cost function
The total cost c of producing and marketing x units of a product depends upon
the number of units. So, the function relating c and is x is called Cost-function
and is written as c = c (x).

(ii) Demand function

An equation that relates to price per unit and quantity demanded at that price is
called a demand function. If p is the price per unit of a certain product and x is
the number of units demanded, then we can write the demand function as x =
f(p) or p = g(x) i.e., price (p) expressed as a function of x.
(iii) Revenue function
If x is the number of units of certain product sold at a rate of p per unit, then the
amount derived from the sale of x units of a product is the total revenue. Thus,
if R represents the total revenue from x units of the product at the rate of p per
unit, then, R = p.x is the total revenue.

Thus, the Revenue function R(x) = p.x = x.p(x)

(iv) Profit function

The profit is calculated by subtracting the total cost from the total revenue
obtained by selling x units of a product.
Thus, if P(x) is the profit function, then P(x) = R(x) – C(x)

(c) For a new product, a manufacturer spends TZS 100,000,000 on the infrastructure and
the variable cost is estimated as TZS 150,000 per unit of the product. The sale price per
unit was fixed at TZS 200,000.

REQUIRED:

(i) Cost function

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 SOLUTION
Let x be the number of units produced and sold.
So, cost function C(x) = Fixed cost + Variable cost
∴ C(x) = 100,000,000 + 150,000x

(ii) Revenue function

SOLUTION
Let P be sale price = TZS.200,000 and x is the number of units produced and sold.

Then, Revenue function R(x) = P(x)

∴ R(x) = 200,000x

(iii) Profit function

SOLUTION
Profit function = Revenue function – Cost function
P(x) = R(x) – C(x)
= 200,000x – (100,000,000 + 150,000x)
∴ P(x) = (50,000x – 100,000,000)
P(x) = 50,000x – 100,000,000

(iv) The breakeven point

SOLUTION

At breakeven point P(x) = 0

Thus, from P(x) =R(x) – C(x)
0 = 50,000x – 100,000,000
50,000x = 100,000,000
x = 2000
Hence x = 2000 is the breakeven point.

This means that when 2000 units of the product are produced and sold, there will be no
profit or loss.

(d) The marginal cost function of manufacturing x units of a product is – 3x2 + 16x + 5. The
total cost of producing 5 items is $500.

REQUIRED:

Find the total cost function.

SOLUTION

𝑑𝑐
If c denotes the total cost and mc = 𝑑𝑥 is marginal cost, then c can be written as:

c = c(x) = ∫(𝑐𝑚)𝑑𝑥 + 𝑘, where k is integration constant.

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 Given, m(c) = 5 + 16x – 3x2

c = c(x) =∫(5 + 16𝑥 − 3𝑥 2) dx

𝑥2 𝑥3
= 5x + 16 2 − 3 3 + k

𝑥2 𝑥3
∴ c(x) = 5x + 16 2 − 3 3 + k

When x = 5, c(x)=c(5)=$500
5𝑥5 5𝑥5𝑥5
500 = 5 x 5 + 16 2
−3 3
+k

500 = 100 + k

500 – 100 = k

K = 400

𝑥2 𝑥3
∴ c(x) = 5x + 16 2 − 3 3 + 400

ANSWER 4

(a)
Activity a m b Expected duration
𝟒𝒎+𝒂+𝒃
=
𝟔

A 1 3 4 2.83
B 2 4 6 4
C 3 5 7 5
D 3 4 5 4
E 3 5 7 5

F 5 7 9 7
G 4 6 8 6
H 2 4 6 4
I 1 4 7 4

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(b) Variance

Activity a m b Variance
(𝒃−𝒂)𝟐
=
𝟔𝟐

A 1 3 4 0.25
B 2 4 6 0.44
C 3 5 7 0.44
D 3 4 5 0.11
E 3 5 7 0.44

F 5 7 9 0.44
G 4 6 8 0.44
H 2 4 6 0.44
I 1 4 7 1.0

(c)

Path Duration
A-B-C 2.83 + 4 + 5 = 11.83 Days
D-E-F 4 + 5 + 7 = 16 Days
G-H-I 6 + 4 + 4 = 14 Days

Thus duration of the project is 16 days.

(d)

Path Duration Standard Deviation

A-B-C 0.25 + 0.44 + 0.44 = 1.13 1.06
D-E-F 0.11 + 0.44 + 0.44 = 0.99 0.99
G-H-I 0.44 + 0.44 + 1.0 = 1.88 1.37

We have to assume that path duration is normally distributed and then we find the
probability of each path using the formula.
𝑆𝑝𝑒𝑐𝑖𝑓𝑖𝑒𝑑 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛−𝑃𝑎𝑡ℎ 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛
Z=
𝑃𝑎𝑡ℎ𝑆𝐷

If Z value is greater or equal to 2.5

The probability of completing the path before specified time is 1 otherwise, we find
probability from normal table.

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 Path Z Value Probability
A-B-C 17−11.83 Of completing before 17
Z= = 4.87 days is 1
1.06
D-E-F 17−16 Completing before 17
Z= = 1.01 days is 0.8438
0.99

G-H-I 17−14 Completing before 17

Z= = 2.19 days is 0.9857.
1.37

Thus, the probability of the project be completed 17 days from its start is 0.8438

______________  ______________

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