Bit 2212: Business Systems Modeling Question Paper

Bit 2212: Business Systems Modeling

Course:Bachelor Of Science In Computer Technology

Institution: Jomo Kenyatta University Of Agriculture And Technology question papers

Exam Year:2012

JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY
University Examinations 2012/2013
FOURTH YEAR SECOND SEMESTER FOR THE DEGREE OF BACHELOR OF SCIENCE IN COMPUTER TECHNOLOGY
BIT 2212: BUSINESS SYSTEMS MODELING
DATE: DECEMBER 2012 TIME: 2 HOURS
INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS

QUESTION ONE

a) Explain any three uses of an inventory (3mks)
b) Describe the three main costs considered in inventory management (3mks)
c) Why would we adopt simulation in place of other known mathematical techniques (3mks)
d) The table below shows the demand for a particular brand of razor in a shop for each of the last nine months

Month 1 2 3 4 5 6 7 8 9
Demand 10 12 13 17 15 19 20 21 20

i. Calculate a three month moving average for months three to nine. What would be forecast for the demand in the month tenth
ii. Apply exponential smoothing with a smoothing constant of 0.3 to derive a forecast for the demand in month ten.
iii. Which of the two forecasts for the month ten do you prefer and why? (9mks)

e) Consider a situation where the mean arrival rate is one customer every 4 minutes and the mean service time is two and a half minutes. Calculate;

i. The average number of customers in the system
ii. Average queue length
iii. Average a customer spends in the system
iv. Average time a customer waits before being served (6mks)

f) The wizard computer company purchases 5000 hard drives per year for use in its computers. Each order costs

$70. The inventory holding cost is 25% of the unit price. the supplier has provided the following price list. Order quantity Price per unit 1-499$ 50
500-649

$45 650 and above$ 42.50

Assuming instantaneous delivery find
i. Optimal order delivery
ii. Optimal total annual cost (5mks)

QUESTION TWO

Biz Training Ltd. is considering buying a new online learning system to enable them to deliver the training key do for their corporate clients. They are looking at three different systems and the cost of each system is as follows:

System A System B System C

$120,000$ 100000

$85000 Each system has a range of functionality, but the do differ quit a bit in what they offer. While they would all do the jobs that Biz Training are looking for, they would need the firm to run their systems very differently and so the expected cash flows from each system are very different. The expected net cash flows (income-expenses) for each system are as follows: Year System A System B System C 1$ 65000

$45000$ 15000
2

$55000$ 35000

$30000 3$ 35000

$35000$ 30000
4

$15000$ 25000

$40000 5$ 25000

$15000$ 45000

The firm is assuming a discount rate of 10% and this means that they need to apply a discount factor as follows:

Year 1 Year 2 Year 3 Year 4 Year 5
0.909 0.826 0.751 0.683 0.621

Carry out an investment analysis for three systems using
i. Payback period
ii. Average rate of return
iii. Discount cash flow
Hence advice the company which investment to undertake. Justify your advice (20mks)

QUESTION THREE

Your company is considering whether it should tender for two contracts (MS1 and MS2) on offer from a government department for the supply of certain components. The company has three options:

. tender for MS1 only; or
. tender for MS2 only; or
. tender for MS1 and MS2.

If tenders are to be submitted the company will incur addition costs. These costs will have to be entirely recouped from the contract price. The risk, of course is that if a tender is unsuccessful the company will have made a loss.
The cost for tendering for contract MS1 only is

$50000. The component supply cost if the tender is successful would be$ 18000.
The cost for tendering for contract MS2 only is

$14000. The component supply cost if the tender is successful would be$ 12000.
The cost for tendering for both contracts MS1 and contract MS2 is

$55000. The component supply cost if the tender is successful would be$ 24000.
For each contract, possible tender prices have been determined. In addition, subjective assessments have been made of the probability of getting the contract with a particular tender price as shown below. Note here that the company can only submit one tender and cannot, for example, submit two tenders (at different prices) for the same contract.

Option Possible tender prices ($) Probability of getting contract

MS1 only 130000 0.20
115000 0.85
MS2 only 70000 0.15
65000 0.80
60000 0.95
MS1 an MS2 190000 0.05
140000 0.65

In the event that the company tenders for both MS1 and MS2 it will either win both contracts (at the prices shown above) or no contract at all.

a) Draw a decision tree for the problem and carry out an analysis to determine what the company should do and why? (16mks)
b) What are the downside and the upside of your suggested course of action? (4mks)

QUESTION FOUR

Six networking companies are competing for five projects. The projects are to be assigned based on their scores on technical capacity to undertake the projects. After technical evaluation the companies scored as follows for the various projects. Determine which company should be assigned to which project.

Company Project 1 Project 2 Project 3 Project 4 Project 5

A 18 15 12 25 21
B 9 11 10 15 8
C 12 10 14 16 17
D 9 10 10 21 20
E 14 18 26 26 24
F 14 19 23 20 25

(20mks)

Bit 2212: Business Systems Modeling Question Paper

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