Quantitative Techniques Question Paper

Quantitative Techniques

Course:Master Of Business Administration

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
INSTITUTE OF OPEN LEARNING
FINAL EXAMINATION FOR THE DEGREE OF MASTERS OF BUSINESS
ADMINISTRATION
BMS 500: QUANTITATIVE TECHNIQUES

DATE: Thursday 10th January 2008 TIME: 9.00 a.m. – 12.00 p.m.

INSTRUCTIONS:
Answer any FOUR questions.
Question One
(a)
Discuss the relevance of the following mathematics techniques in making business decisions.
(i)
Differential and integral calculus.
(2 marks)
(ii)
Matrices
(2 marks)
(iii)
Network analysis
(2 marks)
(iv)
Inventory modes
(2 marks)
(v)
Marginal revenue and marginal cost
(2 marks)
(b)
State and explain areas where linear programme can be used to aid a manager in decision making. (5 marks)

Question Two
(a)
The total revenue and total cost functions for a given firm is as follows:

?TR ? q
10 2 ?
q
200

2
TC ? q ?10q ?1000
Where q is the number of units, determine the value of q that:
(i)
Maximize revenue hence maximum revenue.
(5 marks)
(ii)
Minimizes cost hence minimum cost.
(5 marks)
(iii)
Maximizes profit hence maximum profit.
(5 marks)

Question Three
A company specializing in mail order sales approach is beginning a promotional campaign, advertising expenditures will cost the firm Ksh. 5,959, per day, marketing specialist estimates that the rate at which profit (exclusive of advertising costs) will be generated from the promotion campaign decreases over the length of the campaign. The rate at which revenue is received is estimated by the function.

r(t) ? 50 2
? t ?
000
,
10
Where t represents the day of the campaign and r(t) is measured in Ksh. Per day. In order to maximize net profit the firm should conduct the campaign as long as r(t) exceeds the daily advertising cost.
(a)
how long should the campaign be conducted.
(b)
What are the total advertising expenditures expected to equal during the campaign?
(c)
What net profit will be expected. (15 marks)

Question Four
(a)
State and explain the factors affecting the inventory levels of a firm. (8 marks)
(b)
A company uses 8000 units of a product as raw materials, costing shs 100 per unit. The administrative cost per purchase is Sh. 400. The holding costs are 28% of the average inventory. The company has been offered a 1% of discount if it purchases it’s entire requirement only four times a year. Should the company accept the offer of quantity discount of one percent? If not, what minimum discount should the company demand? (7 marks)

Question Five
A firm makes two products X and Y and has total production capacity of nine tones per day. X and Y requiring the same production capacity. The firm has a permanent contract to supply a least two tones of X and at least three tones of Y per day to another company. Each tonne of X requires twenty-machine hours production time and each tonne of Y requires fifty-machine hours production time. The daily maximum possible number of machine hours is three-hundred and sixty. The entire firm output can be sold and the profit made is 80,000 per tonne of X and 120,000 per tonne.

(a)
Formulate the above as a linear programming problem. (5 marks)
(b)
Using graphical method, determine the number of tones of X and Y that the company should produce to maximize profit hence maximum profit. (10 marks)

Quantitative Techniques Question Paper

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