This is an INDIVIDUAL coursework assignment.
There are two questions to attempt. Each of the two questions have a ‘section A’ and a ‘section B’ respectively. Each section is worth up to 50% of the marks awarded to each question. To achieve ALL of the learning outcomes, you MUST attempt both sections per question.
Both questions are awarded equal marks
Where possible, support your case studies with the use of an Excel spreadsheet. Use any given themes as case studies.
Use your models in each of the questions, to assist you to investigate and analyse the relative strengths and weaknesses. Using the information you find, you are then requested to prepare a report demonstrating your ability to critically evaluate and to reflect upon, the performance of your models as instruments of policy to assist the decision making processes.
Your reflection section for each question must contain information relating to how you would re-address and re-submit your work using a different approach or perspective, how you formulated your ideas for your original work, what methods you used in your research, what library references you found useful, how confident you are in your model etc. etc. Note, this list is not exhaustive. In this section, you may use sensitivity analysis to help you to critically evaluate and to reflect upon your models.
Remember, your reflection section is worth 50% of the marks for EACH of the two questions. (Learning Outcomes 2 and 4) To help you with reflection and sensitivity analysis, you should ‘study’ your respective models into some detail.
Question 1
Section A – worth up to 50% of the total marks awarded to this question
A company has decided to manufacture a new product. The government has indicated there is a non repayable subsidy of £500,000 if the company decide to invest immediately. Since the government is desperate for this product, they have also indicated to the company, that if they decide to limit sales exclusively to the government, then a guaranteed £1,000,000 (£1m) of sales will occur.
However, the company is aware that the potential overall demand for this product could be very high and they have decided to conduct a market research to see if it may be feasible to market this product commercially both in the home and in the export markets. Results of their market research have indicated an initial potential high or low demand, with a respective probability of 0.6 and 0.4. If their initial potential demand is low, the company project that their sales in their export market will realise a possible £2.95m payoff but there is perhaps a 40% chance. Their home market in this ‘low’ area of demand, is split into two distinct markets, one returning a potential £2.05m payoff and the other returning a potential £3.25m payoff with a probability of 0.35 and 0.65 respectively.
In their initial potential demand is ‘high’, then they estimate their home market will demand more of their output, hence they are 50% certain that their export market will return a payoff of £2.75m. Related to their export market is their home market and at this point they are able to make a decision. They project a possibility of a £1.745m payoff from the government since the government will be competing for this product, which inevitably forces up the price. The other option for them, is to sell on the home market, where they project a potential payoff of £1.6m or £2.35m but their respective probabilities are estimated to be 0.8 and 0.2.
Finally, the overall cost of initiating their market research will be £1m. Draw a decision tree to explain this scenario and identify the correct decision for the company to undertake.
Section B – worth up to 50% of the total marks awarded to this question
Discuss- your findings. Also within your reflection section and, as additional information to the requested information contained in the rubric on page one above, you should address the strong and weak points in your model identified by sensitivity analysis. For example, comment upon the possibility of points of indecision (i.e. when two or more payoffs are equal in value) etc. etc. Remember, this reflection section is worth up to 50% of your marks for this question.
Question 2
Section A – worth up to 50% of the total marks awarded to this question
A pharmaceutical company operates a number of manufacturing lines and, each line manufactures different drugs for the health industry. The company operates an employee policy where employees are easily moved from one line to another, for example if the company should face an immediate increase in demand for the output from one particular line.
One of the distribution lines manufactures two drugs, i.e. drug ‘y’ and drug ‘x’. When demand conditions dictate, you may assume that there are up to fifteen employees trained and delegated to undertake employment on this line. Each employee works an eight hour shift and you may also assume that their output per man shift is equal. Each employee is capable of manufacturing a maximum output per man shift of thirty batches of drug ‘y’ or twenty batches of drug ‘x’. The total daily available funds to purchase quantities of the various ingredients needed to manufacture these drugs, is £105,000 (assume £105k or 105). This daily fund would purchase sufficient ingredients to manufacture either fifteen batches of drug ‘y’ or twenty-one batches of drug ‘x’ (maximum).
The available daily budget allocated to blend the ingredients is £56,000 (assume £56k or 56) and this budget will support the blending of either sixteen batches of drug ‘y’ or seven batches of drug ‘x’.
Government policy has restricted the production drug ‘x’ to a maximum of 3.5 batches. Use the graphical method to determine the various amounts of drug ‘y’ and drug ‘x’ to manufacture to maximize profits. You may assume the profits relating to drug ‘y’ and drug ‘x’ are equal.
Section B – worth up to 50% of the total marks awarded to this question
Discuss- your findings. Also within your reflection section and, as additional information to the requested information contained in the rubric on page one above, you should address the strong and weak points in your model identified by sensitivity analysis. For example, comment upon the optimal solution in your model when the slope of the objective function changes (how could this occur in practice?) to become equal in magnitude and direction to the slope of one of the constraints etc. Remember, this reflection section is worth up to 50% of your marks for this question.
