(20 marks) Question 1 Consider the following transportation tableau with three origins and three destinations Windhoek Gobabis wam Bay Supply From Rundu Oshakali Katima Mullo 10 10 100 3 300 16 18 14 110 300 Demand 300 200 Total Required Use the Vogel Approximation method (VAM) to find an initial feasible solution? Total Marks Sub total 20 20 20 Question 2 (20 marks) Miky Lane (ML has come up with a new recipe for ice creams which they are planning to advertise and sell in the month of April 2002. As a frozen food, the sale of the ice cream depends on the weather. If the weather is cold. ML wilseil 3 000 ce creams without the need to advertise. The weather forecast as indicated that there is a 70% probability of a cold weather in April 2022. the weather in April 2022 turns out to be hot. ML will be able to sel 10 000 ice creams without the need to advertise. The weather forecast indicates a 30% probability of a hot weather in April 2022 ML continues to advertise the ice cream and the weather tums out to be cold. tis anticipated that there is a 60% probability that the advertising will increase the demand for ice creams to 7000ML continues to advertise the ice cream and the weather turns out to be hot it is anticipated that there is a 25% probability that the advertising will increase the demand for ice creams to 13000 The following is the profit expected from the ice cream at the different demand levels Number of ice creams sold 5000 6000 7000 8000 9.000 10000 11000 12000 13000 Profit (excluding advertising) NS 120 000 (5000) 35 000 000 70 000 90 000 115 000 130 000 150 000 Page 14 of 16 FACULTY OF COMMERCE, MANAGEMENT AND LAW The budget advertising cost of the ice cream is N$15.000 Required Marks Sub total Total 20 20 20 21 With the aid of a decision tree should ML advertise the ice cream? Total Question 3 (20 marks) Health 4 All centre specialises in the provision of sports/exercise and medical/dietary advice to clients. The service is provided on a residential basis and clients stay for whatever number of days that suits their needs. Budgeted estimates for the year ending 30 June 2022 are as follows: 1. The maximum capacity of the centre is 50 clients per day for 350 days in the year. 2. Clients will be invoiced at a fee per day. The budgeted occupancy level will vary with the client fee level per day and is estimated at different percentages of maximum capacity as follows: Client fee per day Occupancy level Occupancy as percentage of maximum capacity N$180 90% High Medium N$200 75% N$220 Low 6% 3. Variable costs are also estimated at one of the three levels per client per day. The high, most likely and low levels per client days are N$95, N$85 and N$70 respectively. The range of cost levels reflects only the possible effect of the purchase prices of goods and services. Marks Required Sub Total total Prepare a summary which shows the budgeted contribution earned for the year 3.1 ended 30 June 2022 for each of the nine possible outcomes (high, most likely, 10 10 low). State the client fee strategy for the year to 30 June 2022 that will result from the use of each of the following decision rules: 0) | Maximax 3.2 Maximin 10 20 (iii) Minimax regret Your answer should explain the basis of operation of each rule. Use the information from your answer above (3.1) as reference and show any additional working calculations as necessary. Total 20 (ii) Question 4 (25 marks) Oshana Construction has just signed a contract with Tang Enterprises for the construction of a machine. The management accountant constructed the following network diagram for the project Page 15 of 26 FACULTY OF COMMERCE, MANAGEMENT AND LAW 125 The duration and variable cost under normat and accelerated circumstances of the various activities are as follows: Activity Estimated time (hours) Estimated variable implementation Cost slope costs NS Normal Accelerated Normal (NS) Accelerated (N5) AB 96 64 224 000 308 000 2000 A-C 95 90 120 000 135 000 7 B-C 0 0 0 0 0 B-D 48 32 110 000 125 000 1 000 C-E 128 ? 172 000 193 600 1 200 D-E 125 85 133 000 193 000 1 500 779 000 955 600 The accelerated duration of activity C-E is uncertain. The estimated hours are as follows: Most optimistic time 98 hours Most likely time 107 hours Most pessimistic time 134 hours Fixed costs are absorbed at a rate of N$1 750 per hour and are not regarded as committed fixed costs. Other direct costs for the project amount to N$250 000 Marks Sub Total total 2 2 3 5 2 7 Required 4.1 Calculate the cost slope for activity A-C 42 Calculate the expected duration of the accelerated crash activity C-E 4.3 Calculate the duration of the various routes and determine the critical path Set out the programme to be followed in order to reduce total project time in 44 the most cost efficient manner and state the number of hours for completion of the project that will ensure minimum total costs 4.5 Calculate the accelerated crash cost of the project Total 15 22 3 25 25