University of Moratuwa
Faculty of Business
Department of Decision Sciences
B. B. Sc.
Level 3 – Semester VI Examination/Assessment
DA3460– Operations Research – II
Time allowed: Not specified 25th May 2021
INSTRUCTIONS TO CANDIDATES:
This assessment contains 04 questions on 04 pages. It will be available online from 11 am on
23rd May 2021.
This is an open book (online) examination.
You are required to upload scanned copies of answers before 11 am on 25th May 2021 to
LMS/Moodle. Please follow the guidelines issued by the UGS division. All examination
answers should be produced in your own hand writing.
This examination accounts for 50% of the module assessment.
The maximum marks attainable are indicated in brackets.
Answer all FOUR (04) questions.
Clearly state any assumptions you made on the script.
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Question 01 (based on the works of Dr. S. Dye)
Assume any hypothetical government (example: Malaysia) is concerned about country’s exposure to global
oil prices due to its low self-sufficiency (the current local production is about 50% of the total country
demand). One proposal suggests the Government to develop additional storage facilities. This will help to
manage future oil price fluctuations. If implemented, this proposal will eliminate chances of needing to
develop additional emergency storage to face supply risks in case of future oil crises.
You are required to construct a model that values of such additional storage facilities. Assume all future
scenarios are deterministic. This model seeks to maximize social welfare of the country over the period of
the price peak. This proposal will increase countries oil stockpile capacity to 2 million barrels. The following
information may be useful:
§ Actions taken by the government will not have any influence on global oil prices.
§ Ignore all stock holding costs for the sake of simplicity.
§ Assume the current stockpile level to be 0.7 million barrels.
§ The demand curve implies an economic marginal cost of “rationing” oil. Assume a monotone
decreasing linear demand curve.
o A local price of $ 60 per barrel is recorded if the oil availability is limited to 0.9 million
barrels per week.
o Similarly, oil availability limited to 0.8 million barrels per week corresponds to a local
price of $ 110 per barrel.
§ On average, local oil supplies cater 0.4 million barrels per week at $ 96 per barrel.
§ Country exports up to 0.3 million barrels of their local oil supplies. Assume there are no
transportation costs.
§ Assume that on average, the government imports maximum of 2 million barrels per week. Assume
there are no transportation costs.
§ Forecasted global oil prices per barrel (in $) for the coming weeks are shown in Table 1.
Table 1. Weekly international oil prices (example: Brent Crude Oil)
Week 1 2 3 4 5 6 7 8
Price, $ 92 115 155 175 180 140 125 100
§ An “end-of horizon storage value function” for oil at the end of the ten weeks can be constructed
as follows:
o Assume a volume of oil up to 0.8 million barrels is worth $ 108 per barrel. Anything above
that can be valued at $ 97 per barrel.
§ Assume that the government has complete control over oil import, production and rationing
volumes/levels. Also, the government can intervene to control the local oil prices.
Requirements:
a. Develop a deterministic LP model for the above problem. [30 marks]
b. Write the dual problem. Decompose your dual problem into a set of subproblems. Explain dual
problem and sub-problems and implications. [40 marks]
c. What is your take on the form of the optimal policy? Discuss the price behavior and the optimality
conditions. Use graphical interpretations wherever necessary in the above explanations.
[30 marks]
[100 marks]
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Question 02
Sachintha is a postgraduate student reading for her MBA in IT at the University of Moratuwa. For her MBA
research, she is interested in exploring the following research issues: “how does online teaching and learning
strategies have improved student learning experience and their performance?” Sachintha has penciled the
following objectives:
§ To assess the perceived stakeholder requirement of LMS
§ To identify the tools and/or functions available in an LMS
§ To develop a stakeholder requirement – technical capability matrix for LMS to support decision
making at different levels
She identifies the following stakeholders/end-users to conduct interviews to collect data:
Stakeholders: Lecturers and the undergraduates.
All of them are the internal end-users of the LMS system in a university. She has collected data using
structured questionnaire surveys. Table 2 describes the quality aspects of the user requirements and the
expected benefits of such requirements.
Table 2. User expectations (Requirements and required functionalities of LMS)
Requirement Description
C1: Stability of network (e.g. less interruptions)
C2: Ability to assess learning performance
Quality C3: Quality of e-learning platform (LMS)
C4: Richness and diversification of teaching materials
C5: Access to archived teaching and learning materials
C6: Ease of use
C7: Identification of LMS users separately (e.g. teachers, undergraduates)
Benefit C8: Time saving
C9: Ease of sharing or uploading data/information
C10: Flexibility in choosing learning/teaching content
You, as an expert in the area of multi-criteria decision analysis (MCDA) techniques, are required to advice
Ms. Sachintha how to rank the above requirements with appropriate importance. Provide graphical
illustrations to describe your answers. [100 marks]
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Question 03
The following sectors/areas/issue(s) can be identified for each district in Sri Lanka (see Table 3).
Table 3: Sectors/areas/issue(s) in different districts
District Issue(s) District Issue(s)
Jaffna Sea Port and Air Port Ratnapura Deforestation of rainforests,
development Rubber cultivation, Climate
challenge vulnerability and land
slides
Kilinochchi Development of Iranamadu Kegalle Rubber cultivation, Traditional
reservoir project arts and crafts
Mannar Overfishing, Deforestation Trincomalee Trincomalee Port development,
Fishing industry
Mullaitivu Groundnut value chain Batticaloa Oluvil Port development
Fishing industry
Vavuniya Climate challenge vulnerability Ampara Paddy farming
Puttalam Mangrove degradation Badulla Competing land use for corn
farming
Kurunegala Unplanned urban settlements Monaragala Land use for rubber plantations
Groundnut value chain
Colombo Waste management, Air Hambantota Port development, Tourism
pollution, Port-city project industry
Gampaha Climate challenge vulnerability, Matara Tourism industry, Climate
Tourism industry challenge vulnerability: Flood
risk
Kalutara Climate challenge vulnerability, Galle Tourism industry, Climate
Rubber cultivation challenge vulnerability
Anuradhapura Abandon quarries, Land use for Matale Spice cultivation and small-scale
paddy farming, Tourism farming, Climate challenge
industry, Water pollution vulnerability and land slides
Polonnaruwa Land use for paddy farming, Kandy Spice cultivation and small-scale
Tourism industry, Water farming, Air pollution, Climate
pollution challenge vulnerability and land
slides
Nuwara Eliya Tea value chains, Deforestation
Using System Dynamics (causal loops and stock-and-flow diagrams) analyze one of the above issues/sectors
of the district you reside permanently. [100 marks]
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Question 04
Figure 1 shows the proposed LRT route plan. It connects Malabe and Colombo Fort. This route is one
of the most congested traffic corridors leading to the Colombo Metropolitan area from periphery cities
and towns.
Figure 1. Proposed LRT route plan for Malabe to Colombo Fort corrido (Source: Ministry of Megapolis
and Western Development, 2018)
Initial project feasibility reports show a significant reduction of current traffic due to congestion. In
addition, this LRT project will serve increasing transport demand forecasted for the next few years.
Develop a deterministic LP/MILP network optimization model for the above LRT route by clearly
explaining the objective function and constraints including passenger movements at node level. Clearly
write your assumptions in point forms. All decision variables, indices and parameters must be declared
separately at the beginning of your model.
[100 marks]
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