Description
Operations Research
Dec 2025 Examination
Q1. A consumer electronics company in Bengaluru is facing rising maintenance costs and declining efficiency from its 12-year-old assembly line machines. Recent breakdowns have caused missed delivery deadlines and customer complaints. The management team is debating whether to continue repairing the old machines or invest in new, more efficient equipment. They need to apply replacement models to analyze the trade-offs between ongoing maintenance, operational risks, and the capital investment required for new machinery. Given the scenario, how should the management team apply replacement models to determine the optimal timing for replacing aging production equipment, balancing cost, efficiency, and risk? (10 Marks)
Ans 1.
Introduction
In manufacturing industries, machinery plays a central role in ensuring operational continuity and maintaining customer satisfaction. However, as equipment ages, firms face increasing maintenance costs, frequent breakdowns, and reduced efficiency. The case of the Bengaluru-based consumer electronics company highlights this dilemma: management must decide whether to continue repairing old machines or replace them with new equipment. This is a classic problem addressed by replacement models in operations research, which provide a scientific framework to evaluate the trade-offs between costs, risks, and efficiency. By applying these models, firms can determine the optimal time for replacement, balancing short-term repair expenses against the long-term benefits of investing in new technology. Such structured analysis reduces uncertainty and aids in
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Q2(A). A consumer electronics manufacturer operates in a highly competitive and volatile Indian market. The company’s supply chain team is debating whether to focus on minimizing transportation costs or maximizing profits when designing its transportation model. Market conditions are unpredictable, with frequent changes in demand and supply chain disruptions. The management seeks a justified recommendation on which objective to prioritize and why. Assess how a company should prioritize between cost minimization and profit maximization when formulating its transportation problem, especially in a volatile market environment. What criteria should guide the decision, and how might the choice influence the company’s competitive position? (5 Marks)
Ans 2a.
Introduction
In the fast-changing Indian consumer electronics market, companies often struggle to design effective transportation models. The central debate is whether the focus should remain on minimizing transportation costs or on maximizing profits. While cost control is traditionally the first priority in logistics, volatile markets introduce risks such as sudden demand shifts and supply disruptions. Under such circumstances, management needs to weigh not just operational efficiency but also the strategic advantage gained from
Q2(B). A technology company is launching a new product, with activities ranging from R&D to market rollout. The team must select a project management technique: CPM, which uses deterministic time estimates, or PERT, which incorporates uncertainty through three-time estimates. The project involves innovative tasks with unpredictable durations, and management is concerned about meeting tight deadlines and managing risks. Assess the decision-making process of a project team that must choose between PERT and CPM for a new product development initiative in the technology sector. Weigh the advantages and disadvantages of each method in the context of uncertain activity durations, and justify which technique would be more appropriate for this scenario. (5 Marks)
Ans 2b.
Introduction
Project management techniques like CPM and PERT are essential in planning and controlling complex initiatives. When a technology company launches a new product, uncertainties in research, testing, and market rollout make scheduling critical. CPM uses fixed, deterministic time estimates, while PERT incorporates probabilistic estimates for uncertain activities. The project team’s challenge lies in selecting a method that balances accuracy, flexibility, and risk management. The choice will significantly impact their
