OCR MEI D2 (Decision Mathematics 2) 2014 June

Question 1 1 marks
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1 Keith is wondering whether or not to insure the value of his house against destruction. His friend Georgia has told him that it is a waste of money. Georgia argues that the insurance company sets its premiums (how much it charges for insurance) to take account of the probability of destruction, plus an extra fee for its profit. Georgia argues that house-owners are, on average, simply paying fees to the insurance company. Keith's house is valued at \(\pounds 400000\). The annual premium for insuring its value against destruction is \(\pounds 100\). Past statistics show that the probability of destruction in any one year is 0.0002 .
  1. Draw a decision tree to model Keith's decision and the possible outcomes.
  2. Compute Keith's EMV and give the course of action which corresponds to that EMV.
  3. What would be the insurance premium if there were no fee for the insurance company? For the remainder of the question the insurance premium is still \(\pounds 100\).
    Suppose that, instead of EMV, Keith uses the utility function utility \(= ( \text { money } ) ^ { 0.5 }\).
  4. Compute Keith's utility and give his corresponding course of action. Keith suspects that it may be the case that he lives in an area in which the probability of destruction in a given year, \(p\), is not 0.0002 .
  5. Draw a decision tree, using the EMV criterion, to model Keith's decision in terms of \(p\), the probability of destruction in the area in which Keith lives.
  6. Find the value of \(p\) which would make it worthwhile for Keith to insure his house using the EMV criterion.
  7. Explain why Keith may wish to insure even if \(p\) is less than the value which you found in part (vi). [1]
    (a) A national Sunday newspaper runs a "You are the umpire" series, in which questions are posed about whether a batsman in cricket is given "out", and why, or "not out". One Sunday the readers were told that a ball had either hit the bat and then the pad, or had missed the bat and hit the pad; the umpire could not be sure which. The ball had then flown directly to a fielder, who had caught it. The LBW (leg before wicket) rule is complicated. The readers were told that this batsman should be given out (LBW) if the ball had not hit the bat. On the other hand, if the ball had hit the bat, then he should be given out (caught). Readers were asked what the decision should be. The answer given in the newspaper was that this batsman should be given not out because the umpire could not be sure that the batsman was out (LBW), and could not be sure that he was out (caught).
Question 2
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  1. Rachel thinks that the answer given in the newspaper article is not sensible. Give a verbal argument why Rachel might think that the batsman should be given out. Rachel tries to formalise her argument. She defines four simple propositions.
    o: "The batsman is given out."
    lb: "The batsman is given out (LBW)."
    c: "The batsman is given out (caught)."
    b: "The ball hit the bat."
  2. An implication of the batsman not being out (LBW) is that the ball has hit the bat. Write this down in terms of Rachel's propositions.
  3. Similarly, write down the implication of the batsman not being out (caught).
  4. Using your answers to parts (ii) and (iii) write down the implication of a batsman being not out, in terms of \(b\) and \(\sim b\).
    [0pt] [You may assume that if \(\mathrm { w } \Rightarrow \mathrm { y }\) and \(\mathrm { x } \Rightarrow \mathrm { z }\), then \(( \mathrm { w } \wedge \mathrm { x } ) \Rightarrow ( \mathrm { y } \wedge \mathrm { z } )\). ]
  5. By writing down the contrapositive of your implication from part (iv), produce an implication which supports Rachel's argument.
    (b) A classroom rule has been broken by either Anja, Bobby, Catherine or Dimitria, or by a subset of those four. The teacher knows that Dimitria could not have done it on her own. Let \(a\) be the proposition "Anja is guilty", and similarly for \(b , c\) and \(d\).
  6. Express the teacher's knowledge as a compound proposition. Evidence emerges that Bobby and Catherine were elsewhere at the time, so they cannot be guilty. This can be expressed as the compound proposition \(\sim ( b \vee c )\).
  7. Construct a truth table to show the truth values of the compound proposition given by the conjunction of the two compound propositions, one from part (i) and one given above.
  8. What does your truth table tell you about who is guilty? 3 Three products, A, B and C are to be made.
    Three supplements are included in each product. Product A has 10 g per kg of supplement \(\mathrm { X } , 5 \mathrm {~g}\) per kg of supplement Y and 5 g per kg of supplement Z . Product B has 5 g per kg of supplement \(\mathrm { X } , 5 \mathrm {~g}\) per kg of supplement Y and 3 g per kg of supplement Z .
    Product C has 12 g per kg of supplement \(\mathrm { X } , 7 \mathrm {~g}\) per kg of supplement Y and 5 g per kg of supplement Z .
    There are 12 kg of supplement X available, 12 kg of supplement Y , and 9 kg of supplement Z .
    Product A will sell at \(\pounds 7\) per kg and costs \(\pounds 3\) per kg to produce. Product B will sell at \(\pounds 5\) per kg and costs \(\pounds 2\) per kg to produce. Product C will sell at \(\pounds 4\) per kg and costs \(\pounds 3\) per kg to produce. The profit is to be maximised.
  9. Explain how the initial feasible tableau shown in Fig. 3 models this problem. \begin{table}[h]
    1(v)
    1(vi)
    1
  10. \begin{center} \begin{tabular}{|l|l|} \hline 2(a)(i) &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline &
    \hline
Question 3
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3 Three products, A, B and C are to be made.
Three supplements are included in each product. Product A has 10 g per kg of supplement \(\mathrm { X } , 5 \mathrm {~g}\) per kg of supplement Y and 5 g per kg of supplement Z . Product B has 5 g per kg of supplement \(\mathrm { X } , 5 \mathrm {~g}\) per kg of supplement Y and 3 g per kg of supplement Z .
Product C has 12 g per kg of supplement \(\mathrm { X } , 7 \mathrm {~g}\) per kg of supplement Y and 5 g per kg of supplement Z .
There are 12 kg of supplement X available, 12 kg of supplement Y , and 9 kg of supplement Z .
Product A will sell at \(\pounds 7\) per kg and costs \(\pounds 3\) per kg to produce. Product B will sell at \(\pounds 5\) per kg and costs \(\pounds 2\) per kg to produce. Product C will sell at \(\pounds 4\) per kg and costs \(\pounds 3\) per kg to produce. The profit is to be maximised.
  1. Explain how the initial feasible tableau shown in Fig. 3 models this problem. \begin{table}[h]
    Pabcs 1s 2s 3RHS
    1- 4- 3- 10000
    01051210012000
    055701012000
    05350019000
    \captionsetup{labelformat=empty} \caption{Fig. 3}
    \end{table}
  2. Use the simplex algorithm to solve this problem, and interpret the solution.
  3. In the solution, one of the basic variables appears at a value of 0 . Explain what this means. There is a contractual requirement to provide at least 500 kg of product A .
  4. Show how to incorporate this constraint into the initial tableau ready for an application of the two-stage simplex method. Briefly describe how the method works. You are not required to perform the iterations.