Engineering Problem Analysis

Part A: Decision Analysis (25 marks)

As an engineer, very often you have to deal with problems that involve careful consideration, analysis, optimisation, interpretation, conclusion and decision. This assignment consists of three parts (A – Decision analysis, B – Network analysis and C – Maximal flow analysis). Each part comprises a case study which poses real systems challenges in terms of planning, optimization and decision making. You will need to apply appropriate methods to analyze, interpret, and provide decisions regarding the problem context and write a brief report of your recommendations (no more than 2,000 words for the whole report excluding calculations).

You will need to write a managerial report consisting of solutions on the three case study problems. Marks will be awarded based on the quality of analysis and interpretation in applying related perspectives to the case material. Your answers must be in report format, and should include

• Introduction

• calculations, results, interpretation (if needed)

• appropriate decision(s) and recommendation(s)

• critical appraisal

• conclusion

R&R Limited has developed a new type of aircraft engine and the company is planning to bring the engine to the market. One possibility is to immediately license the product rights to another company that will market and sell the product. The best estimate for this alternative is a payoff of £3 million in licensing fees. Two other possibilities are to build a large manufacturing plant now to produce the product or build a small plant now to produce the product with the option of expanding the plant in three years. The expected payoff from producing the product depends on the market acceptance of the product during the first three years and during the next five years. If the market acceptance in the first three is low, R&R Limited will stop production and cut its losses at that point. Analysts at R&R Limited have estimated a 70% probability of a high market acceptance in the first 3 years.

If the market acceptance is high in the first three years, they believe the probability of a high market acceptance in the next five years to be 60%. The following tables give the net payoff estimates (in millions) for producing the product (the negative payoff means a loss to the company):

Managerial report:

Perform a decision analysis of the problem facing R&R Limited and prepare a report that summarises your findings, recommendations and critical appraisal. Include the following information in your report

• A decision tree that shows the logical sequence of the decision problem.

• A recommendation of a course of action to the company. What would be the decision if the company adopts a risk-averse decision strategy?

• A complete profit/loss tableshowing the possible levels of profit the company can make and the associated probabilities.
• A critical appraisal.

R&R Limited is planning to modernize and expand its current main office branch in London. Details of the activities and required time for the modernisation and expansion of the project are shown below:

R&R Limited wishes to know whether the project can be completed over a 30-week period with an additional cost. The following information has been obtained for normal and crash duration of the project.

Managerial report:

Develop a report that presents the activity schedule and expected project completion time to modernize and expand its current office, more specifically:

• Construction of the network diagram.

• Performance of an event-based analysis, i.e. obtaining earliest event times (TE) and latest event times (TL), inserting them appropriately into the diagram and, hence, obtaining the critical path and project duration.
• Performance of an activity-based analysis, i.e. obtaining EST, LST, EFT, LFT, total float (TF) and free float (FF), showing all these values in a table and, obtaining the critical path and project duration.

• Crashing decisions to meet the desired 30-week completion time at the least possible cost making the crashing decisions and developing an activity schedule one-by-one and taking least cost slope first.
• A critical appraisal.

R&R Limited has won a bid to provide a solution for the heavy equipment and automation system to transmit oil for a High-Price Oil Company which owns a pipeline network used to transmit oil from its sources to a storage location.

Due to the varying pipe sizes, the flow capacities also vary. The values indicate the maximum possible flow in million barrels per day from one place to another. Perform a flow analysis so that R&R Limited can provide the maximal flow of oil from the source to destination.

Write a report on the maximal flow analysis that includes

• development of the flow maximization as a linear programming problem with the objective function and constraints

• solution to the flow maximization problem with detailed calculations
• the amount of oil that needs to be transmitted through each pipe with the details of the steps and calculations
• a critical appraisal.

Conclusion: (10 marks)

Conclusion from the case studies with some critical discussions.