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Name: Subject:

MB0032 – SET 1

Study Center: Date of Submission:

March, 2008

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MB0032 – OPERATION RESEARCH

SET – 1
SOLVED ASSIGNMENT
Q 1: Describe in details the different scopes of application of Operations Research?

Operations Research (OR) in the USA, South Africa and Australia, and Operational
Research in Europe and Canada, is an interdisciplinary branch of applied mathematics
and formal science that uses methods such as mathematical modeling, statistics, and
algorithms to arrive at optimal or near optimal solutions to complex problems. It is typically
concerned with optimizing the maxima (profit, assembly line performance, crop yield,
bandwidth, etc) or minima (loss, risk, etc.) of some objective function. Operations research
helps management achieve its goals using scientific methods.

The terms operations research and management science are often used synonymously.
When a distinction is drawn, management science generally implies a closer relationship
to the problems of business management. The field of operations research is closely
related to Industrial engineering. Industrial engineers typically consider Operations
Research (OR) techniques to be a major part of their toolset.

Some of the primary tools used by operations researchers are statistics, optimization,
probability theory, queuing theory, game theory, graph theory, decision analysis, and
simulation. Because of the computational nature of these fields, OR also has ties to
computer science, and operations researchers use custom-written and off-the-shelf
software.

Operations research is distinguished by its frequent use to examine an entire management

information system, rather than concentrating only on specific elements (though this is
often done as well). An operations researcher faced with a new problem is expected to
determine which techniques are most appropriate given the nature of the system, the
goals for improvement, and constraints on time and computing power. For this and other
reasons, the human element of OR is vital. Like any other tools, OR techniques cannot
solve problems by themselves.

• Critical path analysis or project planning: identifying those processes in a complex

project which affect the overall duration of the project
• Designing the layout of a factory for efficient flow of materials
• constructing a telecommunications network at low cost while still guaranteeing
QoS (quality of service) or QoS (Quality of Experience) if particular connections
become very busy or get damaged
• Road traffic management and 'one way' street allocations i.e. allocation problems.
• Determining the routes of school buses (or city buses) so that as few buses are
needed as possible

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• designing the layout of a computer chip to reduce manufacturing time (therefore
reducing cost)
• Managing the flow of raw materials and products in a supply chain based on
uncertain demand for the finished products
• Efficient messaging and customer response tactics
• Robotizing or automating human-driven operations processes
• Globalizing operations processes in order to take advantage of cheaper materials,
labor, land or other productivity inputs
• Managing freight transportation and delivery systems (Examples:
Shipping, intermodal freight transport)
• Scheduling:
o Personnel staffing
o Manufacturing steps
o Network data traffic: these are known as queuing models or queueing
systems.
o sports events and their television coverage
• blending of raw materials in oil refineries
• determining optimal prices, in many retail and B2B settings, within the disciplines
of pricing science

Operations research is also used extensively in government where evidence-based policy is

used.

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Q 2: What do you understand by Linear Programming Problem? What are the

requirement of L.P.P? What are the basic assumption of L.P.P?

Linear programming problem (LPP):

The standard form of the linear programming problem is used to develop the procedure for
solving a general programming problem.

subject to the constraints

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c1, c2,…. Cn, a11, a12,…. amn are all known constants

Z is called the "objective function" of the LPP of n variables which is to be maximized or

minimized.

Requirements of L.P.P :
There are mainly four steps in the mathematical formulation of linear programming
problem as a mathematical model. We will discuss formulation of those problems which
involve only two variables.
• Identify the decision variables and assign symbols x and y to them. These decision
variables are those quantities whose values we wish to determine.
• Identify the set of constraints and express them as linear equations/inequations in
terms of the decision variables. These constraints are the given conditions.
• Identify the objective function and express it as a linear function of decision
variables. It might take the form of maximizing profit or production or minimizing
cost.
• Add the non-negativity restrictions on the decision variables, as in the physical
problems, negative values of decision variables have no valid interpretation.

There are many real life situations where an LPP may be formulated. The following
examples will help to explain the mathematical formulation of an LPP.

Example-1. A diet is to contain at least 4000 units of carbohydrates, 500 units of fat and
300 units of protein. Two foods A and B are available. Food A costs 2 dollars per unit and
food B costs 4 dollars per unit. A unit of food A contains 10 units of carbohydrates, 20
units of fat and 15 units of protein. A unit of food B contains 25 units of carbohydrates, 10
units of fat and 20 units of protein. Formulate the problem as an LPP so as to find the
minimum cost for a diet that consists of a mixture of these two foods and also meets the
minimum requirements.
The above information can be represented as

Let the diet contain x units of A and y units of B.

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∴ Total cost = 2x + 4y
The LPP formulated for the given diet problem is
Minimize Z = 2x + 4y
subject to the constraints

Basic Assumptions of L.P.P:

Linear programming is applicable only to problems where the constraints and objective
function are linear i.e., where they can be expressed as equations which represent straight
lines. In real life situations, when constraints or objective functions are not linear, this
technique cannot be used.

• Factors such as uncertainty, weather conditions etc. are not taken into consideration.
• There may not be an integer as the solution, e.g., the number of men required may
be a fraction and the nearest integer may not be the optimal solution.
i.e., Linear programming techqnique may give practical valued answer which is not
desirable.
• Only one single objective is dealt with while in real life situations, problems come
with multi-objectives.
• Parameters are assumed to be constants but in reality they may not be so.

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Q 3: Describe the different steps needed to solve a problem by Simplex method.

Simplex method

The simplex method is a method for solving problems in linear programming. This method,
invented by George Dantzig in 1947, tests adjacent vertices of the feasible set (which is a
polytope) in sequence so that at each new vertex the objective function improves or is
unchanged. The simplex method is very efficient in practice, generally taking 2m to 3m
iterations at most (where m is the number of equality constraints), and converging in
expected polynomial time for certain distributions of random inputs (Nocedal and Wright
1999, Forsgren 2002). However, its worst-case complexity is exponential, as can be
demonstrated with carefully constructed examples (Klee and Minty 1972).

A different type of methods for linear programming problems are interior point methods,
whose complexity is polynomial for both average and worst case. These methods
construct a sequence of strictly feasible points (i.e., lying in the interior of the polytope but
never on its boundary) that converges to the solution. Research on interior point methods
was spurred by a paper from Karmarkar (1984). In practice, one of the best interior-point
methods is the predictor-corrector method of Mehrotra (1992), which is competitive with
the simplex method, particularly for large-scale problems.
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Dantzig's simplex method should not be confused with the downhill simplex method
(Spendley 1962, Nelder and Mead 1965, Press et al. 1992). The latter method solves an
unconstrained minimization problem in n dimensions by maintaining at each iteration n+1
points that define a simplex. At each iteration, this simplex is updated by applying certain
transformations to it so that it "rolls downhill" until it finds a minimum.

The Simplex Method is "a systematic procedure for generating and testing candidate vertex
solutions to a linear program." (Gill, Murray, and Wright, p. 337) It begins at an arbitrary
corner of the solution set. At each iteration, the Simplex Method selects the variable that
will produce the largest change towards the minimum (or maximum) solution. That
variable replaces one of its compatriots that is most severely restricting it, thus moving the
Simplex Method to a different corner of the solution set and closer to the final solution. In
addition, the Simplex Method can determine if no solution actually exists. Note that the
algorithm is greedy since it selects the best choice at each iteration without needing
information from previous or future iterations.

The Simplex Method solves a linear program of the form described in Figure 3. Here, the
coefficients represent the respective weights, or costs, of the variables . The
minimized statement is similarly called the cost of the solution. The coefficients of the
system of equations are represented by , and any constant values in the system of
equations are combined on the right-hand side of the inequality in the variables .
Combined, these statements represent a linear program, to which we seek a solution of
minimum cost.

Figure 3

A Linear Program

Solving this linear program involves solutions of the set of equations. If no solution to the
set of equations is yet known, slack variables , adding no cost to the
solution, are introduced. The initial basic feasible solution (BFS) will be the solution of the
linear program where the following holds:

Once a solution to the linear program has been found, successive improvements are made
to the solution. In particular, one of the nonbasic variables (with a value of zero) is chosen

to be increased so that the value of the cost function, , decreases. That variable is then
increased, maintaining the equality of all the equations while keeping the other nonbasic
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variables at zero, until one of the basic (nonzero) variables is reduced to zero and thus
removed from the basis. At this point, a new solution has been determined at a different
corner of the solution set.

The process is then repeated with a new variable becoming basic as another becomes
nonbasic. Eventually, one of three things will happen. First, a solution may occur where no
nonbasic variable will decrease the cost, in which case the current solution is the optimal
solution. Second, a non-basic variable might increase to infinity without causing a basic-
variable to become zero, resulting in an unbounded solution. Finally, no solution may
actually exist and the Simplex Method must abort. As is common for research in linear
programming, the possibility that the Simplex Method might return to a previously visited
corner will not be considered here.

The primary data structure used by the Simplex Method is "sometimes called a dictionary,
since the values of the basic variables may be computed (‘looked up’) by choosing values
for the nonbasic variables." (Gill, Murray, and Wright, p. 337) Dictionaries contain a
representation of the set of equations appropriately adjusted to the current basis. The use of
dictionaries provide an intuitive understanding of why each variable enters and leaves the
basis. The drawback to dictionaries, however, is the necessary step of updating them which
can be time-consuming. Computer implementation is possible, but a version of the Simplex
Method has evolved with a more efficient matrix-oriented approach to the same problem.
This new implementation became known as the Revised Simplex Method.

The steps of the Simplex Method also need to be expressed in the matrix format of the
Revised Simplex Method. The basis matrix, B, consists of the column entries of A
corresponding to the coefficients of the variables currently in the basis. That is if is the
fourth entry of the basis, then is the fourth column of B. (Note that B
is therefore an matrix.) The non-basic columns of A constitute a similar though likely
not square, matrix referred to here as V.

Choose to enter the basis based

on the greatest cost contribution.

If cannot decrease the cost, d is If , d is optimal solution.

optimal solution.

Determine that first exits the

basis (becomes zero) as
increases.

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If can decrease without causing If for all i, the solution is
another variable to leave the basis, unbounded.
the solution is unbounded.

Examples:

Use the two phase method to

Maximize z = 3x1 – x2
Subject to 2x1 + x2 ≥ 2
x1 + 3x2 ≤ 2
x2 ≤ 4,
x1, x2 ≥ 0

Rewriting in the standard form,

Maximize z = 3x1 – x2 + 0S1 – MA1 + 0.S2 + 0.S3
Subject to 2x1 + x2 – S1 + A1 = 2
x1 + 3x2 + S2 = 2
x2 + S3 = 4,
x1, x2, S1, S2, S3, A1 ≥ 0.

Phase I : Consider the new objective,

Maximize Z* = – A1
Subject to 2x1 + x2 – S1 + A1 = 2
x1 + 3x2 + S2 = 2
x2 + S3 = 4,
x1, x2, S1, S2, S3, A1 ≥ 0.

Solving by Simplex method, the initial simplex table is given by

x1 x2 S1 A1 S2 S3
2 0 0 –1 0
0 Ratio
A1 – 1 2* 1 –1 1 0 0 2 2/2=1
S2 0 1 3 0 0 1 0 2 2/1=2
S3 0 0 1 0 0 0 1 4
–2 –1 1 0 0 0 –2

The first iteration gives the following table:

x1 x2 x1 A1 S2 S3
0 0 0 –1 0 0
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X1 0 1 1/2 – 1/2 ½ 0 0 1
S2 0 0 5/2 1/2 –½ 1 0 1
S3 0 0 1 0 0 0 1 4
0 0 0 1 0 0 0

Phase I is complete, since there are no negative elements in the last row. The Optimal
solution of the new objective is Z* = 0.

x2 + S3 = 4

with the initial solution x1 = 1, S2 = 1, S3 = 4, the corresponding simplex table is

x1 x2 S1 S2 S3
3 –1 0 0 0 Ratio
X1 3 1 1/2 – 1/2 0 0 1
S2 0 0 5/2 1/2* 1 0 1 1/1/2=2
S3 0 0 1 0 0 1 4
0 5/2 – 3/2 0 0 3

Proceeding to the next iteration, we get the following table:

x1 x2 S1 S2 S3
3 –1 0 0 0
X1 0 1 3 0 1 0 2
S1 0 0 5 1 2 0 2
S3 0 0 1 0 0 1 4
0 10 0 3 0
6

Since all elements of the last row are non negative, the current solution is optimal.

The maximum value of the objective function Z = 6 which is attained for x1 = 2, x2 = 0.

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Q 4: Describe the economics importance of the Duality concept.

i. If the primal contains a large number of constraints and a smaller number of

variables, the labour of computation can be considerably reduced by converting
it into the dual problem and then solving it.

ii. The interpretation of the dual variable from the loss or economic point of view
proves extremely useful in making future decisions in the activities being
programmed.

The linear programming problem can be thought of as a resource allocation model in

which the objective is to maximize revenue or profit subject to limited resources. Looking
at the problem from this point of view, the associated dual problem offers interesting
economic interpretations of the L.P resource allocation model. We consider here a
representation of the general primal and dual problems in which the primal takes the role
of a resource allocation model.

Primal

Maximize

z= ∑C j =1
j .x j
n
Subject to ∑a
j =1
ij x j ≤b j , i = 1,2,…., m

xj ≥ 0, j = 1,2,…., n

Dual

Minimize

w= ∑b . y
i =1
i i

m
Subject to ∑a
i =1
ij yi ≤ ci , i = 1,2,…., n

yj ≥ 0, i = 1,2,…., m

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From the above resource allocation model, the primal problem has n economic activities
and m resources. The coefficient cj in the primal represents the profit per unit of activity j.
Resource i, whose maximum availability is bi, is consumed at the rate aij units per unit of
activity j.

(Objective value in the maximization problem) ≤ (Objective value in the minimization

problem)

At the optimum, the relationship holds as a strict equation. Note: Here the sense of
optimization is very important. Hence clearly for any two primal and dual feasible solutions,
the values of the objective functions, when finite, must satisfy the following inequality.

n m

z = ∑C j x j ≤ ∑bi yi = w
j =1 i =1

The strict equality, z = w, holds when both the primal and dual solutions are optimal.

Consider the optimal condition z = w first given that the primal problem represents a
resource allocation model, we can think of z as representing profit in Rupees. Because bi
represents the number of units available of resource i, the equation z = w can be
expressed as profit (Rs) = ∑ (units of resource i) x (profit per unit of resource i)

This means that the dual variables yi, represent the worth per unit of resource i [variables
yi are also called as dual prices, shadow prices and simplex multipliers].

With the same logic, the inequality z < w associated with any two feasible primal and dual
solutions is interpreted as (profit) < (worth of resources)

This relationship implies that as long as the total return from all the activities is less than
the worth of the resources, the corresponding primal and dual solutions are not optimal.
Optimality is reached only when the resources have been exploited completely, which can
happen only when the input equals the output (profit). Economically the system is said to
remain unstable (non optimal) when the input (worth of the resources) exceeds the output
(return). Stability occurs only when the two quantities are equal.

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Q 5: How can you use the Matrix Minimum method of finding the initial basic feasible
solution in the transportation problem.

The Initial basic Feasible solution using Matrix Minimum Method

Let us consider a T.P involving m-origins and n-destinations. Since the sum of origin
capacities equals the sum of destination requirements, a feasible solution always exists.
Any feasible solution satisfying m + n – 1 of the m + n constraints is a redundant one and
hence can be deleted. This also means that a feasible solution to a T.P can have at the
most only m + n – 1 strictly positive component, otherwise the solution will degenerate.
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It is always possible to assign an initial feasible solution to a T.P. in such a manner that
the rim requirements are satisfied. This can be achieved either by inspection or by
following some simple rules. We begin by imagining that the transportation table is blank
i.e. initially all xij = 0. The simplest procedures for initial allocation discussed in the
following section.

Matrix Minimum Method

Step 1:Determine the smallest cost in the cost matrix of the transportation table. Let it be
cij , Allocate xij = min ( ai, bj) in the cell ( i, j)

Step 2: If xij = ai cross off the ith row of the transportation table and decrease bj by ai go to
step 3.

if xij = bj cross off the ith column of the transportation table and decrease ai by bj go to step
3.

if xij = ai= bj cross off either the ith row or the ith column but not both.

Step 3: Repeat steps 1 and 2 for the resulting reduced transportation table until all the rim
requirements are satisfied whenever the minimum cost is not unique make an arbitrary
choice among the minima.

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Q 6: Describe the Integer Programming Problem? Describe the Gomory’s All-I.P.P. method
for solving the I.P.P. problem.

Integer Programming Problem

The Integer Programming Problem I P P is a special case of L P P where all or some variables
are constrained to assume nonnegative integer values. This type of problem has lot of
applications in business and industry where quite often discrete nature of the variables is
involved in many decision making situations. Eg. In manufacturing the production is frequently
scheduled in terms of batches, lots or runs; In distribution, a shipment must involve a discrete
number of trucks or aircrafts or freight cars

An integer programming problem can be described as follows:

Determine the value of unknowns x1, x2, … , xn
so as to optimize z = c1x1 +c2x2 + . . .+ cnxn
subject to the constraints

ai1 x1 + ai2 x2 + . . . + ain xn =bi , i = 1,2,…,m

and xj ³ 0 j = 1, 2, … ,n

where xj being an integral value for j = 1, 2, … , k ≤ n.

If all the variables are constrained to take only integral value i.e. k = n, it is called an all(or
pure) integer programming problem. In case only some of the variables are restricted to take
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integral value and rest (n – k) variables are free to take any non negative values, then the
problem is known as mixed integer programming problem.

An optimum solution to an I. P. P. is first obtained by using simplex method ignoring the

restriction of integral values. In the optimum solution if all the variables have integer values, the
current solution will be the desired optimum integer solution. Otherwise the given IPP is
modified by inserting a new constraint called Gomory’s or secondary constraint which
represents necessary condition for integrability and eliminates some non integer solution
without losing any integral solution. After adding the secondary constraint, the problem is then
solved by dual simplex method to get an optimum integral solution. If all the values of the
variables in this solution are integers, an optimum inter-solution is obtained, otherwise another
new constrained is added to the modified L P P and the procedure is repeated. An optimum
integer solution will be reached eventually after introducing enough new constraints to
eliminate all the superior non integer solutions. The construction of additional constraints,
called secondary or Gomory’s constraints, is so very important that it needs special attention.

The iterative procedure for the solution of an all integer programming problem is as follows:

Step 1: Convert the minimization I.P.P. into that of maximization, if it is in the minimization
form. The integrality condition should be ignored.

Step 2: Introduce the slack or surplus variables, wherever necessary to convert the
inequations into equations and obtain the optimum solution of the given L.P.P. by using
simplex algorithm.

Step 3: Test the integrality of the optimum solution

a) If the optimum solution contains all integer values, an optimum basic feasible integer
solution has been obtained.
b) If the optimum solution does not include all integer values then proceed onto next step.

Step 4: Examine the constraint equations corresponding to the current optimum solution. Let
these equations be represented by

n1

∑y
j =0
ij x j = bi ( i 0 , 1, 2 , ........, m1 )

Where n’ denotes the number of variables and m’ the number of equations.

Choose the largest fraction of bis ie to find bi { } i

Let it be [bk 1]

or write is as f ko

Step 5: Express each of the negative fractions if any, in the k th row of the optimum simplex
table as the sum of a negative integer and a nonnegative fraction.

Step 6: Find the Gomorian constraint

n1

∑f
j =0
kj x j ≥ f ko

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n1

Gsla ( 1 )= − f ko + ∑ f kj x j
j =0
to the current set of equation constraints.

Step 7: Starting with this new set of equation constraints, find the new optimum solution by
dual simplex algorithm. (So that Gsla (1) is the initial leaving basic variable).

Step 8: If this new optimum solution for the modified L.P.P. is an integer solution. It is also
feasible and optimum for the given I.P.P. otherwise return to step 4 and repeat the process
until an optimum feasible integer solution is obtained.

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