TUSHAR JAIN

ROLL NO. 1411006595

DRIVE- Summer 2015
PROGRAM-MBADS / MBAN2 / MBAHCSN3 / PGDBAN2 / MBAFLEX
SEMESTER- II
SUBJECT CODE & NAME- MB0048 OPERATIONS RESEARCH

Q1. What are the features of operations research? What are the limitations of operations research?
(List and explain any five features of operations research, List and explain the five limitations of
operations research) 5, 5
Answer:
List and explain any five features of operations research:

OR is system-oriented. OR scrutinises the problem from an organisations perspective. The results can
be optimal for one part of the system, while the same can be unfavourable for another part of the
system.

OR imbibes an interdisciplinary team approach. Since no single individual can have a thorough
knowledge of all the fast developing scientific know-how, personalities from different scientific and
managerial cadre form a team to solve the problem.

OR uses scientific methods to solve problems.

OR increases effectiveness of the managements decision-making ability.
OR uses computers to solve large and complex problems.

List and explain the five limitations of operations research:

The limitations are more related to the problems of model building, time, and money factors. The limitations
are:

Magnitude of computation Modern problems involve a large number of variables. The magnitude of

computation makes it difficult to find the interrelationship.

Intangible factors Nonquantitative factors and human emotional\ factors cannot be taken into
account.

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Communication gap There is a wide gap between the expectations of managers and the aim of

research professionals.
Time and money factors When you subject the basic data to frequent changes then incorporating

them into OR models becomes a costly affair.

Human factor Implementation of decisions involves human relations and behaviour.

Q2. a. Explain the graphical method of solving Linear Programming Problem.

b. A furniture manufacturing company plans to make two products: chairs and tables- from its
available resources, which consists of 400 board feet of mahogany timber and 450 man-hours of labour.
It knows that to make a chair requires 5 board feet and 10 man-hours and yields a profit of Rs.45 while
each table uses 20 board feet and 15 man-hours and has a profit of Rs.80.
Formulate the LPP to maximise the profit.
Answer:
a)Graphical Methods to Solve LPP
While obtaining the optimal solution to an LPP by the graphical method, thestatement of the following
theorems of linear programming is used:

The collection of all feasible solutions to an LPP constitutes a convex set whose extreme points

correspond to the basic feasible solutions.

There are a finite number of basic feasible regions within the feasible solution space.
If the convex set of the feasible solutions of the system of simultaneous equation is a convex

polyhedron, then at least one of the extreme points gives an optimal solution.
If the optimal solution occurs at more than one extreme point, the value of the objective function will
be the same for all convex combination of these extreme points.

Working rule
The method of solving an LPP on the basis of the above analysis is known as the graphical method. The
working rule for the method is as follows.
Step 1: Formulate the problem in terms of a series of mathematical equations representing objective function
and constraints of LPP.
Step 2: Plot each of the constraints equation graphically. Replace the inequality constraint equation to form a
linear equation. Plot the equations on the planar graph with each axis representing respective variables.

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Step 3: Identify the convex polygon region relevant to the problem. The area which satisfies all the
constraints simultaneously will be the feasible region. This is determined by the inequality constraints.
Step 4: Determine the vertices of the polygon and find the values of the given objective function Z at each of
these vertices. Identify the greatest and the least of these values. These are respectively the maximum and
minimum value of Z.
Step 5: Identify the values of (x1, x2) which correspond to the desired extreme value of Z. This is an optimal
solution of the problem.

2 b)
Solution:
Mathematical Formulation:
The data of the problem is summarised below:
Products

Raw material

Labour

Profit

Total

Chair

(per unit)
5

(per unit)
10

(per unit)
45

Availability
400

Table

20

15

80

450

Step 1 : The key decision to be made is to determine the number of units of chairs and tables to be produced
by the company.
Step 2 : Let x l designate the number of chairs and x 2 designate the number of tables, which the company
decides to produce.
Step 3 : Since it is not possible to produce negative quantities, feasible alternatives are set of values of x x
and x v such that Xj> and x 2 >
Step 4 : The constraints are the limited availability of raw material and labour. One unit of chair requires 5
board feet of timber and one unit of table requires 20 board feet of timber. Since x 1 and x 2 are the quantities
of chairs and tables, the total requirement of raw material will be 5xj + 20x 2 , which should not exceed the
available raw material of 400 board feet timber. So, the raw material constraint becomes,

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5^j + 20;t 2 < 400
148
Similarly, the labour constraint becomes,
10*!+ 1 5* 2 < 450
Step 5 : The objective is to maximize the total profit that the company gets out of selling their products,
namely chairs, tables. This is given by the linear function.
z= 45* t + 80* 2 .
The linear programming problem can thus be put in the following mathematical form. maximize z = 45* { +
80* 2 subject to 5*! + 20* 2 < 400
10*!+ 1 5* 2 < 450
*! > 0, * 2 >

Q3. a. List the steps of the Vogels Approximation Method(VAM) to find the initial feasible solution.
b. The XYZ manufacturing company has a current transportation schedule which is being questioned
by the top management as to whether or not it is optimal. The firm has 3 factories and 5 warehouses.
The unit transportation costs (in Rs.), factory capacities, and ware house requirements are given below.
Find the initial feasible solution using Vogels Approximation Method (VAM).
Answer:
a)
Vogels approximation method
The Vogels approximation method (VAM) takes into account not only the least cost cij, but also the cost that
just exceeds cij. The steps of the method are given as follows:

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Step 1 - For each row of the transportation table, identify the smallest and the next to smallest costs.
Determine the difference between them for each row. Display them alongside the transportation table by
enclosing them in parenthesis against the respective rows. Similarly, compute the differences for each column.
Step 2 - Identify the row or column with the largest difference among all the rows and columns. If a tie
occurs, use any arbitrary tie breaking choice. Let the greatest difference correspond to the ith row and let Cij
be the smallest cost in the ith row. Allocate the maximum feasible amount xij = min (ai, bj) in the (i, j)th cell
and cross off the ith row or the jth column in the usual manner.
Step 3 - Recomputed the column and row differences for the reduced transportation table and go to step 2.
Repeat the procedure until all the rim requirements are satisfied.
Remarks

A row or column difference indicates the minimum unit penalty incurred by failing to make an

allocation to the least cost cell in that row or column.

It is clear that VAM determines an initial basic feasible solution, which is very close to the optimum
solution, but the number of iterations required to reach the optimal solution is small.

Answer:
b. The XYZ manufacturing company has a current transportation schedule which is being questioned
by the top management as to whether or not it is optimal. The firm has 3 factories and 5 warehouses.
The unit transportation costs (in Rs.), factory capacities, and ware house requirements are given below.
Find the initial feasible solution using Vogels Approximation Method (VAM).

Solution:
The steps Involved in determining an initial solution are as follows :

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(i) Calculate the difference between the two lowest transportation costs for each row and column. These are
written by the side of each row and column and arc known'as row and column penalties.
(ii) Select the row or column with the largest penalty and circle this value. In case of a tie, select that row or
column that allows the greatest movement of units.
(iii) Assign the largest possible allocation within the restrictions of the row and column requirements to the
lowest cost cell for the row or column selected in step (ii).
(iv) Cross out any column or row satisfied by the assignment made in the prior step.
(v) Repeat the steps (r) to (iv) until all allocations have been made.
Using the above steps, the inital solution to the problem of Perfect manufacturing Company is as follows:

Thus, the initial solution is

Transport from factory A to warehouse 5:800 units
Transport from factory B to warehouse 1:400 units
to warehouse 4:200 units
Transport from factory C to warehouse 2:400 units
to warehouse 3:500 units
to warehouse 4:200 units
and the corresponding cost of transportation is 110000.

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4. a. What is Integer Programming Problem (IPP) ?

b. Explain Gomorys all integer algorithm of an IPP.
(Define Integer Programming Problem(IPP)
List the types of Integer Programming Problem(IPP)
List and briefly explain the steps of Gomorys all integer algorithm of an IPP) 1, 1, 8
Answer:
Define Integer Programming Problem:
The IPP is a special case ofLinear Programming Problem (LPP), where all or some variables areconstrained to
assume non-negative integer values. In LPP, the decisionvariables as well as slack or surplus variables were
allowed to take any realor fractional value. However, there are certain real life problems in which
thefractional value of the decision variables has no significance. For example, itdoes not make sense saying
1.5 men working on a project or 1.6 machinesin a workshop. The integer solution to a problem can, however,
be obtainedby rounding off the optimum value of the variables to the nearest integervalue. This approach can
be easy in terms of economy of effort, time andcost that might be required to derive an integer solution but
this solution maynot satisfy all the given constraints. Secondly, the value of the objectivefunction so obtained
may not be an optimal value. Integer programmingtechniques come to our rescue during such scenarios.
Types of Integer Programming Problems:
Linear integer programming problems can be classified into threecategories:
1. Pure (all integer programming problems) - Here, all decisionvariables are restricted to integer values.
2. Mixed integer programming problems - Here some, but not all, of thedecision variables are restricted to
integer values.
3. Zero one integer programming problems - Here, all decisionvariables are restricted to integer values of
0 and 1.

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An integer programming problem(IPP) can be described as follows:
Determine the value of unknowns x1, x2, ,xn
So as to optimise z = c1x1 + c2x2 + . . .+cnxn
Subject to the constraints
ai1 x1 + ai2 x2 + . . . + ainxn = bi , i = 1,2,,mand xj0 j = 1, 2, ,n
Where xjbeing an integral value for j = 1, 2, , k n.

If all the variables are forced to take only integral value that is k = n, it iscalled an all (or pure) integer
programming problem. If some of the variablesare restricted to take integral value and the remaining (n k)
variables takeany non-negative value, then the problem is known as a mixed integerprogramming problem.
All IPP Algorithm:
The iterative procedure for the solution of integer programming problem isas follows:
Step 1: Convert the minimisation IPP into maximisation form. Ignore theintegrality condition.
Step 2: Introduce the slack or surplus variables, if needed to convert theinequations into equations and obtain
the optimum solution of the given LPPby using simplex algorithm.
Step 3: Test the integrality of the optimum solution:
a) If the optimum solution contains all integer values, an optimum basicfeasible integer solution has been
obtained.
b) If the optimum solution does not include all integer values, then proceedto the next step.
Step 4: Examine the constraint equations corresponding to the currentoptimum solution.
Step 5: Express the negative fractions if any, in the kth row of the optimumsimplex table as the sum of a
negative integer and a non-negative fraction.

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Step 6: Find the Gomorian constraint
Step 7: Start with a new set of equation constraints. Find the new optimumsolution by dual simplex
algorithm, that is, choose a variable to enter intothe new solution having the smallest ratio:{(Cj Zj)/ yij;
yij<0} so that Gsla (1) is the initial leaving basic variable.
Step 8: If the new optimum solution for the modified LPP is an integersolution, it is also feasible and
optimum for the given IPP. If it is not aninteger solution, then return to step 4 and repeat the process until
anoptimum feasible integer solution is obtained.

Q5. A) Explain Monte Carlo Simulations.

Answer: Monte Carlo simulations, a statistical technique used to model probabilistic (or stochastic)
systems and establish the odds for a variety of outcomes. The concept was first popularized right after World
War II, to study nuclear fission; mathematician Stanislaw Ulam coined the term in reference to an uncle who
loved playing the odds at the Monte Carlo casino (then a world symbol of gambling, like Las Vegas today).
Today there are multiple types of Monte Carlo simulations, used in fields from particle physics to engineering,
finance and more.

To get a handle on a Monte Carlo simulation, first consider a scenario where we do not need one: to predict
events in a simple, linear system. If you know the precise direction and velocity at which a shot put leaves an
Olympic athletes hand, you can use a linear equation to accurately forecast how far it will fly. This case is a
deterministic one, in which identical initial conditions will always lead to the same outcome.
In the 1990s, for instance, the Environmental Protection Agency started using Monte Carlo simulations in its
risk assessments. Suppose you want to analyze the overall health risks of smog in a city, but you know that
smog levels vary among neighborhoods, and that people spend varying amounts of time outdoors. Given a
range of values for each variable, a Monte Carlo simulation will randomly select a number within each range,
and see how they combine and repeat the process tens of thousands or even millions of times. No two
iterations of the simulation might be identical, but collectively they build up a realistic picture of the
populations smog exposure.

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In a deterministic simulation, you should get the same result every time you run it, explains MIT computer
science professor John Guttag in his OpenCourseWare lecture on Monte Carlo simulations. However, Guttag
adds, in stochastic simulations, the answer will differ from run to run, because theres an element of
randomness in it.

The aggregation of data makes it possible to identify, say, a median level of smog exposure. To be sure, Monte
Carlo simulations are as good as their inputs; accurate empirical data would be necessary to produce realistic
simulation results.
B) A Company produces 150 cars. But the production rate varies with the distribution.
Productio

147

148

149

150

151

152

153

n rate
Probabilit

0.05

0.10

0.15

0.20

0.30

0.15

0.05

At present the track will hold 150 cars. Using the following random numbers determine the average
number of cars waiting for shipment in the company and average number of empty space in the truck.
Random Numbers 82, 54, 50, 96, 85, 34, 30, 02, 64, 47.
Answer.
Production rate and probability
Production rate

Probability

Comulative
probability

Random number
assigned

147
148
149
150
151
152
153

0.05
0.10
0.15
.20
.30
0.15
0.05

0.05
0.15
0.30
.50
.80
0.95
1.00

00-04
05-14
15-29
30-49
50-79
80-94
95-99

Tabe for simulation work sheet

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Trial no.

Random no.

Simulated
production rate

Car waiting in
the factory

Nomber of
example spaces
in the truck

1
2
3
4
5
6
7
8
9
10
Total

82
54
50
96
85
34
30
02
64
47

152
150
150
153
152
150
150
147
151
150

2
3
2
1
2
8

3
3

Therefore average number of car waiting = 8/10=0.8/ day

Average number of empty space = 3/10=0.3/day

Q6. a. Explain the dominance principle in game theory.

b. Describe the Constituents of a Queuing System.
c. Differentiate between PERT and CPM
Answer: a.
Dominance
In a rectangular game, the pay-off matrix of player A is pay-off in one specific row ( r row ) thexceeding the
corresponding pay-off in another specific row( s row ) th. This means that whatever course of action is adopted
by player B, for A, the course of action Ar yields greater gains than the course of action As . Therefore, Ar is a
better strategy than Asirrespective of Bs strategy. Hence, you can say that Ar dominates As . Alternatively, if
each pay-off in a specific column ( p column ) this less than the corresponding pay-off in another specific
column( q column ) th, it means strategy Bp offers minor loss than strategy Bq irrespective of As strategy.
Hence, you can say that Bp dominates Bq . Therefore, you can say that:

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a) In the pay-off matrix, if each pay-off in r row this greater than (or equal to) the corresponding pay-off in thes
row th,Ar dominates As .
b) In the pay-off matrix, if each pay-off in p column this less than (or equal to) the corresponding pay-off in the
q column th,Bp dominates Bq .
At times, a convex combination of two or more courses of action may dominate another course of action.
Whenever a course of action (say As or Bq ) is dominated by others, then that course of action ( As or Bq )
can m be deleted from the pay-off matrix. Such a deletion will not affect the choice of the solution, but it
reduces the order of the pay-off matrix. Successive reduction of the order using dominance property helps in
solving games.
b. Constituents of a Queuing System
In the previous section, you learnt the operating characteristics of a queuing system. You will now learn the
constituents of a queuing system. The constituents of a queuing system include arrival pattern, service facility
and queue discipline.

Arrival pattern: It is the average rate at which the customers arrive.

Service facility: Examining the number of customers served at a time and the statistical pattern of

time taken for service at the service facility.

Queue discipline: The common method of choosing a customer for service amongst those waiting for
service is First Come First Serve.

Arrival pattern
The arrival of customers can be regular as in case of an appointment system of a doctor or flow of
components on a conveyor belt. The regular pattern of arrivals is neither very common nor very easy to deal
with mathematically. The following are the important arrival characteristics:
1. Size of the population: Unlimited (infinite) or limited (finite)
2. Pattern of arrivals (statistical distribution)
3. Behavior of arrivals
Our primary concern is the pattern of completely random arrivals.
Completely random arrivals
If the number of potential customers is infinitely large, then probability of an arrival in the next interval of
time will not depend upon the number of customers already in the system. (The assumption is valid by and
large, except for queues involving a small finite number of customers.)

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c.
PERT and CPM
Both are based on the network representation of activities and their scheduling, which determines the most
critical activities to be controlled in order to meet the completion date of the project.
PERT

PERT was developed in connection with an Research and Development (R&D) work. Therefore, it had
to cope with the uncertainties that are associated with R&D activities. In PERT, the total project
duration is regarded as a random variable. Therefore, associated probabilities are calculated in order to
characterize it.

It is an event-oriented network as in the analysis of a network, emphasis is given on the important

stages of completion of a task rather than the activities required to be performed to reach a particular
event or task.

CPM

CPM was developed in connection with a construction project, which consisted of routine tasks whose
resource requirements and duration were known with certainty. Therefore, it is basically deterministic.

CPM is suitable for establishing a trade-off for optimum balancing between schedule time and cost of
the project.

CPM is used for projects involving activities of repetitive nature.