Quantitative

Techniques
Deepthy Sai Manikandan

Topics:

Linear Programming
Transportation Problem
Assignment problem
Queuing Theory
Decision Theory
Inventory Management
Simulation
Network Analysis

LINEAR
PROGRAMMING

Linear Programming

It is a mathematical technique for

optimum allocation of scarce or
limited resources to several
competing activities on the basis
of given criterion of optimality,
which can be either performance,
ROI, cost, utility, time, distance
etc.

Steps

Define decision variables

Formulate the objective function
Formulate the constraints
Mention the non-negativity
criteria

Components &
Assumptions

Objective
Decision Variable
Constraint
Parameters
Non-negativity

Proportionality
Addivity
Divisibility
Certainity

Problem:
An animal feed company must
produce at least 200 kgs of a mixture
consisting of ingredients x1 and x2
daily. x1 costs Rs.3 per kg. and x2
Rs.8 per kg. No more than 80 kg. of
x1 can be used and at least 60 kg. of
x2 must be used. Formulate a
mathematical model to the problem.

Solution:

Minimize Z = 3x1 + 8x2

Subject to x1 + x2 >= 200
x1 <= 80
x2 >= 60
X1 >= 0 , x2 >= 0

Graphical Solution

Formulate the problem

Convert all inequalities to equations
Plot the graph of all inequalities
Find out the feasilble region
Find out the corner points
Substitute the objective function
Arrive at the solution

Problem:

Maximize Z = 60x1+50x2
subject to 4x1+10x2 <= 100
2x1+1x2 <= 22
3x1+3x2 <= 39
x1,x2 >= 0

Solution :
4x1+10x2=100
2x1+x2=22
(11,0)
x2 3x1+3x2=39
22

13
1
0

A
0

(0,10)(25,0)
(0,22)
(0,13)(13,0)

D
C
B

13

25

Z = 60x1 + 50x2
A (0,0) = 60*0+50*0 = 0
B (11,0) = 60*11+50*0 = 660
C (9,4) = 60*9+50*4 = 740
D (5,8) = 60*5+50*8 = 700
E (0,10) = 60*0+50*10 = 500
Max Z is at C (9,4) and Z = 740

TRANSPORTATION
PROBLEM

Transportation
Problem

A special kind of optimisation

problem in which goods are
transported from a set of sources to
a set of destinations subject to the
supply and demand constraints.
The main objective is to minimize
the total cost of transportation.

Initial Basic Feasible

Solution

North West Corner Method

Least Cost Method
Vogels Approximation Method

The solution is said to be feasible

when one gets (m+n-1)
allotments.

Assignment Problem

It is a problem of assigning
various people, machines and so
on in such a way that the total
cost involved is minimized or the
total value is maximized.

QUEUING THEORY

Queuing Theory

A flow of customers from

finite/infinite population towards
the service facility forms a queue
due to lack of capacity to serve
them all at a time.
Server

Input

Output

Measures

Traffic intensity
Average system length
Average queue length
Average waiting time in queue
Average waiting time in system
Probability of queue length

Queuing & cost

behavior
Total
cost

Cost of
service

Cost of
waiting

DECISION THEORY

Decision Theory
The decision making environment
Under certainity
Under uncertainity
Under risk

Decision making under

uncertainity

Laplace Criterion
Maxmin Criterion
Minmax Criterion
Maxmax Criterion
Minmin Criterion
Salvage Criterion
Hurwicz Criterion

Inventory
management

Inventory is vital to the sucessful

functioning of manufacturing and
retailing organisations. They may
be raw materials, work-inprogress, spare
parts/consumables and finished
goods.

Models

Deterministic Inventory Model

Inventory Model with Price breaks
Probabilistic Inventory Model

Basic EOQ Model

Slope=0
Minim
um
total
cost

Total cost

Carrying cost

Ordering cost
Optimal order

SIMULATION

Simulation

It involves developing a model of

some real phenomenon and then
performing experiments on the
model evolved. It is descriptive in
nature and not an optimizing
model.

Process

Definition of the problem

Construction of an appropriate
model
Experimentation with the model
Evaluation of the results of
simulation

NETWORK ANALYSIS
PERT
CPM

Network Analysis /
Project Management
A project is a series of activities
directed to the accomplishment of
a desired objective.

PERT
CPM

CPM-Critical Path
Method

Activities are shown as a network

of precedence relationship using
Activity-On-Arrow (A-O-A) network
construction.
There is single stimate of activity
time
Deterministic activity time

Project Evaluation &

Review Technique

Activities are shown as a network

of precedence relationships using
A-O-A network construction.
Multiple time estimates
Probabilistic activity time

Crashing
Crashing is shortening the activity
duration by employing more
resources.
cost slope = Cc Cn/ Tn - Tc