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Master of Business Administration- MBA Semester 1 MB0048 Operations Research- 4 Credits (Book ID: B1631) Assignment Set - 1 (60


Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions. Q1. a. What do you mean by linear programming problem? Explain the steps involved in linear programming problem formulation? Ans.1. Linear Programming (LP) is a mathematical technique designed to help managers in their planning and decision-making. It is usually used in an organisation that is trying to make the most effective use of its resources. Resources typically include machinery, manpower, money, time, warehouse space, and raw materials. A few examples of problems in which LP has been successfully applied are: (a) Developments of a production schedule that will satisfy future demands for a firms product and at the same time minimise total production and inventory costs. (b) Establishment of an investment portfolio from a variety of stocks or bonds that will maximise a companys return on investment. (c) Allocation of a limited advertising budget among radio, TV, and newspaper spots in order to maximise advertising effectiveness. (d) Determination of a distribution system that will minimise total shipping cost from several warehouses to various market locations. (e) Selection of the product mix in a factory to make best use of machine and man hours available while maximising the firms profit. 2. The common requirements of LPP are as follows. (a) (b) (c) (d) 3. Decision variables and their relationship. Well-defined objective function. Existence of alternative courses of action. Non-negative conditions on decision variables.

Basic assumptions of LPP are: (a) Linearity. Both objective functions and constraints can be expressed as linear inequalities. (b) Deterministic. All co-efficients of decision variables in the objective and constraints expressions are known and finite. (c) Additively. The value of the objective function and the total amount of each resource used must be equal to the sum of respective individual contributions by decision variables. (d) Divisibility. The solution values of decision variables can be non- negative values including fractions. 1

b. A paper mill produces two grades of paper viz., X and Y. Because of raw material restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of grade Y paper in a week. There are 160 production hours in a week. It requires 0.20 and 0.40 hours to produce a ton of grade X and Y papers. The mill earns a profit of Rs. 200 and Rs. 500 per ton of grade X and Y paper respectively. Formulate this as a Linear Programming Problem. Ans. Decision variables: Let x1 and x2 be the number of units of two grades of paper of X and Y Objective function: Since the profit for the two grades of paper X and Yare given, the objective function is to maximize the profit Max(Z) 200x1+500x2 Constraints: There are 2 constraints one w.r t. to raw material, and the other w.r.t to production hours. The complete LPP is Max(Z) = 200x1+500x2 Subject to x1 400 x2 300 0.2x1 + 0.4x2 160 X1 0, x2 0 Graphical Solution 40 36 (2.5,35)


20 X1


Q2. a. Discuss the methodology of Operations Research. Ans. The scientific method translates a given problem into a mathematical representation which is solved and retransformed into the original context. Problems are as follows: 1. Definition. The first and the most important step in the OR approach of problem solving is to define the problem. One needs to ensure that the problem is identified properly because this problem statement will indicate the following two major aspects: (a) (b) Description of the goal or the objective of the study Identification of the decision alternative to the system 2

2. Construction. Based on the problem definition, you need to identify and select the most appropriate model to represent the system. Hence, appropriate models can be constructed. 3. Solution. After deciding on an appropriate model, you need to develop a solution for the model and interpret the solution in the context of the given problem. One which maximises or minimises the performance of any measure in a model subject to the conditions and constraints imposed on the model. 4. Validation. A model is a good representation of a system. However, the optimal solution must work towards improving the systems performance. 5. Implementation. You need to apply the optimal solution obtained from the model to the system and note the improvement in the performance of the system. b. Explain in brief the phases of Operations Research. Ans. The scientific method in OR study generally involves three phases.

Judgment Phase

Research Phase

Action Phase Phases of Operations Research The brief details of the phases: 1. Judgment phase. This phase includes the following activities: (a) (b) (c) (d) 2. Determination of the operations. Establishment of objectives and values related to the operations. Determination of suitable measures of effectiveness. Formulation of problems relative to the objectives.

Research phase. This phase utilises the following methodologies: (a) (b) (c) data. Operation and data collection for a better understanding of the problems. Formulation of hypothesis and model. Observation and experimentation to test the hypothesis on the basis of additional

(d) Analysis of the available information and verification of the hypothesis using preestablished measure of effectiveness. (e) Prediction of various results and consideration of alternative methods.

3. Action phase. This phase involves making recommendations for the decision process. The recommendations can be made by those who identify and present the problem or by anyone who influences the operation in which the problem has occurred. Q3. Solve the following Linear Programming Problem using Simple method. Maximize Z= 3x1 + 2X2 Subject to the constraints: X1+ X2 4 X1+ X2 2 X1, X2 0 Answer: Maxmize Z = 3X1+2X2-S1-S2 X1+X2+S1 = 4 X1+X2+S2 = 2 3 X1 1 1 0 3 0 1 3 0 2 0 0 Cj X2 S1 S2 ratio 1 1 0 4 1 0 1 2 0 0 0 Zj 2 0 0 Cj-Zj 0 1 -1 1 0 1 3 0 3 Zj -1 0 -3 Cj-Zj

profit program Quantity 0 S1 4 0 S2 2 0 2 2 6 All Cj 0 Therefore, there is an optimum solution X1 = 2 X2 = 0 Z = 3X1+2X2 = 3(2)+2(0) =6

0 3

S1 X1

Q4. Explain the procedure of MODI method of finding solution through optimality test. Ans.1. A feasible solution has to be found always. Rather than determining a first approximation by a direct application of the simplex method, it is more efficient to work with the transportation table. The transportation algorithm is the simplex method specialised to the format of table involving the following steps: (a) Finding an initial basic feasible solution (b) Testing the solution for optimality (c) Improving the solution, when it is not optimal (d) Repeating steps (b) and (c) until the optimal solution is obtained 2. The solution to transportation problem is obtained in two stages In the first stage, we find the basic feasible solution using any of the following methods: (a) North-west corner rule. 4


Matrix minima method or least cost method.

(c) Vogels approximation method. In the second stage, we test the basic feasible solution for its optimality by MODI method. 3. Modified distribution method / Modi method /UV method.

Step 1: Under this method, you construct penalties for rows and columns by subtracting the least value of row /column from the next least value. Step 2: Then select the highest penalty constructed for both row and column. Enter that row/column and selectthe minimum cost and allocate min (ai, bj) Step 3: Delete the row or column or both if the rim availability/ requirements are met. Step 4: You repeat steps 1 to 2 to till all allocations areover. Step 5: For allocating all forms of equations ui+ v j= c j,set one of the dual variable ui/ vj to zero and solve for others. Step 6: Use this value to find Dij= cij ui v j. If all Dij 0, then it is the optimal solution. Step 7: If any Dij 0, select the most negative cell and form loop. Starting point of the loop is positive and alternative corners of the loop are negative and positive. Examine the quantities allocated at negative places. Select the minimum, add it to the positive places and subtract from the negative places. Step 8: Form new table and repeat steps 5 to 7 till Dij 0Balanced TP Q5. a. Explain the steps in Hungarian method. Ans. Hungarian method algorithm is based on the concept of opportunity cost and is more efficient in solving assignment problems. The following steps are adopted to solve an AP using the Hungarian method algorithm. Step 1. Prepare row ruled matrix by selecting the minimum values for each row and subtract it from the other elements of the row. Step 2. Prepare column-reduced matrix by subtracting minimum value of the column from the other values of that column. Step 3. Assign zero row-wise if there is only one zero in the row and cross (X) or cancel other zeros in that column. Step 4. Assign column wise if there is only one zero in that column and cross other zeros in that row. Step 5. Repeat steps 3 and 4 till all zeros are either assigned or crossed. If the number of assignments is equal to number of rows present, you have arrived at an optimal solution, if not, proceed to step 6. Step 6. Mark () the unassigned rows. Look for crossed zero in that row. Mark the column containing the crossed zero. Look for assigned zero in that column. Mark the row containing assigned zero. Repeat this process till all the makings are done. Step 7. Draw a straight line through unmarked rows and marked column. The number of straight line drawn will be equal to the number of assignments made. Step 8. Examine the uncovered elements. Select the minimum. 5

Subtract it from the uncovered elements. Add it at the point of intersection of lines. Leave the rest as is. Prepare a new table.

Step 9. Repeat steps 3 to 7 till optimum assignment is obtained. Step 10. Repeat steps 5 to 7 till number of allocations = number of rows. b. Solve the following assignment problem. Machine A B C D Ans. Machine A B C D 1 60 40 55 45 Operators 2 3 50 45 45 55 70 60 45 40 4 45 35 50 45 1 60 40 55 45 2 50 45 70 45 Operators 3 45 55 60 40

5 45 35 50 45

60 40 55 45 15 5 5 5 10 0 0 0 10 0 0 0

Step-1 Balanced Problem Step-2 Minimisation 50 45 45 55 70 60 45 40 Row minima 5 0 10 20 20 10 5 0 Column minima 0 0 5 20 15 10 0 0 0 5 15 0 0 20 10 0

45 35 50 45 0 0 0 5 0 0 0 5 0 0 0 5

Optimum cost Machine operators cost A 2 50 B 1 40 C 4 50 D 3 40 Total cost 180 6

Q6. a. Explain the steps involved in Vogels approximation method (VAM) of solving Transportation Problem. Ans. 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: 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. 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. Step 4: Stop the process if all row and column requirements are met. If not, go to the next step. Step 5: Recalculate the differences between the two lowest cells remaining in all rows and columns. Any row and column with zero supply or demand should not be used in calculating further differences. Then go to Step 2. b. Solve the following transportation problem using Vogels approximation method. Factories F1 F2 F3 Requirements Ans. Factories F1 F2 F3 Requirements 3 7 2 60 Distribution Centers C1 C2 C3 C4 2 7 6 5 2 3 5 4 5 40 20 15 3 (10) 7 (25) 2 (25) 60 1 1 5 2 (40) 5 5 40 3 0 0 7 2 (20) 4 20 2 2 2 Supply 50 60 25 C1 3 7 2 60 Distribution Centres C2 C3 2 7 5 5 40 2 4 20 Supply C4 6 3 5 15 50 60 25

6 3 (15) 5 15 2 2 2

50 60 25 135

1 3 0 1 1 1 2 2 2

Optimum cost = 10*3+7*25+2*25+2*40+2*20+3*15 = 420