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Spring 2013

Master of Business Administration MBA Semester 2


MB0048 Operations Research (4 credits)
(Book ID: B1631)
ASSIGNMENT- Set 1
Marks 60

Roll No. 1208000294
Student Name: patil rasika somnath
Email Id:rasikapatil111.rp@gmail.com
Phone no: 9833172911
Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions


Q1. Explain the scope of Operations Research. What are the features of Operations
Research?
10 marks (300 - 350 words each)

Answer:

Scope of Operations Research
(i) In Defense Operations:
In modern warfare, the defense operations are carried out by three major independent
components namely Air Force, Army and Navy. The activities in each of these components
can be further divided in four sub-components namely: administration, intelligence,
operations and training and supply.
(ii) In Industry:
The system of modern industries is so complex that the optimum point of operation in its
various components cannot be intuitively judged by an individual. The business environment
is always changing and any decision useful at one time may not be so good some time later.
(iii) Planning:
In modern times, it has become necessary for every government to have careful planning, for
economic development of the country. OR techniques can be fruitfully applied to maximize
the per capita income, with minimum sacrifice and time. A government can thus use OR for
framing future economic and social policies.
(iv) Agriculture:
With increase in population, there is a need to increase agriculture output. But this cannot be
done arbitrarily. There are several restrictions. Hence the need to determine a course of action
serving the best under the given restrictions. You can solve this problem by applying OR
techniques.
(v) In Hospitals:
OR methods can solve waiting problems in out-patient department of big hospitals and
administrative problems of the hospital organizations.
(vi) In Transport: You can apply different OR methods to regulate the arrival of trains and
processing times minimize the passengers waiting time and reduce congestion, formulate
suitable transportation policy, thereby reducing the costs and time of trans-shipment.
(vii) Research and Development:
You can apply OR methodologies in the field of R&D for several purposes, such as to control
and plan product introductions.

Features of Operation Research
Some key features of OR are as follows:
1. OR is system oriented. OR scrutinizes the problem from an organizations perspective. The
results can be optimal for one part of the system, while the same can be unfavorable for
another part of the system.
2. OR imbibes an inter-disciplinary team approach. Since no single individual can have a
thorough knowledge of all fast developing scientific know-how, personalities from different
scientific and managerial cadre form a team to solve the problem.
3. OR makes use of scientific methods to solve problems.
4. OR increases effectiveness of the managements decision-making ability.
5. OR makes use of computers to solve large and complex problems.
6. OR offers a quantitative solution.7. OR also takes into account the human factors.






























Q2. Six Operators are to be assigned to five jobs with the cost of assignment in Rs. given
in the matrix below. Determine the optimal assignment. Which operator will have no
assignment?

Operators

Jobs


1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
6 4 7 4 6 8


Answer:


Operator Jobs
1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
6 4 7 4 6 8

Step-1. Subtract with least number of each row with rest of elements of that row.

Operator Jobs
1 2 3 4 5
1 4 0 3 0 4
2 0 3 6 5 5
3 1 2 0 3 2
4 4 0 1 2 3
5 6 0 5 6 4
6 0 3 0 2 4

Step-II. Subtract with least number of each column with rest of elements of that column.

Operator Jobs
1 2 3 4 5
1 4 0 3 0 2
2 0 3 6 5 3
3 1 2 0 3 0
4 4 0 1 2 1
5 6 0 5 6 2
6 0 3 0 2 2

Step-3. We make the assignment in each row and column.

Operator Jobs
1 2 3 4 5
1 4 0 3 0 2
2 0 3 6 5 3
3 1 2 0 3 0
4 4 0 1 2 1
5 6 0 5 6 2
6 0 3 0 2 2

As from the above table it is obvious that there 5 jobs and six operators so we can assign
jobs to only five operators.
Operator Jobs
1 4
2 1
3 5
5 2
6 3

Job 1 is assigned to operator 2
Job 2 is assigned to operator 4 or 5.
Job 3 is assigned to operator 6.
Job 4 is assigned to operator 1
Job 5 is assigned to operator 3

Q3. a. Explain the Monte Carlo Simulation.

Answer:

Monte Carlo simulation is a computerized mathematical technique that allows people to
account for risk in quantitative analysis and decision making. The technique is used by
professionals in such widely disparate fields as finance, project management, energy,
manufacturing, engineering, research and development, insurance, oil & gas, transportation,
and the environment.
Monte Carlo simulation furnishes the decision-maker with a range of possible outcomes and
the probabilities they will occur for any choice of action.. It shows the extreme possibilities
the outcomes of going for broke and for the most conservative decisionalong with all
possible consequences for middle-of-the-road decisions.
The technique was first used by scientists working on the atom bomb; it was named for
Monte Carlo, the Monaco resort town renowned for its casinos. Since its introduction in
World War II, Monte Carlo simulation has been used to model a variety of physical and
conceptual systems.




Q4. Explain the Characteristics and Constituents of a Queuing System.

Answer:

CHARACTERISTICS OF A QUEUING MODEL
A queuing model may be looked for four basic characteristics:
(i) Arrival characteristics (or input source or calling population)
(ii) Queue or the waiting line itself
(iii) Service facility (or service mechanism), and
(iv) Customer behavior.

A schematic framework of queuing system is shown in the figure:


Queue representation

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Q5. a. What do you mean by dominance? State the dominance rules for rows and
columns.

Answer:

In game theory, dominant strategy (commonly called simply dominance) occurs when one
strategy is better than another strategy for one player, no matter how that player's opponents
may play. Many simple games can be solved using dominance. The opposite, intransitivity,
occurs in games where one strategy may be better or worse than another strategy for one
player, depending on how the player's opponents may play.

Dominance rules for rows and columns

(a) For rows : (i) In the payoff matrix if all the entries in a row i1 are greater than or equal
to the corresponding entries of another row i2, then row i2 is said to be dominated by row i 1.
In this situation row i2 of the payoff matrix can be deleted.

e.g., i2 = ( 1 , 2, -1) is dominated by i1 = (2, 2, 1), hence (1, 2, - 1 ) can be deleted.

(ii) If sum of the entries of any two rows is greater than or equal to the corresponding entry of
a third row, then that third row is said to be dominated by the above two rows and hence third
row can be deleted.

(b) For columns : (i) In the payoff matrix if all the entries in a column j
1
are less than or
equal to the corresponding entries of another column h then column h is said to be
dominated by column j 1. In this situation column h of the payoff matrix can be deleted.

e.g., j
2
= (2 4) is dominated by j1 =(1 2 ). Hence (2 4) can be deleted.

(ii) If sum of the entries of any two columns is less than or equal to the corresponding entry
of a third column, then that third column is said to be dominated by the above two columns
and hence third column can be deleted.



b. Find the saddle point of the following game and state the optimum strategies for
players A and B .


A


1 2 3 4 5

1 9 3 1 8 0
B 2 6 5 4 6 7

3 2 4 4 3 8

4 5 6 2 2 1


Answer: Assuming the existence of the value of the game, if the value is

, then is
called the saddle point of the pay-off matrix. It is clear that there may exist more than one
saddle point in a pay-off matrix of a game with pure strategy. The principle of determining a
saddle point or points and the value of a game is called the maximin minimax principle. If the
value of the game is

for the pure strategies

and

of A and B respectively, then


and

are called optimal strategies for the respective players.


Determination of the value of a game using maximin minimax principle
Consider the following 3x4 pay-off matrix for A.

Player B
Player A



Row minima

4 6 -2 1 -2

3 3 4 2 2

4 5 5 1 1
Column maxima 4 6 5 2 2/2
As pure moves are

and Bs pure moves are

. Each player has a right


to select a pure move.
For As pure move

, As minimum gain is -2 , for

, they are 2 , 1 respectively. So if A selects

, his
gain cannot be less than 2.
Now considering Bs point of view, reasoning in the same way, his loss cannot be more than
2.
In case of A, we arrived at 2 by maximizing the minimum gain of A, and for B we arrived at
2 by minimizing the maximum loss of B, which are equal. Hence the value of the game exists
and is equal to 2. The optimal strategies are

and

for A and B respectively. The (2 ,4)


position of the pay-off matrix is the saddle point of the pay-off matrix.
There may exist more than one saddle point and in that case the optimal strategies are not
unique.
There may not exist a saddle point and in that case the value of the game cannot be
determined by the above principle even if it exists.




Q6. A. What are the differences between PERT and CPM?

Answer: CPM or Critical Path Method":
Tool to analyze project and determine duration, based on identification of "critical
path" through an activity network.
Knowledge of the critical path can permit management of the project to change
duration.
A single estimate for activity time was used that did not allow for variation in activity
times
Activity times are assumed to be known or predictable ("deterministic")
Activities are represented as nodes or circles

PERT or "Project Evaluation and Review Technique":
Another derivative of the GANTT chart
Multiple time estimates were used for each activity that allowed for variation in
activity times
Activity times are assumed to be random, with assumed probability distribution
("probabilistic")
Activities are represented by arrowed lines between the nodes or circles
Differences between PERT and CPM
PERT is probabilistic whereas CPM is deterministic
In CPM, estimates of activity duration are based on historical data
In PERT, estimates are uncertain and we talk of ranges of duration and the probability
that an activity duration will fall into that range
CPM concentrates on Time/Cost trade off.