Operations research

Assignment Set -1

Q1) Explain the process of OR.

Answer
Process of OR- OR provides an integrated framework for making various
business decisions. Therefore, it is of utmost importance for an organisation to
have a clear understanding of this framework for solving various business
problems. The integrated framework of OR involves seven stages, which are as
follows.
1. Orientation: In the recent years, much emphasis has been given on teamwork
in a business environment. Today, most industrial projects are handled by
multifunctional teams. Therefore, the team approach in OR is a natural and
desirable phenomenon. In the orientation phase, OR team holds several
meetings to identify the on-going operational problems in an organisation. This
team ensures that all its members have a clear understanding of the relevant
issues.
2. Problem definition: A problem can only be solved if it is identified properly.
Sometimes, what appears to be a problem may actually be just a symptom of the
root cause? For example, an organisations profits for particular products have
been declining for the last three consecutive years. In this case, a decrease in
profits may only be a symptom. The root cause behind such a decline could be
ineffective marketing or changes in the demand or tastes of customers.
Therefore, it is essential for the OR team to be careful while identifying and
defining the problem. To clearly define the actual problem, the OR team needs
to consider the following three points:
Clearly defining the objective of the problem and its scope: The following
are some examples of appropriate objectives:
To maximise profits in the next quarter by promoting sales
To minimise the average downtime at work centre A
To minimise the total production cost at plant X
Specifying the factors that may affect the objective: These factors can be
controllable or uncontrollable. For example, the volume of production is
controllable, while the actual demand for products in the market is
uncontrollable.
Specifying constraints for the specific actions taken: For example, the
availability of resources can be a constraint to find out the best course of
action.
3. Data collection: At this stage, data is collected to analyse the problem
defined in the second phase. In the OR study, data can be collected mainly
 from two sources: observation and standards. The first corresponds to the
data that is gathered after observing the system in operation. For example,
data related to operation time can be collected by performing time studies or
work method analysis. Similarly, data related to the current demand for
products is obtained from sales records, purchase orders and inventory
databases. On the other hand, the second source provides data based on set
standards. For instance, organisations generally collect cost-related data from
their standard values, such as hourly wage rates, inventory holding charges
and selling prices.
4. Model formulation: In general terms, a model can be defined as a selective
perception of reality, while modelling is a process of picking the selected
characteristics of a system and then combining them to form an abstract
representation of the original system. The main purpose of formulating a model
is that it is much easier to analyse a simplified model than it is to analyse the
original system. Therefore, it is important for the OR team to develop an
accurate model that is based on the conclusions drawn from the original system.
While formulating a model, the OR team should keep in mind that there is
always a trade-off between the accuracy of a model and its tractability. You will
learn about OR models and modelling in detail in the later sections of the unit.
5. Model solution: At this stage, the OR team needs to find all the possible
solutions for the problem represented by the model. Generally, there are three
techniques that can be applied to determine the best course of action for solving
a problem. These techniques are feasibility analysis, optimality analysis and
sensitivity analysis.
6. Authentication and evaluation: At this stage, the OR team needs to verify
whether the solution is logical and realistic. For this, it is necessary for the OR
team to ensure that the model is an accurate representation of the original
system.
7. Implementation and monitoring: At this stage, the final course of action is
implemented to solve the defined problem. After implementing the action, the
OR team needs to monitor the results, identify the gaps and rectify them.
Q2) a. Discuss any four applications of linear programming.
b. An organisation produces X1 and X2 units of products R and S, respectively.
In this case, the objective function and constraints are expressed as follows:
Maximise Z = 60X1 + 120X2
Subject to, 3X1 + 6X2 240 Raw material constraint
2X1 + 4X2 800 Labour hours constraint
X1, X2 0 Non-negativity condition
Answer:2) a. Four applications of linear programming are as follows:

i. Military operations: In military, linear programming is used to perform

various operations, such as selecting an appropriate air weapon system
 against the enemy, minimising the amount of fuel used and dropping of
bombs on pre-identified targets.
ii. Environmental protection: Linear programming is used to identify
possible alternatives for handling waste and hazardous material as per a
countrys provisions of environment protection. Apart from this, linear
programming techniques are also used in analysing alternative sources of
energy and recycling paper.
iii. Public systems: Linear programming helps the government of a country to
select the best locations for public systems, such as hospitals, public
recreation facilities, community halls, telecommunication booths, post
offices and educational institutions. Moreover, linear programming helps
in planning expenditure for constructing these public systems.
iv. Product mix: It refers to a line of products that an organisation produces
and sells. Each product in the product mix requires a certain amount of
resources. The main objective of any organisation is to earn maximum
profits by making efficient use of limited resources. In such a case, linear
programming helps an organisation to determine an optimum amount of
products to be produced and the quantity of resources required for
producing them.

Answer: 2) b. Here,We have to maximise Z = 60X1 + 120X2

Subject to,3X1 + 6X2 240
2X1 + 4X2 800
X1, X2 0

First constraint 3X1 + 6X2 240 in the form of equation,

3X1 + 6X2 = 240
X1 + 2X2 = 80
When X1 = 0, then X2 = 40
When X2 = 0, then X1 = 80
The coordinates will be (0, 40) and (80, 0)

Second constraint 2X1 + 4X2 800 in the form of equation,

2X1 + 4X2 = 800
X1 + 2X2 = 400
When X1 = 0, then X2 = 200
When X2 = 0, then X1 = 400
The coordinates will be (0, 200) and (400, 0)
There is no common feasible region generated by two constraints together so
that we cannot identify a single point satisfying the constraints. Hence there is
no optimal solution.
Q3) a. Explain the concept of Trans-shipment.
b. Solve the following transportation problem using North-west corner method &
Matrix minimum method.
Answer:a. Concept of Trans-shipment -In a general transportation problem, the
optimal solution is determined for a problem wherein goods are directly
transferred from a supply source to a demand destination. However, there could
be several situations where it may be economical to transport items via one or
more intermediate centres. In trans-shipment, the transportation of goods takes
place from a supply source to a demand destination through one or more
intermediate points. Each of these points, in turn, supply to other points. For
instance, an organisation may have regional warehouses that distribute goods to
smaller district warehouses, which, in turn, transfer goods to retail stores.
Therefore, it is clear that the trans-shipment model is the modified model of the
classical transportation model, in which a good at the supply source i is
transported to the demand destination j, passing from one or more intermediate
points. The trans-shipment model helps an organisation in deciding the optimal
location of its warehouses.
b. NWCM is the simplest method that is used to find an initial feasible solution
to a transportation problem. The north-west corner method generates an initial
allocation according to the followingProcedure:

1. Allocate the maximum amount allowable by the supply and requirement

constraints to the variable (i.e. the cell in the top left corner of the transportation
table).
2. If a column (or row) is satisfied, cross it out. The remaining decision
variables in that column (or row) are non-basic and are set equal to zero. If a
row and column are satisfied simultaneously, cross only one out (it does not
matter which).
3. Adjust supply and demand for the non-crossed out rows and columns.
4. Allocate the maximum feasible amount to the first available non-crossed out
element in the next column (or row).
5. When exactly one row or column is left, all the remaining variables are basic
and are assigned the only feasible allocation.

Using North West corner method

C1 C2 C3 C4 S

F1 350 2 7 6 0

F2 710 540 210 3 0

F3 2 5 410 5 0

R 0 0 0 0

Minimum transportation cost

= 50*3 + 10*7 + 40*5 + 10*2 + 10*4 + 5*15
= 150 + 70 + 200 + 20 + 40 + 75
= 555

MATRIX MINIMUM METHOD - The matrix minimum method, also known as

Least Cost Method (LCM), is used to calculate a basic feasible solution of a
transportation problem by considering the lowest cost in the matrix.

1. Identify the lowest cost cell in the entire transportation matrix and allocate
units as much as possible to this cell.
2. Eliminate the row or column in which either supply or demand is exhausted.
In case, the lowest cost cell is not unique, select the cell where the maximum
allocation can be made.
3. After adjusting the supply and demand for all uncrossed rows and columns,
repeat the procedure with the next lowest unit cost among the remaining rows
and columns of the transportation matrix. Then, allocate as much as possible to
this cell and eliminate the row and column in which either supply or demand is
exhausted.
4. Repeat the procedure until the entire supply at different sources is exhausted
to satisfy the demand at different warehouses.
Using matrix minimum method

C1 C2 C3 C4 S

F1 310 240 7 6 0
F2 725 5 220 315 0

F3 225 5 4 5 0
R 0 0 0 0

Minimum transportation cost = 10*3 + 25*7 + 25*2 + 40*2 + 20*2 + 3*15

= 30 + 175 + 50 + 80 + 40 + 45
= 420

Assignment Set -2
Q4) The processing time of four jobs and five machines (in hours, when passing
is not allowed) is given in following table
a. Find an optimal sequence for the above sequencing problem.
b. Calculate minimum elapsed time & idle time for machines A, B, C, D& E.

Answer:
The necessary condition to be satisfied is either or both of the following.

a) Min A1> max (B1,C1,D1)b)Min E1> max (B1,C1,D1)

Since, the second condition is satisfied, we can convert the problem of
five machines to an equivalent problem of two machines X and Y by
combining the time for the first four machines and the time for the last
four machines, respectively, as shown in Table

Combining the Time of Machines

Job Machines x =(A+B+C+D) Machines y(B+C+D+E)
1 23 23
2 24 21
3 31 27
4 31 28
Using the optimal sequence algorithm, an optimal sequence of 1, 3, 2, 4 can be
obtained to calculate the total time of the optimal sequence. We take the
individual processing time of all the jobs through all the machines, as given in
Table
Processing Time for All the Machines

Job Machines
A B C D E
1 0-8 8-12 12-16 16-19 19-27

2 8-18 18-23 23-32 32-39 39-46

3 18-27 27-34 34-43 43-49 40-54

4 27-34 34-40 40-47 47-51 51-55

The minimum elapsed time is 55 hours and the idle time for machines A, B, C,
D, E is 21, 33, 22, 35, and 31 hours respectively.

Q5) Define following criterias used for decision making under Uncertainty
a. Optimism (maximum or minimum) criterion
b. Pessimism (maximum or minimum) criterion
c. Equal probabilities (Laplace) criterion
d. Coefficient of optimism (Hurwitz) criterion
e. Regret (salvage) criterion
Answer:
a) Optimism (maximum or minimum) criterion -Here, the decision maker tries
to achieve the largest possible profit (maxima) or minimum possible cost
(minimum). If the entries in the payoff matrix are the one which the decision
marker wants as large as possible, for example, profits sales revenue, he/she
selects the alternative that represents the maximum of the maximum payoff.
In case where the entries of the payoff matrix are one which the decision
maker wants as small as possible, he/she goes for the minimum of the
minimum. Here, corresponding to the various alternatives, he/she locates the
maximum payoff for each alternative (in case of profit or revenues) and then
selects the alternative which gives the maximum of maxima.
b) Pessimism (maximum or Minimum) criterion - In the criterion, the decision
maker selects the alternative representing the maximum of the minimum
payoffs in case of profits. In the case of cost or loss, he/she selects the
minimum of the maxima.
c) Equal probabilities (Laplace) criterion - As the probabilities are unknown for
the states of nature, all are assigned equal probabilities. Since the states of
nature are mutually exclusive and collectively exhaustive, the probabilities
of each of these states equal one divided by the number of states of nature.
Expected value of the payoff is calculated and case of profit, the maximum
value of the expected payoff is chosen; whereas, in case of losses, the
minimum value of the payoff is chosen.
d) Coefficient of optimism (Hurwitz) criterion -Hurwitz introduced the idea of a
coefficient of optimism, denoted by , to measure the degree of optimism
for the decision maker. The coefficient takes a value between zero and one.
Here, zero represents a complete pessimistic attitude of the decision maker
about the future; whereas, one represents a complete optimistic attitude of
the decision maker towards the future. The criterion suggests that an
alternative that maximise x (maximum in the column)+ (1-) x (minimum
in the column) should be chosen.
e) Regret (salvage) criterion - This criterion is also known as the opportunity-
loss decision criterion or minima x regret decision criterion. This is because
the decision maker feels regret after adopting a wrong course of action
(alternative), which results in an opportunity loss of the payoff. The
decision maker therefore wants to minimise the regret. In order to develop
the opportunity loss table, perform the following steps:
Find the best payoff corresponding to each state of nature.
Subtract all other entries (payoff values) in that row from this value.
For each course of action (strategy or alternative), identify the worst or
maximum regret value .Record this number in a new row.
Select the course of action (alternative) with the smallest anticipated
opportunity loss value.

Q6) Explain the following:

a. Economic Order Quantity (EOQ) b. PERT and CPM
c. Applications of queuing models.
Answer:
a ) Economic order Quality (EOQ) - The EOQ model provides answers to the
two basic questions related to inventory management.
These questions are as follows:
i. What should be the size of the order?
ii. At what level should the order be placed?
When an organisation orders huge inventory in order to reduce the total
ordering cost, the carrying cost increases. Thus, if the organisation wishes to
minimise the overall cost of the inventory, it needs to consider both the ordering
and carrying costs. After determining the desired cost of inventory, the
organisation compares the cost with the benefits of the inventory. The level at
which the cost of inventory is minimum and benefits are maximum is called the
optimal level of inventory. The optimal level of inventory is popularly referred
to as EOQ. Therefore, EOQ may be defined as the level of inventory order that
reduces the total cost related to inventory management. The EOQ model is
based on the following assumptions:
The forecasted consumption for inventory, usually for one year, is
known.
The cost per order is constant regardless of the size of order.
The consumption is even throughout the year.
The carrying cost is a fixed percentage of the average value of inventory.
b) PERT and CPM -

1. PERT -PERT is another model that is used for scheduling and analysing
different activities involved in a project. PERT was developed in 1957 by the
US Navy for planning and scheduling the Polaris nuclear submarine project.
It is used in projects where the time of completion is given priority by the
PERT model. The CPM model uses a single time estimate (when the time
estimate is certain) for each individual activity in the network. Through CPM
does not answer the variability in project duration, PERT model consider the
variability of the project duration? In the PERT model, variance or standard
deviation is used for measuring variability in the project duration. The
average squared difference of a set of numbers from their arithmetic average
is called the variance of the set of numbers.
2. CPM -CPM is one of the most popular and widely used project scheduling
models. This model was developed by Morgan R. Walker of DuPont, USA,
in 1957 to solve maintenance problems in chemical factories. These days,
CPM is used in almost all kinds of projects, including construction, software
development, research, product development, engineering, plant operation
and maintenance. The CPM technique involves the following steps to
schedule a project:
 Developing the network diagram.
Estimating the activity duration.
Identifying the activities in the project.
Determining the dependency and sequence of the activities.
Calculating the earliest and latest start times of the activities.
Calculating the earliest and latest finish times of the activities.

c) Application of queuing model - Queuing models are used in variety of

operational or business situations when there is a mismatch between customers
and service facilities provided by an organisation. Customers are the primary
source of revenue for an organisation. They can be satisfied if the organisation
provides products or services at a minimum cost and within the stipulated time.
If an organisation makes unwanted delays in delivering service, customers may
become highly dissatisfied and can switch to other brands.

Industrial manufacturing or production process: it is a field that has a wide

application of queuing models. In manufacturing, queuing models are used
to minimise the time of:
Assembly lines
Tool room service
Transportation: it is a field where queuing models are used to minimise the
waiting time of the:
Arrival and departure of buses
Checking and ticketing counters
Communication: It is another area where queuing models are widely used. In
the communication industry, queuing models are applied to minimise
waiting time between telephone calls that need to
Service industry: It is a field where queuing models are used to minimise the
time of customers waiting for:
Hospital wards
Restaurants
Other area: they involve the application of queuing models in human
resource to determine appropriate waiting time for promotion of an
employee.