Master of Business Administration - MBA Semester 2

MB 0048 Operation Research (4 credits)

(Book ID: B1631)

Q1 Describe the framework of Operations Research.

1 ANS. The goal of operations research is to provide a framework for constructing models of
decision-making problems, finding the best solutions with respect to a given measure of
merit, and implementing the solutions in an attempt to solve the problems. Given that O.R.
represents an integrated framework to help make decisions, it is important to have a clear
understanding of this framework so that it can be applied to a generic problem.

The OR approach comprises the following seven sequential steps:

(1) Orientation
(2) Problem Definition
(3) Data Collection
(4) Model Formulation
(5) Solution
(6) Model Validation and Output Analysis
(7) Implementation and Monitoring.

Tying each of these steps together is a mechanism for continuous feedback; Figure 1
shows this schematically.

1. Orientation: The first step in the O.R. approach is referred to as problem orientation. The
primary objective of this step is to constitute the team that will address the problem at hand and
ensure that all its members have a clear picture of the relevant issues. Typically, the team will
have a leader and be constituted of members from various functional areas or departments that
will be affected by or have an effect upon the problem at hand. In the orientation phase, the
team typically meets several times to discuss all of the issues involved and to arrive at a focus
on the critical ones. This phase also involves a study of documents and literature relevant to the
problem in order to determine if others have encountered the same (or similar) problem in the
past, and if so, to determine and evaluate what was done to address the problem.
2. Problem Definition: This is the second, and in a significant number of cases, the most difficult
step of the O.R. process. The objective here is to further refine the deliberations from the
orientation phase to the point where there is a clear definition of the problem in terms of its
scope and the results desired. A clear definition of the problem has three broad components to
it.
a. The first is the statement of an unambiguous objective. Along with a specification of the
objective it is also important to define its scope, i.e., to establish limits for the analysis
to follow.
b. The second component of problem definition is a specification of factors that will affect
the objective. These must further be classified into alternative courses of action that are
under the control of the decision maker and uncontrollable factors over which he or she
has no control.
c. The third and final component of problem definition is a specification of the constraints
on the courses of action, i.e., of setting boundaries for the specific actions that the
decision-maker may take.
 3. Data Collection: In the third phase of the O.R. process data is collected with the objective of
translating the problem defined in the second phase into a model that can then be objectively
analyzed. Data typically comes from two sources observation and standards. The first
corresponds to the case where data is actually collected by observing the system in operation
and typically, this data tends to derive from the technology of the system. Other data are
obtained by using standards; a lot of cost related information tends to fall into this category. For
instance, most companies have standard values for cost items such as hourly wage rates,
inventory holding charges, selling prices, etc.; these standards must then be consolidated
appropriately to compute costs of various activities. On occasion, data may also be solicited
expressly for the problem at hand through the use of surveys, questionnaires or other
psychometric instruments.

4. Model Formation: Greater simplification is still necessary before a analysis can be performed.
This is achieved by constructing a model. A mathematical model is a collection of functional
relationships by which allowable actions are delimited and evaluated. Although the analyst
would hope to study the broad implications of the problem using a systems approach, a model
cannot include every aspect of a situation. A model is always an abstraction that is, by
necessity, simpler than the reality. Elements that are irrelevant or unimportant to the problem
are to be ignored, leaving sufficient detail so that the solution obtained with the model has value
with regard to the original problem..

5. Model Solution: The next step in the process is to solve the model to obtain a solution to the
problem. Tools available to the analyst are used to obtain a solution to the mathematical model.
Some methods can prescribe optimal solutions while other only evaluate candidates, thus
requiring a trial and error approach to finding an acceptable course of action. To carry out this
task the analyst must have a broad knowledge of available solution methodologies. It may be
necessary to develop new techniques specifically tailored to the problem at hand. Generally
there are three techniques viz, feasibility analysis, optimality analysis and sensitivity analysis.

6. Validation and Analysis: Once a solution has been obtained two things need to be done
before one even considers developing a final policy or course of action for implementation. The
first is to verify that the solution itself makes sense. The process of ensuring that the model is
an accurate representation of the system is called validation. A typical error that might be
discovered at this stage is that some important constraint was ignored in the model formulation
- this will lead to a solution that is clearly recognized as being infeasible and the analyst must
then go back and modify the model and re-solve it. This cycle continues until one is sure that
the results are sensible and come from a valid system representation. The second part of this
step in the O.R. process is referred to as "what-if" analysis in order to provide not just a
recommended course of action, but also details on its range of applicability and its sensitivity to
model parameters.

7. Implementation and Monitoring: The last step in the O.R. process is to implement the final
recommendation and establish control over it. Implementation entails the constitution of a team
whose leadership will consist of some of the members on the original O.R. team. This team is
typically responsible for the development of operating procedures or manuals and a time-table
for putting the plan into effect. Once implementation is complete, responsibility for monitoring
the system is usually turned over to an operating team. From an O.R. perspective, the primary
responsibility of the latter is to recognize that the implemented results are valid only as long as
the operating environment is unchanged and the assumptions made by the study remain valid.
Thus combining the steps we obtain the complete OR process. In practice, the process may not
be well defined and the steps may not be executed in a strict order. Rather there are many
loops in the process, with experimentation and observation at each step suggesting
modifications to decisions made earlier. The process rarely terminates with all the loose ends
tied up. Work continues after a solution is proposed and implemented. Parameters and
conditions change over time requiring a constant review of the solution and a continuing
repetition of portions of the process. It is particularly important to test the validity of the model
and the solution obtained.

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

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.

2a. Linear programming is a widely used model type that can solve decision problems with many
thousands of variables. Generally, the feasible values of the decisions are delimited by a set of
constraints that are described by mathematical functions of the decision variables. The feasible
decisions are compared using an objective function that depends on the decision variables. For a
linear program the objective function and constraints are required to be linearly related to the
variables of the problem.

Decision variables describe the quantities that the decision makers would like to determine. They
are the unknowns of a mathematical programming model. Typically we will determine their optimum
values with an optimization method. In a general model, decision variables are given algebraic
designations such as xi.

The objective function evaluates some quantitative criterion of immediate importance such as
cost, profit, utility, or yield. The general linear objective function can be written as

Here cj is the coefficient of the jth decision variable. The criterion selected can be either maximized
or minimized.

A constraint is an inequality or equality defining limitations on decisions. Constraints arise from a

variety of sources such as limited resources, contractual obligations, or physical laws. In general,
an LP is said to have m linear constraints that can be stated as

In most practical problems the variables are required to be nonnegative;

This special kind of constraint is called a nonnegativity restriction

Combining the aforementioned components into a single statement gives:

The constraints, including nonnegativity and simple upper bounds, define the feasible region of a
problem

Graphical Method of Solution of a Linear Programming Problem

The graphical method is applicable to solve the LPP involving two decision variables x1, and x2, we
usually take these decision variables as x, y instead of x1, x2. To solve an LP, the graphical method
includes two major steps.

a) The determination of the solution space that defines the feasible solution. The set of values of
the variable x1, x2, x3,....xn which satisfy all the constraints and also the non-negative conditions is
called the feasible solution of the LP.

b) The determination of the optimal solution from the feasible region.

a) To determine the feasible solution of an LP, we have the following steps.

 Step 1: Since the two decision variable x and y are non-negative, consider only the first quadrant of
xy-coordinate plane.

Step 2: Each constraint is of the form ax+by<=c or ax+by>=c

Draw the line ax + by = c (1)

For each constraint, draw the line. Each line divides the first quadrant in to two regions say R1 and
R2, suppose (x1, 0) is a point in R1. If this point satisfies the in equation ax + by<=c or (>= c), then
shade the region R1. If (x1, 0) does not satisfy the inequality, shade the region R2.

Step 3: Corresponding to each constant, we obtain a shaded region. The intersection of all these
shaded regions is the feasible region or feasible solution of the LP.

The optimal solution to a LPP, if it exists, occurs at the corners of the feasible region.

b) The determination of the optimal solution from the feasible region.

Step 1: Find the feasible region of the LLP.

Step 2: Find the co-ordinates of each vertex of the feasible region.

These co-ordinates can be obtained from the graph or by solving the equation of the lines.

Step 3: At each vertex (corner point) compute the value of the objective function.

Step 4: Identify the corner point at which the value of the objective function is maximum (or
minimum depending on the LP)

The co-ordinates of this vertex is the optimal solution and the value of Z is the optimal value.

2b. 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.

Paper Grade X Y
Maximum Produce 400 tons 300 tons
Production Hours 0.20 hrs 0.40hrs 160 hrs
Profit per unit Rs 200 Rs 500

Let us assume that mill produces x tons of grade X paper and y tons of grade Y paper in order to
maximize profit represented as Z.

Total Production of grade X paper can be atmost 400 tons, hence x<= 400
Total Production of grade Y paper can be atmost 300 tons, hence y<= 300

Productions hrs for grade X paper = 0.20x hrs

Productions hrs for grade Y paper = 0.40x hrs
Total production hours = 0.20x+0.40y which could atmost be 160 hrs
Hence 0.20x+0.40y <= 160
Firms objective is to maximize profit, hence objective function would be
Maximize Z = 200x + 500 y.

Thus, LPP representation of the given problem would be

Maximize Z = 200x + 500 y
Under the constraints
x<= 400 (Maximum Produce of X)
y<= 300 (Maximum Produce of Y)
0.20x+0.40y <= 160 (Production Hours)
x,y >= 0
Q3 a. Explain some of the important terms of the transportation problem.
b. Explain the steps of MODI (Modified Distribution) method.

3a There is a type of linear programming problem that may be solved using a simplified version of the
simplex technique called transportation method. Because of its major application in solving
problems involving several product sources and several destinations of products, this type of
problem is frequently called the transportation problem. It gets its name from its application to
problems involving transporting products from several sources to several destinations. Although the
formation can be used to represent more general assignment and scheduling problems as well as
transportation and distribution problems. The two common objectives of such problems are either
(1) minimize the cost of shipping m units to n destinations or (2) maximize the profit of shipping m
units to n destinations.

LP formulation
Suppose a company has m warehouses and n retail outlets. A single product is to be shipped from
the warehouses to the outlets. Each warehouse has a given level of supply, and each outlet has a
given level of demand. We are also given the transportation costs between every pair of warehouse
and outlet, and these costs are assumed to be linear. More explicitly, the assumptions are:
The total supply of the product from warehouse i is ai, where I = 1, 2,. . . ,m.
The total demand for the product at outlet j is bj, where j = 1, 2,. . .,n.
The cost of sending one unit of the product from warehouse I to outlet j is equal to cij, where i = 1,
2,. . .,m and j= 1, 2,. . .,n. The total cost of a shipment is linear in the size of the shipment. The
problem of interest is to determine an optimal transportation scheme between the warehouses and
the outlets, subject to the specified supply and demand constraints.

Decision Variables: A transportation scheme is a complete specification of how many units of the
product should be shipped from each warehouse to each outlet. Therefore, the decision variables
are: xij= the size of the shipment from warehouse i to outlet. This is a set of m n variables.

Objective Function: For any i and any j, the transportation cost per unit is cij; and the size of the
shipment is xij. Since we assume that the cost function is linear, the total cost of this shipment is
given by cij xij. Summing over all i and all j now yields the overall transportation cost for all
combinations.

Thus objective function is Minimize ijcijxij.

The transportation problem has following properties:

Feasibility: Generally it is assumed that the total supply equals the total demand. As long as the
supply equals demand, there exists a feasible solution to the problem. If this is not true for a
particular problem, dummy sources or destinations can be added to make it true. The text refers
to such a problem as a balanced transportation problem. These dummy centers may have zero
distribution costs, or costs may be assigned to represent unmet supply or demand.

Integrality: If the supplies and demands are integer, every basic solution including optimal one,
have integer values. Therefore, it is not necessary to resort to integer programming to find integer
solutions. Linear programming suffices. In general, a basic solution to the transportation model will
have a number of basic variables equal to the number of sources(m) plus the number of
destinations(n) minus one i.e. (m + n - 1).

Degeneracy exists in a transportation problem when the number of filled cells is less than the
number of rows plus the number of columns minus one (m + n - 1). Degeneracy may be observed
either during the initial allocation when the first entry in a row or column satisfies both the row and
column requirements or during the Stepping stone method application, when the added and
subtracted values are equal. Degeneracy requires some adjustment in the matrix to evaluate the
solution achieved. The form of this adjustment involves inserting some value in an empty cell so a
closed path can be developed to evaluate other empty cells. This value may be thought of as an
infinitely small amount, having no direct bearing on the cost of the solution.
3b Modi Distribution method

It is a method for computing optimum solution of a transportation problem which allows to compute
improvement indices quickly for each unused square without drawing all of the closed paths.
Because of this, it can often provide considerable time savings over other methods for solving
transportation problems. MODI provides a new means of finding the unused route with the largest
negative improvement index. Once the largest index is identified, we are required to trace only one
closed path. This path helps determine the maximum number of units that can be shipped via the
best unused route.

STEPS
Step 1
Determine an initial basic feasible solution using any one of the three methods given below:
North West Corner Rule
Matrix Minimum Method
Vogel Approximation Method

Step 2
Determine the values of dual variables, ui and vj, using ui+ vj= cij

Step 3
Compute the opportunity cost using cij ( ui+ vj).

Step 4
Check the sign of each opportunity cost. If the opportunity costs of all the unoccupied cells are
either positive or zero, the given solution is the optimum solution. On the other hand, if one or more
unoccupied cell has negative opportunity cost, the given solution is not an optimum solution and
further savings in transportation cost are possible.

Step 5
Select the unoccupied cell with the smallest negative opportunity cost as the cell to be included in
the next solution.

Step 6
Draw a closed path or loop for the unoccupied cell selected in the previous step. The right angle
turn in this path is permitted only at occupied cells and at the original unoccupied cell.

Step 7
Assign alternate plus and minus signs at the unoccupied cells on the corner points of the closed
path with a plus sign at the cell being evaluated.

Q4 4 a. Explain the steps involved in Hungarian method of solving Assignment problems.

b. Find an optimal solution to an assignment problem with the following cost matrix:

4a Hungarian method of solving Assignment problems.

The assignment problem is a special case of transportation problem in which the objective is to
assign m jobs or workers to n machines such that the cost incurred is minimized. The assignment
model is actually a special case of the transportation model in which the
workers represent the sources and the jobs represent the destinations. The supply amount at each
source and the demand amount at each destination exactly equal 1.

The cost of transporting workers i to job j is Cij. The assignment model can be solved directly as a
regular transportation model.
 The fact that all the supply and demand amounts equal 1 has led to the development of a simple
solution algorithm called the Hungarian method.

Step 1
Identify the minimum element in each row and subtract it from every element of that row.

Step 2

Identify the minimum element in each column and subtract it from every element of that column.

Step 3

Make the assignments for the reduced matrix obtained from steps 1 and 2 in the following way:
a. For each row or column with a single zero value cell that has not be assigned or eliminated,
box that zero value as an assigned cell.
b. For every zero that becomes assigned, cross out (X) all other zeros in the same row and
the same column.
c. If for a row and a column, there are two or more zeros and one cannot be chosen by
inspection, choose the cell arbitrarily for assignment.
d. The above process may be continued until every zero cell is either assigned or crossed (X).

Step 4

An optimal assignment is found, if the number of assigned cells equals the number of rows (and
columns). In case we have chosen a zero cell arbitrarily, there may be alternate optimal solutions. If
no optimal solution is found, go to step 5.

Step 5

Draw the minimum number of vertical and horizontal lines necessary to cover all the zeros in the
reduced matrix obtained from step 3 by adopting the following procedure:

a. Mark all the rows that do not have assignments.

b. Mark all the columns (not already marked) which have zeros in the marked rows.
c. Mark all the rows (not already marked) that have assignments in marked columns.
d. Repeat steps 5 (ii) and (iii) until no more rows or columns can be marked.
e. Draw straight lines through all unmarked rows and marked columns.

Step 6

Select the smallest element (i.e., 1) from all the uncovered elements. Subtract this smallest element
from all the uncovered elements and add it to the elements, which lie at the intersection of two lines.
Thus, we obtain another reduced matrix for fresh assignment.

4b Find an optimal solution to an assignment problem with the following cost matrix:

Step 1: Row Reduction Matrix

J1 J2 J3 J4
M1 3 2 0 1
M2 0 3 2 2
M3 1 0 2 1
 M4 0 1 2 3

Step 2: Column reduction matrix

J1 J2 J3 J4
M1 3 2 0 0
M2 0 3 2 1
M3 1 0 2 0
M4 0 1 2 2

Step 3: Draw minimum number of lines to cross all zeroes

J1 J2 J3 J4
M1 3 2 0 0
M2 0 3 2 1
M3 1 0 2 0
M4 0 1 2 2

Step4: Count Number of lines.

Number of lines drawn is not equal to number of jobs. Hence optimal solution is not achieved

Step 5: Minimum uncrossed value = 1. Subtract this from all uncovered values and add to junction
point values.
J1 J2 J3 J4
M1 4 2 0 0
M2 0 2 1 0
M3 2 0 2 0
M4 0 0 1 1

Step 6: Draw lines to cover all zeroes

J1 J2 J3 J4
M1 4 2 0 0
M2 0 2 1 0
M3 2 0 2 0
M4 0 0 1 1

Step 7: Number of lines = number of jobs. Hence optimal assignment can be done as follows

M1 J3
M2 - J1
M3 J2
M4 J4

This is one of the optimal solution.

Q5 a. Explain Monte Carlo Simulation.

b. Hindustan Bakery is popular for its delicious fruit cakes. The table below shows the
daily demand for the bakerys cakes.

Simulate the demand for cakes for 10 days using the following sequence of random
numbers: 22, 26, 48, 53, 93, 89, 42, 91, 25, 20. If 35 cakes are baked every day in Hindustan
Bakery, determine the inventory stock. In addition, estimate the daily average demand for cakes on
the basis of simulated data.

5a Monte Carlo simulation is a versatile method for analyzing the behavior of some activity, plan or
process that involves uncertainty. The Monte Carlo method was invented by scientists working on
the atomic bomb in the 1940s. Its core idea is to use random samples of parameters or inputs to
explore the behavior of a complex system or process. The scientists faced physics problems that
were too complex for an analytical solution, so they had to be evaluated numerically. Monte Carlo
 simulation proved to be surprisingly effective at finding solutions to these problems. Since that
time, Monte Carlo methods have been applied to an incredibly diverse range of problems in
science, engineering, and finance and business applications in virtually every industry.

Monte Carlo simulation is a method for iteratively evaluating a deterministic model using sets of
random numbers as inputs. This method is often used when the model is complex, nonlinear, or
involves more than just a couple uncertain parameters. A simulation can typically involve over
10,000 evaluations of the model, a task which in the past was only practical using super computers.

The Monte Carlo method is just one of many methods for analyzing uncertainty propagation, where
the goal is to determine how random variation, lack of knowledge, or error affects the sensitivity,
performance, or reliability of the system that is being modeled.

Procedure of Monte Carlo Simulation:

1. Decide the probability distribution of important variables for the stochastic process.
2. Calculate the cumulative probability distributing for each variable in Step 1
3. Decide an interval of random numbers for each variable.
4. Generate random numbers.
5. Simulate a series of trials and determine simulated value of the actual random variables.
5b Hindustan Bakery is popular for its delicious fruit cakes. The table below shows the daily demand
for the bakerys cakes.

Simulate the demand for cakes for 10 days using the following sequence of random numbers: 22,
26, 48, 53, 93, 89, 42, 91, 25, 20. If 35 cakes are baked every day in Hindustan Bakery, determine
the inventory stock. In addition, estimate the daily average demand for cakes on the basis of
simulated data.

The demand for cakes for 10 days is simulated in following steps.

Step1: Daily demand is as depicted in table below.

Daily Probability Cumulative Random Number
Demand Probability Assigned
0 0.01 0.01 00
15 0.15 0.16 01 15
25 0.20 0.36 16 35
35 0.50 0.86 36 85
45 0.12 0.98 86 97
50 0.02 1.00 98 99

Step 2: Daily Demand for 10 days using the given random numbers is as below
Day Random Estimated Old Stock Fresh Stock at
Number Demand Stock end of
day
1 22 25 0 35 10
2 26 25 10 35 20
3 48 35 20 35 20
4 53 35 20 35 20
5 93 45 20 35 10
6 89 45 10 35 0
7 42 35 0 35 0
8 91 45 0 35 0(-10)
9 25 25 0 35 10
10 20 25 10 35 20

During the simulated period, there was no left over stock for three days (day 6,7 and 8), and excess
 stock was available rest of the days.

Average excess stock = 10 + 20 + 20 + 20 + 10 + 0 + 0 + 0 + 10 + 20/10

= 110 / 10
= 11
Thus average excess stock is 11 cakes per day.
Step 3: Computation of Daily average demand
Daily average demand = 25+25+35+35+45+45+35+45+25+25/10
= 340/10
=34
Average daily demand is 34 cakes per day.

Q6 a. State the assumptions of game theory.

b. What are the characteristics of Markov chain?
c. What are the rules for prioritising jobs?

6a State the assumptions of game theory.

Game theory is a branch of mathematical analysis developed to study decision making in conflict
situations. Such a situation exists when two or more decision makers who have different objectives
act on the same system or share the same resources. There are two person and multi-person
games. Game theory provides a mathematical process for selecting an OPTIMUM STRATEGY in
the face of an opponent who has a strategy of his own.

In game theory one usually makes the following assumptions:

(1) Each decision maker or player has available to him two or more well-specified choices or
sequences of choices.

(2) Every possible combination of plays available to the players leads to a well-defined end-state
(win, loss, or draw) that terminates the game.

(3) A specified payoff for each player is associated with a end-state . A ZERO-SUM game means
that the sum of payoffs to all players is zero in each end-state.

(4) Each decision maker has perfect knowledge of the game and of his opposition; that is, he knows
in full detail the rules of the game as well as the payoffs of all other players.

(5) All decision makers are rational; that is, each player, given two alternatives, will select the one
that yields him the greater payoff.

The last two assumptions, in particular, restrict the application of game theory in real-world conflict
situations. Nonetheless, game theory has provided a means for analyzing many problems of
interest in economics, management science, and other fields.

6b b. What are the characteristics of Markov chain?

A Markov chain, named after Andrey Markov, is a random process that undergoes transitions from
one state to another on a state space. It must possess a property that is usually characterized as
memorylessness: the probability distribution of the next state depends only on the current state and
not on the sequence of events that preceded it. This specific kind of memorylessness is called the
Markov property. The term Markov chain refers to the sequence of random variables such a
process moves through, with the Markov property defining serial dependence only between
adjacent periods. It can thus be used for describing systems that follow a chain of linked events,
where what happens next depends only on the current state of the system.

Thus, a Markov chain is a process that consists of a finite number of states and some known
probabilities pij, where pij is the probability of moving from state j to state i. The changes of state of
the system are called transitions. The probabilities associated with various state changes are called
transition probabilities. The process is characterized by a state space, a transition matrix describing
the probabilities of particular transitions, and an initial state across the state space. By convention,
we assume all possible states and transitions have been included in the definition of the process, so
 there is always a next state, and the process does not terminate.

A Markov chain, studied at the discrete time points 0;1;2;:::, is characterized by a set of
States S and the transition probabilities pij between the states. Here, pij is the probability that the
Markov chain is at the next time point in state j , given that it is at the present time point at state i.
The matrix P with elements pij is called the transition probability matrix of the Markov chain. The
definition of the pij implies that the row sums of P are equal to 1. Under the conditions that all states
of the Markov chain communicate with each other (i.e., it is possible to go from each state, possibly
in more than one step, to every other state), the Markov chain is not periodic (a periodic Markov
chain is a chain in which, e.g., you can only return to a state in an even number of steps), the
Markov chain does not drift away to infinity, the probability pi(n) that the system is in state i at time
point n converges to a limit I as n tends to infinity. These limiting probabilities, or equilibrium
probabilities, can be computed from a set of so-called balance equations. The balance equations
balance the probability of leaving and entering a state in equilibrium.

Characteristics of Markov Chain

There must be a finite number of states that are numbered 1,2,3,4.n. A finite Markov
chain is a process that moves along with the elements of a finite set.
States are required to be collectively exhaustive and mutually exclusive. Collectively
exhaustive is one in which all the possible states of the system or process can be listed,
whereas mutually exhaustive means that at any point of time, the system can be only in
one state.
The future state from the previous state can e predicted easily. Given the state probabilities
and transition probabilities, future state can be predicted.
Irreducible Chain: Irreducible is the property that regardless of the current state, we can
reach any other state in finite time. A Markov chain is said to be irreducible if its state space
is a single communicating class; in other words, if it is possible to get to any state from any
state.
Aperiodic Chain: An irreducible Markov chain only needs one aperiodic state to imply all
states are aperiodic.
Stationary Distribution
o Markov Chain can gradually forget its initial state
o eventually converge to a unique stationary distribution
A state i is said to be ergodic if it is aperiodic and positive recurrent. In other words, a state i
is ergodic if it is recurrent, has a period of 1 and it has finite mean recurrence time. If all
states in an irreducible Markov chain are ergodic, then the chain is said to be ergodic.
Ergodic average is given as:

6c c. What are the rules for prioritising jobs?

Many jobs in industry and elsewhere require completing a collection of tasks while satisfying
temporal and resource constraints. Temporal constraints say that some tasks have to be finished
before others can be started; resource constraints say that two tasks requiring the same resource
cannot be done simultaneously (e.g., the same machine cannot do two tasks at once). The
objective is to create a schedule specifying when each task is to begin and what resources it will
use that satisfies all the constraints while taking as little overall time as possible. This is the job-
shop scheduling problem.

The first-come, first-served (FCFS) rule gives the job arriving at the workstation first the
highest priority. This is most applicable when there is ample time available for the
processor and the queue length is small.
The earliest due date (EDD) rule gives the job with the earliest due date based on assigned
due dates the highest priority.
Critical Ratio: The critical ratio (CR) is calculated by dividing the time remaining until a jobs
due date by the total shop time remaining for the job, which is defined as the setup,
processing, move, and expected waiting times of all remaining operations, including the
operation being scheduled. The difference between the due date and todays date must be
 in the same time units as the total shop time remaining. A ratio less than 1.0 implies that
the job is behind schedule, and a ratio greater than 1.0 implies that the job is ahead of
schedule. The job with the lowest CR is scheduled next.
Shortest Processing Time(SPT): The job requiring the shortest processing time at the
workstation is processed next. This rule tends to reduce both work-in-process inventory, the
average job completion (flow) time, and average job lateness.
Longest time first(LPT): Under this priority, the job which is going to take the longest time is
processed first. The smaller jobs are taken later so that more time is consumed on solving
the longest and most difficult job.
Slack Time Remaining(STR): Slack is the difference between the time remaining until a
jobs due date and the total shop time remaining, including that of the operation being
scheduled. STR = Time until job is due - (Sum of processing time remaining). Take the job
with the smallest amount of slack time.
Slack Time Remaining per Remaining Operations: A jobs priority is determined by dividing
the slack by the number of operations that remain, including the one being scheduled, to
arrive at the slack per remaining operations (S/RO). The job with the lowest S/RO is
scheduled next. Ties are broken in a variety of ways if two or more jobs have the same
priority. One way is to arbitrarily choose one of the tied jobs for processing next.
R (Random) Pick any Job in Queue with equal probability. This rule is often used as
benchmark for other rules