PROBLEMS IN

OPERATIONS RESEARCH
(Principles and Solutions)
For Engineering, Computer Science, Commerce, Management,
Economics, Statistics, Mathematics, C.A., I.C.W.A., C.S.
Also Useful for I.A.S. and Other Competitive Examinations

PREM KUMAR GUPTA

B.Sc. Mech. Engg. (Hons.), M.Sc. Mech. Engg. (Distinction), M.I.E. (India)
Formerly Assistant Professor
P.E.C. Institute of Engineering & Technology (Deemed University), Chandigarh

Dr. D.S. HIRA

B.Sc. Mech. Engg., M.Sc. Mech. Engg., Ph.D. (Roorkee)
Director General
Swami Vivekanand Group of Institutes, Banur, Distt. Patiala, Punjab

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© 1991, Prem Kumar Gupta & Dr. D.S. Hira
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First Edition 1991
Subsequent Editions and Reprints : 1993, 95, 98, 99, 2000, 2001, 2002, 2003, 2005, 2007, 2008, 2009, 2010, 2012
(Twice), 2013
Fourth Edition : 2015
ISBN : 978-81-219-0968-6 Code : 10B 128
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 PREFACE TO THE FOURTH EDITION
It is our great pleasure to present to the readers the fourth thoroughly revised edition of the
book after a number of reprints. Every effort has been made to incoporate the valuable suggestions
received from a number of readers. All errors and omissions have been rectified. A number of
typical solved examples have been added. A large number of exercises from the latest examination
papers have been included and the book now covers questions up to year 2013 examinations. The
book now contains 644 solved examples, 1695 exercises and 257 illustrations.
We are indebted to the Publishers S.Chand & Company Pvt. Ltd. for their sincere efforts,
unfailing courtesy and cooperation in bringing out the book in this elegant form.
Suggestions for further improvement of the book will be highly appreciated and thankfully
acknowledged.

Prem Kumar Gupta

Dr. D.S. Hira

iii
 PREFACE TO THE FIRST EDITION
The authors have been feeling the need of a book on Operations Research that would
contain a large number of problems with complete solutions. The overwhelming response to our
book ‘Operations Research’ has prompted us to write and place in the hands of the readers the
present volume. The book has been designed and tailored to meet the long standing requirements
of those appearing in Engineering, C.A., I.C.W.A., I.C.M.A., I.A.S., M.B.A., M.M.S., M.Com.,
M. Math. & Stat., B. Com. and B. Stat. examinations.

Efforts have been made to simplify the technical material without distorting it. The book
does not require a high level of mathematical knowledge on the part of the reader. An elementary
knowledge of integral and differential calculus and matrix algebra is all that is required to
understand the subject.

While the main emphasis has been in each chapter (with the exception of the first which
deals with ‘basics of OR’) on problems and their solutions, brief theory and related principles
have also been provided to enable the readers to understand the solution procedures. Each chapter
contains a large number of important and interesting problems taken from a variety of fields.
Almost each problem presents a new idea. Unsolved exercises (with answers) at the end of each
chapter are provided to test the reader’s understanding of the subject matter. The book contains
around 480 completely solved examples and 490 unsolved exercises.

Every effort has been made to present the material in an easy, clear, lucid and systematic
manner. Though all efforts have been made to make the book reasonably exhaustive and
comprehensive, there still may be ways in which the presentation can be further improved.
Valuable suggestions for further improvement of the book will be gratefully accepted.
AUTHORS

iv
 CONTENTS

Chapters Pages
1. BASICS OF OPERATIONS RESEARCH 1–37
1.1 Development of Operations Research 1
1.2 Definition of Operations Research 4
1.3 Characteristics of Operations Research 5
1.4 Scientific Method in Operations Research 7
1.5 Necessity of Operations Research in Industry 8
1.6 Scope of Operations Research 9
1.7 Operations Research and Decision-Making 10
1.8 Scope of OR in Management 11
1.9 Scope of OR in Financial Management 12
1.10 Applications of Various OR Techniques 13
1.11 Objectives of Operations Research 13
1.12 Phases of OR 14
1.13 Models in OR 18
1.14 Classification Schemes of Models 18
1.15 Characteristics of a Good Model 21
1.16 Advantages of a Model 21
1.17 Limitations of a Model 21
1.18 Constructing the Model 21
1.19 Approximations (Simplifications) in OR Models 23
1.20 Types of Mathematical Models 24
1.21 Role of Computers in Operations Research 31
1.22 Difficulties in Operations Research 32
1.23 Limitations of Operations Research 33
Exercises (1 to 55) 33
2. LINEAR PROGRAMMING 38–227
2.1 Introduction 38
2.2 Formulation of Linear Programming Problems 38
Exercises 2.1 (1 to 68) 79
2.3 Graphical Method of Solution 104
2.4 Some Exceptional Cases 117
Exercises 2.2 (1 to 71) 123
2.5 The General Linear Programming Problem 135
2.6 Canonical and Standard Forms of Linear Programming Problem 136
2.7 Theory of Simplex Method 141
2.8 Some Important Definitions 143
2.9 Analytical Method or Trial and Error Method 144
Exercises 2.3 (1 to 18) 150
2.10 The Simplex Method (Technique or Algorithm) 152
2.11 Artificial Variables Techniques 165

v
 2.11-1 The Big M-Method 165
2.11-2 The Two-Phase Method 175
2.12 Special Cases in the Simplex Method Application 186
2.13 Solution of Simultaneous Equations by Simplex Method 205
2.14 Some Additional Points 208
Exercises 2.4 (1 to 117) 208
3. THE TRANSPORTATION MODEL 228–334
3.1 Introduction to the Model 228
3.2 Definition of the Transportation Model 228
3.3 Matrix Terminology 230
3.4 Formulation and Solution of Transportation Models 230
3.5 Variants in Transportation Problems 264
3.6 Additional Problems 281
3.7 Least-Time Transportation Problems 290
3.8 Post Optimality Analysis in Transportation 292
3.9 The Transshipment Problem 299
3.10 Dual of the Transportation Problem 301
Exercises (1 to 113) 304
4. THE ASSIGNMENT MODEL 335–419
4.1 Definition of the Assignment Model 335
4.2 Mathematical Representation of the Assignment Model 335
4.3 Comparison with the Transportation Model 336
4.4 The Hungarian Method for Solution of the Assignment Problems 336
4.5 Formulation and Solution of the Assignment Models 337
4.6 Variations of the Assignment Problem 347
4.7 Additional Problems 363
Exercises 4.1 (1 to 81) 372
4.8 The Travelling Salesman Problem (Shortest Cyclic Route Models) 397
Exercises 4.2 (1 to 20) 414
5. SEQUENCING MODELS AND RELATED PROBLEMS 420–466
5.1 Sequencing Problems 420
5.2 Assumptions in Sequencing Problems 420
5.3 Processing n Jobs through one Machine 421
5.4 Processing n Jobs through two Machines 426
5.5 Processing n Jobs through three Machines 432
5.6 Processing two Jobs through m Machines 437
5.7 Processing n Jobs through m Machines 443
5.8 Problems related to Sequencing (Routing Problems in Networks) 448
5.9 Minimal Path Problem (Shortest Acyclic Route Models) 448
Exercises (1 to 75) 451
6. ADVANCED TOPICS IN LINEAR PROGRAMMING 467–633
6.1 Duality in Linear Programming 467
Exercises 6.1 (1 to 67) 488
6.2 The Dual Simplex Method 500
Exercises 6.2 (1 to 15) 508
vi
 6.3 The Revised Simplex Method 510
Exercises 6.3 (1 to 14) 526
6.4 The Bounded Variables Problem 528
Exercises 6.4 (1 to 9) 532
6.5 The Decomposition Method 533
6.6 Sensitivity Analysis 534
Exercises 6.6 (1 to 49) 556
6.7 Parametric Linear Programming 566
Exercises 6.7 (1 to 20) 577
6.8 Goal Programming 580
Exercises 6.8 (1 to 21) 590
6.9 Linear Fractional Programming 595
Exercises 6.9 (1 to 4) 596
6.10 Integer Programming 596
Exercises 6.10 (1 to 48) 628
7. DYNAMIC PROGRAMMING 634–678
7.1 Introduction 634
7.2 Optimal Subdivision Problem 654
7.3 System Reliability 666
7.4 Solution of L.P.P. by Dynamic Programming 668
Exercises (1 to 39) 671
8. DECISION THEORY, GAMES 679–815
8.1 Decision Theory 679
8.1-1 Steps in Decision Theory Approach 679
8.1-2 Decision-Making Environments 679
8.1-3 Decision-Making under Conditions of Uncertainty 680
8.1-4 Decision-Making under Conditions of Risk 684
8.1-5 Use of Incremental (Marginal) Analysis 690
8.1-6 Expected Value Criterion for Continuously Distributed Random Variables 692
8.1-7 Additional Examples 692
Exercises 8.1 (1 to 55) 704
8.2 Decision Trees 717
Exercises 8.2 (1 to 14) 738
8.3 Utility Theory 742
Exercises 8.3 (1 to 7) 747
8.4 The Theory of Games 748
8.4-1 Characteristics of Games 749
8.4-2 Definitions 749
8.4-3 Rule 1. Look for a Pure Strategy (Saddle Point) 752
8.4-4 Rule 2. Reduce Game by Dominance 756
8.4-5 Rule 3. Solve for a Mixed Strategy 757
8.4-6 Mixed Strategies (2 × 2 Games) 758
8.4-7 Mixed Strategies (2 × n Games or m × 2 Games) 769
8.4-8 Mixed Strategies (3 × 3 or Higher Games) 780
8.4-9 n-Person Zero-Sum Games 794
8.4-10 Bidding Problems 796
Exercises 8.4 (1 to 98) 798
vii
9. INVESTMENT ANALYSIS AND ANNUITIES 816–845
9.1 Introduction to Investment Analysis 816
9.2 Methods of Investment Analysis 816
9.2-1 Break-Even Analysis 816
9.2-2 Payback Period Method 822
9.2-3 Average (Accounting) Rate of Return Method 824
9.2-4 Time-Adjusted or Discounted Cash Flow (DCF) Methods 824
9.2-5 Net Present Value (NPV) Method 825
9.2-6 Internal Rate of Return (IRR) Method 826
9.2-7 Discounted Payback Period Method 827
9.3 Probabilistic Models 828
9.3-1 Risk Adjusted Discount Rate 828
9.3-2 Certainty-Equivalent Approach 829
9.3-3 Expected Monetary Value (EMV) 830
9.3-4 Hillier and Hertz’s Models 830
Exercises 9.1 (1 to 24) 835
9.4 Annuity 839
Exercises 9.2 (1 to 12) 844
10. QUEUING MODELS 846–907
10.1 Introduction 846
10.2 Elements of a Queuing System 847
10.3 Operating Characteristics of a Queuing System 848
10.4 Waiting Time and Idle Time Costs 849
10.5 Transient and Steady States of the System 850
10.6 Kendall’s Notation for Representing Queuing Models 850
10.7 Models for Arrival and Service Times 851
Exercises 10.1 (1 to 3) 852
10.8 Model 1. Single-Channel Poisson Arrivals with Exponential Service
Times, Infinite-Population Model (M/M/1): (FCFS/∞/∞) 852
10.9 An Explanatory Note on the Queuing Formulae 854
Exercises 10.2 (1 to 56) 872
10.10 Model II. Generalisation of Model (M/M/1): (FCFS/∞/∞) 881
(Birth-Death Process)
10.11 Model III. Single-Channel Poisson Arrivals, Exponential Service,
Infinite-Population, Service in Random Order Model 883
(M/M/1): (SIRO/∞/∞)
10.12 Model IV. (M/M/1): (FCFS/N/∞) Finite Queue Length Model 884
Exercises 10.3 (1 to 8) 886
10.13 Model V. Single-Channel, Finite-Population Model with 887
Poisson Arrivals and Exponential Service Times (Limited
Source Model) (M/M/1): (FCFS/n/M)
Exercises 10.4 (1 to 2) 888
10.14 Model VI. Multi-Channel Queuing Theory Model (M/M/C): (FCFS/∞/∞) 888
Exercises 10.5 (1 to 11) 898
10.15 Erlang Family Distribution 900

viii
 10.16 Model VII. (M / Ek /1) : (FCFS ∞ /∞ ) [Multi-Phase Service Model] 900
Exercises 10.6 (1 to 12) 903
10.17 Deterministic Models 905
10.18 Model XI. D/D/1 905
10.19 Model XII. M/D/1 906
11. REPLACEMENT MODELS 908–948
11.1 Introduction 908
11.2 Replacement of Items Whose Maintenance and Repair 908
Costs Increase with Time, Ignoring Changes in the Value of Money
During the Period
Exercises 11.1 (1 to 21) 916
11.2.1 Replacement of Items Whose Maintenance Costs 920
Increase with Time and Value of Money also Changes with Time
Exercises 11.2 (1 to 15) 927
11.3 Replacement of Items that Fail Suddenly 930
11.4 Group Replacement Policy 930
Exercises 11.3 (1 to 23) 936
11.5 Mortality and Staffing Problems 941
11.6 Miscellaneous Replacement Problems 943
11.7 Renewal Theory 946
Exercises 11.4 (1 to 4) 947
12. INVENTORY MODELS 949–1023
12.1 Necessity for Maintaining Inventory 949
12.2 Inventory Costs 949
12.3 Inventory Control Problem 950
12.4 Classification of Fixed Order Quantity Inventory Models 951
12.5 Inventory Models with Deterministic Demand 951
12.5-1 Model 1(a). Classical EOQ Model (Demand Rate Uniform, 951
Replenishment Rate Infinite)
Exercises 12.1 (1 to 43) 964
12.5-2 Model 1(b). (Demand Rate Non-uniform, Replenishment Rate Infinite) 968
12.5-3 Model 1(c). (Demand Rate Uniform, Replenishment or Production
Rate Finite) 969
12.5-4 Model 2(a). (Demand Rate Uniform, Replenishment Rate Infinite,
Shortages Allowed) 971
12.5-5 Model 2(b). (Demand Rate Uniform, Production Rate Finite,
Shortages Allowed) 972
Exercises 12.2 (1 to 16) 975
12.6 Inventory Models with Probabilistic Demand 978
Exercises 12.3 (1 to 13) 986
12.7 Inventory Models with Price Breaks 988
Exercises 12.4 (1 to 25) 992
12.8 Multi-Item Deterministic Model 995
Exercises 12.5 (1 to 4) 1001
12.9 Forecasting of Demand 1002
12.10 Forecasting Methods 1002
ix
 12.11 When to Order 1005
12.12 Selective Inventory Management Techniques 1013
Exercises 12.6 (1 to 34) 1019
13. SIMULATION 1024–1074
13.1 Introduction 1024
13.2 What is Simulation ? 1024
13.3 Monte Carlo Simulation 1025
13.4 Generation of Random Numbers 1053
Exercises (1 to 50) 1064
14. NETWORK ANALYSIS IN PROJECT PLANNING (PERT AND CPM)
1075–1184
14.1 Introduction 1075
14.2 Phases of Project Management 1075
14.3 Work Breakdown Structure (W.B.S.) 1076
14.4 Basic Tools and Techniques of Project Management 1076
14.5 Network Logic (Network or Arrow Diagram) 1077
14.6 Numbering the Events (Fulkerson’s Rule) 1079
14.7 Activity on Node Diagram 1084
Exercises 14.1 (1 to 17) 1086
14.8 Critical Path Method 1089
Exercises 14.2 (1 to 42) 1098
14.9 Programme Evaluation and Review Technique (PERT) 1108
Exercises 14.3 (1 to 38) 1122
14.10 Cost Analysis and Crashing the Network 1132
Exercises 14.4 (1 to 36) 1149
14.11 Resource Scheduling 1161
14.12 Updating 1175
Exercises 14.5 (1 to 14) 1178
14.13 Applications of Network Techniques 1182
14.14 Distinctions Between PERT and CPM 1183
14.15 Linear Programming Formulation 1183
Exercises 14.6 (1 to 5) 1184
15. STATISTICAL QUALITY CONTROL 1185–1218
15.1 Definition 1185
15.2 Causes of Variation in Quality 1185
15.3 Techniques of SQC 1186
15.4 Control Charts 1186
15.5 Control Charts for Variables 1187
15.6 Control Charts for Attributes 1198
15.7 Product Control 1211
15.8 Acceptance Sampling 1211
15.9 Single Sampling Plan 1212
15.10 Double Sampling Plan 1213
15.11 Multiple or Sequential Sampling Plan 1213
Exercises (1 to 41) 1214

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16. NON-LINEAR PROGRAMMING 1219–1290
16.1 Introduction 1219
16.2 Problem Formulation Examples 1219
16.3 Local and Global Optimum 1222
16.4 Concave and Convex Functions 1223
16.5 Constrained Extremal Problems 1232
16.6 Constrained Extremal Problem with more than one Equality Constraint 1241
16.7 Non-Linear Programming Problem with Inequality Constraints 1245
16.8 Non-Linear Programming Problem with more than One Inequality
Constraint 1249
16.9 The Graphical Method 1254
16.10 One-Variable Unconstrained Optimization 1262
16.11 One-Dimensional Search Procedure 1263
16.12 Multi-Variable Unconstrained Optimization 1267
16.13 The Gradient Search Procedure 1267
16.14 Quadratic Programming Problem 1278
16.15 Wolf’s Modified Simplex Method 1278
Exercises (1 to 50) 1284
Table C-1 1291
Table C-2 1292–1293

xi
xii
CHAPTER

▼
BASICS OF OPERATIONS
1 RESEARCH

This chapter provides an overall view of the subject of operations research. It covers some
general ideas on the subject, thus providing a perspective. The remaining chapters deal with
specific ideas and specific methods of solving OR problems.
1.1 DEVELOPMENT OF OPERATIONS RESEARCH
(i) Pre-World War II: No science has ever been born on a specific day. Operations research
is no exception. Its roots are as old as science and society. Though the roots of OR extend to even
early 1800s, it was in 1885 when Ferderick W. Taylor emphasised the application of scientific
analysis to methods of production, that the real start took place. Taylor conducted experiments in
connection with a simple shovel. His aim was to find that weight load of ore moved by shovel
which would result in maximum of ore moved with minimum of fatigue. After many experiments
with varying weights, he obtained the optimum weight load, which though much lighter than that
commonly used, provided maximum movement of ore during a day.
Another man of early scientific management era was Henry L. Gantt. Most job-scheduling
methods at that time were rather haphazard. A job, for instance, may be processed on a machine
without trouble but then wait for days for acceptance by the next machine. Gantt mapped
each job from machine to machine, minimizing every delay. Now, with the Gantt procedure
it is possible to plan machine loadings months in advance and still quote delivery dates
accurately.
The well-known economic lot size model is attributed to F.W. Harris, who published his
work on the area of inventory control in 1915.
In 1917, A.K. Erlang, a Danish mathematician, published his work on the problem of
congestion of telephone traffic. The difficulty was that during busy periods, telephone operators
were unable to handle the calls the moment they were made, resulting in delayed calls. A few
years after its appearance, his work was accepted by the British Post Office as the basis for
calculating circuit facilities. The formulae he developed on waiting time are of fundamental
importance to the theory of telephone traffic.
During the 1930s, H.C. Levinson, an American astronomer, applied scientific analysis to the
problems of merchandising. His work included scientific study of customers’ buying habits,
response to advertising and relation of environment to the type of article sold.
However, it was the First Industrial Revolution which contributed mainly towards the
development of OR. Before this revolution, most of the industries were small scale, employing
only a handful of men. The advent of machine tools — the replacement of man by machine as a
source of power and improved means of transportation and communication resulted in fast
flourishing industry. It became increasingly difficult for a single man to perform all the managerial
functions (or planning, sale, purchase, production, etc.). Consequently, a division of management
development etc., began to appear. With further industrial growth, further subdivisions of
1
❚❙❘ 2 ❘ ❙❚ Problems in Operations Research

management functions took place. For example, production department was sub-divided into
sections like maintenance, quality control, procurement, production planning, etc.
This industrial development, brought with it, a new type of problems called executive-type
problems. These problems are a direct consequence of functional division of labour in an
organization. In an organization, each functional unit (department or section) performs a part of
the whole job and for its successful working, develops its own objectives. These objectives,
though in the best interest of the individual department, may not be in the best interest of the
organization as a whole. In fact, these objectives of individual departments may be inconsistent
and clashing with each other. Consider, for example, the attitudes of the various departments of
a business organization towards the inventory policy. The production department wants to have
maximum production, associated with the lowest possible cost. This can be achieved by producing
only one item continuously. Thus it is interested in long, uninterrupted production runs, because
such runs minimise set-up and clean-up costs. Thus it prefers to have a large inventory in
relatively few product lines.
The marketing department also wants a large but diverse inventory so that a customer may
be provided immediate delivery over a wide variety of products. It would also like to have a
flexible production policy so as to meet special demands at a short notice.
The finance department wants to minimize inventory so as to minimize the unproductive
capital investments ‘tied up’ in it. Funds could be used elesewhere for better returns. It also
believes that inventories should rise and fall with rise and fall in company’s sales.
The personnel department wants to hire good labour and to retain it. This is possible only
when goods are produced continuously for inventory during slack periods also. In other words, it
is interested in maintaining a constant production level resulting in large inventory.
To set an inventory policy which serves the interest of the organization as a whole and not
that of any individual department is an executive-type problem, which can be satisfactorily solved
by the application of OR techniques. The decision which is in the best interest of the organization
as a whole is called Optimal (optimum or global optimum) decision and the one in the best interest
of an individual department is called sub-optimal decision.
(ii) World War II: During World War II, the military management in England called on a
team of scientists to study the strategic and tactical problems of air and land defence. The
objective was to find out the most effective allocation of limited military resources to the various
military operations and to the activities within each operation. The application included the
effective use of newly invented radar, allocation of British Air Force Planes to missions and the
determination of best patterns for searching submarines. This group of scientists formed the first
OR team.
The name operations research (or operational research) was apparently coined in 1940
because the team was carrying out research on (military) operations. The encouraging results of
these efforts led to the formation of more such teams in British Armed Services and the use of
such scientific teams soon spread to Western Allies — the United States, Canada and France. Thus
though this science of operations research originated in England, the United States soon took the
lead. In United States these OR teams helped in developing strategies for mining operations,
inventing new flight patterns and planning of sea mines.
(iii) Post-World War II: Immediately after the war, the success of military teams attracted
the attention of industrial managers who were seeking solutions to their problems. Industrial
operations research in U.K. and U.S.A. developed along different lines. In U.K. the critical
economic situation required drastic increase in production efficiency and creation of new markets.
Nationalisation of a few key industries further increased the potential field for OR. Consequently
OR soon spread from military to government, industrial, social and economic planning.
 Problems In Operation Research
(Principles And Solution)

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Author : Prem Kumar

Publisher : SChand Publications ISBN : 9788121909686
Gupta, D. S. Hira

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