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1
a) “Operation Techniques is a bunch of mathematical techniques.” Comment.
Ans:
Q.1- b) “Operation Research is an aid for the executive in making his decisions
based on scientific methods analysis”. Discuss the above statement in brief.
Because of the computational nature of these fields, OR also has strong ties to computer
science. Operational researchers faced with a new problem must determine which of
these techniques are most appropriate given the nature of the system, the goals for
improvement, and constraints on time and computing power.
• The major sub disciplines in modern operational research, as identified by the journal
Operations Research, are:
• Computing and information technologies
• Decision analysis
• Environment, energy, and natural resources
• Financial engineering
• Manufacturing, service sciences, and supply chain management
• Policy modelling and public sector work
• Revenue management
• Simulation
• Stochastic models
• Transportation
Q. 2 Comment on the following statements:
1. Systems approach:
The term system approach implies that each problem should be examined in its entirely to
the extent possible and economically feasible from the point of view of the overall system
of which the problem under consideration is one part. Under those approaches a manager
makes conscious attempt to understand the relationships among various parts of the
organisation and their role in supporting the overall performance of the organisation.
Operations objective of operations research is to provide managers of the organisation
with a scientific basis for solving problems involving the interaction of components of
the organisation as a whole. The decision which is best for the organisation as a whole is
called an optimal decision. Operations research tries to find the best decision relative to a
large portion of the total organisation. Hence in operations research every problem is
considered in its totality, i.e. O.R. adopts systems approach for solving the problem. In
other words, “Operations Research is the scientific study of large systems with a view to
identify problem areas and provide the mangers with a quantitative basis for decisions
which will enhance their effectiveness in achieving the specified objectives.”
3. Methodological Approach:
O.R. utilizes scientific methods for solving a problem. Specifically, the process begins
with the careful observation and formulation of the problem. The next step is to construct
a scientific model (typically a mathematical model) that attempts to abstract the essence
of the real problem. From this model, conclusions or solutions are obtained which are
also valid for the real problem. In an interactive fashion, the model is then verified
through appropriate experiments to determine the best or optional solution to the problem
under consideration.
4. Operations economy:
O.R. is a problem solving and a decision making science. Whenever we have conflicts,
uncertainty and complexity in any situation, O.R. can help in the end to reduce costs and
improve profits and effects substantial “Operations Economy”. Once the old approach of
management by intuit is buried, a scientific approach to decision making is bound to help.
Often the conflicts are so tangled that they defy any intuitive solution, viz., the marketing
function frequently caught up in recoiling the following conflicting objectives: i) product
innovation, ii) high scale volume, iii) increasing market share, iv) flexibility in the market
place, and v)entry into new markets and revenue markets. It is here that O.R. is likely to
convincingly optimize the total effectiveness.
From all above areas of applications, one may conclude that operations research can be
widely advocate a systems approach for making timely management decisions and also
used as a corrective measure. O.R. encourages systems approach which concerned with
the cost optimization, and hence we can say: Operation Research advocates a system
approach and is concerned with optimization.
Some of the areas of management where techniques of operations research are applied
are listed below:
a) Determining the quality and timing of purchase of raw materials, machinery, etc.
b) Rules for buying and supplies under varying prices.
c) Bidding policies.
d) Equipment replacement policies.
e) Determination of quantities and timings of purchases.
f) Strategies for exploration and exploitation of new material source.
3. Production Management:
a) Product planning:
i) Location and size of warehouses, distribution centres, retail outlets, etc.
ii) Distribution policy
b) Manufacturing & facility planning:
i) Production scheduling and sequencing
ii) Product scheduling and allocation of resources
iii) Selection & location of factories, warehouses and their sizes
iv) Determining the optimal production mix.
v) Maintenance policies & preventive maintenance.
vi) Scheduling & sequencing the production run by proper allocation of
machines.
4. Marketing Management:
a) Product selection, timing, competitive actions.
b) Advertising strategy & choice of different media of advertising.
c) Number of salesman, frequency of calling of accounts, etc.
d) Effectiveness of market research.
e) Size of the stock to meet the future demand.
5. Personnel Management:
a) Recruitment policies & assignment of jobs.
b) Selection of suitable personnel with due consideration for age and skills, etc.
c) Establishing equitable bonus systems.
From all above areas of applications, one may conclude that operations research can be
widely used in taking timely management decisions and also used as a corrective
measure. The application of this tool involves certain data and not merely a personality of
decision maker, and hence we can say: Operations Research has replaced management by
personality.
Q.3. Explain how the profit maximization transportation problem can be
converted to an equivalent cost minimization transportation problem.
Factory Dealers
1 2 3 4
City - A 2 2 2 4
City - B 3 5 3 2
City - C 4 3 2 1
From the given data, we compute a matrix of net returns as done in table below;
The difference in the simplex solution procedure for a maximization problem and a
minimization problem of linear programming can be explained by the steps followed to
solve the minimization/ minimization problem as follows ;
2. Introduce surplus variables (Si’s) and artificial variables (Ai) for “³” type of constraint.
4. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will
be “M”
6. Slack and artificial variables will form basic variable for the first simplex table.
Surplus variable will never become basic variable for the first simplex table.
8. Select the most negative value of Zj – Cj. That column is called key column. The
variable corresponding to the column will become basic variable for the next table.
9. Divide the quantities by the corresponding values of the key column to get ratios;
select the minimum ratio. This becomes the key row. The basic variable corresponding to
this row will be replaced by the variable found in step 6.
10. The element that lies both on key column and key row is called Pivotal element.
11. Ratios with negative and “a” value are not considered for determining key row.
12. Once an artificial variable is removed as basic variable, its column will be deleted
from next iteration.
13. For maximisation problems, decision variables coefficient will be same as in the
objective function. For minimisation problems, decision variables coefficients will have
opposite signs as compared to objective function.
14. Values of artificial variables will always is – M for both maximisation and
minimisation problems.
Every linear programming problem (LPP) is associated with another linear programming
problem involving the same data and optimal solutions. Such two problems are said to be
duals of each other. One problem is called the primal, while the other problem is called
the dual. The dual formulation is derived from the same data and solved in a manner
similar to the original 'primal' formulation. In other words, you can say that dual is the
'inverse' of the primal formulation because of the following reasons.
• If the primal objective function is 'maximisation' function, then the dual objective
function is 'minimisation' function and vice-versa.
• The column co-efficient in the primal constraint is the row co-efficient in the dual
constraint.
• The co-efficients in the primal objective function are the RHS constraint in the dual
constraint.
• The RHS column of constants of the primal constraints becomes the row of co-
efficient of the dual objective function.
The concept of duality is useful to obtain additional information about the variation in the
optimal solution. These changes could be effected in the constraint co-efficient, in
resource availabilities and/or objective function co-efficient. This effect is termed as post
optimality or sensitivity analysis.
If the primal problem possesses a unique non-degenerate, optimal solution, then the
optimal solution to the dual is unique. However, dual solutions arise under a number of
other conditions. Several of the cases which can arise are:
• When the primal problem has a degenerate optimal solution, the dual has multiple
optimal solutions.
• When the primal problem has multiple optimal solutions, the optimal dual solution is
degenerate.
x1, x2, . . ., xn ≥ 0
i. The maximisation problem in the primal becomes a minimisation problem in the dual
and vice versa
ii. (≤) type of constraints in the primal become (≥) type of constraints in the dual and vice
versa.
iii. The coefficients c1, c2, . . .,cn in the objective function of the primal become b1, b2,
…,bm in the objective function of the dual.
iv. The constants b1, b2,…,bm in the constraints of the primal become c1, c2, . . .,cn in
the constraints of the dual
v. If the primal has n variables and m constraints the dual will have m variables and n
constraints
vi. The variables in both the primal and dual are non-negative
Minimise W = b1 y1 + b2 y2 + . . . +bm ym
Formation of dual LPP is easier when the standard form of LPP for maximisation
problem must contain “≤” type of constraints, while for minimisation problem, it must
contain “≥” type of constraints.
Two-phase method for solving a given LPP can be divided in the two phses as mentioned
below:
Phase I: Formulate the new problem. Start by eliminating the original objective function
by the sum of the artificial variables for a minimisation problem and the negative of the
sum of the artificial variables for a maximisation problem. The Simplex method
optimizes the ensuing objective with the constraints of the original problem. If a feasible
solution is arrived, the optimal value of the new objective function is zero (suggestive of
all artificial variables being zero). Subsequently proceed to phase -II. If the optimal value
of the new objective function is non-zero, it means there is no solution to the problem and
the method terminates.
Phase II: Start phase II using the optimum solution of phase I as the base. Then take the
objective function without the artificial variables and solve the problem using the
Simplex method.
Why is it used?
The drawback of the penalty cost method is the possible computational error resulting
from assigning a very large value to the constant M. To overcome this difficulty, Two -
Phase Simplex method is considered where the use of M is eliminated by solving the
problem in two phases.
Q. 6 Indicate any four shortcomings of taking a simulation approach to solve an
O.R. problem.
In case of other OR models, simulation helps the manager to strike a balance between
opposing costs of providing facilities (usually meaning long term commitment of funds)
and the opportunity and costs of not providing them.
1. It does not produce optimal results. Solutions are approximate, and it is some less than
formal but ‘satisfactory’ approach to problem-solving only.
3. Each simulation run like a single experiment conducted under a given set of conditions
as defined by a set of values for the input solution. A number of simulation runs will be
necessary and thus can be time consuming. As the number of variables increases in terms
of input, the difficulty in finding the optimum values increases considerably.
6. Because of the simplicity in adoption of simulation process, one may develop to rely
on this technique too often, although mathematical model is more suitable to the
situation.
7. One should not ignore the cost associated with a simulation study for data collection,
formation of the model. A good simulation model may be very expensive. Often it takes
years to develop a usable corporate planning model.
9. A simulation application is based on the premise that the behaviour pattern of relevant
variables is known, and this very premise sometimes becomes questionable.
10. Not always can the probabilities be estimated with ease or desired reliability. The
results of simulation should always be compared with solutions obtained by other
methods wherever possible, and “tempered” with managerial judgment