Production Management – PRDH19-2

Sessions 19 & 20 → Optimization + Solver

Application (TOC, APP) + Deming-Juran-Crosby
Introduction to Optimization

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Linear versus Non-linear Models

◼ Linear function
◼ When the function is linear (without any power
function, logarithmic function, inverse function or
trigonometric function)
◼ ax + by + cz + dw = e (a, b, c, d, e = real valued; x, y,
z, w = variables)
◼ Linear programming
◼ All of the Objective function and Constraints are linear
combination of variables
◼ Non-linear programming
◼ At least one of the objective function or constraints will
be non-linear
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Excel Solver – Main Solution
Procedures
◼ Simplex LP
◼ Linear problem
◼ Variable can be real, binary or integer
◼ For binary or integer variable
◼ Branch-and-bound technique is used
◼ GRG (Generalized Reduced Gradient) Nonlinear
◼ Used for non-linear problem
◼ Concept based on derivative
◼ Generates local optimal solution
◼ Evolutionary
◼ Used for non-linear problem
◼ Compares across the ranges of variables
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Example of a Linear Maximization
Problem
◼ A carpenter can produce Chairs and Tables
◼ Profits are as follows:
◼ Chair = 1 per unit; Table = 5 per unit
◼ The carpenter can decide the number of chairs and tables
he will produce
◼ These are known as variables
◼ In other words, variables are controllable in real life
◼ Assume he will prepare x chairs and y tables
◼ Then his total profit = x + 5y
◼ This is linear function of x and y
◼ Carpenter’s objective is to maximize the profit
◼ In absence of constraints → The profit can take any
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Constraints → Makes us to act within
certain boundary

◼ Constraints → Creates boundary to my objective

◼ Suppose there are following constraints:
◼ Can we create these inequality constraints?
◼ Chairs = x, Tables = y
◼ Number of Tables should be
◼ At the max (No. of Chairs + 10)/3 or less
◼ – x + 3y <= 10
◼ He can produce maximum 6 items in a day
◼ x + y <= 6
◼ Maximum difference between Chairs and Tables
◼ Cannot exceed 2 units
◼ x – y <= 2
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Graphical Interpretation of Linear
Optimization Problem

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Introduction to Excel Solver

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Excel Solver – Main Components
Objective → z = x + 5y
Constraints →
– x + 3y ≤ 10
x+y ≤ 6
x–y ≤ 2

Must be function of
Variable cells

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Excel Solver – Dialog Boxes

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Introduction to Non-linearity

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Slopes or Derivatives for functions
◼ Smooth functions
y = f(x) = x2
y = f(x) = - x2

◼ Non-smooth function/discontinuous derivative function

y = f(x)
= |x| = ABS(x)

Negative slope Positive slope

y = f(x) = x3
Derivative does not exist
◼ Discontinuous function
Discontinuous function, Derivative
does not exist Dipankar Bose - XLRI
Excel Non-smooth and Discontinuous
functions
◼ Common non-smooth functions in Excel
◼ ABS/MIN and MAX/INT and ROUND/CEILING and
FLOOR
◼ These functions can also be converted into linear
function and SIMPLEX LP can be applied (by adding
integer variables)
◼ Common discontinuous function in Excel
◼ IF/CHOOSE/VLOOKUP/COUNT/INDEX
◼ Use Evolutionary Solving method to find a “good”
solution

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Constrained Process – Solution using
Solver
◼ Product A
◼ Profit = Rs. 80/unit
◼ Demand = 100/week
◼ Production = 0.4 hours/unit
◼ Product B
◼ Profit = Rs. 50/unit
◼ Demand = 200/week
◼ Production = 0.2 hours/unit

◼ What will be maximum profit (consider both constraints)?

◼ Total available time = 60 hours/week
◼ Total production limit = 180 units/week
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Excel Solver – Interpretation of
Shadow Price
◼ If the Shadow price is ZERO
◼ The constraint is non-binding
◼ Increase in RHS of the constraint has no effect
◼ If the Shadow price is POSITIVE
◼ The constraint is binding
◼ One unit increase in RHS of the constraint
◼ Will increase optimal value of model by shadow
price

◼ Positive shadow priced constraints are also called

Bottleneck
◼ Those are the investment points
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Case – Macpherson Refrigeration

◼ Go through Excel file uploaded

◼ Use the data given in Excel file and use the data to get
values in
◼ Exhibit 1
◼ Exhibit 2
◼ Exhibit 3

◼ Can you improve the results without changing the

policies?

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Some Issues from Deming-Juran-
Crosby Article
◼ What are “common causes” and “special causes”?
◼ Which helps in quality improvement?
◼ What are the problems with control charts?
◼ Why “quality control engineers” are necessary?
◼ Deming Point 8 → Drive out fear…Why?
◼ Juran’s view → When workers are responsible for
mistakes?
◼ Crosby’s view → Why “quality is free”?
◼ Also important
◼ Crosby’s Quality Management Maturity Grid

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PRDH18-2 – End-term Syllabus – Part
3
◼ End-term Examination (30 + 10 = 40 Marks, 2 hours)
◼ Numerical = 15-20 Marks (5-6 Questions)
◼ TOC/CCPM/MPS/MRP/Waiting Line
◼ Excel Solver based = 5-7 Marks (1-2 Questions)
◼ TOC/APP
◼ MCQ = 5-10 Marks (Each 1-mark, NO Negative marking)
◼ Session 15 to Session 20
◼ Laptop required/Open book/Open note exam
◼ Exchange of Textbook, Handout/notes, photocopies,
calculator etc. not allowed
◼ Articles → Both the articles are part of syllabus
◼ Additional 10 Marks → 5 marks each from Part 1 and 2
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Arrival and Service Rates do not follow
Particular Distribution
◼ Known
◼ 𝑋𝑎 = Mean Inter-arrival time
◼ 𝑋𝑠 = Mean Service time
◼ 𝑆𝑎 = Standard deviation of Inter-arrival time sample
◼ 𝑆𝑠 = Standard deviation of Service time sample
◼ Then
𝑆𝑎
◼ Coefficient of variation of Inter-arrival time = 𝐶𝑎 =
𝑋𝑎
𝑆𝑠
◼ Coefficient of variation of service time = 𝐶𝑠 =
𝑋𝑠
1
◼ Customer arrival rate =  =
𝑋𝑎
1
◼ Customer service rate =  =
𝑋𝑠
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Arrival and Service Rates do not follow
Particular Distribution – Continued
◼ Also

◼ Utilization of the server =  =
𝑆
 2(𝑆+1) 𝐶𝑎2 +𝐶𝑠2
◼ Average number in QUEUE = 𝐿𝑞 = ×
1− 2
left part numerator as  to the power
◼ Read 2(𝑆 + 1)

◼ Average number in SYSTEM = 𝐿𝑞 +

𝐿𝑞
◼ Average time waiting in QUEUE =

𝐿𝑠
◼ Average time waiting in SYSTEM =

◼ Can we use 𝑳𝒒 formula for M/M/1 and M/D/1?
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 Thank You!
Best of Luck!
Have a Good Time Ahead….

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