Академический Документы
Профессиональный Документы
Культура Документы
Explain how and why Operation Research methods have been valuable in
aiding executive decisions. b. Discuss the usefulness of Operation Research in
decision making process and the role of computers in this field.
Answer.
Churchman, Aackoff and Aruoff defined Operations Research as:
“the application of scientific methods, techniques and tools to operation of a system
with optimum solutions to the problems”, where ‘optimum’ refers to the best possible
alternative.
“ The use of scientific methods to provide criteria for decisions regarding man,
machine, and systems involving repetitive operations”.
OR
b. “Operation Research is an aid for the executive in making his decisions based
on scientific methods analysis”. Discuss the above statement in brief.
Ans.
“Operation Research is an aid for the executive in making his decisions based on
scientific methods analysis”.
i) In Defense Operations:
In modern warfare, the defense operations are carried out by three major independent
components namely Air Force, Army and Navy. The activities in each of these
components can be further divided in four sub-components namely: administration,
intelligence, operations and training and supply. The applications of modern warfare
techniques in each of the components of military organizations require expertise
knowledge in respective fields. Furthermore, each component works to drive maximum
gains from its operations and there is always a possibility that the strategy beneficial to
one component may be unfeasible for another component. Thus in defense operations,
there is a requirement to co-ordinate the activities of various components, which gives
maximum benefit to the organization as a whole, having maximum use of the
individual components. A team of scientists from various disciplines come together to
study the strategies of different components. After appropriate analysis of the various
courses of actions, the team selects the best course of action, known as the ‘optimum
strategy’.
ii) In Industry: The system of modern industries is so complex that the optimum point
of operation in its various components cannot be intuitively judged by an individual.
The business environment is always changing and any decision useful at one time may
not be so good sometime later. There is always a need to check the validity of decisions
continuously against the situations. The industrial revolution with increased division of
labor and introduction of management responsibilities has made each component an
independent unit having their own goals. For example: production department
minimizes the cost of production but maximise output. Marketing department
maximizes the output, but minimizes cost of unit sales. Finance department tries to
optimize the capital investment and personnel department appoints good people at
minimum cost. Thus each department plans its own objectives and all these objectives
of various department or components come to conflict with one another and may not
agree to the overall objectives of the organization. The application of OR techniques
helps in overcoming this difficulty by integrating the diversified activities of various
components to serve the interest of the organization as a whole efficiently. OR methods
in industry can be applied in the fields of production, inventory controls and marketing,
purchasing, transportation and competitive strategies.
iii)Planning:
In modern times, it has become necessary for every government to have
careful planning, for economic development of the country. OR techniques can be
fruitfully applied to maximise the per capita income, with minimum sacrifice and time.
A government can thus use OR for framing future economic and social policies.
iv) Agriculture:
With increase in population, there is a need to increase agriculture output. But this
cannot be done arbitrarily. There are several restrictions. Hence the need to determine a
course of action serving the best under the given restrictions. You can solve this
problem by applying OR techniques
v) In Hospitals:
OR methods can solve waiting problems in out-patient department of big hospitals and
administrative problems of the hospital organizations.
vi) In Transport:
You can apply different OR methods to regulate the arrival of trains and processing
times minimize the passengers waiting time and reduce congestion, formulate suitable
transportation policy, thereby reducing the costs and time of trans-shipment.
Ans.
Simplex method is used for solving Linear programming problem especially when
more than two variables are involved
SIMPLEX METHOD
Maximize
Z = 40×1 + 30×2
Subject to:
x1 + x2 ≤ 122×1 + x2 ≤ 16x1 ≥ 0; x2 ≥ 0
2. Convert the inequalities into equations.
This is done by adding one slack variable for eachi n equality.For
example to convert the inequality x1 + x2 ≤ 12 into an equation, we
add a non-negativevariable y1, and we getx1 + x2 + y1 = 12Here
the variable y1 picks up the slack, and it represents the amount by
which x1 + x2 fallsshort of 12. In this problem, if Niki works fewer
that 12 hours, say 10, then y1 is 2. Later whenwe read off the final
solution from the simplex table, the values of the slack variables
willidentify the unused amounts.We can even rewrite the objective
function Z = 40×1 + 30×2 as – 40×1 – 30×2 + Z = 0.After adding
the slack variables, our problem reads
Here the vertical line separates the left hand side of the equations
from the right side. The horizontal line separates the constraints from
the objective function. The right side of the equation is represented
by the column C
The reader needs to observe that the last four columns of this matrix
look like the final matrix for the solution of a system of equations. If
we arbitrarily choose
There are two ideas fundamental to duality theory. One is the fact
that (for the symmetric dual) the dual of a dual linear program is the
original primal linear program. Additionally, every feasible solution for
a linear program gives a bound on the optimal value of the objective
function of its dual.
The weak duality theorem states that the objective function value of
the dual at any feasible solution is always greater than or equal to
the objective function value of the primal at any feasible solution. The
strong duality theorem states that if the primal has an optimal
solution,
x*, then the dual also has an optimal solution, y*, such that
cTx*=bTy* . A linear program can also be unbounded or infeasible.
Duality theory tells us that if the primal isunbounded then the dual is
infeasible by the weak duality theorem. Likewise, if the dual
isunbounded, then the primal must be infeasible. However, it is
possible for both the dual and the primal to be infeasible
Q1. What are the essential characteristics of Operation
Research? Mention different phases in an Operation Research
study. Point out some limitations of O.R
Systems Orientation
o This approach recognizes the fact that the behavior of any part of
the system has an effect on the system as a whole. This stresses the
idea that the interaction between parts of the system is what
determines the functioning of the system. No single part of the
system can have a bearing effect on the whole. OR attempts appraise
the effect the changes of any single part would have on the
performance of the system as a whole. It then searches for the
causes of the problem that has arisen either in one part of the system
or in the interrelation parts.
Interdisciplinary groups
o The team performing the operational research is drawn from
different disciplines. The disciplines could include mathematics,
psychology, statistics, physics, economics and engineering. The
knowledge of all the people involved aids the research and
preparation of the scientific model.
Human Factors
o In other forms of quantitative research, human factors are not
considered, but in OR, human factors are a prime consideration.
People involved in the process may become sick, which would affect
the company’s output.
Limitations
Game theory
In the theory of simultaneous games, a minima strategy is a mixed
strategy which is part of the solution to a zero-sum game. In zero-
sum games, the minima solution is the same as the
Nashequilibrium.Minimax theorem The minimax theorem states: For
every two-person, zero-sum game with finitely many strategies, there
exists a value V and a mixed strategy for each player, such that (a)
Given player 2′s strategy, the best payoff possible for player 1 is V,
and (b) Given player 1′s strategy, the best payoff possible for player 2
is −V.Equivalently, Player 1′s strategy guarantees him a payoff of V
regardless of Player 2′s strategy, and similarly Player 2 can guarantee
himself a payoff of −V. The name minimax arises because each
player minimizes the maximum payoff possible for the other—since
the game is zero-sum, he also maximizes his own minimum payoff.
This theorem was established by John von Neumann,
[1]who is quoted as saying “As far as I can see, there could be no
theory of games … without that theorem … I thought there was
nothing worth publishing until the Minimax Theorem was proved”.
[2]See Scion’s minimax theorem and Parthasarathy’s theorem for
generalizations; see also example of a game without a value.
Example The following example of a zero-sum game, whereAand
Bmake simultaneous moves,illustratesminimaxsolutions. Suppose
each player has three choices and consider the payoff matrixfor
Adisplayed at right.Assume the payoff matrix for Bis thesame matrix
with the signs reversed(i.e. if the choices are A1 and B1 thenBpays 3
toA). Then, the minimaxchoice for Ais A2 since the worst possible
result is then having to pay 1, while the simpleminimax choice for Bis
B2 since the worst possible result is then no payment. However, this
solution is not stable, since if BbelievesAwill choose A2 then will
choose B1 to gain 1; then if AbelievesBwill choose B1 then will choose
A1 to gain 3; and then will choose B2; and eventually both players
will realize the difficulty of making a choice. So a more stable
strategy isneeded.Some choices are dominated by others and can be
eliminated: will not choose A3 since either A1 or A2 will produce a
better result, no matter whatBchooses;Bwill not choose B3 since
some mixtures of B1 and B2 will produce a better result, no matter
whatAchooses.Acan avoid having to make an expected payment of
more than 1/3 by choosing A1 with probability 1/6 and A2 with
probability 5/6, no matter whatBchooses.Bcan ensure an expectedB
chooses B1B chooses B2B chooses B3A chooses A1+3 −2 +2A
chooses A2−1 0 +4A chooses A3−4 −3 +1 wouldn’t have to pay as
much to license these characters. Changing the rules is another way
in which companies can benefit. The authors introduce the idea of
judo economics, where a large company may be willing to allow a
smaller company to capture a small market share rather than
compete by lowering its prices. As long as it does not become too
powerful or greedy, a small company can often participate in the
same market without having to compete with larger companies on
unfavorable terms. Kiwi International Air Lines introduced services on
its carriers that were of lower prices to get market share, but made
sure that the competitors understood that they had no intention of
capturing more than 10% of any market. Companies can also change
perceptions to make themselves better off. This can be accomplished
either by making things clearer or more uncertain. In 1994, the New
York Post attempted to make radical price changes in order to get the
Daily News to raise its price to regain subscribers. However, the Daily
News misunderstood and both newspapers were headed for a price
war. The New York Post had to make its intentions clear, and both
papers were able to raise their prices and not lose revenue. The
authors also show an example of how investment banks can maintain
ambiguity to benefit themselves. If the client is more optimistic than
the investment bank, the bank can try to charge a higher commission
as long as the client does not develop a more realistic appraisal of
the company’s value. Finally, companies can change the boundaries
within which they compete. For example, when Sega was unable to
gain market share from Nintendo’s 8-bit systems, it changed the
game by introducing a new 16-bit system. It took Nintendo 2 years to
respond with its own 16-bit system, which gave Sega the opportunity
to capture market share and build a strong brand image. This
example shows how companies can think outside the box to change
the way competition takes place in their industry.Brandenburger and
Nalebuff have illustrated how companies that recognize they can
change the rules of competition can vastly improve their odds of
success, and sometimes respond in a way that benefits both
themselves and the competition. If companies are able to develop a
system where they can make both themselves and their competitors
better off, then they do not have to worry so much about their
competitors trying to counter their moves. Also, because companies
can easily copy each other’s ideas, it is to a firm’s advantage if they
can benefit when their competitors copy their idea, which is not
usually possible under the traditional win-losestructure.This article
has some parallels with the article “Competing on Analytics” by ().
The biggest factor that both of these articles have in common is how
crucial it is for managers to understand everything they can about
their business and the environment in which they work. In“Competing
on Analytics”, the authors say that it is important to be familiar with
this information so that managers can change the way they compete
to improve their chances of success. At the end of “The Right Game:
Use Game Theory to Shape Strategy”, the authors discuss how in
order for companies to be able to change the environment or rules
under which they compete they need to understand everything they
can about the constructs under which they are competing. Whether a
manager intends to use analytics or game theory to be successful, he
or she must first have all available information and use that
information to understand how to make the company better off.
However, the work shown in “Competing on Analytics” tends to place
an emphasis almost exclusively on the use of quantitative data to
improve efficiency or market share of the company. “The Right
Game”, however focuses more on using information to find creative
ways of changing the constructs or rules applied between companies,
often yielding a much broader impact.
Tensions of both PERT and CPM allow the user to manage other
resources in addition to time and money, to trade off resources, to
analyze different types of schedules, and to balance the use of
resources.
Godowns Stock
Factory
1 2 3 4 5 6 available
20 40
(2) (2) (2) (4) ⇐
A 7 5 7 7 5 40 3 60
10 0
10 (3) (3) (3)(3) (3) (3) (3)(9) ⇐
B 9 11 6 11 - 5 20 10
30 20 40
C (0) (0) (2)(2) (5) ⇐
11 10 6 2 2 8 90 70 30
50
(3) (3) (0)(0) (0) (0) (0)(9) ⇐
D 9 10 9 6 9 12 50
60 20 40 20 40 40 220
Demand 50 10 0
(2) (5) (0) (4) (3) (0)
(2) ⇑ (0) (4) (3) (0)
(2) (0) (0)
(2) (0)
⇑ (3)
(0)
(0) (0) (5)
(0) (0) ⇑
(0)
(b) So Optimum basic feasible solution
Godowns
Stock
Factory
available
1 2 3 4 5 40 6
A 20 0
7 5 7 7 5 3 60
B 10 10
9 11 6 11 - 5 20
C 30 20 40
11 10 6 2 2 8 90
D 50
9 10 9 6 9 12 50
Demand 60 20 40 20 40 40 220
So transportation Cast: -
6. A machine operator processes five types of items on his machine each week, and must
choose a sequence for them. The set-up cost per change depends on the item presently
on the machine and the set-up to be made according to the following table:
To item
From Item A B C D E
A ∞ 4 7 3 4
B 4 ∞ 6 3 4
C 7 6 ∞ 7 5
D 3 3 7 ∞ 7
E 4 4 5 7 ∞
If he processes each type of item once and only once each week, how should he sequence
the items on his machine in order to minimize the total set-up cost?
(Hint: A-> E -> C-> B-> D-> A Cost: 20)
Ans. Refer to the Page No 267 Solve by self.
Step 1 Step 2
To item To item
From From
A B C D E A B C D E
Item Item
A ∞ 1 3 0 1 A ∞ 1 2 0 1
B 1 ∞ 3 0 1 B 1 ∞ 2 0 1
C 2 1 ∞ 2 0 C 2 1 ∞ 2 0
D 0 0 4 ∞ 4 D 0 0 3 ∞ 4
E 0 0 1 2 ∞ E 0 0 0 2 ∞
Step 3 Step 4
To item To item
From From
A B C D E A B C D E
Item Item
A ∞ 1 2 [0] 1 A ∞ 0 2 [0] 1
B 1 ∞ 2 0 1 B 1 ∞ 2 [0] 1
C 2 1 ∞ 2 0 C 2 1 ∞ 2 [0]
D 0 0 3 ∞ 4 D [0] 0 3 ∞ 4
E 0 0 0 2 ∞ E 0 [0] [0] 2 ∞
A – D = 3, D–A=3
B – D = 3, E–B=4
C – E = 5, E–C=5
Transportation cost = 23