MBA Semester II Assignment 2 Marks 60 (6X10=60)

MB0048 - Operations Research - 4 credits Subject Code - MB0048

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Q1. Define Operations Research. Discuss different models available in OR. Ans 1.
Operations Research Operations research, or operational research in British usage, is a discipline that deals with the application of advanced analytical methods to help make better decisions. It is often considered to be a sub-field of mathematics. The terms management science and decision science are sometimes used as more modern-sounding synonyms. Employing techniques from other mathematical sciences, such as mathematical modelling, statistical analysis, and mathematical optimization, operations research arrives at optimal or near-optimal solutions to complex decision-making problems. Because of its emphasis on human-technology interaction and because of its focus on practical applications, operations research has overlap with other disciplines, notably industrial engineering and operations management, and draws on psychology and organization science. Operations Research is often concerned with determining the maximum (of profit, performance, or yield) or minimum (of loss, risk, or cost) of some real-world objective. Originating in military efforts before World War II, its techniques have grown to concern problems in a variety of industries. A model is an idealized representation or abstraction of a real-life system. The objective of a model is to identify significant factors that affect the real-life system and their interrelationships. A model aids the decision-making process as it provides a simplified description of complexities and uncertainties of a problem in a logical structure. The most significant advantage of a model is that it does not interfere with the real-life system. Classification of OR models You can broadly classify OR models into the following types. a. Physical Models include all form of diagrams, graphs and charts. They are designed to tackle specific problems. They bring out significant factors and interrelationships in pictorial form to facilitate analysis. There are two types of physical models: I. Iconic models II. Analog models Iconic models are primarily images of objects or systems, represented on a smaller scale. These models can simulate the actual performance of a product. Analog models are small physical systems having characteristics similar to the objects they represent, such as toys. b. Mathematical or Symbolic Models employ a set of mathematical symbols to represent the decision variable of the system. The variables are related by mathematical systems. Some examples of mathematical models are allocation, sequencing, and replacement models. c. By nature of Environment: Models can be further classified as follows: I. Deterministic model in which everything is defined and the results are certain, such as an EOQ model. II. Probabilistic Models in which the input and output variables follow a defined probability distribution, such as the Games Theory. d. By the extent of Generality Models can be further classified as follows: I. General Models are the models which you can apply in general to any problem. For example: Linear programming.

II. Specific Models on the other hand are models that you can apply only under specific conditions. For example: You can use the sales response curve or equation as a function of only in the marketing function. General methods for solving these OR models The basic dominant characteristic feature of operations research is that it employs mathematical representations or models to analyze problems. This distinct approach represents an adaptation of the scientific methodology used by the physical sciences. The scientific method translates a real given problem into a mathematical representation which is solved and retransformed into the original context. The OR approach to problem solving consists of the following steps: Defining the problem, Constructing the model, Solving the model, Validating the model and Implementing the final result. a) Definition The first and the most important step in the OR approach of problem solving is to define the problem. You need to ensure that the problem is identified properly because this problem statement will indicate three major aspects: 1) A description of the goal or the objective of the study 2) An identification of the decision alternative to the system 3) The recognition of the limitations, restrictions and requirements of the system. b) Construction Based on the problem definition, you need to identify and select the most appropriate model to represent the system. While selecting a model, you need to ensure that the model specifies quantitative expressions for the objective and the constraints of the problem in terms of its decision variables. A model gives a perspective picture of the whole problem and helps tackling it in a well-organized manner. Therefore, if the resulting model fits into one of the common mathematical models, you can obtain a convenient solution by using mathematical techniques. If the mathematical relationships of the model are too complex to allow analytic solutions, a simulation model may be more appropriate. There are various types of models which you can construct under different conditions. c) Solution After deciding on an appropriate model you need to develop a solution for the model and interpret the solution in the context of the given problem. A solution to a model implies determination of a specific set of decision variables that would yield an optimum solution. An optimum solution is one which maximizes or minimizes the performance of any measure in a model subject to the conditions and constraints imposed on the model. d) Validation A model is a good representation of a system. However, the optimal solution must work towards improving the systems performance. You can test the validity of a model by comparing its performance with some past data available from the actual system. If under similar conditions of inputs, your model can reproduce the past performance of the system, then you can be sure that your model is valid. However, you will still have no assurance that future performance will continue to duplicate the past behaviour. Secondly, since the model is based on careful examination of past data, the comparison should always reveal favourable results. In some instances, this problem may be overcome by using data from trial runs of the system. Note that such validation methods are not appropriate for non-existent systems, since data will not be available for comparison. e) Implementation You need to apply the optimal solution obtained from the model to the system and note the improvement in the performance of the system. You need to validate this performance check

under changing conditions. To do so, you need to translate these results into detailed operating instructions issued in an understandable form to the individuals who will administer and operate the recommended system. The interaction between the operations research team and the operating personnel reaches its peak in this phase.

Q2. Write dual of Max Z= 4X1+5X2 subject to 3X1+X215 X1+2X210 5X1+2X220 X1, X20
A.2 The given problem is in its standard form. Therefore its dual is Mini W = 15y1 + 10 y2 + 20 y3 Subject to 3y1 + y2 + 5 y3 4 y1 + 2y2 + 2y3 5 y1, y2, y3, 0

Q3. Solve the following Assignment Problem Operation s O1 O2 O3 Ans 3.

Introducing a dummy row and applying Hungarian method, we have

M1

M2

M3

M4

10 9 15

15 10 16

12 9 16

11 12 17

Operations O1 O2 O3 O4

M1 10 9 15 0

M2 15 10 16 0

M3 12 9 16 0

M4 11 12 17 0

Row reduced Matrix and assigning

Operations O1 O2 O3 O4
Iteration 1

M1 0 X X X

M2 5 1 1 0

M3 2 0 1 X

M4 1 3 1 X

Operations O1 O2 O3 O4

M1 0 1 X 1

M2 4 1 0 X

M3 1 0 X X

M4 X 3 X 0

Hungarian Method leads to Multiple solution. Selecting (O3, M2) arbitrarily the optimum solution is O1 to M1 10 O2 to M3 9 O3 to M2 16 O4 to M4 0

35

Total Wastages

Therefore, the optimum assignment schedule is O1M1, O2 M3, O3 M2 AND O4 M4

Q4. Explain PERT

Ans 4 PERT is a method to analyze the involved tasks in completing a given project, especially the time needed to complete each task, and to identify the minimum time needed to complete the total project. PERT was developed primarily to simplify the planning and scheduling of large and complex projects. It was developed for the U.S. Navy Special Projects Office in 1957 to support the U.S. Navy's Polaris nuclear submarine project. It was able to incorporate uncertainty by making it possible to schedule a project while not knowing precisely the details and durations of all the activities. It is more of an event-oriented technique rather than start- and completion-oriented, and is used more in projects where time, rather than cost, is the major factor. It is applied to very large-scale, one-time, complex, non-routine infrastructure and Research and Development projects. An example of this was for the 1968 Winter Olympics in Grenoble which applied PERT from 1965 until the opening of the 1968 Games. Some key points about PERT are as follows: 1. PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterize it. 2. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. 3. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. 4. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. Project scheduling by PERT-CPM It consists of three basic phases: planning, scheduling and controlling.

Planning

Scheduling

Controlling

I.

Project Planning: In the project planning phase, you need to perform the following activities:

Identify Task

Determine resources requirement

Estimate cost and time

Specify inter-relationship between tasks

Develop Network Diagram

i) Identify various tasks or work elements to be performed in the project. ii) Determine requirement of resources, such as men, materials, and machines, for carrying out activities listed above. iii) Estimate costs and time for various activities. iv) Specify the inter-relationship among various activities. v) Develop a network diagram showing the sequential inter-relationships between the various activities. II. Project Scheduling: Once the planning phase is over, scheduling of the project is when each of the activities required to be performed, is taken up. The various steps involved during this phase are listed below: A) Estimate the durations of activities. Take into account the resources required for these execution in the most economic manner. B) Based on the above time estimates, prepare a time chart showing the start and finish times for each activity. Use the time chart for the following exercises. 1) To calculate the total project duration by applying network analysis techniques, such as forward (backward) pass and floats calculation. 2) To identify the critical path. 3) To carry out resource smoothing (or leveling) exercises for critical or scarce resources including re-costing of the schedule taking into account resource constraints Project Control: Project control refers to comparing the actual progress against the estimated schedule. If significant differences are observed then you need to re-schedule the project to update or revise the uncompleted part of the project.

III.

Q5. Explain Maximini-minimax principle

Ans 5 Solving a two-person zero-sum game Player A and player B are to play a game without knowing the other players strategy. However player A would like to maximize his profit and player B would like to minimize his loss. Also each player would expect his opponent to be calculative. Suppose player A plays A1. Then, his gain would be a11 , a12 , ... , a1n,accordingly Bs choice would be B1 ,B2 ,, Bn. Let 1 =min { a11 , a12 ,, a1n . Then,1 is the minimum gain of A when he plays A1(1is the minimum pay-off in the first row.) Similarly, if A plays A2 , then his minimum gain is 2 , the least pay-off in the second row. You will find corresponding to As play A1, A2 ,, Am , the minimum gains are the row minimums 1 , 2,,m . Suppose A chooses the course of action where i is maximum. Then the maximum of the row minimum in the pay-off matrix is called maximin. The maximin is = max I{ min j (aij) } Similarly, when B plays, he would minimise his maximum loss. The maximum loss to B is when B j is j = max i ( aij ). This is the maximum pay-off in the j th column. The minimum of the column maximums in the pay-off matrix is called minimax. The minimax is = min j { maxi (aij) } If = = v (say), the maximin and the minimax are equal and the game is said to have saddle point. If < ,then the game does not have a saddle point. Saddle point In a two-person zero-sum game, if the maximin and the minimax are equal, the game has saddle point. Saddle point is the position where the maximin (maximum of the row minimums) and minimax(minimum of the column maximums) coincide. If the maximin occurs in the rth row and if the minimax occurs in the sth column, the position (r,s) is the saddle point.

Here, v = a rs is the common value of the maximin and the minimax. It is called the value of the game. The value of a game is the expected gain of player A, when both the players adopt optimal strategy. Note: If a game has saddle point, (r, s), the players strategy is pure strategy Solution to a game with saddle point Consider a two-person zero-sum game with players A and B . Let A1 , A2 , ,Am be the courses of action for player A . Let B1 , B2 , ,Bn be the courses of action for player B. The saddle point of the game is as follows a) . The minimum pay-off in each row of the pay-off matrix is encircled. b) The maximum pay-off in each column is written within a box. c) If any pay-off is circled as well as boxed, that pay-off is the value of the game. The corresponding position is the saddle point. Let (r, s) be the saddle point. Then, the suggested pure strategy for player A is Ar. The suggested pure strategy for player B is Bs. The value of the game is a rs. Note: However, if none of the pay-offs is circled or boxed, the game does not have a saddle point. Hence, the suggested solution for the players is mixed strategy.

Q6. Write short notes on the following: a. Linear Programming b. transportation problem
Ans 6 Linear Programming The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Optimization refers to the maximization or minimization of the objective functions. You can define the general linear programming model as follows: Maximise or Minimise: Z = c1 x1 + c2 x2 + - - - - + cn xn Subject to the constraints,

a11 x1 + a12 x2 + + a1n xn ~ b1 a21 x1 + a22 x2 + + a2n xn ~ b2 am1 x1 + am2 x2 + - + amn xn ~ bm

and x1 0, x2 0, xn 0

Where cj, bi and aij (i = 1, 2, 3, .. m, j = 1, 2, 3 - n) are constants determined from the

technology of the problem and xj (j = 1, 2, 3 - n) are the decision variables. Here ~ is either (less than), (greater than) or = (equal). Note that, in terms of the above formulation the coefficient scj, bi aij are interpreted physically as follows. If bi is the available amount of resources i, where aij is the amount of resource i that must be allocated to each unit of activity j, the worth per unit of activity is equal to cj.

b. Transportation Transportation model is an important class of linear programs. For a given supply at each source and a given demand at each destination, the model studies the minimization of the cost of transporting a commodity from a number of sources to several destinations. The transportation problem involves m sources, each of which has available a i (i = 1, 2 m) units of homogeneous product and n destinations, each of which requires b j (j = 1, 2., n) units of products. Here ai and bj are positive integers. The cost cij of transporting one unit of the product from the i th source to the j th destination is given for each i and j. The objective is to develop an integral transportation schedule that meets all demands from the inventory at a minimum total transportation cost .

It is assumed that the total supply and the total demand are equal. m i =1 ai = n j=1 b j . (1)

The condition (1) is guaranteed by creating either a fictitious destination with a demand equal to the surplus if total demand is less than the total supply or a (dummy) source with a supply equal to the shortage if total demand exceeds total supply. The cost of transportation from the fictitious destination to all sources and from all destinations to the fictitious sources are assumed to be zero so that total cost of transportation will remain the same. The standard mathematical model for the transportation problem is as follows. Let X ij be number of units of the homogenous product to be transported from source i to the destination j. Then objective is to Minimize Z = m I =1n j =1 Cij Xij Subject to m I =1 a i, i = 1, 2, 3, -------------, m and n j=1 b j , j = 1, 2, 3, -------------, n With all Xij 0 A necessary and sufficient condition for the existence of a feasible solution to the transportation problem (2) is: m i =1 ai = n j =1 bj Transportation Algorithm (MODI Method) The first approximation to (2) is integral. Therefore, you always need to find a feasible solution. Rather than determining a first approximation by a direct application of the simplex method, it is more efficient to work with the transportation table given below. The transportation algorithm is the simplex method specialized to the format of table involving the following steps 1) Finding an integral basic feasible solution. 2) Testing the solution for optimality. 3) Improving the solution, when it is not optimal. 4) Repeating steps (2) and (3) until the optimal solution is obtained. The solution to TP is obtained in two stages. In the first stage, you find the basic feasible solution using any of the following methods a) North-west corner rule b) Matrix Minima Method or least cost method c) Vogels approximation method. In the second stage, you test the basic feasible solution for its optimality either by MODI method or by stepping stone method (2)