BIRLA INSTITUTE OF TECHNOLOGY MESRA,

RANCHI

Department of Management
(MBA Semester II)

Q1.Discuss the role and scope of quantitative methods for scientific decisionmaking in a business environment?
Ans.
Quantitative methods are always important in making important business decisions.
Therefore, there are various quantitative subjects which have been introduced. For
example, Total Quality Management and Quantitative methods and Techniques are
two subjects which have a lot of quantitative methods to solve various problems and
facilitate decision making process. For example Regression analysis can help the
company to overview the previous trends in the sales of the company and decide the
budgeted sales for the new year.

Mode
ls
Degree
Of
Abstraction

Iconic
Analogu

Mathematic

Features
Interdisciplinary approach: Interdisciplinary is essential because while
attempting to solve a complex management problem one person may not have
the complete knowledge of all its aspects such as economical, social, political.
Methodological approach: Operations Research is the application of scientific
methods, techniques and tools to problems involving the operations of systems
so as to provide those in control of operations research with optimum solutions
to the problem.
Holistic Approach: While arriving at a decision, an operations research team
examines the relative importance of all conflicting and multiple objectives and
the validity of claims of various departments of the organization from the
perspective of whole organization .
Objectivistic approach: An Operations Research approach seeks to obtain an
optimal solution to the under analysis for these, measure of desirability is
defined, based on the objective of the Organization

Application and scope of Operations research

Some of the industrial/government/business problems which can be analysed by OR
Approach have arranged by functional areas as follows
Finance and Accounting

Dividend Policies
Investment and portfolio management
Auditing
Balance sheet
Cash flow Analysis
Claim and complaint procedure and Public accounting
Break even analysis, capital Budgeting, cost allocation and control, financial
planning
Establishing cost for By products and developing standard cost

Marketing

Selection of Productmix
Marketing and Export Planning
Advertising, Media Planning, selection and effective Packing Alternatives
Sales effort allocation and assignment
Best time to launch a new product
Predicting customer Loyalty

Purchasing, Procurement and Exploration

Optimal Buying and reordering with or without price quantity discount

Transportation Planning
Replacement polices
Bidding Policies
Vendor Analysis

Production management

Facilities Planning
Location and Size of warehouse or new plant
Distribution centres and retail outlets

Manufacturing

Aggregate Production Plaiing

Assembly Line
Blending
Purchasing and Inventory control
Maintenance and project scheduling

Personnel Management

Selection of suitable personnel.

Recruitment of employees.

Assignment of jobs.

Skills balancing.

Research and Development

Project selection.

Control of R&D projects.

Government

Economic Planning
Natural resources
Social Planning
Energy

Q2. Discuss advantages and limitation of Operations Research?

Ans.
Advantages

Better Control: The management of large organizations recognize that it is a

difficult and costly affair to provide continuous executive supervision to every
routine work. An O.R. approach may provide the executive with an analytical and
quantitative basis to identify the problem area. The most frequently adopted
applications in this category deal with production scheduling and inventory
replenishment.

Better Systems: Often, an O.R. approach is initiated to analyze a particular

problem of decision making such as best location for factories, whether to open a
new warehouse, etc. It also helps in selecting economical means of
transportation, jobs sequencing, production scheduling, replacement of old
machinery, etc.

Better Decisions: O.R. models help in improved decision making and reduce the
risk of making erroneous decisions. O.R. approach gives the executive an
improved insight into how he makes his decisions.

Better Co-ordination: An operations-research-oriented planning model helps in

co-ordinating different divisions of a company.

Limitations

Dependence on an Electronic Computer: O.R. techniques try to find out an

optimal solution taking into account all the factors. In the modern society, these
factors are enormous and expressing them in quantity and establishing
relationships among these require voluminous calculations that can only be
handled by computers.

Non-Quantifiable Factors: O.R. techniques provide a solution only when all the
elements related to a problem can be quantified. All relevant variables do not lend
themselves to quantification. Factors that cannot be quantified find no place in
O.R. models.

Distance between Manager and Operations Researcher: O.R. being

specialist's job requires a mathematician or a statistician, who might not be
aware of the business problems. Similarly, a manager fails to understand the
complex working of O.R. Thus, there is a gap between the two.

Money and Time Costs: When the basic data are subjected to frequent
changes, incorporating them into the O.R. models is a costly affair. Moreover, a
fairly good solution at present may be more desirable than a perfect O.R. solution
available after sometime.

Implementation: Implementation of decisions is a delicate task. It must take

into account the complexities of human relations and behaviour.

Opportunities

It compels the decision maker to quit explicit about his objectives assumption
and his prospective to constraints
It makes the decision maker consider very carefully just what variables
influence decisions
Quickly points out gaps in the data required to support workable solutions to
a problem
Its model can be solved by a computer

3. It is said that operations research increases the creative capabilities of a decision

maker. Do you agree with this view?
Defend your point of view with examples.
Ans.

The main responsibilities of operations management are to manage and operate as

efficiently and effectively as possible with the given resources. With today's global
market, and large-scale systems, achieving the optimum performance is a challenge.
Many decision science tools are available for all levels of decision makers. Quantitative
methods such as Operations Research (OR), which comprises of simulation, linear and
nonlinear programming, queueing theory and stochastic modeling, are well-accepted
techniques by both research and practice communities. Large profit organization such as
Ford Motors (Chelst, Sidelko, Przebienda, Lockledge, & Mihailidis, 2001), Merrill Lynch
(Atschuler et al., 2000), AT&T (Ambs et al., 2000) and
Journal of Applied Business and Economics
Samsung (Leachman, Kang, & Lin, 2002) reported millions dollars of savings with OR.
OR has a strong presence in nonprofit organizations as well. US Army Recruiting Office
(Knowles, Parlier, Hoscheit, & Ayer, 2002) and Warner Robins Air Logistics Center
(Srinivasan 2006) won the worlds most prestigious award, 2006 Franz Eldelman Award
for outstanding achievements of OR.
Functional entities such as Industrial or Systems Engineering uses both methodologies to
provide feasible alternatives for operations mangers to decide on. An important
component of decision-making process is verifying and validating alternatives, which
typically involve decision makers and engineers or analysts. Thus, high-level
understanding of the tools or methodologies used for recommendations is essential in
making the effective decision for achieving the organizations common goal of
maximizing profit. In the following sections a brief background on Operations Research is
discussed along with selected OR techniques including Linear Programming, Discrete
Event Simulation and Queueing Theory, and a typical problem solving procedures for OR.
Also, Success cases of OR from both practical and research perspectives are discussed.
The paper is concluded with a brief summary of the materials discussed. The primary
motivation and purpose of this literature is to disseminate knowledge; hence, neither
academic nor research disclosures are conversed.

OPERATIONS RESEARCH
During World War II, a set of diversified scientists from England and the United States
developed scientific methods of planning military logistics such as most economical
method of disseminating resources to various war sites. The scientists developed a
famous quantitative method for such operations and named it Operations Research (OR)
or often referred as managerial or decision science (Hillier, 2005; Turner, Mize, Case, &
Nazemetz, 1993). With its proven successes, OR spread to private sectors promptly.
With rapid improvements in computer technology, to this date, OR is one of the most
powerful decision making tools in the Operations Management and Industrial Engineering
disciplines. Murty defines Operations Research as a discipline that deals with techniques
for system optimization (1993). ORs primary objective is to find optimal or near optimal
solution to complex business to engineering problems.
Operations Research techniques are used to answer the common managerial questions
such as:
How many and much resources are required to meet the key performance target?
Which alternatives require minimum cost and generate maximum profit?
What is the optimal resource schedule to minimize overhead cost?
What is the maximum and minimal resource utilization level?
Where are primary and secondary constraints or bottlenecks?
What range of queue and process time is allowed to achieve goal?
What is the current capacity and required capacity to meet the goal?
What are the anticipated risks for accepting or making new product or model?
OR evaluates the system of interest globally. It considers all factors or all factors
identified the decision makers. For example, to maximize or optimize production

performance, characteristics of each or management identified areas such as rate of

production per work station, rate of material usage per product or program, average
time spent in transition and available capacity in terms of space are considered in the OR
models. Viewing such system with the philosophy of local efficiency, the management
will be only interested in maximizing production performance at a workstation, not entire
work stations. Numerous OR techniques are
available to use; however, the scope of this paper is limited to the following commonly
used techniques:
Linear (LP),
Discrete Event Simulation (DES) and
Queueing Theory (QT).
Combination of such techniques in optimization studies, especially in practice.
Discussions of LP, DES and QT techniques are in the following sections.

Linear Programming
Linear programming techniques are considered as mathematics based decision-making
tool. Such technique requires two fundamental types of functions, objective and
constraints, that is developed to generate closed-form solution. In a typical OR problem,
the objective function, often expressed as Z, is formulated to determine the maximum
profit while minimizing cost with given set of rules or constraints such as business
policies, resource availability, preventative maintenance schedule, transportation
distance or time and capacity.
Consider a bank that is expecting an increase of customers due to the new investment
programs, which recently were introduced to the customers. Thus, the operations
management team has a task to determine the number of resources, tellers specifically,
to obtain to sustain the current customer satisfactory level for its 24-hours operations
with minimal cost. The following set of data was requested by and provided to a crossfunctional team responsible for the analysis. This is a modified version of Hillers (2005)
the Union Airways Personnel Scheduling Problem.

Based on the problem description given by the management, the goal of this study is to
minimize total daily personnel cost. Following is the mathematical expression of this
problem statement with a brief description of each function.
Minimize Z = 160 X1 + 176 X2 + 192 X3 + 208 X4 + 224 X5 (Sum of daily cost)
Subject to
X1
X1 + X2
X2 + X3
X3+ X4
X4 + X5

64
111
180
78
19

(8:00 A.M. 12:00 P.M.)

(12:00 P.M. 4:00 P.M.)
(4:00 P.M. 8:00 P.M.)
(8:00 P.M. 12:00 A.M.)
(12:00 A.M. 4:00 A.M.)

X5
25
(4:00 A.M. 8:00 A.M.)
and
Xi 0, for i = 1, 2, 3, 4, 5
Where
Xi = number of tellers assigned to shift i
Using the OR software program called, LINDO for computation, the following set of
optimal solution is found: Z = 48768, (X1, X2, X3, X4, X5) = (64, 102, 78, 0, 25). The
minimum operating cost to sustain the customer satisfactory level is $48,768 which
includes the requirement of recruiting 64, 102, 78, 0 and 25 tellers for 1st, 2nd, 3rd, 4th
and 5th shift, respectively. Note that the 4th shift requires no additional tellers since the
time slot of 8 P.M to 12:00 A.M. and 12 A.M. to 4 A.M. for 3rd and 5th shift, respectively,
cover the time slot of 4th shift, 8:00 P.M. to 4:00 A.M.
As mentioned above, application of LP is abundant. LP models reality with determined,
expected or most-likely values. In contrast, Stochastic Programming (SP) uses law of
probability to model the randomness of reality. Though Stochastic Programming may
represent the reality more closely, but the solution generated may or may not be more
accurate than LP generated solution (Murty, 1995). Accuracy of solutions depends on the
accurate representation of the accurately collected past data. LP solution may be more
accurate, if the data is approximated more realistically than SP, vice versa. SP models
are more complicated and time consuming than LP models since SP tries to model all
possible or variable events. LP models are less time consuming than SP due to its
deterministic nature. LP, however, allows decision makers to perform sensitivity analysis
by creating multiple variable scenarios to see the more accurate insights of the system.
Choice of modeling techniques depends on the complexity of the problem and economic
constraints. As a decision maker, knowing the difference of the modeling techniques
allows confidence in making the economically feasible and effective decisions.

Simulation
A simple definition of simulation is an imitation or mimic of a system. There are two
main types of simulation modeling techniques; Discrete Event and Continuous. Discrete
event simulation (DES) is an event driven simulation. In other words, DES models
chorological sequence of independent events. Referring to the bank example, arrival of a
call, agent answering the call, system dropping a call or customer abandoning a call is
discrete events. In opposition, continuous simulation models continual events where
events change continuously not in increment. Examples for continuous systems include
chemical or fluid flows, stock market prices, conveyors to move parts, etc.
Simulation is an excellent communication tool. Unlike the Linear Programming or
Stochastic Programming, simulation graphically represents a system along with visible
display of relative numerical results. In a typical facility layout studies, decision makers
will be provided with a set of graphical representation of potential layouts for the facility
with people or parts moving through the system. A typical simulation of paperwork
process will have process maps or flow charts as simulation layout and graphically show
the different paperwork moving through the system.
As in LP and SP, DES uses estimated data; however, it does not find optimal solutions.
Instead of finding the most achievable production rate with a given resources, DES finds
expected or average production rate. When setting a goal for a system, LP or Stochastic
Programming is ideal; however, simulation is more suitable for measuring on-going
production performance. Almost all simulation software packages have accompanying
optimization software; SimRunner for ProModel and OptQuest for Arena. Certain
decision science skills are required for simulation modeling. Computer programming skill
is required to build a simulation model using a software package. To optimize the model,
basic optimization techniques are required to interpret results. As simulation modeling
requires some level of computer programming skills, simulation optimization packages
such as SimRunner and OptQuest also require optimization techniques. Awareness

and basic knowledge of such optimization techniques along with simulation can play a
positive role in making more realistic and economically feasible solutions.

Queueing Theory
Waiting is a simple definition of queue. Bank has a queue of customers for service, parts
are in queue to be processed, grocery shoppers are in queue to pay, etc. Queueing or
Queuing Theory (QT) is a mathematical or statistical study of waiting lines. A typical
queueing system has three relative processes defined as arriving, waiting and servicing.
With a set of common assumptions such as empty and full system, QT measures and
reports performance of the system with the indicators such as average time a customer
is expected to wait, probability of a customer waits more than certain hours or minutes
in the queue, number of customers receiving services, etc.
QT uses Kendalls notations, A/B/C, where A, B, C represent arrival process, service
process and number of servers, respectively. A and B can have Markov (M),
Deterministic (D) or G (General). For example, M/M/1, which is the simplest queueing
system, is interpreted as a system with arrival and service pattern of exponential or
Markovian probability with one server. QT analyzes a system with Littles Theorem, N =
T, where N = average number of customers in the system, = average arrival rate of
customers and T = average service time. Based on Littles Theorem, different queueing
systems have different mathematical formulas for calculation. Like Linear Programming,
Stochastic Programming and Discrete Event Simulation, Queueing Theory also has a
challenge of modeling reality accurately, which is common difficulty for mathematically
restrictive approaches.

OPERATIONS RESEARCH METHODOLOGY

Depending on the complication of problem, the common business questions can be
answered using qualitative tools such as fishbone diagrams, value stream maps and
more. However, complex problems such as large-scale systems optimization problems,
quantitative techniques combined with qualitative approaches are recommended and is
common practice. A general procedure for solving Operations Research problems is as
follows:
Step 1 Define the problem
Operations manager along with cross-functional team must define the problem.
The problem definition should include symptoms and the systems objective.
Step 2 Identify the decision variables and collect relevant data
Decision variables are parameters that can be controlled and affects performance
and is often identified the management. In the bank example, a number of tellers
per shift is a decision variable. Depending on the size of the problem and in
reality, multiple decision variables involved in optimization studies.
Step 3 Formulate a mathematical model of the system operations and goal or objective
Functional group such as Operations Analyst, Industrial and/or Systems
Engineering are responsible for formulating the model. The mathematical model
should read: maximize profit or minimize cost subject to set of parameters. In
our bank example, the mathematical model is built to minimize cost based on the
number of tellers assigned per shift.
Step 4 Solve the model for an optimum solution and alternatives
Though manual computation of optimization problems is possible, however, such
a method is not efficient and unrealistic especially for the real-world problems
that have multiple objectives and decision variables. In large problems, the
computation can take more than 24hours easily. Thus, Software programs such

as LINDO API, LINGO, ILOG and Microsoft Office Excel Solver, are used to
solve real world problems which often is large and complex.
Step 5 Perform sensitivity analyses
In this step, active participation from operations managers is required.
Management presents series of what-if questions and series of sensitivity
analyses are performed using the model by the modelers. In the bank example
above, management can inquire about the level of impact on cost if more or less
tellers are assigned per shift.
Step 6 Update the model based on the managements prescription and decisions
After reviewing the results of various what-if scenarios, management needs to
make a decision(s) then the optimization model is updated accordingly.
Step 7 Implement
This is one of the most important steps where the decisions determined by the
model are implemented. Hence, active participation from the management is
crucial in achieving the goal.

OPTIMIZATION IN PRACTICE
OR has strong presence in industries such as financial planning, health care,
telecommunication, military, manufacturing and public services (Hillier, 2005). Ford
Motors used OR for new design verification and reported annual saving of $250 million.
The worlds largest manufacturer of digital integrated circuits, Samsung reduced
production cycle time from more than 80 days to less than 30 days capturing additional
$1 billion in sales revenue (Leachman et al., 2002). Merrill Lynch, brokerage and lending
service provider, the Management Science Group developed optimization models to seize
marketplace and reported savings of $80 million (Altschuler et al., 2002). In 2001,
Continental Airlines reported savings of $40 million for major disruptions and leading five
airlines in recovering operations after September 11 terrorist attack (Yu, Arguello, Song,
& McCowan, 2003).
Nonprofit organizations such as The US Army reported savings of $204 million from a $1
billion recruiting program (Knowles et al., 2002). Warner Robins Air Logistics Center
received the 2006 Franz Eldelman Award for its outstanding OR practice adding the
centers annual revenue of $49.8 million (Srinivasan 2006). In addition to these
companies, organizations including, but not limited to: GM, Athens 2004 Olympic games
Organizing Committee, IBM, Motorola, Phillips, Waste Management, UPS, Texas
Childrens Hospital, GE, Hewitt Packard, National Car Rental Systems, Harris Corporation
and Proctor and Gamble have publicly disclosed significant achievements using OR
techniques.
Q4. What is linear programming? What are its major assumptions and limitations?
Ans.
Linear programming models consist of an objective function and the constraints on that
function. A linear programming model takes the following form:
Objective function:
Z = a1X1 + a2X2 + a3X3 + . . . + anXn
Constraints:
b11X1 + b12X2 + b13X3 + . . . + b1nXn <

c1

b21X1 + b22X2 + b23X3 + . . . + b2nXn < c2

.
.
bm1X1 + bm2X2 + bm3X3 + . . . + bmnXn < cm
In this system of linear equations, Z is the objective function value that is being
optimized, Xi are the decision variables whose optimal values are to be found, and ai, bij,
and ci are constants derived from the specifics of the problem.

Linear Programming Assumptions

The constraints and objective function are linear.

o

This requires that the value of the objective function and the response of
each resource expressed by the constraints is proportional to the level of
each activity expressed in the variables.

Linearity also requires that the effects of the value of each variable on the
values of the objective function and the constraints are additive. In other
words, there can be no interactions between the effects of different
activities; i.e., the level of activity X1 should not affect the costs or
benefits associated with the level of activity X2.

Divisibility -- the values of decision variables can be fractions. Sometimes these

values only make sense if they are integers; then we need an extension of linear
programming called integer programming.

Certainty -- the model assumes that the responses to the values of the variables
are exactly equal to the responses represented by the coefficients.

Data -- formulating a linear program to solve a problem assumes that data are
available to specify the problem

Limitations of Linear Programming

Linear programming is applicable only to problems where the constraints and objective
function are linear i.e., where they can be expressed as equations which represent
straight lines. In real life situations, when constraints or objective functions are not
linear, this technique cannot be used.

Factors such as uncertainty, weather conditions etc. are not taken into
consideration.

There may not be an integer as the solution, e.g., the number of men required
may be a fraction and the nearest integer may not be the optimal solution.

i.e., Linear programming techqnique may give practical valued answer which is
not desirable.

Only one single objective is dealt with while in real life situations, problems come
with multi-objectives.

Parameters are assumed to be constants but in reality they may not be so.

Q5. Linear programming is one of the most frequently and successful applied operations
research technique to managerial decision. Elucidate this statement with some
examples.

Ans.
INTRODUCTION TO LINEAR PROGRAMMING
A Linear Programming model seeks to maximize or minimize a linear function, subject to
a set of linear constraints. The linear model consists of the following components: A set
of decision variables, xj. An objective function, cj xj. A set of constraints, aij xj < bi.
THE FORMAT FOR AN LP MODEL
Maximize or minimize cj xj = c1 x1 +c2 x2 + . + cn xn Subject to aij xj < bi , i =
1,,,,,m Non-negativity conditions: all xj > 0, j = 1, ,n Here n is the number of decision
variables. Here m is the number of constraints. (There is no relation between n and m)
THE METHODOLOGY OF LINEAR PROGRAMMING

Define decision variables

Hand-write objective

Formulate math model of objective function

Hand-write each constraint

Formulate math model for each constraint

Add non-negativity conditions

THE IMPORTANCE OF LINEAR PROGRAMMING

Many real world problems lend themselves to linear programming modeling. Many real
world problems can be approximated by linear models. There are well-known successful
applications in:

Operations

Marketing

Finance (investment)

Advertising

Agriculture There are efficient solution techniques that solve linear programming
models. The output generated from linear programming packages provides useful
what if analysis.

A PRODUCTION PROBLEM A PROTOTYPE EXAMPLE

A company manufactures two toy doll models: Doll A Doll B
Resources are limited to:
1000 kg of special plastic. 40 hours of production time per week.

Marketing requirement:
Total production cannot exceed 700 dozens. Number of dozens of Model A cannot exceed
number of dozens ofModel B by more than 350. The current production plan calls for:
Producing as much as possible of the more profitable product, Model A (Rs. 800 profit
per dozen).
Use resources left over to produce Model B (Rs. 500 profit per dozen), while remaining
within the marketing guidelines.
Management is seeking:
a production schedule that will increase the companys profit A linear
programming model can provide: an insight and an intelligent solution to this problem
Decisions variables
X1 = Weekly production level of Model A (in dozens) X2 = Weekly production level
of Model B (in dozens).
Objective Function:
Weekly profit, to be maximized Maximize 800X1 + 500X2 (Weekly profit) subject to 2X1
+ 1X2

1000 < (Plastic) 3X1 + 4X2

2400 < (Production Time)

X1 + X2 = 700 < (Total production) X1 -X2 = 350 < (Mix) Xj> = 0, j = 1,2
(Nonnegativity)
ANOTHER EXAMPLE
A dentist is faced with deciding: how best to split his practice between the two services
he offersgeneral dentistry and pedodontics? (childrens dental care) Given his
resources, how much of each service should he provide to maximize his profits? The
dentist employs three assistants and uses two operatories. Each pedodontic service
requires .75 hours of operatory time, 1.5 hours of an assistants time and .25 hours of
the dentists time A general dentistry service requires .75 hours of an operatory, 1 hour
of an assistants time and .5 hours of the dentists time. Net profit for each service is Rs.
1000 for each pedodontic service and Rs. 750 for each general dental service. Time each
day is: eight hours of dentists, 16 hours of operatory time, and 24 hours of assistants
time.

Q6. Explain the graphical method of solving an LP problem.

Ans.
The graphical method is applicable to solve the LPP involving two decision variables x1,
and x2, we usually take these decision variables as x, y instead of x1, x2.
To solve an LPP , the graphical method includes two major steps.
a) The determination of the solution space that defines the feasible solution (Note that
the set of values of the variable x1, x2, x3,....xn which satisfy all the constraints and
also the non-negative conditions is called the feasible solution of the LPP)
b) The determination of the optimal solution from the feasible region.
a) To determine the feasible solution of an LPP, we have the following steps.
Step 1:
Since the two decision variable x and y are non-negative, consider only the first quadrant
of xy- plane

Draw the line ax + by = c ...(1)

For each constraint, the line (1) divides the first quadrant in to two regions say R1 and
R2, suppose (x1, 0) is a point in R1. If this point satisfies the in equation ax + by c or
( c), then shade the region R1. If (x1, 0) does not satisfy the inequation, shade the
region R2.
Step 3:
Corresponding to each constant, we obtain a shaded region. The intersection of all these
shaded regions is the feasible region or feasible solution of the LPP.
Let us find the feasible solution for the problem of a decorative item dealer whose LPP is
to maximise profit function.
Z = 50x + 18y ...(1)
Subject to the constraints

Step 1:
Since x 0, y 0, we consider only the first quadrant of the xy - plane

Step 2:
We draw straight lines for the equation
2x+ y = 100 ...(2)
x + y = 80
To determine two points on the straight line 2x + y = 100
Put y = 0, 2x = 100
x = 50
(50, 0) is a point on the line (2)
put x = 0 in (2), y =100
(0, 100) is the other point on the line (2)
Plotting these two points on the graph paper draw the line which represent the line 2x +
y =100.

This line divides the 1st quadrant into two regions, say R1 and R2. Choose a point say
(1, 0) in R1. (1, 0) satisfy the inequation 2x + y 100. Therefore R1 is the required
region for the constraint 2x + y 100.
Similarly draw the straight line x + y = 80 by joining the point (0, 80) and (80, 0). Find
the required region say R1', for the constraint x + y 80.
The intersection of both the region R1 and R1' is the feasible solution of the LPP.
Therefore every point in the shaded region OABC is a feasible solution of the LPP, since
this point satisfies all the constraints including the non-negative constraints.

b) There are two techniques to find the optimal solution of an LPP.

Corner Point Method

The optimal solution to a LPP, if it exists, occurs at the corners of the feasible region.
The method includes the following steps
Step 1:
Find the feasible region of the LLP.
Step 2:
Find the co-ordinates of each vertex of the feasible region.
These co-ordinates can be obtained from the graph or by solving the equation of the
lines.
Step 3:
At each vertex (corner point) compute the value of the objective function.
Step 4:
Identify the corner point at which the value of the objective function is maximum (or
minimum depending on the LPP)
The co-ordinates of this vertex is the optimal solution and the value of Z is the optimal
value
Example:
Find the optimal solution in the above problem of decorative item dealer whose objective
function is Z = 50x + 18y.
In the graph, the corners of the feasible region are
O (0, 0), A (0, 80), B(20, 60), C(50, 0)
At (0, 0) Z = 0
At (0, 80) Z = 50 (0) + 18(80)
= Rs. 1440
At (20, 60), Z = 50 (20) +18 (60)
= 1000 + 1080 = Rs.2080

At (50, 0) Z = 50 (50 )+ 18 (0)

= Rs. 2500.
Since our object is to maximise Z and Z has maximum at (50, 0) the optimal solution is
x = 50 and y = 0.
The optimal value is Rs. 2500.
If an LPP has many constraints, then it may be long and tedious to find all the corners of
the feasible region. There is another alternate and more general method to find the
optimal solution of an LPP, known as 'ISO profit or ISO cost method'

ISO- PROFIT (OR ISO-COST)

Method of Solving Linear Programming Problems
Suppose the LPP is to
Optimize Z = ax + by subject to the constraints

This method of optimization involves the following method.

Step 1:
Draw the half planes of all the constraints
Step 2:
Shade the intersection of all the half planes which is the feasible region.
Step 3:
Since the objective function is Z = ax + by, draw a dotted line for the equation ax + by
= k, where k is any constant. Sometimes it is convenient to take k as the LCM of a and
b.
Step 4:
To maximise Z draw a line parallel to ax + by = k and farthest from the origin. This line
should contain at least one point of the feasible region. Find the coordinates of this point
by solving the equations of the lines on which it lies.

To minimise Z draw a line parallel to ax + by = k and nearest to the origin. This line
should contain at least one point of the feasible region. Find the co-ordinates of this
point by solving the equation of the line on which it lies.
Step 5:
If (x1, y1) is the point found in step 4, then
x = x1, y = y1, is the optimal solution of the LPP and
Z = ax1 + by1 is the optimal value.
The above method of solving an LPP is more clear with the following example.
Example:
Solve the following LPP graphically using ISO- profit method.
maximize Z =100 + 100y.
Subject to the constraints

Suggested answer:
since x 0, y 0, consider only the first quadrant of the plane graph the following straight
lines on a graph paper
10x + 5y = 80 or 2x+y =16
6x + 6y = 66 or x+y =11
4x+ 8y = 24 or x+ 2y = 6
5x + 6y = 90
Identify all the half planes of the constraints. The intersection of all these half planes is
the feasible region as shown in the figure.

Give a constant value 600 to Z in the objective function, then we have an equation of the
line
120x + 100y = 600 ...(1)
or 6x + 5y = 30 (Dividing both sides by 20)
P1Q1 is the line corresponding to the equation 6x + 5y = 30. We give a constant 1200 to
Z, then the P2Q2represents the line.
120x + 100y = 1200
6x + 5y = 60
P2Q2 is a line parallel to P1Q1 and has one point 'M' which belongs to feasible region and
farthest from the origin. If we take any line P3Q3 parallel to P2Q2 away from the origin,
it does not touch any point of the feasible region.
The co-ordinates of the point M can be obtained by solving the equation 2x + y = 16
x + y =11 which give
x = 5 and y = 6
The optimal solution for the objective function is x = 5 and y = 6
The optimal value of Z
120 (5) + 100 (6) = 600 + 600
= 1200

Q7. What is meant by the term feasible region? why this must be a well-defined
boundary for maximization problem?
Ans.
A feasible region is, in a constrained optimization problem, the set of solutions satisfying
all equalities and/or inequalities. On the other hand a linear programming is a
constrained optimization problem in which both the objective function and the
constraints are linear, therefore a feasible region on a linear programming problem is the
set of solutions of the a linear problem. Many algorithms had been designed to
successfully attain feasibility at the same time as resolving the problem, e.g. reaching its
minimum. Perhaps one of the most famous and extensively utilized is the Simplex
Method who travels from one extremal point to another, which happens to be the
possible extrema given the convex nature of the problem, by maintaining a fixed number
of components to zero, called basic variables. Then, the algorithm arrives to a global
minimum generally in polinomial time even if its worst possible case has already been
proved to be exponencial, see Klee-Minty's cube.

GRAPHICAL ANALYSIS THE FEASIBLE REGION

THE SEARCH FOR AN OPTIMAL SOLUTION

The figure shows how different constraints can be represented by straight lines to define
a feasible region. There is an area outside the feasible region that is infeasible.

It may be seen that each of the constraints is a straight line. The constraints intersect to
form a point that represents the optimal solution. This is the point that results in
maximum profit of 436,000 Rs. As shown in the slide below. The procedure is to start
with a point that is the starting point say 200,000 Rs. Then move the line upwards till
the last point on the feasible region is reached. This region is bounded by the lines
representing the constraints.

Q8. Define slack and surplus variables in a linear programming problem.

Ans.
LP constraints are limited to only three possible relational operators:
Strict inequalities ( < , > ) are not allowed in LP.

=, ,

Graphically, an equality constraint traces a line. LP inequality constraints and

consist of a line (the equality part of the relation) along with a half-plane (the inequality
portion). Two-dimensional inequalities are easy to work with graphically because the
regions they define are depicted quite naturally by the Cartesian plane. Alas, that is not
the case with analytical (algebraic) solution methods, which do not deal with geometric
planes but with purely abstract symbols. It's a bit harder to visualize relations with
symbols, but those representations can be very powerful. Algebra actually, math in
general is famously powerful largely because of the logical precision afforded by
symbolic equations. To say that something is equal to something else is, in math, a
rigorously exact statement. On the other hand, to say that something is greater than or
equal to some other quantity leaves open an infinite (real) number of possibilities.
Exactness goes down the drain.

Consider the large block constraint: 2x + y 6. The economic interpretation of this

constraint is: the number of large blocks used to assemble tables plus the number of
large blocks used to assemble chairs cannot exceed the six units of large blocks in
inventory. Suppose we build one table and one chair. In order to determine how many
blocks we have left in stock, we must plug in those values into the variables of the
constraint, compute the left hand side and subtract it from 6. We find we have three
blocks left in stock.

Accountants prefer another approach. Instead of computing how many blocks are left in
stock every time a table or chair is assembled, they create a new account that keeps
track of the blocks inventory continuously. The account is initialized at 6 and decreased
in real time (perpetual inventory) as blocks are used in production. The relation can now
be expressed as: the number of large blocks used to assemble tables plus the number of
large blocks used to assemble chairs plus the number of large blocks left in
inventory must equal the six units of large blocks originally stocked. Mathematically:

2x + y + s = 6

where s is a new variable that keeps track of the large-blocks inventory.

The beauty of this arrangement is twofold. First, we can always tell at a glance how
many blocks are idle (or slack, i.e., not being used in production) by simply checking the
slack variable. No need to recalculate balances.

Minutiae Aedificante
This slack-variable technique illustrates a general principle of computation:
computational procedures can generally be reduced by increasing the size of the
workspace (in our case, adding more variables). Actually, this goes back to a
fundamental principle of physics: time and space are complementary concepts. That is
the reason why relativity theory, and not classical mechanics, provides the correct
description of reality.

In second place, the constraint has been converted from an inequality to an equation. It
is this conversion into an equation that makes analytical solution methods possible.

The variable s is called a slack variable because it measures the amount of slack (idle)
resources still remaining in stock at any point in time during the production process.
Since it is not possible to have negative slack, nonnegativity constraints also apply to
slack variables.

All constraints are automatically converted by LP software into their standard

form (equations) by creating and adding slack variables.

The Lego problem has two constraints, so two slack variables are required:

2x +

y + s1 = 6

2x + 2y + s2 = 8

where s1 = number of large blocks remaining in stock, s2 = number of small blocks

remaining in stock, and s1, s2 0.
To convert constraints to standard form, a surplus variable is subtracted on the
left hand side of the constraint. For example, suppose that at least two items, either
tables or chairs, are needed for demo purposes in the showroom. This requirement is
captured by the following inequality constraint:
x+y 2
Since it is possible to exceed the minimum required production quantity, the only way to
obtain an equation when converting to standard form is to subtract the excess
production (the quantity produced in excess of the minimum requirement):
x + y - s3 = 2
where s3 = number of items produced in excess of showroom requirements.
Nonnegativity constraints are also required for surplus variables. Thus, s3 0.

All constraints are automatically converted by LP software into their standard

form by creating and subtracting surplus variables.
In practical terms, slack and surplus variables keep track of basically the same thing: by
how much is the left hand side of the constraint different from the RHS constant. If there
is a difference, it must be positive, by definition. If there is no difference, s = 0. The
names slack and surplus serve merely to indicate the direction of the difference, that is,
to remind us that the original (pre-standard) constraint was or .

Q9.Explain various steps of the simplex method involved in the computation of an

optimum solution to a linear programming problem.
Ans.

The steps for the computation of an optimum solution are as follows:

Step-1: Check whether the objective function of the given L.P.P is to be maximized or
minimized. If it is to be minimized then we convert it into a problem of maximizing it by
using the result Minimum Z = - Maximum (-z)

Step-2: Check whether all right hand side values of the constrains are non- negative. If
any one of values is negative then multiply the corresponding inequation of the
constraints by -1, so as to get all values are non-negative.
Step-3: Convert all the inequations of the constraints into equations by introducing
slack/surplus variables in the constraints. Put the costs of these variables equal to zero.
Step-4: Obtain an initial basic feasible solution to the problem and put it in the first
column of the simplex table.
Step-5: Compute the net evolutions j = Z j C j (j=1,2,..n) by using the relation Z j
Cj=CBXjCj.
Examine the sign
(i) If all net evolutions are non negative, then the initial basic feasible solution is an
optimum solution.
(ii) If at least one net evolution is negative, proceed on to the next step.
Step-6: If there are more than one negative net evolutions, then choose the most
negative of them. The corresponding column is called entering column.
(i) If all values in this column are 0, then there is an unbounded solution to the given
problem.
(ii) If at least one value is > 0, then the corresponding variable enters the basis.

Step-7: Compute the ratio {X B / Entering column} and choose the minimum of these
ratios. The row which is corresponding to this minimum ratio is called leaving row. The
common element which is in both entering column and leaving row is known as the
leading element or key element or pivotal element of the table.
Step-8: Convert the key element to unity by dividing its row by the leading element itself
and all other elements in its column to zeros by using elementary row transformations.
Step-9: Go to step-5 and repeat the computational procedure until either an optimum
solution is obtained or there is an indication of an unbounded solution.
Q10. What do you mean by an optimal basic feasible solution to a linear programming
problem?
Ans.

The basic feasible solution which optimizes (maximizes or minimizes) the objective
function value of the given LP problem is called an optimum basic feasible solution.
The terms basic solution and basic feasible solution are very important parts of the
standard vocabulary of linear programming, we now need to clarify their algebraic
properties. For the augmented form of the example, notice that the system of functional
constraints has 5 variables and 3 equations, so Number of variables _ number of
equations _ 5 _ 3 _ 2.
This fact gives us 2 degrees of freedom in solving the system, since any two variables
can be chosen to be set equal to any arbitrary value in order to solve the three equations
in terms of the remaining three variables.1 The simplex method uses zero for this
arbitrary value. Thus, two of the variables (called the nonbasic variables) are set equal to
zero, and then the simultaneous solution of the three equations for the other three
variables (called the basic variables) is a basic solution. These properties are described in
the following general definitions.
A basic solution has the following properties:
1. Each variable is designated as either a nonbasic variable or a basic variable.
2. The number of basic variables equals the number of functional constraints (now
equations).
Therefore, the number of nonbasic variables equals the total number of variables
minus the number of functional constraints.
3. The nonbasic variables are set equal to zero.
4. The values of the basic variables are obtained as the simultaneous solution of the
system
of equations (functional constraints in augmented form). (The set of basic variables
is often referred to as the basis.)
5. If the basic variables satisfy the nonnegativity constraints, the basic solution is a BF
solution.
xj _ 0, for j _ 1, 2, . . . , 5.

EXTREME POINTS AND OPTIMAL SOLUTIONS MULTIPLE OPTIMAL SOLUTIONS

There may be more than one optimal solutions. However, the condition is that the
objective function must be parallel to one of the constraints. If a weightage average of
different optimal solutions is obtained, it is also an optimal solution.

Q11.Define the dual of a linear programming problem. State the functional properties of
duality.
Ans.
The term `dual in general sense implies two or double. But in the context of linear
programming, duality implies that each linear programming problem can be analyzed in
two different ways but having equivalent solutions. Each linear programming problem
(both maximization and minimization) stated in its original form has associated with
another linear programming problem called dual linear programming problem or in short
dual. Which is unique, based on the same data. In general, it is immaterial which of the
two problems is called primal or dual, since the dual of the dual primal.
For example, if the primal is concerned with maximizing the contribution from the three
products A, B, and C and from the three departments X, Y, and Z, then the dual will be

concerned with minimizing the costs associated with the time used in the three
departments to produce those three products. An optimal solution to the dual problem
provides a Shadow Price of the time spent in each of the three departments.

functional properties of duality

From an algorithmic point of view, solving the primal problem with the dual simplex
method is equivalent to solving the dual problem with the primal simplex method. So,
these are following functional properties of duality:

When the primal has n variables and m constraints, the dual has m variables and
n constraints.
The constraints for the primal are all less than or equal to, while the constraints
for the dual are all greater than or equal to.
The objective for the primal is to maximize, while the objective for the dual is to
minimize.
All variables for either problem are restricted to be nonnegative.
For every primal constraint, there is a dual variable. Associated with the ith
primal constraint is dual variable pi the dual objective. Function coefficient for pi
is the right-hand side of the ith primal constraint, bi.
For every primal variable, there is a dual constraint. Associated with primal
variable xj is the jth dual constraint whose right-hand side is the primal objective
function coefficient cj.
The number a ij is, in the primal, the coefficient of xj in the ith constraint, while in
the dual, a ij is the coefficient of pi in the jth constraint.

Q12.Explain the primal dual relationship?

Ans.
In the linear programming, in the primal problem, from each sub-optimal point that
satisfies all the constraints, there is a direction or subspace of directions to move that
increases the objective function. Moving in any such direction is said to remove "slack"
between the candidate solution and one or more constraints. An "infeasible" value of the
candidate solution is one that exceeds one or more of the constraints.
In the dual problem, the dual vector multiplies the constants that determine the
positions of the constraints in the primal. Varying the dual vector in the dual problem is
equivalent to revising the upper bounds in the primal problem. The lowest upper bound
is sought. That is, the dual vector is minimized in order to remove slack between the
candidate positions of the constraints and the actual optimum. An infeasible value of the
dual vector is one that is too low. It sets the candidate positions of one or more of the
constraints in a position that excludes the actual optimum.

If primal

Then Dual

(i) Objective is to maximize

(i) Objective is to minimize

(ii) Variable x

(ii) Constraint j

(iii) Constraint i

(iii) Variables y

(iv) Variables x unrestricted in sign

(iv) Constraint j is = type

(v) Constraint I is = type

(v) Variables y is unrestricted in sign

(vi) Type constraints

(vi) Type constraints

(vii) X is unrestricted in sign

(vii) jth constraints is an equation

13.What is duality? What is the significance of dual variables in a LP model?

Ans.
Duality implies that each linear programming problem can be analyzed in two different
ways but having equivalent solutions. Each linear programming problem (both
maximization and minimization) stated in its original form has associated with another
linear programming problem called duality.
The - Dual formulation can be derived from the same data from which the primal was
formulated. The Dual formulated can be solved in the same manner in which the Primal
is solved since the Dual is also a LP formulation. The Dual can be considered as the
'inverse' of the Primal in every respect. The column coefficients in the Primal constrain
become the row co-efficient in the Dual constraints. The coefficients in the Primal
objective function become the right hand side constraints in the Dual constraints. The
column of constants on the right hand side of the Primal constraints becomes the row of
coefficients of the dual objective function. The direction of the inequalities is reversed. If
the primal objective function is a 'Maximization' function then the dual objective function
is a 'Minimization' function and vice-versa.
Significance of dual variables
The importance of the dual LP problem is in terms of the information which it provides
about the value of the resources. The economic analysis in this chapter is concerned in
deciding whether or not to secure more resources and how much to pay for these
additional resources.
The significance of the study of dual is as follows:

The dual variables provide the decision-maker a basis for deciding how much to
pay for additional units of resources.
The maximum amount that should be paid for one additional unit of a resource is
called its shadow price.
The total marginal value of resources equals the optimal objective function value.
The dual variables equal the marginal value of resources.

Q14. Write a short note on Sensitivity analysis?

Ans.
Sensitivity analysis is the study of sensitivity of the optimal solution of an LP problem
due to discrete variations (changes) in its parameters. The degree of sensitivity of the
solution due to these variations can range from no change at all to a substantial change
in the optimal solution of the given LP problem. Thus, in sensitivity analysis, we
determine the range over which the LP model parameters can change without affecting
the current optimal solution. For this, instead of resolving the entire problem as a new
problem with parameters, we may consider the original optimal solution as an initial
solution for the purpose of knowing the ranges both lower and upper, within which a
parameter may assume a value. In other words, Sensitivity analysis is a systematic
study of how sensitive (duh) solutions are to (small) changes in the data.
For example, if you think that the price of your primary output will be between Rs.100
and Rs.120 per unit, you can solve twenty dierent problems (one for each whole
number between Rs.100 and Rs.120).1 This method would work, but it is inelegant and
(for large problems) would involve a large amount of computation time. (In fact, the
computation time is cheap, and computing solutions to similar problems is a standard
technique for studying sensitivity in practice.)
The process of studying the sensitivity of the optimal solution of an LP model is also
called post optimality analysis because it is done after an optimal solution, assuming a
given set of parameters, has been obtained for the model.
Different categories of parameter changes in the original LP model are as follow:-

Profit or cost per unit associated with both basic and non-basic decision variables
(coefficient in the objective function).
Availability of resources (right hand side constants).
Consumptions of resources per unit of decision variables (coefficients of decision
variables on the left hand side of constraints)
Addition of a new variable to the existing list of variables in LP problem.
Addition of a new constraint to the original LP problem constraints.

Q15. What is the role of sensitivity analysis in Linear Programming? Under what
circumstances is it needed, and under what conditions do you think it is not necessary?
Ans.
Linear programming determines the optimal solution, but the dynamic nature of the
values we input to determine optimal solution leads to the problem of uncertainty. The
effect of these input can be determine by Sensitivity analysis. Sensitivity analysis can be
defined as the study of knowing the effect on optimal solution of the LP model due to
variations in the input coefficients (also called parameters) one at a time. Sensitivity

analysis allows us to determine how sensitive the optimal solution is to changes in data
values.
Sensitivity analysis can be used in the following conditions:
1. If the objective function changes, how does the solution change?
2. If resources available change, how does the solution change?
3. If a constraint is added to the problem, how does the solution change?

Question 16. Explain in brief the three methods of initial feasible solution for
transportation problem.
Ans.
Initial Basic Feasible Solution is the condition of obtaining the solution by allocation of
resources to the rows and the column with the non-negative values
There are three different methods to obtain the initial basic
Feasible solution those are mentioned below:
(I) North-West corner rule
(II) Lowest cost entry method
(III) Vogels approximation method

Northwest corner rule

The major advantage of the northwest corner rule method is that it is very simple and
easy to apply. Its major disadvantage, however, is that it is not sensitive to costs and
consequently yields poor initial solutions.

Lowest cost entry method

In this method, allocations are made on the basis of economic desirability. Least cost
method finds a better starting solution by the concentrating on the cheapest routes. This
method assigns as much as possible to the variable with the smallest unit transportation
cost in the entire tableau. Cross out the satisfied row or column and amounts of supply
and demand are adjusted accordingly. Again we search for the next lowest unit
transportation cost and the process continues till total supply and demand is exhausted.
Vogels approximation method (unit cost penalty method) (VAM)
VAM is an improved version of the least-cost method that generally, but not always,
produces better starting solutions. VAM is based upon the concept of minimizing
opportunity (or penalty) costs. The opportunity cost for a given supply row or demand
column is defined as the difference between the lowest cost and the next lowest cost
alternative. This method is preferred over the methods discussed above because it
generally yields, an optimum, or close to optimum, starting solutions. Consequently, if
we use the initial solution obtained by VAM and proceed to solve for the optimum

solution, the amount of time required to arrive at the optimum solution is greatly
reduced.
Q17. State the transportation problem. Describe clearly the steps involved in solving it?
Ans.

Northwest corner rule

The steps involved in determining an initial solution using northwest corner rule are as
follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Go over to the north-west corner of the table. Suppose it is the (i, j)th cell.
Step3. Allocate min (ai, bj) to this cell. If the min (ai , bj) = ai, then the availability of
the ith origin is exhausted and demand at the jth destination remains as bj-ai and the ith
row is deleted from the table. Again if min (ai, bj) = bj, then demand at the jth
destination is fulfilled and the availability at the ith origin remains to be ai-bj and the jth
column is deleted from the table.
Step4. Repeat steps 2, 3 until all origins are exhausted and all demands are fulfilled.

Lowest cost entry method

In this method, allocations are made on the basis of economic desirability. The steps
involved in determining an initial solution using least-cost method are as follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Choose the cell with minimum cost. If it is not unique, anyone can be chosen.
Suppose it is the (i, j)th cell.
Step3. Allocate min (ai, bj) to this cell. If the min (ai , bj) = ai, then the availability of
the ith origin is exhausted and demand at the jth destination remains as bj-ai and the ith
row is deleted from the table. Again if min (ai, bj) = bj, then demand at the jth
destination is fulfilled and the availability at the ith origin remains to be ai-bj and the jth
column is deleted from the table.
Step4. Repeat steps 2, 3 until all origins are exhausted and all demands are fulfilled.
The process must end as .

Vogels approximation method (unit cost penalty method) (VAM)

The steps involved in determining an initial solution using VAM are as follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Compute the difference between the minimum cost and the next minimum cost
corresponding to each row and each column which is known as penalty cost.

Step3. Choose the maximum difference or highest penalty cost. Suppose it corresponds
to the ith row. Choose the cell with minimum cost in the ith row. Again if the maximum
corresponds to a column, choose the cell with the minimum cost in this column.
Step4. Suppose it is the (i, j)th cell. Allocate min (ai, bj) to this cell. If the min (ai , bj)
= ai, then the availability of the ith origin is exhausted and demand at the jth destination
remains as bj-ai and the ith row is deleted from the table. Again if min (ai, bj) = bj, then
demand at the jth destination is fulfilled and the availability at the ith origin remains to
be ai-bj and the jth column is deleted from the table.
Step5. Repeat steps 2, 3, and 4 with the remaining table until all origins are exhausted
and all demands are fulfilled.
Q18. State the transportation problem. Describe clearly the steps involved in solving it?
Ans.

Northwest corner rule

The steps involved in determining an initial solution using northwest corner rule are as
follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Go over to the north-west corner of the table. Suppose it is the (i, j)th cell.
Step3. Allocate min (ai, bj) to this cell. If the min (ai , bj) = ai, then the availability of
the ith origin is exhausted and demand at the jth destination remains as bj-ai and the ith
row is deleted from the table. Again if min (ai, bj) = bj, then demand at the jth
destination is fulfilled and the availability at the ith origin remains to be ai-bj and the jth
column is deleted from the table.
Step4. Repeat steps 2, 3 until all origins are exhausted and all demands are fulfilled.

Lowest cost entry method

In this method, allocations are made on the basis of economic desirability. The steps
involved in determining an initial solution using least-cost method are as follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Choose the cell with minimum cost. If it is not unique, anyone can be chosen.
Suppose it is the (i, j)th cell.
Step3. Allocate min (ai, bj) to this cell. If the min (ai , bj) = ai, then the availability of
the ith origin is exhausted and demand at the jth destination remains as bj-ai and the ith
row is deleted from the table. Again if min (ai, bj) = bj, then demand at the jth
destination is fulfilled and the availability at the ith origin remains to be ai-bj and the jth
column is deleted from the table.
Step4. Repeat steps 2, 3 until all origins are exhausted and all demands are fulfilled.
The process must end as .

Vogels approximation method (unit cost penalty method) (VAM)

The steps involved in determining an initial solution using VAM are as follows:
Step1. Write the given transportation problem in tabular form (if not given).
Step2. Compute the difference between the minimum cost and the next minimum cost
corresponding to each row and each column which is known as penalty cost.
Step3. Choose the maximum difference or highest penalty cost. Suppose it corresponds
to the ith row. Choose the cell with minimum cost in the ith row. Again if the maximum
corresponds to a column, choose the cell with the minimum cost in this column.
Step4. Suppose it is the (i, j)th cell. Allocate min (ai, bj) to this cell. If the min (ai , bj)
= ai, then the availability of the ith origin is exhausted and demand at the jth destination
remains as bj-ai and the ith row is deleted from the table. Again if min (ai, bj) = bj, then
demand at the jth destination is fulfilled and the availability at the ith origin remains to
be ai-bj and the jth column is deleted from the table.
Step5. Repeat steps 2, 3, and 4 with the remaining table until all origins are exhausted
and all demands are fulfilled.
Q19. What is an assignment problem?Give two applications.
Ans.
An assignment problem is a specific case of transportation problem which
refers to the minimization of total cost or the maximization of total profit of
allocation by assigning a number of resources to an equal number of
activities. The problem of assignment arises because available resources such as
men,machines,etc have varying degrees of efficiency for performing a different
activities. Therefore, cost, profit or time of performing the different activities is
different. Thus the problem is:How should the assignments be made so as to optimize
the given objective.
Some of the problems where the assignment technique may be useful are: Assignment
of workers to machines, salesmen to different sales areas, clerks to various check-out
counters, classes to rooms, etc. The assignment problem is a special type of linear
programming problem where assignees are being assigned to perform tasks. For
example, the assignees might be employees who need to be given work assignments.
Assigning people to jobs is a common application of the assignment problem. However,
the assignees need not be people. They also could be machines, or vehicles, or plants, or
even time slots to be assigned tasks. The first example below involves machines being
assigned to locations, so the tasks in this case simply involve holding a machine. A
subsequent example involves plants being assigned
products to be produced.

Example

The JOB SHOP COMPANY has purchased three new machines of different types. There
are four available locations in the shop where a machine could be installed. Some of
these locations are more desirable than others for particular machines because of their
proximity to work centers that will have a heavy work flow to and from these machines.
(There will be no work flow between the new machines.) Therefore, the objective is to
assign the new machines to the available locations to minimize the total cost of materials
handling. The estimated cost in dollars per hour of materials handling involving each of
the machines for the respective locations. Location 2 is not considered suitable for
machine 2, so no cost is given for this case.

Applications of assignment problem

The linear programming model encompasses a wide variety of specific types of problems.
The general simplex method is a powerful algorithm that can solve surprisingly large
versions of any of these problems. However, some of these problem types have such
simple formulations that they can be solved much more efficiently by streamlined
algorithms that exploit their special structure. These streamlined algorithms can cut
down tremendously on the computer time required for large problems, and they
sometimes make it computationally feasible to solve huge problems. This is particularly
true for the two types of linear programming problems studied in this chapter, namely,
the transportation problem and the assignment problem. Both types have a number of
common applications, so it is important to recognize them when they arise and to use
the best available algorithms. These special-purpose algorithms are included in some
linear programming software packages.
This problem has the interpretation of minimizing the cost for the flow of goods through
a network. A streamlined version of the simplex method called the network simplex
method is widely used for solving this type of problem, including its various special
cases.
A supplementary chapter on the books website,, describes various additional special
types of linear programming problems. One of these, called the transshipment problem,
is a generalization of the transportation problem which allows shipments from any source
to any destination to first go through intermediate transfer points. Since the
transshipment problem also is a special case of the minimum cost flow problem. Much
research continues to be devoted to developing streamlined algorithms for special types
of linear programming problems, including some not discussed here. At the same time,
there is widespread interest in applying linear programming to optimize the operation of
complicated large-scale systems. The resulting formulations usually have special
structures that can be exploited. Being able to recognize and exploit special structures is
an important factor in the successful application of linear programming.
Q20. Give the mathematical formulation of an assignment problem. How does it differ
from a transportation problem?

Ans.
The assignment problem is a special type of transportation problem, where the objective
is to minimize the cost or time of completing a number of jobs by a number of persons.
In other words, when the problem involves the allocation of n different facilities to n
different tasks, it is often termed as an assignment problem. The model's primary
usefulness is for planning. The assignment problem also encompasses an important subclass of so-called shortest- (or longest-) route models. The assignment model is useful in

solving problems such as, assignment of machines to jobs, assignment of salesmen to

sales territories, travelling salesman problem, etc.
It may be noted that with n facilities and n jobs, there are n! possible assignments. One
way of finding an optimal assignment is to write all the n! possible arrangements,
evaluate their total cost, and select the assignment with minimum cost. But, due to
heavy computational burden this method is not suitable.

Formulation of an assignment problem

Suppose a company has n persons of different capacities available for performing each
different job in the concern, and there are the same number of jobs of different types.
One person can be given one and only one job. The objective of this assignment problem
is to assign n persons to n jobs, so as to minimize the total assignment cost. The cost
matrix for this problem is given below:

Table: Cost Matrix

Resources(Workers)

Activities(Jobs)
J1
J2 . . . .
C11
C12 . . . .
C21
C22 . . . .
.
.
.
.
.
.
Cn1
Cn2 . . . .
1
1 . . . .

W1
W2
.
.
.
Wn
Demand

Supply
Jn
C 1n
C 2n
.
.
.
Cnn
1

Let Xi j denote the assignment of worker i to job j such that

xij =

1 if job j is performed by worker i

0 otherwise

for i = 1, 2, ..., n and j = 1, 2, ..., n

In the above table, cij is the cost of performing jth job by ith worker.
The optimization model is
Minimize c11x11 + c12x12 + ------- + cnnxnn
subject to
xi1 + xi2 +..........+ xin = 1
x1j + x2j +..........+ xnj = 1
xij = 0 or 1

i = 1, 2,......., n
j = 1, 2,......., n

1
1
.
.
.
1
n

In Sigma notation
Minimize Z =

cijxij

subject to
xij = 1 for i = 1, 2, ....., n (resource availability)

xij = 1 for j = 1, 2, ....., n (activity requirement}

xij = 0 or 1 for all i and j

Assumptions

Number of jobs is equal to the number of machines or persons.

Each man or machine is assigned only one job.

Each man or machine is independently capable of handling any job to be done.

Assigning criteria is clearly specified (minimizing cost or maximizing profit).

The differences between AP and TP are the following:

1. TP has supply and demand constraints while AP does not have the same.
2. The optimal test for TP is when all cell evaluation \s are greater than or equal to
zero whereas in AP the number of lines must be equal to the size of matrix.
3. A TP sum is balanced when demand is equal to supply and an AP sum is balanced
when number of rows are equal to the number of columns.
4. for AP. We use Hungarian method and for transportation we use MODI method
5. In AP. We have to assign different jobs to different entities while in transportation
we have to find optimum transportation cost.

Q21.Define

competitive game,
payoff matrix,
pure and mixed strategies,
saddle point,
optimal strategies
and rectangular(or two person zero- sum) game.

Ans.

1.Two person game theory- To illustrate the basic characteristics of two-person,

zero-sum games, consider the game called odds and evens. This game consists simply of
each player simultaneously showing either one finger or two fingers. If the number of
fingers matches, so that the total number for both players is even, then the player taking
evens (say, player 1) wins the bet (say, $1) from the player taking odds (player 2). If the
number does not match, player 1 pays $1 to player 2.
Thus, each player has two strategies: to show either one finger or two fingers. In
general, a two-person game is characterized by
1. The strategies of player 1
2. The strategies of player 2
3. The payoff table

2. Payoff matrix:- A quantitative measure of satisfaction a player gets at the end of

the play in terms of gains or losses, when players select theirs particular strategies can
be represented in the form of a matrix, called the payoff matrix.

3. Competitive game:- The game refers to the general situation of complete and
competition in which two or more competitors are involved in decision making activities
in anticipation of certain outcomes over a period of times.

4. Pure strategies:- It is the decision rule which is always used by the player to
select the particular strategy. Thus, each player knows in advance of all strategies out of
which he always selects only one particular strategy regardless of the other players
strategies, and the objective of the players is to maximize gains or minimize losses.

5. Mixed strategies:- Courses of action that are to be selected on a particular

occasion with some fixed probability are called mixed strategies. Thus, there is a
probabilistic situation and objective of the players is to maximize expected losses by
making choice among pure strategies with fixed probabilities.

6. Saddle point:- If the maxi min value equals the minimax value, then the game is
said to have a saddle point.

7. Optimal strategies

Q22. Explain: Minimax and Maximin principle used in the game theory.

Maximin PrincipleFor a player A minimum value of each row represents the least gain (pay off) to him if
he chooses his particular strategy . these are written in the matrix by row minima . He
will then select the strategy that gives largest gain among the row minimum value. This
choice of player A is called the maximin principle and the corresponding gain is called the
maximin value of the game.

Minimax PrincipleFor player B who assumes to be the loser, the maximum value in each column represents
the maximum loss to him if he chooses his particular strategy. These are written in the
payoff matrix by column minima. He will then select the strategy that wil give minimum
loss among the column maximum values.This choice of player B is called minimax
principle and the corresponding loss is the minimax value of the game.

Q23.Explain the following terms in PERT/CPM

EARLIEST TIME:
Earliest occurrence time of an event , i .It is the earliest time for an event to occur
immediately after all the proceedings activity have been completed without delaying the
entire project.

LATEST TIME:
Latest allowable time of an event, i . It is the latest time for an event to occur
immediately without causing delay in already determined projects completion time.

EVENT SLACK:
The slack also known as float of an event is the difference between its latest occurrence
time and its earliest occurrence time.i.e.

Event float =Li-Ei

It is a measure of how long an event can be delayed without increasing the project
completion time.

CRITICAL PATH:
It is the sequence of critical activity that form a continuous path between the start of a
project and its completion . It is critical in the sense that if any activity in this sequence
in delayed, the completion of the entire project is delayed

Q24.What is a float? What are different types of float?

Ans.
The float or free time is the length of time to which a non-critical activity and/or an
event can be delayed or extended without delaying the total project completion time.

SLACK ON EVENT :
It is the difference between its latest occurrence time and its earliest occurrence time.
It is a measure of how long an event can be delayed without increasing the project
completion time.

SLACK ON ACTIVITY :
The slack(float) on activity is the length of time available within the estimated time of of
an non-critical activity.It tells how long an activity time may be increased without
increasing project time.

There are three types of slack:

TOTAL FLOAT:
It is the time by which an activity can be delayed if all its proceeding activities are
completed at their earliest time and all successor activities can bedelayed until their
latest permissible time.

FREE FLOAT:
Free float for a non-critical activity is defined as the time by which the completion of
any activity can be delayed without causing any delay in its immediate succeeding
activity.

INDEPENDENT FLOAT:
It is the amount of time available when preceeding activity are completed at their latest
permissible times and all the following activity can still be completed at their earliest
possible time.
Q25.What is replacement? Describe some important replacement situation?
Ans.
The problem of replacement is felt when the job performing units such as men,
machines, equipment, parts etc become less effective or useless due to either sudden or
gradual deterioration in their efficiency, failure or frequent internal, maintenance and
other overhead cost can be reduced.

Some replacement situations are:

Items like machines, vehicles, tyres etc. Whose efficiency deteriorates with age due to
constant use and which needs increased operating and maintenance cost.

Items such as light bulbs and tubes, electric motors, radio,television parts etc. Which do
not give any indication of deterioration ith time but fail of a sudden and become
completely useless.
The existing working staff is an organisation gradually reduces due to retirement , death,
retrenchment and other reasons

Q26.What is dual simplex algorithm? State various steps involved in the dual
simplex algorithm.
Ans.
The dual simplex method is often used in situations where the primal problem has a
number of equality constraints generating artificial variables in the l.p. canonical form.
Like in the primal simplex method, the standard form for the dual simplex method
assumes all constraints are <=, or = constraints, but places no restrictions on the signs
of the RHS bi variables. The dual simplex algorithm consists of three phases. Phase 0 is
identical to Phase 0 of the primal simplex method, as the artificial variables are replaced
by the primal variables in the basis. However, the dual simplex algorithm in Phase 1
searches for a feasible dual program, while in Phase 2, it searches for the optimal dual
program, simultaneously generating the optimal primal program.

Steps involved in the dual simplex method are:

1. All the constraints (except those with equality (=) sign) are modified to lessthanequalto ( ) sign. Constraints with greater-than-equal-to ( ) sign are multiplied by
1( ) through out so that inequality sign gets reversed. Finally, all these constraints are
transformed to equality (=) sign by introducing required slack variables.

2. Modified problem, as in step one, is expressed in the form of a simplex tableau. If all
the cost coefficients are positive (i.e., optimality condition is satisfied) and one or
more basic variables have negative values (i.e., non-feasible solution), then dual
simplex method is applicable.

3. Selection of exiting variable: The basic variable with the highest negative value is
the exiting variable. If there are two candidates for exiting variable, any one is
selected. The row of the selected exiting variable is marked as pivotal row.

4. Selection of entering variable: Cost coefficients, corresponding to all the negative

elements of the pivotal row, are identified. Their ratios are calculated after changing
the sign of the elements of pivotal row, i.e.,

The column corresponding to minimum ratio is identified as the pivotal column and
associated decision variable is the entering variable.

5. Pivotal operation: Pivotal operation is exactly same as in the case of simplex

method, considering the pivotal element as the element at the intersection of pivotal row
and pivotal column.

6. Check for optimality: If all the basic variables have nonnegative values then the
optimum solution is reached. Otherwise, Steps 3 to 5 are repeated until the optimum is
reached.