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1. Decision variable
A decision variable is a quantity that the decision-maker controls.
For example, in an optimization model for labor scheduling, the number of nurses to employ
during the morning shift in an emergency room may be a decision variable.

These are those variables that can be controlled by a decision maker.

For example, the decisions regarding the amount of money to be invested in a mutual fund, the
amount of fees to be charged, or the number of inventory items to be ordered. Decision variables
normally measure the quantity of the resources to be utilized or the level of different exercises to
be completed, such as quantity of the goods to be manufactured.
Decision variables are the uninformed information in an optimization
problem. Finding the value of decision variables is the objective of critical thinking effort. The
optimum values of the decision variables are determined with the help of the optimization
method. By altering the decision variables, the output of the solution can be changed.

Algebraically, decision variables are shown as

Where represents the number of decision variables.

For example- Suppose from 2 different plants, products are to be shipped to 4 different warehouses.
There are different routes through which goods could be sent. So, it is likely to have 8 decision
variables. Each of the decision variables would be showing the number of products sent from a specific
plant to a specific warehouse.

Decision variables are also named constrained variables because they have areas of conceivable esteems
and may have constraints put on the permitted combinations of these values.

2. What is Objective Function?

The objective function is a means to maximize (or minimize) something.
This something is a numeric value: in the real world it could be the cost of a project, a
production quantity, profit value, or even materials saved from a streamlined process. With the
objective function, you are trying to arrive at a target for output, profit, resource use, etc.

An objective function attempts to maximize profits or minimize losses based on a set

of constraints and the relationship between one or more decision variables. The constraints could refer to
capacity, availability, resources, technology, etc. and reflect the limitations of the environment in which
the business operates. Each combination of values that apply to decision variables forms the solution of
the business problem. When these values satisfy the constraints of the problem, the solution is the feasible
solution.
The objective function indicates how much each variable contributes to the value to
be optimized in the problem. The objective function takes the following general form:

where
ci = the objective function coefficient corresponding to the ith variable, and
Xi = the ith decision variable.
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The coefficients of the objective function indicate the contribution to the value of the
objective function of one unit of the corresponding variable.
For example, if the objective function is to maximize the present value of a project, and Xi is the ith
possible activity in the project, then ci (the objective function coefficient corresponding to Xi ) gives the
net present value generated by one unit of activity i.
As another example, if the problem is to minimize the cost of achieving some goal, Xi might be the
amount of resource i used in achieving the goal. In this case, ci would be the cost of using one unit of
resource i.
Note that the way the general objective function above has been written implies that
each variable has a coefficient in the objective function. Of course, some variables may not contribute to
the objective function. In this case, you can either think of the variable as having a coefficient of zero, or
you can think of the variable as not being in the objective function at all.
Objective function
The value you are trying to optimize
For example
If you are trying to make a square as big as possible the area would be the objective
function .One of the main goal optimization is to try to improve the value of the objective function
,whether that means minimizing /maximizing it or trying to bring it certain value .looking at the objective
function value (Area =a*b ) is one of the common ways to tell how about the optimization is work .In the
case of multiple objectives ( Objective =a+b) they usually multiplied ( Objective =a*b) or other ways
combined to form a single value ( Objective =3a+4ab).In dynamic optimization control variables also
form part of objective function .optimization problems are commonly written in the form minimize f(x)
.Here “ f” is the objective function .Another example of objective function might be is minimize cost
,maximize speed, or minimize weight ,maximize profit , or minimize waste. The specific objective
function chosen depend the up on the problem to be solved and the goal to be solving it .The objective
function is the value that you and hopefully your optimizing problem are trying to optimize .The objective
function is either minimized or maximized

3. CONSTRAINTS
A constraint is an inequality or equality defining limitations on decisions.
Constraints arise from a variety of sources such as limited resources, contractual obligations, or
physical laws. In general, an LP is said to have m linear constraints that can be stated as

One of the three relations shown in the large brackets must be chosen for
each constraint. The number is called a "technological coefficient," and the number is
called the "right-side" value of the ith constraint. Strict inequalities (<, >, and ) are not permitted.
When formulating a model, it is good practice to give a name to each constraint that reflects its
purpose.
The constraints are also a linear function of the variables, and that function has to be ≥ or ≤ a number.
Sometimes there is a constraint =, but then we can eliminate a variable by solving for that variable and
substituting in the other functions.
The constraints are the restrictions or limitations on the decision variables. They usually limit the value of
the decision variables.
4. Explain the significance of operational research?
1) It is the application of scientific methods, techniques and tools to problems involving the
operations of a system so as to provide those in the control of the system with optimum
solutions to the problems
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2) Operation Research is a tool for taking decisions which searches for the optimum
results in parity with the overall objectives and constraints of the organisation.
3) O.R. is a scientific method of providing executive department with a quantitative
basis of decisions regarding the operations under their control.
4) O.R. is a scientific approach to problem solving for management.
5) O.R. is an aid for executive in making his decisions by providing him with the
needed quantitative information’s based on the scientific method of analysis.
6) O.R. is the application of modern methods of mathematical science to complex
problems involving management of large systems of men, machines, materials,
and money in industry, business, government and defense. The distinctive
approach is to develop a scientific model of the system incorporating
measurement of factors such as chance and risk, to predict and compare the
outcome of alternative decisions, strategies or controls.
7) It is the application of the scientific methods by scientists and subject specialists
to the study of the given operation. Its purpose is to give administration, a basis
for predicting quantitatively the most effective results of an operation under given
set of variable conditions and thereby to provide a sound basis for “decision-
making”.
8) In fact in Operation Research, research techniques and scientific methods are
employed for the analysis and also for studying the current or future problems.
Thus, Operation Research offers alternative plans for a problem to the
management for decisions.
9) Although it is very clear that operation research never make decisions for the
management, instead the method presents management with a careful scientific
and quantitative analysis of problem so that the management will be in a better
position to make sounder decisions.

It can be used for solving different types of problems, such as:

a) Problems dealing with the waiting line, the arrival of units or persons
requiring service.
b) Problems dealing with the allocation of material or activities among
limited facilities.
c) Equipment replacement problems.
d) Problems dealing with production processing i.e., production control and
material shipment.
e) But it may be remembered that operation research never replaces a
manager as decision maker. The ultimate and full responsibility for
analysing all factors and making decision will be of the manager.
f) In the more wide sense, operation research does not deal with the
everyday problems such as output by the one worker or machine capacity;
instead it is concerned with the overall aspect of business operation such
as something as the relationship between inventory, sales, production and
scheduling. It may also deal with the overall flow of goods and services
from plants to consumers.
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g) The team doing operation research may have statisticians, psychologists,

labour specialists, mathematicians and others depending upon the
requirement for the problems.

Phases in Operation Research Study:

Since, the main objective of operation research is to provide better

quantitative information’s for making decision. Now our aim is to learn how we
can have better decisions.

The procedure for making decisions with the OR study generally involves the following
phases:

(i) Judgment Phase:

i. Determination of operation.
ii. Determination of objectives.
iii. Determination of effectiveness of measures.
iv. Determination of type of problem, its origin and causes.
(ii) Research Phase:
i. Observation and data collection for better understanding of the problem.
ii. Formulation of relevant hypothesis and models.
iii. Analysis of available information and verification of hypothesis.
iv. Production and generation of results and consideration of alternatives.
(iii) Action Phase:
i. Recommendations for remedial action to those who first posed the problem, this includes the
assumptions made, scope and limitations, alternative courses of action and their effect.
ii. Putting the solution to work: implementation.
Without OR, in many cases, we follow these phases in full, but in other cases, we leave important steps
out. Judgment and subjective decision-making are not good enough. Thus industries look to operation
research for more objective way to make decisions. It is found that method used should consider the
emotional and subjective factors also.

For example, the skill and creative labour are important factors in our business and if
management wants to have a new location, the management has to consider the personal feeling
of the employees for the location which he chooses.

Main characteristics of operations research (O.R.) are follows:

(i) Inter-Disciplinary Team Approach:

This requires an inter-disciplinary team including individuals with skills in mathematics, statistics,
economics, engineering, material sciences, computer etc.
(ii) Wholistic Approach to the System:
While evaluating any decision, the important interactions and their impact on the whole organisation
against the functions originally involved are reviewed.
(iii) Methodological Approach:
O.R. utilises the scientific method to solve the problem
(iv) Objective Approach:
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O.R. attempts to find the best or optimal solution to the problem under consideration, taking into account
the goals of the organisation.
5. Explain the objectives and application of operation research?
Operational Research is the scientific study of operations for the purpose of making better
decisions.”
Objectives
1) Decision making and improve its quality
2) Identify optimum solution,
3) Integrating the systems
4) Improve the objectivity of analysis.
5) Minimize the cost and maximize the profit.
6) Improve the productivity
7) Success in competition and market leadership
The intent of operational research is to learn about management and
administration of socio-cultural behavior and economic factors that exist as bottleneck to effective
implementation and to develop more effective approaches to the programming
Applications of Operation Research:
O.R. is a problem solving and decision taking technique. It is considered a kit
of scientific and programmable rules which provides the management a “quantitative basis” for decisions
concerning the operation under its control.
Some areas of management where O.R techniques have been successfully utilized are as follow:
1. Allocation and Distribution in Projects:
a. Optimal allocation of resources such as men materials machines, time and money to
projects.
b. Determination and deployment of proper workforce.
c. Project scheduling, monitoring and control.
2. Production and Facilities Planning:
a) Factory size and location decision.
b) Estimation of number of facilities required.
c) Preparation of forecasts for the various inventory items and computation of economic order
quantities and reorder levels.
d) Scheduling and sequencing of production runs by proper allocation of machines.
e) Transportation loading and unloading,
f) Warehouse location decision.
g) Maintenance policy decisions.
3. Programmes Decisions:
a) What, when and how to purchase to minimize procurement cost.
b) Bidding and replacement policies.
4. Marketing:
a. Advertising budget allocation.
b. Product introduction timing.
c. Selection of advertising media.
d. Selection of product mix.
e. Customer’s preference of size, colour and packaging of various products.
5. Organization Behaviour:
a. Selection of personnel, determination of retirement age and skills.
b. Recruitment policies and assignment of jobs.
c. Recruitment of employees.
d. Scheduling of training programs.
6. Finance:
a) Capital requirements, cash flow analysis.
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b) Credit policies, credit risks etc.

c) Investment decision.
d) Profit plan for the company.
7. Research and Development:
a) Product introduction planning.
b) Control of R&D projects.
c) Determination of areas for research and development.
d) Selection of projects and preparation of their budgets.
e) Reliability and control of development projects thus it may be concluded that operation research
can be widely utilized in management decisions and can also be used as corrective measure.

6. Describe different types of models in operation research?

Most operations research studies involve the construction of a
mathematical model. The model is a collection of logical and mathematical relationships that represents
aspects of the situation under study. Models describe important relationships between variables, include
an objective function with which alternative solutions are evaluated, and constraints that restrict solutions
to feasible values.
A model is always an abstraction that is of necessity simpler than the real
situation. Elements that are irrelevant or unimportant to the problem are to be ignored, hopefully leaving
sufficient detail so that the solution obtained with the model has value with regard to the original problem.
Models must be both tractable, capable of being solved, and valid, representative of the original situation..
The division is based on the mathematical form of the model.
What is OR?
Operations research (OR) is a discipline explicitly devoted to aiding
decision makers. This section reviews the terminology of OR, a process for addressing practical decision
problems and the relation between Excel models and OR.
1) Linear Programming
A typical mathematical program consists of a single objective function,
representing either a profit to be maximized or a cost to be minimized, and a set of constraints that
circumscribe the decision variables. In the case of a linear program (LP) the objective function and
constraints are all linear functions of the decision variables. At first glance these restrictions would seem
to limit the scope of the LP model, but this is hardly the case. Because of its simplicity, software has been
developed that is capable of solving problems containing millions of variables and tens of thousands of
constraints. Countless real-world applications have been successfully modeled and solved using linear
programming techniques.
2) Network Flow Programming
The term network flow program describes a type of model that is a special case of the
more general linear program. The class of network flow programs includes such problems as the
transportation problem, the assignment problem, the shortest path problem, the maximum flow problem,
the pure minimum cost flow problem, and the generalized minimum cost flow problem. It is an important
class because many aspects of actual situations are readily recognized as networks and the representation
of the model is much more compact than the general linear program. When a situation can be entirely
modeled as a network, very efficient algorithms exist for the solution of the optimization problem, many
times more efficient than linear programming in the utilization of computer time and space resources.
3) Integer Programming
Integer programming is concerned with optimization problems in which some of
the variables are required to take on discrete values. Rather than allow a variable to assume all real values
in a given range, only predetermined discrete values within the range are permitted. In most cases, these
values are the integers, giving rise to the name of this class of models.
Models with integer variables are very useful. Situations that cannot be
modeled by linear programming are easily handled by integer programming. Primary among these
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involve binary decisions such as yes-no, build-no build or invest-not invest. Although one can model a
binary decision in linear programming with a variable that ranges between 0 and 1, there is nothing that
keeps the solution from obtaining a fractional value such as 0.5, hardly acceptable to a decision maker.
Integer programming requires such a variable to be either 0 or 1, but not in-between.
Unfortunately integer programming models of practical size are often very difficult
or impossible to solve. Linear programming methods can solve problems orders of magnitude larger than
integer programming methods. Still, many interesting problems are solvable, and the growing power of
computers makes this an active area of interest in Operations Research.
4) Nonlinear Programming
When expressions defining the objective function or constraints of an
optimization model are not linear, one has a nonlinear programming model. Again, the class of situations
appropriate for nonlinear programming is much larger than the class for linear programming. Indeed it
can be argued that all linear expressions are really approximations for nonlinear ones.
Since nonlinear functions can assume such a wide variety of functional forms,
there are many different classes of nonlinear programming models. The specific form has much to do
with how easily the problem is solve, but in general a nonlinear programming model is much more
difficult to solve than a similarly sized linear programming model.
5) Dynamic Programming
Dynamic programming (DP) models are represented in a different way than
other mathematical programming models. Rather than an objective function and constraints, a DP model
describes a process in terms of states, decisions, transitions and returns. The process begins in some initial
state where a decision is made. The decision causes a transition to a new state. Based on the starting state,
ending state and decision a return is realized. The process continues through a sequence of states until
finally a final state is reached. The problem is to find the sequence that maximizes the total return.
The models considered here are for discrete decision problems. Although
traditional integer programming problems can be solved with DP, the models and methods are most
appropriate for situations that are not easily modeled using the constructs of mathematical programming.
Objectives with very general functional forms may be handled and a global optimal solution is always
obtained. The price of this generality is computational effort. Solutions to practical problems are often
stymied by the "curse of dimensionally" where the number of states grows exponentially with the number
of dimensions of the problem.
6) Stochastic Programming
The mathematical programming models, such as linear programming, network
flow programming and integer programming generally neglect the effects of uncertainty and assume that
the results of decisions are predictable and deterministic. This abstraction of reality allows large and
complex decision problems to be modeled and solved using powerful computational methods.
Stochastic programming explicitly recognizes uncertainty by using random
variables for some aspects of the problem. With probability distributions assigned to the random
variables, an expression can be written for the expected value of the objective to be optimized. Then a
variety of computational methods can be used to maximize or minimize the expected value. This page
provides a brief introduction to the modeling process.
7) Combinatorial Optimization
The most general type of optimization problem and one that is applicable to
most spreadsheet models is the combinatorial optimization problem. Many spreadsheet models contain
variables and compute measures of effectiveness. The spreadsheet user often changes the variables in an
unstructured way to look for the solution that obtains the greatest or least of the measure. In the words of
OR, the analyst is searching for the solution that optimizes an objective function, the measure of
effectiveness. Combinatorial optimization provides tools for automating the search for good solutions and
can be of great value for spreadsheet applications.
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8) Stochastic Processes
In many practical situations the attributes of a system randomly
change over time. Examples include the number of customers in a checkout line, congestion on a
highway, the number of items in a warehouse, and the price of a financial security, to name a few. When
aspects of the process are governed by probability theory, we have a stochastic process.
The model is described in part by enumerating the states in
which the system can be found. The state is like a snapshot of the system at a point in time that describes
the attributes of the system. The example for this section is an Automated Teller Machine (ATM) system
and the state is the number of customers at or waiting for the machine. Time is the linear measure through
which the system moves. Events occur that change the state of the system. For the ATM example the
events are arrivals and departures.
In this section we describe the basic ideas associated with
modeling a stochastic process that are useful for both Discrete and
Continuous Time Markov Chains.
9) Discrete Time Markov Chains
Say a system is observed at regular intervals such as every day or every week.
Then the stochastic process can be described by a matrix which gives the probabilities of moving to each
state from every other state in one time interval. Assuming this matrix is unchanging with time, the
process is called a Discrete Time Markov Chain (DTMC). Computational techniques are available to
compute a variety of system measures that can be used to analyze and evaluate a DTMC model. This
section illustrates how to construct a model of this type and the measures that are available.
10) Continuous Time Markov Chains
Here we consider a continuous time stochastic process in which the duration of
all state changing activities are exponentially distributed. Time is a continuous parameter. The process
satisfies the Markovian property and is called a Continuous Time Markov Chain (CTMC). The process is
entirely described by a matrix showing the rate of transition from each state to every other state. The rates
are the parameters of the associated exponential distributions. The analytical results are very similar to
those of a DTMC. The ATM example is continued with illustrations of the elements of the model and the
statistical measures that can be obtained from it.
11) Simulation
When a situation is affected by random variables it is often difficult to obtain
closed form equations that can be used for evaluation. Simulation is a very general technique for
estimating statistical measures of complex systems. A system is modeled as if the random variables were
known. Then values for the variables are drawn randomly from their known probability distributions.
Each replication gives one observation of the system response. By simulating a system in this fashion for
many replications and recording the responses, one can compute statistics concerning the results. The
statistics are used for evaluation and design.
12) QUEUING
This situation is almost always guaranteed to occur at some time in any system
that has probabilistic arrival and service patterns. Tradeoffs between the cost of increasing service
capacity and the cost of waiting customers prevent an easy solution to the design problem. If the cost of
expanding a service facility were no object, then theoretically, enough servers could be provided to
handle all arriving customers without delay. In reality, though, a reduction in the service capacity results
in a concurrent increase in the cost associated with waiting. The basic objective in most queuing models is
to achieve a balance between these costs.
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7. Explain the limitation of operation research?

Limitations of operations research include:
Operations Research has the number of applications; similarly, it also has
certain limitations. These limitations are mostly related to the model building and money and
time factors problems involved in its application. Some of them are as given below:
1) Distance between O.R. specialist and Manager
Operations Researchers job needs a mathematician or statistician, who
might not be aware of the business problems. Similarly, a manager is unable to
understand the complex nature of Operations Research. Thus there is a big gap between
the two personnel.
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.
2) Magnitude of Calculations
The aim of the O.R. is to find out optimal solution taking into consideration
all the factors. In this modern world, these factors are enormous and expressing them in
the quantitative model and establishing relationships among these require voluminous
calculations, which can be handled only by machines.
3) Money and Time Costs
The basic data are subjected to frequent changes, incorporating these
changes into the operations research models is very expensive. However, a fairly good
solution at present may be more desirable than a perfect operations research solution
available in future or after some time.
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
4) Non-quantifiable Factors
When all the factors related to a problem can be quantifiable only then
operations research provides solution otherwise not. The non-quantifiable factors are not
incorporated in O.R. models. Importantly O.R. models do not take into account emotional
factors or qualitative 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.

5) Implementation
Once the decision has been taken it should be implemented. The
implementation of decisions is a delicate task. Implementation of decisions is a delicate
task. It must take into account the complexities of human relations and behavior
This task must take into account the complexities of human relations and
behavior and in sometimes only the psychological factors.
6) 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.
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7) Higher cost: Operations research has a high upfront cost for everything, including
thorough analysis, professional assessment, and consultation fees. Because the field of
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study is so detailed, most companies need to pay a consultant for an operations research
analysis.
8) Relying on technology: The math required to analyze situations needs to be done by a
computer. If technology fails or you lose records somehow, the operations of the
company would be affected.
9) Not accounting for the human element: While math is important and impartial in
assessment, there is always a human element to business. For example, an investor with
the greatest number of shares in your company may demand that a certain percentage of
funding be used in a scenario that isn't the best according to operations research.
10) Estimates used may be wrong: In many cases, you'll need to rely on estimates in
operations research. A misleading result could be one you use for making a decision.