1. Discuss the role and scope of quantitative methods for scientific decisionmaking in a business environment? Ans.

Definition : Operation research is the systematic approach of quantitative application of techniques and tools of analysis of problems involving the operation of system. characteristics 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 economica l, 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. 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

   

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

     

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

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

    

Aggregate Production Plaiing Purchasing and Inventory control Blending Maintenance and project scheduling Assembly Line

Personnel Management
   

Selection of suitable personnel. Recruitment of employees. Assignment of jobs. Skills balancing.

Research and Development

 

Control of R&D projects Project selection.

Government

   

Economic Planning Natural resources Social Planning Energy

2. 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 an d 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 behavio ur.

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, queuing theory and stochastic modelling, 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
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Business and Economics Samsung (Leachman, Kang, & Lin, 2002) reported millions dollars of savings with OR. OR has a strong presence in non -profit organizations as well. US Army Recruiting Office (Knowles, Parlier, Hoscheit, & Ayer, 2002) and Warner Robins Air Logistics Centre (Srinivasan 2006) won the world s most prestigious award, 2006 Franz Edelman Award for outstanding achievements of OR. Functional entities such as Industrial or Systems Engineering uses both methodologies to provide feasible alternatives for opera tions 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 organization s common goal of m aximizing profit. So, i agree with the statement that operation research increases the creative capabilities of a decision maker. 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 world s 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). Non-profit 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 Centre received the 2006 Franz Edelman Award for its outstanding OR practice adding the centre s 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 Children s Hospital, GE, Hewitt Packard, National Car Rental Systems, Harris Corporation and Proctor and Gamble have publicly disclosed significant achievements using OR techniques.
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4.What is linear programming ? What are its major assumptions and limitations ? Ans. Linear programming (LP) is a mathematical method for determining a way to achieve the best outcome (such as maximum profit or lowest cost) in a given mathematical problem for some list of requirements represented as linear relationships. Linear programming is a specific case of mathematical programming . Linear programs are problems that can be expressed as 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 + b13 X3 + . . . + b1nXn < c1 b21X1 + b22X2 + b23X3 + . . . . bm1X1 + bm2X2 + bm3X3 + . . . + bmnXM <Cm Assumptions Linear programming requires linearity in the equations as shown in the above structure. In a linear equation, each decision variable is multiplied by a constant coefficient with no multiplying between decision variables and no nonlinear functions such as logarithms. Linearity requires the following assumptions:
y

b2nXn <

c2

Proportionality - a change in a variable results in a proportionate change in that variable's contribution to the value of the function.
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Additivity - the function value is the sum of the contributions of each term.

Divisibility - the decision variables can be divided into non-integer values, taking on fractional values. Integer programming techniques can be used if the divisibility assumption does not hold.

In addition to these linearity assumptions, linear programming assumes certainty; that is, that the coefficients are known and constant. Limitations of linear programming :
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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 technique may give practical valued answer which is not desirable.
y

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.

5. Linear programming is a one of the most frequently and successfully applied operations research technique to managerial decisions. Elucidate this statement with some examples. Ans. Linear programming is the most widely used technique of decision making in business and industry and in various other fields. In the managerial field it uses in financial management, marketing management, personnel management. Financial managementPortfolio selection This deals with the selection of specific investment activity among several other activities. The objective is to find the allocation which maximizes the total expected return or minimizes risk under certain limitations. Profit planning This deals with the maximization of the profit margin from investment in plant facilities and equipment, cash in hand and inventory. Marketing managementMedia selection Linear programming techniques helps in determining the advertising media mix so as to maximize the effective exposure, subject to limitation of budget, specified exposure rates to different market segment , specified minimum and maximum number of advertisements in various media. Travelling salesman problem-The problem of salesman is to find the shortest route from a given city, visiting each of the specified cities and then returning to the original point of departure, provided no city shall be visited twice during the tour. Such type of problems can be solved with the help of the modified assignment techniques. Physical distribution Linear programming determines the most economic and efficient manner of locating manufacturing plants and distribution centres for physical distributions. Personnel management8

Staffing problem Linear programming is used to allocate optimum manpower to a particular job so as to minimize the overtime cost or total manpower. Determination of equitable salaries Linear programming techniques has been used in determining equitable salaries and sales incentives. Job evaluation and selection Selection of suitable person for a specified job and evaluation of job in organization has been done with the linear programming technique. Example
y

A calculator company produces a scientific calculator and a graphing calculator. Long-term projections indicate an expected demand of at least 100 scientific and 80 graphing calculators each day. Because of limitations on production capacity, no more than 200scientific and 170 graphing calculators can be made daily. To satisfy a shipping contract, a total of at least 200 calculators much be shipped each day. If each scientific calculator sold results in a $2 loss, but each graphing calculator produces a $5 profit, how many of each type should be made daily to maximize net profits? R= 100 < x < 200 80 < y < 170 y > x + 200 2x + 5y, subject to:

6.Explain the graphical method of solving an LP problem. Ans. A linear programming problem is one in which we are to find the maximum or minimum value of a linear expression ax + by + cz + . . . (called the objective function), subject to a number of linear constraints of the form Ax + By + Cz + . . . N
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or Ax + By + Cz + . . . N. The largest or smallest value of the objective function is called the optimal value, and a collection of values of x, y, z, . . . that gives the optimal value constitutes an optimal solution. The variables x, y, z, . . . are called the decision variables. . The graphical method for solving linear programming problems in two unknowns is as follows. A. Graph the feasible region. B. Compute the coordinates of the corner points. C. Substitute the coordinates of the corner points into the objective function to see which gives the optimal value. This point gives the solution to the linear programming problem. D. If the feasible region is not bounded, this method can be misleading: optimal solutions always exist when the feasible region is bounded, but may or may not exist when the feasible region is unbounded. If the feasible region is unbounded, we are minimizing the objective function, and its coefficients are non-negative, then a solution exists, so this method yields the solution.

To determine if a solution exists in the general unbounded case: y Bound the feasible region by adding a vertical line to the right of the rightmost corner point, and a horizontal line above the highest corner point. y Calculate the coordinates of the new corner points you obtain. y Find the corner point that gives the optimal value of the objective function. y If this optimal value occurs at a point of the original (unbounded) region, then the LP problem has a solution at that point. If not, then the LP problem has no optimal solution.

Example: You need to buy some filing cabinets. You know that Cabinet X costs $10 per unit, requires six square feet of floor space, and holds eight cubic feet of files.
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Cabinet Y costs $20 per unit, requires eight square feet of floor space, and holds twelve cubic feet of files. You have been given $140 for this purchase, though you don't have to spend that much. The office has room for no more than 72 square feet of cabinets. How many of which model should you buy, in order to maximize storage volume?

cost: 10x +20y < 140, 6x +8y < 72, volume: V = 8x + 12y

This system (along with the first two constraints) graphs as:

When you test the corner points at (8, 3), (0, 7), and (12, 0), you should obtain a maximal volume of100 cubic feet by buying eight of model X and three of model Y.

7. What is meant by the term feasible region ? Why this must be a welldefined 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.
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This must be a well defined boundary for maximization pr oblem because in this region all the corners found is extreme point and there will be no any extreme point after this. And the solution is also found in the feasible region of extreme point.

8. Define slack and surplus variables in a linear programming p roblem. Ans. Slack variable - In linear programming, a slack variable is a variable that is added to a constraint to turn the inequality into an eq uation. This is required to turn an inequality into an equality where a linear combination of variables is less than or equal to a given constant in the former. As with the other variables in the augmented constraints, the slack variable cannot take on neg ative values, as the Simplex algorithm requires them to be positive or zero.


If the slack variable associated with a constraint is zero in a given state, the constraint is binding, as the constraint restricts the possible changes of the point. If a slack variable is positive in a given state, the constraint is non-binding, as the constraint does not restrict the possible changes of the point. If a slack variable is negative in a given state, the point is infeasible, and not allowed, as it does not satisfy the constraint.

Surplus variable- Surplus variable represent amount by which solution values exceed a resource. These variables are also called negative slack variable. Surplus variable, like slack variables carry a zero coefficient in the objective function.

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9. Explain various steps of the simplex method involved in the computation of an optimum solution to a linear programming problem.

Ans. The various steps involved in simplex method involved in the computation of an optimum solution to a linear programming problem isStep-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 arenon-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= Zj Cj (j=1,2, ..n) by using the relation Z j Cj = C B Xj Cj. 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. ()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.
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Step-8: Convert the key element to unity by dividing its row by the lead 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

10.What do you mean by an optimal basis 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. The simplex method uses zero for this arbitrary value. Thus, two of the variables (called the non-basic 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 non -basic variable or a basic variable.

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2. The number of basic variables equals the number of functio nal constraints (now equations). Therefore, the number of non-basic variables equals the total number of variables- the number of functional constraints. 3. The non-basic 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 non negativity 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.

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11. 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. B ut 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 o f 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 objecti ve. 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.

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12. 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 minim ized 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 (i) Objective is to maximize (ii) Variable x (iii) Constraint i (iv) Variables x unrestricted in sign (v) Constraint I is = type (vi) Type constraints (vii) X is unrestricted in sign

Then Dual (i) Objective is to minimize (ii) Constraint j (iii) Variables y (iv) Constraint j is = type (v) Variables y is unrestricted in sign (vi) Type constraints (vii) jth constraints is an equation

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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 sam e 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.

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14. Write a short notes on sensitivity analysis. Ans. Sensitivity analysis is a systematic study of how sensitive (duh) solutions are to (small) changes in the data. The basic idea is to be able to give answers to questions of the form: 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? Thus, in sensitivity analysis, we determine the range over which the LP model parameters can change without affecting the current optimal solutions. For this, instead of resolving the entire problem as a new problem with new parameters, we may consider the 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. The sensitivity analysis is also referred to as post-optimality analysis because it does not begin until the optimal solution to the given LP model has been obtained. sensitivity analysis is a very important part of almost every linear programming study. Because most of the parameter values used in the original model are just estimates of future conditions, the effect on the optimal solution if other conditions prevail instead needs to be investigated. Furthermore, certain parameter values (such as resource amounts) may represent managerial decisions, in which case the choice of the parameter values may be the main issue to be studied, which can be done through sensitivi ty analysis.

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15. Discuss the role of sensitivity analysis in linear programming. Under what circumstances is it needed and under what condition 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?

16. Explain in brief three methods of initial feasible solution for transportation problem. Ans. North-West corner method (NWCM) The North West corner rule is a method for computing a basic feasible solution of a transportation problem where the basic variables are selected from the North West corner (i.e., top left corner). Steps 1. Select the north west (upper left-hand) corner cell of the transportation table and allocate as many units as possible equal to the minimum between available supply and demand requirements. 2. Adjust the supply and demand numbers in the respective rows and columns allocation.

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3. If the supply for the first row is exhausted then move down to the first cell in the second row. 4. If the demand for the first cell is satisfied then move horizontally to the next cell in the second column. 5. If for any cell supply equals demand then the next allocati on can be made in cell either in the next row or column. 6. Continue the procedure until the total available quantity is fully allocated to the cells as required. Least cost method: Least cost method is a method for computing a basic feasible solution of a transportation problem where the basic variables are chosen according to the unit cost of transportation. Steps 1. Identify the box having minimum unit transportation cost . 2. If there are two or more minimum costs, select the row and the column corresponding to the lower numbered row. 3. If they appear in the same row, select the lower numbered column. 4. Choose the value of the corresponding xij as much as possible subject to the capacity and requirement constraints. 5. If demand is satisfied, delete the column . 6. If supply is exhausted, delete the row. 7. Repeat steps 1-6 until all restrictions are satisfied. Vogel s Approximation Method (VAM) The Vogel approximation method is an iterative procedure for computing a basic feasible solution of the transportation problem. Steps

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1. Identify the boxes having minimum and next to minimum transportation cost in each row and write the difference (penalty) along the side of the table against the corresponding row. 2. Identify the boxes having minimum and next to minimum transportation cost in each column and write the difference (penalty) against the corresponding column 3. Identify the maximum penal ty. If it is along the side of the table, make maximum allotment to the box having minimum cost of transportation in that row. If it is below the table, make maximum allotment to the box having minimum cost of transportation in that column. 4. If the penalties corresponding to two or more rows or columns are equal, select the top most row and the extreme left column.

17. State the transportation problem. Describe clearly the steps involved in solving it. Ans. . North-West corner method (NWCM) The North West corner rule is a method for computing a basic feasible solution of a transportation problem where the basic variables are selected from the North West corner (i.e., top left corner). Steps 1. Select the north west (upper left-hand) corner cell of the transportation table and allocate as many units as possible equal to the minimum between available supply and demand requirements. 2. Adjust the supply and demand numbers in the respective rows and columns allocation. 3. If the supply for the first row is exhausted then move down to the first cell in the second row.

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4. If the demand for the first cell is satisfied then move horizontally to the next cell in the second column. 5. If for any cell supply equals demand then the next allocati on can be made in cell either in the next row or column. 6. Continue the procedure until the total available quantity is fully allocated to the cells as required. Least cost method: Least cost method is a method for computing a basic feasible solution of a transportation problem where the basic variables are chosen according to the unit cost of transportation. Steps 1. Identify the box having minimum unit transportation cost . 2. If there are two or more minimum costs, select the row and the column corresponding to the lower numbered row. 3. If they appear in the same row, select the lower numbered column. 4. Choose the value of the corresponding xij as much as possible subject to the capacity and requirement constraints. 5. If demand is satisfied, delete the column . 6. If supply is exhausted, delete the row. 7. Repeat steps 1-6 until all restrictions are satisfied. Vogel s Approximation Method (VAM) The Vogel approximation method is an iterative procedure for computing a basic feasible solution of the transportation problem. Steps 1. Identify the boxes having minimum and next to minimum transportation cost in each row and write the difference (penalty) along the side of the table against the corresponding row.
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2. Identify the boxes having minimum and next to minimum transportation cost in each column and write the difference (penalty) against the corresponding column 3. Identify the maximum penal ty. If it is along the side of the table, make maximum allotment to the box having minimum cost of transportation in that row. If it is below the table, make maximum allotment to the box having minimum cost of transportation in that column. 4. If the penalties corresponding to two or more rows or columns are equal, select the top most row and the extreme left column.

18. What is an assignment problem? Give two applications. Ans. An assignment problem is a particular case of transportation problem where the objective is to assign a number of resources to an equal number of activities so as to minimize total cost or maximize total profit of allocation. The problem of assignment arises because available resources such as men, machine etc., have varyin g degrees of efficiency for performing different activities. Some of the problem where the assignment technique may be useful are: Assignment of workers to machines, salesman to different sales areas, clerks to various checkout counters, classes to rooms, vehicles to routes, contracts to bidders, etc. 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
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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 programm ing 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 book s website, describes various additional special types of linear programming problems. One of these, called the trans shipment problem, is a generalization of the transportation problem wh ich allows shipments from any source to any destination to first go through intermediate transfer points. Since the trans-shipment 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.

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19. Give the mathematical formulation of an assignment problem. How does it differ from a transportation problem? Ans. A mathematical formulation of assignment problem: Resources(workers) Activities(jobs) J1 C11 C21 . . . Cn1 1 Cn2..........................Cnn 1 ...........................1 J2 .......................Jn C12 ......................C1n C22 .....................C2n supply

W1 W2 . . . Wn Demand

1 1 . . . 1 N

An assignment problem is differ from a transportation problem with two characteristics: (i) (ii) The cost matrix is a square matrix, and The optimal solution for the problem would always be such that there would be only one assignment in a given row or column of the cost matrix.

20.Define: (i) Competitive game (ii) Payoff matrix (iii) Pure and mixed strategies (iv) saddle point (v) Optimal strategies (vi) Rectangular game Ans Competitive game- It is a situation of conflict and competition in which two or more competitors are involved in decision making in anticipation of certain outcomes over a period of time. The competitors are players and the game is competitive game.
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Payoff matrix- A payoff matrix is a decision analysis tool that summarizes pros and cons of a decision in a tabular form. It lists payoffs (negative or positive returns) associated with all possible combinations of alternative actions (under the decision maker's control) and external conditions (not under decision maker's control). Also called pay off table. Pure and mixed strategies- A pure strategy provides a complete definition of how a player will play a game. Each player knows in advance of all strategies out of which he always selects one particular strategy regardless of the player s strategy, and the objective of the players is to maximize gains or minimizes losses. A mixed strategy is an assignment of a probability to each pure strategy. This allows for a player to randomly select a pure strategy. Since probabilities are continuous, there are infinitely many mixed strategies available to a player, even if their strategy set is finite. The objective of the players is to maximize expected gains or to minimize expected losses by making choice among pure strategies with fixed probabilities. saddle point- :- If the maxi min value equals the minimax value, then the game is said to have a saddle point. Optimal strategies - The particular strategy by which a player optimizes his gains or losses without knowing the competitor s strategies is called optimal strategies. Rectangular game- It also called zero-sum games because one player wins whatever the other one loses, so that the sum of their net winnings is zero. In general a two player zero-sum game is characterised by 1. the strategies of Player I; 2. the strategies of Player II; 3. the payo matrix. Before the game begins, each player knows her/his own strategies, the other player s strategies, and the payo matrix. The strategies for each player may not be the same, and the payo matrix A = (aij ) demonstrates the amount Player II gives to Player I under each combination of strategies.

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21. Explain: Minimax and Maximin principle used in the game theory. Ans.know how these players must select their respective strategies so that they could optimize their payoff. Such a decision making criterion is referred to as the minimax -maximin principle. For player A For 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. For 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 will 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.

23.Explain the following terms in PERT/CPM. (i) Earliest time (iii) Total activity time (v) critical path Ans. Earliest time- 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- It is the latest time for an event to occur immediately without causing delay in already determined project s completion time. Total activity time It is the total time completion of the project. (ii) Latest time (iv) Event slack time

Event slack time- The slack also known as float of an event is the difference between it s latest occurrence time and it s earliest occurrence time.

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Critical path- The critical path is the path through the project network in which none of the activities have slack, that is, the path for which ES=LS and EF=LF for all activities in the path.

24. 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 it s latest occurrence time and it s 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 estim ated 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 it s 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 it s 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.

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25. 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.

26.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 less thanequal-to ( ) sign. Constraints with greater-than-equal-to ( ) sign are multiplied by

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1( ) through out so that inequality sign gets reversed. Finally, all thes e 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. The ir 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 enter ing 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 variable s have nonnegative values then the optimum solution is reached. Otherwise, Steps 3 to 5 are repeated until the optimum is reached.

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