COMPUTER

BASED

OPTIMIZATION

TECHNIQUES

Unit I Preliminaries: Inventory Models and Replacement problems: Inventory models various costsdeterministic inventory models, Single period inventory model with shortest cost, stochastic models, Application of inventory models, Economic lot sizes-price breaks, Replacement problems-capital equipment-discounting costs-replacement in anticipation of failure- group replacement-stochastic nature underlying the failure phenomenon. Unit II Linear Programming Problems (LPP): Definition of LPP, Graphical Solutions of Linear Programming Problems, Simplex Method, and Artificial Variable Method, Two Phase Method, Charnes' Big-M Method, Sensitivity Analysis, Revised Simplex Method, Duality, Dual Simplex Method Unit III Integer Linear Programming Problems: Integer Linear Programming Problems, Mixed Integer Linear Programming Problems, Cutting Plane Method, Branch and Bound Method, 0-1 integer linear programming problem. Transportation Problems: Introduction to Transportation Model, Matrix Form of TP, Applications of TP Models, Basic Feasible Solution of a TP, Degeneracy in TP, Formation of Loops in TP, Solution Techniques of TP, Different Methods for Obtaining Initial Basic Feasible Solutions viz. Matrix Minima Method, Row Minima Method, Column Minima Methods, Vogel's Approximation Method, Techniques for Obtaining Optimal Basic Feasible Solution. Assignment Problems: Definition, Hungarian Method for AP. Unit IV Introduction to NLP: Definition of NLP, Convex Programming Problems, Quadratic Programming Problems, Wolfe's Method for Quadratic Programming, Kuhn-Tucker Conditions, Geometrical Interpretation of KT-Conditions, KT-Points etc. Dynamic Programming: Bellman's Principle of optimality of Dynamic Programming, Multistage decision problem and its solution by Dynamic Programming with finite number of stages, Solution of linear programming problems as a Dynamic Programming problem Unit V Queuing Theory Introduction to Queues, Basic Elements of Queuing Models, Queue Disciplines, Memoryless Distribution, Role of Exponential and Poisson Distributions, Markovian Process, Erlang Distribution, Symbols and Notations, Distribution Of Arrivals, Distribution of Service Times, Definition of Steady and Transient State, Poisson Queues.

Unit I INVENTORY MODELS Inventory: Organizations spend lot of money in materials. Material cost represent 20 to 60 percent of the cost of production, even a small saving in material will reflect in profit. Idle scarce material resource is called inventory. Since we invest lot of money in materials and if materials are idle for long time, it is not good for the health of the organization. So it is must to exercise a control over Idle Scares Resources, otherwise lot of money is tied in inventory. So had you not invested this money on material it would have fetched return from other source. Therefore opportunity of earning return is lost by investing in the inventory, you can see now how can you control the inventory.

Need for inventory: Inventory is required for taking care of uncertainty in business, Ex raw material inventory required because of uncertainty of supply .i.e. .supplier is not prompt in supplying goods, Supply is also lesser than expected. Therefore to take care of these raw material supply uncertainty, you need raw material inventory. Types of inventory: 1. Raw material inventory 2. Work in process inventory

3. Finished goods inventory 4. Supplies 5. Pipeline inventory 6. Buffer stock or Safety stock 7. Decoupling inventory Supplies: Materials which are used other than those used for production of finished goods. Ex: lubricants, pencil, pen, paper, spare parts. Definition Mathematical equation or formula that helps a firm in determining the economic order quantity, and the frequency of ordering, to keep goods or services flowing to the customer without interruption or delay. Q. 10.1 What is inventory? Ans. An inventory consists of usable but idle resources such as men, machines material or money When resources involved are a material, the inventory is called stock.

Q. 10.2. Define lead time and reader point in inventory problems. Ans. Lead time : It is the time period between the placement of order and receipt of goods. / 2. Recorder level It is the level of stock at which replenishment order is placed and is equal to the lead time multiplied with the demand during lead time.

Q. 10.3. What are the uses of maintaining inventories Ans. 1. It helps in smooth and efficienf running of an enterprise. 2. It provides service to the customer at a short notice. 3. It reduce product costs since there is an added advantage of batching and long uninterrupted producion run.

Due to absence of stock, the company may have to pay high prices because of piece wise purchasing. Inventory helps in maintaining the economy by absorbing some of the fluctuations when the demand for an item fluctuates.

Q. 10.4. What are the disadvantages of maintaining inventories Ans. 1. A production foreman who has large in process inventory may be able to hide poor planning sinc there is always something to manufacture. Inventory does not add any value to the product. Inventory means unproductive tied up capital of the enterprise. With large inventory there is always likelihood of absolescence etc. For maintaining inventory additional money to be spent on personnel, equipment, insurance etc.

Q. 10.5. What are the different costs that are involved in inventory model? Ans. 1. Inventory carrying or stock holding costs. (a) Capital tied up in inventories. (b) Cost of storage space. (c) Depreciation and deterioration cost. (d) Pilferage cost. (e) Obsolescence cost. (I) Handling cost. (g) Record keeping cost. (h) Taxes and Insurance. 2. Procurement costs or set up costs. 3. Shortage cost or stock out costs.

Q. 10.6. What is the advantages (need) of inventory control in organization?

Ans. 1. Inventory, control ensures an adequate supply of items to customers and avoids the shortage as for as possible at the minimum cost. 2. It makes use of available capital in a most effective way and avoids an unnecessary expenditure on high inventory etc. 3. The risk of loss due to change in prices of items is reduced. 4. It ensures smooth and efficient running of organization. 5. It provides advantages of quality discounts on bulk purchases. 6. It eliminates the possibility of duplicate ordering. 7. It helps to minimize the loss due to deterioration obsolescence, damage or pilferage etc. 8. It helps in maintaining the economy by absorbing some of the fluctuations when the demand for an item fluctuates.

Q. 10.7. How the term inventory may be classified? Or Distinguish between direct and indirect inventories. Ans. Direct inventories : The items, which play a direct role in the manufacture and become an integral part of finished goods, are known as direct inventories. They are further divided into four types (a) Raw material inventories. (b) Walk in process inventories. (c) Finished good inventories. (d) Spare parts inventories. Indirect inventories : Those items which are necessarily required for manufacturing but do not become the component of finished production, like oil, grease, lubricants, petrol etc.

Q 10.8. What is inventory problem? Ans Inventory problem is to decide when to order and how much to order so that total cost of the system should be mimmum

Q 10.9 Define EOQ Write the formula for finding EOQ

Ans EOQ is the size of the order which mmimizes total annual cost of carrying

Q. 10.10. What are price breaks in inventory model? Ans. Inventory problems in which the item cost is variable and depends upon the quantity manufactured or purchased, This usually happens when discounts are offered for the purchase of large quantities. These discounts are known as price break in inventory model.

Problems

Problem. 10.11. Derive an expression for EOQ and state the assumption made by you. Solution. Assumption: 1. Demand is uniform at a rate of R quantity units per unit time. 2. Lead time is zero. 3 Production rate is mfmite z e, production is instantaneous 4. Shortage are not allowed. 5. Holding cost is rupees C1 per quantity unit per unit time. 6. Set up cost in rupees C3 per set up. Derivation : The most economic point in terms of total inventory cost exists where Inventory carrying costs = Annual ordering cost. Inventory Level

Problem 10.12. A particular item has a demand of 9000 units/year. The cost of one procurement is Rs. 100 and the holding cost per unit is Rs. 2.40 per year. The replacement is instantaneous and no shortance are allowed. Determine 1. Economic lot size. 2. The no. of order per year. 3. The time between orders. 4. Total cost per year if the cost of one unit is Rs. 1.

Problem 10.13. A manufacturing company purchases 9000 parts of a machine for its annual requirements, ordering one month usuage at a time. Each part cost Rs. 20. The order cost per ordering is Rs. 15 and the carrying charges are 15% of the average inventory per year. You have been asked to suggest a more economical purchasing policy for the company. What advice would you offer and how much would it same the company per year.

Hence if the company purchases 300 units each time and places 30 orders in the year, the net saving to the company will be Rs. (1305 900) = Rs. 405 a year.

Problem 10.14. You have to supply your customers 100 units of a certain product every monday- You obtain the product from a local supplier at Rs. 60 per unit. The cost of ordering and transportation from the supplier are Rs. 150 per order. The cost of carrying inventory is estimated at 15% per year of the cost of the product carried. 1. Find the lot size which will minimize the cost of the system. 2. Determine the optimal cost.

Problem 10.15. Daily demand for a product is normally distributed with mean, 60 units and a standard deviation of 6 units. The lead time is constant at 9 days. The cost of placing an order is Rs. 200, and the annual holding costs are 20% of the unit price of Rs. 50. A 95% service level is desired for the customers, who place orders during the reorder period. Determine the order quantity and the reorder level for the item in question, assuming that there are 300 working days during a year.

Problem 10.16. The demand per month for a product is distributed normally with a mean of 100 and standard deviation 25. The lead time distribution is given below. What service level will be offorded by a reorder level of 500 units?

Total conditional probability of not running out of stock =10 + 20+ 40+ 19.5 + 5= 94.5. Hence a reorder level of 500 units will give 94.5% service level.

Problem. 10.17. The annual demand for a product is 500 units. The cost of storage per unit per year is 10% of the unit cost, The ordering cost is Rs. 180 for each order. The unit cost depends upon the amount ordered. The range of amount ordered and the unit cost price are as follows

Linear Programming Problems and Application (Formulation, Graphical and Analytic Method)

Q. 2.1 Define LPP.

Ans. A problem consists of a linear function of variable called objective function subject to set of linear equation or inequalities called constraints, are known as linear programming problem.

Q. 2.2 Why LP models are called deterministic in nature.

Ans. (i) In LP model the various parameters namely the objective function coefficients, R.H.S, coefficients of the constraints and resource values are certainly known and their value do not change with time. Thus the profit or cost per unit of product, availability of labour and material, market demand is known with certainty. Thats why it is called deterministic in nature.

Q. 2.3. What are the assumptions of Linear programming Models?

Ans. 1. Proportionality 2. Additivity 3. Continuity 4. Certainty.

Q. 2.4. Enumerate few application of linear programming.

Ans. Industrial Applications 1. Product Mix problem 2. Blending problem

3. Production Scheduling problem 4. Trim loss problem 5. Sub contract problem.

Management Problems 1. Media selection problem 2. Transportation problem 3. Assignment problem 4. Man power scheduling problem Agricultural Applications Military Applications.

Q. 2.5 What are the advantages and limitations of linear programming methods?

Ans. Advantages 1. It helps in attaining the optimum use of productive factors. 2. It improves the quality of decisions. The individual who makes use of linear programming methods becomes more objective than subjective. 3. It also helps in providing better tools for adjustment to meet changing conditions. 4. It highlights the bottlenecks in the production processes. 5. Most business problems involve constraints like raw materials availability, market demand etc. which must be taken into consideration. Just we can produce so many units of product does not mean that they can be sold. Linear programming can handle such situation also. Limitations 1. In some problems objective functions and constraints are not linear. LPP under non linear condition usually results in an incorrect soIution 2. LPP deals with problems that have a single objective. Real life problem may involve multiple objectives. 3. Parameters appearing in the model are assumed to be constant. But in real life situation they are neither constant nor deterministic.

4. It is applicable to only static situations since it does not take into account the effect of time. 5. LPP can not be used efficiently for large scale problems, the computational difficulties are enormous, even when the large digital computer is available. 6. LPP may get fractional valued answers for the decision variables, whereas it may happen that only integer values of the variable are logical.

Q. 2.6. Define: (i) Solution to LPP (ii) Feasible solution (iii) Basic solution (iv) Basic feasible solution (v) Optimum basic feasible solution (vi) Unbounded Solution.

Ans. (i) Solution to LPP- A set of variable [x1x2,....x,J is called a solution to LI? if it satisfy the given constraints (ii) Feasible solutionA set of variable is called a feasible solution to LPP if it satisfy the given constraints as well as non negativity restrictions (iii) Basic solution-A solution obtained by setting any n variables equal to zero and solvmg for remainmg m variables is called basic solution (iv) Basic feasible solution-It is a basic solution that also satisfy the non negativity restrictions. (v) Optimum basic feasible solutionIt is the basic feasible solution thafalso optimize the objective function. (vi) Unbounded solution-If the value of the objective function can be increased or decreased indefinitely the solution is called unbounded solution

Q 2.7 What is redundant constraint?

Ans A constraint, which does not affect the solution space, is known as redundent Constraint

Q. 2.8. Name three basic parts of simplex techniques.

Ans. 1. Basis 2. Body matrix 3 Identity matrix

Q 2.9 Distinguish between slack, surplus and Artificial variable

Ans SlackThe positive variable, which is added to the left hand side of the constraint to convert it into equation, is called the slack variable Surplus-The positive variable, which is subtracted from the left hand side of the constraint to convert it into equation, is called the surplus variable. Artificial VariableLPP in which one or more constraints are of or = type (after ensuring that all all bs are non negative)in such cases we introduce another type of variable known as artificial variables in order to get the initial basic feasible solution.

Q 2.10 What is the physical meaning of artificial variable?

Ans These variables are fictitious and have no physical meaning They are merely a device to get the starting basic feasible solution so that simplex algorithm may be applied. These variables are required because in such problems the basic matrix is not obtained as identity matrix in the starting simplex table.

Q. 2.11. Define pivot element. (Or key element).

Ans. It is intersection element of key column and key row.

Q. 2.12. While finding the solution by simplex method, when does the problem have infinite optimal solution, unbounded solution and infeasible solution?

Ans. Infinite optimal solution-If a non basic variable have zero coefficient in the C-.Z row there exist an infinite optimal solution. Unbounded solution-An unbounded solution occurred when it is not possible to determme the basic variable that should leave the basis This happens when there is no minimum non negative replacement ratio. Infeasible solution-When optimality condition is satisfied and artificial variable is present at some positive level The problem does not have any feasible solution

Q. 2.13. Distinguish between the Big M and two phase method.

Ans. 1. The big M method solves the problem in one pass, whereas the two phase method solve it in two stages. 2. The big M method is computionally inconvenient due to existence of the large number M The two phase method does not involve M during computation 3. The big M method present a difficulty when the problem is solved on digital computer, but there is no such type of problem in two phase method.

Q 2.14 Give outlines of a simplex method in linear programming

Ans. 1. Express the problem in standard form. 2. Find initial basic feasible solution.

3. Construct the starting simplex table which consists of basis, body matrix, identity matrix and quantity column 4. Perform optimality test. (z) Compute Z (=cB a7) elements for variable column (ii) Find index row C-.Z

It may be resolved by perturbation method. (iii) (Minimization Problem) if all the elements of CZ row are non negative then optimahty condition is satisfied (Maximization problem) If all the elements of CZ row are zero or negative then optimahty condition is satisfied 5. Iteration towards an optimal solution. (z) Selecting of the entering variable (ii) Selecting of outgoing variable (iii) Preparing the new simplex table. 6. Repeat step 4 and 5 till the optimal solution is obtained.

Q. 2.15. What do you understand by degeneracy?

Ans Degeneracy linear programming is said to occur when one or more basic Lables have zero value. It may occur at initial stage or at subsequent iteration stage.

Q. 2.16. Define basic and non basic variables.

Ans. Basicvariable under the basic column are known as basic variable. Non Basicvariables not entered under basic column are known as non basic variable.

Q. 2.17. What do you mean by shadow prices?

Ans. The elements in C-Z row (index row) under slack variable columns are known as shadow prices or imputed values of the resources.

Problems

Problem. 2.18. An advertising company wishes to plan its advertising strategy in three different media-television, radio and magazines. The purpose of advertising is to reach as large a number of potential customers as possible. Following data have been obtained from market survey-

The company wants to spend not more than Rs. 450000 on advertising. Following are the further requirements. 1. at least 1 million exposures take place among female customers. 2. advertising on magazines be limited to Rs 1, 50000 3. at least 3 advertising units to be bought on magazine 1 and 2 units on magazine II. 4. The number of advertising units on television and radio should each be between 5 and 10.

Formulate an LPP model for the problem.

Solution : Let x1- no. of advertising unit of television no. of advertising unit of radio x3- no. of advertising unit of Magazine I x4 no. of advertising unit of Magazine II Objective function Maximize Z = i05 (2x1+ 6x2 + 1.5x3 + x4) Constraints are

Problem 2.19. A person requires 10, 12 and 12 units of chemicals A, B and C respectively for herbal garden. A liquid product contains 5, 2 and 1 units of A,B and C respectively per Jar. A dry product contains 1, 2 and 4 units of A, B and C per cartoon. If the liquid product sells for Rs. 3 per Jar and dry product sells for Rs. 2 per cartoon, how many of each should be purchased to minimise the cost and meet the requirements.

Problem. 2.20. A firm manufactures pain relieving pills in two sizes A and B, size A contains 4 grains of element a, 7 grains of element b and 2 grains of element c, size B contains 2 grains of element a, 10 grains of element b and 8 grains of c. It is found by users that it requires at least 12 grains of element a, 74 grains of element b and 24 grains of element c to provide immediate relief It is required to determine that least no. of pills a patient should take to get immediate relief. Formulate the problem as standard LPP.

Problem. 2.21. An automobile manufactuEer makes automobiles and trucks in a factory that is divided into two shops. Shop A which perform the basic assy operation must work 5 man days on each truck but only 2 man days on each automobile. Shop B which perform finishing operations must work 3 man days for each automobile or truck that it produces. Because of men and machine limitations shop A has 180 man days per week available while shop B has 135.man days per week. If the manufacturer makes a profit of Rs. 300 on each truck and Rs. 200 on each automobile; how many of each should be produced to maximize his profit?

Problem. 2.22 On completing the construction of house a person discovers that J square feet of plywood scrap and 80 square feet of white pine scrap are in use!able m for the construction of tables and book cases. It takes 16 square feet of plywood 8 square feet of white pine to make a table, 12 square feet of plywood and 16 Llare feet of white pine are required to contruct a book case. By selling the finishing duct to a local furniture store the person can realize a profit of Rs. 25 on each table d Rs. 290 on each book case. How may the man most profitably use the left over ood ? Use graphical method to solve problem.

Problem 2.23. A truck can carry a total of 10 tons of product. Three types of produts are available for shipment. Their weight and values are tabulated. Assuming that at. least one of each type must be shipped. Determine the loading which will maximize the total value. Formulate the problem.

Transportation, Assignment and Sequencing Problem

Q. 3.1. State transportation problem. Is this a special class of LPP ? When does it a unique solution ?

Ans. The transportation problem is to transport various amount of single object that are initially stored at various origins, to different destinations in such a way that the total transportation cost is minimum. Yes it is a special class of LPP and may be solved by simplex method. Transportation problem always posses a feasible solution. It has a unique solution when cell evaluation matrix has only positive values.

Q. 3.2. Write mathematical model for general transportation problem as LPP.

Ans. Mathematical formulat Suppose that there are m sources and n destinations. Let a1be the number of supply units available at source i (i =1, 2, 3 m) and let b1 be the number of demand units required at destination j (f = 1, 2, 3 n). Let C, represent the unit transportation cost for transporting the units from source i to distination j. The objective is to determine the number of units to be transported from source i to destination j. So that total transportation cost is minimum.

Q. 3.3. List the various methods that can be used for obtaining an initial basic solution for transportation problem.

Ans. 1. North west corner method 2. Row minimum method 3. Column minimum method 4. Least cost method 5. Vogal approximation method.

Q. 3.4. What is degeneracy in transportation problem?

Ans. In a transportation problem with m origins and n destinations if a basic feasible solution has less than ( m + ni) allocations, the problem is said to be a degenerate transportation problem.

Q. 3.5. What do you understand by a balanced and an unbalanced transportation problem ? How an unbalanced problem is tackled?

Ans In a transportation problem if the total availability from all the origins is equal

to the total demand at all the destinations z

Such transportation

problems are known as balanced tansportation problems. (Total supply = Total demand) In many

situations, the total availability may not be equal to the total demand i.e. Such problems are known as unbalanced tranportation problem.

The unbalanced problem could be tackled by adding a dummy destination or source depending upon the requirement and the costs of shipping to this destination (or from source) are set equal

to zero. The zero cost cells are treated the same way as real cost cell and the problem is solved as a balanced problem. (Total supply Total demand)

Q. 3.6. Describe the steps involved in vogal approximation method (VAM).

Ans. Setp. 1. For each row of the transportation table identify the smallest and next to smallest cost. Determine the difference between them for each row. These are called penalities. Similarly compute these penalities for each column. Setp. 2. Identify the row or column with the largest penalty and allocate as much as possible within the restrictions of the rim conditions to the lowest cost cell in the row or column selected.

Setp. 3. Cross out of the row or column completely satisfied by the allocation. Setp. 4. Repeat steps 1 to 3 untill all assignment have been made.

Q. 3.7. Define the following terms in transportation Problem. (i) feasible solution (ii) Optimal solution.

Ans. 1. Feasible Solution. A feasible solution to a transportation problem is a set of non negative allocations, x that satisfy the rim conditions. 2. Optimal Solution. A feasible solution that minimize the transportation cost is called the optimal Solution.

Q. 3.8. Explain North west corner rule for finding initial solution for a transportation problem.

Ans. 1. Start in the north west corner of the requirement table:

(a) If D1< S1, set x11 equal to find the balance supply and demand and proceed horizontally (cell 1, 2). (b) If = S1 set x11 equal to D1, find the balance supply and demand and proceed diagonally (cell 2, 2). (c) If D1>S1, set x11equal to compute the baiance supply and demand and proceed vertically (cell 2, 1). 2. Continue in this manner, step by step away from the north west corner until, finally a value is reached in the south east corner.

Q. 3.9. Give an algorithm to solve transportation problem. Or Describe the steps involved in solving transportation problem.

Ans. 1. Make a transportation Model. For this enter the supply a., from the origin demand b1 at the destinations and unit cost C,, m the varous cells 2 Find initial basic feasible solution 3. Perform optimality test: (a) Find dual variable (b) Make opportunity cost matrix (c) Compute the cell evaluation matrix the current basic feasible solution is optimal. If all cell evaluation are positive or zero

(d) In case any cell evaluation is negative, select the vacant cell with the most negative evaluation. This isalled identified cell. 4. Iterate towards optimal solution. For this make as much allocation in the identified cell as possible so that it become basic. 5. Repeat step 3 and 4 till optimal solution is obtained.

Q. 3.10. State the Assignment model. Is assignment problem a special case of transportation?

Ans Assignment Model Suppose there are n jobs to be performed and n person are available for doing these jobs. Assume that each person can do each job at a time, though with varying degree of efficiency.The problem is to find an assignment so that the total cost for performmg all jobs is minimum Yes, the assignment problem is a special case of transportation problem when each origin is associated with one and only one destination.

Q 3.11 Give the mathematical formulation of an assignment problem

Ans Let = 0, if the facility is not assigned to 1th job 1, if the th facility is assigned to th job. The model is given by

Q. 3.12.What do you mean by restrictions an assignments? Or How a restriction problem tackled? Or How will you solve an assignment where a particular assignment is prohibited?

Ans. Sometime technical, space, legalor other problems do not permit the assignment of a particular facility to a particularjob. Such problem are known restrictions an assignment problem. Such problem can be solved by assigning a very heavy cost to the corresponding cell. It will automatically excluded from further consideration.

Q. 3.13. What is the unbalanced assignment problem ? How is it solved by the Hungarian method?

Ans When the number of facilities is not equal to the number of jobs, such problems are known as unbalanced assignment problem. Since the Hungarian methodof solution require a square matrix, fictitious facilities or jobs. Jobs may be added and zero costs be assigned to the corresponding cells of the matrix. These cells are then treated the same way as the real cost cells during the solution procedure.

Q. 3.14. How do you come to know that Assignment problem has alternate optimal solution?

Ans. Sometimes it is possible to have two or more ways to strike off all zero elements in the reduced matrix for a given problem. In such cases there will be an alternate optimal solution with same cost.

Q. 3.15. Describe the steps involved in solving assignment problem by Hungarian method.

Ans. 1. Prepare a square matrix. 2. Reduce the matrix. 3. Check whether an optimal assignment can be made in the reduced matrix or not. 4. Find the minimum number of lines crossing all zeros. If this number of lines is equal to the order of matrix then it is an optimal solution. Otherwise gp to step 5. 5. Iterate towards the optimal solution.

6. Repeat step 3 through 5 until an optimal solution is obtained.

Q. 3.16. Compare assignment problem with transportation problem.

Ans. An assignment model may be regarded as special case of the transportation model. Here facilities represent the sources and jobs represent the destination. Number of sources is equal to the number of destinations, supply at each source is unity and demand at each distination is unit. In assignment the number of units allocated to a cell be either one or zero. The assignment problem is a completely degenerate form of transportation problem.

Q. 3.17. Distinguish between transportation, assignment and sequencing model what is sequencing model).

Ans. Transportation and assignment are allocation model (as explained above) Sequencing model. are applicable in situation in which the effectiveness measure a function of order as sequence of performing a series of jobs. The selection of the apropriate order in which waiting customer/Job may be served is called sequencing.

Q. 3.18. State the assumption made in sequencing model.

Ans 1 Only one operation is carried out on a m/c 2. Each operation once started, must be completed. 3. Only one rn/c of each type is available. 4. A job is processed as soon as possible but only in the order specified. 5. Processing time are independent of order f performing the operation. 6. Transportation time is negligible. 7. Cost of in process inventory is negligible.

Problems

Problem 3.19. Find the optimum solution to the following problem.

Solution: 1. Make a transportation model

1. Find basic feasible solution (VAM method)

2.

3. Check for optimality (MODI Test) m (a) Cost matrix of allocated cell. + n - 1 = 8 (no. of allocation)

Since all the elements of cell evaluation matrix are positive so optimality test is passed. Minimum Transportation Cost = Rs. 321.

Problem 3.20. Solve the following cost-minimizing transportation problem.

Ans. 1. Make a transportation model.

1. Find basic feasible solution

1. Check for optimality test (m + n -1) > no. of allocation (8)

m + n- 1 = no. of allocation 9

9. Cost matrix of allocated cell

(c) Cell evaluation matrix

1. Iteration for optimal solution. 2.

(a). Cost matrix of allocated cell.

Since all elements of cell evaluation matrix are non negative so 2hldI feasible solution is the optimum solution. Transportation cost

Duality Theory, Sensitivity analysis and Goal Programming Q. 4.1 Explain the meaning of duality in LP

Ans For every LP problem there is related unique L P problem mvolvmg the same data which also describes the original problem. The given original problem is known as primal programme. The programme can be rewritten by transposing the rows and columns of the statement of the problem. Inverting the programme in this way results in dual programme. The two programmes have very closely related properties so that optimal solution of the dual problem gives complete information about the optimal solution of primal problem. Solving the problem by writing dual programme is known as duality in LP

Q. 4.2. In a primal problem 1. jr variable unrestricted 2. il constraint occur with equality sign. What can you say about its dual problem of the above two problems.

1. If in primal th variable is unrestricted then one of the constraint will be of equality sign in dual problem. 2. If in primal th constraint with equality sign then one of the variable will be unrestricted in the dual problem.

Q. 4.3. If the dual of an LPP is solved, where will we get the value of decision variables of the primal LPP. Ans. The value of decision variables of primal are given by the base row of the dual solution under the slack variable, neglecting the -ye sign if any, and under the artificial variables neglecting the ye sign if any, after deleting the constant M.

Q. 4.4. What is the importance of duality? Ans. 1.If. the primal problem contains a large number of rows and a smaller number of columns, the computational procedure can be considerably reduced by converting it into dual and then solving it.

2. This can help managers in answer questions about alternative course of actions and their relative values. 3. Economic interpretation of the dual helps the management in making future decisions. 4. Calculation of the dual checks the accuracy of the primal solution.

Q. 4.5. Write short note on sensitivity analysis. Ans. During the formulation it is assumed that the parameters such as market demand, capacity resources, consumption, availability, cost or profit are all known with certainty and do not change over time. In actual practice the market fluctuate and all these variables kept on changing. It is therefore desirable to study how the current optimal solution changes when the parameter of the problem get changed. In thei problems this information may be more important than the single result provided by optimal solution. The study of the effect of discrete changes in parameters on the optimal solution is called the sensitivity analysis. Such an analysis converts the static linear programming. solution into dynamic tool to study the effect of changing conditions such as in business and industry. In other words the objective of analysis is to determine how sensitive is the optimal solution to the changes in those parameters. Such an analysis is known as sensitivity analysis.

Q. 4.6. Write a short note on Goal programming. Ans. Goal programming is quite similar to linear programming but is applied for situation which have multiple goal as objective. For a company manufacturing lathes and milling machines there can be following objectives 1. Maximize profit in rupees 2. Maximize number of lathes to be manufactured. 3. Maximize number of milling machines to be manufactured. It is obvious that the three goals cannot be added, since their units are different. Goal programming asks the management to set some targets for each of the goal and rank them in order of importance. Having received this information, goal programming tries to mimmize the deviations from the targets It starts with the most important goal and continues till the achievement of a less important goal.

Solution: As the given problem is of minimization all constraints should be of type

Probabilistic Models (Decision Theory and Game Theory)

Q. 5.1. What do you mean by zero sum game and two person zero sum games in game theory?

Ans. Zero sum game: It is the game in which the sumof payments to all the players after the play of the game is zero. Two person zero sum game : It is a game involving two players, in which the gain of one player equals the loss of other.

Q. 5.2. What is saddle point and game value in game theory?

Ans. Saddle point : Saddle point is the number, which is lowest in its row and highest in its column. - Game value : It is the average wining per play over a long no. of plays.

Q. 5.3. Write short note on pure strategy. How it differ from mixed strategy?

Ans Pure strategy If a player knows exactly what the other player is going to do, a deterministic situation is obtained and objective function is to minimize the gain Therefore the pure strategy is a decision rule always to select a particular course of action. Mixed strategy If a player is guessmg as to which activity is to be selected by the other on any particular occasion, a probabilistic situation is obtained and objective function is to maximize the expected gain. Thus, the mixed strategy is a selection among pure strategies withfixed probabilities.

Q. 5.4. Indicate the difference between decision making under risk and uncertainty in statistical decision theory.

Ans Decision making under risk In this case more than one states of nature exist and there is enough information available to assign probability to each of the possible state.

Decision making under uncertainty : Here more than one state of nature exists but there is no information about the various states, not even sufficient knowledge to assign probabilities to them.

Q 5.5 Enumerate the vanous quantitative methods which are used for decision making under uncertainty and decision making under risk

Ans Decision making under uncertainty 1 Criterian of optimism 2. Criterian of pessimism. 3. Minimax regret criterion. 4. Criterion of realism. 5. Laplace criterion. Decision making under risk: 1. Expected value criterion 2 Expected opportunity loss criterian 3 Expected value of perfect mformation 4. Use of incremental analysis.

Q. 5.6. List the steps in decision, making approach.

Ans. 1. List all the alternatives. 2. Identify the expected future events. 3 Construct a payoff table 4. Select optimum criterion.

Q 5.7 Distinguish between game of strategy and game of chance

Ans Game of strategy If in the game the actions are determined by skills, at is called a game of strategy Game of change If m the game the actions are determmed by chance, it is termed as game of chance.

Q 5.8 What do you mean by optimal strategy?

Ans Optimal strategy The strategy that puts the player in the most preferred position irrespective of the strategy of his opponents is called an optimal strategy Any deviation from this strategy would reduce his payoff

Problems

Problem 5.9. Mr. Sinha had to decide whether or not to drill a well on his firm. In his village, only 40% of the wells drilled were successful at 200 feet of depth. Some of the formers who did not get water at 200 feet drilled further upto 250 feet but only 20% struck water at 250 feet. Cost of chilling is Rs. 50 per foot. Mr. Sinha estimated that be would pay Rs. 18000 during a 5 years period in the present value terms, if he continues to buy water from the neighbour rather than go far well which would have a life of 5 years. Mr. Sinha has three decisions to make. (a) Should he drill upto 200 feet (b) if no water is found at 200 feet, should he drill upto 250 feet? (c) should he continue to buy water from his neighbour.

Thus the optimal course of action for Mr. Sinha is not to drill the well and pay Rs. 18000 for water to his neighbour for five years.

Problem. 5.10. Find the value of games shown below also indicator whether they are fair or strictly determinable

Solution.

Solution. (a)

Saddle point = (I, IV) Game value 0 Strategy of A = Al Strategy of B = B IV Since maximum = Minimax = 0 So game = Fair.

Problem. 5.11. In a game of matching coins, player A wins Rs. 2. If there are two heads, win nothing if there are two tails and loses Rs. 1. When there are one head and one tail. Determine the pay off matrix, best strategies for each player and the value of game to A.

Solution. The payoff matrix for A will be

There is no saddle point By Arithmetic method

Player A best strategy (0.25, 0.75) Player B best strategy (0.25, 0.75) Game value Let B plays H; Value of the game

Problem 5.12. (By Dominance) Two players P and Q play a game. Each of them has to choose one of three colours, white (W) Black (B) and Red (R) independently of the other. There after the colours are compared. If both P and Q have choosen white (W,W) neither win anything. If player P selects white and player Q black (W, B), player P loses Rs. 2 or player Q wins the same amount and so on. The complete payoff table is shown. Find the optimum strategies for P and Q and the value of the game.

Solution.

There is no saddle point

By dominance rule for column, 3 column may be removed. The resulting matrix is

By dominance rule for row, row may be removed The resultmg matrix (2 x 2) is

Applying Arithmatic method

Optimum strategies for P

Problem. 5.13. Solve the following games by reducing them to 2 x 2 games by graphical method.

 reduce by dominance rule for column 2 and 5th column may be deleted as dominated by 4th and 3 column. The resulting matrix is 1. No saddle point

Resulting matrix

expected payoff the two lines which intersect at lowest pomt of upper bound show the two course of action A should choose in his best strategy. The resulting matrix is

5.14. Solve the following game.

Solution There is no saddle point in the game By rule of dommance for column 1st and 3 column may be deleted as dominated by 2nd and 4th column respectively. Thus the resulting matrix is

Problem, 5.15. Obtain the optimal strategies for both persons and the value of the game for zero sum two person game whose payoff matrix is given as follows:

Solution. There is no saddle point m the game by rule of dominance for column 2nd, 4th and 5th column are dominated by 1st column and 3rd column dommated by 6th column hence 2nd, 4th, 5th and 3rd column may be removed. The resulting matrix is (2x2).

Game theory Game theory is a study of strategic decision making. More formally, it is "the study ofmathematical models of conflict and cooperation between intelligent rational decisionmakers."An alternative term suggested "as a more descriptive name for the discipline" isinteractive decision theory.Game theory is mainly used in economics, political science, and psychology, as well as logic and biology. The subject first addressed zero-sum games, such that one person's gains exactly equal net losses of the other participant(s). Today, however, game theory applies to a wide range of class relations, and has developed into an umbrella term for the logical side of science, to include both human and non-humans, like computers. Classic uses include a sense of balance in numerous games, where each person has found or developed a tactic that cannot successfully better his results, given the other approach.

Modern game theory began with the idea regarding the existence of mixed-strategy equilibrium in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original proof used Browers fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by his 1944 book Theory of Games and Economic Behavior, with Oskar Morgenstern, which considered cooperative games of several players. The second edition of this book provided an axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat decision-making under uncertainty. This theory was developed extensively in the 1950s by many scholars. Game theory was later explicitly applied to biology in the 1970s, although similar developments go back at least as far as the 1930s. Game theory has been widely recognized as an important tool in many fields. Eight game-theorists have won the Nobel Memorial Prize in Economic Sciences, and John Maynard Smith was awarded the Crawford for his application of game theory to biology.

Simulation Q. 6.1 What do you understand by simulation?

Ans. Simulation: is a representation of reality through the use of a model or other device, which will react in the similar manner as reality under a given set of conditions. Analogue Simulation: Reality in physical form. Computer simulation: Complex system in formulated into a mathematical model for which computer program are developed as problem is solved on high speed computers.

Q. 6.2. What are the advantages and limitation of simulation techniques?

Ans. Advantages: 1. Simulation allows experimentation with a model of the real system rather than the actual operating system. 2. Management can forsee the difficulties and bottleneck. 3. Relatively free from mathematics. 4. Comparatively flexible. 5. Easier to use than other techniques.

6. Training the operating and personal staff. Limitation 1. Optimum resultcan not be produced. 2. Quantification of variable is not possible. (how many variable affecting the system). 3. Difficult to make program because of difficult to know the interrelationship among many variables. 4. Comparatively costlier and time consuming method. 5. Too many tendency to rely on the simulation model.

Q. 6.3. Explain Monte Carlo technique in simulation.

Ans. (a) Select the measure of effectiveness. (b) Decide the variables, which influence the measure of effectiveness significantly. (c) Determine the cumulative probability distribution of each variable. (d) Choose a set of random number. (e) Consider each number as a decimal value of the cumulative probability distribution. (J) Insert the simulated value. (g) Repeat step (e) and f) until sample is large enough for the safisfaction of decision maker.

Q. 6.4. Define Random Number.

Ans. It is a number in a sequence of numbers whose probability of occurance is the same as that of any other member.

Q. 6.5. When to use simulation?

Ans. When the characteristics such as uncertainty, complexity dynamic interaction between the decision and subsequent event and the need to develop a detailed procedure combine together in one situation, it becomes too complex to be solved by any of the technique of mathematical programming. Under such situation the simulation is best technique to be used.

Q. 6.6. What are the applications of simulation? V

Ans. Applications: 1. In industrial problems including the design of quening system, inventory control, communication networks, chemical processes, nuclear reactors and scheduling of production processes. 2. In business and economic problems including, price determination, forecasting etc. 3. In social problems including population growth etc. 4. In biomedical science such as fluid balance, brain activities etc. 5. In the design of weapon system, war strategies and tactics.

Problem

Q. 6.7. A bakery keeps stock of popular brand of cake daily demand based on past experience is given below

Using the sequence, simulate the demand for the next 10 days.

Solution, The simulated demand for the cakes for the next 10 days can be obtained from the table

Number of cakes demanded in the next 10 days are 35,35, 15, 35, 35, 35, 15, 15, 35 and 15.

Problem 6.8. Consider an inventory situation in a manufacturing concern. If the number of sales per day is Poission with mean 5, then generate 30 days of sales by monte-carlo method.

Solution. (Poission distribution) Probability for sale S is given by

and so on.

Problem. 6.9. Arrival at a service station have been found to follow Poission process. The mean arrival rate is ? 6 units per hour. Simulate five hours of arrivals at the station.

*Five hour completed.

Problem 6.10. Two persons X and Y work on a two-station assembly line. The dIstributions of activity times at their stations are

(a) Simulate operation of the line for eight items

(b) Assuming Y must wait until X completes the first item before starting work, will he have to. wait to process any of the other seven items ? What is the average waiting time of items for Y Use the following random numbers For X : 83, 70, 06,12, 59, 46, 54 and 04. For Y : 51, 99, 84, 81; 15, 36, 12 and 54. (c) Determine the inventory of items between the two stations. (d) What as the average production rate

Solution Table below shows the cumulative frequency distribution for X Eight random numbers given for person X are also fitted. The serial numbers of random are shown in the perent theses

Thus the eight times for X are 60, 50, 10, 30, 50, 50, 50 and 10 seconds respectively Likewise, the eight times for Y are derived from his comulative distribution below

Thus the eight times for Y are .50, 80, 70, 70, 30, 40, 30 and 50 seconds respectively. Note that the cumulative frequency has been multiplied by 2 to make it 100. The above times for persons X and Y are used to calculate the waiting time, if any.

Thus person X will not have to wait for the remaining seven items.

Problem. 6.11. A company trading in motor vehicle spares whishes to determine the level of stock it should carry for the items in its range. Demand is not certain and there is a lead time for stock replenishment. For one item X, the following information is obtained.

Stock in hand at the beginning of the simulation exercise was 20 units. You are required to carry out a simulation run over a period of 10 days with the objective of evaluating the following inventory rule: V

Dynamic Programming Q. 7.1 State the Principle of optimality in dynamic programming. Ans. This principle implies that a wrong decision taken at one stage does not prevent from taking the optimum decision for the remaining stages. An optimal policy has the property that whatever the initial state and decision are, the remaining decisions must constitute an optimal policy with regard to the state resulting from the first decision.

Q. 7.2. Explain concepts of state and stage in dynamic programming. Ans. Stage : Stage is a certain time interval or certain sub division of the problem for which independent feasible decision are possible. State: is the description of the system, which tells the necessary parameters of the system for making decisions.

Q. 7.3. What are the essential characteristics of dynamic programming? Ans. 1. The problem can be divided into stages, with a policy decision required at eacfi stage. 2. Each stage has a number of states associated with it. 3. The effect of the policy decision at each stage is to transform the current state into a state associated with next stage. 4. Given the current stage, an optimal policy for remaining stages is independent of the policy adopted in the pervious stages. 5. The solution procedure begins by finding an optimum policy for each state of the last stage.

6. A functional equation is available which identifies the optimal policy for each state with (n 1) stages left. 7. Using this function4l equation, the solution procedure moves backward stage by stage, each time finding the policy when starting at initial stage.

Q. 7.4. Distinguish between linear programming and dynamic programming. What sort of problems can be solved by dynamic programming? Ans Linear programming models assume that data do not change w r t time It is one time decision process and assumes average values of the decision variables Other important limitation of linear programming is that it assumes that data to be known with certainty. Dynamic programming can be used to determine optimal strategies, by taking into account the uncertainties and can analyze multiperiod and multistage problems. In other words the technique is free from the limitation of linear programming. But it can be used to tackle very simple situations involving a few variables. If the no. of variable is larger the computation took becomes quite complex and involved. Moreover linear programming has standard ways to formulate the problems and solve them; there is no standard approach in dynamic programming. It is on the other hand a general way of solving large, co;mplex problem by splitting them into smaller problems, which are more easily solved.

Q. 7.5. What is dynamic programming ? Write some application of dynamic programming. Ans. Dynamic programming: It is a mathematical technique dealing with the optimization of multistage decision process. The word programming has been used in the mathematical sense of selecting an optimum allocation of resources and dynamic is particular useful for problems where decisions are taken at several distinct stages such as everyday or every weak. Dynamic programming is a technique for solving large complex problem (time varying variables) by splitting them into smaller problems, which are more easily solved. Applications The following are a few of the large no of fields in which dynamics programming has been successfully applied:. 1. Production 2. Inventory control 3. Allocation of resources 4. Selection of advertising media 5. Spare part level determination 6. Equipment replacement policy.

Problem

Q. 7.6. Give a mathematical formulation of dynamic programming problem. Ans.Consider a situation wherein a certain quantity R of a resource (such as men, machines, many materials etc.) is to be distributed among n number of different activities. The return p depends upon the activities and the quantities of resources alloted to them and objective is to maximize the total returns If P1 (R1) denotes the returns from the ith activity with the resources R1, then the total return may be expressed as

The quantity of resources R is limited, which gives rise to the constraint

The problem is to maximize the total return given by equation (z) subject to constraint equation (ii)

Q 7.7 A firm has divided its marketing area into three zones The amount of sales of sales depends upon the number of salesmen in each zone The firm has been collecting the data regarding sales and salesmen in each area over a number of past years The information is summarized in table. For the next year firm has only 9 salesmen and the problem is to allocate these salesmen to three different zones so that the total sales are maximum.

Solution. In this problem the Three zones represent the three stages and the number of salesman represent the state variables. Stage 1 : We start with zone 1. The amount of sales corresponding to different number of salesmen allocated to zone I are given in table I and are reproduced in table 2.

Stage 2 : Now consider the first two zones, zones 1 and 2. Nine salesmen can be divided among two zones in 10 different ways : as 9 in zone 1 and 0 in zone 2, 8 in zones and 1 in zone 2, 7 in zone 1 and 2 in zone 2, etc. Each combination will have associated with it certain retruns. The returns of all number of salesmen (total) 9, 8, 7 ..., 0 are shown in table 7.3. For a particular number of salesmen, the profits for all possible combination can be read along the diagonal. Max. profits are marked by*.

Stage 3: Now consider the distribution of 9 salesmen in three zones 1, 2 and 3. The decision at this stage will result in allocating certain number of salesmen to zone 3 and the remaining to zone 2 and 1 combined ; and then by following the backward process, they will be. distributed to zones 2 and 1.

For total of 9 salesmen to be allocated to the three zones, the returns are shown in tble 4 below.

Problem 7.8. (Capital Budgeting Problem). A manufacturing company has three sections producing automobile parts, bicycle parts and sewing machine parts respectively. The management has allocated Rs. 20,000 for expanding the production facilities. In the auto parts and bicycle parts sections, the production can be increased either by adding new machines or by replacing some old inefficient machines by automatic machines. The sewing machine parts section was started only a few years back and thus the additional amount can be invested only by adding new machines to the section. The cost of adding and replacing the machines, -along with the associated pected returns in the different sections is given in table 7.5. Select a set of expansion plans which may yield the maximum return.

Solution. Here each section of the company is a stage. At each stage there are a number of alternatives for expansion. Capital represents the state variable. Let us consider the first stage the auto parts section There are three alternatives no expansion, add new machines and replace old machines The amount that may be allocated to stage I may vary from 0 to Rs 20,000, of course, it will be overspending if it is more than Rs 6000 The return of the various alternatives is given in table

When the capital allocated is zero or Rs. 2.000 only first alternative (no expansion) is possible. Return is, of course, zero. When the amount allocated is Rs. 4,000, alternatives 1 and 2 are possible with returns of Rs. 0 and Rs. 8,000. So we select alternative 2 and when the amount allocated is Rs 6,000, all the three alternatives are possible, giving returns of zero, Rs. 8,000 and Rs. 10,000 respectively. So we select alternative 3 with return of Rs. 10,000 and so on. Stage 2 : Let us now move to stage 2. Here, again,, three alternatives are available. The computations are carried out in table 3.

Here state x2 represents the total amount allocated to the current stage (stage 2) and the preceding stage (stage 1). Similarly, the return also is the sum of the current stage and the preceding stage (Principle of optimality). Thus when x2< Rs. 8,000, only the first alternative (no expansion) is possible. But with x2 = 8,000, a return of Rs. 12,000 is possible by selecting the second alternative. (add new machines). With x2 = Rs. 12,000, three alternatives are possible with the maximum return of Rs. 20,000 from alternative 2., The optimal policy consists of a set of two decisions, namely adopt alternative 2 at second stage (table 3) and again, alternative 2 at the first stage (table 2) Stage 3: The computations for stage 3 are given in table 4. Table 4 Stage 3 : Sewing rn/c parts section (+ Bicycle parts section + Auto parts section)

Ans. Optimum return = Rs. 36000.

Differentiating w.r.t. u2 and equating the differential to zero.

Queueing Theory Q. 8.1. What is a queueing problem ? What is to be determined system?

Ans A queuemg problem is to determine the optimum level or service which minimize the total cost of providing service and waiting for the service. In a specified queuing system, the problem is to determine the following: (a) Probability distribution of queue length. (b) Probability distribution of waiting time of customer in the queueing (c) The busy, period distribution. There are two costs involved in queueing problems: 1. Waiting time cost. 2. Service cost.

Q. 8.2. Differentiate between transient and steady state.

Ans Transient state It the operating characteristics vary with time, it is said to be transient state. Usually a system is transient during the early stages of its operation. Steady State : If the operating characteristics are independent of time, it is said to be steady state.

Q. 8.3. Define Traffic intensity or utilization factor.

Ans Utilization factor/Traffic Intensity It is the proportion of time a server actually spends with the customers.

Q. .8.4. State some of the important distributions of arrival and

Ans. Important distributions of arrival and service time 1. M - Markovian arrival and departure distribution. 2. Ek Erlangian with parameter k service times. 3. CI General independent arrival distribution. 4. G - General departure distribution 5. D Deterministic interarrival and service time.

Q. 8.5. Write a note on Ken lal and Lees notation for the identification of queues.

Ans. The complete notation can be expressed as (a/b/c) : (a/ elf) a = arrival distribution b = departure distribution c = no of parallel service channel in the system d = Service discipline e = maximum number of customer allowed in the system. f = calling source or population.

Q. 8.6. Explain the notation (MIM/1) (FCFS/oc/).

Ans. Compare with standard notation M Markovian (possion) arrival distribution. M Markovian (exponential) service distribution. I = Single channel FCFS Service discipline - First come first served cc = Max. no. of customer allowed in the system (Infinite).

cc = Calling source or population (infinite)

Q. 8.7. Distinguish between Balking, Jockeying and Reneging.

Ans. If a customer decides not be enter the queue since it is too long, he is said to have balked. If the customer enter the queue, but after sometimes looses patience and leave it, he is said tohave reneged. When there are two or more parallel queue and customer moves from one queue to other is known as Jockeying.

Q.8.8. What do you mean by calling source or population.

Ans. The arrival pattern of the customer depends upon the source, which generate them is called calling source or population. A finite source exist when the arrival affects the probability of future customer.

Q. 8.9. Name the different queuing discipline.

Ans. FIFO : First In First Out FCFS : First Come,. First Served LIFO :Last In First Out SIRO : Service In Random Order.

Q. 8.10. List down the assumptions made in single channel queuing model with poission arrival and exponential service rate.

Ans. Assumption-

1. The customer arrive for service at a single facility at random according to poission distribution with mean arrival rate 2. 2. The service time has exponential distribution with mean service rate . 3. The service discipline followed is first come first served. 4. Customer behaviour is normal. 5. Service facility behaviour is normal. 6. The waiting space far queue is finite. 7. The calling source has infinite size. 8. The system is in stable state.

Q. 8.11. Give some applications of queuing theory.

Ans. Queuing theory has been applied to wide variety of business situations. All situation where customers are involved such as restaurants, cafeterias, departmental stores, cinema halls, banks, post offices, petrol pump, airline counter, patient in clinic etc. are likely to have waiting lines. The customer expects a certain level of service, whereas the firm providing service facility tries to keep the cost minimum while providing service.

Q. 8.12. How do you classify Queuing Model?

Ans. The various types of queuing models can be classified as follows: 1. Probabilistic models 2. Deterministic models 3. Mixed Queuing models.

List of Formulas

1. Expected number of umts m the system (waiting + being served) (or) Length of the system

3. Expected time per unit in the system (Expected time a unit spends in the system)

4. Expected time per unit in the queue (Expected time a unit spends in the queue)

5. Avg. length of non empty queue (length of the queue that is formed from time to time)

6. Avg. waiting time is non empty queue Avg. waitmg time of an arrival who waits

Problems

Problem 8.13. Auto vehicles arrive at a petrol pump, having one petrol unit, in poission fashion an avg. of 10 units per hour. The service is distributed exponentially with a mean of 3 minutes. Find the following: (a) Avg. number of units in the system. (b) Avg. waiting time for customer. (c) Avg. length of queue (d) Probability that a customer arriving at the pump will have to wait. (e) The utilisation factor for the pump unit. (t) Probability that the number of customers in the system is 2.

Ans.

Problem. 8.14. Arrival at a telephone booth are considered are to be poission, with an average time of 10 minutes between one arrival and next. The length of phone call assumed to be distributed exponentially with mean 3 minutes then (a) What is. the probability that a person arriving at the booth will have to wait? (b) What is the average length of the queues that form from time to time.

(b) Average queue length that is formed from time to time

Problem. 8.15. Customers arrive at one-window drive according to a poission distribution with mean of 10 mm and service time per customer is exponential with mean of 6 minutes. The space in front of the window can accommodate only three vehicles including the serviced one. Other vehicles have wait outside the space. Calculate. (a) Probability that an arriving customer can drive directly to the space in front of the window. (b) Probability that an arriving customer will have to wait outside the directed space. (c) How long is an arriving customer expected to wait before starting service?

(a) The probability that an arriving customer can drive to the space in front of the window can be obtained by summing up the probabilities of the events in which this can happen. A customer can drive directly to the space if (1) three is no. customer car already. (2) there is already 1 customer car. (3) there are 2 cars in the space.

Problem 8.16. Arrival of machinists at a tool crib are considered to be poission distribution at an avg. rate of 6 per hour. The length of time the machinists must remain at the tool crib is exponentially distributed with an average time being 0.05 hours. (a) What is the probability that the machinists arriving at tool crib will have to wait. (b) What is the average number of machinists at the tool crib.

(c) The company will install a second tool crib when convinced that a machinist would expect to have spent at least 6 mins waiting and being serviced at the tool crib. By how much must the flow of machinists to toolcrib increase to justify the addition of second tool crib?

Ans. Arrival rate of machinist 2 = 6 per hour time spent by machinist at the tool crib = 0.05 hours.

1. Probability that the machinists arriving at tool crib will have to wait

1. Avg. no. of machinists at the tool crib

Increase in the flow of machinists to toolcrib increase to justify the addition of a

second tool crib =10 6 = 4/hour.

Problem 8.17 On an average 96 patients per 24 hours day require the service of an emergency clinic. Also an average a patient requires 10 miii. of active attention. Assume that the facility can handle one emergency at a time. Suppose that it cost the clinic Rs. 100 per patient treated to obtain an average servicing time of 10 minutes, and that each minute of decrease in his average time would cost Rs. 10/-per patient treated. How much would have to be budgeted by the clinic to decrease the average size of

Thus to decrease the size of the queue, the budget per patient should be increased from Rs. 100 to Rs. 125/

Problem 8.18. In a large maintenance department, fitters draw parts from the parts stores which is at present staffed by one storeman. The maintenance foreman is concerned about the time spent by fitters getting parts and wants to know if the employment of a stores labourer to assist the storeman would be worth while. On investigation it is found that

(a) a simple queue situation exists. (b) fitters cost Rs. 2.50 per hour. (c) the storeman costs Rs. 2 per hour and can deal, on the avg. with 10 fitters per hour. (d) a labourer could be employed at Rs. 1.75 per hour and would, increase the service capacity of the stores to 12 per hour. (e) on the average 8 fitters visit the stores each hour.

Ans. We calculate the avg. number of customers in the system before and after the labouer is employed and compare the reduction in the resulting queuing cost with the increase in service cost. Without labourer: Number of customers in the system

Since there is net saving of Rs. 3.25/- It is recommended to employs the labourer.

Problem 8.19. Customers arrive at the first class ticket counter of a theatre at the rate of 12 per hour. There is one clerk serving the customers at the rate of 30 per hour. (a) What is the probability that there is no customer in the counter (i.e. that the system is idle) ? (b) What is the probability that there are more than 2 customers in the counter? (c) What is the probability that there is no customer waiting to be served? (d) What is the probability that a customer is being served and no body is waiting.

1. Probability that there are more than two customers in the counter

Probability that there is no customer waiting to be served = Probability that there is at most one customer in the counter.

Probability that a customer is being served and no body is waiting.

Problem 8.20. In a bank there,is only one window, a solitary employee performs all the service required and the window remains continuously open from 7 am to 1 pm. It has been discovered that average number of clients is 54 during the day and the average servicetime is of 5 mins per person. Calculate (a)Average number of clients in the system (including the one bring served) (b)The average number of clients in the waiting line. (including the one being served) (c) Average waiting time.

(d) Average time spends in the system. Ans. Working hours per day = 6 hrs.

Ans.

Replacement Models Q. 9.1. What is replacement problem? Ans The replacement problems are concerned with the situations that arise when some time such as machmes, equipments and electric bulbs etc need replacement due to decreased efficiency, failure or breakdown.

The problem of replacement is to decide best policy to determine an age at which the replacement is more economical instead of continuing at increased cost.

Q. 9.2. What are the situations, which makes the replacement of items necessary? Ans. 1. The old item has become in worse condition and work badly. 2. The old item has failed due to accident. 3. A better or efficient design of machine has come in market.

Q. 9.3. Explain money value, present value and discount rate. Ans. Money Value : Money has a value over time. We often speak; Money is worth 10% per year spending Rs. 100 today would be equivalent to spending Rs. 110 at the end of one year. In, other words if we spend Rs. 110 after a year from now, we could equivalently spend Rs. 100 today which would be of worth Rs. 110 next year. Present Worth FactorIf i is the interest rate then (1 +i) is called the present worth factor. In other wards Present value of one rupee spends in n years time ftom now onwards. Discount rate The present worth factor of unit amount to be spent after one year is given by V = (1 + r) where i is interest rate and V is called discount rate or depreciation value.

Q. 9.4. Discuss the brief replacement procedure for the items that deteriorate with time. Ans. When ignoring the changes in the value of money-The item should be replaced when the average annual cost to date becomes equal to the current maintenance cost. When considering the changes in the value of money(a) The machine should be replaced if the next periods cost is greater than the weighted average of previous cost. (b) The machine should not be replaced if the next periods cost is less than the weighted average of previous costs.

Q. 9.5. Briefly explain Individual and Group replacement. Ans. Group replacement is concerned with those items that either work or fail completely. It often happens that a system contains a large no. of identical low cost items that are increasingly liable to failure with age When the value of individual items is so small that cost of keeping records of individual ages cannot be justified. It may be advantageous to replace all items at fixed intervals. Such a policy is called Group replacement. Individual replacement: Under this policy an item is replaced immediately after its failure Group replacement: Under this policy, decision is taken as to when all the items must be replaced irrespective of the fact that the item has failed or have not failed, with the provision of that an item fails before optimal time, it may be replaced individually

Q. 9.6. What is the advantages of preventive replacement over routine replacement? Ans. Advantages of Preventive Replacement Over Routine Replacement: Routine replacement means carrying out minor replacement jobs at regular intervals. It involves minor jobs such as lubrication, minor adjustment of pressure and tightening of loose parts etc. Preventive maintenance is the planned maintenance of plants and equipments in order to prevent or minimize breakdowns and depreciation rates. PM incudes all types of jobs like (a) Major jobs like overhauling and reconditioning etc. (b) Replacement of consumables like gaskets, belts, seal, bearings etc. .. . . (c) Internal cleaning of equipments, lubrication and oil changing.

Q. 9.7. What is the difference between age maintenance and preventive maintenance? Ans. Age replacement is a subset of preventive maintenance.

Age Replacement: It is the replacement of item at fixed interval (as per its technical characteristics) irrespective to its condition at that time. Condition basedMaintenance : It is based on the fact that whenever any failure is to occur it gives some types of waining. CBM is the use of advanced technology to sense machinery operating characteristics such as vibration, temp., pressure etc. and to compare the measured values of these characteristics with historical data as per established criteria to assess machinery condition. CBM permit conditiOn based rather than age based initiation of maintenance efforts to correct the any problem identified

Problems

Type A Replacement of items whose Maintenance and repair cost increase with time, ignoring changes in the value of money during the period Problem 9.8. The cost of a machine is Rs. 6100/- and its scrap The maintenance costs found from experience are as follows: value is Rs. 100/-.

The avg. annual cost is minimum Rs. should be replaced after 6 years of use. (1575/-) during the sixth year. Hence the m/c

Problem. 9.9. A machine owner finds from his past records that the costs per year of maintaining a machine whose purchase price is Ks. 6000 are as given below

Determine at what age is a replacement due? Ans. Capital cost C = 6000/-. Let it be profitable to replace the. machine after n years. Then n should be determined by the minimum value of Tav

We observe from the table that avg. annual cost is minimum (Rs. 2700/-). Hence the m/c should replace at the end of 5th year. Type B. Replacement of items whose maintenance costs increase with time and value of money also changes with time. The machine should be replaced if the next periods cost is greater than weighted average of previous cost. Discount rate [Present worth factor (PWF)

Problem. 9.10. A machine costs Rs. 500/ Operation and Maintenance cost are zero for the first year and increase by Rs. 100/ every year. If money. is worth 5% every year, determine the best age at which the machine should be replaced. The resale value of the machine is negligible small. What is the weighted average cost of owning and operating the machine?

M/c su1d be replaced at the end of 3C1 year.

Problem 9.11. Purchase price of a machine is Rs. 3000/ and its running cost is given in the table below. If should be replaced. the discount rate is 0.90. Find at what age the machine

Ans. V (Discount rate) = 0.90

M/c should be replaced at the end of 5th year. Type C. Replacement of items that fail suddenly.

Problem 9.12. The following mortality ratio have been observed for a certain type of light bulbs in an installation with 1000 bulbs

There are a large no. of such bulbs which are to be kept in working order. If a bulb fails in service, it cost Rs. 3 to replace but if all the bulbs all replaced in the same operation it can be done for only Rs. 0.70/ a bulb. It is proposed to replace all bulbs at fixed intervals, whether or not they have burnt out and continue replacing burnt out bulb as they fail. (a) What is the best interval between group replacement? (b) Also establish if the policy, as determined by you is superior to the policy of replacing bulbs as and when they, fail, there being nothing like group replacement.

(c) At what group replacement price per bulb, would a policy of strictly individual replacement become preferable to the adopted policy? Solution : Let p. be the probability that a new light bulbs fail during the 1th wek of the life.

Inventory Models

. 10.1 What is inventory? Ans. An inventory consists of usable but idle resources such as men, machines material or money When resources involved are a material, the inventory is called stock.

Q. 10.2. Define lead time and reader point in inventory problems. Ans. Lead time : It is the time period between the placement of order and receipt of goods. / 2. Recorder level It is the level of stock at which replenishment order is placed and is equal to the lead time multiplied with the demand during lead time.

Q. 10.3. What are the uses of maintaining inventories?

Ans. 1. It helps in smooth and efficienf running of an enterprise. 2. It provides service to the customer at a short notice. 3. It reduce product costs since there is an added advantage of batching and long uninterrupted producion run. Due to absence of stock, the company may have to pay high prices because of piece wise purchasing. Inventory helps in maintaining the economy by absorbing some of the fluctuations when the demand for an item fluctuates.

Q. 10.4. What are the disadvantages of maintaining inventories Ans. 1. A production foreman who has large in process inventory may be able to hide poor planning sinc there is always something to manufacture. Inventory does not add any value to the product. Inventory means unproductive tied up capital of the enterprise. With large inventory there is always likelihood of absolescence etc. For maintaining inventory additional money to be spent on personnel, equipment, insurance etc.

Q. 10.5. What are the different costs that are involved in inventory model? Ans. 1. Inventory carrying or stock holding costs. (a) Capital tied up in inventories. (b) Cost of storage space. (c) Depreciation and deterioration cost. (d) Pilferage cost. (e) Obsolescence cost. (I) Handling cost. (g) Record keeping cost. (h) Taxes and Insurance. 2. Procurement costs or set up costs. 3. Shortage cost or stock out costs.

Q. 10.6. What is the advantages (need) of inventory control in organization? Ans. 1. Inventory, control ensures an adequate supply of items to customers and avoids the shortage as for as possible at the minimum cost. 2. It makes use of available capital in a most effective way and avoids an unnecessary expenditure on high inventory etc. 3. The risk of loss due to change in prices of items is reduced. 4. It ensures smooth and efficient running of organization. 5. It provides advantages of quality discounts on bulk purchases. 6. It eliminates the possibility of duplicate ordering. 7. It helps to minimize the loss due to deterioration obsolescence, damage or pilferage etc. 8. It helps in maintaining the economy by absorbing some of the fluctuations when the demand for an item fluctuates.

Q. 10.7. How the term inventory may be classified? Or Distinguish between direct and indirect inventories. Ans. Direct inventories : The items, which play a direct role in the manufacture and become an integral part of finished goods, are known as direct inventories. They are further divided into four types (a) Raw material inventories. (b) Walk in process inventories. (c) Finished good inventories. (d) Spare parts inventories. Indirect inventories : Those items which are necessarily required for manufacturing but do not become the component of finished production, like oil, grease, lubricants, petrol etc.

Q 10.8. What is inventory problem? Ans Inventory problem is to decide when to order and how much to order so that total cost of the system should be mimmum

Q 10.9 Define EOQ Write the formula for finding EOQ Ans EOQ is the size of the order which mmimizes total annual cost of carrying

Q. 10.10. What are price breaks in inventory model? Ans. Inventory problems in which the item cost is variable and depends upon the quantity manufactured or purchased, This usually happens when discounts are offered for the purchase of large quantities. These discounts are known as price break in inventory model.

Problems

Problem. 10.11. Derive an expression for EOQ and state the assumption made by you. Solution. Assumption: 1. Demand is uniform at a rate of R quantity units per unit time. 2. Lead time is zero. 3 Production rate is mfmite z e, production is instantaneous 4. Shortage are not allowed. 5. Holding cost is rupees C1 per quantity unit per unit time. 6. Set up cost in rupees C3 per set up. Derivation : The most economic point in terms of total inventory cost exists where Inventory carrying costs = Annual ordering cost. Inventory Level

Problem 10.12. A particular item has a demand of 9000 units/year. The cost of one procurement is Rs. 100 and the holding cost per unit is Rs. 2.40 per year. The replacement is instantaneous and no shortance are allowed. Determine 1. Economic lot size. 2. The no. of order per year. 3. The time between orders. 4. Total cost per year if the cost of one unit is Rs. 1.

Problem 10.13. A manufacturing company purchases 9000 parts of a machine for its annual requirements, ordering one month usuage at a time. Each part cost Rs. 20. The order cost per ordering is Rs. 15 and the carrying charges are 15% of the average inventory per year. You have been asked to suggest a more economical purchasing policy for the company. What advice would you offer and how much would it same the company per year.

Hence if the company purchases 300 units each time and places 30 orders in the year, the net saving to the company will be Rs. (1305 900) = Rs. 405 a year.

Problem 10.14. You have to supply your customers 100 units of a certain product every monday- You obtain the product from a local supplier at Rs. 60 per unit. The cost of ordering and transportation from the supplier are Rs. 150 per order. The cost of carrying inventory is estimated at 15% per year of the cost of the product carried. 1. Find the lot size which will minimize the cost of the system. 2. Determine the optimal cost.

Problem 10.15. Daily demand for a product is normally distributed with mean, 60 units and a standard deviation of 6 units. The lead time is constant at 9 days. The cost of placing an order is Rs. 200, and the annual holding costs are 20% of the unit price of Rs. 50. A 95% service level is desired for the customers, who place orders during the reorder period. Determine the order quantity and the reorder level for the item in question, assuming that there are 300 working days during a year.

Problem 10.16. The demand per month for a product is distributed normally with a mean of 100 and standard deviation 25. The lead time distribution is given below. What service level will be offorded by a reorder level of 500 units?

Total conditional probability of not running out of stock =10 + 20+ 40+ 19.5 + 5= 94.5. Hence a reorder level of 500 units will give 94.5% service level.

Problem. 10.17. The annual demand for a product is 500 units. The cost of storage per unit per year is 10% of the unit cost, The ordering cost is Rs. 180 for each order. The unit cost depends upon the amount ordered. The range of amount ordered and the unit cost price are as follows

Network Models Q 11.1 Define critical path and critical activities Ans Critical path the path containing critical activities (with zero float) is known as critical path. Critical activity the activity, which can not be delayed without delaying the

project duration, is known as critical activity

Q 11.2 Differentiate between supercritical and subcritical activities Ans Supercritical an activity having negative float is known as supercritical activity. Subcritical An activity having positive float is known as subcritical activity This activity may be delayed without any delay m the project

Q 11.3 Differentiate between slack and float Ans Slack It is the time by which occurrence of an event can be delayed

Q. 11.4. Enlist four types of floats used in network analysis. Ans. (a) Total float. (b) Free float (c) Independent float (d) Interfering float

Q 11.5 Define Free Float, Independent float, Interfering float as used in PERT chart. Ans. Freefloat : Portion of the total float within which an activity can be manipulated without affecting the floats of subsequent activities. Independent float: Portion of the total float within which an activity can be delayed without affecting the floats of proceeding activities. Interfering float : It is equal to the difference between the total float and the free float of the activity.

Q. 11.6. What do you mean by dummy activity? Ans. Dummy activity : An activity, which only determines the dependency of one activity on the other, but does not consume any time, is called a dummy activity.

Q. 11.7. Define dummy arrow used in network. Ans. Dummy arrow: It represent the dummy activity in the network. It only represents the dependency of one activity on the other. It is denoted by dash/dotted line.

Q 11.8. Define dangling and looping in net-work models. Ans. Dangling : The disconnection of an activity before the completion of all the activities in a network diagram is known as dangling. Looping (cycling) : Looping error is also known as cycling error in a network diagram. Drawing an endless loop in a network is known as error of looping.

Q. 11.9. Differentiate between event and activity. Ans. Event: The beginning and end points of an activity are called events or nodes. Event is a point in time and does not consume any resources. Activity : It is physically identifiable part of a project which require time and resources for its execution. An activity is represented by an arrow, the tail of which represents the start and the head, finish of the activity.

Q. 11.10. Define (i) Network (ii) Path terms used in network. Ans. (i) Network: It is the graphical representation of logically and sequentially connected arrows and nodes representing activities and events of a project. (ii) Path : An unbroken chain of activity ,arrows connecting the initial event to some other event is called path.

Q. 11.11. Differentiate between CPM and PERT. Ans. CPM.: 1. CPM is activity oriented i.e., CPM network is built on the basis of activities. 2. CPM is a deterministic model. It does not take into account in uncertainties involved in the estimation of time. 3. CPM places dual emphasis on project time as well as cost and finds the trade off. between project time and project cost. 4. CPM is primarily used for projects which are repetitive in nature and comparatively small in size. PERT 1.PERT is event oriented. 2.PERT is a probabilitic model. 3.PERT is primarily concerned with time only. 4. PERT is used for large one time reserach and development type of projects.

Q 11.12. Define crashing in network mode1s. Ans. Crashing: The deliberatic reduction of activity normal time by puffing an extra effort is called crashing. The crashing is being done by allocating more manpower or by subcontracts.

Q. 11.13. Differentiate between: (i) Crash project time and optimum project time (ii) Normal cost and crash cost. Ans. (i) Crash project time: It is the minimum time by which the prOject may be completed. Optimum project time: The time corresponding to minimum project cost for completion of the project is known as optimum project time.

(ii) Normal cost : The cost associated when the project completed with normal time Crash cost: The cost associated when the project completed with crash time is known as crash cost.

Q.11.14. Briefly explain resource allocations. Distinguish between Resource smoothing and Resource levelling. Ans. The resource allocation procedure mainly consists of two activities: (z) Resource smoothing (ii) Resource levelling. Resource smoothing If the project duration could not be changed then the resource allocation only smoothen the demand on resources in order that the demand for any resource is uniform as possible The periods of maximum demand for resource are located and the activities are accordmg to their float values are shifted for balancing the availability and requirement of resources. The intelligent utilization of floats can smoothen the demand of resources to the maximum possible extent is called resource smoothing. Resource Levelling : There are various activities in a project demanding varying levels of resources. The demand on certain specified resources should not go beyond the prescribed level is know as resource levelling.

Problems

Problem 11.15. Construct the network for the following activity data:

Solution. Network:

Critical path 1357810 with project duration of 22 weeks.

Problem. 11.17. The time estimate for the activities of a PERT network are given below :

(a) Draw the project network and identify all the path through it. (b) Determine the expected project length.

(c) Calculate the standard deviation and variance of the project length. (d) What is the probability that the project will be completed 1. At least 4 weeks earlier than expected time. 2. No more than 4 weeks later than expected time. (e) The probability that the project will be completed on schedule if the schedule completion time is 20 weeks. (f) What should be the scheduled completion time for the probability of completion to be 90%. Solution. (a) Network

Critical path1 356

Project duration = 17 weeks. (c) Variance of the project length is the sum of the variance of the activities on the critical.

(d) (i) Probability that the project will be completed at least 4 week earlier than expected time

2. Probability that the project will be completed at least 4 weeks later than expected Time Expected time = 17 weeks Scheduled time =17+ 4 =21 weeks

(e) Scheduled time = 20 weeks

(f) Value of Z for P = 0.9 is 1.28 (from probability table)

Problem 11.18. Consider the PERT network given in fig. Determine the float of each activity and identify the critical path if the scheduled completion time for the project is 20 weeks.

Solution.

Critical path 10 - 20- 30 - 60 70.

Problem. 11.19. Table below show jobs, their normal thne and and cost estimates for cost and crash time the project

Indirect cost for the project is Rs. 300 per day. 1. Draw the network of the project. 2 What is normal duration and cost of the project 3 If all activities are crashed, what will be the minimum project duration and corresponding cost. 4 Find the optimum duration and minimum project cost Solution.

2. Critical path I 2 3 4 6 Normal duration of project = 20 days Normal cost of project = Rs 9200. 3. Crashing

Crash following activities one day

Minimum project duration 12 days

Cost corresponding to mm. project duration 16533.1 Minimum cost of project 15000 Optimum duration = 17 days.

Problem 11.20. The following table gives the activities in a construction project and other relevant information.

Draw activity network of the project. (b)Find total float and free float of each activity. (c) Using the above information Crash or shorten the activity step by step untill the shortest duration is reached.

Solution.

1. Activity Network.

(b)

Free float = Total float - Head event slack. Critical path 1-2-34-5.

(c) Crashing

Problem 11.21. The activities, of a project are tabulated below with immediate predecessors and normal and crash time cost.

1 Draw the network corresponding to normal time 2 Determine the critical path and normal duration and cost of project, if the indirect cost per day is Rs. 8. 3. Suitably reduce the activities so that the normal duration may be reduced by 2 days at minimum cost. Also find the. project cost for this shortened duration.

Solution.

Total project cost for reducing 3 days duration. = Direct cost + Indirect cost + crash cost = 3030 + 160 + 178 = Rs. 3368.