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MB0048 –Operation Research

Q1. a. Explain how and why Operation Research methods have been valuable in aiding
executive decisions.

b. Discuss the usefulness of Operation Research in decision making process and the role of
computers in this field.

Ans.

Churchman, Aackoff and Aruoff defined Operations Research as: “the application of scientific
methods, techniques and tools to operation of a system with optimum solutions to the problems”,
where ‘optimum’ refers to the best possible alternative.

The objective of Operations Research is to provide a scientific basis to the decision-makers for
solving problems involving interaction of various components of the organisation. You can
achieve this by employing a team of scientists from different disciplines, to work together for
finding the best possible solution in the interest of the organisation as a whole. The solution thus
obtained is known as an optimal decision.

You can also define Operations Research as “The use of scientific methods to provide criteria for
decisions regarding man, machine, and systems involving repetitive operations”.OR “Operation
Techniques is a bunch of mathematical techniques.”

b. “Operation Research is an aid for the executive in making his decisions based on
scientific methods analysis”. Discuss the above statement in brief.

Ans.

“Operation Research is an aid for the executive in making his decisions based on scientific
methods analysis”.

Discussion:-

Any problem, simple or complicated, can use OR techniques to find the best possible solution.
This section will explain the scope of OR by seeing its application in various fields of everyday
life.

i) In Defense Operations: In modern warfare, the defense operations are carried out by three
major independent components namely Air Force, Army and Navy. The activities in each of
these components can be further divided in four sub-components namely: administration,
intelligence, operations and training and supply. The applications of modern warfare techniques
in each of the components of military organisations require expertise knowledge in respective
fields. Furthermore, each component works to drive maximum gains from its operations and
there is always a possibility that the strategy beneficial to one component may be unfeasible for
another component. Thus in
defense operations, there is a requirement to co-ordinate the activities of various components,
which gives maximum benefit to the organisation as a whole, having maximum use of the
individual components. A team of scientists from various disciplines come together to study the
strategies of different components. After appropriate analysis of the various courses of actions,
the team selects the best course of action, known as the ‘optimum strategy’.

ii) In Industry: The system of modern industries is so complex that the optimum point of
operation in its various components cannot be intuitively judged by an individual. The business
environment is always changing and any decision useful at one time may not be so good some
time later. There is always a need to check the validity of decisions continuously against the
situations. The industrial revolution with increased division of labour and introduction of
management responsibilities has made each component an independent unit having their own
goals. For example: production department minimises the cost of production but maximise
output. Marketing department maximises the output, but minimises cost of unit sales. Finance
department tries to optimise the capital investment and personnel department appoints good
people at minimum cost. Thus each department plans its own objectives and all these objectives
of various department or components come to conflict with one another and may not agree to the
overall objectives of the organisation. The application of OR techniques helps in overcoming this
difficulty by integrating the diversified activities of various components to serve the interest of
the organisation as a whole efficiently. OR methods in industry can be applied in the fields of
production, inventory controls and marketing, purchasing, transportation and competitive
strategies.

iii) Planning: In modern times, it has become necessary for every government to have careful
planning, for economic development of the country. OR techniques can be fruitfully applied to
maximise the per capita income, with minimum sacrifice and time. A government can thus use
OR for framing future economic and social policies.

iv) Agriculture: With increase in population, there is a need to increase agriculture output. But
this cannot be done arbitrarily. There are several restrictions. Hence the need to determine a
course of action serving the best under the given restrictions. You can solve this problem by
applying OR techniques.

v) In Hospitals: OR methods can solve waiting problems in out-patient department of big
hospitals and administrative problems of the hospital organisations.

vi) In Transport: You can apply different OR methods to regulate the arrival of trains and
processing times minimise the passengers waiting time and reduce congestion, formulate suitable
transportation policy, thereby reducing the costs and time of trans-shipment.

vii) Research and Development: You can apply OR methodologies in the field of R&D for
several purposes, such as to control and plan product introductions.

Q2. Explain how the linear programming technique can be helpful in decision-making in
the areas of Marketing and Finance.
Ans.

Linear programming problems are a special class of mathematical programming problems for
which the objective function and all constraints are linear. A classic example of the application
of linear programming is the maximization of profits given various production or cost
constraints.

Linear programming can be applied to a variety of business problems, such as marketing mix
determination, financial decision making, production scheduling, workforce assignment, and
resource blending. Such problems are generally solved using the “simplex method.”

MEDIA SELECTION PROBLEM.

The local Chamber of Commerce periodically sponsors public service seminars and programs.
Promotional plans are under way for this year’s program. Advertising alternatives include
television, radio, and newspaper. Audience estimates, costs, and maximum media usage
limitations are shown in Exhibit 1.

If the promotional budget is limited to $18,200, how many commercial messages should be run
on each medium to maximize total audience contact? Linear programming can find the answer.

Q3. a. How do you recognise optimality in the simplex method?

b. Write the role of pivot element in simplex table?

Ans. Simplex method is used for solving Linear programming problem especially when more
than two variables are involved
SIMPLEX METHOD

1. Set up the problem.

That is, write the objective function and the constraints.

2. Convert the inequalities into equations.

This is done by adding one slack variable for each inequality.

3. Construct the initial simplex tableau.

Write the objective function as the bottom row.

4. The most negative entry in the bottom row identifies a column.

5. Calculate the quotients. The smallest quotient identifies a row. The element in the
intersection of the column identified in step 4 and the row identified in this step is identified
as the pivot element.
The quotients are computed by dividing the far right column by the identified column in step 4.
A quotient that is a zero, or a negative number, or that has a zero in the denominator, is ignored.

6. Perform pivoting to make all other entries in this column zero.

This is done the same way as we did with the Gauss-Jordan method.

7. When there are no more negative entries in the bottom row, we are finished;
otherwise, we start again from step 4.

8. Read off your answers.

Get the variables using the columns with 1 and 0s. All other variables are zero. The maximum
value you are looking for appears in the bottom right hand corner.

Example

Niki holds two part-time jobs, Job I and Job II. She never wants to work more than a total of 12
hours a week. She

has determined that for every hour she works at Job I, she needs 2 hours of preparation time, and
for every hour

she works at Job II, she needs one hour of preparation time, and she cannot spend more than 16
hours for

preparation. If she makes $40 an hour at Job I, and $30 an hour at Job II, how many hours
should she work per

week at each job to maximize her income?

Solution: In solving this problem, we will follow the algorithm listed above.

1.Set up the problem. That is, write the objective function and the constraints.

Since the simplex method is used for problems that consist of many variables, it is not practical
to use the variables x, y, z etc. We use the symbols x1, x2, x3, and so on.

Let x1 = The number of hours per week Niki will work at Job I.

and x2 = The number of hours per week Niki will work at Job II.

It is customary to choose the variable that is to be maximized as Z.

The problem is formulated the same way as we did in the last chapter.
Maximize Z = 40×1 + 30×2

Subject to: x1 + x2 ≤ 12

2×1 + x2 ≤ 16

x1 ≥ 0; x2 ≥ 0

2. Convert the inequalities into equations. This is done by adding one slack variable for each
inequality.

For example to convert the inequality x1 + x2 ≤ 12 into an equation, we add a non-negative
variable y1, and we get

x1 + x2 + y1 = 12

Here the variable y1 picks up the slack, and it represents the amount by which x1 + x2 falls
short of 12. In this problem, if Niki works fewer that 12 hours, say 10, then y1 is 2. Later when
we read off the final solution from the simplex table, the values of the slack variables will
identify the unused amounts.

We can even rewrite the objective function Z = 40×1 + 30×2 as – 40×1 – 30×2 + Z = 0.

After adding the slack variables, our problem reads

Objective function: – 40×1 – 30×2 + Z = 0

Subject to constraints: x1 + x2 + y1 = 12

2×1 + x2 + y2 = 16

x1 ≥ 0; x2 ≥ 0

3. Construct the initial simplex tableau. Write the objective function as the bottom row.

Now that the inequalities are converted into equations, we can represent the problem into an
augmented matrix called the initial simplex tableau as follows.

x1 x2 y1 y2 Z C
1 1 1 0 0 12
2 1 0 1 0 16
–40 –30 0 0 1 0

Here the vertical line separates the left hand side of the equations from the right side. The
horizontal line separates the constraints from the objective function. The right side of the
equation is represented by the column C.
The reader needs to observe that the last four columns of this matrix look like the final matrix for
the solution of a system of equations. If we arbitrarily choose x1 = 0 and x2 = 0, we get

Which reads

y1 = 12

y2 = 16

Z =0

The solution obtained by arbitrarily assigning values to some variables and then solving for the
remaining variables is called the basic solution associated with the tableau. So the above
solution is the basic solution associated with the initial simplex tableau. We can label the basic
solution variable in the right of the last column as shown in the table below.

x1 x2 y1 y2 Z
1 1 1 0 0 12 y1
2 1 0 1 0 16 y2
–40 –30 0 0 1 0 Z

4. The most negative entry in the bottom row identifies a column.

The most negative entry in the bottom row is –40, therefore the column 1 is

identified.

x1 x2 y1 y2 Z
1 1 1 0 0 12 y1
2 1 0 1 0 16 y2
–40 –30 0 0 1 0 Z

Q4. What is the significance of duality theory of linear programming? Describe the general
rules for writing the dual of a linear programming problem.

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 model for some
list of requirements represented as linear relationships. Linear programming is a specific case of
mathematical programming.

More formally, linear programming is a technique for the optimization of a linear objective
function, subject to linear equality and linear inequality constraints. Given a polytope and a real-
valued affine function defined on this polytope, a linear programming method will find a point
on the polytope where this function has the smallest (or largest) value if such point exists, by
searching through the polytope vertices.
Linear programs are problems that can be expressed in canonical form:

where x represents the vector of variables (to be determined), c and b are vectors of (known)
coefficients and A is a (known) matrix of coefficients. The expression to be maximized or
minimized is called the objective function (cTx in this case). The equations Ax ≤ b are the
constraints which specify a convex polytope over which the objective function is to be
optimized. (In this context, two vectors are comparable when every entry in one is less-than or
equal-to the corresponding entry in the other. Otherwise, they are incomparable.)

Linear programming can be applied to various fields of study. It is used most extensively in
business and economics, but can also be utilized for some engineering problems. Industries that
use linear programming models include transportation, energy, telecommunications, and
manufacturing. It has proved useful in modeling diverse types of problems in planning, routing,
scheduling, assignment, and design.

Duality: Every linear programming problem, referred to as a primal problem, can be converted
into a dual problem, which provides an upper bound to the optimal value of the primal problem.
In matrix form, we can express the primal problem as:

Maximize cTx subject to Ax ≤ b, x ≥ 0;

with the corresponding symmetric dual problem,

Minimize bTy subject to ATy ≥ c, y ≥ 0.

An alternative primal formulation is:

Maximize cTx subject to Ax ≤ b;

with the corresponding asymmetric dual problem,

Minimize bTy subject to ATy = c, y ≥ 0.

There are two ideas fundamental to duality theory. One is the fact that (for the symmetric dual)
the dual of a dual linear program is the original primal linear program. Additionally, every
feasible solution for a linear program gives a bound on the optimal value of the objective
function of its dual. The weak duality theorem states that the objective function value of the dual
at any feasible solution is always greater than or equal to the objective function value of the
primal at any feasible solution. The strong duality theorem states that if the primal has an optimal
solution, x*, then the dual also has an optimal solution, y*, such that cTx*=bTy*.

A linear program can also be unbounded or infeasible. Duality theory tells us that if the primal is
unbounded then the dual is infeasible by the weak duality theorem. Likewise, if the dual is
unbounded, then the primal must be infeasible. However, it is possible for both the dual and the
primal to be infeasible