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**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

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