Role Of Operations Research/Management Science

In
Managerial Decision Making

Management Science Operations Research Operational Research Operations Analysis It is sometimes believed that operations research refers to constant monitoring of an organization's ongoing activities such as production scheduling and inventory control, facility maintenance and repair, staffing of service facilities etc. Whereas many management science studies treat other kind of decisions that bear on daily operations only indirectly. These studies usually have planning orientation. For example determining the breadth of a firm’s product line, developing a long term plan for plant expansion, designing a network of warehouses for a wholesale distribution system, entering a new business by merger or acquisition.

Some Definitions Of Operations Research
1. O.R.Deals with systematic and scientific research on the operations of a system .(Mccloskey andTrefethen) O.R. Is the application of scientific methods, techniques, and tools to problems involving the operations of a system so as to provide those in control of the system with optimum solution to the problem. (Churchmann,Ackoff and Arnoff). O.R. Is a scientific approach to problem solving for executive management. (H.M.Wagner). O.R. Is the art of giving bad answers to problems to which ‘worst’ answer are sought otherwise. (T.L.Saaty).

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Major O.R.Techniques
1. 2. 3. 4. 5. Linear Programming Transportation Models Assignment Models Other Mathematical Programming Techniques Like Goal, Integer, Dynamic Etc Network Techniques Like PERT/CPM Etc. Queuing Theory Inventory Management Simulation Markov Chains Game Theory

6. 7. 8. 9. 10.

1.Characteristics Of O.R. Holistic Approach To The System 3. Inter-disciplinary Team Approach 2. Focus On Decision Making .

Testing The Model And The Solution 5. Building A Model 3. Study 1. Identifying The Problem 2. Implementation .Phases Of An O. Establishing Control Limits 6. Finding The Solution 4.R.

Areas Of Applications Of Operations Research (Schumacher-Smith Survey) Percent Of Companies Area Of Application Reporting Activities Forecasting Production Scheduling Inventory Control Quality Control Transportation Advertising And Sales Research Maintenance And Repairs Accounting Procedures Plant Location Equipment Replacement Packaging Capital Budgeting 73 90 90 51 54 27 32 17 32 27 7 39 .

An Unpublished MBA (Part Time )Project. . 1999.Usage Of OR Techniques Among 125 Companies Frequency Of Use Tool/Tech Statistical Analysis Computer Simulation PERT/CPM Inventory Mgt. Techniques Linear Programming Never 20 16 22 22 30 Moderate Frequent 30 57 45 39 47 75 52 58 64 48 Queuing Theory Non-linear Programming Dynamic Programming Game Theory 46 68 62 64 46 39 37 37 (No. Of Companies) 33 18 26 24 Source:.

. New Jersey (Contains AB: QM 4.1990.0.0). Englewood Cliffs.Taylor. Management Science... New Jersey. Quantitative Systems For Business Plus (QSB+) Version 3. (Contains Tora And SimmnetI1). Englewood Cliffs.Inc. Allyn and Bacon.0. New Delhi.Lee and Jung P.Taha. 1995.Shim. Hamdy A.1995. (Contains Micro Manager Version2.1994. . Prentice-Hall. Yih-long Chang. Englewood Cliffs. Prentice-Hall. Quantitative Systems (QS) Version 3. Micro Management Science. 1996.NewJersey. Inc. Yih-long Chang. Inc. PrenticeHall. Sang M. Operations Research : An Introduction.0 By Sang Lee). Prentice-Hall Of India.Operations Research Software Available Bernard W.

Should Not Be Inhibiting. Scientific Methods Still Employed And Computers Began To Be Integrated Into Tool Box. Second / 1950s Third/ 1960s Fourth/ 1970sPresent Fifth/? The Five Generations Of OR . Dependent Upon The Situation. Emphasized Mathematical/Optimization Techniques. Decision Maker In Both Cases Becoming More Involved. One Needs To Employ A Much Larger Combination Of Techniques And Tools.Generation / Time Frame First/ 1930s1940s Description Emphasized The Applications Of The Scientific Methods To Problems Involving Operations Of Systems. OR Associated With Quantitative. There Is Now A Realization That To Solve A Larger Set Of “Real-World "problems. Thus Creating Two Approaches To “Satisficing. AI With Qualitative. DSS And ES Methodologies Symbolize This Generation. Artificial Barriers And Constraints Of The Discipline. DSS By MS/OR. ES Were Developed By AI In Response To Difficulties It Had Encountered.” Multiple Objective Optimization And Goal Programming Reflected The Change In OR. OR Teams Were Interdisciplinary And Addressed Complex Problems. Those Who Emphasized Heuristics Programming And Aibased Methodology Separated From OR. And So Make A Significant Impact On Decision Making Technology.

OR’S FORMULATION APPLIED SCIENTIFIC METHOD TO PROBLEMS INVOLVING OPERATIONS OF COMPLEX SYESTEMS(CS) FIRST GENERATION EARLY OR ( 1930s-1940s) ATTEMPTED TO USE MATHEMATICAL/ OPTIMIZATION TECHNIQUES TO SOLVE PROBLEMS INVOLVING OPERATIONS OF CS ( 1950s) AI SECOND GENERATION CLASSICAL OR QUANTITATIVE METHODOLOGY APPLIED TO SOME SUBSET OF PROBLEMS INVOLVING OPERATIONS OF CS THIRD GENERATION MS/OR QUALITATIVE METHODOLOGY APPLIED TO LARGE CLASS OF PROBLEMS(GENERAL PROBLEM SOLVERS-GPS) ( 1960s) AI/ES DSS DEVELOPED IN RESPONSE TO THE LIMITED SUCCESS ACHIEVED BY THE PREVIOUS GENERATION ES DEVELOPED IN RESPONSE TO THE LACK OF SUCCESS IN CREATING GPS IN PREVIOUS GENERATION ( 1970s)-PRESENT FOURTH GENERATION SOR (SYNERGISTICOR) SYNERGY OF ALL SCHOOLS OF THOUGHT QUANTITATIVE CLASSICAL OR MS/OR/DSS QUALITATIVE AI AI/ES (?) FIFTH GENERATION OTHER RELEVANT PARADIGMS THE FIVE GENERATIONS OF OR .

A Method To Optimize A Linear Function Subject To Set Of Linear Constraints. Yet Another Class Of Optimization Techniques. . 3. 2.Some Definitions Of Linear Programming 1. A Method To Allocate Limited Resources In An Optimal Manner So As To Satisfy The Laws Of Supply And Demand For The Firm‟s Products.

They believe that they can sell or store at negligible cost all fertilizer produced during the month. 5-10-5 and 6-5-10 (nos. Determine optimal product mix.200 tonnes of phosphates. The firm has 120 tonnes of nitrates . The contribution towards profits and overheads is Rs. 150 tonnes of potash and unlimited filler material. phosphates and potash in each tonne of fertilizers). They will not receive additional chemicals until next month. represent % wt. The firm mixes these four ingredients to make two basic fertilizers. phosphates.Janata fertilizers uses nitrates. Of nitrates. potash and an inert filler material for fertilizer manufacture.300 and Rs.400 per tonne for (5-10-5) and (6-5-10) respectively. .

A state agricultural federation manufactures and markets cattle feed.10 25% 20% Ing. is minimized? .B Rs. What amounts of A and B should be used so that cost/kg.40 75% 10% Specifications are that fiber content should be at least 50% and fat content should not exceed 18% in every one kg. Of the feed. It uses two ingredients which have the following characteristics Ing. Fiber content Fat content Rs.A Cost/kg.

400 Available 120 TONNES 200 TONNES 150 TONNES .PROBLEM-I 5-10-5 NITRATES PHOSPHATES POTASH CONTRIBUTION Per Tonne 5% 10% 5% Rs.300 6-5-10 6% 5% 10% Rs.

Problem-2 Ing.10 25% 20% Rs. Fiber Fat Required Rs.B Cost/Kg.Not More Then 18% .40 75% 10% Fiber Content – At least 50% Fat Content .A Ing.

100/.PER PAIR B COSTS RS.80.000) TV COMMERCIAL (Rs.150/. 3. 2.000) MINIMAL EXPOSURE TA 2% 1% 50% TB 1% 3% 30% A PRODUCT MIX PROBLEM A COSTS RS.A MEDIA PLANNING PROBLEM EXPOSURE RATES MAGAZINE (Rs.PER PAIR BUYER WANTS:1.20.3. EXACTLY 5000 PAIRS NOT MORE THAN 2000 PAIRS OF A FOR EVERY ONE PAIR OF A NOT MORE THAN TWO PAIRS OF B OBJECTIVE: MINIMIZE THE COSTS .

Another Product Mix Problem Cont/Pair Rs. SB-3 TC = Rs 600.2857 TC – Rs 19285.42857 B .100 SEWING STRETCHING HIKING BOOTS SKING BOOTS 2 3 5 2 AVAILABLE 13 HOURS 16 HOURS SOLUTION :.114.HB-2.100 A( moccasin) Cutting & Upper Closing Lasting Sole Adhesion Solution :100 50 250 Or Or Or Rs.21.A Product Mix Problem Cont/Pair Rs 150 Rs.71 .150 B (derby) 150 200 125 A .

Y2. X 2 .4 Rs.3 Rs. 0 3 4 OC DUAL PROBLEM Mm Z* = 10Y1+12Y2+15Y3 Y1+2Y2+3Y3 > 3 2Y1+Y2+Y3 > 4 3Y1+2Y2+Y3 > 5 Y1.5 MAX Z = PRIMAL PROBLEM 3X1+4X2+5X3 X1+2X2+3X3< 10 2X1+X2+2X3< 12 3X1+X2+X3< 15 X 1 . X3 > 0 Q 1 4 3 3 X1 0 1 0 4 X2 0 0 1 5 X3 4/5 -1/5 8/5 -4/5 0 S1 -1/5 -1/5 3/5 -9/5 0 S2 1 0 0 0 S3 -3/5 2/5 -1/5 -2/5 SV S2 X1 X2 CONT COEFF.PRODUCTS MATERIALS A B C 1 2 3 10 2 1 2 12 3 1 1 15 CONT/UNIT P1 P2 P3 AVAILABLE Rs.Y3 > 0 .

15 0 10 OC 2/5 4/5 9/5 10 Y1 0 0 1 12 Y2 3/5 -4/5 1/5 1 15 Y3 1 0 0 0 S1 -2/5 1/5 1/5 4 0 S2 1/5 -8/5 -3/5 3 0 S3 0 1 0 Y3 S3 Y1 .SV COST Q COEFF.

5. 2. 4. 2 3. 6. Media Planning Routing Of Salesmen Physical Distribution Warehousing Decisions . 3. Product Mix Production Smoothing Assembly Line Balancing Sub Contracting Some Purchasing Decisions Location Of Production Facilities Applications Of Linear Programming In Marketing Management 1. 4.Applications Of Linear Programming In Production Management 1.

APPLICATIONS OF LINEAR PRORAMMING IN FINANCIAL MANAGEMENT 1. 2. 5. 2. 5. 3. Capital Budgeting Financing Decisions Portfolio Selection Profit Planning Financial Audit Applications Of Linear Programming In Personnel Management 1. 4. 3. 4. Job Assignment Manpower Scheduling Manpower Planning Equitable Salaries Manpower Deployment .

3.Limitations Of Linear Programming 1. Single Objective . Linearity Additivity Continuity Certainty 5. 4. 2.

THE OPERATING COSTS OF THESE TRUCKS ARE RS. THE CUTTING DEPARTMENT CAN PROCESS 300 BOXES OF ROUNDS OR 600 BOXES FLATS PER HOUR. MAJOR PRODUCTION FACILITIES INVOLVED ARE CUTTING AND PACKING. A TOOTHPICK MANUFACTURER MAKES TWO KINDS OF TOOTHPICKS: ROUNDS AND FLATS. THE FIRM HAS A POLICY OF RETAINING AT LEAST ONE CLASS-A TRUCK WITH EVERY TWO CLASS-B TRUCKS IN RESERVE. 4 PER TONNE KM RESPECTIVELY. WHAT IS THE OPTIMUM PRODUCTION LEVEL? – UNDER WHAT CIRCUMSTANCES WOULD THE MANUFACTURER BE BETTER OFF TO PRODUCE ONLY ROUNDS? 2 A TRUCKING FIRM HAS RECEIVED AN ORDER TO MOVE 3.1. THE PACKING DEPARTMENT CAN PACKAGE 600 BOXES OF ROUNDS OR 300 BOXES OF FLATS PER HOUR. AWAY. . 3 AND RS. – IF THE CONTRIBUTION OF PROFIT FOR A BOX OF ROUNDS IS EXACTLY SAME AS THAT FOR A BOX OF FLATS. BASED ON PAST EXPERIENCE. IT DESIRES TO KNOW HOW MANY OF THE TWO CLASSES OF VEHICLES SHOULD BE DISPATCHED TO MOVE THE MATERIALS AT MINIMAL OPERATING COSTS.000 TONNES OF INDUSTRIAL MATERIAL TO A DESTINATION 1.000 KM. THE FIRM HAS AVAILABLE AT THE MOMENT A FLEET OF 150 CLASS A 15 TONNE TRAILER TRUCKS AND ANOTHER FLEET OF 100 CLASS B 10 TONNE TRAILER TRUCKS.

THE PRICE HE CAN OBTAIN IS RE. FERTILIZER IS AVAILABLE AT RE. LABOUR REQUIRED FOR SOWING. A TOTAL OF 400 MAN-DAYS OF LABOUR ARE AVAILABLE AT RS. A FARMER HAS A 100. THE AVERAGE YIELD PER HECTARE IS 2. OR RADISHES HE CAN RAISE.000 KILOGRAM OF TOMATOES. .20 PER MAN-DAY.50 PER KILOGRAM AND THE AMOUNT REQUIRED PER HECTARE IS 100 KILOGRAMS EACH FOR TOMATOES AND LETTUCE AND 50 KILOGRAMS FOR RADISHES. 2 PER KILOGRAM FOR RADISHES. FORMULATE THIS PROBLEM AS A LINEAR PROGRAMMING MODEL TO MAXIMIZE THE FARMER‟S TOTAL PROFIT.000 KILOGRAMS OF RADISHES.3. LETTUCE. RE. 0.1 PER KILOGRAM FOR TOMATOES. HE CAN SELL ALL THE TOMATOES. CULTIVATING AND HARVESTING PER HECTARE IS 5 MAN-DAYS EACH FOR TOMATOES AND RADISHES AND 6 MANDAYS FOR LETTUCE.75 A HEAD FOR LETTUCE AND RS. 3000 HEADS OF LETTUCE AND 1.HECTARE FARM. 0.

. THE QUANTITIES REQUIRED FOR THE NEXT PRODUCTION PERIOD BEING: PRODUCT 1 2. ASSIGNMENT OF FOUR PRODUCTS: RATES PRODUCTION IN UNITS PER DAY.000 UNITS PRODUCT 3 3. RS.LINE CAPACITY(DAYS) A B C 150 200 160 100 500 400 100 760 400 80 890 600 20 20 18 FORMULATE THE ABOVE AS A LINEAR PROGRAMMING PROBLEM TO MINIMIZE THE COST OF PRODUCTION.000 UNITS THERE ARE THREE PRODUCTION LINES ON WHICH THE PRODUCTS COULD BE PROCESSED. FOUR PRDUCTS HAVE TO BE PROCESSED THROUGH THE PLANT. OF PRODUCTION LINE 1 PRODUCT 2 3 4 MAX. 400 PER DAY.000 UNITS PRODUCT 2 3.RESPECTIVELY.000 UNITS PRODUCT 4 6. THE COST OF USING THE LINES IS RS. RS.4. 600. THE RATES FOR PRODUCTION IN UNITS PER DAY AND THE TOTAL AVAILABLE CAPACITY IN DAYS ARE GIVEN IN THE FOLLOWING TABLE. 500.

5. 1. BARLEY COSTS RS. SELLS FOR RS.1.25 PER KG. AND EACH ADDITIONAL KG. UPTO 99 KG. AND ONLY 1. PRQ FEED COMPANY MARKETS TWO FEED MIXES FOR CATTLE. SET UP THE LINEAR PROGRAMMING PROBLEM TO DETERMINE THE PRODUCE MIX THAT RESULTS IN MAXIMUM PROFITS.80 PER KG. MULTIPLEX REQUIRES AT LEAST TWICE AS MUCH BARELY AS WHEAT. REQUIRES AT LEAST TWICE AS MUCH WHEAT AS BARLEY. WHEAT COSTS RS. MULTIPLEX SELLS AT RS. 1. SELLS FOR RS. FERTILEX SELLS FOR RS.55. AND 1200 KG. BHARAT FARMS WILL BUY ANY AND ALL AMOUNTS OF BOTH MIXES PQR FEED COMPANY WILL MIX.1.50 PER KG.1.OVER 99 KG. UPTO 99 KG. ARE AVAILABLE. THE FIRST MIX. FERTILEX.65. . AND EACH ADDITIONAL KG. THE SECOND MIX.70 PER KG. ARE AVAILABLE THIS MONTH.1.000 KG. OVER 99 KG.

75 FOR TRANING THE ADDITIONAL PEOPLE REQUIRED TO PRODUCE AT THE 300 UNIT LEVEL.)SIMILARLY IT COSTS 50 PAISE PER UNIT TO REDUCE PRODUCTION FROM ONE MONTH TO THE NEXT. DELIVERIES ARE SCHEDULED AS FOLLOW: JANUARY 100 FEBRUARY 200 MARCH 300 APRIL 400 MAY 100 JUNE 100 JULY 500 AUGUST 300 TOTAL 2. THE MANUFACTURER CAN PRODUCE ANY NUMBER OF UNITS IN A GIVEN MONTH. SINCE THE UNIT CAN BE PRODUCED MOSTLY WITH PART-TIME LABOUR. .A MANUFACTURER HAS CONTRACTED TO PRODUCE 2. FORMULATE THE ABOVE AS A LINEAR PROGRAMMING PROBLEM. THE MANUFACTURER HAS ESTIMATED THAT IT COSTS APPOXIMATELY 75 PAISE PER UNIT TO INCRESE THE PRODUCTION LEVEL FROM ONE MONTH TO THE NEXT(E. THE COST IS RS.000 UNITS OF A PARTICULER PRODUCT OVER THE NEXT EIGHT MONTHS. ALL EMPLOYEE WILL BE LAID OFF WITH THE CORRESPONDING PRODUCTIONREDUCTION COSTS). HE HAS A WAREHOUSE CAPACITY OF 300 UNITS. HOWEVER. IF PRODUCTION IN JANUARY IS 200 AND IS INCREASED TO 300 IN FEBRUARY. WHICH CAN BE EASILY OBTAINED.THERE ARE THE COST OF TRANING NEW PERSONNEL AND COSTS ASSOCIATED WITH LAYING OFF PERSONNEL WHO HAVE BEEN HIRED. 1 TO STORE ONE UNIT OF PRODUCT FOR ONE MONTH. ASSUME THE PRODUCTION LEVEL BEFORE JANUARY IS ZERO .000 THE MANUFACTURER HAS ESTIMATED THAT IT COSTS HIM RE. (AT THE END OF EIGHT MONTHS.G.

With known requirements. how many units should be allocated from which availability centre to which consumption centre so that . • The distribution cost (freight. handling costs etc.e. With known availabilities.Transportation Models There are a number of availability centres such as factories. markets etc.) Per unit from an availability centre to a consumption centre is given • The problem is to find an optimal distribution plan i. the total distribution cost is minimized • Single commodity • Direct shipment • . warehouses etc. • There are a number of consumption centres such as warehouses.

such that the total return resulting from the assignment is optimized. how the assignment should be made so as to minimize the total time taken for completing the jobs. one item to a receiver. Ex-1 A marketing manager may have four salesmen and four sales territories. Which assignment will help in maximizing sales? Ex-2 A foreman may have five mechanics and five jobs.The Assignment Model • The assignment model is a special type of linear programming problem in which „n‟ items are assigned among „n‟ receivers. • • • . The returns associated with each assignment are assumed to be known and independent of each other.

A TRANSPORTATION PROBLEM WAREHOUSES TO/ FROM A D 42 E 48 F 38 G CAPACITY 37 160 160 B FACTORIES 40 49 52 51 150 80 C REQD. 39 10 38 40 60 43 220 190 500/500 80 80 90 110 110 AN ASSIGNMENT PROBLEM WORKERS I II III IV A B C D 16 12 14 16 JOBS 14 13 13 18 15 16 11 15 18 14 12 17 FROM CITY A B C D E A ROUTING PROBLEM TO CITY A B C 4 7 4 6 7 6 3 7 3 4 5 4 D 3 3 7 7 E 4 4 5 7 - .

For Maximization Case • The numerical value of a given objective function with respect to the integer solution can never exceed the numerical value of that objective function with respect to the non-integer solution. For Minimization Case • The numerical value of a given objective function with respect to the integer solution can never be less than the numerical value of that objective function with respect to the non-integer solution. .

First pattern will cut each film length into 35 feet pieces with the remaining 15 feet to scrap. What minimum number of plastic films of 85 feet should be cut to meet customer requirement? . Second pattern will cut each film length into a 35 feet piece and two 25 feet pieces with nothing to scrap.The cutting division of the photo film corporation requisitions from stock control department plastic films of 85 feet (fixed unit length) which can be cut according to two patterns. The present order from a customer is for 8 pieces of 35 feet length and 6 pieces of 25 feet length.

.Problems On Integer Linear Programming 1.15.2. However. Machines A and B will produce 24 and 20 units respectively of this product per day. Determine the minimum number of machines that should be purchased.000 and company has a budget of Rs.000 while machine B costs Rs.00.000 for the same. machine A will require a floor space of 12 square feet while machine B will require 18 square feet and company has total floor space of 180 square feet only. Machine A costs Rs.20. The ABC company requires an output of at least 200 unit of a product per day and to accomplish this target it can buy machine A or B or both.

6.000.000 AND IN THE SECOND YEAR TO RS. NO 1 2 3 4 NPV (RS.5. 15. THE COMPANY IS CONSTRAINED TO LIMIT ITS EXPENDITURE IN THE FIRST YEAR TO RS.38. IF PROJECTS 1 AND 3 ARE MCTUALLY EXCLUSIVE. HOW SHOULD THE INVESTMENT BE MADE SO THAT THE TOTAL NET PRESENT VALUE IS MAXIMIZED? . ABC COMPANY HAS 4 INDEPENDENT INVESTMENT PROJECTS AND MUST ALLOCATE A FIXED CAPITAL TO ONE OR MORE OF THEM SO THAT THE COMPANY‟S NET PRESENT VALUE IS MAXIMIZED.1000) YEAR(I) YEAR(II) 50 105 318 100 150 30 143 68 IN SELECTING THESE PROJECTS.2. THE ESTIMATED NET PRESENT VALUE AND THE ANTICIPATED CASH OUTFLOWS ASSOCIATED WITH THESE PROJECTS IS GIVEN IN THE FOLLOWING TABLE: PR. 1000) 100 50 140 90 CASH OUTFLOWS(RS.

MACHINE 1 2 3 SET-UP COST(Rs) 8000 5000 4000 COST PER MAX. PRODUCT PLANT A B C D DEMAND P 35 30 20 24 500 Q 24 28 25 32 800 R 20 25 37 28 600 CAPACITY 600 1.000 800 800 . UNIT (Rs) PRODUCTION 5 4 8 4000 3000 1000 QUANTITY REQUIRED:5000 UNITS AT MINIMUM COST.

BASIC CONCEPTS OF GOAL PROGRAMMING 1. GOALS HAVE PREEMPTIVE PRIORITIES. ATTACH WEIGHTS TO DIFFERENT ACTIVITIES AT THE SAME GOAL LEVEL. . 2. 3. MINIMIZE DEVIATIONS FROM GOALS.

CONTD….50. IS DISTRIBUTED TO RETAIL FABRIC STORES. WHENEVER THERE IS EXCESS DEMAND OVER NORMAL PRODUCTION. AVERAGE PRODUCTION RATES FOR THE TWO MATERIALS ARE IDENTICAL. THE DRESS MATERIAL ON THE OTHER HAND. BY RUNNING TWO SHIFTS.2. OF UPHOLSTERY AND 45.000 M. THE M. THEREFORE. 1000 METRES/HR. OF DRESS MATERIAL.D. A STRONG UPHOLSTERY MATERIAL AND A REGULAR DRESS MATERIAL.NTC PRODUCES TWO TYPES OF MATERIALS. NET OPERATIONAL CAPACITY OF THE PLANT IS 80 HOURS/WK.1. OF THE COMPANY BELIVES THAT A GOOD EMPLOYER. HOWEVER HE FEELS THAT OVERTIME OF MORE THAN 10 HOURS/WK. ACCORDING TO THE ACCOUNTING DEPARTMENT.EMPLOYEE RELATIONSHIP IS IMPORTANT IN BUSINESS. THE MARKETING DEPARTMENT REPORTS THAT THE MAXIMUM ESTIMATED SALES FOR THE FOLLOWING WEEK IS 70. HE SIMPLY EXPANDS PRODUCTION CAPACITY BY PROVIDING OVERTIME. THE APPROXIMATE PROFIT FROM A METRE OF UPHOLSTERY MATERIAL IS RS. THE UPHOLSTERY IS PRODUCED ACCORDING TO DIRECT ORDERS FROM FURNITURE MANUFACTURERS.50 AND FROM A METRE OF DRESS MATERIAL IS RS. SHOULD BE AVOIDED – BECAUSE OF ACCELERATING COSTS.P/2. . HENCE HE DECIDES THAT A STABLE EMPLOYMENT LEVEL IS A PRIMARY GOAL FOR THE FIRM.000 M.

FOURTH GOAL: MINIMISE OT OPERATION AS MUCH AS POSSIBLE. . MAINTAIN STABLE EMPLOYMENT AT NORMAL CAPACITY SECOND GOAL: LIMIT OT OPERATION TO 10 HOURS. THIRD GOAL :ACHIEVE SALES GOALS OF 70. FORMULATE AND SOLVE THIS PROBLEM AS A GOAL PROGRAMMING PROBLEM. OF UPHOLSTERY AND 45.• • • • • FIRST GOAL: AVOID UNDER UTILISATION OF PRODUCTION CAPACITY.000 M.E. OF DRESS MATERIAL. I.000 M.

THE TOP MANAGEMENT OF THE FIRM HAS THE FOLLOWING GOALS FOR THE WEEK (IN ORDINAL RANKING): GOAL -1: GOAL –2 : GOAL –3 : GOAL –4 : PRODUCTION GOAL –180 SETS. EXPECTED PROFIT FROM AN AVERAGE CTV SET IS RS. ASSUME COST OF OPREATIONS IS IDENTICAL FOR BOTH PRODUCTION LINES) FORMULATE THE PROBLEM AS A GLP MODEL.1000/. IN LINE-2. PRODUCTION RATE OF LINE-1 IS 2 SETS/HR.90. LIMIT OT OF LINE-1 TO 10 HOURS.BHARAT TELEVISION COMPANY PRODUCES CTV SETS.1/2 SETS/ HR. IT HAS TWO PRODUCTION LINES. ACCORDING TO RELATIVE COST OF OT HOUR. . AND IT IS 1.1. LIMIT THE SUM OF OT FOR BOTH LINES.000 FOR THE WEEK AS THE TOP PRIORITY GOAL ABOVE THE STATED FOUR GOALS. HOW WOULD THE MODEL CHANGE./WK. (ASSIGN WTS.. THE REGULAR PRODUCTION CAPACITY IS 40 HR. AVOID UNDERUTILISATION OF REGULAR WORKING HOURS FOR BOTH LINES. FOR BOTH LINES. IF THE TOP MANAGEMENT DESIRES TO PUT A PROFIT GOAL OF RS.

SOME OF THE BEST KNOWN APPLICATIONS OF GOAL PROGRAMMING INCLUDE THE FOLLOWING PROBLEM AREAS: • • • • • • • • • • • • • • ACADEMIC PLANNING AND ADMINISTRATION ACCOUNTING ANALYSIS ADVERTISING MEDIA SCHEDULING BLOOD COLLECTION AND DISTRIBUTION CAPITAL BUDGETING COMPUTER RESOURCE PLANNING AND ALLOCATION DECISION-SUPPORT SYSTEM DESIGN ECONOMIC POLICY ANALYSIS EDUCATIONAL SYSTEM PLANNING ENVIRONMENTAL PROTECTION PORTFOLIO DETERMINATION PRODUCTION SCHEDULING PROJECT SCHEDULING QUALITY CONTROL • • • • • • • • • • • • • • • • FACILITIES LOCATION AND LAYOUT PLANNING FINANCIAL PLANING HEALTH-CARE DELIVERY SYESTEM DESIGN INVENTORY MANAGEMENT LOCATION AND ALLOCATION DECISIONS MANPOWER PLANNING MARKETING LOGISTICS MILITARY STRATEGIES AND PLANNING NETWORK SCHEDULING ORGANIZATIONAL ANALYSIS PERSONNEL ADMINISTRATION POLICY ANALYSIS RESEARCH AND DEVELOPMENT TRANSPORTATION LOGISTICS URBAN PLANNING WATER RESOURCES PLANNING . AND NON PROFIT INSTITUTIONS.APPLICATION AREAS OF GOAL PROGRAMMING GOAL PROGRAMMING HAS BEEN WIDELY APPLIED TO VARIOUS DECISION PROBLEMS IN BUSINESS FIRMS. GOVERNMENT AGENCIES.

A TOTAL OF 15. 6 &7.THE AIR FREIGHT PER TONNE (IN 100 RS. A VERY HIGH COST M HAS BEEN USED. TO LOCATIONS 4. 3. A CERTAIN CORPORATION MUST SHIP A CERTAIN PERISHABLE COMMODITY FROM LOCATIONS 1. THE PROBLEM IS TO DETERMINE THE OPTIMAL SHIPPING PLAN. A LOCATION 1 2 3 4 5 6 7 1 2 3 4 5 6 7 - 12 - 27 10 - 14 25 28 - 45 32 50 16 - 36 M 28 20 26 - 15 22 10 32 35 20 - .) BETWEEN SEVEN LOCATIONS IS GIVEN IN THE FOLLOWING TABLE. WHERE NO DIRECT AIR FREIGHT SERVICE IS AVAILABLE. 30 25 & 30 TONNES ARE TO BE SENT TO LOCATIONS 4. TOTAL OF 30. 50 & 20 TONNES OF THIS COMMODITY ARE TO BE SENT FROM LOCATIONS 1. 5. 2. 2 & 3 RESPECTIVELY. SHIPMENTS CAN BE SENT THROUGH INTERMEDIATE LOCATIONS AT A COST EQUAL TO THE SUM OF THE COSTS FOR EACH OF THE LEGS OF THE JOURNEY. 5. 6 & 7 RESPECTIVELY. .

THE PROBABILITY THAT THE RESPECTIVE TEAMS-CALL THEM A.20 0.0.60 AND 0.20 0.OF 0 0.30 HOW SHOULD THE TWO SCIENTISTS BE ALLOCATED TO THE TEAMS? . TEAM A B C NO. THUS THE CURRENT PROBABILITY THAT ALL THE THREE TEAMS WILL FAIL IS= 0.40 0.80 RESPECTIVELY. THREE RESEARCH TEAMS ARE CURRENTLY TRYING THREE DIFFERENT APPROACHES FOR SOLVING THIS PROBLEM THE ESTIMATE HAS BEEN MADE THAT UNDER PRESENT CIRCUMSTANCES.192.40 0. SINCE THE OBJECTIVE IS TO MINIMIZE THIS PROBABILITY THE DECISION HAS BEEN MADE TO ASSIGN TWO MORE TOP SCIENTISTS AMONG THE THREE TEAMS IN ORDER TO LOWER IT AS MUCH AS POSSIBLE.15 0. 1 AND 2 .60 0.A PROBLEM ON DYNAMIC PROGRAMMING A GOVERNMENT SPACE PROJECT IS CONDUCTING RESEARCH ON A CERTAIN ENGINEERING PROBLEM THAT MUST BE SOLVED BEFORE MAN CAN FLY TO THE MOON SAFELY. THE FOLLOWING TABLES GIVES THE ESTIMATED PROBABILITIES OF FAILURE WHEN 0.50 2 0.40.B AND C – WILL NOT SUCCEED IS 0.SCIENTISTS ARE ADDED TO THE TEAMS.80 NEW SCIENTISTS 1 0.

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