Question 1: Discuss the role and scope of quantitative methods for scientific decision- making in a business environment.

Answer: Today, when knowledge and technology are changing rapidly, new
problems with little or no precedents continually arise. The role of scientific decision making in business environment has become a complex task. The uncertainty of the future and the nature of competition greatly increase the difficulty of scientific decision making. It began during World War II in Britain when teams of scientists worked with the Royal Air Force to improve radar detection of enemy aircraft, leading to coordinated efforts to improve the entire system of early warning, defence, and supply. It is characterized by a systems orientation, or systems engineering, in which interdisciplinary research teams adapt scientific methods to large-scale problems that must be modelled, since laboratory testing is impossible. Examples include resource allocation and replacement, inventory control, and scheduling of large-scale construction projects. It offers the decision-maker a method of evaluating every possible alternative by using various techniques to know the potential outcomes. It attempts to resolve the conflicts of interest among various sections of the organisation and seeks the optimal solution which may not be acceptable to one department but is in the interest of the organisation as a whole. It is concerned with providing the decision-maker with decision aids derived from: A total system orientation, Scientific methods of investigation, and Models of reality based on quantitative methods

The scope of quantitative method is indeed vast. Commencing with the selection of location quantitative method covers such activities as acquisition of land, constructing building, procuring and installing machinery, purchasing and storing raw material and converting them into saleable products. It was mainly developed during world war for optimum uses of resources, so it is widely applicable in military operations. It is applicable in various fields of management such as production management, financial management, marketing management, human resource management etc. When there is a lack of qualitative factors, decision makers increasingly turn to quantitative methods to arrive at the optimal solution to problem involving a large number of alternatives. Question2: Discuss the advantage & limitation of operation research. Answer: There are several advantages and limitations of operation research. Advantages:

1) Structured approach to problems: A substantial amount of time and effort can be saved in developing and solving OR models if one uses a logical and consistent approach. This implies that the decision maker has to be careful while defining controllable and uncontrollable variables, availability of resources, etc., functional relationships among variables in the objective function and constraints. 2) Critical Approach to problem solving: The decision maker will come to understand various components of the problem and accordingly select a mathematical model for solving the given problem. He will be aware of the explicit and implicit assumptions and inherent limitations of such models. Problem solutions are examined critically and the effect of any change and error in the problem data can be studied through sensitivity analysis techniques. Limitations: 1) Often solution to a problem is derived by either making it simplified or simplifying assumptions and thus, such solutions have limitations. 2) Sometimes models do not present the realistic situations in which decisions must be made. 3) Often decision-maker is not fully aware of the limitations of the models that he is using. 4) Many real world problems just cannot have an OR solution. Question 3: It is said that the operation research increases the creative capabilities of decision-maker. Do you agree with this view? Defend your point of view with examples. Answer: Yes, operations research increases the creative capabilities of a decision maker. I agree with this point because operations research is the systematic application of quantitative methods, techniques and tools to the analysis of problems involving the operation of systems. Operation research offers the decision-maker a method of evaluating every possible alternative by using various techniques to know the potential outcomes. While solving a real-life problem, the decision maker must examine it both from quantitative as well as qualitative perspective. Information about the problem from both these perspective need to be brought together. Based on some mix of the sources of information, a decision is taken by the decision maker. The study of these methods and how decision-makers use them in decision process is the essence of operations research process. As the term implies, operations research involves research on military operations. This indicates the approach as well as the area of its application. The operations research approach is particularly useful in balancing conflicting objectives where there are many alternative course of action available to the decision-makers.

It is often called global optimum. The operations research approach attempts to find global optimum by analysing inter-relationships among the system components involved in the problem. For example, consider the basic problem of maintaining stocks of finished goods. To the marketing manager, stocks of a large variety of products are a means of supplying the companys customers with what they want and when they want it. Clearly, according to a marketing manager, a fully stocked warehouse is of prime importance to the company. But the production manager argues for long production runs preferably on a smaller product range, particularly if significant time is lost when production is switched from one variety to another. The result would again be a tendency to increase the amount of stock carried but it is, of course, vital that the plant should be kept running. On the other hand, the finance manager seeks stocks in terms of capital tied up unproductively and argues strongly for their reduction. In view of above examples, we can say that operations research increases the creative capabilities of the decision-maker irrespective of his specialisation. Question 4: What is linear assumptions and limitations? programming? What are its major

Answer: The word linear refers to linear relationship among variables in a model. Thus, a given change in one variable will always cause a resulting proportional change in another variable. The word programming refers to modelling and solving a problem mathematically that involves the economic allocation of limited resources by choosing a particular course of action or strategy among various alternative strategies to achieve the desired objective. Assumptions: The following major assumptions of LP model are: 1) Certainty: In all LP models, it is assumed, that all parameters such as availability of resources, profit (or cost) contribution of a unit of decision variable and consumption of resources by a unit of decision variable must be known and may be constant. 2) Additively: The value of the objective of function and the total amount of each resources used, must be equal to the sum of the respective individual contributions by decision variables.

3) Linearity: The amount of each resource used and its contribution to the objective in the profit in objective function must be proportional to the value of each decision variable. 4) Divisibility: The solution values of decision variables are allowed to assume continuous values. Limitations: 1) LP treats all relationships among decision variable as linear. However, generally, neither the objective functions nor the constraints in real life situations concerning business & individual problems are linearly related to the variables. 2) LP model does not take into consideration the effect of time and uncertainty. Thus LP model should be defined in such a way that any change due to internal as well as external factors can be incorporated. 3) Parameters appearing in the model are assumed to be constant but in real life situations they are frequently neither known nor constant. 4) It deals with only single objective, whereas in real life situation we may come across conflicting multi objective problems. Question 5: Linear programming is one the most frequently and successfully applied operation researchs technique to managerial decisions. Elucidate this statement with some examples. Answer: Linear programming helps in attaining the optimum use of productive resources. It also indicates how a decision maker can employ his productive factors effectively by selecting and distributing these resources. Linear programming technique improves the quality of decisions. The decision making approach of the use of this technique becomes more objective and less subjective. Linear programming technique provides possible and practical solutions since there might be other constraints operating outside the problem which must be taken into account. Question 6: Explain the graphical method of solving an LP problem. Answer The graphical method is applicable to solve the LPP involving two decision variables x1, and x2, we usually take these decision variables as x, y instead of x1, x2. To solve an LPP, the graphical method includes two major steps.

a) The determination of the solution space that defines the feasible solution (Note that the set of values of the variable x1, x2, x3,....xn which satisfy all the constraints and also the non-negative conditions is called the feasible solution of the LPP) b) The determination of the optimal solution from the feasible region. a) To determine the feasible solution of an LPP, we have the following steps. Step 1: Since the two decision variable x and y are non-negative, consider only the first quadrant of xy- plane

Draw the line ax + by = c ... (1) For each constraint, the line (1) divides the first quadrant in to two regions say R1 and R2, suppose (x1, 0) is a point in R1. If this point satisfies the in equation ax + by c or ( c), then shade the region R1. If (x1, 0) does not satisfy the inequation, shade the region R2. Step 3: Corresponding to each constant, we obtain a shaded region. The intersection of all these shaded regions is the feasible region or feasible solution of the LPP. Let us find the feasible solution for the problem of a decorative item dealer whose LPP is to maximise profit function. Z = 50x + 18y ... (1) Subject to the constraints

Step 1: Since x 0, y 0, we consider only the first quadrant of the xy - plane Step 2: We draw straight lines for the equation 2x+ y = 100 ...(2) x + y = 80 To determine two points on the straight line 2x + y = 100 Put y = 0, 2x = 100

x = 50 (50, 0) is a point on the line (2) put x = 0 in (2), y =100 (0, 100) is the other point on the line (2) Plotting these two points on the graph paper draw the line which represent the line 2x + y =100.

This line divides the 1st quadrant into two regions, say R1 and R2. Choose a point say (1, 0) in R1. (1, 0) satisfy the inequation 2x + y 100. Therefore R1 is the required region for the constraint 2x + y 100. Similarly draw the straight line x + y = 80 by joining the point (0, 80) and (80, 0). Find the required region say R1', for the constraint x + y 80. The intersection of both the region R1 and R1' is the feasible solution of the LPP. Therefore every point in the shaded region OABC is a feasible solution of the LPP, since this point satisfies all the constraints including the nonnegative constraints.

b) There are two techniques to find the optimal solution of an LPP. Corner Point Method The optimal solution to a LPP, if it exists, occurs at the corners of the feasible region. The method includes the following steps Step 1: Find the feasible region of the LLP.

Step 2: Find the co-ordinates of each vertex of the feasible region. These coordinates can be obtained from the graph or by solving the equation of the lines. Step 3: At each vertex (corner point) compute the value of the objective function. Step 4: Identify the corner point at which the value of the objective function is maximum (or minimum depending on the LPP). The co-ordinates of this vertex is the optimal solution and the value of Z is the optimal value Example: Find the optimal solution in the above problem of decorative item dealer whose objective function is Z = 50x + 18y. In the graph, the corners of the feasible region are O (0, 0), A (0, 80), B (20, 60), C (50, 0) At (0, 0) Z = 0 At (0, 80) Z = 50 (0) + 18(80) = Rs. 1440 At (20, 60), Z = 50 (20) +18 (60) = 1000 + 1080 = Rs.2080 At (50, 0) Z = 50 (50) + 18 (0) = Rs. 2500. Since our object is to maximise Z and Z has maximum at (50, 0) the optimal solution is x = 50 and y = 0. The optimal value is Rs. 2500. If an LPP has many constraints, then it may be long and tedious to find all the corners of the feasible region. There is another alternate and more general method to find the optimal solution of an LPP, known as 'ISO profit or ISO cost method' ISO- PROFIT (OR ISO-COST) Method of Solving Linear Programming Problems Suppose the LPP is to Optimize Z = ax + by subject to the constraints

This method of optimization involves the following method. Step 1: Draw the half planes of all the constraints Step 2: Shade the intersection of all the half planes which is the feasible region. Step 3: Since the objective function is Z = ax + by, draw a dotted line for the equation ax + by = k, where k is any constant. Sometimes it is convenient to take k as the LCM of a and b. Step 4: To maximise Z draw a line parallel to ax + by = k and farthest from the origin. This line should contain at least one point of the feasible region. Find the coordinates of this point by solving the equations of the lines on which it lies. To minimise Z draw a line parallel to ax + by = k and nearest to the origin. This line should contain at least one point of the feasible region. Find the coordinates of this point by solving the equation of the line on which it lies. Step 5: If (x1, y1) is the point found in step 4, then x = x1, y = y1, is the optimal solution of the LPP and Z = ax1 + by1 is the optimal value. The above method of solving an LPP is more clear with the following example. Example: Solve the following LPP graphically using ISO- profit method. Maximize Z =100 + 100y. Subject to the constraints

Suggested answer: since x 0, y 0, consider only the first quadrant of the plane graph the following straight lines on a graph paper

10x + 5y = 80 or 2x+y =16 6x + 6y = 66 or x+y =11 4x+ 8y = 24 or x+ 2y = 6 5x + 6y = 90 Identify all the half planes of the constraints. The intersection of all these half planes is the feasible region as shown in the figure.

Give a constant value 600 to Z in the objective function, and then we have an equation of the line 120x + 100y = 600 ... (1) or 6x + 5y = 30 (Dividing both sides by 20) P1Q1 is the line corresponding to the equation 6x + 5y = 30. We give a constant 1200 to Z, then the P2Q2represents the line. 120x + 100y = 1200 6x + 5y = 60

P2Q2 is a line parallel to P1Q1 and has one point 'M' which belongs to feasible region and farthest from the origin. If we take any line P3Q3 parallel to P2Q2 away from the origin, it does not touch any point of the feasible region. The co-ordinates of the point M can be obtained by solving the equation 2x + y = 16 x + y =11 which give x = 5 and y = 6 The optimal solution for the objective function is x = 5 and y = 6 The optimal value of Z 120 (5) + 100 (6) = 600 + 600 = 1200 Question 7: What is meant by the term feasible region? Why this must be a well-defined boundary for maximization problem? Answer: A feasible region is, in a constrained optimization problem, the set of solutions satisfying all equalities and/or inequalities. On the other hand a linear programming is a constrained optimization problem in which both the objective function and the constraints are linear, therefore a feasible region on a linear programming problem is the set of solutions of the a linear problem. Many algorithms had been designed to successfully attain feasibility at the same time as resolving the problem, e.g. reaching its minimum. Perhaps one of the most famous and extensively utilized is the Simplex Method who travels from one extremal point to another, which happens to be the possible extrema given the convex nature of the problem, by maintaining a fixed number of components to zero, called basic variables. Then, the algorithm arrives to a global minimum generally in polinomial time even if its worst possible case has already been proved to be exponencial, see Klee-Minty's cube.

GRAPHICAL ANALYSIS THE FEASIBLE REGION

THE SEARCH FOR AN OPTIMAL SOLUTION The figure shows how different constraints can be represented by straight lines to define a feasible region. There is an area outside the feasible region that is infeasible.

It may be seen that each of the constraints is a straight line. The constraints intersect to form a point that represents the optimal solution. This is the point that results in maximum profit of 436,000 Rs. As shown in the slide below. The procedure is to start with a point that is the starting point say 200,000 Rs. Then move the line upwards till the last point on the feasible region is reached. This region is bounded by the lines representing the constraints.

Question 8: Define slack and surplus variables in a linear programming problem. Answer: LP constraints are limited to only three possible relational operators: = , , Strict inequalities ( < , > ) are not allowed in LP. Graphically, an equality constraint traces a line. LP inequality constraints and consist of a line (the equality part of the relation) along with a half-plane (the inequality portion). Two-dimensional inequalities are easy to work with graphically because the regions they define are depicted quite naturally by the Cartesian plane. Alas, that is not the case with analytical (algebraic) solution methods, which do not deal with geometric planes but with purely abstract symbols. It's a bit harder to visualize relations with symbols, but those representations can be very powerful. Algebra actually, math in general is famously powerful largely because of the logical precision afforded by symbolic equations. To say that something is equal to something else is, in math, a rigorously exact statement. On the other hand, to say that something is greater than or equal to some other quantity leaves open an infinite (real) number of possibilities. Exactness goes down the drain. Consider the large block constraint: 2x + y 6. The economic interpretation of this constraint is: the number of large blocks used to assemble tables plus the number of large blocks used to assemble chairs cannot exceed the six units of large blocks in inventory. Suppose we build one table and one chair. In order to determine how many blocks we have left in stock, we must plug in those values into the variables of the constraint, compute the left hand side and subtract it from 6. We find we have three blocks left in stock. Accountants prefer another approach. Instead of computing how many blocks are left in stock every time a table or chair is assembled, they create a new account that keeps track of the blocks inventory continuously. The account is initialized at 6 and decreased in real time (perpetual inventory) as blocks are used in production. The relation can now be expressed as: the number of large blocks used to assemble tables plus the number of large blocks used to assemble chairs plus the number of large blocks left in inventory must equal the six units of large blocks originally stocked. Mathematically: 2x + y + s = 6

Where s is a new variable that keeps track of the large-blocks inventory. The beauty of this arrangement is twofold. First, we can always tell at a glance how many blocks are idle (or slack, i.e., not being used in production) by simply checking the slack variable. No need to recalculate balances. Minutiae Aedificante This slack-variable technique illustrates a general principle of computation: computational procedures can generally be reduced by increasing the size of the workspace (in our case, adding more variables). Actually, this goes back to a fundamental principle of physics: time and space are complementary concepts. That is the reason why relativity theory, and not classical mechanics, provides the correct description of reality. In second place, the constraint has been converted from an inequality to an equation. It is this conversion into an equation that makes analytical solution methods possible. The variable s is called a slack variable because it measures the amount of slack (idle) resources still remaining in stock at any point in time during the production process. Since it is not possible to have negative slack, nonnegative constraints also apply to slack variables. All constraints are automatically converted by LP software into their standard form (equations) by creating and adding slack variables. The Lego problem has two constraints, so two slack variables are required: 2x + y + s1 = 6 2x + 2y + s2 = 8 Where s1 = number of large blocks remaining in stock, s2 = number of small blocks remaining in stock, and s1, s2 0. To convert constraints to standard form, a surplus variable is subtracted on the left hand side of the constraint. For example, suppose that at least two items, either tables or chairs, are needed for demo purposes in the showroom. This requirement is captured by the following inequality constraint: x+y2

Since it is possible to exceed the minimum required production quantity, the only way to obtain an equation when converting to standard form is to subtract the excess production (the quantity produced in excess of the minimum requirement): x + y - s3 = 2 Where s3 = number of items produced in excess of showroom requirements. Nonnegative constraints are also required for surplus variables. Thus, s3 0. All constraints are automatically converted by LP software into their standard form by creating and subtracting surplus variables. In practical terms, slack and surplus variables keep track of basically the same thing: by how much is the left hand side of the constraint different from the RHS constant. If there is a difference, it must be positive, by definition. If there is no difference, s = 0. The names slack and surplus serve merely to indicate the direction of the difference, that is, to remind us that the original (pre-standard) constraint was or . Question 9: Explain various steps of the simplex method involved in the computation of an optimum solution to a linear programming problem. Answer: The steps for the computation of an optimum solution are as follows: Step-1: Check whether the objective function of the given L.P.P is to be maximized or minimized. If it is to be minimized then we convert it into a problem of maximizing it by using the result Minimum Z = - Maximum (-z) Step-2: Check whether all right hand side values of the constrains are nonnegative. If any one of values is negative then multiply the corresponding inequation of the constraints by -1, so as to get all values are non-negative. Step-3: Convert all the in equations of the constraints into equations by introducing slack/surplus variables in the constraints. Put the costs of these variables equal to zero. Step-4: Obtain an initial basic feasible solution to the problem and put it in the first column of the simplex table.

Step-5: Compute the net evolutions j = Z j C j (j=1, 2n) by using the relation Z j C j = C B X j C j. o Examine the sign o (i) If all net evolutions are non negative, then the initial basic feasible solution is an optimum solution. o (ii) If at least one net evolution is negative, proceed on to the next step. Step-6: If there is more than one negative net evolution, then choose the most negative of them. The corresponding column is called entering column. o (i) If all values in this column are 0, then there is an unbounded solution to the given problem. o (ii) If at least one value is > 0, then the corresponding variable enters the basis. Step-7: Compute the ratio {X B / Entering column} and choose the minimum of these ratios. The row which is corresponding to this minimum ratio is called leaving row. The common element which is in both entering column and leaving row is known as the leading element or key element or pivotal element of the table. Step-8: Convert the key element to unity by dividing its row by the leading element itself and all other elements in its column to zeros by using elementary row transformations. Step-9: Go to step-5 and repeat the computational procedure until either an optimum solution is obtained or there is an indication of an unbounded solution. Question 10: What do you mean by an optimal basic feasible solution to a linear programming problem? Answer: The basic feasible solution which optimizes (maximizes or minimizes) the objective function value of the given LP problem is called an optimum basic feasible solution. The terms basic solution and basic feasible solution are very important parts of the standard vocabulary of linear programming, we now need to clarify their algebraic properties. For the augmented form of the example, notice that the system of functional constraints has 5 variables and 3 equations, so Number of variables _ number of equations _ 5 _ 3 _ 2.

This fact gives us 2 degrees of freedom in solving the system, since any two variables can be chosen to be set equal to any arbitrary value in order to solve the three equations in terms of the remaining three variables.1 The simplex method uses zero for this arbitrary value. Thus, two of the variables (called the nonbasic variables) are set equal to zero, and then the simultaneous solution of the three equations for the other three variables (called the basic variables) is a basic solution. These properties are described in the following general definitions. A basic solution has the following properties: 1. Each variable is designated as either a nonbasic variable or a basic variable. 2. The number of basic variables equals the number of functional constraints (now equations). Therefore, the number of nonbasic variables equals the total number of variables minus the number of functional constraints. 3. The nonbasic variables are set equal to zero. 4. The values of the basic variables are obtained as the simultaneous solution of the system of equations (functional constraints in augmented form). (The set of basic variables is often referred to as the basis.) 5. If the basic variables satisfy the nonnegative constraints, the basic solution is a BF Solution. Xj _ 0, for j _ 1, 2. . . 5.

EXTREME POINTS AND OPTIMAL SOLUTIONS MULTIPLE OPTIMAL SOLUTIONS There may be more than one optimal solutions. However, the condition is that the objective function must be parallel to one of the constraints. If a weightage average of different optimal solutions is obtained, it is also an optimal solution.

Question 11: Define the dual of a linear programming problem. State the functional properties of the duality. Answer: In the context of linear programming, duality implies that each linear programming problem can be solved in two different ways but having equivalent solutions. Each LP Problem (both minimization and maximization) stated in its original form has associated with another linear programming problem (called dual linear programming problem or in short dual) , which is not unique, based on the same data. In general, it is immaterial which of the two problems is called primal or dual, since the dual of the dual is primal.

Through the dual LP problem, production management attempts to achieve a production plan that optimizes resource allocation so that each product is produced at that quantity such that its marginal opportunity cost equals to its marginal return. Thus the main focus of dual is to find out for each resource, its best marginal value (dual price or shadow price). Essentially then, the shadow prices constitute an internal pricing system for the firms resource that: 1. Permits the rm to select which activity to pursue by considering only the marginal portability of its activities; 2. Allocate the contribution of the firm to its resources at the margin. Functional properties of duality:

There are basically three functional properties of duality. These are: 1. Weak duality: The first property is referred to as weak duality and provides a bound on the optimal value of the Objective function of either the primal or the dual. Simply stated, the value of the objective function for any feasible solution to the primal maximization problem is bounded from above by the value of the objective function for any feasible solution to its dual. Similarly, the value of the objective function for its dual is bounded from below by the value of the objective function of the primal. The sequence of properties to be developed will lead us to the strong duality" property, which states that the optimal values of the primal and dual problems are in fact equal. Further, in developing this result, we show how the solution of one of these problems is readily available from the solution of the other. 2. Unboundedness Property: If the primal (dual) problem has an unbounded solution, then the dual (primal) problem is infeasible. We are now in a position to give the main result of this section, the strong duality property. The importance of this property is that it indicates that we may in fact solve the dual problem in place of origin conjunction with the primal problem. The proof of this result depends merely on observing that the shadow prices determined by solving the primal problem by the simple method give a dual feasible solution. 3. Strong Duality Property: If the primal (dual) problem has a nite optimal solution, then so does the dual (primal) problem and these two values are equal.

Question 12: Explain the primal dual relationship. Answer: A summary of general relationship between primal and dual LPP is:-

(i) (ii) (iii) (iv) (v) (vi)

If primal Objective is to maximize. jth primal value, xj ith primal constraint Primal variable xj unrestricted in sign Primal constraint i = type Primal constraints is less than equal to type

(i) (ii) (iii) (iv) (v) (vi)

If dual Objective is to minimize Jth dual constraint Its dual variable, yi Dual constraint j = type Dual variable yi is unrestricted in sign Dual constraints is greater than equal to type

Question 13: What is duality? What is the significance of dual variables in a LP model? Answer: Duality implies that each LPP can analyse in two different ways but would have equivalent solution. Any LPP can be stated in another equivalent form based on same data. The new LPP is called dual linear programming. By using primal LPP, the production manager attempts to optimize resource allocation by determining qualities of each product to be produced that will maximize profit. Through a dual LPP approach, he attempts to achieve a production plan that optimizes resource allocation in a way that each product is produced at that quantity so that its marginal opportunity cost equals its marginal return. Thus, the main focus of a dual problem is to find for each resource its best marginal value.

Question 14: Write a short note on sensitivity analysis. Answer: A technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions. This technique is used within specific boundaries that will depend on one or more input variables, such as the effect that changes in interest rates will have on a bond's price. Sensitivity analysis is a

way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s). Sensitivity analysis is very useful when attempting to determine the impact the actual outcome of a particular variable will have if it differs from what was previously assumed. By creating a given set of scenarios, the analyst can determine how changes in one variable(s) will impact the target variable. For example, an analyst might create a financial model that will value a company's equity (the dependent variable) given the amount of earnings per share (an independent variable) the company reports at the end of the year and the company's price-to-earnings multiple (another independent variable) at that time. The analyst can create a table of predicted price-to-earnings multiples and a corresponding value of the company's equity based on different values for each of the independent variables. Duality allows us to identify those resources whose adjustment might bring incremental cost or profit improvement in the value of objective function. However duality variable values do not reveal possible magnitude such changes. But the study of sensitivity analysis shows us the magnitude of a change in the optimal solution of an LP model due to discrete variations in its parameters. The degree of sensitivity of the optimal solution due to these variations can range from no change at all to a substantial change in the optimal solution of the given LP problem. Thus the sensitivity analysis, we determine the range (or limit) over which the LP model parameters can be change without affecting the current optimal solution. The sensitivity analysis is also referred to as post optimality analysis because it does not begin until the optimal solution to the given LP model has been obtained. Question 15: Discuss the role of sensitivity analysis in linear programming. Under what circumstances it is needed, and under what conditions do you think it is not necessary? Answer: The study of sensitivity analysis, however, does how the magnitude of a change in the optimal solution of an LP model due to discrete variations in its parameters. The degree of sensitivity of the solution due to these variations can change without affecting the current optimal solution. For this, instead of resolving the entire problem as a new problem with new parameters. We may consider the optimal solution as an initial solution for

the purpose of knowing the ranges, both lower and upper, within which a parameter may assume a value. The circumstances when sensitivity analysis is needed When there are changes in objective function coefficients (cj): 1. Change in the coefficient of a non-basic variable: If cj-zj 0 for all non basic variable in a maximization LP problem, then the current optimal solution remains unchanged. 2. Change in the coefficient of a basic variable: In the maximization LP problem, the change in the coefficient, say ck, of a basic variable xk affects the cj-zj values corresponding to all non basic variables in the optimal Simplex table. It is because of coefficient ck is listed in the cB column of the Simplex table and affects the calculation of zj values. 3. Change in coefficient of a non basic variable in minimization problem

When there is a change in the availability of resources: 1. When slack variable is not in the solution mix 2. When a slack variable is in the basis (column B) 3. Changes in the right side when constrains are mixed type.

Question 16: Explain in brief the methods of initial feasible solution for transportation problem. Answer: There are several methods available to obtain an initial basic feasible solution. (a) NWCM North West Corner Method :- It is a simple and efficient method to obtain an initial solution. This method does not take into account the cost of transportation on any route of transportation. (b) Least cost method:- The main objective is to minimize the total transportation cost, we must try to transport as much as possible through those routes where the unit transportation cost is lowest.

This method takes into account the minimum unit cost of transportation for obtaining the initial solution. (c) VAM Vogels Approximation Method:- In this method, each allocation is made on the basis of the opportunity cost that would have been incurred if the allocation in certain cells with minimum unit transportation cost were missed. In this method allocations are made so that the penalty cost is minimised. The advantage of this method is that it gives an initial solution or is the optimal solution itself.

Question 17: State the transportation problem. Describe clearly the steps involved in solving it. Answer: The structure of transportation problem involves a large number of shipping routes from several supply origins to several demand destinations. The objective is to determine the number of units of an item that should be shipped from an origin to a destination in order to satisfy the required quantity of goods or services at each destination centre. The transportation algorithm discussed is applied to minimize the total cost of transporting a homogeneous commodity from supply centres to demand centres. The steps are as follows:1. Formulate the problem and arrange the data in matrix form:- the formulation of transportation problem is similar to the LPP formulation. Here objective function is the total transportation cost and the constraints are the supply and demand available at each source and destination. 2. Obtain the initial basic feasible solution:There are three methods :a) North West Corner Method b) Least cost method c) Vogels approximation method The initial solution obtained by any of three methods must satisfy following conditions:i) The solution must be feasible, that is it must verify all the supply and demand constraints. ii) The number of positive allocations must be equal to m+n-1 where m is the no. of rows and n is the no. of columns. Any solution that satisfies the above condition is called nondegenerate basic feasible solution, otherwise degenerate solution.

3. Test the initial solution for optimality:- The MODI method is discussed to test the optimality of the solution obtained in step 2. If the current solution is optimal, then stop. Otherwise, determine a new improved solution. 4. Updating the solution:- Repeat the step 3 until the optimal solution is reached.

Question 19: What is an assignment problem? Give two applications. Answer: An assignment problem is a particular case of a transportation problem where the sources are assignment and the destinations are tasks. Every source has a supply of 1 and every destination has a demand of 1. Also, the objective is to minimize the total cost or to maximize the total profit of allocation. Some of the problems where the assignment technique may be useful are assignment of: workers to machines, salesmen to different sales area, clerks to various checkout counters, classes to rooms, vehicles to routes, contracts to bidders, etc. Applications of assignment problem The linear programming model encompasses a wide variety of specific types of problems. The general simplex method is a powerful algorithm that can solve surprisingly large versions of any of these problems. However, some of these problem types have such simple formulations that they can be solved much more efficiently by streamlined algorithms that exploit their special structure. These streamlined algorithms can cut down tremendously on the computer time required for large problems, and they sometimes make it computationally feasible to solve huge problems. This is particularly true for the two types of linear programming problems studied in this chapter, namely, the transportation problem and the assignment problem. Both types have a number of common applications, so it is important to recognize them when they arise and to use the best available algorithms. These special-purpose algorithms are included in some linear programming software packages. This problem has the interpretation of minimizing the cost for the flow of goods through a network. A streamlined version of the Simplex method called the network simplex method is widely used for solving this type of problem, including its various special cases.

A supplementary chapter on the books website describes various additional special types of linear programming problems. One of these, called the transshipment problem, is a generalization of the transportation problem which allows shipments from any source to any destination to first go through intermediate transfer points. Since the transshipment problem also is a special case of the minimum cost flow problem. Much research continues to be devoted to developing streamlined algorithms for special types of linear programming problems, including some not discussed here. At the same time, there is widespread interest in applying linear programming to optimize the operation of complicated large-scale systems. The resulting formulations usually have special structures that can be exploited. Being able to recognize and exploit special structures is an important factor in the successful application of linear programming. Question 20: Give the mathematical formulation of an assignment problem. How does it differ from a transportation problem? Answer: Given n resources and n activities and effectiveness of each resource for each activity, the problem lies in assigning each resource to one and only one activity so that given resource of activity is optimized. Let there be n jobs which are to be assigned to n operators so that one job is assigned to only one operator. i = Index for job, i = 1, 2, n j = Index for operators, j = 1, 2, n Cij = Unit cost for assigning job i to operator j 1 if job i is assigned to operator j Xij = 0 Otherwise The objective is to minimize the total cost of assignment. If job I is assigned to operator 1, the cost is (C11X11). Similarly, for job 1, operator 2 the cost is (C12X12). The objective function is: Minimize = ni=1 nj=1 Cij Xij (1) Since one job (i) can be assigned to any one of the operators, we have following constraint set: ni=1 Xij = 1; for all j;j = 1, 2, ... n (2) Similarly for each operator, there may be only one assignment of job. For this, the constraint set is: ni=1 Xij = 1; for all i;i = 1, 2, ... n (3) The non-negativity constraint is: Xij > 0 (4) ni=1 nj=1 Cij Xij Minimize Z = Subject to ni=1 Xij = 1; for all j;j = 1, 2, ... n nj=1 Xij = 1; for all i;i = 1, 2, ... n

Xij > for all i and all j. The assignment problem is nothing but a variation of the transportation problem with two characteristics:i) ii) The cost matrix is a square matrix. The optimal solution for the problem would always be such that there would be only one assignment in a given row or column of the cost matrix.

Question 21: Define (1) Competitive game: The term game refers to a situation of conflict and competition in which two or more competitors are involved in decision making process in anticipation of certain outcomes over a period of time. The competitors are referred to as players. A player may be an individual, a group of individuals, or an organisation. (2) Pay off matrix: The payoffs in terms of gains or losses, when players select their particular strategies, can be represented in the form of a matrix called payoff matrix. (3) Pure strategies: This is the decision rule that is always used by the player to select the particular strategy. Thus, each player knows in advance all strategies out of which he can always select only one particular strategy, regardless of the other players strategy. The objective of the player is to maximize their gains or minimize their losses. (4) Mixed strategies: Courses of action that are to be selected on a particular occasion with some fixed probability are called mixed strategies. Thus, there is a probabilistic situation and objective of the player is to maximize expected gains or to minimize expected losses by making the choice among pure strategies with fixed probabilities. (5) Saddle point: Maxmin value equals the minmax value, then the game is said to have a saddle point. (6) Optimal strategies: A course of action that puts any player in the most preferred position, irrespective of course of action his competitor adopt, is called as optimal strategy. (7) Two-person zero-sum games: A game with only two players. Say player A and player B, is called a two-person zero-sum game, only if one players gain is equal to the loss of other player in a way that total sum is zero.

Question 22: Explain Minimax and Maxmin principle used in the theory of game. Answer: Maxmin principle: - For player A the minimum value in each row represents the least gain (payoff) to him, if he chooses his particular strategy. These are written in the matrix by row minima. He will then select the strategy that gives the largest gain among the row minimum values. The choice of player A is called the maxmin principle, and the corresponding gain is called the maxmin value of game. Minimax principle: - For player B, who is assumed to be the looser, the maximum value in each column represents the maximum loss to him, if he chooses his particular strategy. These are written in the payoff matrix by column maximum. He will then select the strategy that gives the minimum loss among the column maximum values. This choice of player B is called the minimax principle, and the corresponding loss is the minimax value of the game. Question 23: Explain the following terms in PERT/CPM. (i) Earliest time (ii) Latest time (iii) Total activity time (iv) Event slack (v) Critical path Answer: (i) It is the earliest time for an event to occur immediately after all the preceding activities have been completed without delaying the entire project. (ii) It is the latest time at which an event can occur without causing a delay in the already determined projects completion time (iii)Total activity time is the sum of the durations of all the activities. (iv) The float/slack or free time is the length of time to which a noncritical activity and/or an event can be delayed or extended without delaying the total project completion time. (v) Certain activities in the network diagram of any project are called critical activities because delay in their execution will cause further delay in the project completion time (activities with zero float). The critical path is the sequence of critical activities that form a continuous path between the start of the project and its end. Question 24: What is float? What are the different types of float? Answer: The float or free time is the length of the time in which a noncritical activity and/or an event can be delayed or extended without delaying the total project completion time.

The different types of floats are: Total float: - This is the length of time by which an activity can be delayed when all preceding activities are completed at their earliest possible time and all successor activities can be delayed until their latest permissible time.

The within which an activity must be scheduled is computed from LS and ES values for each activitys start event and end event. That is for each activity (i, j) the total float is equal to the latest allowable time for the event at the event at the end of the activity minus the earliest time for an event at the beginning of the activity minus the activity duration. That is; Total float (TFij) = (Lj Ei) tij = LSij Esij = LFij - EFij Free float: - The free float of a non-critical activity is defined as the time by which the completion of an activity can be delayed without causing any delay in its immediate succeeding activities. Free float values for each activity (i, j) are compared as follows:

Free float (FFij) = (Ej EI) tij = Min { ESij, for all immediate successors of activity (i, j)} Efij

Independent float: - This is the amount of acceptable delay in the completion of an activity so that it neither affects its predecessor nor the successor activities. Thus, independent float is the amount of time available when preceding activities are completed at their latest permissible times and all the following activities can still be completed at their earliest possible times. Independent float values for each activity are computed as follows: Independent float (IFij) = (Ej Li_ - tij = {ESij Lsij} tij The negative value if independent float is considered to be zero.

Question 25: What is replacement situation.

replacement?

Describe

some

important

Answer: The problem of replacement is felt when the job performing units such as men, machines, equipment, parts etc become less effective or

useless due to either sudden or gradual deterioration in their efficiency, failure or breakdown. By replacing those with ones at frequent intervals, maintenance and other overhead costs can be reduced. There are three types of replacement situation: 1) Items such as machines, vehicles, tyres etc whose efficiency deteriorates with age due to constant use and which need increased operating and maintenance costs. In such cases the deterioration level is predictable and is represented by a) Increased maintenance/operational cost b) Its waste or scrap value and damage to item and safety risk. 2) Items such as light bulbs and tubes, electric motors, radio, television parts etc which do not give any indication of deterioration with time but fail all of a sudden and are rendered useless. Such cases require an anticipation of failure to specify the probability of any future time period. With this probability distribution and the cost information, it is desired to formulate optimal replacement policy in order to balance the wasted life of an item, replaced before failure against the costs incurred when the item fails in service. 3) The existing working staffs in an organisation gradually reduce due to retirement, death, retrenchment and other reasons.