operation research NAME: KOTIAN SUBHA RAMESH
MASTER OF BUSINESS ADMINISTRATION Second
ASSIGNMENT SET: I
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Operations research helps management achieve its goals using scientific methods. When a distinction is drawn.”Comment. For this and other reasons. a. probability theory. is a bunch of mathematical
Operations Research Management focuses on the mathematical scoring of consequences of a decision aiming to optimize the use of time. allocation problems. the goals for improvement. decision analysis. effort and resources. o Road traffic management and 'one way' street allocations i. the human element of OR is vital. queuing theory. Some of the primary tools used by operations researchers are statistics. o Determining the routes of school buses or city buses so that as few buses are needed as possible. and constraints on time and computing power. Scope of operation Research: o Critical path analysis or project planning for identifying those processes in a complex project which affect the overall duration of the project. An operations researcher faced with a new problem is expected to determine which techniques are most appropriate given the nature of the system. It is an interdisciplinary mathematical science that focuses on the effective use of technology by organizations. graph theory. o Constructing a telecommunications network at low cost while still guaranteeing QoS (quality of service) or Qoe (Quality of Experience) if particular connections become very busy or get damaged. OR also has ties to computer science. Because of the computational nature of these fields. and simulation. and operations researchers use custom-written and off-the-shelf software. OR techniques cannot solve problems by themselves. “Operation Techniques techniques. optimization.operation research
1. o Designing the layout of a computer chip to reduce manufacturing time which can reduce cost and managing the flow of raw materials and
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.e. Industrial engineers typically consider Operations Research (OR) techniques to be a major part of their toolset. rather than concentrating only on specific elements (though this is often done as well). The terms operations research and management science are often used synonymously. Operations research is distinguished by its frequent use to examine an entire management information system. management science generally implies a closer relationship to the problems of business management. game theory. o Designing the layout of a factory for efficient flow of materials. and avoid blunders. The field of operations research is closely related to Industrial engineering. Like any other tools.
and systems involving repetitive operations”. machine. techniques and tools to operation of a system with optimum solutions to the problems”. Network data traffic is known as queuing models and queuing systems. to work together for finding the best possible solution in the interest of the organization as a whole. 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 organization. Personnel staffing. Globalizing operations processes in order to take advantage of cheaper materials. analyzing them mathematically. land or other productivity inputs Managing freight transportation and delivery systems. within the disciplines of pricing science. Manufacturing steps.
b. risk. Refineries determining optimal prices. Work in operational research and management science may be characterized as one of three categories: Modelling work is concerned with the construction of models. labour. Automating human-driven operations processes. or yield or minimum of loss. Project tasks. Efficient messaging and customer response tactics. in many retail and B2B settings. “Operation Research is an aid for the executive in making his decisions based on scientific methods analysis”. where 'optimum' refers to the best possible alternative.operation research
o o o products in a supply chain based on uncertain demand for the finished products. Discuss the above statement in brief. implementing them on computers. performance. The solution thus obtained is known as an optimal decision.
o o o o o o o
Operations research is also used extensively in government where evidencebased policy is used. and assessing their effectiveness with data. Scheduling. Operations Research is often concerned with determining the maximum of profit. Sports events and their television coverage blending of raw materials in oil.
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. This level is mainly instrumental. Aackoff and Aruoff Operation Research is “the application of scientific methods. solving them using software tools.
According to Churchman. or cost of some real-world objective. Operation Research can also be defined as “The use of scientific methods to provide criteria for decisions regarding man. One can achieve this by employing a team of scientists from different disciplines.
In other words. “Operations Research is the scientific study of large systems with a view to identify problem areas and provide the mangers with a quantitative basis for decisions which will enhance their effectiveness in achieving the specified objectives. are: o o o o o o o o o o Computing and information technologies Decision analysis Environment. and natural resources Financial engineering Manufacturing. The decision which is best for the organization as a whole is called an optimal decision. as identified by the journal Operations Research. and supply chain management Policy modelling and public sector work Revenue management Simulation Stochastic models Transportation
Q. Application work in operational research. like other engineering and economics' disciplines. attempts to use models to make a practical impact on real-world problems. energy. Operations research tries to find the best decision relative to a large portion of the total organization. Operations objective of operations research is to provide managers of the organization with a scientific basis for solving problems involving the interaction of components of the organization as a whole.”
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. The major sub disciplines in modern operational research. 2 Comment on the following statements: a) Operation Research advocates a system approach and is concerned with optimization. Hence in operations research every problem is considered in its totality. Systems approach: The term system approach implies that each problem should be examined in it‟s entirely to the extent possible and economically feasible from the point of view of the overall system of which the problem under consideration is one part. service sciences. 1.operation research
and driven mainly by statistics and econometrics. Under those approaches a manager makes conscious attempt to understand the relationships among various parts of the organization and their role in supporting the overall performance of the organization.
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. a team comprising experts from different disciplines such as mathematics. utilizes the inter disciplinary team approach. In an interactive fashion. Methodological Approach: O. computer science.operation research
2. The next step is to construct a scientific model typically a mathematical model that attempts to abstract the essence of the real problem.. In this way. the process begins with the careful observation and formulation of the problem. economics. iii) Increasing market share. O. is a problem solving and a decision making science. Often the conflicts are so tangled that they defy any intuitive solution. management. Thus. Operations economy: O.R. can help in the end to reduce costs and improve profits and effects substantial “Operations Economy”.R. is constituted. may be in a position to suggest an approach to overcome a problem that otherwise may not be possible for an individual to tackle. O. According to this characteristic. From this model. 3. Inter-disciplinary Team Approach: It is an important characteristic of O. etc. Once the old approach of management by intuit is buried. 4. the model is then verified through appropriate experiments to determine the best or optional solution to the problem under consideration. no single individual can be an expert on all aspects of a problem under consideration. utilizes scientific methods for solving a problem. engineering and psychology. statistics.R.R. If the answer is yes. a scientific approach to decision making is bound to help. then it is solution of the current problem. ii) High scale volume. the marketing function frequently caught up in recoiling the following conflicting objectives: i) Product innovation. conclusions or solutions are obtained which are also valid for the real problem. by utilizing his experience and expertise. while solving the problem. Specifically. Such a team when confronted with a problem determines its solution by utilizing the diverse background and skills of the teammates. uncertainty and complexity in any situation. Whenever we have conflicts. each member of the team. Under this approach. Every expert of the team. tries to abstract the essence of the problem and then determines whether a similar type of problem has been dealt by his team or not.
An operation uses some valuable resources like men.2. credit risks and delinquent account procedures. Claim and complaint procedures. The outcome of the operation has also some value. It is here that O.
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iv)Flexibility in the market place v) Entry into new markets and revenue markets. etc.
Purchasing. machinery. Finance. An operations research worker is required: i) to minimize the input value for a specific output. Rules for buying and supplies under varying prices.R.b). etc. time. balance sheet and cash flow analysis. investment portfolios. investment and portfolio management. Comment. etc. encourages systems approach which concerned with the cost optimization and hence Operation Research advocates a system approach and is concerned with optimization. long range capital requirements. money. Some of the areas of management where techniques of operations research are applied are: 1. Q. Credit policies.R. g. Operation Research replaces management by personality. cash flow analysis. machines. Dividend policies. Budgeting and Investments: a) b) c) d) 2. procurement and Exploration: a) b) c) Determining the quality and timing of purchase of raw materials. O. is likely to convincingly optimize the total effectiveness. or /and ii) to maximize the output value for a specific input. e. the profit function -difference between output & input values or return-on-investment function ratio of output and input values. effort. etc. or /and iii) maximize some function of these values. Bidding policies. dividend policies.
Number of salesman. Determination of quantities and timings of purchases. ii) Distribution policy b) Manufacturing & facility planning: i) Production scheduling and sequencing ii) Product scheduling and allocation of resources iii) Selection & location of factories. retail outlets.operation research
d) e) f) 3.
Production Management: a) Product planning: i) Location and size of warehouses. Effectiveness of market research. etc. competitive actions. Selection of suitable personnel with due consideration for age and skills. etc. Establishing equitable bonus systems. distribution centres. Size of the stock to meet the future demand.
Personnel Management: a) b) c) Recruitment policies & assignment of jobs.
4. etc. Strategies for exploration and exploitation of new material source. Equipment replacement policies. Advertising strategy & choice of different media of advertising. timing. warehouses and their sizes iv) Determining the optimal production mix.
Marketing Management: a) b) c) d) e) Product selection.
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. frequency of calling of accounts.
each of which has available ai (i = 1. the model studies the minimization of the cost of transporting a commodity from a number of sources to several destinations. 2… m) units of homogeneous product and n destinations. The transportation problem involves m sources. Transportation model is an important class of linear programs for a given supply at each source and a given demand at each destination. The application of this tool involves certain data and not merely a personality of decision maker Operations Research has replaced management by personality. Research & Development: a) b) c) d) e) Determination development. Determination of time & cost requirements. each of which requires bj (j = 1. n) units of products. The cost cij of transporting one unit of the product from the ith source to the jth destination is given for each i and j. Control of development projects.operation research
6. The objective is to develop an integral transportation schedule that meets all demands from the inventory at a minimum total transportation cost. 2…. Coordination of multiple research projects. Explain how the profit maximization transportation problem can be converted to an equivalent cost minimization transportation problem. Here ai and bj are positive integers.. of areas of concentration of research and
Reliability & evaluation of alternative designs.
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Operations research can be widely used in taking timely management decisions and also used as a corrective measure.
The variable corresponding to the column will become basic variable for the next table. Zj = sum of [cost of variable x its coefficients in the constraints – Profit or cost coefficient of the variable]. Introduce surplus variables (Si‟s) and artificial variables (Ai) for “³” type of constraint. The difference in the simplex solution procedure for a maximization problem and a minimization problem of linear programming can be explained by the steps followed to solve the minimization/ minimization problem as follows. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will be “M” 5. Introduce only Artificial variable for “=” type of constraint. That column is called key column. 1. Write the difference in the simplex solution procedure for a maximization problem and a minimization problem of linear programming. 7. The cost of transportation from the fictitious destination to all sources and from all destinations to the fictitious sources are assumed to be zero so that total cost of transportation will remain the same. 8. 3.operation research
It is assumed that the total supply and the total demand are equal. Surplus variable will never become basic variable for the first simplex table. Find Zj – Cj for each variable. Introduce stack variables (Si‟s) for “£” type of constraint. Select the most negative value of Zj – Cj.
4. Slack and artificial variables will form basic variable for the first simplex table. 4. 2. m n ∑ ai = ∑ bj (1) i=1 j=1 The condition (1) is guaranteed by creating either a fictitious destination with a demand equal to the surplus if total demand is less than the total supply or a (dummy) source with a supply equal to the shortage if total demand exceeds total supply.
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Q. For minimization problems.operation research
9. 15.5 What do you mean by the two-phase method for solving a given LPP? Why is it used? Every linear programming problem (LPP) is associated with another linear programming problem involving the same data and optimal solutions. One problem is called the primal. then the dual objective function is 'minimization' function and vice-versa. o The co-efficient in the primal objective function are the RHS constraint in the dual constraint. its column will be deleted from next iteration. o If the primal objective function is 'maximization' function. The element that lies both on key column and key row is called Pivotal element. The dual formulation is derived from the same data and solved in a manner similar to the original 'primal' formulation. 11. The process is continued till all Zj – Cj ³ 0. In other words. 14. 12. o The column co-efficient in the primal constraint is the row co-efficient in the dual constraint. while the other problem is called the dual. decision variables coefficients will have opposite signs as compared to objective function. Divide the quantities by the corresponding values of the key column to get ratios. The basic variable corresponding to this row will be replaced by the variable found in step 6. For maximization problems. Ratios with negative and “a” value are not considered for determining key row. Such two problems are said to be duals of each other. decision variables coefficient will be same as in the objective function. This becomes the key row. select the minimum ratio.
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. 13. Values of artificial variables will always is – M for both maximization and minimization problems. you can say that dual is the 'inverse' of the primal formulation because of the following reasons. Once an artificial variable is removed as basic variable.
.. o When the primal problem has multiple optimal solutions. Formulation of Dual Concepts Consider the following LPP Maximise Z = c1x1 +c2x2 + . + a1n xn ≤ b1 a21 x1 + a22 x2 + . o When the primal problem is unbounded. This effect is termed as post optimality or sensitivity analysis. optimal solution. the optimal dual solution is degenerate. xn ≥ 0 To construct a dual problem one must adopt the following guidelines:
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. + a2n xn ≤ b2 am1 x1 + am2 x2 + . the dual is infeasible. . . . However. x2.operation research
o The RHS column of constants of the primal constraints becomes the row of co-efficient of the dual objective function. . the dual is unbounded or infeasible. then the optimal solution to the dual is unique. The concept of duality is useful to obtain added information about the variation in the optimal solution. . Characteristics of dual solutions If the primal problem possesses a unique non-degenerate. . . These changes could be effected in the constraint coefficient. the dual has multiple optimal solutions. + amn xn ≤ bm x1. dual solutions arise under a number of other conditions. in resource availabilities and/or objective function co-efficient. . Several of the cases which can arise are: o When the primal problem has a degenerate optimal solution. . o When the primal problem is infeasible. .+ cnxn Subject to the constraints a11 x1 + a12 x2 + .
. . . (≤) types of constraints in the primal become (≥) type of constraints in the dual and vice versa. 4. + amn ym ≥ cn y1. . y2. c2. . +bm ym Subject to the constraints a11 y1 + a21 y2 + . The maximization problem in the primal becomes a minimization problem in the dual and vice versa 2. b2. . The variables in both the primal and dual are non-negative Thus the dual problem will be Minimise W = b1 y1 + b2 y2 + . .bm in the constraints of the primal become c1. .cn in the constraints of the dual 5. 3. .bm in the objective function of the dual. Two Phase Method: Two-phase method for solving a given LPP can be divided in the two phases as mentioned below: Phase I: Formulate the new problem.operation research
1. b2. Start by eliminating the original objective function by the sum of the artificial variables for a minimization problem and the
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.. + am2 ym ≥ c2 a1n y1 + a2n y2 + . .cn in the objective function of the primal become b1. . + am1 ym ≥ c1 a12 y1 + a22 y2 + . The constants b1.….…. . . . If the primal has n variables and m constraints the dual will have m variables and n constraints 6.. it must contain “≥” type of constraints. while for minimization problem. The coefficients c1. c2. . ym ≥ 0 Formation of dual LPP is easier when the standard form of LPP for maximization problem must contain “≤” type of constraints. .
two . problem. In case of other OR models simulation helps the manager to strike a balance between opposing costs of providing facilities (usually meaning long term commitment of funds) and the opportunity and costs of not providing them.operation research
negative of the sum of the artificial variables for a maximization problem.R. The simulation approach is recognised as a powerful tool for management decision-making. The degree to which a simulation model can be made close to reality is dependent upon the ingenuity of the OR team who identifies the relevant variables as well as their behaviour. formation of the model and the computer time as it is fairly significant A simulation application is based on the premise that the behaviour pattern of relevant variables is known. Indicate any four shortcomings of taking a simulation approach to solve an O. Then take the objective function without the artificial variables and solve the problem using the Simplex method. Unlike other mathematical models. Subsequently proceed to phase -II. The Simplex method optimizes the ensuing objective with the constraints of the original problem. The results of simulation should always be compared with
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6. Phase II: Start phase II using the optimum solution of phase I as the base. It is used for: The drawback of the penalty cost method is the possible computational error resulting from assigning a very large value to the constant M. This makes the results more reliable and also ensures easy acceptance for implementation. The range of application of simulation in business is extremely wide. it means there is no solution to the problem and the method terminates. simulation can be easily understood by the users and thereby facilitates their active involvement. the optimal value of the new objective function is zero (suggestive of all artificial variables being zero). One should not ignore the cost associated with a simulation study for data collection. If the optimal value of the new objective function is non-zero.Phase Simplex method is considered where the use of M is eliminated by solving the problem in two phases. If a feasible solution is arrived. and this very premise sometimes becomes questionable. To overcome this difficulty. Not always can the probabilities be estimated with ease or desired reliability.
the difficulty in finding the optimum values increases considerably. As the number of variables increases in terms of input.
The simulation approach is recognized as a powerful tool for management decision-making. o As a number of parameters. R. problem are as follows.operation research
solutions obtained by other methods wherever possible. o A fairly good knowledge of the parts or components of the system and their characteristics is required to able to simulate systems. o A simulation application is based on the premise that the behaviour pattern of relevant variables is known. Adequate knowledge of the system behavior. Often it takes years to develop a usable corporate planning model. and this very premise sometimes becomes questionable. and “tempered” with managerial judgment. o The computer time as it is fairly significant.
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. increase. o The results of simulation should always be compared with solutions obtained by other methods wherever possible. and it is some less than formal but „satisfactory‟ approach to problem-solving only. and “tempered” with managerial judgment. Shortcomings of taking a simulation approach to solve an O. o Each simulation run like a single experiment conducted under a given set of conditions as defined by a set of values for the input solution. Solutions are estimated. o Mathematical model is more suitable to the situation due to the simplicity in adoption of simulation process. explain and predict the dynamic behavior of the system or the sum total of these parts. o It does not produce optimal results. A number of simulation runs will be necessary and thus can be time consuming. the difficulty in finding the optimum values increases to a considerable extent. formation of the model. A good simulation model may be very expensive. one may develop to rely on this technique too often o One should not ignore the cost associated with a simulation study for data collection. The desire is to understand.