Master of Business Administration- MBA Semester 2

MB0048 – Operations Research
Assignment Set – 2
1. Define Operations Research. Discuss different models available in OR. Churchman, Aackoff and Aruoff defined Operations Research as: “the application of scientific methods, techniques and tools to operation of a system with optimum solutions to the problems”, where 'optimum' refers to the best possible alternative. The objective of Operations Research is to provide a scientific basis to the decision-makers for solving problems involving interaction of various components of the organisation. We can achieve this by employing a team of scientists from different disciplines, to work together for finding the best possible solution in the interest of the organisation as a whole. The solution thus obtained is known as an optimal decision. We can also define Operations Research as “The use of scientific methods to provide criteria for decisions regarding man, machine, and systems involving repetitive operations”. A model is an idealized representation or abstraction of a real-life system. The objective of a model is to identify significant factors that affect the reallife system and their interrelationships. A model aids the decision-making process as it provides a simplified description of complexities and uncertainties of a problem in a logical structure. The most significant advantage of a model is that it does not interfere with the real-life system.

A broad classification of OR models
You can broadly classify OR models into the following types. A. Physical Models include all form of diagrams, graphs and charts. They are designed to tackle specific problems. They bring out significant factors and interrelationships in pictorial form to facilitate analysis. There are two types of physical models: a. Iconic models b. Analog models Iconic models are primarily images of objects or systems, represented on a smaller scale. These models can simulate the actual performance of a product. Analog models are small physical systems having characteristics similar to the objects they represent, such as toys. B. Mathematical or Symbolic Models employ a set of mathematical symbols to represent the decision variable of the system. The variables are related by mathematical systems. Some examples of mathematical models are allocation, sequencing, and replacement models. C. By nature of Environment: Models can be further classified as follows: a. Deterministic model in which everything is defined and the results are certain, such as an EOQ model. b. Probabilistic Models in which the input and output variables follow a defined probability distribution, such as the Games Theory. D. By the extent of Generality Models can be further classified as follows:

b. Write dual of Max Z= 4X1+5X2 subject to 3X1+X2≤15 X1+2X2≤10 5X1+2X2≤20 X1. Y2.a. For example: Linear programming. For example: You can use the sales response curve or equation as a function of only in the marketing function. adding a dummy row and applying Hungarian method. 2. . Solve the following Assignment Problem Sol: Since the number of rows are less than number of columns. Y3 ≥ 0 3. General Models are the models which you can apply in general to any problem. X2≥0 Sol: Min W = 15Y1 + 10Y2 + 20Y3 Subject to 3Y1 + Y2 + 5Y3 ≥ 4 Y1 + 2Y2 + 2Y3 ≥ 5 Y1. Specific Models on the other hand are models that you can apply only under specific conditions.

Selecting (03. associated probabilities are calculated so as to characterize it.  Estimate the time required for each activity. PERT planning involves the following steps:  Identify the specific activities and milestones. PERT was developed in connection with an R&D work. the optimum assignment schedule is O1 – M1. and coordinate tasks within a project. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. 4. and to identify the minimum time needed to complete the total project. . Therefore. O2 – M3. It is basically a method to analyze the tasks involved in completing a given project. emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. M2) arbitrarily. In PERT. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. 4. especially the time needed to complete each task.  Determine the proper sequence of the activities. the total project duration is regarded as a random variable. It is an event-oriented network because in the analysis of a network.  Construct a network diagram. Explain PERT Program (Project) Evaluation and Review Technique (PERT) is a project management tool used to schedule. O1 – M1 10 O2 – M3 09 O3 – M2 16 O4 – M4 00 ------------------------TOTAL 35 Therefore. organize. 3. Some key points about PERT are as follows: 1. Therefore. O3 – M2 AND O4 – M4.Hungarian Method leads to multiple solutions.  Determine the critical path. 2. it had to cope with the uncertainties that are associated with R&D activities.  Update the PERT chart as the project progresses.

α1 is the minimum gain of A when he plays A1 (α1 is the minimum payoff in the first row. Then. However. then his minimum gain is α2. A2.5. . (r. This is the maximum pay-off in the j th column. the maximin and the minimax are equal and the game is said to have saddle point. Explain Maximini-minimax principle Solving a two-person zero-sum game Player A and player B are to play a game without knowing the other player’s strategy. when B plays. accordingly B’s choice would be B1. It is called the value of the game. The maximum loss to B is when Bj is βj = max i ( aij ). A2. the position (r. … . his gain would be a11. The value of a game is the expected gain of player A. the player’s strategy is pure strategy. then the game does not have a saddle point. Suppose A chooses the course of action where αi is maximum. player A would like to maximize his profit and player B would like to minimize his loss.) Similarly. … . … . . the minimum gains are the row minimums α1. Then. . if A plays A2. a1n. v = ars is the common value of the maximin and the minimax. s) is the saddle point. The maximin is α = max I { min j (aij) } Similarly. the game has saddle point.. Saddle point In a two-person zero-sum game. Let α1 = min { a11. B2. if the maximin and the minimax are equal. Also each player would expect his opponent to be calculative. Let A1. Bn. … . the least pay-off in the second row. The minimax is β = min j { max I (aij) } If α = β = v (say). Suppose player A plays A1. he would minimise his maximum loss. … . a12. Saddle point is the position where the maximin (maximum of the row minimums) and minimax (minimum of the column maximums) coincide. You will find corresponding to A’s play A1. If the maximin occurs in the rth row and if the minimax occurs in the sth column. Am.B2. Then the maximum of the row minimum in the pay-off matrix is called maximin. The minimum of the column maximums in the pay-off matrix is called minimax. If α < β. α2. a12. when both the players adopt optimal strategy. Let B1. The saddle point of the game is as follows: 1.. Solution to a game with saddle point Consider a two-person zero-sum game with players A and B.Bn be the courses of action for player B. Note: If a game has saddle point. a1n. αm. Here.Am be the courses of action for player A. The minimum pay-off in each row of the pay-off matrix is encircled. s). … .

2… m) units of homogeneous product and n destinations. Note that. ≥ (greater than) or = (equal). Hence. The cost of transportation from the fictitious destination to all . The transportation problem involves m sources. The corresponding position is the saddle point. 2…. the model studies the minimization of the cost of transporting a commodity from a number of sources to several destinations. if none of the pay-offs is circled or boxed. cj. 2.+ a1nXn ~ b1 a21X1 + a22X2 + --. where aij is the amount of resource i that must be allocated to each unit of activity j. If any pay-off is circled as well as boxed.n) are the decision variables. 3. …. 3 ---. Write short notes on the following: a. Optimization refers to the maximization or minimization of the objective functions. The suggested pure strategy for player B is Bs. It is assumed that the total supply and the total demand are equal. X2. ………………. the suggested solution for the players is mixed strategy. The value of the game is ars. 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. Here ~ is either ≤ (less than). a11X1 + a12X2 + --.. the suggested pure strategy for player A is Ar. that pay-off is the value of the game. 3 ------. m. bi and aij (i = 1. each of which requires bj (j = 1. Linear Programming b. mΣi=1 ai = nΣj=1 bj (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.n) are constants determined from the technology of the problem and Xj (j = 1. 6.2. each of which has available ai (i = 1. the game does not have a saddle point. If bi is the available amount of resources i. n) units of products. Here ai and bj are positive integers. 2. Let (r. the “worth” per unit of activity is equal to cj. in terms of the above formulation the coefficients cj..+ amnXn ~ bm and X1. The objective is to develop an integral transportation schedule that meets all demands from the inventory at a minimum total transportation cost. Transportation Transportation model is an important class of linear programs.. bi and aij are interpreted physically as follows. 3. transportation problem Linear Programming Linear programming focuses on obtaining the best possible output (or a set of outputs) from a given set of limited resources. s) be the saddle point. The maximum pay-off in each column is written within a box.. 2. For a given supply at each source and a given demand at each destination. Note: However. The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Then. You can define the general linear programming model as follows: Maximize or Minimize: Z = c1X1 + c2X2 + --.+ a2nXn ~ b2 am1X1 + am2xX2 + --. Xn ≥ 0 Where. j = 1.+cnXn Subject to the constraints.

3. j = 1. The standard mathematical model for the transportation problem is as follows.sources and from all destinations to the fictitious sources are assumed to be zero so that total cost of transportation will remain the same. i = 1. m and nΣj=1 bj. n (2) With all XIJ ≥ 0 A necessary and sufficient condition for the existence of a feasible solution to the transportation problem (2) is: mΣi=1 CIJ Xij ai = nΣj=1 bj . 2. Then objective is to Minimize Z = mΣi=1 nΣj=1 Subject to mΣi=1 ai. 3. Let Xij be number of units of the homogenous product to be transported from source i to the destination j. -------------. -------------. 2.

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