OPERATIONS RESEARCH THEORY AND APPLICATIONS Fourth Edition JK SHARMA Formery Professor Faculty of Management Studies University of Delhi, Delhi MACMILLAN(© Macmillan Publishers India Led, 1987, 2003, 2007, 2009 ‘All rights reserved. No part ofthis pubicatin may be reproduced or tmansmited, n any for or by any means, without permission. ABy ‘etson who does any inauthorised act in relation to this publication nay be liable to eiminal prosecution and civil elas for damages. First published, 1997 Reprined, 1998, 2000.2002 (sir mes) ‘Second edition, 2003 ‘Reprinted, 2003-2006 fight times) ‘Third edition, 2007 Reprined, 2008 Fourthedition, 2009 Reprnied, 2009 (nice) MACMILLAN PUBLISHERS INDIA LTD. Delhi Bangalore Chennai Kotkat, Mumbai ‘Anmesabad Bhopal Chandigarh Coimbatore Cuttack CGuwabati Hubli Hyderabad Jaipur Lacknow Madurai [Nagpu: Patsa Pune Thirwvananthapuram Visakhapatzam Companies and representatives throughout the weld ISBN 10; 0280-63885.6 ISBN 13: 978-0230-63885-3 Published by Rajiv Beri for Macmillan Publishers Inia Lid 210 Aasar Road, Daryagan} New Deli 110 002 Lasertypeset by Sara Assignments ‘A4(B-49, Johi Colony, Patarganj Ext, Delhi 110 092 Printed at Baba Barkha Nath Printre 37, MIE, Bahadurgarh, Haryana 124 SOT “Ts bok ant ec aig pues Te aba) fe nk vv ei esol caro es tbe Get Be bak do ve any xg copyright oe nelle pope igs aay pene in my mana woo, eee be mor) sae Ben ule ‘Chek any soa al apy ba een ene nin pe ol he plier ning er ese onContents Preface to Fourth Edition Preface to First Edition Chapter Chapter 1 Operations Research: An Introduction 1.1 Operations Research — A Quantitative Approach to Decision Makin 12 The History of Operations Research 3 13 Definitions of Operations Research 14 Features of Operations Research Approach 6 13 Operations Research Approsch wo Problem Solving 7 Conceptual Questions A 7 16 Models and Modelling in Operations Research 8 = Classification Besed on Structure 9» Classification Based on Function or Parpose_10 * Classification Based on Time Reference 1 + Classification Based on Degree of Certainty * Classification Based on Method of Soluion or Quantification V1 1.7 Advantages of Model Building 12 18 Methods for Solving Operations Research Models 12 ‘+ Anelytical (or Deductive) Method 12 + Numerical (or lerative) Method 12 # Monte Carlo Method 12 1.9 Methodology of Operations Research 12 L109 Advantages of Operations Research Study 15 LIL Opportunities and Shortcomings of the Operations Research Approach 16 L12 Features of Operations Research Solution 16, 1.13 Applications of Operations Research 16 114. Operations Research. Models in Practice 17 115 Computer Software for Operations Research 19 Conceptual Questions B19 Chapter Summary 20 Chapter Concep’s Quiz 20 Case_Study 22 Puzzles in Operations Research 24 2 Linear Programming: Applications and Model Formulation 21 Introduction 28 22. Structure of Linear Programming Model 28 * General Structure of an LP Model 28 + Assumptions of an LP Model 29 23 Advantages of Using Linear Programming 29 24 Limitations of Linear Programming 30 25 Application Areas of Linear Programming 30 26 General Mathematical Model of Linear Programming Problem 31 2.7 Guidelines on Linear Programming Model Formulation 32 28 Examples of LP Model Formulation 33 + Examples on Production 33» Examples on Marketing 44 » Examples on Finance 48 + Examples on Agriculture $4 « Example on Trarsportation $6 + Examples on Personnel Conceptual Questions 59 Self Practice Problems 60 ‘Hints_and_Answers 66 Chapter Summary 69 Chapter Conceps Quiz 69 vi 1-26 27-70 37Contents Chapter Chapter 4 Linear Programming: The Sim Chapter 3 Linear Programming: The Graphical Method 71-102 3.1 Introduction 72 32 Important Definitions 72 33 Graphical Solution Methods of LP Problems 72 + Extreme Point Solution Method 13 + Examples on Maximization LP Problem 73 + Examples on Minimization LP Problem 78 » Examples on Mized Constraints LP Problem 81 « Iso-profit (Cost) Function Line Method 88 + Comparison of Two Graphical Solution Methods 89 34 Special Cases in Linear programming 90 + Alternative (or Multiple) Optimal Solutions 90 + Unbounded Solution 91 + Infeasible Solution 93» Redundancy 95 Conceptual Questions 95 ‘Self Practice Problems 9§ Hints_and_Answers _99 (Chapter Summary 101 Chapter Concepts Quiz_101 41_Iniroduetion 104 42. Standard form of an LP Problem 104 4.3 Simplex Algorithm (Maximization Case) 106 44 Simplex Algorithm (Minimization Case) 115 Two-Phase Method IIT + The Big-M Method 122 Selr Practice problems A 130 ‘Hinis_and_Answers 133 45 Some Complications and Their Resolution _135 ‘= Unrestricted Variables 135 + Tie for Entering Basie Variable (Key Column) 137 = Me for L Basic Variable (Key Row) ~ Degeneracy 138 46 Types of Linear Programming Solutions 139 = Altemative (Multiple) Optimal Solutions 139 © Unbounded Soluion 140 + Infeasible Solution 141 ‘Conceptual Questions 142 ‘Self Practice Problems B 143 ‘Hints_and_Answers 144 Chapter Summary _145 ‘Chapter Concepts Quiz 145 Case Study 147 5 Duality in Linear Programming 149-172 .1__Introduction 150 52 Formulation of Dual Linear Programming Problem 150 « Syrmetrical Form 150» Econonic Interpretation of Duol Voriobles_\51 + Economic Interpretation of Dual Constrains 152 + Rules for Constrcting the Dual from Primal ‘Self Practice Problems A156 Hints_and Answers 156 53 Sundaxd Resuls on Duality 157 + Printiple of Comblementary Slackness 181 54 rial Significance of Dual 55 _Advaniages of Duality 163 Conceptual Questions 168 Self Practice Problems B 164 ‘Mims_and_Answers_166 ‘Chapter Summary 168 Chapter Concepts Quiz 168 ry ‘Theorems of Duality 170Contents Chapter 6 Sensitivity Analysis in Linear Programming 173-204 6 soduction 174 62__ Sensitivity Analysis _174 ‘s Change in Objective Function Coefficient (cj) 174 = Change in the Availability of Resources (6) 181 © Change inthe Inpur-Out Coeficienis (ays) 8 + Addition of a New Variable 217 = Addition of a New Variable (Column) 191 + Addition of a New Consirain (Row) 194 Conegpival_ Questions 200 ‘Self Practice Problems —200 ‘Hints_and_Answers 203 Chapter Summary 203 Chapter Concepts Quiz _203 Chapter 7 Integer Linear Programming 205-238 21_Introduction 206 72 Types of Imeger Programming Problems 206 73 Enumeration ard Cutting Plane Solution Concept 207 74 Gomory’s All Integer Cutting Plane Method 207 ‘= Method for Constructing Additional Constraint (Cut) 208 = Steps_of Gomory’ All_Inieger Programming Algorithm 208 Self Practice Problems A” 216 ‘Hints_and_Answers 219 75 Gomony’s Mixed-Inieger Cutting Plane Method 220 = Method for Constructing Additional Constraint (Cut) 220 = Steps of Gomory’ Mixed Integer Programming Algoritln 222 26 Tanck and Bound Method 225 7.7 Applications of Zero-One Integer Programming _232 + Capital Budgeting Problen 232 + Fixed Cost (or Charge) Problem 232 ‘= Plant Location Problem 233 Conceptual Questions 234 ‘Self Practice Problems B 234 ‘Hiin's_and_Answers 235 Chapter Summary 236 Chapter Concepts Qui Case Study 237 Chapter 8 Goal Programming 239-258 81_Introduction 240 32 _ Difference Beween LP and GP Approach 249 83 Concept of Goal Programming 240 « Distinction Among Ohjectives, Goals and Constraints 241 84 Goal Programming Model Formulation 241 * Single Goal with Multiple Subgoals 241 + Equally Ranked Multiple Goals 242 = Ranting and Weighting of Unequal Multiple Goals 243 = Algorithy to Formulate GP Model 244 + General GP Model 244 ‘Graphical Solution Method for Goal Programming 244 Ke Modified Simplex Method of Goal Programming 74% 37 _Altemative Simplex Method for Goal Programming 250 ‘Conceptual Questions 253 ‘Self Practice Problems 253 Chapter Summary _255 ‘Chapter Concepts Quiz _256 Case Study 257 Chapter 9 Transportation Problem 259-312 21_Inireduction 260 92 Mathematical Model of Transportation Problem _260 236 CopyrightContents Chapter Chapter ‘+ General Mathematical Model of Transportation Problem 261 93 The Transportation Algorithm 262 9.4 Methods for Finding Initial Solution 262 ‘= North-West Corner Method (NWCM) 262. « Least Cost Method (LCM) 263 = Vogel's Approximation Method (VAM) 268 Conceptual Questions A 268 ‘Self Practice Problems A268 ‘Hinis_and_Answers 268 95 Test for Optimality 269 ~ Dual of Transporation Model 269 + Economie Inerpretation of u,¥ and vjs 210 {Sep of MOD) Method (Wrantporiaion Algor) “21 = Close-loop in Transportation Table and lis Properties 272 Conceptual Questions B28} ‘Self Practice Problems B_ 281 ‘Hinls_and_Answers 283 96 Variations in Transportation Problem _283 = Unbalanced Supply and Demand 283» Degeneracy and its Resolution 286 = Alternative Optimal Solutions 290 + Prohibited Transportation Routes 293 9.7_Maximization Transportation Problem 297 98 Trans-Shipment Problem 209 Conceptual Questions C_301 ‘Self Practice Problems C301 ‘Hins and Answers 305 Chapter Summary _307 Chapter Concepts Quiz _307 Case Study _ 308) ‘Appendix: Theorems and Results 310 10 Assignment Problem 10.1 Introduction 314 10.2 Mathematical Models of Assignment Problem 314 10.3 Solution Methods of Assignment Problem 315 ‘= Hungarian Method for Solving Assignment Problem 315 Conceptual Questions A321 Self Practice Problems A 321 ‘Hinis_and_Answers 323 10.4 Variations of the Assignment Problem _323 Multiple Optimal Solutions 323 + Maximization Case in yment Problem 323 ‘© Unbalanced Assignment Problem 326 + Restrictions on Assignmenis 326 Conceptual Questions B 330 ‘Self Practice Problems B33 Hims and Answers 332 10.5 A Typical Assignment Problem 333, 106 Travelling Salesman Problem 337 Self Practice Problems C 339 Hinws and Answers 340 Chapter Summary 340 Chapter Concepts Quiz 341 Appendix: Important Results and Theorems 342 11 Decision Theory and Decision Trees 11 Introduction 344 112. Steps of Decision-Making Process 345 113 Types of Decision-Making Environments 345 114 Decision-Making Under Uncertainty 346 313-342 343-390 ‘= Optimism (Maximax or Minimin) Criterion 346 + Pessimism (Maxinin or Minimax) Criterion 346Chapter Chapter Contents + Equal Probabilities (Laplace) Criterion 347 + Coefficient of Optimism (HHurwics) Criterion 34 + Regret (Savage) Criterion 347 Conceptual Questions A 350 Self Practice Problems A 350 Hints and Answers 351 11S. Decision-Making Under Risk 351 + Expectsd Monetary Value (EMV) 351 + Expected Opportunity Loss (EOL) 354 + Expected Value of Perfect Information (EVP) 356 11.6 Posterior Probabilities and Bayesian Analysis 364 Conceptual Questions B 369 Self Practice Problems B 369 Hints and Answers 371 117 Decision Trees Analysis 372 118. Decision-Making with Utilities 383, + Usility Functions 384» Utility Curve 384 * Construction of Utility Curves 384 Self Practice Problems C 386 Hints and Answers 387 Chapter Summary 388 Chapter Concepts Quiz 389 Case Study 390 12 Theory of Games 391-324 124 Introduction 392 122 Two-Peron Zero-Sum Games 393 12.3 Pure Strategies (Minimax and Maximin Principles): Games With Saddle Point 395 + Rules 10 Determine Saddle Point 385 Conceptual Questions A297 Self Practice Problems A 398 Hints and Answers 399 124 Mixed Strategies: Games Without Saddle Point 399 12.5 The Rules (Principles) of Dominance 400 126 Soluion Methods Games without Saddle Point 401 + Algebraic Method 401 Arithmetic Method 409 » Matrix Method 410 * Graphical Method 412 + Linear Programming Method 416 Conceptual Questions B 420 Self Practice Problems B 420 Hints and Answers 422 Chapter Summary 423 Chapter Concepts Quiz 423 13 Project Management: PERT and CPM 425-482 13.1 Introduction 426 132. Basic Differences Between PERT and CPM 426 * Significance of Using PERTICPM 427 133. Phases of Project Management 427 + Project Planning Phase 427 Scheduling Phase 427 Project Control Phase 428 134 PERT/CPM Network Components and Precedence Relationships 428 + Rules for AOA Network Construction 430.» Errors and Dummies in Network 431 Conceptual Questions A 434 Self Practice Problems A 434 135. Critical Path Analysis 436 + Forward Pass Method (For Earliest Event Time) 436 + Backward Pass Method (For Latest Allowable Event Time) 437 + Float (Slack) of an Activity and Event 437 « Critical Path 438 Conceptual Questions B 442 Self Practice Problems B 442 Hints and Answers 445, 136 Project Scheduling with Uncertain Activity Times 445Contents Chapter + Estimation of Project Completion Time 446 Conceptual Questions C450 Self Practice Problems C 450 Mints and Answers 453 137 Project Time-Cost Trade-off 453 + Project Crashing 453 + Time-Cosi Trade-off Procedure 454 Self Practice Problems D462 Hints and Answers 465 138 Updating of the Project Progress 465 19 Resoures Allocation 467 + Resowce Levelling 467 + Resource Smoothing 467 Self Practice Problems E478 Chapter Summary 479 Chapter Concepts Quiz 479 Case Stuly 481 14 Deterministic Inventory Control Models 483-552 4.1 Introduction 484 142. The Meaning of Inventory Control 484 143. Furetional Role of Inventory 485 144 Reesons for Carying Inventory 586 145 Factors Involved in inventory Problem Analysis 487 ‘+ Inventory Cost Components 488 + Demand for Inventory Items 490 + Replenishment Lead Tine 490 + Order Cycle 490 + Lead Time or (delivery lag) 490 + Siock Replenishment 490» Length of Planning Period 490 146 Inventory Model Building 490 + Steps of inventory Model Building 491 + Replenishment Order Size Decisions and Concept of EOQ 491 + Classification of EOQ Models 491 147 Single Item Inventory Control. Models Without Shortages 492 + Model 1(a): EOQ Model with Constant Rate of Demand 492 + Model 1(b): EOQ Model with Different Rates of Demand 495 + Model Ic: Economic Production Quanity Model when Supply (Replenishment) ls Gradual 500 Conceptual Questions A 503 Self Practice Problems A 503 Hints and Answers 505 148 Single Item Inventory Control Models With Shortages 506 + Model HM(a): EOQ Model with Constant Demand and Variable Order Cycle Time 06 + Model 11(6): EOQ Model with Constant Demand and Fixed Reorder Cycle Time $08 + Model H(c): EOQ Model with Gradual Supply and Shortage Allowed 510 Conceptual Questions B S12 Self Practice Problems B. 512 Hints and Answers 513, 149 Muitiftem Inventory Models with Constraints 514 + Model IIN(a): EOQ Mode! with Warehouse Space Constraint S14 + Model I11(): EOQ Modet with Investment Constraint S15 + Model IN): BOO Model with Average Inventory Level Consiraint 516 * Model Il): EOQ Model with Number of Orders Constraint 517 Self Practice Problems C518 14.10 Single Item Inventory Control Models with Quantity Discounts S18 * Model IV : EOQ Model with All Units Quantity Discounts 519 Self Practice Problems D 522 Hints and Answers 523 14.11 Inventory Control Models with Uncertain Demand 525 + Reorder Level with Constant Demand 525» Service Level 526 « Additional Stocks S28 14.12. Information Systems for Inventory Control 530 + The Q-Sjsiem wiih Uncerwin Demand 530Chapter 15. Probabil Chapter Contents + The Q-sysiem with Uncertain Demard and Lead Time $37 * Application of Q-System: Two-Bin System S37_» The P-system with Uncertain Demand 537 + Comparison between Q-sysiem and P-ssstem 540 Conceptual Questions C541 Self Practice Problems E542 Hints and Answers $43 1413 Selective Inventory Control Techniques $44 Conceptual Questions D549 Self Practice Problems F 549 Chapter Summary $50 Chapter Concepts Quiz $50 Case Study 551 tic Inventory Control Models 553-570 151 Introduction $54 152. Instantancous Demand Inventory Control Models without Setup Cost 554 + Model I: Optimal Order Point — Marginel Analysis Approach $55 + Model il: Single Period EOQ Model for Uncertain Demand (Newsboy Problem) SST + Model Iil(a): Instantaneous Demand with Shortages, Discrete Replenishment $87 + Medel I11(3): Instantaneous Demand with Shortages Continuous Replenishment $60 + Model II(c}: Reorder Lead Time Without Set-up Cost Model 561 Conceptual Questions A 563 Self Practice Problems A 563 Hints and Answers S64 153 Continuous Demand Inventory Control Models without Set-up Cost 564 + Medel 1V(a): Continuous Demand, Discrete Replenishment S64 + Model IVI(}): Continuous Demand, Continuous Replenishment 567 154 Instantaneous Demand Inventory Control Model with Setup Cost 568 4+ Madel V- Instantaneous Demand, Continous Replenishment 568 Conceptual Questions B 569 Self Practice Problems B 509 Hints and Answers $70 Chapter Summary 570 16 Queuing Theory 571-624 161 Introduction 572 162 The Structure of « Queuing System S72 + Calling Population Characteristics $73» Queuing Process 37% + Quewe Discipline S76 + Service Process (or Mechanism) 516 163. Performance Measures of « Queuing System 577 + TransiontState and Steady-State S18 « Relotionthips Among Performance Measures 579 164 Probebility Distributions in Queuing Systems 580 * Distribution of Arrivals (Pure Birth Process) 580 + Distribution of Imerarrival Times (Exponentiel Process). $81 + Distribution of Departures (Pure Death Process) $81 + Distribution of Service Times 381 Conceptual Questions A 582 165 Classification of Queuing Models 582 + Solution of Queuing Models 383 166. Single-Server Quesing Models 583 + Model |: (MI) (o4FCES)} Exponential Service ~ Unlimited Queue 583 + Model If: {QM/M/1) + (#/SIRO)) 390 + Model It: ((MM/) : (NIFCS)} Exponential Service ~ Finite or Limited) Queue 591 Conceptual Questions B 592 Self Practice Problems A 593 Hints and Answers 594Contents, Chapter Chapter 167 Multi-Server Queuing Models 595 # Model IV: {(M/Ms) : (o¥®CFS)} Exponential Service ~ Unlimited Queue 595 + Model V: ((WMs) : (NIFCFS)} Exponential Service ~ Limited (Finite) Queue 600 Conceptual Questions C 603 Self Practice Problems B_ 603 Hims and Answers 604 168 Finite Calling Population Queuing Models 604 * Model Vi: (MIM/L) : (MIGD)} Single Server ~ Finite Population (Source) of Arrivals 604 + Model Vit: {(M/M/s) : (MGD)} Multiserver ~ Finite Population (Source) of Arrivals 605 Self Practice Problems C 608 169° Multi-Phase Service Queuing Model 608 + Model Vil: ((M/>E,/I) : (=/FCFS)) Erlang Service Time Distribution with k-Phases 608 Self Practice Problems D. 611 Hinss and Answers 612 16.10 Special Purpose Queuing Models 612 ‘+ Model IX: Single Server, Non-Exponential Service Times Disribution — Unlimited Queve 612 + Model X: Single Server, Constant Service Times ~ Unlimited Queue 613 + Model Xi: Service Level Cost Model 613 Chapter Summary 615 Chapter Concepts Quiz 615 Case Stidy 616 Appendix 16: Probability Distribution of Arsivals and Departures 618 Appendix 16B: Erlangian Service Time Distribution with K-Phases 622 17 Replacement and Maintensnce Models 625-658 17.1 Introduction 626 172 Types of Failure 626 + Gradual Failure 626 + Sudden Failure 626 173. Replacement of Items Whose Efficiency Deteriorates with Time 627 ‘+ Model 1: Replacement Policy for lems Whose Running Cost Increases with Tine and Value of Money Remains Constant During a Period 627 ‘+ Model II: Replacement Policy for items Whose Running Cost Increases with Time but Value of Money Changes with Constant Rate During a Period 634 Conceptual Questions A 640 Self Practice Problems A 640 Hints and Answers 642 174, Replacement of Items that Completely Fail 642 + Individual Replacement Policy 645» Group Replacement Policy 645 Conceptual Questions B 651 Self Practice Problems B 651 Hints and Answers 652 175 Other Replacement Problems 653 + Staffing Problem 653 + Equipment Renewal Problem 654 Self Practice Problems C 656 Hints and Answers 657 Chapter Summary 657 Chapter Concepts Quiz 658 18 Markov Chains 659-686 181 Introduction 660 182 Characteristes of a Markov Chain 650 183 Applications of Markov Analysis 660 184 State and Transition Probabilities. 661 185 Multi-period Transition Probabilities 663 + Steps of Constructing Marie of Transition Probabilities 663 186 Steady-State (Equilibrium) Conditions 672 ' Procedure Jor Determining Steady-State Condition 673 187 Absorbing States and Accounts Receivable Application 618