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a) “Operation Techniques is a bunch of mathematical techniques.” Comment.

Ans:

science that uses methods such as mathematical modelling, statistics, and algorithms to

arrive at optimal or near optimal solutions to complex problems. It is typically concerned

with optimizing the maxima (profit, assembly line performance, crop yield, bandwidth,

etc) or minima (loss, risk, etc.) of some objective function. Operations research helps

management achieve its goals using scientific methods. The terms operations research

and management science are often used synonymously. When a distinction is drawn,

management science generally implies a closer relationship to the problems of business

management. The field of operations research is closely related to Industrial engineering.

Industrial engineers typically consider Operations Research (OR) techniques to be a

major part of their toolset. Some of the primary tools used by operations researchers are

statistics, optimization, probability theory, queuing theory, game theory, graph theory,

decision analysis, and simulation. Because of the computational nature of these fields,

OR also has ties to computer science, and operations researchers use custom-written and

off-the-shelf software. Operations research is distinguished by its frequent use to examine

an entire management information system, rather than concentrating only on specific

elements (though this is often done as well). An operations researcher faced with a new

problem is expected to determine which techniques are most appropriate given the nature

of the system, the goals for improvement, and constraints on time and computing power.

For this and other reasons, the human element of OR is vital. Like any other tools, OR

techniques cannot solve problems by themselves.

1. Critical path analysis or project planning: identifying those processes in a complex

project which affect the overall duration of the project.

2. Designing the layout of a factory for efficient flow of materials.

3. Constructing a telecommunications network at low cost while still guaranteeing QoS

(quality of service) or QoS (Quality of Experience) if particular connections become very

busy or get damaged.

4. Road traffic management and 'one way' street allocations i.e. allocation problems.

5. Determining the routes of school buses (or city buses) so that as few buses are needed

as possible.

6. Designing the layout of a computer chip to reduce manufacturing time (therefore

reducing cost) Managing the flow of raw materials and products in a supply chain based

on uncertain demand for the finished products.

7. Efficient messaging and customer response tactics.

8. Robotizing or automating human-driven operations processes.

9. Globalizing operations processes in order to take advantage of cheaper materials,

labour, land or other productivity inputs Managing freight transportation and delivery

systems (Examples: LTL Shipping, intermodal freight transport).

10. Scheduling.

11. Personnel staffing.

12. Manufacturing steps.

13. Project tasks.

14. Network data traffic: these are known as queuing models or queueing systems.

15. Sports events and their television coverage blending of raw materials in oil.

16. Refineries determining optimal prices, in many retail and B2B settings, within the

disciplines of pricing science.

is used.

Q.1- b) “Operation Research is an aid for the executive in making his decisions

based on scientific methods analysis”. Discuss the above statement in brief.

quantitative basis for decisions regarding the operations under their control. Morse &

Kimball Operations research is a scientific approach to problem solving for executive

management. – H.M. Wagner Operations research is an aid for the executive in making

these decisions by providing him with the needed quantitative information based on the

scientific method of analysis. The mission of Operations Research is to serve the entire

Operations Research (OR) community, including practitioners, researchers, educators,

and students. Operations Research, as the flagship journal of our profession, strives to

publish results that are truly insightful. Each issue of Operations Research attempts to

provide a balance of well-written articles that span the wide array of creative activities in

OR. Thus, the major criteria for acceptance of a paper in Operations Research are that the

paper is important to more than a small subset of the OR community, contains important

insights, and makes a substantial contribution to the field that will stand the test of time.

Operational research, also known as operations research, is an interdisciplinary branch of

applied mathematics and formal science that uses advanced analytical methods such as

mathematical modelling, statistical analysis, and mathematical optimization to arrive at

optimal or near-optimal solutions to complex decision-making problems. It is often

concerned with determining the maximum (of profit, performance, or yield) or minimum

(of loss, risk, or cost) of some real-world objective. Originating in military efforts before

World War II, its techniques have grown to concern problems in a variety of industries.

Operational research, also known as OR, is an interdisciplinary branch of applied

mathematics and formal science that uses advanced analytical methods such as

mathematical modelling, statistical analysis, and mathematical optimization to arrive at

optimal or near-optimal solutions to complex decision-making problems. It is often

concerned with determining the maximum (of profit, performance, or yield) or minimum

(of loss, risk, or cost) of some real world objective. Originating in military efforts before

World War II, its techniques have grown to concern problems in a variety of industries.

Operational research encompasses a wide range of problem-solving techniques and

methods applied in the pursuit of improved decision-making and efficiency. Some of the

tools used by operational researchers are statistics, optimization, probability theory,

queuing theory, game theory, graph theory, decision analysis, mathematical modelling

and simulation.

Because of the computational nature of these fields, OR also has strong ties to computer

science. Operational researchers faced with a new problem must determine which of

these techniques are most appropriate given the nature of the system, the goals for

improvement, and constraints on time and computing power.

three categories:

probability, optimization, and dynamical systems theory.

mathematically, implementing them on computers, solving them using software tools,

and assessing their effectiveness with data. This level is mainly instrumental, and driven

mainly by statistics and econometrics. Application work in operational research, like

other engineering and economics' disciplines, attempts to use models to make a practical

impact on real-world problems.

• The major sub disciplines in modern operational research, as identified by the journal

Operations Research, are:

• Computing and information technologies

• Decision analysis

• Environment, energy, and natural resources

• Financial engineering

• Manufacturing, service sciences, and supply chain management

• Policy modelling and public sector work

• Revenue management

• Simulation

• Stochastic models

• Transportation

Q. 2 Comment on the following statements:

optimization.

1. Systems approach:

The term system approach implies that each problem should be examined in its 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. Under those approaches a manager

makes conscious attempt to understand the relationships among various parts of the

organisation and their role in supporting the overall performance of the organisation.

Operations objective of operations research is to provide managers of the organisation

with a scientific basis for solving problems involving the interaction of components of

the organisation as a whole. The decision which is best for the organisation as a whole is

called an optimal decision. Operations research tries to find the best decision relative to a

large portion of the total organisation. Hence in operations research every problem is

considered in its totality, i.e. O.R. adopts systems approach for solving the problem. 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.”

individual can be an expert on all aspects of a problem under consideration. Thus, O.R.

utilizes the inter disciplinary team approach. Under this approach, a team comprising

experts from different disciplines such as mathematics, statistics, economics,

management, computer science, engineering and psychology, etc. is constituted. Such a

team when confronted with a problem determines its solution by utilizing the diverse

background and skills of the teammates. Every expert of the team, while solving the

problem, 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. If the answer is yes, then it is

solution of the current problem. In this way, each member of the team, by utilizing his

experience and expertise, may be in a position to suggest an approach to overcome a

problem that otherwise may not be possible for an individual to tackle.

3. Methodological Approach:

O.R. utilizes scientific methods for solving a problem. Specifically, the process begins

with the careful observation and formulation of the problem. The next step is to construct

a scientific model (typically a mathematical model) that attempts to abstract the essence

of the real problem. From this model, conclusions or solutions are obtained which are

also valid for the real problem. In an interactive fashion, the model is then verified

through appropriate experiments to determine the best or optional solution to the problem

under consideration.

4. Operations economy:

O.R. is a problem solving and a decision making science. Whenever we have conflicts,

uncertainty and complexity in any situation, O.R. can help in the end to reduce costs and

improve profits and effects substantial “Operations Economy”. Once the old approach of

management by intuit is buried, a scientific approach to decision making is bound to help.

Often the conflicts are so tangled that they defy any intuitive solution, viz., the marketing

function frequently caught up in recoiling the following conflicting objectives: i) product

innovation, ii) high scale volume, iii) increasing market share, iv) flexibility in the market

place, and v)entry into new markets and revenue markets. It is here that O.R. is likely to

convincingly optimize the total effectiveness.

From all above areas of applications, one may conclude that operations research can be

widely advocate a systems approach for making timely management decisions and also

used as a corrective measure. O.R. encourages systems approach which concerned with

the cost optimization, and hence we can say: Operation Research advocates a system

approach and is concerned with optimization.

number of diverse human activities. To be precise an operation uses some valuable

resources like men, money, machines, time, effort, etc. The outcome of the operation has

also some value. An operations research worker is required: i) to minimize the input

value for a specific output, or /and ii) to maximize the output value for a specific input, or

/and iii) maximize some function of these values, e. g. the profit function (difference

between output & input values) or return-on-investment function (ratio of output and

input values), etc.

Some of the areas of management where techniques of operations research are applied

are listed below:

a) cash flow analysis, long range capital requirements, investment portfolios, dividend

policies, etc.

b) Credit policies, credit risks and delinquent account procedures.

c) Claim and complaint procedures.

d) Dividend policies, investment and portfolio management, balance sheet and cash flow

analysis.

a) Determining the quality and timing of purchase of raw materials, machinery, etc.

b) Rules for buying and supplies under varying prices.

c) Bidding policies.

d) Equipment replacement policies.

e) Determination of quantities and timings of purchases.

f) Strategies for exploration and exploitation of new material source.

3. Production Management:

a) Product planning:

i) Location and size of warehouses, distribution centres, retail outlets, etc.

ii) Distribution policy

b) Manufacturing & facility planning:

i) Production scheduling and sequencing

ii) Product scheduling and allocation of resources

iii) Selection & location of factories, warehouses and their sizes

iv) Determining the optimal production mix.

v) Maintenance policies & preventive maintenance.

vi) Scheduling & sequencing the production run by proper allocation of

machines.

4. Marketing Management:

a) Product selection, timing, competitive actions.

b) Advertising strategy & choice of different media of advertising.

c) Number of salesman, frequency of calling of accounts, etc.

d) Effectiveness of market research.

e) Size of the stock to meet the future demand.

5. Personnel Management:

a) Recruitment policies & assignment of jobs.

b) Selection of suitable personnel with due consideration for age and skills, etc.

c) Establishing equitable bonus systems.

a) Determination of areas of concentration of research and development.

b) Reliability & evaluation of alternative designs.

c) Control of development projects.

d) Coordination of multiple research projects.

e) Determination of time & cost requirements.

From all above areas of applications, one may conclude that operations research can be

widely used in taking timely management decisions and also used as a corrective

measure. The application of this tool involves certain data and not merely a personality of

decision maker, and hence we can say: Operations Research has replaced management by

personality.

Q.3. Explain how the profit maximization transportation problem can be

converted to an equivalent cost minimization transportation problem.

minimization transportation problem can be understood by following Illustration as:

A firm has three factories located in city A, B & C and supplies goods to four dealers,

dealer 1, 2, 3 & 4, spread all over the country. The production capacities of these

factories are 1000, 700 & 900 units per month respectively. The monthly orders from the

dealers are 900, 800, 500 & 400 units respectively. Per unit return (excluding

transportation costs) are Rs. 8, 7 & 9 at the three factories. Unit transportation costs from

the dealers are given below:

Factory Dealers

1 2 3 4

City - A 2 2 2 4

City - B 3 5 3 2

City - C 4 3 2 1

From the given data, we compute a matrix of net returns as done in table below;

Factory Dealers Factory

capacity

1 2 3 4

City - A 6 6 6 4 1000

City - B 4 2 4 5 700

City - C 5 6 7 8 900

identify the cell (element) which has the highest contribution per unit (in this problem C-

4 has highest per unit contribution, Rs.8), and subtract all elements from this highest

element. The resultant matrix is a transportation problem with minimizing objective

function. This has been given in the following table.

Factory Dealers Factory

capacity

1 2 3 4

City - A 2 2 2 4 1000

City - B 4 6 4 3 700

City - C 3 2 1 0 900

Dealer 900 800 500 400 2600

requirement

optimal solution is also the optimal solution to the original (maximization) problem. The

value of the objective function is computed by referring the matrix of the maximization

problem. It should be noted that the converted minimization problem will have at least

one element with zero value.

4. Write the difference in the simplex solution procedure for a maximization

problem and a minimization problem of linear programming.

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 ;

2. Introduce surplus variables (Si’s) and artificial variables (Ai) for “³” type of constraint.

4. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will

be “M”

6. Slack and artificial variables will form basic variable for the first simplex table.

Surplus variable will never become basic variable for the first simplex table.

coefficient of the variable].

8. Select the most negative value of Zj – Cj. That column is called key column. The

variable corresponding to the column will become basic variable for the next table.

9. Divide the quantities by the corresponding values of the key column to get ratios;

select the minimum ratio. This becomes the key row. The basic variable corresponding to

this row will be replaced by the variable found in step 6.

10. The element that lies both on key column and key row is called Pivotal element.

11. Ratios with negative and “a” value are not considered for determining key row.

12. Once an artificial variable is removed as basic variable, its column will be deleted

from next iteration.

13. For maximisation problems, decision variables coefficient will be same as in the

objective function. For minimisation problems, decision variables coefficients will have

opposite signs as compared to objective function.

14. Values of artificial variables will always is – M for both maximisation and

minimisation problems.

Q.5 What do you mean by the two-phase method for solving a given LPP? Why is

it used?

Ans:

Every linear programming problem (LPP) is associated with another linear programming

problem involving the same data and optimal solutions. Such two problems are said to be

duals of each other. One problem is called the primal, while the other problem is called

the dual. The dual formulation is derived from the same data and solved in a manner

similar to the original 'primal' formulation. In other words, you can say that dual is the

'inverse' of the primal formulation because of the following reasons.

• If the primal objective function is 'maximisation' function, then the dual objective

function is 'minimisation' function and vice-versa.

• The column co-efficient in the primal constraint is the row co-efficient in the dual

constraint.

• The co-efficients in the primal objective function are the RHS constraint in the dual

constraint.

• The RHS column of constants of the primal constraints becomes the row of co-

efficient of the dual objective function.

The concept of duality is useful to obtain additional information about the variation in the

optimal solution. These changes could be effected in the constraint co-efficient, in

resource availabilities and/or objective function co-efficient. This effect is termed as post

optimality or sensitivity analysis.

If the primal problem possesses a unique non-degenerate, optimal solution, then the

optimal solution to the dual is unique. However, dual solutions arise under a number of

other conditions. Several of the cases which can arise are:

• When the primal problem has a degenerate optimal solution, the dual has multiple

optimal solutions.

• When the primal problem has multiple optimal solutions, the optimal dual solution is

degenerate.

Formulation of Dual Concepts

x1, x2, . . ., xn ≥ 0

i. The maximisation problem in the primal becomes a minimisation problem in the dual

and vice versa

ii. (≤) type of constraints in the primal become (≥) type of constraints in the dual and vice

versa.

iii. The coefficients c1, c2, . . .,cn in the objective function of the primal become b1, b2,

…,bm in the objective function of the dual.

iv. The constants b1, b2,…,bm in the constraints of the primal become c1, c2, . . .,cn in

the constraints of the dual

v. If the primal has n variables and m constraints the dual will have m variables and n

constraints

vi. The variables in both the primal and dual are non-negative

Minimise W = b1 y1 + b2 y2 + . . . +bm ym

y1, y2, . . ., ym ≥ 0

Formation of dual LPP is easier when the standard form of LPP for maximisation

problem must contain “≤” type of constraints, while for minimisation problem, it must

contain “≥” type of constraints.

Two-phase method for solving a given LPP can be divided in the two phses as mentioned

below:

Phase I: Formulate the new problem. Start by eliminating the original objective function

by the sum of the artificial variables for a minimisation problem and the negative of the

sum of the artificial variables for a maximisation problem. The Simplex method

optimizes the ensuing objective with the constraints of the original problem. If a feasible

solution is arrived, the optimal value of the new objective function is zero (suggestive of

all artificial variables being zero). Subsequently proceed to phase -II. If the optimal value

of the new objective function is non-zero, it means there is no solution to the problem and

the method terminates.

Phase II: Start phase II using the optimum solution of phase I as the base. Then take the

objective function without the artificial variables and solve the problem using the

Simplex method.

Why is it used?

The drawback of the penalty cost method is the possible computational error resulting

from assigning a very large value to the constant M. To overcome this difficulty, Two -

Phase Simplex method is considered where the use of M is eliminated by solving the

problem in two phases.

Q. 6 Indicate any four shortcomings of taking a simulation approach to solve an

O.R. problem.

mathematical models, simulation can be easily understood by the users and thereby

facilitates their active involvement. This makes the results more reliable and also ensures

easy acceptance for implementation. 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 behavior.

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.

making. Shortcoming of taking a simulation approach to solve an O. R. problems are as

follows;

1. It does not produce optimal results. Solutions are approximate, and it is some less than

formal but ‘satisfactory’ approach to problem-solving only.

the system and their characteristics is required. The desire is to understand, explain and

predict the dynamic behavior of the system or the sum total of these parts. Adequate

knowledge of the system behavior.

3. 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. A number of simulation runs will be

necessary and thus can be time consuming. As the number of variables increases in terms

of input, the difficulty in finding the optimum values increases considerably.

when manually done.

increases to a considerable extent.

6. Because of the simplicity in adoption of simulation process, one may develop to rely

on this technique too often, although mathematical model is more suitable to the

situation.

7. One should not ignore the cost associated with a simulation study for data collection,

formation of the model. A good simulation model may be very expensive. Often it takes

years to develop a usable corporate planning model.

9. A simulation application is based on the premise that the behaviour pattern of relevant

variables is known, and this very premise sometimes becomes questionable.

10. Not always can the probabilities be estimated with ease or desired reliability. The

results of simulation should always be compared with solutions obtained by other

methods wherever possible, and “tempered” with managerial judgment

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