Quantitative Techniques

Deepthy Sai Manikandan

Topics:
 Linear Programming
 Transportation Problem
 Assignment problem
 Queuing Theory
 Decision Theory
 Inventory Management
 Simulation
 Network Analysis
LINEAR PROGRAMMING
Linear Programming

 It is a mathematical technique for

optimum allocation of scarce or limited
resources to several competing
activities on the basis of given criterion
of optimality, which can be either
performance, ROI, cost, utility, time,
distance etc.
Steps

 Define decision variables

 Formulate the objective function
 Formulate the constraints
 Mention the non-negativity criteria
Components & Assumptions

 Objective  Proportionality
 Decision Variable  Addivity
 Constraint  Divisibility
 Parameters  Certainity
 Non-negativity
Problem:

An animal feed company must

produce at least 200 kgs of a mixture
consisting of ingredients x1 and x2
daily. x1 costs Rs.3 per kg. and x2
Rs.8 per kg. No more than 80 kg. of
x1 can be used and at least 60 kg. of
x2 must be used. Formulate a
mathematical model to the problem.
Solution:

Minimize Z = 3x1 + 8x2

Subject to x1 + x2 >= 200
x1 <= 80
x2 >= 60
X1 >= 0 , x2 >= 0
Graphical Solution

 Formulate the problem

 Convert all inequalities to equations
 Plot the graph of all inequalities
 Find out the feasilble region
 Find out the corner points
 Substitute the objective function
 Arrive at the solution
Problem:

 Maximize Z = 60x1+50x2
subject to 4x1+10x2 <= 100
2x1+1x2 <= 22
3x1+3x2 <= 39
x1,x2 >= 0
 Solution :
4x1+10x2=100 (0,10)(25,0)
2x1+x2=22 (0,22)(11,0)
3x1+3x2=39 (0,13)(13,0)
x2
22

13

10
E
D

C
A

0 B 11 13 25 x1
Z = 60x1 + 50x2

A (0,0) = 60*0+50*0 = 0
B (11,0) = 60*11+50*0 = 660
C (9,4) = 60*9+50*4 = 740
D (5,8) = 60*5+50*8 = 700
E (0,10) = 60*0+50*10 = 500

Max Z is at C (9,4) and Z = 740

TRANSPORTATION
PROBLEM
Transportation Problem

 A special kind of optimisation problem

in which goods are transported from a
set of sources to a set of destinations
subject to the supply and demand
constraints. The main objective is to
minimize the total cost of
transportation.
Initial Basic Feasible Solution

 North West Corner Method

 Least Cost Method
 Vogel’s Approximation Method

The solution is said to be feasible when

one gets (m+n-1) allotments.
Assignment Problem

 It is a problem of assigning various

people, machines and so on in such a
way that the total cost involved is
minimized or the total value is
maximized.
QUEUING THEORY
Queuing Theory

 A flow of customers from finite/infinite

population towards the service facility
forms a queue due to lack of capacity
to serve them all at a time.

Input Server Output

Measures

 Traffic intensity
 Average system length
 Average queue length
 Average waiting time in queue
 Average waiting time in system
 Probability of queue length
Queuing & cost behavior

Cost of
Total cost
service

Cost of waiting
DECISION THEORY
Decision Theory

The decision making environment

 Under certainity

 Under uncertainity

 Under risk
Decision making under
uncertainity
 Laplace Criterion
 Maxmin Criterion
 Minmax Criterion
 Maxmax Criterion
 Minmin Criterion
 Salvage Criterion
 Hurwicz Criterion
Inventory management

 Inventory is vital to the sucessful

functioning of manufacturing and
retailing organisations. They may be
raw materials, work-in-progress, spare
parts/consumables and finished goods.
Models

 Deterministic Inventory Model

 Inventory Model with Price breaks
 Probabilistic Inventory Model
 Basic EOQ Model

Slope=0 Total cost

Minimu
m total
cost Carrying cost

Ordering cost

Optimal order qty

SIMULATION
Simulation

 It involves developing a model of

some real phenomenon and then
performing experiments on the model
evolved. It is descriptive in nature and
not an optimizing model.
Process

 Definition of the problem

 Construction of an appropriate model
 Experimentation with the model
 Evaluation of the results of simulation
NETWORK ANALYSIS
PERT
CPM
Network Analysis /
Project Management
A project is a series of activities directed
to the accomplishment of a desired
objective.

 PERT
 CPM
CPM-Critical Path Method

 Activities are shown as a network of

precedence relationship using Activity-
On-Arrow (A-O-A) network
construction.
 There is single stimate of activity time
 Deterministic activity time
Project Evaluation &
Review Technique
 Activities are shown as a network of
precedence relationships using A-O-A
network construction.
 Multiple time estimates
 Probabilistic activity time
Crashing

Crashing is shortening the activity

duration by employing more
resources.
cost slope = Cc – Cn/ Tn - Tc