OR Course Pack for BBA V Sem

COURSE PACK
FOR
INTRODUCTION
TO
OPERATIONS RESEARCH
BBA V SEM
Course Instructors: Dr. Parul Agrawal

Mrs. Bhawna Duggal
Dr. Nancy Goel
Course Leader: Mrs. Bhawna Duggal
Bharati Vidyapeeth University Institute of Management & Research, New Delhi

An ISO 9001:2015 Certified Institute
“A+” Grade Re-Accreditation by NAAC
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Index
Unit Topic Page No.
Course Outline 1-14

❖ Course Overview
❖ Learning Outcomes
❖ List of Modules
❖ Evaluation Criteria
❖ Books Recommendation
❖ Session Plan
❖ Mapping lecture with course learning
outcomes ❖ Contact Details
1 Introduction to Operations Research 15-19

❖ Definition of Operations Research
❖ History of Operations Research
❖ Characteristics of Operations Research
❖ Application/ Scope of Operations Research
❖ Process of Operations Research
❖ Advantages of Operations Research
❖ Limitations of Operations Research
2 Linear Programming Problem (LPP) 20 – 31

❖ Definition
❖ Components of LPP
❖ Assumptions underlying LPP
❖ Graphic Solution to LPP
❖ Advantages of LPP
❖ Limitations of LPP
❖ Practice Questions
Formulation
Graphical Method
❖ Additional Notes (if any)
3 Transportation Problem 32 – 42
❖ Inputs
❖ Objective
❖ Transportation Methods
• North-West Corner Rule
• Least Cost Method
• Vogel’s Approximation Method
❖ Test for optimality
❖ Special Cases in Transportation Problems
❖ Flow Charts
4. Assignment Problem 43 – 51
❖ Hungarian Assignment Method
❖ Variations of the Assignment Problem
• Multiple Optimal Solutions:
• Maximization Case in Assignment Problem:
• Unbalanced Assignment Problem
• Prohibition in Assignment Problem
❖ Flow Chart
5. Simulation 52 – 57
❖ Process of Simulation
❖ Monte Carlo Simulation
6. Network Analysis 58 - 68
❖ Rules of Network Construction
❖ Floats
❖ PERT
❖ Difference between PERT & CPM
7. Z Table 69-87
Random No. Table
Previous year Question Papers (Internal)
Previous year Question Papers (University)
BHARATI VIDYAPEETH DEEMED UNIVERSITY
INSTITUTE OF MANAGEMENT AND RESEARCH
Course Outline
BBA-Sem V
ACADEMIC YEAR 2019-20
1. Course Code: J010330 Credits: 4 2. Course Title: Introduction to

Operations Research
3. Course Overview:
An operation research (OR) is the discipline of applying advanced analytical methods to help make better
decisions. It uses mathematical modeling, analysis, and optimization in a holistic approach to improving
our knowledge of systems and designing useful, efficient systems. Its applications range from engineering
to management and from industry to the public sector.
Operations Research (OR) is the application of mathematical techniques and analysis to problem solving
in business and industry, in particular to carrying out more efficiently tasks such as scheduling, or
optimizing the provision of services. OR is an interdisciplinary topic drawing from mathematical
modeling, optimization theory, game theory, decision analysis, statistics, and simulation to help make
decisions in complex situations. This course in OR concentrates on mathematical modeling and
optimization: for example maximizing production capacity, or minimizing risk. The course covers a
variety of mathematical techniques for linear optimization, and the theory behind them. Examples will be
presented from important application areas, such as the emergency services, telecommunications,
transportation, and manufacturing.
This module aims to introduce students to use quantitative methods and techniques for effective
decisions– making; model formulation and applications that are used in solving business decision
problems.
1. To provide students with basic skills and knowledge of operations research and its
application. 2. To make students Understand how to translate a real-world problem, given in
words, into a mathematical formulation.
3. To introduce the students how to use variables for formulating complex mathematical models
in management science.
4. To introduce the students to the use of basic methodology for the solution of LPP, Transportation,
Assignment, PERT/CPM, Simulation etc. and Critically analyzing and interpreting results. 5.
Students must be able to apply the techniques used in operations research to solve real life problems.
The students are expected to review the course readings and the indicated portion of the prescribed
text for class discussions prior to attending each session.
4. Learning Outcomes:
After undergoing this course, the student will be able to:
1. Understand how to translate a real-world problem, given in words, into a mathematical

formulation. 2. How to use different models of OR to solve real life problems.
3. How the scarce resources can be utilized in an efficient manner.
4. Find the ways to achieve the organization objectives: minimizing cost & maximizing
profit/output. 5. Critically analyze and interpret results.
Specific knowledge:
(a) Formulate a Linear Program (LP) or translate into standard form, and use the Graphical Method
to solve.
(c) Formulation and solution of network problems using PERT and CPM.
(d) How to solve transportation & Assignment Problems for time cost & distance
optimization. (e) Better understand the topic of Simulation and its use in practical problems.
5. List of Topics/ Modules:

Topic/ Module Contents/ Concepts
Module I: Introduction to • History

Operations Research
• Meaning & Significance
• Scope and Limitations
• Applications of OR in Business & Management
Module II: Linear • Definition and Components of LPP

Programming Problem
• Formulation of LPP model,
• Solution
• Max/Min Problems, Graphical Method
• Application and Limitation
• Sensitivity Analysis
Module III: Transportation Problems • Formulation
• Initial Feasible Solution using North West Corner
Rule, Row Minima Method, Column Minima
Method, Matrix Minimum Method, VAM
• Optimality Check
• Finding optimal solution/s.
Module IV: Assignment Problem • Meaning, Definition and application of assignment
problem.
• Hungarian Method
• Assignment Problem for Max/ Min Cases.
Module V: Simulation • Introduction

• Monte Carlo Technique
• Business Application
• Limitations
Module VI: Network Analysis • PERT and CPM Techniques

• Introduction to Networks
• Key terms in Network Analysis, Network Models –
PERT/ CPM
• Network Components and Precedence
Relationships
• CPM, PERT
• Determination of PERT times
• Determining critical path
• Floats and Slacks
6. Evaluation Criteria:
Component Description Weight
age for
100
marks
1.End Term It will be based on conceptual questions and situation specific 60 %

Exams application oriented questions. End term exam will cover both pre mid-
term and post mid-term course coverage. Course readings are an
integral component of learning in this course.
2.Mid Term There will be two Internal exams of 10 % weight age each. They will be 20 %
Exams based on conceptual questions and situation specific application oriented
questions. Course readings are an integral component of learning in this
course. At least one of the questions will be based on these readings
which will not be specified to the students.
3.Class Students will be awarded marks for active and constructive participation 10%
Participation in class. Students are also required to submit reflective notes
& Reflective
Notes individually at the end of each class. (Reflective notes are collection of
notes, observation, thoughts and learning that the students have
experienced after attending the class. The reflective notes will include
only the key learning and key takeaways which the students got from
the class.)
4. Continuous Students will be Evaluated 4 times through any of the CES activities 10 %
Evaluation which includes Class test, Case Studies, Quiz on Moodle, Presentations
System (CES)
etc. Their knowledge may be tested through class tests at the end of each
module. They may also be asked to give presentations on the topics
allotted to them and at the end of the complete syllabus they will
required
to appear in the quiz on moodle.
7. Recommended/ Reference Text Books and Resources:
Text Books 1.Vohra, N. D, Quantitative Techniques in Management, 4th Ed, Tata McGraw Hill,
2010.
Course Reading 1. Gupta, P. K., & Hira, D. (2010). Operations Research. S. Chand & Company
Ltd. 2. Sharma, J. K. (2013). Operations Research (5th ed.). Mcmillan Publishers
India Ltd.
3. Taha : An Introduction to Operations Research, PHI
You tube Links https://youtu.be/1CnFjNOewEU
https://youtu.be/ILWbaWrjgU4
https://youtu.be/-aIV14ZLqOM
8. Session Plan:
Schedule Topic to be discussed Reading Due Learning Outcome
by the
students
before
coming to
the class
Module I - Overview of Operation Research Quantitative Techniques in

Management by N.D.Vohra, 4th
Edition
1 History of OR; Meaning & Significance Chapter-1 How to use different

of OR models of OR to
Page No. 3 - 12
solve real life
Scope & Limitations of OR
problems
Applications of OR in Business
Module II - Linear Programming
2 Theoretical concepts of Linear Chapter-2 To develop the skill

programming problems Page No. 19 - and ability to
25 translate a
given real – life
Formulation of Linear
situation into a linear
programming problems
programming format.
3 Formulation of Linear Page No. 19 -

programming problems 25
4 Discussion/Evaluation on Assignment given - Enhancement of

analytical skills
5 Solution by graphical methods Page No. 25-29 How to minimizing

Maximization Problem cost & maximizing
profit/output.
6 Solution by graphical methods-Minimization Page No. 29-32
Problem
7 Solution by graphical methods-Mix Problem Example

2.11- 2.21
8 Special Cases in LPP (Multiple & Page No. 32-37 Enhancement of

Unbounded) analytical skills
9 Discussion/Evaluation on Assignment given -
10 Sensitivity analysis(theory) Notes given
Doubts handling -
Module III - Transportation Problems
11 Introduction about transportation problem Chapter-5 How OR model is

used to optimize the
Solution by North West Corner Method transportation cost
Page No.
204- 209
12 Solution by Least Cost Method Page No. Enhancement of

210- 211 Problem solving and
analytical skills
Solution by Row Minima , column Notes given
Minima Method
13 Solution by Vogel's Approximation Page No. How OR model is

Method 211- 214 used to optimize the
transportation cost
14 Solution by Vogel's Approximation Page No.

Method 211- 214
15 Optimum Solution by Stepping Page No. Enhancement of

stone method 214- 220 Problem solving and
analytical skills
16 Optimum Solution by Modi method Page No.

220- 224
17 Special Cases – Unbalanced, Page No. Enhancement of

Maximization, Restricted 224- 235 analytical skills
18 Special Cases-Degeneracy in T. Problems P. No. 224-235
19 Discussion/Evaluation on Assignment given - Enhancement of

analytical skills
20 Class Test-1 -
10 | P a g e F o r I n t e r n a l C i r c u l a t i o n
Module IV - Assignment Problems
21 Assignment problem-Theoretical Chapter-6 How to use different

Background Page No. models of OR to
288 - 298 solve real life
problems
Hungarian Method of solution Page No.

288 - 298
22 Hungarian Method of solution Page No. How this method is

288 - 298 used to minimize the
time, cost & distance
while
assigning/allocating
work
23 Special Cases – Maximization, Restriction Page No. Enhancement of

299 - 305 analytical skills
24 Special Cases – Multiple Solutions Page No. Enhancement of

25 Applications of Assignment Problem Notes Given
Discussion/Evaluation on Assignment given -
26 Class Test-2 -
Module V - Simulation
27 Introduction to Simulation Chapter-17 How to use different

Page No. models of OR to
878- 888 solve real life
problems
Monte Carlo Method-Practical Problems Page No.
878- 888
28 Monte Carlo Method-Practical Problems Page No. Enhancement of

889- 905 analytical skills
29 Business Applications & Limitations Page No. How OR models

878- 888 are used to solve
the
business problems
Discussion/Evaluation on Assignment given - Enhancement of

analytical skills
30 Class Test-III -
Module VI - Network Analysis
31
Introduction to Networks
Network Models-PERT/CPM Chapter-12 How to achieve time and
Page No.
608 - 616
Network components & cost optimization by
precedence relationship using this model of
OR in projects
32 Representing a Project as a Network Page No.

617 - 619
33 Critical Path Method Page No.

619 - 620
34 Floats –Total, Free & Independent Floats Page No. Enhancement of

35 PERT-project completion time with Page No.

three time estimates 638 - 643
36 PERT-calculation of probability & Page No.

completion time 638 - 643
37 Discussion/Evaluation on Assignment given -
38 Quiz on Moodle -
9. MAPPING LECTURE WITH COURSE LEARNING OUTCOMES

LO1 LO2 LO3 LO4 LO5
LECTURE1 High
LECTURE2 High Medium

LECTURE10 High
LECTURE11 High Medium Low
LECTURE17 High
LECTURE18 High
LECTURE19 High
LECTURE20 High
LECTURE25 High
LECTURE28 High
LECTURE29 High
LECTURE30 High

LECTURE37 High
LECTURE38 High
10. Contact Details:

Name of the Instructor: Mrs. Bhawna Duggal; Dr. Parul Agrawal, Ms. Nisha Nandal
Office Location: Paschim Vihar
Telephone: 011-25285808, ext. 274, 221
Email: b16_dhawan@yahoo.co.in, Parul_agrawal@yahoo.com
Unit 1 – Introduction to Operations Research
Operations
The activities carried out in an organization.
Research
The process of observation and testing characterized by the scientific method.
Operations Research is a quantitative approach to decision making based on the scientific method of problem
solving.
Definitions of Operations Research
• Operations research is the application of the methods of science to complex problems in the direction
and management of large systems of men, machines, materials and money in industry, business,
government and defence. The distinctive approach is to develop a scientific model of the system
incorporating measurements of factors such as chance and risk, with which to predict and compare the
outcomes of alternative decisions, strategies or controls. The purpose is to help management in
determining its policy and actions scientifically.
—Operational Research Society, UK
• Operations research is concerned with scientifically deciding how to best design and operate man–
machine systems usually requiring the allocation of scarce resources.
—Operations Research Society, America
• It is the use of scientific knowledge through interdisciplinary team effort for the purpose of determining
the best utilization of limited resources.
—Hamdy A Taha
• The application of scientific method to study of operations of large complex organizations or activities.
It provides top level administrators with a quantitative basis for decisions that will increase the
effectiveness of such organizations in carrying out their basic purpose.
—Committee on OR of National Research Council
History of Operations Research
• Strategic and tactical problems – World war-II
The term ‘operations research’ was coined as a result of research on military operations during
World War II. Since expecting adequate solutions from individuals or specialists in a single discipline
was unrealistic, groups of individuals who collectively were considered specialists in mathematics,
economics, statistics and probability theory, engineering, behavioural, and physical science were
formed. In Britain, Col. P. M. S. Blackett was assigned the problem of analysing the coordination of
radar equipment at gun sites
• Adoption in other fields
After the war, scientists who had been active in the military operations research (OR) groups made
efforts to apply operations research approach to civilian problems, related to business, industry,
research and development, etc.
• Economic and industrial boom
After World War II, economic and industrial boom resulted in continuous mechanization,
automation, decentralization of operations and division of management functions. Therefore
application of operations research to managerial decision-making became popular.
Characteristics of Operations Research
⚫ Use of Scientific Methods
⚫ Use of Models to represent the complex relationship
⚫ Interdisciplinary approach
⚫ Provision of a quantitative basis for decision making
⚫ Methodological Approach
⚫ Decision-making
⚫ Operations Economy
Applications/Scope of Operations Research
❑ Areas
• Finance
• Production
• Marketing
• Personnel
❑ Techniques
• Linear Programming
• Decision Models
• Network Theory
• Inventory Control
• Queuing Theory
• Sequencing
• Game Theory
• Simulation
Process of Operations Research
18 | P a g e F o r
InternalCirculation
Advantages of Operations Research
⚫ Better Decision-making
⚫ Better control
⚫ Better Co-ordination
⚫ Helpful in complex situations ⚫
Resolve conflicts
⚫ Improves Productivity
Limitations of Operations Research
⚫ Magnitude of Computation
⚫ Non-Quantifiable Factors
⚫ Distance between User and Analyst ⚫
Time and Money Costs
⚫ Implementation
Unit 2- Linear Programming Problem
Definitions
Linear programming is a mathematical technique useful for allocation of ‘scarce’ or ‘limited’ resources, to
several competing activities on the basis of a given criterion of optimality.
The word ‘linear’ refers to linear relationship among variables in a model. That is, a change in one variable
causes a resulting proportional change in other variable. The word ‘programming’ refers to the solution of a
problem that involves the economic allocation of limited resources, by choosing a particular course of action
or strategy among various alternative strategies in order to achieve a desired objective.
Components of an LPP
• Decision Variables
• Objective Function
➢ To maximize or minimize
• Constraints
➢ Involving ≤, =, or ≥ sign
• Non-negativity Condition
➢ Variables to be non-negative
Assumptions underlying Linear Programming
➢ Proportionality
➢ Additivity
➢ Continuity
➢ Certainty
➢ Finite Choices
Graphic Solution to LPPs
➢ Plot constraints
➢ Mark feasible region which should be a convex set
➢ Evaluate corner points/use iso-profit or iso-cost lines to get optimal solution ❖
Redundant constraints
❖ Binding constraints
❖ Non-binding constraints
Solutions to LPPs
• Unique Optimal Solution
• Multiple Optimal Solutions
• Infeasibility: No feasible solution

• Unbounded Solution
Advantages of Linear Programming
• Linear programming helps in attaining the optimum use of productive resources. It also indicates the use
of productive factors effectively by selecting and distributing (allocating) these resources. • Linear
programming technique improves the quality of decisions. In other words, decision-making approach
becomes more objective and less subjective.
• Linear programming technique provides possible and practical solutions by taking into account the
constraints operating outside the problem.
• Linear programming also helps in re-evaluation of the outcome due to a course of action under changing
conditions. This helps to adjust the remainder of the decision process for best results.
Limitations of Linear Programming
• Linear programming treats all relationships among decision variables as linear. However, in real life
neither the objective function nor the constraints concerning business and industrial problems are
linearly related to the variables.
• While solving an LP model, there is no guarantee to get an integer valued solution. Rounding off the
solution to the nearest integer will not yield an optimal solution. In such cases, integer programming is
used to ensure integer value to the decision variables.
• Linear programming model does not take into consideration the effect of time and uncertainty. •
Parameters of LP model are assumed to be constant but in real-life situations, they are neither known nor
constant.
• A LP model has single objective function, whereas in real-life situations we may come across conflicting
multi-objective problems. In such cases, a goal programming model is used to get satisfactory value of
such objectives.
Practice Questions
Q-1 A firm produces three products A, B & C each of which passes through three departments: Fabrication,
Finishing & Packaging. Each unit of product A requires 3, 4 & 2; a unit of product B requires 5, 4 & 4 while
each unit of product C requires 2, 4 & 5 hours respectively in the three departments. Every day 60 hrs are
available in the fabrication department, 72 hrs in the finishing department and 100 hrs in the packaging
department. The unit contribution of product A is Rs. 5, of product B is Rs. 10 and of product C is Rs. 8.
Formulate the problem as LPP.
Q-2 The agricultural research institute suggested the farmer to spread out at least 4800 kg of special
phosphate fertilizer and not less than 7200 kg of a special nitrogen fertilizer to raise the productivity of crops
in his fields. There are two sources for obtaining these – mixtures A and mixtures B. Both of these are
available in bags weighing 100kg each and they cost Rs.40 and Rs.24 respectively. Mixture A contains
phosphate and nitrogen equivalent of 20kg and 80 kg respectively, while mixture B contains these ingredients
equivalent of 50 kg each. Write this as an LPP and determine how many bags of each type the farmer should
buy in order to obtain the required fertilizer at minimum cost.
Q-3 Chocolate India Ltd. produces three varieties of Chocolates – Hard, mild & soft from three different
inputs I1, I2 & I3. One unit of Hard requires 2 units of I1 and 4 unit of I2. One unit of mild requires 5 units of I1,
4 units of I2 and 3 units of I3 and one unit of soft requires 10 units of I1 & 15 units of I3. The total available of
inputs in the company’s warehouse is as under:
I1 - 100 units
I2 - 400 units
I3 - 50 units
The profit per unit for hard, mild & soft are Rs. 20, Rs. 30 and Rs. 40 respectively. Formulate the problem so
as to maximize the total profit by using linear programming.
Q-4 Safe & sound Investment Ltd. wants to invest up to Rs. 10 lakhs into various bonds. The management is
currently considering four bonds, the detail on return & maturity of which are as follows:
Bonds Types Returns Maturity Time
α Govt. 22% 15 years
β Govt. 18% 5 years
γ Industrial 28% 20 years
θ Industrial 16% 3 years
Q-5 To maintain good health, a person must fulfill certain minimum daily requirements of several kinds of
nutrients. For the sake of simplicity let us assume that only three kinds of these needs to be considered
calcium, protein vitamin A. also assume that the person’s diet is to consist of only 2 food items, I & II; whose
prices & nutrient content’s are given in the following table. Find out the optimal combination of the two food
items that will satisfy the daily requirements & entail the least cost.
Foods Calcium Protein Qty Vitamin A Qty Cost per Unit
F1 10 5 2 6
F2 4 5 6 1
Daily Min. Requirements 20 20 12
Q-6 A steel plant manufactures two grades of steel S 1 & S2. Data given below shows the total resources
consumed & profit per unit associated with S1 & S2 .iron and labor are the only resources which are consumed
in the manufacturing process. The manager of the firm wishes to determine the different units of S1 & S2 which
should be manufactured to maximize the total profit.
Resource utilized Unit-requirement Amount Available
S1 S2
Iron (kg) 30 20 300
labour (Hours) 5 10 110
Profit (Rs.) 6 8
Q-7 A manufacturer produces two types of models M1 and M2.Each model of the type M1 requires 4 hours
of grinding and 2 hours of polishing; whereas each model of M2 requires 2 hours of grinding and 5 hours of
polishing. The manufacturer has 2 grinders and 3 polishers. Each grinder works for 40 hours a week and each
polisher works 60 hours a week. Profit on M1 model is Rs.3.00 and on model M2 is Rs.4.00.Whatever
produced in a week is sold in the market. How should the manufacturer allocate his production capacity to the
two types of models, so that he makes maximum profit in a week? = 3
X
Q-8 Alpha Limited produces & sells 2 different products under the brand name black & white. The profits per
unit on these products are Rs. 50 & Rs. 40 respectively. Both black & white employ the same manufacturing
process which has a fixed total capacity of 50,000 man-hours. As per the estimates of the marketing research
department of Alpha Limited, there is a market demand for maximum 8,000 units of Black & 10,000 units of
white. Subject to the overall demand, the products can be sold in any possible combination. If it takes 3 hours
to produce one unit of black & 2 hours to produce one unit of white, formulate the about as a linear
programming model.
4X1 + 2X2 < 80 2X1 + 5X2 < 180 X1, X2 > 0
Q-9 A person wants to decide the constituents of a diet which will fulfill his daily requirements of proteins,
Fats & carbohydrates at the minimum cost. The choice is to be made from four different types of
foods. The yield per unit of these foods is:
Food Type Yield Per Unit Cost per
Proteins Fats Carbohydrates Unit (Rs.)
1 3 2 6 45
2 4 2 4 40
3 8 7 7 85
4 6 5 4 65
Minimum 800 200 700

Requirement
Formulate the linear programming model for the problem.
Q-10 High Quality furniture Ltd. manufactures two products, tables & chairs. Both the products have to be
processed through two machines Ml & M2 the total machine-hours available are: 200 hours ofM1 and 400
hours of M2 respectively. Time in hours required for producing a chair and a table on both the machines is as
follows:
Time in Hours
Machine Table Chair
M1 7 4
M2 5 5
Profit from the Sale of table is Rs. 40 and that from a chair is Rs. 30, determine optimal mix of tables & chairs
so as to maximize the total profit.
Q-11 Good Results Company manufactures & sells in the export market three different kinds of products P 1,
P2 & P3. The anticipated sales for the three products are 100 units of P1, 200 units of P2 & 300 units of P3. As
per the terms of the contract Good results must produce at least 50 units of P 1 & 70 units of P3. Following is
the break – up of the various production lines:
Product Production Hours per Unit Unit Profit
(Rs.)
Department Department Department Department
(A) (B) (C) (D)
P1 0.05 0.06 0.07 0.08 15
P2 0.10 0.12 0.30 20

P3 0.20 0.09 0.07 0.08 25
Available 40.00 45.00 50.00 55.00

hours
Management is free to establish the production schedule subject to the above constraints. Formulate as a
linear programming model assuming profit maximization criterion for Good Results Company.
Q-12 The management of Surya Chemicals is considering the optimal mix of two possible processes. The
values of input & output for both these process are given as follows:
Process Inputs Units Outputs Units
I1 I2 O1 O2
X 2 6 3 7
Y 4 8 5 9
Maximum 500 units of Input I1 and 300 units of I2 are available to Surya Chemicals in the local market. The
forecasted demand for outputs OI & O2 are at least 5,000 units & 7,000 units respectively. The respective
profits from process X & Y are Rs. 1,000 & Rs. 2,000 – per production run. You are required to formulate the
above as a linear programming model.
Solve using Graphical Method
Q-13 A small scale industry manufactures electrical regulators, the assembly of which is being accomplished
by a small group of skilled workers, both men and women. Due to the limitations of space and finance, the
number of workers employed cannot exceed 11 and their salary bill not more than Rs. 60,000 per
month. The male members of the skilled workers are paid Rs. 6000 per month, while the female worker doing
the same work as the male member get Rs. 5000 member contributes Rs. 10,000 per month to total return of
the industry, while the female worker contributes Rs. 8500 per month. Determine the number of male and
female workers to be employed in order to maximize the monthly total return.(maximization- bounded
unique)
Q-14 Maximize: z=2x1 + x2 (Bounded- Unique)
Constraints:
x1 + 2x2 ≤ 360
x1 + x2 ≤ 6
x1 - x2 ≤ 2
x1 - 2x2 ≤ 1
x1, x2 ≥ 0
Q-15 MD Ltd. has two bottling plants, one located at Solan and the other at Mohan Nagar. Each plant
produces three drinks; whisky, beer and fruit juices name A, B, C respectively. The number of bottles
produced per day is as follows:
Plant at
Solan Mohan Nagar
Whisky 1500 1500
Beer 3000 1000
Fruit Juices 2000 5000
A market survey indicates that during the month of April, there will be a demand of 20,000 bottles of whisky,
40,000 bottles of beer and 44,000 bottles of fruit juices. The operating costs per day for plants at Solan and
Mohan Nagar are 600 & 400 monetary units. For how many days each plant is run in April so as to minimize
the production cost while still meeting the market demand?(Unbounded- Minimization- Unique)
Q-16 Use the graphical method to solve the LP problem. (Minimize- Bounded with negative coordinates
Unique (negative) solution)
Minimize Z = − x1 + 2x2
Subject to the constraints
−x1 + 3x2 ≤ 10
x1 + x2 ≤ 6
x1 − x2 ≤ 2
And x1, x2 ≥ 0.
Q-17 Solve the following problem graphically (Maximize- Unbounded- Infinite)
Max Z= 5X1+4X2
Subject to X1-2X2 ≤ 1
X1+2X2 ≥ 3
X1, X2 ≥ 0
Q-18 Solve the following problem graphically: (Maximize- Bounded- Unique)
Max Z= -X1+2X2
Subject to
X1-X2≤ -1
-0.5 +X2 ≤ 2
X1, X2 ≥ 0
Q-19 Maximize Z=4x1 + 3x2 (Bounded- Multiple optimal)
3x1 + 4x2 ≤ 24
8x1 + 6x2 ≤ 48
x1 ≤ 5
x2 ≤ 6
x1, x2 ≥ 0
Q-20 Maximize: z=4x1 + 2x2 (Unbounded- Infeasible)
Constraints:
2x1 + 3x2 ≤ 18
x1 + x2 ≥ 10
x1, x2 ≥ 0
Q-21 An advertising firm desires to reach two types of audiences- customers with annual income of more than
Rs. 40,000 (target audience A) and customers with annual income of less than Rs. 40,000 (target
audience B). The total advertising budget is Rs.2, 00,000. One programme of T.V advertising costs Rs.50, 000
and one programme of radio advertising costs Rs. 20,000. Contract conditions ordinarily require that there
should be atleast3 programmes on T.V and the number of programmes on Radio must not exceed 5. Survey
indicates that a single T.V programme reaches 7, 50,000 customers in target audience A and 1, 50,000 in
target audience B. One Radio programme reaches 40,000 customers on target audience A and 2, 60,000 in
target audience B. Formulate this as a LPP and determine the media mix to maximize the total reach using
graphic method. (Maximize- Bounded- Unique)
NOTES
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Unit III: Transportation Problems
Inputs:
➢ Sources with availability
➢ Destinations with requirements
➢ Unit cost of transportation from various sources to destinations
Objective:
➢ To determine schedule of transportation to minimize total transportation cost

Transportation Method
Step 1
Balance the problem if Aggregate Demand and Aggregate Supply are unequal; place an M in the cost cell if
some route is prohibited; and convert into equivalent minimization problem if it is a maximization problem.
Step 2
Obtain initial solution
❑ North-West Corner Rule: considers only demand and availability
❑ Least Cost Method: considers unit cost, demand and availability
❑ Vogel’s Approximation Method: considers cost differences, demand and availability
Step 3
Test for optimality
For this, check if the number of occupied cells = m + n – 1
If yes, obtain ui and vj values and calculate ∆ij values for unoccupied cells
➢ If all ∆ij values are ≤ 0, it is optimal solution
➢ If all ∆ij values are negative, it is unique optimal solution
➢ If some ∆ij value/s = 0 while others are negative, there are multiple optimal solutions In
case of non-optimal solution go to step 4
Step 4
Improve non-optimal solution
(a) Begin with cell having largest ∆ij, draw a closed path:
✓ Move alternately between rows and columns
✓ Stop only at occupied cells
✓ Start with a + sign in the cell of origin, place – and + signs alternately on cells on the
path
(b) Consider cells with – sign, choose the least quantity in them, add it to each cell with + sign and subtract it
from each cell with – sign
(c) Obtain revised solution and go back to step 3

Special Cases in Transportation Problem
Unbalanced Transportation Problem
A problem is known to be unbalanced problem if Aggregate Demand and Aggregate Supply are unequal; the
first step is to make it balanced by adding a dummy row or dummy column as per the requirement & placing
zero in all the cost cells of that dummy row or dummy column.
Transportation Problem of Maximization
If a problem is of maximization (instead of cost profit /saving is given) then convert it into equivalent
minimization problem by subtracting all the values from the highest value.
Prohibition in Transportation Problem
If some routes are prohibited in the problem then place an M (which denotes vary high cost) in the cost cell
which is prohibited and then solve in usual manner.
Degeneracy in Transportation Problem
If the basic feasible solution of a transportation problem with m origins and n destinations has fewer than
m+n-1 positive cij (Occupied cells), the problem is said to be a degenerate transportation problem.
Degeneracy occurs at two stages:
1) Initial Stage
2) During testing the optimal solution. (Prevents testing optimality of the solution)
Degeneracy is removed by placing an infinitesimally small value ε (Epsilon) in each of the required number
of independent cells
Practice Questions
Q-1 Find out the initial feasible solution using:
i) North West Corner Method,

ii) Least Cost Method/ Matrix Minima Method
iii) Row Minima method
iv) Column Minima Method
v) Vogel’s Approximation Method
Distribution Centers
Plants A B C D Supply
P 2 3 11 7 6
Q 1 0 6 1 1
R 5 8 15 9 10
Requirements 7 5 3 2
Q-2 Find the optimal transportation cost using: MODI Method

P Q R S Supply
A 12 10 12 13 500
B 7 11 8 14 300
C 6 16 11 7 200
Demand 180 150 350 320 1000
Q-3 Given the following transportation problem:

Warehouse Market Supply
A B C
1 10 12 7 180
2 14 11 6 100
3 9 5 13 160
4 11 7 9 120
Demand 240 200 220
It is known that currently nothing can be sent from warehouse 1 to market A and from warehouse 3 to market
C. Solve the problem and determine the least cost transportation schedule. Is the optimal solution obtained by
you is unique? If not, what is/ are the other optimal solution/s?
Q-4 The following matrix gives the distance in kms, from source of supply to the destination. The shipping
cost is Rs. 10per km. What shipping schedule should be used to minimize total cost?
D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8
S2 4 7 7 6 5 5
S3 8 4 6 6 4 9
Demand 4 4 5 4 8
Q-5 Determine a transportation schedule to minimize cost using NWC Rule.

D1 D2 D3 Supply
S1 8 5 6 120
S2 15 10 12 80
S3 3 9 10 80
Demand 150 80 50
Q-6 There are four warehouses located at A, B, C and D with capacity of 90, 50, 80 and 60 tons respectively.
A supply has to be made in 3 cities P, Q and r with a demand of 120, 100 and 110 tons respectively. The
shipping cost per ton is given below:-
P Q R
A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7
• Shipments are prohibited from A to P. Find out the minimum cost.
Q-7 A company supplies the product from its warehouses to 4 cities. The profit per unit is given below.
Warehouse/City 1 2 3 4 Supply
A 6 6 11 15 80
B 4 6 10 12 120
C 6 4 7 6 150
D 4 10 14 14 70
E 8 8 7 9 90
Demand 100 200 120 80
Q-8 The table below records transportation costs per unit of a product from origins O1, O2, O3 and O4 to
destinations D1, D2, D3, D4 and D5. The capacities of the four origins are respectively 55, 45, 30 and 50
while the requirements of the five destinations are respectively 40, 20, 50, 30 and 40.Employing Vogel’s
Approximation Method, or otherwise, make the initial allocations to the origins to satisfy the requirements of
the destinations and test the optimality of these allocations. Use Modified Distribution Method (MODI) for
obtaining an optimal solution that would minimize the total cost of transportation.
Origin Destination Capacity
D1 D2 D3 D4 D5
O1 12 4 9 5 9 55
O2 8 1 6 6 7 45
O3 1 12 4 7 7 30
O4 10 15 6 9 1 50
Requirement 40 20 50 30 40
Find the total cost implied by the solution. Is the solution unique? If not, find an alternative solution as
well.
Q-9 A company has four warehouses and six stores. The warehouses altogether have a surplus of 22 units of a
given commodity, divided among them as follows:
Warehouses 1 2 3 4
Surplus 5 6 2 9
The six stores altogether need 22 units of the commodity. Individual requirements at stores 1, 2,3,4,5 and 6
are 4, 4, 6, 2, 4 and 2 units respectively.
Cost of shipping one unit of commodity from warehouse to stores in rupees is given in the matrix below:
Warehouses Stores
1 2 3 4 5 6
1 9 12 9 6 9 10
2 7 3 7 7 5 5
3 6 5 9 11 3 11
4 6 8 11 2 2 10
How the products should be shipped from the warehouses to the stores so that the transportation cost is
minimum?
Q-10 A company has received a contract to supply gravel to three new construction projects located in
towns A, B and C. The construction engineers have estimated that the required amounts of gravel which will
be needed at these construction projects are:
Project Location Weekly Requirements
(Truckloads)
A 72
B 102
C 41
The company has 3 gravel pits located in towns X, Y and Z. The gravel required by the construction project
can be supplied by three pits. The amount of gravel that can be supplied by each pit is as follows:
Plant: X Y Z
Amount Available (Truckloads) 76 82 77
The company has computed the delivery cost from each pit to each project site. These costs (in Rs.) are shown
in the following table:
Project Location
A B C
4 8 8
16 24 16
8 16 24
Pit
Schedule the shipment from each pit to each project in such a manner that it minimizes the total transportation
cost within the constraints imposed by pit capacities and project requirements. Also find the minimum cost.
Q-11 Find the optimum solution to the following transportation problem in which the cells contain the
transportation cost in rupees.
W1 W2 W3 W4 W5 Available
F1 7 6 4 5 9 40
F2 8 5 6 7 8 30
F3 6 8 9 6 5 20
F4 5 7 7 8 6 10
Required 30 30 15 20 5 100
Q-12 XYZ tobacco Company purchases tobacco and stores in warehouses located in the following four
cities:
Warehouse Location(City) A B C D
Capacity (Tons) 90 50 80 60
The warehouse supply tobacco to cigarette companies in three cities that have the following demand:
Cigarette Company Demand (Tons)
Bharat 120
Janta 100
Red Lamp 110
The following railroad shipping costs per tonne (in hundred rupees) have been determined:
Warehouse Location Bharat Janta Red Lamp
A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7
Because of railroad construction, shipments are temporarily prohibited from warehouse at city A to Bharat
Cigarette Company.
a) Find the optimum distribution for XYZ Tobacco Company.

b) Are there multiple optimum solutions? If yes, identify them.
Q-13 Find the initial solution for the transportation problem by VAM method. Also obtain the optimum
solution by MODI Method.
Plant Market Supply
M1 M2 M3 M4
P1 6 4 9 1 40
P2 20 6 11 3 40
P3 7 1 0 14 50
P4 7 1 12 6 30
Demand 90 30 50 30
Q-14 A company manufacturing air – coolers has two plants located at Mumbai and Kolkata with a capacity
of 200 units and 100 units per week respectively. The company supplies the air – coolers to its four
showrooms situated at Ranchi, Delhi, Lucknow and Kanpur which have a maximum demand of 75, 100, 100
and 30 units respectively. Due to the differences in raw material cost and transportation cost, the profit per
unit in rupees differs which is shown in the table below:
Ranchi Delhi Lucknow Kanpur
Mumbai 90 90 100 110
Kolkata 50 70 130 85
Plan the production program so as to maximize the profit. The company may have its production capacity at
both plans partly or wholly unused.
Q-15 A product is manufactured at four factories A, B, C and D. Their unit production costs are Rs. 2, Rs. 3,
Re 1 and Rs. 5, respectively. Their production capacities are 50, 70, 30 and 50 units, respectively. These
factories supply the product to four stores, demands of which are 25, 35, 105 and 20 units respectively. Unit
transportation cost in rupees from each factory to each store is given in the table below:
Stores
Factories I II III IV
A 2 4 6 11
B 10 8 7 5
C 13 3 9 12
D 4 6 8 3
Determine the extent of deliveries from each of the factories to each of the stores, so that the total production
and transportation cost is the minimum.
Q-16 A company has factories at F1, F2 and F3 that supply products to warehouses at W1, W2 and W3. The
weekly capacities of the factories are 200, 160 and 90 units, respectively. The weekly warehouse requirements
are 180, 120 and 150 units, respectively. The unit shipping costs (in rupees) are as follows:
Factory Warehouse Supply
W1 W2 W3
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150 450
Determine the optimal distribution for this company in order to minimize its total shipping cost.
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Unit IV: Assignment Problem
Assignment problem arises when each assignee (workers, salesmen, vehicles, contracts, etc.) is to be assigned
to exactly one task (sales regions, machines, checkout counters, routes, bidders, etc.) with an objective to
minimize the total cost/time/distance or to maximize total profit.
The problem of assignment arises because resources that are available have varying degree of efficiency for
performing different tasks. The cost, profit or time of performing different tasks is also different.
Assignment Problem
• Can be solved by complete enumeration
• Can be formulated and solved as a transportation problem
• Can be formulated and solved an LPP (a 0-1 IPP)
• Can be solved by Hungarian Assignment Method (HAM)
• HAM is most efficient of all methods
Hungarian Assignment Method
Step 1
➢ Balance the problem if it is unbalanced
➢ Place an M as the cost element if some assignment is prohibited
➢ Convert into equivalent min problem if it is a max problem
Step 2
Obtain zeros in every row and column by row reductions and column reductions
Step 3
Cover all zeros by least number of horizontal/ vertical lines
If number of lines = n move to step 4 else make adjustment: select least uncovered value; subtract it from
every uncovered value; and add to each one at intersection of lines
Again cover zeros with lines to find if you could go to 4
Step 4
Make assignments by considering zeros
Variations of the Assignment Problem
Multiple Optimal Solutions:
While making assignments, it is possible to have two or more ways to strike off a certain number of
zeros. This indicates that there are multiple optimal solutions with the same optimal value of objective
function.
Maximization Case in Assignment Problem:
If an assignment problem is for maximization of profit/revenue, then such problems are solved by
converting given data on profit/revenue into cost data as follows:
Locate largest payoff element in the assignment table and then subtract all elements of the table from
this element. The new assignment problem, so obtained, can be solved by using the Hungarian
method.
Unbalanced Assignment Problem
Hungarian method requires that the number of columns and rows in the assignment matrix be equal.
Otherwise, assignment problem is called an unbalanced problem. To make given matrix a square
matrix, dummy row(s) or column(s) are added (with zeros cost elements).
Prohibition in Assignment Problem
If some routes are prohibited in the problem then place an M (which denotes vary high cost) in the
cost cell which is prohibited and then solve in usual manner.
Practice Questions
Q-1 To stimulate interest and provide an atmosphere for intellectual discussion, the finance faculty in
management school decides to hold special seminars on 4 contemporary topics- leasing, portfolio
management, mutual funds and swaps & options. Such seminars would be held once per week in the
afternoons. However, scheduling these seminars (1 for each topic and not more than 1 seminar in the
afternoon) has to be carefully done so that the number of students unable to attend is kept minimum. A
study indicates that the number of students who cannot attend a particular seminar on a specific day is as
follows:
Leasing Portfolio Management Mutual Funds Swaps &

Options
Monday 50 40 60 20
Tuesday 40 30 40 30
Wednesday 60 20 30 20
Thursday 30 30 20 30
Friday 10 20 10 30
Find an optimal schedule of the seminars. Also find out the total number of students who will be missing at
least 1 seminar.
Q-2 A solicitor’s firm employs typists on hourly piece-rate basis for their daily work. There are 5 typists and
their charges and speed are different. According to an earlier understanding, only 1 job is given to 1 typist
and the typist is paid for a full hour even when he works for a fraction of an hour. Find the least cost
allocation for the following data:
Typist Rate/hr (Rs) No. of pages Job No. of pages

typed/hr
A 5 12 P 199
B 6 14 Q 175
C 3 8 R 145
D 4 10 S 298
E 4 11 T 178
Q-3 In a multi-storied building, there are 5 rooms to be assigned to 5 managers. Each room has its own
advantages and disadvantages. They are all of different shapes and sizes. Each of the 5 managers was
asked to rank their preferences amongst the rooms. Their preferences are recorded in the below table:
Manager
M1 M2 M3 M4 M5
302 302 303 302 301
303 304 301 305 302

304 305 304 304 304
301 305 303
302
Most of the managers did not list all the 5 rooms since they were not satisfied with some of these rooms.
Assuming that their preferences can be quantified in numbers, find out as to which manager should be
assigned to which room so that their total preference ranking is minimum.
Q-4 A firm produces 4 products. There are 4 operators capable of producing any of these 4 products. The firm
records 8 hrs a day and allows 30 min for lunch. The processing time in minutes and profit for each of
the products is given below. Find the optimal assignment of products to operators.
Operator A B C D
1 15 9 10 6
2 10 6 9 6
3 25 15 15 9
4 15 9 10 10
Profit/Unit 8 6 5 4
Q-5 A company has 4 sales representatives who are to be assigned 4 sales territories. The monthly sales
increase estimated for each sale representatives are shown below. Suggest optimal assignment so as to
maximize total sales per month.
Sales Sales Territories

Representatives I II III IV
A 200 150 170 220
B 160 120 150 140
C 190 195 190 200
D 180 175 160 190
If for certain reasons, sales representative B cannot be assigned to sales territory III, will the optimal
assignment schedule be different? If so, find that schedule and its effect on sales.
Q6. An airline, operating 7 days a week, has given the following schedule of its flights between New Delhi
and Mumbai. The crews should have a minimum of 5 hours between the flights. Obtain the pairing of
flights that minimizes layover time away from home. For any given pairing, the crew will be based at the
city that results in the smallest layover.
New Delhi-Mumbai Mumbai-New Delhi
Flight No. Departure Arrival Flight No. Departure Arrival
101 5 A.M. 7 A.M. 201 7 A.M. 9 A.M.
102 7 A.M. 9 A.M. 202 8 A.M. 10 A.M.
103 1 P.M. 3 P.M. 203 1 P.M. 3 P.M.
104 7 P.M. 9 P.M. 204 6 P.M. 8 P.M.
Q-7 A company proposes to undertake a national promotional campaign for its newly developed product. It
has decided to schedule a series of 1 minute commercials during peak audience viewing hours of 1 P.M. - 5
P.M. To reach the widest possible audience the company wants to schedule 1 commercial on each of the
networks & to have only 1 commercial appear during each of the 4 one-hour time blocks. The exposure
ratings for each hour, which represent the number of of viewers per Rs. 10,000 spent, are given below:
Network
Viewing Hours A B C D
1-2 P.M. 27.1 18.1 11.3 9.5
2-3 P.M. 18.9 15.5 17.1 10.6
3-4 P.M. 19.2 18.5 9.9 7.7
4-5 P.M. 11.5 21.4 16.8 12.8
a) Which network should be scheduled each hour to provide maximum audience exposure?
b) How would schedule change if it is decided not to use network A between 1-3 P.M.?
NOTES
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Unit 5- Simulation
It is the imitation of the operation of a real-world process or system over time. The act of simulating
something first requires that a model be developed; this model represents the key characteristics or
behaviors/functions of the selected physical or abstract system or process.
The model represents the system itself, whereas the simulation represents the operation of the system over
time.
Simulation is used in many contexts, such as simulation of technology for performance optimization, safety
engineering, testing, training, education, and video. Often, computer experiments are used to study simulation
models. Simulation is also used with scientific modeling of natural systems or human systems to gain insight
into their functioning.[2] Simulation can be used to show the eventual real effects of alternative conditions and
courses of action. Simulation is also used when the real system cannot be engaged, because it may not be
accessible, or it may be dangerous or unacceptable to engage, or it is being designed but not yet built, or it
may simply not exist.[3]
Key issues in simulation include acquisition of valid source information about the relevant selection of key
characteristics and behaviors, the use of simplifying approximations and assumptions within the simulation,
and fidelity and validity of the simulation outcomes.
The most commonly used method for simulation is Monte Carlo Method. 'Monte Carlo Simulation' A
problem solving technique used to approximate the probability of certain outcomes by running multiple trial
runs, called simulations, using random variables.
Process of Simulation
➢ Simulation: a descriptive method
➢ To simulate is to replicate a system
➢ Phases of simulation process:
❑ Definition of the problem and statement of objectives
❑ Construction of an appropriate model
❑ Experimentation with the model constructed
❑ Evaluation of the results of simulation
Monte Carlo Simulation
• Uses random numbers to generate data
• Process calls for:
➢ Determination of random number intervals
➢ Obtaining random numbers and finding the input values corresponding to them ➢
Carrying out needed simulation
• Is used extensively in areas like capital budgeting; inventory control; queuing analysis; and
project management.
Practice Questions
Que.1 The weekly demand for laptops at a dealer’s shop is as follows:
Demand 0 1 2 3 4 5 6
No of Days 5 16 28 12 14 15 10
Simulate the demand for the next two weeks using the following random
numbers. 39, 20, 19, 75, 82, 36, 05, 10, 90, 88, 64, 50, 57, 29
Que-2 The no. of Airhostesses reporting sick at a leading airline company is distributed as follows:
No of 0 1 2 3 4 5 6
Airhostesses
Probability .10 .17 .30 .20 .10 .08 .05
Simulate the absenteeism pattern of the airhostesses for the next two weeks using the following random
numbers.
10, 25, 36, 82, 79, 44, 75, 80, 19, 20, 66, 75, 99, 75
Que-3 At a bill counter customers arrival and service times are distributed as follows:
Inter Arrival Times (In Mins) Probability Service Times (In Mins) Probability
2 .05 2 .05
4 .25 3 .15
6 .45 4 .35
8 .15 5 .30
10 .10 6 .07
7 .08
Assuming that the counter opens at 8.00 AM, Simulate the arrival and Service pattern for the next 10
customers using the following random numbers.
For Inter arrival times: 21, 65, 75, 84, 35, 65, 72, 44, 90, 24
For Service times: 16, 75, 26, 44, 86, 95, 56, 28, 37, 29
Hence compute the waiting times of the customer & server.
Que-4 The occurrence of rain in a city on a day is dependent on whether it rained on the previous day: if it
rained on the previous day the rain distribution is given as follows:
Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain 4 cm Rain 5 cm Rain
Probability .50 .25 .15 .05 .03 .02

If it did not rain on the previous day the rain distribution is given by:
Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain
Probability .75 .15 .06 .04
Simulate the city’s whether for ten days & determine by simulation the total days without rain as well as the
total rain fall during the period using the following random numbers:
67, 63, 39, 55, 29, 78, 70, 6, 78, 76
Assume that for the first day of the simulation it had not rain the day before.
Que-5 Find out the total inventory cost for 15 weeks of a company whose demand during lead time as well as
lead time distribution are given as follows:
Demand 0 1 2 3
Lead Time 2 3 4
Probability .20 .65 .15
The reorder point is 6 units & reorder quantity is 12 units. If the Ordering cost is Rs. 100 per order, holding
cost is Rs. 4/ unit, Shortage cost is Rs. 60 per unit. Assume initial inventory of 10 units. Random No. (Lead
Time): 47, 74
Random No. (Demand): 57, 77, 25, 99, 09, 79, 79, 48, 05, 24, 47, 65, 56, 52, 17,
Que-6 The manager of a warehouse is interested in designing an inventory control system for its products.
The demand of the products comes from various retail outlets & it receives its stock from a factory
whose lead time is not constant. The manager wants to determine best release orders so as to minimize
stock outs yet keeping the total inventory cost at acceptable levels. Based on the study following data
are available:
Demand 0 1000 2000 3000

Lead Time 2 3 4
Probability .30 .40 .30
If the Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit, Shortage cost is Rs. 10 per unit. Determine
10 simulation runs if the ordering policy suggests that whenever inventory level becomes less than or equal to
2000 units, an order equal to 4000 units is placed. Assume inventory of 3000 units in hand. Random Nos.
(Lead Time): 29, 33, 44, 57, 72
Random Nos. (Demand): 31, 70, 53, 86, 32, 78, 26, 64, 45, 12
Also find out total inventory cost if reorder level is 2000 units & reorder quantity is 3000 units.
Que-7 A company trading motor car spares wishes to determine the level of stock. The demand is not certain
& the lead time for stock replenishment is 2 days. Following data is also available:
Demand 3 4 5 6 7
Probability .10 .20 .30 .30 .10
Carry out simulation for a period of 10 days. The Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit.
If the ordering policy is to order 20 units with reorder point at 15 units and inventory in hand is 20 units,
calculate total inventory cost using following Random Nos.
73, 44, 4, 39, 89, 8, 44, 74, 11, 64
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Unit-6 Network Analysis
Rules of Network Construction
1. Each activity is represented by one arrow
2. An activity can begin only when all its predecessors are done
3. Length and bearing of arrows is of no consequence
4. Arrow direction indicates general progression in time – tail events represent start while head
events represent end of activities
5. Events are identified by numbers while activities are represented by their starting and ending
events
6. A network should have only one initial and one final node
7. Introduce as few dummy activities as may be necessary
8. Looping is not permitted
Floats
❑ Total float is the amount of time by which an activity may be delayed without delaying the
project completion
✓ Caution: interpret total floats of activities carefully - all cannot be used independently
❑ Free float is that part of total float which can be used without affecting floats of the succeeding
activities
❑ The part of total float which is not free is called interfering float
❑ Independent float is the amount of time which can be used without affecting the head and the tail
events
Total Float ≥ Free Float ≥ Independent Float
❑ Total float = Latest start time – Earliest start time
❑ Free float = Total float – Head event slack
❑ Interfering float = Total float – Free float
❑ Independent float = Free float – Tail event slack, or zero, whichever is higher
PERT (Program Evaluation & Review Technique)
➢ Uses three time estimates for every activity: optimistic (a), most likely (m) and pessimistic (b) ➢
They are used to obtain expected times and their variances
Expected time = (a+4×m+b)/6; and
Variance = [(b – a)/6]2
➢ Obtain critical path using expected times and identify critical activities
➢ Add variances for critical activities to get variance for completion time and find its square root to
get standard deviation
➢ With expected duration and standard deviation, calculate probabilities of project completion
using normal distribution
PERT/Cost
➢ A modification of PERT which allows planning, monitoring and controlling of project cost and
duration
➢ Budgeting process allows to determine how much money is to be spent every time unit
(week/month) over planned duration of project
➢ Budgets are prepared on the basis of earliest and latest start times of activities ➢
Comparisons are made continuously between the actual costs and budgeted amounts
➢ Comparisons are also made between percentage of work done and percentage of budgeted
amount spent: if former is smaller than the later, we have budget overrun
Practice Questions
Q-1 Draw the Network diagram.

Activity Immediate predecessor
A -
B -
C -
D A
E C
F A
G D,B,E

A -
B A
C A
D C
E B,D
F E
G B,D
H F,G

A -
B A
C A
D B,C
E C
F D
G E
H F,G

A -
B -
C -
D A,B
E B,C
F A,B
G C
H D,E,F
I D
J G
K G
L H,J
M K
N I,L
Q-5 Draw the Network diagram and calculate critical path.

Activity Immediate predecessor Expected completion
Time (weeks)
A - 5
B A 2
C A 6
D B 12
E D 10
F D 9
G D 5
H B 9
I C,E 1
J G 2
K F,I,J 3
L K 9
M H,G 7
N M 8
Q-6 Draw the Network diagram and calculate the following:

1-6 2
Activity Predecessor Optimistic
Time (WK) 2-3 6
A - 2 2-4 2
B - 6 3-5 5
C - 6 4-5 3
D A 2 5-8 1
E A 11 6-7 3
F B, D 8 7-8 4
G B,D 3
H C, F 9 a. Calculate the critical path & expected completion

time
I E 4 b. Calculate the probability of completing the jobs in 41
days.
the Probability of completing the project one week
before the expected time? Calculate the schedule time of
completion with 95% probability
Q-7 Draw the Network diagram and calculate the

following:
Activity Optimistic Time (Days)
1-2 3
What is
Activity Optimistic Time Most Likely Pessimistic (Days)
(Days) (Days)
1-2 1 2 3
2-3 1 2 3
2-4 1 3 5
3-5 3 4 5
4-5 2 3 4
4-6 3 5 7
5-7 4 5 6
6-7 6 7 8
7-8 2 4 6
7-9 4 6 8
8-10 1 2 3
9-10 3 5 7
a. Calculate the critical path & expected completion time

b. Calculate the probability of completing the jobs in 30 days.

(Days) (Days)
1-2 3 5 8
1-3 2 3 5
1-5 2 3 4
2-3 1 2 5
2-6 7 8 9
3-4 1 3 6
3-5 2 4 6
4-5 1 2 4
5-6 1 2 3

b. Calculate the schedule time of completion with 98% probability
(Days) (Days)
1-2 5 8 10
1-3 18 20 22
1-4 26 33 40
2-5 16 18 20
2-6 15 20 25
3-6 6 9 12
4-7 7 10 12
5-7 7 8 9
6-7 3 4 5

b. Calculate the probability OF COMPLETING THE PROJECT IN 41.5 DAYS.

(Days) (Days)
1-2 1 2 9
2-3 1 4 7
2-4 2 4 12
3-4 0 0 0
3-5 2 3 4
3-7 6 8 16
4-5 4 6 8
4-6 3 5 7
5-6 ½ 1 3/2
5-7 5 7 15
6-7 3 5 13
b. Calculate the probability OF COMPLETING THE PROJECT IN 25 DAYS.
c. Calculate the schedule time of completion with 98% probability
(Days) (Days)
10-20 4 8 12
20-30 1 4 7
20-40 8 12 16
30-50 3 5 7
40-50 0 0 0
40-60 3 6 9
50-70 3 6 9
50-80 4 8 6
60-100 4 6 8
70-90 4 8 12
80-90 2 5 8
90-100 4 10 16


(Days) (Days)
1-2 2 4 6
1-3 6 6 6
1-4 6 12 24
2-3 2 5 8
2-5 11 14 28
3-4 15 24 45
3-6 3 6 9
4-6 9 15 27
5-6 4 10 16


Activity Optimistic Time Most Likely (Days) Pessimistic (Days)
(Days)
1-2 1 4 7
1-3 5 10 17
2-4 3 3 3
2-6 1 4 7
3-4 8 15 26
3-5 2 4 8
4-5 5 5 5
5-6 2 5 8
b. Calculate the probability OF COMPLETING THE PROJECT IN 5 days more than the expected time.

Activity Optimistic Time (Days) Most Likely (Days) Pessimistic (Days)
1-2 1 2 3
1-3 1 2 3
1-4 0 0 0
2-5 1 2 3
2-6 2 5 8
3-7 3 4 5
4-8 3 5 7
5-9 4 6 8
6-9 2 3 4
7-8 3 4 5
8-9 4 6 8

b. Calculate the probability of completing the jobs in 19 days.
NOTES
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Bharati Vidyapeeth Deemed University,
Institute of Management and Research (BVIMR), New Delhi

1st Internal Examination
Subject Introduction to Operations Research (BBA –V) Course Code: J010326 Max. Marks: 40 Max.
Time: 2 Hours Instructions: 1. Attempt all questions
2. Show the detailed calculations, wherever required
Q. 1 Attempt any five questions. Answer in 50 words [5 x 2] a) Explain Unbalanced Transportation
Problem with the help of an example.
b) Find the initial Basic Feasible Solution using NWC method:
P Q R SUPPLY
A 7 5 10 100
B 20 9 23 50
C 8 21 7 200
DEMAND 120 170 60
c) Find the initial Basic Feasible Solution using Least Cost method:
W1 W2 W3 SUPPLY
I 4 6 8 300
II 4 2 9 200
III 8 7 10 500
DEMAND 400 200 300
d) Write the applications of Linear Programming.

e) Explain infeasibility in LPP with example.
f) Write the various steps of solving transportation problem using Vogel’s Approximation Method. g)
Explain how to deal with Maximization case in transportation with a suitable example. h) What is
Degeneracy in transportation Problems?
Q. 2 Attempt any two questions. Answer in 200 words [2x 5] a) Discuss the advantages &
limitations of LPP.
b) Explain the graphical method of solving Linear Programming Problems?
c) What is the history of Operations Research?
Q.3 Attempt any two questions. Answer in 200 words [2 x 5]
a) A medical scientist claims to have found a cure for the common cold that consists of three drugs called K, S
and H. His results indicate that the minimum daily adult dosage for effective treatment is 10 mg. of
drug K, 6 mg. of drug S, and 8 mg. of drug H. Two substances are readily available for preparing pills
or drugs. Each unit of substance A contains 6 mg., 1 mg. and 2 mg. of drugs K, S and H respectively,
and each unit of substance B contains 2 mg, 3 mg, and 2 mg., of the same drugs. Substance A costs Rs.
3 per unit and substance B costs Rs. 5 per unit. Find the least-cost combination
of the two substances that will yield a pill designed to contain the minimum daily recommended adult
dosage.
b) A car company is faced with an allocation problem resulting from rental agreement that allow cars to be
transported to locations other than those which they were originally rented. At the present time there are two
centers with 15 and 13 cars available respectively and 4 locations requiring 9, 6, 7 and 9 cars respectively.
The unit transportation costs between the location are given below:-
Destinations/ Sources D1 D2 D3 D4
S1 45 17 21 30
S2 14 18 19 31
Obtain the minimum cost schedule.

c) Use the graphical method to solve the LPP.
Minimize Z = -X + 2Y
-X+ 3Y ≤ 10
X+Y≤6
X–Y≤2
And X, Y ≥ 0
Q.4 Attempt any one. Answer in 600 words [10 x 1]
a) An airplane can carry a maximum of 200 passengers. A profit of Rs. 200 is made on each of the first class ticket and
a profit of Rs 300 is made on each of economy class ticket. The airline reserves at least 20 seats for first class.
However, at least 4 times as many passengers prefer to travel by economy class than by the first class. How
many tickets of each class must be sold in order to maximize profit for the airline? Formulate the problem and
find the solution using graphical method.
b) Consider the transportation Problem presented in the following table:-

Distribution Centre
Plant D1 D2 D3 D4 Supply
P1 19 30 50 12 7
P2 70 30 40 60 10
P3 40 10 60 20 18
Requirement 5 8 7 15 35
Determine the optimal solution of the above problem.
Bharati Vidyapeeth Deemed University, Institute of Management

and Research (BVIMR), New Delhi
2nd Internal Examination
Course BBA Semester V Subject: Introduction to Operations Research Course Code: J010330 Max. Marks:
40 Max. Time: 2:00 Hours
----------------------------------------------------------------------------------------------------------------------------------
- Instructions: - (use of Simple 10 digits Calculator is allowed)
Q. 1 Attempt any five questions: [5 x 2] a) Draw the Network diagram
Activity A B C D E F G H I J
Predecessor - A - C B,C C F D,E,G D,E H,I
b) Define critical path.

c) Define Total Float.
d) What do you understand with expected time?
e) Define Independent Float
f) How do you balance an unbalanced assignment problem?
g) How do you handle maximization case in Assignment Problem? Show with
example. h) Discuss advantages & disadvantages of Monte Carlo Method.
Q. 2 Attempt any two questions: [2 x 5] a) Differentiate between PERT & CPM
b) Write short note on simulation.
c) Discuss Hungarian method of solving assignment problem.
Q.3 Attempt any two questions: [2 x 5]
a) A Sales Manager wishes to assign four sales territories to four sales persons. The Sales person differ in
their Sales acumen and consequently the sales expected to be effected in each territory are different for
each sales person. The estimates of sales per month in thousands of rupees for each sales person in
each territory are given below:
Sales Person/Sales T1 T2 T3 T4
territories
P 56 25 32 45
Q 45 21 54 26
R 21 54 36 45
S 34 35 28 52
Find an optimal schedule to maximize the total sales revenue.

b) A company selling water heaters examines it sales over the past 50 days and notes the following:
Hot Water Heater Sales per day No. of days this heater was sold
4 6
5 5
6 9
7 12
8 8
9 7
10 3
Using the following random numbers, simulate the demand for next 20 days and also calculate the
average demand per day?
10, 24, 03, 32, 23, 59, 95, 34, 34, 51, 08, 48, 66, 97, 03, 96, 46, 74, 77, 44
c) Complete the following table:
Activity Predecessor Duration ES EF LS LF TF HS FF TS IF
A I 12 12 24 0 0
B H,F 14 39 53 0 0
C D 20 19 42 3 10
D I 7 12 29 10 0
E C,G 11 39 53 0 3
F A,D 7 24 39 0 5
G A,D 13 24 42 3 5
H A 15 24 39 0 0
I - 12 0 12 0 0
Q.4 Attempt any one question: an [1 x 10]
a) Draw Network diagram, Calculate Critical path. Expected project Completion time. Also calculate the
probability of completing the project in less than 5 days & greater than 3 days of expected completion
time of the project.
Activity Predecessor Optimistic time (Days) Most Likely time (Days) Pessimistic Time (Days)
A - 7 9 17
B A 5 7 15
C A 1 8 9
D B 9 13 23
E B 6 10 20
F B,C 10 15 20
G B,.C 5 6 13
H D,F 12 17 28
b) Inter arrival and service times studied over past few years for a single channel queuing system
revealed the following patterns:
Inter Arrival Times (In Mins) Probability Service Times (In Mins) Probability
2 .19 1 .15
4 .22 3 .28
6 .32 5 .30
8 .17 7 .17
10 .10 9 .10
Using the following random no, simulate the queue behavior for a period of 60 minutes. Also calculate
waiting time of server & customers.
Random No. for inter arrival time: 19 32 59 81 27 45 26 52 77 46 85 83 34 42 43 07 17 23
Random No for Service times: 08 27 74 96 48 07 65 78 92 49 12 63 10 06 97 53 48 7

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COURSE PACK

Course Instructors: Dr. Parul Agrawal

Bharati Vidyapeeth University Institute of Management & Research, New Delhi

------------------------ ------------------------ ------------------------ Forwarded by

Course Outline 1-14

1 Introduction to Operations Research 15-19

2 Linear Programming Problem (LPP) 20 – 31

1. Course Code: J010330 Credits: 4 2. Course Title: Introduction to

1. Understand how to translate a real-world problem, given in words, into a mathematical

5. List of Topics/ Modules:

Module I: Introduction to • History

Module II: Linear • Definition and Components of LPP

• Max/Min Problems, Graphical Method

• Application and Limitation

Module V: Simulation • Introduction

Module VI: Network Analysis • PERT and CPM Techniques

1.End Term It will be based on conceptual questions and situation specific 60 %

You tube Links https://youtu.be/1CnFjNOewEU

Module I - Overview of Operation Research Quantitative Techniques in

1 History of OR; Meaning & Significance Chapter-1 How to use different

Module II - Linear Programming

2 Theoretical concepts of Linear Chapter-2 To develop the skill

3 Formulation of Linear Page No. 19 -

4 Discussion/Evaluation on Assignment given - Enhancement of

5 Solution by graphical methods Page No. 25-29 How to minimizing

6 Solution by graphical methods-Minimization Page No. 29-32

7 Solution by graphical methods-Mix Problem Example

8 Special Cases in LPP (Multiple & Page No. 32-37 Enhancement of

9 Discussion/Evaluation on Assignment given -

10 Sensitivity analysis(theory) Notes given

Module III - Transportation Problems

11 Introduction about transportation problem Chapter-5 How OR model is

12 Solution by Least Cost Method Page No. Enhancement of

13 Solution by Vogel's Approximation Page No. How OR model is

14 Solution by Vogel's Approximation Page No.

15 Optimum Solution by Stepping Page No. Enhancement of

16 Optimum Solution by Modi method Page No.

17 Special Cases – Unbalanced, Page No. Enhancement of

18 Special Cases-Degeneracy in T. Problems P. No. 224-235

19 Discussion/Evaluation on Assignment given - Enhancement of

21 Assignment problem-Theoretical Chapter-6 How to use different

Hungarian Method of solution Page No.

22 Hungarian Method of solution Page No. How this method is

23 Special Cases – Maximization, Restriction Page No. Enhancement of

24 Special Cases – Multiple Solutions Page No. Enhancement of

25 Applications of Assignment Problem Notes Given

Discussion/Evaluation on Assignment given -

27 Introduction to Simulation Chapter-17 How to use different

28 Monte Carlo Method-Practical Problems Page No. Enhancement of

29 Business Applications & Limitations Page No. How OR models

Discussion/Evaluation on Assignment given - Enhancement of

Module VI - Network Analysis

32 Representing a Project as a Network Page No.

33 Critical Path Method Page No.

34 Floats –Total, Free & Independent Floats Page No. Enhancement of

35 PERT-project completion time with Page No.

36 PERT-calculation of probability & Page No.

37 Discussion/Evaluation on Assignment given -

9. MAPPING LECTURE WITH COURSE LEARNING OUTCOMES

LO1 LO2 LO3 LO4 LO5

LECTURE2 High Medium

LECTURE3 High Medium