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Describe in details the OR approach of problem solving. What are the limitations of
the Operations Research?
Answer:
Optimization is the act of obtaining the best result under any given
circumstance. In various practical problems we may have to take many technical
or managerial decisions at several stages. The ultimate goal of all such decisions
is to either maximize the desired benefit or minimize the effort required. We make
decisions in our every day life without even noticing them. Decision-making is
one of the main activities of a manager or executive.
The search of a decision may also be done by trial and error but such a search
may be cumbersome and costly. Preparative calculations may avoid long and
costly research. Doing preparative calculations is the purpose of Operations
research. Operations research does mathematical scoring of consequences of a
decision with the aim of optimizing the use of time, efforts and resources and
avoiding blunders.
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solution which is the best in the interest of the organization as a whole. The
solution thus obtained is known as optimal decision.
The first and the most important requirement is that the root problem should be
identified and understood. The problem should be identified properly, this indicates
three major aspects:
A description of the goal or the objective of the study.
An identification of the decision alternative to the system.
Recognition of the limitations, restrictions and requirements of the system.
Limitations of OR:
The limitations are more related to the problems of model building, time and money
factors.
Magnitude of computation: Modern problem involve large number of variables
and hence to find interrelationship, among makes it difficult.
Non – quantitative factors and Human emotional factor cannot be taken into
account.
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There is a wide gap between the managers and the operation researches.
Time and Money factors when the basic data is subjected to frequent changes then
incorporation of them into OR models are a costly affair.
Implementation of decisions involves human relations and behavior
Answer:
The solution thus obtained is known as optimal decision. The main features
of OR are:
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•It is System oriented: OR studies the problem from over all points of view of
organizations or situations since optimum result of one part of the system may not
be optimum for some other part.
•It imbibes Inter – disciplinary team approach. Since no single individual can
have a thorough knowledge of all fast developing scientific know-how,
personalities from different scientific and managerial cadre form a team to solve
the problem.
•It makes use of Scientific methods to solve problems.
•OR increases the effectiveness of a management Decision making ability.
•It makes use of computer to solve large and complex problems.
•It gives Quantitative solution.
•It considers the human factors also.
The first and the most important requirement is that the root problem should be
identified and understood. The problem should be identified properly, this
indicates three major aspects:
(1) A description of the goal or the objective of the study,
(2) An identification of the decision alternative to the system, and
(3) A recognition of the limitations, restrictions and requirements of the system.
Limitations of OR
The limitations are more related to the problems of model building, time and
money factors.
•Magnitude of computation: Modern problem involve large number of variables
and hence to find interrelationship, among makes it difficult.
•Non – quantitative factors and Human emotional factor cannot be taken into
account.
•There is a wide gap between the managers and the operation researches.
•Time and Money factors when the basic data is subjected to frequent changes
then incorporation of them into OR models are a costly affair.
•Implementation of decisions involves human relations and behaviour
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Operation Research is an aid for the executive in making his decisions by providing
him the needed quantitative information, based on scientific method analysis.
Discuss.
Answer:- The Operations Research may be regarded as a tool which is utilized to
increase the effectiveness of management decisions. In fact, OR is the objective feeling
of the administrator (decision-maker). Scientific method of OR is used to understand and
describe the phenomena of operating system.
OR models explain these phenomena as to what changes take place under altered
conditions, and control these predictions against new observations. For example, OR may
suggest the best locations for factories, warehouses as well as the most economical means
of transportation. In marketing, OR may help in indicating the most profitable type, use
and size of advertising campaigns subject to the final limitations.
The advantages of OR study approach in business and management decision making may
be classified as follows:
1. Better Control. The management of big concerns finds it much costly to provide
continuous executive supervisions over routine decisions. An OR approach directs the
executives to devote their attention to more pressing matters. For example, OR approach
deals with production scheduling and inventory control.
2. Better Co-ordination. Some times OR has been very useful in maintaining the law
and order situation out of chaos. For example, an OR based planning model becomes a
vehicle for coordinating marketing decisions with the limitation imposed on
manufacturing capabilities.
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programming problems on the basis of linearity and non-linearity of the objective
function and/or constraints respectively. In linear programming problems, the objective
function is linear and constraints are also linear inequalities/equations. Transportation and
Assignment models can be viewed as special cases of linear programming. These can be
solved by specially devised procedures called Transportation and Assignment
Techniques.
In case the decision variables in a linear programming problem are restricted to either
integer or zero-one value, it is known as Integer and Zero-One programming problems,
respectively. The problems having multiple, conflicting and incommensurable objective
functions (goals) subject to linear constraints are called linear goal programming
problems. If the decision variables in a linear programming problem depend on chance,
then such problems are called stochastic linear programming problems.
3. Waiting Line (or Queuing) Models: In queuing models an attempt is made to predict:
(i) How much average time will be spent by the customer in a queue?
The study of waiting line problems provides us methods to minimize the sum of cost of
providing services and cost obtaining service which are primarily associated with the
value of time spent by the customer in a queue.
4. Markovian Models: These models are applicable in such situation where the state of
the system can be defined by some descriptive measure of numerical value and where the
system moves from one state to another on probability basis. Brand-switching problems
considered in marketing studies are an example of such models.
5. Competetive Strategy Models (Games Theory): These models are used to determine
the behavior of decision-making under completion or conflict. Methods for solving such
models have not been found suitable for industrial applications, mainly because they are
referred to an idealistic world neglecting many essential features of reality.
6. Net work Models: These models are applicable in large projects involving
complexities and inter-dependencies of activities. Project Evaluation and Review
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Techniques (PERT) And critical Method (CPM) are used for planning, scheduling and
controlling complex project which can be characterized net-work.
7. Job Sequencing Models: These Models involve the selection of such a sequence of
performing a series of jobs to be done on service facilities (machines) that optimize the
efficiency measure of performance of the system. In other words, sequencing is
conserved with such a problem in which efficiency measure depends upon the order or
sequences of performing a series of jobs.
(i) The number of variables and constraint relationships may be so large that it is not
computationally feasible to pursue such analysis.
(ii) Secondly, the model may be much away from the reality that no confidence can be
placed on the computational results.
In fact, such models are solved by simulation techniques where no other method is
available for its solution.
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Definition and Explanation:
Linear programming is a mathematical technique which permits determination
of the best use of available resources.
Constraints
A linear equation represents a straight line. Limited time, labour etc. may be expressed as
linear inequations or equations and are called constraints.
e.g., If 2 tables and 3 chairs are to be made in not more than 10 hours and 1 table is made
in x hours while 1 chair is made in y hours, then this constraint may be written as
A linear equation is also called a linear constraint as it restricts the freedom of choice of
the values of x and y.
Optimisation
A decision which is considered the best one, taking into consideration all the
circumstances is called an optimal decision. The process of getting the best possible
outcome is called optimisation. The best profit is the maximum profit. Hence optizmizing
the profit would mean maximising the profit. Optimising the cost would mean
minimising the cost as this would be most favourable.
Solution of a LPP
A set of values of the variables x1, x2,….xn which satisfy all the constraints is called the
solution of the LPP.
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Feasible Solution
A set of values of the variables x1, x2, x3,….,xn which satisfy all the constraints and also
the non-negativity conditions is called the feasible solution of the LPP.
Optimal Solution
The feasible solution, which optimises (i.e., maximizes or minimizes as the case may be)
the objective function is called the optimal solutio
Simplex method is considered one of the basic techniques from which many linear
programming techniques are directly or indirectly derived. The simplex method is an
iterative, stepwise process which approaches an optimum solution in order to reach
an objective function of maximization or minimization.
The term ‘Linear’ is used to describe the proportionate relationship of two or more
variables in a model. The given change in one variable will always cause a resulting
proportional change in another variable.
The word , ‘programming’ is used to specify a sort of planning that involves the
economic allocation of limited resources by adopting a particular course of action or
strategy among various alternatives strategies to achieve the desired objective.
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The objective function of an LPP (Linear Programming Problem) is a mathematical
representation of the objective in terms a measurable quantity such as profit, cost,
revenue, etc.
The constraints These are the set of linear inequalities and/or equalities which impose
restriction of the limited resources
Additivity
The value of the objective function for the given value of decision variables and the total
sum of resources used, must be equal to the sum of the contributions (Profit or Cost)
earned from each decision variable and sum of the resources used by each decision
variable respectively. /The objective function is the direct sum of the individual
contributions of the different variables
Linearity
All relationships in the LP model (i.e. in both objective function and constraints) must be
linear.
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am1X1+ a m2X2+………………+ a mnXn (<,=,>) bm
Duality in Linear Programming For every LPP there is a unique LPP associated with it
involving the same data and closely related optimal solution. The original problem is then
called primal problem while the other is called its Dual problem
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Example.1
Write the Dual of the following LPP
Min Z = 2X2+ 5X3
X1+ X2 > 2
2X1+ X2 + 6X3 < 6
X1- X2 +3X3 = 4
and X1, X2,X3 > 0
Example.2
Write the Dual of the following LPP
Min Z = 4X1 + 5X2- 3X3
Subject to constraints,
X1+ X2 + X3 = 22
3X1+ 5X2 - 2X3 < 65
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X1+ 7X2 +4X3 > 120
X1 , X2 > 0 and X3 is unrestricted
What are the characteristics of the standard form of L.P.P.? What is the standard
form of L.P.P.? State the fundamental theorem of L.P.P?
Answer:
Introduction:
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a point on the polyhedron where this function has the smallest (or largest) value if
such point exists, by searching through the polyhedron vertices.
Maximize
Subject to
Represents the vector of variables (to be determined), while and are vectors of
(known) coefficients and is a (known) matrix of coefficients. The expression to be
maximized or minimized is called the objective function ( in this case). The
equations are the constraints which specify a convex polytope over which the
objective function is to be optimized.
Uses:
Standard form:
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Standard form is the usual and most intuitive form of describing a linear
programming problem. It consists of the following three parts:
E.g. maximize
e.g.
Non-negative variables
e.g.
PERT/CPM
PERT – Program Evaluation & Review Technique – It is generally used for those
projects where time required to complete various activities are not known as a priori. It is
probabilistic model & is primarily concerned for evaluation of time. It is event oriented.
CPM – Critical Path Analysis – It is a commonly used for those projects which are
repetitive in nature & where one has prior experience of handling similar projects. It is a
deterministic model & places emphasis on time & cost for activities of a project.
Steps for drawing CPM/PERT network:
1. Analyze & break up of the entire project into smaller systems i.e. specific
activities and/or
events.
2. Determine the interdependence & sequence of those activities.
3. Draw a network diagram.
4. Estimate the completion time, cost, etc. for each activity.
5. Identify the critical path (longest path through the network).
6. Update the CPM/PERT diagram as the project progresses.
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Network Representation:
Each activity of the project is represented by arrow pointing in direction of progress of
project. The events of thenetwork establish the precedence relationship among different
activities.
Three rules are available for constructing the network.
Rule 1. Each activity is represented by one & only one, arrow.
Rule 2. Each activity must be identified by two distinct events & No two or more
activities can have the same tail and head events.
Following figure shows how a dummy activity can be used to represent two concurrent
activities, A & B. By definition, a dummy activity, which normally is depicted by a
dashed arrow, consumes no time or resources.
Dummy activity is a hypothetical activity which takes no resource or time to complete. It
is represented by broken arrowed line & is used for either distinguishing activities having
common starting & finishing events or to identify & maintain proper precedence
relationship between activities that are not connected by events.
Inserting dummy activity in one four ways in the figure, we maintain the concurrence of
A & B, and provide unique end events for the two activities (to satisfy Rule 2).
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Rule 3. To maintain correct precedence relationship, the following questions must be
answered as each activity is added to the network:
(a) What activities must be immediately precede the current activity?
(b) What activities must follow the current activity?
(c) What activities must occur concurrently with the current activity?
The answers to these questions may require the use of dummy activities to ensure correct
precedences among the activities. For example, consider the following segment of a
project:
1. Activity C starts immediately after A and B have been completed.
2. Activity E starts only after B has been completed.
Part (a) of the figure above, shows the incorrect representation of the precedence
relationship because it requires both A & B to be completed before E can start. In part (b)
the use of dummy rectifies situation.
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distribution than by a single estimate. Three time estimates (from beta probability
distribution) are made as follows:
1) The Optimistic Time Estimate (to): Shortest possible time in which an activity can be
completed in ideal conditions. No provisions are made for delays or setbacks while
estimating this time.
2) The Most Likely Time (tm): It assumes that things go in normal way with few setbacks.
3) The Pessimistic Time (tp): The max. possible time if everything go wrong & abnormal
situations prevailed. However, major catastrophes such as earthquakes, labour troubles,
etc. are not taken into account.
The expected time (mean time) for each activity can be approximated using the weighted
average i.e.
Expected Time (te) = (to + 4tm + tp)/6
Forward Pass Computation: It is the process of tracing the network from START to
END. It gives the earliest start & finish times for each activity.
Earliest event time (Ej): The time that event j will occur if the preceding activities are
started as early as possible. Ej is the max. of the sums Ei + tij involving each
immediately precedent event i & intervening event ij.
Backward Pass Computation: It is the process of tracing the network starting from
LAST node & moving backward.
Latest event time (Lj): The latest time that event i can occur without delaying
completion of beyond its earliest time. Li is the min. of the differences Li - tij involving
each immediately precedent event j & intervening event ij.
The critical path can be identified by determining the following four parameters for each
activity:
• EST - earliest start time: the earliest time at which the activity can start given that all its
precedent activities must be completed first = Ei
• EFT - earliest finish time, equal to the earliest start time for the activity plus the time
required to complete the activity = EST(i-j) + tij
• LFT - latest finish time: the latest time at which the activity can be completed without
delaying (beyond its targeted completion time) the project = Lj
• LST - latest start time, equal to the latest finish time minus the time required to
complete the activity = LFT(i-j) - tij
CRITICAL PATH: The critical path is the path through the project network in which
none of the activities have float (total float is zero) i.e. A critical path satisfies following
3 conditions:
• EST =LST
• EFT=LFT
• Ej – Ei = Lj – Li = tij
The duration of project is fixed by the time taken to complete the path through the
network with the greatest total duration. This path is known as critical path & activities
on it are known as critical activities. A delay in the critical path delays the project.
Similarly, to accelerate the project it is necessary to reduce the total time required for the
activities in the critical path.
The total float time for an activity is the time between its earliest and latest start time, or
between its earliest and latest finish time. It is the amount of time that an activity can be
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delayed past its earliest start or earliest finish without delaying the project. = LST-EST
or LFT-EFT = LFT-EST-tij = LFT- (EST+tij)
The slack time or slack of an event in a network is the difference the latest event time &
earliest event time i.e. Li- Ei
The free float time of an activity is equal to the amount by which its duration can be
increased without affecting either the project time or the time available for the subsequent
activities. It indicates the value by which an activity can be delayed beyond the earliest
starting point without affecting the earliest start, & therefore, the total float of
the activities following it. = Total Floatij – (Slack of event j)
The independent float time of an activity is the amount by which the duration of an
activity could be extended without affecting the total project time, the time available for
subsequent activities or the time available for the preceding activities. = [Free Floatij –
(Slack of event i)] or ZERO, whichever is higher. Also EST of following
activity – LFT of preceding activity – Duration of current activity or Zero, whichever is
higher.
The interfering float time is the part of total float which causes a reduction in the float of
successor activities. It is that portion of the activity float which cannot be consumed
without affecting adversely the float of the subsequent activity or activities. = LFT –
(EST of following activity) or ZERO, whichever is higher.
Project Crashing: There are usually compelling reasons to complete the project earlier
than the originally estimated duration of critical path computed on the normal basis of a
new project.
Direct Cost: This is the cost of the materials, equipment and labour required to perform
the activity. When the time duration is reduced the project direct cost increases.
Activity Cost Slope = (Cc- Nc)÷(Nt-Ct)
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Where, Cc = Crash Cost = Direct cost that is anticipated in completing an activity within
crash time.
Nc = Normal Cost = This is the lowest possible direct cost required to complete an
activity
Nt = Normal Time = Min. time required to complete an activity at normal cost.
Ct = Crash Time = Min. time required to complete an activity.
Indirect Cost: It consists of two parts: fixed cost and variable cost. The fixed cost is due
to general and administrative expenses, insurance, etc. Variable indirect cost consists of
supervision, interest on capital, etc.
The total project cost is the sum of the direct & the indirect costs.
Optimum duration is the project duration at which total project cost is lowest.
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The set of critical activities forms a critical path through the network
A delay in any activity on the critical path delays the project
The sum of the completion times on the critical path is the
expected project completion time = E(T)
A linear program can be solved to determine the completion time for the project:
You should know how to use the PERT/CPM template for projects
whose activity completion times are known with certainty.
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The PERT/CPM Three-Time Estimate Approach
Activity completion times are rarely (if ever) known with certainty, so a probability
approach is more realistic in evaluating a project’s expected completion time. A
three-time estimate approach allows for such probability analyses
Three time estimates are determined (by studies, guesses, etc.) for each activity
o a = an optimistic completion time (the chance of finishing in < a is very small)
o m = a most likely completion time (this is the mode)
o b = a pessimistic completion time (the chance of finishing in > b is very small)
Activity approximations
o An approximation for the distribution of an activity’s completion time is a
BETA distribution
o An approximation for the mean completion time for an activity is a weighted
average (1/6, 4/6, 1/6) of the three completion times; so it is a 4mb
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o An approximation for the standard deviation for the completion time for an
activity is its Range/6 or ba
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o The variance of an activity’s completion time is the square of the standard
deviation = ba
2
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Project assumptions
1. The distribution of the project completion time is determined by the critical path
using the mean activity completion times
2. The activity completion times are independent – just because one activity takes
longer or shorter than expected does not affect another activity’s time.
3. There are enough activities on the critical path so that the central limit can be used
to determine the distribution, mean, variance and standard deviation of the project
Project distribution
Given the above assumption this means
o The project completion time distribution is normal
o The mean (expected) completion time, µ, of the project is the sum of the
expected completion times along the critical path
o The variance of the completion time, σ2, of the project is the sum of the
variance in completion times along the critical path
o The standard deviation of the completion time, σ, of the project is the square
root of the variance of the completion time of the project
The probability of completing by a certain date t, can now be found by finding the
P(X < t) from a normal distribution with mean µ and standard deviation σ
Key terms
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Activity —
A task to be completed.
CPM (Critical Path Method) —
A project management technique based on a project network; the focus of CPM is
project planning, with the critical path defining those activities into which
additional resources might be poured to accelerate the schedule.
Critical path —
The path through a project network that links the critical events that must begin
on time and the critical activities that must require no more than their estimated
duration if the project is to be completed on time.
Diverge —
To split a single input path into multiple paths.
Dummy activity —
An activity that links parallel events, but consumes neither time nor resources.
Duration —
The elapsed time required to complete an activity.
Earliest event time (EET) —
The earliest time the event can possibly begin.
Event —
The beginning or end of an activity.
Latest event time (LET) —
The latest time an event can occur without impacting the project schedule.
Merge —
To combine two or more input paths into a single output path.
PERT (Program Evaluation and Review Technique) —
A project management technique based on a project network; with PERT, the
critical path is the primary focus of management control and monitoring the
critical events provides an early warning if estimates are inaccurate.
Project network —
A bubble chart that graphically depicts activities, their starting and completion
times, and their interrelationships.
Slack —
The maximum time an activity can slip without affecting the project schedule.
Compare and contrast CPM and PERT. Under what conditions would you
recommend scheduling by PERT? Justify your answer with reasons.
Answer :- Project management has evolved as a new field with the development of two
analytic techniques for planning, scheduling and controlling projects. These are the
Critical Path Method (CPM) and the Project Evaluation and Review Technique (PERT).
PERT and CPM are basically time-oriented methods in the sense that they both lead to
the determination of a time schedule.
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Though there are no essential differences between PERT and CPM as both of them share
in common the determination of a critical path. Both are based on the network
representation of activities and their scheduling that determines the most critical activities
to be controlled so as to meet the completion date of the project.
PERT
PERT was developed in connection with an R&D work. Therefore, it had to cope
with the uncertainties that are associated with R&D activities. In PERT, the total
project duration is regarded as a random variable. Therefore, associated
probabilities are calculated so as to characterise it.
It is an event-oriented network because in the analysis of a network, emphasis is
given on the important stages of completion of a task rather than the activities
required to be performed to reach a particular event or task.
PERT is normally used for projects involving activities of non-repetitive nature in
which time estimates are uncertain.
It helps in pinpointing critical areas in a project so that necessary adjustment can
be made to meet the scheduled completion date of the project.
CPM
Phases of PERT-CPM
1. Project Planning: In the project planning phase, you need to perform the following
activities:
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2. Project Scheduling: Once the planning phase is over, scheduling of the project is
when each of the activities required to be performed, is taken up. The various steps
involved during this phase are listed below:
Estimate the durations of activities. Take into account the resources required for
these execution in the most economic manner.
Based on the above time estimates, prepare a time chart showing the start and
finish times for each activity. Use the time chart for the following exercises.
ü To calculate the total project duration by applying network analysis techniques, such as
forward (backward) pass and floats calculation
ü To carry out resource smoothing (or levelling) exercises for critical or scarce resources
including re-costing of the schedule taking into account resource constraints
3. Project Control: Project control refers to comparing the actual progress against the
estimated schedule. If significant differences are observed then you need to re-schedule
the project to update or revise the uncompleted part of the project.
SIMULATION
A simulation is the imitation of the operation of a real-world process or system
over time. Steps include
o Generating an artificial history of a system
o Observing the behavior of that artificial history
o Drawing inferences concerning the operating characteristics of the real
system
Use the operation of a bank as an example:
o Counting how many people come to the bank; how many tellers, how long
each customer is in service; etc.
o Establishing a model and its corresponding computer program.
o Executing the program, varying parameters (number of tellers, service
time, arrival intervals) and observing the behavior of the system.
o Drawing conclusions: increasing number of tellers; reducing service time;
changing queueing strategies; etc.
The behavior of a system as it evolves over time is studied by developing a
simulation model.
A model is a set of entities and the relationship among them.
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For the bank example: entities would include customers, tellers, and queues.
Relations would include customers entering a queue; tellers serving the customer;
customers leaving the bank.
Once developped, a model has to be validated. There are many different ways to
validate a model: observation (measurement); analytical model comparison
(analysis).
E.g. When studying cache memory using simulation, one has to decide where is
the boundary of the system. It can be simply the CPU and cache, or it can include
main memory, disk, O.S., compiler, or even user programs.
Components of a System
An entity is an object of interest in the system. E.g. customers in a bank.
An attribute is a property of an entity. E.g. the checking account balance of the
customer.
An activity represents a time period of specified length. Here the time period is
emphasized because often the simulation involves time. E.g. deposit money into
the checking account at a specified date and time.
The state of a system is defined to be that collection of variables necessary to
describe the system at any time, relative to the objectives of the study. E.g.
number of busy tellers, number of customers waiting in line.
An event is defined as an instantaneous occurrence that may change the state of
the system. E.g. customer arrival, addition of a new teller, customer departure.
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Model of a System
A model is defined as a representation of a system for the purpose of studying the system.
Many times one can't experiment with a real system such as a bank, or a highway system.
One has to expriment with a model of the real system. A model is often not exactly the
same as the real system it presents. Rather, it includes a few (or majority of) key aspects
of the real system. It is an abstraction of the real system.
Types of Models
Static vs. dynamic: A static simulation model, sometimes called Monte Carlo
simulation, represents a system at particular point in time. A dynamic simulation
model represents systems as they change over time.
Deterministic vs. stochastic: A deterministic simulation contains no random
variable(s). e.g. patients arrvie in a doctor's office at a pre-scheduled time. A
stochastic simulation involves one or more randome variables as input.
Discrete vs. continuous: (already discussed).
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Advantages and Disadvantages
Main advantages of simulation include:
State two major reasons for using simulation. Explain the basic steps of Monte-
Carlo simulation. Briefly describe the application in finance & Accounting.
Imagine a betting game where the stakes are based on correct prediction of the number of
heads, which occur when five coins are tossed. If it were only a question of one coin;
most people know that there is an equal likelihood of a head or a tail occurring, that is the
probability of a head is ½. However, without the application of probability theory, it
would be difficult to predict the chances of getting various numbers of heads, when five
coins are tossed. In this kind of situation simulation plays an important role.
Monte Carlo simulation is useful when same elements of a system, such as arrival of
parts to a machine, etc., exhibit a chance factor in their behavior. Experimentation on
probability distribution for these elements is done through random sampling. Following
five steps are followed in the Monte Carlo simulation:
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1. Decide the probability distribution of important variables for the stochastic
process.
2. Calculate the cumulative probability distributing for each variable in Step 1
3. Decide an interval of random numbers for each variable.
4. Generate random numbers.
5. Simulate a series of trials and determine simulated value of the actual random
variables.
.It can also be employed for a wide variety of problems encountered in production
systems – the policy for optimal maintenance in terms of frequency of replacement of
spares or preventive maintenance, number of maintenance crews, number of equipment
for handling materials, job shop scheduling, routing problems, stock control and so forth.
The other areas of application include dock facilities, facilities at airports to minimize
congestion, hospital appointment systems and even management games.
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.
The assignment problem can be stated as a problem where different jobs are to be
assigned to different machines on the basis of the cost of doing these jobs. The
objective is to minimize the total cost of doing all the jobs on different machines
The peculiarity of the assignment problem is only one job can be assigned to one
machine i.e., it should be a one-to-one assignment
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The cost data is given as a matrix where rows correspond to jobs and columns to
machines and there are as many rows as the number of columns i.e. the number of
jobs and number of Machines should be equal
Assignment becomes a problem because each job requires different skills and the
capacity or efficiency of each person with respect to these jobs can be different.
This gives rise to cost differences. If each person is able to do all jobs equally
efficiently then all costs will be the same and each job can be assigned to any
person.
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A balanced assignment problem is one where the number of rows = the number of
columns (comparable to a balanced transportation problem where total demand =total
supply)
Unbalanced assignment is one when the number of rows not equal to the number of
columns and vice versa. e.g. The number of machines may be more than the number of
jobs or the number of jobs may be more than the number of machines.
In such a situation we introduce dummy row/column(s) in the matrix. These rows or
columns have a zero cost element. Thus we can balance the problem and then use
Hungarian method to find optimal assignment.
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3) What is a Prohibited Assignment Problem?
Transportation
Complete
Problem
Enumeration
Simplex Method
Hungarian method
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1)Complete Enumeration Method: This method can be used in case of assignment.
problems of small size. In such cases a complete enumeration and evaluation of all
combinations of persons and jobs is possible.
One can select the optimal combination. We may also come across more than one
optimal combination The number of combinations increases manifold as the size of the
problem increases as the total number of possible combinations depends on the number
of say, jobs and machines. Hence the use of enumeration method is not feasible in real
world cases.
As we are using the concept “opportunity this means that the cost of any opportunity that
is lost while taking a particular decision or action is taken into account while making
assignment. Given below are the steps involved to solve an assignment problem by using
Hungarian method.
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Step 1:
Determine the opportunity cost table
Step 2:
Determine the possibility of an optimal assignment
Step 3
Modify the second reduced cost table
Step 4:
Make the optimum assignment
Step 1:
Determine the opportunity cost tableI
Locate the smallest cost in each row and subtract it from each cost figure in that
row. This would result in at least one zero in each row. The new table is called
reduced cost table.
Locate the lowest cost in each column of the reduced cost table subtract this
figure from each cost figure in that column. This would result in at least one zero
in each row and each column, in the second reduced cost table.
Step 2:
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To make an optimal assignment in a say 3 x 3 table. We should be in a position to
locate 3 zero’s in the table. Such that 3 jobs are assigned to 3 persons and the total
opportunity cost is zero .A very convenient way to determine such an optimal
assignment is as follows:
Draw minimum number of straight lines vertical and horizontal, to cover all the
zero elements in the second reduced cost table. One cannot draw a diagonal
straight line. The aim is that the number of lines (N) to cover all the zero
elements should be minimum. If the number of lines is equal to the number of
rows (or columns) (n) i.e N=n it is possible to find optimal assignment .
Example :for a 3 x 3 assignment table we need 3 straight lines which cover all the
zero elements in the second reduced cost table. If the number of lines is less than
the number of rows (columns) N < n optimum assignment cannot be made. we
then move to the next step.
Step 3:
Select the smallest number in the table which is not covered by the lines. Subtract
this number from all uncovered numbers aswell as from itself.
Add this number to the element which is at the intersection of any vertical and
horizontal lines.
Draw minimum number of lines to cover all the zeros in the revised opportunity
cost table.
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Step 4:
If the assignment table is small in size it is easy to make assignment after step 3.
However, in case of large tables it is necessary to make the assignments systematically.
So that the total cost is minimum. To decide optimum allocation.
Select a row or column in which there is only one zero element and encircle it
Assign the job corresponding to the zero element i.e. assign the job to the circle
with zero element. Mark a X in the cells of all other zeros lying in the column
(row) of the encircled zero. So that these zeros cannot be considered for next
assignment.
Again select a row with one zero element from the remaining rows or columns.
Make the next assignment continue in this manner for all the rows.
Repeat the process till all the assignments are made i.e. no unmarked zero is left.
now we will have one encircled zero in each row and’ each column of the cost
matrix. The assignment made in this manner is Optimal.
Calculate the total cost of assignment from the original given cost table.
Maximization method
In order to solve a maximization type problem we find the regret values instead of
opportunity cost. the problem can be solved in two ways
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The first method is by putting a negative sign before the values in the assignment
matrix and then solves the sum as a minimization case using Hungarian methods
as shown above.
Second method is to locate the largest value in the given matrix and subtract each
element in the matrix from this value. Then one can solve this problem as a
minimization case using the new modified matrix.
Hence there are mainly four methods to solve assignment problem but the most efficient
and most widely used method is the Hungarian method
This type of problem is quite simple but there is no general algorithm available for its
solution. The problem is usually solved by enumeration method, where the number of
enumerations is very large.
For example for a salesman who is instructed to visit five cities we shall have to consider
more than 100 possible routes. The method is therefore impractical for large size
problems and it also implies approximations in finding route with minimum distance.
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The peculiar nature of the problem and the various restrictions imposed on resulting
solution indicate that the method of solution to a traveling salesman problem should
include:
(1) Assigning an infinitely large element M in the diagonal of the distance matrix.
(2) Solve the problem using Hungarian Method as it gives shortcut route but,
(3) Test the solution for feasibility whether it satisfies the condition of a continues route
without visiting a city more than once.
If the route is not feasible, make adjustments with minimum increase in the total distance
traveled by the salesman. This is how one can solve traveling sales man problem
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2 Possibilities That Make The Problem Unbalanced
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demand and each cell of this row has a zero transportation cost per unit. Once the
problem is balanced it can be solved by the procedures normally used to solve a
transportation problem.
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9) What is Degeneracy in a Transportation Problem?
The initial basic feasible solution to a transportation problem should have a total number
of occupied cell (stone squares) which is equal to the total number of rim requirements
minus one i.e. m + n — 1. When this rule is not met the solution is degenerate.
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It is an insignificant value and does not affect the total cost. But it is appreciable enough
to be considered a basic variable. When the initial basic solution is degenerate, we assign
c to an independent empty cell. An independent cell is one from which a closed loop
cannot be traced. It is preferably assigned to a cell which has minimum per unit cost.
After introducing e we solve the problem using usual methods of solution.
PHASE I
Step 1:
Check whether the given T.P. is balanced or not
Step 2:
Develop initial feasible solution by any of the five methods
Step 1:
Check whether the given T.P. is balanced or not. If it is unbalanced then balance it by
adding a row or a column.
Step 2:
Develop initial feasible solution by any of the five methods:
a) North West Corner Rule (NWCR) or South West Corner Rule (SWCR)
b) Row Minima Method (RMM)
c) Column Minima Method (CMM)
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d) Matrix Minima Method (MMM)
e) Vogel’s Approximation Method (VAM)
We discuss here the two commonly used methods to make initial assignments
(1) Northwest corner rule (2) Vogel’s Approximation Method (VAM)
(i) If al > b1 assign quantity b1 in the cell, i.e. x1 b1. Then proceed horizontally to the
next column in the first row until a1 is exhausted i.e. assign the remaining number a1 - b1
in the next column.
(ii) If al < b1 then put Xl al and then proceed vertically down to the next row until b1 is
satisfied. i.e. assign b1 – a1 in the next row.
(iii) If a1 = b1 then put XII = a1 and proceed diagonally to the next cell or square
determined by next row and next column.
In this way move horizontally until a supply source is exhausted, and vertically down
until destination demand is completed and diagonally when a1 = b1, until the south-east
corner of the table is reached.
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It is therefore, not a very sound method as it ignores the important factor, namely cost
whiçh we seek to minimize. The VAM, on the other hand considers the cost in each cell
while making the allocations we explain below this method.
(i) Consider each row of the cost matrix individually and find the difference between two
least cost cells in it. Then repeat this exercise for each column. Identify the row or
column with the Largest difference (select any one in case of a tie).
(ii) Now consider the cell with minimum cost in that column (or row) and assign the
maximum units possible to that cell.
(iv) Again find out the differences and proceed in the same manner as stated in earlier
paragraph and continue until all units have been assigned.
Before we enter phase II, the following two conditions should be fulfilled in that order.
(i) Obtaining a basic feasible solution implies finding a minimum number of ij values.
This minimum number is m + n - 1. Where m is the number of origins n is the number of
destinations. Thus initial assignment should occupy m + n - I cells i.e. requirements of
demand and supply cells minus — 1.
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After obtaining the initial feasible solution, the next step is to test whether it is optimal or
not.
We explain here the Modified Distribution (MODI) Method for testing the optimality.
If the solution is non-optimal as found from MODI method then we improve the solution
by exchanging non-basic variable for a basic variable. In other words we rearrange the
allocation by transferring units from an occupied cell to an empty cell that has the largest
net cost change or improvement index, and then shift the units from other related cells so
that all the rim (supply, demand) requirements are satisfied. This is done by tracing a
closed path or closed loop.
Step 1:
Add a column u to the RHS of the transportation tableau and a
row v at the bottom of the tableau.
Step 2:
Assign, arbitrarily, any value to u or v generally u = 0.
Step 3
Having determined u1 and v calculate ij = (u1 + v1) — for every
unoccupied cell.
Step 4:
If the solution is not optimal select the cell with largest positive
improvement index.
Step 5:
Test the solution again for optimality and improve fit if necessary
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Step I:
Add a column u to the RHS of the transportation tableau and a row v at the bottom of the
tableau.
Step 2:
Assign, arbitrarily, any value to u or v generally u = 0. This method of assigning values
to u1 and v1 is workable only if the initial solution is non-degenerate i.e., for a table there
are exactly m + n -1 occupied cells.
Step 3:
Having determined u1 and v calculate ij = (u1 + v1) — for every unoccupied cell. This
represents the net cost change or improvement index of these cells
(1) If all the empty cells have negative net cost change ij, the solution is optimal and
unique
(2) If an empty cell has a zero Xij and all other empty cells have negative Xij the solution
is optimal but not unique.
(3) If the solution has positive Ai for one or more empty cells the solution is not optimal.
Step 4:
If the solution is not optimal select the cell with largest positive improvement index.
Then trace a closed loop and transfer the units along the route.
(2) Beginning with the selected unused square trace a loop via used squares back to the
original unused squares. Only one loop exists for any unused square in a given solution.
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(3) Assign (+) and (—) signs alternately at each square of the loop beginning with a plus
sign at the unused square. Assign these sign in clockwise or anticlockwise direction.
These signs indicate addition or subtraction of units to a square.
(4) Determine the per unit net change in cost as a result of the changes made in tracing
the loop. Compare the addition to the decrease in cost. It will give the improvement index.
(It is equivalent to j in a LPP).
(6) In a minimization case. If all the indices are greater than or equal to zero, the solution
is optimal. If not optimal, we should find a better solution.
(i) An even number of at least four cells participate in a closed loop. An occupied cell can
be considered only once.
(ii) If there exists a basic feasible solution with m + n — 1 positive variables, then there
would be one and only one closed loop for each cell.
(iii) All cells that receive a plus or minus sign except the starting empty cell, must be the
occupied cells.
(iv) Closed loops may or may not be square or rectangular in shape. They may have
peculiar configurations and a loop may cross over itself.
Step 5:
Test the solution again for optimality and improve fit if necessary. Repeat the process
until an optimum solution is obtained.
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11) What are the differences between assignment problem and transportation
problem?
1. TP has supply and demand constraints while AP does not have the same.
2. The optimal test for TP is when all cell evaluation \s are greater than or equal to
zero whereas in AP the number of lines must be equal to the size of matrix.
3. A TP sum is balanced when demand is equal to supply and an AP sum is balanced
when number of rows are equal to the number of columns.
4. for AP. We use Hungarian method and for transportation we use MODI method
5. In AP. We have to assign different jobs to different entities while in transportation
we have to find optimum transportation cost.
A LPP is concerned with the use of allocation of resources such as time, capital, materials,
etc.
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eg. a solution may call for 9.3 trucks or 8.7 units of product.
3. It does not take into consideration the effect of time and uncertainty.
4. There may be cases of infeasibility and unbounded ness.
Answer:
This model studies the minimization of the cost of transporting a commodity from
a number of sources to several destinations. The supply at each source and the demand at
each destination are known. The transportation problem involves m sources, each of
which has available an i (i = 1, 2, m) units of homogeneous product and n destinations,
each of which requires bj (j = 1, 2…., n) units of products. Here a
i and bj are positive integers. The cost cij of transporting one unit of the product from the
ith source to the
jth destination is given for each i and j. The objective is to develop an integral
transportation schedule that meets all demands from the inventory at a minimum total
transportation cost. It is assumed that the total supply and the total demand are equal i.e.
The standard mathematical model for the transportation problem is as follows. Let
xij be number of units of the homogenous product to be transported from source i to the
destination j. Then objective is to-
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Theorem:
A necessary and sufficient condition for the existence of a feasible solution to the
transportation problem (2) is that
The solution to T.P is obtained in two stages. In the first stage we find Basic
feasible solution by any one of the following methods a) North-west corner rule b) Matrix
Minima Method or least cost method c) Vogel’s approximation method. In the second
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stage we test the B.Fs for its optimality either by MODI method or by stepping stone
method.
Q.5: Describe the North-West Corner rule for finding the initial basic feasible
solution in the transportation problem.
Answer:
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The Initial basic Feasible solution using North-West corner rule:
Let us consider a T.P involving m-origins and n-destinations. Since the sum of
origin capacities equals the sum of destination requirements, a feasible solution
always exists. Any feasible solution satisfying m + n – 1 of the m + n constraints
is a redundant one and hence can be deleted. This also means that a feasible
solution to a T.P can have at the most only m + n – 1 strictly positive component,
otherwise the solution will degenerate.
Step1:
a. The first assignment is made in the cell occupying the upper left hand
(North West) corner of the transportation table.
b. The maximum feasible amount is allocated there, that is x11 = min (a1,
b1) So that either the capacity of origin O1 is used up or the requirement
at destination D1 is satisfied or both.
c. This value of x11 is entered in the upper left hand corner (Small Square)
of cell (1, 1) in the transportation table.
Step 2:
a. If b1 > a1 the capacity of origin O, is exhausted but the requirement at
destination D1 is still not satisfied , so that at least one more other variable
in the first column will have to take on a positive value.
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b. Move down vertically to the second row and make the second allocation
of magnitude x21 = min (a2, b1 – x21) in the cell (2, 1). This either
exhausts the capacity of origin O2 or satisfies the remaining demand at
destination D1.
Step 3:
a. Start from the new North West corner of the transportation table satisfying
destination requirements and exhausting the origin capacities one at a
time.
b. Move down towards the lower right corner of the transportation table until
all the rim requirements are satisfied.
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State and discuss the methods for solving an assignment problem. How is
Hungarian method better than other methods for solving an assignment problem?
Answer : Assignment becomes a problem because each job requires different skills and
the capacity or efficiency of each person with respect to these jobs can be different. This
gives rise to cost differences. If each person is able to do all jobs with same efficiency
then all costs will be the same and each job can be assigned to any person. When
assignment is a problem it becomes a typical optimisation problem. Therefore, you can
compare an assignment problem to a transportation problem.
Solution Methods
Enumeration method
Simplex method
Transportation method
Hungarian method
Enumeration method:
In this method, a list of all possible assignments among the given resources and activities
is prepared. Then an assignment involving the minimum cost, time or distance or
maximum profits is selected. If two or more assignments have the same minimum cost,
time or distance, the problem has multiple optimal solutions. This method can be used
only if the number of assignments is less. It becomes unsuitable for manual calculations
if number of assignments is large
Simplex method:
The simplex method focuses on solving LPP of any enormity involving two or more
decision variables.
The simplex algorithm is an iterative procedure for finding the optimal solution to a
linear programming problem. The objective function controls the development and
evaluation of each feasible solution to the problem. If a feasible solution exists, it is
located at a corner point of the feasible region determined by the constraints of the
system.
The simplex method simply selects the optimal solution amongst the set of feasible
solutions of the problem. The efficiency of this algorithm is because it considers only
those feasible solutions which are provided by the corner points, and that too not all of
them. You can consider obtaining an optimal solution based on a minimum number of
feasible solutions.
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Transportation method
Transportation model is an important class of linear programs. For a given supply at each
source and a given demand at each destination, the model studies the minimisation of the
cost of transporting a commodity from a number of sources to several destinations.
Hungarian method
There are various ways to solve assignment problems. Certainly it can be formulated as a
linear program (as we saw above), and the simplex method can be used to solve it. In
addition, since it can be formulated as a network problem, the network simplex method
may solve it quickly.
Step 2. Add a dummy source or dummy destination, so that the cost table becomes a
square matrix. The cost entries of the dummy source/destinations are always zero.
Step 3. Locate the smallest element in each row of the given cost matrix and then
subtract the same from each element of the row.
Step 4. In the reduced matrix obtained in the step 3, locate the smallest element of each
column and then subtract the same from each element of that column. Each column and
row now have at least one zero.
Step 5. In the modified matrix obtained in the step 4, search for the optimal assignment
as follows:
(a) Examine the rows successively until a row with a single zero is found. Enrectangle
this row (�)and cross off (X) all other zeros in its column. Continue in this manner until
all the rows have been taken care of.
(b) Repeat the procedure for each column of the reduced matrix.
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(c) If a row and/or column has two or more zeros and one cannot be chosen by inspection
then assign arbitrary any one of these zeros and cross off all other zeros of that row /
column.
(d) Repeat (a) through (c) above successively until the chain of assigning (�) or cross (X)
ends.
Step 6. If the number of assignment (�) is equal to n (the order of the cost matrix), an
optimum solution is reached.
If the number of assignment is less than n(the order of the matrix), go to the next step.
Step7. Draw the minimum number of horizontal and/or vertical lines to cover all the
zeros of the reduced matrix.
(a)Find the smallest element of the reduced matrix not covered by any of the lines.
(b)Subtract this element from all uncovered elements and add the same to all the elements
laying at the intersection of any two lines.
Step 9. Go to step 6 and repeat the procedure until an optimum solution is attained.
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