MBA ASSIGNMENT – SEM – II

OPERATION RESEARCH

Subject Code – MB0032 – 4 Credits

Set – I

Ques 1 : Describe in details the different scopes of application of

Operations Research.

Ans : In general, whenever there is any problem simple or complicated,

the OR techniques may be applied to find the best solution.

i) In Defence Operations: In modern warfare the defence operations

are carried out by a number of independent components namely
Air Force, Army and Navy. The activities in each of these
components can be further divided in four subcomponents viz.:
administration, intelligence, operations and training, and supply.

ii) In Industry: The system of modern industries are so complex that

the optimum point of operation in its various components cannot
be intuitively judged by an individual. The business environment is
always changing and any decision useful at one time may not be
so good some time later. There is always a need to check the
validity of decisions continually, against the situations. The
industrial revolution with increased division of labour and
introduction of management responsibilities has made each
component an independent unit having their own goals.

iii) Planning: In modern times it has become necessary for every

government to have careful planning, for economic development
of the country. OR techniques can be fruitfully applied to maximize
the per capita income, with minimum sacrifice and time. A
government can thus use OR for framing future economic and
social policies.

iv) Agriculture: With increase in population there is a need to increase

agriculture output. But this cannot be done arbitrarily. There are a
number of restrictions under which agricultural production is to be
studied. Therefore there is a need to determine a course of action,
which serves the best under the given restrictions. The problem
can be solved by the application of OR techniques.

v) In Hospitals: The OR methods can be used to solve waiting

problems in outpatient department of big hospitals. The
administrative problems of hospital organization can also be
solved by OR Techniques.

vi) In Transport: Different OR methods can be applied to regulate the

arrival of trains and processing times, minimize the passengers
waiting time and reduce congestion, formulate suitable
transportation policy, reducing the costs and time of
transshipment.
 vii) Research and Development: Control of R and D projects, product
introduction planning etc. and many more applications.

Ques 2: What do you understand by Linear Programming Problem?

What are the requirements of L.P.P.? What are the basic
assumptions of L.P.P.?

Ans : One of the most important problems in management decision is to

allocate limited and scarce resource among competing agencies in the best
possible manner. Resources may represent man, money, machine, time,
technology on space. The task of the management is to derive the best
possible output (or set of outputs) under given restraints on resources.
The management problem may be to optimize (maximize or minimize) the
output or the objective function subject to the set of constraints An
optimization problem in which both the objective function and the
constraints are represented by linear forms is a problem in linear
programming.

Linear programming problem (LPP) : The standard form of the linear

programming problem is used to develop the procedure for solving a
general programming problem.
A general LPP is of the form
Max (or min) Z = c1x1 + c2x2 + … +cnxn
x1, x2, ....xn are called decision variable.
subject to the constraints

c1, c2,…. Cn, a11, a12,…. amn are all known constants
Z is called the "objective function" of the LPP of n variables which is to be
maximized or
minimized.

Requirements of L.P.P : There are mainly four steps in the

mathematical formulation of linear programming problem as a
mathematical model. We will discuss formulation of those problems which
involve only two variables.

• Identify the decision variables and assign symbols x and y to them.

These decision variables are those quantities whose values we wish
to determine.
• Identify the set of constraints and express them as linear
equations/inequations in terms of the decision variables. These
constraints are the given conditions.
• Identify the objective function and express it as a linear function of
decision variables. It might take the form of maximizing profit or
production or minimizing cost.
 • Add the non-negativity restrictions on the decision variables, as in the
physical problems, negative values of decision variables have no valid
interpretation.

There are many real life situations where an LPP may be formulated.

Basic Assumptions of L.P.P: Linear programming is applicable only

to problems where the constraints and objective function are linear i.e.,
where they can be expressed as equations which represent straight lines. In
real life situations, when constraints or objective functions are not linear,
this technique cannot be used.

• Factors such as uncertainty, weather conditions etc. are not taken

into consideration. There may not be an integer as the solution, e.g.,
the number of men required may be a fraction and the nearest
integer may not be the optimal solution. i.e., Linear programming
technique may give practical valued answer which is not desirable.

• Only one single objective is dealt with while in real life situations,
problems come with multi-objectives.

• Parameters are assumed to be constants but in reality they may not

be so.

Ques 3 Describe the different steps needed to solve a problem by

simplex method.

Ans : Following are the steps needed to solve the problem by simplex
method-

1. Introduce stack variables (Si’s) for “ less than or equal to” type of
constraint.
2. Introduce surplus variables (Si’s) and Artificial Variables (Ai) for “ more
than or equal to” type of constraint.

3. Introduce only Artificial variable for “=” type of constraint.

4. Cost (Cj) of slack and surplus variables will be zero and that of Artificial
variable will be “M”

5. Find Zj - Cj for each variable.

6. Slack and Artificial variables will form Basic variable for the first simplex
table. Surplus variable will never become Basic Variable for the first simplex
table.

7. Zj = sum of [cost of variable x its coefficients in the constraints – Profit or

cost coefficient of the variable].
8. Select the most negative value of Zj - Cj. That column is called key
column. The variable corresponding to the column will become Basic
variable for the next table.

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

get ratios select the minimum ratio. This becomes the key row. The Basic
variable corresponding to this row will be replaced by the variable found in
step 6.

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

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

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

13. For maximization problems decision variables coefficient will be same

as in the objective function. For minimization problems decision variables
coefficients will have opposite signs as compared to objective function.

14. Values of artificial variables will always is – M for both maximization and
minimization problems.

15. The process is continued till all Zj - Cj more than or equal to 0.

Ques 4: Describe the economic importance of the Duality concept.

Ans : The Importance Of Duality Concept Is Due To Two Main

Reasons

i. If the primal contains a large number of constraints and a smaller number

of variables, the labour of computation can be considerably reduced by
converting it into the dual problem and then solving it

ii. The interpretation of the dual variable from the loss or economic point of
view proves extremely useful in making future decisions in the activities
being programmed.

Here the sense of optimization is very important. Hence clearly for any two
primal and dual feasible solutions, the values of the objective functions,
when finite, must satisfy the following inequality.

Economic importance of duality concept The linear programming

problem can be thought of as a resource allocation model in which the
objective is to maximize revenue or profit subject to limited resources.
Looking at the problem from this point of view, the associated dual problem
offers interesting economic interpretations of the L.P resource allocation
model. We consider here a representation of the general primal and dual
problems in which the primal takes the role of a resource allocation model.

Primal
Maximize
n
z= ∑C
j =1
j .x j

n
Subject to ∑a
j =1
ij x j ≤b j , i = 1,2,…., m

xj ≥ 0, j = 1,2,…., n

Dual

Minimize
m
w= ∑b . y
i =1
i i

m
Subject to ∑a
i =1
ij yi ≤ ci , i = 1,2,…., n

yj ≥ 0, i = 1,2,…., m
From the above resource allocation model, the primal problem has n
economic activities and m resources. The coefficient cj in the primal
represents the profit per unit of activity j. Resource i, whose maximum
availability is bi, is consumed at the rate aij units per unit of activity j.

Interpretation of Duel Variables –

For any pair of feasible primal and dual solutions, (Objective value in the
maximization problem) ≤ (Objective value in the minimization problem)

At the optimum, the relationship holds as a strict equation. Note: Here the
sense of optimization is very important. Hence clearly for any two primal
and dual feasible solutions, the values of the objective functions, when
finite, must satisfy the following inequality.

n m

z = ∑C j x j ≤ ∑bi yi = w
j =1 i =1

The strict equality, z = w, holds when both the primal and dual solutions
are optimal.

Consider the optimal condition z = w first given that the primal problem
represents a resource allocation model, we can think of z as representing
profit in Rupees. Because bi represents the number of units available of
resource i, the equation z = w can be expressed as profit (Rs) = ∑ (units of
resource i) x (profit per unit of resource i)

This means that the dual variables yi, represent the worth per unit of
resource i [variables yi are also called as dual prices, shadow prices and
simplex multipliers].

With the same logic, the inequality z < w associated with any two feasible
primal and dual solutions is interpreted as (profit) < (worth of resources)
This relationship implies that as long as the total return from all the
activities is less than the worth of the resources, the corresponding primal
and dual solutions are not optimal. Optimality is reached only when the
resources have been exploited completely, which can happen only when
the input equals the output (profit). Economically the system is said to
remain unstable (non optimal) when the input (worth of the resources)
exceeds the output (return). Stability occurs only when the two quantities
are equal.

Ques 5: How can you use the Matrix Minimum method to find the
initial basic feasible solution in the transportation problem.

Ans : The Initial basic Feasible solution using Matrix Minimum

Method:
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.

It is always possible to assign an initial feasible solution to a T.P. in such a

manner that the rim requirements are satisfied. This can be achieved either
by inspection or by following some simple rules. We begin by imagining that
the transportation table is blank i.e. initially all xij = 0. The simplest
procedures for initial allocation discussed in the following section.

Matrix Minimum Method

Step 1:Determine the smallest cost in the cost matrix of the transportation
table. Let it be cij , Allocate xij = min ( ai, bj) in the cell ( i, j)

Step 2: If xij = ai cross off the ith row of the transportation table and
decrease bj by ai go to step 3.

if xij = bj cross off the ith column of the transportation table and decrease ai
by bj go to step 3.

if xij = ai= bj cross off either the ith row or the ith column but not both.

Step 3: Repeat steps 1 and 2 for the resulting reduced transportation table
until all the rim requirements are satisfied whenever the minimum cost is
not unique make an arbitrary choice among the minima.

Ques 6: Describe the Integer Programming Problem. Describe the

Gomory’s All-I.P.P. method for solving the I.P.P. problem.
Ans : Integer Programming Problem : The Integer Programming
Problem I P P is a special case of L P P where all or some variables are
constrained to assume nonnegative integer values. This type of problem
has lot of applications in business and industry where quite often discrete
nature of the variables is involved in many decision making situations. Eg.
In manufacturing the production is frequently scheduled in terms of
batches, lots or runs; In distribution, a shipment must involve a discrete
number of trucks or aircrafts or freight cars
An integer programming problem can be described as follows:
Determine the value of unknowns x1, x2, … , xn

so as to optimize z = c1x1 +c2x2 + . . .+ cnxn

subject to the constraints

ai1 x1 + ai2 x2 + . . . + ain xn =bi , i = 1,2,…,m

and xj ³ 0 j = 1, 2, … ,n

where xj being an integral value for j = 1, 2, … , k ≤ n.

If all the variables are constrained to take only integral value i.e. k = n, it is
called an all(or pure) integer programming problem. In case only some of
the variables are restricted to take integral value and rest (n – k) variables
are free to take any non negative values, then the problem is known as
mixed integer programming problem.

Gomory’s All – IPP Method

An optimum solution to an I. P. P. is first obtained by using simplex method

ignoring the restriction of integral values. In the optimum solution if all the
variables have integer values, the current solution will be the desired
optimum integer solution. Otherwise the given IPP is modified by inserting a
new constraint called Gomory’s or secondary constraint which represents
necessary condition for integrability and eliminates some non integer
solution without losing any integral solution. After adding the secondary
constraint, the problem is then solved by dual simplex method to get an
optimum integral solution. If all the values of the variables in this solution
are integers, an optimum inter-solution is obtained, otherwise another new
constrained is added to the modified L P P and the procedure is repeated.
An optimum integer solution will be reached eventually after introducing
enough new constraints to eliminate all the superior non integer solutions.
The construction of additional constraints, called secondary or Gomory’s
constraints, is so very important that it needs special attention.

The iterative procedure for the solution of an all integer programming

problem is as follows:

Step 1: Convert the minimization I.P.P. into that of maximization, if it is in

the minimization form. The integrality condition should be ignored.
Step 2: Introduce the slack or surplus variables, wherever necessary to
convert the inequations into equations and obtain the optimum solution of
the given L.P.P. by using simplex algorithm.

Step 3: Test the integrality of the optimum solution

a) If the optimum solution contains all integer values, an optimum basic

feasible integer solution has been obtained.
b) If the optimum solution does not include all integer values then
proceed onto next step.

Step 4: Examine the constraint equations corresponding to the current

optimum solution. Let these equations be represented by

n1

∑y
j =0
ij x j = bi ( i 0 , 1, 2 , ........, m1 )

Where n’ denotes the number of variables and m’ the number of equations.

Choose the largest fraction of bis ie to find {bi}i

Let it be [bk 1]
or write is as f ko

Step 5: Express each of the negative fractions if any, in the k th row of the
optimum simplex table as the sum of a negative integer and a nonnegative
fraction.

Step 6: Find the Gomorian constraint

n1

∑f
j =0
kj x j ≥ f ko

and add the equation

n1
Gsla ( 1 )= − f ko + ∑ f kj x j
j =0

to the current set of equation constraints.

Step 7: Starting with this new set of equation constraints, find the new
optimum solution by dual simplex algorithm. (So that Gsla (1) is the initial
leaving basic variable).

Step 8: If this new optimum solution for the modified L.P.P. is an integer
solution. It is also feasible and optimum for the given I.P.P. otherwise return
to step 4 and repeat the process until an optimum feasible integer solution
is obtained.