Write a short note on decision making.

• Decision making is a process of evaluating and selecting the best alternative among available
options.
• It involves identifying goals, constraints, and alternatives.
• Decision making requires objective evaluation of alternatives.
• The repercussions of each choice need to be considered.
• Decision making is necessary due to limited resources and conflicting goals.
• The process consists of two phases: formulation of goals, constraints, and alternatives, and
selection of the optimal course of action.
• In Operations Research, decision making focuses on choosing the best strategy based on
specified assumptions.
• Decisions can be classified based on the level of certainty: decision making under certainty,
uncertainty, and risk.

Explain the techniques used to solve transportation problems.

The transportation problem is a common optimization problem in product optimization techniques. It
involves determining the most efficient way to transport goods from sources to destinations while
minimizing costs or maximizing profits. Several techniques are commonly used to solve transportation
problems:

• Northwest Corner Method: This technique starts by allocating the maximum possible value to
the cell in the top-left corner of the transportation matrix. Then, it fills the remaining cells by
moving along the northwest corner of the matrix and allocating values based on supply and
demand constraints.
• Least Cost Method: The least cost method selects the cell with the lowest transportation cost as
the starting point. It continues to allocate values to cells with the lowest cost until supply and
demand constraints are satisfied.
• Vogel's Approximation Method (VAM): VAM considers both the costs and the differences
between the two lowest costs in each row and column. It identifies the cell with the largest
difference and assigns values accordingly. This method often provides more balanced solutions.
• MODI (Modified Distribution Method): MODI is an iterative technique that improves the initial
solution obtained from methods like the Northwest Corner or VAM. It calculates the opportunity
costs for each unused cell in the transportation matrix and identifies the one with the maximum
value. It then adjusts the allocation accordingly to improve the solution.
• Steppingstone Method: The stepping stone method is another iterative technique used to
improve initial solutions. It involves identifying "closed paths" in the transportation matrix and
calculating the improvement in cost by temporarily reallocating units along these paths. The
method continues until no further improvements can be made.
Explain in brief.
1) linear programming
2) Assumption of linear programming model
3) Application of linear programming
• Linear programming (LP) is a mathematical optimization technique used to determine the best
possible outcome in a given situation, given a set of linear constraints and an objective function.
It involves maximizing or minimizing an objective function while satisfying a set of linear
constraints. The objective function represents the goal to be optimized, such as maximizing
profit or minimizing cost, while the constraints represent the limitations or restrictions that must
be adhered to. LP is widely used in various fields, including operations research, economics,
engineering, and management, to solve complex optimization problems efficiently.

Assumptions of a linear programming model include:

• Proportionality: The relationships between variables in the objective function and constraints
are linear.
• Additivity: The contributions of individual variables can be combined additively to form the
objective function and constraints.
• Certainty: The parameters of the model, such as coefficients and constants, are known with
certainty and do not involve randomness.
• Divisibility: The decision variables can take on fractional or continuous values, allowing for a
range of feasible solutions.
• Non-negativity: The decision variables cannot have negative values.

Linear programming finds applications in product optimization techniques. Some of its key
applications include:

• Production planning: LP can be used to optimize production schedules, allocate resources, and
minimize costs while meeting demand requirements.
• Supply chain management: LP can optimize inventory management, transportation logistics, and
distribution planning to minimize costs and improve efficiency.
• Marketing and advertising: LP can optimize advertising budgets, media selection, and resource
allocation to maximize sales or reach a target audience.
• Portfolio optimization: LP can help in asset allocation, portfolio selection, and risk management
to optimize investment portfolios and maximize returns.
• Resource allocation: LP can be used to allocate limited resources, such as labor, machinery, or
raw materials, among various activities or projects to achieve maximum efficiency.
Define significance of Slack variable and Surplus variable
Slack Variables: Slack variables are introduced to represent the unused resources or capacities in a linear
programming model. They are used in constraints that have inequality symbols (≤ or ≥) instead of strict
equality (=). By introducing slack variables, the inequalities are converted into equalities, allowing for a
more convenient representation of the problem.

The significance of slack variables includes:

• Identifying the surplus or unused resources in the optimal solution.

• Providing information about the degree to which the constraints are satisfied.
• Allowing for a clear interpretation of the resource utilization in the optimization problem.

Surplus Variables: Surplus variables are introduced to represent the excess or surplus of a particular
resource in a linear programming model. They are used in constraints that have inequality symbols (≥ or
≤) instead of strict equality (=). Like slack variables, surplus variables help in converting the inequalities
into equalities for ease of representation and solution.

The significance of surplus variables includes:

• Identifying the surplus or excess of a particular resource in the optimal solution.

• Providing information about the extent to which the constraints are violated.
• Assisting in analyzing the sensitivity of the optimal solution to changes in the constraint
coefficients.

Difference between Northwest corner and least cost methods

Approach:

• Northwest Corner Method: This method starts allocating values to the cells in the transportation
matrix from the top-left corner (northwest corner) and moves horizontally or vertically to fill the
remaining cells. It prioritizes the most available supply or demand cell and allocates values
accordingly.
• Least Cost Method: The least cost method selects the cell with the lowest transportation cost as
the starting point and proceeds to allocate values based on the lowest cost. It considers the cost
aspect while filling the cells.

Allocation Strategy:

• Northwest Corner Method: This method does not consider the cost aspect; instead, it focuses on
balancing the supply and demand. It allocates value without considering the transportation
costs, resulting in a solution that may not be cost-effective.
• Least Cost Method: The least cost method considers the transportation costs. It selects the cell
with the lowest cost and allocates values, accordingly, aiming to minimize the overall
transportation costs.
Cost Consideration:

• Northwest Corner Method: This method does not prioritize cost considerations, as it focuses
primarily on allocating supply and demand.
• Least Cost Method: The least cost method is specifically designed to minimize transportation
costs. It ensures that the cells with lower transportation costs are prioritized during allocation.

Cost Efficiency:

• Northwest Corner Method: The solution obtained from the Northwest corner method may not
be the most cost-efficient, as it does not consider cost optimization.
• Least Cost Method: The least cost method aims to provide a more cost-efficient solution by
considering transportation costs during the allocation process.

Explain Vogel's approximation method of finding the initial solution.

Vogel's approximation method (VAM) is an initial solution technique used in product optimization,
particularly in transportation problems. It is a more sophisticated approach compared to methods like
the Northwest corner or least cost methods. VAM considers both the costs and the differences between
the two lowest costs in each row and column of the transportation matrix.

Here's a step-by-step explanation of Vogel's approximation method:

• Calculate the penalty values for each row and column: Find the difference between the two
lowest costs in each row and column and assign these differences as penalty values.
• Identify the cell with the highest penalty value: Locate the cell with the largest penalty value.
This cell represents the most unbalanced row or column.
• Select the cell with the lowest cost in the unbalanced row or column: Choose the cell with the
lowest cost among those in the unbalanced row or column. If multiple cells have the same
lowest cost, select any one of them.
• Allocate the maximum possible amount to the selected cell: Assign the maximum amount that
can be allocated to the selected cell while considering the supply and demand constraints.
• Update the supply and demand values: Adjust the remaining supply and demand quantities after
the allocation. Reduce the supply or demand of the corresponding row or column by the
allocated amount.
• Update the penalty values: Recalculate the penalty values for the updated rows and columns
based on the new differences between the two lowest costs.
• Repeat steps 2 to 6 until all supply and demand quantities are fulfilled: Iterate the process of
selecting the highest penalty cell and making allocations until all supply and demand quantities
are satisfied.

Vogel's approximation method aims to provide a more balanced initial solution by considering both cost
and the differences between costs. It often results in a more optimal starting solution compared to
simpler methods like the Northwest corner or least cost methods. From this initial solution, further
optimization techniques can be applied to improve the solution and find the optimal allocation in
product optimization problems.
What is an Operations Research model? Discuss the advantages of
limitations of good Operations Research model.
An Operations Research (OR) model is a mathematical representation of a real-world problem or
situation that is formulated and solved using techniques from the field of Operations Research. OR
models are designed to aid decision-making by providing a systematic and analytical approach to
problem-solving.

Advantages of a Good Operations Research Model:

• Efficiency: OR models help improve efficiency by optimizing resource allocation, minimizing

costs, and maximizing utilization. They provide a quantitative framework to find the most
optimal solutions, leading to improved operational performance.
• Decision Support: OR models provide decision-makers with valuable insights and information for
making informed choices. By analyzing different scenarios and alternatives, they enable decision-
makers to evaluate trade-offs, identify risks, and select the best course of action.
• Resource Optimization: OR models help in optimizing the allocation and utilization of resources.
This includes effective inventory management, production scheduling, capacity planning,
transportation routing, and more. By optimizing resource usage, organizations can reduce waste,
improve productivity, and achieve higher levels of efficiency.
• Risk Management: OR models can incorporate risk and uncertainty factors into decision-making
processes. By considering probabilistic models, sensitivity analysis, and simulation techniques,
organizations can assess the impact of various uncertainties on outcomes and make risk-
informed decisions.
• Strategic Planning: OR models aid in strategic planning by providing a quantitative basis for
evaluating long-term decisions. They assist in analyzing the impact of different strategies, market
trends, competitor behavior, and other factors to develop robust and effective plans.

Limitations of an Operations Research Model:

• Simplifying Assumptions: OR models rely on simplifying assumptions to make complex problems

manageable. However, these assumptions may oversimplify real-world complexities, potentially
leading to unrealistic or suboptimal solutions.
• Data Requirements: OR models heavily rely on accurate and reliable data. Gathering and
maintaining relevant data can be challenging, and inaccuracies or missing data can affect the
validity and reliability of the model's results.
• Expertise and Interpretation: Developing and using OR models often require specialized
knowledge and expertise. Interpretation of the model's results and recommendations can be
complex and may require expert understanding to ensure proper implementation and decision-
making.
• Dynamic Nature of Problems: Many real-world problems are dynamic and evolve over time. OR
models may struggle to capture the dynamic nature of these problems, leading to static
solutions that may not be optimal in changing conditions.
 • Resistance to Change: Implementing solutions derived from OR models often require changes in
organizational processes, systems, and behaviors. Resistance to change within the organization
can hinder the effective implementation and realization of the model's benefits.

What is degeneracy in a transportation problem? How is it resolved?

Degeneracy in a transportation problem refers to a situation where one or more of the basic variables
(allocated quantities) in the optimal solution are equal to zero. In other words, there are empty cells in
the solution where no units are allocated. Degeneracy can occur when the number of rows (supply) is
not equal to the number of columns (demand) or when there are redundant constraints in the problem
formulation.

Degeneracy can lead to difficulties in solving transportation problems, particularly when using certain
optimization algorithms or methods. It can cause inefficiencies in the computational process and may
result in a longer time to reach the optimal solution.

To resolve degeneracy in a transportation problem, various methods can be employed:

• Modified Distribution Method: This method involves modifying the allocation process by
considering empty cells with zero allocations as non-empty cells. The algorithm is adjusted to
account for the degenerate situation and ensure that all empty cells receive non-zero
allocations.
• Steppingstone Method: The steppingstone method is an iterative procedure used to find an
optimal solution to transportation problems. It helps identify and correct degeneracy by
examining the empty cells (with zero allocations) and finding a closed loop path through the
non-empty cells. This path is then adjusted to introduce a non-zero allocation to the empty cell,
thereby resolving the degeneracy.
• Russell's Approximation Method: Russell's method is another approach used to address
degeneracy. It involves introducing a small value (epsilon) to the zero cells in the transportation
matrix, converting them into non-zero cells. This modification allows the problem to be solved
using regular transportation algorithms, effectively resolving degeneracy.

By applying these methods, the degeneracy issue can be resolved, and a valid solution to the
transportation problem can be obtained. It is important to note that the specific approach chosen may
depend on the problem's characteristics, the available resources, and the desired computational
efficiency.

Enumerate the steps involved in solving a Linear programming by

graphical approach.
The graphical approach is one method used to solve linear programming problems. Here are the steps
involved in solving a linear programming problem using the graphical approach:

• Formulate the Problem: Define the objective function to be maximized or minimized, along with
the constraints, in terms of linear inequalities or equations.
• Plot the Constraints: Plot each constraint as a linear inequality on a graph, typically using the x
and y axes. This creates a feasible region, which represents the intersection of all the constraints.
 • Identify the Feasible Region: Determine the region in the graph that satisfies all the constraints.
This region is a feasible region, and it may be bounded or unbounded.
• Determine the Objective Function Line: Plot the objective function line on the same graph. For
maximization, the objective function line has a positive slope, while for minimization, it has a
negative slope.
• Find the Optimal Solution: Identify the corner points (vertices) of the feasible region. Evaluate
the objective function at each corner point to determine the optimal solution. The optimal
solution is the corner point that yields the maximum (or minimum) objective function value.
• Interpret the Solution: Analyze the optimal solution in the context of the problem to understand
the values of the decision variables and the optimal objective function value.
• Sensitivity Analysis (Optional): Perform sensitivity analysis to evaluate the impact of changes in
the objective function coefficients or constraint boundaries on the optimal solution. This helps
assess the stability and robustness of the solution.
• Verify the Solution: Check the feasibility of the optimal solution by verifying if it satisfies all the
constraints. Also, ensure that the solution makes logical sense within the context of the problem.

What is the difference between CPM and PERT?

CPM (Critical Path Method) and PERT (Program Evaluation and Review Technique) are both project
management techniques used in product optimization to plan and schedule activities. While they have
similarities, there are some key differences between CPM and PERT:

Focus:

• CPM: CPM focuses on determining the critical path, which is the longest sequence of dependent
activities that determines the project's overall duration.
• PERT: PERT focuses on estimating activity durations and probabilities to analyze the project's
uncertainties and risks.

Activity Time Estimates:

• CPM: CPM uses deterministic time estimates, assuming that activity durations are fixed and
known with certainty.
• PERT: PERT uses probabilistic time estimates, incorporating three time estimates for each
activity: optimistic, pessimistic, and most likely. These estimates are used to calculate expected
activity durations and probabilities.

Network Representation:

• CPM: CPM uses a deterministic network diagram, known as the arrow diagramming method
(ADM), where activities are represented as arrows and nodes represent events or milestones.
• PERT: PERT uses a probabilistic network diagram, known as the precedence diagramming
method (PDM), where activities are represented as nodes connected by arrows to show
dependencies.
Time Analysis:

• CPM: CPM focuses on calculating early start, early finish, late start, and late finish times for each
activity, determining the project's critical path and float times.
• PERT: PERT focuses on calculating expected durations, variance, and standard deviation for each
activity, as well as the project's expected duration and probability of meeting specific deadlines.

Application:

• CPM: CPM is commonly used in projects with well-defined and certain activity durations, where
the focus is on optimizing time and resource allocation.
• PERT: PERT is commonly used in projects with uncertain activity durations, where the focus is on
analyzing and managing project risks and uncertainties.

List out of the rules in constructing a network diagram?

When constructing a network diagram in product optimization techniques, such as Critical Path Method
(CPM) or Program Evaluation and Review Technique (PERT), several rules should be followed to ensure
an accurate representation of the project's activities and their dependencies. Here are the key rules for
constructing a network diagram:

• Define Activities: Identify and define the individual activities that need to be completed as part
of the project. Each activity should represent a specific task or work package.
• Determine Precedence Relationships: Determine the logical relationships between activities to
establish their sequence and dependencies. Identify which activities must be completed before
others can start (predecessor activities) and which activities depend on the completion of others
(successor activities).
• Represent Activities: Represent each activity as a node or box on the diagram. Use unique labels
or identifiers to differentiate between activities.
• Connect Activities: Connect the activities with arrows or lines to represent the logical flow and
dependencies. The arrows should indicate the direction of the relationship, from predecessor to
successor activities.
• Include Durations: Optionally, include the estimated durations or time required for each activity.
This information can be useful for scheduling and calculating critical paths.
• Consider Milestones: If applicable, include milestone events in the network diagram. Milestones
represent significant points or achievements in the project timeline, indicating the completion of
a group of activities or a major deliverable.
• Avoid Cycles or Loops: Ensure that the network diagram does not contain any cycles or loops,
where activities form a circular dependency. Such loops can lead to infinite time or resource
requirements and are not feasible.
• Review and Validate: Review the constructed network diagram to ensure accuracy,
completeness, and logical consistency. Validate the diagram with project stakeholders and
subject matter experts to verify the correctness of the activity sequence and dependencies.
What is (1) Total float (2) Free Float and (3) Independent float
In project management, particularly in the context of product optimization techniques like Critical Path
Method (CPM), the terms Total Float, Free Float, and Independent Float are used to describe different
types of flexibility or slack within a project schedule. Here's a brief explanation of each:

Total Float (TF): Total float, also known as total slack, refers to the amount of time an activity can be
delayed without affecting the project's overall duration or the start time of subsequent activities on the
critical path. It represents the maximum amount of time an activity can be delayed without causing a
delay to the project completion date.

Free Float (FF): Free float, also known as free slack, refers to the amount of time an activity can be
delayed without delaying the early start of any immediately following activities. In other words, it
represents the flexibility available within an activity's schedule without impacting the start of
subsequent dependent activities.

Independent Float (IF): Independent float refers to the amount of time an activity can be delayed
without delaying any other dependent activities or the project's overall duration. It specifically applies to
non-critical activities, which are activities that are not on the critical path. Independent float allows for
some scheduling flexibility within these non-critical activities.

How is optimality tested in solving transportation problems?

Optimality Test for Basic Feasible Solution (BFS) using the Modified Distribution Method (MODI):

• Calculate the opportunity costs or shadow prices for each unused allocation (empty cell) in the
transportation table. The opportunity cost represents the amount by which the objective
function value would change if one unit of the product were allocated to that cell.
• Determine the row and column with the most negative opportunity cost. This indicates the cell
that offers the maximum improvement in the objective function value.
• Perform a loop called the stepping-stone method to find an alternative allocation that improves
the objective function value without violating the supply and demand constraints. This involves
moving along a closed loop formed by occupied cells and unoccupied cells.
• Repeat the above steps until all opportunity costs are non-negative. This indicates an optimal
solution, as no further improvements can be made.

Optimality Test for Vogel's Approximation Method:

• Calculate the penalties or penalties for each row and column in the transportation table. The
penalty represents the difference between the two smallest costs in a row or column.
• Identify the row or column with the highest penalty. This indicates the row or column that offers
the maximum potential for cost reduction.
• Allocate units to the cell with the minimum cost in the identified row or column, considering the
supply and demand constraints.
• Recalculate the penalties and repeat the above steps until all penalties are zero or non-negative.
This indicates an optimal solution.
What are the methods used to find the initial transportation cost?
To find the initial transportation cost in a transportation problem, two commonly used methods are the
Northwest Corner Method and the Least Cost Method. These methods determine the initial allocation of
units and associated costs in the transportation table. Here's an overview of each method:

Northwest Corner Method:

• Start by allocating units in the top-left corner (northwest corner) cell of the transportation table.
• Move horizontally or vertically, allocating units to the cells with the most available supply or
demand until one of them is exhausted.
• Calculate the cost for each allocation by multiplying the quantity allocated in each cell by its
respective transportation cost.
• Repeat the process until all supply and demand requirements are fulfilled, filling the entire
transportation table.
• The total initial transportation cost is obtained by summing up the costs of all allocated cells.

Least Cost Method:

• Begin by identifying the cell with the lowest transportation cost in the transportation table.
• Allocate as many units as possible to this cell without exceeding the supply or demand
constraints.
• Calculate the cost for this allocation.
• Adjust the remaining supply and demand quantities based on the allocation made.
• Repeat the process by selecting the next cell with the lowest cost and continue allocating units
until all supply and demand requirements are met.
• Compute the total initial transportation cost by summing up the costs of all allocated cells.

Explain the terms.

(1) Time estimates
(2) Expected time
(3) Variance activity
• Time Estimates: Time estimates refer to the estimated durations or completion times assigned to
individual activities within a project. These estimates represent the expected amount of time
required to complete each activity based on factors such as historical data, expert judgment, or
experience. Time estimates can be given in different units, such as days, weeks, or hours,
depending on the project's granularity.
• Expected Time: The expected time of an activity is a calculated value that represents the average
or most likely completion time for that activity. It is often derived using statistical techniques,
such as PERT analysis, which takes into account three-time estimates: optimistic time (O),
pessimistic time (P), and most likely time (M). The expected time is calculated as a weighted
 average of these three estimates using the formula: Expected Time (TE) = (O + 4M + P) / 6. It
provides a single, representative value for the activity duration.
• Variance Activity: Variance activity, also known as activity variance or activity standard deviation,
is a measure of the variability or uncertainty associated with an activity's duration. It represents
the dispersion or spread of possible completion times around the expected time. Variance
activity is calculated using the formula: Variance (V) = [(P - O) / 6] ^2, where P is the pessimistic
time and O is the optimistic time. A higher variance value indicates greater uncertainty or
variability in the activity's duration.

Why is it difficult to solve a transportation problem with simplex

method?
The simplex method is a powerful optimization algorithm commonly used to solve linear programming
problems. However, when it comes to solving transportation problems, the simplex method faces several
challenges that make it more difficult to apply compared to other specialized methods. Here are a few
reasons:

• Nonlinearity: Transportation problems involve a network structure with constraints on the

allocation of goods or resources between multiple sources and destinations. The nonlinearity of
the transportation problem formulation, specifically the presence of constraints related to
supply and demand, makes it challenging to directly apply the simplex method, which is
designed for linear programming problems.
• Large Dimensionality: Transportation problems often have many variables and constraints,
resulting in a high-dimensional problem. The simplex method becomes computationally
intensive and time-consuming as the number of variables and constraints increases. It requires
numerous iterations to reach an optimal solution, making it less efficient for transportation
problems with a large-scale network.
• Initial Basic Feasible Solution: The simplex method relies on starting with an initial basic feasible
solution, which satisfies certain requirements for the problem constraints. Finding an initial
feasible solution for transportation problems can be complex and time-consuming, especially
when dealing with many sources, destinations, and supply-demand relationships.
• Cycling Phenomenon: The cycling phenomenon refers to a situation where the simplex method
gets trapped in a loop and fails to converge to an optimal solution. In transportation problems,
cycling can occur due to the unique structure and constraints of the network. Resolving cycling
requires additional techniques or modifications to the standard simplex method.

What is an unbalanced transportation problem? What should be done

to solve the problem?
To balance an unbalanced transportation problem, the following steps can be taken:

• Adding a Dummy Source or Dummy Destination: Introduce a dummy source or dummy

destination to the transportation problem to balance the supply and demand. A dummy source
represents a fictitious supply point with an artificially added supply value, while a dummy
destination represents a fictitious demand point with an artificially added demand value.
 • Adjusting the Supply and Demand Values: Increase or decrease the supply or demand values at
existing sources or destinations to achieve a balanced transportation problem. This adjustment
can involve modifying the original supply and demand quantities based on the surplus or
shortage in the problem.
• Transportation Cost for Dummy Cells: Assign appropriate transportation costs to the dummy cells
(dummy source or dummy destination) to reflect the additional supply or demand introduced.
These costs are typically set to zero or a negligible value since dummy cells do not involve actual
transportation.

State the conditions to be checked for applying Johnson’s rule for 4

machines and 10 jobs in a sequencing problem.
Johnson's rule is a sequencing method used to minimize the total completion time in a scheduling
problem involving two machines or two stages. To apply Johnson's rule for a sequencing problem with 4
machines and 10 jobs, the following conditions need to be checked:

• Two Machines or Stages: Johnson's rule is applicable when there are exactly two machines or
stages involved in the sequencing problem. In this case, the problem satisfies this condition as
there are 4 machines.
• Independent Job Times: The processing times or durations of the jobs on each machine should
be independent of each other. That is, the time taken to complete a job on one machine should
not depend on the time taken to complete another job on the same machine. If the job times
are independent, Johnson's rule can be applied.
• Non-preemptive Operations: Johnson's rule assumes that jobs cannot be interrupted or
preempted once they start on a machine. Each job must be completed in its entirety on the
respective machine.
• Minimization Objective: Johnson's rule is designed to minimize the total completion time.
Therefore, the objective of the sequencing problem should be to minimize the overall
completion time of all jobs.

Explain the procedure for constructing a decision tree for arriving at

the best decision out of the various options.
Constructing a decision tree is a systematic procedure used in decision analysis to evaluate various
options and arrive at the best decision. Here is the procedure for constructing a decision tree:

• Identify the Decision: Clearly define the decision or problem to be addressed. This could be a
strategic choice, investment decision, product optimization, or any other situation where
multiple options need to be evaluated.
• Determine Objectives and Criteria: Identify the key objectives and decision criteria that will be
used to evaluate the options. These criteria should be measurable and relevant to the decision
at hand. Examples include cost, profitability, risk, market demand, or customer satisfaction.
• List Decision Alternatives: Identify the different possible courses of action or alternatives that
can be taken to address the decision. List all feasible options that are available for consideration.
 • Define Uncertainty and Chance Events: Consider any uncertain factors or chance events that may
influence the decision outcome. These could include market conditions, competitor actions,
regulatory changes, or other unpredictable variables that can impact on the results.
• Assign Probabilities and Payoffs: Assign probabilities to the chance events and determine the
potential payoffs or outcomes associated with each alternative and chance event combination.
These probabilities and payoffs can be estimated based on historical data, expert judgment, or
analysis.
• Construct the Decision Tree: Begin constructing the decision tree by representing the decision
nodes, chance nodes, and outcome nodes. Decision nodes represent the decision points where
alternatives are chosen, chance nodes represent uncertain events, and outcome nodes
represent the potential outcomes or results.
• Calculate Expected Payoffs: Calculate the expected payoffs for each alternative by multiplying
the payoffs of each outcome by their corresponding probabilities and summing them up. This
provides an overall measure of the expected value or utility associated with each alternative.
• Evaluate and Compare Alternatives: Evaluate the expected payoffs and utilities of each
alternative and compare them to decide. Consider the trade-offs between different objectives,
risk tolerance, and any other decision criteria to arrive at the best decision.
• Sensitivity Analysis: Conduct sensitivity analysis to assess the impact of changes in probabilities
or payoffs on the decision outcome. This helps understand the robustness of the decision and
identify critical factors that may influence the decision.
• Make the Decision: Based on the analysis and evaluation of the decision tree, select the
alternative with the highest expected payoff or utility as the best decision. Communicate and
implement the chosen decision.

What are the applications of operation research?

Operations Research (OR) has a wide range of applications across various industries and sectors. Some
common applications of Operations Research include:

• Supply Chain Management: OR techniques are used to optimize inventory management,

production planning, distribution network design, and transportation logistics, resulting in cost
reduction, improved efficiency, and better customer service.
• Production and Operations Management: OR models are employed to optimize production
scheduling, workforce planning, capacity utilization, and resource allocation, leading to
increased productivity, reduced costs, and improved operational performance.
• Financial Management: OR is utilized in portfolio optimization, risk management, asset
allocation, and investment planning to maximize returns, minimize risks, and make informed
financial decisions.
• Marketing and Sales: OR helps in market segmentation, pricing optimization, demand
forecasting, and sales force management, enabling companies to effectively target customers,
optimize pricing strategies, and maximize revenues.
• Healthcare Management: OR techniques are applied to healthcare resource allocation, patient
scheduling, hospital bed management, and healthcare delivery optimization, leading to
improved patient care, reduced waiting times, and efficient resource utilization.
 • Transportation and Logistics: OR is used in route optimization, vehicle scheduling, fleet
management, and logistics network design, resulting in efficient transportation operations,
reduced costs, and improved delivery times.
• Project Management: OR techniques like Critical Path Method (CPM) and Program Evaluation
and Review Technique (PERT) are used for project planning, scheduling, and resource allocation,
enabling effective project management and timely completion.
• Energy and Utilities: OR models are applied in energy production planning, power system
optimization, energy distribution, and demand management, facilitating efficient energy
utilization and cost savings.
• Environmental Management: OR helps in environmental resource management, pollution
control, waste management, and sustainability analysis, aiding in making environmentally
conscious decisions and optimizing resource utilization.
• Defense and Security: OR techniques are used in military operations planning, resource
allocation, troop deployment, and risk assessment, enhancing defense strategies and optimizing
resource allocation.

What is crashing? What is the procedure to be followed for carrying

out crashing of a project?
In project management, crashing refers to the technique of shortening the project duration by allocating
additional resources or increasing their utilization to complete the project faster. It involves compressing
the project schedule by reducing the time allocated to certain activities without compromising the
project objectives.

The procedure for carrying out crashing of a project typically involves the following steps:

• Identify Critical Path: Determine the critical path in the project network diagram, which
represents the sequence of activities that determines the project's overall duration. Any changes
made to activities on the critical path will directly impact the project timeline.
• Determine Time-Cost Trade-offs: Analyze the cost and time trade-offs associated with different
activities on the critical path. Determine the additional costs required to expedite the
completion of activities and the potential reduction in time that can be achieved.
• Evaluate Resource Constraints: Assess the availability of additional resources and their cost
implications. Identify the resources that can be allocated or increased to expedite the project,
such as adding more personnel, equipment, or working overtime.
• Identify Crashing Options: Identify the activities that can be crashed or shortened to reduce the
project duration. Evaluate the impact of crashing each activity in terms of time reduction and
associated costs.
• Analyze Cost-Time Curves: Plot cost-time curves for the activities identified for crashing. These
curves show the relationship between the time reduction and the corresponding cost increase.
Analyze the curves to identify the most cost-effective crashing options.
• Select Optimal Crashing Strategy: Evaluate the crashing options based on their cost and time
impact. Select the optimal crashing strategy that minimizes the additional cost while achieving
the desired project duration reduction.
 • Implement Crashing: Once the optimal crashing strategy is determined, implement the changes
by allocating additional resources, increasing their utilization, or taking any necessary actions to
expedite the selected activities. Communicate the changes to the project team and stakeholders.
• Monitor and Control: Continuously monitor the project progress and the impact of the crashing
strategy. Track the actual time and cost associated with the crashed activities. Adjust the project
plan and resources as needed to ensure the desired project duration is achieved.

What do you understand by a redundant constraint?

• Redundant constraints in product optimization refer to constraints in a mathematical
optimization problem that do not affect the feasible solution space or the optimal solution.
• These constraints are unnecessary and can be safely removed from the problem formulation
without altering the solutions or the objective value.
• Removing redundant constraints simplifies the problem and reduces computational complexity.
• It improves computational efficiency and can lead to faster solution times.
• Techniques such as sensitivity analysis and linear dependence analysis can be used to identify
and eliminate redundant constraints.
• Eliminating redundant constraints does not change the feasible solution space or the optimal
solution.

What is the need for a dummy activity in a network diagram?

In product optimization techniques, a dummy activity is used in a network diagram to represent a logical
relationship or dependency between two tasks or nodes that do not involve any actual work or
consumption of resources. The need for a dummy activity arises in certain situations to accurately depict
the precedence relationships and sequencing of activities in the project.

Here are some reasons for using dummy activities in a network diagram:

• Representing Finish-to-Start Relationships: In some cases, an activity can only start once another
activity has finished. To represent this dependency, a dummy activity is inserted between the
two activities to maintain the proper sequence.
• Handling Concurrent Activities: When two or more activities can occur concurrently or
independently, a dummy activity is used to show that they are not dependent on each other.
• Preserving the Network Structure: In network diagrams, each activity should have a unique
starting and ending node. If two or more activities have the same start and end nodes, a dummy
activity is introduced to maintain the structural integrity of the network.
• Resolving Logical Constraints: Dummy activities are used to handle situations where a logical
constraint exists, such as ensuring that a certain task or event occurs before or after another
task, even if no actual work is involved.
• Simplifying Complex Networks: Dummy activities can simplify complex networks by providing a
clear representation of the relationships between activities and their sequencing.
Explain Infeasibility and Unboundedness for an LPP using Graphical
Method.
In product optimization techniques, the graphical method is used to solve linear programming problems
(LPP) graphically by representing the constraints and the objective function on a two-dimensional graph.
When using the graphical method, there are two possible outcomes: infeasibility and unboundedness.

• Infeasibility: Infeasibility occurs when there is no feasible region or feasible solution that satisfies
all the constraints of the linear programming problem. This means that the constraints are
inconsistent or contradictory, and it is not possible to find a point that satisfies all the constraints
simultaneously.
o Graphically, infeasibility is indicated by the absence of any feasible region or the absence
of a feasible solution point. The constraints may intersect in such a way that there is no
common region that satisfies all of them. In this case, the linear programming problem is
said to be infeasible, and no optimal solution exists.
• Unboundedness: Unboundedness occurs when the objective function can be increased or
decreased indefinitely without reaching an optimal value. It means that there is no finite upper
or lower limit to the objective function value, and the solution space extends infinitely in one or
more directions.
o Graphically, unboundedness is indicated by the absence of a bounded feasible region.
The constraints and the objective function may allow for unbounded growth in one or
more directions, implying that the problem has no optimal solution. This situation can
arise when there are no constraints or when the constraints are too relaxed, allowing
the objective function to increase or decrease indefinitely.

Which are the conditions to be satisfied to solve LPP with simplex

method?
To solve a linear programming problem (LPP) using the simplex method, certain conditions must be
satisfied. These conditions include:

• Linearity: The objective function and all constraints in the LPP must be linear. This means that
the variables appear only in the first degree and are not raised to any exponent or involved in
any non-linear operations.
• Maximization or Minimization: The LPP must be either a maximization or minimization problem.
The objective function should be explicitly stated, and the goal should be to maximize or
minimize it.
• Constraints in Standard Form: The constraints in the LPP should be written in standard form. The
standard form requires that all inequalities are expressed as "less than or equal to" (≤)
constraints, and all variables are non-negative (≥ 0).
• Feasible Region: The LPP should have a feasible region, which is the set of points that satisfy all
the constraints. The feasible region should not be empty, indicating that there exists at least one
feasible solution.
 • Non-degeneracy: The LPP should not be degenerate, which means that there are no redundant
or extra variables in the constraints or the objective function. Degeneracy can lead to issues
during the iteration process of the simplex method.
• Boundedness: The feasible region of the LPP should be bounded, meaning that there are finite
upper and lower limits to the values of the decision variables. Unbounded problems cannot be
solved using the simplex method.

Define:
1. Laplace Principle
2. Maximin Principle
3. Maximax Principle
4. Hurwicz Principle
1. Laplace Principle: The Laplace Principle, also known as the Principle of Insufficient Reason, is a
decision-making principle that assumes equal probabilities for each alternative when there is a
lack of additional information or preferences.
2. Maximin Principle: The Maximin Principle, also known as the Minimax Principle, is a decision-
making principle that focuses on minimizing the maximum potential loss or regret associated
with each alternative.
3. Maximax Principle: The Maximax Principle is a decision-making principle that aims to maximize
the maximum potential gain or payoff associated with each alternative.
4. Hurwicz Principle: The Hurwicz Principle is a decision-making principle that balances optimism
and pessimism by assigning a coefficient to weigh potential gains and losses for each alternative.

What are the different types of inventories? Explain.

• Raw Materials Inventory: Basic materials or components needed for production.
• Work-in-Progress (WIP) Inventory: Partially completed products in the production process.
• Finished Goods Inventory: Completed products ready for sale or distribution.
• Maintenance, Repair, and Operations (MRO) Inventory: Supplies for maintaining production
systems.
• Packaging and Labeling Inventory: Materials for product packaging and labeling.
• Transit or Distribution Inventory: Goods in transit to distribution centers or retail locations.

Differentiate between Transportation and Assignment problem.

The transportation problem and the assignment problem are two distinct optimization problems in
product optimization. Here are the key differences between them:

Nature of the Problem:

 • Transportation Problem: The transportation problem deals with determining the optimal
transportation plan for goods from multiple sources to multiple destinations, considering the
cost of transportation.
• Assignment Problem: The assignment problem involves assigning a set of tasks or jobs to a set of
resources or individuals, typically with the objective of minimizing the overall cost or maximizing
the overall efficiency.

Objective:

• Transportation Problem: The objective of the transportation problem is to minimize the total
transportation cost while satisfying supply and demand constraints.
• Assignment Problem: The objective of the assignment problem is to optimize the assignment of
tasks to resources based on criteria such as cost, time, or efficiency.

Variables:

• Transportation Problem: In the transportation problem, the decision variables represent the
quantity of goods transported from each source to each destination.
• Assignment Problem: In the assignment problem, the decision variables represent the
assignment of tasks to resources, typically in the form of a binary matrix.

Constraints:

• Transportation Problem: The transportation problem has constraints related to the availability of
supply at sources, the demand at destinations, and the capacity of transportation routes.
• Assignment Problem: The assignment problem typically has constraints that ensure each task is
assigned to exactly one resource, and each resource is assigned to at most one task.

Solution Approach:

• Transportation Problem: The transportation problem can be solved using methods such as the
Northwest Corner method, Least Cost method, Vogel's approximation method, or the simplex
method.
• Assignment Problem: The assignment problem can be solved using methods such as the
Hungarian algorithm or the branch and bound method.

Define Following:
(1) Redundant constraint
(2) Slack Variable
(3) Artificial variable
1. Redundant Constraint: In product optimization techniques, a redundant constraint refers to a
constraint in a linear programming problem that does not affect the feasible region or the
optimal solution. It is a redundant or unnecessary constraint that can be removed without
affecting the problem's solution.
 2. Slack Variable: In linear programming, a slack variable is introduced to convert inequality
constraints into equations. It represents the surplus or excess capacity of a constraint in the
optimal solution. The slack variable is added to the left-hand side of the constraint and allows for
the relaxation of the constraint, enabling it to hold with equality.
3. Artificial Variable: An artificial variable is introduced in linear programming when solving a
problem with the simplex method, particularly in cases where there is no feasible initial basic
feasible solution. It is used to help the algorithm find an initial feasible solution. Artificial
variables are typically associated with equality constraints and are added to the objective
function with a large penalty to discourage their inclusion in the final optimal solution. Their
purpose is to assist in reaching a feasible solution during the optimization process, but they are
eventually eliminated from the final solution if possible.

State the two basic inventory decisions management must make as

they attempt to accomplish the functions of inventory just described
by you.
The two basic inventory decisions that management must make are:

• Determining the Optimal Inventory Levels: Management needs to decide the appropriate level
of inventory to maintain for each type of inventory (such as raw materials, work-in-progress,
finished goods). This involves determining the quantity of inventory to be ordered or produced,
known as the order quantity or production quantity, respectively. Factors considered in
determining optimal inventory levels include customer demand, lead time, production capacity,
carrying costs, ordering costs, and service level targets.
• Establishing Reorder Points and Reorder Quantities: Management needs to establish reorder
points and reorder quantities for inventory replenishment. The reorder point is the inventory
level at which a new order should be placed to replenish the stock. It is calculated based on
factors such as lead time, demand variability, and desired service level. The reorder quantity is
the quantity to be ordered when the inventory reaches the reorder point. It is determined based
on factors such as order costs, carrying costs, and economies of scale.

Explain the similarity and the difference between Infeasible and

Unbounded solution related to graphical method using a suitable
example. Also explain unbounded solution space with an optimum
solution.
Similarity between Infeasible and Unbounded Solutions:

Both infeasible and unbounded solutions are undesirable outcomes in linear programming problems
solved using the graphical method. They indicate that an optimal solution cannot be obtained.

Difference between Infeasible and Unbounded Solutions:

• Infeasible Solution: An infeasible solution occurs when there is no feasible solution that satisfies
all the constraints of the linear programming problem. In other words, the constraints are
 mutually contradictory and cannot be simultaneously satisfied. The feasible region is empty, and
there is no point that satisfies all the constraints. Infeasibility can arise when the constraints
form an infeasible region or when the feasible region is outside the bounds of the graph.
• Unbounded Solution: An unbounded solution occurs when the feasible region is not bounded,
and the objective function can be improved indefinitely in the direction of optimization. There is
no upper or lower bound on the objective function value. In this case, the objective function can
be continuously increased or decreased, resulting in infinitely better solutions. The
unboundedness typically arises when the objective function is not constrained or the constraints
are too loose.

Example:

• Consider a linear programming problem with two decision variables, x and y, and the following
constraints:
• Constraint 1: x + y ≤ 5
• Constraint 2: x - y ≥ 3
• Constraint 3: x ≥ 0, y ≥ 0
• Infeasible Solution: If the constraints are as follows:
• Constraint 1: x + y ≤ 5
• Constraint 2: x - y ≤ 1
• Constraint 3: x ≥ 0, y ≥ 0
• The feasible regions of these constraints do not overlap, resulting in an empty feasible region.
Thus, the problem has no feasible solution, indicating an infeasible solution.

Unbounded Solution: If the constraints are as follows:

• Constraint 1: x + y ≥ 5
• Constraint 2: x - y ≥ 3
• Constraint 3: x ≥ 0, y ≥ 0

The feasible region of these constraints is unbounded, and the objective function can be continuously
improved without limit. This implies that the problem has no optimal solution because there is no finite
maximum or minimum. The solution space is unbounded, but no optimum solution exists.

What are the different criteria in case of maximization and

minimization problem while solving LPP using simplex method?
When solving a linear programming problem (LPP) using the simplex method, the criteria for
maximization and minimization problems differ. Here are the different criteria for each case:

Maximization Problem:

• Maximization Objective: In a maximization problem, the objective is to maximize the value of the
objective function. The objective function represents the quantity to be maximized, such as
profit or revenue.
 • Slack Variables: In a maximization problem, slack variables are introduced to convert the
inequalities in the constraints to equations. These variables represent the surplus resources in
the problem and have a value of zero in the initial basic feasible solution.
• Pivot Selection: The pivot element is selected based on the largest coefficient in the objective
row (also known as the most negative coefficient) since the goal is to maximize the objective
function. The entering variable is selected as the column with the most negative coefficient.

Minimization Problem:

• Minimization Objective: In a minimization problem, the objective is to minimize the value of the
objective function. The objective function represents the quantity to be minimized, such as cost
or time.
• Artificial Variables: In a minimization problem, artificial variables are introduced to convert any
inequalities in the constraints to equations. These variables represent the shortage or deficiency
in resources and have a positive value in the initial basic feasible solution.
• Pivot Selection: The pivot element is selected based on the smallest coefficient in the objective
row (also known as the most positive coefficient) since the goal is to minimize the objective
function. The entering variable is selected as the column with the most positive coefficient.

Explain merge and burst event.

In the context of project management and product optimization techniques, the terms "merge event"
and "burst event" are often associated with network diagrams, specifically in the Critical Path Method
(CPM).

• Merge Event: A merge event represents a point in the network diagram where multiple activities
or paths converge into a single point. It occurs when two or more activities are completed, and
their successors depend on the completion of all these activities. At a merge event, the project
flow is consolidated, and the subsequent activities can only start once all the preceding activities
are finished.
o For example, let's consider a construction project where Activity A and Activity B are two
parallel activities. Activity C is dependent on the completion of both Activity A and
Activity B. The merge event occurs when both Activity A and Activity B are completed,
and Activity C can start.
• Burst Event: On the other hand, a burst event represents a point in the network diagram where a
single activity is followed by multiple successor activities. It occurs when a single activity
generates several parallel activities or paths. The burst event indicates that the completion of
the preceding activity triggers multiple concurrent activities.
o For instance, in a software development project, Activity X involves coding a software
module, and Activity Y involves testing that module. Once Activity X is completed, a
burst event occurs, and multiple testing activities, such as functional testing,
performance testing, and usability testing, can be initiated simultaneously.
What is the optimality criterion in the assignment problem?
In the assignment problem, the optimality criterion is to find an assignment of tasks to resources that
minimizes the total cost or maximizes the total benefit. The objective is to optimize the assignment
based on a given cost or benefit matrix.

The optimality criterion in the assignment problem can be defined as follows:

• Minimization Objective: If the assignment problem aims to minimize the total cost, the
optimality criterion is to find an assignment that yields the lowest possible total cost. The
objective is to minimize the sum of the costs associated with each assignment. The goal is to
allocate tasks to resources in a way that minimizes the overall cost incurred.
• Maximization Objective: If the assignment problem aims to maximize the total benefit, the
optimality criterion is to find an assignment that yields the highest possible total benefit. The
objective is to maximize the sum of the benefits associated with each assignment. The goal is to
allocate tasks to resources in a way that maximizes the overall benefit achieved.

To achieve the optimality criterion, various algorithms can be used, such as the Hungarian algorithm or
the Kuhn-Munkres algorithm, which efficiently solve the assignment problem and find the optimal
assignment that minimizes the cost or maximizes the benefit based on the specified objective.

What do you mean by variance and standard deviation in the case of

PERT?
In the context of Project Evaluation and Review Technique (PERT), variance and standard deviation are
statistical measures used to quantify the uncertainty or variability associated with the estimated
durations of project activities.

• Variance: Variance represents the average squared deviation from the expected or most likely
duration of an activity. It measures how much the estimated duration of an activity varies from
the expected value. A higher variance indicates greater uncertainty or variability in the estimated
duration. The variance of an activity is typically calculated using the formula: Variance =
[(Optimistic - Expected) / 6] ^2.
• Standard Deviation: Standard deviation is the square root of the variance. It provides a measure
of the dispersion or spread of the estimated activity durations around the expected value. A
higher standard deviation indicates greater variability in the estimated durations. The standard
deviation is calculated as the square root of the variance: Standard Deviation = √Variance.

Explain following terms with respect to CPM:

(1) EST (2) EFT (3) LST (4) LFT
• EST (Earliest Start Time): EST refers to the earliest possible time at which an activity can start. It
is determined by considering the completion times of all preceding activities and the
dependencies between them. The EST of an activity is calculated by taking the maximum of the
EFTs (Earliest Finish Times) of its immediate predecessors.
 • EFT (Earliest Finish Time): EFT represents the earliest possible time at which an activity can be
completed. It is calculated by adding the duration of the activity to its EST. EFT = EST + Activity
Duration.
• LST (Latest Start Time): LST indicates the latest time an activity can start without delaying the
project completion time. It is determined by subtracting the activity duration from the LFT
(Latest Finish Time) of the activity. LST = LFT - Activity Duration.
• LFT (Latest Finish Time): LFT represents the latest time an activity can finish without delaying the
project completion time. It is calculated by considering the LSTs of all succeeding activities and
the dependencies between them. The LFT of an activity is obtained by taking the minimum of
the LSTs of its immediate successors.

Explain: Decision making under risk & under uncertainty.

Decision Making Under Risk:

• Decision making under risk involves situations where the probabilities of different outcomes are
known or can be estimated.
• In this approach, decision makers have access to probabilistic information regarding the
likelihood of various outcomes and their associated values or consequences.
• Decision makers can use techniques such as probability analysis, expected value analysis, and
decision trees to evaluate the expected outcomes and make decisions based on maximizing
expected value or minimizing expected costs.
• The focus is on assessing the risks associated with different choices and selecting the option with
the highest expected payoff or utility.

Decision Making Under Uncertainty:

• Decision making under uncertainty occurs when there is a lack of reliable or complete
information about the probabilities of different outcomes.
• In this approach, decision makers face situations where the future states of nature or events are
unknown, and it is difficult or impossible to assign precise probabilities.
• Decision makers rely more on subjective judgment, intuition, experience, and qualitative
assessments to make decisions in the absence of quantitative data.
• Techniques such as scenario analysis, sensitivity analysis, and simulation can be used to explore
various possible outcomes and their implications.
• The emphasis is on considering multiple scenarios, evaluating the potential consequences of
different actions, and selecting strategies that are robust and flexible in dealing with uncertain
environments.
Explain the significance of Crashing and Resource allocation with a
suitable example. Explain the Johnsons rule of Sequencing with a
suitable example.
Crashing and resource allocation are important concepts in project management, specifically in the
context of optimizing project schedules and resource utilization. Johnson's rule of sequencing is a
technique used to determine the optimal sequence of tasks in a project. Let's explore each concept with
suitable examples:

Crashing and Resource Allocation:

• Crashing: Crashing refers to the process of shortening the project duration by reducing the time
required for certain critical activities. It involves allocating additional resources to these activities
to expedite their completion.
• Significance: Crashing allows project managers to meet tight deadlines or accelerate project
completion. It helps in identifying critical activities that are causing project delays and allows for
resource optimization to achieve the desired project timeline. By allocating resources
strategically, project managers can reduce overall project duration and improve project
efficiency.

Example: Consider a construction project to build a residential complex. The project is behind schedule,
and the project manager needs to expedite the construction process. By allocating additional labor and
equipment resources to critical activities like foundation work and structural framing, the project
manager can reduce the time required for these activities, thereby shortening the project duration.

Johnson's Rule of Sequencing:

• Johnson's Rule: Johnson's rule is a sequencing technique used to determine the optimal order in
which to schedule tasks with varying processing times on two machines or resources.
• Procedure: The rule involves the following steps:
• Step 1: Identify the tasks and their processing times on the two machines.
• Step 2: Find the task with the shortest processing time on either machine. If there is a tie,
choose any task.
• Step 3: Assign the selected task to the machine with the shorter processing time.
• Step 4: Repeat steps 2 and 3 until all tasks are assigned to machines.
• Step 5: Sequence the tasks based on the order in which they were assigned to the machines.

Example: Let's say a manufacturing company needs to process six different jobs on two machines, A and
B. The processing times for each job on each machine are as follows:

Job | Machine A | Machine B

Job 1 | 3 | 2

Job 2 | 2 | 4

Job 3 | 4 | 5
Job 4 | 1 | 3

Job 5 | 3 | 2

Job 6 | 2 | 1

Applying Johnson's rule, we identify the shortest processing times for each machine: Job 4 (Machine A:
1) and Job 6 (Machine B: 1). We assign Job 4 to Machine A and Job 6 to Machine B. Next, we look for the
next shortest processing times: Job 2 (Machine A: 2) and Job 5 (Machine B: 2). We assign Job 2 to
Machine A and Job 5 to Machine B. Finally, we assign the remaining two jobs: Job 1 to Machine A and
Job 3 to Machine B. The optimal sequence based on Johnson's rule is: Job 4, Job 6, Job 2, Job 5, Job 1,
Job 3.

By following Johnson's rule, we can minimize the total processing time and optimize the sequencing of
tasks on the two machines.

Discuss: EOQ, Price-break, Lead-time, Buffer stock.

• EOQ (Economic Order Quantity):
o EOQ is a model used in inventory management to determine the optimal order quantity
that minimizes the total cost of ordering and holding inventory. It takes into account
factors such as demand rate, ordering cost, and holding cost. By finding the EOQ,
businesses can balance the costs associated with ordering too frequently or carrying
excess inventory.
• Price-break:
o Price-break refers to a situation where the unit cost of a product decreases at certain
order quantity thresholds. Suppliers may offer volume discounts or price breaks to
incentivize customers to order larger quantities. By taking advantage of price-break
opportunities, businesses can reduce the overall cost per unit and improve their
profitability.
• Lead-time:
o Lead-time refers to the time interval between placing an order for a product and
receiving it. It encompasses the processing time, manufacturing time, transportation
time, and any other delays involved in the procurement process. Lead time is an
important consideration in inventory management, as it affects the timing of placing
orders and the level of safety stock required to meet customer demand.
• Buffer stock:
o Buffer stock, also known as safety stock, is the extra inventory held by a company to
mitigate the risk of stockouts due to uncertainties in demand and lead time. It acts as a
buffer between the average demand and the time required to replenish inventory. Buffer
stock provides a cushion to absorb unexpected fluctuations in demand, supply
disruptions, or delays in lead time, ensuring that the business can meet customer
requirements and minimize the impact of disruptions.
Compare and Contrast: Assignment and transportation problem
Assignment Problem:

• Deals with assigning tasks to resources in an optimal way.

• Involves one-to-one assignments and aims to minimize cost or maximize profit.
• Uses a square cost matrix to represent task-resource assignments.

Transportation Problem:

• Involves finding optimal transportation of goods from sources to destinations.

• Deals with many-to-many assignments and aims to minimize transportation cost.
• Uses a rectangular cost matrix to represent transportation costs.

Comparison:

• Both involve resource allocation and optimization.

• Assignment problem deals with task-resource assignments, while transportation problem deals
with goods transportation.
• Assignment problems have one-to-one assignments, while transportation problem has many-to-
many assignments.
• Assignment problem uses a square cost matrix, while transportation problem uses a rectangular
cost matrix.