BLO A1A-OPFRATIONS RESEARCH Operations Research can also be treated as science in the sense it des: ibing, understanding and predicting the systems behaviour, especially man-machine system. Thus O.R. specialists Are involved in three classical aspect of science, they are as follows: 1) Determining the systems behaviour Analyzing the systems behaviour by developing appropriate models iii) Predict the future behaviour using these models 1.2 Stages of Development of Operations Research The stages of development of O.R. are also known as phases and process of O.R, which has six important steps. These six steps are arranged in the following order: Step I: Observe the problem enyironment Step Il: Ai lyze and define the problem Step III: Develop a model Step IV: Select appropriate data input Step V: Provide a solution and test its reasonableness Step VI: Implement the solution Step I: Observe the problem environment ‘The first step in the process of O.R. development is the problem environment observation. This step includes different activitic they are conferences, site visit, research, observations ete. These activities provide sufficient information to the O.R. specialists to formulate the problem, . Step 1 Analyze and define the problem This step is analyzing and defining the problem. In this step in addition to the problem definition the objectives, uses and limitations of O.R. study of the problem also defined. The outputs of this step are clear grasp of need for a solution and its nature understanding, Step IIL: Develop a model This step develops a model; a model is a representation of some abstract or real si ‘models are basically mathematical models, which describes systems, ation. The Processes in the form of equations, formula/relationships. The different activities in this step are variables definition, formulating equations etc. The model is tested in the field under different environmental Page 2 of 89LD AIH OPEHATIONS HEAREH constralnty and modified in order to work, Sometines the model Is modified to sathefy the Management with the results, Step LV: Select appropriate date Input A model works appropriately when there Is appropriate data Input, Hence, selecting appropriate Input data fy Important step In the QR, development stage or process. ‘The rctivities in this step Include internavexternal data analysts, fet analysts, and collection of wifficient opinions and use of computer data banks, ‘The objective of this step fy to provi data Input to operate and (ext the model developed In Stop HH, Step Vi Provide w solution and (ent tis reasonableness This step Is to get a solution with the help of model and Input data, ‘This solution is not implemented Immediately, Instend the wolutlon In used (0 test the model and to find there is any limitations, Suppose If the solution Is not reasonable or the behaviour of the model fs not proper, the model Is updated and modified at this stage, ‘The output of this stage Is the solution(s) that supports the current organizational objectives. Step VI At this step the solution obtained from the previous step Iv Implemented, The Implementation of the solution involves many behavioural Issues, ‘Therefore, before Implementation the implementation authority has 10 resolve the Issues. A properly Implemented solution results in quality of work and gains the support from the management. ols and Tech 13 OR, ques Operations Research uses any sultable tools or techniques avallable, ‘The common frequently used tools/techniques are mathematical procedures, cost analysis, electronle computation. However, operations researchers given special importance to the development and the use of techniques like linear programming, game theory, decision theory, queuing theory, Inventory models and simulation, In addition tothe above techniques, some other common tools are non: linear programming, integer programming, dynamic programming, sequencing theory, Markov process, network scheduling (PERT/CPM), symbolle Model, Information theory, and 1" Operations Research tools/lechniques alvo exists, The brief value theory. There Is many oth explanations of some of the above techniques/tools are as follows: Page 3 of 69BLD 418-OPERATIONS RESEARCH 1.3.1 Linear Programming: This is a constrained optimization technique, which optimize some criterion within some constraints, In Linear programming the objective function (profit, loss or return on investment) and constraints are ear, There are different methods available to solve linear programming. 1.3.2 Game Theory: This is used for making decisions under conflicting situations where there are one or more players/opponents, In this the motive of the players are dichotomized. The success’ of one player tends to be at the cost of other players and hence they are in conflict. 13.3 Decision Theory: Decision theory is concerned with making decisions under conditions of complete certainty about the future outcomes and under conditions such that we ean make some probability about what will happen in future, 1.3.4 Queuing Theory: This is used in situations’ where the queue is formed (for example customers waiting for service, aircrafts waiting for landing, jobs waiting for processing in the computer system, etc). ‘The objective here is minimizing the cost of waiting without increasing the cost of servicing. 1.3.5 Inventory Models: Inventory model make a decision that total inventory cost. This model successfully reduces the total cost of purch: ing, carrying, and out of stock inventory. 1.3.6 Simulation: ‘Simulation is a procedure that studies a problem by ereating a model of the process involved in the problem and then through a series of organized trials and error solutions attempt to determine the best solution. Sometimes this is a difficult/time consuming procedure. Simulation is used when actual experimentation is not feasible or solution of model is not possible. 1.3.7 Non-linear Programming: This is used when the objective function and the constraints are not linear in nature, Linear relationships may be applied to approximate non-linear constraints but limited to some range, because approximation becomes poorer as the range is extended. Thus, the non-linear Page 4 of 89BLD 418-OPERATIONS RESEARCH Programming is used to determine the approximation in which a solution lies and then the solution is obtained using linear methods, 1.3.8 Dynamic Programming: Dynamic programming is a method of analyzing multistage decision processes. In this each lementary decision depends on those preceding decisions and as well as external factors. 13.9 Integer Programming: fone or more variables of the problem, take integral values only then dynamic programming ‘method is used. For example, number or motor ‘an organization, number of passenger in an aircraft, number of generators in a power generating plant, etc. 1.3.10 Markov Process: Markov process permits to predict changes overtime information about the behavior of a system is known. This is used in decision making in situations where the various states are defined. The probability from one state to another state is known and depends on the current state and is independent of how.we have arrived at that particular state. 13.11 Network Scheduling: This technique is used extensively to plan, schedule, and monitor large projects (for example computer system installation, R & D design, construction, maintenance, ete.). The aim of this. technique is minimize trouble spots (such as delays, interruption, production bottlenecks, etc.) by identifying the critical factors. The different activities and their relationships of the ent project are represented diagram: for identit re lly with the help of networks and arrows, which is used ng critical activities and path, There are two main types of technique in network scheduling, they are: . Program Evaluation and Review Technique (PERT) ~ is used when activities time is not known aceurately/ only probabilistic esti ate of time is available. Critical Path Method (CPM) — is used when activities time is known accurately. 1.3.12 Information Theory: This analytical process is transferred from the electrical communi field to OR. The objective of this theory is o evaluate the effectiveness of flow of information wit system. This is used mainly in communication networks but also has indirect influence in Page S of 89. LO 418-OPERATIONS RESEARCH simulating the examination of business organizational structure with a view of enhancing flow of information, 14 Applications of Operations Research ‘Today, almost all fields of business and government utilizing the benefits of Operations Research, There are voluminous of applications of Operations Research. Although it is not feasible to cover all applications of O.R. in brief. The following are the abbreviated set of typical operations research applications to show how widely these techniques are used today: Accounting: Assigning audit teams effectively Credit policy analysis Cash flow planning Developing standard costs Establishing costs for byproducts Planning of delinquent account strategy Construction: Project scheduling, monitoring and control Determination of proper work force Deployment of work force Allocation of resources to projects Facilities Plannin; Factory location and size decision Estimation of number of facilities required Hospital planning International logistic system design ‘Transportation loading and unloading Warehouse locati decision Finance: Building cash management models Allocating capital among various alternatives Building financial planning models Investment analysis Portfolio analysis ividend policy making Manufacturi Inventory control Marketing balance projection Marketing: Advertising budget allocation Product introduction timing Page 6 of 89.BLD 418-OPERATIONS RESEARCH Selection of Product mix Deciding most effective packaging alternative Organizational Behavior / Human Resources: Personnel planning. Recruitment of employees Skill balancing + ‘Training program scheduling Designing organizational structure more effectively Purchasing: ‘Optimal buying Optimal reordering, Materials transfer Research and Development R & D Projects control R & D Budget allocation Planning of Product introduction Page 7 of 89BLD 418 OPERATIONS RESEARCH 20 TRANSPORTATION PROBLEM. A special class of linear programming problem is Transportation Problem, where the chjectine is to minimize the cost of distributing a product from a number of sources (c.g. Tactories) to amamber of destinations (¢ g. warehouses) while satisfying both the supply limits and the demand requirement. Because of the special structure of the Transportation Problem the Simpler Method of solving is unsuitable for the Transportation Problem. The model -Bssumes that the distributing cost on a given rout irectly proportional to the number of units 0 ‘The mean Service rate is E(t) = 17, Queueing, Discipline: - itisa rule according to which the ‘customers are selected for service when a queue has been formed. The most common disciplines are First come first served - (FCFS) First in first out — (FIFO) Last in first out — (LIFO) Selection for service in random order (SIRO) Customer's behaviour Generally, it is assumed that the customers arrive into the system one by one. But in some cases, customers may arrive in groups. Such arrival is called Bulk arriv If there is more than one queue, the customers from one queue may be tempted to join another queue because of its smaller size. This behaviour of customers is known as jockeying. 3. If the queue length appears very large to a customer, he/she may not join the queue. This property is known as Balking of customers. 4, Sometimes, a customer who is already in a queue will leave the queue in anticipation of longer waiting line. This kind of departure is known as reneging. List of Variables. The list of variable used in queueing models is give below: n= No of customers in the system C- No of servers in the system P, (1) — Probability of having n customers in the system at time t. P, - Steady state probability of having customers in the system Po- Probability of having zero customer in the system Lq- Average number of customers waiting in the queue. L,- Average number of customers waiting in the system (in the queue and in the service counters) “Page 57 of 89BLD 418-OPERATIONS RESE/ ‘\.,- Average waiting time oF customers in the quew Wo. Average g time ofc h ‘Average waiting time of customers in the system (in the queue and in the service counter Arrival rate of customers H- Service rate of server 4} Utilization factor of the server Self Effective rate of artival of customers M- Poisson distribution N- Maximum numbers of customers permitted in the system. Als source of the customers, GD - General discipline for service (LIFS) random order (Ro) ete, Traffic intensity (or utilization factor) An important measure of a simple queue is its tafe intensity given by Trafic imensiy §= Memantelcine — 1 . it denotes the size of the calli This may be first in first ~ serve (FIFS), last-in-first ser and the unit of traffic intensity is Erlang Classification of Queueing models Generally, queueing models can be classified into six categories using Kendall's notation with six parameters to define a model. ‘The parameters of this notation are P- Arrival rate distribution ie probability law for the arrival /inter — arrival time. Q Service rate distribution, ie probability law according to which the customers are being served. R- Number of Servers (ie number of service stations) X- Service discipline Y- Maximum number of customers permitted in the system. 2- Size of the calling source of the customers. A queuing model with the above parameters is written as (PIQUR: X/Y/Z) Model 1: (M/M/1): (GD/- /2) Model In this model @ (i) the arrival rate follows poisson (M) distribution. Service rate follows poisson distribution (M) Number of servers is | cae Service discipline is general disciple (ie GD) isinite ce) Maximum number of customers permitted in the system is infinite Page 58 of 89BLD 418-OPERATIONS RESEARCH (Size of the calling source is infinite (22) sin the system and the The steady state equations ‘ 8 t0 obtain, Pa th i ing cus n= 01,2, sowhere $= 4 (sl) Ls - Average number of i heat din the i customer ing i in the queue and in t service station) rs waiting in the system (ie waiting q [r= or-0) | ‘Average waiting time of customers in the system (in the queue and in the service station) = Ws = bs Whee (Since 8 = nd) Wy= Average waiting time of customers in the queue, Page 59 of 89BLD 418-OPERATIONS RESEARCH ~ > 11/8} (07/11 - 0) = 1/u0 [ 07/[1 = 9}] Since no = 5 Example 1: The arrival rate of customers at a banking counter follows a poisson distibution with a mean of 30 per hours. The service rate of the counter clerk also follows poisson distribution with mean of 45 per hour. 8) What is the probability of having zero customer in the system? b) What is the probability of having 8 customers in the system? ©) What is the probability of having 12 customers in the system? 4) Find Ls, Lq, Ws and Wq Solution Given arrival rate follows poisson distribution with mean =30 2.8 = 30 per hour Given service rate follows poisson distribution with mean = 45 = 45 Per hour +. Utilization factor $= 8/ = 30/45 = 2/3 = 0.67 a) The probability of having zero customer in the system Po b) The probability of having 8 customers in the system Ps =G8(I- 4) Page 60 of 89°LD 418-OPERATIONS RESEARCH = 0.0134 Pr Tobability of having 12 customers in the system is Po = $F Cg) (0.67)"? (1.0.67) = 0.0082 x 0.33 = 0.002706 Ly= t= 067 2 0672993 ing 1-067 a3 = 2 customer 0.67 45-30 15 Example 2 : ‘Atone-man barbar shop, customers arrive according to poisson distribution with mean arrival rate of 5 per hour and the hair cutting time was exponentially distributed with an avefage hair cut taking 10 minutes. It is assumed that because of his excellent reputation, customers were always willing to wait. Calculate the following: () Average number of customers in the shop and the average numbers waiting for a haircut. (ii) The percentage of time arrival can walk in straight without having to wait. The percentage of customers who have to wait before getting into the barber's chair. Solution: - Given mean arrival of customer 8 = 5/60 =1/12 and mean time for server jt 10) reg 8/ n= [1/2] x 10 = 10/12 = 0.833 Page 61 of 89OPERATIONS RESEARCH pio a1 Average number of customers in the system (numbers in the queue and in the service station) Ly =$/ 1-6 =0.83/1-0.83 0.83 /0.17 88 =5 Customers a Gi The percentage of time arrival can walk straight into barber's chair without waiting i Service utilization = 6 % =5/ 1% ).833 x 100 3.3 (iii) The percentage of customers who have to wait before getting int barber’s chair = (Ie) % = (1-0.833)% = = 16 to the .167 x 100 % Example 3: Vehicles are passing through a-toll gate at the rate of 70 per hour. The average time to pass through the gate is 45 seconds. The arrival rate and service rate follow poisson distibution. There is a complaint that the vehicles wait for a long duration. ‘The authorities are willing to install one ‘more gate to reduce the average time to pass through the toll gate to 35 seconds if the idle time of the toll gate is less than 9% and the average queue length at the gate is more than 8 vehicles, check whether the installation of the second gate is justified? Solutions: Arrival rate of vehicles at the toll gate3 = 70 per hour Time taken to pass through the gate = 45 Seconds : hour seconds Service rate ft = = 3600/45 = 80 = 80 Vehicles per hour : Utilization factor > = 8/ = 70/80 = 0.875 (@) Waiting no. of vehicles in the queue is La Ly =@2/1-6 = (0.875) / 1-0.875 Page 62 of 89BLO 418-OPERATIONS RESEARCH = 0.7656 / 0.125 = 6.125 =6 Vehicles (by Revised time taken to pass through the gate =30 seconds The new service rate after installation of an additional gate = 1 hour/35 Seconds = 3600/35 = 102.68 Vehicles / Hour +. Utilization factor = 8/ = 70/ 102.86 681 Percentage of idle time of the gate = (1- ) % (1-0.681) % This idle time is not less than 9% which is expected. Therefore, the installation of the second gate is not justified since the average waiting number of vehicles in the queue is more than 8 but the idle time is not less than 32%. Hence idle time is far greater than the number. of vehicles waiting in the queue. Page 63 of 89Anoms aco aia cor seaaen OPERATIONS RESEARCH 1.0 NATURE AND SCOPE OF QUANTITATIVE MANAGEMENT 1. Introduction to Operations Res re (OR) Terminology ‘The British Turopeans refer to “operational research”, the Americans to “operations research + but both are often shortened just “OR® = which is the term we will use Another term which is used for this field is "management science” ("MS") The Americans sometimes combine the terms OR and MS together and say "OR/MS" or “ORMS" Yet other terms sometimes used are “industrial engineering” ("IE") and “decision science” DS") In recent years there has been a move towards a standardization upon a single ferm for the field namely the term “OR. Operation Research is a relatively new discipline. The contents and the boundaries of the OR hisa are not yet fixed. Therefore, o yive a formal definition of the term Operations Resea difficult task. The OR starts when mathematical and quantitative techniques are used to substantiate the dec of a manager is the decision making. n being taken, The main act In our daily life we make the decisions even without noticing them. The decisions are taken simply by common sense, judgment and expertise without using any mathematical or any other model in simple situations. But the decision we are concerned here with are complex and ts heavily responsible. Examples are public transportation network planning in a city havi own layout of factories, residential blocks or finding the appropriate product mix when there exists a large number of products with different profit contributions and production requirement etc. Operations Research tools are not from any one discipline. Operations Research takes tools from different discipline such as mathematics, statistics, economies, psychology. engineering ic. and combines these tools to make a new set of knowledge for decision making. Today. ic methods OR. became a professional discipline which deals with the application of scier for making decision, and especially to the allocation of scarce resources. The main purpose of OAR. is to provide a rational basis for decisions making in the absence of complete information, because the systems composed of human, machine, and procedures may do not have complete information, Page 1 of 89