MS-207 MANAGEMENT

SCIENCE
PRESENTED BY-
Mr. ASHWIN GEDAM
ASST. PROF.
GGITS, MBA
 UNIT 1
• Operations Research Nature and significance of operation research,
Scope and phases of operations research. Basic operations research
models, Role of Computers in operations research.
• Linear Programming (LP) Generalized Linear Programming Models.
Solutions to LP Models by Graphical methods and Simplex methods.
Big M method. Duality in LP Models.
 UNIT 2
• Special Types of Linear Programming. Transportation models and
their solutions (Basic & Optimal).
• Assignment models and solutions (and its special cases).
 UNIT 3
• Special Operation Research Techniques Decision Theory and Decision
tree.
• Theory of games, Replacement Theory
• Queuing problems and models.
 UNIT 4
• Job Sequencing Models and solutions
• Network scheduling by PERT & CPM (Introduction and application)
• Network analysis
• Time estimation
• Probabilistic estimation
 UNIT 5
• Inventory Control Model
• Deterministic & probabilistic Models
 UNIT 1
Operations Research Nature and significance of
operation research, Scope and phases of
operations research. Basic operations research
models, Role of Computers in operations research.
Linear Programming (LP) Generalized Linear
Programming Models. Solutions to LP Models by
Graphical methods and Simplex methods. Big M
method. Duality in LP Models.
Operations Research Nature and significance
of operation research
 Example: A Case of Factory Production
• Imagine a manufacturing company that produces various products.
The factory needs to optimize its production schedule to minimize
costs, maximize efficiency, and meet customer demand.
• Here’s how O.R. can help:
➢Production Planning:
➢O.R. techniques analyze historical data, demand forecasts, and
resource availability to create an optimal production plan.
➢The goal is to allocate resources (such as machines, labor, and
raw materials) efficiently while meeting production targets.
➢Inventory Management:
➢O.R. models help determine the optimal inventory levels for raw
materials, work-in-progress, and finished goods.
➢Balancing inventory costs (storage, holding, and ordering) with
production requirements is crucial.
➢Scheduling:
➢O.R. assists in creating production schedules that minimize idle
time, reduce changeovers, and maintain smooth operations.
➢Factors like machine setup times, processing rates, and due dates
are considered.
➢Supply Chain Optimization:
➢O.R. helps optimize supply chain decisions, such as selecting
suppliers, transportation routes, and distribution centers.
➢The objective is to minimize costs while ensuring timely delivery.
➢Quality Control:
➢O.R. models can improve quality control processes by identifying
optimal inspection points and sampling strategies.
➢Balancing inspection costs with defect prevention is essential.
➢Resource Allocation:
➢O.R. assists in allocating scarce resources (like labor shifts or
machine hours) to different production tasks.
➢The goal is to maximize overall productivity.
➢Maintenance Scheduling:
➢O.R. techniques optimize maintenance schedules for machinery
and equipment.
➢Balancing preventive maintenance, downtime, and repair costs is
critical.
➢Routing and Logistics:
➢O.R. helps design efficient routes for transporting goods between
factories, warehouses, and customers.
➢Minimizing transportation costs and delivery time is the objective.
➢Facility Location:
➢When expanding or setting up new facilities, O.R. aids in selecting
optimal locations.
➢Factors like proximity to suppliers, customers, and transportation
networks are considered.
➢Energy Management:
➢O.R. models optimize energy usage in factories by scheduling
production during off-peak hours or using energy-efficient
processes.
 What is operations research?
• The subject OPERATIONS RESEARCH is a branch of mathematics -
specially applied mathematics, used to provide a scientific base for
management to take timely and effective decisions to their problems.
• It tries to avoid the dangers from taking decisions merely by guessing
or by using thumb rules. Management is the multidimensional and
dynamic concept.
 Multidimensional & Dynamic nature of
Management
• It is multidimensional, because management problems and their
solutions have consequences in several dimensions, such as human,
economic social and political fields.
• As the manager operates his system in an environment, which will
never remain static, hence is dynamic in nature.
• Hence any manager, while making decisions, consider all aspects in
addition to economic aspect, so that his solution should be useful in all
aspects.
DEFINITIONS
1.Definition by P.M. Morse and G.E. Kimball.

• Operations Research is defined as Scientific method for

providing executive departments a quantitative basis for
decisions regarding the operations under their control.
• This definition suggests that the Operations Research
provides scientific methods for an executive to make optimal
decisions. But this suggests that executives can use scientific
methods for decision-making.
 2.Definition based on natural sciences
• Operations Research is the study of administrative system
pursued in the same scientific manner in which system in
Physics, Chemistry and Biology are studied in natural
sciences.
• This definition is more elaborate. It compares the subject Operations
Research with that of natural science subjects such as Physics,
Chemistry and Biology, where while deciding any thing experiments
are conducted and results are verified and then the course of action is
decided.
3.Definition by Churchman, Ackoff and Arnoff.
• Operations Research is the application of scientific methods,
techniques and tools to operation of a system with optimum
solution to the problem.
• This definition clearly states that the operations research applies scientific
methods to find an optimum solution to the problem of a system. A system may be
a production system or information system or any system, which involves men,
machine and other resources. We can clearly identify that this definition tackles
three important aspects of operations research i.e. application of scientific
methods, study of a system and optimal solution. This definition too does not give
any idea about the characteristics of operations research.
 4.Definition by D.W. Miller and M.K. Starr.

• Operations Research is applied decision theory. It uses any

scientific, mathematical or logical means to attempt to cope with
problems that confront the executive, when he tries to achieve a
thorough going rationally in dealing with his decision problem.
• This definition also explains that operations research uses scientific
methods or logical means for getting solutions to the executive
problems.
 5.Definition by Operations Society of Great
Britain
• Operations Research is the application of the methods of science to
complex problems arising in the direction and management of large
systems of men, materials and money in industry, business,
Government and defense.
• The distinctive approach is to develop a scientific model of the system,
incorporating measurements of factors such as chance and risk, with
which to predict and compare the outcome of alternative decisions,
strategies or controls. The purpose is to help management to determine
its policy and actions scientifically. - Operations Society of Great
Britain.
 CHARACTERISTICS OF OPERATIONS
RESEARCH
• After considering the objective and definitions of Operations
Research, now let us try to understand what are the characteristics of
Operations Research.
a) Operations Research is an interdisciplinary team approach.
b) Operations Research increases the creative ability of the decision
maker.
c) Operations Research is a systems approach.
a) Operations Research is an interdisciplinary
team approach.
• The problems an operations research analyst face is heterogeneous in
nature, involving the number of variables and constraints, which
are beyond the analytical ability of one person. Hence people from
various disciplines are required to understand the operations
research problem, who applies their special knowledge acquired
through experience to get a better view of cause and effects of the
events in the problem and to get a better solution to the problem on
hand. This type of team approach will reduce the risk of making
wrong decisions.
b) Operations Research increases the creative
ability of the decision maker.
• Operations Research provides manager mathematical tools,
techniques and various models to analyze the problem on hand
and to evaluate the outcomes of various alternatives and make an
optimal choice. This will definitely helps him in making better and
quick decisions. A manager, without the knowledge of these
techniques has to make decisions by thumb rules or by guess
work, which may click some times and many a time put him in
trouble. Hence, a manager who uses Operations Research techniques
will have a better creative ability than a manager who does not use the
techniques.
c) Operations Research is a systems approach.
• A business or a Government organization or a defense organization
may be considered as a system having various sub-systems. The
decision made by any sub-system will have its effect on other sub-
systems. Say for example, a decision taken by marketing
department will have its effect on production department. When
dealing with Operations Research problems, one has to consider the
entire system, and characteristics or sub- systems, the inter-
relationship between sub-systems and then analyze the problem,
search for a suitable model and get the solution for the problem. Hence
we say Operations Research is a Systems Approach
 SCOPE OF OPERATIONS RESEARCH
• Some of the fields where Operations Research techniques can be
applied to understand how the techniques are useful to solve the
problems are given below:
i. In Défense Operations
ii. In Industry
iii. In Planning for Economic Growth
iv. In Agriculture
v. In Traffic Control
vi. In Hospitals
 i. In Défense Operations
• In any war field two or more parties are involved, each having
different resources (manpower, ammunition, etc.), different courses
of actions (strategies) for application. Every opponent has to guess the
resources with the enemy, and his courses of action and accordingly he
has to attack the enemy. For this he needs scientific, logical analysis
of the problem to get fruitful results. Here one can apply the
techniques like Linear Programming, Game theory, and inventory
models etc. to win the game. In fact in war field every situation is a
competitive situation. More over each party may have different
bases, such as Air force, Navy and Army. The decision taken by one
will have its effect on the other. Hence proper co-ordination of the
three bases and smooth flow of information is necessary. Here
operations research techniques will help the departmental heads to
take appropriate decisions.
 ii. In Industry
• Various models have been developed to solve industrial problems.
Today the managers have on their hand numerous techniques to solve
different types of industrial problems. In fact decision trees, inventory
model, Linear Programming model, Transportation model,
Sequencing model, Assignment model and replacement models are
helpful to the managers to solve various problems, they face in their
day to day work. These models are used to minimize the cost of
production, increase the productivity and use the available
resources carefully and for healthy industrial growth. An industrial
manager, with these various models on his hand and a computer to
workout the solutions (today various packages are available to solve
different industrial problems) quickly and preciously.
 iii. In Planning For Economic Growth
• In India we have five year planning for steady economic growth.
Every state government has to prepare plans for balanced growth of
the state. Various secretaries belonging to different departments
has to co-ordinate and plan for steady economic growth. For this
all departments can use Operations research techniques for planning
purpose. The question like how many engineers, doctors, software
people etc. are required in future and what should be their quality
to face the then problems etc. can be easily solved.
 iv. In Agriculture
• The demand for food products is increasing day by day due to
population explosion. But the land available for agriculture is
limited. We must find newer ways of increasing agriculture yield. So
the selection of land area for agriculture and the seed of food
grains for sowing must be meticulously done so that the farmer will
not get loss at the same time the users will get what they desire at the
desired time and desired cost.
 V. In Traffic Control
• Due to population explosion, there is an increase in the number and
varieties of vehicles, road density is continuously increasing.
Especially in peak hours, it will be a headache to control the traffic.
Hence proper timing of traffic signaling is necessary. Depending
on the flow of commuters, proper signaling time is to be worked
out. This can be easily done by the application of queuing theory.
 vi. In Hospitals
• Many a time we see very lengthy queues of patient near hospitals
and few of them get treatment and rest of them have to go without
treatment because of time factor. Some times we have problems of
non-availability of essential drugs, shortage of ambulances,
shortage of beds etc. These problems can be conveniently solved by
the application of operations research techniques.
PHASES OF OPERATIONS
RESEARCH
 PHASES IN SOLVING OPERATIONS RESEARCH
PROBLEMS OR STEPS IN SOLVING OPERATIONS
RESEARCH PROBLEMS
• Any Operations Research analyst has to follow certain sequential steps to
solve the problem on hand. The steps he has to follow are discussed below:
1. Formulation of the problem
2. Identify the Variables and Constraints
3. Establishing the Relationship b/w the variables and constraints by
constructing the Model
4. Identifying the maximization of the problem
5. Establish relationship between variables and constraints and build up a
model
6. Formulation of objective function, Structural constraints and non-negative
constraint
7. Identify the possible alternative solutions (or known as Basic Feasible
Solutions or simply BFS)
8. Install and Maintain the solution
Step/Phase 1. Formulation of the problem
• The Operations Research analyst or team of experts first have to
examine the situation and clearly define what exactly happening
there and identify the variables and constraints. Similarly identify
what is the objective and put them all in the form of statement.
The statement must include:
a) a precise description goals or objectives of the study,
b) identification of controllable and uncontrollable variables and
c) restrictions of the problem.
• The team should consult the personals at the spot and collect
information, if something is beyond their reach, they have to consult
duty engineers available and understand the facts and formulate the
problem.
 Step/Phase 2. Identifying the Variables &
Constraints
• If the Company is manufacturing two products X and Y, then
these are the two variables in the problem. When they are in the
problem statement they are written in capital letters. Once they are
entered in the model small letters (lower case) letters are used (i.e,. x
and y). We have to find out how much of X and how much of Y are
to be manufactured. Hence they are variables. In linear
programming language, these are known as competing candidates.
Because they compete to use or consume available resources.
For example:
• Question/Statement: A company manufactures two products X
and Y, by using the three machines A, B, and C. Each unit of X
takes 1 hour on machine A, 3 hours on machine B and 10 hours on
machine C. Similarly, product Y takes one hour, 8 hours and 7 hours
on Machine A, B, and C respectively. In the coming planning period,
40 hours of machine A, 240 hours of machine B and 350 hours of
machine C is available for production. Each unit of X brings a profit
of Rs 5/- and Y brings Rs. 7 per unit. How much of X and Y are to be
manufactured by the company for maximizing the profit? The team of
specialists prepares this statement after studying the system. As per
requirement this must include the variables, constraints, and
objective function.
 Step/Phase 3.Establishing the Relationship b/w the
variables and constraints by constructing the Model
There are three machines A, B, and C on which the
products are manufactured. These are known as
resources. The capacity of machines in terms of machine
hours available is the available resources. The competing
candidates have to use these available resources, which are
limited in nature. Now in the above statement, machine A has
got available 40 hours and machine B has available a capacity
of 240 hours and that of machine C is 350 hours. The
products have to use these machine hours in required
proportion. That is one unit of product X consumes one hour
of machine A, 3 hours of machine B and 10 hours of machine
C. Similarly, one unit of Y consumes one hour of machine B,
8 hours of machine B and 7 hours of machine C. These
machine hours given are the available resources and they
are limited in nature and hence they are constraints given
in the statement.
Step/Phase 4. Identifying the maximization of
the problem
• Now the main question remains is - To maximize the profit how much
of X and Y are to be manufactured?
• That is maximization of the profit or maximization of the returns
is the objective of the problem.
• For this in the statement it is given that the profit contribution of X is
Rs 5/- per unit and that of product Y is Rs. 7/- per unit.
Step/Phase 5. Establish relationship between variables and
constraints and build up a model
Let us say that company manufactures ‘x’ units of X
and ‘y’ units of Y. Then as one unit of x consumes one
hour on machine A and one unit of y consumes one hour
on machine A, the total consumption by manufacturing
x units of X and y units of Y is, 1x + 1y and this should
not exceed available capacity of 40 hours. Hence the
mathematical relationship in the form of mathematical
model is 1x + 1y ≤ 40. This is for resource machine A.
Similarly for machine B and machine C we can formulate
the mathematical models. They appear as shown below: 3x
+ 8y ≤ 240 for machine B and 10x + 7y ≤ 350 for machine
C. Therefore, the mathematical model for these resources
are:
1x + 1y ≤ 40
3x + 8y ≤ 240 and
10x + 7y ≤ 350.
 Step/Phase 6.Formulation of objective function,
Structural constraints and non-negative constraint
• For objective function as the company is manufacturing x units of X and y units of Y
and the profit contribution of X and Y are Rs.5/- and Rs 7/- per unit of X and Y
respectively, the total profit earned by the company by manufacturing x and y
units is 5x + 7y. This we have to maximize. Therefore objective function is
Maximize 5x + 7y. At the same time, we have to remember one thing that the
company can manufacture any number of units or it may not manufacture a particular
product, for example say x = 0. But it cannot manufacture negative units of x and
y. Hence one more constraint is to be introduced in the model i.e. a non - negativity
constraint. Hence the mathematical representation of the contents of the statement is
as given below:
1. Maximize Z = 5x + 7y --------→OBJECTIVE FUNCTION.
Subject to a condition:
1. 1x + 1y ≤ 40
2. 3x + 8y ≤ 240 STRUCTURAL CONSTRAINTS
3. 10x + 7y ≤ 350
4. Both x and y are ≥ 0 --------------------→ NON-NEGATIVITY CONSTRAINT.
Step/Phase 7. Identify the possible alternative solutions
(or known as Basic Feasible Solutions or simply BFS)
• There are various methods of getting solutions. For example we go on
giving various values (positive numbers only), and find various values
of objective function. All these are various Basic Feasible Solutions.
For example x = 0,1,2,3, etc. and y = 0,1,2,3 etc are all feasible values
as far as the given condition is concerned. Once we have feasible
solutions on hand go on asking is it maximum? Once we get
maximum value, those values of x and y are optimal values. And
the value of objective function is optimal value of the objective
function.
1. 1x + 1y ≤ 40 ----------------------------→STRUCTURAL CONSTRAINTS
2. 3x + 8y ≤ 240 --------------------------→STRUCTURAL CONSTRAINTS
3. 10x + 7y ≤ 350 -----------------------→STRUCTURAL CONSTRAINTS
 Step/Phase 8. Install and Maintain the
solution
• Once we get the optimal values of x and y and objective function
instructions are given to the concerned personal to manufacture the
products as per the optimal solution, and maintain the same until
further instructions.
 Home Work Question.1
• A company manufactures two products X and Y, which require, the
following resources. The resources are the capacities machine M1,
M2, and M3. The available capacities are 50, 25,and 15 hours
respectively in the planning period. Product X requires 1 hour of
machine M1, 2 hour of machine M2 and 1 hour of machine M3.
Product Y requires 2 hours of machine M1, 2 hours of machine M2
and 1 hour of machine M3. The profit contribution of products X and
Y are Rs.5/ and Rs.4/- respectively. Formulate the basic linear
programing model, including objective function, structural constraints
and non negativity constraints.
BASIC OPERATIONS RESEARCH
MODELS
 Types of Models
i. Classification by Structure
ii. Classification by Utility
iii. Classification by Nature of environment
iv. Classification depending on the behaviour of the problems variables
v. Classification depending on the method of getting the solution
 i. Classification by Structure
a) Iconic models-
b) Analogues models
c) Symbolic models or Mathematical models
 a) Iconic models
• These models are scaled version of the actual
object. For example a globe is an iconic model of
Earth. They explain all the features of the actual
object. The advantages of these models: are It is
easy to work with an iconic model in some cases,
these are easy to construct and these are useful in
describing static or dynamic phenomenon at some
definite time. The limitations are, we cannot study
the changes in the operation of the system. For
some type of systems, the model building is very
costly. It will be sometimes very difficult to carry out
experimental analysis on these models.
 b) Analogues models
• In this model one set of properties are used
to represent another set of properties. Say
for example, blue color generally represents
water. Whenever we want to show water
source on a map it is represented by blue
colour. Contour lines on the map is also
analog model. Many a time we represent
various aspects on graph by different colors or
different lines all these are analog models.
These are also not much used in operations
research. The best examples are warehousing
problems and layout problems.
c) Symbolic models or Mathematical models
• In these models the variables of a problem is represented by
mathematical symbols, letters etc. To show the relationships between
variables and constraints we use mathematical symbols. Hence these
are known as symbolic models or mathematical models. These models
are used very much in operations research. Examples of such
models are Resource allocation model, transportation model etc.
• Examples:
• X+Y > 1, here variable X, Y can be any objects.
 ii. Classification by utility
a) Descriptive model
b) Predictive model
c) Prescriptive model
 a) Descriptive model
• The descriptive model simply explains certain aspects of the problem
or situation or a system so that the user can make use for his analysis.
It will not give full details and clear picture of the problem for the
sake of scientific analysis.
• For example:
✓A retail store creates a descriptive model that outlines the inventory
system.
✓It describes the following aspects:
• Inventory Levels: How much stock is available for each product
category.
• Replenishment Process: How new stock is ordered and received.
• Demand Patterns: When and how customers purchase items.
• Sales Trends: Seasonal variations and peak sales periods.
• Stockout Situations: Instances when items are out of stock.
• Supplier Relationships: How the store interacts with suppliers.
 b) Predictive model
• These models basing on the data
collected, can predict the
approximate results of the
situation under question. For
example, basing the satellite
imagery the weather scientist can
predict the future weather
conditions. In the adjacent example a
weather scientist can predict heavy
rainfall in south and east region of
India.
• This is one type of predictive model.
 c) Prescriptive models
• We have seen that predictive models predict the approximate results. But if
the predictions of these models are successful, then it can be used
conveniently to prescribe the courses of action to be taken. In such case
we call it as Prescriptive model.
✓For example-
• Personalized Product Recommendations on E-Commerce Websites:
• When you shop online, algorithms analyze your browsing history, purchase
behavior, and preferences.
• Based on this data, the system prescribes personalized product
recommendations.
• For instance, if you’ve been looking at running shoes, the model might
suggest related accessories or similar shoe styles
 iii. Classification by nature of environment
a) Deterministic models
b) Probabilistic or Stochastic models
 a) Deterministic models
• In this model the operations research analyst assumes complete certainty about
the values of the variables and the available resources and expects that they do
not change during the planning horizon. All these are deterministic models and
do not contain the element of uncertainty or probability. The problems we see in
Linear Programming, assumes certainty regarding the values of variables and
constraints hence the Linear Programming model is a Deterministic model. The
primary goal of deterministic optimization is to find the global best result while
providing theoretical guarantees that the returned solution is indeed the global
optimum
• For example:
• Maximize Z = 5x + 7y
• Subject to a condition
1. 1x + 1y ≤ 40
2. 3x + 8y ≤ 240
3. 10x + 7y ≤ 350
• Both x and y are ≥ 0
 b) Probabilistic or Stochastic models
• In these models, the values of variables, the pay offs of a certain
course of action cannot be predicted accurately because of element
of probability. It takes into consideration element of risk into
consideration. The degree of certainty varies from situation to
situation. A good example of this is the sale of insurance policies by
Life Insurance Companies to its customers. Here the failure of life
is highly probabilistic in nature. The models in which the pattern of
events has been compiled in the form of probability distributions are
known as Probabilistic or Stochastic Models.
iv. Classification depending on the behaviour
of the problem variables
a) Static models
b) Dynamic models
 a) Static models
• These models assumes that no changes in the values of variables given
in the problem for the given planning horizon due to any change in the
environment or conditions of the system. All the values given are
independent of the time. Mostly, in static models, one decision is desirable
for the given planning period.
• For example-
✓Examples of Static Models in OR:
• Inventory Management:
• Consider an inventory problem where we determine the economic
order quantity for the next period.
• In this static model, we assume that the demand in the
planning period will remain the same as today’s demand.
• The model helps optimize inventory levels without considering
time-dependent variations
 b) Dynamic models
• In these models the values of given variables goes on changing with
time or change in environment or change in the conditions of the given
system. Generally, the dynamic models then exist a series of
interdependent decisions during the planning period.
• For example-
 v. Classification depending on the method of
getting the solution
a) Analytical models
b) Simulation models
 a) Analytical models
• The given model will have a well-defined mathematical structure
and can be solved by the application of mathematical techniques.
We see in our discussion that the Resource allocation model,
Transportation model, Assignment model, Sequencing model etc.
have well defined mathematical structure and can be solved by
different mathematical techniques. For example, Resource allocation
model can be solved by Graphical method or by Simplex method
depending on the number of variables involved in the problem. All
models having mathematical structure and can be solved by
mathematical methods are known as Analytical Models.
 b) Simulation models
• The meaning of simulation is imitation. These models have
mathematical structure but cannot be solved by using
mathematical techniques. It needs certain experimental analysis.
To study the behavior of the system, we use random numbers. More
complex systems can be studied by simulation. Studying the behavior
of laboratory model, we can evaluate the required values in the
system. Only disadvantage of this method is that it does not have
general solution method.
• For example, a banking institutions use roleplay to teach customer
service to new bank employees.
 HW Question 1
• A company manufactures two products X and Y, which require, the
following resources. The resources are the capacities machine M1,
M2, and M3. The available capacities are 50,25,and 15 hours
respectively in the planning period. Product X requires 1 hour of
machine M2 and 1 hour of machine M3. Product Y requires 2 hours of
machine M1, 2 hours of machine M2 and 1 hour of machine M3. The
profit contribution of products X and Y are Rs.5/ and Rs.4/-
respectively.
 Solution
• Here, the products are X and Y
• The machine which produces them are M1,M2 and M3.
• The capacities of each machines are 50, 25 and 15 hours respectively
for the planning period.
• Now, for individual product:
• The product X requires 1 hour of M2 and 1 hour of M3, as M1 hour is
not given in question so we will take it as 0 hour.
• The product Y requires 2 hours of M1, 2 hours of M2 and 1 hour of
M3.
• At last, the profit contribution of products X & Y are Rs. 5/- and Rs.
4/- respectively.
 SOME IMPORTANT MODELS (PROBLEMS)
WE COME ACROSS IN THE STUDY OF
OPERATIONS RESEARCH
1. Linear Programming Model
2. Sequencing Model
3. Waiting Line Model or Queuing Model
4. Replacement Model
5. Inventory Model
 1. Linear Programming Model
• This model is used for resource allocation when the resources are
limited and there are number of competing candidates for the use of
resources. The model may be used to maximize the returns or
minimize the costs.
 2. Sequencing Model
• When a manufacturing firm has some job orders, which can be
processed on two or three machines and the processing times of each
job on each machine is known, then the problem of processing in a
sequence to minimize the cost or time is known as Sequencing model.
 3. Waiting Line Model or Queuing Model
• A model used for solving a problem where certain service facilities
have to provide service to its customers, so as to avoid lengthy waiting
line or queue, so that customers will get satisfaction from effective
service and idle time of service facilities are minimized is waiting line
model or queuing model.
 4. Replacement Model
• Any capital item, which is continuously used for providing service or
for producing the product is subjected to wear and tear due to usage,
and its efficiency goes on reducing. This reduction in efficiency can
be predicted by the increasing number of breakdowns or reduced
productivity. The worn out parts or components are to be replaced to
bring the machine back to work. This action is known as maintenance.
• A time is reached when the maintenance cost becomes very high and
the manager feels to replace the old machine by new one. This type of
problems known as replacement problems and can be solved by
replacement models.
 5. Inventory Models
• Any manufacturing firm has to maintain stock of materials for its use.
This stock of materials, which are maintained in stores, is known as
inventory. Inventory is one form of capital or money. The company
has to maintain inventory at optimal cost. There are different types of
inventory problems, depending the availability and demand pattern of
the materials. These can be solved by the application of inventory
models.
 Role of computers in Operations Research
• Computers play a pivotal role in the field of operations
research (OR). Let’s delve into their contributions:
1. Simulation and Modeling
2. Decision Support Systems (DSS)
3. Experimental Optimization
4. Data Processing and Record Keeping
5. Research and Media Production
 1. Simulation and Modelling
• Computers have dramatically impacted the management of industrial
production systems and the field of operations research.
• Their speed and data-handling capabilities allow engineers and
scientists to build larger, more realistic models of organized systems.
• Simulation techniques involve evaluating models for randomly
selected values of variables, aiding in finding meaningful solutions.
• Operational gaming, where real decision makers participate, is also
used for studying interactions and competitive situations.
 2. Decision Support Systems (DSS)
• DSS systems project and predict the results of decisions before they
are made.
• They assist managers by providing insights and recommendations
based on data analysis.
• DSS leverages computers to enhance decision-making processes.
 3.Experimental Optimization
• Computers facilitate experimentation on systems to find optimal
solutions to problems within them.
• These experiments, conducted either simultaneously or sequentially,
help refine decision-making.
 4. Data Processing and Record Keeping
• Computers automate paperwork flow, handle business transactions
(such as order processing and inventory management), and maintain
accurate records.
• These applications, commonly referred to as data processing, are vital
for most organizations.
 5. Research and Media Production
• Computers aid in researching industry trends, patents, trademarks,
clients, and competitors through search engines and proprietary
databases.
• They are also used to produce various types of media, including
graphics, video, and audio productions.
LINEAR PROGRAMMING
 What is Linear Programming?
• A model, which is used for optimum allocation of scarce or limited
resources to competing products or activities under such
assumptions as certainty, linearity, fixed technology, and constant
profit per unit, is linear programming.
• Whenever we want to allocate the available limited resources for
various competing activities for achieving our desired objective, the
technique that helps us is LINEAR PROGRAMMING.
• As a decision making tool, it has demonstrated its value in various
fields such as production, finance, marketing, research and
development and personnel management.
Basic Assumptions in formulating Linear Programming
• The following are some important assumptions made in formulating a linear
programming model:
1. It is assumed that the decision maker here is completely certain (i.e.,
deterministic conditions) regarding all aspects of the situation, i.e.,
availability of resources, profit contribution of the products, technology,
courses of action and their consequences etc.
2. It is assumed that the relationship between variables in the problem and the
resources available i.e., constraints of the problem exhibits linearity. Here
the term linearity implies proportionality and additivity. This assumption is
very useful as it simplifies modeling of the problem.
3. We assume here fixed technology. Fixed technology refers to the fact that
the production requirements are fixed during the planning period and will not
change in the period.
4. It is assumed that the profit contribution of a product remains constant,
irrespective of level of production and sales
 Basic Assumptions Contd…
5. It is assumed that the decision variables are continuous. Continuous
variables can assume any numeric value and can be meaningfully split into
smaller parts. They have valid fractional and decimal values. For example,
company manufacture 2.5 vehicles, 3.2 barrels of oil etc.
6. It is assumed that only one decision is required for the planning
period. This condition shows that the linear programming model is a static
model, which implies that the linear programming problem is a single stage
decision problem. (Note: Dynamic Programming problem is a multistage
decision problem).
7. All variables are restricted to non-negative values (i.e., their numerical
value will be ≥ 0).
Generalize Linear Programming Problem

NON NEGATIVITY CONSTRAINT

 PROPERTIES OF LP MODEL
• Any linear programming model (problem) must have the following
properties:
a) The relationship between variables and constraints must be
linear.
b) The model must have an objective function.
c) The model must have structural constraints.
d) The model must have non-negativity constraint.
Question Maxima Case
 Solution-Formulation of LP model
• Here, the per unit profit of product 1 is Rs.4, product 2 is Rs.3 and product 3
is Rs.6 respectively. Suppose company manufactures ‘a’ units of product 1,
‘b’ units of product 2 and ‘c’ units of product 3. Then in this case the linear
programming equation will be as-
Maximize Z = 4a+3b+6c ------- OBJECTIVE FUNCTION
• Subject to-
2a+3b+2c≤ 440
4a+0b+3c≤ 470 ----STRUCTURAL CONSTRAINTS
2a+5b+0c≤ 430
• Here,
a,b,c≥0 -------------------------NON-NEGATIVE CONSTRAINTS
Question Minima Case
Solution
 HW Question
• A firm manufactures three products A,B and C. The profits per unit product
are Rs.3, Rs.2 and Rs.4 respectively. The Firm has two machines and the
required processing time in minutes for each machine on each product is
given below:
• PRODUCT
A B C
MACHINE X 4 3 5
Y 2 2 4

Machine X and Y have 2000 and 1500 machine-minutes respectively.

The firm must manufacture 100 A’s 200 B’s and 50 C’s but no more than 150 A’s.
Set up an L.P. model to maximize the profit.
 Solution
• Let the number of products manufactured for A be x
• Let the number of products manufactured for B be y
• Let the number of products manufactured for C be z
• Then, Max Z = 3x+2y+4z ……………… Objective function
• Subject to:
4x+3y+5z ≤ 2000
2x+2y+4z ≤ 1500
x ≥ 100 & x≤ 150 ……………..Structural Constraints
y≥ 200
z≥ 50
• Here, x,y,z ≥ 0 …………………… Non-negative constraints
The Graphical Method to LP problems
 The Graphical Method to LP problems
• In graphical method, the inequalities (structural constraints) are
considered to be equations. This is because; one cannot draw a graph
for inequality. Only two variable problems are considered, because
we can draw straight lines in two-dimensional plane (X- axis and Y-
axis). More over as we have non negativity constraint in the problem
that is all the decision variables must have positive values always the
solution to the problem lies in first quadrant of the graph.
• In graphical method we use two methods to obtain optimal solution:
• One is getting coordinates of the obtained polygon and putting
coordinates value in Objective Function
• Second is getting solution through Isoprofit line method.
 The characteristics of Graphical method are
1. Generally the method is used to solve the
problem, when it involves two decision
variables.
2. For three or more decision variables, the graph
deals with planes and requires high imagination
to identify the solution area.
3. Always, the solution to the problem lies in
first quadrant.
4. This method provides a basis for understanding
the other methods of solution
 Solving questions using graphical method
• Q. A company manufactures two products, X and Y by using three
machines A, B, and C. Machine A has 4 hours of capacity available
during the coming week. Similarly, the available capacity of machines
B and C during the coming week is 24 hours and 35 hours
respectively. One unit of product X requires one hour of Machine A, 3
hours of machine B and 10 hours of machine C. Similarly one unit of
product Y requires 1 hour, 8 hour and 7 hours of machine A, B and C
respectively. When one unit of X is sold in the market, it yields a profit
of Rs. 5/- per product and that of Y is Rs. 7/- per unit. Solve the
problem by using graphical method to find the optimal product mix.
Solution for graphical method:
• Let the company manufactures x units of X and y units of Y, and then
the L.P. model is:
✓Maximize Z = 5x + 7y ----Objective Function
• Subject to:
✓1x + 1y ≤ 4
✓3x + 8y ≤ 24 ----------- Structural constraints
✓10x + 7y ≤ 35
• and Both x and y are ≥ 0. -------Non-negative constraints
Removing inequalities:
• As we cannot draw graph for inequalities, let us consider them as
equations.
✓Maximise Z = 5x + 7y s.t.
• Subject to :
✓1x + 1y = 4 ……….equation for machine A
✓3x + 8y = 24 ……...equation for machine B
✓10x + 7y = 35 …….equation for machine C
✓and both x and y are ≥ 0
For machine A, equation is 1x+1y=4, then for
Machine A When x = 0 , y = 4 and when y = 0, x = 4
For machine B, equation is 3x+8y=24, then for
Machine B When x = 0 , y = 24/8 = 3 and when y = 0 x = 24/3 = 8
For machine C, equation is 10x + 7y = 35, then
Machine C When x = 0, y = 35/10 = 3.5 and when
y = 0, x = 35 / 7 = 5
If we combine the above three graph as explained
before we get the final graph as below:

Consider the area enclosed in

ROUVW. The coordinates are:
R (0,3); O (0,0); U (3.5,0); V (2.5,1.5);
W (1.6,2.4)
Method 1. Here we find the co-ordinates of corners of
the closed polygon ROUVW and substitute the values
in the objective function.
• In maximisaton problem, we select the co-ordinates giving maximum value.
And in minimisaton problem, we select the co-ordinates, which gives
minimum value. In the problem the co-ordinates of the corners are: R = (0,
3.5), O = (0,0), U = (3.5,0), V = (2.5, 1.5) and W = (1.6,2.4).
• Substituting these values in objective function: Maximize Z = 5x + 7y
✓Z( 0,3) = 5 × 0 + 7 × 3 = Rs. 21, at point R
✓Z (0,0) = 5 × 0 + 7 × 0 = Rs. 00.00, at point O
✓Z(3.5,0) = 5 × 3.5 + 7 × 0 = Rs. 17.5 at point U
✓Z (2.5, 1.5) = 5 × 2.5 + 7 × 1.5 = Rs. 23.00 at point V
✓Z (1.6, 2.4) = 5 × 1.6 + 7 × 2.4 = Rs. 24.80 at point W
• Hence the optimal solution for the problem is company has to manufacture
1.6 units of product X and 2.4 units of product Y, so that it can earn a
maximum profit of Rs. 24.80 in the planning period.
 Method 2. Isoprofit Line Method:
• Isoprofit line, a line on the graph drawn as per the objective function, assuming
certain profit.
• On this line any point showing the values of x and y will yield same profit.
• For example in the given problem, the objective function is:-
Maximise Z = 5x + 7y.
• If we assume a profit of Rs. 35/-, to get Rs. 35, the company has to manufacture
either 7 units of X or 5 units of Y.
• The equation will become as 5x+7y= 35……………………..(1)
• Obtain the coordinates of equation (1), it will come out to be X (7,0) and Y (0,5)
• Draw a line using the above coordinates Z’Z
• Next step is displayed on graph.
ISOPROFIT LINE METHOD
Draw a straight line Z’Z intersecting Y at 5
And X at 7; draw a line NN’ parallel to Z’Z at
origin O. slowly move line NN’ away from origin
Until it touches the farthermost point of the closed
polygon. Note the coordinates of this point, this is the
optimal solution.
 Explanation for Isoprofit line
• Hence, we draw line ZZ (preferably dotted line) for 5x + 7y = 35.
Then draw parallel line to this line ZZ at origin. The line at origin
indicates zero rupees profit. No company will be willing to earn zero
rupees profit. Hence slowly move this line away from origin. Each
movement shows a certain profit, which is greater than Rs.0.00. While
moving it touches corners of the polygon showing certain higher
profit. Finally, it touches the farthermost corner covering all the
area of the closed polygon. This point where the line passes
(farthermost point) is the OPTIMAL SOLUTION of the problem.
• In the figure 2.6. the line ZZ passing through point W covers the entire
area of the polygon, hence it is the point that yields highest profit.
Now point W has co-ordinates (1.6, 2.4). Now Optimal profit Z = 5 ×
1.6 + 7 × 2.4 = Rs. 24.80.
 HW Graphical Method Question
• A firm manufactures two products A & B on which profits earned per
unit are Rs.3 and Rs. 4 respectively. Each product is processed on two
machines M1 and M2 . Product A requires 1 minute of M1 and 2
minutes of M2 , while B requires 1 minute of M1 and 1 minute of M2 .
Machine M1 is available for not more than 7 hrs 30 mins. While
machine M2 is available for 10 hrs, during any working day. Find the
number of products A and B to be manufactured to get the maximum
profit.
Obtained Chart will be
First , convert the maximum machine hours
into minutes
• Then , for machine M1 ; 7 hrs 30 mins the value will be 450 mins
• Then, for machine M2 ;10 hrs, the value will be 600 mins
Then the equations thus obtained will be:
• Max Z= 3x+4y ……………………..OBJECTIVE FUNCTION
• Subject to,
• Machine M1 → x+y ≤ 450
STRUCTURAL CONSTRAINTS
• Machine M2 →2x+y≤ 600
• Here x, y ≥ 0 ………………NON-NEGATIVITY FUNCTION
After removing inequalities
• Max Z= 3x+4y
• Subject to,
• Machine M1 → x+y = 450
• Machine M2 →2x+y = 600
• Here x, y ≥ 0
Plotting the equations on to graph
Machine M1 → x+y = 450
Machine M2 →2x+y = 600
• For M → x+y= 450,
• When x is 0, y will be 450
• When y is 0, x will be 450
• Thus the coordinates for M1 → (450,0) and (0,450)
• For M2 → 2x+y = 600
• When x is 0, y will be 600
• When y is 0, x will be 300
• Thus the coordinates for M2 → (0,600) and (300,0)
Making graph by putting coordinates
M1 → (450,0) and (0,450)
M2 → (0,600) and (300,0)

The coordinates thus obtained will be:

1. C (0,450)
2. O (0,0)
3. E (300,0)
4. D (150,300)
Calculation of profit using equation Max Z= 3x+4y
• Then, the solution will be
• Max Z (profit) =
➢3*0+4*450 = Rs.1800 …. C (0,450)
➢3*0+4*0 = Rs.0 ………….O (0,0)
➢3*300+4*0 = Rs.900 ……..E (300,0)
➢3*150+4*300 = Rs.1650 ….D (150,300)
• Answer → as the obtained value is for point C is maximum thus,
• The obtained value will be x =0, y=450 and maximum profit will be
Rs.1800
 Linear Programming Model
(Solution by Simplex Method) Resource
Allocation Model – Maximisation Case
Q1. Solve LP problem by simplex method
Maximum Z (profit) = 12x1+16x2
Subject to-
10x1+20x2≤ 120
8x1+8x2≤ 80
Here, x1 and x2 ≥ 0
Solution
First we will remove the inequality sign from the equations by
introducing slack variables in the equations, slack variable is introduced
to balance the two sides of the equations. So we add two variables S1
and S2 in equations (i) and (ii).
Maximum Z = 12x1+16x2
Subject to-
10x1+20x2≤ 120……………………………. (i)
8x1+8x2≤ 80…………………………..... (ii)
Here, x1 and x2 ≥ 0
After introduction of slack variable, the inequality sign
will be removed
Maximum Z = 12x1+16x2+0S1+0S2
Subject to-
10x1+20x2+S1= 120………………………. (i)
8x1+8x2+S2= 80…………………………..... (ii)
Here, x1, x2, S1and S2 ≥ 0
 About slack variable
1.Purpose of Slack Variables:
1. A slack variable is an additional variable introduced into an optimization
problem to transform inequality constraints into equality constraints.
2. Essentially, it allows us to convert inequalities (such as “less than” or “greater
than”) into equalities (such as “equal to”).
3. By introducing slack variables, we create a balance between constraints and
make the problem more amenable to solution using optimization techniques.
2.How Slack Variables Work:
1. Suppose we have an inequality constraint like this: [2x + 3y ≤ 30]
2. To convert it into an equality constraint, we introduce a slack variable (s): [2x
+ 3y + s = 30]
3. The slack variable (s) represents the surplus or slack in the constraint. It
accounts for any “extra” capacity beyond the strict constraint boundary.
4. Importantly, slack variables cannot take on negative values, as the simplex
algorithm (a common method for solving linear programming problems)
requires them to be positive or zero.
 Initial Simplex Table
Maximum Z = 12x1+16x2+0S1+0S2
Here,
Subject to-
✓Zj = ∑ Cbi*aij, here i= 1 to 2
10x1+20x2+S1= 120
✓Cj = Coefficient of objective function
8x1+8x2+S2= 80
✓Cbi = Coefficient of basic variables
 Maximum Z = 12x1+16x2+0S1+0S2
Initial Simplex Table: Subject to-
10x1+20x2+S1= 120
formulation of table 8x1+8x2+S2= 80
 Initial Simplex Table: calculation of Zj

Here, for X1 , Zj will be calculated as( 0*10 + 0*8)

for X2 , Zj will be calculated as (0*20 + 0*8)
for S1 , Zj will be calculated as (0*1 +0*0)
for S2 , Zj will be calculated as (0*0+ 0*1)
for capacity column, Zj will be calculated as ( 0*120 + 0*80)
 Initial Simplex Table: Calculation of Cj-Zj

Here, for X1 , Cj-Zj will be calculated as (12-0 = 12)

for X2 , Cj-Zj will be calculated as (16-0 = 16) Here, check for maxima condition, i.e. ≤
for S1 , Cj-Zj will be calculated as (0-0 = 0)
for S2 , Cj-Zj will be calculated as (0-0 = 0)
 After determining the Cj-Zj, check for
optimality condition
• After finding Cj-Zj, find the optimality condition , for optimality
condition-
➢For maxima,
✓ all Cj-Zj ≤ 0 ; values must be less than or equal to zero
✓Thus in the above solution in initial table the values of Cj-Zj are not ≤
0 hence we have not reached the optimal condition.
✓In order to reach optimality first step is to select the maximum value in
Cj-Zj ; i.e., out of 12,16,0,0 → 16 is the maximum value.
➢Note: for minima, all Cj-Zj ≥ 0 ; values must be more than or equal to
zero
If optimality condition is not reached the we
proceed with iteration process
• For optimality condition Cj-Zj ≤ 0, but we have still got two positive
values in the initial table, so to remove two positive values and obtain
the optimal result we must do ‘iteration’ of the above initial table.
• The following slides will do iteration until less than zero or negative
value is obtained in the Cj-Zj row.
 Initial table: Finding the key column

Note: the column below the maximum value in Cj-Zj row becomes the key column
Note: divide the capacity column value by key column value
 Initial Table: finding the key row and key element

x2 is entering variable

S1 is leaving variable

Note: the row right to the least value in Ratio column becomes key row
Note: the value at the intersection of key row and key column is key element
Iteration 1
 Initiation of the iteration process
• The above process is done in order to get the new elements in the
table, in the table in the previous slide, X2 is entering variable and S1
is leaving variable, so the in iteration table replace S1 by X2.
• After this stage we will commence the iteration process
The iteration table with new introduce element ‘x2’
Add the coefficient of X2 i.e., 16 in CBi
column. This is ITERATION TABLE
 Finding new elements of Iteration table, for Row X2
For finding new elements of
iteration table we will consider
the row S1 elements of Initial
table, and the divide the
elements of row S1 by key
element, i.e., 20; so the new
elements obtained will be
1. 10/20= ½
2. 20/20= 1
3. 1/20= 1/20
4. 0/20= 0
5. 120/20= 6
Iteration table: After finding elements of Row X2
Using the below formula to calculate the
elements of Row S2
 Finding new elements of Iteration table, Row S2
For finding new elements of iteration
table we will consider the row S2
elements of Initial table, by using the
below mentioned formula:
New Value = old value- Corresponding key X Corresponding key
column value Row value
Key Element

• For new value X1= 8- (8*10)/20 = 4

• For new value X2= 8- (8*20)/20 = 0
• For new value S1= 0- (8*1)/20 = -2/5
• For new value S2= 1- (8*0)/20 = 1
• For new value capacity = 80-
(8*120)/20 = 32
Put the value obtained in new iteration table
This is the final table of iteration table 1
Calculate Zj and Cj- Zj using the same method as earlier

96
Again, Check for optimality condition in
Iteration table 1
• Still in the table the value of Cj-Zj ≥0 , so in this case we will again do
iteration for obtaining the optimal value.
Iteration 1 contd…

X1 is entering variable and S2

is leaving variable, so replace
S2 by X1
Iteration 2
Iteration 2 blank table
 Determining the elements of Row X1
• To obtain the elements
of Row X1 divide by key
element i.e., 4 from the
elements of Row S2 of
old iteration table 1 .
Thus we obtained,
1. 4/4= 1
2. 0/4= 0
3. (-2/5)/4= -1/10
4. ¼= ¼
5. 32/4= 8
Putting the obtained elements in New Row X1
 Determining the elements of Row X2
For finding new elements of iteration table we will consider the row X2
elements of Iteration table 1, by using the below mentioned formula:
New Value = old value- Corresponding key Corresponding key
column value X Row value

Key Element

• For new value 1= ½- (1/2*4)/4 = 0

• For new value 2= 1- (1/2*0)/4 = 1
• For new value 3= 1/20- (1/2*-2/5)/4 = 1/10
• For new value 4= 0- (1/2*1)/4= -1/8
• For new value 5 = 6- (1/2*32)/4 = 2
Put the elements in Row X2
The final Iteration table 2 obtained
Finding Zj and Cj-Zj
 Final answer
• In the iteration table 2 obtained, all the Cj-Zj value is ≤ 0; thus we can
say that optimality condition is reached, thus in this case , The optimal
solution is given by:-
• X1= 8
• X2=2
• and Z (opt)= 128.
Question-
Removing the inequalities into equations by
adding slack variables-
Maximize Z = 2x1+5x2+0S1+0S2+0S3
Subject to :
➢x1+4x2+S1 = 24
➢3x1+x2+S2 = 21
➢x1+x2+S3 = 9
• Here, x1,x2,S1,S2,S3 ≥ 0
Maximize Z = 2x1+5x2+0S1+0S2+0S3
Subject to :
x1+4x2+S1 = 24
3x1+x2+S2 = 21
Initial Simplex Table
x1+x2+S3 = 9
Cj 2 5 0 0 0
Cbi Basic X1 X2 S1 S2 S3 Capacity Ratio
Variable

0 S1 1 4 1 0 0 24
0 S2 3 1 0 1 0 21
0 S3 1 1 0 0 1 9
Zj 0 0 0 0 0 0
Cj-Zj 2 5 0 0 0
 Initial Simplex Table: finding key element
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacit Ratio

Variabl y
e
0 S1 1 4 1 0 0 24 24/4= 6

0 S2 3 1 0 1 0 21 21/1= 21

0 S3 1 1 0 0 1 9 9/1 = 9

Zj 0 0 0 0 0 0

Cj-Zj 2 5 0 0 0
 Iteration Table 1
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacit Ratio

Variable
y
5 X2

0 S2

0 S3

Zj

Cj-Zj
Calculation for Row X2 : divide the elements of
Row S1 of initial table by key element i.e.,4
• The elements of new Row X2 will be =
Using the below formula to find element of
Row S2 and Row S3
Calculations for elements of Row S2 and Row S3
 Finding elements of Iteration Table 1
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacity Ratio

Variable
5 X2 1/4 1 1/4 0 0 6

0 S2 11/4 0 -1/4 1 0 15

0 S3 3/4 0 -1/4 0 1 3

Zj 5/4 5 5/4 0 0 30

Cj-Zj 3/4 0 -5/4 0 0

 Findings key element in Iteration table 1
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacit Ratio

Variabl y
e
5 X2 1/4 1 1/4 0 0 6 24

0 S2 11/4 0 -1/4 1 0 15 60/11

0 S3 3/4 0 -1/4 0 1 3 4

Zj 5/4 5 5/4 0 0 30

Cj-Zj 3/4 0 -5/4 0 0

 Iteration Table 2
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacit Ratio

Variabl y
e
5 X2

0 S2

0 X1

Zj

Cj-Zj
 Iteration Table 2
Cj 2 5 0 0 0

Cbi Basic X1 X2 S1 S2 S3 Capacit Ratio

Variabl y
e
5 X2 0 1 1/3 0 -1/3 5

0 S2 0 0 2/3 1 -11/3 4

0 X1 1 0 -1/3 0 4/3 4

Zj 2 5 1 0 1 33

Cj-Zj 0 0 -1 0 -1
Answer
• Thus , the optimal solution obtained will be:
• X1=4
• S2=4
• X2=5
• Z (profit)= 33
 Linear Programming Model
(Solution by Simplex Method) Resource
Allocation Model – Minimization Case-
Big M Method
Use simplex Big M method to solve the
following-
• Minimize Z = 7x1+15x2+20x3
• Subject to,
• 2x1+4x2+6x3 ≥ 24
• 3x1+9x2+6x3 ≥ 30
• x1,x2,x3 ≥ 0
Removing inequalities and adding dummy
variables S1,S2,MA1 & MA2
• Minimize Z = 7x1+15x2+20x3+0S1+0S2+MA1+MA2
• Subject to,
• 2x1+4x2+6x3+S1 = 24
• 3x1+9x2+6x3+S2 = 30
• Here, x1,x2,x3,S1,S2,MA1 & MA2 ≥ 0
 Minimize Z = 7x1+15x2+20x3+0S1+0S2+MA1+MA2
Subject to,
2x1+4x2+6x3+S1 = 24
Initial Simplex
3x1+9x2+6x3+S2 = 30
Table
Cj 7 15 20 0 0 M M

Row Cbi Basic X1 X2 X3 S1 S2 A1 A2 Capacity Ratio

Varia
ble
R1 M A 2 4 6 -1 0 1 0 24 24/4=6

R2 M A 3 9 6 0 -1 0 1 30 30/9=10/3

Zj 5M 13M 12M -M -M M M 54M

Cj-Zj 7-5M 15- 20- M M 0 0

13M 12M
 Finding key element
Cj 7 15 20 0 0 M M

Row Cbi Basic X1 X2 X3 S1 S2 A1 A2 Capacity Ratio

Variable

R1 M A1 2 4 6 -1 0 1 0 24 24/4=6

R2 M A2 3 9 6 0 -1 0 1 30 30/9=10/3

Zj 5M 13M 12M -M -M M M 54M

Cj-Zj 7-5M 15- 20- M M 0 0

13M 12M
 Iteration Table 1
Cj 7 15 20 0 0 M M

Row Cbi Basic X1 X2 X3 S1 S2 A1 A2 Capa Ratio

Variab city
le
R3 M A 2/3 0 10/3 -1 4/9 1 - 32 32/3/10/
3=16/5
R4 M X 1/3 1 2/3 0 -1/9 0 - 10/3 (10/3)/(2
/3)=5
Zj 2/3M+ 15 10/3M -M 4/9M- M - 32/3
15 +10 5/3 M+50
Cj-Zj - 0 - M - 0 -
2/3M+ 10/3M 4/9M+
2 +10 5/3
 Finding Key element in iteration table 1
Cj 7 15 20 0 0 M M

Row Cbi Basic X1 X2 X3 S1 S2 A1 A2 Capa Ratio

Variable city
R1 M A1 2/3 0 10/3 -1 4/9 1 - 32 (32/3)/(10/3)
=16/5

R2 M X2 1/3 1 2/3 0 -1/9 0 - 10/3 (10/3)/(2/3)=

5

Zj 2/3M+ 15 10/3M -M 4/9M- M - 32/3

15 +10 5/3 M+50
Cj-Zj - 0 - M - 0 -
2/3M+ 10/3M 4/9M+
2 +10 5/3
 Iteration table 2
Cj 7 15 20 0 0 M M

Row Cbi Basic X1 X2 X3 S1 S2 A1 A2 Capa Ratio

Variab city
le
R5 M X3 1/5 0 1 - 2/15 - - 16/5
3/10
R6 M X2 1/5 1 0 1/5 -1/5 - - 6/5

Zj 7 15 20 -3 -1/3 - - 82

Cj-Zj 0 0 0 3 1/3 - -
 Answer
• Thus, the optimal condition thus obtained is-
• X3=16/5
• X2=6/5
• Min Z = 82
DULAITY IN LINEAR
PROGRAMMING
 INTRODUCTION
• Most important finding in the development of Linear Programming
Problems is the existence of duality in linear programming problems.
• Linear programming problems exist in pairs. That is in linear
programming problem, every maximization problem is associated with
a minimization problem.
• Conversely, associated with every minimization problem is a
maximization problem. Once we have a problem with its objective
function as maximization, we can write by using duality relationship
of linear programming problems, its minimization version. The
original linear programming problem is known as primal problem, and
the derived problem is known as dual problem.
 The concept of Dual Problem
• The concept of the dual problem is important for several reasons. Most
important are (i) the variables of dual problem can convey important
information to managers in terms of formulating their future plans and (ii)
in some cases the dual problem can be instrumental in arriving at the
optimal solution to the original problem in many fewer iterations, which
reduces the labour of computation.
• Whenever, we solve the primal problem, may be maximization or
minimization, we get the solution for the dual automatically. That is, the
solution of the dual can be read from the final table of the primal and vice
versa. Let us try to understand the concept of dual problem by means of an
example. Let us consider the diet problem, which we have discussed while
discussing the minimization case of the linear programming problem.
 What is Duality in Linear Programming?
• Duality in linear programming is a unifying theory that develops the
relationships between a given linear program and another related linear
program. This concept is based on the principle that every optimization
problem may be viewed from the primal problem or the dual problem.
• The duality theory in linear programming is concerned with the study of the
relationship between two related linear programming problems, where if the
primal is a maximization problem, then the dual is a minimization problem
and vice versa.
• The importance of duality is twofold:
1.Sometimes, the dual problem is easier to solve for an initial feasible
solution than the primal problem.
2.It provides a way to understand the sensitivity of the solution to changes in
the input data
 Steps for a standard primal form
1. Change the objective function to maximization form.
2. If the constraints have an inequality sign ‘≥’ then convert the same to ‘≤’ .
3. If the constraint has an ‘=’ sign then replace it by two constraints
involving the inequalities going in opposite directions. For example
x1+2x2=4 then convert it into equations, x1+2x2 ≤ 4 and x1+2x2 ≥ 4 => -
x1-2x2 ≤ -4
4. Every unrestricted variable is replaced by the difference of two non-
negative variables, x3= x3’-x3’’
5. Standard primal form of the given LPP in which- (i) all constraints have
‘≤’ sign, where the objective function is of maximization form. (ii) all
constraints have ‘≥’ sign, where the objective function is of minimization
form.
 Primal and dual form
• In every LP problem the initial problem is known as Primal problem.
• In dual LPP we have other problem which is derived from the primal
one known as Dual problem.
• In duality there are two kinds of ways to solve the dual problems:
1. Primal to dual conversion
2. Dual simplex method
 Primal to Dual conversion concept 1
Concept 1: When objective function of LPP is either Min or Max
• In concept 2 we need to change Primal form first to Standard primal
form, i.e., Max Z form. If the objective function is Max Z, then there
is no need to change the function, but if the function is Min Z then we
need to change the function to Max Z by multiplying (-1) with the
equation. Once changed to Max Z form we need to convert the
function to dual form.
• Secondly, change all the sign of constraints equation from ≥ to ≤ ,
then convert the same to Dual form.
 Primal to dual conversion Concept 1
Q. Convert the following into dual conversion form
 Primal to Dual conversion concept 2
Concept 2: When objective function of LPP is either Min or Max.
• In concept 2 we need to keep the Primal form of either Max Z and Min
Z in Standard primal form. We need to change only the signs of the
constraints. Once changed to individual Min Z or Max Z form, convert
the same to dual form.
Answer
END
 UNIT-II
SPECIAL TYPES OF LINEAR
PROGRAMMING
 SYLLABUS
• Special Types of Linear Programming:
➢Transportation models and their solutions (Basic & Optimal).
➢Assignment models and solutions (and its special cases).
 Introduction to the Transportation Problem
• The transportation
model deals with a (Warehouse/market)
special class of linear
programming
problem in which the
objective is to
transport a
homogeneous
commodity from
various origins or
factories to different
destinations or
markets at a total
minimum cost.
 Assumptions of Transportation problem
Linear and Constant Transportation Costs:
• The transportation costs (shipping costs) are assumed to be linear and
constant. In other words, the cost of transporting a unit of goods from
one source to a destination remains consistent.
Fixed Supply and Demand:
• Each source has a fixed supply of units, and this entire supply must be
distributed to the destinations.
• Similarly, each destination has a fixed demand for units.
 Assumptions of Transportation
problem…contd
Homogeneous Goods:
• The goods being transported are assumed to be homogeneous (i.e.,
identical).
Balanced and Unbalanced Problems:
• If the total supply equals the total demand, the transportation problem
is considered balanced.
• If the total supply and total demand do not match, it is an unbalanced
transportation problem.
 Assumptions of Transportation problem…contd

Occupied and Unoccupied Cells:

• In the transportation problem, we allocate
goods from sources to destinations.
• The allocated cells represent the routes
for transportation, and the numbers in
each cell indicate the shipping cost per
unit for that route.
• The problem involves determining how to
distribute goods optimally while
minimizing transportation costs.
 Few terms used in Transportation Problem
• Feasible Solution: A feasible solution to a transportation is a set of non-negative
allocations, Xij , that satisfies the rim (row and column) restrictions.
• Basic Feasible Solution: A feasible solution to a transportation problem is said to
be a basic feasible solution if it contains no more than ‘m+n-1’ non-negative
allocations, where ‘m’ is the number of rows and ‘n’ is the number of columns of
the transportation problem. For example, if ‘m=3’ and ‘n=4’ then ‘m+n-1 = 11’,
this means that the problem must contain 11 cells having non-negative value.
• Optimal solution: A feasible solution (not necessarily basic) that minimizes
(maximizes) the transportation cost (profit) is called an optimal solution.
• Non-degenerate basic feasible solution: A basic solution to a (m x n)
transportation problem is said to be non-degenerate if,
a. The total number of non-negative allocations is exactly ‘m+n-1’ (i.e., number of independent
constraints), and
b. These ‘m+n-1’ allocations are in independent positions.
Few terms used in Transportation
Problem…contd
• Degenerate basic feasible solution: A basic feasible solution in
which the total number of non-negative allocations is less than m+n-1
is called degenerate basic feasible solution.
 Example question
• To understand the problem more clearly, let us take an example and
discuss the rationale of transportation problem. Three factories A, B
and C manufactures sugar and are located in different regions. Factory
A manufactures, b1 tons of sugar per year and B manufactures b2 tons
of sugar per year and C manufactures b3 tons of sugar. The sugar is
required by four markets W, X, Y and Z. The requirement of the four
markets is as follows: Demand for sugar in Markets W, X, Y and Z is
d1, d2, d3 and d4 tons respectively. The transportation cost of one ton
of sugar from each factory to market is given in the matrix below. The
objective is to transport sugar from factories to the markets at a
minimum total transportation cost.
• The above problem has got the following properties:
1. It has an objective function.
2. It has structural constraints.
3. It has a non-negativity constraint.
4. The relationship between the variables and the constraints are linear.
• We know very well that these are the properties of a linear
programming problem. Hence the transportation model is also a linear
programming problem. But a special type of linear programming
problem.
Similarities and differences b/w
transportation & LP
 Similarities between transportation & LP
• Similarities-
1.Both have objective function.
2. Both have linear objective function.
3. Both have non - negativity constraints.
4. Both can be solved by simplex method. In transportation model it is
laborious.
5. A general linear programming problem can be reduced to a
transportation problem if (a) the aij's (coefficients of the structural
variables in the constraints) are restricted to the values 0 and/or 1 and
(b) There exists homogeneity of units among the constraints.
 Differences between Transportation &
General Linear Programming
S.NO TRANSPORTATION MODEL LINEAR PROGRAMMING

1 Basically a minimization model may be of maximization type or

minimization type.
2 The resources, for which, the The resources, for which, the structural
structural constraints are built up constraints are built up in general linear
is homogeneous in transportation programming model they are different.
model
3 solved by transportation algorithm solved by simplex method

4 is restricted to values either 0 or 1 in values of structural coefficients (i.e. xij)

transportation problem. are not restricted to any value in general
linear programming model
 Balance V/s Unbalance Transportation
Problem
• A transportation problem is said to be balance when the Demand is
equal to Supply, in other words the sum of total demand must be equal
to sum of total supply.
• i.e., Σ bj = Σ ai
• Whereas, a transportation problem is said to be unbalanced when
either :
i. Supply  Demand
ii. Supply < Demand
Unbalance case I: when Supply > Demand
Add extra dummy column

.
.
.
Bn+1
Unbalance case II : when Supply < Demand
Add extra dummy row

.
..

Am+1
------
 APPROACH TO SOLUTION TO A
TRANSPORTATION PROBLEM BY
USING TRANSPORTATION ALGORITHM
I. Obtaining Initial Basic Feasible solution or IBFS
Step I:
• Balancing the given problem. Balancing means check whether sum of
availability constraints is equal to sum of requirement constraints. That is
whether supply = demand.
• Once they are equal, go to step two.
• If not, then open a Dummy row or Dummy column to balance the
problem. The cost coefficients of dummy cells are zero. If supply < demand
then add dummy row to the transportation table, if supply > demand then add
dummy column to the table as discussed above.
• Remember while solving general linear programming problem to convert an
inequality into an equation, we add (for maximization problem) a slack
variable. In transportation problem, the dummy row or dummy column is
added exactly similar to a slack variable.
 Step II
Find an initial basic feasible solution:
• To find initial basic solution following test are used:
i. North-west corner method (describe in few words)
ii. Row minima method (describe in few words)
iii. Column minima method (describe in few words)
iv. Lowest cost entry method (Matrix minima method) (describe in few
words)
v. Vogel’s approximation method (VAM) or Unit cost penalty method
(describe in few words)
 Step III
Check for non-degeneracy
• Check whether the solution obtained during performing initial basic
feasible process is degenerate or not. To check the same, the
following two conditions must be satisfied, i.e.,
1. m+n-1 = number of allocations
2. Whether the allocated cells are in independent positions or not.
• If the above two conditions are satisfied then we can say that the
obtained solution is non-degenerate.
• Note: If the solution obtained is degenerate then we will perform
operations to remove degeneracy and proceed further.
 Step IV
If the basic Feasible Solution if non-degenerate
Perform an optimality test and iterate till
optimal solution is obtained
Optimality is used to examine whether there can be a minimum cost that
can be obtained further much less than the cost obtained in Basic
Feasible Stage. Following methods are used to check whether the
solution obtained is optimal or not. :
i. MODI method (Modified distribution ) or UV method
ii. Stepping stone method
Questions and solutions on :
i. North-west corner method
ii. Row minima method
iii. Column minima method
iv. Lowest cost entry method (Matrix minima method)
v. Vogel’s approximation method (VAM) or Unit cost penalty method
 METHOD 1:NORTH WEST CORNER
RULE
W1 W2 W3 W4 FACTORY
CAPACITY
F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

WAREHOUSE 5 8 7 14
REQUIREMENT
STEP I CHECK FOR BALANCE
WAREHOUSE W1 W2 W3 W4 FACTORY
FACTORY
CAPACITY

F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

WAREHOUSE 5 8 7 14 34
REQUIREMENT

SUPPLY = DEMAND
34=34
 STEP II FINDING INTIAL BASIC
FEASIBLE SOLUTION
W1 W2 W3 W4 FACTORY
CAPACITY
F1 19 30 50 10 7, 2 0
5 2
F2 70 30 40 60 9, 3 0
6 3

F3 40 8 70 20 18, 14 0
4 14
WAREHOUSE 50 8, 6, 0 7, 4, 0 14, 0
REQUIREMENT
STEP III- FINIDNG OPTIMAL COST
• Total cost- 19*5 + 30*2 + 40*3 + 70*4 + 20*14 = 1015 Rs.
Q. Determine the IBFS using NWCR
W1 W2 W3 W4 W5 SUPPLY

F1 3 4 6 8 9 20
F2 2 10 1 5 8 30
F3 7 11 20 40 3 15
F4 2 1 9 14 16 13
DEMAND 40 6 8 18 6
• x11=20, x21= 20, x22=6,x23= 4 x33= 4, x34=11, x44=7 ,and
x45=6
• Min cost= 3*20+2*20+10*6+1*4+4*4+40*11+14*7+16*6
• 814 Rs.
 METHOD 2:ROW MINIMA RULE
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1
6 3 5 4 22
F2
5 9 2 7 15
F3
5 7 8 6 8
DEMAND
7 12 17 9
 STEP I:CHECK FOR BALANCE
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1
6 3 5 4 22
F2
5 9 2 7 15
F3
5 7 8 6 8
DEMAND
7 12 17 9 45

SUPPLY = DEMAND
45=45
 STEP II:INITIAL BASIC FEASIBLE
SOLUTIONS
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 6 3 5 4 22 10 1 0
12 1 9
F2 5 9 2 7 15 0
15

F3 5 7 8 6 810
7 1
DEMAND 70 12 0 17 16 0 90

SUPPLY = DEMAND
45=45
STEP III- FINDING TOTAL COST
=3*12+5*1+4*9+2+15+5*7+8*1
=36+5+36+30+35+8
=150 Rs.
Q. Solve using row minima method
D1 D2 D3 D4 SUPPLY

F1 5 2 4 3 22

F2 4 8 1 6 15

F3 4 6 7 5 8

DEMAND
7 12 17 9
answer
• 12*2+1*4+9*3+15*1 + 7*4 + 1*7
• 105
METHOD 3:COLUMN MINIMA METHOD
WAREHOUSE W1 W2 W3 SUPPLY
FACTORY

F1
10 13 6 10
F2
16 7 13 12
F3
8 22 2 8
DEMAND
6 11 13
 STEP I- CHECK FOR BALANCE
WAREHOUSE W1 W2 W3 SUPPLY
FACTORY

F1 10 13 6 10

F2 16 7 13 12

F3 8 22 2 8

DEMAND 6 11 13 30

SUPPLY = DEMAND
30=30
 STEP II: INITIAL BASIC FEASIBLE
SOLUTIONS
WAREHOUSE W1 W2 W3 SUPPLY
FACTORY

F1 10 13 6 10 10 0

F2 16 7 11 13 1 121 0

F3 8 6 22 2 2 820

DEMAND 60 11 0 13 11 1 0
STEP III-FIND TOTAL MINIMUM COST
• 8*6+7*11+13*1+2*2+6*10
• = 202 Rs
Q Solve using Column Minima Method
D1 D2 D3 SUPPLY

F1 16 19 12 14

F2 22 13 19 16

F3 14 28 8 12

DEMAND 10 15 17
• 14*12+15*13+19*1+ 10*14 + 2*8
• 538rs.
 METHOD 4:LOWEST COST ENTRY
METHOD (MATRIX MINIMA METHOD)
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

DEMAND 5 8 7 14
 STEP I- CHECK FOR BALANCE
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

DEMAND 5 8 7 14 34
 STEP II-FIND IBFS (Initial Basic Feasible
Solution)
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 19 30 50 10 70
7
F2 70 30 40 60 920
2 7
F3 40 8 70 20 18 10 3 0
3 8 7
DEMAND 5 2 0 80 7 0 14 7 0
STEP III- FIND TOTAL MINIMUM COST
✓70*2+40*3+8*8+40*7+10*7+20*7
✓140+120+64+280+70+140
✓814 Rs.
Q. Solve using least cost method
D1 D2 D3 D4 SUPPLY

O1
6 4 1 5 14
O2
8 9 2 7 16
O3
4 3 6 2 5
DEMAND
6 10 15 4
• The total minimum cost is given by:
• 1*14+8*6+9*9+2*1+3*1+2*4
• 14+48+81+2+3+8
• 156 Rs.
METHOD 5: VOGEL’S APPROXIMATION
METHOD
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

DEMAND 5 8 7 14
 STEP I: CHECK FOR BALANCE
WAREHOUSE W1 W2 W3 W4 SUPPLY
FACTORY

F1 19 30 50 10 7

F2 70 30 40 60 9

F3 40 8 70 20 18

DEMAND 5 8 7 14 34
STEP II- FIND INTIAL BASIC FEASIBLE SOLUTIONS
STEP III- FIND MINIMUM COST
• = 19*5+10*2+40*7+60*2+8*8+20*10
• = 95+20+280+120+64+200
• = 779 Rs.
 Q. Solve using Vogel’s Approximation
Method
1 2 3 4
A 3 8 7 4
B 1 7 5 9
C 8 4 3 2
 Rules in case of Tie penalty
1. In case of tie among the highest penalties select the row or column
having minimum cost.
2. In case of tie in the min cost also, select the cell which can have
maximum allocation.
3. In case of tie in the maximum allocation also, select the cell
randomly for allocation.
 II. Properties of a basic feasible solution
1. The allocation made must satisfy the rim requirements, i.e., it must satisfy
availability constraints and requirement constraints.
2. It should satisfy non negativity constraint.
3. Total number of allocations must be equal to (m + n – 1), where 'm' is the
number of rows and 'n' is the number of columns. Consider a value of m = 4 and
n = 3, i.e. 4 × 3 matrix. This will have four constraints of ≤ type and three
constraints of ≥ type. Totally it will have 4 + 3 (i.e m + n) inequalities. If we
consider them as equations, for solution purpose, we will have 7 equations. In
case, if we use simplex method to solve the problem, only six rather than seen
structural constraints need to be specified. In view of the fact that the sum of the
origin capacities (availability constraint) equals to the destination requirements
(requirement constraint) i.e., b i Σ = Σdj, any solution satisfying six of the seven
constraints will automatically satisfy the last constraint. In general, therefore, if
there are 'm' rows and 'n' columns, in a given transportation problem, we can
state the problem completely with m + n – 1 equations. This means that one of
the rows of the simplex tableau represents a redundant constraint and, hence,
can be deleted. This also means that a basic feasible solution of a transportation
problem has only m + n – 1 positive components. If b Σ = Σdj, it is always
possible to get a basic feasible solution by North-west corner method, Least
Cost cell method or by VAM
Maximization case of Transportation Problem
• Basically, the transportation problem is a minimization problem, as the
objective function is to minimize the total cost of transportation.
Hence, when we would like to maximize the objective function. There
are two methods.
• (i) The given matrix is to be multiplied by –1, so that the problem
becomes maximization problem. Or ii) Subtract all the elements in the
matrix from the highest element in the matrix. Then the problem
becomes maximization problem. Then onwards follow all the steps of
maximization problem to get the solution. Let us consider the same
problem solved above.
What is degeneracy in transportation
problem- A note
• In the context of a transportation problem, degeneracy occurs when the basic
feasible solution has fewer positive allocations (occupied cells) than the sum of
the number of origins (m) and destinations (n) minus one, i.e., less than m + n -
1. This is also known as the Rim condition.
• A transportation problem is said to be degenerate if the total number of allocations
is less than m + n - 1. In other words, the supply and demand constraints are not
fully binding, leading to redundant allocations.
• To resolve degeneracy, a small quantity close to zero (often denoted by a Greek
letter ε or Δ) is allocated to one or more unoccupied cells to satisfy the condition
m + n - 1. The cell containing this extremely small quantity is considered to be an
occupied cell.
• It’s important to note that degeneracy can lead to computational difficulties in
solving the transportation problem, and resolving it is crucial for the correct
application of methods like the North-West Corner Rule, Least Cost Method, or
Vogel’s Approximation Method
 Degeneracy in Transportation Problem (176)
• Earlier, it is mentioned that the basic feasible solution of a
transportation problem must have (m + n – 1) basis variables or
allocations. This means to say that the number of occupied cells or
loaded cells in a given transportation problem is 1 less than the sum of
number of rows and columns in the transportation matrix. Whenever
the number of occupied cells is less than (m + n – 1) , the
transportation problem is said to be degenerate. Degeneracy in
transportation problem can develop in two ways. First, the problem
becomes degenerate when the initial programme is designed by
northwest corner or inspection or VAM, i.e. at the stage of initial
allocation only.
• To solve degeneracy at this stage, we can allocate extremely small amount
of goods (very close to zero) to one or more of the empty cells depending
on the shortage, so that the total occupied cells becomes m + n – 1. The cell
to which small element (load) is allocated is considered to be an occupied
cell. In transportation problems, Greek letter ‘∈’ represents the small
amount. One must be careful enough to see that the smallest element
epsilon is added to such an empty cell, which will enable us to write row
number ‘ui’ and column number ‘vj’ without any difficulty while giving
optimality test to the basic feasible solution by MODI method. That is care
must be taken to see that the epsilon is added to such a cell, which will not
make a closed loop, when we move horizontally and vertically from loaded
cell to loaded cell.
• Secondly, the transportation problem may become degenerate during
the solution stages. This happens when the inclusion of a most
favorable empty cell i.e. cell having highest opportunity cost results in
simultaneous vacating of two or more of the currently occupied cells.
Here also, to solve degeneracy, add epsilon to one or more of the
empty cells to make the number of occupied cells equals to (m + n –
1).
Degeneracy in Transportation problem
• During finding of IBFS (Intial Basic Feasible Solution) we make sure
that , the below condition must be met, i.e.,
M+n-1 = no. of allocations
• If somehow, m+n-1 > no. of allocations, it is known as degeneracy
• The degeneracy at transportation problem is formed at two levels:
1. Degenracy at the initial solutions, it happens when, m+n-1 > no. of
allocations
2. It does happen in IBFS stage but may also produced in optimla stage
also.
 Solution to Degeneracy during the initial
stage
S1 S2 S3 AVAILABILITY

F1 8 7 3 60

F2 3 8 9 70

F3 11 3 5 80

REQUIREMENT 50 80 80
Step1: Find IBFS (initial basic feasible solution)
S1 S2 S3 AVAILABILITY

F1 8 7 3 60
60
F2 3 8 9 20
70
50
F3 11 3 5 80
80
REQUIREMENT 50 80 80

• Check for degeneracy-

• m+n-1= 3+3-1= [5 > 4]; there is degeneracy
Resolution of degeneracy :
• We need to allocate an element to one unoccupied cell to nullify
degeneracy.
1. Check for minimum costs in unoccupied cells.
2. Check whether they are at independent position.
• It means to find lowest element where allocations is not made, where
you can allocate maximum resources, in our example it is 5.
Then the table will become
AVAILABILITY
S1 S2 S3

F1 8 7 3 60 60

F2 3 50 8 9 20 70

F3 11 3 80 5 ∆ 80 + ∆
REQUIREMENT
50 80 80 + ∆
• ∆ = equivalent to zero
Then find the min cost
= 3*60 + 3*50 + 9*20 +3*80 + 5 * ∆
= 3*60 + 3*50 + 9*20 +3*80 + 5 * 0
= 750 Rs,
This is IBFS.
Finding optimal solution in Transportation
problem
• Whenever we find an basic feasible solution we get a minimum value
in terms of cost or any other element. The value can be reduced further
if we went far beyond calculation the Basic Feasible Solution of BFS.
• To find whether we can reduce the value obtained in BFS of the
transportation problem. We use two methods, usually known as:
1. MODI method (Modified distribution ) or UV method
2. Stepping stone method
I. MODI Method or UV Method
The modified solution will be given in the
following table
 II. Stepping Stone Method
• We will understand the concept of Stepping stone method by solving
the following the below mentioned example of transportation:
Destinations
Sources
Step 1: check whether the matrix is balanced
or not
• As the supply = demand = 34 , thus we say that the problem is
balanced
 Step 2: Solve the problem using VAM (Vogel’s
Approximation Method)
• We can solve the above problem by any method if not asked, here we
are using VAM to solve the problem:
Supply Penalty

Minimum cost
= 2*3 + 7*2
+ 1*8 +4*7+1*4+2*10
= 80Rs.

Demand
Penalty
Step 3: Check for non-degeneracy and
independency of the allocated cells
• So, m+n-1 = 6 , that is, 3+4-1 = 6, or 6=6 , thus the solution is non-
degenerate
• Also, the allocations are independent.
• Thus, we can apply optimality procedure to the following problem.
Step IV: Apply Stepping stone method to the
matrix as below (iteration 1):
The new modified matrix will be as below:

Here , minimum value will be :

= 2*5+ 3*2+ 1*6+ 4*7+ 1*2+ 2*12
= Rs. 76
Checking whether the optimality conditions
can be applied to the matrix in iteration 1
• So, m+n-1 = 6 , that is, 3+4-1 = 6, or 6=6 , thus the solution is non-
degenerate
• Also, the allocations are independent.
• Thus, we can apply optimality procedure to the following problem.
Iteration 2: Now applying optimal condition
on the below matrix
Checking whether the optimality conditions
can be applied to the matrix in iteration 2
• So, m+n-1 = 6 , that is, 3+4-1 = 6, or 6=6 , thus the solution is non-
degenerate
• But the allocations are not independent.
• Thus, we cannot apply optimality procedure to the following problem.
• In this case our final answer will be Rs. 71.
• END
 Special cases of Linear
Programming: Assignment
Problem
 Assignment Model
• The assignment model looks alike with transportation model with an
objective function of minimizing the time or cost of manufacturing
the products by allocating one job to one machine or one machine
to one job or one destination to one origin or one origin to one
destination only. This type of problem is given the name
ASSIGNMENT MODEL.
• Basically assignment model is a minimization model.
• For solving the assignment problem we use Assignment technique or
Hungarian method or Flood's technique. All are one and the same.
Above, it is mentioned that one origin is to be assigned to one
destination.
Assignment Model must have:
• (i) an objective function,
• (ii) it must have structural constraints,
• (iii) It must have non-negativity constraint and
• (iv) The relationship between variables and constraints must have
linear relationship.
 Definition
• Given n facilities and n jobs and given
the effectiveness of each facility for n
each job, the problem is to assign each
facility to one and only one job so as
to optimize the given measure of
effectiveness.
• The table, represents the assignment of
n facilities to n jobs. Cij is the cost of
assigning ith facility to jth job and Xij
represents the assignment of ith n
facility to jth job. If ith facility can be
assigned to jth job, then Xij = 1,
otherwise zero. The objective is to
make assignments that minimize the
total assignment cost or maximize the
total associated gain.
Why transportation problem cannot be used
to solve assignment cases?

Some more reasons are discussed in the following slides:

 1.The problem structure-Transportation
Problem
• In transportation problems, goods are
transported from multiple sources to
multiple destinations while minimizing
the total transportation cost.
• The problem involves supply and demand
constraints, cost coefficients, and a matrix
representing the cost of transporting
goods from sources to destinations.
• It is a special type of linear programming
problem.
 1.Problem Structure- Assignment Model
• The assignment problem deals with
assigning a set of tasks (jobs) to a set of
workers (agents) in the most efficient
manner.
• It is a special case of transportation
problems where the number of sources and
destinations is equal (i.e., square matrix).
• Each task can be assigned to only one
worker, and each worker can handle only
one task.
• The goal is to minimize the total assignment
cost (e.g., time, distance, or any other
metric).
 2.Matrix dimensions-
• Transportation Problem:
• The transportation problem involves a rectangular cost matrix (m × n), where
m represents the number of sources (supply points) and n represents the number
of destinations (demand points).
• The supply and demand need not be equal.
• Assignment Problem:
• The assignment problem requires a square cost matrix (n × n), where n
represents the number of tasks or workers.
• The capacity of each source and the requirement of each destination are both
taken as 1.
• The supply and demand need to be equal.
3.Degeneracy
• Transportation Problem:
• Degeneracy (having fewer basic variables than expected) is common
in transportation problems.
• The simplex method may encounter difficulties due to degeneracy.
• In degeneracy m+n-1 > no. of allocations
• In non-degeneracy m+n-1= no. of allocations
• Assignment Problem:
• The assignment problem does not suffer from degeneracy because
it has a balanced structure (square matrix).
4.Computational Efficiency:
• Transportation Problem:
• Solving transportation problems using the simplex method can be
computationally inefficient due to the large number of constraints
and variables.
• The transportation method may require an exorbitant computational
effort.
• Assignment Problem:
• The assignment problem, being a special case, is more
straightforward to solve efficiently.
SIMILARITIES BETWEEN TRANSPORTATION
PROBLEM AND ASSIGNMENT PROBLEM
• Now let us see what are the similarities and differences between
Transportation problem and Assignment Problem.
• Similarities:
1. Both are special types of linear programming problems.
2. Both have objective function, structural constraints, and non-
negativity constraints.
3. Both have relationships between variables and constraints are linear.
4. The coefficients of variables in the solution will be either 1 or zero in
both cases.
5. Both are basically minimization problems. For converting them into
maximization problem same procedure is used.
The Hungarian Method for solution of the
assignment problems
• Assignment problem:
Q 1. Determine how task should be allocated to each person so as to
minimize the total man-hours? EMPLOYEES

I II III IV
A 8 26 17 11
TASK
B 13 28 4 26
C 38 19 18 15
D 19 26 24 10
Using Hungarian Method- Row Reduction
1. Subtract the smallest element of each row from every element of that
row. This is known as row reduction
EMPLOYEES

I II III IV
A 0 18 9 3
TASK
B 9 24 0 22
C 23 4 3 0
D 9 16 14 0
 Using Hungarian Method- Column
Reduction
1. Subtract the smallest element of each column from every element of
that column. This is known as column reduction
EMPLOYEES

I II III IV
A 0 14 9 3
TASK
B 9 20 0 22
C 23 0 3 0
D 9 12 14 0
Start assignment
• Check for single zeros only starting with rows first, where you
encounter two zeros leave that row and jump to next row. Once all the
single zeros are assigned in the rows, go with the column, check for
single zeros in each column. If you encounter any single zero in a
column assign it and cancel the zero in the same row of the assigned
zero. The zeros highlighted with yellow are assigned zeros and marked
with red are cancelled zero.

I II III IV
A 0 14 9 3
B 9 20 0 22
C 23 0 3 0
D 9 12 14 0
Check for optimality
• If the no. of assignments = no. of m*n
• i.e., 4 = 4*4
• Then, we can say that our assignment process was performed well.
Also, each and every row must have one assignment.
Answer: Assign values to the subjects and
calculate man hours
• A-I, B-III, C-II, D-IV
•8 4 19 10
• Total man hours = 8+4+19+10= 41 Hrs.
Question 2
• How should the task be allocated one to a man so as to minimize the
total man hours?
MEN

a b c d
A 18 26 17 11
TASK

B 13 28 14 26
C 38 19 18 15
D 19 26 24 10
1. Row Reduction

a b c d
A 7 15 6 0
B 0 15 1 13
C 23 4 3 0
D 9 16 14 0
2. Column reduction

a b c d
A 7 11 5 0
B 0 11 0 13
C 23 0 2 0
D 9 12 13 0
Check for optimality
• That is, no. of assignment = m*n
• But, here, 3 = 4 * 4
• As the optimality condition is not reached , we need to further update
the same, as row fourth ha no assignment we need to improve the
solution
1. Tick the row in which there are no assignment
2. Tick the zero in that row
3. Tick the element which contain the assigned zero in 2nd column
4. Check the unticked rows and ticked column
5. Draw lines through them (no. of zeros is out of the line)
6. Now the element in the matrix is either covered or uncovered by
,lines
 a b c d
A 7 11 5 0 3
B 0 11 0 13
C 23 0 2 0
D 9 12 13 0 • 1

• 2
• Find the smallest no. in the uncovered elements, here it is 5.
• Now the elements which have the line over them, leave them as it is,
the element lying at the intersection of two lines add +5. The elements
which are not covered subtract -5
This will be updated matrix-

a b c d
A 2 6 0 0
B 0 11 0 18
C 23 0 2 5
D 4 7 8 0
• Now, apply optimality condition-
• No. of assignment = m*n
• 4 =4*4
• Thus the optimal assignment will be-
• A-c, B-a, C-b, D-d
⁼ A-III, B-I, C-II, D-IV
⁼ 17 13 19 10
⁼ TOTAL HOURS= 59 hrs
Q3. Solve the following assignment problem
I II III IV V
1 10 5 9 18 11
2 13 9 6 12 14
3 3 2 4 4 5
4 18 9 12 17 15
5 11 6 14 19 10
Answer
• 1-I, 2-III, 3-IV, 4-II, 5-V
Q.4

1 2 3 4
1 5 7 11 6
2 8 5 9 6
3 4 7 10 7
4 10 4 8 3
ANSWER
• 1-1, 2-2, 3-3, 4-4,
• Zmin = Rs.23
Q 4. Assignment problem- Maximization case
• A company has a team of four salesman and there are four districts
where the company wants to start its business. After taking into
account the capabilities of salesmen and the nature of districts the
company estimates that the profit per day in rupees for each salesman
in each district is as below. Find the assignment of salesmen to various
districts which will yield maximum profit.
1 2 3 4
A 16 10 14 11
B 14 11 15 15
C 15 15 13 12
D 13 12 14 15
Solution
• As the problem is of maximization type we will first convert it into
minimization to be solved by Hungarian Method. This will be
achieved by subtracting all the elements of the matrix from the largest
element in it. Thus, subtracting all the elements from the largest
element i.e., 16, the matrix is converted as below:
• 1 2 3 4
A 0 6 2 5
B 2 5 1 1
C 1 1 3 4
D 3 4 2 1
Row reduction

1 2 3 4
A 0 6 2 5
B 1 4 0 0
C 0 0 2 3
D 2 3 1 0
Column reduction
• No change

1 2 3 4
A 0 6 2 5
B 1 4 0 0
C 0 0 2 3
D 2 3 1 0
Assignment

1 2 3 4
A 0 6 2 5
B 1 4 0 0
C 0 0 2 3
D 2 3 1 0
Check for optimality
• Here , no. of allocations = m x n
• Thus, 4=4x4
• As there is one assignment in each row and in each column, optimal
assignment can be made in the current solution. Assignment policy
shall be ,
⁼ A-1, B-3, C-2, D-4
⁼ 16 15 15 15
⁼ Maximum profit for day= Rs. 16+15+15+15 = Rs.61
Q5. Unbalance Assignment problem
Machine M1 M2 M3
Jobs
1 9 26 15
2 13 27 6
3 35 20 15
4 18 30 20
 Machine M1 M2 M3 M4
Jobs
1 9 26 15 0
2 13 27 6 0
3 35 20 15 0
4 18 30 20 0
Row reduction

Machine M1 M2 M3 M4
Jobs
1 9 26 15 0
2 13 27 6 0
3 35 20 15 0
4 18 30 20 0
 Column Reduction

Machine M1 M2 M3 M4
Jobs
1 0 6 9 0
2 4 7 0 0
3 26 0 9 0
4 9 10 14 0
• No. of assignment = mx n matrix
• i.e., 4= 4x4
⁼ 1-M1, 2-M3, 3-M2, 4-M4
⁼9 6 20 0
⁼ 35 Hrs
END
Q 8 Travelling salesmen problem
• Find the solution of the travelling salesman problem.
TO CITY

A B C D
A  4 9 5
FROM
CITY B 6  4 8
C 9 4  9
D 5 8 9 
The salesman problem
• Assuming a salesman has to visit n cities. He wishes to start from a
particular city, visit each city once and return to his starting point. His
objectives is to select the sequence in which the cities are visited in
such a way that his total travelling cost or time is minimized.
• Conditions:
1. No city is to be visited twice before the tour of all cities is completed
2. Going to city i-i is not permitted
Solution- starting with row reduction
• The number of rows and columns are equal so the matrix is balanced.
• Subtract the minimum element in each row from all the elements in its
row.
TO CITY

A B C D
A  0 5 1
FROM
CITY B 2  0 4
C 5 0  4
D 0 3 4 
Column reduction
• Subtract the minimum element in each row from all the elements in its
row.

TO CITY

A B C D
A  0 5 0
FROM
CITY B 2  0 3
C 5 0  3
D 0 3 4 
• As the matrix is 4x4 but the total number of allocations is 3 thus the
optimal solution is not reached. Thus, we will solve to obtain optimal
solution
TO CITY

A B C D
A  0 5 1
FROM
CITY B 2  0 3
C 5 0  3
D 0 3 4 
 TO CITY

A B C D
A  0 5 0
FROM
CITY B 2  0 3
C 5 0  3
D 0 3 4 
• By observing the above table A is visiting D and returing back fro =m
D but not visiting B & C , so in this case. So, the above solution is not
a solution to the travelling salesman problem as he visits each city
only once. So, the next best solution can be obtained by bringing the
minimum non-zero element.
TO CITY

A B C D
A  0 5 0
FROM
CITY B 2  0 3
C 5 0  3
D 0 3 4 
• In the above table, no. of assignment =3 but no. of rows =4, which is
not equal, so the solution is not optimal. Thus we will update the
matrix: TO CITY

A B C D
A  0 5 0
FROM
CITY B 2  0 3
C 5 0  3
D 0 3 4 
 TO CITY

A B C D
A  0 8 0
FROM
CITY B 2  0 0
C 8 0  4
D 0 0 4 
 TO CITY

A B C D
A  0 8 0
FROM
CITY B 2  0 0
C 8 0  4
D 0 0 4 
• By observing the above table A is visiting D and returing back fro =m
D but not visiting B & C , so in this case. So, the above solution is not
a solution to the travelling salesman problem as he visits each city
only once. So, the next best solution can be obtained by bringing the
minimum non-zero element.
TO CITY

A B C D
A  0 8 0
FROM
CITY B 2  0 0
C 8 0  4
D 0 0 4 
• For the above table, the travelling salesman path will be
• A -→B→C→D→A
• Thus the condition is satisfied.
• The optimal solution can be:
• A -→B→C→D→A
• 4 + 4 +9 + 5
• 22 Rs
• END
 UNIT-III
• Special Operation Research Techniques Decision
Theory and Decision tree
• Theory of games, Replacement Theory
• Queuing problems and models
 What is Decision Theory?
• Decision theory provides managers a rational approach in dealing with
problems confronted with partial, imperfect or uncertain future
conditions.
• It is used when a manager has less information about certain
events, for e.g., a manager may approve substantial financial
investment decision with less than complete information. In such case
it become important to choose appropriate decision.
• Each decision has two parts- one is alternatives and other is state of
nature.
 Decision Making Environments
• Decisions are made under four types of environments that differ
according to the degree of certainty. The degree of certainty may vary
from complete certainty to complete uncertainty. The region that lies
in between correspond to decision making under risk.
i. Decision making under conditions of certainty
ii. Decision making under conditions of uncertainty
iii. Decision making under conditions of risk
iv. Decision making under conditions of conflict
1. Decision Making under conditions of
certainty
• In this, only one state of nature exists for each alternative, i.e.,
there is complete certainty about the future.
• It is easy to analyse the situation and make good decision. Since
the decision-maker has perfect knowledge about the future outcomes,
he simply chooses the alternative having optimum payoff.
• For example, an ice-cream manufacturer has perfect knowledge
about increasing its production during summer season.
• Examples include cost-volume-profit analysis when information
about them is certainly and precisely known, linear programming
when resources required, resources available, cost or profit per unit of
the product are known with certainty.
2. Decision making under conditions of
uncertainty
• Here, more than one states of nature exist but the decision maker
lacks sufficient knowledge to allow him assign probabilities to the
various states of nature.
• For example, an ice-cream manufacturer is uncertain about the
demand of ice-cream during rainy season.
3. Decision making under conditions of risk
• Here also, more than one states of nature exist but the decision
maker has sufficient information to allow him probabilities to each
of these states.
• For example, an ice-cream manufacturer has sufficient information
that it will rain less during this monsoon season which will result in
sale of more ice-cream but he is still uncertain about the demand of
ice-cream during monsoon season, as some customers may prefer
buying ice-cream and some may not.
4. Decision making under conditions of
conflict
• Situations exist in which two (or more) opponents with conflicting
objectives try to make decisions with each trying to gain at the cost of
other. Examples include situations such as two players struggling
to win at chess, candidates fighting an election , two enemies
planning war tactics, firms struggling to maintain their market
shares, etc.
• These situations are different since the decision maker is working
against an intelligent opponent. They are called decision making under
conflict of under partial uncertainty. The theory governing these types
of decision problems is called theory of games
Steps in Decision Theory Approach
• The decision theory has four steps. We will discuss the same by taking
an example of manufacturing company-
1. List all the viable alternatives
2. Identify the expected future events
3. Construct a payoff table
4. Select optimum decision criterion
Step 1: List all viable alternatives
• For example , a manufacturing company has the following three
options to fulfil rising demand of extra products:
i. Expand the present plant
ii. Construct a new plant
iii. Subcontract production for extra demand
• These alternatives are termed as courses of actions or simply
actions or acts or strategies and are known to and under the control of
decision maker.
Step 2: Identify the expected future events
• First, its is possible to identify most of the events that can occur; the
difficulty is to identify which particular event will occur. These future
events (not under the control of decision maker) are termed as ‘states of
nature or outcomes’ in decision theory . Of course, out of this, only one of
the events will occur. For manufacturing co., the greatest uncertainty will be
about product demand. The future events related to the demand may be:
i. High demand
ii. Moderate demand
iii. Low demand
iv. No demand
Step 3: Construct a payoff table
• The decision maker now constructs a table representing profit, benefit,
etc., or conditional gain or conditional profit table for each possible
combination of alternative course of action and state of nature. Table
below represents 12 possible payoffs for the manufacturing company’s
expansion decision.

(present plant)
(new plant)
Step 4: Select optimum decision criterion
• Finally, the decision maker will choose criterion which results in
largest payoff. The criterion may be economic, quantitative or
qualitative (e.g., market share, profit, fragrance of perfume. etc)
 Decision Maker under conditions of
Uncertainty
Under conditions on uncertainty, the decision maker has a
knowledge about the states of nature that happen but lacks the
knowledge about the probabilities of their occurrence. Situation like
launching a new product fall under this category. The insufficient data
lead to a more complex decision model and, perhaps , a less satisfactory
solution. However, one uses scientific methods to exploit the available
data to the fullest extent.
Under conditions of uncertainty, a few decision criteria are available
which could be of help to the decision maker and a choice among them
is determined by the company’s policy and attitude of the decision
maker.
 Decision making under conditions of
uncertainty
• Decision criteria are adopted as follows:
1. Maximax (Criterion of optimism)
2. Maximin (Criterion of pessimism/ Wald criterion)
3. Minimax (Savage criterion/ regret)
4. Criterion of realism (Hurwicz criterion)
5. Criterion of rationality (Laplace criterion)
 1. Maximax (Criterion of optimism)
• This criterion provides the decision maker with optimistic criterion.
• Decision maker finds the maximum possible payoff for each possible
alternative and then chooses the alternative with maximum payoff
within this group. The maximax payoff to the company in below
example is Rs.70000/-
2.Maximin Criterion or criterion of pessimism (Wald
criterion)
• In this the decision maker maximizes his minimum payoffs. He finds
first the minimum possible payoff for each alternative and then
chooses the alternative with maximum payoff within this group. The
maximin payoff to the company in below example is –Rs.10000/-
 3. Minimax Regret Criterion (Savage
Criterion)
• The Savage criterion, proposed by Leonard Savage in 1951, is a decision-making
approach that focuses on minimizing regret (or opportunity loss).
• The minimax regret approach aims to minimize the worst-case regret associated with
making a decision worse than the optimal choice, given a specific state of nature.
• The basic steps involved in this are:
1. Determine the amount of regret corresponding to each event for every alternative.
The regret for jth event corresponding to ith alternative is given by ith regret =
(maximum payoff – ith payoff) for the jth event.
2. Determine the maximum regret amount for each alternative.
3. Choose the alternative which corresponds to the minimum of the above maximum
regrets.
Example-Minimax Regret Criterion (Savage Criterion)
4.Hurwicz Criterion (Criterion of realism)
Example- Hurwicz Criterion (Criterion of realism)

Example,
P= 0.8*50,000+ (1-0.8)* (-45000) = 31000/-
 5.Laplace Criterion or Criterion of
Rationality (Bayes’ Criterion)
• This criterion is based upon what is known as the principle of
insufficient reason. Since the probabilities associated with the
occurrence of various events that are unknown , there is not enough
information to conclude that these probabilities will be different. This
criterion assigns equal probabilities to all events of each
alternative decision and selects the alternative associated with the
maximum expected payoff. Symbolically, if n denotes the number of
events and P’s denote the payoffs, then expected value for strategy,
say s1 is-
Example- Laplace Criterion
Example Page 720
Solution
For the given payoff matrix, the values corresponding to pessimistic, optimistic and equal
probability criteria are given below:
Table, below represents the regret for every event and for each alternative calculated
by the expression

maximum possible regrets

Decision Trees
 Introduction
• A decision tree is a graphical representation of the decision process
that indicates-
1. Alternatives
2. States of nature
3. Probabilities attached to the states of nature
4. Conditional benefits and losses
Types of nodes
• Decision node represented by a square .
• State of nature node represented by a circle .
Introduction Decision Tree –in detail
Example-Drawing decision tree and computing
the decision for the following case– Page 765
Calculation of Decision Tree
Question pg 767
Theory Of Games
 Definition of Game Theory
• Game theory is a type of decision theory in which one’s choice of
action is determined after taking into account all possible
alternatives available to an opponent playing the same game, rather
than just by the possibilities of several outcome results.
• For example, in a game involving throwing a dice the player is
aware of the opponent’s alternatives of throwing a dice.
• Game theory analyzes how individuals or entities make decisions
when their outcomes depend on the actions of others.
• It focuses on strategic interactions, where each participant’s choices
affect the outcomes for all participants.
 Characteristics of Game
• Chance or Strategy - If in a game, activities are determined by skill,
it is said to be a game of strategy, if they are determined by chance, it
is a game of chance. In general , a game may involve game of strategy
as well as game of chance.
• Number of person- A game is called an n-person game if the number
of persons playing is n. The person means an individual or a group
aiming at a particular objective.
• Number of activities/actions- These are finite for each player.
• Number of alternatives (choices) available to each person in a
particular activity may be finite or infinite. A finite game has finite
number of activities, each involving a finite number of alternatives,
otherwise the game is said to be infinite.
• Information to the players about the past activities of other
players is completely available, partly available or not available at
all.
• Payoff- A quantitative measure of satisfaction a person gets at the end
of each play is called a payoff. It is a real valued function of variables
in the game.
• Gain- The gain of participant depends not only on his own actions but
also on the action of others. The gain may be positive or negative or
zero. Negative gain is called a loss. The gains (payoff) for each and
every play are fixed and specified in advance and are known to each
player.
 Definition
• Competitive game-
A competitive situation is called a competitive game if it has the
following four properties-
i. There are finite number (n) of competitors (called players).
ii. Each player has a list of finite number of possible activities.
iii. A play is said to occur when each player chooses one of his
activities.
iv. Every combination of activities determines an outcome.
 2. Zero-sum and Non-zero sum game
• Competitive games are classified according to the number of player
involved, i.e., as a two person game , three-person game, etc.
• If the players make payments only to each other , i.e., the loss of one is
the gain of other and nothing comes from outside, the competitive
game is said to be zero-sum game.
• A game which is not zero-sum is called a non-zero sum game.
If in a game there are ‘n’ players and ‘n’
payoff then,
• For ‘n’, players the number of players will be- P1,P2,P,……….Pn.
• Similarly, for ‘n’ payoff the number of players will be- V1,V2
,V3,……Vn.
• Then, the summation for ‘n’ payoff will be:
• σ𝑛𝑖=1 𝑉𝑖 = 0
• Here, Vi ≥ 0,1,2……n
 Strategy
• A strategy for a given player is a set of rules that specifies which of the
available course of action he should make at each play. This strategy may be
of two kinds:
i. Pure strategy- If a player knows exactly what the other player is going
to do, a deterministic situation is obtained and objective function is to
maximize the gain. Therefore, the pure strategy is a decision rule
always to select a particular course of action.
ii. Mixed strategy- If a player is guessing as to which activity is to be
selected by the other on any particular occasion, a probabilistic
situation is obtained and objective function is to maximize the expected
gain.
➢Thus, the mixed strategy is a selection among pure strategies with fixed
probabilities.
Two- person, Zero sum (Rectangular) games
• A game with only two players (say, player A and player B, is called a
‘two person zero sum game’ if the losses of one player are equivalent
to the gains of the other, so that the sum of their net gains is zero.
• Two person, zero sum games are also called as rectangular games, as
these are usually represented by a payoff matrix in rectangular form.)
Payoff- Matrix
• Suppose the player A has ‘m’ activities and the player B has ‘n’ activities.
Then a payoff matrix can be formed by adopting the following rules.
i. Row designations for each matrix are activities available to player A
ii. Column designations for each matrix are activities available to
player B.
iii. Cell entry ‘aij’ is the payment to player A in A’s payoff matrix when A
chooses the activity ‘i’ and B chooses the activity ‘j’.
iv. With a ‘zero sum, two person game’, the cell entry in the player B’s
payoff matrix will be negative of the corresponding cell entry ‘aij’ in the
players A’s payoff matrix so that sum of payoff matrices for player A and
player B is ultimately zero.
Player A’s Payoff Matrix
Player B’s Payoff Matrix
 Example of Throwing a Coin
In a throwing of a coin between two players A and B , there are four
probabilities- HH, TT, HT or TH
PLAYER B
H T

Player H +1 -1 =0
A T -1 +1 =0

Then if HH or TT come then B pays A or if HT or TH come then A pays B.

In both cases the total payout is zero. Thus, it is a two person zero sum game.
 Maximin & Minimax Criteria
✓Maximin criteria
• The player who is maximising (gaining) his outcome or payoff finds
out his minimum gains from each strategy (course of action) and
selects the maximum value out of these minimum gains.
✓Minimax criteria
• In this criterion the minimising (losing) player determines the
maximum loss from each strategy and then selects with minimum
loss out of the maximum loss list.
 Saddle Point
• A saddle point of a payoff matrix is the position of an element in the
payoff matrix which is minimum in its row and maximum in its
column.

• Then the matrix is said to have a saddle point (r,s)

Rules for determining a saddle point
1. Select the minimum element of each row of the payoff matrix and
mark them by ‘0’
2. Select the greatest element of each column of the payoff matrix and
mark them by
3. If there appears an element in the payoff matrix marked by ‘0’ and
both, the position of that element is a saddle point of the payoff
matrix.
 Optimal Strategy

• The course of action which maximizes the profit of a player or

minimizes his loss is called an optimal strategy.
• If the payoff matrix {vij} has the saddle point (r,s) then the players (A
and B) are said to have rth and sth optimal strategies, respectively.
 Value of Game
• The payoff (vrs) at the saddle point (r,s) is called the value of game and
it is obviously equal to the maximin ( v ) and minimax value ( v ) of
the game.
• A game is said to be a fair game if v = =0
• A game is said to be strictly determinable if v = =v.
 RULES FOR GAME THEORY Pg 798
• RULE 1: Look for Pure Strategy (Saddle Point)
• RULE 2: Reduce game by dominance
• RULE 3: Solve for mixed strategy
S.No Method Applicable To
1 Athematic 2 X 2 games
2 Algebraic method/ m X 2 and 2 X n games
Graphical method
3 Simplex Method. Method 3 X 3 or higher games
of Matrices
RULE 1: Look for Pure Strategy (Saddle Point)
Question 1. Solution by finding Saddle Point
Q. Consider a two person zero sum game matrix which represents
payoff to Player A. Find the optimal strategy if any.
PLAYER B
I II III
I -3 -2 6
PLAYER A
II 2 0 2
II 5 -2 -4

Note: if the matrix is given for Player A then, player A known as maximising player and player B
is known as minimising player.
 Step 1: Calculations of Row Minima &
Column Minima
I II III Row Minimum

I -3 -2 6 -3
II 2 0 2 0 Maximin
Value (V)
III 5 -2 -4 -4
Column Maximum
5 0 6

Minimax As V=V=0 , thus, 0 at C22 is the saddle point

Saddle Point Value (V) Also, known as the value of the game.
Step II: Determine the saddle point position
• Saddle point (2,2) → (r,s)
• Value of the game V22 = 0
• Thus, the optimal strategy of player A → II
• And , the optimal strategy of player B → II
RULE 2: Reduce game by dominance
Question 2. Solution when no saddle point is
obtained
Q. Consider a two person zero sum game matrix which represents
payoff to Player A. Find the optimal strategy if any.
PLAYER B
I II III
I 3 -2 4
PLAYER A
II -1 4 2
II 2 2 6

Note: if the matrix is given for Player A then, player A known as maximising player and player B
is known as minimising player.
 Step 1: Calculations of Row Minima &
Column Minima
I II III Row Minimum

I 3 -2 4 -2
II -1 4 2 -1 Maximin
Value (V)
III 2 2 6 2
Column Maximum
3 4 6

Minimax
Value (V)
• As there is no saddle point obtained , thus we will reduce the game by
Rule of Dominance.
• The rule of Dominance is given on next slide.
 I II III Addition
I 3 -2 4 5
II -1 4 2 5
III 2 2 6 10
Addition 4 4 12

We can delete column III as it is dominating column on I. Since all the elements
In the third column are greater than or equal to the corresponding elements in
the first column. Therefore, column III is dominated by column I.
So , we can delete column III. So, the reduced pay-off matrix will be given by
In next slide.
 Reduced matrix, column III deleted
I II
The following matrix is reduced
I 3 -2 to 3 X 2 matrix, , the same can be
solved by graphical method
II -1 4

III 2 2
3. Solve for Mixed Strategy
S.No Method Applicable To
1 Arithmetic 2 X 2 games
2 Algebraic method/ Graphical m X 2 and 2 X n games
method
3 Simplex Method/ Method of 3 X 3 or higher games
Matrices / Dominance
 Arithmetic Method
• A 2 X 2, payoff matrix where there is no saddle point can be solved by
Analytical method, for example-
• Given the matrix:-

• Then value of the game (V):-

With the coordinates:
Q. Solve the following game
 Graphical Method
• The graphical method is used to solve the games whose payoff matrix
has
1. Two rows and n columns (2 * n)
2. m rows and 2 columns (m*2)
• Algorithm for solving 2 * n matrix games-
i. Draw two vertical axes 1 unit apart, the two lines are x1=0, x1=1.
ii. Take the points of the first row in the payoff matrix on the vertical line
x1=1 and the points of the second row in the payoff matrix on the vertical
lines x1=0.
iii. The point aij on axis x1 = 1 then joined to the point a2j on the axis x1= 0 to
give a straight line. Draw ‘n’ straight lines for j=1,2,3,…..r and determine
the highest point of the lower envelop obtained this will be the maximin
point.
iv. The two or more line passing through the maximin point determines the
required 2*2 payoff matrix. This in turn give the optimum solution by
making use of analytical method.
Algorithm for solving m X 2 matrix games-
1. Draw two vertical axes 1 unit apart, the two lines are X1 = 0 and X1 =1.
2. Take the points of the first column in the payoff matrix on the vertical line
X1 =1 and the points of the second column in the payoff matrix on the
vertical line, X1 = 0.
3. The point a1j on axis X1 = 1 is then joined to the point a2j on the axis X1
=0 to give a straight line. Draw ‘n’ straight lines for j=1,2,…..n and
determine the lowest point of the upper envelop obtained, This will be the
minimax point.
4. The two or more lines passing through the minimax point determines the
required 2 X 2 payoff matrix. This in turn gives the optimum solution by
making use of analytical method.
Q. Solve the following game
B1 B2 B3

A1 4 -1 0

A2 -1 4 2
Solution
Q. Solve the following game

B1 B2
A1 -2 0
A2 3 -1
A3 -3 2
A4 5 -4
Solutions for 3x3 or higher games
• We two methods :
1. Solution by Linear Programming (Simplex)
2. Solution by method of matrices
Let the value of the game (to A) be V. We will
view the game from B’s point of view
• Thus, the solution for B’s original problem is obtained as –
• y1 = Y1 * V = 2/5 *2 = 4/5
• y2 = Y2* V= 1/10 * 2 = 1/5
• y3 = Y3* V = 0*2 = 0
• The Optimal strategies for the player A are obtained from the final
table of the above problem. This is given by duality rules:
• X1 = x1/ V , thus x1 = X1 * V
• x1 = X1 * V = 0*2 = 0
• x2 = X2 * V = 0*2 = 0
• x3 = X3 * V = 1/2*2 = 1
• Therefore, optimal strategy of player A (0,0,1)
• Therefore, optimal strategy of player B (4/5, 1/5, 0)
• Value of game , V= 2
Solution by
Method of
Matrices
• END
 UNIT III
Replacement Model
 INTRODUCTION
• The problem of replacement arises when any one of the components of
productive resources, such as machinery, building and men
deteriorates due to time or usage.
• The examples are:
(a) A machine, which is purchased and installed in a production system,
due to usage some of its components wear out and its efficiency is
reduced.
(b) A building in which production activities are carried out, may leave
cracks in walls, roof etc., and needs repair.
(c) A worker, when he is young, will work efficiently, as the time passes
becomes old and his work efficiency falls down and after some time he
will become unable to work.
Loss of efficiency after maintenance
 Loss of efficiency after maintenance
• Once the maintenance is attended, the efficiency may not be regained
to previous level but a bit less than that of previous level.
• For example, if the operating efficiency is 95 percent and due to
deterioration, the efficiency reduces to 90 percent, after maintenance,
it may regain to the level of 93 percent. .
• Once again due to usage the efficiency falls down and the maintenance
is to be attended. This is an ongoing business of the management.
• After some time, the efficiency reduces to such a level, the
maintenance cost will become very high and due to less efficiency
the unit production cost will be very high and this is the time the
management has to think of replacing the facility.
Objective
• The problem of replacement is to decide the best policy in determining
a time at which the replacement is most economical, instead of
continuing at an increased cost.
• The main objective of replacement is to direct the organization in
maximizing its profit (or minimising the cost).
 Decision taken under Replacement
1. We may decide whether to wait for complete failure of the item
(which may result in some losses due to deterioration or to replace
earlier at the expense of higher cost of the item,
2. The expensive item may be considered individually to decide
whether we should replace now or, if not, when it should be
reconsidered for replacement,
3. Whether the item is to be replaced by similar type of item or by
different type for example item with latest technology.
• The problem of replacement is encountered in the case of both men
and machines. Using probability, it is possible to estimate the chance
of death or failure at various ages. The main objective of replacement
is to help the organization for maximizing its profit or to minimize the
cost.
FAILURE MECHANISIM OF ITEMS
• In industrial maintenance term Failure is classified as below:
Gradual failure
• In this class as the life of the machine decreases due to continuous
usage or due to wear and tear of components of the facility, its
efficiency deteriorates due to which the management can experience:
a) Progressive Increase in maintenance expenditure or operating
costs,
b) Decreased productivity of the equipment and
c) Decrease in the value of the equipment i.e. resale value of the
equipment/facility decreases. Examples of this category are:
Automobiles, Machine tools, etc.
 Sudden Failure
• In this case, the items ultimately fail after a period of time.
• The life of the equipment cannot be predicted and is some sort of
random variable.
• Further, sudden failure are of three types:
I. Progressive
II. Retrogressive
III. Random
 I. Progressive failure
• In this case probability of failure
increases with the increase in life
of an item. The best example is
electrical bulbs and computer
components. It can be shown as
in figure
 II. Retrogressive failure
Some items will have higher probability
of failure in the beginning of their life,
and as the time passes chances of failure
becomes less. That is the ability of the
item to survive in the initial period of life
increases its expected life. The examples
are newly installed machines in production
systems, new vehicles, and infant baby
(The probability of survival is very less in
infant age, but once the baby get
accustomed to nature, the probability of
failure decreases). This can be shown as in
figure.
 III. Random failure
• In this class, constant
probability of failure is
associated with items that fail
from random causes such as
physical shocks, not related
to age. In such cases all items
fail before aging has any
effect. This can be shown as in
figure. Example is vacuum
tubes.
 The Bathtub Curve or machine life curve
• Machine or equipment or facility life can be classified into three
stages.
• They are
1. Infant stage,
2. Youth stage or Youth phase and
3. Old age stage or Old age phase.
 a) Infant Stage or Phase
• This is also known as early failure stage. When new equipment is
purchased and installed in the existing system, it has to cope up with the
operating efficiency of the existing system. Also it has to accustom to
operating skill of the operator. Perhaps when a new vehicle is purchased,
due to mechanical conditions of the machine and the operating skill of the
person, the vehicle may give trouble in the early stages. The owner may
have to visit the mechanic many times. It is like a baby, which has come out
from mother's womb. The baby until birth, it was in a controlled atmosphere
and when the birth takes place, it has to get accustom to outside atmosphere.
Hence it cries. Sometimes there is a danger of failure of life. Hence we see
more failures in infant stage. Once an age of 10 to 15 years is reached, the
death rate or failure rates will reduce. In this stage the safety of machine is
covered by the guarantee period given by the manufacturer. This is
represented by a curve on the left hand side of the Bathtub curve.
 b) Youth stage or random failure stage
• In this stage the equipment or machine is accustomed to the
system in which it is installed and works at designed operating
efficiency. Regular maintenance such as overhauling, oiling,
greasing, cleaning keep the machine working. Now and then due to
wear and tear of components or heavy load or electrical voltage
fluctuations, breakdown may occur, which can be taken care of by
repair maintenance. The machine or equipment works for longer
periods without any trouble. This is like youth stage in human life
that is full of vigor and energy and the person will be healthy and work
for longer periods without any diseases. This is shown as a horizontal
line in bathtub curve. Here repair maintenance; preventive
maintenance or other maintenance techniques are used to keep the
machine or equipment in working condition.
c) Old age stage of Old age phase or wear out
failures
• Due to continuous usage and age of the machine, there will be
wear and tear of various components. Not only this, during youth
stage, some of the components might have been replaced due to wear
and tear. These replaced components may not suit well in the system if
they are not from original manufacturer. As the manufacturers are
changing the design, one has to go for spares available in the market.
All this may reduce to operating efficiency of the machine or
equipment and the management has to face frequent failures. This is
very similar to old age in human life. Due to old age, people will get
diseases and old age weakness and many a time they have to go to
hospitals for treatment before the life fails. This is shown on the right
side of the bath- tub curve. Here one will think of replacement of the
equipment or machine.
Summary of three stages of maintenance
 Cost Associated with maintenance
• Our main aim is to find optimal replacement period so as to
minimize the maintenance cost. Hence we are very much interested
in the various cost associated with maintenance. Various costs to be
discussed are:
a) Purchase cost or Capital cost: ( C )
b) Salvage value / Scrap value / Resale value / Depreciation: (S)
c) Running costs including maintenance, Repair and Operating costs:
(a) Purchase cost or Capital cost: ( C )
• This cost is independent of the age of the machine or usage of the
machine.
• This is incurred at the beginning of the life of the machine, i.e. at
the time of purchasing the machine or equipment.
• But the interest on the invested money is an important factor to be
considered.
(b) Salvage value / Scrap value / Resale value
(S)
• As the age of the machine increases, the resale value decreases as
its operating efficiency decreases and the maintenance costs
increases.
• It depends on the operating conditions of the machine and life of the
machine.
(c) Running costs/maintenance/Repair/
Operating costs
• These costs are the functions of age of the machine and usage of
the machine.
• As the usage increases or the age increases, due to wear and tear, many
components fail to work and they are to be replaced.
• As the age increases, failures also increase and the maintenance
costs goes on increasing.
• At some period the maintenance costs are so high, which will indicate
that the replacement of the machine or equipment is essential.
Types of Replacement Problems
I. Replacement Problem when value of money is ignored or does not
change with time
II. Replacement Problem when value of money changes with time
III. Replacement of equipment that fails suddenly
Replacement Policy for Solving Replacement
Problems
• Rule: If the running or maintenance or operating cost of the
machine for the next year is more than the average annual cost of
the selected year, then replace the machine at the end of selected
year.
• Some related terms:
1. C: Capital cost of machine
2. S: Scrap value or resale value of machine
3. N: Number of years the machine would be in use.
4. F(t): Maintenance cost or Running Cost
5. A(n): Average annual cost
6. Total cost= Capital cost – Scrap value + Maintenance cost OR
Depreciation cost + maintenance cost
7. Depreciation cost= Capital cost – scrap value
Type I : Replacement Problem when value of
money is ignored or does not change with time-
Example 1
• Question: The cost of machine is Rs. 61000/- & its scrap value is
Rs.1000. The maintenance cost found from the past experience are as
follows:
Year 1 2 3 4 5 6 7 8
Maintenance
cost in Rs.
1000 2500 4000 6000 9000 12000 16000 20000

• When should the machine be replaced?

Solution
• We are given
1. The maintenance cost in the table,
2. Scrap value= Rs.1000
3. Cost of the machine= Rs. 61000
• In order to determine the optimal time when the machine should be
replaced , we calculate on average annual cost.
• The total cost per year during the life of the machine is shown in the
following table:
1.Year 2.Running 3.Cumulative running 4.Depreciation 5.Total cost (Rs.) 6.Average Annual
cost (Rs.) cost (Rs.) Cost(Rs.) TC= Col. 3 + Col.4 Cost (Rs.)
DC= (C-S) Or Col.6=Col.5/Col.1
C- Capital Cost TC= Cumulative cost +
S- Scrap Value Depreciation cost
1 1000 1000 (61000-1000)= 60000+1000= 61000 61000/1= 61000
60000
2 2500 (2500+1000)= 3500 60000 60000+3500= 63500 63500/2= 31750

3 4000 (4000+3500)= 7500 60000 60000+7500= 67500 67500/3= 22500

4 6000 (6000+7500)= 60000 60000+13500= 73500 73500/4= 18375

13500
5 9000 (9000+13500)= 22500 60000 60000+22500= 82500 82500/5= 16500

6 12000 (12000+22500)= 34500 60000 60000+34500= 94500/6= 15750

(select the year with minimum
94500 annual cost)

7 16000 (16000+34500)= 50500 60000 60000+50500= 110500/7=

110500 15785.71
8 20000 (20000+50500)= 70500 60000 60000+70500= 130500 130500/8= 16312.5
 Answer
From the table it is noted that the average annual cost is minimum in the 6th
year i.e. Rs.15750 and running cost for next year i.e. 7th year is Rs. 16000.
So, according to rule we must replace the machine at the end of selected
year.
Thus, Running cost for next year > Average annual cost for the selected
year
i.e., 16000>15750
Then, we can replace the machine at the end of 6th year.
Type I : Replacement Problem when value of
money is ignored or does not change with time-
Example 2
• A machine cost Rs. 10000. Its operating cost and resale values are
given below:
Year 1 2 3 4 5 6 7 8
Operating 1000 1200 1400 1700 2000 2500 3000 3500
Cost
Resale 6000 4000 3200 2600 2500 2400 2000 1600
Value

• Determine at what time it should be replaced?

 Solution:
• Given, the cost of the machine= Rs. 10000
• To determine the optimal time, when the machine should be replaced ,
we calculate an average annual total cost per year as shown in the
following table.
• Note: Operating cost= running cost
1.Year 2.Running 3.Cumulative 4.Resale 5.Depreciation 6.Total cost (Rs.) 7.Average Annual Cost
cost (Rs.) running cost (Rs.) Value Cost(Rs.) TC= Col. 5 + Col.3 (Rs.)
(S) DC= (C-S) Or Col.7=Col.6 / Col.1
C= Rs.10000/- TC= Cumulative cost
S= Resale Vale + Depreciation cost
(column 4)
1 1000 1000 6000 10000-6000= 4000 1000+5000= 5000 5000

2 1200 1000+1200= 2200 4000 10000-4000= 6000 8200 4100

3 1400 1400+2200= 3600 3200 10000-3200= 6800 10400 3466.7

4 1700 1700+3600= 2600 10000-2600= 12700 3175

5300 7400
5 2000 2000+5300= 7300 2500 10000-2500= 7500 14800 2960

6 2500 2500+7300= 9800 2400 10000-2400= 7600 17400 2900

7 3000 9800+3000= 12800 2000 10000-2000= 8000 20800 2971.4

8 3500 3500+12800= 16300 1600 10000-1600= 8400 24700 3087.5

Answer
• From this table, it is clear that average annual cost is minimum at the
end of the 6th Year , i.e. Rs.2900 than the running cost for the 7th year
i.e. Rs. 3000.
• Running cost of the machine for the next year = Rs.3000
• Average annual cost for selected year = Rs.2900
• i.e 3000> 2900
• Hence, We conclude that the equipment / machine should be replaced
at the end of 6th year.
Type II: Replacement Problem when value of
money changes with time (no salvage value)
• Question: A machine cost Rs.15000/-. The running cost for the
different years are given below:

Year 1 2 3 4 5 6 7
Running 2500 3000 4000 5000 6500 8000 10000
cost

• Find the optimal replacement period if the capital is worth 10% per
annum and has no salvage value.
• Discount rate (V):
• 𝑉 = (1 + 𝑟)−1 ,(where ‘r’ is called rate of interest and V is called discount rate)

• Discount factor, 𝑉 𝑛−1 , here n= no. of years, then the weighted. avg. cost of all previous
‘n’ year:

W(n) = C + ∑ Rn 𝑉 𝑛−1 - Sn 𝑉 𝑛
n=1

∑ 𝑉 𝑛−1
n=1

• W (n) = weighted average cost of all previous ‘n’ year

• C = Capital cost
• Rn = Running cost
• Sn = Salvage Value
• 𝑉 𝑛−1 = Discount factor
Solution
• Since money is worth 10% per year , the discount rate will be
𝑉 = (1 + 10/100)−1 = (1 + 0.1)−1 = 0.9091
• Thus, discount factor will be 𝑉 𝑛−1 , ‘n’ is the number of years
• For n=1, dF= 𝑉 𝑛−1 = (0.909)1−1 = (0.9091)0 = 1
• For n=2, dF= 𝑉 𝑛−1 = (0.909)2−1 = (0.9091)1 = 0.909
• For, n=3, dF= 𝑉 𝑛−1 = (0.9091)3−1 = (0.9091)2 = 0.8264
• For, n=4, dF= 𝑉 𝑛−1 = (0.9091)4−1 = (0.9091)3 = 0.7513
• For n=5, dF= 𝑉 𝑛−1 = (0.9091)5−1 = (0.9091)4 = 0.6830
• For n=6, dF= 𝑉 𝑛−1 = (0.9091)6−1 = (0.9091)5 = 0.6209
• For n=7, dF= 𝑉 𝑛−1 = (0.9091)7−1 = (0.9091)6 = 0.5645
1.Year 2.Running 3. Discount 4.Cumulati 5.Discount 6.Cumulative 7.Total cost 8. Weighted
cost Factor ve Discount Running Cost discount {C+ ∑ Rn Average cost :
(Rn) (𝑉 𝑛−1 ) Factor (Rn 𝑉 𝑛−1 ) running cost 𝑉 𝑛−1 } C + ∑Rn 𝑉 𝑛−1
i (∑ 𝑉 𝑛−1 ) (∑Rn 𝑉 𝑛−1 ) Here, C= ∑ 𝑉 𝑛−1
Rs.15000

1 2500 1 1 2500 2500 17500 17500

2 3000 0.9091 1.9091 2727.3 5227.3 20227.3 10595.2

3 4000 0.8264 2.7356 3306 8533.30 23533.3 8602.60

4 5000 0.75134 3.486 3756.68 12289.98 27289.9 7826.34

5 6500 0.6830 4.169 4439.76 16729.7 31729.7 7610.87

6 8000 0.6209 4.7899 4967.61 21697.3 36697.3 7661.40

7 10000 0.5645 5.3544 5645 2734.4 42342.4 7907.96

Answer
• We observe that the weighted average cost is minimum at the end of
the 5th year (7610.87).
• Weighted average cost for selected i.e., 5th year = Rs.7610.87 and
• Running cost for next year, i.e., 6th year = Rs.8000
• Now, since ,
• Running cost for next year,  Weighted average cost for
selected i.e., 6th year = Rs.8000 i.e., 5th year = Rs.7610.87
Thus, we can replace the machine at the end of 5th year.
Hence, the optimal replacement period is every 5th year or at the end of
fifth year.
Type II: Replacement Problem when value of
money changes with time (salvage value given)
• A machine costs Rs.6000. The running cost and the salvage value at
the end of the year is given in the table below:
Year 1 2 3 4 5 6 7
Running 1200 1400 1600 1800 2000 2400 3000
cost
Salvage 4000 2666 2000 1500 1000 600 600
value

• If the rate of interest is 10% per year, when should the machine be
replaced.
• Discount rate (V):
• 𝑉 = (1 + 𝑟)−1 ,(where ‘r’ is called rate of interest and V is called discount rate)

• Discount factor, 𝑉 𝑛−1 , here n= no. of years, then the weighted. avg. cost of all previous
‘n’ year:

W(n) = C + ∑ Rn 𝑉 𝑛−1 - Sn 𝑉 𝑛
n=1

∑ 𝑉 𝑛−1
n=1

• W (n) = weighted average cost of all previous ‘n’ year

• C = Capital cost
• Rn = Running cost
• Sn = Salvage Value
• 𝑉 𝑛−1 = Discount factor
Solution
• Since money is worth 10% per year , the discount rate will be
𝑉 = (1 + 10/100)−1 = (1 + 0.1)−1 = 0.9091
• Thus, discount factor will be 𝑉 𝑛−1 , ‘n’ is the number of years
• For n=1, dF= 𝑉 𝑛−1 = (0.909)1−1 = (0.9091)0 = 1
• For n=2, dF= 𝑉 𝑛−1 = (0.909)2−1 = (0.9091)1 = 0.909
• For, n=3, dF= 𝑉 𝑛−1 = (0.9091)3−1 = (0.9091)2 = 0.8264
• For, n=4, dF= 𝑉 𝑛−1 = (0.9091)4−1 = (0.9091)3 = 0.7513
• For n=5, dF= 𝑉 𝑛−1 = (0.9091)5−1 = (0.9091)4 = 0.6830
• For n=6, dF= 𝑉 𝑛−1 = (0.9091)6−1 = (0.9091)5 = 0.6209
• For n=7, dF= 𝑉 𝑛−1 = (0.9091)7−1 = (0.9091)6 = 0.5645
• For n=8, dF= 𝑉 𝑛−1 = (0.9091)8−1 = (0.9091)7 = 0.51319
1.Year 2.Running 3. Discount 4.Discount 5.Cumulati 6. Salvage 7. (𝑉 𝑛) 8. Sn 𝑉 𝑛 9.  𝑉 𝑛−1 10. C + ∑ 11. Wn
cost Factor Running ve discount Value (Sn) OR Rn 𝑉 𝑛−1 - OR
(Rn) (𝑉 𝑛−1 ) Cost
running Col 6*7 Sn 𝑉 𝑛 col 10/ col
(Rn 𝑉 𝑛−1 ). 9
OR cost (∑Rn
Col 2*3 𝑉 𝑛−1 ) OR
C+ 5-8
1 1200 1 1200 1200 4000 0.9091 3636.4 1 3563.6 3563.6

2 1400 0.9091 1272.7 2472.7 2666 0.8264 2203.34 1.9091 6269.4 3286.95

3 1600 0.8264 1322.34 3795.08 2000 0.75134 1502.67 2.7356 8292.52 3031.33

4 1800 0.75134 1352.4 5147.48 1500 0.6830 1024.56 3.4869 10122.96 2903.14

5 2000 0.6830 1366.01 6573.49 1000 0.6209 620.9 4.1699 11892.57 2852.01

6 2400 0.6209 1490.19 8003.68 600 0.5645 338.7 4.7908 13664.96 2852.33

7 3000 0.5645 1693.38 9697.06 600 0.51319 307.91 5.3552 15389.25 2873.64
Answer
• We observe that weighted average cost is minimum at the end of 5th year.
• Weighted average cost at 5th year = 2852.01
• Running cost for 6th year = 2400
• 2400 > 2852.01 (False)
• Thus, we can choose next minimum weighted cost, which is at 6th year.
• Again, weighted average cost for 6th year= 2852.33
• Running cost for 7th year = 3000
• 3000> 2852.33 (True)
• Hence, wecan replace the machine at the end of 6th year
Replacement of equipment that fails suddenly
i. Individual replacement policy- under this policy, an item is replaced
immediately after it fails
ii. Group replacement policy- Under this policy, we take decisions as
to when all the items must be replaced, replaced irrespective of the
fact that items have failed or not, with a provision that if any item
fails before the optimal time, it may be individually replaced.
• We have optimal policy-
• Group replacement must be made at the end of tth period if the cost of
individual replacement for the tth period is greater than the average
cost per period through the end of the ‘t’ period
Type III- Replacement Problem equipment
fails suddenly (group replacement cost)
• The following mortality rate have been observed for a certain type of light
bulbs.
Week 1 2 3 4 5
Percent failing
by the end of
10% 25% 50% 80% 100%
week

• There are 1000 bulbs in use and its costs Rs.2 to replace an individual bulb,
which has burnt out. If all the bulbs were replaced simultaneously, it would
cost 50 paise per bulb. It is proposed to replace all bulbs at fixed intervals,
whether or not they have burnt out and to continue replacing burnt out bulbs
as they fail. At what intervals should all the bulbs be replaced?
 Step 1: Let Pi be the probability that a bulb, which
was new when placed in position for use, fails
during ith week of its life
• P1 = 10/100 = 0.1 Week 1 2 3 4 5
• P2 = 25/100 = 0.25-0.1 = 0.15 Percent 10% 25% 50% 80% 100%
failing by
• P3 = 50/100 = 0.5 – 0.25 = 0.25 the end of (10+15) (25+25) (50+30) (80+20)
• P4 = 80/100 = 0.8-0.5 = 0.3 week

• P5 = 100/100 = 1-0.8= 0.2

• Now, P1+P2+P3+P4+P5 = 0.1+0.15+0.25+0.3+0.2 = 1
• Since the sum of probabilities is 1, so all the probability beyond P5 will be
taken as zero.
Step 2: Let Ni be the number of replacement at the end
of the ith week
N0 = Number of items (bulb) in the beginning of first week
= 1000
N1 = N0P1 (Number of items (bulb) at the end of first week)
= 1000* 0.1 = 100
N2 = N0P2 + N1P1 (Number of items (bulb) at the end of second week)
= (1000*0.15) + (100* 0.1) = 150 + 10 = 160
N3 = N0P3 + N1P2 + N2P1 (Number of items (bulb) at the end of third week)
= (1000*0.25) + (100*0.15) + (160*0.1) = 250+15+16 = 281
N4 = N0P4 + N1P3 + N2P2 + N3P1 (Number of items (bulb) at the end of fourth week)
= (1000*0.3)+ (100*0.25)+ (160*0.15)+ (281*0.1) = 377.1
N5 = N0P5 + N1P4 + N2P3 + N3P2+ N4P1 (Number of items (bulb) at the end of Fifth week)
= (1000*0.2)+ (100*0.3)+ (160*0.25)+ (281*0.15)+ (377*0.1) = 350
Step 3: We calculate the expected life of each
bulb
For this, we have given five weeks and probabilities of fail bulb during
each week as calculated in Step 1,
Thus,  iPi
= (1*0.1) + (2*0.15)+ (3*0.25)+ (4*0.3)+ (5*0.2)
= 1.1 + 0.3 + 0.75 + 1.2 + 1
= 3.35 per week Week 1 2 3 4 5
Probability
of failing by
0.1 0.15 0.25 0.3 0.2
the end of
week
Step 4 : calculate average number of failure
per week
Average number of failure per week, i.e., Number of bulbs/ expected
life of each bulb-
= 1000 = 298.50
3.35
= 299 (approx)
Step 5: The cost of individual replacement
per week
• Now , since the replacement of all the 1000 bulbs simultaneously cost
50 paise per bulb and replacement of an individual bulb on failure cost
Rs. 2, the average cost for different group replacement policies is
given below.
• = 299 * 2
• = 598 Rs.
End of Individual Total Cost (individual+ Average cost=
week Replacement group) (Total cost/ week)
1 100 100 * 2 +1000 * 0.5 = 700/1 = 700
200+500= 700
2 100+160= 260 260*2 + 1000*0.5 = 1020/2 = 510
520+500 = 1020
3 260+281 = 541 541*2 + 1000*0.5 = 1582/3 = 527.3
1082+500= 1582
4 541+377 = 918 918*2+1000*0.5 = 2336/4 = 584
1836+500 = 2336
5 918+350 = 1268 1268*2 + 1000*0.5 = 3036/5 = 607.2
2536+500 = 3036
Answer
• Since the average cost is minimum in the 2nd week, the optimal
replacement period to have a group replacement is after every 2nd
week.
• Since the average cost is less than Rs. 598 (step 5) for individual
replacement the group replacement policy is preferable.
 UNIT III
Queuing Theory
 Introduction
• A flow of customers from infinite/finite population towards the service
facility forms a queue (waiting line).
• Why queue forms:
i. When no. of customers exceed no. of server (shopkeeper).
ii. Server (shopkeeper) do not work efficiently and take more time than
prescribed to serve a customer.
 Applications of Queueing Models
1.Retail: Queueing models can help optimize customer flow and reduce
waiting times in retail stores.
2.Telecommunications: They are used to manage network traffic and
optimize data flow.
3.Transportation: Queueing models can help manage traffic flow of
vehicles, aircraft, and people.
4.Finance and Banking: They can be used to manage customer service lines
and optimize banking operations.
5.Logistics: They can help manage and optimize supply chain processes.
6.Emergency Services: Queueing models can be used to manage patient flow
in hospitals and emergency departments.
7.Industrial Engineering: They are used to optimize manufacturing
processes and workflows.
 Queue Model (Queue system)
1
2
Customer . Total
****************** Number Customer
. of departure
Arriving Queue length servers
.
OR
Waiting Line
.
n
Servicing
facility
• We don’t count customers getting service we count customers standing or waiting in line
 Some definitions
• Customer: The arriving unit that requires some services to be
performed is called a customer. The customer may be a person,
machines, vehicles, etc.
• Queue: Stands for the number of customers waiting to be serviced.
This does not include the customer being serviced.
• Service facility: The process or system that provides services to the
customers is termed as service channel or service facility.
Elements of Queuing system (Structure of a
Queuing system)
• A queue system can be completely described by:
1. The Input or arrival (Arrival pattern) distribution
2. The output or departure (service) distribution
3. Service channels
4. The service mechanism/discipline (service pattern)
5. Maximum number of customer allowed in the system
6. The queue discipline
7. Customer’s behaviour
 (1) The input (Arrival pattern)
• Input describe the way in which the customers arrive and join the
system. Generally, customers arrive in a more or less random
fashion, which is not possible to predict.
• Thus, the arrival pattern can be described in terms of probabilities, and
consequently the probability distribution for inter-arrival time (the
time between two successive arrivals) must be defined.
• We deal with those queueing system in which the customers arrive
in Poisson fashion.
• Arrivals may also be represented by the inter-arrival time, which
is the period between two successive arrivals.
 Poisson distribution
• The Poisson distribution is a discrete probability distribution that
expresses the probability of a given number of events occurring in a
fixed interval of time if these events occur with a known constant
mean rate and independently of the time since the last event.
• Suppose a shopping mall receives an average of 12 customer per hour.
This is our rate (λ) which is 12. Now, if we want to find out the
probability of receiving exactly 15 customer in the next hour, we can
use the Poisson formula:
 (2) The output or departure (service)
distribution
• It represents the pattern in which the number of customers leave the
service facility.
• It can also be represented by the service (inter-departure) time
which the time period between two successive services.
 (3)Service channels
• A queuing system may be called as one server model , when the
system has only one server only and a multi-server model when the
system has a number of parallel channels each with one server.
• Example of single server: A doctor’s clinic
• Example of multi server (parallel): A barber’s shop
• Example of multi server (series): A product manufacturing in a
factory in sequence.
 (4) The service Mechanism/discipline
• This means, the arrangement of service facility to serve customers.
• If there is an infinite no. of servers, then all the customers are served
instantaneously on arrival, and there will be no queue.
• If no. of servers is finite then the customers are served according to
the specific order, with service time as a constant or random variable.
(5)Maximum number of customer allowed in
the system
• Maximum number of customer in the system can be either finite
or infinite.
• In some facilities, only a limited number of customers are allowed in
the system and new arriving customers are not allowed to join the
system unless the number becomes less than the limiting value.
 (6) The Queue discipline
• It is a rule according to which the customers are selected for service
when a queue has been formed. The most common discipline are:
a) First come first serve (FCFS) or FIFO
b) Last Come First Serve LCFS or LIFO
c) SIRO (Service In Random Order)
d) Priority
 (7) Customer’s Behaviour
• The customers generally behave in the following ways
a. Patience- the customer will wait patiently for his or her time to come in a
queue
b. Impatience:
i) Balking- when customer came, see the queue but never join it
ii) Reneging- when customer came, see the queue and join it but
leave after few minutes
iii) Jockeying- When customers switches the queue in search for a
shorter queue. He or she is not leaving the queue but only changing or
switching the line.
 Operating Characteristic of Queue System
i. Queue length (Lq) = The average no. of
customer in the queue waiting to get service.
This excludes the customers being served
ii. System Length (Ls)= The average number of
customers in the system including those waiting
as well as those being served.
iii. Waiting time in the queue (Wq)= The average
time for which a customer has to wait in the
queue to get service.
iv. Waiting time in the system (Ws)= The average
total time spent by a customer in the system from
the moment he arrive till he leave the system. It
is taken to be the waiting time plus the service
time.
v. Mean Arrival Rate (): No. of customer
arriving per unit of time
vi. Mean Service rate (): No. of customer served
per unit of time
(vii)Traffic Intensity (or utilization factor):
Denoted by  (rho).
• It is the proportion of the time a server actually spends with the
customers.
• It is the ratio of mean arrival rate and mean service rate.
Traffic intensity () = Mean arrival rate
Mean service rate
Or =

• The unit of traffic intensity is Erlang.
(viii) Transient state and steady state
• A system is said to be in transient state when its operating
characteristics are depending on time.
• A steady state system is the one in which the behaviour of the
system is independent of time.
• Let Pn (t) denote the probability that there are ‘n’ customers in the
system, at time t. Then in steady state,
Lim Pn (t) = Pn (independent of t)
t 
 Kendall’s Notation for Representing Queue
Models
• Generally, queueing model may be completely specified in the
following symbol (a/b/c) : (d/e) where,
a=arrival (inter-arrival) distribution
b=departure (or service time) distribution
c=number of parallel channels (or service stations)
d=capacity of system i.e., max no. of customer allowed in the system (in
service and waiting)
e=queue discipline (FCFS, LIFO)
Symbol used for ‘a’ & ‘b’ (arrival &
service distribution rate)
• M – Markovian (Poisson) arrival or departure distribution or
exponential inter arrival or service time.
• Ek – Erlang or gamma interval or service time distribution with
parameter K.
• GI- General independent arrival distribution
• D- Deterministic interval or service time
• G- General departure distribution
• Symbol used for ‘c’ (no. of channel):
• 1 – Single server
• S – Fixed no. of server
•Symbol used for ‘d’ (capacity of system):
•  → Infinite no. of customer
• N → Finite no. of customer

•Symbol used for ‘e’ (queue discipline):

• FCFS → First come first serve
• LCFS → Last come first serve
• SIRO → Service in random order
• GD → General discipline
Classification of Queueing Models:
• The queueing models are classified as follows:
1. Model I : (M/M/1) : (/ FCFS): (birth death model) This denotes
Poisson arrival, Poisson departure, single server, Infinite capacity
and First come first serve discipline.
2. Model II: (M/M/1) : (N/FCFS): This denotes Poisson arrival,
Poisson departure, single server, capacity of system is limited
(finite), FCFS discipline.
3. Model III: Multiservice Model (M/M/S) : (/FCFS): This model
takes the no. of service channel as S (multiple channel).
4. Model IV: (M/M/S) : (N/FCFS): This model is same as model II,
except that the maximum no. of customer in the system is limited to
N (N>S).
 UNIT IV
• Job Sequencing Models and Solutions
• Network scheduling by PERT & CPM (Introduction &
application)
• Network Analysis
• Time Estimation
• Probabilistic estimation
 Introduction
• Sequencing problems in operations research are concerned with
finding an optimal order (sequence) for a series of jobs to be done on a
finite number of service facilities, such as machines.
• The main goal is to optimize some efficiency measure, such as total
elapsed time, overall cost, or uniform resource utilization
 Sequencing Problems
• Type I: Problems with n jobs through 2 machine
• Type II: Problems with n jobs through 3 machine
• Type III: Problems with n jobs through K machine
• Type IV: Problems with 2 jobs through K machine
 Type I: Problems with n jobs through 2
machine

Jobs 1 2 3 ……………… n
Machine A A1 A2 A3 ……………… An
Machine B B1 B2 B3 ……………… Bn

Here, A1,A2……….An are processing time for machine A for all

individual jobs
And B1,B2,B3……Bn are processing time for machine B for all
individual jobs
We need to minimize the total elapsed time
 Johnson’s Algorithm
• Step 1: Select the least processing time occurring in the list A1, A2, A3…..An and
B1,B2,B3…...Bn.
• Step 2: If the shortest processing time is for machine A then place it in the
beginning of the sequence. If it is for machine B then place it in the end of the
sequence.
• Step 3: when there is a tie in selecting the minimum processing time, then there
may be three solution:.
a. If equal minimum values occur only for machine A, select the Job with smallest
processing time in B to be placed first in the Job sequence.
b. If the equal min. value occur only for machine B, select the Job with smallest
processing time in A to be placed last in the Job sequence.
c. It there are equal min. values one for each machine , then place the job in
machine A first and one in the machine B last.
• Step 4: Delete the job already sequenced. If all the job have been sequenced, go to
the next step other wise repeat step1 to 3.
• Step 5: Determine the overall or total elapsed time and sloe idel time on machine
A and Machine B.
Principal assumptions
1. No machine can process more than one operation at a time
2. Each operation once gets started must be performed till completion
3. There is only one machine of each type
4. The time required to transfer the jobs between machines is
negligible.
Q. Find the sequence that minimizes the total elapsed time in hours required to
complete the following tasks on two machine

Task A B C D E F G H I
Machine 2 5 4 9 6 8 7 5 4
I
Machine 6 8 7 4 3 9 3 8 11
II
Solution
Below is the sequence of the tasks for machine I and machine II

A C I B H F D G E
Machine I Machine
→ II
Finding the total elapsed time and idle time
for each machine
JOBS MACHINE I MACHINE II
In Out In Out
A 0 2 2 8
C 2 6 8 15
I 6 10 15 26
B 10 15 26 34
H 15 20 34 42
F 20 28 42 51
D 28 37 51 55
G 37 44 55 58
E 44 50 58 61

Answer
Total elapsed time = 61 hours
Idle time for machine I= 61-50 = 11hours
Idle time for machine II= (61-61)+2 = 2 hours
Type II: Problems with n jobs through 3
machine
• Q. Determine the sequence that will minimize the total elapsed time
also find idle time of all machine.

Job 1 2 3 4 5 6
Machine 3 12 5 2 9 11
A
Machine 8 6 4 6 3 1
B
Machine 13 14 9 12 8 13
C
Convert the problem into two machine problem
and then solve using Johnson’s Algorithm
Step 1: find the minimum processing time for the first and last machine and
maximum processing time for the second machine, i.e., find Min (Ai,Ci) and
Max (Bi) [i= 1,2,3,…….n]
Step 2: Check the following inequality (Min Ai ≥ Max Bi ) or (Min Ci ≥ Max
Bi )
Step 3: If none of the inequalities in step 2 are satisfied , this method cannot
be applied
Step 4: If atleast one of the inequalities in step 2 are satisfied, we defined two
machines G and H, such that the processing time on G and H are given by,
Gi = Ai + Bi i= 1,2,3,……n
Hi = Bi + Ci
Step 5 : For the converted machines G and H , we obtained the optimum
sequence using two machine algorithm.
Step 1: find the minimum processing time for the first and last
machine and maximum processing time for the second
machine, i.e., find Min (Ai,Ci) and Max (Bi) [i=
1,2,3,…….n]

• So, we have Job 1 2 3 4 5 6

✓Min (A) = 2 Machine A
3 12 5 2 9 11
✓Min (C) = 8 Machine B
8 6 4 6 3 1
✓Max (B) = 8 Machine C
13 14 9 12 8 13
Step 2: Check the following inequality (Min
Ai ≥ Max Bi ) or (Min Ci ≥ Max Bi )
• We have
i. Min (A) ≥ Max (B) = 2 ≥ 8 which is false
ii. Min (C) ≥ Max (B) = 8 ≥ 8 which is true
Step 3: If none of the inequalities in step 2 are
satisfied , this method cannot be applied
• But the inequality (ii) is justified, then we will proceed to step 4
Step 4: If atleast one of the inequalities in step 2 are satisfied, we
defined two machines G and H, such that the processing time on G and
H are given by,
Gi = Ai + Bi i= 1,2,3,……n
Hi = Bi + Ci
• Thus, we will formulate two new machines, G= A+B and H= B+C
Job 1 2 3 4 5 6
G 11 18 9 8 12 12
H 21 20 13 18 11 14
Job 1 2 3 4 5 6
Machine
A
3 12 5 2 9 11
Machine
B
8 6 4 6 3 1
Machine
C
13 14 9 12 8 13
• Step 5 : For the converted machines G and H , we obtained the
optimum sequence using two machine algorithm.

4 3 1 6 2 5
Machine G → Machine H
Here, we will find the total estimate time for A, B and C
• To minimum total elapsed time and idle time for machine A, B and C-
Jobs Machine A Machine B Machine C
Sequence IN OUT IN OUT IN OUT
4 0 2 2 (+6) 8 8(+12) 20
3 2 (+5) 7 8 (+4) 12 20 (+9) 29
1 7 (+3) 10 12(+8) 20 29 (+13) 42
6 10 (+11) 21 21 (+1) 22 42 (+13) 55
2 21 (+12) 33 33 (+6) 39 55 (+14) 69
5 33 (+9) 42 42 (+3) 45 69 (+8) 77

Hence, total elapsed time = 77 units

Idle time for machine A = (77-42)= 35 units
Idle time for machine B = (77-45)+2+1+11+3 = 49 units
Idle time for machine C = (77-77)+8 = 8 units
 Type III: Problems with n jobs through K
machine
Q.Four Jobs are to be processed on each of the 5 machines. Find the total
minimum
Elapsed time if no passing of jobs is permitted. Also, find the idle time for
each machine
Machines Jobs
I II III IV
A 7 6 5 8
B 5 6 4 3
C 2 4 5 3
D 3 5 6 2
E 9 10 8 6
Convert the question into n job 2 machine
problem and then solve using Johnson’s algorithm
Step 1: Find Min. M1 and Min Mk and Max. of each M2, M3,…. Mk-1 (Mk is the last
machine)
Step 2: Check whether
Min M1 ≥ Max Mj or (j=2,3,…..k-1)
Min Mk ≥ Max Mj
Step 3: If the inequalities in step 2 are not satisfied , the method fails otherwise go to next
step.
Step 4: In addition to step 2, if M2+M3+…….Mk-1 = Cm where C is positive constant for
all i= 1,2,….n. Then determine the optimal sequence for ‘n’ jobs, where two machines are
M1 and Mk by using the optimal sequence algorithm.
Step 5: If the condition M2+M3+……+Mk-1 ≠ C, we define two machine G and H , such
that
Gi = M1+M2+………..Mk-1
H = M2+M3+………..Mk
Determine the optimal sequence using two machine algorithm or Johnson algorithm
 Solution
Since the problem is to be sequenced on five machines, we convert the problem into a two
,machine problem.
Min (A) = 5,
Machines Jobs
Min (E)=6
I II III IV
Max (B, C, D) = (6,5,6)
A 7 6 5 8
➢Min (A) ≥ Max (6,5,6)---False
B 5 6 4 3
➢Min (E) ≥ Max (6,5,6)---True
C 2 4 5 3
As 6 ≥ 6
D 3 5 6 2
• Since, Bi + Ci + Di = B1+C1+D1 = 10
E 9 10 8 6
B2+C2+D2 = 15
as Bi + Ci+ Di ≠ C
We define two machines G and H such that ,
G = A+B+C+D
H= B+C+D+E
Convert the ‘m’ machine problem to 2
machine problem
Jobs 1 2 3 4
G 17 21 20 16
H 19 25 23 14

Optimal sequence is-

1 3 2 4

Machine G Machine H
Find the total elapse and idle time
Machine A Machine B Machine C Machine D Machine C
JOBS
IN OUT IN OUT IN OUT IN OUT IN OUT

1 0 7 7 (+5) 12 12 14 14(+3) 17 17(+9) 26

(+12)
3 7 (+5) 12 12(+4) 16 16 (+5) 21 21(+6) 27 27(+8) 35

2 12(+6) 18 18(+6) 24 24(+4) 28 28(+5) 33 35(+10) 45

4 18(+8) 26 26(+3) 29 29(+3) 32 33(+2) 35 45(+6) 51

Total elapse time = 51 hrs

Idle time for machine A= (51-26)=25 h
Idle time for machine B = (51-29)+7+2+2=33h
Idle time for machine C = (51-32)+12+2+3+1 = 37h
Idle time for machine D = (51-35)+14+4+1 = 35h
Idle time for machine E = (51-51)+17+1 = 18
 Type IV- 2 Job m Machine sequencing
• Use graphical method to minimize the time needed to process the
following jobs on the machines shown below. Also, calculate the total
time need to complete both the Jobs

Job 1 Sequence A B C D E
of
machine 3 4 2 6 2
time
Job 2 Sequence B C A D E
of
machine 5 4 3 2 6
time
Steps for 2 jobs m Machine
• Each machine can perform only one job at a time. The objective is to
determine the optimal sequence of processing the jobs so as to
minimize the total elapsed time.
• The optimal sequence in this case can be obtained by making use of
the graph.
• The procedure is given in the following steps:
• Step 1: First draw a set of axes, where the horizontal axis represents
processing time on Job 1 and the vertical axis represents processing
time on job 2.
• Step 2: Mark the processing time for job 1 and job 2 on the horizontal
and vertical lines respectively, according to given order of machines.
• Step 3: Construct various blocks starting from the origin (starting
point), by pairing the same machines until the end point.
• Step 4: Draw the line starting from the origin to the end point by
moving horizontally, vertically and diagonally along a line which
makes an angle of 45 degree with the horizontal line. The horizontal
segment of this line indicates that the first job is under process with
seconds job idle similarly, the vertical line indicate that the second job
is under process while first is idle. The diagonal segment of the line
shows that the jobs are under process simultaneously.
• Step 5: An optimal path is the one that minimizes the idle time for both
the jobs. Thus we must choose the path on with diagonal movement is
maximum.
• Step 6: The total elapsed time is obtained by adding the idle time for
either job to the processing time for that job.
 UNIT IV
• Job Sequencing Models and solutions
• Network scheduling by PERT & CPM
(Introduction and application)
• Network analysis
• Time estimation
• Probabilistic estimation
Network scheduling by PERT & CPM
(Introduction and application)
 Project- An Introduction
• A project defines a combination of interrelated activities which must be
executed in a certain order before the entire task can be completed.
• let’s consider a simple project that involves the construction of a house. The
project can be broken down into the following tasks:
1.Designing the house (Task A)
2.Getting the necessary permits (Task B)
3.Laying the foundation (Task C)
4.Building the main structure (Task D)
5.Installing the roof (Task E)
6.Finishing the interior (Task F)
7.Landscaping (Task G)
 Basic requirements of each project
• Each project, whether big or small, has three basic requirements:
i. It should be completed without any delay
ii. It should use available man power and other resources as small as possible
iii. It should involve a small investment as possible
 Phases of Project Management :
1. Project planning
2. Project scheduling
3. Project controlling
➢ Out of these three phases, the first two are accomplished before the
start of the actual project. The third phase comes into operation during
the execution of the project. It highlights the bottlenecks during
execution of the project and spells out measures to remove bottlenecks
& complete the project in time.
➢The network techniques of PERT and CPM are valuable during all the
three phases of project management.
 Project Planning
• Planning – planning phase is started by splitting the total project into small
projects-→Activities →Analyse by dept. or section.
• Project planning is an important phase during which are set the plans and
strategies of project execution, keeping in mind the politics, procedures and
rules of the organisation. It has two important aspects – identification of
the activities (jobs & tasks) to be performed and estimation of the
required resources.
• In planning we:
1. Divide the project into distinct activities
2. Estimate time requirement for activities
3. Establish precedence relationship
4. Construct arrow diagram
Examples of project planning
• Resources of many kinds and are classified as:
1. Manpower resources
2. Equipment (machinery) resources
3. Financial resources
4. Material resources
5. Time & space resources
 Project Scheduling
• Scheduling- Objective of the scheduling phase is to prepare a time
chart showing the start and finish times for each activity as well as
its relationship to other activities of the project.
• In other words, scheduling is the preparation of the time table of the
implementation of the activities and computation of resources required
at different stages of time.
• In scheduling we:
• Determine the start and end time for activity
• Determine the critical path on which the activity required attention
• Determine the slack and float for non-critical path.
 Project Controlling
• Controlling phase is the follow up of the planning and scheduling
phases.
• While planning and scheduling are undertaken before the actual
project starts, the controlling phase is undertaken during the actual
execution of the project.
• In controlling we:
1. Make the periodical progress report
2. Review the progress
3. Analyse the status of the project
Techniques of project Management
i. PERT- Project evaluation and review technique
ii. CPM- Critical Path Method
Representation of a network nodes and
activity
 Network diagram
• It is the graphical representation of logically and sequentially
connected arrows and modes representing activities and events of a
project.
1. Activity: Activity – Any individual operation or jobs or task. It
represent some action and is a time consuming effort necessary to
complete a particular part of overall project.
 Types of activity
1. Preceding activity: Activity that must be accomplished before a
given event can occur.
2. Succeeding activity: Activity that cannot be accomplish until an
event has occurred.
3. Concurrent activity: Activity taking place at the same time or in the
same location.
4. Dummy activity: Activity which neither consume time nor resources
but are used simply to represent a connection or a link between the
events are known as dummies. It is shown in a network by dotted
lines.
• Predecessor
• Successor
B is successor to A
• Concurrent A is predecessor to B
B & C are known as concurrent
• Dummy activity as its starting point is
same
2. Event – The beginning and end point of an activity are called events
or nodes.
• Merge
• Burst
• Merge & burst

Common point of
Two or more events
 Dummy activity
• In the below network diagram activity D is successor to activity B and
C , that means activity D cannot start until the completion of B & C, as
C has no direct connection to activity D we will introduce a dummy
activity D1(x). Dummy activity is used when we need to assume an
activity , here in this case it is D1(x):
• 3. Sequencing – maintaining the precedence relationship
 Numbering the events (Fulkerson’s rule)
1.The starting event, the event having no predecessor activity, is numbered as
1.
2.Other events are numbered in increasing order from left to right.
3.If there are more than one initial event found in the diagram, they are to be
numbered from top to bottom in increasing order.
4.No two events can have the same number in any case.
5.All the activities emerging out from an event in the diagram are overseen. If
one or more initial events having no predecessor activities are found,
number these events according to rule 1.
6.Follow rule 2 for newly numbered events and so on until the event having
no activity emerging out from it is found. That event is numbered as the
highest one in the diagram
 Common Errors in Drawing Networks
• 1. Dangling- To disconnect an activity before the completion of all
activities in a network diagram is known as dangling
• Looping (or cycling)- Drawing an endless loop in a network is known
as an error of looping.
• Redundancy- Unnecessarily inserting the dummy activity in a network
logic is known as the error of redundancy.
Network Diagram Construction
• Rules for drawing Network:
1. Each activity is represented by one and only one arrow in the
network.
2. No two activities can be identified by the same start and end events.
3. In order to ensure the correct precedence relationship in the arrow
diagram following questions must be checked:
i. What activity must be completed immediately before a particular
activity starts?
ii. What activities follow this?
iii. What activities must be performed concurrently with this?
Suggestions
1. Time flows left to right
2. Arrows should be kept straight and not curved
3. Use dummies freely in rough draft but final network should not have
any redundant dummies
4. Arrows should not cross each other where crossing cannot be
avoided bridging should be done
5. In a network diagram there should be only one initial event and one
end event
Network Diagram Construction
• Q1.Draw the network diagram for the project whose activities and
their precedence relationship are as given below:
Activity Predecessor Activity
A -
B A
C A
D B
E C
F D,E
Q2.Draw the network diagram for the project
whose activities and their precedence relationship
are as given below:
Activity Predecessor Activity
A -
B -
C A
D A
E B
F C
G D,E
• Q3. A project consists of a series of tasks labelled A,B,……..H,I with
the following relationships (w < x, y; means x and y cannot start
until w is completed; x, y < w means w cannot start until both x
and y are completed) with this notation construct the network
diagram having the following constraints.
• A< D,E; B,D < F; C<G ; B<H ; F,G ,I
Solution
ACTIVITY PREDECESSOR ACTIVITY
D A
E A
F B, D
G C
H B
I F,G
Raw diagram
Final
Q4. Draw the network diagram for the following
using AOA (Activity on Arrow) & AON (Activity
on Node)
ACTIVITY PREDECESSOR
A -
B -
C -
D A,B
E B
F B,C
Q5. Draw the network diagram for the following
using AOA (Activity on Arrow) & AON (Activity
on Node)
ACTIVITY PREDECESSOR ACTIVITY
A -
B A
C A
D B
E B,C
F C
G D,E,F
Draw a network for the following project:

• A is the start event and K is the end event

• A proceeds event B
• J is the successor event to F
• C and D are successor events to B
• D is the preceding event to G
• E and F occur after event C
• E precedes F
• C restraints the occurrence of G and G precedes H
• H precedes J and K succeeds J
• F restraints the occurrence of H.
Q7. Home Work Question
Solution to Q.6
Solution to Q.7
 Time Analysis
• Forward path computation
• Backward path computation
• Determination of floats and slack times
1. Total float
2. Free float
3. Independent float
4. Critical activity
5. Critical path
• Critical path method (CPM)
• Programme Evaluation and Review Technique (PERT)
Time Analysis
• Tij/Dij = estimate completion time of activity
• (Es)ij= Earliest starting time of activity (i,j)
Forward path computation
• (Ef)ij = Earliest finishing time of activity (i,j)

• (Ls)ij = Latest starting time of activity (i,j)

Backward Path computation
• (Lf)ij = Latest finish time of activity (i,j)
 Forward & Backward Path Computation
• Forward path computation :
• Zero be the starting time for the project
• (Ef)ij = (Es)ij+tij
• Ej = Max (Ej+tij)
• Backward path computation:
• E=L
• (Lf)ij = (Lf)ij-tij
• Lj = Min (Ej-tij)
Determination of floats and slack times
• Float: it is defined as the differences between the latest and earliest
activity time.
• Slack : It is defined as the difference between the latest and earliest
event time.
 Determination of Floats and Slack times
• Total float (TF)- total float represents the maximum time within which an
activity can be delayed without affecting the project completion time.
➢(TF)ij= (Latest start –earliest start) for activity (i-j)
➢(TF)ij = (Ls)ij- (Es)ij
Or (TF)ij = (Lj- Ei) – tij
Where, Ei= Earliest time for tail event
Lj= Latest time for head event
tij= Normal time for activity (i,j)
• Free float (FF)– free float is the time by which completion of an
activity can be delayed without delaying its immediate successor
activities.
➢(FF)ij = (Earliest time for event j – earliest time for event i)-
Activity time for (i,j)
• (FF)ij = (Ej-Ei)-tij
• (FF)ij = Total float – head event slack
• Head event slack = Lj-Ej
• Independent Float (IF)- portion of the total float within which an
activity can be delayed for start without affecting the floating of
preceding activities.
➢(If)ij = (Ej-Li)-Dij OR (IF)ij = (Ej-Li)-tij
• (IF)ij = Free float – Tail event slack
• Tail event slack = Li-Ei
• Interfering float (IF)- Part of the total float which causes a reduction
in the floats of the succeeding activities.
➢(Interfering float)ij = (IF)ij-(FF)ij

• Slack – It is the time by which occurrence of an event can be delayed

➢Slack = (latest occurrence time- earliest occurrence time) of event
 CRITICAL PATH METHOD
• The critical path method of a network gives the shortest time in which
the whole project can be completed.
• It is the chain of activities with the longest time duration.
• These activities are called critical activities.
• They are critical in the sense that delay in any of them results in
the delay of the completion of the project.
• There may be more than one critical path in the network and it is
possible for the critical path to run through a dummy.
The critical path analysis consists of the
following steps:
1. Calculate the time schedule for each activity: It involves the
determination of the time by which an activity must begin and the
time before which it must be completed. The time schedule data for
each activity include the calculation of the earliest start, the earliest
finish, the latest start, the latest finish times and the float.
2. Calculate the time schedule for the completion of the entire
project: It involves the calculation of project completion time.
3. Identify the critical activities and find the critical path: Critical
activities are the ones which must be started and completed on
schedule or else the project may get delayed. The path containing
these activities is the critical path and is the longest path in terms of
duration.
Determination of critical path
• Critical event- The events with ‘zero’ slack time are called ‘critical
events’.
• Critical Activity- Since the difference between the latest start time and
earliest start time of an activity is usually called as total float. The
activities with zero total float are known as critical activities.
• Critical path- the sequence of critical activities in a network is called
the critical path. The critical path is the longest path in the network
from the starting event to ending event and defines the minimum time
required to complete the project.
• Critical Activity : An activity is said to be critical , if the total float
(TF)ij for any activity (i,j) is zero.
• Critical path conditions:
i. (ES)i = (LF)i
ii. (ES)j = (LF)j
iii. (ES)j-(ES)i= (LF)j-(LF)i=tij
 Q2. A project schedule has the following
characteristics
ACTIVITY
1-2 2-3 2-4 3-5 3-6 4-5 4-7 5-8 6-8 7-8
A B C D E F G H I J
DURATION
2 8 10 6 3 3 7 5 2 8

1. Construct network diagram

2. Compute the earliest event time and latest event time
3. Determine the critical path and total project duration
4. Compute total, independent and free float for each activity
Activity tij Earliest Latest Float

Start Finish Start Finish Total Free (Ej- Independ Ej Li

ES (Ei) EF=Ei+ti (LS=Lj- LF (Lj) (LS-ES) Ej-tij) ent (Ej-
j tij) Li-Dij)
1-2 2 0 2 0 2 0 0 0 2 0

2-3 8 2 10 8 16 6 0 0 10 2

2-4 10 2 12 2 12 0 0 0 12 2

3-5 6 10 16 16 22 6 0 -6~0 16 16

3-6 3 10 13 22 25 12 0 -6~0 13 16

4-5 3 12 15 19 22 7 1 1 16 12

4-7 7 12 19 12 19 0 0 0 19 12

5-8 5 16 21 22 27 6 6 0 27 22

6-8 2 13 15 25 27 12 12 0 27 25

7-8 8 19 27 19 27 0 0 0 27 19
Critical Path
• Ej- earliest time for head event
• Li- latest time for tail event
Q.A project schedule has the following
characteristics
Activi 1-2 1-3 2-4 3-4 3-5 4-9 5-6 5-7 6-8 7-8 8-10 9-10
ty
Time 4 1 1 1 6 5 4 8 1 2 5 7
(Days)

1. Construct network diagram

2. Compute the earliest event time and latest event time
3. Determine the critical path and total project duration
4. Compute total and free float for each activity
 PERT Program Evaluation
• The following table shows the jobs of a network along with their time estimates:
Activity Estimated duration (weeks)
Optimistic (to) Most likely (tm) Pessimistic time
(tp)
1-2 1 7 13
1-6 2 5 14
2-3 2 14 26
2-4 2 5 8
3-5 7 10 19
4-5 5 5 17
6-7 5 8 29
5-8 3 3 9
7-8 8 17 32
You are required to
1. Draw the project network
2. Find the expected duration and variance of each activity
3. Calculate the earliest and latest occurrence for each event
4. Calculate expected project length
5. Calculate the variance and standard deviations of project length
6. Find the probability of the project completing in 40 days
 Programme Evaluation And Review Technique
(PERT)
• PERT is a probabilistic method, where the activity times are represented by a
probability distribution. This distribution of activity times is based on three
different time estimates made for each activity, which are as follows:
i. Optimistic time estimate (to) {the least time required }
ii. Most likely time estimate (tm) {how much time is required to complete
the activity under normal circumstances}
iii. Pessimistic time estimate (tp) {under worst conditions, what time is
project going to take}
• For these three estimate , we have to calculate the expected time of an
activity:
Variance
• Variance is a statistical measure that tells us how much a set of
numbers is spread out. It’s the average of the squared differences from
the mean. In simpler terms, it gives us an idea of how far each number
in the set is from the average (mean) and thus from every other
number in the set. It’s used to see the variability or spread of a data
set. Variance of an activity is given by -
Expected project duration = 7+14+11+4 = 36 weeks
Critical path = 1-2-3-5-8
Project length variance, 2 = 4 + 16 + 4 + 1 = 25
Project length standard deviation,  = 5
Calculate the standard normal variable:
• Z = Ts-Te , where Ts is the schedule time to complete the project.
• 
• Te = Normal expected project length
•  = Expected standard deviation of the project length
• Thus, the probability that the project will be completed in 40 days is
given by P (Z≤ D)
• D = Ts-Te = 40-36 = 0.8
•  5
• P (z ≤ 0.8) = 0.7881 = 78.81 %
JUNE 2022