MB0048-Unit-01-Introduction to Operations Research Unit-01-Introduction to Operat ions Research Structure: 1.1 Introduction Learning objectives 1.

2 Historical Bac kground Definitions of Operations Research 1.3 Scope of Operations Research 1.4 Features of Operations Research 1.5 Phases of Operations Research 1.6 Types of O perations Research models 1.7 Operations Research Methodology Definition Constru ction Solution Validation Implementation

1.8 Operations Research Techniques and Tools 1.9 Structure of the Mathematical M odel 1.10 Limitations of Operations Research 1.11 Summary 1.12 Terminal Question s 1.13 Answers to SAQs and TQs Answers to Self Assessment Questions Answers to T erminal Questions 1.14 References 1.1 Introduction Welcome to the unit on Operat ions Research Management. Operations Research Management focuses on the mathemat ical scoring of consequences of a decision aiming to optimise the use of time, e ffort and resources, and avoid blunders. The act of obtaining the best results u nder any given circumstances is known as optimising. The key purpose of Operatio ns Research (OR) is to do preparative calculations that aid the decisionmaking p rocess. Now, you will agree that decision-making is a key part of our daily life . The ultimate goal of all decisions is to

maximise benefits and minimise effort and time. OR gives decision makers the pow er to make effective decisions and improve day-to-day operations. Decision maker s consider all the available options, study the outcomes and estimate the risks. In simple situations, you use your common sense and judgement to take decisions . For example, if you are buying a microwave or washing machine, the decisionmak ing process is not very complicated. You can simply compare the price, quality a nd durability of the well known brands and models in the market and take a decis ion based on it. However, in complex situations, although it is possible to take decisions based on ones common sense, a decision backed by mathematical calculat ions reduces the risk factor and increases the probability of success. Some such situations, where decision-makers have to reply on mathematical scoring and rea soning, are finding an appropriate product mix amidst competitors products or pla nning a public transportation netwo`rk in a city. Learning Objectives By the end of this unit, you should be able to: List the significant features of Operation s Research Describe the methodology of Operations Research

 Define the structure of a mathematical model in Operations Research Describe the significance of the function of Operations Research 1.2 Historical Background D uring the World War II, scientists from United Kingdom studied the strategic and tactical problems associated with air and land defense of the country. The aim of this study was to determine the effective utilisation of limited military res ources to win the battle. The technique was named Operations Research. After Wor ld War II, Operations Research techniques were developed and deployed in the dec ision making process in complicated situations in various fields, such as indust rial, academic and government organisations. 1.2.1 Definitions of operations res earch Churchman, Aackoff and Aruoff defined Operations Research as: the applicati on of scientific methods, techniques and tools to operation of a system with opt imum solutions to the problems, where optimum refers to the best possible alternati ve. The objective of Operations Research is to provide a scientific basis to the decision-makers for solving problems involving interaction of various component s of

the organisation. You can achieve this by employing a team of scientists from di fferent disciplines, to work together for finding the best possible solution in the interest of the organisation as a whole. The solution thus obtained is known as an optimal decision. You can also define Operations Research as The use of sc ientific methods to provide criteria for decisions regarding man, machine, and s ystems involving repetitive operations. Self Assessment Questions Fill in the bla nks: 1. The main objective of OR is to provide a _______ ________ to the decisio n-makers. 2. OR employs a team of _________ from _________ __________. 1.3 Scope of Operations Research Any problem, simple or complicated, can use OR technique s to find the best possible solution. This section will explain the scope of OR by seeing its application in various fields of everyday life. i) In Defense Oper ations: In modern warfare, the defense operations are carried out by three major independent components namely Air Force, Army and

Navy. The activities in each of these components can be further divided in four sub-components namely: administration, intelligence, operations and training and supply. The applications of modern warfare techniques in each of the components of military organisations require expertise knowledge in respective fields. Fur thermore, each component works to drive maximum gains from its operations and th ere is always a possibility that the strategy beneficial to one component may be unfeasible for another component. Thus in defense operations, there is a requir ement to co-ordinate the activities of various components, which gives maximum b enefit to the organisation as a whole, having maximum use of the individual comp onents. A team of scientists from various disciplines come together to study the strategies of different components. After appropriate analysis of the various c ourses of actions, the team selects the best course of action, known as the optim um strategy. ii) In Industry: The system of modern industries is so complex that the optimum point of operation in its various components cannot be intuitively j udged by an individual. The business environment is always changing and any deci sion useful at one time may not be so good some time later. There is always a ne ed to check the validity of decisions continuously against the situations. The i ndustrial revolution with increased division of labour and introduction of manag ement responsibilities has made

each component an independent unit having their own goals. For example: producti on department minimises the cost of production but maximises output. Marketing d epartment maximises the output, but minimises cost of unit sales. Finance depart ment tries to optimise the capital investment and personnel department appoints good people at minimum cost. Thus each department plans its own objectives and a ll these objectives of various department or components come to conflict with on e another and may not agree to the overall objectives of the organisation. The a pplication of OR techniques helps in overcoming this difficulty by integrating t he diversified activities of various components to serve the interest of the org anisation as a whole efficiently. OR methods in industry can be applied in the f ields of production, inventory controls and marketing, purchasing, transportatio n and competitive strategies. iii) Planning: In modern times, it has become nece ssary for every government to have careful planning, for economic development of the country. OR techniques can be fruitfully applied to maximise the per capita income, with minimum sacrifice and time. A government can thus use OR for frami ng future economic and social policies. iv) Agriculture: With increase in popula tion, there is a need to increase agriculture output. But this cannot be done ar bitrarily. There are several restrictions. Hence the

need to determine a course of action serving the best under the given restrictio ns. You can solve this problem by applying OR techniques. v) In Hospitals: OR me thods can solve waiting problems in out-patient department of big hospitals and administrative problems of the hospital organisations. vi) In Transport: You can apply different OR methods to regulate the arrival of trains and processing tim es minimise the passengers waiting time and reduce congestion, formulate suitabl e transportation policy, thereby reducing the costs and time of trans-shipment. vii) Research and Development: You can apply OR methodologies in the field of R& D for several purposes, such as to control and plan product introductions. Self Assessment Questions 3. Mention two applications of OR. 4. How can a hospital be nefit from the application of OR methods? 1.4 Features of Operation Research Som e key features of OR are as follows: 1. OR is system oriented. OR scrutinises th e problem from an organisations perspective. The results can be

optimal for one part of the system, while the same can be unfavourable for anoth er part of the system. 2. OR imbibes an interdisciplinary team approach. Since no single individual can have a thorough knowledge of all fast developing scientif ic know-how, personalities from different scientific and managerial cadre form a team to solve the problem. 3. OR makes use of scientific methods to solve probl ems. 4. OR increases effectiveness of the managements decision-making ability. 5. OR makes use of computers to solve large and complex problems. 6. OR offers a q uantitative solution. 7. OR also takes into account the human factors. Self Asse ssment Questions Fill in the blanks: will be measures of efficiency of the syste m, such as the average length of a queue, expected waiting time of a customer an d the average time spent by the customer in the system. In this approach, your s uccess primarily depends on the alternatives considered and not so much on the q ueuing models developed. 5. Transportation model: The transportation model is an important class of linear programs. The model studies the minimisation of the c ost of transporting a commodity from a number of sources to several destinations . The supply at each source and the demand at each destination are known. The ob jective of the model is to develop an integral transportation schedule that meet s all demands from the inventory at a minimum total transportation cost. The tra nsportation problem involves m sources, each of which has available ai (i = 1, 2 , ..,m) units of homogeneous product and n destinations, each of which

requires bj (j = 1, 2., n) units of products. Here ai and bj are positive integer s. The cost cij of transporting one unit of the product from the ith source to t he jth destination is given for each i and j. It is assumed that the total suppl y and the total demand are equal. (1) The condition (1) is guaranteed by creatin g either a fictitious destination with a demand equal to the surplus if total de mand is less than the total supply or a (dummy) source with a supply equal to th e shortage if total demand exceeds total supply. The cost of transportation from the fictitious destination to all sources and from all destinations to the fict itious sources are assumed to be zero so that total cost of transportation will remain the same. 6. In addition to the above there are tools, such as the sequen ce model, the assignment model, and network analysis which you will learn in det ail in later units. Self Assessment Questions State True/False 11. OR methodolog y consists of definition, solution and validation only.

12. The interaction between OR team and Management reaches peak level in impleme ntation phase. 1.9 The Structure of the Mathematical Model Many industrial and b usiness situations are concerned with planning activities. In each case of plann ing, there are limited sources, such as men, machines, material and capital at t he disposal of the planner. One has to take decision regarding these resources t o either maximise production, or minimise the cost of production or maximise the profit. These problems are referred as the problems of constrained optimisation . Linear programming is a technique for determining an optimal schedule of inter dependent activities, for the given resources. Therefore, you can say that progr amming refers to planning and the process of decision-making about a particular plan of action from a given set of alternatives. Any business activity or produc tion activity to be formulated as a mathematical model can best be discussed thr ough its parts which are as follows: 1. Decision variables 2. Objective function 3. Constraints

4. Diet problem Decision variables Decision variables are the unknowns, which yo u need to determine from the solution of the model. The parameters represent the controlled variables of the system. Objective function The objective function d efines the measure of effectiveness of the system as a mathematical function of its decision variables. The optimal solution to the model is obtained when the c orresponding values of the decision variable yield the best value of the objecti ve function whilst satisfying all constraints. Therefore, you can say that the o bjective function acts as an indicator for the achievement of the optimal soluti on. While formulating a problem, the desire of the decisionmaker is expressed as a function of n decision variables. This function is a linear programming problem that is each of its items will have only one variable raised to the power one). Some of the objective functions in practice are: Maximisation of contribution o r profit Minimisation of cost

 Maximisation of production rate or minimisation of production time Minimisation of labour turnover Minimisation of overtime Maximisation of resource utilisation Minimisation of risk to environment or factory Constraints To account for the p hysical limitations of the system, you need to ensure that the model includes co nstraints, which limit the decision variables to their feasible range or permiss ible values. These are expressed as constraining mathematical functions. For exa mple, in chemical industries, restrictions come from the government about throwi ng gases in the environment. Restrictions from sales department about the market ability of some products are also treated as constraints. A linear programming p roblem then has a set of constraints in practice. The mathematical models in OR may be viewed generally as determining the values of the decision variables x J, J = 1, 2, 3, n, which will optimize Z = f (x 1, x 2, - x n).

Subject to the constraints: g i (x 1, x 2 x n) ~ b i, i = 1, 2, - m And xJ 0 j = 1 , 2, 3 - n where ~ is , or =. The function f is called the objective function, whe re xj ~ bi, represent the ith constraint for i = 1, 2, 3 - m where b i is a known constant. The constraints x j 0 are called the non-negativity condition, which restrict the variables to zero or positive values only. Diet problem Formulate t he mathematical model for the following: Vitamin A and Vitamin B are found in fo od 1 and food 2. One unit of food 1 contains 5 units of vitamin A and 2 units of vitaminB. One unit of food 2 contains 6 units of vitamin A and 3 units of vitaminB . The minimum daily requirement of a person is 60 units of vitamin A and 80 unit s of Vitamin B. The cost per one unit of food 1 is Rs. 5/- and one unit of food2 is Rs. 6/-. Assume that any excess units of vitamins are not harmful. Find the m inimum cost of the

mixture (of food1 and food2) which meets the daily minimum requirements of vitamin s. Mathematical Model of the Diet Problem: Suppose x1 = the number of units of f ood1 in the mixture and x2 = the number of units of food2 in the mixture. Lets form ulate the constraint related to vitamin-A. Since each unit of food1 contains 5 un its of vitamin A, we have that x1 units of food1 contains 5x1 units of vitamin A. S ince each unit of food 2 contains 6 units of vitamin A, we have that x2 units of f ood2 contains 6x2 units of vitaminA. Therefore, the mixture contains 5x1 + 6x2 uni ts of vitamin-A. Since the minimum requirement of vitamin A is 60 units, you can say that 5x1 + 6x2 60. Now lets formulate the constraint related to vitaminB. Sinc e each unit of food1 contains 2 units of vitaminB we have that x1 units of food1 co ntains 2x1 units of vitamin-B. Since each unit of food2 contains 3 units of vitam inB, we have that x2 units of food2 contains 3x2 units of vitaminB. Therefore the m ixture contains 2x1 + 3x2 units of vitamin B. Since the minimum requirement of vi taminB is 80 units, you can say that 2x2 + 3x2 80

Next lets formulate the cost function. Given that the cost of one unit of food1 is Rs. 5/- and one unit of food 2 is Rs. 6/-. Therefore, x1 units of food1 costs Rs . 5x1, and x2 units of food 2 costs Rs. 6x2. Therefore, the cost of the mixture is given by Cost = 5x1 + 6x2. If we write z for the cost function, then you can write z = 5x1 + 6x2. Since cost is to be minimised, you can write min z = 5x1 + 6x2. Since the number of units (x1 or x2) are always nonnegative, therefore, you have x1 0, x2 0. Therefore, the mathematical model is: 5x1 + 6x2 60 2x1 + 3x2 8 0 x1 0, x2 0, min z = 5x1 + 6x2. 1.10 Limitations of OR The limitations are more related to the problems of model building, time and money factors.

i. Magnitude of computation: Modern problems involve a large number of variables . The magnitude of computation makes it difficult to find the interrelationship. ii. Intangible factors: Non quantitative factors and human emotional factor can not be taken into account. iii. Communication gap: There is a wide gap between t he expectations of managers and the aim of research professionals. iv. Time and Money factors: When you subject the basic data to frequent changes then incorpor ation of them into OR models becomes a costly affair. v. Human Factor: Implement ation of decisions involves human relations and behaviour. Self Assessment Quest ions Fill in the blanks: 13. OR imbibes _________ team approach. 14. Linear prog ramming is tool of _______. 15. The three phases of OR are ________. 16. To solv e any problem through OR approach the first step is _______. 17. _________ repre sents a real life system.

18. _________ represents the controlled variables of the system 1.11 Summary The OR approach needs to be equally developed in various agricultural problems on a regional or international basis. With the explosion of population and consequen t shortage of food, every country faces the problem of optimum allocation of lan d in various crops in accordance with climate conditions and available facilitie s. The problem of optimal distribution of water from a resource like a reservoir for irrigation purposes is faced by each developing country, and a good amount of scientific work can be done in this direction. 1.12 Terminal Questions 1. Def ine OR. 2. What are the characteristic features of OR? 3. What is a model in OR? Discuss different models available in OR. 4. Write short notes are different ph ases of OR. 5. What are the limitations of OR? 1.13 Answers to SAQs and TQs Answ ers to Self Assessment Questions

1. Scientific basis 2. Scientists, different disciplines 3. Industry Planning 4. To solve waiting problems 5. Imbibes 6. Decision making 7. True 8. True 9. True 10. False 11. False 12. False 13. Inter-disciplinary 14. OR 15. Judgement phase , Research phase & Action phase 16. Define the problem 17. Model

18. Parameters Answers to Terminal Questions 1. Refer to 1.2.1 2. Refer to 1.4 3 . Refer to 1.6 4. Refer to 1.5 5. Refer to 1.10 1.14 References No external sour ces have been referred for this unit. Copyright 2009 SMU Powered by Sikkim Manip al University . MB0048-Unit-02-Linear Programming Unit-02-Linear Programming Str ucture: 2.1 Introduction Learning objectives

2.2 Requirements Basic assumptions of linear programming problems 2.3 Linear Pro gramming Canonical forms Case studies of linear programming problems 2.4 Graphic al Analysis Some basic definitions 2.5 Graphical Methods to Solve Linear Program ming Problems Working rule Solved problems on mixed constraints LP problem Solve d problem for unbounded solution Solved problem for inconsistent solution Solved problem for redundant constraint 2.6 Summary 2.7 Terminal Questions 2.8 Answers to SAQs and TQs Answers to Self Assessment Questions

Answers to Terminal Questions 2.9 References 2.1 Introduction Welcome to the uni t of Operations Research on Linear Programming. Linear programming focuses on ob taining the best possible output (or a set of outputs) from a given set of limit ed resources. Minimal time and effort and maximum benefit coupled with the best possible output or a set of outputs is the mantra of any decision-maker. Today, decision-makers or managements have to tackle the issue of allocating limited an d scarce resources at various levels in an organisation in the best possible man ner. Man, money, machine, time and technology are some of these common resources . The managements task is to obtain the best possible output (or a set of outputs ) from these given resources. You can measure the output from factors, such as t he profits, the costs, the social welfare, and the overall effectiveness. In sev eral situations, you can express the output (or a set of outputs) as a linear re lationship among several variables. You can also express the amount of available resources as a linear relationship among various system variables. The manageme nts dilemma is to optimise (maximise or minimise) the output or the objective fun ction subject to the set of constraints.

Optimisation of resources in which both the objective function and the constrain ts are represented by a linear form is known as a linear programming problem (LP P). Learning objectives By the end of this unit, you should be able to: Construc t linear programming problem and analyse a feasible region Evaluate and solve li near programming problems graphically 2.2 Requirements of LPP The common require ments of a LPP are as follows. i. Decision variables and their relationship ii. Well-defined objective function iii. Existence of alternative courses of action iv. Non-negative conditions on decision variables 2.2.1 Basic Assumptions of LPP 1. Linearity: You need to express both the objective function and constraints a s linear inequalities.

2. Deterministic: All co-efficient of decision variables in the objective and co nstraints expressions are known and finite. 3. Additivity: The value of the obje ctive function and the total sum of resources used must be equal to the sum of t he contributions earned from each decision variable and the sum of resources use d by decision variables respectively. 4. Divisibility: The solution of decision variables and resources can be non-negative values including fractions. Self Ass essment Questions Fill in the blanks 1. Both the objective function and constrai nts are expressed in _____ forms. 2. LPP requires existence of _______, _______, ____ and _______. 3. Solution of decision variables can also be ____________. 2 .3 Linear Programming The LPP is a class of mathematical programming where the f unctions representing the objectives and the

constraints are linear. Optimisation refers to the maximisation or minimisation of the objective functions. You can define the general linear programming model as follows: Maximise or Minimise: Z = c1 x1 + c2 x2 + - - + cn xn Subject to the constraints, a11 x1 + a12 x2 + + a1n xn ~ b1 a21 x1 + a22 x2 + + a2n xn ~ b2 + amn xn ~ bm and x1 0, x2 0, xn 0 Where cj, bi and aij (i = 1, 2, 3, .. m, j - n) are constants determined from the technology of the problem and xj (j = 1, 2 , 3 - n) are the decision variables. Here ~ is either (less than), (greater than) or = (equal). Note that, in terms of the above formulation the coefficients cj, bi aij are interpreted physically as follows. If bi is the available amount of resources i, where aij is the amount of resource i that must be allocated to eac h unit of activity j, the worth per unit of activity is equal to cj.

2.3.1 Canonical forms You can represent the general Linear Programming Problem ( LPP) mentioned above in the canonical form as follows: Maximise Z = c1 x1+c2 x2 + + cn Subject to, a11 x1 + a12 x2 + + a1n xn b1 a21 x1 + a22 x2 + + a2n xn b2 mn xn bm x1, x2, x3, xn 0. The following are the characteristics of this form. 1 . All decision variables are non-negative. 2. All constraints are of type. 3. Th e objective function is of the maximisation type. You can represent any LPP in t he canonical form by using five elementary transformations, which are as follows :

1. The minimisation of a function is mathematically equivalent to the maximisati on of the negative expression of this function. That is, Minimise Z = c1 x1 + c2 x2 + . + cn xn is equivalent to Maximise Z = c1x1 c2x2 cn xn 2. Any inequality one direction ( or ) may be changed to an inequality in the opposite direction ( or ) by multiplying both sides of the inequality by 1. For example 2x1+3x2 5 is equi valent to 2x13x2 5 3. An equation can be replaced by two inequalities in opposite d irection. For example: 2x1+3x2 = 5 can be written as 2x1+3x2 5 and 2x1+3x2 5 or 2x1+3x2 5 and 2x1 3x2 5 4. An inequality constraint with its left hand side in t he absolute form can be changed into two regular inequalities. For example: 2x1+ 3x2 5 is equivalent to 2x1+3x2 5 and 2x1+3x2 5 or 2x1 3x2 5

5. The variable which is unconstrained in sign ( 0, 0 or zero) is equivalent to t he difference between 2 nonnegative variables. For example: if x is unconstraine d in sign then x = (x+ x) where x+ 0, x 0 Caselet An automobile company has two un its X and Y which manufacture three different models of cars A, B and C. The com pany has to supply 1500, 2500, and 3000 cars of A, B and C respectively per week (6 days). It costs the company Rs. 1,00,000 and Rs. 1,20,000 per day to run the units X and Y respectively. On a day unit X manufactures 200, 250 and 400 cars and unit Y manufactures 180, 200 and 300 cars of A, B and C respectively per day . The operations manager has to decide on how many days per week should each uni t be operated to meet the current demand at minimum cost. The operations manager along with his team uses a LPP model to arrive at the minimum cost solution. 2. 3.2 Case Studies of linear programming problems

Self Assessment Questions State True/False 4. One of the characteristics of cano nical form in the objective function must be of maximisation.

5. 2x 3y 10 can be written as -2x + 3y -10 2.4 Graphical Analysis You can analyse linear programming with 2 decision variables graphically. Example Lets look at t he following illustration. Maximise Z = 700 x1+500 x2 Subject to 4x1+3x2 210 2x1 +x2 90 and x1 0, x2 0 Let the horizontal axis represent x1 and the vertical axis x2. First, draw the line 4x1 + 3x2 = 210, (by replacing the inequality symbols by the equality) which meets the x1axis at the point A (52.50, 0) (put x2 = 0 an d solve for x1 in 4x1 + 3x2 = 210) and the x2 axis at the point B (0, 70) (put x 1 = 0 in 4x1 + 3x2 = 210 and solve for x2).

Figure 2.1: Linear programming with 2 decision variables Any point on the line 4 x1+3x2 = 210 or inside the shaded portion will satisfy the restriction of the in equality, 4x1+3x2 210. Similarly the line 2x1+x2 = 90 meets the x1-axis at the p oint C(45, 0) and the x2 axis at the point D(0, 90). Figure 2.2: Linear programming with 2 decision variables Combining the two graph s, you can sketch the area as follows:

Figure 2.3: Feasible region The 3 constraints including non-negativity are satis fied simultaneously in the shaded region OCEB. This region is called feasible re gion. 2.4.1 Some basic definitions

Note: The objective function is maximised or minimised at one of the extreme poi nts referred to as optimum solution. Extreme points are referred to as vertices or corner points of the convex regions. Self Assessment Questions Fill in the blanks 6. The collection of all feasible s olutions is known as the ________ region. 7. A linear inequality in two variable s is known as a _________.

2.5 Graphical Methods to Solve LPP Solving a LPP with 2 decision variables x1 an d x2 through graphical representation is easy. Consider x1 x2 the plane, where y ou plot the solution space enclosed by the constraints. The solution space is a convex set bounded by a polygon; since a linear function attains extreme (maximu m or minimum) values only on the boundary of the region. You can consider the ve rtices of the polygon and find the value of the objective function in these vert ices. Compare the vertices of the objective function at these vertices to obtain the optimal solution of the problem. 2.5.1 Working rule The method of solving a LPP on the basis of the above analysis is known as the graphical method. The wo rking rule for the method is as follows. Step 1: Write down the equations by rep lacing the inequality symbols by the equality symbols in the given constraints. Step 2: Plot the straight lines represented by the equations obtained in step I. Step 3: Identify the convex polygon region relevant to the problem. Decide on w hich side of the line, the halfplane is located.

Step 4: Determine the vertices of the polygon and find the values of the given o bjective function Z at each of these vertices. Identify the greatest and least o f these values. These are respectively the maximum and minimum value of Z. Step 5: Identify the values of (x1, x2) which correspond to the desired extreme value of Z. This is an optimal solution of the problem

2.5.2 Solved problems on mixed constraints LP problem

In linear programming problems, you may have: i) a unique optimal solution or ii ) many number of optimal solutions or iii) an unbounded solution or iv) no solut ions.

2.5.3 Solved problem for unbounded solution

2.5.4 Solved problem for inconsistent solution

2.5.5 Solved problem for redundant constraint

Self Assessment Questions State True/False 8. The feasible region is a convex se t

?| >Kl \9. The optimum value occurs anywhere in feasible region 2.6 Summary In a LPP, you first identify the decision variables with economic or physical quantit ies whose values are of interest to the management. The problems must have a wel l-defined objective function expressed in terms of the decision variable. The ob jective function is to maximise the resources when ui it expresses profit or con tribution. Here, the objective function indicates that cost has to be minimised. The decision variables interact with each other through some ] B0048-Unit-12-Game Theory Unit-12-Game Theory Structure: 12.1 Introduction Learning Objectives 12.2 Compet itive Situations Marketing different brands of commodity Campaigning for electio ns

Fighting military battles 12.3 Characteristics of Competitive Games N-person gam e Zero sum game Two-person-zero-sum game (rectangular game) Strategy Pure strate gy Mixed strategy 12.4 Maximin Minimax Principle Saddle point Solution to a game with a saddle point 12.5 Dominance Solving games using dominance 12.6 Summary 1 2.7 Terminal Questions 12.8 Answers to SAQs and TQs Answers to Self Assessment Q uestions Answers to Terminal Questions 12.9 References 12.1 Introduction Welcome to unit twelve of Operations Research Management on Game Theory. John Von Newma n developed the Game Theory in the year 1928. The theory gained importance after 1944, when John Von Newman along with Morgenstern published their work on Theory of games and economic behaviour. This highly resourceful field of study is devel oping fast. Learning Objectives

By the end of this unit, you should be able to: Comprehend competitive situation s Apply game theory to such situations Compute a solution using saddle point and dominance principle 12.2 Competitive Situations Competitive situations arise wh en two or more parties with conflicting interests operate. The following competi tive situations may occur. Figure 12.1: Types of competitive situations 12.2.1 Marketing different brands o f a commodity Two or more brands of detergents/soaps trying to capture the marke t by adopting various methods (courses), such as advertising through electronic m edia, providing cash discounts to consumers or offering larger sales commission to d ealers are said to be in a competitive situation. 12.2.2 Campaigning for election s Two or more candidates contesting in elections are in a competitive situation. They adopt various methods (courses), such as campaigning through TV, door to door campaigning or campaigning through public meetings to capture more votes. 12.2.3 F ighting military battles Another example of a competitive situation is where two forces are fighting a war to gain supremacy over one another. They adopt variou s courses of action, such as direct ground attack on enemy camp, ground attack supp orted by aerial attack or playing defensive by not attacking. The above mentioned s ituations can be considered as a competitive game where the parties (players) ad opt a course of action (play the game). Self Assessment Questions Fill in the bl anks:

1. Competitive situations arise when _______ or ________ parties with __________ _ operate. 12.3 Characteristics of a Competitive Game A competitive game has the following characteristics: 1. The number of players or competitors is finite. 2 . Each player has finite number of courses of action or moves. 3. A game is play ed when each player adopts any one course of action. 4. Every time a game is pla yed, the corresponding combination of courses of action leads to a transaction o r payment to each player. The payment is called pay-off or gain. The pay-off may be monetary (money) or some benefit, such as increased sales. 5. The players do not communicate with each other. 6. The players are aware of the rules before s tarting the game. 12.3.1 N person game A game having n players participating is ca lled n-person game. A two-player game is called 2-person game (two person game). 1 2.3.2 Zero sum game If the sum of the gains (pay-off) of the players in a game i s zero, the game is called zero-sum game. A zero-sum game with two players is ca lled two-person zero-sum game. It is also called rectangular game. In a two-pers on zero-sum game, the gain of one player is the loss of the other. 12.3.3 Two pe rson zero sum game (rectangular game) A two-person zero-sum game is a game where Two players participate The gain of one player is the loss of the other. In a t wo-person zero-sum game with the players A and B. Let action for player A. Let b e the m courses of be the n courses of action for player B. Let

be the pay-off (gain) of player A when he plays the course of action, and player B plays the course of action matrix of player A. . Then, the following matrix i s the pay-off (gain) This is a (read as m by n) game. Here, is As gain and Bs loss. Therefore, (gain of B. To obtain the pay-off matrix of B, write () in the place of in the above mat rix and then write the transpose of the matrix. ) is the 12.3.4 Strategy In a game, the strategy of a player is predetermined. The player uses this strategy to select a course of action during the game. The strategy o f a player may be pure or mixed. Figure 12.2: Types of strategy 12.3.5 Pure strategy During the game, if a players strategy is to adopt a specific course of action, irrespective of the opponents strategy, the players strategy is called pure strategy. 12.3.6 Mixed strategy

If a player chooses his course of action according to pre-assigned probabilities , then the players strategy is called mixed strategy. Thus, if player A decides t o adopt courses of action with perspective probabilities 0.4 and 0.6, it is mixe d strategy. Self Assessment Questions Write one line answers 2. State any one characteristic s of a competitive game. 3. When do you call a game zero-sum game? 4. What is a re ctangular game? 5. What is pure strategy? 6. How many courses of actions are ava ilable to the players in a competitive game? 12.4 Maximin Minimax Principle Solv ing a two-person zero-sum game

Player A and player B are to play a game without knowing the other players strate gy. However, player A would like to maximise his profit and player B would like to minimise his loss. Also each player would expect his opponent to be calculati ve. Suppose player A plays Then, his gain would be . Then, row.) is the minimum gain of A when he plays ( is the minimum pay-off in the first . accordingly Bs ch oice would be .Let Similarly, if A plays , his minimum gain is , the least pay-off in the second row. , the minimum gains are the row You will find corresponding to As play minimums . Suppose A chooses the course of action where is maximum. Then the maximum of the row minimum in the pay-off matrix is called maximin. The maximin is Similarly, when B plays, he would minimise his maximum loss. The maximum loss to B is when This is the maximum pay-off in the is column. . The minimum of the column maximums in the pay-off matrix is called minimax. The minimax is

If point. If Note: , the maximin and the minimax are equal and the game is said to have saddle , th en the game does not have a saddle point. cannot be greater than . 12.4.1 Saddle point In a two-person zero-sum game, if the maximin and the minima x are equal, the game has saddle point. Saddle point is the position where the maximin (maximum of the row minimums) and minimax (minimum of the column maximums) coincide. If the maximin occurs in the s) is the saddle point. Here, row and if the minimax occurs in the column, the position (r, is the common value of the maximin and the minimax. It is called the value of the game. The value of a game is the expected gain of player A, when both the players adopt optimal strategy. Note 1: If a game has sa ddle point, (r, s), the players strategy is pure strategy. For player A and B, th e suggested solutions are and respectively. Note 2: If a game does not have saddle point, the solution offers a mixed strate gy. Note 3: A game is said to be fair if its value is zero. 12.4.2 Solution to a game with saddle point Consider a two-person zero-sum game with players A and B . Let action for player A. Let be the courses of action for player B. be the cou rses of The saddle point of the game is as follows: 1. The minimum pay-off in each row o f the pay-off matrix is encircled as shown in example 2. 2. The maximum pay-off in each column is written within a box as shown in example 2. 3. If any pay-off is circled as well as boxed, that pay-off is the value of the game. The correspo nding position is the saddle point.

Let (r, s) be the saddle point. Then, the suggested pure strategy for player A i s pure strategy for player B is . The value of the game is . . The suggested Note: However, if none of the pay-offs is circled or boxed, the game does not ha ve a saddle point. Hence, the suggested solution for the players is mixed strate gy.

Self Assessment Questions True or False: 7. Saddle point occurs at row minimum a nd column maximum. 8. If the value of the game is zero, then it is called zero-s um game.

9. The pay off matrix represents the gain for top player. 12.5 Dominance In a re ctangular game, the pay-off matrix of player A is pay-off in one specific row ex ceeding the corresponding pay-off in another specific row gains than the course of action strategy. Hence, you can say that . Therefore, dominates . This means that yields greater irrespective of Bs whatever course of action is adopted by pl ayer B, for A, the course of action is a better strategy than . is less than the corresponding offers minor loss than dominates . Therefore, Alternatively, if each pay-off in a specific column pay-off in another specific column strategy irrespective of As strategy. Hence you can say that you can say t hat: a) In the pay-off matrix, if each pay-off in (or equal to) the correspondin g pay-off in the b) In the pay-off matrix, if each pay-off in (or equal to) the corresponding pay-off in the is greater than , , it means strategy dominates is less than , . dominates . At times, a convex combination of two or more courses of action may dominate ano ther course of action. Whenever a course of action (say or ) is dominated by oth ers, then that course of action ( or ) can be deleted from the pay-off matrix. S uch a deletion will not affect the choice of the solution, but it reduces the or der of the pay-off matrix. Successive reduction of the order using dominance pro perty helps in solving games. 12.5.1 Solving games using dominance Consider a two-person zero-sum game with players A and B. Let of action for play er A. Let be the courses of action for player B. be the courses Suppose the game has a saddle point. Use the dominance property in sequence to d elete the courses of action of A as well as B till the pair comprising the saddl e point remains alone. The procedure to arrive at the saddle point is as follows : a) In the pay-off matrix, if each pay-off in pay-off in the , dominates , henc e is greater than (or equal to) the corresponding is deleted.

b) In the pay-off matrix, if each pay-off in pay-off in the , dominates is less than (or equal to) the corresponding , hence so, is deleted. c) Repeat the above steps in succession to achieve the saddle point. Note: Somet imes, a convex combination of two or more courses of action may dominate another course of action.

Solved Problem 6: Solve the following game using dominance property. Solution: In the pay-off matrix, each pay-off in the first row exceeds the corre sponding pay-off in the third row. Therefore, is deleted. Hence the reduced matr ix is as follows: dominates . So, Here, each pay-off in the third column is less than the corresponding pay-off in the first column. Therefore, dominates . Also, dominates dominates . Similarly, . Thus, the matrix reduces to Here, since 12>8, dominates . And so, finally the matrix reduces to Thus, (1, 3) is the saddle point and the solution to the game is as follows: a) Strategy for A is .

b) Strategy for B is . c) Value of the game is v = 12 Solved Problem 7: Solve the following zero-sum ga me and find its value. Solution: In the pay-off matrix, each pay-off in the second column is less than (or equal to) the corresponding pay-off in the third column. And so, the course of action Q dominates R. Similarly, Q dominates S. After deleting R and S, the r educed matrix is as follows. Here, pay-off in the second row is greater than (or equal to) the corresponding pay-offs in the first, third as well as fourth rows. Therefore, B dominates A, C and D. After deleting A, C and D, the reduced matrix is as follows: Here, 1<6. Therefore, Q dominates P. After deleting P, the reduced matrix is as follows: Therefore the solution to the game is:

a) Strategy for Company X is B. b) Strategy for Company Y is Q. c) Value of the game is v = 1. Solved Problem 8 In a two-person zero-sum game, the pay-off matri x of A is Write down the pay-off matrix of player B. Solution: The pay-off matrix of B is as follows: Self Assessment Questions Fill in the blanks 10. The row whose elements are less than the corresponding elements of another row is __________. 11. If the averag e of any 2 columns is less than or equal to the corresponding elements of anothe r column, it is _________. 12.6 Summary

The game theory module explains the concept of competitive situations, character istics of competitive game and its strategy. The unit also explains the maximin minimax principle, saddle point and dominance using precise examples. 12.7 Termi nal Questions 1. Solve the following rectangular game. 2. In a rectangular game, pay-off matrix of player A is as follows: i) Solve the game. ii) Write down the pay-off matrix of B and then, solve the ga me. 3. Briefly describe characteristics of competitive game. 4. Explain maximinminimax principle. 12.8 Answers to SAQs and TQs Answers to Self Assessment Ques tions 1. Two, more, conflicting interest 2. Players do not communicate with each other. 3. When the value of the game is zero (0). 4. Two person zero sum game. 5. When a player plays only one strategy irrespective of opponents move.

6. Each player has finite number of courses of action or moves. 7. True 8. True 9. False 10. Deleted 11. Deleted Answers to Terminal Questions 1. Value of the g ame is 1. As Strategy (0, 1, 0, 0), while Bs Strategy (0, 0, 1, 0, 0). 2. Value is 5. As strategy is (1, 0), while Bs strategy is (1, 0). 3. Refer to section 12.3 f or answer. 4. Refer to section 12.4 for answer. 12.9 References Below is the lis t of reference books for Unit 12: 1. Operations Research an introduction IV Educ ation Homdy A. Taha- Macmillan Publishing Company. 2. Operations research theory and applications J. K. Sharma-Macmillan India Ltd. 3. Problems in operations Re search (Methods and Solutions) P. K. Gupta, Manmohan Sultan Chand and Sons Publi shers. 4. Theory and Problems of Operations Research Richard Bronsoon-Schaums Out line Series. Copyright 2009 SMU Powered by Sikkim Manipal University .

. These constraints arise due to limited resources, stipulation on quality, tech nical, legal or variety of other reasons. The objective function and the constra ints are linear functions of the decision variables. A LPP with two decision var iables can be solved graphically. Any nonnegative solution satisfying all the co nstraints is known as a feasible solution of the problem. The collection of all feasible solutions is known as a feasible region. The feasible region of a LPP i s a convex set. The value of the decision variables, which maximise or minimise the objectives function is located on the extreme point of the convex set formed by the feasible solutions. Sometimes the problem may be unfeasible indicating t hat no solution exists for the problem. 2.7 Terminal Questions 1. Use the graphi cal method to solve the LPP. Maximise Z= 5x1 + 3x2 Subject to: 3x1 + 5x2 15 5x1 + 2x2 10 x1, x2 0

2. Mathematically formulate the problem. A firm manufactures two products; the n et profit on product 1 is Rs. 3 per unit and the net profit on product 2 is Rs. 5 per unit. The manufacturing process is such that each product has to be proces sed in two departments D1 and D2. Each unit of product 1 requires processing for 1 minute at D1 and 3 minutes at D2; each unit of product 2 requires processing for 2 minute at D1 and 2 minutes at D2. Machine time available per day is 860 mi nutes at D1 and 1200 minutes at D2. How much of products 1 and 2 should be produ ced every day so that total profit is maximum. Formulate this as a problem in L. P.P. 2.8 Answers to SAQs and TQs Answers to Self Assessment Questions 1. Linear 2. Alternate course of action 3. Fractious 4. True 5. True 6. Feasible

7. Half-plan 8. True 9. False Answers to Terminal Questions 1. 2. Maximise 3x1 + 5x2, subject to x1 + 2x2 800 (minutes) 3x1 + 2x2 1200 (minutes) x1, x2 0 2.9 Re ferences No external sources have been referred. Copyright 2009 SMU Powered by S ikkim Manipal University . MB0048-Unit-03-Simplex Method Unit-03-Simplex Method Structure: 3.1 Introduction Learning objectives

3.2 Standard Form of LPP The standard form of LPP Fundamental theorem of LPP 3.3 Solution of LPP Simplex Method Initial basic feasible solution of a LPP To solv e problem by Simplex Method 3.4 The Simplex Algorithm Steps 3.5 Penalty Cost Met hod or Big M-method 3.6 Two Phase Method 3.7 Solved Problems on Minimisation 3.8 Summary 3.9 Terminal Questions 3.10 Answers to SAQs & TQs Answers to Self Asses sment Questions Answers to Terminal Questions 3.11 References

3.1 Introduction Welcome to the third unit of Operations Research Management on the simplex method. The simplex method focuses on solving LPP of any enormity in volving two or more decision variables. The simplex algorithm is an iterative pr ocedure for finding the optimal solution to a linear programming problem. The ob jective function controls the development and evaluation of each feasible soluti on to the problem. If a feasible solution exists, it is located at a corner poin t of the feasible region determined by the constraints of the system. The simple x method simply selects the optimal solution amongst the set of feasible solutio ns of the problem. The efficiency of this algorithm is because it considers only those feasible solutions which are provided by the corner points, and that too not all of them. You can consider obtaining an optimal solution based on a minim um number of feasible solutions. Learning objectives By the end of this unit, yo u should be able to: Create a standard form of LPP from the given hypothesis App ly the simplex algorithm to the system of equations

 Interpret the big M-technique Discuss the importance of the two phase method Con struct the dual from the primal (and vice versa) 3.2 Standard Form of LPP The ch aracteristics of the standard form of LPP are: 1. All constraints are equations except for the nonnegativity condition, which remain inequalities (, 0) only. 2. The right-hand side element of each constraint equation is non-negative. 3. All the variables are non-negative. 4. The objective function is of maximisation or minimisation type. You can change the inequality constraints of equations by add ing or subtracting the left hand side of each such constraint by a non-negative variable. The non-negative variable that has to be added to a constraint inequal ity of the form to change it to an equation is called a slack variable. The nonnegative variable subtracted from a constraint inequality of the form to change it to an equation is called a surplus variable. To make the right hand side of a constraint equation positive, multiply both the sides of the resulting equation

by (-1). Use the elementary transformations introduced with the canonical form t o achieve the remaining characteristics. 3.2.1 The standard form of the LPP Any standard form of the LPP is given by Maximise or Minimise Subject to: & xj 0, j = 1, 2, n. S i 0, i = 1, 2, m 3.2.2 Fundamental theorem of LPP A set of m simult aneous linear equations in n unknowns/variables, n m, AX = b, with r (A) = m. If there is a feasible solution X 0, then there exists a basic feasible solution. Self Assessment Questions State True or False 1. We add surplus variable for of c onstraint.

2. The right hand side element of each constraint is nonnegative. 3.3 Solution o f the Linear Programming Program Simplex Method Consider a LPP given in the stan dard form To optimise z = c1 x1 + c2 x2 + + cn xn Subject to a11 x1 + a12 x2 + + an x n a21 x1 + a22 x2 + -+ a2n xn S 1 = b1 S2 = b2 . am1 x1 + am2 x2 + + amn xn x1, x2, xn, S1, S2 , Sm 0. Sm = bm To each of the constraint equations, add a new variable called an artificial var iable on the left hand side of every equation which does not contain a slack var iable. Subsequently every constraint equation will contain either a slack variab le or an artificial variable. The introduction of slack and surplus variables do es not alter either the constraints or the objective function. Therefore, you ca n incorporate such variables in the objective function with zero coefficients. H owever, the

artificial variables do change the constraints as these are added only to the le ft hand side of the equations. The newly derived constraint equation is equivale nt to the original equation, only if all the artificial variables have value zer o. Artificial variables are incorporated into the objective function with very l arge positive coefficient M in the minimisation program and very large negative coefficientM in the maximisation program guaranteeing optimal solutions. The larg e positive and negative coefficients represent the penalty incurred for making a unit assignment to the artificial variable. Thus the standard form of LPP can b e given as follows: Optimise Z = CT X Subject to AX = B, And X 0 Where X is a co lumn vector with decision, slack, surplus and artificial variables, C is the vec tor corresponding to the costs; A is the coefficient matrix of the constraint eq uations and B is the column vector of the right hand side of the constraint equa tions.

3.3.1 Initial basic feasible solution of a LPP Consider a system of m equations in n unknowns x1, x2 - a n,

a11 x1 + a12 x2 + - + a1n xn = b1 a21 x1 + a22 x2 + - + a2n xn = b2 am1 x1 + am2 x2 + - + amn xn = bn Where m n To solve this system of equations, y ou must first assign any of n m variables with value zero. The variables assigne d the value zero are called non-basic variables, while the remaining variables a re called basic variables. Then, solve the equation to obtain the values of the basic variables. If one or more values of the basic variables are valued at zero , then solution is said to degenerate, whereas if all basic variable have non-ze ro values, then the solution is called a non-degenerate solution. A basic soluti on satisfying all constraints is said to be feasible.

3.3.2 To solve problem by simplex method To solve a problem by the d, follow the steps below. 1. Introduce stack variables (Sis) for nt. 2. Introduce surplus variables (Sis) and artificial variables f constraint. 3. Introduce only Artificial variable for = type of

simplex metho type of constrai (Ai) for type o constraint.

4. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will be M 5. Find Zj Cj for each variable. 6. Slack and artificial varia bles will form basic variable for the first simplex table. Surplus variable will never become basic variable for the first simplex table. 7. Zj = sum of [cost o f variable x its coefficients in the constraints Profit or cost coefficient of t he variable]. 8. Select the most negative value of Zj Cj. That column is called key column. The variable corresponding to the column will become basic variable for the next table. 9. Divide the quantities by the corresponding values of the key column to get ratios; select the minimum ratio. This becomes the key row. Th e basic variable corresponding to this row will be replaced by the variable foun d in step 6. 10. The element that lies both on key column and key row is called Pivotal element. 11. Ratios with negative and a value are not considered for dete rmining key row. 12. Once an artificial variable is removed as basic variable, i ts column will be deleted from next iteration.

13. For maximisation problems, decision variables coefficient will be same as in the objective function. For minimisation problems, decision variables coefficie nts will have opposite signs as compared to objective function. 14. Values of ar tificial variables will always is M for both maximisation and minimisation probl ems. 15. The process is continued till all Zj Cj 0. Self Assessment Questions St ate True or False 3. A basic solution is said to be a feasible solution if it sa tisfies all constraints. 4. If one or more values of basic variable are zero the n solution is said to be degenerate. 5. The right hand side element of each cons traint is nonnegative. 3.4 The Simplex Algorithm To test for optimality of the c urrent basic feasible solution of the LPP, use the following algorithm called si mplex algorithm. Lets also assume that there are no artificial variables existing in the program. 3.4.1 Steps

Perform the following steps to solve the simplex algorithm. Figure 3.1: Steps to solve simple algorithm 1) Locate the negative number in the last row of the simplex table. Do not include the last column. The column that has negative number is called the work column. 2) Next, form ratios by dividing each positive number in the work column, excluding the last row into the element in the same row and last column. Assign that element to the work column to yiel d the smallest ratio as the pivot element. If more than one element yields the s ame smallest ratio, choose the elements randomly. The program has no solution, i f none of the element in the work column is non-negative.

3) To convert the pivot element to unity (1) and then reduce all other elements in the work column to zero, use elementary row operations. 4) Replace the x -var iable in the pivot row and first column by x-variable in the first row pivot col umn. The variable to be replaced is called the outgoing variable and the variabl e that replaces it is called the incoming variable. This new first column is the current set of basic variables. 5) Repeat steps 1 through 4 until all the negat ive numbers in the last row excluding the last column are exhausted. 6) You can obtain the optimal solution by assigning the value to each variable in the first column corresponding to the row and last column. All other variables are consid ered as non-basic and have assigned value zero. The associated optimal value of the objective function is the number in the last row and last column for a maxim isation program, but the negative of this number for a minimisation problem. Cas elet A manufacturing company discontinued production of an unprofitable product line. This created excess production capacity. The companys management is conside ring devoting this excess capacity to one or more

of the other ongoing products. Knowing the capacity of the machines, the number of machine hours required to produce one unit of each product and the unit profi t per product, the management needs to find out how much of each product the com pany should produce to maximise profit. The management can use the simplex metho d to arrive at the required solution.

Self Assessment Questions State Yes or No 6. The key column is determined by Zj Cj row. 7. Pivotal element lies on the crossing of key column and key row. 8. Th e negative and infinite ratios are considered for determining key row. 3.5 Penal ty Cost Method or Big-M Method Consider a LPP when at least one of the constrain ts is of type or =. While expressing in the standard form, add a non negative va riable to each of such constraints. These variables are called artificial variab les. Addition of artificial variables causes violation of the corresponding cons traints as they are added to only one side of an equation. The new system is equ ivalent to the old system of constraints only if the artificial variables are va lued at zero. To guarantee such assignments in the optimal solution, you can inc orporate artificial variables into the objective function with large positive or large negative coefficients in a minimisation and maximisation programs respect ively. You denote these coefficients by M. Whenever artificial variables are par t of the initial solution X0, the last row of simplex table will contain the

penalty cost M. You can make the following modifications in the simplex method t o minimise the error of incorporating the penalty cost in the objective function . This method is called Big M-method or Penalty cost method. Figure 3.2: Big M-method 1) The last row of the simplex table is decomposed into two rows, the first of which involves those terms not containing M, while the s econd involves those containing M. 2) The step 1 of the simplex method is applie d to the last row created in the above modification and followed by steps 2, 3 a nd 4 until this row contains no negative elements. Then step 1 of simplex algori thm is applied to those elements next to the last row that are positioned over z ero in the last row.

3) Whenever an artificial variable ceases to be basic, it is removed from the fi rst column of the table as a result of step 4; it is also deleted from the top r ow of the table as is the entire column under it. 4) The last row is removed fro m the table whenever it contains all zeroes. 5) If non-zero artificial variables are present in the final basic set, then the program has no solution. In contra st, zero valued artificial variables in the final solution may exist when one or more of the original constraint equations are redundant.

Self Assessment Questions State Yes or No 9. The value of artificial value is M. 10. Artificial variables enter as basic variables.

3.6 Two Phase Method The drawback of the penalty cost method is the possible com putational error resulting from assigning a very large value to the constant M. To overcome this difficulty, a new method is considered, where the use of M is e liminated by solving the problem in two phases. Phase I: Formulate the new probl em. Start by eliminating the original objective function by the sum of the artif icial variables for a minimisation problem and the negative of the sum of the ar tificial variables for a maximisation problem. The Simplex method optimises the ensuing objective with the constraints of the original problem. If a feasible so lution is arrived, the optimal value of the new objective function is zero (sugg estive of all artificial variables being zero). Subsequently proceed to phase II . If the optimal value of the new objective function is nonzero, it means there is no solution to the problem and the method terminates. Phase II: Start phase I I using the optimum solution of phase I as the base. Then take the objective fun ction without the artificial variables and solve the problem using the Simplex m ethod.

3.7 Solved Problems on Minimisation

3.8 Summary This unit explains how to solve LPP using the simplex method. The un it also explains the constraints for which you need to introduce the slack, surp lus and artificial variables. Examples are used to illustrate the method of solv ing LPP using the simplex method. 3.9 Terminal Questions 1. Maximise z = 3x1 x2 Subject to the constraints 2x1 + x2 2 x1 + 3x2 3 x2 4, x1, x2 0. 2. Minimise Z = 6x1 + 7x2 Subject to the constraints x1 + 3x2 12 3x1 + x2 12 x1 + x2 8 x1 + x2 0

3.10 Answers to SAQs and TQs Answers to Self Assessment Questions 1. False 2. Tr ue 3. True 4. True 5. Yes 6. Yes 7. No 8. Yes 9. Yes 10. Yes Answers to Terminal Questions 1. Z = 9 X1 = 3 X2 = 0 2. Z = 5.8 X1 = 8/3 X2 = 6 3.11 References No external sources of content have been referred for unit 3

Copyright 2009 SMU Powered by Sikkim Manipal University . MB0048-Unit-04-Duality in LPP Unit-04-Duality in LPP Structure: 4.1 Introduction Learning Objectives 4 .2 Importance of Duality Concepts 4.3 Formulation of Dual Concepts 4.4 Economic Interpretation of Duality Economic interpretation of dual variables 4.5 Sensitiv ity Analysis Changes in Cj of non-basic variable Change in Cj of a basic variabl e Change in available resources Calculating the range

4.6 Summary 4.7 Terminal Questions 4.8 Answers to SAQs and TQs Answers to self a ssessment questions Answers to terminal questions 4.9 References 4.1 Introductio n Every linear programming problem (LPP) is associated with another linear progr amming problem involving the same data and optimal solutions. Such two problems are said to be duals of each other. One problem is called the primal, while the other problem is called the dual. The dual formulation is derived from the same data and solved in a manner similar to the original primal formulation. In other w ords, you can say that dual is the inverse of the primal formulation because of th e following reasons. If the primal objective function is maximisation function, th en the dual objective function is minimisation function and vice-versa. The column co-efficient in the primal constraint is the row co-efficient in the dual const raint.

 The co-efficients in the primal objective function are the RHS constraint in the dual constraint. The RHS column of constants of the primal constraints becomes the row of co-efficient of the dual objective function. The concept of duality i s useful to obtain additional information about the variation in the optimal sol ution. These changes could be effected in the constraint coefficient, in resourc e availabilities and/or objective function co-efficient. This effect is termed a s post optimality or sensitivity analysis. Learning objectives By the end of thi s unit, you should be able to: Describe the duality concept Solve a dual problem Describe the economical interpretation Apply sensitivity analysis 4.2 Importanc e of Duality Concepts The importance of duality concept is due to two main reaso ns:

i. If the primal contains a large number of constraints and a smaller number of variables, the labour of computation can be considerably reduced by converting i t into the dual problem and then solving it. ii. The interpretation of the dual variable from the loss or economic point of view proves extremely useful in prog ramming future decisions in the activities. Characteristics of dual solutions If the primal problem possesses a unique non-degenerate, optimal solution, then th e optimal solution to the dual is unique. However, dual solutions arise under a number of other conditions. Several of the cases which can arise are: When the p rimal problem has a degenerate optimal solution, the dual has multiple optimal s olutions. When the primal problem has multiple optimal solutions, the optimal du al solution is degenerate. When the primal problem is unbounded, the dual is inf easible. When the primal problem is infeasible, the dual is unbounded or infeasi ble. Self Assessment Questions State Yes or No

1. Dual LPP always reduces the amount of computation. 2. It is possible to rever se the dual LPP to primal LPP 4.3 Formulation of Dual Concepts Consider the foll owing LPP Maximise Z = c1x1 +c2x2 + . . .+ cnxn Subject to the constraints a11 x 1 + a12 x2 + . . . + a1n xn b1 a21 x1 + a22 x2 + . . . + a2n xn b2 am1 x1 + am2 x2 + . . . + amn xn bm x1, x2, . . ., xn 0 To construct a dual problem, you must adopt the following guidelines: i. The maximisation problem in the primal becom es a minimisation problem in the dual and vice versa ii. ( ) type of constraints i n the primal become ( ) type of constraints in the dual and vice versa. iii. The c oefficients c1, c2, . . .,cn in the objective function of the primal become b1, b2,,bm in the objective function of the dual.

iv. The constants b1, b2,,bm in the constraints of the primal become c1, c2, . . .,cn in the constraints of the dual v. If the primal has n variables and m const raints the dual will have m variables and n constraints vi. The variables in bot h the primal and dual are nonnegative Thus the dual problem will be Minimise W = b1 y1 + b2 y2 + . . . +bm ym Subject to the constraints a11 y1 + a21 y2 + . . . + am1 ym c1 a12 y1 + a22 y2 + . . . + am2 ym c2 a1n y1 + a2n y2 + . . . + amn y m cn y1, y2, . . ., ym 0 Formation of dual LPP is easier when the standard form of LPP for maximisation problem must contain type of constraints, while for minim isation problem, it must contain type of constraints. Solved Problem 1 Write dual of

Max Z = 4x1 + 5x2 Subject to 3x1 + x2 15 x1 +2 x2 10 5x1 + 2x2 20 tion: The given problem is in its standard form. Therefore, its dual is 15y1 + 10 y2 + 20 y3 Subject to 3y1 + y2 + 5 y3 4 y1 + 2y2 + 2y3 5 0 Solved Problem 2 Write the dual of Min Z = 10x1 + 12x2 Subject to 2x1 5x1 +6 x2 20 x1 + 2x2 15 2x1 + 3x2 12

x1, x2, 0 Solu Mini W = y1, y2, y3, +3 x2 10

x1, x2, 0 Solution: The given problem is in its standard form. Therefore, its du al problem is Max W = 10y1 + 20 y2 + 15 y3 + 12y4 Subject to 2y1 + 5y2 + y3 = 2y 4 12 6y1 + 2y2 + 3 y3 10 y1, y2, y3, 0 Solved Problem 3 Write the dual of Max Z = 100x1 + 200x2 Subject to 3x1 10 x2 15 +4x1 +15 x2 20 x1, x2, 0 Solution: First we convert 3x1 10x2 15 to type as shown here. -3x1 + 10x2 -15 Therefore, its dua l is

Mini Z = -15y1 + 20 y2 Subject to -3y1 + 4y2 100 10y1 + 15y2 200 y 1, y 2, 0 Sol ved Problem 4 When the constraints contain = sign, write the dual of Max Z = 40x1 + 30x2 Subject to 10x1 +6 x2 15 5x1 +6 x2 -10 x1 + x2 = 9 x1 + x2 10 x1, x2, 0 Solution: Firstly, 5x1 7x2 -10 is rewritten as -5x1 +7x2 10 Secondly,

x1 + x2 = 9 is written as x1 + x2 9 Also x1 + x2 9 this is same as -x1 x2 -9 The refore, the given problem is Max Z = 40x1 + 30x2 Subject to 10x1 + 6 x2 15 - 5x1 +7 x2 10 x1 +x2 9 - x1 x2 9 Therefore, its dual is Mini W = -15y1 + 10 y2 + 9y3 1 9y311 Subject to 10y1 5y2 + y31 y311 40 6y1 + 7y2 + y31 y311 30 y1, y2, y31 y 11 0 Let y31 y311= y3

Then the dual becomes Max W = 15y1 -5 y2 + y3 Subject to 10y1 5y2 + y3 40 6y1 + 7y2 + y3 30 y 1, y 2, 0 y3 is unrestricted in sign Solved Problem 5 Write the du al of Max Z = 12x1 + 15x2 Subject to 5x1 +36 x2 10 x1 + x2 5 x1 0 x2 is unrestri cted in sign Solution: Let x2 =x21 x211 0. Therefore, its standard form is Max Z = 12x1 + 15x21 -15x211 Subject to 5x1 +3(x21- x211) 10 - [x1 +(x21- x211)] -5

Or x1 x21+ x211 -5 x1, x21, x211 0 Therefore, dual is 5y1 y2 12 .(1) 3y1 y2 y2 15 (3) No.3 constraint is 3y1 y2 15 (4) Constraints 2 and 4 give 3y1 y problem is Max W = 10y1 15 y2 Subject to 5y1 y2 12 3y1 y2 =15 y1 0 y2 unrestrict ed in sign Solved Problem 6 Write the dual of the following LPP Minimise Z = 3x1 2x2 + 4x3

Subject to 3x1 + 5x2 + 4x3 7 6x1 + x2 + 3x3 4 7x1 2x2 x3 10 x1 2x2 + 5x3 3 4x1 7x2 2x3 2, x1, x2, x3 0 Solution: Since the problem is of minimisation, all con straints should be of type. Therefore, you have to multiply the third constraint throughout by -1 so that -7x1 + 2x2 + x3 -10 Let y1, y2, y3, y4 and y5 be the d ual variables associated with the above five constraints. Then the dual problem is given by Maximise W = 7y1 + 4 y2 10 y3 + 3 y4 + 2y5 Subject to 3y1 + 6y2 7 y3 + y4 + 4y5 3 5y1 + y2 + 2y3 2y4 + 7y5 -2 4y1 + 3y2 + y3 + 5y4 2y5 4 y1, y2, y3, y4, y5 0 Solved Problem 7

Find the dual of Maximise 12x1 + 10x2 Subject to 2x1 + 3x2 18 2x1 + x2 14 x 1, x 2 0 Solution: The dual formulation for this problem will be Minimise 18y1 + 14y2 Subject to 2y1 + 2y2 12 3y1 + y2 10 y1 >= 0, y2 0 Points to be noted: The column coefficients in the primal constraint namely (2, 2) and (3, 1) have become the row co-efficient in the dual constraints. The coefficient of the primal objectiv e function namely, 12 and 10 have become the constants in the right hand side of the dual constraints.

 The constants of the primal constraints, namely 18 and 14, have become the coeff icient in the dual objective function. The direction of the inequalities has bee n reserved. While the primal is a maximisation problem the dual is a minimisation pr oblem Solved Problem 8 Obtain the dual problem of the following primal formulati on. Maximise Z = 2x1 + 5x2 + 6x3 Subject to 5x1 + 6x2 -x3 3 -2x1 + x2 + 4x 4 x1 5x2 + 3x3 1 -3x1 3x2 + 7x3 6 x1, x2, x3 0 Solution: Step 1: Write the objective fu nction of the dual. As there are four constraints in the primal, the objective f unction of the dual will have 4 variables. Minimise r* = 3 w 1 + 4 w 2 + w 3 + 6 w 4

Step 2: Write the constraints of the dual. As all the constraints in the primal are <, the constraints in the dual will be >. The column COM+ efficient of the prima l becomes the row co-efficient of the dual. Constraints 5w1 2w2 + w3 3w4 2 6w1 + w2 5w3 -w4 5 -w1 + 4w2 + 3w3 + 7w4 6 Step 3 : Therefore the dual of the primal i s : Minimise Z = 3w1 + 4w2 + w3 + 6w4 Subject to: 5w1 2w2 + w3 3w4 2 6w1+ w2 5w3 3w4 5 - w1 + 4w2 + 3w3 + 7w4 6 w1, w2, w3, w4 >= 0 Solved Problem 9 Obtain the d ual of the following linear programming problem. Minimise Z = 5x1 -6x2 + 4x3 Sub ject to the constraints: 3x1 + 4x2 + 6x3 9

x1 + 3x2 + 2x3 5 7x1 2x2 x3 10 x1 2x2 + 4x3 4 2x1 + 5x2 3x3 3 x 1, x 2, x 3 ution: As you can see, one of the primal constraints is a " " constraint while th e others are all " constraints. The dual cannot be worked out unless all the const raints are in the same direction. To convert this into " constraint, multiply both the sides of the equation by "-" sign. After multiplying the constraint by "-" sign, it will become 7x1 + 2x2 + x3 -10. Now that all the constraints are in the same direction and the dual can be worked out, the dual formulation is: Maximis e Z = 9w1 + 5w2 10w3 + 4w4 + 3w5 Subject to: 3w1 + w2 7w3 + w4 + 2w5 5 4w1 + 3w2 + 2w3 2w4 + 5w5 -6 6w1 + 2w2 + w3 + 4w4 + -3w5 4 w1, w2, w3, w4, w5 0

Self Assessment Questions Fill in the blanks 3. The coefficients of decision var iables in the objective function become quantities on the right hand side of ___ ______ __________. 4. constraints changes to ________ type in dual LP. 5. For eve ry LPP, there exists a unique ________ problem. 4.4 Economic Interpretation of D uality The linear programming problem is thought of as a resource allocation mod el where the objective is to maximise revenue or profit subject to limited resou rces. The associated dual problem offers interesting economic interpretations of the LP resource allocation model. Consider a representation of the general prim al and dual problems where primal takes the role of a resource allocation model.

In the above resource allocation model, the primal problem has n economic activiti es and m resources. The coefficient cj in the primal represents the profit per uni t of activity j. Resource i, whose maximum availability is bi, is consumed at th e rate aij units per unit of activity j. 4.4.1 Economic interpretation of dual v ariables: For any pair of feasible primal and dual solutions, (Objective value i n the maximisation problem) (Objective value in the minimisation problem). At th e optimum, the relationship holds as a strict equation. Note: Here, the sense of optimisation is very important. Hence, for any two primal and dual feasible sol utions, the values of the objective functions, when finite, must satisfy the fol lowing inequality. The strict equality, z = w, holds true when both the primal and dual solutions a re optimal. Consider the optimal condition z = w. Given that the primal problem represents a resource allocation model, you can think of z as representing the p rofit in rupees. bi represents the number of units available of the resource i. Therefore, we can

express the equation z = w as profit (Rs) = (units of resource i) x (profit per unit of resource i) This means that the dual variables yi, represent the worth p er unit of resource i. Note: Variables yi are also called as dual prices, shadow prices and simplex multipliers. With the same logic, the inequality z < w assoc iated with any two feasible primal and dual solutions is interpreted as (profit) < (worth of resources). This relationship implies that as long as the total ret urn from all the activities is less than the worth of the resources, the corresp onding primal and dual solutions are not optimal. Optimality is achieved only wh en the resources have been exploited to their fullest extent, which can happen o nly when the input equals the output (profit). Economically, the system is said to be unstable (non optimal) when the input (worth of the resources) exceeds the output (return). Stability occurs only when the two quantities are equal. Self Assessment Questions True or False 6. Dual variables represent the worth or unit of a resource.

7. Optimality is reached when the resources are not fully utilised. 8. At optimu m level the relationship holds as a strict equation 4.5 Sensitivity Analysis In linear programming, all model parameters are assumed to be constant. However; in real-life situations, the decision environment is always dynamic. Therefore, it is important for the management to know how profit would be affected by an incr ease or decrease in the resource level, by change in the technological process, and by change in the cost of raw materials. Such an investigation is known as se nsitivity analysis or post optimality analysis. The results of sensitivity analy sis establishes upper and lower bounds for input parameter values within which t hey can vary without causing major changes in the current optimal solution. Sens itivity analysis allows you to figure out which data offers a significant impact on the results. This in turn allows you to concentrate on getting accurate data for those items or at least running through several scenarios with various valu es of the crucial data to get an idea of the range of possible outcomes.

Sensitivity analysis is important because of the following reasons: Values of LP parameters might change LP parameters have an uncertainty factor attached to th em Any change in an LPs parameters affects the optimality of the basic variable. This is because of the following two reasons. When a variable (or number of vari ables) in row 0 has a negative coefficient, we can obtain a better basic feasibl e solution of larger z-value by pivoting a non-basic variable with a negative co efficient in row 0. If this occurs, the basic variable becomes a sub-optimal bas is. A constraint (or number of constraints) may have a negative RHS. In such a c ase, at least one member of basic variable will now be negative and will no long er yield a basic feasible solution. If this occurs, you can say that the basic v ariable is now an infeasible basis. The following six types of changes in LPs par ameters cause changes in the optimal solution: Changing the objective function c oefficient of a nonbasic variable

 Changing the objective function coefficient of a basic variable Changing the rig ht-hand side of a constraint Changing the column of a non-basic variable Adding a new variable or activity Adding a new constraint Caselet Luminous lamps produc e three types of lamps A, B and C. These lamps are processed on three machines X , Y and Z. To find out the optimal solution in order to maximise profit and mini mise cost, first you find out whether a previously determined optimal solution r emains optimal if the contribution rate is changed. An increase in Cj of a varia ble would mean that resources from other products should be diverted to this mor e profitable product. The reverse is true for a minimisation problem.

4.5.1 Changes in Cj of a non-basic variable A non basic variable can be brought on the basis only if its contribution rate is attractive. Therefore, you need to determine the upper limit of the profit contribution (Cj) of each non basic var iable. The reverse is true for a minimisation problem. Consider the final simple x table of the above problem. Table 4.2: The final simplex table

From the above final simplex table, you can see that profit contribution for pro duct C is Re 1, which is not greater than its zj. Therefore, to bring x3 into th e basis, its profit contribution rate cj must exceed Rs. to make zj cj value neg ative or zero that is zj cj 0. Specifically, If cj* cj > zj cj, then a new optim al solution must be derived If cj* cj = zj cj, then alternative optimal solution exist. If cj* cj < zj cj, then current optimal solution remains unchanged. In c ase of c3 = 1 and z3 c3 = C3* 1 ,

C3* +1 = x3 can be introduced in the basis, if its contribution rate c3 increases at leas t Rs . If it increases beyond that, then the current solution will no longer be optimal. 4.5.2 Change in Cj of a basic variable Consider the case of product A ( x1 column) and divide each zj cj entry in the index row by the corresponding coe fficient in the x1 row as shown below: - Minimum Referring to the final simplex table, you observe that corresponding to the non basic variables x3 and x5, y13, y15 <0. Therefore, Minimum = minimum (11, 3) = 3 Corresponding to the non- basic variable x4 ,y14 >0, therefore, Minimum =5

Hence, 5 c1* -12 3 i.e. 7 c1* 15 Thus, you can say that the optimal solution is i nsensitive as long as the changed profit coefficient c1* varies between Rs 7 and Rs. 15 4.5.3 Change in available resources If the available resources change, y ou need to investigate whether a previous optimal solution remains feasible or n ot. For long term planning, it is important to know the bounds within which each available resource (for instance machine hours) can vary without causing violen t changes in the current optimal solution. To illustrate this, divide each quant ity in the XB column by the corresponding coefficient in the X4 column of the ta ble. Table 4.3: Resources table The least positive ratio indicates the number of hours of machine M1 that can be decreased. The least negative

ratio (10) indicates the increase in the number of hours of machine M1. 4.5.4 Cal culating the range Lower limit = 100 = Upper limit = 100 (10) = 110 Therefore, the range of hours for M1 is to 110. You can calculate the range of hours for machine M2 and M3 in the same manner. T he management of a company rarely restricts its interest to the numerical values of an optimal solution. It is interested in knowing the impact of changes in th e input parameter values on the optimal solution. This process is called sensiti vity analysis. Self Assessment Questions Fill in the blanks 9. Sensitivity analy sis is carried out on _______ simplex table. 10. It helps us to study the effect of changes in _______ _______ in objective function. 11. The results of sensiti ve analysis establish ___________ and ________ ___________ for input parameters value.

4.6 Summary For every linear programming problem there exists a dual linear prog ramming problem. The dual LPP helps us to reduce the amount of calculation invol ved in original the LPP. They also help us to interpret the economic variables m ore effectively. 4.7 Terminal Questions 1. Write the dual of the following linea r programming problems. a) Maximise 2 = 7x1 + 5x2 Subject to constraints x1 + 2x 2 6 4x1 + 3x2 12 x1 x2 0 b) Maximise z = 3x1 + 4x2 Subject to constrains 5x1 + 4 x2 200; 3x1 + 5x2 150; 5x1 + 4x2 100; 8x1 + 4x2 80, x1 0, x2 0

c) Maximise z = 2x1 + x2 Subject to constraints 4x1 + 3x2 12, 4x1 + x2 8, 4x1 x2 8, x1, x2 0 4.8 Answers to SAQs and TQs Answers to Self Assessment Questions 1. No 2. Yes 3. Dual 4. 5. Dual 6. True 7. False 8. True 9. Final 10. Resource, le vels

11. Upper, lower, bounce Answers to Terminal Questions 1. a. Minimise W = 6y1 + 12y2 Subject to constraints y1 + 4y2 7 2y1 + 3y2 5 y1 + y2 0 b. Minimise w = 200 y1 + 150y2 100y3 80y4 Subject to constraints 5y1 + 3y2 5y3 8y4 3 4y1 + 5y2 4y3 y4 4 y1, y2, y3, y4 0 c. Minimise w = 12y1 + 8y2 + 8y3 Subject to constraints 4y 1 + 4y2 + 4y3 2 3y1 + y2 y3 1 y1, y2, y3, 0 4.9 References The following sources have been referred to for additional content for the unit.

 http://www.psnacet.edu.in/courses/MBA/Linearprogram ming/lecture-11.pdf http://a gecon2.tamu.edu/people/faculty/mccarlbruce/mccspr/new04.pdf http://www.sce.carle ton.ca/faculty/chinneck/po/Chapter6. pdf. http://wwwee.eng.hawaii.edu/~jyee/491. 06/lectures/chapter06.pdf Copyright 2009 SMU Powered by Sikkim Manipal Universit y . MB0048-Unit-05-Transportation Problem Unit-05-Transportation Problem Structu re: 5.1 Introduction Learning objectives 5.2 Formulation of Transportation Probl em (TP) 5.3 Transportation Algorithm (MODI Method)

5.4 The Initial Basic Feasible Solution North west corner rule Matrix minimum me thod Vogels approximation method 5.5 Moving Towards Optimality Improving the solu tion Modified distribution method / MODI method / U V Method Degeneracy in trans portation problem 5.6 Summary 5.7 Terminal Questions 5.8 Answers to SAQs and TQs Answers to Self Assessment Questions Answers to Terminal Questions 5.9 Referenc es 5.1 Introduction Welcome to the unit on transportation model in Operations Re search Management. Transportation model is an important class of linear programs . For a given

supply at each source and a given demand at each destination, the model studies the minimisation of the cost of transporting a commodity from a number of source s to several destinations. The transportation problem involves m sources, each o f which has available ai (i = 1, 2 m) units of homogeneous product and n destinat ions, each of which requires bj (j = 1, 2., n) units of products. Here ai and bj are positive integers. The cost cij of transporting one unit of the product from the ith source to the jth destination is given for each i and j. The objective is to develop an integral transportation schedule that meets all demands from th e inventory at a minimum total transportation cost. It is assumed that the total supply and the total demand are equal. (1) The condition (1) is guaranteed by c reating either a fictitious destination with a demand equal to the surplus if to tal demand is less than the total supply or a (dummy) source with a supply equal to the shortage if total demand exceeds total supply. The cost of transportatio n from the fictitious destination to all sources and from all destinations to th e fictitious sources are assumed to be

zero so that total cost of transportation will remain the same. Learning objecti ves By the end of this unit, you should be able to: Formulate the transportation problem Find the initial basic feasible solution Compare the advantages of vari ous methods of finding initial basic feasible solution Solve the degeneracy in t he transportation problem Apply the model to minimise the cost of transporting a commodity 5.2 Formulation of Transportation Problem The standard mathematical m odel for the transportation problem is as follows. Let xij be number of units of the homogenous product to be transported from source i to the destination j The n objective is to Minimise z = Subject to

With all xij 0 and integrals Theorem: A necessary and sufficient condition for t he existence of a feasible solution to the transportation problem (2) is: Self Assessment Questions Fill in the blanks 1. Transportation problems are a sp ecial type of ___________. 2. The number of rows and columns need not always be ___________. 3. Transportation problem develops a schedule at _______ and ______ __. 5.3 Transportation Algorithm (MODI Method) The first approximation to (2) is integral. Therefore, you always need to find a feasible solution. Rather than d etermining a first approximation by a direct application

of the simplex method, it is more efficient to work with the transportation tabl e given below. The transportation algorithm is the simplex method specialised to the format of table involving the following steps: i) Finding an integral basic feasible solution ii) Testing the solution for optimality iii) Improving the so lution, when it is not optimal iv) Repeating steps (ii) and (iii) until the opti mal solution is obtained The solution to TP is obtained in two stages. In the fi rst stage, you find the basic feasible solution using any of the following metho ds a) North-west corner rule b) Matrix Minima Method or least cost method c) Vog els approximation method. In the second stage, you test the basic feasible soluti on for its optimality either by MODI method or by stepping stone method. Table 5 .1: Transportation Table

Self Assessment Questions State Yes or No 4. In transportation problems, is a su fficient and necessary condition for getting a feasible solution. 5. Transportat ion problems can also be solved by simplex method. 6. Matrix-minima method gives optimum solution. 5.4 The Initial Basic Feasible Solution Let us consider a TP involving m-origins and ndestinations. Since the sum of origin capacities equals the sum of destination requirements, a feasible solution always exists. Any fea sible solution satisfying m + n 1 of the m + n constraints is a redundant one an d hence it can be deleted. This also means that a feasible solution to

a TP can have only m + n 1 positive component; otherwise the solution will degen erate. It is always possible to assign an initial feasible solution to a TP, sat isfying all the rim requirements. This can be achieved either by inspection or b y following some simple rules. You can begin by imagining that the transportatio n table is blank that is initial xij = 0. The simplest procedures for initial al location are discussed in the following section. 5.4.1 North West Corner rule St ep1: The first assignment is made in the cell occupying the upper left hand (nor th-west) corner of the transportation table. The maximum feasible amount is allo cated here is x11 = min (a1, b1) Either the capacity of origin O1 is used up or the requirement at destination D1 is satisfied or both. This value of x11 is ent ered in the upper left hand corner (small square) of cell (1, 1) in the transpor tation table. Step 2: If b1 > a1, the capacity of origin O is exhausted and the requirement at destination D1 is still not satisfied. Then at least one variable in the first column will have to take on a positive value. Move down vertically to the second row and make the second allocation of magnitude:

x21 = min (a2, b1 x21) in the cell (2, 1) This either exhausts the capacity of o rigin O2 or satisfies the remaining demand at destination D1. If a1 > b1 ,the re quirement at destination D1 is satisfied, but the capacity of origin O1 is not c ompletely exhausted. Move to the right in a horizontal position to the second co lumn to make the second allocation of magnitude: x12 = min (a1 x11, b2) in the c ell (1, 2) This either exhausts the remaining capacity of origin O1 or satisfies the demand at destination D2. If b1 = a1, the origin capacity of O1 is complete ly exhausted as well as the requirement at destination is completely satisfied, then there is a tie at the second allocation. An arbitrary tie breaking choice i s made. Make the second allocation of magnitude x12 = min (a1 a1, b2) = 0 in the cell (1, 2) OR x21 = min (a2, b1 b2) = 0 in the cell (2, 1) Step 3: Start from the new north-west corner of the transportation table satisfying the destination requirements and exhausting the origin capacities one at a time, moving down to wards the lower right corner of the

transportation table until all the rim requirements are satisfied.

5.4.2 Matrix minimum method Step 1: Determine the smallest cost in the cost matr ix of the transportation table. Let it be cij . Allocate xij = min ( ai, bj) in the cell ( I, j ) Step 2: If xij = ai cross the ith row of the transportation ta ble, decrease bj by ai and proceed to step 3. If xij = bj cross the ith column o f the transportation table, decrease ai by bj and proceed to step 3. If xij = ai = bj cross either the ith row or the ith column, but not both. Step 3: Repeat st eps 1 and 2 to reduce transportation table until all the rim requirements are sa tisfied. Whenever the minimum cost is not unique, make an arbitrary choice among the minima.

5.4.3 Vogels approximation method

The Vogels approximation method (VAM) takes into account the least cost cij, but also the cost that just exceeds cij. The steps of the method are given below. St ep 1: For each row of the transportation table, identify the smallest and the ne xt to smallest costs. Determine the difference between them for each row. Displa y them alongside the transportation table by enclosing them in parenthesis again st the respective rows. Similarly, compute the differences for each column. Step 2: Identify the row or column with the largest difference among all the rows an d columns. If a tie occurs, use any arbitrary tie breaking choice. Let the great est difference correspond to the ith row and let Cij be the smallest cost in the ith row. Allocate the maximum feasible amount xij = min (ai, bj) in the (i, j)t h cell and cross off the ith row or the jth column in the usual manner. Step 3: Recompute the column and row differences for the reduced transportation table an d go to step 2. Repeat the procedure until all the rim requirements are satisfie d. Remarks: 1. A row or column difference indicates the minimum unit penalty incu rred by failing to make an allocation to the last smallest cell in that row or c olumn.

2. It is clear that VAM determines an initial basic feasible solution, which is very close to the optimum solution. But the number of iterations required to rea ch the optimal solution is small. Caselet A company has four warehouses. Each wa rehouse supplies inventory to five stores. The company needs to develop an integ ral transportation schedule that meets all demands from the inventory at a minim um total transportation cost. Assuming that the total supply and the total deman d are equal, the company can use the transportation model of a LPP to arrive at a basic feasible solution.

Self Assessment Questions State True or False 7. In matrix-minima method, you st art allocating from the left-top cell of the table. 8. In Vogels approximation me thod, you first construct penalty and then start allocating. 9. North-west corne r rule gives optimum solution. 10. Vogels approximation method gives solution nea r to the optimum solution. 5.5 Moving Towards Optimality After evaluating an ini tial basic feasible solution to a transportation problem, the next question is h ow to get the optimum solution. The basic techniques are illustrated below. 1. D etermine the net evaluations for the nonbasic variables (empty cells) 2. Determin e the entering variable 3. Determine the leaving variable 4. Compute a better ba sic feasible solution

5. Repeat steps (1) to (4) until an optimum solution has been obtained 5.5.1 Imp roving the solution Definition: A loop is the sequence of cells in the transport ation table such that: i) Each pair of consecutive cells lie either in the same row or same column ii) No three consecutive cells lies in the same row or same c olumn iii) The first and the last cells of the sequence lies in the same row or column iv) No cell appears more than once in the sequence Consider the non-basic variable corresponding to the most negative of the quantities cij ui vj, calcul ated in the test for optimality; it is made the incoming variable. Construct a l oop consisting exclusively of this incoming variable (cell) and current basic va riables (cells). Then allocate the incoming cell to as many units as possible af ter appropriate adjustments have been made to the other cells in the loop. Avoid violating the supply and demand constraints, allow all allocations to remain no n-negative and reduce one of the old basic variables to zero (where upon it ceas es to be basic).

5.5.2 Modified distribution method / Modi method / UV method Step 1: Under this m ethod, you construct penalties for rows and columns by subtracting the least val ue of row / column from the next least value. Step 2: Then select the highest pe nalty constructed for both row and column. Enter that row/column and select the minimum cost and allocate min (ai, bj) Step 3: Delete the row or column or both if the rim availability/ requirements are met. Step 4: You repeat steps 1 to 2 t o till all allocations are over. Step 5: For allocating all forms of equations u i + vj = cj, set one of the dual variable ui / vj to zero and solve for others. Step 6: Use this value to find Dij = cij ui vj. If all Dij 0, then it is the opt imal solution. Step 7: If any Dij 0, select the most negative cell and form loop . Starting point of the loop is positive and alternative corners of the loop are negative and positive. Examine the quantities allocated at negative places. Sel ect the minimum, add it to the positive places and subtract from the negative pl aces.

Step 8: Form new table and repeat steps 5 to 7 till Dij 0 Balanced TP

Unbalanced T.P

5.5.3 Degeneracy in transportation problem It is shown that a basic solution to an m-origin, n destination; transportation problem can have at the most m+n-1 po sitive basic variables (non-zero), otherwise the basic solution degenerates. It follows that whenever the number of basic cells is less than m + n 1, the transp ortation problem is a degenerate one. The degeneracy can develop in two ways: Ca se 1: The degeneracy develops while determining an initial assignment via any on e of the initial assignment methods discussed earlier. To resolve degeneracy, yo u must augment the positive variables by as many zero-valued variables as is nec essary to complete the required m + n 1 basic variable. These zero-valued variab les are selected in such a manner that the resulting m + n 1 variable constitute s a basic solution. The selected zero valued variables are designated by allocat ing an extremely small positive value to each one of them. The cells containing these extremely small allocations are then treated like any other basic cells. T he s are kept in the transportation table until temporary degeneracy is removed o r until the optimum solution is attained, whichever occurs first. At that point, we set each = 0.

Case 2: The degeneracy develops at the iteration stage. This happens when the se lection of the entering variable results in the simultaneous drive to zero of tw o or more current (pre-iteration) basic variables. To resolve degeneracy, the po sitive variables are augmented by as many zero-valued variables as it is necessa ry to complete m+n-1 basic variables. These zerovalued variables are selected fr om among those current basic variables, which are simultaneously driven to zero. The rest of the procedure is exactly the same as discussed above in case 1. Not e: The extremely small value is infinitely small and it never affects the value it is added to or subtracted from. Introduce in unallocated minimum cost cell to a void forming a loop.

Self Assessment Questions Fill in the blanks 11. All the values of should be ___ _______ or _________ for the solution to be optimum. 12. In unbalanced transport ation problem . 13. If the number of allocation is less than _________ then it i s said to be a degenerate transportation problem. 5.6 Summary The transportation problem is a special type of linear programming problem in which the objective is to transport a homogeneous product manufactured at several plants (origins) t o a number of different destinations at a minimum total cost. In this unit, you have learnt several different techniques for computing an initial basic feasible solution to a transportation problem, such as north-west corner rule, matrix mi nimum method and Vogels approximation method. Further, you studied the degeneracy in transportation problem with examples on obtaining an optimum basic feasible solution. 5.7 Terminal Questions 1. Solve the following transportation problem.

2. A company has three cement factories located in cities 1,2,3 which supply cem ent to four projects located in towns 1,2,3,4. Each plant can supply daily 6,1,1 0 truck loads of cement respectively and the daily cement requirements of the pr ojects are respectively 7,5,3,2 truck loads. The transportation cost per truck l oad of cement (in hundreds of rupees) from each plant to each project site is as follows. Determine the optimal distribution for the company so as to minimise the total t ransportation cost. 3. Solve the following transportation problem. 9 12 9 6 9 10 5 7 3 7 7 5 5 6 6 5 9 11 3 11 2

6 8 11 2 2 10 9 4 4 6 2 4 2 22 5.8 Answers to SAQs and TQs Answers to Self Asses sment Questions 1. LPP 2. Equal 3. Minimum cost 4. Yes 5. Yes 6. No 7. False 8. True 9. False 10. True 11. zero 12. Not equal to 13. m + n 1 Answers to Terminal Questions

1. The optimal transportation cost is Rs. 796 2 Optimal transportation cost is R s. 10, 000 3 The minimum transportation cost is Rs. 112 as 5.9 References No ext ernal sources have been referred for this unit. Copyright 2009 SMU Powered by Si kkim Manipal University . MB0048-Unit-06-Assignment Problem Unit-06-Assignment P roblem Structure: 6.1 Introduction Learning Objectives 6.2 Mathematical Formulat ion of the Problem 6.3 Hungarian Method Algorithm 6.4 Routing Problem Unbalanced AP

Infeasible Assignments Maximisation in AP 6.5 Travelling Salesman Problem 6.6 Su mmary 6.7 Terminal Questions 6.8 Answers to SAQs and TQs Answers to Self Assessm ent Questions Answers to Terminal Questions 6.9 References 6.1 Introduction Welc ome to unit six of Operations Research Management on Assignment Problem. The ass ignment problem is a special case of the transportation problem, where the objec tive is to minimise the cost or time of completing a number of jobs by a number of persons, maximise revenue and sales efficiently. In other words, when the pro blem involves the allocation of n different facilities to n different tasks, it is o ften termed as an assignment problem. This model is mostly used for planning. Th e assignment model is useful in solving problems, such as assignment of machines to jobs,

assignment of salesman to sales territories, travelling salesman problem and man y more similar situations. It may be noted that with n facilities and n jobs, there are n possible assignments. One way of finding an optimal assignment is to write a ll the n possible arrangements, evaluate their total cost and select the assignmen t model offering minimum cost. This method can be unfeasible due to involvement of computational procedures. In this unit, we will study an efficient method for solving assignment problems. Lets say there are n jobs in a factory having n machine s to process the jobs. A job i (=1 n), when processed by machine j (=1 n) is assum ed to incur a cost Cij. The assignment is to be made in such a way that each job can associate with one and only one machine. You can then determine an assignme nt of jobs to the machines to minimise the overall cost. The cost data is given as a matrix where rows correspond to jobs and columns to machines and there are as many rows as the number of columns. The number of jobs and number of machines should be equal. Assignment becomes a problem because each job requires differe nt skills and the capacity or efficiency of each person with respect to these jo bs can be different. This gives rise to cost differences. If each person is able to do

all jobs with same efficiency then all costs will be the same and each job can b e assigned to any person. When assignment is a problem it becomes a typical opti misation problem. Therefore, you can compare an assignment problem to a transpor tation problem. The cost element is given and is a square matrix and requirement at each destination is one and availability at each origin is also one. Additio nally, you have number of origins, which equal the number of destinations. There fore, the total demand is equal to the total supply. There is only one assignmen t in each row and each column. However if you compare this to a transportation p roblem, you will find that a general transportation problem does not have the ab ove mentioned limitations. These limitations are peculiar to assignment problems only. An assignment problem can be either balanced or unbalanced. Lets first foc us on a balanced assignment problem. A balanced assignment problem is one where the number of rows = the number of columns (comparable to a balanced transportat ion problem where total demand =total supply). Balanced assignment problem: No. of rows = No. of columns

Minimisation case for an assignment problem: You need to perform the following s teps to solve the minimisation case for an assignment problem: Figure 6.1: Steps to solve the minimisation case for an assignment problem Step 1: Determine the total opportunity cost matrix a) Arrive at a column opportunity cost matrix by subtracting the lowest entry of each column of the given payoff matrix from all the entries in the column. b) Then subtract the lowest entry of each row of the matrix obtained in (a) from all the entries in its row. The resu lt of step 1b gives the total-opportunity-cost matrix.

Step 2: Determine whether an optimal assignment can be made a) Cover all the zer oes of the current total-opportunitycost matrix with the minimum possible number of horizontal and vertical lines. b) If the number of lines in step 2a equals t he number of rows (or columns) of the matrix, the problem can be solved. Make a complete assignment so that the total opportunity cost involved in the assignmen t is zero. c) If the number of lines drawn in step 2a is less than the number of rows (or columns) of the matrix, proceed to step 3. Step 3: Revise the total op portunity cost matrix a) Subtract the lowest entry in the uncovered cells of the current total opportunity cost matrix from all the uncovered cells. b) Add the same lowest entry to only those cells in which the covering lines of step 2 cros s. The result of steps 3a and 3b is a revised total opportunity cost matrix. Ste p 4: Repeat steps 2 and 3 until an optimal assignment having a total opportunity cost of zero can be made.

You can solve an assignment problem by any of the following four methods. Enumer ation method Simplex method Transportation problem Hungarian method However, in this unit, we will focus on the most commonly used method, that is the Hungarian method to solve the assignment problems. Figure 6.2: Methods to solve assignment problem Learning objectives By the end o f this unit, you should be able to: Formulate mathematically an assignment probl em Solve a routing problem Describe the travelling salesman problem

 State the significance of the assignment problem Compute the problem using the H ungarian method Solve practical problems, such as routing problems and travellin g salesman problems 6.2 Mathematical Formulation of the Problem Let xij be a var iable defined by Since only one job is assigned to each machine, you have xij = 1 and xij = 1 Hence, the total assignment cost is given by z= xij cij Thus the assignment problem takes the following mathematical form Determine xij 0 (i, j =1 n). Minimise z = xij cij

Subject to the constraints xij = 1 j =1, 2, n And xij = 1 i = 1, 2 n With xij = 0 or 1 Note: In an assignment problem, if you add or subtract a real number to or from each element of a row or column of the cost matrix, then the o ptimum assignment for the modified matrix is also optimum for the original one. Self Assessment Questions State True or False 1. In an AP, the constraints are o f equality type. 2. The number of facilities should be equal to the number of re sources. 3. The decision variables can take on any value. 6.3 Hungarian Method A lgorithm Hungarian method algorithm is based on the concept of opportunity cost and is more efficient in solving assignment problems. Adopt the following steps

mentioned below to solve an AP using the Hungarian method algorithm: Step 1: Pre pare row ruled matrix by selecting the minimum values for each row and subtract it from other elements of the row. Step 2: Prepare column reduced matrix by subt racting minimum value of the column from the other values of that column. Step 3 : Assign zero row-wise if there is only one zero in the row and cross (cancel) ( X) other zeros in that column. Step 4: Assign column wise if there is only one z ero in that column and cross other zeros in that row. Step 5: Repeat steps 3 and 4 till all zeros are either assigned or crossed. If the number of assignments i s equal to number of rows present, you have arrived at an optimal solution, if n ot, then proceed to step 6. Step 6: Mark (P) the unassigned rows. Look for cross ed zero in that row. Mark the column containing the crossed zero. Look for assig ned zero in that column. Mark the row containing assigned zero. Repeat this proc ess till all makings are over.

Step 7: Draw straight line through unmarked rows and marked column. The number o f straight line drawn will be equal to number of assignments made. Step 8: Exami ne the uncovered elements. Select the minimum. a) Subtract it from uncovered ele ments. b) Add it at the point of intersection of lines. c) Leave the rest as it is. d) Prepare a new table. Step 9: Repeat steps 3 to 7 till optimum assignment is obtained. Step 10: Repeat steps 5 to 7 till number of allocations = number of rows. The assignment algorithm applies the concept of opportunity costs. The co st of any kind of action or decision consists of the opportunities that are sacr ificed in taking that action. If we do one thing, we cannot do another.

Self Assessment Questions State Yes or No 4. In Hungarian method, you prepare ro w-reduced matrix. 5. The number of assignments should be equal to the number of rows for an optimum solution. 6. There can be more than one allocation in a row. 6.4 Routing Problem Network scheduling is a technique for planning and scheduli ng of large projects. It has successfully been applied in transportation and com munication problems. A typical network problem involves finding route from one n ode (origin) to another (destination) between which alternative paths are availa ble at various stages of the journey. The problem is to select the route that yi elds minimum cost. A number of different constraints may be placed on acceptable routes for instance, not returning to the node passed or passing through each n ode just once. These kinds of problems are called as routing problems. A wide va riety of problems other than routing may be developed in connection with the con struction and utilisation of networks. Here, you are going to consider the speci al type of routing problem that occurs frequently in OR the travelling salesman problem.

6.4.1 Unbalanced AP Unbalanced assignment is an assignment where the number of r ows is not equal to the number of columns and vice versa. For example, the numbe r of machines may be more than the number of jobs or the number of jobs may be m ore than the number of machines. In such a situation, you have to introduce dumm y row/column(s) in the matrix. The dummy rows or columns will contain all costs elements as zero. This balances the problem and then you can use Hungarian metho d to find optimal assignment. Unbalanced assignment problem: No. of rows No. of columns.

6.4.2 Infeasible assignments It is sometimes possible that a particular person i s incapable of doing certain work or a specific a specific job cannot be perform ed on a particular machine. The

solution of the assignment problem should take into account these restrictions s o that the infeasible assignment can be avoided. This can be achieved by assigni ng a very high cost (say or M) to the cells where assignments are prohibited, th ereby, restricting the entry of this pair of job machine or resource activity in to the final solution. After inserting a high value a at the cell we need to app ly Hungarian method to solve the problem.

6.4.3 Maximisation in AP Some assignment problems are phrased in terms of maximi sing the profit or effectiveness or payoff of an assignment of people to tasks o r of jobs to machines. You cannot apply the Hungarian method to such maximisatio n problems. Therefore, you need to reduce it to a minimisation problem. It is ea sy to obtain an equivalent minimisation problem by converting every number in th e table to an opportunity loss. To do so, you need to subtract every value from the highest value of the matrix and then proceed as usual You will notice that m inimising the opportunity loss produces the same assignment solution as the orig inal maximisation problem.

Caselet A tailoring unit has four sewing machines of different makes. Each machi ne is capable of stitching all the required designs and patterns. However, the p rofit factor differs for each assignment. The unit is looking at maximising prof it. To do so, the unit needs to carry out an optimal assignment exercise of assi gning the right jobs to the right machines.

Self Assessment Questions Fill in the blanks 7. In unbalanced AP, the number of rows ________ to number of column. 8. Hungarian method cannot be applied directl y to _________ problem. 9. If some jobs cannot be assigned to some machines, the n it is called _________ assignment problem. 6.5 Travelling Salesman Problem Sup pose a salesman has to visit n number of cities. He wishes to start from a particu lar city, visit each city once and then return to his starting point. The object ive is to select the sequence to visit the cities in such a way that his total t ravelling time is minimised. Starting from a given city, the salesman will have total of (n-1) different sequences. Further, since the salesman has to visit all the n number of cities; the optimal solution remains independent of selection of the starting point. The problem can be represented as a network where the nodes and arcs represent the cities and the distance between them respectively. Assume that in a five city problem, a round trip of the salesman is given by the follo wing arcs.

(3,1), (1,2), (2,4), (4,5), (5,3) These arcs in order are the first, second, thi rd, fourth and fifth directed arcs for the trip. Generally the kth directed arc represents the kth leg of the trip that is on leg k, the salesman travels from c ity i to city j (i, j = 1, 2 n; ) To formulate the problem, whose solution will y ield the minimum travelling time, let the variables xijk be defined as: Where, i, j and k are integers that vary between 1 and n Following are the const raints of the problem. a) Only one directed arc may be assigned to a specific k, thus xijk = 1 k =1, 2, 3n b) Only one other city may be reached from a specific city i, thus xijk =1, i = 1, 2, n

c) Only one other city can initiate a direct arc to a specified city j, thus xij k =1, j =1, 2 n d) Given the kth directed arc ends at some specific city j, the ( k+1)th directed arc must start at the same city j; thus xijk = xjr ( k +1) for a ll j and k. These constraints ensure that the round trip will consist of connected arcs. The objective function is to minimise z= dij xijk Where dij is the distance from city i to city j Self Assessment Questions Fill i n the blanks 10. In travelling salesman problem, the objective is to visit each cities ________ __________. 11. Salesman has ________ different sequences if n a re the number of cities to be visited. 6.6 Summary

This unit on assignment problems focuses on a special type of transportation pro blem, where the objective is to allocate n number of different facilities to n numbe r of different tasks. Although an assignment problem can be formulated as a line ar programming problem, it is solved by a special method know as Hungarian metho d. If the number of persons is the same as the number of jobs, the assignment pr oblem is said to be balanced. The unit also explains the travelling salesman pro blem in brief. 6.7 Terminal Questions 1. Four jobs are to be done on four differ ent machines. The cost in (rupees) of producing ith on the j th machine is given below: Assign the jobs to different machines to minimise the total cost. 2. A marketing manager has 5 salesmen and 5 sales districts. Considering the capabilities of t he salesman and the nature of districts, the marketing manager estimates that sa les per month (in hundred rupees) for each salesman in each district would be as follows.

Find the assignment of salesman to districts that will result in maximum sales. 3. In a plant layout, there are five vacant places. The plant orders four machin es to be installed in the vacant places. The cost of installing is as follows: M /G M1 M2 M3 M4 A 9 12 14 B 11 9 11 8 C 15 14 12 D 10 10 11 7 E 11 9 7 8 Find the optimum assignment. 4. Find the assignment that maximises the total sal e. Zone Sales men M1 M2 1 42 30 2 35 25 3 28 20 4 21 15

M3 M4 30 24 25 20 20 16 15 12 6.8 Answers to SAQs and TQs Answers to Self Assessment Questions 1. True 2. True 3. False 4. True 5. True 6. False 7. 8. Maximisation problem 9. Infeasible 10. Only once 11. (n-1) Answers to Terminal Questions 1. The optimum assignment poli cy is Job1 to machine 2, Job 2 to machine 4

Job 3 to machine1, Job 4 to machine 3. And the minimum assignment cost = Rs. (11 +13+14+11) = Rs. 49 2. Optimal assignment policy is salesman 1 to district B, 2 to A, 3 to E, 4 to C and 5 to D. Hence the maximum sales = Rs. (38+40+37+41+35) 100 = Rs. 19,100. 3. M1 A2; M2 B; M3 E; M4 D Total 38 4. M1 1; M2 2; M3 3; M4 Total 99 6.9 References The following resources have been referred to for additi onal content for the unit. http://www.scribd.com/doc/13259677/AssignmentProblem http://www.scribd.com/doc/13259687/QMB-FromLinnyorg http://nsdl.niscair.res.in/b itstream/123456789/827/1/CHA PTER-4+AP++-+ Formatted.pdf Copyright 2009 SMU

Powered by Sikkim Manipal University . MB0048-Unit-07-Integer Programming Proble m Unit-07-Integer Programming Problem Structure: 7.1 Introduction Learning Objec tives 7.2 All and Mixed Integer Programming Planning 7.3 Gomorys all IPP Method C onstruction of Gomorys constraints 7.4 All IPP Algorithms 7.5 Branch and Bound Te chnique Branch and bound algorithm 7.6 Summary 7.7 Terminal Questions 7.8 Answer s to SAQs and TQs Answers to self assessment questions

Answers to terminal questions 7.9 References 7.1 Introduction Welcome to the sev enth unit on Integer Programming Problem in Operations Research Management. The Integer Programming Problem (IPP) is a special case of Linear Programming Proble m (LPP), where all or some variables are constrained to assume non-negative inte ger values. You can apply this problem to various situations in business and ind ustry where discrete nature of the variables is involved in many decision-making situations. For instance, in manufacturing, the production is frequently schedu led in terms of batches, lots or runs; in distribution, a shipment must involve a discrete number of trucks or aircrafts or freight cars. Learning objectives By the end of this unit, you should be able to: Write an integer programming probl em (IPP) Solve an integer programming problem (IPP) using Gomorys method Apply th e branch and land technique

7.2 All and Mixed Integer Programming Problem (IPP) An integer programming probl em can be described as follows: Determine the value of unknowns x1, x2, , xn So as to optimise z = c1x1 +c2x2 + . . .+ cnxn Subject to the constraints ai1 x1 + ai2 x2 + . . . + ain xn =bi , i = 1,2,,m and xj 0 j = 1, 2, ,n Where xj being an integral value for j = 1, 2, , k n. If all the variables are forced to take only integral value that is k = n, it is called an all (or pure) integer programming problem. If some of the variables are restricted to take integral value and the remaining (n k) variables take any non-negative value, then the problem is know n as a mixed integer programming problem. Self Assessment Questions True or Fals e: 1. Integer programming is applied to problems that involve discrete variables .

2. If some variables take on non-negative values, then it is known as pure IPP. 7.3 Gomorys All IPP Method An optimum solution to an IPP is obtained by using the simplex method, ignoring the restriction of integral values. In the optimum sol ution, if all the variables have integer values, the current solution will be th e required optimum integer solution. Otherwise, the given IPP is modified by ins erting a new constraint called Gomorys constraint or secondary constraint. This c onstraint represents necessary conditions for integrability and eliminates some non-integer solution without losing any integral solution. On addition of the se condary constraint, the problem is solved using dual simplex method to obtain an optimum integral solution. If all the values of the variables in the solution a re integers, then an optimum inter-solution is obtained, or else a new constrain t is added to the modified LPP and the procedure is repeated till the optimum so lution is derived. An optimum integer solution will be reached eventually after introducing enough new constraints to eliminate all the superior non-integer sol utions. The construction of additional constraints, called secondary or Gomorys c onstraints is important and needs special attention.

7.3.1 Construction of Gomorys constraints Consider a LPP or an optimum noninteger basic feasible solution. With the usual notations, let the solution be displayed in the following simplex table. Table 7.1: Simplex table yB xB y2 y10 y3 y20 y0 0 y1 y11 y21 y01 y2 y12 y22 y02 y3 y13 y23 y03 y4 y14 y24 y04 The optimum basic z = y00 Since xB l. The constraint to y10 = y11 x1 + feasible solution is given by xB = [x2, x3 ] = [y10, y20]; max is a non-integer solution, we can assume that y10 is fractiona equation is y10 = y11 x1 + y12 x2 + y13 x3+ y14 x4 It reduces x2 + y14 x4 _____ (1)

Because x2 and x3 are basic variables (which implies that y12 = 1 and y13 = 0). The above equation can be rewritten as x2 = y10 - y11 x1 - y14 x4

This is a linear combination of non-basic variables. Now, since y10 0 the fracti onal part of y10 must also be non-negative. You can split each of yij in (1) int o an integral part Iij , and a non-negative fractional part, f1j for j = 0,1,2,3 ,4. After the breakup (1) above, you can write it as: I10 + f10 = (I11 + f11) x2 + (I14 + f14) x4 Or f10 - f11 x2 - f14 x4 = x2 + I11 x1 + I14x4 - I10 _____ (2) If you compare (1) and (2), you will see that if you add an additional constrai nt in such a way that the left-hand side of (2) is an integer; then you will be forcing the noninteger y10 towards an integer. The desired Gomorys constraint is f10 f11 x1 f11 x4 0 It is possible to have f10 f11 x1 f11 x4 = h where h > 0 is an integer. Then f10 = h + f11 x1 + f14 x4 is greater than one. This contradicts that 0 < fij < 1 for j = 0, 1, 2, 3, 4. Thus Gomorys constraint is

Where Gsla (1) is a slack variable in the above first Gomorys constraint The addi tional constraint to be included in the given LPP is towards obtaining an optimu m all integer solution. After adding the constraint, the optimum simplex table l ooks like table 7.2 given below. Table 7.2: Optimum simplex table yB xB y1 y10 y 2 y20 Gsla(1) f10 y00 y1 y11 y21 f11 y01 y2 y12 y22 0 y02 y3 y13 y23 0 y03 y4 y1 4 y24 f14 y04 Gsla(1) 0 0 1 y05 Since f10 is negative, the optimal solution is unfeasible. Thus the dual simplex method is to be applied for obtaining an optimum feasible solution. After obtai ning this solution, the above referred procedure is applied for constructing sec ond Gomorys constraint. The process is to be continued till all the integer solut ion has been obtained. Self Assessment Questions Fill in the blanks: 3. An optim um solution to IPP is first obtained by using ______________.

4. With the addition of Gomorys constraint, the problem is solved by ______ _____ _ ________. 7.4 All IPP Algorithm The iterative procedure for the solution of in teger programming problem is as follows. Figure 7.1: Iterative procedure of IPP

Step 1: Convert the minimisation IPP into maximisation, if it is in minimisation form. Ignore the integrality condition. Step 2: Introduce the slack or surplus variables, if needed to convert the inequations into equations and obtain the op timum solution of the given LPP by using simplex algorithm. Step 3: Test the int egrality of the optimum solution a) If the optimum solution contains all integer values, an optimum basic feasible integer solution has been obtained. b) If the optimum solution does not include all integer values, then proceed to the next step. Step 4: Examine the constraint equations corresponding to the current opti mum solution. Let these equations be represented by Where denotes the number of variables and the number of equations. Choose the la rgest fraction of bis to find Let it be or write is as

Step 5: Express the negative fractions if any, in the kth row of the optimum sim plex table as the sum of a negative integer and a non-negative fraction. Step 6: Find the Gomorian constraint And add the equation To the current set of equation constraints Step 7: Start with a new set of equat ion constraints. Find the new optimum solution by dual simplex algorithm so that Gsla (1) is the initial leaving basic variable. Step 8: If the new optimum solu tion for the modified LPP is an integer solution, it is also feasible and optimu m for the given IPP. If it is not an integer solution, then return to step 4 and repeat the process until an optimum feasible integer solution is obtained.

Self Assessment Questions True or False: 5. Do you select the variable for Gomor ys constraint whose fractional value is more? 6. Optimum values in an pure IPP ca n be x=2 and y=3.5. 7.5 Branch and Bound Technique Sometimes a few or all the va riables of an IPP are constrained by their upper or lower bounds or by both. The most general technique for a solution of such constrained optimisation problems is the branch and bound technique. The technique is applicable to both all (or pure) IPP as well as mixed IPP. The technique for a maximisation problem is disc ussed below: Let the IPP be Maximise (1)

Subject to the constraints (2) xj is integer valued , j = 1, 2, .., r (

xj > 0 . j = r + 1, .., n - (4) Further let us suppose that fo nd upper bounds for the optimum values of the variable by Lj xj Uj j = 1, 2, . r behind the branch and bound technique. Consider any variable xj, and let I be so me integer value satisfying Lj I Uj 1. Then clearly an optimum solution (1) thro ugh (5) also satisfies either linear constraint. x j I + 1 ( lets assume that there were no integer restrictions (3), and it yields an optimal solution to LPP (1), (2), (4) and (5). This indicates x1 = 1.66 (for example). Then you formulate and solve two LPPs each containing (1), (2) and (4). But (5) for j = 1 is modified to be 2 x1 U1 in one problem and L1 x1 1 in the other. Fur ther to

each of these problems, process an optimal solution satisfying integer constrain t (3). Then the solution having the larger value for z is clearly the optimum fo r the given IPP. However, it usually happens that one (or both) of these problem s have no optimal solution satisfying (3), and thus some more computations are r equired. Now let us discuss, step wise, the algorithm that specifies how to appl y the partitioning (6) and (7) in a systematic manner to finally arrive at an op timum solution. Lets start with an initial lower bound for z, say z(0) at the fir st iteration, which is less than or equal to the optimal value z*. This lower bo und may be taken as the starting Lj for some xj. In addition to the lower bound z(0), you also have a list of LPPs (to be called master list) differing only in the bounds (5). To start with (the 0th iteration) the master list contains a sin gle LPP consisting of (1), (2), (4) and (5). Let us now discuss the procedure th at specifies how the partitioning (6) and (7) can be applied systematically to e ventually get an optimum integer-valued solution. 7.5.1 Branch and bound algorit hm At the tth iteration (t = 0, 1, 2 ), apply the following steps to get an optim um integer.

Step 0: If the master list is not empty, choose an LPP from it. Otherwise stop t he process, go to step 1. Step 1: Obtain the optimum solution to the chosen prob lem. If either i) It has no feasible solution or ii) The resulting optimum value of the objective function z is less than or equal to z(t), then let z(t+1) = z( t) and return to step 0; otherwise go to step 2 Step 2: If the obtained optimum solution satisfies the integer constraints (3) then record it. Let z(t+1) be the associated optimum value of z; return to step 0. Otherwise move to step 3. Step 3: Select any variable xj, j = 1, 2, ., p. that does not have an integer value i n the obtained optimum solution to the LPP, chosen in step 0. Let denote this op timal value of xj. Add two LPPs to the master list. These LPPs are identical to the LPPs chosen in step 0, except that, the lower bound on xj is replaced by Let z(t+1) = z(t); return to step 0. + 1. Note: At the termination of the algorithm, if a feasible integer valued solution yielding z(t) has been recorded, it is optimum, or else no integer valued feasi ble solution exists.

Self Assessment Questions True or False: 7. Branch and bound technique is applie d when some variables have upper or lower bounds. 8. We start the technique with lower bound. 7.6 Summary This chapter examines the programming model in which t he assumption of divisibility is weakened. This unit also describes two algorith ms to determine the optimal solution for an integer programming problem. One is the cutting plane algorithm devised by Gomory and the other is the branch and bo und algorithm developed by Land Doig. 7.7 Terminal Questions 1. Use Branch and B ound technique to solve the following problem Maximise z = 3x1 + 3x2 + 13 x3 Sub ject to 3x1 + 6x2 + 7x3 8 6x1 3x2 + 7x3 8

xj 5 And xj are integer j = 1, 2, 3 2. What is integer programming? 3. Explain the Gomorys cutting plane all integer algorithm of an IPP? 7.8 Answers to SAQs a nd TQs Answers to Self Assessment Questions 1. True 2. False 3. Simplex method 4 . Dual simplex method 5. Correct 6. Wrong 7. True 8. False Answers to Terminal Q uestions 1. At the end of the 8th iteration we get the optional solution to the I.P.P. is x1 = x2 = 0, x3 = 1, z* = 13.

2. Refer to Section 7.2 3. Refer to Section 7.3 7.9 References No external sourc es have been referred for this unit. Copyright 2009 SMU Powered by Sikkim Manipa l University . MB0048-Unit-08-Infinite Queuing Models Unit-08-Infinite Queuing M odels Structure: 8.1 Introduction Learning objectives 8.2 Queuing Theory 8.3 Ana lysis of Queuing Process 8.4 Constituents of Queuing System Arrival pattern Comp letely random arrivals

8.5 Service Facility 8.6 Queue Discipline Customer behaviour Server behaviour 8. 7 Mathematical Analysis of Queuing Process Properties of the system Notations 8. 8 Single Channel Models 8.9 Multiple Service Channels 8.10 Erlang Family of Dist ribution of Service Times 8.11 Summary 8.12 Terminal Questions 8.13 Answers to S AQs and TQs Answers to Self Assessment Questions Answers to Terminal questions 8 .14 References 8.1 Introduction

Welcome to the eighth unit of Operations Research on Infinite Queuing Models. Th is unit talks about how a queuing model used to approximate a queuing situation for the queuing method is to be analysed mathematically. Who isnt familiar with q ueues in our daily existence? On way to your work place, you have to wait at the bus stop, wait for the traffic light to turn green, wait for your turn to enter the lift. You come across cars in line at petrol pumps for service, queues to d eposit cash at the bank, mobile subscriber waiting for a new connection, custome rs waiting at the checkout counter, goods in production/warehouse waiting to be shipped; even aircrafts waiting for a free runway to take off. The one thing com mon to all the above mentioned examples is that customers arrive at a service ce ntre and wait for their turn to receive the service. Though the arrival of custo mers is irregular and time taken for service is not consistent, queues build up during hours of demand and disappear during the lull period. Personally we do no t like to wait. In commercial or industrial situations, it may not be economical to have waiting lines. On the other hand, it may not be feasible or economical to totally avoid queues. An executive dealing with the system then would like to find the optimal facilities to be provided

Learning objectives By the end of this unit, you should be able to: Describe the queuing process Evaluate the queuing process mathematically Apply different mod els to practical problems 8.2 Queuing Theory The queuing theory is based on prob ability concepts. It gives an indication of the capability of a given system and the possible changes in its performance with modification to the system. All th e constraints of the process are not taken into account in the formulation of a queuing model. The application of queuing theory cannot be viewed as an optimisa tion process as there is no maximisation or minimisation of an objective functio n. Help on hand in the form of queuing theory allows the executive to make an in formed guess of what the balance between customer waiting time and service capab ility should be. The executive first considers several alternatives, evaluates t heir effect on the system through queuing models and makes his choice. The evalu ation criteria will measure efficiency of the system by measuring the average le ngth of a queue, expected

waiting time of a customer and the average time spent by the customer in the sys tem. The success in using this approach primarily depends on the alternatives co nsidered and not on the queuing models developed. Therefore, it is essential for the executive to have a succinct understanding of the process, so that he can c onsider the right alternatives and formulate the correct models. Self Assessment Questions True or False: 1. Customers arrive at a bank at regular intervals. 2. Queuing identifies the optimal service facilities to be provided. 3. Queuing th eory is based on the deterministic model. 8.3 Analysis of a Queuing Process The management is often interested in finding out the quality of service rendered to the customers. An indicator of efficiency of a system involving flow of custome rs for service is the speed which they are served. Augmenting the physical facil ities to provide service will enhance service leading to customer satisfaction. However, these facilities cannot be increased randomly as

they are expensive. If the queuing process involves waiting of machines for serv ice, it is possible to find the economic level of the maintenance facilities by balancing the cost of machine downtime against the cost of maintenance facilitie s. Such evaluation in monetary terms is not always possible when the customers a re people. Then some measures of efficiency of the system as mentioned above may prove helpful. A typical investigation of a queuing system would comprise the f ollowing steps: Step 1: Preliminary study This stage involves an analysis of the process created through a flow diagram. An attempt is made to identify the poin ts, which restrict service or the characteristics, which indicate scope for impr ovement. Step 2: Exploration of the various alternatives By introducing changes in the constituents of the queuing system, it is possible to effect improvement. The arrival pattern may be altered by withdrawing service facilities to certain categories of customers or by introducing an appointment system. The time taken for providing service can be improved by increasing the capacity of the system, that is, by increasing the number of service channels or the working hours. Pro viding additional service facilities to relieve congestion during peak periods i s a common

feature. Also, modifying the queue discipline may change the characteristics of the system. Priority has to be given to the arrivals involving high cost of wait ing time. In multi channel queues, separate channels of service are provided for different types of customers. The fixed change counter at the Churchgate railwa y station manned by Western Railway authorities is said to have cut down the wai ting time for a majority of customers. Step 3: Collection of data and analysis D irect observation of the system in terms of customers arrival time, service rate, length of queue and waiting time is done during the collection stage. The data is analysed in detail to determine the statistical pattern of the variables. The measures of efficiency of the system are computed on the basis of queuing theor y. These are counterchecked with the results obtained through direct observation to confirm the validity of the formulae applied. It may be necessary to collect additional data regarding the process. Step 4: Evaluation of alternatives Effec t of modifying the constituents of the system on the basis of the selected alter natives is evaluated through application of queuing theory. Simulation technique is another alternative. Based on the results obtained, the best

combination of the changes to be made in the existing system is selected. Step 5 : Implementation Formulated proposals are implemented and tested on a small scal e. If the need arises, further changes are made and rechecked before implementin g them on full scale. It is advisable to observe the functioning of the system p eriodically to ensure that the desired results are maintained. Self Assessment Q uestions Fill in the blanks: 4. One of the indicators of efficiency of a system is ________ factor. 5. Analysis of queuing system explores ________ ________. 6. ____________ technique can also be used for analysis. 8.4 Constituents of a Que uing System The constituents of a Queuing System include arrival pattern, servic e facility and queue discipline. Arrival pattern: It is the average rate at whic h the customers arrive as well as the statistical pattern of arrival

 Service facility: Examining the number of customers served at a time and the sta tistical pattern of time taken for service at the service facility Queue discipl ine: The common method of choosing a customer for service amongst those waiting for service is First Come First Serve Let us examine each of these constituents in detail. 8.4.1 Arrival pattern The arrival of customers can be regular as in cas e of an appointment system of a doctor or flow of components on a conveyor belt. The regular pattern of arrivals is neither very common nor very easy to deal wi th mathematically. Our primary concern is the pattern of completely random arriv als. 8.4.2 Completely random arrivals If the number of potential customers is in finitely large, then probability of an arrival in the next interval of time will not depend upon the number of customers already in the system. (The assumption is valid by and large, except for queues involving a small finite number of cust omers.) When the arrivals are completely random, they follow the Poisson distrib ution, which equals to the average number of arrivals per unit time.

Sometimes it is necessary to distinguish between groups of customers, such as ma le and female callers, or large and small aircrafts during the arrivals. There a re several other types of arrival patterns which shall not be dealt with due to their restricted applications. Self Assessment Questions True or False: 7. Every queuing process has an arrival pattern, a service facility and a queue discipli ne as its constituents. 8. If the arrivals are completely random, then it follow s Poisson distribution. 8.5 Service Facility Service Facility is based on three parameters Availability of Service, Number of Service Centres and Duration of Se rvice. i) Availability of service It is necessary to examine if there are any co nstraints that reduce the number of customers to be served at a time, apart from specifying the time span of the availability of service. For example, in a wait ing line for a suburban train, apart from the timings of the train services, the probability distribution of the number of passengers that can be accommodated i n a train that arrives is relevant.

ii) Number of service centres If only one service centre is referred to as a ser vice channel, obviously only one customer can be served at a time. There will de finitely be more than one service centre and the behaviour of the queues will va ry with the number of channels available for service. Multiple service channels may be arranged in series or in parallel. Multiple service channels are arranged in series when a customer has to go through several counters one after another with each providing a different part of the service. For instance, bank counters where a customer has to go to at least two counters to withdraw is an example o f arrangement in series. On the other hand ticket booths in a railway station ha ve multiple channels with parallel arrangement. iii) Duration of service This is the length of time taken to serve a customer. This can be constant or varying. (a) Constant service time: Though not in practice, an assumption that service ti me is constant holds true, if the pattern of arrivals is very irregular. (b) Com pletely random service time: The service time can be considered completely rando m when:

 The server does not distinguish between the various arrivals The server does not deliberately change the duration of service on the basis of the time taken to s erve the previous arrival. The server forgets the time for which he has been ser ving a customer. Under the above mentioned conditions, the service time follows exponential distribution which means equal to reciprocal of the average rate of service. (c) Service time following Erlang Distribution Sometimes, the assumptio n of an exponential distribution for service time is not valid; hence Erlang fam ily of service time distributions is used. Table 8.1: Erlang Distribution of ser vice time Sr.No. 1. Situation Passage of customers through supermarket checkout Flow of Arriving Service Customers Facility Shoppers Checkout counters 2. Automobiles Road

3. 4. 5. 6. 7. automobile traffic through a road network. Transfer of electronic messages Banki ng transactions Flow of computer programmers through a computer system. Sale of theatre tickets Arrival of trucks to carry fruits and vegetables from a central market Registration of unemployed at employment exchange Occurrences of Network Electronic messages Transmission lines Bank patrons Bank tellers Computer Central Programmers processing unit Theatregoers Trucks Ticket booking windows Loading crews and facilities 8. Unemployed Registration personnel assistants Fires Firemen and 9.

10. 11 fires Flow of ships to ships the seashore Calls at police control room equipment Harbour and docking facilities Service calls policemen Self Assessment Questions Fill in the blanks: 9. Multiple service channels may b e arranged in ___________ or in _________. 10. The service time can be _________ _ or _________. 8.6 Queue Discipline The pattern of selection for service from t he pool of customers is of two types. The common pattern is to select in the ord er in which the customers arrive. First come first served is a common example. In issuing materials from a stores inventory sometimes the storekeeper follows the Last in First Out principle because of the convenience it offers for removal from stocks and handling. There are queues according to priority to certain types of customers. This type of queuing can have two approaches: non pre-emptive and pr e-emptive. In case of

non pre-emptive priority, the customer getting service is allowed to continue wi th service till completion, even if a priority customer arrives midway during his service. This is a common form of priority. Pre-emptive priority involves stopp ing the service of the non priority customers as soon as the priority customer a rrives. Priority given to repairs of a production holding machine over an auxili ary unit for allocation of maintenance labour force is a typical example. Prefer ence is given to larger ships over the smaller ones irrespective of the order in which they arrive for allocation of berths. 8.6.1 Customer behaviour a) Balking: Arriving customers are said to balk if they do not join a queue because of their reluctance to wait. b) Collusion: Customers may be in collusion meaning that only one person would join the queue, but dema nd service on behalf of several customers. c) Reneging: Impatient customers who would not wait beyond a certain time and leave the queue are said to renege.

d) Jockeying: Some customers keep on switching over from one queue to another in a multiple service centre. This is called jockeying. 8.6.2 Server behaviour Alt hough the service timings have been specified, the server may not be available t hrough the entire span of time. For instance, in every one hour the server may d isconnect from the service centre for 5 minutes so that it can go through its da ily updates or cleanup routine. Self Assessment Questions Fill in the blanks: 11 . When customers keep on switching over from one queue to another then it is cal led ________. 12. _____ ________ ______ ______ are the types of customer behavio ur. 8.7 Mathematical Analysis of Queuing Process Statistical Equilibrium: While analysing the queuing process, our main interest is in developing a mathematical model which represents the system. This implies that changes occurring in the c haracteristics of the system are not to be considered if they are of short durat ions. When we specify the statistical distributions of the arrivals or service t imes, we want to ensure an equilibrium state.

In a queuing process, at each point of time, there is a probability distribution for the length of the queue. Compare the number of customers arrived at the pos t office, 15 minutes after the counter is opened to that after one hour. After t he initial rush, youll find the system with the same type of probabilities of arr ivals. The probability distribution of the arrivals will then be different from that of the initial state. The state, in which the probability distribution rema ins the same, is called the steady state and the system is said to have acquired a state of statistical equilibrium. In the steady state, there will be variatio ns in the queue from time to time but the probability distributions representing the queuing process will remain the same and are independent of the time at whi ch the system is examined. 8.7.1 Properties of the system While developing queui ng models, we will confine our discussion to queuing systems with the following properties. Arrivals Customers are discrete entities Population Finite/Infinite

 No simultaneous arrivals Pattern of arrivals in a time period t0 follows Poisson distribution with average arrival rate x = 0, 1, 2 .. Service Single serve channe l/Multiple channels Single queue/Infinite capacity Pattern discipline First come first serve Note: When the number of arrivals follows Poisson distribution (dis crete), the inter-arrival time; that is the time between arrivals follows expone ntial distribution (continuous). 8.7.2 Notations The queuing systems with which you are concerned are denoted by M/M/1 and M/M/c where Ms stand for exponential inter arrival and exponential service time distributions, and the third figure i ndicates the number of channels (or servers) available (1 or c). Here is a list of notations which are commonly used.

Self Assessment Questions Fill in the blanks: 13. E (m) refers to ________ _____ ____ ________ _________. 14. Probability density function of the time spent by a customer in the system is denoted by _____________. 15. ___________ arrivals ar e allowed. 8.8 Single Channel Models The formulae are listed in tables 8.2 and 8 .3. The examples illustrate the computation of various measures

of efficiency of a queuing system, but give an idea of the areas of application as well. Table 8.2: Formulae for Poisson Arrivals, Exponential Service, Single C hannel Queuing Models Infinite Population Table 8.3: Formulae for Poisson Arrivals, Exponential Service, Single Channel Qu euing Models Number of customers linked to N.

Solved Problem 1: Patrons arrive at a small post office at the rate of 30 per ho ur. Service by the clerk on duty takes an average of 1 minute per customer a) Ca lculate the mean customer time (i) Spent waiting in line (ii) Spent receiving or waiting for service b) Find the mean number of persons (i) In line (ii) Receivi ng or waiting for service Solution: Mean arrival rate l = 30 customers per hour = customer per minute Mean service rate = 1 per minute Traffic intensity (a) (i) Mean customer time spent waiting in line minute

(ii) Mean customer time receiving or waiting for service = 2 minutes (b) (i) Mea n number of persons in line customer (ii) Mean number of persons receiving or wa iting for service customer Solved Problem 2: The Tool Companys quality control de partment is manned by a single clerk, who takes an average of 5 minutes in check ing parts of each of the machines coming for inspection. The machines arrive onc e in every 8 minutes on the average. One hour of machine is valued at Rs. 15 and a clerks time is valued at Rs. 4 per hour. What is the average hourly queuing sy stem costs associated with the quality control department? Solution: Mean arrival rate l = 1/8 per minute = per hour

Mean service rate p er minute = 12 per hour Average time spent by a machine in the system E (v) = = hours Average queuing co st per machine is An average arrival of = Rs. 25 per hour Average hourly queuing cost = Rs. 25 Average hourly cost for the clerk = Rs. 4 Hence total hourly cost for the department = Rs. 29 machines per hour costs

Self Assessment Questions Fill in the blanks: 16. The expected number of custome rs in non empty queue is given by ___________. 17. The probability that an arriv ing customer has to wait for receiving service is given by ___________. 8.9 Mult iple Service Channels The analysis of systems involving several service channels is more complex. The major practical utility of these models are the ways of im proving to provide additional service facilities. The list of formulae to be use d is given in table below followed by few examples. Table 8.4: Formulae for Pois son Arrivals, Exponential Service Multi channel Queuing Models Infinite Populati on

Self Assessment Questions Write the formula : 18. Expected number of customers i n the system. 19. Average waiting time of the customer in the queue. 8.10 Erlang Family of Distribution of Service Times The queuing processes discussed till no w are mathematically simple. Assuming that the service time follows negative exp onential distribution, you are also taking the standard deviation equal to its m ean. There would be situations, where the mean and the standard deviation substa ntially differ, the models have to be made more general by using a distribution system, which coincide closely to the practical problems, but yet retains the si mplicity of the properties of negative exponential distribution. A.K. Erlang fir st studied such a distribution system. Consider the distribution of a service ti me involving a fixed number of phases k, each phase having a negative exponential distribution. If there are k phases, and the average time taken by a customer t hrough each phase is units, the service time distribution f (t) is given by

The mean of this distribution is and standard deviation is . If k = 1, f (f) = m em1 which is the negative exponential distribution; same as the models considered earlier. For k = 2, f (f) = 4m 2te 2 m f and so on. The mode is located at t = . If k = the variance is zero and this corresponds to a case where the service tim e is constant and has value . The figure below shows the way the density functio ns vary as k increases. Figure 8.1: Density functions vary as k increases The measures of efficiency sho uld take into account the number of customers getting service, number having ent ered during any one or more of the phases, and the

number yet to join. For arrivals following Poisson distribution, with mean l and service time following the kth Erlang distribution with mean, applicable are gi ven below. Average queue length Average number of units in the system Average wa iting time Average time spent in the system For constant service time, equating k to the formulae

Self Assessment Questions

Write the formula for: 20. E (m) 21. E (w) 8.11 Summary The waiting line theory or queuing theory analysis suggests the number of facilities required and the co st of customers waiting time and the optimum service level. The queuing theory c ontributes vital information required for balancing the cost of service and cost associated with waiting time of the customer. This unit discusses all the diffe rent models used under different conditions. 8.12 Terminal Questions 1. If in a particular single-server system, the arrival rate, l = 5 per hour and service ra te, m = 8 per hour. Assuming the conditions for use of the single channel queuin g model, find out: a. The probability that the server is idle. b. The probabilit y that there are at least two customers in the system. c. Expected time that a c ustomer is in the queue. 2. Customers arrive at the first class ticket counter o f a theatre at a rate of 12 per hour. There is one clerk serving

the customers at a rate of 30 per hour. Assuming the conditions for use of the s ingle channel queuing model, evaluate: a. The probability that an arriving custo mer has to wait for the service. b. The expected number of customers in the syst em. c. The average waiting time of the customer in the system. 3. In a bank, eve ry 15 minutes, one customer arrives for cashing the cheque. The clerk takes 10 m inutes to service. Assuming the usual conditions find. a. The ideal time of the clerk in 8 working hours. b. Expected no. of customers in the queue. c. The prob ability that a customer has to wait for 15 minutes or more to receive the servic e. 8.13 Answers to SAQs and TQs Answers to Self Assessment Questions 1. False 2. True 3. False 4. Utilization

5. Various alternatives 6. Simulation 7. Yes 8. Yes 9. Series, parallel 10. Cons tant, varying 11. Jockeying 12. Balancing 13. Average length of queue 14. F ( ) 15. Simultaneous 16. m / m l 17. l / 18. Refer to section 8.9 19. Refer to secti on 8.9 20. Refer to section 8.10 21. Refer to section 8.10

Answers to Terminal Questions 1. a) 3 /8 b)125 / 512 c)12.5 minutes 2. a) 3 /5 b ) 2 / 3 per hour c) 10 /3 minutes 3. a) 8 /3 hrs b) 4 /3 c) 0.4043 8.14 Referenc es No external sources of content have been referred for this unit. Copyright 20 09 SMU Powered by Sikkim Manipal University . MB0048-Unit-09-Finite Queuing Mode ls Unit-09-Finite Queuing Models Structure: 9.1 Introduction Learning objectives 9.2 Finite Queuing Models Finite queuing tables Measures of system efficiency

Use of finite queuing tables 9.3 Summary 9.4 Terminal Questions 9.5 Answers to S AQs and TQs Answers to self assessment questions Answers to terminal questions 9 .6 References 9.1 Introduction Welcome to unit nine of Operations Research Manag ement on Finite Queuing Models. The models discussed so far relate to situations involving infinite population of customers, that is, the queue can increase ind efinitely. However, you may come across scenarios where the possible number of a rrivals is limited and small. In this unit, we will discuss such scenarios. In a production shop, if the machines are considered as customers requiring service from repair crews or operators, the population is restricted to the total number of machines in the shop. In a hospital ward, the probability of the doctors or nurses being called for service is governed by the number of beds in the ward. S imilarly, in an aircraft the number of seats is finite and

the number of stewardesses provided by the airlines will be based on the conside ration of the maximum number of passengers who can demand service. In case of a queuing system with infinite population, you can improve the efficiency of the s ystem in terms of reduced average length of queues, average waiting time and tim e spent by the customer in the system. To do this, you need to increase the numb er of service channels. However, such increases mean additional cost and will ha ve to be balanced with the benefits likely to accrue. If the queuing system in a machine shop is under study, the cost of providing additional maintenance crews or operators can be compared with the value of additional production due to red uced downtime of the machines. Sometime it is not possible to quantify the benef its, the management will have to base its decisions on the desired standards for customer service. Learning objectives By the end of this unit, you should be ab le to: Describe queuing models and various queuing disciplines Interpret and app ly finite queuing tables to solve problems 9.2 Finite Queuing Models

Basic concept of queuing models You use a queuing model to approximate a real qu euing situation or system, so that you can analyse the queuing behaviour mathema tically. Queuing models allow you to determine a number of useful steady state p erformance measures. These measures are: Average number in the queue, or the sys tem Average time spent in the queue, or the system Statistical distribution of t hose numbers or times Probability of the queue being empty or full Probability o f finding the system in a particular state Analysis of the relevant queuing mode ls allows you to identify the cause of a queuing issue and assess the impact of the proposed changes. Typically, you need to analyse a queuing model to minimise the sum of: Customer waiting cost Service capacity cost In a finite queuing mod el, the system processes incoming requests or messages at a certain rate. Any ne wly arrived request or message is added to the queue only if the number of reque sts or messages waiting in the queue is less than the maximum.

The model is based on the following assumptions: The number of requests/messages in the queue uniquely characterises the state of the queue. Each source has a w ell-defined arrival pattern over time, i.e., inter-arrival or interval times are constant or randomly spaced over time with a known inter-arrival time probabili ty distribution (Poisson distribution). The service times at each channel may be constant or random with a known service distribution (negative exponential dist ribution). The potential arrivals may balk if the length of waiting line becomes excessive and decide not to join or arrivals may join the waiting line and subs equently renege, i.e., become impatient and leave before being served. They are lost by the service system. In a steady state, the average rate of departure is equal to average rate of arrivals. A queue is characterised by the maximum permi ssible number of customers that it can contain. This also could be finite or inf inite. In most of the practical situations, it is finite. Queuing discipline det ermines the manner in which the system handles calls from the customers. It defi nes the way in which they are served, the order in which they are

served, and the way in which resources are divided between the customers. A fini te queuing process may follow any of the following queuing disciplines. Fig. 9.1: Queue discipline route in a finite queuing process i. First come-first served (FIFS): This principle states that customers are served one at a time an d that the customer that has been waiting the longest is served first. In most q ueuing models, the order is usually first comefirst served. ii. Priority: Priori ty-discipline models give priority to rush jobs and important customers over oth ers. For instance, machines of high cost may be given priority for maintenance w hile others may be kept waiting even if they had broken down before. iii. Random : The principle states that the system may randomly select a customer for servic e. For example, in a machine shop if a single operator is attending to several

machines and several machines call for his attention at a time, he may attend fi rst to the one nearest to him. iv. Last Come-First Served (LIFS): This disciplin e is based on the stack method. Most quantitative parameters, such as the averag e queue length and average time spent in the system do not depend on the queuing discipline. Thats why most models either do not take the queuing discipline into account at all or assume the normal FIFS queue. The only parameter that depends on the queuing discipline is the variance (or standard deviation) of the waitin g time. The analysis of finite queuing models is more complex than those with in finite population although the approach is similar. L.G. Peck and R. N. Hazelwoo d have provided solutions to such problems in their book Finite Queuing Tables (J ohn Wiley & Sons Inc 1958). Simple Waiting Line Model The simplest waiting line model assumes that arrivals join a queue that is of unlimited size, waiting in l ine until their turn for service comes on a first-cum-first-serve basis and then enter a service facility consisting of a single channel. If, W = Average time s pent in queue (i.e., sum of the expected waiting time and expected service time) =

Average rate of units passing through the system per unit time L = Average numbe r of units in the system Then, L= W If = Average service rate 1/ = Expected inter arrival time 1/ = Expected service time Further, the utilisa tion factor, (i.e. the expected fraction of time the server is busy is given by: = /s Where, (s ) is the fraction of the systems service capacity that being util ised on the average by arriving customers C ) The crux of the queuing theory is to achieve a trade off between excessive waiting by customers (i.e., too much dem and) and cost due to excessive idle time at the service facility (i.e., too litt le demand). Lending system in a library is an example of single facility channel waiting line. 9.2.1 Finite queuing tables Given below are different notations u sed in finite queuing tables:

Consider a machine shop with N machines. The inter breakdown time of these machi nes follows a negative exponential distribution with mean U. The number of break downs follows Poisson distribution with mean Fig. 9.2: Notations used in finite queuing tables It is assumed that machines ar e kept running (or in operation) all the time, except when in repairs or waiting for repair crew to attend. If M repair crews are available, the time taken by a ny crew follows a negative exponential distribution with mean T. Naturally, a ma chine which has broken down will have to wait for repairs if all the repair crew s are busy. 9.2.2 Measures of system efficiency For a given set of machines, the efficiency of the repair system may be judged by the extent to which machines h ave to wait for repairs. If W is the average time for

which a machine has to wait, the efficiency factor F is defined as At any point of time, a machine will either be running or under repair or waitin g for repairs. Therefore, the total number of machines N = J + H + L. , correspo nd to the probability that a machine is being repaired, running or waiting for r epairs respectively. In the finite queuing tables, service factor X is defined a s . X is an indicator of the utilisation of repair crew. The formulae for other properties of the system are given below: 9.2.3 Use of finite queuing tables The above table gives values of F and D for d ifferent values of N, M and X. They are arranged in the ascending

order of the values of the population. For each N, the value of X increases from .001 to .950. For a given service factor X, several values of M can be found. F or each value of X and M, values of D and F are tabulated. The steps for finite queuing tables are as follows: i) Find mean service time T and mean running time U. ii) Compute the service factor. iii) Select the table corresponding to the p opulation N. iv) For the given population, locate the service factor value. v) R ead off from tables, values of D and F for the number of service crews M. vi) If necessary, these values may be interpolated between relevant values of X. vii) Calculate the other measures L, W, H, and J from the formulae given.

Figure 9.3: Finite queuing tables steps The overall efficiency F of the system w ill increase with the number of service channels (M) provided. As mentioned earl ier, addition of service crews involves cost, which should be justified by the i ncrease in the efficiency of the system that is additional running time of machi nes. However, it will be seen from the table that as M increases the rate of inc rease in efficiency decreases. The practical significance is that beyond a certa in value of M, it is not worthwhile increasing M as there would be no appreciabl e increase in the efficiency of the system. Caselet In a chemical factory, there are five hoppers

of identical size which feed material to grinding mills. Due to changes in the r equirement of material, there are variations in the time taken for emptying the hoppers. On the basis of past experience, it was found to follow negative expone ntial distribution with an average of 10 hours between getting emptied. Whenever a hopper gets empty, it has to be filled by a pay loader. Although the capacity of the hopper is the same, the time taken to fill the hoppers varies due to dif ferent locations from where the material is to be loaded. The time for filling t he hopper also was found to follow negative exponential distribution with an ave rage of 2.5 hours. The company hires the pay loaders at a cost of Rs. 100 per ho ur irrespective of whether it is operated or not. If the mill has to be stopped due to the empty hopper, it costs Rs. 1000 per hour in terms of loss of profits. To determine the number of pay loaders which the company should engage to minim ise overall cost you need to create a finite queuing table.

Self Assessment Questions True or False

1. When the possible number of arrivals is limited, then we apply infinite queui ng model. 2. The queue discipline in a finite queuing process can be random. 3. The efficiency factor for this model is HJ / H + J + L. 9.3 Summary This unit on finite queuing theory deals with situations where customers arrive, wait for th e service, get the service and leave the system. Customers may come individually or in groups from large/small population, at known/variable times, form one or more queues and move in a certain order to the service station(s) to avail of se rvices whose speed may be fixed or variable. Queuing systems are analysed for de termining the optimal service level, where the total cost of providing service a nd waiting, is minimised. An increase in the service level increases the cost of providing service, but reduces the cost of waiting, while a decrease in the ser vice level induces opposite changes. 9.4 Terminal Questions 1. Customers arrive at the first class ticket counter of a theatre at a rate of 12 per hour. There i s one clerk serving the customers at a rate of 30 per hour.

i) What is the probability that there is no customer in counter (for instance, t he system is idle)? ii) What is the probability that there are more than 2 custo mers in the counter? iii) What is the probability that there is no customer wait ing to be served? iv) What is the probability that a customer is being served an d nobody is waiting? 2. Assume that at a bank teller window, the customers arriv e in their cars at the average rate of twenty per hour according to the Poisson distribution. Also assume that the bank teller spends an average of two minutes per customer to complete a service, and the service time is exponentially distri buted. Customers, who arrive from an infinite population, are served on a first come first served basis and there is no limit to possible queue length. i) What is the expected waiting time in the system per customer? ii) What is the mean nu mber of customers waiting in the system? iii) What is the probability of zero cu stomers in the system? iv) What value is the utilisation factor?

9.5 Answers to SAQs and TQs Answers to Self Assessment Questions 1. False 2. Tru e 3. False Answers to Terminal Questions 1. i. P (the system is idle) = 1- r = 1 -0.4 = 0.6. ii. P (n > 2) = 1 P (n 2) = 1 [P (0) + P (1) + P (2)] = 1- 0.936 = 0 .064. iii. P (no customer waiting to be served) = P (0) + P (1) = 0.84. iv. P (a customer is being served and none is waiting) = P (1) = 0.24. 2. i. Expected wa iting time in the system per customer, Ws = 1/ (m-l) = 1/ (30-20) =1/10 hr. ii. Mean number of customers waiting in the system,

Lq = P (0) = . . iii. Probability of zero customers in the system, iv. Utilisation factor, 9.6 References The following external sources have been referred to for additional content for unit 9: http://en.wikipedia.org/wiki/Queu eing_model http://www.scribd.com/doc/14160718/OperationsManagement-Ch19-WaitingLines http://staff.um.edu.mt/jskl1/simweb/intro.htm http://docs.google.com/gview ?a=v&q=cache%3AuNc0Dt LpqBMJ%3Awww.stsc.hill.af.mil%2Fcrosstalk%2F2007 %2F12%2F0 712LauAppendix.pdf+finite+queuing+model &hl=en&gl=uk&sig=AFQjCNHDjmWKl7g8LD_Dzts UvEJxyr9Ig&pli=1 Copyright 2009 SMU Powered by Sikkim Manipal University

. MB0048-Unit-10-Simulation Unit 10 Simulation Structure: 10.1 Introduction Lear ning objectives 10.2 Basic Concepts 10.3 Simulation Procedure Allocation of rand om numbers Use of random number tables 10.4 Sample Size 10.5 Application of Simu lation Limitations Solved problems 10.6 Summary 10.7 Terminal Questions 10.8 Ans wers to SAQs and TQs

Answers to self assessment questions Answers to terminal questions 10.9 Referenc e 10.1 Introduction Welcome to the tenth unit of Operations Research Management on Simulation. While formulating mathematical models of various systems or situa tions, the statistical distribution of the variables conform to a standard patte rn. However, it is not always true. In a typical pricing problem, the management cannot risk changing the price of the product without evaluating the various al ternatives. Representing the terms of a mathematical model is virtually impossib le because of the complexity of the interaction of several variables having a be aring on the final outcome. One of the approaches to the problem is to assign pr obabilities of achieving various sales targets under different conditions of com pletion. These different conditions may be related to changes in price, demand a nd choose the alternative giving the maximum profit. Where formulating a mathema tical model is difficult, simulation is of great help for decision making. Learn ing objectives

By the end of this unit, you should be able to: Define simulation Demonstrate th e application of simulations in business problems Describe the Monte Carlo Metho d 10.2 Basic Concepts Simulation is also called experimentation in the managemen t laboratory. While dealing with business problems, simulation is often referred to as Monte Carlo Analysis. Two American mathematicians, Von Neumann and Ulan, in the late 1940s found a problem in the field of nuclear physics too complex for analytical solution and too dangerous for actual experimentation. They arrived a t an approximate solution by sampling. The method they used had resemblance to t he gamblers betting systems on the roulette table, hence the name Monte Carlo has s tuck. Imagine a betting game where the stakes are based on correct prediction of the number of heads, which occur when five coins are tossed. If it were only a question of one coin; most people know that there is an equal likelihood of a he ad or a tail occurring, that is the probability of a head is . However, without t he application of probability theory, it would be difficult to

predict the chances of getting various numbers of heads, when five coins are tos sed. Why dont you take five coins and toss them repeatedly. Note down the outcome s of each toss after every ten tosses, approximate the probabilities of various outcomes. As you know, the values of these probabilities will initially fluctuat e, but they would tend to stabilise as the number of tosses are increased. This approach in effect is a method of sampling, but is not very convenient. Instead of actually tossing the coins, you can conduct the experiment using random numbe rs. Random numbers have the property that any number is equally likely to occur, irrespective of the digit that has already occurred. Let us estimate the probab ility of tossing of different numbers of heads with five coins. We start with se t random numbers given below: Table 10.1: Random number set 78466 71923 78722 78 870 06401 61208 04754 05003 97118 95983 By following a convention that even digit s signify a head (H) and the odd digits represent a tail (T), the

tossing of a coin can be simulated. The probability of occurrence of the first s et of digits is and that of the other set is also a condition corresponding to t he probability of the occurrence of a head and the probability of occurrence of a tail respectively. It is immaterial as to which set of five digits should sign ify a head. The rule could be that the digits 0, 1, 2, 3 and 4 represent a head and the digits 5, 6, 7, 8 and 9 a tail. It is only necessary to take care that t he set of random numbers allotted to any event matches with its probability of o ccurrence. For instance, if youre interested in allotting random numbers to three events A, B and C with respective probabilities 0.24, 0.36 and 0.40, choose two digit random numbers 00 to 99. The numbers 00 to 23 signify event A, 24 to 59 s ignify B and 60 to 99 signify C. The first set of five random digits in the list of random numbers implies that the outcome of the first toss of 5 coins is as f ollows: Table 10.2: Outcome of first toss of 5 coins Coin 12 3 4 5 Random Number 7 8 4 6 6 Outcome THHHH Hence it is 4 heads and 1 tail.

Proceeding in the same way, you can tabulate the results of the first ten tosses . Table 10.3: Results of first ten tosses Based on the ten tosses of the coins, the estimates of probabilities of occurren ce of different numbers of heads are: Continue experimenting further, as these estimates come closer to the theoretica l value with increasing sample size.

The results for obtaining 2 heads and 3 tails for 100 throws are shown below: Ta ble 10.4: Results for 100 throws 10 throws 20 throws 30 throws 40 throws 50 thro ws 60 throws 70 throws 80 throws 90 throws 100 throws 0 6 11 14 18 19 21 22 24 2 7 Table 10.5 compares the final results at the end of 100 throws with the theoreti cal probabilities. Table 10.5: Final results at the end of 100 throws No. of hea ds 0 1 2 Estimated Probability 0.03 0.21 0.27 Theoretical Probabilities 0.03 0.1 6 0.31

3 4 5 0.33 0.12 0.04 0.31 0.16 0.03 It is observed that the results obtained with the large sample of 100, when comp ared are more in favour with the theoretical values than with a sample of ten se ts of numbers. Self Assessment Questions Fill in the blanks 1. Simulation may be called experimentation in the _________ _______. 2. Random numbers have the pro perty that any number has ____to occur. 3. The totality of probability assigned to the variable should always be equal to _______. 10.3 Simulation Procedure The approach to solve a gambling problem can be extended to decision-making in busi ness where risk is a common feature. The probabilities associated with the varia bles can be estimated on the basis of availability of previous data or by inputt ing subjective values.

In any simulation problem, the variables to be studied will be given with associ ated probabilities. The initial conditions will also be specified. You can choos e random numbers from table. However, to get uniform results, the random numbers will be specified. The first step involves coding the data that is, you assign random numbers to the variable. Then you identify the relationship between the v ariables and run the simulation to get the results Let us illustrate this by a s imple example of a queuing process.

10.3.1 Allocation of random numbers The following tables show the allocation of random numbers based on time between arrivals and service time. Table 10.8 Alloc ation of random number time between arrivals Table 10.9 Allocation of random numbers service time Service Time (1) 0.5 Cumula tive Random Nos. Frequency Probability Frequency Allocated (2) (4) (3) (5) Cumul ative 12 12 0.12 00 to 11

1.0 1.5 2.0 2.5 3.0 21 36 19 7 5 33 69 88 95 100 0.33 0.69 0.88 0.95 1.00 12 to 32 33 to 68 69 to 87 88 to 94 95 to 99 Note that the upper bound of random numbers allocated for each value of the para meter is one less than the corresponding cumulative frequency, since you have ch osen a range of random numbers from 00 to 99 Table 10.10 Arrival and service tim e The service facility is made available at clock time zero and the server has to be idle for 3.5 minutes, when the

service for first arrival starts. The service is completed at 5.0 minutes and ag ain the server is idle for 2 minutes till the second arrival joins the system. T he first three arrivals get immediate service and they dont have to wait, as the server is idle when they arrive. The fourth arrival that joins at 9.0 minutes ha s to wait for 0.5 minute, while the service to the third is completed. Similarly the waiting time and idle time can be computed for further arrivals. Total elap sed time = 29 minutes Waiting time of arrival = 1 minute Percentage of waiting t ime = Idle time for server = 14.5 minutes Percentage of idle time = 10.3.2 Use o f random number tables The random numbers can be selected by any random process, similar to drawing numbered chips from a hat. However, it is convenient to use a table of random numbers prepared on the basis of some physical phenomenon. The grouping of random numbers in the tables has no significance and one should be concerned with individual digits only. The first random number could be picked a t random from any point in the tables and the subsequent ones are to be selected proceeding

sequentially either in a vertical or horizontal direction. Depending upon the nu mber of digits required, the random numbers will be chosen in sets of single dig it or twodigit numbers, that is pseudorandom numbers Truly random numbers cannot b e produced by an algorithm and hence random numbers generated using recursive eq uations are referred to as pseudorandom numbers. There are several methods of gen erating pseudorandom numbers, but you will briefly learn only the mid square meth od. Operation starts with an arbitrary four digit integer called the seed. To ob tain the first random number, the seed is squared and all digits except the midd le four are ignored. This process is repeated each time using the previous rando m number as the new seed. Seed = 8695 = 75603025 Taking the middle 4 digits, = 6030 = 36360900 = 3609

Repeating the above procedure: One of the disadvantages of the mid square method is that the generated numbers start cycling after a short set of random numbers is obtained. There are methods by which the seed can be chosen to obtain a fairly long sequence of numbers bef ore cycling starts. Statistical tests check whether the generated sequence is tr uly random. Self Assessment Questions True or False: 4. In any simulation proble m, initial conditions are stated. 5. Random numbers are assigned for cumulative probability values. 6. Without identifying any relationship between variables, y ou can solve the simulation problem. 10.4 Sample Size As you have seen with the coin-tossing experiment, the larger the number of trials, the more confident you can be in your estimates. The question that arises is how many

trials for simulation? If the experiment is as simple as tossing a coin involving only one variable, you can work out the sample size required for a given confid ence level. Usually, a simulation model involves several variables making it impossible to d etermine the number of trials required to obtain the desired accuracy at a speci fied confidence level. One can only say that the accuracy associated with simula tion improves as the square root of the number of trials, which results in large number of trials.

This requires a great deal of computational effort and the use of computer becom es inevitable. In fact, special simulation languages such as GPSS and SIMSCRIPT have been developed to save time and effort required to structure and debug simu lation models. A practical indicator of when to stop simulation trials is when t he results that violently fluctuate initially tend to stabilise if the simulatio n is continued. If the successive cumulative results tally reasonable well, the simulation may be stopped. The degree of accuracy required varies with the probl em on hand and calls for analyst judgment. Self Assessment Questions True or Fal se: 1/2 7. Standard error for percentage of success = (P (1-P) / N) . 8. It is possible to determine the number of trials. 9. The accuracy of results increases as the square of number of trials. 10.5 Application of Simulation The range of application of simulation in business is extremely wide. Unlike other m athematical models, simulation can be easily understood by the users and thereby facilitates their active involvement. This makes

the results more reliable and also ensures easy acceptance for implementation. T he degree to which a simulation model can be made close to reality is dependent upon the ingenuity of the OR team who identifies the relevant variables as well as their behaviour. You have already seen by means of an example how simulation could be used in a queuing system. It can also be employed for a wide variety of problems encountered in production systems the policy for optimal maintenance i n terms of frequency of replacement of spares or preventive maintenance, number of maintenance crews, number of equipment for handling materials, job shop sched uling, routing problems, stock control and so forth. The other areas of applicat ion include dock facilities, facilities at airports to minimise congestion, hosp ital appointment systems and even management games. In case of other OR models, simulation helps the manager to strike a balance between opposing costs of provi ding facilities (usually meaning long term commitment of funds) and the opportun ity and costs of not providing them. 10.5.1 Limitations The simulation approach is recognised as a powerful tool for management decision-making. One should not ignore

the cost associated with a simulation study for data collection, formation of th e model and the computer time as it is fairly significant. A simulation applicat ion is based on the premise that the behaviour pattern of relevant variables is known, and this very premise sometimes becomes questionable. Not always can the probabilities be estimated with ease or desired reliability. The results of simu lation should always be compared with solutions obtained by other methods wherev er possible, and tempered with managerial judgment.

10.5.2 Solved problems

Self Assessment Questions True or False: 10. Simulation gives optimum solution. 11. Simulation interrupts real system activities. 12. This technique can be easi ly understood by nontechnical managers. 10.6 Summary This unit explains the basi c concepts concerned with simulations and simulation procedures. The unit explai ns allocation of random numbers with the use of random number tables, the sample size and the application of simulation. 10.7 Terminal Questions 1. Briefly writ e down the basic concepts concerned with simulation. 2. What do you mean by simu lation procedure? 3. Briefly explain the use of random number tables. 4. Discuss the different applications of simulation. 5. Two components have to be produced in M/C A and M/C B and then finally assembled. The time taken to

assemble on two machines varies with the following probability distribution. Usi ng simulation technique and the ordered pair of random numbers, first for M/C A and second for M/C B, find the average time taken for production. Random Numbers (10, 92); (25, 83); (36, 76); (44, 15); (57, 25); (62, 67); (04, 99); (72, 53); (81, 35); (94, 07) 10.8 Answers to SAQs and TQs Answers to Self A ssessment Questions 1. Management laboratory 2. Equally likely 3. 1 4. True 5. T rue

6. False 7. Agree 8. Agree 9. Disagree 10. False 11. False 12. True Answers to T erminal Questions 1. Refer to section 10.2 2. Refer to section 10.3 3. Refer to section 10.3.3 4. Refer to section 10.5 5. 57.7 minutes 10.9 Reference No extern al sources of content have been referred for this unit. Copyright 2009 SMU Power ed by Sikkim Manipal University

. MB0048-Unit-12-Game Theory Unit-12-Game Theory Structure: 12.1 Introduction Le arning Objectives 12.2 Competitive Situations Marketing different brands of comm odity Campaigning for elections Fighting military battles 12.3 Characteristics o f Competitive Games N-person game Zero sum game Two-person-zero-sum game (rectan gular game) Strategy Pure strategy Mixed strategy

12.4 Maximin Minimax Principle Saddle point Solution to a game with a saddle poi nt 12.5 Dominance Solving games using dominance 12.6 Summary 12.7 Terminal Quest ions 12.8 Answers to SAQs and TQs Answers to Self Assessment Questions Answers t o Terminal Questions 12.9 References 12.1 Introduction Welcome to unit twelve of Operations Research Management on Game Theory. John Von Newman developed the Ga me Theory in the year 1928. The theory gained importance after 1944, when John V on Newman along with Morgenstern published their work on Theory of games and econ omic behaviour. This highly resourceful field of study is developing fast. Learni ng Objectives

By the end of this unit, you should be able to: Comprehend competitive situation s Apply game theory to such situations Compute a solution using saddle point and dominance principle 12.2 Competitive Situations Competitive situations arise wh en two or more parties with conflicting interests operate. The following competi tive situations may occur. Figure 12.1: Types of competitive situations 12.2.1 Marketing different brands o f a commodity Two or more brands of detergents/soaps trying to capture the marke t by adopting various methods (courses), such as advertising through electronic m edia, providing cash discounts to consumers or offering larger sales commission to d ealers are said to be in a competitive situation. 12.2.2 Campaigning for election s

Two or more candidates contesting in elections are in a competitive situation. T hey adopt various methods (courses), such as campaigning through TV, door to door c ampaigning or campaigning through public meetings to capture more votes. 12.2.3 Fig hting military battles Another example of a competitive situation is where two f orces are fighting a war to gain supremacy over one another. They adopt various courses of action, such as direct ground attack on enemy camp, ground attack suppor ted by aerial attack or playing defensive by not attacking. The above mentioned sit uations can be considered as a competitive game where the parties (players) adop t a course of action (play the game). Self Assessment Questions Fill in the blan ks: 1. Competitive situations arise when _______ or ________ parties with ______ _____ operate. 12.3 Characteristics of a Competitive Game A competitive game has the following characteristics: 1. The number of players or competitors is finit e.

2. Each player has finite number of courses of action or moves. 3. A game is pla yed when each player adopts any one course of action. 4. Every time a game is pl ayed, the corresponding combination of courses of action leads to a transaction or payment to each player. The payment is called pay-off or gain. The pay-off ma y be monetary (money) or some benefit, such as increased sales. 5. The players d o not communicate with each other. 6. The players are aware of the rules before starting the game. 12.3.1 N person game A game having n players participating is c alled nperson game. A two-player game is called 2-person game (two person game). 1 2.3.2 Zero sum game If the sum of the gains (pay-off) of the players in a game i s zero, the game is called zero-sum game. A zero-sum game with two players is ca lled two-person zero-sum game. It is also called rectangular game.

In a two-person zero-sum game, the gain of one player is the loss of the other. 12.3.3 Two person zero sum game (rectangular game) A two-person zero-sum game is a game where Two players participate The gain of one player is the loss of the other. In a two-person zero-sum game with the players A and B. Let be the m cour ses of action for player A. Let be the n courses of action for player B. Let be the pay-off (gain) of player A when he plays the course of action, and player B plays the course of action . Then, the following matrix is the payoff (gain) mat rix of player A. This is a (read as m by n) game. Here, is As gain and Bs loss. Therefore, (- ) is the gain of B. To obtain

the pay-off matrix of B, write (- ) in the place of in the above matrix and then write the transpose of the matrix. 12.3.4 Strategy In a game, the strategy of a player is predetermined. The player uses this strategy to select a course of ac tion during the game. The strategy of a player may be pure or mixed. Figure 12.2: Types of strategy 12.3.5 Pure strategy During the game, if a players strategy is to adopt a specific course of action, irrespective of the opponents strategy, the players strategy is called pure strategy. 12.3.6 Mixed strategy If a player chooses his course of action according to preassigned probabilities, th en the players strategy is called mixed strategy. Thus, if player A decides to ad opt courses of action with perspective probabilities 0.4 and 0.6, it is mixed st rategy.

Self Assessment Questions Write one line answers 2. State any one characteristic s of a competitive game. 3. When do you call a game zero-sum game? 4. What is a re ctangular game? 5. What is pure strategy? 6. How many courses of actions are ava ilable to the players in a competitive game? 12.4 Maximin Minimax Principle Solv ing a two-person zero-sum game

Player A and player B are to play a game without knowing the other players strate gy. However, player A would like to maximise his profit and player B would like to minimise his loss. Also each player would expect his opponent to be calculati ve. Suppose player A plays . Then, his gain would be would be .Let accordingly Bs choice . ( is Then, is the minimum gain of A when he plays the minimum pay-off in the first ro w.) Similarly, if A plays , his minimum gain is , the least pay-off in the second ro w. You will find corresponding to As play minimum gains are the row minimums , th e . Suppose A chooses the course of action where is maximum. Then the maximum of the row minimum in the pay-off matrix is called maximin. The maximin is

Similarly, when B plays, he would minimise his maximum loss. The maximum loss to B is when is column. . This is the maximum pay-off in the The minimum of the column maximums in the pay-off matrix is called minimax. The minimax is If , the maximin and the minimax are equal and the game is said to have saddle p oint. If , then the game does not have a saddle point. Note: cannot be greater t han . 12.4.1 Saddle point In a two-person zero-sum game, if the maximin and the minimax are equal, the game has saddle point.

Saddle point is the position where the maximin (maximum of the row minimums) and minimax (minimum of the column maximums) coincide. If the maximin occurs in the row and if the minimax occurs in the column, the position (r, s) is the saddle point. Here, is the common value of the maximin and the minimax. It is called th e value of the game. The value of a game is the expected gain of player A, when both the players adopt optimal strategy. Note 1: If a game has saddle point, (r, s), the players strategy is pure strategy. For player A and B, the suggested sol utions are and respectively. Note 2: If a game does not have saddle point, the s olution offers a mixed strategy. Note 3: A game is said to be fair if its value is zero. 12.4.2 Solution to a game with saddle point Consider a two-person zerosum game with players A and B. Let be the courses of action for player A. Let be the courses of action for player B.

The saddle point of the game is as follows: 1. The minimum pay-off in each row o f the pay-off matrix is encircled as shown in example 2. 2. The maximum pay-off in each column is written within a box as shown in example 2. 3. If any pay-off is circled as well as boxed, that pay-off is the value of the game. The correspo nding position is the saddle point. Let (r, s) be the saddle point. Then, the su ggested pure strategy for player A is . The suggested pure strategy for player B is . The value of the game is . Note: However, if none of the pay-offs is circl ed or boxed, the game does not have a saddle point. Hence, the suggested solutio n for the players is mixed strategy.

Self Assessment Questions True or False:

7. Saddle point occurs at row minimum and column maximum. 8. If the value of the game is zero, then it is called zerosum game. 9. The pay off matrix represents the gain for top player. 12.5 Dominance In a rectangular game, the pay-off matri x of player A is pay-off in one specific row exceeding the corresponding pay-off in another specific row . This means that whatever course of action is adopted by player B, for A, the course of action yields greater gains than the course of action . Therefore, is a better strategy than irrespective of Bs strategy. Hence , you can say that dominates . Alternatively, if each pay-off in a specific colu mn is less than the corresponding pay-off in another specific column , it means strategy offers minor loss than strategy irrespective of As strategy. Hence you c an say that dominates . Therefore, you can say that: a) In the pay-off matrix, i f each pay-off in than (or equal to) the corresponding pay-off in the dominates . is greater ,

b) In the pay-off matrix, if each pay-off in than (or equal to) the correspondin g pay-off in the dominates . is less , At times, a convex combination of two or more courses of action may dominate ano ther course of action. Whenever a course of action (say or ) is dominated by oth ers, then that course of action ( or ) can be deleted from the pay-off matrix. S uch a deletion will not affect the choice of the solution, but it reduces the or der of the pay-off matrix. Successive reduction of the order using dominance pro perty helps in solving games. 12.5.1 Solving games using dominance Consider a tw o-person zero-sum game with players A and B. Let be the courses of action for pl ayer A. Let be the courses of action for player B. Suppose the game has a saddle point. Use the dominance property in sequence to delete the courses of action o f A as well as B till the pair comprising the saddle point remains alone. The pr ocedure to arrive at the saddle point is as follows: a) In the pay-off matrix, i f each pay-off in is greater than (or equal to) the corresponding pay-off in the , dominates , hence is deleted.

b) In the pay-off matrix, if each pay-off in is less than (or equal to) the corr esponding pay-off in the , dominates , hence so, is deleted. c) Repeat the above steps in succession to achieve the saddle point. Note: Sometimes, a convex comb ination of two or more courses of action may dominate another course of action.

Solved Problem 6: Solve the following game using dominance property. Solution: In the pay-off matrix, each pay-off in the first row exceeds the corre sponding pay-off in the third row. Therefore, dominates . So, is deleted. Hence the reduced matrix is as follows: Here, each pay-off in the third column is less than the corresponding pay-off in the first column. Therefore, dominates . Similarly, dominates . Also, dominates . Thus, the matrix reduces to

Here, since 12>8, dominates . And so, finally the matrix reduces to Thus, (1, 3) is the saddle point and the solution to the game is as follows: a) Strategy for A is . b) Strategy for B is . c) Value of the game is v = 12 Solved Problem 7: Solve the following zero-sum game and find its value. Solution: In the pay-off matrix, each pay-off in the second column is less than (or equal to) the corresponding pay-off in the third column.

And so, the course of action Q dominates R. Similarly, Q dominates S. After dele ting R and S, the reduced matrix is as follows. Here, pay-off in the second row is greater than (or equal to) the corresponding pay-offs in the first, third as well as fourth rows. Therefore, B dominates A, C and D. After deleting A, C and D, the reduced matrix is as follows: Here, 1<6. Therefore, Q dominates P. After deleting P, the reduced matrix is as follows: Therefore the solution to the game is: a) Strategy for Company X is B. b) Strate gy for Company Y is Q. c) Value of the game is v = 1.

Solved Problem 8 In a two-person zero-sum game, the pay-off matrix of A is Write down the pay-off matrix of player B. Solution: The pay-off matrix of B is as follows: Self Assessment Questions Fill in the blanks 10. The row whose elements are less than the corresponding elements of another row is __________.

11. If the average of any 2 columns is less than or equal to the corresponding e lements of another column, it is _________. 12.6 Summary The game theory module explains the concept of competitive situations, characteristics of competitive g ame and its strategy. The unit also explains the maximin minimax principle, sadd le point and dominance using precise examples. 12.7 Terminal Questions 1. Solve the following rectangular game. 2. In a rectangular game, pay-off matrix of player A is as follows: i) Solve the game.

ii) Write down the pay-off matrix of B and then, solve the game. 3. Briefly desc ribe characteristics of competitive game. 4. Explain maximin- minimax principle. 12.8 Answers to SAQs and TQs Answers to Self Assessment Questions 1. Two, more, conflicting interest 2. Players do not communicate with each other. 3. When the value of the game is zero (0). 4. Two person zero sum game. 5. When a player pl ays only one strategy irrespective of opponents move. 6. Each player has finite n umber of courses of action or moves. 7. True 8. True 9. False 10. Deleted 11. De leted

Answers to Terminal Questions 1. Value of the game is 1. As Strategy (0, 1, 0, 0) , while Bs Strategy (0, 0, 1, 0, 0). 2. Value is 5. As strategy is (1, 0), while Bs strategy is (1, 0). 3. Refer to section 12.3 for answer. 4. Refer to section 12 .4 for answer. 12.9 References Below is the list of reference books for Unit 12: 1. Operations Research an introduction IV Education Homdy A. Taha- Macmillan Pu blishing Company. 2. Operations research theory and applications J. K. Sharma-Ma cmillan India Ltd. 3. Problems in operations Research (Methods and Solutions) P. K. Gupta, Manmohan Sultan Chand and Sons Publishers. 4. Theory and Problems of Operations Research Richard Bronsoon-Schaums Outline Series. Copyright 2009 SMU

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