MBA Semester 2

MB0048 – Operations Research

Assignment Set – 1

Q No.1: Describe in details the different scopes of application of Operations Research.

Answer: Scope of Operations Research.
Any problem, simple or complicated, can use OR techniques to find the best possible solution. Below
we will explain the scope of OR by seeing its application in various fields of everyday life.

i) In Defence Operations: 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. Furthermore, each component works to drive maximum gains from its operations and
there is always a possibility that the strategy beneficial to one component may be unfeasible for
another component. Thus in defense operations, there is a requirement to co -ordinate the
activities of various components, which gives maximum benefit to the organisation as a whole,
having maximum use of the individual components. A team of scientists from various disciplines
come together to study the strategies of different components. After appropriate analysis of the
various courses of actions, the team selects the best course of action, known as the ‘optimum
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 judged by an individual. The business environment is
always changing and any decision useful at one time may not be so goo d some time later.
There is always a need to check the validity of decisions continuously against the situations. The
industrial revolution with increased division of labour and introduction of management
responsibilities has made each component an indepen dent unit having their own goals. For
example: production department minimises the cost of production but maximises output.
Marketing department maximises the output, but minimises cost of unit sales. Finance
department tries to optimise the capital invest ment and personnel department appoints good
people at minimum cost. Thus each department plans its own objectives and all these objectives
of various department or components come to conflict with one another and may not agree to
the overall objectives of the organisation. The application of OR techniques helps in overcoming
this difficulty by integrating the diversified activities of various components to serve the interest of
the organisation as a whole efficiently. OR methods in industry can be applied i n the fields of
production, inventory controls and marketing, purchasing, transportation and competitive
strategies.
iii) Planning: In modern times, it has become necessary for every government to have careful
planning, for economic development of the country. OR techniques can be fruitfully applied to
maximise the per capita income, with minimum sacrifice and time. A government can thus use
OR for framing future economic and social policies.
iv) Agriculture: With increase in population, there is a need to increase agriculture output. But this
cannot be done arbitrarily. There are several restrictions. Hence the need to determine a course
of action serving the best under the given restrictions. You can solve this problem by applying OR
techniques.
v) In Hospitals: OR methods 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
times minimise the pass engers waiting time and reduce congestion, formulate suitable
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 contro l and plan product introductions.

Q. No.2: What do you understand by Linear Programming Problem? What are the requirements of
L.P.P.? What are the basic assumptions of L.P.P.?
Answer: Linear Programming Problem focuses on obtaining the best possible outpu t (or a set of
outputs) from a given set of limited resources.

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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 and scarce resources at various levels in an organisation in the
best possible manner. Man, money, machine, time and technology are some of these common
resources. The management’s 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 the profits, the costs, the social welfare, and the
overall effectiveness. In several situations, you can express the output (or a set of outputs) as a line ar
relationship among several variables. You can also express the amount of available resources as a
linear relationship among various system variables. The management’s dilemma is to optimise
(maximise or minimise) the output or the objective function sub ject to the set of constraints.
Optimisation of resources in which both the objective function and the constraints are represented
by a linear form is known as a linear programming problem (LPP).

Requirements of LPP
The common requirements of a LPP are a s 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.

Basic Assumptions of LPP

1. Linearity: You need to express both the objective funct ion and constraints as linear
inequalities.
2. Deterministic: All co-efficient of decision variables in the objective and constraints expressions
are known and finite.
3. Additivity: The value of the objective function and the total sum of resources used must be
equal to the sum of the contributions earned from each decision variable and the sum of
resources used by decision variables respectively.
4. Divisibility: The solution of decision variables and resources can be non -negative values
including fractions.

Q. No.3: Describe the different steps needed to solve a problem by simplex method.
Answer: To solve a problem by the simplex method, follow the steps below.

1. Introduce stack variables (S i’s) for “•“ type of constraint.

2. Introduce surplus variables (S i’s) and artificial variables (A i) for “•” type of constraint.

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

4. Cost (C j) of slack and surplus variables will be zero and that of artifici al variable will be “M”

5. Find Z j - Cj for each variable.

6. Slack and artificial variables will form basic variable for the first simplex table. Surplus variable
will never become basic variable for the first simplex table.

7. Zj = sum of [cost of variable x i ts coefficients in the constraints – Profit or cost coefficient of the
variable].

8. Select the most negative value of Z j - Cj. That column is called key column. The variable
corresponding to the column will become basic variable for the next table.

9. Divide the quantities by the corresponding values of the key column to get ratios; select the
minimum ratio. This becomes the key row. The basic variable corresponding to this row will be
replaced by the variable found in step 6.

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

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

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

13. For maximisation problems, decision variables coefficient will be same as in the objective
function. For minimisation problems, decision variables coefficients will have opposite signs as
compared to objective function.

14. Values of artificial variables will always is – M for both maximisation and minimisation
problems.

15. 15. The process is continued t ill all Zj - Cj • 0.

Q. No.4: Describe the economic importance of the Duality concept.

Answer: Every linear programming problem (LPP) is associated with anothe r linear programming
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 da ta and solved in a manner similar to the original
‘primal’ formulation. In other words, you can say that dual is the ‘inverse’ of the primal formulation
because of the following reasons.
· If the primal objective function is ‘maximisation’ function, then 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 constraint.
· The co-efficients in the primal objective function are the RHS constraint in the dual cons traint.
· The RHS column of constants of the primal constraints becomes the row of co -efficient of the
dual objective function.
The concept of duality is useful to obtain additional information about the variation in the optimal
solution. These changes could be effected in the constraint co -efficient, in resource availabilities
and/or objective function co -efficient. This effect is termed as post optimality or sensitivity analysis

The linear programming problem is thought of as a resource allocation model wh ere the objective is
to maximise revenue or profit subject to limited resources. The associated dual problem offers
interesting economic interpretations of the LP resource allocation model. Consider a representation
of the general primal 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 activities and ‘m’
resources. The coefficient c j in the primal represents the profit per unit of activity j. Resourc e i, whose
maximum availability is b i, is consumed at the rate a ij units per unit of activity j.

5.Q. No.5: How can you use the Matrix Minimum method to find the initial basic feasible solution in
the transportation problem.
Answer: Matrix Minimum Met hod:

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

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

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

If Xij = ai = bj cross off either the ith row or the ith column but not both.

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

The Initial Basic Feasible Solution:

Let us consider a T.P involving m -origins and n-destinations. Since the sum of ori gin capacities equals
the sum of destination requirements, a feasible solution always exists. Any feasible solution satisfying
m+n -1 of the m+n constraints is a redundant one and hence can be deleted. This also means that a
feasible solution to a T.P can have at the most only m + n -1 strictly positive component, otherwise
the solution will degenerate.

It is always possible to assign an initial feasible solution to a T.P. in such a manner that the rim
requirements are satisfied. This can be achieved eithe r by inspection or by following some simple
rules. We begin by imagining that the transportation table is blank i.e. initially all Xij = o. The simplest
procedures for initial allocation discussed in the following section.

Q. No.6: Describe the Integer P rogramming Problem. Describe the Gomory’s All -I.P.P. method for
solving the I.P.P. problem.
Answer: An integer programming problem can be described as follows:

Determine the value of unknowns X1, X2, …, Xn

So as to optimize z = C1X1 + C2X2 + … CnXn

Subject to the constraints

ai1 X1 + ai2 X2 + … + ain Xn = bi, i = 1,2, …, m

and xj • 0 j = 1, 2, …, n

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

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

Gomory’s All – IPP Method:

An optimum solution to an I. P. P. is first obtained by using simplex method ignoring the restriction of
integral values. In the optimum solution if all the variables have integer values, the current solution
will be the desired optimum integer solution. Otherwise the given IPP is modified by inserting a new
constraint called Gomory’s or secondary constraint which represents necessary condition for
integrability and eliminates some non integer solution without losing any integral solution.

After adding the secondary constraint, the problem is then solved by dual sim plex method to get an
optimum integral solution. If all the values of the variables in this solution are integers, an optimum
inter-solution is obtained, otherwise another new constrained is added to the modified L P P and the
procedure is repeated.

An optimum integer solution will be reached eventually after introducing enough new constraints to

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eliminate all the superior non integer solutions. The construction of additional constraints, called
secondary or Gomory’s constraints is so very important that i t needs special attention.

MBA Semester 2
MB0048 – Operations Research
Assignment Set – 2

Q. No.1: What are the important features of Operations Research? Describe in details the different
phases of Operations Research.
Answer: Features of Operation Research

Some key features of OR are as follows:

1. OR is system oriented. OR scrutinises the problem from an organisation’s perspective. The

results can be optimal for one part of the system, while the same can be unfavourable for
another part of the system.
2. OR imbibes an inter –disciplinary team approach. Since no single individual can have a
thorough knowledge of all fast developing scientific know -how, personalities from different
scientific and managerial cadre form a team to solve the pro blem.
3. OR makes use of scientific methods to solve problems.
4. OR increases effectiveness of the management’s decision -making ability.
5. OR makes use of computers to solve large and complex problems.
6. OR offers a quantitative solution.
7. OR also takes into account the human factors.

Phases of Operations Research

1. Judgment Phase: This phase includes the following activities:

a) Determination of the operations
b) Establishment of the objectives and values related to the operations
c) Determination of the suitable measures of effectiveness
d) Formulation of the problems relative to the objectives

2. Research Phase: This phase utilises the following methodologies:

a) Operations and data collection for a better understanding of the problems
b) Formulation of hypothesis and model
c) Observation and experimentation to test the hypothesis on the basis of additional data
d) Analysis of the available information and verification of the hypothesis using pre -
established measure of effectiveness
e) Prediction of various results and consideration of alte rnative methods.

3. Action Phase: The action phase involves making recommendations for the decision process.
The recommendations can be made by those who identified and presented the problem or
anyone who influences the operation in which the problem has occ urred.

Q. No.2: Describe a Linear Programming Problem in details in canonical form.

Answer: Canonical forms

We can represent the general Linear Programming Problem (LPP) in the canonical form as follows:

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Maximise Z = c 1 x1+c2 x2 + —— + cn
Subject to,
a11 x1 + a12 x2 + —— + a1n xn £ b1
a21 x1 + a 22 x2 + —— + a 2n xn £ b2
—————————————— –
am1 x1+am2 x2 + …… + a mn xn £ bm
x1, x2, x3, … xn ³ 0.

The following are the characteristics of this form.

1. All decision variables are non -negative.
2. All constraints are of • type.
3. The objective function is of the maximisation type.

We can represent any LPP in the canonical form by using five elementary transformations, which are
as follows:

1. The minimisation of a function is mathematically equivalent to the ma ximisation of the negative

expression of this function. That is,
Minimise Z = c1 x1 + c2x2 + ……. + c n xn
is equivalent to
Maximise – Z = – c1x1 – c2x2 – … – cn xn

2. Any inequality in 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 ³ 5 is equivalent to –2x1–3x2 £ –5

3. An equation can be replaced by two inequalities in opposite direction. For example:

2x1+3x2 = 5 can be written as 2x 1+3x2 • 5 and 2x 1+3x2 • 5 or 2x1+3x2 • 5 and – 2x1 – 3x2 • – 5

4. An inequality constraint with its left hand side in the absolute form can be changed into two
regular inequalities. For example:
2x1+3x2 • 5 is equivalent to 2x 1+3x2 • 5 and 2x 1+3x2 • – 5 or – 2x1– 3x2 • 5

5. The variable which is unconstrained in sign ( • 0, • 0 or zero) is equivalent to the difference

between 2 non-negative variables. For example:
if x is unconstrained in sign then x = (x + – x–) where x+ • 0, x– • 0

Q. No.3: What are the different steps needed to solve a system of equations by the simplex method?
Answer: The Simplex Method

To test for optimality of the current basic feasible solution of the LPP, use the following algorithm
called simplex algorithm. Let’s also assume that there ar e no artificial variables existing in the
program.

Steps: Perform the following steps to solve the simplex algorithm.

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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 i s 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
yield the smallest ratio as the pivot element. If more than one element yields the same smallest
ratio, choose the elements randomly. The program has no solution, if 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 -variable in the pivot row and first column by x -variable in the first row pivot
column. The variable to be replaced is called the outgoing variable and the variable 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 negative 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 considered 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 maximisation program, but the negative of this number for a
minimisation problem.

Q. No.4: What do you understand by the transportation problem? What is the basic assumption
behind the transportation problem? Describe the MODI method of solving transportation problem.
Answer: Transportation Problem:

Here we study an important class of linear programs called the transportation model. This model
studies the minimization of the cost 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 objective is to develop an integral transportation schedule that meets all demands from the
inventory at a minimum total transportation cost.

Basic Assumption behind Transportation Problem:

Let us consider a T.P involving m -origins and n-destinations. Since the sum of origin capacities equals
the sum of destination requirements, a feasible solution always exists. Any feasible solution satisfying
m+n-1 of the m + n constraints is a redundant one and hence can be deleted. This also means that
a feasible solution to a T.P can have at the most only m + n – 1 strictly positive components,
otherwise the solution will degenerate.

It is always possible to assign an initial feasible solution to a T. P. in such a manner that the rim
requirements are satisfied. This can be achieved either by inspection or by following some simple
rules. We begin by imagining that the transportation table is blank i.e. initially all Xij = 0. The simplest
procedures for initial allocation discussed in the following section.

MODI Method of Solving Transportation Problem:

The first approximation to (2) is always integral and therefore always a feasible solution. Rather than
determining a first approximation by a direct application of the simplex method it is more efficient to
work with the table given below called the transportation table. The transportation algorithm is the
simplex specialized to the format of table it involves:

a) Finding an integral basic feasible solution

b) Testing the solution for optimality
c) Improving the solution, when it is not optimal
d) Repeating steps (1) and (2) until the optimal solution is obtained

The solution of T.P. is obtained in two stages. In the fi rst stage we find basic feasible solution by any

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one of the following methods a) North -west corner rale b) Matrix Minima method or least cost
method c) Vogel’s approximation method. In the second stage we test the B.Fs for its optimality
either by MODI method or by stepping stone method.

Q. No.5: Describe the North-West Corner rule for finding the initial basic feasible solution in the
transportation problem.
Answer: North West Corner rule

Step1: The first assignment is made in the cell occupying the upper left hand (north-west) corner of
the transportation table. The maximum feasible amount is allocated here is
x11 = min (a 1, b1)
Either the capacity of origin O 1 is used up or the requirement at destination D 1 is satisfied or both. This
value of x 11 is entered in the upper left hand corner (small square) of cell (1, 1) in the transportation
table.

Step 2: If b1 > a1, the capacity of origin O is exhausted and the requirement at destination D 1 is still
not satisfied. Then at least one variable in the first co lumn will have to take on a positive value. Move
down vertically to the second row and make the second allocation of magnitude:
x21 = min (a 2, b1 – x21) in the cell (2, 1)
This either exhausts the capacity of origin O 2 or satisfies the remaining demand at destination D 1.
If a1 > b1 ,the requirement at destination D 1 is satisfied, but the capacity of origin O 1 is not completely
exhausted. Move to the right in a horizontal position to the second column to make the second
allocation of magnitude:
x12 = min (a1 – x11, b2) in the cell (1, 2)
This either exhausts the remaining capacity of origin O 1 or satisfies the demand at destination D 2.
If b1 = a1, the origin capacity of O 1 is completely 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 is
made. Make the second allocation of magnitude
x12 = min (a 1 – a1, b2) = 0 in the cell (1, 2)
OR
x21 = min (a 2, 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 towards the lower
right corner of the transportation table until all the rim requireme nts are satisfied.

Q. No.6: Describe the Branch and Bound Technique to solve an I.P.P. problem.
Answer: Branch and Bound Technique

Sometimes a few or all the variables of an IPP are constrained by their upper or lower bounds or by
both. The most gener al 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 discussed below:
Let the IPP be

Maximise –––––––––––––––––––––––––––– (1)

Subject to the constraints

––––––––––––––––––– (2)

xj is integer valued , j = 1, 2, …….., r (< n) –––––––––––––––––- (3)

xj > 0 …………………. j = r + 1, …….., n ––––––-––––––––––––––– (4)

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Further let us suppose that for each integer valued x j, we can assign lower and upper bounds for the
optimum values of the variable by
Lj • xj • U j j = 1, 2, …. r –––––––––––––––––––––––––– (5)

This is the main idea behind “the branch and bound technique”.
Consider any variable xj, and let I be some integer value satisfying Lj £ I £ Uj – 1. Then clearly an
optimum solution (1) through (5) also satisfies either linear constraint.
x j ³ I + 1 –––––––––––––––––––––––––––––– (6)

Or the linear constraint x j • I –––––––––––––––––––––––––––––– (7)

To explain how this partitioning helps, let’s 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 • U 1 in one problem and L1 • x1 • 1 in the other. Further to each of these problems, process
an optimal solution satisfying integer constraint (3).
Then the solution having the larger value for z is clearly the optimum for the given IPP. However, it
usually happens that one (or both) of these problems have no optimal solution satisfying (3), and
thus some more computations are required. Now let us discu ss, step wise, the algorithm that specifies
how to apply the partitioning (6) and (7) in a systematic manner to finally arrive at an optimum
solution.
Let’s start with an initial lower bound for z, say z(0) at the first iteration, which is less than or equal to
the optimal value z*. This lower bound 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 0 th iteration) the master list contains a single LPP consisting of (1),
(2), (4) and (5). Let us now discuss the procedure that specifies how the partitioning (6) and (7) can
be applied systematically to eventually get an opti mum integer-valued solution.

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