Efficient Operations Planning:

Role of O.R. and Simulation

A.K.Chatterjee
 A BRIEF ON OR
• OR as an approach to Managerial
Problem Solving involves:
2.Defining the Decision Variables
3.Articulating the Objectives and Constraints
4.Formulate the Problem by expressing the
above mathematically in terms of the
Decision Variables
5.Collect Data and Solve the Problem
6.Validate the Model
 A BRIEF ON OR cont.

• OR may be seen as comprising of two

kinds of techniques:
2.Mathematical Programming where the
objective is to get the best solution. e.g..
Linear Programming (LP), NLP etc.,
3.Simulation where one pursues a “good
solution” rather than the best solution in
order to reflect more of reality in the
model.
EXAMPLE OF LP FORMULATION
You have gone to Utopia where you find two
kinds of gems, rubies and emeralds. Each
ruby & emerald weighs 3kg & 2kg, & fetches
a value of Rs.4 & 3 crores respectively. Your
haversack can carry a maximum of 12 kg.

Formulate the problem using OR.

 FORMULATION

Step 1 Decision Variables: Let R= No. of

rubies to be carried and E= No. of emeralds
to be carried
Step 2 Objective: Maximize the value to be
Carried; Constraint: Capacity of Haversack
Step 3: Formulate: Maximize (4R + 3E)
subject to 3R + 2E ≤ 12
R,E ≥ 0
 PRODUCT MIX PROBLEM
:
ABC wants to find the product-mix for the next period. It
makes 2 types of chairs both of which are processed
Through the carpentry (C) and assembly (A) Dept. An unit
of Type1 requires 0.4 hrs, & 0.5hrs, for C, & A, Type 2
requires 0.5 & 0.3 hrs for C, & A, respectively. In the next
period 316 hrs & 354 hrs of C & A Dept.’ s time will be
available for production. The contribution per unit of the two
products Type 1 and Type 2 are Rs. 50 & 40 respectively
And one may assume that the Manufacturer can sell all
that he produces in the next period.
 FORMULATION:

Maximise 50X + 40Y

Subject to 0.4X + 0.5Y ≤ 316
0.5X + 0.3Y ≤ 354
X, Y ≥ 0
 TIRE EXAMPLE : ANALYSIS
PROBLEM IS OF EFFICIENT ALLOCATION OF
RSOURCES TO THE PRODUCTS.
STEP 1 Check if capacity is available to meet all
demand. Say, all F is produced using W, we have,
D Qty/hrs Cap Use F-W
June 1000/120 700hr 420hr. 3500
July 5000/600 300hr 300hr 2500
August 5000/600 1000hr 600hr 5000
(Cap Available on W, 280 and 400 in June & Aug)
 Tire Example (contd.)
Similarly, say all N is produced using R
D Qty/hrs Cap Use N-R
June 4000/640 1500hr 1500hr 9375
July 8000/1280 400hr 400hr 2500
Aug 3000/480 300hr 300hr 1875
Cap of R is over, and pending demand of N in Aug
and July are 1125 and 125. Using W to produce N,
we need 160 hr & 19hr, which is there. So all
demands can be met from existing capacity.
 Tire Example (contd.)
Step 2 As it is possible to meet all demand and
each product has a positive contribution, Max.profit
is same as Min.cost.
Step 3 To find the optimal solution, note that we
have operated in a fashion whereby we have extra
capacity of W. R is fully utilised. W being the more
productive machine you should use it more, eg,
Aug 400hrs of W can be used to produce N, ie
2667 tires W-N, balance 333 R-N can be used.