OPERATIONS RESEARCH

MBA (205)
ASSIGNMENT
WINTER 2018-2019

NAGESHWAR SINGH
1802000398

Q1. Explain Various Assumptions of linear programming.

Ans: Various assumptions to linear programming.

Linearity: It means equality. Linearity refers the equal relationship between the factors of
production. It is assumed that there exists a linear relationship between the input and output of
production. It is not only an assumption but also a condition for linear programming. According
to the assumption of linearity, the factor of production provides equal returns in the short run.
The linear relationship between input and output is represented by a linear equation.

For example, a manufacturing organization requires 25 men (W), 10 machines (M) and 0.6 tons
of raw materials (R) for the production of one unit of output (O). In such a case, the relationship
between input and output can be represented as follows:

25W + 10M + 0.6R = 1O

However, this assumption has restricted the application of linear programming to only linear
input-output relationships.

Continuity: Assumptions are the conditions that need to be present for conducting an
experiment or applying a formula .As per this assumption, all variables are measurable only if
they have a numerical value. According to this assumption, only numerical values bring
consistency in the measurement of variables, which otherwise would be difficult if the variables
are measured in qualitative form.

Independence and additivity: According to this assumption, variables and their numerical
values are not dependent on other variables. This implies that variables are selected randomly
within limits. For example, in an industry, the production of steel within two months contributes
₹40,000 to the total output regardless of the amount of steel produced in one month. Another
assumption related to the additive nature of variables to be added together is that if the variables
cannot be added together, they have no meaning in linear programming. For example, two
variables, namely 5 men and 2 machines, are used for producing one unit of product A. In this
case, the production of one unit of product is independent of the hours of work done by men or
machines in one day.

Proportionality: It refers to the relationship between the two variables. It is assumed that there
is a proportional relationship among the variables. The proportionality between the variables
remains the same while finding out the solution of a problem. This implies that the proportional
relationship among the variables is the same at every level of output. For example, if a product
requires five units of input to produce one unit of output, the production of 10 units of output
will require 50 units of input.

Constant price: The price which remains constant at different conditions is called constant
price. As per this assumption, the prices of input and output remain constant, regardless of the
quantity sold and purchased. For example, if the price of raw material for producing one unit of
product A is ₹100, the price of the raw material for producing 100 units of product A will be
₹10,000.

Q2. Write short note on

a) Concept of Duality in Linear Programming problem.

b) North-West Corner Method in Transportation problem

c) Benefits of holding inventory

d) Economic Order Quantity (EOQ) model

Ans: a) Concept of Duality in Linear Programming problem.

The term ‘duality’ indicates that every LPP, irrespective of minimisation or maximisation types,
can be examined in two different ways, without any additional information. For instance, the
problem of maximising profit can be analysed as the problem of minimising cost. Similarly, the
problem of minimising cost can be analysed as the problem of making an efficient use of
resources. The original problem is called the primal problem, while the associated problem is
called the dual problem. There is a symmetrical relationship between the primal and dual
problems. This is because if the primal problem is solved by using the simplex method, the
corresponding dual problem is also solved simultaneously. In other words, you can say that
while finding the optimal solution of one problem, the optimal solution of the other problem is
also found automatically. By going through the following points, you can understand the
relationship between the primal and dual problems:

 If the primal problem is of a maximisation type, the dual problem would be of a

minimisation type and vice versa.
 The total number of variables in the primal problem would be equal to the total number
of constraints in the dual problem and vice versa.

 If the constraints in the primal are of the ≤ type (in case of maximisation) and of the ≥
type (in case of minimisation), the variables in the dual would be non-negative.
 In case the constraints in the primal problem are of the = type, the variables in the dual
problem would be unrestricted in sign.
 If the variables in the primal are unrestricted in sign, the constraints in the dual would be
the = type.

b. North-West Corner Method in Transportation problem: It is the most simplest and the
most common method of finding the solution of transportation problem. NWCM is the
simplest method that is used to find an initial feasible solution to a transportation problem.
In this method, minimum value (ai, bj) is allocated to the north-west corner (upper-left
corner) of the transportation cost matrix. Here, ai represents the availability of goods at the
supply source i, and bj represents the requirement at demand point j. In the matrix, the row
 or column that satisfies is not considered further. Now, minimum of (ai, bj) is allocated
again in the remaining sub-matrix and the row or column is satisfied. This process
continues till all the rows and columns in the matrix are satisfied.

c) Benefits of holding inventory

Benefits in purchasing: It is concerned with purchasing the goods in larger quantities. These are
the benefits obtained by purchasing goods in large quantities. If an organisation purchases raw
material or goods in a huge quantity, it may avail discounts. This would lower ordering and
carrying costs.

Benefits in production: Productions refers to the total input produced by the organization. If an
organisation has a sufficient amount of inventory, it can increase or decrease the level of
production to match sales. This would be a special advantage to organisations with a seasonal
sales pattern. Suppose the sales volume of a cooler manufacturing organisation is higher in the
summer season and lower in the winter season. In such a situation, it would be better for the
organisation to maintain a sufficient level of inventory to avoid the situation of scarce or excess
production of coolers.

Benefits in sales: It refers to the process of selling the products and the services of the
organization for earning profits and to satisfy the needs of the customer. Effective management
of inventory helps an organisation to enhance its sales efforts. If there is no inventory of finished
goods, the level of sales would depend on the level of current production. In such a situation, the
organisation would not be able to meet a higher demand instantly. There would be a time lag
depending upon the production process. If the organisation maintains an adequate level of
inventory, the actual sales would not have to depend on lengthy manufacturing processes.

d) Economic Order Quantity (EOQ) model: The EOQ model provides answers to the two
basic questions related to inventory management. These questions are as follows:

 What should be the size of the order? •At what level should the order be placed?
When an organisation orders huge inventory in order to reduce the total ordering cost, the
carrying cost increases. Thus, if the organisation wishes to minimise the overall cost of the
inventory, it needs to consider both the ordering and carrying costs. After determining the
desired cost of inventory, the organisation compares the cost with the benefits of the inventory.
The level at which the cost of inventory is minimum and benefits are maximum is called the
optimal level of inventory. The optimal level of inventory is popularly referred to as EOQ.
Therefore, EOQ may be defined as the level of inventory order that reduces the total cost related
to inventory management. The EOQ model is based on the following assumptions:

 The forecasted consumption for inventory, usually for one year, is known. The
consumption is even throughout the year.
 The orders placed to replenish inventory stocks are received at exactly that point of time
when the level of inventory becomes zero.
 The costs associated with inventory, such as ordering and carrying costs, can be
distinguished.
 The cost per order is constant regardless of the size of order.
 The carrying cost is a fixed percentage of the average value of inventory.

The total costs of ordering and carrying can be mathematically calculated by using the following
formula:

T = [{(B / Q) A} + {(Q/2)C}]

Where,B = Annual consumption, Q = Quantity ordered, A = Cost per Order

Q3) a. What is degeneracy in transportation problem?

b. Solve the following transportation problem using Vogel’s approximation method.

Ans: a) Degeneracy: In case the basic feasible solution of a transportation problem with m

sources and n destinations has fewer than m + n − 1 basic variables (occupied or allocated cells),

the solution is said to be a degenerate solution. Degeneracy can take place at two stages: at the
initial solution or during the testing of the optimal solution. To resolve degeneracy, an artificial

quantity d is assigned to an unoccupied cell that has the minimum transportation cost.

2) Calculation of transportation problem through Vogel’s approximation method

Supply
Factories Distribution Centres

C₁ C₂ C₃ C₄

F₁ 3(10) 2(40) 6 6 50
1 3 - - - -

F₂ 7(25) 5 2(20) 3(15) 60

1 1 1 1 1 2
F₃ 2(25) 5 4 5 25

Requirements 60 40 20 15 2 2 2 - - -

1 3 2 2

1 - 2 2

5 - 2 2

7 - 2 3

- - 2 3

- - 2 -

= 10 х 03 + 25 х 07 + 25 х 02 + 40 х 02 + 20 х 2 + 15 х 03

= 30 + 175 + 50 + 80 + 40 + 45

= 420
 SET -2

Q1 The processing time of four jobs and five machines (in hours, when passing is not
allowed) is given in following table

a. Find an optimal sequence for the above sequencing problem.

b. Calculate minimum elapsed time & idle time for machines A, B, C, D & E.

Ans:

MACHINES

JOB

A B C D E

1 8 4 8 3 8

2 7 6 7 4 4

3 9 7 9 6 5

4 10 5 9 7 7

A₁ Minimum = 7, E₁ Minimum = 4 , Maximum B ,C ,D = 7, 9,7

The necessary condition to be satisfied is either or both of the following

a) Min A₁ ≥ Max B₁ , C₁ ,D₁

b) Min E₁ ≥ Max B₁ , C₁ ,D₁

Since the condition is satisfied, we can convert the problem of two machines X and Y by
combining the time for the first four machines and the time for the last four machines.

Converting machine into two machine

 MACHINE

JOB X Y

1 23 23

2 24 21

3 31 27

4 31 28

Optimal sequence = 1, 4, 3, 2

Machine 1 Machine 2 Machine 3 Machine 4 Machine 5

JOB IN OUT IN OUT IN OUT IN OUT IN OUT

1 0 - 08 8 - 12 12 - 20 20 - 23 23 - 31

2 8 - 18 18 - 23 23 - 32 32 - 39 39 - 46

3 18 - 27 27 - 34 34 - 43 43 - 49 49 - 54

4 27 - 34 34 - 40 43 - 50 50 - 54 54 - 58

Total elapsed time = 58

Ideal Time

A = 58 – 34 = 24

B = 8 + 6 + 4 + (58 - 40) = 36

C = 12 + 3 + 2 + (58 - 50) = 25

D = 20 + 9 + 4 + 1 + (58 – 54) = 38

E = 23 + 8 + 3 + 0 (58 - 58) = 34

Optimal Sequence = 1 4 3 2 , Ideal time A = 24, B = 36, C = 25 , D = 38, E = 34

Q2) a. Elaborate the meaning of Simulation.

b. What are different Practical applications of simulation

Ans: a. Elaborate the meaning of Simulation.

Simulation is a representation of real-life situations. It is a method in which a replica of a real-

world process or system is developed over a period of time. The simulated model acts in the
same manner as the selected physical or abstract process or system behaves in reality. For
example, aircraft pilots are given training through simulation models as training with real
aircrafts can incur huge costs as well as involve various risks. Similarly, in education sector,
teachers are trained on the simulated models of students (a group of individuals who imitate as
students). This avoids the risk of spoiling the future of students if the teacher is not able to teach
properly. Therefore, simulation models have proved to be useful for training purposes.

b) Practical applications of simulation

Simulation in the education sector: Education sector play a major role in the Indian economy.
Simulation is used for educational purposes. Simulation plays a leading role in the educational
sector. Simulation models are used to create a real-world environment in a classroom that helps
students to understand various key concepts. In business schools, these models are used for
management games and to perform experimentation with different business strategies in a risk-
free environment and conduct case study discussions. Apart from this, social simulation models
are used to demonstrate social and political processes in various subjects, such as anthropology,
economics, history, political science and sociology.

Simulation in the medical sector: Simulation is also used for medical purposes. Simulation is
used for the recruitment of the healthcare personnel in the organization. In the medical sector,
simulation models are developed to teach therapeutic and diagnostic procedures and various
medical concepts. Moreover, these models are used to make decisions related to the recruitment
of healthcare personnel. Simulation models are also developed for providing training on blood
draw, laparoscopic surgery and trauma care. They are also used for designing devices for
biomedical engineering problems, and new therapies and treatments. Apart from this, simulation
is applied for developing life-size dummies that can respond to injected drugs and fatal medical
conditions.
 Simulation in the entertainment sector: In the entertainment sector, simulation has been
proved to be very effective in various fields, which are as follows:

Computer and video games: Refer to simulation games that represent a real environment.
These games represent interactions between playable characters and environment realistically.

Film: Refers to one of the most important applications of simulation, in the field of
entertainment. Simulation models are used to provide 3D computer graphics and special visual
effects in films. In this way, these models are used for producing high quality films and
controlling visual effects.

Theme park rides: It consists of entertainment sector. It refer to one of the most rapidly
growing fields of entertainment. Simulator models are used here to record the moves of rides.

Simulation in manufacturing: The field of manufacturing has a wide application of simulation

models. These models are used for evaluating the effect of capital investments in equipment,
plants, warehouses and distribution centers. Simulation models can also be used to determine the
performance of the existing and planned system.

Q3) a. Explain the importance and utility of the replacement model in business
organizations.

b. The maintenance cost and re-sale value per year of a machine whose purchase

price is Rs. 7000 is given below-

Year 1 2 3 4 5 6 7 8

Maintenance cost 900 1200 1600 2100 2800 3700 4700 5900

Re-sale value 4000 2000 1200 600 500 400 400 400
 Ans)

Maintenance Cumulative Resale value Depreciation Total Cost Average cost

Year (1) cost (Mt) (2) cost (ƩMt) (3) (S) (4) ( C – S) (5) T(n) (3+5) A(n)= (6)/(1)
(6)

1 900 900 4,000 3,000 3,900 3,900

2 1,200 2,100 2,000 5,000 7,100 3,550

3 1,600 3,700 1,200 5,800 9,500 3,166.66

4 2,100 5800 600 6,400 12,200 3,050

5 2,800 8,600 500 6,500 15,100 3,020

6 3,700 12,300 400 6,600 18,900 3,150

7 4,700 17,000 400 6,600 23,600 3,371.42

8 5,900 22,900 400 6,600 29,500 3,687.5

From the above table it can be seen that the lowest average cost is Rs. 3020 which corresponds
which corresponds to the 5th year.

Therefore the best time to replace the machine is after 5th year.