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OPERATION RESEARCH

The term Operations Research (OR) describes the discipline that is focused

on the application of information technology for informed decision -making.

In other words, OR represents the study of optimal resource allocation. The

goal of OR is to provide rational bases for decision making by seeking to

understand and structure complex situations, and to utilize this

understanding to predict system behavior and improve system

performance.

c c

c c

þ? è . Linear Programming (LP) is a mathematical

technique of assigning a fixed amount of resources to satisfy a

number of demands in such a way that some objective is optimized

and other defined conditions are also satisfied.

þ?

The transportation problem is a special

type of linear programming problem, where the objective is to

minimize the cost of distributing a product from a number of sources

to a number of destinations.

þ?

Succinctly, when the problem involves the

allocation of ë different facilities to ë different tasks, it is often

termed as an assignment problem.

þ?

The queuing problem is identified by the presence

of a group of customers who arrive randomly to receive some service.

This theory helps in calculating the expected number of people in the

queue, expected waiting time in the queue, expected idle time for the

server, etc. Thus, this theory can be applied in such situations where

decisions have to be taken to minimize the extent and duration of the

queue with minimum investment cost.

situations where there are one or more opponents (i.e., players). In

the game theory, we consider two or more persons with different

objectives, each of whose actions influence the outcomes of the game.

The game theory provides solutions to such games, assuming that

each of the players wants to maximize his profits and minimize his

losses.

c c

þ?

It is concerned with the acquisition,

storage, handling of inventories so as to ensure the availability of

inventory whenever needed and minimize wastage and losses. It help

managers to decide reordering time, reordering level and optimal

ordering quantity.

r r

designed to solve optimization problems where all the constraints as well

as the objectives are expressed as ǮLinear functionǯ .It was developed by

George B. Denting in 1947. Its earlier application was solely related to the

activities of the secondǯ World War. However soon its importance was

recognized and it came to occupy a prominent place in the industry and

trade.

c c

è

productions such as skilled labor, capital and raw material etc. are very

precious and scarce. The policy planner is, therefore faced with the

problem of scarce resource allocation to meet the various competing

demands and numerous conflicting objectives. The traditional and

conventional methods can no longer be applied in the changed

circumstances for solving this problem and are hence fast losing their

importance in the current economy. Hence, the planners in our country are

continuously and constantly in search of highly objective and result

oriented techniques for sound and proper decision making which can be

effective at all levels of economic planning. Non -programmed decisions

consist of capacity expansion, plant location, product line diversification,

expansion, renovation and modernization etc. On the other hand, the

programmed decisions consist of budgeting, replacement, procurement,

transportation and maintenance etc.

and tools have been developed by the economists all over the globe. All

these findings form the basis of operations research. Some of these well-

known operations research techniques have been successfully applied in

Indian situations, such as: business forecasting, inventory models-

deterministic and probabilistic, Linear Programming. Goal programming,

integer programming and dynamic programming etc. The main

applications of the Linear Programming techniques, in Indian context

are as follows:

In the formulation of the country's five year plans,

the Linear Programming approach and econometric models are being used

in various diverse areas such as : food grain storage planning,

transportation, multi-level planning at the national, state and district levels

and urban systems.

Indian Railways, the largest employer in public sector

undertakings, has successfully applied the methodology of Linear

Programming in various key areas. For example, the location of Rajendra

Bridge over the Ganges linking South Bihar and North Bihar in Mokama in

preference to other sites has been achieved only by the help of Linear

Programming.

c c

Linear Programming approach is being extensively

used in agriculture also. It has been tried on a limited scale for the crop

rotation mix of cash crops, food crops and to/ascertain the optimal

fertilizer mix.

Our national airlines are also using Linear

Programming in the selection of routes and allocation of air-crafts to

various chosen routes. This has been made possible by the application of

computer system located at the headquarters. Linear Programming has

proved to be a very useful tool in solving such problems. '

The commercial institutions as well as the

individual traders are also using Linear Programming techniques for cost

reduction and profit maximization. The oil refineries are using this

technique for making effective and optimal blending or mixing decisions

and for the improvement of finished products.

Various process industries such as paint industry

makes decisions pertaining to the selection of the product mix and

locations of warehouse for distribution etc. with the help of Linear

Programming techniques. This mathematical technique is being extensively

used by highly reputed corporations such as TELCO for deciding what

castings and forging to be manufactured in own plants and what should be

purchased from outside suppliers. '

. The major steel plants are using Linear Programming

techniques for determining the optimal combination of the final products

such as : billets, rounds, bars, plates and sheets.

Big corporate houses such as Hindustan Lever

employ these techniques for the distribution of consumer goods

throughout the country. Linear Programming approach is also used for

capital budgeting decisions such as the selection of one project from a

number of different projects. This minimizes the total risk under different

situations.

c c

TRANSPORTATION PROBLEM

or selecting routes in a product distribution network among the

manufacturing plants and distribution warehouses situated in

different regions or local outlets.

a distribution route, which can lead to minimization of transportation

cost or maximization of profit.

called network flow problems

(1) Northwest corner rule

(2) Vogelǯs Approximation Method (VAM)

è c

ù ? Lcm or matrix minima method is certainly an Improvement over the

(north-west corner Rule) ,but is not yet the lowest possible shipping

Schedule.

ù ? It is used to compute transportation route in such away so as to

minimize cost but not in an optimum way.

ù ? In lcm method reduction of total cost is definitely the primary criteria

but it is not dealt in a optimum way, which can be derived through

VAM method.

c c

APPLICATIONS OF VAM

ù? It is used to compute transportation routes in such a way as to

minimize transportation cost for finding out locations of warehouses.

ù? It is used to find out locations of transportation corporations depots

where insignificant total cost difference may not matter.

D cè

ù? The assignment problem can be stated as a problem where different

jobs are to be assigned to different machines on the basis of the cost

of doing these jobs. The objective is to minimize the total cost of

doing all the jobs on different machines

ù? The peculiarity of the assignment problem is only one job can be

assigned to one machine i.e., it should be a one -to-one assignment

ù? 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 i.e. the number of jobs and number of Machines should be

equal

ù? This can be compared to demand equals supply condition in a

balanced transportation problem. In the optimal solution there

should be only one assignment in each row and columns of the given

assignment table. one can observe various situations where

assignment problem can exist e.g., assignment of workers to jobs like

assigning clerks to different counters in a bank or salesman to

different areas for sales, different contracts to bidders.

c c

è c

ù? Match jobs to machines.

ù? Vehicle routing.

ù? Signal processing.

c c

Dc

optimal choices that will lead to a desired outcome under given condition.

To put it simply, it's a study of ways to win in a situation given the

conditions of the situation. While seemingly trivial in name, it is actually

becoming a field of major interest in fields like economics, sociology, and

political and military sciences, where game theory can be used to predict

more important trends.

Neumann, the first to explore this matter was a French mathematician

named Borel. In the 1930s, Neumann published a set of papers that

outlined the tenets of game theory and thus made way for the first

simulations which considered mathematical probabilities. This was used by

strategists during the second World War, and since then has earned game

theory a place in the context of Social Science.

something that seems purely based on skill and chance, but game theory is

in actuality a complex part of many branches of mathematics including set

theory, probability and statistics, and plain algebra. This results from the

fact that games are dictated by a given set of rules that can be used to

outline a set of possible moves which can be ranked by desirability and

effectiveness, and with information available, such a set can also be

constructed for the opponent, thus allowing predictions about the possible

outcomes within a certain number of moves with a probabilistic accuracy.

c c

è ccDc

Though at first glance the idea of game theory sounds trivial,

applications of game theory are extensive. Von Neumann and Morgenstern

originally applied their models of games to economic analysis. Each factor

in the market, such as seasonal preferences, buyer choice, changes in

supply and material costs, and other such market factors can be used to

describe strategies to maximize the outcome and thus the profit. However,

game theory can be also used to simply study economics of the past and

interactions of different factors in a matter. It can also be used to

investigate matters such as monetary distributions and their effects on

other outcomes.

Usually, such games are not zero-sum games, for loses to one side are not

won by the other, and they have been criticized as potentially dangerous

oversimplification of necessarily factors. Economic situations are also more

complicated than zero-sum games, but those factors only require

readjustments to the strategy over time. Sociologists have taken an interest

in game theory, and have developed an entire branch dedicated to group

decision making. Immunization procedures and vaccine or other

medication tests are analyzed by epidemiologists using game theory.

c c

Dc

£ueueing theory (also commonly spelled queuing theory) is the

mathematical study of waiting lines (or queues). There are several related

processes, arriving at the back of the queue, waiting in the queue

(essentially a storage process), and being served by the server at the front

of the queue. It is applicable in transport and telecommunication and is

occasionally linked to ride theory.

è cc

Dccè c

accommodate the offered traffic intensity with only a small loss. The

performance of loss systems is quantified by their Grade of Service (GoS),

driven by the assumption that if insufficient capacity is available, the call is

refused and lost. Alternatively, overflow systems make use of alternative

routes to divert calls via different paths -- even these systems have a finite

or maximum traffic carrying capacity. However, the use of queuing in

PSTNs allows the systems to queue their customer's requests until free

resources become available. This means that if traffic intensity levels

exceed available capacity, customerǯs calls are here no longer lost; they

instead wait until they can be served. This method is used in queuing

customers for the next available operator. A queuing discipline determines

the manner in which the exchange handles calls from customers. It defines

the way they will be served, the order in which they are served, and the

way in which resources are divided between the customers. Here are

details of three queuing disciplines:

c

c - Customers are serviced according to their order

of arrival.

è

c

èc - The last customer to arrive on the queue is the

one who is actually serviced first.

- Customers are serviced equally, i.e. they

experience the same amount of delay.

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