LINEAR PROGRAMMING, DESIGNING AWORK SYSTEM

AND DECISION ANALYSIS

(ASSIGNMENT # 02 SEMESTER 6TH -2020)

Submission Date (MARCH 08, 2020)

BY

ZEESHAN ZAHID

ROLL # 17460920-084

MGT-407 (POM)

BBA 6TH (C)

Submitted to SIR BADAR MUNIR

Department of Management Sciences (FMAS)

UNIVE
RSITY OF GUJRAT
 LINEAR PROGRAMMING

‘Linear and programming’. The world linear stand for indicating the relationships between
different variables of degree one whereas another word programming means planning and refers
to the process of selecting best course of action from various alternatives.

Thus, linear programming is a mathematical technique for allocating limited resources is

optimum manner. In the words of William M. Fox, “Linear programming is a planning technique
that permits some objective function to be minimized or maximized within the framework of
given situational restrictions.”

Chief characteristics:

All linear programming problems must have following five characteristics:

(a) Objective function:

There must be clearly defined objective which can be stated in quantitative way. In business
problems the objective is generally profit maximization or cost minimization.

(b) Constraints:

All constraints (limitations) regarding resources should be fully spelt out in mathematical form.

(c) Non-negativity:

The value of variables must be zero or positive and not negative. For example, in the case of
production, the manager can decide about any particular product number in positive or minimum
zero, not the negative.

(d) Linearity:

The relationships between variables must be linear. Linear means proportional relationship
between two ‘or more variable, i.e., the degree of variables should be maximum one.

(e) Finiteness:
The number of inputs and outputs need to be finite. In the case of infinite factors, to compute
feasible solution is not possible.

Assumptions:

(i) There are a number of constraints or restrictions- expressible in quantitative terms.

(ii) The prices of input and output both are constant.

(iii) The relationship between objective function and constraints are linear.

(iv) The objective function is to be optimized i.e., profit maximization or cost minimization.

Advantages and limitations:

 LP has been considered an important tool due to following reasons:

1. LP makes logical thinking and provides better insight into business problems.

2. Manager can select the best solution with the help of LP by evaluating the cost and profit of
various alternatives.

3. LP provides an information base for optimum allocation of scarce resources.

4. LP assists in adjusting according to changing conditions.

5. LP helps in solving multi-dimensional problems.

 LP approach suffers from the following limitations also:

1. This technique could not solve the problems in which variables cannot be stated quantitatively.

2. In some cases, the results of LP give a confusing and misleading picture. For example, the
result of this technique is for the purchase of 1.6 machines. It is very difficult to decide whether
to purchase one or two- machine because machine can be purchased in whole.

3. LP technique cannot solve the business problems of non-linear nature.

4. The factor of uncertainty is not considered in this technique.

5. This technique is highly mathematical and complicated.

6. If the numbers of variables or contains involved in LP problems are quite large, then using
costly electronic computers become essential, which can be operated, only by trained personnel.

7. Under this technique to explain clearly the objective function is difficult.

Managerial uses and applications:

 LP technique is applied to a wide variety of problems listed below:

(a) Optimizing the product mix when the production line works under certain specification;

(b) Securing least cost combination of inputs;

(c) Selecting the location of Plant;

(d) Deciding the transportation route;

(e) Utilizing the storage and distribution centers;

(f) Proper production scheduling and inventory control;

(g) Solving the blending problems;

(h) Minimizing the raw materials waste;

(i) Assigning job to specialized personnel.

The fundamental characteristic in all such cases is to find optimum combination of factors after
evaluating known constraints. LP provides solution to business managers by understanding the
complex problems in clear and sound way.

The basic problem before any manager is to decide the manner in which limited resources can be
used for profit maximization and cost minimization. This needs best allocation of limited
resources—for this purpose linear programming can be used advantageously.

DESIGNING A WORK SYSTEM

First, a company determines its objectives, and then it develops an operations strategy to achieve
those objectives. Part of the operations strategy is designing a work system, which provides the
structure for the productivity of the company. The work system includes job design, work
measurement, and worker compensation. The company determines the purpose of each job, what
the job consists of, and the cost of the employees to do the job. A job must add value and enable
the company to achieve its objectives.

Suppose your company is an organization with an objective to operate a fancy, upscale

restaurant. To achieve its objective, the restaurant must define a set of jobs, the tasks each job
consists of, and a system for evaluating the employee's performance in the job. The set of jobs at
your restaurant would include a chef, a trained kitchen staff, a professional wait staff, a maître d’,
a wine steward, and so forth. The chef's tasks would include developing the food motif and
menu, for example. The performance measurement would be based on revenue.

Job design ensures that each employee's duties and responsibilities are geared toward achieving
the restaurant's mission. Methods analysis eliminates unnecessary tasks and improves the process
for completing tasks. Work measurement is a process for evaluating employee performance and
comparing alternative processes. Let's begin with job design.

Design of Work Systems is an important component in Production and Operations Management.

Design of Work Systems forms the basis and explains the importance of work design. Design of
Work Systems is used to describe the two basic approaches to job design, the first approach
focuses on Efficiency through job specialization and the other focuses behavioral approaches to
job design. Design of Work System also entails method analysis which in turn centers on how
jobs are performed. Motivation and Trust also form an important dimension in Design of Work
systems as this alone provides an opportunity to the Organization to develop effective teams who
can achieve organizations short- and long-term objectives. Motivation and Trust observations
also emphasizes working conditions that in turn lead to work measurements which leads to
reward and compensation of the individual working for the organization. In short, this topic of
Design of Work Systems provides the perfect bridge between Production and Operations
Management with Human Resource Management.

JOB DESIGN

Job design involves specifying the content and methods of job. In general, the goal of the job
designs to create a work system that is not only productive but also efficient. Job designers are
concerned with: -What will be done Who will do the job How the job will be done Where the job
will be nonergonomic successful Job Design must have the following qualities
  Carried out by experienced personnel who have the necessary training and background
 Consistent with the goals of the organization.
 In documented form.
 Understood and agreed by both management and employees.
 Shared with the new employees.6. Factors that affect Job Design

Job Design Models

Efficiency model - economic

 Taylor and scientific management

 Reduce decision making by workers

Behavioral model - satisfaction

 Satisfaction of employee wants and needs

 Efficiency approach not appropriate in all cases
 Concern with uninteresting jobs and lack of control

Behavioral Approach

Job enlargement

larger portion of the total task

horizontal loading

Job rotation

workers exchange jobs

Job enrichment

increase responsibility for planning & coordination

vertical loading

Specialization

Goal - focus efforts and become proficient

Jobs have a narrow scope

Two extremes, professionals and line workers

High productivity and low unit costs

Limited mental requirements

Frustrated employees

Specialization Advantages

For management

Simplifies training

High productivity

Low wage costs

For labor

Low education & skills

Minimum responsibilities

Little mental effort

Specialization Disadvantages

For management:

Difficult to motivate quality

Worker dissatisfaction

For labor

Monotonous work

Limited advancement

Little control
Little opportunity for self-fulfillment

Team-Based Approaches

Use of teams is a significant change

Self-directed teams (self-managed)

Increase teamwork & employee involvement

Empowered to make changes

Workers are experts in the processes

Teamwork requires training

Reduce managers

Improved responsiveness

Team-Based Approaches

Football team

Baseball team

Soccer team

Tennis doubles team

Methods analysis

Start of the job design process

Reasons for:

Technology changes
Product design changes, new products

Changes in materials or procedures

Gov’t regulations or procedures

Accidents, quality, etc.

Productivity improvements

Existing and new jobs

Methods analysis procedures

Identify operation & gather information

Discuss job with operator & supervisors

Study & document present method

Analyze the job

Propose new methods

Install new methods

Follow-up

Which process to study?

Increase productivity and reduce costs

Jobs that:

have a high labor cost

are done frequently

are unsafe, tiring, unpleasant, noisy

are designated as problems

bottlenecks, quality problems

DECISION ANALYSIS

Decision analysis (DA) is a systematic, quantitative, and visual approach to addressing and
evaluating the important choices that businesses sometimes face. Ronald A. Howard, a professor
of Management Science and Engineering at Stanford University, is credited with originating the
term in 1964. The idea is used by large and small corporations alike when making various types
of decisions, including management, operations, marketing, capital investments, or strategic
choices.

Decision analysis uses a variety of tools to evaluate all relevant information to aid in the
decision-making process and incorporates aspects of psychology, management techniques,
training, and economics. It is often used to assess decisions that are made in the context of
multiple variables and that have many possible outcomes or objectives. The process can be used
by individuals or groups attempting to decide related to risk management, capital investments,
and strategic business decisions.

KEY TAKEAWAYS

 Decision analysis is a systematic, quantitative, and visual approach to making strategic

business decisions.
 Decision analysis uses a variety of tools and also incorporates aspects of psychology,
management techniques, and economics.
 Risk, capital investments, and strategic business decisions are areas where decision
analysis can be applied.
 Decision trees and influence diagrams are visual representations that help in the analysis
process.
 Critics argue that decision analysis can easily lead to analysis paralysis and, due to
information overload, the inability to make any decisions at all.

Examples of Decision Analysis

If a real estate development company is deciding on whether or not to build a new shopping
center in a location, they might examine several pieces of input to aid in their decision-making
process. These might include traffic at the proposed location on various days of the week at
different times, the popularity of similar shopping centers in the area, financial demographics,
local competition, and preferred shopping habits of the area population. All of these items can be
put into a decision-analysis program and different simulations are run that help the company
decide about the shopping center.

As another example, a company has a patent for a new product that is expected to see rapid sales
for two years before becoming obsolete. The company is confronted with a choice of whether to
sell the patent now or build the product in-house. Each option has opportunities, risks, and trade-
offs, which can be analyzed with a decision tree that considers the benefits of selling the patent
verses making the product in-house. Within those two branches of the tree, another group of
decision trees can be created to consider such things as the optimal selling price for the patent or
the costs and benefits of producing the product in-house.

At the operational level hundreds of decisions are made in order to achieve local outcomes that
contribute to the achievement of a company's overall strategic goal. These local outcomes are
usually not measured directly in terms of profit, but instead are measured in terms of quality,
cost-effectiveness, efficiency, productivity, and so forth. Achieving good results for local
outcomes is an important objective for individual operational units and individual operations
managers. However, all these decisions are interrelated and must be coordinated for the purpose
of attaining the overall company goals. Decision making is analogous to a great stage play or
opera, in which all the actors, the costumes, the props, the music, the orchestra, and the script
must be choreographed and staged by the director, the stage managers, the author, and the
conductor so that everything comes together for the performance.

For many topics in operations management, there are quantitative models and techniques
available that help managers make decisions. Some techniques simply provide information that
the operations manager might use to help decide; other techniques recommend a decision to the
manager.
REFRENCES

https://www.oreilly.com/library/view/operations-management-
creating/9780470525906/ch02.html

https://uh.edu/~jhansen/ITEC4341/StevCh7.htm

https://www.investopedia.com/terms/d/decision-analysis.asp

https://www.oreilly.com/library/view/operations-management-an/9781118122679/ch11-
sec004.html

https://www.businessmanagementideas.com/business-management/linear-programming-
meaning-characteristics-assumption-and-other-details/537