COURSE MATERIAL

IV Year B. Tech I- Semester

MECHANICAL ENGINEERING

OPERATIONS RESEARCH
R18A0325

MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY

DEPARTMENT OF MECHANICAL ENGINEERING
(Autonomous Institution-UGC, Govt. of India)
Secunderabad-500100, Telangana State, India.
www.mrcet.ac.in
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
DEPARTMENT OF MECHANICAL ENGINEERING

CONTENTS

1. Vision, Mission and Quality Policy

2. POs, PSOs & PEOs

3. Blooms Taxonomy

4. Course Syllabus

5. Course Outline.

6. Mapping of Course Objectives.

7. Unit wise course Material

a. Objectives and Outcomes

b. Detailed Notes

c. Industry applications relevant to the concepts covered

d. Tutorial Questions

e. Question bank for Assignments: 05/Unit

8. Previous Question papers: 05

www.mrcet.ac.in
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)

VISION
 To establish a pedestal for the integral innovation, team spirit, originality and
competence in the students, expose them to face the global challenges and become
technology leaders of Indian vision of modern society.

MISSION
 To become a model institution in the fields of Engineering, Technology and
Management.
 To impart holistic education to the students to render them as industry ready
engineers.
 To ensure synchronization of MRCET ideologies with challenging demands of
International Pioneering Organizations.

QUALITY POLICY

 To implement best practices in Teaching and Learning process for both UG and PG
courses meticulously.

 To provide state of art infrastructure and expertise to impart quality education.

 To groom the students to become intellectually creative and professionally

competitive.

 To channelize the activities and tune them in heights of commitment and sincerity,
the requisites to claim the never - ending ladder of SUCCESS year after year.

For more information: www.mrcet.ac.in

MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering

VISION

To become an innovative knowledge center in mechanical engineering through state-of-

the-art teaching-learning and research practices, promoting creative thinking
professionals.

MISSION

The Department of Mechanical Engineering is dedicated for transforming the students

into highly competent Mechanical engineers to meet the needs of the industry, in a
changing and challenging technical environment, by strongly focusing in the
fundamentals of engineering sciences for achieving excellent results in their professional
pursuits.

Quality Policy

 To pursuit global Standards of excellence in all our endeavors namely teaching,

research and continuing education and to remain accountable in our core and
support functions, through processes of self-evaluation and continuous
improvement.

 To create a midst of excellence for imparting state of art education, industry-

oriented training research in the field of technical education.
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering
PROGRAM OUTCOMES
Engineering Graduates will be able to:
1. Engineering knowledge: Apply the knowledge of mathematics, science, engineering
fundamentals, and an engineering specialization to the solution of complex engineering
problems.
2. Problem analysis: Identify, formulate, review research literature, and analyze complex
engineering problems reaching substantiated conclusions using first principles of
mathematics, natural sciences, and engineering sciences.
3. Design/development of solutions: Design solutions for complex engineering problems
and design system components or processes that meet the specified needs with
appropriate consideration for the public health and safety, and the cultural, societal, and
environmental considerations.
4. Conduct investigations of complex problems: Use research-based knowledge and
research methods including design of experiments, analysis and interpretation of data,
and synthesis of the information to provide valid conclusions.
5. Modern tool usage: Create, select, and apply appropriate techniques, resources, and
modern engineering and IT tools including prediction and modeling to complex
engineering activities with an understanding of the limitations.
6. The engineer and society: Apply reasoning informed by the contextual knowledge to
assess societal, health, safety, legal and cultural issues and the consequent
responsibilities relevant to the professional engineering practice.
7. Environment and sustainability: Understand the impact of the professional engineering
solutions in societal and environmental contexts, and demonstrate the knowledge of, and
need for sustainable development.
8. Ethics: Apply ethical principles and commit to professional ethics and responsibilities and
norms of the engineering practice.
9. Individual and teamwork: Function effectively as an individual, and as a member or
leader in diverse teams, and in multidisciplinary settings.
10.Communication: Communicate effectively on complex engineering activities with the
engineering community and with society at large, such as, being able to comprehend and
write effective reports and design documentation, make effective presentations, and give
and receive clear instructions.
11.Project management and finance: Demonstrate knowledge and understanding of the
engineering and management principles and apply these to one’s own work, as a member
and leader in a team, to manage projects and in multidisciplinary environments.
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering
12.Life-long learning: Recognize the need for and have the preparation and ability to
engage in independent and life-long learning in the broadest context of technological
change.

PROGRAM SPECIFIC OUTCOMES (PSOs)

PSO1 Ability to analyze, design and develop Mechanical systems to solve the
Engineering problems by integrating thermal, design and manufacturing Domains.

PSO2 Ability to succeed in competitive examinations or to pursue higher studies or

research.

PSO3 Ability to apply the learned Mechanical Engineering knowledge for the
Development of society and self.

Program Educational Objectives (PEOs)

The Program Educational Objectives of the program offered by the department are broadly
listed below:

PEO1: PREPARATION

To provide sound foundation in mathematical, scientific and engineering fundamentals

necessary to analyze, formulate and solve engineering problems.

PEO2: CORE COMPETANCE

To provide thorough knowledge in Mechanical Engineering subjects including theoretical

knowledge and practical training for preparing physical models pertaining to Thermodynamics,
Hydraulics, Heat and Mass Transfer, Dynamics of Machinery, Jet Propulsion, Automobile
Engineering, Element Analysis, Production Technology, Mechatronics etc.

PEO3: INVENTION, INNOVATION AND CREATIVITY

To make the students to design, experiment, analyze, interpret in the core field with the help of
other inter disciplinary concepts wherever applicable.

PEO4: CAREER DEVELOPMENT

To inculcate the habit of lifelong learning for career development through successful completion
of advanced degrees, professional development courses, industrial training etc.
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering

PEO5: PROFESSIONALISM

To impart technical knowledge, ethical values for professional development of the student to
solve complex problems and to work in multi-disciplinary ambience, whose solutions lead to
significant societal benefits.
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering

Blooms Taxonomy
Bloom’s Taxonomy is a classification of the different objectives and skills that educators set for
their students (learning objectives). The terminology has been updated to include the following
six levels of learning. These 6 levels can be used to structure the learning objectives, lessons,
and assessments of a course.

1. Remembering: Retrieving, recognizing, and recalling relevant knowledge from long‐ term
memory.
2. Understanding: Constructing meaning from oral, written, and graphic messages through
interpreting, exemplifying, classifying, summarizing, inferring, comparing, and explaining.
3. Applying: Carrying out or using a procedure for executing or implementing.
4. Analyzing: Breaking material into constituent parts, determining how the parts relate to
one another and to an overall structure or purpose through differentiating, organizing, and
attributing.
5. Evaluating: Making judgments based on criteria and standard through checking and
critiquing.
6. Creating: Putting elements together to form a coherent or functional whole; reorganizing
elements into a new pattern or structure through generating, planning, or producing.
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
www.mrcet.ac.in
Department of Mechanical Engineering
Course Syllabus
 B. Tech (MECH) R18

MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY

L T/P/D C
3 0 3
IV Year B. Tech, ME-I SEM
(R18A0325) OPERATIONS RESEARCH
(PROFESSIONAL ELECTIVE 3)

Course Objectives:
1. Define and formulate linear programming problems and appreciate their limitations.
2. Solve linear programming problems using appropriate techniques and optimization
solvers, interpret the results obtained and translate solutions into directives for
action.
3. Conduct and interpret post-optimal and sensitivity analysis and explain the primal-
dual relationship.
4. Develop mathematical skills to analyze and solve integer programming and network
models arising from a wide range of applications.
5. Effectively communicate ideas, explain procedures and interpret results and
solutions in simulation.

UNIT–I
Introduction: Development of OR – Definitions-Operation Research models– applications.
Resource Allocation: Linear Programming Problem Formulation –Graphical solution –
Simplex method –Artificial variables techniques -Big-M method
UNIT–II
Transportation Problem: Formulation – Optimal solution, unbalanced transportation
problem –Degeneracy. Assignment problem –Formulation –Optimal solution - Variants of
Assignment Problem-Traveling Salesman problem.
UNIT–III
Theory of Games: Introduction – Minimax (maximin) – Criterion and optimal strategy –
Solution of games with saddle points – Rectangular games without saddle points – 2 X 2
games – dominance principle – m X 2 & 2 X n games -graphical method.
UNIT–IV
Replacement Analysis: Introduction – Replacement of items that deteriorate with time –
when money value is not counted and counted – Replacement of items that fail completely,
group replacement.Inventory: Introduction – Single item – Deterministic models – Purchase
inventory models with one price break and multiple price breaks – shortages are not
allowed
UNIT–V
Sequencing: Introduction – Flow –Shop sequencing – n jobs through two machines – n jobs
through three machines – Job shop sequencing – two jobs through ‘m’ machines.
Simulation: Definition – Types of simulation models – phases of simulation– applications of
simulation – Inventory and Queuing problems – Advantages and Disadvantages – Simulation
Languages

TEXT BOOKS :
1 S.D.Sharma - Operations Research , Kedarnath, Ramnath 2015
2. Hiller &Libermann - Introduction to O.R , Mc Graw Hill 2011
3. Taha - Introduction to O.R , PHI 2010

MRCET CAMPUS 166

 B. Tech (MECH) R18

REFERENCE BOOKS:
1. A.M.Natarajan,P.Balasubramani,A. Tamilarasi -Operations Research , Pearson .
Education.
2. R.Pannerselvam - Operations Research ,PHI Publications 2006
3. J.K.Sharma- Operation Research , MacMilan 2010

Course Outcomes:
1. Student will be able to Identify and develop operational research models from the
verbal description of the real system.
2. Understand the mathematical tools that are needed to solve optimization problems.
3. Develop a report that describes the model and the solving technique, analyses the
results and propose recommendations in language understandable in Management
Engineering.
4. Student able to understand Multi-criteria decision techniques, Decision making
under uncertainty and risk, Game theory, and Dynamic programming.
5. Use mathematical software to solve the proposed simulation models.

MRCET CAMPUS 167

Lecturer Notes
CONTENTS

UNIT NO NAME OF THE UNIT PAGE NO

I Introduction to OR & Resource Allocation 1- 22

II Transportation Problem & Assignment problem 23 - 53

III Theory of Games 54 - 85

IV Replacement Analysis & Inventory 86 - 124

V Sequencing & Simulation 125 - 138

iv
 COURSE COVERAGE SUMMARY

Chapter
No’s In The Editi
Units Author Text Book Title Publishers
Text Book on
Covered
Unit-I
Eastern
Introduction to OR Operations
1&2 R.Pannerselvam Economy 2
& Research
Resource Allocation education

Unit-II Eastern
Transportation R.Pannerselvam Operations Economy
3 &4 Research 2
Problem & education
Assignment problem
Unit-III Operations Eastern
Theory of Games 12 R.Pannerselvam Economy 2
Research
education
Unit-IV
Operations Eastern
Replacement R.Pannerselvam
7&13 Research Economy 2
Analysis
education
& Inventory
Unit-V Vikas
Operations
Sequencing & 14 Kalavathy. S publishing 4
Research
Simulation House Pvt.Ltd

v
 UNIT 1
Introduction to OR
&
Resource Allocation

1
DEPARTMENT OF MECHANICAL ENGINEERING
 UNIT I

Operation Research is a relatively new discipline. The contents and the boundaries of the OR are
not yet fixed. Therefore, to give a formal definition of the term Operations Research is a difficult
task. The OR starts when mathematical and quantitative techniques are used to substantiate the
decision being taken. The main activity of a manager is the decision making. In our daily life we
make the decisions even without noticing them. The decisions are taken simply by common
sense, judgment and expertise without using any mathematical or any other model in simple
situations. Operations Research tools are not from any one discipline. takes tools from different
discipline such as Mathematics, Statistics, Economics, Psychology, Engineering etc, and
Combines these tools to make a new set of knowledge for Decision Making.

DEFINITION of OR :
According to the Operational Research Society of Great Britain “Operational Research is the
attack of modern science on complex problems arising in the direction and management of large
systems of Men, Machines, Materials and Money in Industry, Business, Government and
Defense. Its distinctive approach is to develop a Scientific model of the system, Incorporating
measurements of factors such as Change and Risk, with which to predict and compare the
outcomes of alternative Decisions, Strategies or Controls. The purpose is to help management
determine its policy and actions scientifically”.

According Morse and Kimball, “OR is A scientific method of providing executive departments
with a quantitative basis for decisions regarding the operations under their control”
.
According Miller and Starr, “O.R. is applied decision theory, which uses any scientific,
mathematical or logical means to attempt to cope with the problems that confront the executive,
when he tries to achieve a thorough-going rationality in dealing with his decision problem”.

Stages of Development of Operations Research: The stages of development of O.R. are also
known as phases and process of O.R
Step I: Observe the problem environment
Step II: Analyze and define the problem
Step III: Develop a model
Step IV: Select appropriate data input
Step V: Provide a solution and test its reasonableness
Step VI: Implement the solution

Step I : Observe the problem Environment

Process Activities Process Output
Site visits, Conferences, Sufficient information and support to proceed
Observations, Research

Step II : Analyze and define the problem

Process Activities Process Output
Define: Use, Objectives, Limitations Clear grasp of need for and nature
of solution requested

DEPARTMENT OF MECHANICAL ENGINEERING

Step III: Develop a mode
Process Activities Process Output
Define inter relationships, Formulate Models that works under stated environmental
equations, Use known O.R. Model, Search constraints
alternate Model

Step IV: Select appropriate data input

Process Activities Process Output
Analyze: internal-external data, Facts Collect Sufficient inputs to operate and
options Use computer data banks test model

Step V: Provide a solution and test its reasonableness

Process Activities Process Output
Test the model, find limitations, Update the Solution(s) that support current
model organizational goals

Step VI: Implement the solution

Process Activities Process Output
Resolve behavioral issues, Sell the idea, Give improved working and Management support
explanations, Management involvement for longer run operation of model

Relationship between Manager/Decision Maker and O.R. Specialists

Steps in problem recognition, formulation and solution Involvement O.R. specialist or

manager
Recognize from organizational symptoms that a problem exists. Manager
Decide what variables are involved; state the problem in Manager and O.R. Specialist
quantitative relationships among the variables.
Investigate methods for solving the problems as stated above; O.R. Specialist
determine appropriate quantitative tools to be used
Attempt solutions to the problems; find various solutions; state O.R. Specialist
assumptions underlying these solutions; test alternative
solutions.
Determine which solution is most effective because of practical Manager and O.R. Specialist
constraints within the organization; decide what the solution
means for the organization.
Choose the solution to be used. Manager
Sell the decision to operating managers; Manager and O.R. Specialist
get their understanding and cooperation.

DEPARTMENT OF MECHANICAL ENGINEERING

Tools and Techniques :
The common frequently used tools/techniques are mathematical procedures, cost analysis,
electronic computation. However, operations researchers given special importance to the
development and the use of techniques like
 Linear Programming
 Game Theory
 Decision Theory
 Queuing Theory
 Inventory Models and Simulation
In addition to the above techniques, some other common tools are
 Non-Linear Programming
 Integer Programming
 Dynamic Programming
 Sequencing Theory
 Markov Process,
 Network Scheduling (PERT/CPM),
 Symbolic Model,
 Information theory, and
 Value theory.

Linear Programming : This is constrained optimization technique, which optimize some

criterion within some constraints. In Linear programming the objective function (profit, loss or
return on investment) and constraints are linear. There are different methods available to solve
linear programming

Game Theory : This is used for making decisions under conflicting situations where there are
one or more players/opponents. In this the motive of the players are dichotomized. The success
of one player tends to be at the cost of other players and hence they are in conflict.
Decision Theory : It is concerned with making decisions under conditions of
complete certainty about the future outcomes and under conditions such that we
can make some probability about what will happen in future.

Queuing Theory : This is used in situations where the queue is formed (for example customers
waiting for service, aircrafts waiting for landing, jobs waiting for processing in the computer
system, etc). The objective here is minimizing the cost of waiting without increasing the cost of
servicing.

Inventory Model : It make a decisions that minimize total inventory cost. This model
successfully reduces the total cost of purchasing, carrying, and out of stock inventory.

Simulation : It is a procedure that studies a problem by creating a model of the process involved
in the problem and then through a series of organized trials and error solutions attempt to
determine the best solution. Some times this is a difficult/time consuming procedure. Simulation
is used when actual experimentation is not feasible or solution of model is not possible.

Non-linear Programming : This is used when the objective function and the constraints are not
linear in nature. Linear relationships may be applied to approximate non-linear constraints but

DEPARTMENT OF MECHANICAL ENGINEERING

limited to some range, because approximation becomes poorer as the range is extended. Thus,
the non-linear programming is used to determine the approximation in which a solution lies and
then the solution is obtained using linear methods

Dynamic Programming : It is a method of analyzing multistage decision processes. In this each

elementary decision depends on those preceding decisions and as well as external factors.

Information Theory : This analytical process is transferred from the electrical communication
field to O.R. field. The objective of this theory is to evaluate the effectiveness of flow of
information with a given system. This is used mainly in communication networks but also has
indirect influence in simulating the examination of business organizational structure with a view
of enhancing flow of information.

Applications of Operations Research

Accounting:
 Assigning audit teams effectively
 Credit policy analysis
 Cash flow planning
 Developing standard costs
 Establishing costs for byproducts
 Planning of delinquent account strategy
Construction:
 Project scheduling, monitoring and control
 Determination of proper work force
 Deployment of work force
 Allocation of resources to projects

Facilities Planning :
 Factory location and size decision
 Estimation of number of facilities required
 Hospital planning
 International logistic system design
 Transportation loading and unloading
 Warehouse location decision
Finance:
 Building cash management models
 Allocating capital among various alternatives
 Building financial planning models
 Investment analysis
 Portfolio analysis
 Dividend policy making
Manufacturing:
 Inventory control
 Marketing balance projection
 Production scheduling
 Production smoothing

DEPARTMENT OF MECHANICAL ENGINEERING

Marketing:
 Advertising budget allocation
 Product introduction timing
 Selection of Product mix
 Deciding most effective packaging alternative
Organizational Behavior / Human Resources:
 Personnel planning
 Recruitment of employees
 Skill balancing
 Training program scheduling
 Designing organizational structure more effectively
Purchasing:
 Optimal buying
 Optimal reordering
 Materials transfer

Research and Development:

 R & D Projects control
 R & D Budget allocation
 Planning of Product introduction

Limitations of Operations Research

Distance between O.R. specialist and Manager : Operations Researchers job needs a
mathematician or statistician, who might not be aware of the business problems. Similarly, a
manager is unable to understand the complex nature of OR. Thus there is a big gap between the
two personnel
Magnitude of Calculations : The aim of the O.R. is to find out optimal solution taking into
consideration all the factors. In this modern world these factors are enormous and expressing
them in quantitative model and establishing relationships among these require voluminous
calculations, which can be handled only by machines
Money and Time Costs : The basic data are subjected to frequent changes, incorporating these
changes into the operations research models is very expensive. However, a fairly good solution
at present may be more desirable than a perfect operations research solution available in future or
after some time
Non-quantifiable Factors : When all the factors related to a problem can be quantifiable only
then OR provides solution otherwise not. The non-quantifiable factors are not incorporated in
OR models. Importantly O.R. models do not take into account emotional factors or qualitative
factors.

Implementation : Once the decision has been taken it should be implemented. The
implementation of decisions is a delicate task. This task must take into account the complexities
of human relations and behavior and in some times only the psychological factors.

Linear Programming:
 It is a special and versatile technique which can be applied to Advertising, Distribution,
Refinery Operations, Investment, Transportation analysis and Production.

DEPARTMENT OF MECHANICAL ENGINEERING

  It is useful not only in industry and business but also in non-profit sectors such as
Education, Government, Hospital, and Libraries
 The linear programming method is applicable in problems characterizedby the presence
of decision variables.
 The objective function and the constraints can be expressed as linear functions of the
decision variables.
 The decision variables are in some sense, controllable inputs to the system being
modeled.
 An objective function represents some principal objective criterion or goal that measures
the effectiveness of the system such as maximizing profits or productivity, or minimizing
cost or consumption
 There is always some practical limitation on the availability of resources like Man,
Material, Machine, or Time for the system.
 These constraints are expressed as linear equations involving the decision variables.

L PP Formulation
 The L PP formulation is illustrated through a product mix problem. The product mix
problem occurs in an industry where it is possible to manufacture a variety of
products.
 A product has a certain margin of profit per unit, and uses a common pool of limited
resources. In this case the linear programming technique identifies the products
combination which will maximize the profit subject to the availability of limited
resource constraints

Problem 1 : Suppose an Industry is manufacturing tow types of products P1 and P2.The profits
per Kg of the two products are Rs.30 and Rs.40 respectively. These two products require
processing in three types of machines. The following table shows the available machine hours
per day and the time required on each machine to produce one Kg of P 1 and P2. Formulate the
problem in the form of linear programming model

Profit/Kg P1 P2 Total available Machine

(Rs.30) (Rs.40) ( hours/day)

Machine 1 3 2 600

Machine 2 3 5 800

Machine 3 5 6 1100

Solution :
Constraints in this Problem are of “less than or equal to” type
Introduce the decision variable as follows
Let x1 = amount of P1
x2 = amount of P2

DEPARTMENT OF MECHANICAL ENGINEERING

In order to maximize profits, we establish the objective function as
30X1+ 40X2
Since one Kg of P1 requires 3 hours of processing time in machine 1 while the
corresponding requirement of P2 is 2 hours. So, the first constraint can be expressed as
3X1 + 2X2 ≤ 600
Similarly, corresponding to machine 2 and 3 the constraints are
3X1 + 5X2 ≤ 800
5X1 + 6X2 ≤ 1100
In addition to the above there is no negative production, which may be represented algebraically
as X1 ≥ 0 ; X2 ≥ 0
Thus, the product mix problem in the linear programming model is as follows:
Maximize : 30X1 + 40X2
Subject to : 3X1 + 2X2 ≤ 600
3X1 + 5X2 ≤ 800
5X1 + 6X2 ≤ 1100
X1 ≥ 0, X2 ≥ 0

Problem 2:
Formulation with Different Types of Constraints ( L PP with different constraints )
A company owns two flour mills viz. A and B, which have different production capacities for
high, medium and low quality flour. The company has entered a contract to supply flour to a firm
every month with at least 8, 12 and 24 quintals of high, medium and low quality respectively. It
costs the companyRs.2000 and Rs.1500 per day to run mill A and B respectively. On a day, Mill
A produces 6, 2 and 4quintals of high, medium and low quality flour, Mill B produces 2, 4 and
12 quintals of high, medium and low quality flour respectively. How many days per month
should each mill be operated in order to meet the contract order most economically.

Solution:
Let us define x1 and x2 are the mills A and B. Here the objective is to minimize the cost of the
machine runs and to satisfy the contract order.
The linear programming problem is given by
Minimize
2000X1 + 1500X2
Subject to:
6X1 + 2X2 ≥ 8
2X1 + 4X2 ≥ 12
4X1 + 12X2 ≥ 24
and X1 ≥ 0 ; X2 ≥ 0

DEPARTMENT OF MECHANICAL ENGINEERING

Graphical Analysis of Linear Programming:

In this we use two models

1. Maximization Problems
2. Minimization problems

Maximization Problem :-

Maximize Z = 30X1 + 40X2

Subject to 3X1 + 2X2 ≤ 600
3X1 + 5X2 ≤ 800
5X1 + 6X2 ≤ 1100 and
X1 ≥ 0, X2 ≥ 0

Solution:-
Z = 30X1 + 40X2
Let us consider Equation (1) i.e
3X1 + 2X2 ≤ 600
Put X1 = 0, X2 = 0, Equation (1)
We can get point = ( 0, 0 )
Put X1 = 0, in Equation (1) X2= 300
and X2 = 0, in Equation (1) X1= 200
We can get points = ( 0, 300 ) and (200,0)
Let us consider Equation (2) i.e
3X1 + 5X2 ≤ 800
Put X1 = 0, in Equation (2) X2= 160 and X2 = 0, in Equation (2) X1= 266.66
We can get points = ( 0, 160 ) and (266.66, 0)
Let us consider Equation (3) i.e
5X1 + 6X2 ≤ 1100
Put X1 = 0, in Equation (3) X2= 183.33 and X2 = 0, in Equation (3) X1=220
We can get points = ( 0, 183.33 ) and (200, 0)
A, B, C, and D is feasible Region

DEPARTMENT OF MECHANICAL ENGINEERING

 A, B, C, and D is feasible Region
With help of graph from the Feasible Region we calculate Z MAX Value
Key Terms :
Objective Function: Is a linear function of the decision variables representing the objective of
the manager/decision maker.
Constraints: Are the linear equations or inequalities arising out of practical limitations.
Decision Variables: Are some physical quantities whose values indicate the solution.
Feasible Solution: Is a solution which satisfies all the constraints (including the non-negative)
presents in the problem.
Feasible Region: Is the collection of feasible solutions.
Multiple Solutions: Are solutions each of which maximize or minimize the objective function.
Unbounded Solution: Is a solution whose objective function is infinite.
Infeasible Solution: Means no feasible solution.

SIMPLEX METHOD

The Linear Programming with two variables can be solved graphically. The graphical method of
solving. Linear programming problem is of limited application in the business problems as the
number of variables is substantially large.
If the linear programming problem has larger number of variables, the suitable method for
solving is Simplex Method.
The simplex method is an iterative process, through which it reaches ultimately to the minimum
or maximum value of the objective function.

The simplex method also helps the decision maker/manager to identify the following:
 Redundant Constraints
 Multiple Solutions
 Unbounded Solution
 Infeasible Problem

10

DEPARTMENT OF MECHANICAL ENGINEERING

Basics of Simplex Method

The basic of simplex method is explained with the following linear programming problem.
Maximize: 60X1 + 70X2
Subject to: 2X1 + X2 ≤ 300;
3X1 + 4X2 ≤ 509;
4X1 + 7X2 ≤ 812;
X1, X2 ≥ 0

Solution :
First we introduce the variables S3, S4, S5 ≥ 0 So that the constraints becomes equations,
thus,
2X1 + X2 + 1S3 + 0S4 + 0S5 = 300
3X1 + 4X2 + 0S3+1S4 + 0S5 = 509
4X1 + 7X2 + 0S3+ 0S4 +1S5 = 812

Corresponding to the three constraints, the variables S3, S4, S5 are called as slack variables.
Now, the system of equation has three equations and five variables..
There are two types of Solutions they are
 Basic Solutions
 Basic Feasible Solutions
Basic Solution

We may equate any two variables to zero in the above system of equations, and then the system
will have three variables.
Thus, if this system of three equations with three variables is solvable such a solution is called as
basic solution.
For example suppose we take X1= 0 and X2= 0, the solution of the system with remaining three
variables is S3= 300, S4= 509 and S5= 812, this is a basic solution
The variables S3, S4, and S5 are known as basic variables where as the variables x1, x2 are
known as non-basic variables.
The number of basic solution of a linear programming problem is depends on the presence of the
number of constraints and variables
For example if the number of constraints is “m” and the number of variables including the slack
variables “n” there are at most basic solution.

Basic Feasible Solution

A basic solution of a linear programming problem is called as basic feasible solutions

if it is feasible it means all the variables are non-negative
The solution S3 = 300, S4 = 509 and S5 = 812 is a basic feasible solution.
The number of basic feasible solution of a linear programming problem is depends on the
presence of the number of constraints and variables.

For example if the number of constraints is m and the number of variables including the slack
variables is n then there are at most basic feasible solutions

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DEPARTMENT OF MECHANICAL ENGINEERING

Every basic feasible solution is an extreme point of the convex set of feasible solutions and every
extreme point is a basic feasible solution of the set of given constraints.
It is impossible to identify the extreme points geometrically if the problem has several variables
but the extreme points can be identified using basic feasible solutions. Since one the basic
feasible solution will maximize or minimize the objective function, the searching of extreme
points can be carry out starting from one basic feasible solution to another.
The Simplex Method provides a systematic search so that the objective function increases in the
cases of maximization progressively until the basic feasible solution has been identified where
the objective function is maximized.

Problem :
Consider the following linear programming problem
Maximize :60X1 + 70X2
Subject to: 2X1 + X2 + 1S3 + 0S4+0S5 = 300;
3X1 + 4X2 + 0S3+1S4 +0S5 = 509;
4X1 + 7X2 + 0S3+0S4+1S5 = 812
and X1, X2, S3, S4 ,S5 ≥ 0

Solution:-
In this problem the slack variables S3, S4, and S5 provide a basic feasible solution
from which the simplex computation starts. i.e S3==300, S4=509 and S5=812. This result
follows because of the special structure of the columns associated with the slacks.
If z represents profit, then z = 0 corresponding to this basic feasible solution.
We represent by CB the coefficient of the basic variables in the objective function and by XB the
numerical values of the basic variable.
So that the numerical values of the basic variables are: XB1=300, XB2=509, XB3=812.
The profit Z = 60X1+70X2 can also expressed as z – 60X1 – 70X2 = 0.
The simplex computation starts with the first compact standard simplex table
as given below:

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DEPARTMENT OF MECHANICAL ENGINEERING

In the objective function the coefficients of the variables are CB1= CB2 = CB3 = 0. The topmost
row of the Table 1 denotes the coefficient of the variables X1, X2, S3, S4, S5 of the objective
function respectively. The column under x1 indicates the coefficient of x1 in the three equations
respectively. Similarly the remaining column also formed On seeing the equation z = 60X 1+70X2
we may observe that if either X1 or X2, which is currently non-basic is included as a basic
variable so that the profit will increase. Since the coefficient of X2 is higher we choose X2 to be
included as a basic variable in the next iteration. An equivalent criterion of choosing a new basic
variable can be obtained the last row of Table 1 i.e. corresponding to “Z” Since the entry
corresponding to X2 is smaller between the two negative values, X2 will be included as a basic
variable in the next iteration. However with three constraints there can be only three basic
variables Thus, by bringing X2 a basic variable one of the existing basic variables becomes non-
basic. The question here is How to identify this variable?

The following statements give the solution to this question..

Consider the first equation i.e. 2X1 + X2 + 1S3 + 0S4 + 0S5 = 300
From this equation 2X1+S3 = 300 - X2
But X1 = 0. Hence, in order that S3 ≥ 0 300 - X2 ≥ 0 i.e. X2 ≤ 300
Similarly consider the second equation i.e.
3X1 + 4X2 + S4 = 509
From this equation 3X1+S4 = 509 – 4X2
But, X1=0. Hence, in order that S4 ≥0 509 - 4x2 ≥ 0 i.e. X2 ≤ 509/9
Similarly consider the third equation i.e.
4X1 + 7X2 + S5 = 812
From this equation 4X1+S5 = 812-7X2
But X1 = 0. Hence, in order that S5 ≥ 0
812 - 7X2 ≥ 0 i.e. X2 ≤ 812 / 7
Therefore the three equation lead to

X2 ≤ 300, X2 ≤ 509/9, X2 ≤ 812/7

Thus X2 = Min ( X2 ≤ 300, X2 ≤ 509/9, X2 ≤ 812/7 ) it means

X2 = Min (X2 ≤ 300/1, X2 ≤ 509/9, X2 ≤ 812/7 ) = 116

Therefore X2 = 116 If X2 = 116, you may be note from the third equation

7X2+S5 = 812 i.e. S5 = 0

Thus, the variable S5 becomes non-basic in the next iteration.

So that the revised values of the other two basic variables are

S3=300-X2 = 184 S4 = 509 - 4 x116 =45

Refer to Table 1, we obtain the elements of the next Table i.e. Table 2 using the following rules:
1. We allocate the quantities which are negative in the Z- row. Suppose if all the quantities
, the inclusion of any non-basic variable will not increase the value of the objective

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DEPARTMENT OF MECHANICAL ENGINEERING

 function. Hence the present solution maximizes the objective function. If there are more
than one negative values we choose the variable as a basic variable corresponding to
which the Z value is least as this is likely to increase the more profit.

2. Let Xj be the incoming basic variable and the corresponding elements of the jth row
column be denoted by Y1j, Y2j and Y3 j respectively. If the present values of the basic
variables are XB1, XB2 and XB3 respectively, then we can compute.
Min [ XB1 /Y 1j, XB2 / Y2j, XB3 / Y3j ] for Y1j, Y2j, Y3 j > 0.
Note that if any Yij ≤ 0, this need not be included in the comparison. If the
minimum occurs Corresponding to XBr / Yrj then the rth basic variable will
become non-basic in the next iteration.

3. Using the following rules the Table 2 is computed from the Table 1.
i.) The revised basic variables are S3, S4 and X2. Accordingly, we make CB1= 0,
CB2 = 0 and CB3 = 70.
ii.) As X2 is the incoming basic variable we make the coefficient of x2 one by dividing
Each element of row -3 by 7. Thus the numerical value of the
element corresponding to X1 is 4/7, corresponding to S5 is 1/ 7 in Table 2.
iii.) The incoming basic variable should appear only in the third row. So we
multiply the third-row of Table 2 by 1 and subtract it from the first-row
of Table 1 element by element. Thus the element corresponding to X2 in
the first-row of Table 2 is 0. Therefore the element corresponding to X1 is ( 2 - 1 x 4) /
7= 10 / 7 and the element corresponding to S5 is (0 – 1 x 1 / 7 ) = -1/7 In this way we
obtain the elements of the first and the second row in Table 2.

In Table 2 the numerical values can also be calculated in a similar way

Let CB1, CB2, CB3 be the coefficients of the basic variables in the objective function.
For example in Table 2 CB1=0, CB2=0 and CB3=70. Suppose corresponding to a variable J, the
quantity Zj is defined as Zj= CB1, Y1+ CB2, Y2j + CB3Y3 j.
Then the Z-row can also be represented as Zj - Cj.

For example: Z1 - C1 = ( 10/7 x 0 ) + ( 5/7x0) + ( 70x4/7)-60 = -140/ 7

Z5 – C5 = ( -1/7x0 ) – (4/7x0) +(1/7x70) – 0 = 70/7

1. Now we apply rule (1) to Table 2. Here the only negative Zj - Cj is Z1-C1 = -140/7

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DEPARTMENT OF MECHANICAL ENGINEERING

Hence X1 should become a basic variable at the next iteration.
2. We compute the minimum of the ratio

This minimum occurs corresponding to S4, it becomes a non basic variable in next iteration
3. Like Table 2, the Table 3 is computed using the rules (i), (ii), (iii) as described above.

1. Z5 – C5 < 0 should be made a basic variable in the next iteration.

2. Now compute the minimum ratios

Note: Since Y25 = -4/5 < 0, the corresponding ratio is not taken for comparison.
The variable s3 becomes non basic in the next iteration
3. From the Table 3, Table 4 is calculated following the usual steps.

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DEPARTMENT OF MECHANICAL ENGINEERING

Note that zj – cj ≥ 0 for all j, so that the objective function can’t be improved any further.
Thus, the objective function is maximized for x1 = 691/5 and x2=118/5 and
The maximum value of the objective function is 9944

Two Phase andBig M-Method

The simplex method was applied to linear programming problems with less than or equal to (≤)
type constraints. Thus, there we could introduce slack variables which provide an initial basic
feasible solution of the problem.
Generally, the linear programming problem can also be characterized by the presence of both
less than or equal to “ (≤) ’ type or ‘greater than or equal to “ (≥)’ type constraints.
In such case it is not always possible to obtain an initial basic feasible solution using slack
variables.
The greater than or equal to type of linear programming problem can be solved by using the
following methods:
1. Two Phase Method
2. Big M- Method

Problem:
Solve the following problem with Two phase method Minimize 12.5X1 + 14.5X2 Subject to : X1
+ X2 ≥ 2000 0.4X1 + 0.75X2 ≥ 1000 0.075X1 + 0.1X2 ≤ 200 X1, X2 ≥ 0

Solution:
Here the objective function is to be minimized; the values of X 1 and X2 which minimized this
objective function are also the values which maximize the revised objective function i.e.
Maximize : -12.5 X1 – 14.5X2
We can multiply the second and the third constraints by 100 and 1000 respectively for the
Convenience of calculation.
Thus, the revised linear programming problem is:
Maximize -12.5X1 – 14.5X2
Subject to: X1 + X2 ≥ 2000
40X1 + 75X2 ≥ 100000
75X1 + 100X2 ≤ 200000 and X1, X2 ≥ 0
Now we convert the two inequalities by introducing surplus variables S3 and S4
respectively. The third constraint is changed into an equation by introducing a
slack variable S5.
Thus, the linear programming problem becomes as

Maximize : -12.5X1 – 14.5X2 = -25/2X1 – 29/2 X2

Subject to : X1 + X2 -S3 = 2000
40X1 + 75X2 -S4 = 100000
75X1 + 100X2 +S5 = 200000 X1, X2,S3,S4, S5 ≥ 0
Even though the surplus variables can convert greater than or equal to type constraints into
equations they are unable to provide initial basic variables to
start the Simplex method calculation.
So we may have to introduce two more additional variables A6 and A7 called as artificial variable
to facilitate the calculation of an initial basic feasible solution.

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DEPARTMENT OF MECHANICAL ENGINEERING

In this method the calculation is carried out in Two phases hence two phase method

Phase I :- In this phase we will consider the following linear programming problem
Maximize : – A6 – A7
Subject to: X1 + X2 -S3 +A6 = 2000
40X1 + 75X2 -S4 + A7 = 100000
75X1 + 100X2 +S5 = 200000
and X1, X2, S3, S4, S5, A6, A7 ≥ 0
The initial basic feasible solution of the problem is A6 = 2000, A7=100000 and
S5 = 200000.
As the minimum value of the objective function of the Phase –I, is zero at the end of the Phase –
I, calculation both A6 and A7 become zero.

Here X2 becomes a basic variable and A7 becomes non basic variable in the next iteration. It is
no longer considered for re-entry in the table.

Then X1 becomes a basic variable and A6 becomes a non basic variable in the next iteration.

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DEPARTMENT OF MECHANICAL ENGINEERING

The calculation of Phase - I end at this stage. Note that, both the artificial variable have
been removed and also found a basic feasible solution of the problem.
The basic feasible solution is :
X1 = 10000/7
X2 = 4000/2
S5 = 250000/7

Phase II
The initial basic feasible solution obtained at the end of the Phase I calculation is used as the
initial basic feasible solution of the problem.
In this Phase II calculation the original objective function is introduced and the usual simplex
procedure is applied to solve the linear programming problem.

In this Table 1 all Zj - Cj ≥ 0 the current solution maximizes the revised objective function.
Thus, the solution of the problem is:
X1 = 10000/7 = 1428
X2 = 4000/7 = 571.4
and The Minimum Value of the objective function is: 26135.3

Big –M Method :

In this method also we need artificial variables for determining the

initial basic feasible solution
Maximize: -12.5X1 – 14.5X2
Subject to: X1 + X2 –S3 = 2000
40X1 + 75X2 -S4 = 100000
75X1 + 100X2 +S5 = 200000
and X1, X2, S3, S4, S5 ≥ 0.

Introduce the artificial variables A6 and A7 in order to provide basic feasible solution in the
second and third constraints.

The objective function is revised using a large positive number say M

Thus, instead of the original problem, consider the following problem i.e

Maximize : -12.5 X1 – 14.5X2 – M (A6 + A7)

Subject to: X1 + X2 –S3 + A6 = 2000
40X1 + 75X2 -S4 +A7 = 100000
75X1 + 100X2 +S5 = 200000

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DEPARTMENT OF MECHANICAL ENGINEERING

 and X1, X2, S3, S4, S5, A6, A7 ≥ 0
The coefficient of A6 and A7 are large negative number in the objective function.
Since the objective function is to be maximized in the optimum solution, the artificial variables
will be zero.

Therefore, the basic variable of the optimum solution are variable other than the
artificial variables and hence is a basic feasible solution of the original problem.
The successive calculation of simplex tables is as follows

Since M is a large positive number, the coefficient of M in the Zj – Cj row would decide the
entering basic variable. As -76M < - 41M, X2 becomes a basic variable in the next iteration
replacing A7.The artificial variable A7 can’t be re-entering as basic variable.

Now X1becomes a basic variable replacing A6, Like A7 the variable A6 also artificial
variable so it can’t be re-entering in the table.

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DEPARTMENT OF MECHANICAL ENGINEERING

Hence The optimum solution of the problem is
X1 = 10000/7
X2 = 4000/7 and
The Minimum Value of the Objective Function is: 26135.3

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DEPARTMENT OF MECHANICAL ENGINEERING

 Tutorial Questions
1. Let us consider a company making single product. The estimated demand for the product for the next
four months are 1000,800,1200,900 respectively. The company has a regular time capacity of 800 per
month and an overtime capacity of 200 per month. The cost of regular time production is Rs.20 per unit
and the cost of overtime production is Rs.25 per unit. The company can carry inventory to the next month
and the holding cost is Rs.3/unit/month the demand has to be met every month. Formulate a linear
programming problem for the above situation.

2. What are the advantages and applications of OR

3. Solve the following LPP by Big-M penalty method Minimize Z = 5 X1 + 3 X2

S.T 2 X1 + 4 X 2 =1 2, 2 X1 + 2 X 2 = 1 0 ,5 X1 +2 X 2 = 1 0 and X1 , X 2 ≤ 0

4. Solve the following LP problem using graphical method

Maximize Z == -X1+2X2
Subjected to X1-X2≤-1
-0.5X1 - X2≤2 x1,x2≥ 0

5. Explain what is meant by degeneracy in LPP? How can this be solved?

DEPARTMENT OF MECHANICAL ENGINEERING

 Assignment Questions

1. Solve the following LP problem by two phase method. Maximize Z = 5x1+3x2

subjected to 3x1+2x2 ≥ 3
x1+4x2 ≥ 4
x1+x2 ≤ 5

x1+x2 ≥ 0
2. Solve the following LPP problem by Two phase method Max Z=2x1+3x2+5x3
Subjected to
3x1+10x2+5x3 ≤15

33x1- 10x2+9x3≤33
x1+2x2+3x3≥4
x1, x2, x3≥0

3.a) Define the LPP. Give an example

b) Solve the following LPP using graphical method and verify by Simplex method Maximize
Z=10x1+8x2
x2≤500 and
x1≤300 x1, x2, ≥0

4. A firm produces three types of biscuits A,B,C it packs them in arrangement of two sizes 1
and 11. The size 1 contains 20 biscuits of type A, 50 of type B and 10 of type C. the size 11
contains 10 biscuits of type A, 80 of type B and 60 of type C. A buyer intends to buy at least
120 biscuits of type A, 740 of type B and 240 of type C. Determine the least number of
packets he should buy. Write the dual LP problem and interrupt your answer

5.Explain what is meant by degeneracy in LPP? How can this be solved?

6. Solve the following LP problem by graphically

Maximize Z=2x1+x2

Subjected to X1+2X2≤10 ,
X1+X2≤ 6,

X1-X2≤ 2,

X1 - 2X2≤ 1 x1,x2≥ 0

DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT 2
Transportation Problem
&
Assignment problem

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DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT II
Transportation Problems

A special class of linear programming problem is Transportation Problem, where the objective is
to minimize the cost of distributing a product from a number of sources (e.g. factories) to a
number of destinations (e.g. warehouses) while satisfying both the supply limits and the demand
requirement. The transportation model can be extended to areas other than the direct
transportation of a commodity, including among others, inventory control, employment
scheduling, and personnel assignment.
The problem has more constraints and more variables. So, it is not possible to solve such a
problem using simplex method. This is the reason for the need of special computational
procedure to solve transportation problem.

Transportation Algorithm:- The steps of the transportation algorithm are exact parallels of the
simplex algorithm, they are:
Step 1: Determine a starting basic feasible solution, using any one of the following three
methods
1. North West Corner Method
2. Least Cost Method
3. Vogel Approximation Method
Step 2: Determine the optimal solution using the following method
1. MODI (Modified Distribution Method) or UV Method.

The special structure of the transportation problem allows securing a non artificial basic feasible
solution using one the following three methods.
1. North West Corner Method (NWCM)
2.Least Cost Method ( LCM)
3. Vogel Approximation Method(VAM)

The difference among these three methods is the quality of the initial basic feasible solution they
produce, in the sense that a better that a better initial solution yields a smaller objective value.

Generally the Vogel Approximation Method produces the best initial basic feasible solution, and
the North West Corner Method produces the worst, but the North West Corner Method involves
least computations

North West Corner Method :

The method starts at the North West (upper left) corner cell of the tableau ( variable X11 ).

Step -1: Allocate as much as possible to the selected cell, and adjust the associated amounts of
capacity(supply) and requirement (demand) by subtracting the allocated amount.

Step -2: Cross out the row (column) with zero supply or demand to indicate that no further
assignments can be made in that row (column). If both the row and column becomes zero
simultaneously, cross out one of them only, and leave a zero supply or demand in the uncrossed
out row (column).

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DEPARTMENT OF MECHANICAL ENGINEERING

Step -3: If exactly one row (column) is left uncrossed out, then stop. Otherwise, move to the cell
to the right if a column has just been crossed or the one below if a row has been crossed out. Go
to step -1.

Problem1 :

Consider the problem discussed in Example 1.1 to illustrate the North West Corner Method of
determining basic feasible solution

Solution :
The allocation is shown in the following tableau:

The arrows show the order in which the allocated (bolded) amounts are generated.
The starting basic solution is given as
X11 = 50, X21 = 50, X22 = 50 X32 = 10, X33 = 50, X34 = 50, X35 = 40
The corresponding transportation cost is
50 x 1 + 50 x24 + 50 x 12 + 10 x 33 + 50 x 1 + 50 x 23 + 40 x 26 = 4420
It is clear that as soon as a value of Xij is determined, a row (column) is eliminated from.
Further Consideration. The last value of Xij eliminates both a row and column. Hence a feasible
solution computed by North West Corner Method can have at most m + n – 1 positive Xij if the
transportation problem has m sources and n destinations

Least Cost Method :

The LCM is also known as matrix minimum method in the sense we look for the row and the
column corresponding to which Cij is minimum.
This method finds a better initial basic feasible solution by concentrating on the cheapest
routes.Instead of starting the allocation with the northwest cell as in the North West Corner
Method, we start by allocating as much as possible to the cell with the smallest unit cost. If there
are two or more minimum costs then we should select the row and the column. Corresponding to
the lower numbered row.If they appear in the same row we should select the lower numbered
column

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DEPARTMENT OF MECHANICAL ENGINEERING

We then cross out the satisfied row or column, and adjust the amounts of capacity and
requirement accordingly.
If both a row and a column is satisfied simultaneously, only one is crossed out. Next, we look for
the uncrossed-out cell with the smallest unit cost and repeat the process until we are left at the
end with exactly one uncrossed-out row or column.

Problem2 :

Determine the initial basic feasible solution using Least Cost Method Problem

Solution :
The Least Cost method is applied in the following manner, We observe that C11= 1 is the
minimum unit cost in the table. Hence X11= 50 and the first row is crossed out since the row has
no more capacity.

Then the minimum unit cost in the uncrossed-out row and column is C25=1, hence X25=40 and
the fifth column is crossed out.
Next C33=1is the minimum unit cost, hence X33=50 and the third column is crossed out.
Next C22=12 is the minimum unit cost, henceX22=60 and the second column is crossed out.
Next we look for the uncrossed-out row and column now C31=14 is the minimum unit cost,
hence X31=50 and crossed out the first column since it was satisfied
Finally C34=23 is the minimum unit cost, hence X34=50 and the fourth column is crossed out.
So that the basic feasible solution developed by the LCM has
transportation cost is
1 x 50 + 12 x 60 + 1 x 40 + 14 x 50 + 1 x 50 + 23 x 50 = 2710
Note : That the minimum transportation cost obtained by the least cost method is much lower
than the corresponding cost of the solution developed by using the North-West Corner Method.

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DEPARTMENT OF MECHANICAL ENGINEERING

Vogel Approximation Method (VAM):

VAM is an improved version of the least cost method that generally produces better solutions.
The steps involved in this method are:

Step 1: For each row (column) with strictly positive capacity (requirement), determine a penalty
by subtracting the smallest unit cost element in the row (column) from the next smallest unit cost
element in the same row (column).

Step 2: Identify the row or column with the largest penalty among all the rows and columns. If
the penalties corresponding to two or more rows or columns are equal we select the topmost row
and the extreme left column.

Step 3: We select Xij as a basic variable if Cij is the minimum cost in the row or column
With largest penalty. We choose the numerical value of Xij as high as possible subject to the row
and the column constraints. Depending upon whether ai or bj is the smaller of the two ith row or
jth column is crossed out.

Step 4: The Step 2 is now performed on the uncrossed-out rows and columns until all the basic
variables have been satisfied.

Problem :
Solve the following transportation problem

Solution :
Note: ai = capacity (supply) bj = requirement (demand) Now, compute the penalty for various
rows and columns which is shown in the following table:

Look for the highest penalty in the row or column, the highest penalty occurs in the second
column and the minimum unit cost i.e. Cij in this column is C12=22.
Hence assign 40 to this cell i.e. X12=40 and cross out the second column (since second column
was satisfied.

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DEPARTMENT OF MECHANICAL ENGINEERING

This is shown in the following table:

The next highest penalty in the uncrossed-out rows and columns is 13 which occur in the first
row and the minimum unit cost in this row is C14 = 4, hence X14= 80 and cross out the first row.
The modified table is as follows

The next highest penalty in the uncrossed-out rows and columns is 8 which occurs in the third
column and the minimum cost in this column is C23=9, hence X23=30 and cross out the third
column with adjusted capacity, requirement and penalty values. The modified table is as follows

The next highest penalty in the uncrossed-out rows and columns is 17 which occurs in the second
row and the smallest cost in this row is C24=15, hence X24=30 and cross out the fourth column
with the adjusted capacity, requirement and penalty values.
The modified table is as follows:

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DEPARTMENT OF MECHANICAL ENGINEERING

The transportation cost corresponding to this choice of basic variables is
22 x 40 + 4 x 80 + 9 x 30 + 7 x 30 + 24 x 10 + 32 x 50 = 3520

Modified Distribution Method :

The Modified Distribution Method, also known as MODI method or u-v method, which provides
a minimum cost solution (optimal solution) to the transportation problem. The following are the
steps involved in this method

Step 1: Find out the basic feasible solution of the transportation problem using any one of the
three methods discussed in the previous section.

Step 2: Introduce dual variables corresponding to the row constraints and the column constraints.
If there are m origins and n destinations then there will be m+n dual variables. The dual variables
corresponding to the row constraints are represented by U i, i = 1,2,…..m where as the dual
variables corresponding to the column constraints are represented by Vj, j = 1,2,…..n. The values
of the dual variables are calculated from the equation given below Ui + Vj = Cij if Xij > 0

Step 3: Any basic feasible solution has m + n -1 and Xij > 0. Thus, there will be m + n -1
equation to determine m + n dual variables. One of the dual variables can be chosen arbitrarily. It
is also to be noted that as the primal constraints are equations, the dual variables are unrestricted
in sign.

Step 4: If Xij =0, the dual variables calculated in Step 3 are compared with the C ij values of this
allocation as Cij – Ui – Vj. If al Cij – Ui – Vj ≥ 0, then by the theorem of complementary slackness
it can be shown that the corresponding solution of the transportation problem is optimum. If one
or more Cij – Ui – Vj < 0, we select the cell with the least value of Cij – Ui – Vj and allocate as
much as possible subject to the row and column constraints. The allocations of the number of
adjacent cell are adjusted so that a basic variable becomes non-basic.

Step 5: A fresh set of dual variables are calculated and repeat the entire procedure from Step 1 to
Step 5.

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DEPARTMENT OF MECHANICAL ENGINEERING

Problem 3:
Solve the following transportation problem using Modified Distribution method

Solution :-
Step 1: First we have to determine the basic feasible solution. The basic feasible solution using
least cost method is

X11=50, X22=60, X25=40, X31=50, X32=10, X33=50 and X34=40

Step 2: The dual variables U1, U2, U3 and V1, V2, V3, V4, V5 can be calculated from the
corresponding Cij values, that is
U1 + V1=1 U2 + V2 = 12 U2 + V5 =1
U3 + V1 =14 U3 + V2 = 33 U3+V3 = 1 U3+V4 =23

Step 3: Choose one of the dual variables arbitrarily is zero that is u3=0 as it occurs most often in
the above equations. The values of the variables calculated are
U1= -13, U2= -21, U3= 0 V1= 14, V2= 33, V3= 1, V4= 23, V5= 22

Step 4: Now we calculate Cij – Ui – Vj values for all the cells where Xij=0 ( i.e. un allocated cell
by the basic feasible solution) That is
Cell (1,2) = C12-U1-V2 = 9+13-33 = -11
Cell (1,3) = C13-U1-V3 = 13+13-1 = 25
Cell (1,4) = C14-U1-V4 = 36+13-23 = 26
Cell (1,5) = C15-U1-V5 = 51+13-22 = 42
Cell (2,1) = C21-U2-V1 = 24+21-14 = 31
Cell (2,3) = C23-U2-V3 = 16+21-1 = 36
Cell (2,4) = C24-U2-V4 = 20+21-23 = 18
Cell (3,5) = C35-U3-V5 = 26-0-22 = 4l

Note that in the above calculation all the Cij – Ui – Vj ≥ 0 except for cell (1, 2)
where C12 – U1 – V2 = 9+13-33 = -11.
Thus in the next iteration x12 will be a basic variable changing one of the present basic variables
non-basic. We also observe that for allocating one unit in cell (1, 2) we have to reduce one unit
in cells (3, 2) and (1, 1)and increase one unit in cell (3, 1). The net transportation cost for each
unit of such reallocation is -33 -1 + 9 +14 = -11
The maximum that can be allocated to cell (1, 2) is 10 otherwise the allocation in the cell (3, 2)
will be negative. Thus, the revised basic feasible solution is

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 X11= 40, X12= 10, X22= 60, X25= 40, X31= 60, X33= 50, X34= 40

Unbalanced Transportation Problem:-

The total supply (capacity) at the origins is equal to the total demand (requirement) at the
destination it is called balanced transportation problem
when the total supply is not equal to the total demand, which are called as unbalanced
transportation problem.
In the unbalanced transportation problem if the total supply is more than the total demand then
we introduce an additional column which will indicate the surplus supply with transportation
cost zero.
Similarly, if the total demand is more than the total supply an additional row is introduced in the
transportation table which indicates unsatisfied demand with zero transportation cost.

Problem :
Solve the following unbalanced transportation problem

Solution: -
In this problem the demand is 1300 whereas the total supply is 900. Thus, we now introduce an
additional row with zero transportation cost denoting the unsatisfied demand. So that the
modified transportation problem table is as follows>

Now we can solve this problem as well as a balanced problem

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Degenerate Transportation Problem :-

In a transportation problem, if a basic feasible solution with m origins and n destinations has
less than m + n -1 positive Xij i.e. occupied cells, then the problem is said to be a Degenerate
transportation problem
The degeneracy problem does not cause any serious difficulty, but it can cause computational
problem wile determining the optimal minimum solution.
Therefore it is important to identify a degenerate problem as early as beginning and take the
necessary action to avoid any computational difficulty.
The degeneracy can be identified through the following results:
“In a transportation problem, a degenerate basic feasible solution exists if and only if some
partial sum of supply (row) is equal to a partial sum of demand (column). For example the
following transportation problem is degenerate. Because in this problem

a1 = 400 = b1 a2 + a3 = 900 = b2 + b3

There is a technique called perturbation, which helps to solve the degenerate problems.
Perturbation Technique: The degeneracy of the transportation problem can be avoided if we
ensure that no partial sum of ai (supply) and bj (demand) is equal. We set up a new problem
where
ai = ai +d i i = 1, 2, ……, m
bj = bj j = 1, 2, ……, n -1
bn = bn + md d>0
This modified problem is constructed in such a way that no partial sum of ai is equal to the bj.
Once the problem is solved, we substitute d = 0 leading to optimum solution of the original
problem
Example :-

Now this modified problem can be solved by using any of the three methods viz. North-west
Corner, or Least Cost, or VAM

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 ASSIGNMENT PROBLEM

Assignment Problem:-
Given n facilities, n jobs and the effectiveness of each facility to each job, here the problem is to
assign each facility to one and only one job so that the measure of effectiveness if optimized.
Here the optimization means Maximized or Minimized
There are many management problems has a assignment problem structure.

For example, the head of the department may have 6 people available for assignment and 6 jobs
to fill. Here the head may like to know which job should be assigned to which person so that all
tasks can be accomplished in the shortest time possible.

Another example a container company may have an empty container in each of the location 1,
2,3,4,5 and requires an empty container in each of the locations 6, 7, 8,9,10. It would like to
ascertain the assignments of containers to various locations so as to minimize the total distance.

The third example here is, a marketing set up by making an estimate of sales performance for
different salesmen as well as for different cities one could assign a particular salesman to a
particular city with a view to maximize the overall sales.
Note that with n facilities and n jobs there are n! possible assignments.

The simplest wayof finding an optimum assignment is to write all the n! possible arrangements,
evaluate their total cost and select the assignment with minimum cost. But this method leads to a
Calculation problem of formidable size even when the value of n is moderate.

Assignment Problem Structure and Solution

The structure of the Assignment problem is similar to a transportation problem, is as follows:

The element Cij represents the measure of effectiveness when ith person is assigned jth job.
Assume that the overall measure of effectiveness is to be minimized. The element X ij represents
the number of ith individuals assigned to the jth job. Since ith the following
Xi1 + Xi2 + ……………. + Xin = 1, where i = 1, 2, ............. , n person can be assigned
only one job and jth job can be assigned to only one person.
we have X1j + X2j + ……………. + Xnj = 1, where j = 1, 2, . . . . . . . , n and the objective
function is formulated as Minimize

C11X11 + C12X12 + ……….. + Cnn Xnn and Xij ≥ 0

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The assignment problem is actually a special case of the transportation problem where m = n
and ai = bj = 1.
However, it may be easily noted that any basic feasible solution of an assignment problem
contains (2n – 1) variables of which (n – 1) variables are zero.

Because of this high degree of degeneracy the usual computation techniques of a

transportation problem become very inefficient. So, that a separate computation
Technique is necessary for the assignment problem.

“ If a constant is added to every element of a row/column of the cost matrix of an

Assignment problem the resulting assignment problem has the same optimum solution as the
original assignment problem and vice versa”.

This result may be used in two different methods to solve the assignment problem. If in an
assignment problem some cost elements Cij are negative, we may have to convert them into an
equivalent assignment problem
where all the cost elements are non-negative by adding a suitable large constant to the cost
elements of the relevant row or column, and then we look for a feasible solution which has zero
assignment cost after adding suitable constants to the cost elements of the various rows and
columns.
Since it has been assumed that all the cost elements are non-negative, this assignment must be
optimum. On the basis of this principle a computational technique known as Hungarian Method
is developed.

Hungarian Method: The Hungarian Method is discussed in the form of a series of

computational steps as follows, when the objective function is that of minimization type.

Step 1: From the given problem, find out the cost table. Note that if the number of origins is not
equal to the number of destinations then a dummy origin or destination must be added.

Step 2: In each row of the table find out the smallest cost element, subtract this smallest cost
element from each element in that row. So, that there will be at least one zero in each row of the
new table. This new table is known as First Reduced Cost Table.

Step 3: In each column of the table find out the smallest cost element, subtract this smallest cost
element from each element in that column. As a result of this, each row and column has at least
one zero element. This new table is known as Second Reduced Cost Table.

Step 4: Now determine an assignment as follows:

i. For each row or column with a single zero element cell that has not be assigned or eliminated,
box that zero element as an assigned cell.
ii. For every zero that becomes assigned, cross out all other zeros in the same row and for
column.
iii. If for a row and for a column there are two or more zero and one can’t be chosen by
inspection, choose the assigned zero cell arbitrarily.
iv. The above procedures may be repeated until every zero element cell is either assigned(boxed)
or crossed out.

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Step 5: An optimum assignment is found, if the number of assigned cells is equal to the number
of rows (and columns). In case we had chosen a zero cell arbitrarily, there may be an alternate
optimum. If no optimum solution is found i.e. some rows or columns without an assignment then
go to Step 6.
Step 6:Draw a set of lines equal to the number of assignments which has been made in Step 4,
covering all the zeros in the following manner

i. Mark check (√) to those rows where no assignment has been made
ii. Examine the checked (√) rows. If any zero element cell occurs in those rows, check
(√) the respective columns that contains those zeros
iii. Examine the checked (√) columns. If any assigned zero element occurs in those
columns, check (√) the respective rows that contain those assigned zeros.
iv. The process may be repeated until now more rows or column can be checked.
v. Draw lines through all unchecked rows and through all checked columns.

Step 7 : Examine those elements that are not covered by a line. Choose the smallest of these
elements and subtract this smallest from all the elements that do not have a line through them,
Add this smallest element to every element that lies at the intersection of two lines. Then the
resulting matrix is a new revised cost table
.
Problem1:
A work shop contains four persons available for work on the four jobs. Only one person can
work on any one job. The following table shows the cost of assigning each person to each job.
The objective is to assign person to jobs such that the total assignment cost is a minimum.

Solution :

Step 1: From the given problem, find out the cost table. Note that if the number of origins is not
equal to the number of destinations then a dummy origin or destination must be added.
Problem has 4 row and 4 columns. So it is balanced problem

Step 2: In each row of the table find out the smallest cost element, subtract this smallest cost
element from each element in that row. So, that there will be at least one zero in each row of the
new table. This new table is known as First Reduced Cost Table.

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 0 5 2 8
0 3 8 2
2 0 4 7
2 0 1 1

Step 3: In each column of the table find out the smallest cost element, subtract this smallest cost
element from each element in that column. As a result of this, each row and column has at least
one zero element. This new table is known as Second Reduced Cost Table.

Step 4: Determine an Assignment

By examine row A of the table in Step 3, we find that it has only one zero (cell A1) box this zero
and cross out all other zeros in the boxed column. In this way we can eliminate cell B 1.Now
examine row C, we find that it has one zero (cell C2) box this zero and cross out (eliminate) the
zeros in the boxed column. This is how cell D2 gets eliminated. There is one zero in the column
3. Therefore, cell D3 gets boxed and this enables us to eliminate cell D4.Therefore, we can box
(assign) or cross out (eliminate) all zero’s. The resultant table is shown below

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Step 5: The solution obtained in Step 4 is not optimal. Because we were able to make three
assignments when four were required

Step 6: Cover all the zeros of the table shown in the Step 4 with three lines (since already we
made three assignments).Check row B since it has no assignment. Note that row B has a zero in
column 1, therefore check column 1.
Then we check row A since it has a zero in column 1. Note that no other rows and columns are
checked. Now we may draw three lines through unchecked rows (row C and D) and the checked
column(column 1). This is shown in the table given below:

Step 7: Develop the new revised table.

Examine those elements that are not covered by a line in the table given in Step 6.
Take the smallest element in this case the smallest element is 1. Subtract this smallest element
from the uncovered cells and add 1 to elements (C1 and D1) that lie at the intersection of two
lines.
Finally, we get the new revised cost table, which is shown below

Step 8: Now, go to Step 4 and repeat the procedure until we arrive at an optimal solution
(assignment).
Step 9:Determine an assignment Examine each of the four rows in the table given in Step 7, we
may find that it is only row C which has only one zero box this cell C2 and cross out D2.

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Note that all the remaining rows and columns have two zeros. Choose a zero arbitrarily, say A1
and box this cell so that the cells A3 and B1 get eliminated.
Now row B (cell B4) and column 3 (cell D4) has one zero box these cells so that cell D4 is
eliminated. Thus, all the zeros are either boxed or eliminated. This is shown in the following
table

Since the number of assignments equal to the number of rows (columns), the assignment shown
in the above tale is optimal.
The total cost of assignment is: 78
that is A1 + B4 + C2 + D3 = 20 + 17 + 17 + 24 = 78

Unbalanced Assignment Problem:

In the previous section we assumed that the number of persons to be assigned and the number of
jobs were same. Such kind of assignment problem is called as balanced assignment problem.
Suppose if the number of person is different from the number of jobs then the assignment
problem is called as unbalanced.
If the number of jobs is less than the number of persons, some of them can’t be assigned any job.
So that we have to introduce on or more dummy jobs of zero duration to make the unbalanced
assignment problem into balanced assignment problem.
This balanced assignment problem can be solved by usingthe Hungarian Method as discussed in
the previous section. The persons to whom the dummy jobs are assigned are left out of
assignment. Similarly, if the number of persons is less than number of jobs then we have
introduce one or more dummy persons with zero duration to modify the unbalanced into
balanced and then the problem is solved using the Hungarian Method. Here the jobs assigned to
the dummy persons are left out.

Problem :
Solve the following unbalanced assignment problem of minimizing the total time for performing
all the jobs

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Solution :
In this problem the number of jobs is less than the number of workers so we have to introduce a
dummy job with zero duration. The revised assignment problem is as follows:

Now the problem becomes balanced one since the number of workers is equal to the number
jobs. So that the problem can be solved using Hungarian Method.

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Step 1: The cost table

Step 2: Find the First Reduced Cost Table

Step 3 Find the second Cost Reduced table:

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Step 4 : Determine an Assignment By using the Hungarian Method the assignment is made as
follows

Step 5 : The solution obtained in Step 4 is not optimal. Because we were able to make five
assignments when six were required.

Step 6: Cover all the zeros of the table shown in the Step 4 with five lines (since already we
made five assignments).

Step 7: Develop the new revised table. Examine those elements that are not covered by a line in
the table given in Step 6. Take the smallest element in this case the smallest element is 1.
Subtract this smallest element from the uncovered cells and add 1 to elements (A 6, B6, D6 and F6)
that lie at the intersection of two lines. Finally, we get the new revised cost table, which is shown
below

Step 8: Now, go to Step 4 and repeat the procedure until we arrive at an optimal solution
(assignment).

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Step 9: Determine an assignment

Since the number of assignments equal to the number of rows (columns), the assignment shown
in the above tale is optimal.
Thus, the worker A is assigned to Job4, worker B is assigned to job 1, worker C is assigned To
job 6, worker D is assigned to job 5, worker E is assigned to job 2, and worker F is assigned to
job 3. Since the Job 6 is dummy so that worker C can’t be assigned. The total
Minimum time is 14, that is A4 + B1 + D5 + E2 + F3 = 2 + 2 + 4 + 3 + 3 = 14

Infeasible Assignment Problem :

Sometimes it is possible a particular person is incapable of performing certain job or a specific

job can’t be performed on a particular machine. In this case the solution of the problem takes into
account of these restrictions so that the infeasible assignment can be avoided.
The infeasible assignment can be avoided by assigning a very high cost to the cells where
assignments are restricted or prohibited.

Problem :
A computer centre has five jobs to be done and has five computer machines to perform them.
The cost of processing of each job on any machine is shown in the table below.

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Because of specific job requirement and machine configurations certain jobs can’t be done on
certain machines. These have been shown by X in the cost table. The assignment of jobs to the
machines must be done on a one to one basis. The objective here is to assign the jobs to the
available machines so as to minimize the total cost without violating the restrictions as
mentioned above.

Solution :-

Step 1: The cost Table; Because certain jobs cannot be done on certain machines we assign a
high cost say for example500 to these cells i.e. cells with X and modify the cost table. The
revised assignment problem is as follows:

Now
we can Solve this Problem Using Hungarian Method

Step 2: Find the First Reduced Cost Table

Step 3: Find the Second Reduced Cost Table

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Step 4: Determine an Assignment

Step 5: The solution obtained in Step 4 is not optimal. Because we were able to make four
assignments when five were required.

Step 6: Cover all the zeros of the table shown in the Step 4 with four lines (since already we
made four assignments).
Check row 4 since it has no assignment. Note that row 4 has a zero in column 3, therefore check
column3. Then we check row 3 since it has a zero in column 3. Note that no other rows and
columns are checked. Now we may draw four lines through unchecked rows (row 1, 2, 3 and 5)
and the checked column (column 3). This is shown in the table given below

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DEPARTMENT OF MECHANICAL ENGINEERING

Step 7:Develop the new revised table. Examine those elements that are not covered by a line in
the table given in Step 6. Take the smallest element in this case the smallest element is 10.
Subtract this smallest element from the uncovered cells and add 1 to elements (A6, B6, D6 and F6)
that lie at the intersection of two lines. Finally, we get the new revised cost table, which is shown
below

Step 8: Now, go to Step 4 and repeat the procedure until we arrive at an optimal solution
(assignment).

Step 9: Determine an assignment

Since the number of assignments equal to the number of rows (columns), the assignment shown
in the above tale is optimal.
Thus, the Machine1 is assigned to Job5, Machine 2 is assigned to job4, Machine3 is assigned
tojob1, Machine 4 is assigned to job3 and Machine5 is assigned to job2.

The minimum assignment cost is: 170

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Traveling Salesman problem:

Traveling salesman problem is similar to the assignment problem, but here two extra restrictions
are imposed. The first restriction is that we cannot select the element in the leading diagonal as
we do not follows i again by i .The second restriction is that we do not produce an item again
until all the items are produced once. The second restriction means no city is visited twice until
the tour of all the cities is completed

Steps to Solve Travelling Sales Man Problems:

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DEPARTMENT OF MECHANICAL ENGINEERING

Priority rule:
For maximization (minimization) traveling salesman problem, assign the ones on the rows which
have greatest (smallest) element on the right hand side, respectively.
If a tour is not reached, so do the assignment that will make a tour. We note that if a tour does
not occur, then assign the element immediately greater than one
One question arise here, what to do with non square matrix? To make square, a non square
matrix, we add one artificial row or column which all elements are one. Thus we solve the
problem with the new matrix, by using the new method.
The matrix after performing the steps reduces to a matrix which has ones in each row and each
column. So, the optimal solution has been reached

Problem:
Consider the following traveling salesman problem. Design a tour to five cities to the salesman
such that minimize the total distance. Distance between cities is shown in the following matrix.

Solution :

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DEPARTMENT OF MECHANICAL ENGINEERING

Now find the minimum element of each column in distance matrix ( say bj ), and divide each
element of j th column of the matrix by bj .This operation create some ones to each row and each
column. This operation create some ones to each row and each column

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DEPARTMENT OF MECHANICAL ENGINEERING

Problem : Consider the following traveling salesman problem. Design a tour to five cities to the
salesman such that minimize the total distance. Distance between cities is shown in the following
matrix.

Now the minimum element of second column is 1.28 . Divide each element of second column by
1.28 and the minimum element of 4th column is 1.5 . Divide each element of 4th column by 1.5 .
These operations create some ones on second and 4th column, and the reduced matrix is as
follows:

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DEPARTMENT OF MECHANICAL ENGINEERING

 Tutorial Questions

1. A company has factories at F1, F2 and F3 that supply products to ware houses at W1, W2 and W3
.The weekly capacities of the factories are 200,160 and 90 units. The weekly warehouse
requirements are 180,120 and150/units respectively. The unit shipping costs in rupees are as follows
find the optimal solution
W1 W2 W3 supply
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150

2. Different machines can do any of the five required jobs with different profits ring from
each assignment as shown in adjusting table. Find out maximum profit possible
through optimal assignment

3. a). Briefly explain about the assignment problems in OR and applications of assignment in OR?

b) What do you understand by degeneracy in a transportation problem?

4. a) Give the mathematical formulation of Transportation problem

b) Use Vogel's approximate method to obtain an initial basic feasible solution of a

transportation problem and find the optimal solution

DEPARTMENT OF MECHANICAL ENGINEERING

 Assignment Questions
1. Six jobs go first on machine A, then on machine B and last on a machine C. The order of
completion of jobs have no significance. The following table gives machine time for the six
jobs and the three machines. Find the sequence of jobs that minimizes elapsed time to
complete the jobs.

2 a) What do you understand by degeneracy in a transportation problem?

b) Obtain initial solution in the following transportation problem by using VAM and LCM

3. Different machines can do any of the five required jobs with different profits resulting
from each assignment as shown in the adjusting table. Find out maximum profit possible
through optimalassignment.

4. a) State the assignment problem mathematically.

b) For the assignment table, find the assignment of salesmen to districts that will result
in maximum sales

DEPARTMENT OF MECHANICAL ENGINEERING

5. a) What do you understand by degeneracy in a transportation problem?

b)A company has three plants at locations A.B.C which supply to Warehouse located at D,E,F,G and
6. H. Monthly plant capacities are 800,500, and 900 respectively. Monthly warehouse
requirements are 400,500,400 and 800units.Unit Transportation cost in rupees is

7. Determine the optimum distribution for the company in order to minimize total transportation cost
by NWCR

DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT 3
Theory of Games

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DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT III
Theory of Games
Introduction : The definition given by William G. Nelson runs as follows: “Game theory, more
properly the theory of games of strategy, is a mathematical method of analyzing a conflict.
The alternative is not between this decision or that decision, but between this strategy or that
strategy to be used against the conflicting interest”.
In the perception of Robert Mockler, “Game theory is a mathematical technique helpful in
making decisions in situations of conflicts, where the success of one part depends at the expense
of others, and where the individual decision maker is not in complete control of
the factors influencing the outcome”.
According to von Neumann and Morgenstern, “The ‘Game’ is simply the totality of the rules
which describe it. Every particular instance at which the game is played – in a particular way –
from beginning to end is a ‘play’. The game consists of a sequence of moves, and the play of a
sequence of choices”.
According to Edwin Mansfield, “A game is a competitive situation where two or more
persons pursue their own interests and no person can dictate the outcome. Each player, an entity
with the same interests, make his own decisions. A player can be an individual or a group”.

Assumptions for a Competitive Game:

Game theory helps in finding out the best course of action for a firm in view of the anticipated
countermoves from the competing organizations. A competitive situation is a competitive game
if the following properties hold,
1. The number of competitors is finite, say N.
2. A finite set of possible courses of action is available to each of the N competitors.
3. A play of the game results when each competitor selects a course of action from the set of
courses available to him. In game theory we make an important assumption that all the players
select their courses of action simultaneously. As a result, nocompetitor will be in a position to
know the choices of his competitors.
4. The outcome of a play consists of the particular courses of action chosen by the individual
players. Each outcome leads to a set of payments, one to each player, which may be either
positive, or negative, or zero.

Managerial Applications of the Theory of Games:

The techniques of game theory can be effectively applied to various managerial problems as
detailed below:
1) Analysis of the market strategies of a business organization in the long run.
2) Evaluation of the responses of the consumers to a new product.
3) Resolving the conflict between two groups in a business organization.
4) Decision making on the techniques to increase market share.
5) Material procurement process.
6) Decision making for transportation problem.
7) Evaluation of the distribution system.

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DEPARTMENT OF MECHANICAL ENGINEERING

8) Evaluation of the location of the facilities.
9) Examination of new business ventures and
10) Competitive economic environment.

Concepts in the Theory of Games:

Players: The competitors or decision makers in a game are called the players of the game.

Strategies: The alternative courses of action available to a player are referred to as his strategies.

Pay off: The outcome of playing a game is called the pay off to the concerned player.

Optimal Strategy: A strategy by which a player can achieve the best pay off is called the
optimal strategy for him.

Zero-sum game: A game in which the total payoffs to all the players at the end of the game is
zero is referred to as a zero-sum game.

Non-zero sum game: Games with “less than complete conflict of interest” are called non-zero
sum games. The problems faced by a large number of business organizations come under this
category. In such games, the gain of one player in terms of his success need not be completely at
the expense of the other player.

Payoff matrix: The tabular display of the payoffs to players under various alternatives is called
the payoff matrix of the game.

Pure strategy: If the game is such that each player can identify one and only one strategy as the
optimal strategy in each play of the game, then that strategy is referred to as the best strategy for
that Player and the game is referred to as a game of pure strategy or a pure game
.
Mixed strategy: If there is no one specific strategy as the ‘best strategy’ for any player in a
game, then the game is referred to as a game of mixed strategy or a mixed game. In such a game,
each player has to choose different alternative courses of action from time to time.

N-person game: A game in which N-players take part is called an N-person game.

Maxi min-Mini max Principle: The maximum of the minimum gains is called the maxi min
value of the game and the corresponding strategy is called the maxi min strategy. Similarly the
minimum of the maximum losses is called the mini max value of the game and the corresponding
strategy is called the mini max strategy. If both the values are equal, then that would guarantee
the best of the worst results.

Negotiable or cooperative game: If the game is such that the players are taken to cooperate on
any or every action which may increase the payoff of either player, then we call it a negotiable or
cooperative game.

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DEPARTMENT OF MECHANICAL ENGINEERING

Non-negotiable or non-cooperative game: If the players are not permitted for coalition then we
refer to the game as a non-negotiable or non-cooperative game.

Saddle point: A saddle point of a game is that place in the payoff matrix where the maximum of
the row minima is equal to the minimum of the column maxima. The payoff at the saddle point is
called the value of the game and the corresponding strategies are called the pure strategies.

Dominance: One of the strategies of either player may be inferior to at least one of the
remaining ones. The superior strategies are said to dominate the inferior ones.

Types of Games:

There are several classifications of a game. The classification may be based on various factors
such as the number of participants, the gain or loss to each participant, the number of
Strategies available to each participant, etc. Some of the important types of games are
enumerated below.

Two person games and n-person games : In two person games, there are exactly two players
and each competitor will have a finite number of strategies. If the number of players in a game
exceeds two, then we refer to the game as n-person game.

Zero sum game and non-zero sum game: If the sum of the payments to all the players in a
game is zero for every possible outcome of the game, then we refer to the game as a zero sum
game. If the sum of the payoffs from any play of the game is either positive or negative but not
zero, then the game is called a non-zero sum game

Games of perfect information and games of imperfect information: A game of perfect

information is the one in which each player can find out the strategy that would be followed by
his opponent. On the other hand, a game of imperfect information is the one in which no player
can know in advance what strategy would be adopted by the competitor and a player has to
proceed in his game with his guess works only.

Games with finite number of moves / players and games with unlimited number of moves :
A game with a finite number of moves is the one in which the number of moves for each player
is limited before the start of the play. On the other hand, if the game can be continued over an
extended period of time and the number of moves for any player has no restriction, then we call
it a game with unlimited number of moves.

Constant-sum games: If the sum of the game is not zero but the sum of the payoffs to both
players in each case is constant, then we call it a constant sum game. It is possible to reduce such
a game to a zero sum game.

2x2 two person game and 2xn and mx2 games: When the number of players in a game is two
and each player has exactly two strategies, the game is referred to as 2x2 two person game. A
game in which the first player has precisely two strategies and the second player has

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three or more strategies is called an 2xn game. A game in which the first player has three or more
strategies and the second player has exactly two strategies is called an mx2 game.

3x3 and large games: When the number of players in a game is two and each player has exactly
three strategies, we call it a 3x3 two person game. Two-person zero sum games are said to be
larger if each of the two players has 3 or more choices. The examination of 3x3 and larger games
is involves difficulties. For such games, the technique of linear programming can be used as a
method of solution to identify the optimum strategies for the two players.

Non-constant games: Consider a game with two players. If the sum of the payoffs to the two
players is not constraint in all the plays of the game, then we call it a non-constant game. Such
games are divided into negotiable or cooperative games and non-negotiable or non-cooperative
games.
Two-person zero sum games: A game with only two players, say player A and player B, is called
a two-person zero sum game if the gain of the player A is equal to the loss of the player B, so
that the total sum is zero.

Payoff matrix: When players select their particular strategies, the payoffs (gains or losses) can
be represented in the form of a payoff matrix..Since the game is zero sum, the gain of one player
is equal to the loss of other and vice-versa. Suppose A has m strategies and B has n strategies.
Consider the following payoff matrix. Player A wishes to gain as large a payoff aij as possible
while player B will do his best to reach as small a value ij a as possible where the gain to player
B and loss to player A be (-aij ).
The amount of payoff, i.e., V at an equilibrium point is known as the value of the game. The
optimal strategies can be identified by the players in the long run.

Fair game: The game is said to be fair if the value of the game V = 0.

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Assumptions for two-person zero sum game:

For building any model, certain reasonable assumptions are quite necessary. Some assumptions
for building a model of two-person zero sum game are listed below.
a) Each player has available to him a finite number of possible courses of action. Sometimes the
set of courses of action may be the same for each player. Or, certain courses of action may be
available to both players while each player may have certain specific courses of action which are
not available to the other player.
b) Player A attempts to maximize gains to himself. Player B tries to minimize losses to himself.
c) The decisions of both players are made individually prior to the play with no communication
between them.
d) The decisions are made and announced simultaneously so that neither player has an advantage
resulting from direct knowledge of the other player’s decision.
e) Both players know the possible payoffs of themselves and their opponents. Mini max and
Maxi min Principles
The selection of an optimal strategy by each player without the knowledge of the competitor’s
strategy is the basic problem of playing games. The objective of game theory is to know how
these players must select their respective strategies, so that they may optimize their payoffs. Such
a criterion of decision making is referred to as mini max-maxi min principle. This principle in
games of pure strategies leads to the best possible selection of a strategy for both players.
For example, if player A chooses his ith strategy, then he gains at least the payoff min
a ij , which is minimum of the ith row elements in the payoff matrix. Since his objective is to
Maximize his payoff, he can choose strategy i so as to make his payoff as large as possible.
i.e., a payoff which is not less than

Similarly player B can choose jth column elements so as to make his loss not greater than

If the maxi min value for a player is equal to the mini max value for another player, i.e.

then the game is said to have a saddle point (equilibrium point) and the corresponding strategies
are called optimal strategies. If there are two or more saddle points, they must be equal.

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Problem:
Solve the game with the following pay-off matrix.

Solution:
First consider the minimum of each row.

Next consider the maximum of each column.

We see that the maximum of row minima = the minimum of the column maxima. So the

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game has a saddle point. The common value is 12. Therefore the value V of the game = 12.
Interpretation: In the long run, the following best strategies will be identified by the two
players
The best strategy for player A is strategy 4.
The best strategy for player B is strategy IV.
The game is favorable to player A.
Problem 2: Solve the game with the following pay-off matrix

Solution: First consider the minimum of each row.

Maximum of {7, 20, –8, -2} = 20

Next consider the maximum of each column.

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 Minimum of {25, 35, 20, 28, 30}= 20
It is observed that the maximum of row minima and the minimum of the column maxima are
equal. Hence the given the game has a saddle point. The common value is 20.This indicates that
the value V of the game is 20.
Interpretation: The best strategy for player X is strategy 2.
The best strategy for player Y is strategy III.
The game is favorable to player A.

Problem :
Solve the following game:

Solution:
First consider the minimum of each row.

Maximum of {-6, -8, -5, -4} = -4

Next consider the maximum of each column

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 Minimum of {5, -4, 8, 7}= - 4
Since the max {row minima} = min {column maxima}, the game under consideration has a
saddle point. The common value is –4. Hence the value of the game is –4.

Interpretation.
The best strategy for player A is strategy 4.
The best strategy for player B is strategy II. Since the value of the game is negative, it is
concluded that the game is favorable to player B.
Games with no Saddle point:
2 x 2 zero-sum game When each one of the first player A and the second player B has exactly
two strategies, we have a 2 x 2 game.
Motivating point First let us consider an illustrative example.

Problem :
Examine whether the following 2 x 2 game has a saddle point

Solution:
First consider the minimum of each row.

Maximum of {3, 2} = 3
Next consider the maximum of each column.

Minimum of {4, 5}= 4

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We see that max {row minima} and min {column maxima} are not equal. Hence thegame has no
saddle point
Method of solution of a 2x2 zero-sum game without saddle point: Suppose that a 2x2 game has
no saddle point. Suppose the game has the following pay-off matrix.

Since this game has no saddle point, the following condition shall hold:

In this case, the game is called a mixed game. No strategy of Player A can be called the
best strategy for him. Therefore A has to use both of his strategies. Similarly no strategy of
Player B can be called the best strategy for him and he has to use both of his strategies.
Let p be the probability that Player A will use his first strategy. Then the probability that
Player A will use his second strategy is 1-p.If Player B follows his first strategy. Expected value
of the pay-off to Player A.

In the above equation, note that the expected value is got as the product of the corresponding
values
of the pay-off and the probability.
If Player B follows his second strategy

If the expected values in equations (1) and (2) are different, Player B will prefer the minimum
of the two expected values that he has to give to player A. Thus B will have a pure strategy.
This contradicts our assumption that the game is a mixed one. Therefore the expected values
of the pay-offs to Player A in equations (1) and (2) should be equal. Thus we have the condition

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Therefore, the value V of the game is

To find the number of times that B will use his first strategy and second strategy:
Let the probability that B will use his first strategy be r. Then the probability that B will use
his second strategy is 1-r.

When A use his first strategy

The expected value of loss to Player B with his first strategy = ar

The expected value of loss to Player B with his second strategy = b(1-r)
Therefore the expected value of loss to B = ar + b(1-r) (3)

When A use his second strategy

The expected value of loss to Player B with his first strategy = cr
The expected value of loss to Player B with his second strategy = d(1-r)

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Therefore the expected value of loss to B = cr + d(1-r) (4)
If the two expected values are different then it results in a pure game, which is a contradiction.
Therefore the expected values of loss to Player B in equations (3) and (4) should be equal.
Hence we have the condition

Problem:
Solve the following game

Solution:
First consider the row minima

Maximum of {2, 1} = 2
Next consider the maximum of each column

We see that Max {row minima} == min {column maxima}

So the game has no saddle point. Therefore it is a mixed game.
We have a = 2, b = 5, c = 4 and d = 1.
Let p be the probability that player X will use his first strategy. We have

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Interpretation.

Therefore, out of 2 trials, player X will use his first strategy once and his second strategy once.

Therefore, out of 3 trials, player Y will use his first strategy twice and his second strategy once.

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The Principle of Dominance:
In the previous lesson, we have discussed the method of solution of a game without a saddle
point. While solving a game without a saddle point, one comes across the phenomenon of the
dominance of a row over another row or a column over another column in the pay-off matrix of
the game. Such a situation is discussed in the sequel.In a given pay-off matrix A, we say that the
ith row dominates the kth row if
and
In this case, the player B will loose more by choosing the strategy for the q th column than by
choosing the strategy for the pth column. So he will never use the strategy corresponding to the
qth column. When dominance of a row ( or a column) in the pay-off matrix occurs, we can delete
a row (or a column) from that matrix and arrive at a reduced matrix. This principle of dominance
can be used in the determination of the solution for a given game.
Let us consider an illustrative example involving the phenomenon of dominance in a
game.

Problem :
Solve the game with the following pay-off matrix:

Solution:
First consider the minimum of each row.

Maximum of {2, 3, 3} = 3
Next consider the maximum of each column.

Minimum of {6, 4, 7, 6}= 4

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The following condition holds:
Max {row minima}== min {column maxima}
Therefore we see that there is no saddle point for the game under consideration.
Compare columns II and III.

We see that each element in column III is greater than the corresponding element in column
II. The choice is for player B. Since column II dominates column III, player B will discard
his strategy 3.Now we have the reduced game

For this matrix again, there is no saddle point. Column II dominates column IV. The choice
is for player B. So player B will give up his strategy 4
The game reduces to the following:

This matrix has no saddle point.

The third row dominates the first row. The choice is for player A. He will give up his
strategy 1 and retain strategy 3. The game reduces to the following

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The value of the game

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Method of convex linear combination :
A strategy, say s, can also be dominated if it is inferior to a convex linear combination of several
other pure strategies. In this case if the domination is strict, then the strategy s can be deleted. If
strategy s dominates the convex linear combination of some other pure strategies, then one of the
pure strategies involved in the combination may be deleted. The domination will be decided as
per the above rules. Let us consider an example to illustrate this case.

Problem:
Solve the game with the following pay-off matrix for firm A:

Solution:
First consider the minimum of each row.

Maximum of {-2, 0, -6, -3, -1} = 0

Next consider the maximum of each column.

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Minimum of { 4, 8, 6, 8, 6}= 4
Hence,
Maximum of {row minima}== minimum of {column maxima}.
So we see that there is no saddle point. Compare the second row with the fifth row. Each element
in the second row exceeds the corresponding element in the fifth row. Therefore, A2 dominates
A5 . The choice is for firm A. It will retain strategyA2 and give up strategy A5 .Therefore the
game reduces to the following.

Compare the second and fourth rows. We see that A2 dominates A4 . So, firm A will retain the
strategy A2 and give up the strategy A4 . Thus the game reduces to the following:

Compare the first and fifth columns. It is observed that B1 dominates B5. The choice is for
firm B. It will retain the strategy B1 and give up the strategy B5 . Thus the game reduces to the
Following

Compare the first and fourth columns. We notice that B1 dominates B4. So firm B will discard
the strategy B4 and retain the strategy B1 . Thus the game reduces to the following

For this reduced game, we check that there is no saddle point. Now none of the pure strategies of
firms A and B is inferior to any of their other strategies. But, we observe that convex linear
combination of the strategies B2 and B3dominates B1 , i.e. the averages of payoffs due to
strategies B2 and B3,

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dominate B1 . Thus B1 may be omitted from consideration. So we have the reduced matrix

Here, the average of the pay-offs due to strategies A1 and A2 of firm A, i.e.

off matrix

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. Value of the game

Problem:
For the game with the following pay-off matrix, determine the saddle point

Solution:

The choice is with the player B. He has to choose between strategies II and III. He will lose
more in strategy III than in strategy II, irrespective of what strategy is followed by A. So he
will drop strategy III and retain strategy II. Now the given game reduces to the following
game.

Consider the rows and columns of this matrix

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Interpretation: No player gains and no player loses. i.e., The game is not favourable to any
player. i.e. It is a fair game.

Problem:
Solve the game

Solution:
First consider the minimum of each row

Maximum of {4, 2, 4} = 4
Next, consider the maximum of each column.

Since Maximum of { Row Minima} and Minimum of { Column Maxima } are different, it
follows that the given game has no saddle point.
Denote the strategies of player A by A 1, A2 , A3 . Denote the strategies of player B by B1 ,B2 ,B3
.

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Compare the first and third columns of the given matrix.

The pay-offs in B3 are greater than or equal to the corresponding pay-offs in B1 . The player B
has to make a choice between his strategies 1 and 3. He will lose more if he follows strategy 3
rather than strategy 1. Therefore he will give up strategy 3 and retain strategy 1. Consequently,
the given game is transformed into the following game:

Compare the first and third rows of the above matrix.

The pay-offs in A1 are greater than or equal to the corresponding pay-offs in A2 . The player A
has to make a choice between his strategies 1 and 3. He will gain more if he follows strategy 1
rather than strategy 3. Therefore he will retain strategy 1 and give up strategy 3.Now the given
game is transformed into the following game.

It is a 2x2 game. Consider the row minima

Maximum of {4, 2} = 4
Next, consider the maximum of each column

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Maximum {row minima} and Minimum {column maxima } are not equal.Therefore, the reduced
game has no saddle point. So, it is a mixed game

The probability that player A will use his first strategy is p. This is calculated as

The probability that player B will use his first strategy is r. This is calculated as

Value of the game is V. This is calculated as

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Interpretation
Out of 3 trials, player A will use strategy 1 once and strategy 2 once. Out of 4 trials, player B
will use strategy 1 thrice and strategy 2 once. The game is favorable to player A.

Problem:
Solve the game with the following pay-off matrix.(Dividing a game into sub-games)

Solution:
First, consider the row minima.

Maximum of {-4, -3, -3} = -3

Next, consider the column maxima.

We see that Maximum of { row minima}==

Minimum of { column maxima}.
So the game has no saddle point. Hence it is a mixed game. Compare the first and third
Columns.

We assert that Player B will retain the first strategy and give up the third strategy. We get the
following reduced matrix

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We check that it is a game with no saddle point.
Sub games : Let us consider the 2x2 sub games. They are:

First, take the sub game

Next, consider the sub game

We see that it is a game with no saddle point. Take a = -4, b = 6, c = 2, d = -3. Then the
value of the game is

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Let us tabulate the results as follows:

The value of 0 will be preferred by the player A. For this value, the first and third
strategies of A correspond while the first and second strategies of the player B correspond to
the value 0 of the game. So it is a fair game.

Graphical solution of a 2x2 game with no saddle point:

Problem:
Consider the game with the following pay-off matrix.

Solution:

Maximum of {2, 1} = 2.
Next, consider the column maxima.

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 Minimum of {4, 5} = 4.
We see that Maximum { row minima} == Minimum { column maxima }
So, the game has no saddle point. It is a mixed game.
Equations involving probability and expected value:
Let p be the probability that player A will use his first strategy.
Then the probability that A will use his second strategy is 1--p.
Let E be the expected value of pay-off to player A.
When B uses his first strategy
The expected value of pay-off to player A is given by

(1)
When B uses his second strategy
The expected value of pay-off to player A is given by

(2)
Consider equations (1) and (2). For plotting the two equations on a graph sheet, get some points
on them as follows: E = -2p+4 E = 4p+1

Graphical solution:

Procedure: Take probability and expected value along two rectangular axes in a graph sheet.
Draw two straight lines given by the two equations (1) and (2). Determine the point of
intersection of the two straight lines in the graph. This will give the common solution of the two
equations (1) and (2). Thus we would obtain the value of the game.

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 Represent the two equations by the two straight lines AB and CD on the graph sheet.
Take the point of intersection of AB and CD as T. For this point, we have p = 0.5 and E = 3.
Therefore, the value V of the game is 3.

Problem:
Solve the following game by graphical method.

Solution:
First consider the row minima.

Maximum of {-18, - 4} = - 4.
Next, consider the column maxima.

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 Minimum of {6, 2} = 2.
We see that Maximum {row minima}== Minimum { column maxima }So, the game has no
saddle point. It is a mixed game. Let p be the probability that player A will use his first strategy.
Then the probability that A will use his second strategy is 1- p.
When B uses his first strategy. The expected value of pay-off to player A is given by

Graphical solution:
Take probability and expected value along two rectangular axes in a graph sheet. Draw two
straight lines given by the two equations (1) and (2). Determine the point of intersection of the
two straight lines in the graph. This will provide the common solution of the two equations (1)
and (2). Thus we would get the value of the game.
Represent the two equations by the two straight lines AB and CD on the graph sheet. Take the
point of intersection of AB and CD as T. For this point, we have p = 1/ 3
and E = -2. Therefore, the value V of the game is -2.

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 Tutorial Questions
1. a)Explain the terms i)Rectangular games ii) type of Strategies

b) Solve the following game graphically where pay off matrix for player A has been prepared
1 5 -7 4 2
2 4 9 -3 1

2. a)Explain the terms

i) Maxmin criteria and Minimax criteria ii) Strategies: Pure and mixed strategies.

b) Solve the following game graphically

3. a)What are characteristics of a game?

b Reduce the following Game by dominance and the fit the game value

PlayerA
I II III IV
I 3 2 4 0
II 3 4 2 4
III 4 2 4 0
IV 0 4 0 8

4. a) Obtain the optimal strategies for both pensions and the value of the game for two persons
zero sum game whose payoff matrix is as follows.

b) Explain pay of matrix and types of strategy in game theory?

DEPARTMENT OF MECHANICAL ENGINEERING

 Assignment Questions

2.

DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT 4
Replacement Analysis
&
Inventory

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 UNIT- 4
Replacement Problems
Introduction:
The replacement problems are concerned with the situations that arise when some items such
as men, machines and usable things etc need replacement due to their decreased efficiency,
failure or breakdown. Such decreased efficiency or complete breakdown may either be gradual
or all of a sudden.
If a firm wants to survive the competition it has to decide on whether to replace the out dated
equipment or to retain it, by taking the cost of maintenance and operation into account. There are
two basic reasons for considering the replacement of an equipment.
They are (i) Physical impairment or malfunctioning of various parts.
(ii) Obsolescence of the equipment.
The physical impairment refers only to changes in the physical condition of the equipment
itself. This will lead to decline in the value of service rendered by the equipment, increased
operating cost of the equipments, increased maintenance cost of the equipment or the
combination of these costs. Obsolescence is caused due to improvement in the existing Tools and
machinery mainly when the technology becomes advanced therefore, it becomes uneconomical
to continue production with the same equipment under any of the above situations. Hence the
equipments are to be periodically replaced.
Sometimes, the capacity of existing facilities may be in adequate to meet the current demand.
Under such cases, the following two alternatives will be considered.
1. Replacement of the existing equipment with a new one
2. Argument the existing one with an additional equipments.

Type of Maintenance:
Maintenance activity can be classified into two types
i) Preventive Maintenance
ii) Breakdown Maintenance
Preventive maintenance (PN) is the periodical inspection and service which are aimed to detect
potential failures and perform minor adjustments a requires which will prevent major operating
problem in future. Breakdown maintenance is the repair which is generally done after the
equipment breaks down. It is offer an emergency which will have an associated penalty in terms
of increasing the cost of maintenance and downtime cost of equipment, Preventive maintenance
will reduce such costs up-to a certain extent . Beyond that the cost of preventive maintenance
will be more when compared to the cost of the breakdown maintenance.
Total cost = Preventive maintenance cost + Breakdown maintenance cost.
This total cost will go on decreasing up-to P with an increase in the level of maintenance up-to
apoint, beyond which the total cost will start increasing from P. The level of maintenance
corresponding to the minimum total cost at P is the Optional level of maintenance this concept is
illustrated in the follows diagram

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The points M and N denote optimal level of maintenance and optimal cost respectively
Types of replacement problem : The replacement problem can be classified into two categories.
i) Replacement of assets that deteriorate with time (replacement due to gradual failure, due to
wear and tear of the components of the machines) This can be further classified into the
following types.
a) Determination of economic type of an asset.
b) Replacement of an existing asset with a new asset.
ii) Simple probabilistic model for assets which will fail completely (replacement due to sudden
failure).

Determination of Economic Life of an asset

Any asset will have the following cost components
i) Capital recovery cost (average first cost), Computed form the first cost (Purchase price) of the
asset.
ii) Average operating and maintenance cost.
iii) Total cost which is the sum of capital recovery cost (average first cost) and average operating
and maintenance cost.
A typical shape of each of the above cost with respect to life of the asset is shown below.

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 From figure, when the life of the machine increases, it is clear that the capital recovery cost
(average first cost) goes on decreasing and the average operating and maintenance cost goes on
increasing. From the beginning the total cost goes on decreasing upto a particular life of the asset
and then it starts increasing. The point P were the total cost in the minimum is called the
Economic life of the asset. To solve problems under replacement, we consider the basics of
interest formula.

Time value of money does not change

If the value of money does not change with time, then the user of the equipment does not need
to pay interest on his investments. We wish to determine the optimal time to replace the
equipment. If the value of money does not change with time, then the user of the equipment does
not need to pay interest on his investments. We wish to determine the optimal time to replace
the equipment.
We make use of the following notations:
C = Capital cost of the equipment
S = Scrap value of the equipment
n = Number of years that the equipment would be in use
Cm = Maintenance cost function.
ATC = Average total annual costent.We make use of the following notations:
C = Capital cost of the equipment
S = Scrap value of the equipment
n = Number of years that the equipment would be in use
Cm = Maintenance cost function.
ATC = Average total annual cost
Two possibilities are there
(i) Time t is a continuous random variable In this case the deterioration of the equipment is being
monitored continuously. The
total cost of the equipment during n years of use is given by
TC = Capital cost - Scrap value + Maintenance cost

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i.e., when the maintenance cost becomes equal to the average annual cost, the decision should be
to replace the equipment.

(ii) Time t is a discrete random variable

In this case

A (n) is Minimum when

Similarly

Thus the optimal policy is Replace the equipment at the end of n years if the maintenance cost in
the (n+1) th year is more than the average total cost in the nth year and the nth year’s maintenance
cost is less than previous year’s average total cost.

Present worth factor denoted by (P/F, i,n). If an amount P is invested now with amount earning
interest at the rate i per year, then the future sum (F) accumulated after n years can be obtained.
P - Principal sum at year Zero
F - Future sum of P at the end of the nth year
i - Annual interest rate
n - Number of interest periods.
Then the formula for future sum F = P ( 1 + i ) n
P = F/(1 +i)n = Fx (present worth factor)
If A is the annual equivalent amount which occurs at the end of every year from year one
through n years is given by

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Problem;

The cost of equipment is Rs. 62,000 and its scrap value is Rs. 2,000. The life of the
equipment is 8 years. The maintenance costs for each year are as given below:

When the equipment should be replaced?

Solution:-
C = 62,000/-
As the avg. yearly cost is minimum for 6th year the equipment should be replace after 6 year.

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Problem:

(a) Machine A cost Rs. 36,000. Annual operating costs are Rs. 800 for the first year, and then
increase by Rs. 8000 every year. Determine the best age at which to replace the machine. If the
optimum replacement policy if followed, what will be the yearly cost of owning and operating
the machine?
(b) Machine B costs Rs. 40,000. Annual operating costs Rs. 1,600 for the first year, and then
increase by Rs. 3,200 every year. You now have a machine of type A which is one year old.
Should you replace it with B, if so when? Assume that both machines have no resale value

Solution:-
(a) Machine A
C = 36,000/- As the avg. yearly cost is minimum for 3rd year for machine A, machine
A should be replace after 3 year.
Avg. yearly cost for operating & owing the machine A is Rs. 20,800.
The avg. cost per year of operating & owing the machine B is less that of machine A.

(b) Machine B
C = 40,000/- Machine A should be replaced with machine B. As the cost of using
machine A in 3rd year is more than avg. yearly cost of operating & owing the machine.
Machine A should be replaced machine B after 2 years. i.e. 1 year from now because of
machine A is already 1 year old.

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Problem :
A firm pays Rs. 10,000 for its equipment. Their operating and maintenance costs are about
Rs. 2500 per year for the first two years and then go up by approximately Rs. 1,500 per year.
When such equipment replaced? The discount rate is 10% per year.

Solution:-

C = 10,00 0/- i = 0.10

As the avg. yearly cost is minimum for 4th year the equipment should be replace after 4 year

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Problem :
The following mortality rates have been observation for certain type of light bulbs There are
1000 bulbs in use and it costs Rs 10 to replace an individual bulb which has burnt out. If all
bulbs were replaced simultaneously, it would cost Rs 2.5 per bulbs. It is proposed to replace all
the bulbs at fixed interval, and individually those which fail between the intervals. What would
be the best policy to adopt?

Solution:

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As cost of group replacement after every 2nd month is less than cost of individual replacement.
Group replacement policy after every 2 months is better.

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Problem:
A firm is considering replacement of an equipment whose first cost is Rs. 1750 and
the scrap value is negligible at any year. Based on experience, it is found that maintenance cost is
zero during the first year and it increases by Rs. 100 every year thereafter.
(i) When should be the equipment replaced if
a) i = 0%
b) i = 12%

Solution :

Given the first cost = Rs 1750 and the maintenance cost is Rs. Zero during the first years and
then increases by Rs. 100 every year thereafter. Then the following table shows the calculation.
(a.) Calculations to determine Economic life (a) First cost Rs. 1750. Interest rate = 0%

The value corresponding to any end-of-year (n) in Column F represents the average total cost of
using the equipment till the end of that particulars year.
In this problem, the average total cost decreases till the end of the year 6 and then it increases.
Hence the optimal replacement period is 6 years ie the economic life of the equipment is 6 years
.
When interest rate i = 12% When the interest rate is more than 0% the steps to get the
economic life are summarized in the following table.
( b.)Calculation to determine Economic life First Cost = Rs. 1750 Interest rate = 12%

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Identify the end of year for which the annual equivalent total cost is minimum in column. In this
problem the annual equivalent total cost is minimum at the end of year hence the economics life
of the equipment is 7 years.

Simple probabilistic model for items which completely fail

Electronic items like bulbs, resistors, tube lights etc. generally fail all of a sudden, instead of
gradual failure. The sudden failure of the item results in complete breakdown of the system. The
system may contain a collection of such items or just an item like a single tube-light. Hence we
use some replacement policy for such items which would minimize the possibility of complete
breakdown. The following are the replacement policies which are applicable in these cases.
i) Individual replacement policy :Under this policy, each item is replaced immediately after
failure.
ii) Group replacement policy :Under group replacement policy, a decision is made with regard
the replacement at what equal internals, all the item are to be replaced simultaneously with a
provision to replace the items individually which fail during the fixed group replacement period.
Among the two types of replacement polices, we have to decide which replacement policy we
have to follow. Whether individual replacement policy is better than group replacement policy.
with regard to economic point of view. To decide this, each of the replacement policy is
calculated and the most economic one is selected for implementation.

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 Inventory

Introduction :
Simply inventory is a stock of physical assets. The physical assets have some economic value,
which can be either in the form of material, men or money. Inventory is also called as an idle
resource as long as it is not utilized. Inventory may be regarded as those goods which are
procured, stored and used for day to day functioning of the organization.
Inventory can be in the form of physical resource such as raw materials, semi-finished goods
used in the process of production, finished goods which are ready for delivery to the consumers,
human resources, or financial resources such as working capital etc.
Thus, inventory control is the technique of maintaining stock items at desired levels. In
other words, inventory control is the means by which material of the correct quality and quantity
is made available as and when it is needed with due regard to economy in the holding cost,
ordering costs, setup costs, production costs, purchase costs and working capital.

Objectives of Inventory : Inventory has the following main objectives:

 To supply the raw material, sub-assemblies, semi-finished goods, finished goods, etc. to
its users as per their requirements at right time and at right price.
 To maintain the minimum level of waste, surplus, inactive, scrap and obsolete items.
 To minimize the inventory costs such as holding cost, replacement cost, breakdown cost
and shortage cost.
 To maximize the efficiency in production and distribution.
 To maintain the overall inventory investment at the lowest level
 To treat inventory as investment which is risky? For some items, investment may lead to
higher profits and for others less profit.

Inventory Conversion Diagram: The socks at input are called raw materials whereas thestocks
at the output are called products. The stocks at the conversion process may be called finished or
semi-finished goods or sometimes may be raw material depending on the requirement of the
product at conversion process, where the input and output are based on the market situations of
uncertainty, it becomes physically impossible and economically impractical for each stock item
to arrive exactly where it is required and when it is required.

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Role of Inventory:
Inventories play an essential and pervasive role in any organization because they make it
possible:
 To meet unexpected demand
 To achieve return on investment
 To order largest quantities of goods, components or materials from the suppliers at
Advantageous prices
 To provide reasonable customer service through supplying most of the requirements from
Stock without delay
 To avoid economically impractical and physically impossible delivering/getting right
Amount of stock at right time of required
 To maintain more work force levels
 To facilitate economic production runs
 To advantage of shipping economies
 To smooth seasonal or critical demand
 To facilitate the intermittent production of several products on the same facility
 To make effective utilization of space and capital
 To meet variations in customer demand
 To take the advantage of price discount
 To hedge against price increases
 To discount quantity

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Basic Functions of Inventory :

The important basic function of inventory is

 Increase the profitability- through manufacturing and marketing support. But zero
inventory manufacturing- distribution system is not practically possible, so it is important
to remember that each rupee invested in inventory should achieve a specific goal.
The other inventory basic functions are
 Geographical Specialization
 Decoupling
 Balancing supply and demand and
 Safety stock

Factors affecting inventory

1.) Inventory or stock cost:-

There are several:
i) Purchase/Production cost– cost of purchasing a unit of item
ii) Ordering/Acquisition/Set-up cost – costs related to acquisition of purchased items i.e. those
of getting an item to a firm’s store e.g. transport, loading and off-loading, inspection.
iii) Inventory carrying/ holding costs – costs associated with holding a given level of
inventory e.g. warehousing, spoilage, security, pilferage, administrative, insurance,
depreciation.
iv) Stock-out cost/ shortage costs – incurred due to a delay in meeting demand or inability
to meet demand at all because of shortage of stock loss of future sales, cost associated
with future replenishment.

2. Order cycle – the time period between placements of 2 successive orders.

3. Lead time – time between placing an order and actual replenishment of item. Also
referred to as procurement time.

4. Time horizon – this is the period over which the inventory level will be controlled.

5. Maximum stock – the level beyond which stocks should not be allowed to rise.

6. Minimum stock level/buffer stock/safety stock – level below which stock should not
be allowed to fall. It is the additional stock needed to allow for delay in delivery or for
any higher than expected demand that may arise due to lead time.

7. Reorder level – point at which purchased order must be sent to supplier for the supply
of more stock. The level of stock at which further replenishment order should be
placed.

8. Reorder quantity – the quantity of the replacement order.

ROP (Reorder Point) = Daily Demand X Lead Time

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 ROP = D/T x TL
Note that Demand is on daily basis

9. Average stock level Minimum stock level + Maximum stock level

Average stock level = 2

10. Physical stock – no. of items physically in stock at any given time.

11. Stock replenishment – rate at which items are added to the inventory.

12. Free stock – the physical stock plus the outstanding replenishment orders minus the
unfulfilled requirements.

13. Economic order quantity (EOQ) – the quantity at which the cost of having stocks is
minimum.

14. Economic batch quantity (EBQ) – quantity of stock within the enterprise. Company
orders from within its own warehouses unlike in EOQ where it is ordered from
elsewhere.

15. Demand:-
 Customer's demand, size of demand, rate of demand and pattern of demand is
important
 Size of demand = no. of items demanded per period
 Can be deterministic (Static or dynamic) or probabilistic (governed by discrete or
continuous probability distribution)
 The rate of demand can be variable or constant
 Pattern reflects items drawn from inventory -instantaneous (at beginning or end) or
gradually at uniform rate
There are four major elements of inventory costs that should be taken for analysis, such as
(1) Item cost, Rs. C/item.
(2) Ordering cost, Rs. Co/order.
(3) Holding cost Rs. Ch/item/unit time.
(4) Shortage cost Rs. Cs/item/Unit time.

(1) Item Cost (C)

This is the cost of the item whether it is manufactured or purchased. If it is
manufactured, it includes such items as direct material and labor, indirect materials and labor
and overhead expenses. When the item is purchased, the item cost is the purchase price of 1
unit. Let it be denoted by Rs. C per item.

(2) Purchasing or Setup or Acquisition or Ordering Cost (Co)

Administrative and clerical costs are involved in processing a purchase order,
expediting, follow up etc., It includes transportation costs also. When a unit is manufactured,
the unit set up cost includes the cost of labor and materials used in the set up and set up
testing and training costs. This is denoted by Rs. Co per set up or per order

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Inventory holding cost (Ch): If the item is held in stock, the cost involved is the item carrying
or holding cost. Some of the costs included in the unit holding cost are
(1) Taxes on inventories
(2) Insurance costs for inflammable and explosive items,
(3) Obsolescence,
(4) Deterioration of quality, theft, spillage and damage to times,
(5) Cost of maintaining inventory records.
This cost is denoted by Rs. Ch/item/unit time. The unit of time may be days, months, weeks
or years.

Shortage Cost (Cs): The shortage cost is due to the delay in satisfying demand (due to wrong
planning); but the demand is eventually satisfied after a period of time. Shortage cost is not
considered as the opportunity cost or cost of lost sales. The unit shortage cost includes such
items as,
(1) Overtime requirements due to shortage,
(2) Clerical and administrative expenses.
(3) Cost of expediting.
(4) Loss of goodwill of customers due to delay.
(5) Special handling or packaging costs.
(6) Lost production time.
This cost is denoted by Rs. Cs per item per unit time of shortage.

The basic deterministic inventory models

1. EOQ Model with Uniform Demand

2. EOQ Model with Different rates of Demands in different cycles
3. EOQ Model with Shortages (backorders) allowed
4. EOQ Model with Uniform Replenishment

Notations used:-
Q = number of units per order
Q* = economic order quantity or optimal no. of units per order to minimize total cost
D = annual demand requirement (units per year)
C = cost of 1 unit of item
C0 = ordering (preparation or set-up) cost of each order
Ch = Cc = holding or carrying cost per unit per period of time
T = length of time between two successive orders
N = no. of orders or manufacturing runs per year
TC = Total Inventory cost
The optimal order quantity (EOQ) is at a point where the ordering cost = holding cost

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Model 1- EOQ Model with Uniform Demand

Policy: Whenever the inventory level is 0, order Q items

Objective: Choose a Q that will minimize total Inventory Cost
The behavior of inventory at hand with respect to time is illustrated below:
1. No stock-out is allowed.
2. Quantity discounts are not allowed – purchase price is constant.
3. Lead time is known and fixed.
This is the ordering quantity which minimizes the balance of cost between inventory holding cost
and ordering costs
.
It is based on the following assumptions:

1. A known constant stock holding cost.

2. A known constant ordering cost.
3. The rate of demand is known (is deterministic).
4. A known constant price per unit.
5. Inventory replenishment is done instantaneously
6. No stock-out is allowed.
7. Quantity discounts are not allowed – purchase price is constant.
8. Lead time is known and fixed.

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Solve for Q

1. Inventory holding or carrying costs are often expressed as annual percentage(s) of the unit cost
or price.
Co or Ch as % of unit cost or price
I = annual inventory carrying charge (cost) as 1% of price
Ch = IC where C is the unit price of inventory item

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem:
A supplier is required to deliver 20000 tons of raw materials in one year to a large manufacturing
organization. The supplier maintains his go-down to store the material received from various
resources. He finds that cost of inventory holding is 30 paisa per ton per month. His cost for
ordering the material is Rs. 400. One of the conditions of the supplier contract from the
manufacturing organization is that the contract will be terminated in the event of supply not
being maintained as a schedule. Determine (1) in what lot size is the supplier should produce the
material for minimum total associated cost of inventory? (2) At what time interval should he
procure the material? It may be assume that replacement of inventory is instantaneous

Solution:

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem :
In the above example, if there is (i) 10 per cent increase in holding cost or (ii) 10 percent increase
in ordering cost, in each case determine the optimal lot size and corresponding minimum total
expected cost of inventory. Comment the result.

Problem :
A certain item costs Rs. 250 per ton. The monthly requirement is 5 tons and each time the stock
is replenished, there is an order cost of Rs. 120. The cost of carrying inventory has been
estimated at 10% of the value of the stock per year. What is the optimal order quantity? If lead
time is 3 months, determine the re order point. At what intervals the order should be placed?

Solution: -
Given Data
C = Rs. 250 per ton
Co = Rs. 120
Ch = 250×0.1 = Rs. 25 per ton per year
D = 5×12 = 60 tons
TL = 3 months

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem :
A manufacturer has to supply his customers with 1200 units of his product per annum.
Theinventory carrying cost amounts to ₹ 1.2 per unit. The set-up cost per run is ₹ 160. Find:
i) EOQ
ii) Minimum average yearly cost
iii) Optimum no of orders per year
iv) The optimum time between orders (optimum period of supply per optimum order)

Solution:

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem:
The annual demand per item is 6400 units. The unit cost is ₹ 12 and the inventory carrying
charges 25% per annum. If the cost of procurement is ₹ 300 determine:
i) EOQ
ii) No. of orders per year
iii) Time between 2 consecutive orders
iv) Optimum cost

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DEPARTMENT OF MECHANICAL ENGINEERING
 ( OR)

Model 2- EOQ Model with Different Rates of Demand

Assumptions of this model are same as those of model 1 except

Demand rate is different in different cycles. The total demand D is specified as demand during
time horizon T

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Problem:
A manufacturing company needs 4000 units of material every month. The delivery system from
the supplier is so scheduled that once delivery commences the materials is received at the rate of
6000 units per month. The cost of processing purchase order is Rs. 600 and the inventory
carrying cost is 30 paisa per unit per month. Determine the optimal lot size and interval at which
the order is to be placed. What is maximum inventory during a cycle?

Solution:-
Given Data
Co = Rs. 600
Ch = Rs. 0.30 per unit per month
d = 6000 units per months
r = 4000 units per months

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem:
The demand for a certain item is 150 units per week. No shortages are to be permitted. Holding
cost is 5 paisa per unit per week. Demand can be met either by manufacturing or purchasing.
With each source the data are as follows

Determine (a) the minimum cost procurement source and its economic advantage over its
alternative resource, (b) E.O.Q. or E.B.Q. as per the source selected, (c) the minimum
procurement level ( Re-order point)

Solution:-
For manufacture
Given Data
Co = Rs. 90
Ch = Rs. 0.05 per unit per month
d = 260 units per weeks
r = 150 units per weeks
TL = 4 week
C = Rs. 10.50 per unit

For purchase Given Data

Co = Rs. 20
Ch = Rs. 0.05 per unit per month
r = 150 units per weeks
TL = 4 week
C = Rs. 12 per unit

(a) Minimum TC is 1598.9 per week for manufacture

(b) E.B.Q

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Model 3- EOQ Model with Shortages (backorders) allowed
Assumptions of this model are same as those of model 1 except Shortages is allowed.

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Problem:
A tractor manufacturing company has entered in to a contract with M/s Auto Diesel for
delivering 30 engines per day. M/s Auto Diesel has committed that for every day’s delay in
delivery; there will be penalty of delayed supply at the rate of Rs. 100 per engine per day. M/s
Auto Diesel has the inventory holding cost of Rs. 600 per engine per month. Assume
replenishment of engines as instantaneous and ordering cost as Rs. 15000. What should be initial
inventory level and what should be ordering quantity for minimum associated cost of inventory?
At what interval procurement should be made?

Solution:-
Given Data
Co = Rs. 15000
Ch = Rs. 600 per engine per month
Cs = 100*30 =3000 per engine per month
r = 30*30 = 900 engine per month

Problem:
In above example, find out optimum order quantity if shortage is not permitted. Compare this
with the value of obtained in above example and comment on the result.

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Model 4- EOQ Model with Uniform Replenishment

Assumptions of this model are same as those of model 1 except Demand is variable and
Shortages is allowed.

Problem :
The demand for an item in a company is 18000 units per year and the company can produce the
item at a rate of 3000 units per month. The set up cost is Rs. 500 per set up and the annual
inventory holding cost is estimated at 20 percent of the investment in average inventory. The cost
of one unit short is Rs. 20 per year. Determine, (i) Optimal production batch quantity, (ii)
Optimum cycle time and production time, (iii) Maximum inventory level in the cycle, (iv)
Maximum shortage permitted and (v) Total associated cost per year. The cost of the items is Rs.
20 per unit.

Solution:-
Given Data Co = Rs. 500
Ch = 0.20*20 = Rs. 4 per unit per year Cs = Rs. 20 per unit per year r = 18000 unit per year
d = 3000*12 = 36000 unit per year

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DEPARTMENT OF MECHANICAL ENGINEERING
Model 5- EOQ Model with Quantity Discounts :

Quantity discounts occur in numerous situations where suppliers provide an incentive for large
order quantities by offering a lower purchase cost when items are ordered in larger lots or
quantities. In this section we show how the EOQ model can be used when quantity discounts are
available.

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem:
A wholesale dealer in bearings purchases 30000 bearings annually at intervals and order size
suitable to him. The price is Rs. 150 per bearing. The manufacturing company offers the dealer a
discount of Rs. 7 per bearing for the order size larger than earlier. The reorder cost is Rs. 40 and
the inventory carrying cost amounts to 20 percent of the investment in purchase price. Decide the
optimum order size for special discount offer purchase and the maximum benefit he can derive
from this order.

Solution:-
Given Data Co = Rs. 40 Ch = 0.20*150 = Rs. 30 per unit per year r = 30000 unit per year
C = Rs 150 per unit Cd = Rs 7 per unit i = 0.20

= 7640 Units

= 27779

Model 6- Probabilistic Inventory Models

The inventory models that we have discussed thus far have been based on the assumption that the
demand rate is constant and deterministic throughout the year. We developed minimum-cost
order quantity and reorder-point policies based on this assumption. In situations where the
demand rate is not deterministic, models have been developed that treat demand as probability
distribution. In this section we consider a single-period inventory model with probability

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DEPARTMENT OF MECHANICAL ENGINEERING
demand. The single-period inventory model refers to inventory situations in which one order is
placed for the product; at the end of the period, the product has either sold out, or there is a
surplus of unsold items that will be sold for a salvage value. The single-period inventory model
is applicable in situations involving seasonal or perishable items that cannot be carried in
inventory and sold in future periods. Seasonal clothing (such as bathing suits and winter coats) is
typically handled in a single-period manner. In these situations, a buyer places one preseason
order for each item and then experiences a stock out or hold a clearance sale on the surplus stock
at the end of the season. No items are carried in inventory and sold the following year.
Newspapers are another example of a product that is ordered one time and is either sold or not
sold during the single period. While newspapers are ordered daily, they cannot be carried in
inventory and sold in later periods. Thus, newspaper orders may be treated as a sequence of
single-period models; that is, each day or period is separate, and a single-period inventory
decision must be made each period (day). Since we order only once for the period, the only
inventory decision we must make is how much of the product to order at the start of the period.
Because newspaper sales are an excellent example of a single-period situation, the single-period
inventory problem is sometimes referred to as the newsboy problem.
Optimum stock level

Problem:
A large industrial campus has decided to have its diesel generator system for street lighting,
security illumination and round the clock process systems. The generator needs a tailor made for
each other control unit which cost Rs. 18000 per number when ordered with the total equipment
of diesel generator. A decision needs to be taken whether additional numbers of this unit should
be ordered along with equipment, and if so, how many units should be ordered? These control
units, though tropicalized and considered quite reliable, are known to have failed from time to
time and history of failures of similar equipment give the following probability of failure. It is
found that if the control unit fails, the entire generator system comes to a grinding halt. When
control unit fails and a spare unit is not available it is estimated that the cost rush order
procurement, including the associated cost of the downtime is Rs. 50000 per unit. Considering
that any investment in inventory is the cost of inventory, decide how many spare units should be
ordered along with the original order. Determine total associated cost for each no. of spare unit

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DEPARTMENT OF MECHANICAL ENGINEERING
As I = 1, total associated cost is minimum, 1 spare units should be ordered along with the
original order. Pr is between 0.6 and 0.8 ; 0.6 ≤ 0.7352 ≤ 0.8
Optimum stock level is 1.
Problem: In the above problem as regular purchase price of control unit is almost one third of
the estimated rush order associated cost of one unit. The management decides to buy two spare

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DEPARTMENT OF MECHANICAL ENGINEERING
units with the first order. Having decided that, the management would like to know for what
range of actual values of shortage cost, the decision is justified

Problem -
Probabilistic demand of sweets in a large chain of sweet marts is rectangular between 1000 kg
and 1400 kg. Profit per kg of fresh sweet sold is Rs. 14.70. If sweet is not sold fresh, next day it
can be sold at a loss of Rs. 2.30 per kg. Determine the optimum stock to have fresh sweet on
hand every day.
Ans:- Given Data Co = Rs. 14.70 per kg Ch = Rs 2.30 per kg Range = 1400-1000 = 400

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem :
A newspaper boy buys daily papers from vendor and gets commission of 4 paisa for each paper
sold. As he is always demanding large number in a lot, he has agreed to pay 3 paisa per each
copy returned unsold. He has the past experience of the demand (its probability) as under.
23 (0.01), 24 (0.03), 25 (0.06), 26(0.10), 27(0.20), 28(0.25), 29(0.15), 30(0.10), 31(0.05),
32(0.05)
How many papers should he lift from vendor for minimum associated cost?
Solution:-
Given Data
Co = 4 paisa per paper
Ch = 3 paisa per paper

ABCAnalysys:
ABC analysis is an inventory categorization method which consists in dividing items into three
categories (A, B, C):
 A being the most valuable items,
 B bieng Inter class item
 C being the least valuable ones.
This method aims to draw managers’ attention on the critical few (A-items) not on the trivial
many (C-items)
The ABC approach states that a company should rate items from A to C, basing its ratings
on the following rules:

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DEPARTMENT OF MECHANICAL ENGINEERING
A-items are goods which annual consumption value is the highest; the top 70-80% of
the annual consumption value of the company typically accounts for only 10-20% of
total inventory items.
B-items are the interclass items, with a medium consumption value; those 15-25% of
annual consumption value typically accounts for 30% of total inventory items.
C-items are, on the contrary, items with the lowest consumption value; t
he lower 5%
of the annual consumption value typically accounts for 50% of total inventory items

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DEPARTMENT OF MECHANICAL ENGINEERING
 Tutorial Questions `
1 a)a)State Group of replacement policy
b) The following failure rates have been observed for a certain type of light bulbs

10. End of week 11. Probability of failure

date
12. 1 13. 0.05
14. 2 15. 0.13
16. 3 17. 0.25
18. 4 19. 0.43
20. 5 21. 0.68
22. 6 23. 0.88
24. 7 25. 0.96
26. 8 27. 1.00
The cost of replacing an individual failed bulb is Rs.1.25.the decision is made to replace all bulbs
simultaneously at fixed intervals and also to replace individual bulbs as they fall in service. If the
cost of group replacement is 30 paise per bulb, what is the best interval between group
replacements? At what group replacement price per bulb would a policy of strictly individual
replacement become preferable to the adopted policy?
2. A firm is considering the replacement of a machine, whose cost price is Rs.12,200 and its
shop value is Rs.200. From experience the running (maintenance and operating) costs are
found to be as follows.

3. a) When should the machine be replaced?

b) Find the most economic batch quantity of a product on machine if the production rate of
the item on the machine is 300 pieces per day and the demand is uniform at the rate of 150
pieces/day. The set up Cost is Rs.300 per batch and the cost of holding one item in
inventory is Rs.0.81/per day. How will the batch quantity vary if the machine production n
rate was infinite?
4. A salesman has to visit five cities A,B,C,D,E. The intercity distances are tabulated below

9. 10. A 11. B 12. C 13. D 14. E

15. A 16. - 17. 12 18. 24 19. 25 20. 15
21. B 22. 6 23. - 24. 16 25. 18 26. 7
27. C 28. 10 29. 11 30. - 31. 18 32. 12
33. D 34. 14 35. 17 36. 22 37. - 38. 16
39. E 40. 12 41. 13 42. 23 43. 25 44. -

Find the shortest route covering all the cities.

5. The data collected in running a Machine the cost of which is Rs: 60,000 are
Resale value 1 2 3 4 5
Resale value(R 42,000 30,000 20,400 14,400 9,650
Cost of Spares ( 4,000 4,270 4,880 5,700 6,800
Cost of Labor 14,000 16,000 18,000 21,000 25,00
Find the time when the machine should be replaced?

DEPARTMENT OF MECHANICAL ENGINEERING

 Assignment Questions
1. Machine A costs of Rs:80,000. Annually operating cost are Rs:2,000 for the first years
and they increase by Rs:15,000 every years (for example in the fourth year the
operating cost are Rs:47,000) .Determine the least age at which to replace the machine.
If the optional replacement policy is followed (
a) What will be the average yearly cost of operating and owing the machine (Assume
that the reset value of the machine is zero when replaced, and that future costs are not
discounted
b) Another machine B cost Rs:1,00,000.Annual operating cost for the first year is Rs:4,000 and
they increase by Rs:7,000 every year .The following firm has a ma(chine of type A which is one
year old. Should the firm replace it with B and if so when?
(c) Suppose the firm is just ready to replace the M/c A with another M/c of the same type, just
the the firm gets an information that the M/c B will become available in a year .What should
firm do?
2. a) The Production department of a company required 3600 Kg, if raw material for manufacturing a
particular item for a year. It has been estimated that the cost of placing an order is Rs. 36 and the
cost of carrying inventory is 25% for the investment in the inventories, the price is Rs. 10/Kg. help
the purchase manager to determine and ordering policy for raw material, determine optimal lot size.
i. Define group replacement policy.
b) A computer contains 10000 resistors. When any resistor fails, it is replaced
the cost of replacing a resistor individually is Rs.1 only. If all the resistors are
replaced at the same time, cost per resistor would be reduced to 35 paisa. The
% of surviving resistors say S(t) at the end of month t and the P(t) the
probability of failure during

The month t is.

What is the optimal replacement policy?

3. A dealer supplies you the following information with regards to a product that he deals in
annual demand =10,000 units, ordering cost Rs.10/order. Price Rs.20/unit. Inventory
carrying cost is 20% of the value of inventory per year. The dealer is considering the
possibility of allowing some back orders to occur. He has estimated that the annual cost of
back ordering will be 25% of the value of inventory
a. What should be the optimum no of units he should buy in 1 lot?
b. What qty of the product should be allowed to be back ordered
c. What would be the max qty of inventory at any time of year

Would you recommend to allow backordering? If so what would be the

annual cost saving by adopting the policy of back ordering.

DEPARTMENT OF MECHANICAL ENGINEERING

 4. .a) Purchase manager places order each time for a lot of 500 no of particular item from
the available data the following results are obtained, inventory carrying 40%, ordering
cost order Rs.600, cost per unit Rs.50 annual demand 1000 find out the loser to the
organization due to his policy

b) What are inventory models? Enumerate various types of inventory models and describe them
briefly

5. The demand for a purchased item 1000 units per month and shortages are allowed. If the
unit cost is Rs. 1.50 per unit, the cost of making one purchase is Rs.600,the holding cost
for one unit is Rs.2 per year and one shortage isRs.10 per year. Determine

i) The optimum purchase quantity ii)The number of orders per year iii)The optimal

total yearly cost

DEPARTMENT OF MECHANICAL ENGINEERING

 UNIT 5
Sequencing
&
Simulation

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DEPARTMENT OF MECHANICAL ENGINEERING
 UNIT V
Sequencing
Introduction:
The selection of an appropriate order for finite number of different jobs to be done on a finite
number of machines is called sequencing problem. In a sequencing problem we have to
determine the optimal order (sequence) of performing the jobs in such a way so that the total
time (cost) is minimized.
Suppose n jobs are to be processed on m machines for successful completion of a project. Such
type of problems frequently occurs in big industries. The sequencing problem is to determine the
order (sequence) of jobs to be executed on different machines so that the total cost (time)
involved is minimum.
Before developing the algorithm we define certain terms as M ij = processing time required by ith
job on the jth machine (i = 1 to n, j = 1 to m).
Tij = idle time on machine j from the completion of (i - 1 )th job to the start of ith job.
T = elapsed time (including idle time) for the completion of all the jobs.
The problem is to determine a sequence i1, i2, ... , in, where i1, i2, ... , in is a some permutation of
the integers 1,2, ... ,n that minimizes the total elapsed time T. Each job is processed on machine
M1 and then on machine M2 , and we say jobs functioning order is M1M2. Before developing the
algorithm in the next section we make certain assumptions.
(i) No Machine can process more than one job at a time.
(ii) Each job once started on a machine must be completed before the start of new job.
(iii) Processing times Mij's are independent of the order of processing the jobs.
(iv) Processing times Mij's are known in advance and do not change during operation.
(v) The time required in transferring a job from one machine to other machine is negligible.

Processing of n jobs through two machines:

The simplest possible sequencing problem is that of n job two machine sequencing problem in
which we want to determine the sequence in which n-job should be processed through two
machines so as to minimize the total elapsed time T. The problem can be described as:
a) Only two machines A and B are involved;
b) Each job is processed in the order AB.
c) The exact or expected processing times A1,A2,A3, --- , An ; B1,B2,B3, --- , Bn are known
and are provided in the following table.

The problem is to find the sequence (or order) of jobs so as to minimize the total elapsed time T.
The solution of the above problem is also known as Johnson’s procedure which involves the
following steps:

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DEPARTMENT OF MECHANICAL ENGINEERING
 Step 1. Select the smallest processing time occurring in the list A1,A2,A3, --- , An ;
B1,B2,B3, --- , Bn if there is a tie, either of the smallest processing times can be
selected.
Step 2. If the least processing time is Ar , select the rth job first. If it is Bs, do the sth job
last as the given order is AB
Step 3. There are now (n-1) jobs left to be ordered. Repeat steps I and II for the remaining
set of processing times obtained by deleting the processing time for both the
machines corresponding to the job already assigned.
Step 4. Continue in the same manner till the entire jobs have been ordered. The resulting
ordering will minimize the total elapsed time T and is called the optimal
sequence.
Step 5. After finding the optimal sequence as stated above find the total elapsed time and
idle times on machines A and B as under:
Totalelapsedtime = The time between starting the first job in the optima
sequence on machine A and completing the last job in
the optimal machine B.
Idletimeon machineA = (Time when the last job in the optimal sequence on
sequences is completed on machine B)- (Time when the
last job in the optimal sequences is completed on
machine A)
Idletimeon machineB = (Time when the first job in the optimal sequences is
completed on machine A)+

Problem:
There are nine jobs, each of which must go through two machines P and Q in the order PQ,
the processing times (in hours) are given below:

Find the sequence that minimizes the total elapsed time T. Also calculate the total idle time for
the machines in this period.

Solution:
The minimum processing time on two machines is 2 which correspond to task A on machine P.
This shows that task A will be preceding first. After assigning task A, we are left with 8 tasks on
two machines

Minimum processing time in this reduced problem is 3 which correspond to jobs E and G (both

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DEPARTMENT OF MECHANICAL ENGINEERING
on machine Q). Now since the corresponding processing time of task E on machine P is less than
the corresponding processing time of task G on machine Q therefore task E will be processed in
the last and task G next to last. The situation will be dealt as

The problem now reduces to following 6 tasks on two machines with processing time as follows:

Here since the minimum processing time is 4 which occurs for tasks C and I on machine P and
task D on machine Q. Therefore, the task C which has less processing time on P will be
processed first and then task I and task D will be placed at the last i.e., 7th sequence cell. The
sequence will appear as follows:

The problem now reduces to the following 3 tasks on two machines

In this reduced table the minimum processing time is 5 which occurs for tasks B and H both on
machine P. Now since the corresponding time of tasks B and H on machine Q are same i.e. 8.
Tasks B or H may be placed arbitrarily in the 4th and 5th sequence cells. The remaining task F can
then be placed in the 6th sequence cell. Thus the optimal sequences are represented as

( OR)

Further, it is also possible to calculate the minimum elapsed time corresponding to the optimal
sequencing A → I → C → B → H → F → D → E → G.

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DEPARTMENT OF MECHANICAL ENGINEERING
Hence the total elapsed time for this proposed sequence staring from job A to completion of job
G is 61 hours .During this time machine P remains idle for 11 hours (from 50 hours to 61
hours)and the machine Q remains idle for 2 hours only (from 0 hour to 2 hour ).
Processing of n Jobs through Three Machines: The type of sequencing problem can be
described as follows:
a) Only three machines A, B and C are involved;
b) Each job is processed in the prescribed order ABC
c) No passing of jobs is permitted i.e. the same order over each machine is maintained.
d) The exact or expected processing times A1,A2,A3, --- , An ; B1,B2,B3, --- , Bn and
C1,C2,C3, --- , Cn are known and are denoted by the following table
Our objective will be to find the optimal sequence of jobs which minimizes the total elapsed
time. No general procedure is available so far for obtaining an optimal sequence in such case.
However, the Johnson’s procedure can be extended to cover the special cases where either one or
both of the following conditions hold:
a) The minimum processing time on machine A ≥ the maximum processing time on machine B.
b) The minimum processing time on machine C ≥ the maximum processing time on machine B.
The method is to replace the problem by an equivalent problem involving n jobs and two
machines. These two fictitious machines are denoted by G and H and the corresponding time
Gi and Hi are defined by
Gi = Ai + Bi and Bi + Ci
Now this problem with prescribed ordering GH is solved by the method with n jobs through two
machines, the resulting sequence will also be optimal for the original problem.

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DEPARTMENT OF MECHANICAL ENGINEERING
Problem :

There are five jobs (namely 1,2,3,4 and 5), each of which must go through machines A, B and C
in the order ABC. Processing Time (in hours) are given below:

Find the sequence that minimum the total elapsed time required to complete the jobs.

Solution :

Here Min Ai = 5; Bi = 5 and Ci =3 since the condition of Min. Ai ≥ Max. Bi is satisfied the given
problem can be converted into five jobs and two machines problem.

The Optimal Sequence will be

2 5 4 3 1
Total elapsed Time will be

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DEPARTMENT OF MECHANICAL ENGINEERING
Problems with n Jobs and m Machines
Let there be n jobs, each of which is to be processed through m machines, say M1,M2, --- , Mm in
the order M1,M2,M3, --- , Mm. Let T ij be the time taken by the ith machine to complete the jth job.
The iterative procedure of obtaining an optimal sequence is as follows:
Step I: Find (i) minj (T1j), ii) minj (Tmj) iii) maxj (T2j,T3j,T4j, --- , T(m-1)j) for j=1,2,---, n

Step II: Check whether a. minj(T1j) ≥ maxj (Tij) for i=2,3, --- ,m-1
Or
b. minj(Tmj) ≥ maxj (Tij) for i=2,3,---,m-1

Step III: If the inequalities in Step II are not satisfied, method fails, otherwise, go to next step.

Step IV: Convert the m machine problem into two machine problem by introducing two
fictitious machines G and H, such that
TGj = T1j + T2j + --- +T(m-1)j, and THj = T2j + T3j + --- +Tmj
Determine the optimal sequence of n jobs through 2 machines by using optimal sequence
algorithm.
Step V: In addition to condition given in Step IV, if Tij = T2j + T3j + --- +Tmj = C is a fixed
positive constant for all i = 1, 2, 3, , n then determine the optimal sequence of n jobs
and two machines M1 and Mm in the order M1Mm by using the optimal sequence
algorithm.

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DEPARTMENT OF MECHANICAL ENGINEERING

Problem:
Find an optimal sequence for the following sequencing problem of four jobs and five machines
when passing is not allowed, of which processing time (in hours) is given below:

Also find the total elapsed time.

Solution
Here Min. Ai = 5, Min. Ei = 6
Max. (Bi, Ci, Di) = 6, 5, 6 respectively
Since Min. Ei = Max. (Bi, Di) and Min. Ai = Max. Ci satisfied therefore the problem can be
converted into 4 jobs and 2 fictitious machines G and H as follows:

The above sequence will be:

1 3 2 4
Total Elapsed Time Corresponding to Optimal Sequence can be obtained as follows:

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DEPARTMENT OF MECHANICAL ENGINEERING

Thus the minimum elapsed time is 51 hours.
Idle time for machine A = 25 hours(26-51)
Idle time for machine B = 33 hours(0-7,16-18,24-26,29-51)
Idle time for machine C = 37 hours(0-12,14-16,21-24,28-29,32-51)
Idle time for machine D = 35 hours (0-14,17-21,27-28,35-51)
Idle time for machine E = 18 hours (0-17,26-27)

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DEPARTMENT OF MECHANICAL ENGINEERING

 Simulation
Simulation:
Simulation is an experiment conducted on a model of some system to collect necessary
information on the behavior of that system.
The representation of reality in some physical form or in some form of Mathematical equations
are called Simulations. Simulations are imitation of reality.
For example:
1, Children cycling park with various signals and crossing is a simulation of a read model traffic
system
2. Planetarium
3. Testing an air craft model in a wind tunnel.

Need for simulation:

 Consider an example of the queuing system, namely the reservation system of a transport
corporation.
 The elements of the system are booking counters (servers) and waiting customers
(queue).
 Generally the arrival rate of customers follow a Poisson distribution and the service time
follows exponential distribution.
 Then the queuing model (M/M/1) : (GD/∞ /∞ ) can be used to find the standard results.
But in reality, the following combinations of distributions may exist.
1. Arrived rate does not follow Poisson distribution, but the service rate follows an exponential
distribution.
2. Arrival rate follows a Poisson distribution and the service rate does not follow exponential
distribution.
3. Arrival rate does not follows Poisson distribution and the service time also does not follow
exponential distribution.
In each of the above cases, the standard model (M/M/1) : (G/D/∞ /∞ ) cannot be used. The last
resort to find the
solution for such a queuing problem is to use simulation.

Advantage of simulation :

1. Simulation is Mathematically less complicated

2. Simulation is flexible
3. It can be modified to suit the changing environments.
4. It can be used for training purpose
5. It may be less expensive and less time consuming in a quite a few real world situations.

Limitations of Simulation:

1. Quantification or Enlarging of the variables maybe difficult.

2. Large number of variables make simulations unwieldy and more difficult.
3. Simulation may not. Yield optimum or accurate results.

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DEPARTMENT OF MECHANICAL ENGINEERING

4. Simulation are most expensive and time consuming model.
5. We cannot relay too much on the results obtained from simulation models.

Steps in simulation:

1. Identify the measure of effectiveness.

2. Decide the variables which influence the measure of effectiveness and choose those variables,
which affects the measure of effectiveness significantly.
3. Determine the probability distribution for each variable in step 2 and construct the cumulative
probability distribution.
4. Choose an appropriate set of random numbers.
5. Consider each random number as decimal value of the cumulative probability distribution.
6. Use the simulated values so generated into the formula derived from the measure of
effectiveness.
7. Repeat steps 5 and 6 until the sample is large enough to arrive at a satisfactory and reliable
decision.

Uses of Simulation:
Simulation is used for solving
1. Inventory Problem
2. Queuing Problem
3. Training Programs etc

General Purpose Languages used for Simulation:

FORTRAN: Probably more models than any other language

PASCAL; Not an universal as FORTRAN

MODULA: Many improvements over PASCAL

ADA: Department of Defense attempt at standardization

C, C++: Object-Oriented Programming Language

PSPICE: Simulation Software

MAT LAB: MATrix LABoratory : High Level Languages (Mathematical and Graphical
Subroutines)

SIMULINK: Used to Model, Analyze and Simulate Dynamic Systems using block diagrams

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DEPARTMENT OF MECHANICAL ENGINEERING

Problem :

Customers arrive at a milk booth for the required service. Assume that inter – arrival and service
time are constants and given by 1.5 and 4 minutes respectively. Simulate the system by hand
computations for 14 minutes.
(i) What is the waiting time per customer?
(ii) What is the percentage idle time for the facility?
(Assume that the system starts at t = 0)

Solution :

First customer arrives at the service center at t = 0

His departure time after getting service = 0 + 4 = 4 minutes.
Second customer arrives at time t = 1.5 minutes
he has to wait = 4 – 1.5 = 2.5 minutes.
Third customer arrives at time t = 3 minutes
he has to wait for = 8-3 = 5 minutes
Fourth customer arrives at time t = 4.5 minutes and he has to wait for 12 – 4.5 = 7.5 minutes.
During this 4.5 minutes, the first customer leaves in 4 minutes after getting service and the
second customer is getting service.
Fifth customer arrives at t = 6 minutes
he has to wait 14 – 6 = 8 minutes
Sixth customer arrives at t = 7.5 minutes
he has to wait 14 – 7.5 = 6.5 minutes
Seventh customer arrives at t = 9 minutes
he has to wait 14 – 9 = 5 minutes
During this 9 minutes the second customer leaves the service in 8th minute and third person is to
get service in 9th minute.
Eighth customer arrives at t = 10.5 minutes
he has to wait 14 – 10.5 = 3.5 minutes
Nineth customer arrives at t = 12 minutes
he has to wait 14 – 12 = 2 minutes
But by 12th minute the third customer leaves the Service
10th Customer arrives at t = 13.5 minutes
he has to wait 14-13.5 = 0.5 minute
From this simulation table it is clear that
(i) Average waiting time for 10 customers = 2.5+5+7.5+8+6.5+5.0+3.5+2+0.5
10
= 40.5 = 4.05
10
(ii) Average waiting time for 9 customers who are in waiting for service 40.5 = 4.5 minutes.
9
But the average service time is 4 minutes which is less that the average waiting time, the
percentage of idle time for service = 0%

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DEPARTMENT OF MECHANICAL ENGINEERING

 Tutorial Questions

1. Solve the following sequence problem given optimal solution when passing is not allowed
Jobs
Operator 1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
6 4 7 4 6 8

2. Six jobs are to be processed on three machines A, B, C with the

order of processing jobs as BCA

The suggested sequence is Y-W-Z-V-U-X. Find out the elapsed time for the sequence suggested. Is it
optimal? If it is not optimal, then find out the optimal sequence and the minimum total elapsed time
associated with it.
3. A book binder has one printing press, one binding machine and manuscripts of 7 different
books The time required for performing printing and binding operations for different books are
shown below
Book 1 2 3 4 5 6 7
Printing 20 90 80 20 120 15 65
time (hr)
Binding 25 60 75 30 90 35 50
time(hrs)
Decide the optimum sequence of processing of books binder to minimize the total time
required to bring out all the books

DEPARTMENT OF MECHANICAL ENGINEERING

 Assignment Questions
1. A bakery keeps stock of a popular brand of cake. Previous experience show the daily demand
pattern for the item with associated probabilities as given,Use the following sequence of random
numbers to simulate the demand for next 10 days Random numbers: 25,39,65,76,12,05,73,89,19,49
Also estimate the daily average demand for the cakes on the basis of the

2. Define simulation why simulation uses. Give one application area when thistechnique is used in
practice

DEPARTMENT OF MECHANICAL ENGINEERING

Previous Question Papers

139
DEPARTMENT OF MECHANICAL ENGINEERING
 MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
Department Of Mechanical Engineering
th
B.Tech IV Year 1 Semester
Operations Research
MODEL PAPER 1

PART A (25 Marks)

1. a. Write the scope of Operations research (2M)

b. Write the Applications of Operations Research (3M)
c. Write the different Types in Transportation problem (2M)
d. Define the following i)Alternative optimum solution
ii)unbounded solution
iii)Slack variable (3M)
e. Discuss the practical application of assignment problem (2M)
f. Discuss the steps of Hungarian method (3M)
g. What is dynamic programming (2M)
h. What is Kendall Notation .Give the classification of queuing system
based on Kendall Notation (3M)
i. Define inventory (2M)
j. Find the value of the game (3M)

6 9
8 4

PART B (50 Marks)

2. a) Let us consider a company making single product. The estimated demand for the product for
the next four months are 1000,800,1200,900 respectively. The company has a regular time
capacity of 800 per month and an overtime capacity of 200 per month. The cost of regular time
production is Rs.20 per unit and the cost of overtime production is Rs.25 per unit. The
company can carry inventory to the next month and the holding cost is Rs.3/unit/month the
demand has to be met every month. Formulate a linear programming problem for the above
situation.

b) What are applications of OR

OR
3. Solve the following LPP by Big-M penalty method
Minimize Z 5 X 1 3 X2
S.T 2 X1 4X2 1 2 , 2 X1 2X2 1 0 , 5 X1 2X2 10

and X1 , X 2 0

4. A company has factories at F1, F2 and F3 that supply products to ware houses at W1, W2 and W3

140

DEPARTMENT OF MECHANICAL ENGINEERING

 .The weekly capacities of the factories are 200,160 and 90 units. The weekly warehouse
requirements are 180,120 and 150/units respectively. The unit shipping costs in rupees are as
follows find the optimal solution
W1 W2 W3 supply
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150

OR

5. Different machines can do any of the five required jobs with different profits ring from
each assignment as shown in adjusting table. Find out maximum profit possible through
optimal assignment

6. Solve the following sequence problem given optimal solution when passing is not allowed

Jobs
Machines
A B C D E
M1 11 13 9 16 17
M2 4 3 5 2 6
M3 6 7 5 8 4
M4 15 8 13 9 11

OR

7. Machine A costs of Rs:80,000. Annually operating cost are Rs:2,000 for the first years and
they increase by Rs:15,000 every years (for example in the fourth year the operating cost are
Rs:47,000) .Determine the least age at which to replace the machine. If the optional
replacement policy is followed (a)What will be the average yearly cost of operating and
owing the machine (Assume that the reset value of the machine is zero when replaced, and
that future costs are not discounted
b)Another machine B cost Rs:1,00,000.Annual operating cost for the first year is Rs:4,000
and they increase by Rs:7,000 every year .The following firm has a ma(chine of type A
which is one year old. Should the firm replace it with B and if so when?
(c)Suppose the firm is just ready to replace the M/c A with another M/c of
the same type, just the the firm gets an information that the M/c B
will become available in a year .What should firm do?

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DEPARTMENT OF MECHANICAL ENGINEERING

8. Obtain the optimal strategies for both pensions and the value of the game for two persons zero
sum game whose payoff matrix is as follows.

player-B
B1 B2
A1 1 -3
A2 3 5
Player-A
A3 -1 6
A4 4 1
A5 2 2
A6 -5 0

OR

9. The production department of a companyrequired 3,600kg If raw material for

manufacturing a particular item per year. It has been estimated that the cost of placing an
order is Rs.36 and the cost of carrying inventory is 25% for the investment in the
inventories, the price is Rs.10/kg. help the purchase manager to determine and ordering
policy for raw material, determine optimal lot size

10. Customers arrive at box office windows being manned by a single individual
according to a poisson input process with a mean rate of 20/hr. the time required
to same a customer has an exponential distribution with a mean of 90
sec. Find the average waiting time of customers. Also determine the average number of customers
in the system and average queue length
OR

11. a)What is simulation? Discuss application of

2 2 2
simulation? b)Minimize z=y1 +y2 +y3

subjected to y1+y2+y3 =10 and y1, y2, y3≥0 solve using Bellman’s principle

142

DEPARTMENT OF MECHANICAL ENGINEERING

 MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
Department Of Mechanical Engineering
th
B.Tech 4 Year 1 Sem
Operations Research
MODEL PAPER 2

PART A (25 Marks)

1. a. Define Operations research (2M)

b. Write the industrial Applications of Operations Research (3M)
c. Write the different Types in Transportation problem (2M)
d. Write algorithm for Northwest corner method (3M)
e. Discuss the practical application of assignment problem (2M)
f. Discuss the steps of Hungarian method (3M)
g. What is difference between balanced and unbalanced problems in the
Assignment problems (2M)
h. What is Kendall Notation .Give the classification of queuing system
based on Kendall Notation (3M)
i. Define inventory (2M)
j. Find the value of the game (3M)
6 2 4
2 3 3
5 2 6

PART B (50 Marks)

2.a) Solve the following LP problem using graphical method

Maximize Z == -x1+2x2
Subjected tox1-x2≤-1
-0.5x1-x2≤2 x1,x2≥ 0
b) Explain the advantages of OR
OR
3 a.) Explain what is meant by degeneracy in LPP? How can this be solved?

b.) Solve the following LP problem by two phase

method. Maximize Z = 5x1+3x2

subjected to 3x1+2x2 ≥ 3
x1+4x2 ≥ 4

x1+x2 ≤ 5

x1+x2 ≥ 0

4. a) Solve the following assignment problem to minimize the total time of the

143

DEPARTMENT OF MECHANICAL ENGINEERING

 Operator
Jobs
Operator 1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
6 4 7 4 6 8

b) Write the Mathematical representation of an assignment model?

OR

5. a). Briefly explain about the assignment problems in OR and applications of assignment in OR?

b) What do you understand by degeneracy in a transportation problem?

6. A book binder has one printing press, one binding machine and manuscripts of 7 different
books The time required for performing printing and binding operations for different books
are shown below

Book 1 2 3 4 5 6 7
Printing 20 90 80 20 120 15 65
time (hr)
Binding 25 60 75 30 90 35 50
time(hrs)
Decide the optimum sequence of processing of books binder to minimize the total time required
to bring out all the books

OR

7. Six jobs are to be processed on three machines A, B, C with the order

of processing jobs as BCA

The suggested sequence is Y-W-Z-V-U-X. Find out the elapsed time for the
sequence suggested. Is it optimal? If it is not optimal, then find out the
optimal sequence and the minimum total elapsed time associated with it.

8. Define group replacement policy.

b) A computer contains 10000 resistors. When any resistor fails, it is replaced the cost
of replacing a resistor individually is Rs.1 only. If all the resistors are replaced at the
same time, cost per resistor would be reduced to 35 paisa. The % of surviving
resistors say S(t) at the end of month t and the P(t) the probability of failure during

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DEPARTMENT OF MECHANICAL ENGINEERING

 The month t is.

What is the optimal replacement policy?

OR

9. a)Explain the terms

i) Maxmin criteria and Minimax criteria ii) Strategies: Pure and mixed strategies.
b) Solve the following game graphically

10.Customers arrive at box office windows being manned by a single individual according to a
poisson input process with a mean rate of 20/hr. the time required to save a customer has an
exponential distribution with a mean of 90 sec. Find the average waiting time of the customers.
Also determine the average number of customers in the system and average queue length
OR

11 a) State and explain the Bellman‟s principle of optimality.

b) Solve the LPP by dynamic programming
approach Maximize z = 4x1 + 14x2
such that 2x 1 + 7x2 ≤ 21
7x1 + 2x2 ≤ 21 x1, x2 ≥ 0

145

DEPARTMENT OF MECHANICAL ENGINEERING

 MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
Department Of Mechanical Engineering
th
B.Tech 4 Year 1 Sem
Operations Research

MODEL PAPER 3
PART A (25 MARKS)

1. a. Define Operations research (2M)

b. Write the assumptions in Linear programming (3M)
c. Write the formula for EOQ for the purchase model without shortages (2M)
d. Write algorithm for Least Cost Cell method (3M)
e. Discuss the practical application of assignment problem (2M)
f. Discuss the steps of Hungarian method (3M)
g.What is dominance property (2M)
h.Distinguish between breakdown maintenance and preventive maintenance (3M)
i. Define dynamic programming (2M)
j. Find the value of the game (3M)

6 2 4
2 3 3
5 2 6

PART B (50 Marks)

2. Solve the following LPP problem by Two phase

method Max Z=2x1+3x2+5x3

S.T 3x1+10x2+5x3≤15

33x1-10x2+9x3≤33

x1+2x2+3x3≥4
x1, x2, x3≥0
OR

3.a) Define the LPP. Give an example

b) Solve the following LPP using graphical method and verify by Simplex method
Maximize Z=10x1+8x2

S.T x1+2x2≤1000
x1≤300
x2≤500 and x1, x2, ≥0

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DEPARTMENT OF MECHANICAL ENGINEERING

4. a) Give the mathematical formulation of Transportation problem

b) Use Vogel's approximate method to obtain an initial basic feasible solution of a

transportation problem and find the optimal solution

OR

5. Six jobs go first on machine A, then on machine B and last on a machine C. The order of completion of
jobs have no significance. The following table gives machine time for the six jobs and the three
machines. Find the sequence of jobs that minimizes elapsed time to complete the jobs.

6. The data collected in running a Machine the cost of which is Rs: 60,000 are
Resale value 1 2 3 4 5
Resale value (R 42,000 30,000 20,400 14,400 9,650
Cost of Spares ( 4,000 4,270 4,880 5,700 6,800
Cost of Labor 14,000 16,000 18,000 21,000 25,00

Find the time when the machine should be replaced?

OR

7. Find the most economic batch quantity of a product on machine if the production rate of the item
on the machine is 300 pieces per day and the demand is uniform at the rate of 150 pieces/day. The
set up Cost is Rs.300 per batch and the cost of holding one item in inventory is Rs.0.81/per day.
How will the batch quantity vary if the machine production n rate was infinite?

8. a)Explain the terms i)Rectangular games ii) type of Strategies

b) Solve the following game graphically where pay off matrix for player A has been prepared

147
DEPARTMENT OF MECHANICAL ENGINEERING
 1 5 -7 4 2
2 4 9 -3 1
OR

9. A dealer supplies you the following information with regards to a product that he deals in
annual demand =10,000 units, ordering cost Rs.10/order. Price Rs.20/unit. Inventory carrying
cost is 20% of the value of inventory per year. The dealer is considering the possibility of
allowing some back orders to occur. He has estimated that the annual cost of back ordering will
be 25% of the value of inventory

a. What should be the optimum no of units he should buy in 1 lot?

b. What qty of the product should be allowed to be back ordered
c. What would be the max qty of inventory at any time of year
d. Would you recommend to allow backordering? If so
what would be the annual cost saving by adopting the
policy of back ordering.

10. a) Explain how the queues are classified and give their notations
b) In a bank, cheques are cashed at a single “teller” counter. Customers
arrive at the counter in a Poisson manner at an average rate of 30 customers/hr.
The teller takes on an average 1.5 minutes to cash a cheque. The service time has
been shown to be exponentially distributed.
i) Calculate the percentage of time the teller is busy
ii) Calculate the average time a customer is expected to wait.

OR
11. Use dynamic programming to solve the following
LPP Max z= 3x1+5x2

Subjected to x1≤4.
X2≤6,

3x1+2x2≤18 ,

x1,x2≥0

148
DEPARTMENT OF MECHANICAL ENGINEERING
 MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
Department Of Mechanical Engineering
th
B.Tech 4 Year 1 Sem
Operations Research
MODEL PAPER 4
PART A (25 Marks)

1. a. Define Operations research (2M)

b. What is simulation and what is the need of simulation (3M)
c. What is surplus variable (2M)
d. Write algorithm for Northwest corner method (3M)
e. Discuss the practical application of Transportation problem (2M)
f. Discuss the steps of Hungarian method (3M)
g. What is difference between balanced and unbalanced problems in the
Assignment problems (2M)
h. Define the following i)balking
ii) Reneging
iii) dynamic programming (3M)
i. Define strategy (2M)
j. Find the value of the game (3M)
1 -1 3 -1 5
-2 2 -2 4 -2

PART B (50 Marks)

2. a)Write the applications and scope of OR

b) Use Big-M method solve the following
Max Z=6x1+4x2

Subjected to 2x1+3x2≤30, 3x1+2x2≤24, x1+x2≥3, x1, x2 ≥0

OR

3. Solve the following LPP by Two phase

method Max z =2x1+3x2+5x3

subjected to 3x1+10x2+5x3≤15
33x1-10x2+9x3≤33

x1+2x2+3x3≥4

x1,x2, x3 ≥0

4.a) What do you understand by degeneracy in a transportation problem?

149
DEPARTMENT OF MECHANICAL ENGINEERING
b) Obtain initial solution in the following transportation problem by using VAM and LCM

OR

5. Different machines can do any of the five required jobs with different profits resulting from each
assignment as shown in the adjusting table. Find out maximum profit possible through optimal assignment.

6. A salesman has to visit five cities A,B,C,D,E. The intercity distances are tabulated below
A B C D E
A - 12 24 25 15
B 6 - 16 18 7
C 10 11 - 18 12
D 14 17 22 - 16
E 12 13 23 25 -

Find the shortest route covering all the cities.

OR
7.a) Explain the terminology of sequencing techniques in operations research?

b) Solve the following sequence problem, given an optimal solution when passing is not allowed

150
DEPARTMENT OF MECHANICAL ENGINEERING
8.a) Purchase manager places order each time for a lot of 500 no of particular item from the available data
the following results are obtained, inventory carrying 40%, ordering cost order Rs.600, cost per unit Rs.50
annual demand 1000 find out the loser to the organization due to his policy

b) What are inventory models? Enumerate various types of inventory models and describe them briefly

OR

9. a)What are characteristics of a game?

b) Reduce the following Game by dominance and the fid the game value

PlayerA
I II III IV
I 3 2 4 0
II 3 4 2 4
III 4 2 4 0
IV 0 4 0 8
10. A bakery keeps stock of a popular brand of cake. Previous experience show the daily
demand pattern for the item with associated probabilities as given

use the following sequence of random numbers to simulate the demand for next 10 days
Random numbers: 25,39,65,76,12,05,73,89,19,49 Also estimate the daily average demand for
the cakes on the basis of the

OR

11. Solve using dynamic programming

Max z= 50x1+100x2

S.T 2x1+3x2≤48
x1+3x2≤42

151
DEPARTMENT OF MECHANICAL ENGINEERING
 MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
Department Of Mechanical Engineering
th
B.Tech 4 Year 1 Sem
Operations Research
MODEL PAPER 5

PART A (25 Marks)

1. a. Define scope of Operations research (2M)

b. Write the advantages of simulation (3M)
c. What is artificial variable (2M)
d. Write algorithm for LCM method (3M)
e. Discuss the practical application of Transportation problem (2M)
f. Write any three applications of Bellman's principle of optimality (3M)
g. What is difference between balanced and unbalanced problems in the
Assignment problems (2M)
h. Write the applications of Travelling salesman problem (3M)
i. Define pure strategy (2M)
j. Discuss the steps of Hungarian method (3M)

PART B (50 Marks)

2. a) A firm produces three types of biscuits A,B,C it packs them in arrangement of two sizes 1 and 11. The
size 1 contains 20 biscuits of type A, 50 of type B and 10 of type C. the size 11 contains 10 biscuits of type
A, 80 of type B and 60 of type C. A buyer intends to buy at least 120 biscuits of type A, 740 of type B and
240 of type C. Determine the least number of packets he should buy. Write the dual LP problem and
interrupt your answer

b) Solve the following LPP using graphical method and verify by Simplex method
Maximize Z=10x1+8x2

S.T x1+2x2≤1000
x1≤300
x2≤500 and x1, x2, ≥0
OR

3. a) Explain what is meant by degeneracy in LPP? How can this be

solved? b)Solve the following LP problem by graphically

Maximize Z=2x1+x2

S.T x1+2x2≤10 , x1+x2≤ 6,x1-x2≤ 2,x1-2x2≤ 1 x1,x2≥ 0

4. a) State the assignment problem mathematically.

b) For the assignment table, find the assignment of salesmen to districts that will result

152
 in maximum sales

OR
5. a) What do you understand by degeneracy in a transportation problem?

b)A company has three plants at locations A.B.C which supply to Warehouse located at D,E,F,G and
H. Monthly plant capacities are 800,500, and 900 respectively. Monthly warehouse requirements are
400,500,400 and 800units.Unit Transportation cost in rupees is

Determine the optimum distribution for the company in order to minimize total transportation cost by NWCR

6. a) State Group of replacement policy

b) The following failure rates have been observed for a certain type of light bulbs

End of week Probability of failure date

1 0.05
2 0.13
3 0.25
4 0.43
5 0.68
6 0.88
7 0.96
8 1.00
The cost of replacing an individual failed bulb is Rs.1.25.the decision is made to replace all
bulbs simultaneously at fixed intervals and also to replace individual bulbs as they fall in
service. If the cost of group replacement is 30 paise per bulb, what is the best interval between
group replacements? At what group replacement price per bulb would a policy of strictly
individual replacement become preferable to the adopted policy?

OR

7. a) A firm is considering the replacement of a machine, whose cost price is Rs.12,200 and its shop value is
Rs.200. From experience the running (maintenance and operating) costs are found to be as follows.

153
DEPARTMENT OF MECHANICAL ENGINEERING
 When should the machine be replaced?

b) Explain two person zero sum game and n person game?

8. The demand for a purchased item 1000 units per month and shortages are allowed. If the unit
cost is Rs. 1.50 per unit, the cost of making one purchase is Rs.600,the holding cost for one
unit is Rs.2 per year and one shortage isRs.10 per year. Determine

i) The optimum purchase quantity

ii)The number of orders per year

iii)The optimal total yearly cost

OR

9. a)Obtain the optimal strategies for both pensions and the value of the game for two persons zero sum game
whose payoff matrix is as follows.

b) Explain pay of matrix and types of strategy in game theory?

10. a) Define simulation why simulation uses. Give one application area when this technique is used in
practice

b) Use dynamic programming to solve the following

LPP Max z= 3x1+5x2
Subjected to x1≤4.
X2≤6,
3x1+2x2≤18 ,
x1,x2≥0
OR
11. a)What are the applications of the dynamic programming?.Explain Bellman's principle
of optimality.
b)Using dynamic programming approach solve the below problem

154
DEPARTMENT OF MECHANICAL ENGINEERING
 R15
Code No: R15A0330
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
IV B.Tech I Semester Supplementary Examinations, October 2020
Operations Research
(ME)
Roll No

Time: 2 hours Max. Marks: 75

Answer Any Four Questions
All Questions carries equal marks
1 Solve the following LPP by simplex method
Minimize Z=8x1 – 2x2.
Subject to -4x1+ 2x2 ≤ 1
5x1 – 4x2 ≤ 3
x1, x2 ≥ 0.
2 Max Z= 2 X1+ 5X2
Subject to: 2X1+ X2  43
3X1+2X2  46
X1, X2  0
Use Graphical method approach to solve LPP.
3 Solve the following transportation problem:
To Destination
Availability
1 2 3 4
From 1 15 0 20 10 50
Origins 2 12 8 11 20 50
3 0 16 14 18 100
Requirement 30 40 60 70 200
4 Find the sequence that minimizes the total elapsed time required to complete the
following tasks on machines M1, M2, M3 in the order M1M2 M3. Also, find the
minimum total elapsed time.
Task 1 2 3 4 5 6 7 8 9
M1 4 9 6 10 6 12 8 3 8
M2 6 4 8 9 4 6 2 6 4
M3 10 12 9 11 14 15 10 14 12
5 A field owner finds from this past records the cost of a running a truck those
purchase price is RS.6000 of a given below. The maintenance cost and resale
value per year of a machine below:
Year 1 2 3 4 5 6 7
Running lost. 1000 1200 1400 1800 2300 2800 3400
Resale value
3000 1500 750 375 200 200 200
or soap value
What are the optimal replacement period?
6 Using Dominance property solve the game

Page 1 of 2
  I II III IV 
  5 3 1 20 
 
5 5 4 6
 
 4  2 0  5

7 What are the various costs involved with the inventory? Explain.
8 Define simulation. Why is simulation used? Give one application area where this
technique is used practice?
******

Page 2 of 2
 R17
Code No: R17A0333
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
IV B.Tech I Semester Regular Examinations, February 2021
Operations Research
(ME)
Roll No

Time: 2 hours 30 min Max. Marks: 70

Answer Any Five Questions
All Questions carries equal marks.
***
1 Describe various operations research models elaborately? [14M]
2 Use Simplex Method To minimize Z = x1 - 2x2 + 3x3 [14M]
Subject to the constraints
-2x1 + x2 + 3x3 = 2
2x1 + 3x2 + 4x3 = 1
x1, x2, x3 ≥ 0
3 Solve the following transportation problem, in which cell entries represent unit [14M]
costs
To
A B C Available
I 2 7 4 5
II 3 3 1 8
From III 5 4 7 7
IV 1 6 2 14
Reqd. 7 9 18 34

4 Solve the following transportation problem for optimum transportation cost. [14M]
Destination Available
A B C D
1 19 30 50 10 7
2 70 30 40 60 9
3 40 8 70 20 18
Demand 5 8 7 14
5 Consider (two persons, zero sum) game matrix which represents pay off to the [14M]
player ‘A’. Find the optimal strategy, if any.
Player B
I II III
Player I -3 -2 6
A II 2 0 2
III 5 -2 -4

Page 1 of 2
 6 Find game value of the following payoff matrix. [14M]

Player B

18 4 6 4
Player A 6 2 13 7
11 5 17 3
7 6 12 2
7 A stock list has to supply 400 units of a product every Monday to his customers. [14M]
He gets the product at Rs. 50 per unit from the manufacturer. The cost of ordering
and transportation from the manufacturer is Rs.75 per order. The cost of carrying
inventory is 7.5% per year of the product. Find
i) The economic lot size
ii ) The total optimal cost(including the capital cost) .
8(a) What is simulation? Explain the phases of simulation? [7M]
(b) What are the features of simulation languages? Explain? [7M]
**********

Page 2 of 2
 R15
Code No: R15A0330
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
IV B. Tech I Semester Regular Examinations, November 2018
Operations Research
(ME)
Roll No

Time: 3 hours Max. Marks: 75

Note: This question paper contains two parts A and B
Part A is compulsory which carriers 25 marks and Answer all questions.
Part B Consists of 5 SECTIONS (One SECTION for each UNIT). Answer FIVE Questions,
Choosing ONE Question from each SECTION and each Question carries 10 marks.
.******
PART-A (25 Marks)
1). a What are the different models in operations research? [2M]
b What is meant by unique, infinite, unbounded, infeasible solution? [3M]
c What is meant by degeneracy in transportation? [2M]
d Define sequencing and state what are the assumptions [3M]
e What are the two types of replacements? [2M]
f Define the principle of Max min – Min max? [3M]
g Define simulation [2M]
h Define a queue. What is the customer behaviour? [3M]
i State applications of simulation. [2M]
j What is dynamic programming? [3M]
PART-B (50 MARKS)
SECTION-I
2 Use graphical method to solve the following problem: [10M]
Z Max = 4x1 + 10x2.
Subject to 2x1+ x2 ≤ 50
2x1 + 5x2 ≤ 100
2x1+ 3x2 ≤ 90.
x1, x2 ≥ 0
OR
3 Solve the following LPP [10M]
Maximize Z= 15 x1 + 6x2 + 9x3 + 2x4
s.t 2x1 + x2 + 5x3 + 6x4  20,
3x1 + x2 + 3x3 + 25x4  20,
7x1 + x4  70,
x1, x2 ,x3 and x4  0
SECTION-II
4 Solve the following assignment problem. [10M]

1 3 2 8 8
2 4 3 1 5
5 6 3 4 6
3 1 4 2 2
1 5 6 5 4
Page 1 of 2
 OR
5 a) What are the assumptions made in sequencing problems? [10M]
b) Find the sequence that minimizes the total elapsed time required to
complete the following tasks:
Tasks A B C D E F G
Machine 1 3 8 7 4 9 8 7

Proces

time
sing
Machine 2 4 3 2 5 1 4 3

on
Machine 3 6 7 5 11 5 6 2
SECTION-III
6 A field owner finds from this past records the cost of a running a truck those [10M]
purchase price is Rs.6000 of a given below. The maintenance cost and resale value
per year of a machine whose purchase price is Rs.7000 is given below:
Year 1 2 3 4 5 6 7
Running lost. 1000 1200 1400 1800 2300 2800 3400
Resale value
3000 1500 750 375 200 200 200
or soap value
OR
7 Solve the following game: [10M]
I II III IV
I 6 8 3 13
II 4 1 5 3
III 8 10 4 12
IV 3 6 7 12

SECTION-IV
8 Find the optimal quantity for a product for which price breaks are as follows: [10M]
Quantity Unit cost
0  Q1 < 500 Rs. 10
500  Q2  750 Rs. 9.25
750  Q 3 Rs8.75
The monthly demand for a product is 200 units, the cost of storage is 2 % of the
unit cost and the cost of ordering is Rs.350
OR
9 People arrive at a Theatre ticket booth in Poisson distributed arrival rate of 25 per [10M]
hour. Service time is Constant at 2 minutes. Calculate
a) The mean number in the waiting line.
b) The mean waiting time.
c) The utilization factor.
SECTION-V
10 State the Bellman’s principle of optimality in dynamic programming and give a [10M]
mathematical formulation of a dynamic programming problem?
OR
11 Define simulation. Why is simulation used? Give one application area where this [10M]
technique is used practice?
******

Page 2 of 2
 R15
Code No: R15A0330
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
IV B. Tech I Semester Supplementary Examinations, May 2019
Operations Research
(ME)
Roll No

Time: 3 hours Max. Marks: 75

Note: This question paper contains two parts A and B
Part A is compulsory which carriers 25 marks and Answer all questions.
Part B Consists of 5 SECTIONS (One SECTION for each UNIT). Answer FIVE Questions,
Choosing ONE Question from each SECTION and each Question carries 10 marks.
***
PART-A (25 Marks)
1). a What is operation research? [2M]
b Define Slack, Surplus & Artificial variables. [3M]
c What is the difference between Transportation &assignment? [2M]
d What are the various types of sequencing problems? [3M]
e Define discount factor? [2M]
f Define saddle point & value of the game. [3M]
g Define the term EOQ [2M]
h What are the classifications of Queering Models? [3M]
i Define stage. [2M]
j State applications of dynamic programming [3M]
PART-B (50 MARKS)
SECTION-I
2 A pare mill produces 2 grades of paper namely x and y. Because of raw material [10M]
restrictions, it cannot produce more than 400 tons of grade x and 300 tons of grade
y in a week there are 160 production hours in a week. Of require 0.2 and 0.4
hours to produce a tone of product z , y respectively, with corresponding pretties
of Rs. 200 and Rs. 500 per ton .Formulas the above as a LPP it maximize the
profit & find the optimum product mix using graphical method.
OR
3 Solve the following LPP by simplex method [10M]
Minimize Z=8x1 – 2x2.
s.t -4x1+ 2x2 ≤ 1
5x1 – 4x2 ≤ 3
x1, x2 ≥ 0
SECTION-II
4 Find the optimal sequence for processing jobs through the two Machines A, B in [10M]
the order of ABC. Processing times are given below.
JOBS 1 2 3 4 5 6 7 8
A 14 19 16 20 16 22 18 13
B 16 14 18 19 14 16 12 16
Find the optimal sequence and total elapsed times.

Page 1 of 2
 OR
5 Solve the following transportation problem: [10M]
To Destination
Availability
1 2 3 4
From 1 15 0 20 10 50
Origins 2 12 8 11 20 50
3 0 16 14 18 100
Requirement 30 40 60 70 200
SECTION-III
6 The maintenance cost and resale value per year of a machine whose purchase price [10M]
is Rs.7000 is given below:
Year 1 2 3 4 5 6 7 8
Maintenance
900 1200 1600 2100 2800 3700 4700 5900
cost in Rs.
Resale value
4000 2000 1200 600 500 400 400 400
in Rs.
When should the machine be replaced?
OR
7 Solve the following game using Dominance property [10M]

I II III
A1 1 7 2
A2 6 2 7
A3 6 1 6
SECTION-IV
8 Find the optimal quantity for a product where the annual demand for the product is [10M]
500 units. The cost of storage per unit per year is 10% of the unit cost and the
ordering cost per order is Rs. 180.00. The unit costs are given below.
Quantity Unit cost
0  Q1 < 500 Rs. 25
500  Q2 < 1500 Rs. 24.80
1500 < Q3 < 3000 Rs. 24.60
3000 < Q4 Rs. 24.40
OR
9 Job arrival at a work station in a manufacturing plant is in Poisson fashion at an [10M]
average of 5 per hour. The time to machine one job is an exponential distribution
with a mean time of 20 minutes. What is the expected time a job has to wait at the
workstation? What is the probability that there will be more than four jobs?
SECTION-V
10 State the Bellman’s principle of optimality in dynamic programming and give a [10M]
mathematical formulation of a dynamic programming problem?
OR
11 What are advantages and disadvantages of simulation? [10M]
******

Page 2 of 2
Code No: R15A0330
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY R15
(Autonomous Institution – UGC, Govt. of India)
IV B.Tech I Semester Supplementary Examinations, February 2021
Operations Research
(ME)
Roll No

Time: 2 hours 30 min Max. Marks: 75

Answer Any Five Questions
All Questions carries equal marks.
***

(1) Discuss the following terms in brief (15M)

(a) Basic Solution (b) Unbounded Solution (c) Degenerate Basic feasible solution
(d) Extreme points (e) optimal solution

(2) Solve the following Linear Programming Problem using Simplex Method (15M)
Minimize Z =X1 - 3 X2 + 2 X3
Subjected to the constraints: 3X1 - 2 X2 +3 X3 ≤ 7
-2X1 + 2 X2 ≤ 12
-4X1 +3 X2 +8 X3 ≤ 15
X1 , X2, X3 ≥ 0
(3) Consider the following table and solve the Problem for the minimization of cost of Assignment.
(15M)

Job 1 2 3 4
Machine
A 18 24 28 32
B 8 13 17 19
C 15 15 19 22

(4) A Machine operator has to perform two operations (Turning and Threading) on Lathe Machine
for different jobs. The time required to perform the operations on each job are shown in table
below. Deter mine the sequence in which the jobs are to be processed in order, so that the time
required to complete all the jobs is minimized. (15M)

Job 1 2 3 4 5 6
Time taken for
Turning (Hrs) 4 13 6 3 15 12
(Machine-A)
Time taken for
Threading(Hrs) 9 11 15 7 4 2
(Machine-B)
(5) A machine is purchased for Rs. 3000 and running costs are estimated at Rs.800 for each of the
first 5 years and thereafter it increases every year by Rs. 200 from sixth to tenth year. If the
money is worth 15% per year, Determine the year at which machine should be replaced. (15M)
(6) (a) Explain the following terms in brief (5M)
(i) Pure strategy & Mixed strategy (ii) Saddle Point
(b) Consider the following game matrix that represents the payoff to the player A. Find the
Optimal strategy. (10M)
Player B
Player A I II III
I -3 -2 6
II 2 0 2
III 5 -2 -4
(7) A manufacturer has to supply 15,000 units/year. The ordering cost is Rs. 200 and the holding
cost is Rs. 3.00 / year. If the replacement is instantaneous and no shortages are allowed. Assume
purchase cost as Rs.1/unit. Find
(i) Optimum run size
(ii) Optimum scheduling period
(iii) The no. of orders per year (15M)
(8) Explain in detail about Bellman’s Principle of optimality and list out the applications of
Dynamic programming. (15M)
Code No: R15A0330
R15
MALLA REDDY COLLEGE OF ENGINEERING & TECHNOLOGY
(Autonomous Institution – UGC, Govt. of India)
IV B.Tech I Semester Regular/Supplementary Examinations, November 2019
Operations Research
(ME)
Roll No

Time: 3 hours Max. Marks: 75

Note: This question paper contains two parts A and B
Part A is compulsory which carriers 25 marks and Answer all questions.
Part B Consists of 5 SECTIONS (One SECTION for each UNIT). Answer FIVE Questions,
Choosing ONE Question from each SECTION and each Question carries 10 marks.
****
PART-A (25 Marks)
1). a Define solution to LPP and basic solution [2M]
b What is meant by degeneracy in linear programming? [3M]
c Define feasible solution in transportation problem. [2M]
d Give a mathematical formulation of the transportation problem. [3M]
e What is pure strategy? [2M]
f Explain Row dominance and column dominance. [3M]
g Define the terms: Balking and reneging. [2M]
h Explain the concept of EOQ. [3M]
i Define the stage and state of a dynamic programming model. [2M]
j List out the types of simulation. [3M]
PART-B (50 MARKS)
SECTION-I
2 Use the graphical method to solve the following LP problem. [10M]
Minimize Z  3x1  2x 2
subject to the constraint s :
5x1  x 2  10; x1  x 2  6; x1  4x 2  12; x1, x 2  0
OR
3 Solve the following LP problem using the simplex method. [10M]
Maximize Z  3X1  2X 2
Subject to
2X1  X 2  2; 3X1  4X 2  12; X1, X 2  0
SECTION-II
4 A department has five employees with five jobs to be performed. The time (in [10M]
hours) each men will take to perform each job is given in the effectiveness matrix.

Page 1 of 3
 Employees
I II III IV V
A 10 5 13 15 16
Jobs B 3 9 18 13 6
C 10 7 2 2 2
D 7 11 9 7 12
E 7 9 10 4 12
How should the jobs be allocated, one per employee, so as to minimize the total
man-hours?
OR
5 We have six jobs, each of which must go through machines A, B and C in the [10M]
order ABC. Processing time (in hours) are given in the following table:
Job : 1 2 3 4 5 6
__________________________________________________
Machine A : 8 3 7 2 5 1
Machine B : 3 4 5 2 1 6
Machine C : 8 7 6 9 10 9
Determine a sequence for the five jobs that will minimize the elapsed time, idle
time on machine A, B and C.
SECTION-III
6 The data on the running costs per year and resale price of equipment A whose [10M]
purchase price is Rs 2,00,000 are as follows:
Year 1 2 3 4 5 6 7
Running 30,000 38,000 46,000 58,000 72,000 90,000 1,10,000
cos (Rs)
Resale 1,00,000 50,000 25,000 12,000 8,000 8,000 8, 000
value (Rs)
What is the optimum period of replacement?
OR
7 The maintenance cost and resale value per year of a machine whose purchase price [10M]
is Rs.7000 is given below:
Year 1 2 3 4 5 6 7 8
Maintenance
900 1200 1600 2100 2800 3700 4700 5900
cost in Rs.
Resale value
4000 2000 1200 600 500 400 400 400
in Rs.
When should the machine be replaced?
SECTION-IV
8 Find the optimal quantity for a product where the annual demand for the product is [10M]
500 units. The cost of storage per unit per year is 10% of the unit cost and the
ordering cost per order is Rs. 180.00. The unit costs are given below.

Page 2 of 3
 Quantity Unit cost
0  Q1 < 500 Rs. 25
500  Q2 < 1500 Rs. 24.80
1500 < Q3 < 3000 Rs. 24.60
3000 < Q4 Rs. 24.40
OR
9 On an average 96 patients per 24 hour day require the service of an emergency [10M]
clinic. Also on average, a patient requires 10 minutes of active attention. Assume
that the facility can handle only one emergency at a time. Suppose that it costs the
clinic Rs.100 per patient treated to obtain an average servicing time of 10 minutes,
and that each minute of decrease in this average time would cost Rs.10 per patient
treated. How much would have to be budgeted by the clinic to decrease the
average size of the queue from 1 1/3 patient to ½ patient.
SECTION-V
10 Select the shortest highway route between two cities. The network in fig: provides [10M]
the possible routes between the starting city at node 1 and destination city at node
7.

OR
11 Define simulation. Why is simulation used? Give one application area where this [10M]
technique is used practice?
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