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

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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.

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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
x Linear Programming
x Game Theory
x Decision Theory
x Queuing Theory
x Inventory Models and Simulation
In addition to the above techniques, some other common tools are
x Non-Linear Programming
x Integer Programming
x Dynamic Programming
x Sequencing Theory
x Markov Process,
x Network Scheduling (PERT/CPM),
x Symbolic Model,
x Information theory, and
x 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

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

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

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

Research and Development:

x R & D Projects control
x R & D Budget allocation
x 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:
x It is a special and versatile technique which can be applied to Advertising, Distribution,
Refinery Operations, Investment, Transportation analysis and Production.

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

L PP Formulation
x 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.
x 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

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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

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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

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 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:
x Redundant Constraints
x Multiple Solutions
x Unbounded Solution
x Infeasible Problem

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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
x Basic Solutions
x 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 + CB3Y3j.
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 X1 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

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