Course Pack

Subject Title: Operations Research For Managers

Course Code: 207
Course: MBA
Semester: II Year: 2023-24
Course Instructors: Dr. Parul Agrawal
Dr. Bhawna Dhawan
Course Leader: Dr. Parul Agrawal

Checked by: Program Coordinator Forwarded by: HOD Approved by: Director

Institute of Management & Research, New Delhi

An ISO 9001:2015 & 14001:2015 Certified Institute
A-4, Paschim Vihar, New Delhi – 110063
(Ph.: 011-25284396, 25285808 Fax: 011-25286442)

“Strictly for internal use only”

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BVIMR Snapshot

Established in 1992, Bharati Vidyapeeth (Deemed to be University) Institute of Management and Research
(BVIMR), New Delhi focuses on imbibing the said values across various stakeholders through adequate
creation, inclusion and dissemination of knowledge in management education.

The institute has over the past few years emerged in the lead with a vision of Leadership in professional
education through innovation and excellence. This excellence is sustained by consistent value enhancement
and initiation of value-added academic processes in Institute’s academic systems.

Based on the fabulous architecture and layout on the lines of Nalanda Vishwa Vidyalaya, the institute is a
scenic marvel of lush green landscape with modern interiors. The Institute which is ISO 9001:2015 certified
is under the ambit of Bharati Vidyapeeth University (BVU), Pune as approved by Govt. of India on the
recommendation of UGC under Section 3 of UGC Act vide its letter notification No. F. 9 – 16 / 2004 – U3
dated 25th February, 2005.

Strategically located in West Delhi on the main Rohtak Road, BVIMR, New Delhi has splendid layout on
sprawling four acres of plot with 'state-of-art' facilities with all class rooms, Library Labs, Auditorium etc.

that are fully air-conditioned. The Institute that has an adjacent Metro station “Paschim Vihar (East)”,
connects the entire Delhi and NCR.

We nurture our learners to be job providers rather than job seekers. This is resorted to by fostering the skill
and enhancement of knowledge base of our students through various extracurricular, co-curricular and
curricular activities by our faculty, who keep themselves abreast by various research and FDPs and
attending Seminars/Conferences. The Alumni has a key role here by inception of SAARTHI Mentorship
program who update and create professional environment for learner’s centric academic ambiance and
bridging industry-academia gap.

Our faculty make distinctive contribution not only to students but to Academia through publications,
seminars, conferences apart from quality education. We also believe in enhancing corporate level interaction
including industrial projects, undertaken by our students under continuous guidance of our faculty. These
form the core of our efforts which has resulted in being one of the premier institutes of management.

At BVIMR, we are imparting quality education in management at Doctorate, Post Graduate and Under
Graduate levels.

*********

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Brief Profiles of faculty members:

Dr. Parul Agrawal

Dr. Parul Agrawal is currently working as Associate Professor with Bharati Vidyapeeth University Institute
of Management and Research (BVIMR) and has been working with this esteem institution for the past 15
years. He has done his Ph.D. in management from Bharati Vidyapeeth (Deemed to be University). He has
25 years of experience of teaching subjects like Operations Research, Financial Management, Economics,
Management Accounting, and Cost Accounting. He has organizing various National & International
conferences, Case Study writing & presentation competitions, AIMS round table conference, Model United
Nations Academy, SDPs and FDPs during his service tenure including one AICTE sponsored FDP of two
weeks. He is also editor of one book on Case Studies in Management. He has also written numerous papers
in the journal of repute and presented papers at various national & International platforms.

Dr. Bhawna Dhawan

She is currently working as Assistant Professor at Bharati Vidyapeeth University Institute of Management
and Research (BVIMR) and has been working with this esteem institute for the past 15 years. She is Ph.D.
in management from Bharati Vidyapeeth (Deemed to be University) and a UGC NET qualified faculty. She
has also earned a degree in M.Phil from Vinayaka Mission University, MBA & BCAM from Guru Gobind
Singh Indraprastha University. She has 17 years of experience of teaching subjects like Operations
Research, Financial Management, Economics, Management Accounting, and Cost Accounting. She has
organized various FDPs during her service tenure including two AICTE sponsored FDPs of two weeks. She
has also organized NTPC sponsored National Seminar on “Women Entrepreneurship, Empowerment &
Development'' in 2014, which was inaugurated by Hon’ble late Smt. Sheila Dixit (the then chief minister of
Delhi) and has organized international webinars and conferences. She is also editor of two books, namely,
Women Empowerment & Social Development and Case Studies on Management. She has also written
papers in the journal of repute on financial inclusion which focuses on how to make people self-sufficient
rather than relying on unorganized markets.

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 Index
Unit Topic Page No.

Course Outline
 Course Overview
 Learning Outcomes
 List of Modules
 Evaluation Criteria 7-17
 Books Recommendation
 Session Plan
 Mapping lecture with course learning outcomes
 Contact Details

1 Introduction to Operations Research 18-22

 Introduction,
 Historical background,
 Meaning,
 Significance,
 Scope and Limitations of O.R.
 Features of Operations Research,
 Phases of Operations Research.
 Applications of O.R. in Business and Management.
2 Linear Programming Problem (LPP) 23 – 31
 Definition and Components of LPP,
 Formulation of LPP, Solution of LPP by Graphical
Method,
 Examples on maximization and minimization,
 Examples on mixed constraints,
 Special cases in LPP: Alternative or multiple optimal
solutions

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 3 Transportation Problem 32 – 41
 Introduction and Formulation of TP,
 Initial Basic Feasible Solution I.B.F.S. by North West
Corner Rule (NWCR),
 Matrix Minimum Method,
 Vogel‘s Approximation Method (VAM),
 Checking Optimality by Modified Distribution Method
(MODI Method),
 Special cases in TP: maximization, unbalanced TP,
restricted TP, applications of T.P. in business.

4. Assignment Problem 42 – 48
 Definition
 Hungarian Assignment Method
 Variations of the Assignment Problem
 Multiple Optimal Solutions:
 Maximization Case in Assignment Problem:
 Unbalanced Assignment Problem
 Prohibition in Assignment Problem
 Practice Questions
 Additional Notes (if any)

5. Simulation 49 – 59
 Introduction to Simulation,
 Types of Simulation,
 steps of simulation process,
 Monte Carlo technique,
 Business applications and limitations.
 Decision Environments-risk & uncertainty Payoff
table, regret table,
 Decision making under uncertainty, Maximin &
Maximax criteria, Minimax regret criteria, Laplace
Criterion, Hurwicz criterion,
 Expected monetary value criterion,
 Expected Pay off of Perfect
 Information (EPPI),

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  Expected Value of Perfect Information (EVPI),
 Expected Opportunity Loss (EOL),
 Decision Tree

6. 60 - 68
Network Analysis
 Introduction to Networks,
 Basic differences between PERT and CPM,
 Network models − PERT/CPM network components
and precedence relationships.
 Critical Path Analysis, forward pass computation for
earliest event time, backward pass computation for
latest allowable event time,
 Program Evaluation and Review Technique (PERT).
Determination of PERT times
7. Z Table 69-104
Random No. Table
Previous Year Question Papers
 Internal Examination
 University Examination

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 BHARATI VIDYAPEETH DEEMED UNIVERSITY
INSTITUTE OF MANAGEMENT AND RESEARCH
Course Outline
MBA-Sem II
ACADEMIC YEAR 2023-24

1. Course Code: 207 Credits: 3

2. Course Title: Operations Research
3. Course Overview:
An operation research (OR) is the discipline of applying advanced analytical methods to help make better
decisions. It uses mathematical modeling, analysis, and optimization in a holistic approach to improving our
knowledge of systems and designing useful, efficient systems. Its applications range from engineering to
management and from industry to the public sector.

Operations Research (OR) is the application of mathematical techniques and analysis to problem solving in
business and industry, in particular to carrying out more efficiently tasks such as scheduling, or optimizing the
provision of services. OR is an interdisciplinary topic drawing from mathematical modeling, optimization
theory, game theory, decision analysis, statistics, and simulation to help make decisions in complex situations.
This course in OR concentrates on mathematical modeling and optimization: for example, maximizing
production capacity, or minimizing risk. The course covers a variety of mathematical techniques for linear
optimization, and the theory behind them. Examples will be presented from important application areas, such
as the emergency services, telecommunications, transportation, and manufacturing. This module aims to
introduce students to use quantitative methods and techniques for effective decisions– making; model
formulation and applications that are used in solving business decision problems.

1. To provide students with basic skills and knowledge of operations research and its application.
2. To make students Understand how to translate a real-world problem, given in words, into a
mathematical formulation.

3. To introduce the students how to use variables for formulating complex mathematical models in
management science.

4. To introduce the students to the use of basic methodology for the solution of LPP, Transportation,
Assignment, PERT/CPM, Simulation etc. and Critically analyzing and interpreting results.

5. Students must be able to apply the techniques used in operations research to solve real life problems.

The students are expected to review the course readings and the indicated portion of the prescribed text
for class discussions prior to attending each session.

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4. Learning Outcomes:

After undergoing this course, the student will be able to:

1. Understand how to translate a real-world problem, given in words, into a mathematical formulation.
2. How to use different models of OR to solve real life problems.
3. How the scarce resources can be utilized in an efficient manner.
4. Find the ways to achieve the organization objectives: minimizing cost & maximizing profit/output.
5. Critically analyze and interpret results.
Specific knowledge:
(a) Formulate a Linear Program (LP) or translate into standard form, and use the Graphical Method to
solve.

(c) Formulation and solution of network problems using PERT and CPM.
(d) How to solve transportation & Assignment Problems for time cost & distance optimization.
(e) Better understand the topic of Simulation and its use in practical problems.

5. List of Topics/ Modules:

Topic/ Module Contents/ Concepts

 Introduction,
 Historical background,
Module I: Introduction to Operations  Meaning,
Research  Significance,
 Scope and Limitations of O.R.
 Features of Operations Research,
 Phases of Operations Research.
 Applications of O.R. in Business and Management.

Module II: Linear Programming  Definition and Components of LPP,

Problem  Formulation of LPP, Solution of LPP by Graphical
Method,
 Examples on maximization and minimization,
 Examples on mixed constraints,
 Special cases in LPP: Alternative or multiple optimal
solutions

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Module III: Transportation Problems  Introduction and Formulation of TP,
 Initial Basic Feasible Solution I.B.F.S. by North
West Corner Rule (NWCR),
 Matrix Minimum Method,
 Vogel ‘s Approximation Method (VAM),
 Checking Optimality by Modified Distribution
Method (MODI Method),
 Special cases in TP: maximization, unbalanced TP,
restricted TP, applications of T.P. in business.
Module IV: Assignment Problem  Meaning,
 definition of AP,
 Hungarian Method of solving AP,
 Assignment Problem for Maximization,
minimization. Unbalanced AP, restricted AP,
Multiple /Optimal Solutions, applications of A.P. in
business.

Module V: Simulation  Introduction to Simulation,

 Types of Simulation,
 steps of simulation process,
 Monte Carlo technique,
 Business applications and limitations.
 Decision Environments-risk & uncertainty Payoff
table, regret table,
 Decision making under uncertainty, Maximin &
Maximaxcriteria, Minimax regret criteria, Laplace
Criterion, Hurwicz criterion, expected monetary
value criterion, Expected Pay off of Perfect
 Information (EPPI), Expected Value of Perfect
Information (EVPI),Expected Opportunity Loss
(EOL),
 Decision Tree
Module VI: Network Analysis by PERT  Introduction to Networks,
and CPM  Basic differences between PERT and CPM,
 Network models − PERT/CPM network
components and precedence relationships.
 Critical Path Analysis, forward pass computation
for earliest event time, backward pass computation
for latest allowable event time,
 Program Evaluation and Review Technique
(PERT). Determination of PERT times

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6. Evaluation Criteria:

Component Description Weight

age for
100
marks

1.End Term 50 %
Exams It will be based on conceptual questions and situation specific application
oriented questions. End term exam will cover both pre mid-term and post
mid-term course coverage. Course readings are an integral component of
learning in this course.

2.Mid Term There will be two Internal exams of 10 % weight age each. They will be 30 %
Exams based on conceptual questions and situation specific application oriented
questions. Course readings are an integral component of learning in this
course. At least one of the questions will be based on these readings which
will not be specified to the students.
3.Class Students will be awarded marks for active and constructive participation 10%
Participation & in class. Students are also required to submit reflective notes individually
Reflective Notes at the end of each class. (Reflective notes are collection of notes,
observation, thoughts and learning that the students have experienced after
attending the class. The reflective notes will include only the key learning
and key takeaways which the students got from the class.)

4. Continuous 10 %
Evaluation System Students will be Evaluated 3 times through any of the CES activities which
(CES) includes Class test, Case Studies, Quiz on Moodle, Presentations etc. They
may be given assignments for practicing questions at the end of each module
(or in between the module, if required) or their knowledge may be tested
through class tests at the end of each module. They may also be asked to
give presentations on the topics allotted to them and at the end of the
complete syllabus they will required to appear in the quiz on Moodle.

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7. Recommended/ Reference Text Books and Resources:

Text Books 1.Vohra, N. D, Quantitative Techniques in Management, 4th Ed, Tata McGraw Hill,
2010.
Course Reading 1. Gupta, P. K., & Hira, D. (2010). Operations Research. S. Chand & Company Ltd.
2. Sharma, J. K. (2013). Operations Research (5th ed.). McMillan Publishers India
Ltd.
3. Taha : An Introduction to Operations Research, PHI
You tube Links https://youtu.be/1CnFjNOewEU

https://youtu.be/ILWbaWrjgU4

https://youtu.be/-aIV14ZLqOM

8. Session Plan:

Reading Due by
the students
Schedule Topic to be discussed before coming to Learning Outcome
the class
Module I - Overview of Operation Research Quantitative Techniques in Management by
N.D.Vohra, 4th Edition

1 History of OR; Meaning & Significance of Chapter-1

OR Page No. 3 - 12 How to use different
models of OR to solve
Scope & Limitations of OR
real life problems
Applications of OR in Business
Module II - Linear Programming

2 Theoretical concepts of Linear programming To develop the skill and

problems ability to translate a
Chapter-2 given real – life situation
Formulation of Linear programming
Page No. 19 - 25
problems into a linear
programming format.
3 Formulation of Linear programming Page No. 19 - 25
problems

4 Discussion/Evaluation on Assignment given - Enhancement of

analytical skills

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 5 Solution by graphical methods- Page No. 25-29 How to minimizing cost
Maximization Problem & maximizing
profit/output.

12
6 Solution by graphical Methods-Minimization Page No. 29-32
Problem
Example 2.11-
7 Solution by graphical methods-Mix Problem 2.21

Special Cases in LPP (Multiple & Enhancement of

8 Page No. 32-37
Unbounded) analytical skills

9 Discussion/Evaluation on Assignment given -

10 Sensitivity analysis(theory) Notes given

Discussion on Research Paper- LINEAR https://www.ijeast.

11 PROGRAMMING: A BOON FOR
FARMERS com/papers/223226,Tesma512,IJE AST.pdf

12 Doubts handling -

Module III - Transportation Problems

Introduction about transportation problem Chapter-5 How OR model is used

13 Page No. 204-209

Solution by North West Corner Method to optimize the
transportation cost
Solution by Least Cost Method Page No. 210-211 Enhancement of Problem
solving and analytical
14 Solution by Row Minima, column Minima Notes given
skills
Method
Solution by Vogel's Approximation Method Page No. 211-214 How OR model is used
to optimize the
15
transportation cost

Solution by Vogel's Approximation Method Page No. 211-214

16

Optimum Solution by Stepping stone Page No. 214-220 Enhancement of Problem

method solving and analytical
17
skills
18 Optimum Solution by Modi method Page No. 220-224

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 Special Cases – Unbalanced, Maximization, Page No. 224-235 Enhancement of
19 analytical skills
Restricted
Special Cases-Degeneracy in T. Problems P. No. 224-235
20

Discussion/Evaluation on Assignment given - Enhancement of

21 analytical skills

Discussion on Research Paper- A Survey

22 of Transportation Problems

23 CES-1 Moodle Quiz -

Module IV - Assignment Problems

Chapter-6 How to use different

Assignment problem-Theoretical
Page No. 288 - models of OR to solve
Background
24 298 real life problems
Page No. 288 -
Hungarian Method of solution
298
How this method is used
Page No. 288 - to minimize the time,
25 Hungarian Method of solution cost & distance while
298
assigning/allocating work
26 Special Cases – Maximization, Restriction Page No. 299 - Enhancement of
305 analytical skills

27 Special Cases – Multiple Solutions Page No. 299 - Enhancement of

305 analytical skills

28 Applications of Assignment Problem Notes Given

Discussion/Evaluation on Assignment given -

29 Discussion on Research Paper- (PDF) Application of Linear Programming

Application of Linear Programming (Assignment Model) (researchgate.net)
(Assignment Model)
30 Class Test-II -

Module V - Simulation
31 Introduction to Simulation Chapter-17 How to use different
Page No. 878888 models of OR to solve
real life problems
Monte Carlo Method-Practical Problems Page No. 878-888

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 32 Monte Carlo Method-Practical Problems Page No. 889-905 Enhancement of
analytical skills

33 Business Applications & Limitations Page No. 878-888 How OR models are used
to solve the business
problems
Discussion/Evaluation on Assignment given - Enhancement of
analytical skills
34 CES-2 Class Test -

Module VI - Network Analysis

35 How to achieve time and

Introduction to Networks cost optimization by
Chapter-12
using this model of OR in
Network Models-PERT/CPM Page No. 608 -
projects
616
Network components & precedence
relationship
36 Page No. 617 -
Representing a Project as a Network
619
37 Page No. 619 -
Critical Path Method
620
38 Page No. 621 - Enhancement of
Floats –Total, Free & Independent Floats
624 analytical skills
39 PERT-project completion time with three Page No. 638 -
time estimates 643
40 PERT-calculation of probability & Page No. 638 -
completion time 643
41 Discussion on Research Paper- (PDF) OPTIMIZ ATION OF TIMES AND
Optimization of times and costs of project COSTS OF PRO JECT OF HORIZONTAL
of horizontal laminator production using LAMINATOR PRODUCTION USING
pert/cpm technical PERT/C PM TECHNICAL
(rese archgate.net)
42 -
Discussion/Evaluation on Assignment given

43 CES-3 Quiz on Moodle -

44
Discussion on Previous year question papers

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9. MAPPING LECTURE WITH COURSE LEARNING OUTCOMES

LO1 LO2 LO3 LO4 LO5

LECTURE1 High

LECTURE2 High Medium

LECTURE3 High Medium

LECTURE4 High Medium

LECTURE5 High Medium

LECTURE6 High Medium

LECTURE7 High Medium

LECTURE8 High Medium

LECTURE9 High Medium

LECTURE10 High

LECTURE11 High Medium Low

LECTURE12 High Medium

LECTURE13 High Medium

LECTURE14 High Medium

LECTURE15 High Medium

LECTURE16 High Medium

LECTURE17 High

LECTURE18 High

LECTURE19 High

LECTURE20 High

LECTURE21 High Medium Low

LECTURE22 High Medium

LECTURE23 High Medium

LECTURE24 High Medium

LECTURE25 High

LECTURE26 High Medium Low

LECTURE27 High Medium

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LECTURE28 High

LECTURE29 High

LECTURE30 High

LECTURE31 High Medium

LECTURE32 High Medium

LECTURE33 High Medium

LECTURE34 High Medium

LECTURE35 High Medium

LECTURE36 High Medium

LECTURE37 High

LECTURE38 High

LECTURE39 High

LECTURE40 High

LECTURE41 High

LECTURE42 Medium High

LECTURE43 Medium

LECTURE44 High

LECTURE45 Medium

LECTURE46 High

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10. Contact Details:

Dr. Parul Agrawal,

Name of the Instructors:
Dr. Bhawna Dhawan,

Office Location: Paschim Vihar, New Delhi

9811880805,
Telephone:
8588990881

[email protected];
Email:
[email protected];

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 Unit 1 – Introduction to Operations Research

Operations

The activities carried out in an organization.

Research

The process of observation and testing characterized by the scientific method.

Operations Research is a quantitative approach to decision making based on the scientific method of problem
solving.

Definitions of Operations Research

Operations research is the application of the methods of science to complex problems in the direction and
management of large systems of men, machines, materials and money in industry, business, government and
defence. The distinctive approach is to develop a scientific model of the system incorporating measurements of
factors such as chance and risk, with which to predict and compare the outcomes of alternative decisions,
strategies or controls. The purpose is to help management in determining its policy and actions scientifically.
—Operational Research Society, UK
• Operations research is concerned with scientifically deciding how to best design and operate man–
machine systems usually requiring the allocation of scarce resources.
—Operations Research Society, America
• It is the use of scientific knowledge through interdisciplinary team effort for the purpose of determining
the best utilization of limited resources.
—Hamdy A Taha
The application of scientific method to study of operations of large complex organizations or activities. It
provides top level administrators with a quantitative basis for decisions that will increase the effectiveness of
such organizations in carrying out their basic purpose.
—Committee on OR of National Research Council
History of Operations Research
• Strategic and tactical problems – World war-II
The term ‘operations research’ was coined as a result of research on military operations during World
War II. Since expecting adequate solutions from individuals or specialists in a single discipline was
unrealistic, groups of individuals who collectively were considered specialists in mathematics,
economics, statistics and probability theory, engineering, behavioral, and physical science were
formed. In Britain, Col. P. M. S. Blackett was assigned the problem of analyzing the coordination of
radar equipment at gun sites

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Adoption in other fields
After the war, scientists who had been active in the military operations research (OR) groups made
efforts to apply operations research approach to civilian problems, related to business, industry,
research and development, etc.

• Economic and industrial boom

After World War II, economic and industrial boom resulted in continuous mechanization, automation,
decentralization of operations and division of management functions. Therefore, application of
operations research to managerial decision-making became popular.

Characteristics of Operations Research

 Use of Scientific Methods

 Use of Models to represent the complex relationship

 Interdisciplinary approach

 Provision of a quantitative basis for decision making

 Methodological Approach

 Decision-making

 Operations Economy
Applications/Scope of Operations Research
 Areas
• Finance
• Production
• Marketing
• Personnel

 Techniques
• Linear Programming
• Decision Models
• Network Theory
• Inventory Control
• Queuing Theory
• Sequencing
• Game Theory •
• Simulation

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 Process/ Phases of Operations Research

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 Advantages of Operations Research

 Better Decision-making

 Better control

 Better Co-ordination

 Helpful in complex situations

 Resolve conflicts

 Improves Productivity

Limitations of Operations Research

 Magnitude of Computation

 Non-Quantifiable Factors

 Distance between User and Analyst

 Time and Money Costs

 Implementation

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 Unit 2- Linear Programming Problem

Definitions

Linear programming is a mathematical technique useful for allocation of ‘scarce’ or ‘limited’ resources, to several
competing activities on the basis of a given criterion of optimality.

The word ‘linear’ refers to linear relationship among variables in a model. That is, a change in one variable
causes a resulting proportional change in other variable. The word ‘programming’ refers to the solution of a
problem that involves the economic allocation of limited resources, by choosing a particular course of action
or strategy among various alternative strategies in order to achieve a desired objective.

Components of an LPP

• Decision Variables

• Objective Function

 To maximize or minimize

• Constraints

 Involving ≤, =, or ≥ sign

• Non-negativity Condition

 Variables to be non-negative

Assumptions underlying Linear Programming

 Proportionality

 Additivity

 Continuity

 Certainty

 Finite Choices

Graphic Solution to LPPs

 Plot constraints

 Mark feasible region which should be a convex set

 Evaluate corner points/use iso-profit or iso-cost lines to get optimal solution

 Redundant constraints

 Binding constraints

 Non-binding constraints

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Solutions to LPPs

• Unique Optimal Solution

• Multiple Optimal Solutions

• Infeasibility: No feasible solution

• Unbounded Solution

Advantages of Linear Programming

• Linear programming helps in attaining the optimum use of productive resources. It also indicates the
use of productive factors effectively by selecting and distributing (allocating) these resources.

• Linear programming technique improves the quality of decisions. In other words, decision-making
approach becomes more objective and less subjective.

• Linear programming technique provides possible and practical solutions by taking into account the
constraints operating outside the problem.

• Linear programming also helps in re-evaluation of the outcome due to a course of action under
changing conditions. This helps to adjust the remainder of the decision process for best results.

Limitations of Linear Programming

• Linear programming treats all relationships among decision variables as linear. However, in real life
neither the objective function nor the constraints concerning business and industrial problems are
linearly related to the variables.

• While solving an LP model, there is no guarantee to get an integer valued solution. Rounding off the
solution to the nearest integer will not yield an optimal solution. In such cases, integer programming
is used to ensure integer value to the decision variables.

• Linear programming model does not take into consideration the effect of time and uncertainty.
• Parameters of LP model are assumed to be constant but in real-life situations, they are neither known
nor constant.

• A LP model has single objective function, whereas in real-life situations we may come across
conflicting multi-objective problems. In such cases, a goal programming model is used to get
satisfactory value of such objectives.

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 Practice Questions

Q-1 A firm produces three products A, B & C each of which passes through three departments: Fabrication,
Finishing & Packaging. Each unit of product A requires 3, 4 & 2; a unit of product B requires 5, 4 & 4 while
each unit of product C requires 2, 4 & 5 hours respectively in the three departments. Every day 60 hrs are
available in the fabrication department, 72 hrs in the finishing department and 100 hrs in the packaging
department. The unit contribution of product A is Rs. 5, of product B is Rs. 10 and of product C is Rs. 8.
Formulate the problem as LPP.

Q-2 The agricultural research institute suggested the farmer to spread out at least 4800 kg of special phosphate
fertilizer and not less than 7200 kg of a special nitrogen fertilizer to raise the productivity of crops in his fields.
There are two sources for obtaining these – mixtures A and mixtures B. Both of these are available in bags
weighing 100kg each and they cost Rs.40 and Rs.24 respectively. Mixture A contains phosphate and nitrogen
equivalent of 20kg and 80 kg respectively, while mixture B contains these ingredients equivalent of 50 kg
each. Write this as an LPP and determine how many bags of each type the farmer should buy in order to obtain
the required fertilizer at minimum cost.

Q-3 Chocolate India Ltd. produces three varieties of Chocolates – Hard, mild & soft from three different
inputs I1, I2 & I3. One unit of Hard requires 2 units of I1 and 4 units of I2. One unit of mild requires 5 units of
I1, 4 units of I2 and 3 units of I3 and one unit of soft requires 10 units of I1 & 15 units of I3. The total available
of inputs in the company’s warehouse is as under:

I1 - 100 units

I2 - 400 units

I3 - 50 units

The profit per unit for hard, mild & soft are Rs. 20, Rs. 30 and Rs. 40 respectively. Formulate the problem so as
to maximize the total profit by using linear programming.
Q-4 Safe & sound Investment Ltd. wants to invest up to Rs. 10 lakhs into various bonds. The management is
currently considering four bonds, the detail on return & maturity of which are as follows:

Bonds Types Returns Maturity Time

α Govt. 22% 15 years

β Govt. 18% 5 years

γ Industrial 28% 20 years

θ Industrial 16% 3 years

The company has decided not to put less than half of its investment in the government bonds and that the
average age of the portfolio should not be more than 6 years. The investment should be such which maximizes
the return on investment, subject to the above restriction. Formulate the above as a LP problem.

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Q-5 To maintain good health, a person must fulfill certain minimum daily requirements of several kinds of
nutrients. For the sake of simplicity let us assume that only three kinds of these needs to be considered calcium,
protein vitamin A. also assume that the person’s diet is to consist of only 2 food items, I & II; whose prices &
nutrient contents are given in the following table. Find out the optimal combination of the two food items that
will satisfy the daily requirements & entail the least cost.

Foods Calcium Protein Qty Vitamin A Qty Cost per Unit

F1 10 5 2 6

F2 4 5 6 1

Daily Min. Requirements 20 20 12

Q-6 A steel plant manufactures two grades of steel S1 & S2. Data given below shows the total resources
consumed & profit per unit associated with S1 & S2. Iron and labor are the only resources which are consumed
in the manufacturing process. The manager of the firm wishes to determine the different units of S1 & S2 which
should be manufactured to maximize the total profit.

Resource utilized Unit-requirement Amount

Available
S1 S2
Iron (kg) 30 20 300
labour (Hours) 5 10 110
Profit (Rs.) 6 8

Q-7 A manufacturer produces two types of models M1 and M2. Each model of the type M1 requires 4 hours
of grinding and 2 hours of polishing; whereas each model of M2 requires 2 hours of grinding and 5 hours of
polishing. The manufacturer has 2 grinders and 3 polishers. Each grinder works for 40 hours a week and each
polisher works 60 hours a week. Profit on M1 model is Rs.3.00 and on model M2 is Rs.4.00. Whatever
produced in a week is sold in the market? How should the manufacturer allocate his production capacity to
the two types of models, so that he makes maximum profit in a week? = 3 X

Q-8 Alpha Limited produces & sells 2 different products under the brand name black & white. The profits
per unit on these products are Rs. 50 & Rs. 40 respectively. Both black & white employ the same
manufacturing process which has a fixed total capacity of 50,000 man-hours. As per the estimates of the
marketing research department of Alpha Limited, there is a market demand for maximum 8,000 units of Black
& 10,000 units of white. Subject to the overall demand, the products can be sold in any possible combination.
If it takes 3 hours to produce one unit of black & 2 hours to produce one unit of white, formulate the about as
a linear programming model. 4X1 + 2X2 < 80 2X1 + 5X2 < 180 X1, X2 > 0

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Q-9 A person wants to decide the constituents of a diet which will fulfill his daily requirements of proteins,
Fats & carbohydrates at the minimum cost. The choice is to be made from four different types of foods.
The yield per unit of these foods is:

Food Type Yield Per Unit Cost per Unit

Proteins Fats Carbohydrates
(Rs.)
1 3 2 6 45

2 4 2 4 40

3 8 7 7 85

4 6 5 4 65
Minimum 800 200 700
Requirement

Formulate the linear programming model for the problem.

Q-10 High Quality Furniture Ltd. manufactures two products, tables & chairs. Both the products have to be
processed through two machines Ml & M2 the total machine-hours available are: 200 hours ofM1 and 400
hours of M2 respectively. Time in hours required for producing a chair and a table on both the machines is as
follows:

Time in Hours

Machine Table Chair

M1 7 4
M2 5 5

Profit from the Sale of table is Rs. 40 and that from a chair is Rs. 30, determine optimal mix of tables & chairs so
as to maximize the total profit.

Q-11 Good Results Company manufactures & sells in the export market three different kinds of products P 1,
P2 & P3. The anticipated sales for the three products are 100 units of P1, 200 units of P2 & 300 units of P3. As
per the terms of the contract Good results must produce at least 50 units of P 1 & 70 units of P3. Following is
the break – up of the various production lines:

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 Product Production Hours per Unit Unit Profit
(Rs.)
Department Department Department Department
(A) (B) (C) (D)
P1 0.05 0.06 0.07 0.08 15
P2 0.10 0.12 0.30 20
P3 0.20 0.09 0.07 0.08 25
Available 40.00 45.00 50.00 55.00
hours

Management is free to establish the production schedule subject to the above constraints.

Formulate as a linear programming model assuming profit maximization criterion for Good Results Company.

Q-12 The management of Surya Chemicals is considering the optimal mix of two possible processes.
The values of input & output for both these process are given as follows:

Process Inputs Units Outputs Units

I1 I2 O1 O2
X 2 6 3 7
Y 4 8 5 9

Maximum 500 units of Input I1 and 300 units of I2 are available to Surya Chemicals in the local market. The
forecasted demand for outputs OI & O2 are at least 5,000 units & 7,000 units respectively. The respective
profits from process X & Y are Rs. 1,000 & Rs. 2,000 – per production run. You are required to formulate the
above as a linear programming model.

Solve using Graphical Method

Q-13 A small scale industry manufactures electrical regulators, the assembly of which is being accomplished
by a small group of skilled workers, both men and women. Due to the limitations of space and finance, the
number of workers employed cannot exceed 11 and their salary bill not more than Rs. 60,000 per month. The
male members of the skilled workers are paid Rs. 6000 per month, while the female worker doing the same
work as the male member get Rs. 5000 member contributes Rs. 10,000 per month to total return of the industry,
while the female worker contributes Rs. 8500 per month. Determine the number of male and female workers
to be employed in order to maximize the monthly total return. (maximization- bounded- unique)

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Q-14 Maximize: z=2x1 + x2 (Bounded- Unique)
Constraints: x1 + 2x2 ≤ 360
x1 + x2 ≤ 6
x1 - x2 ≤ 2
x1 - 2x2 ≤ 1
x1, x2 ≥ 0
Q-15 MD Ltd. has two bottling plants, one located at Solan and the other at Mohan Nagar. Each plant produces
three drinks; whisky, beer and fruit juices name A, B, C respectively. The number of bottles produced per day
is as follows:

Plant at
Solan Mohan Nagar
Whisky 1500 1500
Beer 3000 1000
Fruit Juices 2000 5000

A market survey indicates that during the month of April, there will be a demand of 20,000 bottles of whisky,
40,000 bottles of beer and 44,000 bottles of fruit juices. The operating costs per day for plants at Solan and
Mohan Nagar are 600 & 400 monetary units. For how many days each plant is run in April so as to minimize
the production cost while still meeting the market demand? (Unbounded- Minimization- Unique)

Q-16 Solve the following problem graphically (Maximize- Unbounded- Infinite)

Max Z= 5X1+4X2

Subject to X1-2X2 ≤ 1

X1+2X2 ≥ 3

X1, X2 ≥ 0

Q-17 Solve the following problem graphically: (Maximize- Bounded- Unique)

Max Z= -X1+2X2

Subject to

X1-X2≤ -1

-0.5 +X2 ≤ 2

X1, X2 ≥ 0

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Q-18 Maximize Z=4x1 + 3x2 (Bounded- Multiple optimal)

Subject to the constraints

3x1 + 4x2 ≤ 24

8x1 + 6x2 ≤ 48

x1 ≤ 5

x2 ≤ 6

x1, x2 ≥ 0

Q-19 Maximize: Z = 4x1 + 2x2 (Unbounded-Infeasible)

Subject to the constraints

2x1 + 3x2 ≤ 18

x1 + x2 ≥ 10

x1, x2 ≥ 0

Q-20 An advertising firm desires to reach two types of audiences- customers with annual income of more than
Rs. 40,000 (target audience A) and customers with annual income of less than Rs. 40,000 (target audience B).
The total advertising budget is Rs.2, 00,000. One Programme of T.V advertising costs Rs.50, 000 and one
Programme of radio advertising costs Rs. 20,000. Contract conditions ordinarily require that there should be
atleast3 programs on T.V and the number of programs on Radio must not exceed 5. Survey indicates that a
single T.V Programme reaches 7, 50,000 customers in target audience A and 1, 50,000 in target audience B.
One Radio Programme reaches 40,000 customers on target audience A and 2, 60,000 in target audience B.
Formulate this as a LPP and determine the media mix to maximize the total reach using graphic method.
(Maximize- Bounded- Unique)

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 Unit III: Transportation Problems
Inputs:

 Sources with availability

 Destinations with requirements

 Unit cost of transportation from various sources to destinations

Objective:

 To determine schedule of transportation to minimize total transportation cost

Transportation Method

Step 1

Balance the problem if Aggregate Demand and Aggregate Supply are unequal; place an M in the cost cell if
some route is prohibited; and convert into equivalent minimization problem if it is a maximization problem.

Step 2

Obtain initial solution

 North-West Corner Rule: considers only demand and availability

 Least Cost Method: considers unit cost, demand and availability

 Vogel’s Approximation Method: considers cost differences, demand and availability

Step 3

Test for optimality

For this, check if the number of occupied cells = m + n – 1

If yes, obtain ui and vj values and calculate ∆ij values for unoccupied cells

 If all ∆ij values are ≤ 0, it is optimal solution

 If all ∆ij values are negative, it is unique optimal solution

 If some ∆ij value/s = 0 while others are negative, there are multiple optimal solutions

In case of non-optimal solution go to step 4

Step 4

Improve non-optimal solution

(a) Begin with cell having largest ∆ij, draw a closed path:

 Move alternately between rows and columns

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  Stop only at occupied cells
 Start with a + sign in the cell of origin, place – and + signs alternately on cells on the path
(b) Consider cells with – sign, choose the least quantity in them, add it to each cell with + sign and subtract it
from each cell with – sign
(c) Obtain revised solution and go back to step 3

Special Cases in Transportation Problem

Unbalanced Transportation Problem

A problem is known to be unbalanced problem if Aggregate Demand and Aggregate Supply are unequal; the
first step is to make it balanced by adding a dummy row or dummy column as per the requirement & placing
zero in all the cost cells of that dummy row or dummy column.

Transportation Problem of Maximization

If a problem is of maximization (instead of cost profit /saving is given) then convert it into equivalent
minimization problem by subtracting all the values from the highest value.

Prohibition in Transportation Problem

If some routes are prohibited in the problem, then place an M (which denotes vary high cost) in the cost cell
which is prohibited and then solve in usual manner.

Degeneracy in Transportation Problem

If the basic feasible solution of a transportation problem with m origins and n destinations has fewer than m+n-1
positive cij (Occupied cells), the problem is said to be a degenerate transportation problem.
Degeneracy occurs at two stages:
1) Initial Stage
2) During testing the optimal solution. (Prevents testing optimality of the solution)
Degeneracy is removed by placing an infinitesimally small value ε (Epsilon) in each of the required number
of independent cells

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 Practice Questions

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Q-1 Find out the initial feasible solution using:
i) North West Corner Method,
ii) Least Cost Method/ Matrix Minima Method
iii) Row Minima method
iv) Column Minima Method
v) Vogel’s Approximation Method

Distribution Centers
A B C D Supply
P 2 3 11 7 6
Plants
Q 1 0 6 1 1
R 5 8 15 9 10
Requirements 7 5 3 2

Q-2 Find the optimal transportation cost using: MODI Method

P Q R S Supply
A 12 10 12 13 500
B 7 11 8 14 300
C 6 16 11 7 200
Demand 180 150 350 320 1000

Q-3 Given the following transportation problem:

Market
Warehouse Supply
A B C
1 10 12 7 180
2 14 11 6 100
3 9 5 13 160
4 11 7 9 120
Demand 240 200 220

It is known that currently nothing can be sent from warehouse 1 to market A and from warehouse 3 to
market C. Solve the problem and determine the least cost transportation schedule. Is the optimal
solution obtained by you is unique? If not, what is/ are the other optimal solution/s?

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Q-4 The following matrix gives the distance in kms, from source of supply to the destination. The shipping
cost is Rs. 10 per km per unit. What shipping schedule should be used to minimize total cost?

D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8
S2 4 7 7 6 5 5
S3 8 4 6 6 4 9
Demand 4 4 5 4 8

Q-5 Determine a transportation schedule to minimize cost using NWC Rule.

D1 D2 D3 Supply
S1 8 5 6 120
S2 15 10 12 80
S3 3 9 10 80
Demand 150 80 50

Q-6 There are four warehouses located at A, B, C and D with capacity of 90, 50, 80 and 60 tons respectively.
A supply has to be made in 3 cities P, Q and r with a demand of 120, 100 and 110 tons respectively.
The shipping cost per ton is given below: -

P Q R
A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7
Shipments are prohibited from A to P. Find out the minimum cost.

Q-7 A company supplies the product from its warehouses to 4 cities. The profit per unit is given below.
Find the optimal Transportation schedule so as to maximize the profit.

Warehouse/City 1 2 3 4 Supply
A 6 6 11 15 80
B 4 6 10 12 120
C 6 4 7 6 150
D 4 10 14 14 70
E 8 8 7 9 90
Demand 100 200 120 80

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Q-8 The table below records transportation costs per unit of a product from origins O1, O2, O3 and O4 to
destinations D1, D2, D3, D4 and D5. The capacities of the four origins are respectively 55, 45, 30 and 50
while the requirements of the five destinations are respectively 40, 20, 50, 30 and 40. Employing
Vogel’s Approximation Method, or otherwise, make the initial allocations to the origins to satisfy the
requirements of the destinations and test the optimality of these allocations. Use Modified Distribution Method
(MODI) for obtaining an optimal solution that would minimize the total cost of transportation.

Destination
Origin Capacity
D1 D2 D3 D4 D5
O1 12 4 9 5 9 55
O2 8 1 6 6 7 45
O3 1 12 4 7 7 30
O4 10 15 6 9 1 50
Requirement 40 20 50 30 40

Find the total cost implied by the solution. Is the solution unique? If not, find an alternative solution as well.

Q-9 A company has four warehouses and six stores. The warehouses altogether have a surplus of 22 units of a
given commodity, divided among them as follows:

Warehouses 1 2 3 4
Surplus 5 6 2 9

The six stores altogether need 22 units of the commodity. Individual requirements at stores 1, 2,3,4,5 and 6 are
4, 4, 6, 2, 4 and 2 units respectively.

Cost of shipping one unit of commodity from warehouse to stores in rupees is given in the matrix below:

Stores
Warehouses
1 2 3 4 5 6
1 9 12 9 6 9 10
2 7 3 7 7 5 5
3 6 5 9 11 3 11
4 6 8 11 2 2 10

How the products should be shipped from the warehouses to the stores so that the transportation cost is minimum?

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Q-10 A company has received a contract to supply gravel to three new construction projects located in towns
A, B and C. The construction engineers have estimated that the required amounts of gravel which will be
needed at these construction projects are:

Project Location Weekly Requirements

(Truckloads)
A 72
B 102
C 41
The company has 3 gravel pits located in towns X, Y and Z. The gravel required by the construction project
can be supplied by three pits. The amount of gravel that can be supplied by each pit is as follows:

Plant: X Y Z
Amount Available 76 82 77
(Truckloads)
The company has computed the delivery cost from each pit to each project site. These costs (in Rs.) are shown in
the following table:
Project Location Pit

A B C

4 8 8

16 24 16

8 16 24

Schedule the shipment from each pit to each project in such a manner that it minimizes the total transportation
cost within the constraints imposed by pit capacities and project requirements. Also find the minimum cost.

Q-11 Find the optimum solution to the following transportation problem in which the cells contain the
transportation cost in rupees.

W1 W2 W3 W4 W5 Available

F1 7 6 4 5 9 40

F2 8 5 6 7 8 30

F3 6 8 9 6 5 20

F4 5 7 7 8 6 10

Required 30 30 15 20 5 100

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Q-12 XYZ tobacco Company purchases tobacco and stores in warehouses located in the following four cities:

Warehouse Location(City) A B C D
Capacity (Tons) 90 50 80 60

The warehouse supply tobacco to cigarette companies in three cities that have the following demand:

Cigarette Company Demand (Tons)

Bharat 120
Janta 100
Red Lamp 110

The following railroad shipping costs per tonne (in hundred rupees) have been determined:

Warehouse Location Bharat Janta Red Lamp

A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7

Because of railroad construction, shipments are temporarily prohibited from warehouse at city A to Bharat
Cigarette Company.

a) Find the optimum distribution for XYZ Tobacco Company.

b) Are there multiple optimum solutions? If yes, identify them.

Q-13 Find the initial solution for the transportation problem by VAM method. Also obtain the optimum solution
by MODI Method.

Ma rket
Plant Supply
M1 M2 M3 M4
P1 6 4 9 1 40
P2 20 6 11 3 40
P3 7 1 0 14 50
P4 7 1 12 6 30
Demand 90 30 50 30

Q-14 A company manufacturing air – coolers has two plants located at Mumbai and Kolkata with a capacity
of 200 units and 100 units per week respectively. The company supplies the air – coolers to its four
showrooms situated at Ranchi, Delhi, Lucknow and Kanpur which have a maximum demand of 75,
100, 100 and 30 units respectively. Due to the differences in raw material cost and transportation cost,
the profit per unit in rupees differs which is shown in the table below:

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 Ranchi Delhi Lucknow Kanpur

Mumbai 90 90 100 110

Kolkata 50 70 130 85

Plan the production program so as to maximize the profit. The company may have its production capacity at
both plans partly or wholly unused.

Q-15 A product is manufactured at four factories A, B, C and D. Their unit production costs are Rs. 2, Rs.
3, Re 1 and Rs. 5, respectively. Their production capacities are 50, 70, 30 and 50 units, respectively.
These factories supply the product to four stores, demands of which are 25, 35, 105 and 20 units
respectively. Unit transportation cost in rupees from each factory to each store is given in the table
below:

Stores
Factories I II III IV
A 2 4 6 11
B 10 8 7 5

C 13 3 9 12
D 4 6 8 3

Determine the extent of deliveries from each of the factories to each of the stores, so that the total production
and transportation cost is the minimum.

Q-16 A company has factories at F1, F2 and F3 that supply products to warehouses at W1, W2 and W3.
The weekly capacities of the factories are 200, 160 and 90 units, respectively. The weekly warehouse
requirements are 180, 120 and 150 units, respectively. The unit shipping costs (in rupees) are as
follows:
Warehouse
Factory Supply
W1 W2 W3
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150 450

Determine the optimal distribution for this company in order to minimize its total shipping cost.

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 Unit IV: Assignment Problem
Assignment problem arises when each assignee (workers, salesmen, vehicles, contracts, etc.) is to be assigned
to exactly one task (sales regions, machines, checkout counters, routes, bidders, etc.) with an objective to
minimize the total cost/time/distance or to maximize total profit.

The problem of assignment arises because resources that are available have varying degree of efficiency for
performing different tasks. The cost, profit or time of performing different tasks is also different.

Assignment Problem

• Can be solved by complete enumeration

• Can be formulated and solved as a transportation problem

• Can be formulated and solved an LPP

• Can be solved by Hungarian Assignment Method (HAM)

• HAM is most efficient of all methods

Hungarian Assignment Method

Step 1

 Balance the problem if it is unbalanced

 Place an M as the cost element if some assignment is prohibited

 Convert into equivalent min problem if it is a max problem

Step 2

Obtain zeros in every row and column by row reductions and column reductions

Step 3

Cover all zeros by least number of horizontal/ vertical lines

If number of lines = n move to step 4 else, make adjustment: select least uncovered value; subtract it from every
uncovered value; and add to each one at intersection of lines

Again cover zeros with lines to find if you could go to 4

Step 4

Make assignments by considering zeros

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Variations of the Assignment Problem

Multiple Optimal Solutions:

While making assignments, it is possible to have two or more ways to strike off a certain number of
zeros. This indicates that there are multiple optimal solutions with the same optimal value of
objective function.

Maximization Case in Assignment Problem:

If an assignment problem is for maximization of profit/revenue, then such problems are solved by
converting given data on profit/revenue into cost data as follows:

Locate largest payoff element in the assignment table and then subtract all elements of the table from
this element. The new assignment problem, so obtained, can be solved by using the Hungarian
method.

Unbalanced Assignment Problem

Hungarian method requires that the number of columns and rows in the assignment matrix be equal.
Otherwise, assignment problem is called an unbalanced problem. To make given matrix a square
matrix, dummy row(s) or column(s) are added (with zeros cost elements).

Prohibition in Assignment Problem

If some routes are prohibited in the problem, then place an M (which denotes vary high cost) in the cost
cell which is prohibited and then solve in usual manner.

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44 | P a g e ForInternalCirculation
 Practice Questions

Q-1 To stimulate interest and provide an atmosphere for intellectual discussion, the finance faculty in
management school decides to hold special seminars on 4 contemporary topics- leasing, portfolio
management, mutual funds and swaps & options. Such seminars would be held once per week in the
afternoons. However, scheduling these seminars (1 for each topic and not more than 1 seminar in the
afternoon) has to be carefully done so that the number of students unable to attend is kept minimum.
A study indicates that the number of students who cannot attend a particular seminar on a specific day
is as follows:

Leasing Portfolio Management Mutual Funds Swaps &

Options
Monday 50 40 60 20
Tuesday 40 30 40 30
Wednesday 60 20 30 20
Thursday 30 30 20 30
Friday 10 20 10 30

Find an optimal schedule of the seminars. Also find out the total number of students who will be missing at
least 1 seminar.

Q-2 A solicitor’s firm employs typists on hourly piece-rate basis for their daily work. There are 5 typists
and their charges and speed are different. According to an earlier understanding, only 1 job is given to
1 typist and the typist is paid for a full hour even when he works for a fraction of an hour. Find the
least cost allocation for the following data:

Typist Rate/hr No. of pages Job No. of pages

(Rs) typed/hr
A 5 12 P 199
B 6 14 Q 175
C 3 8 R 145
D 4 10 S 298
E 4 11 T 178

Q-3 In a multi-storied building, there are 5 rooms to be assigned to 5 managers. Each room has its own
advantages and disadvantages. They are all of different shapes and sizes. Each of the 5 managers was
asked to rank their preferences amongst the rooms. Their preferences are recorded in the below table:

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 Manager
M1 M2 M3 M4 M5
302 302 303 302 301
303 304 301 305 302
304 305 304 304 304
301 305 303
302

Most of the managers did not list all the 5 rooms since they were not satisfied with some of these rooms.
Assuming that their preferences can be quantified in numbers, find out as to which manager should be assigned
to which room so that their total preference ranking is minimum.

Q-4 A firm produces 4 products. There are 4 operators capable of producing any of these 4 products. The
firm records 8 hrs a day and allows 30 min for lunch. The processing time in minutes and profit for
each of the products is given below. Find the optimal assignment of products to operators.

Operator A B C D
1 15 9 10 6
2 10 6 9 6
3 25 15 15 9
4 15 9 10 10
Profit/Unit 8 6 5 4

Q-5 A company has 4 sales representatives who are to be assigned 4 sales territories. The monthly sales
increase estimated for each sale representatives are shown below. Suggest optimal assignment so as to
maximize total sales per month.

Sales Sales Territories

Representatives I II III IV
A 200 150 170 220
B 160 120 150 140
C 190 195 190 200
D 180 175 160 190

If for certain reasons, sales representative B cannot be assigned to sales territory III, will the optimal
assignment schedule be different? If so, find that schedule and its effect on sales.

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Q6. An airline, operating 7 days a week, has given the following schedule of its flights between New Delhi
and Mumbai. The crews should have a minimum of 5 hours between the flights. Obtain the pairing of
flights that minimizes layover time away from home. For any given pairing, the crew will be based at
the city that results in the smallest layover.

New Delhi-Mumbai Mumbai-New Delhi

Flight No. Departure Arrival Flight No. Departure Arrival
101 5 A.M. 7 A.M. 201 7 A.M. 9 A.M.
102 7 A.M. 9 A.M. 202 8 A.M. 10 A.M.
103 1 P.M. 3 P.M. 203 1 P.M. 3 P.M.
104 7 P.M. 9 P.M. 204 6 P.M. 8 P.M.

Q-7 A company proposes to undertake a national promotional campaign for its newly developed product.
It has decided to schedule a series of 1 minute commercials during peak audience viewing hours of 1
P.M. - 5 P.M. To reach the widest possible audience the company wants to schedule 1 commercial on
each of the networks & to have only 1 commercial appear during each of the 4 one-hour time blocks.
The exposure ratings for each hour, which represent the number of of viewers per Rs. 10,000 spent,
are given below:

Network
Viewing Hours A B C D
1-2 P.M. 27.1 18.1 11.3 9.5
2-3 P.M. 18.9 15.5 17.1 10.6
3-4 P.M. 19.2 18.5 9.9 7.7
4-5 P.M. 11.5 21.4 16.8 12.8

a) Which network should be scheduled each hour to provide maximum audience exposure?
b) How would schedule change if it is decided not to use network A between 1-3 P.M.?

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 Unit 5- Simulation

It is the imitation of the operation of a real-world process or system over time. The act of simulating something
first requires that a model be developed; this model represents the key characteristics or behaviors/functions
of the selected physical or abstract system or process.

The model represents the system itself, whereas the simulation represents the operation of the system over time.
Simulation is used in many contexts, such as simulation of technology for
performance optimization, safety engineering, testing, training, education, and video. Often, computer
experiments are used to study simulation models. Simulation is also used with scientific modeling of natural
systems or human systems to gain insight into their functioning.[2] Simulation can be used to show the eventual
real effects of alternative conditions and courses of action. Simulation is also used when the real system cannot
be engaged, because it may not be accessible, or it may be dangerous or unacceptable to engage, or it is being
designed but not yet built, or it may simply not exist. Key issues in simulation include acquisition of valid source
information about the relevant selection of key characteristics and behaviors, the use of simplifying
approximations and assumptions within the simulation, and fidelity and validity of the simulation outcomes.

The most commonly used method for simulation is Monte Carlo Method. 'Monte Carlo Simulation' A
problem solving technique used to approximate the probability of certain outcomes by running multiple trial
runs, called simulations, using random variables.

Process of Simulation
 Simulation: a descriptive method 
To simulate is to replicate a system
 Phases of simulation process:

 Definition of the problem and statement of objectives

 Construction of an appropriate model
 Experimentation with the model constructed
 Evaluation of the results of simulation Monte Carlo Simulation

• Uses random numbers to generate data

• Process calls for:
 Determination of random number intervals
 Obtaining random numbers and finding the input values corresponding to them 
Carrying out needed simulation

• Is used extensively in areas like capital budgeting; inventory control; queuing analysis; and project
management.

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 Practice Questions
Que.1 The weekly demand for laptops at a dealer’s shop is as follows:

Demand 0 1 2 3 4 5 6
No of Days 5 16 28 12 14 15 10

Simulate the demand for the next two weeks using the following random numbers.
39, 20, 19, 75, 82, 36, 05, 10, 90, 88, 64, 50, 57, 29

Que-2 The no. of Airhostesses reporting sick at a leading airline company is distributed as follows:

No of
0 1 2 3 4 5 6
Airhostesses

Probability .10 .17 .30 .20 .10 .08 .05

Simulate the absenteeism pattern of the airhostesses for the next two weeks using the following random numbers.

10, 25, 36, 82, 79, 44, 75, 80, 19, 20, 66, 75, 99, 75

Que-3 At a bill counter customer’s arrival and service times are distributed as follows:

Inter Arrival Times (In Mins) Probability Service Times (In Mins) Probability
2 .05 2 .05
4 .25 3 .15
6 .45 4 .35
8 .15 5 .30
10 .10 6 .07
7 .08

Assuming that the counter opens at 8.00 AM, Simulate the arrival and Service pattern for the next 10 customers
using the following random numbers.

For Inter arrival times: 21, 65, 75, 84, 35, 65, 72, 44, 90, 24

For Service times: 16, 75, 26, 44, 86, 95, 56, 28, 37, 29

Hence compute the waiting times of the customer & server.

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Que-4 The occurrence of rain in a city on a day is dependent on whether it rained on the previous day: if it
rained on the previous day the rain distribution is given as follows:

Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain 4 cm Rain 5 cm Rain

Probability .50 .25 .15 .05 .03 .02

If it did not rain on the previous day, the rain distribution is given by:

Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain

Probability .75 .15 .06 .04

Simulate the city’s whether for ten days & determine by simulation the total days without rain as well as the
total rain fall during the period using the following random numbers:

67, 63, 39, 55, 29, 78, 70, 6, 78, 76

Assume that for the first day of the simulation it had not rain the day before.

Que-5 Find out the total inventory cost for 15 weeks of a company whose demand during lead time as well as
lead time distribution are given as follows:

Demand 0 1 2 3
Probability .10 .45 .30 .15

Lead Time 2 3 4
Probability .20 .65 .15

The reorder point is 6 units & reorder quantity is 12 units. If the Ordering cost is Rs. 100 per order, holding
cost is Rs. 4/ unit, Shortage cost is Rs. 60 per unit. Assume initial inventory of 10 units.

Random No. (Lead Time): 47, 74

Random No. (Demand): 57, 77, 25, 99, 09, 79, 79, 48, 05, 24, 47, 65, 56, 52, 17,

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Que-6 The manager of a warehouse is interested in designing an inventory control system for its products.
The demand of the products comes from various retail outlets & it receives its stock from a factory
whose lead time is not constant. The manager wants to determine best release orders so as to minimize
stock outs yet keeping the total inventory cost at acceptable levels. Based on the study following data
are available:

Demand 0 1000 2000 3000

Probability .20 .40 .30 .10

Lead Time 2 3 4

Probability .30 .40 .30

If the Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit, Shortage cost is Rs. 10 per unit.
Determine 10 simulation runs if the ordering policy suggests that whenever inventory level becomes less
than or equal to 2000 units, an order equal to 4000 units is placed. Assume inventory of 3000 units in hand.

Random Nos. (Lead Time): 29, 33, 44, 57, 72

Random Nos. (Demand): 31, 70, 53, 86, 32, 78, 26, 64, 45, 12
Also find out total inventory cost if reorder level is 2000 units & reorder quantity is 3000 units.

Que-7 A company trading motor car spares wishes to determine the level of stock. The demand is not certain &
the lead time for stock replenishment is 2 days. Following data is also available:

Demand 3 4 5 6 7

Probability .10 .20 .30 .30 .10

Carry out simulation for a period of 10 days. The Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit.
If the ordering policy is to order 20 units with reorder point at 15 units and inventory in hand is 20 units,
calculate total inventory cost using following Random Nos.
73, 44, 4, 39, 89, 8, 44, 74, 11, 64

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 Decision Theory and Decision Tree

Decision Theory
• A decision is the conclusion of a process designed to weigh the relative payoff due to a set of decision
alternatives so that the most preferred can be selected for implementation. Arriving to a decision
requires to set:
 Priorities to achieve an objective
 An enumeration of feasible courses of action
 Consequences (payoff) associated with different courses of action
 Criteria to choose most preferred course of action.
• Decision theory provides an analytical and systematic approach to compare outcomes resulting from
alternative managerial actions.

Characteristics of Decision Theory

• Decision Alternatives: There is a finite number of decision alternatives (actions, strategies or courses of
action) available with the decision maker at each point in time when a decision is made. The number and
type of such alternatives may depend on the previous decisions made and on what has happened
subsequent to those decisions.
 The decision alternatives may be described numerically such as, stocking 100 units of a particular item,
or non-numerically such as, conducting a market survey to know the likely demand of an item
• States of Nature: These are the future conditions (also called consequences, events or scenarios) not
under the control of decision-maker.
 A state of nature may be a state of economy (e.g. inflation), a weather condition, a political
development, etc. The states of nature are usually not determined by the action of an individual or an
organization.
 The states of nature are mutually exclusive and collectively exhaustive with respect to any decision
problem. These may be described numerically such as, demand of 100 units of an item or non-
numerically such as, employees strike, etc.
 Payoff: A numerical value (outcome) resulting from each possible combination of courses of action and
states of nature. The payoff values are always conditional because of unknown states of nature.
 The payoff is measured within a specified period. The payoffs considered in most decisions are
monetary

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 Decision-making Environments
Decision Making Under Certainty
• The decision-maker has the complete knowledge (perfect information) of consequence of every course
of action with certainty.
 Decision to purchase either National Saving Certificate (NSS), Indira Vikas Patra or deposit in National
Saving Scheme (NSS) is one in which it is reasonable to assume complete information about the future
because payment would be made when it is due.

Decision Making Under Risk

 The decision-maker has less than complete knowledge with certainty of the consequence of every
decision alternative because it is not definitely known which outcome. This means there is more than
one state of nature and for which he makes an assumption of the probability with which each state of
nature will occur.
 The decision-maker is unable to specify the probabilities for occurrence of states of nature.
 Probability that Mr X will be the prime minister of the country 15 years from now is not known

Decision Making Under Uncertainty

Criteria of decision-making under uncertainty:
• Optimism (maximax or minimin) criterion
• Pessimism (Maximin or minimax) criterion
• Equal probabilities (Laplace) criterion
• Coefficient of optimism (Hurwicz) criterion
• Regret (salvage) criterion

Optimism (Maximax or Minimin) Criterion

 The decision-maker ensures that he should not miss the opportunity to achieve the largest possible profit
(maximax) or lowest possible cost (minimin). Thus, he selects the course of action that represents the
maximum of the maxima (or minimum of the minima) payoffs (consequences).
 Locate the maximum (or minimum) payoff values corresponding to each course of action, and then
 Select a course of action with best anticipated payoff value (maximum for profit and minimum for cost).

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 Pessimism (Maximin or Minimax) Criterion
 The decision-maker ensures that he would earn no less (or pay no more) than some specified amount.
Thus, he selects the alternative that represents the maximum of the minima payoff in case of profits (or
minimum of the maxima in case of loss).
 Locate the minimum (or maximum in case of profit) payoff value in case of loss (or cost) data
corresponding to each alternative, then
 Select an alternative with the best anticipated payoff value (maximum for profit and minimum for loss
or cost).

Equal Probabilities (Laplace) Criterion

 Since probabilities of states of nature are not known, it is assumed that all states of nature will occur
with equal probability. Since states of nature are mutually exclusive and collectively exhaustive,
probability of each of these must be 1/(number of states of nature).
 Assign equal probability value to each state of nature by using the formula: 1 /(number of states of
nature).
 Compute the expected (or average) payoff for each alternative by adding all the payoffs and dividing by
the number of possible states of nature.
 Select best expected payoff value (maximum for profit and minimum for cost).

Coefficient of Optimism (Hurwicz) Criterion

• A decision-maker should be neither completely optimistic nor pessimistic and must display a trade-off
of both. Hurwicz, coefficient of optimism (α) measures the decision-maker’s degree of optimism. Value
of α lies between 0 and 1, where 0 represents a complete pessimistic attitude about the future and 1
represents complete optimistic attitude about the future. If α is the coefficient of optimism, then (1 − α)
is the coefficient of pessimism.
• Hurwicz approach suggests to select an alternative that maximizes
• Criterion of realism = α (Maximum in column) + (1 − α) (Minimum in column)
 Decide the coefficient of optimism α (alpha) and then coefficient of pessimism (1 − α).
 For each alternative select the largest and lowest payoff value and multiply these with a and (1 − α)
values, respectively. Then calculate the weighted average, H.
 Select an alternative with best anticipated weighted average payoff value

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 Regret (Savage) Criterion (Opportunity Loss Decision Criterion or Minimax Regret Decision
Criterion)

The decision-maker feels regret after choosing a wrong decision alternative, resulting in an opportunity
loss of payoff.
• Given payoff matrix, develop an opportunity-loss (or regret) matrix as follows:
 Find the best payoff corresponding to each state of nature, and
 Subtract all other payoff values in that row from this value.
• For each decision alternative identify the worst (or maximum) regret value. Record this number in a new
row.
• Select a decision alternative with the smallest anticipated opportunity-loss value.

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 Practice Questions
Ques.1 A book store sells a particular book of tax laws for Rs 100.It purchases the book for Rs 80 per copy. Since
some of the tax laws change every year, the copies unsold at the end of a year become outdated and can
be disposed of for Rs. 30 each. According to past experience, the annual demand for this book is between
18 and 23 copies. Assuming that the order for this book can be placed only once during the year, the
problem before the store’s manager is to decide how many copies of the book should be purchased for the
next year.

Ques. 2 Technico Ltd has installed a machine costing Rs. 4 lacs and is in the process of deciding on an appropriate
number of certain spare parts required for repairs. The spare parts cost Rs. 4000 each but are available
only if they are ordered now. In case the machine fails and no spares are available, the cost to the company
of mending the plant would be Rs. 18000. The plant has an estimated life of 8 years and the probability
distribution of failures during this time, based on experience with similar machines, is as follows:
Number of
failures during 0 1 2 3 4 5 6
8-year period

Probability 0.1 0.2 0.3 0.2 0.1 0.1 0

Ignoring any discounting for time value of money, determine the optimal number of units of the spare part
on the basis of (i) minimax principle, (ii) Minimin principle, (iii) Laplace principle, (iv) Hurwicz principle
(taking ά = 0.7) and (v) expected cost principle.

Ques.3 An oil company has recently acquired right in a certain area to conduct surveys and test drillings to lead
to lifting oil if it is found in commercially exploitable quantities. The area is considered to have good
potential for finding oil in commercial quantities. At the outset the company has the choice to conduct
further geological tests or to carry out a drilling Programme immediately. On the known conditions, the
company estimates that there is a 70:30 chance of further tests showing a success.
Whether the tests show the possibility of ultimate success or not or even if no tests are undertaken at all,
the company could still pursue its drilling Programme or alternatively consider selling its rights to drill in
the area. Thereafter, however, if it carries out the drilling Programme, the likelihood of final success or
failure is considered dependent on the foregoing stages. Thus: If successful tests have been carried out,
the expectation of success in drilling is given as 80:20
If the tests indicate failure, then the expectation of success in drilling is 20:80. If no tests have been carried
out the expectation of success in drilling is 55:45.
Costs and revenues have been estimated for all possible outcomes and the net present value of each is as
follows: -

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 Outcome NPV (Rs Million)
Success
 With prior test 100
 Without prior test 120
Failure
 With prior test -50
 Without prior test -40
Sale of exploitation rights
 Prior test show success 65
 Prior test show failure 15
 Without prior test 45

a) Draw decision tree diagram to represent the above information

b) Evaluate the tree in order to advise the management of the company on its best course of action

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 NOTES

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 Unit-6 Network Analysis
Rules of Network Construction

1. Each activity is represented by one arrow

2. An activity can begin only when all its predecessors are done

3. Length and bearing of arrows is of no consequence

4. Arrow direction indicates general progression in time – tail events represent start while head events
represent end of activities

5. Events are identified by numbers while activities are represented by their starting and ending events

6. A network should have only one initial and one final node

7. Introduce as few dummy activities as may be necessary

8. Looping is not permitted

Floats

 Total float is the amount of time by which an activity may be delayed without delaying the project
completion

 Caution: interpret total floats of activities carefully - all cannot be used independently

 Free float is that part of total float which can be used without affecting floats of the succeeding
activities

 The part of total float which is not free is called interfering float

 Independent float is the amount of time which can be used without affecting the head and the tail
events

Total Float ≥ Free Float ≥ Independent Float

 Total float = Latest start time – Earliest start time

 Free float = Total float – Head event slack

 Interfering float = Total float – Free float

 Independent float = Free float – Tail event slack, or zero, whichever is higher

PERT (Program Evaluation & Review Technique)

 Uses three time estimates for every activity: optimistic (a), most likely (m) and pessimistic (b)

 They are used to obtain expected times and their variances

Expected time = (a+4×m+b)/6; and

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 Variance = [(b – a)/6]2

 Obtain critical path using expected times and identify critical activities

 Add variances for critical activities to get variance for completion time and find its square root to
get standard deviation

 With expected duration and standard deviation, calculate probabilities of project completion using
normal distribution

PERT/Cost

 A modification of PERT which allows planning, monitoring and controlling of project cost and
duration

 Budgeting process allows to determine how much money is to be spent every time unit
(week/month) over planned duration of project

 Budgets are prepared on the basis of earliest and latest start times of activities

 Comparisons are made continuously between the actual costs and budgeted amounts

 Comparisons are also made between percentage of work done and percentage of budgeted amount
spent: if former is smaller than the later, we have budget overrun

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 Practice Questions

Q-1 Draw the Network diagram.

Activity Immediate predecessor

A -
B -
C -
D A
E C
F A
G D,B,E

Q-2 Draw the Network diagram.

Activity Immediate predecessor

A -
B A
C A
D C
E B,D
F E
G B,D
H F,G

Q-3 Draw the Network diagram.

Activity Immediate predecessor

A -
B A
C A
D B,C
E C
F D
G E
H F,G

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Q-4 Draw the Network diagram, find critical path, and calculate expected project completion time and all
floats.

Activity Immediate Expected completion Time

predecessor (days)
A - 10
B - 12
C - 7
D A,B 9
E B,C 6
F A,B 5
G C 4
H D,E,F 13
I D 14
J G 15
K G 6
L H,J 9
M K 10
N I,L 11

Q-5 Draw the Network diagram and calculate critical path, expected project completion time and all floats.

Expected completion Time

Activity Immediate predecessor
(weeks)
A - 5
B A 2
C A 6
D B 12
E D 10
F D 9
G D 5
H B 9
I C,E 1
J G 2
K F,I,J 3
L K 9
M H,G 7
N M 8

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Q-6 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity Predecessor
(WK) (WK) (WK)
A - 2 4 6
B - 6 6 6
C - 6 12 24
D A 2 5 8
E A 11 14 23
F B, D 8 10 12
G B,D 3 6 9
H C, F 9 15 27
I E 4 10 16
What is the Probability of completing the project one week before the expected time?

Calculate the schedule time of completion with 95% probability

Q-7 Draw the Network diagram and calculate the following:

Activity Optimistic Time (Days) Most Likely (Days) Pessimistic (Days)

1-2 3 6 15
1-6 2 5 14
2-3 6 12 30
2-4 2 5 8
3-5 5 11 17
4-5 3 6 15
5-8 1 4 7
6-7 3 9 27
7-8 4 19 28

a. Calculate the critical path & expected completion time

b. Calculate the probability of completing the jobs in 41 days.

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Q-8 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 1 2 3
2-3 1 2 3
2-4 1 3 5
3-5 3 4 5
4-5 2 3 4
4-6 3 5 7
5-7 4 5 6
6-7 6 7 8
7-8 2 4 6
7-9 4 6 8
8-10 1 2 3
9-10 3 5 7

a. Calculate the critical path & expected completion time

b. Calculate the probability of completing the jobs in 30 days.

Q-9 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 3 5 8
1-3 2 3 5
1-5 2 3 4
2-3 1 2 5
2-6 7 8 9
3-4 1 3 6
3-5 2 4 6
4-5 1 2 4
5-6 1 2 3

a. Calculate the critical path & expected completion time

b. Calculate the schedule time of completion with 98% probability

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Q-10 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 5 8 10
1-3 18 20 22
1-4 26 33 40
2-5 16 18 20
2-6 15 20 25
3-6 6 9 12
4-7 7 10 12
5-7 7 8 9
6-7 3 4 5

a. Calculate the critical path & expected completion time

b. Calculate the probability OF COMPLETING THE PROJECT IN 41.5 DAYS.

Q-11 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 1 2 9
2-3 1 4 7
2-4 2 4 12
3-4 0 0 0
3-5 2 3 4
3-7 6 8 16
4-5 4 6 8
4-6 3 5 7
5-6 ½ 1 3/2
5-7 5 7 15
6-7 3 5 13

a. Calculate the critical path & expected completion time

b. Calculate the probability OF COMPLETING THE PROJECT IN 25 DAYS.
c. Calculate the schedule time of completion with 98% probability

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Q-12 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely

Activity Pessimistic (Days)
(Days) (Days)
10-20 4 8 12
20-30 1 4 7
20-40 8 12 16
30-50 3 5 7
40-50 0 0 0
40-60 3 6 9
50-70 3 6 9
50-80 4 8 6
60-100 4 6 8
70-90 4 8 12
80-90 2 5 8
90-100 4 10 16

a. Calculate the critical path & expected completion time

b. Calculate the probability OF COMPLETING THE PROJECT IN 48 DAYS.
c. Calculate the schedule time of completion with 95% probability

Q-13 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 2 4 6
1-3 6 6 6
1-4 6 12 24
2-3 2 5 8
2-5 11 14 28
3-4 15 24 45
3-6 3 6 9
4-6 9 15 27
5-6 4 10 16

a. Calculate the critical path & expected completion time

b. Calculate the probability OF COMPLETING THE PROJECT IN 60 DAYS.
c. Calculate the schedule time of completion with 90% probability

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Q-14 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 1 4 7
1-3 5 10 17
2-4 3 3 3
2-6 1 4 7
3-4 8 15 26
3-5 2 4 8
4-5 5 5 5
5-6 2 5 8

a. Calculate the critical path & expected completion time

b. Calculate the probability OF COMPLETING THE PROJECT IN 5 days more than the expected time.
c. Calculate the schedule time of completion with 95% probability
Q-15 Draw the Network diagram and calculate the following:

Optimistic Time Most Likely Pessimistic

Activity
(Days) (Days) (Days)
1-2 1 2 3
1-3 1 2 3
1-4 0 0 0
2-5 1 2 3
2-6 2 5 8
3-7 3 4 5
4-8 3 5 7
5-9 4 6 8
6-9 2 3 4
7-8 3 4 5
8-9 4 6 8

a. Calculate the critical path & expected completion time

b. Calculate the probability of completing the jobs in 19 days.
c. Calculate the schedule time of completion with 95% probability

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73 | P a g e ForInternalCirculation
 Bharati Vidyapeeth Deemed University,
Institute of Management and Research (BVIMR), New Delhi
1st Internal Examination September 2018
Subject Operations Research Course Code: 302 Course: MBA Sem-III
Max. Marks: 40 Max. Time: 2 Hours

Instructions: 1. Attempt all questions

2. Show the detailed calculations, wherever required
Q. 1 Attempt any five questions. Answer in 50 words [5 x 2]
a) How do you convert a maximization transportation problem into minimization problem explain with example?
b) What do you understand by a transportation problem, explain?
c) How can we balance an unbalanced Assignment Problem? Explain with example.
d) Define Operation Research.
e) Enlist the various techniques of Operations Research?
f) Define Assignment Problem.
g) Differentiate between feasible solution & optimal solution in transportation.
h) Find the initial cost using North West Corner method:
Factories/Stores S1 S2 S3 S4 Supply
F1 25 20 26 24 60
F2 42 29 35 40 30
F3 35 25 36 42 40
F4 16 27 34 31 50
Demand 40 30 50 60

Q. 2 Attempt any two questions. Answer in 200 words [2 x 5]

a) Briefly explain the advantages & Limitations of Operations Research.
b) Write the various steps to solve the assignment problem with the help of an example. (Example from
question paper will not be considered.)
c) Explain degeneracy in transportation problem with the help of an example.

Q.3 Attempt any two questions. Answer in 200 words [2 x 5]

a) Find the initial solution of the following matrix which represents profits, using Least Cost Method:
Factories Warehouses Supply
1 2 3 4
X 90 100 90 80 15
Y 30 50 40 80 35
Z 60 80 40 70 50
Demand 20 40 30 10

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 The owner of a small machine shop has four mechanic available to assign jobs for the day. Five jobs are
offered with expected profit for each mechanic on each job, which are as follows:
Mechanics Jobs
A B C D E
Virat 71 84 61 73 59
Raj 48 64 87 77 80
Jay 62 78 50 111 82
Adi 87 92 111 71 81

Find the optimal assignment of mechanics to the jobs.

b) Find the Initial feasible solution of following matrix using VAM method:
Source/Destination D1 D2 D3 Availability
X 28 24 23 200
Y 25 19 14 300
Z 28 12 15 400
Demand 400 300 100

Q.4 Attempt any one. [10 x 1]

a) A solicitor’s firm employs typists on hourly piece-rate basis for their daily work. There are 5 typists
and their charges and speed are different. According to an earlier understanding, only 1 job is given to
1 typist and the typist is paid for a full hour even when he works for a fraction of an hour. Find the
least cost allocation for the following data:

No. of pages No. of

Typist Rate/hr (Rs) Job
typed/hr pages
A 5 12 P 199
B 6 14 Q 175
C 3 8 R 145
D 4 10 S 298
E 4 11 T 178

c) Solve the following transportation problem using North West Corner method only.

W1 W2 W3 W4 SUPPLY
F1 3 1 5 10 20
F2 7 4 2 3 60
F3 8 8 5 2 70
DEMAND 20 30 40 60

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 Bharati Vidyapeeth (Deemed to be University)
Institute of Management and Research (BVIMR), New Delhi
2nd Internal Examination (2018)
Course: MBA Semester: III
Subject: Introduction to Operation Research Course Code: 302
Max. Marks: 40 Max. Time: 2 Hours

Instructions (if any): - (Calculator is allowed)

Question No. 1 is compulsory. Attempt any two questions from Q2 to Q5. And attempt any two question
from section 2.
Section 1
Answer in 400 words. Each question carries 06 marks.
Q. 1 Following is the network diagram of a project:

Complete the following table from the above diagram:

Activity Duration ES EF LS LF TF HS FF TS IF
1-2
1-6
2-3
2-4
3-5
4-5
5-8
6-7
7-8

Q. 2 Following is the absenteeism pattern of nurses in a city hospital in past 1 year comprises of 360 days.

No. of Nurses absent 2 3 4 5 6 7 8

No. of Days 54 18 36 72 18 90 72

Simulate the absenteeism of nurses for next 15 days using the following random numbers and find the
how many nurses will remain absent in 15 days.
Random No’s: 22, 97, 19, 20, 75, 69, 26, 53, 65, 50, 28, 45, 33, 81, 84
Q 3. Draw a Network diagram and calculate Critical Path.

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 Activity A B C D E F G H I
Predecessor - - - A A B, D B,D C, F E
Time 2 6 6 2 11 8 3 9 4

Q. 4 The ABC Company has been a producer of picture tubes for the television sets and certain printed circuits for
radio. The company has just expended into full scale production and marketing of AM and AM-FM radio. It
has built a new plant that can operate 48 hours per week. Production of AM radio in the new plant will require
2 hours and production of AM-FM radio will require 3 hours. Each AM radio will contribute Rs. 40 to profits
while an AM-FM radio will contribute Rs. 80 to profits. The marketing department after extensive research
has determined that a maximum of 15 radios out of which 5 AM and 10 AM-FM radios can be sold each week.
Formulate and solve it as a linear programming model to determine the optimum production mix of radios to
maximize profits.
Q. 5 Write Short Note on any two. Answer in 300 words. Each carry 03 marks.
a) Explain the Monte Carlo method of Simulation
b) Define Total Float, free Float & Independent Float
c) How PERT is different from CPM
Section 2
Attempt any 2 questions. Each question carries 11 marks
Q 6. Dr. STRONG is a dentist who schedules all her patients for 30 minutes’ appointments. Some of the patients
take more or less than 30 minutes depending on the type of dental work to be done. The following summary shows
the various categories of work, their probabilities and the time needed to complete the work:
Category Time required Probability of category
Filling 45 minutes 0.40
Crown 60 minutes 0.15
Cleaning 15 minutes 0.15
Extraction 45 minutes 0.10
Checkup 15 minutes 0.20

Simulate the dentist’s clinic for 4 hours and determine the average waiting time for the patients as well as of the
doctor. Assume that all the patients show up at the clinic at exactly their scheduled arrival time starting at 8.00
a.m. Use the following random numbers for handling the above problem: 40 82 11 34 25 66 17 79

Q 7. Draw network, Find Critical Path & Calculate expected project completion time with all the floats.

Activity A B C D E F G H I J K L M N
Predecessor - A A B D D D B C,E G F,I,J K H,G M
Time (days) 5 2 6 12 10 9 5 9 1 2 3 9 7 8

Q 8. Draw network, Find Critical Path and probability of completing the project in 30 days, also find the
expected time of completion with 94 % probability.

Activity 1-2 1-3 1-4 2-3 2-5 3-5 3-7 4-6 5-7 5-8 6-7 6-8 7-8

Optimistic Time 4 1 3 1 1 7 1 5 3 10 7 2 4

Most Likely Time 6 3 7 2 4 8 2 8 6 13 9 3 5

Pessimistic Time 14 5 11 9 7 15 3 17 9 16 17 4 12

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 Sample MCQs

Operations Research (OR), which is a very powerful tool for ----------------

A. Research
B. Decision – Making
C. Operations
D. None of the options given
ANSWER: B
This innovative science of Operations Research was discovered during -------------
A. Civil War
B. World War I
C. World War II
D. Industrial Revolution
ANSWER: C
Operations Research has the characteristics that it is done by a team of -----------------
A. Scientists
B. Mathematicians
C. Academics
D. None of the options given
ANSWER: A
There is a great scope for ------------ working as a team to solve problems of defence by using the
Operations Research approach

A. Economists
B. Administrators
C. Statisticians and Technicians
D. All of the options given
ANSWER: D
Operations Research emphasizes on the overall approach to the system. This characteristics of Operations
Research is often referred as

A. System Orientation
B. System Approach
C. Interdisciplinary Team Approach
D. All of the options given
ANSWER: D

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 Operations Research cannot give perfect ------------------ to problems
A. Answers
B. Solutions
C. Answers and Solutions Both
D. Decisions
ANSWER: C
Operations Research simply helps in improving the -------------- of the solution but does not result in a
perfect solution.

A. Quality
B. Clarity
C. Look
D. None of the options given
ANSWER: A
Operations Research involves ------------------- attack of complex problems to arrive at the optimum
solution A. Scientific

B. Systematic
C. Statistical
D. Scientific and Systematic both
ANSWER: D
A feasible solution is called a basic feasible solution if the number of allocations/occupied cells is equal
to

A. m-n+1
B. m-n-1
C. m+n-1
D. None of the options given
ANSWER: C
Any feasible solution to a transportation problem containing m origins and n destinations is said to be

A. Independent
B. Degenerate
C. Non-degenerate
D. None of the options given
ANSWER: C

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 A path formed by allowing horizontal and vertical lines and the entire corner cells of which are occupied
is called a

A. Occupied path
B. Closed path
C. Open path
D. None of the options given
ANSWER: B
Transportation algorithm can be used for minimizing the transportation cost of ------------ from O origins
and D destinations

A. Goods
B. Products
C. Items
D. None of the options given
ANSWER: A
If demand is lesser than supply then dummy demand node is added to make it a ----------------
A. Simple problem
B. Balanced problem
C. Transportation problem
D. None of the options given
ANSWER: B
ABC Limited produces & sells 2 different products under the brand name black & white. The profit
per unit on these products in Rs. 50 & Rs. 40 respectively. Both black & white employ the same
manufacturing process which has a fixed total capacity of 50,000 man-hours. As per the estimates of
the marketing research department of ABC Limited, there is a market demand for maximum 8,000
units of Black & 10,000 units of white. Subject to the overall demand, the products can be sold in any
possible combination. If it takes 3 hours to produce one unit of black & 2 hours to produce one unit of
white, Which is the objective function?

A. Max Z= 50x1 - 40x2

B. Min Z= 50x1 + 40x2
C. Min Z= 50x1 - 40x2
D. Max Z= 50x1 + 40x2
ANSWER: D
Free Float is the difference of Head slack & Tail Slack
A. True
B. False

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 ANSWER: B

In. L.P.P.....................
A. objective function is linear
B. constraints are linear
C. Both objective function and constraints are linear
D. None of the option is correct.
ANSWER: C
XYZ Limited produces & sells 2 different products under the brand name black & white. The profit
per unit on these products in Rs. 50 & Rs. 40 respectively. Both black & white employ the same
manufacturing process which has a fixed total capacity of 50,000 man-hours. As per the estimates of
the marketing research department of XYZ Limited, there is a market demand for maximum 8,000
units of Black & 10,000 units of white. Subject to the overall demand, the products can be sold in any
possible combination. If it takes 3 hours to produce one unit of black & 2 hours to produce one unit of
white, Which is the Constraint?

A. 3x1 + 2x2 less than equal to 50000

B. 3x1 + 2x2 greater than equal to 50000
C. 3x1 - 2x2 less than equal to 50000
D. 3x1 - 2x2 greater than equal to 50000
ANSWER: A
A network may have more than one critical path.
A. True
B. False
ANSWER: A
Critical Activities are the least important activities of the network.
A. True
B. False
ANSWER: B
Critical path is known to be the shortest path in a network diagram.
A. True
B. False
ANSWER: B
Total Float is the difference of Latest finish and Latest start times.
A. True
B. False
ANSWER: B

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