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Decision Science

Introduction
 Decision Science is the collection of quantitative
techniques used to inform decision-making at the
individual and population levels.

 Decision science is concerned with making optimal

choices based on available information.

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Introduction
 Operations Research (OR) is a science which deals with
problem, formulation, solutions and finally appropriate
decision making.
 It is a branch of mathematics - specially applied
mathematics, used to provide a scientific base for
management to take timely and effective decisions to
their problems.
 It tries to avoid the dangers from taking decisions merely
by guessing or by using thumb rules.

Problem Solving Process

Formulate the
Problem
Situation Problem
Statement

Data
Construct
a Model
Implement
the Solution

Model

Procedure
Find
a Solution
Establish
a Procedure

Test the Model

and the Solution Solution Tools

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What is Linear Programming?

 Linear Programming problem (LP) is a mathematical
programming problem where all the functions are linear.
 Variables have power of 1
 Variables not multiplied with each other
𝑓 𝑥
 𝑓 𝑥 5𝑥 3 (Linear)
 𝑓 𝑥 𝑥 3 (Non-linear)

 Important Assumption: Variables are continuous (for now)

Requirements of a Linear Programming

Problem
 Decision Variable and their Relationship
 Well-Defined Objective Function
 to be maximized or minimized
 Constraints or Restrictions
 Amount or extent of attainment of objective
 Availability of recourses
 Alternative Courses of Action
 A product can be processed on two or more
machines
 allocation the amount/quantity of product to each
machine
 Decision variables should be non-negative

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Assumptions in Linear Programming Model

 Certainty: All parameters such as: availability of
resources, profit (or cost) contribution per unit of
decision variable and consumption of resources per
unit of decision variable must be known and
constant.
 Additivity: Total contribution = Sum of contribution
of all variables
 Changeover time
 Chemical reaction
 Linearity (Proportionality): Relationship among
variables both in objective function & constraints.
 Divisibility (Continuity): Values of decision
variable can be integer or fractional.

Formulation of a Linear Programming

Problem
 Steps:
1. To decide (define) decision variables.
2. To formulate objective function.
3. To formulate constraints.

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Formulation of a Linear Programming

Problem
 CASE – 1: Data for LP Formulation

Factory: Two products P1 & P2

Profit/piece of P1 = Rs.5/-
Profit/piece of P2 = Rs.8/-
Time Constraint:
Time required/piece of P1 = 2 hrs.
Time required/piece of P2 = 5 hrs.
Max. time available = 20 hrs.
Material Constraint:
Max. Material available for P1 = 5 pieces.
Max. Material available for P2 = 8 pieces.
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Formulation of a Linear Programming

Problem
 CASE – 1: Data for LP Formulation
Decision variables
x1 = no. of pieces of P1, x2 = no. of pieces of P2

Objective Function: Max. Z = 5x1 + 8x2

Subject to,

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Formulation of a Linear Programming

Problem
 A firm produces three products. These products are processed on three
different machines. The time required to manufacture one unit of each
of the product and the daily capacity of the three machines are given in
the table below.
Time per unit (minutes) Machine capacity
Machine Product 1 Product 2 Product 3 (minutes/day)
M1 2 3 2 440
M2 4 --- 3 470
M3 2 5 --- 430

 It is required to determine the daily number of units to be

manufactured for each product. The profit per unit for product 1, 2 and
3 is Rs. 4, Rs. 3 and Rs. 6 respectively.

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Formulation of a Linear Programming

Problem
Decision variables
x1 = no. of units of product 1, x2 = no. of units of product 2,
x3 = no. of units of product 3

Objective Function: Max. Z = 4x1 + 3x2 + 6x3

Subject to,

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LP Terminology
 Decision Variables: things we control
 Objective function: measure of performance
 Nonnegativity constraints
 Functional constraints: restrictions we have
 Parameters: constants we use in the objective function and
constraint definitions
 Solution: any choice of values for the decision variables
 Feasible solution is one that satisfies the constraints
 Optimal solution is the best feasible solution

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Formulation and Solution of a Linear

Programming Problem
 Data for LP Formulation

Factory: Two products P1 & P2

Profit/piece of P1 = Rs.3/-
Profit/piece of P2 = Rs.5/-
Machine availability Constraint:
Time required/piece of P1 = 3 hrs.
Time required/piece of P2 = 2 hrs.
Max. time available = 18 hrs.
Raw Material Constraint:
Max. Material available for P1 = 4 pieces.
Max. Material available for P2 = 6 pieces.
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Graphical Method
Case A.
II
E Opt. Pt. (2,6)
A
III
A (0,6)
B (0,0)
Zopt = 36. C (4,0)
D (4,3)
E (2,6)

F.R. D
ZA= 30
ZB= 0
ISO PROFIT LINE Z=15. ZC= 12
ZD= 27
I
ZE = 36
Z=0.
B C

Slack and Surplus

 Slack is the amount of a resource that is not used
 For a less-than-or-equal constraint
Slack = (Amount of resource available)
− (Amount of resource used)

 Factory decides to produce 2 units of P1 and 6 units of P2

3(2) + 2(6) = 18 (Machine time used)

18 hrs = (Machine time available)
18 − 18 = 0 (Slack time on Machine)

(2) = 2 (Raw Material for P1 used)

4 units = (Raw material for P1 available)
4 − 2 = 2(Slack raw material for P1)

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Formulation and Solution of a Linear

Programming Problem
 Data for LP Formulation

Factory: Two products P1 & P2

Profit/piece of P1 = Rs.3/-
Profit/piece of P2 = Rs.5/-
Machine utilization Constraint:
Time required/piece of P1 = 3 hrs.
Time required/piece of P2 = 2 hrs.
Min. time for which machine to be utilized = 18 hrs.
Raw Material Constraint
Max. Material available for P1 = 4 pieces.
Max. Material available for P2 = 6 pieces.

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Graphical Method
Case B.
II
Opt. Pt. (4,6)
III
F.R.
Zopt = 42

Z=15.
I

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Slack and Surplus

 Surplus is used with a greater-than-or-equal-to
constraint to indicate the amount by which the right-hand
side of the constraint is exceeded

Surplus = (Actual amount) − (Minimum amount)

 Factory decides to produce 4 units of P1 and 6 units of P2

3(4) + 2(6) = 24 (Machine time used)

18 hrs = (Min. time for Machine utilization)
24 − 18 = 6 hrs (Surplus time for Machine utilization)

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Graphical Method
Case C.
II
Opt. Pt. (2,6)
III

F.L.

Zopt = 36

Z=15.
I

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Formulation of a Linear Programming

Problem (Minimization case)
 G.J. Breweries Ltd have two bottling plants, one located at ‘G’ and the
other at ‘J’. Each plant produces three drinks, named A, B and C
respectively. The number of the bottles produced per day are shown in
the table.
Plant
Drink
G J
A 1500 1500
B 3000 1000
C 2000 5000

 A market survey indicates that during the month of July, there will be a
demand of 20,000 bottles of A, 40,000 bottles of B and 44,000 bottles of
C. The operating cost per day for plants at G and J are 600 and 400
monetary units. For how many days each plant be run in July so as to
minimize the production cost, while still meeting the market demand?
Formulate this problem as an LP problem and solve that using graphical
method.
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Formulation of a Linear Programming

Problem
Decision variables
x1 = no. of days of work at plant G,
x2 = no. of days of work at plant J,

Objective Function: Min. Z = 600x1 + 400x2

Subject to,
1500𝑥 1500𝑥 20,000 𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐴

3000𝑥 1000𝑥 40,000 𝐼𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐵

2000𝑥 5000𝑥 44,000 𝐼𝐼𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐶

𝑥 ,𝑥 0 Non negativity Constraint

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X2
Graphical Method
𝑀𝑖𝑛 𝑍 600𝑥1 400𝑥2
II
𝑠/𝑡
F.R. 1500𝑥1 1500𝑥2 20000 𝐼
40
3000𝑥1 1000𝑥2 40000 𝐼𝐼
A (0,40) 2000𝑥1 5000𝑥2 44000 𝐼𝐼𝐼
𝑥1, 𝑥2 0
30

20 Opt. Sol. (Min)

x1= 12, x2= 4,
10
III B (12,4) Z = 8,800
C (22,0)
X1
(0,0)
10 20 30
I
ZA= 16000
ZB= 8,800 (Min)
Zc= 13,200
X2 Iso-Cost Line

Graphical Method
Special Case.
II Alternative
Optimal Solutions
III

F.R.
I

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Graphical
Method
Special Case. Opt. Sol. (Max)
II
(Unbounded)
Opt. Pt.
(Min.)
F.R. (Unbounded)

III

I
Z line

Graphical
Method
Special Case.

Infeasible
Solution
F.R. Not
possible

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Opt. Pt. (0.5, 4.5)

Zopt = 12.5

F.R.
Z=6 III

II
I

Graphical
Method
Special Case.

X2
Graphical Method

Unbounded I
II
F.R.
3 A (0,3)

Opt. Sol. (Max)

2

(Unbounded)
1
B
(2,1)
X1
(0,0)
1 2 3

-1
ZA= 6 (Min)
ZB= 8 Opt. Sol. (Min)
X2
x1= 0, x2= 3, Z = 6

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X2
Graphical Method
8 A (0,0)
I B (0,1.33)
7 C (0.851,1.191)
D (1,0)
6
ZA= 0
ZB= 1.33
5
ZC= 8
ZD= 8
4 Construction of
Iso-profit line: Redundancy
3
Let Z =4
II Multiple Optimum Solution
2

B
x1= 0.851, x2= 1.191, Z = 8
C
1
x1= 1, x2= 0, Z = 8
D III IV
A
(0,0) X1
1 2 3 4 5 6 7 8

LP solution using Excel Solver

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LP solution using Excel Solver

LP solution using Excel Solver

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LP solution using Excel Solver

LP solution using Excel Solver

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Solution using Excel solver:

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Solution using Excel solver:

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Solution using Excel solver:

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Solving a linear programming problem using

Excel Solver
Decision variables
x1 = no. of days of work at plant G,
x2 = no. of days of work at plant J,

Objective Function: Min. Z = 600x1 + 400x2

Subject to,
1500𝑥 1500𝑥 20,000 𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐴

3000𝑥 1000𝑥 40,000 𝐼𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐵

2000𝑥 5000𝑥 44,000 𝐼𝐼𝐼 𝐷𝑒𝑚𝑎𝑛𝑑 𝑜𝑓 𝑑𝑟𝑖𝑛𝑘 𝐶

𝑥 ,𝑥 0 Non negativity Constraint Opt. Sol. (Min)

x1= 12, x2= 4,
57 Z = 8,800

Case discussion:
Mexicana Wire Winding, Inc.
 Ron Garcia felt good about his first week as a management trainee at
Mexicana Wire Winding, Inc. He had not yet developed any technical
knowledge about the manufacturing process, but he had toured the
entire facility, located in the suburbs of Mexico City, and had met many
people in various areas of the operation.

Mexicana, a subsidiary of Westover Wire Works, a Texas firm, is a

medium-sized producer of wire windings used in making electrical
transformers. José Arroyo, the production control manager, described
the windings to Garcia as being of standardized design.

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Case discussion:
Mexicana Wire Winding, Inc.
 Garcia’s tour of the plant, laid out by process type, followed the
manufacturing sequence for the windings: drawing, extrusion, winding,
inspection, and packaging. After inspection, good product is packaged
and sent to finished product storage; defective product is stored
separately until it can be reworked.

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Case discussion:
Mexicana Wire Winding, Inc.
 On March 8, Vivian Espania, Mexicana’s general manager, stopped by
Garcia’s office and asked him to attend a staff meeting at 1:00 p.m.

“Let’s get started with the business at hand,” Vivian said, opening the
meeting. “You all have met Ron Garcia, our new management trainee.
Ron studied operations management in his MBA program in southern
California, so I think he is competent to help us with a problem we have
been discussing for a long time without resolution. I’m sure that each of
you on my staff will give Ron your full cooperation.”

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Case discussion:
Mexicana Wire Winding, Inc.
 Vivian turned to José Arroyo, the production manager. “José, why don’t
you describe the problem we are facing?”

“Well,” José said, “business is very good right now. We are booking more
orders than we can fill. We will have some new equipment on line
within the next several months, which will take care of our capacity
problems, but that won’t help us in April. I have located some retired
employees who used to work in the drawing department, and I am
planning to bring them in as temporary employees in April to increase
capacity there. Because we are planning to refinance some of our long-
term debt, Vivian wants our profits to look as good as possible in April.
I’m having a hard time figuring out which orders to run and which to
back order so that I can make the bottom line look as good as possible.
Can you help me with this?”

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Case discussion:
Mexicana Wire Winding, Inc.
 Garcia was surprised and apprehensive to receive such an important,
high-profile assignment so early in his career. Recovering quickly, he
said, “Give me your data and let me work with it for a day or two.”

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Case discussion:
Mexicana Wire Winding, Inc.

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Case discussion:
Mexicana Wire Winding, Inc.
Discussion Questions:
1. What recommendations should Ron Garcia make, with what
justification? Provide a detailed analysis with charts, graphs, and
computer printouts included.
2. Discuss the need for temporary workers in the drawing department.
3. Discuss the plant layout.

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Case discussion:
Mexicana Wire Winding, Inc.
 Vivian turned to José Arroyo, the production manager. “José, why don’t
you describe the problem we are facing?”

“Well,” José said, “business is very good right now. We are booking more
orders than we can fill. We will have some new equipment on line
within the next several months, which will take care of our capacity
problems, but that won’t help us in April. I have located some retired
employees who used to work in the drawing department, and I am
planning to bring them in as temporary employees in April to increase
capacity there. Because we are planning to refinance some of our
long‐term debt, Vivian wants our profits to look as good as
possible in April. I’m having a hard time figuring out which orders to
run and which to back order so that I can make the bottom line look as
good as possible. Can you help me with this?”

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

Decision Variables:
No. of units of product W75C: W75C
No. of units of product W33C: W33C
No. of units of product W5X: W5X
No. of units of product W7X: W7X

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

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Case discussion:
Mexicana Wire Winding, Inc.
LP formulation:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.
Solution using Excel solver:

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Case discussion:
Mexicana Wire Winding, Inc.

2. Bringing in temporary workers in the Drawing Department would not

help. Drawing is not a binding constraint. However, if these former
employees could do rework, we could reduce our rework inventory
and fill some of our backorders thereby increasing profits. We have
about a third of a month’s output in rework inventory. Expediting the
rework process would also free up valuable cash.

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Case discussion:
Mexicana Wire Winding, Inc.
manufacturing sequence for
the windings: drawing,
extrusion, winding,
inspection, and packaging.
After inspection, good
product is packaged and sent
to finished product storage;
defective product is stored
separately until it can be
reworked.

3. The plant layout is not optimum. When we install the new equipment,
an opportunity for improving the layout could arise. Changing the
locations for packaging and Inspection would create a better flow of
our main product.

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