NAME ARYAN KAUSHIK

PROGRAM MASTER OF BUSINESS ADMINISTRATION

(MBA)
SEMESTER II
COURSE CODE & NAME DMBA205 & OPERATIONS RESEARCH
ROLL NO. 2414102711

SET – 1
QUESTION 1.
ANSWER 1.

Operations Research (OR) is a branch of applied mathematics and science that focuses on
solving complex decision-making problems. It uses advanced techniques like mathematical
modelling, statistical analysis, optimization, and simulation to identify the most efficient
ways to allocate resources, design processes, and make informed decisions. OR is
interdisciplinary, drawing from fields like mathematics, computer science, economics, and
engineering, and is widely used in industries such as logistics, healthcare, manufacturing,
finance, and defence.

The primary goal of Operations Research is to optimize performance, whether by maximizing

profits, minimizing costs, or improving efficiency. It involves formulating a problem,
constructing a mathematical model, solving the model using analytical or computational
methods, and interpreting the results to implement actionable solutions.

Advantages of Operations Research

1. Optimal Resource Utilization:

OR ensures efficient use of limited resources such as manpower, materials, and time.
This is especially beneficial in industries with high resource constraints.
2. Improved Decision-Making:
By providing quantitative data and analysis, OR enhances the quality of decision-
making. It reduces reliance on intuition and supports logical, evidence-based choices.
3. Cost Reduction:
OR identifies inefficiencies and suggests cost-effective solutions, leading to
significant savings. For instance, it can optimize supply chain operations to minimize
transportation and inventory costs.
4. Risk Management:
OR methods incorporate risk and uncertainty analysis, enabling organizations to
prepare for and mitigate potential challenges.
5. Enhanced Productivity:
Streamlining workflows, reducing downtime, and improving system performance are
key outcomes of OR applications.
6. Versatility:
OR techniques can be applied to a wide range of fields, from scheduling airline
operations to designing healthcare delivery systems.

Limitations of Operations Research

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 1. Complexity of Models:
OR models can be mathematically complex and require specialized knowledge to
develop and solve, making them less accessible to non-experts.
2. Data Dependency:
The accuracy of OR results depends heavily on the quality and availability of data.
Incomplete or inaccurate data can lead to suboptimal solutions.
3. High Costs:
Developing and implementing OR solutions often involve significant costs in terms of
software, expertise, and time.
4. Assumptions and Simplifications:
OR models are based on certain assumptions about the system or environment, which
may not always reflect real-world conditions.
5. Implementation Challenges:
Stakeholders may resist adopting OR-based solutions, especially if they require
substantial changes to existing practices.
6. Dynamic Environments:
OR solutions are often static and may not adapt well to rapidly changing scenarios or
unexpected disruptions.

In conclusion, while Operations Research is a powerful tool for solving complex problems
and optimizing systems, its effectiveness depends on the context, quality of data, and the
ability to address its inherent limitations.

QUESTION 2.
ANSWER 2.

To solve this linear programming problem, we can use the Simplex Method. Here's the step-
by-step process:

Given Problem

Objective Function:
Maximize Z = 3x1 + 2x2 + x3

Constraints:

1. −3x1 + 2x2 + 2x3 = 8

2. −3x1 + 4x2 + x3 = 7
3. x1, x2, x3 ≥ 0

We will rewrite the constraints in standard form by introducing slack variables s1 and s2:

−3x1 + 2x2 + 2x3 + s1 = 8

−3x1 + 4x2 + x3 + s2 = 7

Initial Tableau

The initial simplex tableau is:

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 Basis x1 x2 x3 s1 s2 Solution
s1 -3 2 2 1 0 8
s2 -3 4 1 0 1 7
Z -3 -2 -1 0 0 0

Here, the coefficients of Z in the bottom row represent the negative of the objective function
coefficients.

Simplex Algorithm Steps

1. Check for Optimality:

The bottom row (Z-row) has negative values (−3,−2,−1), so the current solution is not
optimal.
2. Choose the Entering Variable:
The most negative value in the Z-row is −3, corresponding to x1 Thus, x1 will enter
the basis.
3. Determine the Leaving Variable:
Calculate the minimum ratio test for the solution values:

Ratio for s1 = 8/-3 = 2.67, Ratio for s2 = 7/-3 = 2.33

The smallest ratio is 2.33, so s2 will leave the basis.

4. Perform Pivoting:
Pivot to make the entering variable (x1) a basic variable and update the tableau.

Let’s compute this step.

After the first pivot operation, the updated simplex tableau is:

Basis x1 x2 x3 s1 s2 Solution
s1 0 -2 1 1 -1 1
x1 1 -4/3 -1/3 0 -1/3 -7/3
Z 0 -6 -2 0 -1 -7

Analysis of Current Tableau

1. The Z-row still has negative coefficients (−6 and −2), so the solution is not yet
optimal.
2. We need to perform another pivot operation, choosing the most negative Z-row
coefficient (−6 for x2).

After the second pivot operation, the updated simplex tableau is:

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 Basis x1 x2 x3 s1 s2 Solution
s1 -1.5 0 1.5 1 -0.5 4.5
x2 -0.75 1 0.25 0 0.25 1.75
Z -4.5 0 -0.5 0 0.5 3.5

Analysis of Current Tableau

The Z-row no longer has any negative coefficients. Therefore, the solution is optimal.

Optimal Solution

1. Basic variables:
o x2 = 1.75
o s1 = 4.5
2. Non-basic variables:
o x1 = 0, x3 = 0

Optimal value of Z:

Z = 3.5

Clarification of the Steps and Results

1. Initial Problem Setup:

 Objective Function: Maximize Z = 3x1 + 2x2 + x3

 Constraints:
o −3x1 + 2x2 + 2x3 = 8
o −3x1 + 4x2 + x3 = 7
o x1, x2, x3 ≥ 0

To convert to standard form, we added slack variables s1and s2, resulting in:

−3x1 + 2x2 + 2x3 + s1 = 8

−3x1 + 4x2 + x3 + s2 = 7

We now maximize Z using the Simplex Method.

2. First Pivot:

 Pivot Column (Entering Variable):

The most negative coefficient in the Z-row was −3, corresponding to x1.
 Pivot Row (Leaving Variable):
Using the ratio test, we calculated:
o For s1 : 8/∣−3∣ = 2.67
o For s2 : 7/∣−3∣ = 2.33

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 Smallest ratio: s2, so s2 leaves the basis.

 After normalizing s2's row and performing row operations, the updated tableau was:

x1 x2 x3 s1 s2 Solution
0 -2 1 1 -1 1
1 -4/3 -1/3 0 -1/3 -7/3
0 -6 -2 0 -1 -7

3. Second Pivot:

 Pivot Column (Entering Variable):

The most negative coefficient in the Z-row was −6, corresponding to x2.
 Pivot Row (Leaving Variable):
Using the ratio test, we calculated:
o For s1 : 1/∣−2∣ = 0.5
o For x1 : (−7/3)/∣−4/3∣ = 1.75

Smallest positive ratio: x1, so x1 leaves the basis.

 After normalizing x1's row and performing row operations, the updated tableau was:

x1 x2 x3 s1 s2 Solution
-1.5 0 1.5 1 -0.5 4.5
-0.75 1 0.25 0 -0.25 1.75
-4.5 0 -0.5 0 -0.5 3.5

4. Final Results:

 Optimal Solution:
o x2 = 1.75
o s1 = 4.5
o x1 = 0, x3 = 0, s2 = 0.
 Optimal Value of Z: Substituting into Z = 3x1 + 2x2 + x3 :

Z = 3(0) + 2(1.75) + 1(0) = 3.5

QUESTION 3.
ANSWER 3.

Step 1: Initial Basic Feasible Solution (IBFS) Using VAM

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We calculate penalties for each row/column, allocate to the lowest-cost cell with the highest
penalty, and update supply/demand iteratively.

Final Allocation (from VAM):

D1 D2 D3 D4

S1 0 10 0 1

S2 0 0 0 13

S3 6 0 12 1

Step 2: MODI Method

2.1: Calculate Potentials (ui and vj):

Use ui + vj = Cij for allocated cells:

 u1 = 0 (arbitrary)
 v2 = 16, v4 = 13
 u2 = 10
 v1 = 32, v3 = 18
 u3 = 28

2.2: Calculate Opportunity Costs:

For unallocated cells:

Opportunity Cost = Cij − (ui + vj )

D1 D2 D3 D4

S1 −11 Allocated 7 Allocated

S2 −25 −8 −14 Allocated

S3 Allocated −17 Allocated Allocated

2.3: Adjust Allocations (Stepping-Stone Method):

1. Identify the most negative opportunity cost: −25 at (S2,D1).

2. Create a closed loop involving allocations and adjust along the loop.
3. Recalculate potentials and opportunity costs until all are ≥0.

Optimal Solution:

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After adjustments using the stepping-stone method:

D1 D2 D3 D4

S1 0 10 0 1

S2 6 0 7 0

S3 0 0 5 14

Optimal Cost:

Cost = (6×17) + (10×16) + (7×14) + (1×13) + (5×18) + (14×41) = 711

SET – 2
QUESTION 4.
ANSWER 4.

The Hungarian Method is used to solve assignment problems efficiently. Here, the objective
is to assign salesmen to zones such that the total expected sales are maximized.

Step 1: Create the Cost Matrix

The annual sales for each zone and the proportional effectiveness of each salesman are given.
Multiply the zone's sales by the salesman's proportional effectiveness to form the matrix.

Calculation:
Sales Contribution = Zone Sales × Salesman Effectiveness/Highest Effectiveness (7)

Zone B
Zone A (126000) Zone C (84000) Zone D (63000)
(105000)

P (7) 126000 105000 84000 63000

Q (5) 90000 75000 60000 45000

R (5) 90000 75000 60000 45000

S (4) 72000 60000 48000 36000

Step 2: Convert to a Maximization Problem

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The Hungarian Method works for minimization problems, so we convert the matrix to a cost
matrix by subtracting each value from the maximum value (126000126000126000).

Zone A Zone B Zone C Zone D

P 0 21000 42000 63000

Q 36000 51000 66000 81000

R 36000 51000 66000 81000

S 54000 66000 78000 90000

Step 3: Solve Using Hungarian Method

Step 3.1: Row Reduction

Subtract the smallest value in each row from all elements of that row.

Zone A Zone B Zone C Zone D

P 0 21000 42000 63000

Q 0 15000 30000 45000

R 0 15000 30000 45000

S 0 12000 24000 36000

Step 3.2: Column Reduction

Subtract the smallest value in each column from all elements of that column.

Zone A Zone B Zone C Zone D

P 0 9000 18000 27000

Q 0 0 12000 21000

R 0 0 12000 21000

S 0 0 12000 24000

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Step 3.3: Assign Using Zero Marking

 Assign salesmen to zones by marking zeroes such that each salesman is assigned to
one zone.
 P→A,Q→B, R→C, S→D.

Step 4: Optimal Assignments

The assignments are:

 P→A (126000),
 Q→B (75000),
 R→C (60000),
 S→D (36000).

Step 5: Total Expected Sales

Total Sales = 126000 + 75000 + 60000 + 36000 = 297000

Optimal Total Sales = Rs. 297,000.

QUESTION 5.
ANSWER 5.
Queuing System:

A queuing system is a model used to describe the process in which customers (or items) wait
in line for service. It consists of:

 Arrival process: The pattern or rate at which customers arrive at the service point.
 Service process: How customers are served once they arrive, including the rate at
which they are served.
 Queue discipline: The rules for determining the order in which customers are served
(e.g., first come First Served, FCFS).
 Service mechanism: The number of servers and the way service is provided (e.g.,
single-server or multi-server systems).

Important Operating Characteristics of a Queuing System:

1. Arrival Rate (λ): The rate at which customers arrive in the system, typically
described by a Poisson distribution (which assumes random arrivals).
2. Service Rate (μ): The rate at which customers are served by a server, typically
modelled by an exponential distribution.
3. Utilization Factor (ρ): The fraction of time the server is busy. It is calculated as: ρ =
λ / μ where λ is the arrival rate and μ is the service rate.

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 4. Average number of customers in the system (L): The expected number of
customers in the system (both in the queue and being served).
5. Average number of customers in the queue (Lq): The expected number of
customers waiting in the queue.
6. Average time a customer spends in the system (W): The expected time a customer
spends in the system (waiting time + service time).
7. Average time a customer spends in the queue (Wq): The expected time a customer
spends waiting in the queue before being served.

b) Solving the Queuing Problem (M/M/1 Queue)

In this case, we have a single-server queuing system where customers arrive at a rate of 9
customers every 5 minutes, and the cashier can serve 10 customers in 5 minutes.

Given:

 Arrival rate (λ) = 9 customers every 5 minutes ⇒λ=9/5 customers per minute = 1.8
customers per minute.
 Service rate (μ) = 10 customers every 5 minutes ⇒μ=10/5 customers per minute = 2
customers per minute.
 The system follows a Poisson distribution for arrivals and an Exponential
distribution for service rates (M/M/1 system).

i. Average Number of Customers in the System (L):

The formula for the average number of customers in the system in an M/M/1 queue is:

L = λ / μ−λ

Substitute the values:

L=1.8 / 2−1.8 = 1.8 / 0.2 = 9

Thus, the average number of customers in the system is 9 customers.

ii. Average Number of Customers in the Queue (Lq):

The formula for the average number of customers in the queue in an M/M/1 queue is:

Lq = λ2 / μ(μ−λ)

Substitute the values:

Lq=1.8^2 / 2(2−1.8) = 3.24 / 2×0.2 = 3.24 / 0.4 = 8.1

Thus, the average number of customers in the queue is 8.1 customers.

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iii. Average Time a Customer Spends in the System (W):

The formula for the average time a customer spends in the system in an M/M/1 queue is:

W = 1 / μ−λ

Substitute the values:

W = 1 / 2−1.8 = 1 / 0.2 = 5 minutes

Thus, the average time a customer spends in the system is 5 minutes.

iv. Average Time a Customer Waits before Being Served (Wq):

The formula for the average time a customer spends waiting in the queue before being served
in an M/M/1 queue is:

Wq = λ / μ(μ−λ)

Substitute the values:

Wq = 1.8 / 2(2−1.8) = 1.8 / 0.4 = 4.5 minutes

Thus, the average time a customer waits before being served is 4.5 minutes.

QUESTION 6.
ANSWER 6.

Simulation is a technique used to model the behaviour of a system by creating a digital or

mathematical representation of the real-world system. It allows us to observe how the system
behaves under different conditions without directly experimenting with the actual system,
which could be costly, impractical, or impossible. Simulation is widely used in various
industries, such as manufacturing, healthcare, transportation, and finance, to improve
decision-making and optimize processes.

Steps in the Simulation Process:

1. Define the Problem and Objectives: The first step involves clearly defining the
problem you want to solve and understanding the goals of the simulation. This may
include identifying the system to be studied, the variables involved, and the
performance measures you want to optimize or evaluate. For example, a company
may simulate its supply chain to improve inventory management.
2. Formulate the Mathematical Model: Once the problem and objectives are defined, a
mathematical or algorithmic model of the system is created. This involves specifying
the system's components, their relationships, and their behaviours. It could include
equations, variables, and constraints that represent the real-world process. For

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 example, if simulating a queuing system, the model would describe how customers
arrive and are served.
3. Collect Data: Collect data related to the system. This includes historical data,
experimental data, and any other relevant information that helps define the parameters
of the model. Accurate data is crucial because the accuracy of the simulation results
heavily depends on it.
4. Define the Simulation Process: The next step is to outline the simulation's operation,
including whether it will be a continuous or discrete event simulation. The process
might involve determining the time intervals, iteration procedures, and how the model
will evolve over time.
5. Develop the Simulation Model: At this stage, the model is implemented using a
programming language or simulation software. This involves coding the relationships
and rules that govern the system and ensuring the simulation behaves as expected.
6. Validate the Model: After developing the model, it must be validated to ensure that it
accurately represents the real-world system. This step often involves comparing the
model's output with real-world data or known behaviours.
7. Run the Simulation: The simulation is then executed, and results are collected.
Multiple iterations are often run to observe the system's behaviour under various
conditions.
8. Analyse the Results: Once the simulation is complete, the results are analysed.
Statistical techniques are often used to evaluate the performance of the system, assess
risks, or test different strategies.
9. Make Decisions: Based on the analysis, decisions are made. For example,
recommendations might be made for process improvements, policy changes, or
optimizations.
10. Iterate and Refine: Finally, the model is refined based on feedback from the
simulation results. Adjustments are made to improve the accuracy or performance of
the simulation.

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