2.

6 QUANTITATIVE TECHNIQUES AND OPERATIONRESEARCH

MODULE 1 - Introduction to Operations Research 10HOURS
• Introduction, Historical Background, Scope of Operations Research, Features of
Operations Research, Phases of Operations Research, Types of Operations Research
Models, Operations Research Methodology, Operations Research Techniques and Tools,
Structure of the Mathematical Model, Limitations of Operations Research
• Linear programming problem, Mathematical Formulation of LPP, Graphical method,
Simplex method (standard maximization) problems, Formulation of duality.

MODULE 2 – Minimization Techniques 12 HOURS

• Transportation: Importance, terminologies used, methods for finding Initial basic
feasible solution; NWCM, LCM and VAM, unbalanced, degeneracy in transportation,
test for optimality (MODI method only), maximization problems.
• Assignment: Introduction, Mathematical Formulation of the Problem, Hungarian
Method Algorithm, Routing Problem, Travelling Salesman Problem.

MODULE 3 - Sequence and Replacement 08 HOURS

• Sequencing: terminologies and notations, types of sequencing problems; processing ‘n’
jobs through 2 machines, processing ‘n’ jobs through ‘m’ machines.
• Replacement Models: Failure mechanism of items, assumptions of replacement theory,
types of replacement problems, replacement of items which deteriorates with time, group
replacement

MODULE 4 - Network analysis 10 HOURS

• Networking Concepts; Rules for drawing network diagram; CPM Computations: CPM
Terminology, Finding critical path - Different Floats; PERT Computations: Computation
of earliest and latest allowable times, Probability of meeting the scheduled dates;
difference between PERT and CPM, Concept of Project Crashing

MODULE 5 – Game Theory 10 HOURS

• Introduction, Types, pure and mixed strategies with two people zero sum game,
Maximin– Minimax Principle, Saddle point, principle of dominance. Graphical method
of solving game.
• Queuing Theory(waiting line): Single server/single queue, essential features of queuing
system, single queue, operating characteristics of queuing system, probability distribution
in queuing system, multi-server, description of other queuing models (only description).

MODULE 6 – Simulation 06 HOURS

• Basic concepts, procedures and application, Monte Carlo simulation using Random
numbers, Application of simulation in Inventory Management, Marketing Management,
Financial Management

QT & OR 1
 MODULE-1

INTRODUCTION TO OPERATIONS RESEARCH

Operation Research is a scientific method of providing executive departments with a

quantitative basis for decisions regarding the operations under their control.
Operation Research is a scientific method of providing executive with an analytical and
objective basis for decision

Scope of Operation Research:

Operation Research is useful in the following various important fields

1. In Agriculture
2. In Finance
3. In Industry
4. In Marketing
5. In Personal Management
6. In Production Management

Features of Operation Research

1. Systematic orientation
2. Use of interdisciplinary terms
3. Application of scientific method
4. Uncovering new problems
5. Quantitative solution
6. Human factors

Phases of Operation Research

Phase1: Formulating the problem

Phase 2: Constructing a mathematical model
Phase 3: deriving the solution from the model
Phase 4: testing the model and its solution
Phase 5: Controlling the solution
Phase 6: Implementing the solution

Types of Operation Research Models

Operation research model is an idealized representation of the real life situation and
represents one or more aspects of reality

QT & OR 2
Models can be classified as follows
1. Models by function
i. Descriptive Models
ii. Predictive models
iii. Normative models
2. Models by structure
i. Iconic or Physical Models
ii. Analogue Models
iii. Mathematic or Symbolic Models

3. Models by nature of an environment

i. Deterministic Models
ii. Probabilistic Models

4. Models by time horizon

i. Static Model
ii. Dynamic Model

Operation Research Techniques & Tools

QT & OR 3
Advantage of Operation Research

• It provides a logical and systematic approach to the problem

• It allows modification of mathematical solutions before they are put to use
• Suggests all the alternate courses of action for the same management
• Helps I finding avenues for new research and improvement in system
• Facilitates improved quality of decision
• Leads to optimum use of managers production factor
• Helps in preparation of future managers by improving their knowledge and skills

Limitations of Operation Research

• The validity of a model for a particular situation can be ascertained only by

conducting experiments on it.
• Mathematical models are applicable to only specific categories of problems
• Operation research requires huge calculations which cannot be handled manually
and require computers resulting in heavy costs
• As it is new field there is a resistance from the employees to the new proposals.

QT & OR 4
 LINEAR PROGRAMMING PROBLEM

INTRODUCTION:

Linear programming deals with the optimization (maximization or minimization) of a

function of variables known as objective functions. It is subject to a set of linear
equalities and inequalities known as constraints. Linear programming is a mathematical
technique which involves the allocation of limited resources in an optimal manner, on the
basis of a given criterion of optimality.

FORMULATION OF LP PROBLEMS

The procedure for mathematical formulation of a LPP consists of the following steps:
Step 1: To write down the decision variable of the problem
Step 2: To formulate the objective function to be optimized as a linear function of the
decision variables.
Step 3: To formulate the other conditions of the problem such as resource limitation,
market constraints, interrelation between variables etc as linear in equations or equations
in terms of the decision variables.
Step 4: To add the non-negative constraint from the considerations so that the negative
values of the decision variables do not have any valid physical interpretation.

General Formulation of LPP:

1. Decision variables: X1, X2, X3…..Xn

2. Objective Function: Max Z = C1X1 + C2X2….. CnXn
Min Z = C1X1 + C2X2….. CnXn

3. Constraints/limitations = Max Z = Subject to A1X1 + A2X2 < M

Min Z = Subject to A1X1 + A2X2 > M

4. Non-Negativity = X1, X2, X3 >0

LIMITATIONS OF LPP
1. Linear programming assumes linear relationships among decision variables.
2. While solving an LP model there is no guarantee that decision variables will get
integer value.
3. The linear programming model does not take into consideration the effect of time
and uncertainty.

QT & OR 5
 4. Parameters in the model are assumed to be constant but in real-life situations, they
are frequently neither known nor constant.
5. Linear programming deals with only single objective.

ADVANTAGES OF LPP

2. LPP provides a scientific approach to problem solving.

3. It helps to make the best possible use of available productive resources.
4. Highlighting of bottlenecks in the production process is the most significant
advantage of LP.
5. It contributes to the development of executive through the techniques of model
building and corresponding interpretations,
6. Flexibility in analyzing a variety of multi-dimensional problems,
7. LP provides better tools for adjusting to meet changing conditions.

PROBLEMS ON FORMULATION OF LPP

MAXIMIZATION PROBLEMS
1. A firm is engaged in producing two products, A and B. Each unit of A requires 2Kg
of raw material and 4 labour hours for processing, whereas each unit of product B
requires 3kg of raw material and 3 hours of labour, of the same type. Every week,
the firm has an availability of 60kg of raw material and 96 labour hours. One unit of
product A sold yields Rs 40 and one unit of product B sold gives Rs 35 as profit.
Formulate this problem.

2. 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, where each model of M2
requires 2 hours of grinding and 5 hours of polishing. The manufactures has 2
grinders and 3 polishers each grinder works 40 hours a week and each polisher
works for 60 hours a week. Profit on M1 model is Rs 3 and on M2 model is Rs 4.
Whatever is produced in a week is sold in the market. How should manufactures
allocate his production capacity to the two types of model so that he make
maximum profit in a week?

QT & OR 6
MINIMIZATION PROBLEMS
3. A person requires 10, 12 and 12 units of chemicals, A, B & C respectively for his
garden. A liquid product contains 5, 2 and 1 units of A, B and C respectively, per
jar. A dry product contains 1, 2 and 4 units of A, B, C per carton. If the liquid
product sells for Rs 3 per jar and the dry product sells for Rs 2 per carton, how
many of each should be purchased in order to minimize the cost and meet the
requirements?
4. The agricultural research institute suggested to a farmer to spread out at least 4800
kg of a special phosphate fertilizer and not less than 7200 kg of a special nitrogen
fertilizer to raise productivity of crops in his fields. There are two sources for
obtaining these mixtures A and B. Both of these are available in bags weighing
100kg each and they cost Rs 40 and Rs 24 respectively. A contains phosphate and
nitrogen equivalent of 20 kg and 80 kg respectively, while mixture B contains these
ingredients equivalent of 50 kg each. Determine how many bags of each type the
farmer should buy in order to obtain the required fertilizer at minimum cost.

GRAPHICAL METHOD

MINIMIZATION PROBLEM

1. Solve the following LPP using graphical method

Minimize Z = 4X1 + 6X2

Subject to
X1 +X2 > 8
6X1+X2 > 12
X1 and X2 >0

2. Solve the problem graphically

Minimize Z = 40X1 + 24X2

Subject to
20X1 +50X2 > 4800
80X1+50X2 > 7200
X1 and X2 > 0

QT & OR 7
 3. Solve the following LPP using graphical method

Minimize Z = 20X1 + 10X2

Subject to
X1 +2X2 ≤ 40
3X1+X2 > 30
4X1+3X2 > 60

X1 and X2 > 0

MINIMIZATION PROBLEM

1. Solve graphically

Maximize Z = 40X1 + 35X2 Profit

Subject to
2X1 + 3X2 ≤ 60 Raw material constraint
4X1+ 3X2 ≤ 96 Labour constraint
X1 and X2 > 0

2. Solve the following LPP using graphical method

Maximize Z = 100X1 + 60X2

Subject to
5X1 + 10X2 ≤ 50
8X1+ 2X2 > 16
3X1 – 2X2 > 6
X1 and X2 > 0

3. Solve the following LPP using graphical method

Maximize Z = 5X1 + 7X2

Subject to
X1 + X2 ≤ 4
3X1+ 8X2 ≤ 24
10X1 + 7X2 ≤ 35
X1 and X2 > 0

QT & OR 8
 MODULE-2
TRANSPORTATION & ASSIGNMENT
Transportation is one of the important application of linear programming in the area of
physical distribution of goods and services from several supply centres to several demand
Centre. The transportation is applied to minimize the total cost of transporting a
homogenous commodity from supply Centre to demand Centre. However it can also be
applied to the maximization of some total value. There are different methods used to
calculate transportation cost.

1. Initial Basic Feasible Solution (IBFS)

a) NWCR (North West corner)

b) LCM (Least Cost method)
c) VAM (Vogel’s Approximation method)

2. Optimal Solution:

a) MODI (Modified Distribution Method)

b) Stepping Stone Method

MINIMIZATION PROBLEMS

1. A company has 3 production facilities S1, S2, S3 with production capacity of 7, 9

and 18 units per week of a product respectively. These units are to be shipped to
four ware houses D1, D2, D3 and D4 with requirements of 5, 8, 7 and 14 per
week respectively. The transportation cost per unit between factories to ware
houses is given in the table below.

D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14 34
Formulate transportation problem using NWCR, LCM and VAM method.

2. Determine an initial basic feasible solution to the following transportation

problem by using NWCR, LCM and VAM.

D1 D2 D3 D4 Supply
S1 21 16 15 3 11
S2 17 18 14 23 13
S3 32 27 18 41 19
Demand 6 10 12 15 43

QT & OR 9
 3. Determine an initial basic feasible solution to the following transportation
problem by using NWCR, LCM and VAM.

D E F Supply
A 6 4 1 50
B 3 8 7 40
C 4 4 2 60
Demand 20 95 35 150

4. determine an initial basic feasible solution to the following transportation problem

by using LCM and VAM

D1 D2 D3 D4 Supply
S1 1 2 1 4 30
S2 3 3 2 1 50
S3 4 2 5 9 20
Demand 20 40 30 10

5. Calculate an IBFS to the following transportation problem by using NWCR and

LCM

D1 D2 D3 D4 Supply
O1 6 4 1 5 14
O2 8 9 2 7 16
03 4 3 6 2 5
Demand 6 10 15 4

TEST FOR OPTIMALITY: once an IBFS is obtained, the next step is to check for its
optimality. An optimal solution is one where there is no other set of transportation routes
that will further reduce the total transportation cost.

6. Calculate the optimal solution for the following

D1 D2 D3 D4 Supply
S1 19 30 50 10 7
S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14 34

QT & OR 10
 7. Determine an IBFS to the following transportation problem by using NWCR,
LCM and VAM and also calculate the optimal solution.
D1 D2 D3 D4 Supply
A 11 13 17 14 250
B 16 18 14 10 300
C 21 24 13 10 400
Demand 200 225 275 250 950

8. A company has factories at F1, F2 and F3 which supply to ware houses at W1,
W2 and W3 weekly factory capacities are 200, 160 and 90 units respectively.
Weekly ware house requirements are 180, 120 and 150 respectively. Units
shipping costs are as follows.

W1 W2 W3 Supply
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 to minimize the total shipping
Cost.

9. ABC Limited has three production shops that supply a product to five ware
houses. The cost of production varies from shop to shop and cost of transportation
from shop to a ware house also varies. Each shop has a specific production
capacity and each ware house has certain amount of requirement. The cost of
transportation is given below.

Ware house
I II III IV V Supply
A 6 4 4 7 5 100
B 5 6 7 4 8 125
C 3 4 6 3 4 175
Demand 60 80 85 105 70 400

The cost of manufacturing the product at different production shops is

Shop variable cost fixed cost
A 14 7000
B 16 4000
C 15 5000

Find the optimal quantity to be supplied from each shop to different warehouses at the
minimum total cost.

QT & OR 11
 DEGENERACY PROBLEMS

Degeneracy problem arises when the number of occupied cells is less than the number of
rows and columns minus 1. I.e. m + n – 1
The degeneracy in the transportation problem may occur at two stages
a) When obtaining an initial basic feasible solution
b) At any stage while moving towards optimal solution

10. A manufacturer wants to ship 22 loads of his product as shown below. The matrix
gives the kilometres from sources of supply to the destinations.
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

The shipping cost is Rs 10 per load per KM. what shipping schedule should be used in
order to minimize the total transportation cost?

UNBALANCED PROBLEMS

For a feasible solution to exist it is necessary that the total supply must equal the total
demand. That is
Total supply = total demand

A situation may arise when the total available supply is not equal to the total demand.
The following two cases may arise.

a) If the total supply exceeds the total demands, then an additional column
(dummy demand) can be added to the transportation table in order to absorb
the excess supply. The unit transportation cost for the cells in this column is
set equal to zero.
b) If the total demand exceeds the total supply a dummy row (dummy supply)
can be added to the transportation table to account for the excess demand
quality.
11. Solve the transportation problem when the unit transportation costs, demand and
supplies are as given below

D1 D2 D3 D4 Supply
O1 6 1 9 3 70
O2 11 5 2 8 55
03 10 12 4 7 70
Demand 85 35 50 45

QT & OR 12
 12. Solve the transportation problem when the unit transportation costs, demand and
supplies are as given below

D1 D2 D3 D4 Supply
F1 4 6 8 13 50
F2 13 11 10 8 70
F3 14 4 10 13 30
F4 9 11 13 8 50
Demand 25 35 105 20

13. A company has received a contract to supply gravel for 3 new construction
projects located in town A,B and C. the company has 3 gravel pits located in town
X,Y and Z. the requirements and the cost are in the given table.

A B C Supply
X 4 8 8 76
Y 16 24 16 82
Z 8 16 24 77
Demand 72 102 41

MAXIMISATION PROBLEMS

In this the objective is to maximize the total profit for which the profit matrix is given.
For this first we have to convert the maximization problem into minimization by
subtracting all the elements from the highest element in the given transportation table.
The modified minimization problem can be solved in the usual manner.

14. Solve the following transportation problem to maximize the profit.

Destination
A B C D Supply
F1 15 51 42 33 23
F2 80 42 26 81 44
B F3 90 40 66 60 33
Demand 23 31 16 30 100

15. Solve the transportation problem to maximize the profits and determine the
resultant optimal profit.

A B C D Supply
P 40 25 22 33 100
Q 44 35 30 30 30
R 38 38 28 30 70
Demand 40 20 60 30

QT & OR 13
 16. A company has four manufacturing plants and five ware houses. Each plant
manufactures the same product, which is sold at different prices in each
warehouse area. The cost of manufacturing and cost of raw materials are different
in each plant due to various factors. The capacities of the plants are also different.
The relevant data is given in the following table.

Items Plant
1 2 3 4
Manufacturing cost per unit 12 10 8 8

Raw material cost per unit 8 7 7 5

Capacity per unit. 100 200 120 80

The company has five warehouses. The sale prices, transportation costs and demands are
given in the following table

Warehouse Transportation cost (Rs) per unit

1 2 3 4 sale price demand
A 4 7 4 3 30 80
B 8 9 7 8 32 120
C 2 7 6 10 28 150
D 10 7 5 8 34 70
E 2 5 8 9 30 90

a) Formulate this problem as a transportation problem in order to maximize profit

b) Find the solution using VAM method
c) Test for optimality and find the optimal solution.

QT & OR 14
 ASSIGNMENT
An assignment problem is a particular case of transportation problem where the objective
is to assign a number of resources to an equal number of activities so as to minimize the
total cost or maximize total profit.
The problem of assignment arises because available resources such as
men, machine etc. have varying degree of efficiency for performing different activities.
Thus the problem is how the assignment should be made so as to optimize the given
objective.
Some of the problems where the assignment problems are useful are.
Assignment of workers to machine, salesman to different areas, vehicles to different
routes, etc.

ASSIGNMENT PROBLEMS

1. A department has 5 employees with 5 jobs to be performed. The time (in hrs) each
men will take to perform each job is given in the effective matrix.
EMPLOYEES
I II III IV V
A 10 5 13 15 16
JOBS B 3 9 18 13 6
C 10 7 2 2 2
D 7 11 9 7 12
E 7 9 10 4 12
how should the jobs be assigned to the employees to reduce the minimum time.

2. Using the following cost matrix determine optimal job assignment and the cost of
assignment.
Jobs
1 2 3 4 5
A 10 3 3 2 8
M/C B 9 7 8 2 7
C 7 5 6 2 4
D 3 5 8 2 4
E 9 10 9 6 10

3. A company has 5 jobs to be done on 5 machines; any job can be done on any
machine. The cost of doing the job in different machines is given below. Assign
the jobs for different machines so as to minimize the total cost.

QT & OR 15
 Machines
A B C D E
1 13 8 16 18 19
Jobs 2 9 15 24 9 12
3 12 9 4 4 4
4 6 12 10 8 13
5 15 17 18 12 20

4. Solve the following assignment problem in order to minimise the total cost. The
cost matrix given below gives the assignment cost when different operators are
assigned to various machines.

OPERATORS
I II III IV V
A 30 25 33 35 36
M/C B 23 29 38 23 26
C 30 27 22 22 22
D 25 31 29 27 32
E 27 29 30 24 32

5. Five wagons are available at stations 1,2,3,4 & 5. These are required at 5 stations
I, II, III, IV & V. The mileages between various stations are given by the table
below. How should the wagons be transported so as to minimize the total mileage
covered.
STATIONS
I II III IV V
1 10 5 9 18 11
Wagons 2 13 9 6 12 14
3 3 2 4 4 5
4 18 9 12 17 15
5 11 6 14 19 10

6. Solve the following assignment.

I II III IV V
1 11 17 8 16 20
2 9 7 12 6 15
3 13 16 15 12 16
4 21 24 17 28 26
5 14 10 12 11 13

QT & OR 16
 7. Solve the following cost minimising problem
Jobs
I II III IV V
A 45 30 65 40 55
B 50 30 25 60 30
M/C C 25 20 15 20 40
D 35 25 30 30 20
E 80 60 60 70 50

UNBALANCED ASSIGNMENT PROBLEMS

Unbalanced problems is said to be a assignment problem if the given matrix is not a

square matrix .i.e. number of columns will be not equal to number of rows. To make it
balance add the dummy row or column with all the entries as zero

8. A company has surplus truck in each of the cities A, B, C, D & E and deficit truck
in each of the cities 1, 2, 3, 4, 5 & 6. The distance between the cities in Km is
shown in the matrix below. Find the assignment of trucks from cities in surplus to
cities in deficit so that the total distance covered by vehicle is minimum.

1 2 3 4 5 6
A 12 10 15 22 18 8
B 10 18 25 15 16 12
C 11 10 3 8 5 9
D 6 14 10 13 13 12
E 8 12 11 7 13 10

9. A company has 4 machines to do 3 jobs, each job can be assigned to one and only
machine. The cost of each job on each machine is given below. Determine the job
assignment which will minimise the total cost

W X Y Z
A 18 24 28 32
B 8 13 17 18
C 10 15 19 22

QT & OR 17
 10. A marketing director of a multiunit company is faced with a problem of assigning
5 senior managers to 6 zones. From past experience he knows that the efficiency
percentage judge by sales, operating cost etc. depends on manager zone
combination, the efficiency of different managers is given below.
Zones
1 2 3 4 5 6
A 73 91 87 82 78 80
B 81 85 69 76 74 85
C 75 72 83 84 78 91
D 93 96 86 91 83 82
E 90 91 79 89 69 76

11. An airline company has drawn up a new flight schedules involving 5 flights to
assisting in allocating 5 pilots to the flights. It has asked them to state their
preference score by giving each flight a number out of 10. The higher the number
greater the preference. Certain of the flights are unsuitable to some pilots owing to
domestic reason; these have been marked with X.
1 2 3 4 5
A 8 2 X 5 4
B 10 9 2 8 4
C 5 4 9 6 X
D 3 6 2 8 7
E 5 6 10 4 3
W
What should be the allocation of the pilots to fly?

12. There are 4 jobs to be assigned to the machines. Only one job could be assigned
to one machine, the amount of time in hours required for a job in a machine is
given in the following matrix.
A B C D E
1 4 3 6 2 7
2 10 12 11 14 16
3 4 3 2 1 5
4 8 7 6 9 6

Find an optimal assignment of jobs to the machine to minimize the total

processing time and also find for which machine no job is assigned

QT & OR 18
MAXIMISATION PROBLEMS

In this, the objective is to maximise the profit. To solve this we first convert the given
profit matrix into the loss matrix by subtracting all the elements from the highest element
of the given profit matrix. For this converted loss matrix we apply the steps in Hungarian
method to get the optimal assignment.

13. The owner of a small machine shop has 4 mechanics available to assign jobs for
the day. Five jobs are offered with expected profit, for each mechanic on each job
which is as follows.
JOBS
A B C D E
1 62 78 50 111 82
M/C 2 71 84 61 73 59
3 87 92 111 71 81
4 48 64 87 77 80

Find by using assignment method, the assignment of mechanics to the job that
will result in a maximum profit which job should be declined

14. A marketing manager has 5 sales man and 5 sales districts considering the
capabilities of the sales man and the nature of the districts. The marketing
manager estimates that sales per month for each salesman in each district would
be as follows.
Jobs
A B C D E
1 32 38 40 28 40
Sales 2 40 24 28 21 36
men 3 41 27 33 30 37
4 41 38 41 36 36
5 29 33 40 35 39

Find the assignment of salesman to districts that will results in maximizing profit.

15. A company is faced with the problem of assigning 4 machines to 6 different jobs
the profits are estimated as follows.
Machine
A B C D
1 3 6 2 6
2 7 1 4 4
Jobs 3 3 8 5 8
4 6 4 3 7
5 5 2 4 3
6 5 7 6 4

Solve the problem to maximize the profit.

QT & OR 19
 16. Five lathes are to be allocated to five operators. The following table gives weekly
output figures (in pieces)

L1 L2 L3 L4 L5
P 20 22 27 32 36
Q 19 23 29 34 40
R 23 28 35 39 34
S 21 24 31 37 42
T 24 28 31 36 41

Profit per piece is Rs 25. Find the maximum profit.

17. Five salesmen are to be assigned to five territories. Based on the past performance
the following table shows the annual sales that can be generated by each salesman
in each territory. Find the optimal assignment.

T1 T2 T3 T4 T5
S1 26 14 10 12 9
S2 31 27 30 14 16
S3 15 18 16 25 30
S4 17 12 21 30 25
S5 20 19 25 16 10

TRAVELLING SALESMAN PROBLEMS

Assume a salesman has to visit n cities. He wishes to start to start from a particular city,
visit each city once and then return to his starting point and no city is visited twice before
the tour of all the cities is completed. His objective is to select the sequence in which the
cities are visited such a way that his total travelling time is minimized and

18. A travelling salesman has to visit 5 cities. He wishes to start from a particular
city. Visit each city once and then return to his starting point. Cost of going from
one city to another is shown below. You are required to find the least cost route.

TO CITY
A B C D E
A ∞ 4 10 14 2
B 12 ∞ 6 10 4
From C 16 14 ∞ 8 14
City D 24 8 12 ∞ 10
E 2 6 4 16 ∞

QT & OR 20
 19. A salesman travel from one place to another, he cannot however travel from one
place to itself. The distance between pairs of cities is given below.

P Q R S
P -- 15 25 20
Q 22 -- 45 55
R 40 30 -- 25
S 20 26 38 --

20. A salesman has to 5 cities A, B, C, D & E the distance between 5 cities are as
follows.
To city
A B C D E
A -- 1 6 8 4
B 7 -- 8 5 6
From C 6 8 -- 9 7
City D 8 5 9 -- 8
E 4 6 7 8 --

If the salesman starts from city A and has to come back to city A which root
should he select so that the total distance travelled is minimum?

QT & OR 21
 MODULE-3
SEQUENCING & REPLACEMENT

Introduction,

In this we determine an appropriate order for a series of job to be done on a finite no of

service facilities in some pre-assigned order so as to optimize the total time.

Definition: - Sequencing problem is the problem of finding and optimal sequence of

completing certain number of jobs so as to minimize total elapsed time between
completion of first and last job.

Terminologies

1) Processing order: It refers to the order in which various machines are

required to completing the job.
2) Processing time: It means the time required by each job on each machine.
3) Idle time: This is the time for which a machine remains idle during the total
elapsed time.
4) Total elapsed time: This is the time between starting the first job and
completing the last job which also includes the idle time.

Types of Sequence:

1) Problems with n jobs through 2 machines.

2) Problems with n jobs through 3 machines
3) Problems with n jobs through K machines
4) Problems with 2 jobs through K machines.

1) Problems with n jobs through 2 machines (Johnson logorithm)

The logorithm which is used to optimize the total elapsed time for processing n jobs
through 2 machines is called Johnson logarithm. Which has following steps?

Step 1:- Select the least processing time occurring in the least A1, A2…..An and B1,B2…..
Bn. Let this minimum processing time occurs for some job ‘K’

Step 2:- If the smallest processing is for the M/c A, process the Kth job 1st and place it
in the beginning of the sequence. If it is for the machine B process the Kth job in the last
& place it at the end of the sequence.

Step 3:- when there is a tie in selecting the minimum processing time they may be thee
solutions.

QT & OR 22
 a) If the equal minimum value occurs for the M/c A, select the job with largest
processing time in B for placing in the job sequence first.
b) If the equal minimum values accures for machine B select the job with a
largest processing time in A to be sequenced at last.
c) If there are equal minimum values one for each machine then place. The job
in the machine A first and the one in the machine B last.

Step 4: Delete the job already sequence

Step 5: In this step determine the overall or total elapsed time & also the idle on M/c A &
B.

Problems with n jobs through 2 machines

1. There are 5 jobs each of which must go through the two machine A & B in the
order A, B. Processing times are given below.

JOB 1 2 3 4 5

M/C A 5 1 9 3 10

M/C B 2 6 7 8 4

Determine A sequence for 5 jobs that will minimize the total elapsed time.

2. Find the following optimum sequence that minimizes the total elapsed time

JOB A B C D E F

M/C A 1 4 6 3 5 2

M/C B 3 6 8 8 1 5

3. Find the sequence that minimizes the total elapsed time require to complete the
following task on two machines.

Task A B C D E F G H I
M/c 1 2 5 4 9 6 8 7 5 4
M/c 2 6 8 7 4 3 9 3 8 11

QT & OR 23
 4. In a factory there are 6 jobs to perform each of which should go through two
machine A & B in the order A,B in the processing timings for the given here. You
are require to determine the sequence for performing the jobs that would
minimize the total elapsed time ‘T’ what is the value of ‘T’.
Jobs 1 2 3 4 5 6

M/c A 7 4 2 5 9 8

M/c B 3 8 6 6 4 1

5. We have 7 jobs each of which has to go through the machine M1 & M2 in the
order M1 & M2 processing time are given as follows.
Jobs 1 2 3 4 5 6 7

M/c M1 3 12 15 6 10 11 9

M/c M2 8 10 10 6 12 1 3

Determine a sequence of these jobs that will minimize the total elapsed time.

6. 10 jobs are required to be process on two machines M1 & M2 in the order M1, M2.
Processing times are given here, determine the optimal sequence and evaluate for
total elapsed time.

Jobs J1 J2 J3 J4 J5 J6 J7 J8 J9 J10

M/c M1 7 8 10 3 7 4 5 8 5 6

M/c M2 4 2 6 6 5 7 2 6 7 6

7. A book binder has one printing press, one binding machine and the manuscript of
a number of different books. The time required to perform the printing and
binding operations for each book are shown as follows.

Book 1 2 3 4 5 6

Printing Time (hrs) 30 120 50 20 90 100

Binding time (hrs) 80 100 90 60 30 10

Determine the order in which the books should be processed in order to minimize the
total time required to turn out all the books

QT & OR 24
 8. Jobs are required to be processed through A & B. the processing time of each job
on the two machines is given below:

Job Processing Time

M/c A M/c B

1 10 05

2 20 21

3 05 04

4 25 15

5 15 14

6 12 12

7 16 09

Suggest optimal sequence of processing the jobs & total minimum elapsed time.

Problems with n jobs through 3 machines

9. We have 5 jobs, each of which must go through the machines A, B and C in the
order ABC. Determine the sequence that will minimize the total elapsed time.

Job 1 2 3 4 5

Machine A 5 7 6 9 5

Machine B 2 1 4 5 3

Machine C 3 7 5 6 7

10. You are given the following data regarding the processing times of some jobs on
3 machines I, II, III. The order processing is I-II-III. Determine the sequence that
minimizes the total elapsed time T required to complete the jobs. Also evaluate T
and idle time of II and III.

QT & OR 25
 Job A B C D E F G

M/c I 3 8 7 4 9 8 7

M/c II 4 3 2 5 1 4 3

M/c III 6 7 5 11 5 6 12

11. Find the sequencing for the following jobs that will minimize the total elapsed
time for the completion of all jobs. Each job is processed in the same order.

Jobs

Time for 1 2 3 4 5 6 7 8
Machines

A 4 6 7 4 5 3 6 2

B 8 10 7 8 11 8 9 13

C 5 6 2 3 4 9 15 11

12. A machine operator has to perform three operations turning, threading and
knurling on a numbers of different jobs. The time required to perform these
operations (in minutes) for each job is known. Determine the order in which the
jobs should be processed in order to minimize the total time required to turn out
all the jobs. Also find the minimum elapsed time.

Job 1 2 3 4 5 6

Turning 3 12 5 2 9 11

Threading 8 6 4 6 3 1

Knurling 13 14 9 12 8 13

QT & OR 26
 13. Find the sequencing for the following jobs that will minimize the total elapsed
time for the comptetion of all jobs. Each job is processed in the same order.

Job 1 2 3 4 5 6 7 8

M/c A 7 8 6 6 7 8 5 7

M/c B 2 2 1 3 3 2 4 2

M/c C 6 5 4 4 2 1 5 5

14. Find the sequencing that minimizes the total elapsed time required to complete the
following jobs on machines. M1, M2 and M3 in the order M1, M2, M3

Job A B C D E F

M1 8 3 7 2 5 1

M2 3 4 5 2 1 6

M3 8 7 6 9 10 9

15. Find the sequencing that minimizes the total elapsed time required to complete the
following jobs on machines A,B and C in the order ABC.

Job J1 J2 J3 J4 J5 J6

M/c A 12 8 7 11 10 5

M/c B 7 10 9 6 10 4

M/c C 3 4 2 5 2 4

Problems with n jobs through K machines

16. 4 jobs 1, 2, 3, & 4 are to be processed on each of the 5 machines A, B, C, D & E

in the order ABCDE. Find the total minimum elapsed time if no passing of job is
permitted also find the idle time for each machine.

QT & OR 27
 Job

M/c 1 2 3 4

A 7 6 5 8

B 5 6 4 3

C 2 4 5 3

D 3 5 6 2

E 9 10 8 6

17. Find an optimal sequence for the following sequencing for when passing is not
allowed of which

Jobs A B C D

M/c M1 7 6 5 8

M/c M2 5 6 4 3

M/c M3 2 4 5 3

M/c M4 3 5 6 2

M/c M5 9 10 8 6

18. Solve the following sequencing pro giving an optimal solution when passing is
not allowed.

Jobs A B C D E

M/c M1 11 13 9 6 17

M/c M2 4 3 5 2 6

M/c M3 6 7 5 8 4

M/c M4 15 8 13 9 11

QT & OR 28
 REPLACEMENT MODEL
The replacement problems are concerned with the situations that arise when some items
such as men, machine, and electric light bulbs etc. need replacement due to their
decreased efficiency, failure or break down.
Systematic analysis of alternative available in situation involving items which
fails in use overtime is called replacement analysis.

Types of replacement situations

a) When the old item has failed completely or old item is expected to fail shortly.
b) When the old item has deteriorated and requires expensive maintenance.
c) When a better design of equipment’s has developed.

Types of replacement decision

a) Whether the equipment deteriorate or become obsolete or less efficient because of

the constant use or out dated due to the new development.
b) Whether the equipment is subjected to failure Eg: machine tools, vehicles etc.

Formula

Annual cost = C-S (t) + CF (t)

TA = 1/N [C-S (t) + CF (t)]
Where C = capital cost of the item
S (t) = selling price or resale value or salvage value
F (t) = operating cost or maintenance cost
TA = average annual cost
N = replacement periods

QT & OR 29
1. A truck owner finds from his past experience that maintenance cost per year of a truck
spare parts whose purchase price is Rs 8000 are as given below

Year Maintenance cost Resale value

1 1000 4000
2 1300 2000
3 1700 1200
4 2200 600
5 2900 500
6 3800 400
7 4800 400
8 6000 400
Determine at which time it is profitable to replace a spare parts.

2. A cost of a machine is Rs 6100 and its scrap value is only Rs 100. The
maintenance cost are found from experience to be,

year Maintenance cost Scrap value

1 100 100
2 250 100
3 400 100
4 600 100
5 900 100
6 1250 100
7 1600 100
8 2000 100
When should machine be replaced?

3. A machine shop has a press which is to be replaced as it wears out a new press is
to be installed now and a optimal replacement plant is to be for next 7 years after
which the press is no longer required.

QT & OR 30
 Year Cost of new machine Salvage value Operating cost
1 5000 2500 1500
2 5250 1250 2000
3 5500 750 2500
4 6000 500 3000
5 6500 400 3750
6 7250 250 4500
7 8000 0 5750
Find an optimal replacement policy

4. Company is considering replacement of a machine whose cost price is 15500

scrap values is Rs 1500, the maintenance cost are as follows.

Year Maintenance cost

1 400
2 700
3 1300
4 1900
5 2600
6 3400
7 4600
8 5500
When should be machine be replaced?

5. A company considers replacement of a machine cost is Rs 15, 00,000 and the

scrap value is Rs 1.50000, the maintenance cost for different years are as follows.
Year 1 2 3 4 5 6 7 8
Maintenance 4000 9000 15000 24000 28000 37000 48000 55000
cost

QT & OR 31
 6. A firm is considering replacement of machine whose cost price is Rs 12000 and
the scrap value is Rs 200.
Year Maintenance cost
1 200
2 500
3 800
4 1200
5 1800
6 2500
7 3200
8 4000
When should be machine be replaced.

7. A taxi owner estimates from past records that the cost per year for operating a taxi
whose purchase price is Rs 60000
Age in years Operating cost
1 10000
2 12000
3 15000
4 18000
5 20000
After 5 years the operating cost is Rs 6000K where K = 6-10. K denotes age in
years if the resale value decreases by 10% of the purchase price of each year.
What is the best replacement policy?

Replacement of Equipment that fails suddenly

It is difficult to predict that a particular equipment will fail at a particular time. This
difficulty can be overcome by determining the probability distribution of failures.
Assuming that the failures occurs only at the end of the period, sat t, the objective is to
find the value of t, which maximizes the total cost involved for the replacement.

QT & OR 32
1. The following mortality rates have been observed for a certain type of light bulbs.
Week 1 2 3 4 5
Percent failing by 10 25 50 80 100
the end of week
There are 1,000 bulbs in use and it cost Rs 2 to replace an individual bulb, which has
burnt out. If all the bulbs were replaced simultaneously, it would cost 50 paisa per bulb. It
is proposed to replace all bulbs at fixed intervals, whether or not they have burnt out and
continue replacing burnt out bulbs as they fail. At what intervals should all the bulbs be
replaced?

2. The following mortality rates have been observed for a certain types of fuses.
Week 1 2 3 4 5
Percent failing by 5 15 35 75 100
the end of week
There are 1000 fuses in use and it costs Rs 5 to replace on individual fuse. If all fuse were
replaced simultaneously it would cost Rs 1.24 per fuse. At what intervals the groups
replacement should be done? Which policy is better?

3. In a certain company, there are exactly 500 machines parts that are battery operated.
The expectancy of the life of the batteries is as per data given herein, depending on the
usage of the machines end of the month.
End of the 1 2 3 4 5 6
month
Probability of 0.10 0.20 0.40 0.60 0.90 1.00
being exhausted

Each battery cost Rs 20 if replaced individually but if all 500 changed together then each
battery will cost just Rs 10.
You are advised the company the following
a) If the company wants to make group replacement how often should it be.
b) Is individual replacement better.

QT & OR 33
 MODULE-4
NETWORK ANALYSIS
Network analysis is a technique used for planning, scheduling and controlling large
projects, in the field of construction, maintenance, and purchasing of computers systems
etc. It is a method of minimizing the trouble spots such as production delays and
interruptions by determining critical factors and coordinating various parts of the overall
job.
There are two basic planning and control techniques that utilize a network to complete a
predetermined project or schedule. These are Programme Evaluation Review Technique
(PERT) and Critical Path Method (CPM)

BASIC TERMS
To understand the network techniques, few basic terms of both CPM & PERT should be
familiar.
1. Network: It is the graphical representation of logically and sequentially connected
arrows and nodes, representing activities and events in a project. Network are also called
arrow diagrams.
2. Activity: An activity represents some action and is a time consuming effort necessary to
complete a particular part of the overall project. Thus, each and every activity has a point
of time where it begins and a point where it ends.
It is represented in the network by an arrow,

A
i
Here A is called the activity.

3. Event: The beginning and end points of an activity are called events or nodes. Event is a
point in time and does not consume any resources. It is represented by a numbered circle.
A
i j
Tail head
4. Merge and burst event: It is not necessary for an event to be the ending event of
only one activity as it can be the ending event of two or more activities. Such an event is
defined as a merge event.

If the event happens to be the beginning event of two or more activities, it is defined as a
burst event.

QT & OR 34
 5. Preceding and succeeding activities: Activities that must be accomplished before a
given event can occur, are termed as preceding activities.
Activities that cannot be accomplished until an event has occurred, are termed as
succeeding activities.

6. Dummy activity: Certain activities, which neither consume time nor resources but are
used simply to represent a connection or a link between the events are known as
dummies. It is shown in the network by a dotted line.

B
A
C

RULES OF NETWORK CONSTRUCTION

There are number of rules in connection with the handling of events and activities of a
project network that should be followed.
• Try to avoid arrows that cross each other.
• Use straight arrows.
• No event can occur until every activity preceding it has been completed.
• An event cannot occur twice
• An activity succeeding an event cannot be started until that event has occurred.
• Dummies should be introduced only if it is extremely necessary.

Construction of Network:
1. Draw the network diagram for the following list of activities

Activity A B C D E F G H
Immediate -- A A B,C C D E F,G
predecessor

2. Construct a network for each of the project whose activities and their precedence
relationships are given below.
Activity A B C D E F G H I J K

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

QT & OR 35
 3. Draw the network diagram for the following

Activity A B C D E F G H I J K

Predecessor - - A B A B C,D G,F E H,I J

4. Construct a network for the project whose activities and precedence relationships are as
given below:
Activities A B C D E F G H I

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

predecessor

5. Draw the network diagram

Activity Immediate predecessor

A -

B -

C A,B

D B

E D

F G, E

G D

CRITICAL PATH METHOD

A critical path method is the one which is having all the branches representing the
activities are critical in the sense that any changes in the duration of time activity would
change the project completion time. It is the longest path in the project network.

Determination of floats and slack time

When the network diagram is completely drawn properly label earliest and latest event
times. Once it is determined the next objective is to determine floats and slack time.
Floats as defined as the difference between latest and earliest activity, time
Slack is defined as the difference between the latest and the earliest event time.

QT & OR 36
 There are mainly 3 kinds of floats.
1) Total Float: This is concerning with overall project duration. The amount of time
by which the completion of activity could be delayed beyond the earliest expected
completion time without affecting the overall project duration time
Total float = (TFij) = (Li – Dij) – Ei

2) Free Float: It is very useful for rescheduling the activities with minimum
destruction of earlier plans. The time by which the completion of an activity can be
delayed beyond the earliest finished time without affecting earliest start of a
succeeding activity.
Free Float = (FFij) = (Ej – Ei) –Dij

3) Independent Float: The amount of time by which the start of activity can be
delayed without affecting earliest start time of any immediately following activities
assuming float the preceding activity has finished at its latest finished time

Independent Float: (IFij) = (Ej – Li) – Dij

1. Consider the schedule of activities and related information for construction of a new
plant as shown.
Activity Expected time Variance Expected cost

1-2 4 1 5

2-3 2 1 3

3-6 3 1 4

2-4 6 2 9

1-5 2 1 2

5-6 5 1 12

4-6 9 5 20

5-7 7 8 7

7-8 10 10 14

6-8 1 1 4

Calculate
a) Critical path
b) Expected cost of construction of plant
c) Expected time required to build a plant
d) The standard deviation of expected time

QT & OR 37
 2. A project schedule has the following characteristic
Activity Time

1-2 2

1-4 2

1-7 1

2-3 4

3-6 1

4-5 5

4-8 8

5-6 4

6-9 3

7-8 3

8-9 5

Construct the network and find the critical path and time duration.

3. Determine the earliest start, latest start in respect of all node points and identify
critical path in respect of the following network.

4. Following table gives activities in a construction project

Activity 1-2 1-3 2-3 2-4 3-4 4-5

Duration 20 25 10 12 6 10

Find the critical path, total float, free float and independent float.

QT & OR 38
 5. Draw a network corresponding to the following information. Obtain the early and late
start and completion times and determine the critical activities.

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

Duration 4 6 8 7 4 6 5 19 10

6. A project schedule has the following characteristics.

Activity

1-2 1-3 2-4 3-4 3-5 4-9 5-6 5-7 6-8 7-8 8-10 9-10

Time 4 1 1 1 6 5 4 8 1 2 5 7
(days)

From the above information you are required to

1. Construct a network diagram
2. Compute the earliest event time and latest event time.
3. Determine the critical path and total project duration.
4. Compute total and free float for each activity.

PERT (Programme Evaluation Review techniques)

PERT is a probabilistic method where the activity times are represented by a

probabilistic distribution this probabilistic distribution is based upon 3 different time
estimates mode for each activity these are .
1) Optimistic time : It is the smallest time taken to complete the activity there is a very
little chance that activity can be done in the less than the optimistic time it is denoted by
(“to”)

2) Most likely time: It refers to the estimate of the normal time the activity would take. It
is denoted by (“tm”)

3) Pessimistic time : It is the longest time that an activity would take it is denoted by ( “
tp”)

From these 3 estimates we have to calculation of estimation time of activity is

given by

Te = to + 4 tm + t p
6

QT & OR 39
Variance of the activity is given by σ2= tp – to 2

The main objective in the analysis through part is to find the completion for a particular
event with in specified time
D = Due date - Total expected date

P (Z ≤ D)

1. The following table shows the job of a network along with the time estimates,

Jobs Optimistic time Most likely time Pessimistic time

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
6-7 3 9 27
5-8 1 4 7
7-8 4 19 28
a. Draw the project network
b. Calculate the length and variance of critical path
c. What is the appropriate probability that jobs on the critical path will be
completed in 41 days.

2. The activity involved in a PERT project are detailed in the adjoining table
Job 1-2 2-3 3-5 7-8 5-8 6-7 4-5 1-6 2-4

To 3 6 5 4 1 3 3 2 2

Tm 6 12 11 19 4 9 6 5 5

Tp 15 30 17 28 7 27 15 14 8

a) Draw a network diagram

b) Find the critical path after estimating the earliest and latest event times of all
the nodes.
c) Find the probability of completing the project before 31 days.
d) What will be the effect on the current critical path of most likely time of
activity gets revised to 14.

QT & OR 40
 3. Find the project duration, standard deviation for the critical path. Total float, free
float, independent float for the following data.

Activity Predecessor To Tm Tp

A - 4 6 8

B A 10 12 16

C A 8 12 16

D B 4 8 12

E B 4 6 8

F C,D 4 8 14

G E,F 4 8 12

H B 2 4 6

I H 4 8 14

J G,I 4 6 8

4. A project consists of nine activities whose time estimates (in weeks) and other
characteristics are given below.

Activity Preceding To Tm Tp
activity

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 10

QT & OR 41
 a) Show the PERT network for the project.
b) Identify the critical activities.
c) What is the expected time and its variance?
d) What is the probability of completing the project one week before expected
time?

5. A small project consisting of eight activities has the following characteristic.

Activity Immediate To Tm Tp
predecessor

A - 2 4 12

B - 10 12 26

C A 8 9 10

D A 10 15 20

E A 7 7.5 11

F B,C 9 9 9

G D 3 3.5 7

H E,F,G 5 5 5

a) Draw the PERT diagram

b) Find out the critical path and the expected project completion time.
c) If a 30 weeks deadline is imposed what is the probability that the project be
finished within the time limit.

QT & OR 42
 MODULE- 5
GAME THEORY
The term games refers to a situation of conflicts and competition in which two or more
competitors are involved in decision making in anticipation of certain outcomes over a
period of time. The competitors are referred to as players.

“Game theory is a type of decision theory in which ones choice of action is

determined after taking in to account of all possible alternatives available to an opponent
playing the same game, rather than just by the possibility of several outcomes”.

The models in the theory of game can be classified depending upon the following
factors.

a) Number of players: if a game involves any two players, then it is called a two
person game. However if the players are more the game is referred to as ‘n’
person game.
b) Sum of gain or losses: if in a game sum of the gain to one player is exactly equal
to the sum of the losses of to another player, so that some of the games and losses
equals to zero, then the game is said to be a zero sum game.
c) Strategy: the strategy for a player is the list of possible action that he will take for
every payoff (outcome) that might arise. General two types of strategies are used
by players in a game.

• Pure strategy: it is the decision rule where each player knows exactly what the
other player is going to do out of which he always select only one particular
strategy irrespective of other player’s strategy. The objective of the player is to
maximise gains or minimize losses

• Mixed strategy: course of action that is to be selected on a particular occasion

with some fixed probability is called mixed strategy. Thus the mixed strategy is a
selection among pure strategies with fixed probability.

TWO PERSON ZERO SUM GAME

A game with only two players say A & B is called a two person zero sum game
where one player gain is exactly equal to loss of other player so that the total sum is zero.

The Maximin – Minimax principle

This principle is used for the selection of optimal strategies by two players i.e. A & B

1) Maximin: for player ‘A’ minimum value in each row is the least gain to him
these are written in the matrix by row minimum. He will select the strategy that
gives largest gain among the row minimum values. This choice of player ‘A’ is

QT & OR 43
 called the maximin principle and the corresponding gain is called the maximin
values of the game.
2) Mimimax principle: for player ‘B’ the maximum values in each column
represents the maximum loss to him these written in the matrix by column
maximum. He will then select the strategy that gives minimum values. This
choice of player ‘B’ is called the minimax principle and corresponding loss is the
minimax value of the game.

DEFINITIONS

SADDLE POINT: a saddle point of a pay of matrix is the position of such an element in
the pay of matrix which is minimum in its row and maximum in its column then the
matrix is said to have a saddle point.

Optimal strategy: if the payoff matrix has the saddle point then the players (A & B) are
said to have optimal strategies.

Value of the game: the payoff at the saddle point is called the value of the game and it is
equal to the maximin and minimax value of the game.

Rules to determine saddle point

The following 3 steps to determine the payoff matrix

1) Select the minimum element in each row of the payoff matrix and write them
under row minimum heading. Then enclose it in a circle(0)
2) Select the maximum element in each column of the payoff matrix and write them
under column maximum heading and then enclose it in a rectangle.
3) Find out the element which is same in the circle as well as rectangle. This element
represents the value of the game and is called saddle point.

PROBLEMS

1. Consider 2 person zero sum game matrix which represents payoff to the player A.
find the optimal strategy if any.

PLAYER B
I II III
I -3 -2 6
PLAYER A
II 2 0 2

III 5 -2 -4

a) Find out the best strategy for player A

b) Find out the best strategy for player B
c) Find the value of the game.

QT & OR 44
 2. The payoff matrix of a game is given. Find the solution of the game to the player
A and B.

PLAYER B
I II III IV V
I -2 0 0 5 3

II 3 2 1 2 2
PLY A
III -4 -3 0 -2 6

IV 5 3 -4 2 -6

a) Find the best strategy for A and B

b) The value of the game

3. Solve the game whose payoff matrix is given by

PLAYER B
I II III
I -2 15 -2
PLAYER A
II -5 -6 -4

III -5 20 -8

a) find out the best strategy for A and B

b) the value of the game

4. Solve the game whose payoff matrix is given below.

PLAYER B
I II III
I 1 3 1
PLAYER A
II 0 -4 -3

III 1 5 -1

a) Find out the best strategy for A and B

b) The value of the game.

QT & OR 45
 5. Solve the game whose payoff matrix is given below
PLAYER B
I II III IV
I 0 -4 -2 -4

PLAYER A II 3 -5 1 -5

III -2 -1 6 -2

IV 1 0 4 0

a) find out the best strategy for A and B

b) The value of the game.

Rectangular game without saddle point

In some games we have no saddle point for the problem. In such cases the maximin and
mimimax principles of solving problem will not be useful to meet such a situation. The
concept of chance move is introduced.

However each player would like to move in a random manner in such a way that his
average payoff over a large number of plays would be optimum. Even though he may
loose more game, any individual game. The mixed strategies for player be (A1 & A2)
with probability (P1 & P2)

SA A1 A2 Where P1 + P2 =1
P1 P2

The optimum strategy for player B is P1 & P2 and Q1 and Q2 respectively. The problem
is to determine P1 and P2 for player A and Q1 and Q2 for player B for any 2x2 matrix
with out any saddle point having the payoff matrix for player A

Player A1 a11 a12 Where P1 + P2 =1

A2 a21 a22

P1 = a22 – a21 : Q1 = a22 – a12

P2 a11 – a22 Q2 a11 – a21

V = a11 x a22 – a21 X a12

(a11 + a22) – (a12 + a21) where P1 + P 2 = 1
Q1 + Q2 = 1

QT & OR 46
DOMINANCE PROPERTY

This occurs when one or more of the pure strategies of either player can be deleted
because they are inferior to at least one of the remaining strategies and hence it is never
used. The deleted strategies are dominated by superior one. Thus if each element in one
row of the payoff matrix is less than or equal to the corresponding element in some other
row. Then player A will never choose that particular row.

General rules for dominance

1. If all the elements of the first row are less than or equal to the corresponding
element of any other row then the first row is dominated by other.
2. If all the elements of column say first is greater than or equal to corresponding
element of any other row then the first column is dominated by other.
3. if X1, X2 be the optimal strategy for player A for the reduced game P1 and X2 be
the optimal strategy
4. If Y1, Y2 be the optimal strategy for the player B for the reduced game P2 and Y1
be the optimal strategy.
5. If the dominance hold strictly then the value of the optimal strategy do co-inside.
When the dominance does not hold strictly then the value of optimal strategy does
not co-inside.

PROBLEMS

6. find the value of the game for the following mixed strategy problem

4 1
2 3

7. Use the dominance property; find the value of a game.

PLAYER B
I II III
I 60 50 40
PLAYER
II 70 70 50

III 80 60 75

QT & OR 47
 8. solve the game whose payoff matrix to the player A is given in the table

I II III
I 1 7 2

II 6 2 7
9. reduce the
III 5 2 6

following game by dominance and find the value of the game

I II III
I -4 6 3

II -3 -3 4

III 2 -3 4

QT & OR 48
 MODULE-6
SIMULATION
It is a quantitative technique developed for studying alternative course of action by
building a model of that system and conducting a series of repeated trial and error
experiment to predict a behavior of a system over a period of time.
In general terms simulation involves developing a model of some real phenomena and
them performing experiments on the model and evolved.
Ex: - Aerodynamic testing
Models of aero planes are built and placed in the wind tunnels using a wind tunnel air is
blown to examine the aerodynamic properties of model.

Process of Simulation:
Broadly there are 4 faces of simulation process they are
1. Definition of problem and statement of objective
2. Construction of an appropriate model
3. Experimentation with the model constructed.
4. Evaluation of the result of simulation.

There are two techniques of simulation

1. Monte Carlo simulation:-
It is a type of simulation that uses probability distribution to determine whether or
not random events occur and it is also solved problem requiring decision making
under uncertainty. This technique uses random numbers to solve the problem
requiring decision making under uncertainty where mathematical formulation is
impossible.
2. System simulation techniques:
It is applicable to situation in which there is a reproduction of the environment
and the system allows the analysis of the response from the environment through
alternative management action. This method is complicated practically more
difficult and involves a higher cost.

QT & OR 49
Simulation Problems
1. The automobile company manufactures around 150 scooters. The daily
production varies from 146 to 154 depending upon the availability of raw
materials and other working condition.
Production per Day Probability

146 0.04

147 0.09

148 0.12

149 0.14

150 0.11

151 0.10

152 0.20

153 0.12

154 0.08

The finished scooters are transported in a specially arranged lorry accumulating

150 scooters using the following random numbers 80, 81, 76, 75, 64, 43, 18, 26,
10, 12, 65, 68, 69, 61, 57 simulate the process to find out;
i. What will be the average no. of scooter waiting in the factory
ii. What will be the avg. no of empty space in the lorry?

2. A company manufactures around 200 mopeds. Depending upon the availability of

raw material and other condition the daily production has been verifying from 196
to 204 mopeds. Whose probability distribution is as given below?

QT & OR 50
 Production Per Probability
Day
196 0.05

197 0.09

198 0.12

199 0.14

200 0.20

201 0.15

202 0.11

203 0.08

204 0.06

The finished mopeds are transported. In a specially designed 3 storied lorry that can
accommodate only 200 mopeds using the following 15 random no’s 82, 89, 78, 24, 53,
61, 18, 45, 04, 23, 50, 77, 27, 54, and 10. Simulate the process to find out:
i. What will be the avg. no of mopeds waiting in the factory?
ii. What will be the avg. no of empty space in the lorry?
3. A bakery keeps stocks of popular of brand of bread. Previous experience indicates
the daily demand has given below
Daily Demand Probability

0 0.01

10 0.20

20 0.15

30 0.50

40 0.12

50 0.02

Consider the following sequence of random number 48, 78, 19, 51,56,77,15,14,68,08
using above sequence simulate the demand for the next ten days.

QT & OR 51
 i. Simulate the demand for the next ten days
ii. Find out the stock situation if the owner of the bakery decides to make 30
breads every day.
iii. Estimate the daily avg. demand for the bread on the basis of simulated
data.

4. The automobile company manufactures around 100 cars. The daily production
varies from 97 to 103 depending upon the availability of raw materials and other
working conditions.

Production per Day Probability

97 0.05

98 0.10

99 0.20

100 0.25

101 0.20

102 0.15

103 0.05

The finished cost are transported in a specially arranged lorry accommodating 100 cars
using following random no 5 1010, 730, 7040, 6080, 9130, 4870, 5170, 2180, 8730,
9833. Simulate the process to find out
i. The avg. no of cars waiting for space

ii. Empty space in the lorry.

QT & OR 52
 5. A company manufactures 30 units per day. The sale of these items depends upon
demand which has the following distribution

Sales(units) Probability
27 0.10
28 0.15
29 0.20
30 0.35
31 0.15
32 0.05

The production cost and sale price of each unit are Rs 40 and Rs 50 respectively. Any
unsold product is to be disposed off at a loss of Rs 15 per unit. There is a penalty of Rs 5
per unit. If the demand is not met.
Using the following random number estimate the total loss or profit for the
company for next 10 days 10, 99, 65, 99, 95, 01, 79, 11, 16, 20. If the company decides to
produce 29 units per day what is the advantage and disadvantage to the company.

QT & OR 53