Operations Research

By
Rituparna Choudhary

Chapter 01
Linear Programming Problem (LPP)

Definition: -
Linear Programming a technique for determining how to use limited resources
of a business to achieve a specific objective such as maximum revenue,
maximum profit, minimum cost, minimum time.

Some Terminology

1) Decision Variables:- Decision variables are entities whose values are to be

determined from the solution. Decision variable has a linear relationship
between themselves.
2) Optimal Solution: - An optimal solution is the one for which the values of
individual variables are such that total profit is maximized, or total cost is
minimized.
3) Objective function:- It specifies the objective of finding the solution to the
stated problem andit is expressed in terms of decision variable.
4) Constraints: - Constraints are restrictions or limitations imposed on the
problem. They can be of two types
Less than equal to (≤ ) and more than equal to ( ≥ )
5) Non – negativity :- The decision variables can not be negative. They can be
zero or positive. This condition is called as non – negativity condition.
Graphical Method :-
Example :-
1) Max Z = 10x1+20 x2
subject to constraints
3x1+5 x2 ≤ 600
2x1+3 x2 ≤ 300
x1, x2 ≥ 0
Solution :-
Let us consider lines as
3x1+5 x2 = 600 -----------------------(1)
x1 0 200
 x2 120 0
(x1 , x2 ) (0 , 120 ) (200 , 0 )

2x1+3 x2 = 300 ------------------------(2)

x1 0 150
x2 100 0
(x1 , x2 ) (0 , 100 ) (150 , 0 )
Lets draw the diagram with the above points
X2

140
( 0 , 120 )
120

100 ( 0 , 100)

80

60

40

20 ( 200 , 0 )
(140 , 0)

( 0,0) 20 40 60 80 100 120 140 160 180 200 X

Here points on the feasible region are ( 0 ,0 ) , ( 140 , 0) and ( 0 , 100)

So substituting these points we get
at ( 0 , 0 ) , z = 0
at ( 140 , 0 ) , z = 10 × 140 + 20 × 0 = 1400
at ( 0 , 100 ) , z = 10 × 0 + 20 × 100 = 2000
Here , 2000 is maximum hence solution is
x1 = 0 , x2 = 100

2) Max Z = 80x1+40 x2 subject to constraints

8x1+5 x2 ≤ 400
7x1+3 x2 ≤ 420
2x1+ x2 ≤ 80
x1, x2 ≥ 0
Solution :- Let us consider lines as
8x1+5 x2 = 400 -----------------------(1)
x1 0 50
x2 80 0
 (x1 , x2 ) (0 , 80 ) (50 , 0 )
7x1+3 x2 = 420 ------------------------(2)
x1 0 60
x2 140 0
(x1 , x2 ) (0 , 140 ) ( 60 , 0 )

2x1+ x2 = 80 ------------------------(3)
x1 0 40
x2 80 0
(x1 , x2 ) (0 , 80 ) (40 , 0 )

Let us draw the lines on the graph paper

X2
180

160

140 (0,140)

120

100

80 (0 , 80)

60

40

20
(40, 0) (50, 0) (60, 0)
(0, 0) 20 40 60 80 100 120 140 160 180 X1
Here points on the feasible region are ( 0 ,0 ) , ( 40 , 0) and ( 0 , 80)
So substituting these points we get
at ( 0 , 0 ) , z = 0
at ( 40 , 0 ) , z = 80 × 40 + 40 × 0 = 3200
at ( 0 , 80 ) , z = 80 × 0 + 40 × 80 = 3200
Here , 3200 is maximum hence solution is
x1 = 40 , x2 = 0
OR
x1 = 0 , x2 = 80
3) Max Z = 10x1+20 x2 subject to constraints
10x1+4 x2 ≤ 40
6x1+8 x2 ≤ 48
x1, x2 ≥ 0
Solution :-
Let us consider lines as
10x1+4 x2 = 40 -----------------------(1)
x1 0 4
x2 10 0
(x1 , x2 ) ( 0 ,10) (4, 0)
6x1+8 x2 = 48 ------------------------(2)
x1 0 8
x2 6 0
(x1 , x2 ) ( 0 , 6) (8 , 0)
Let us draw the lines on the graph paper
X2

10 (0, 10 )

6 (0, 6)

5 16 30
(7 , )
7
4

(8 , 0 )
(4, 0)

(0 , 0) 1 2 3 4 5 6 7 8 9 10 X1
Now let us solve ( 1) and (2).
By (1)× 2 − (2) we get
20x1+8 x2 = 80
-6x1-8 x2 = -48
16
we get , 14 x1 = 32 , hence , x1 =
7
 16 16
Now substituting , x1 = in (1) we got 10× + 4 x2 = 40
7 7
160 280−160 120
4 x2 = 40 - = =
7 7 7
30
Hence , x2 =
7
16 30
Here points on the feasible region are ( 0 ,0 ) , ( 4 , 0) , ( , ) and ( 0 , 6)
7 7
So substituting these points we get
at ( 0 , 0 ) , z = 0
at ( 4 , 0 ) , z = 10 × 4 + 20 × 0 = 40
16 30 16 30 160+600 760
at ( , ) , z = 10 × + 20 × = =
7 7 7 7 7 7
at ( 0 , 6 ) , z = 10 × 0 + 20 × 6 = 120
Here , 120 is maximum hence solution is x1 = 0 , x2 = 6.

4) Max Z = 6x1+12 x2 subject to constraints

4x1+2 x2 ≤ 32
4x1+ 6 x2 ≤ 48
x1 ≤ 4, x1, x2 ≥ 0
Solution :-
Let us consider lines as
4x1+2 x2 = 32-----------------------(1)
x1 0 8
x2 16 0
(x1 , x2 ) (0 , 16) (8 , 0)
4x1+ 6 x2 = 48 ------------------------(2)
x1 0 12
x2 8 0
(x1 , x2 ) (0,8) ( 12, 0)
x1 = 4 ------------------(3)
Let us draw the lines on the graph paper
 Y

18
( 0 , 16 )
16
x1 = 4
14

12

10 ( 0 , 8 )
16
8 (4 , 3
)

2 (8,0)
(4 , 0 ) (12 , 0 )

(0 , 0) 2 4 6 8 10 12 14 16 18 20 X1
Lets find intersection of line (2) and (3 )
On (3) x1 = 4 hence 4× 4 + 6 x2 = 48
6 x2 = 48 – 16 = 32
32 16
x2 = =
6 3
16
Here points on the feasible region are ( 0 ,0 ), ( 4 , 0) , (4 , )and ( 0 , 8)
3
So substituting these points we get
at ( 0 , 0 ) , z = 0
at ( 4 , 0 ) , z = 6 × 4 + 12 × 0 = 24
16 16
at (4 , ), z = 6 ×4 + 12 × = 24 + 64 = 𝟖𝟖
3 3
at ( 0 , 6 ) , z = 6 × 0 + 12 × 6 = 72
16
Here , 88 is maximum hence solution is x1 = 4 and x2 =
3

5) Max Z = 6x +9y, subject to constraints

30x +24 y ≤ 360
x ≤9,y≤9
x,y≥0
Solution :-
Let us consider lines as
30x +24 y = 360-----------------------(1)
 x 0 12
y 15 0
(x , y ) (0 , 15 ) (12 , 0 )
x = 9 -----------------------(2)
y = 9 -----------------------(3)
Let us draw the lines on the graph paper

18
( 0 , 15)
16 x=9

14

12
24
(0,9) ( 5
, 9)
10
y=9
8

6 15
(9 , 4
)
4

( 9 , 0) ( 12 , 0)
2
(0 , 0) 2 4 6 8 10 12 14 16 18 20 X
Lets find the points on the feasible region .
The intersection of line ( 1) and (2) gives us x = 9
and 30x +24 y = 360
30 × 9 + 24𝑦 = 360
24 y = 360 – 270 = 90
90 15
y = 24 = 4
The intersection of line ( 1) and (3) gives us y = 9
and 30x +24 y = 360
30 x + 24 × 9 = 360
30x = 360 – 216 = 144
144 24
x = 30 = 5
15 24
Here points on the feasible region are (0 ,0), (9 , 0) , (9 , ) ,( , 9 ) and (0 , 9)
4 5
So substituting these points we get
at ( 0 , 0 ) , z = 0
at ( 9 , 0) , z = 6 × 9 + 9 × 0 = 54
15 15
at (9 , ), z = 6 ×9 + 9× = 54 + 33.75 = 87.75
4 4
 at ( 24
5
, 9), z = 6 ×
24
5
+9 × 9 = 28.8 + 81 = 109.8
at ( 0 , 9), z = 6 × 0 + 9 × 6 = 54
Here , 109.8 is maximum hence solution is
x = 245 and y = 9

6) Max Z = 15 x + 10 y subject to constraints

24x +32 y ≤ 384
16x +20 y ≤ 320
x ≥ 10, y ≤ 8 , x , y ≥ 0
Solution :- Let us consider lines as
24x +32 y = 384-----------------------(1)
x 0 16
y 12 0
(x , y ) ( 12 , 0 ) ( 16 , 0 )
16x +20 y = 320 ------------------------(2)
x 0 20
y 16 0
(x , y ) ( 0 , 16 ) ( 20 , 0 )
x = 10 --------------------------------(3)
y = 8 ---------------------------------(4)
Let us draw the lines on the graph paper

Y
18
( 16 , 0 ) x = 10
16

14
( 12 , 0 )
12

10
y =8
8
(8,0)
6
( 10 , 4.5 )
4

2
( 10 , 0 ) ( 16 , 0 ) ( 20 , 0 )

(0 , 0) 2 4 6 8 10 12 14 16 18 20 X
 The intersection of line ( 1) and (3) gives us x = 10
and 24x +32 y = 384
24 × 10 + 32𝑦 = 384
32 y = 384 – 240 = 144
144
y= = = 4.5
32
Here points on the feasible region are ( 10 , 0) , (16 , 0 ) and ( 10 , 4.5)
So substituting these points we get
at ( 10 , 0) , z = 15 × 10 + 10 × 0 = 150
at (16 , 0 ), z = 15 ×16 + 10× 0 = 240
at ( 10 , 4.5 ), z = 15 ×10 + 10 × 4.5= 150 + 45 = 195
Here , 240 is maximum hence solution is
x = 16 and y = 0

7) Max Z = 100 x + 80 y
subject to constraints
6x +4 y ≤ 7200
2x +4 y ≤ 4000
x,y≥0
Solution :-
Let us consider lines as
6x +4 y = 7200 -----------------------(1)
x 0 1800
y 1200 0
(x , y ) ( 1200 , 0 ) ( 1800 , 0 )
2x +4 y = 4000 ------------------------(2)
x 0 2000
y 1000 0
(x , y ) ( 0 , 1000 ) ( 2000 , 0 )
 Let us draw the graph of the given lines

Y
1800

1600

1400

1200 ( 1200 , 0 )

1000 ( 1000, 0 )

800
( 800 , 600 )
600

400

200
( 2000 , 0 )
( 1800 , 0 )
(0 , 0) 200 400 600 800 1000 1200 1400 1600 1800 2000 X
let us solve the line ( 1) and ( 2)
by (1) – (2) we get , 6x +4 y = 7200
- 2x - 4 y = -4000
4x = 3200 , ∴ x = 800
Now substituting x = 800 in ( 2) we get 2 × 800 + 4𝑦 = 4000
4y = 4000- 1600 = 2400
∴ y = 600
Here points on the feasible region are (1800,0),(800,600 ) and (1000,0)
So substituting these points we get
at ( 1800,0) , z = 100 × 1800 + 80 × 0 = 180000
at (800,600 ), z = 100 ×800 + 80× 600 = 80000 +48000 = 128000
at ( 1000 , 0), z = 100 ×1000 + 80 × 0 = 10000
Here , 128000 is maximum hence solution is x = 800 and y = 600

8) Min Z = 40 x + 80 y subject to constraints

72x +12 y ≥ 216
6x +24 y ≥ 72
40x + 20y ≥ 200 , x , y ≥ 0
Solution :-
Let us consider lines as
72x +12 y = 216 -----------------------(1)
x 0 3
y 18 0
(x , y ) ( 0 , 18 ) (3,0)
6x +24 y = 72------------------------(2)
x 0 12
y 3 0
(x , y ) (0,3) ( 12 , 0 )
40x + 20y = 200 ------------------------(3)
x 0 5
y 10 0
(x , y ) ( 0 , 10 ) (5,0)
Let us draw the graph of the given lines

Y
(0, 18 )
18

16

14

12

10 ( 0, 10 )

8
(2,6)
6

( 0, 3 )
4
(4,2)
2
(3,0) ( 12 , 0 )
(5,0)

(0 , 0) 2 4 6 8 10 12 14 16 18 20 X
By solving ( 1) and ( 3 ) we get
(1) × 5 − (3) × 3
360x +60 y = 1080
-120x - 60y = -600
240 x = 480
x=2
substituting x = 2 in (3 ) we get 40× 2 + 20y = 200
20y = 200 – 80 = 120
y=6
 By solving (2) and (3) we get (2)× 5 − 6 × (3)
30x +120 y =360
-240x -120y = -1200
- 210 x = - 840
x= 4
substituting x = 4 in (3 ) we get 40× 4 + 20y = 200
20 y = 200 – 160
y=2
Here points on the feasible region are (0,18), (2 ,6), (4,2) and (12, 0)
Z = 40 x + 80 y
So substituting these points we get
at (0,18) , z = 40 × 18+ 80 × 0 = 720
at (2 ,6) , z = 40 ×2 + 80× 6 = 80 + 240 = 320
at (4,2) , z = 40 ×4 + 80 × 2 = 160 + 160 = 320
At , (12, 0) , z = 40 ×12 + 80 × 0 = 480
Here , 320 is maximum hence solution is
either x = 2 and y = 6 OR x = 4 , y = 2

9) Min Z = 2 x + 3 y subject to constraints

x ≥ 20 , y ≥ 30
15x +10 y ≤ 1200
x,y≥0
Solution :-
Let us consider lines as
x = 20 -----------------------(1)
y = 30 ----------------------- (2)
15x +10 y = 1200 -----------(3)
x 0 80
y 120 0
(x , y ) ( 0 , 120 ) ( 80 , 0 )
 Y
180

160 x = 20

140
(120, 0 )
120

100
( 20 , 90 )
80

60

40 ( 60 , 30 )
( 20 , 30 ) y = 30
( 0 , 30 )
20

( 20 , 0 ) ( 80 , 0 )
(0 , 0) 20 40 60 80 100 120 140 160 180 200 X
Let us find the point of intersections .
When x = 20 , 15× 20 + 10 𝑦 = 1200
Hence , 10y = 1200 – 300 = 900
y = 90
When y = 30 , 15 x + 10 × 30 = 1200
15x = 1200-300 = 900
x = 60
Here points on the feasible region are (20,30), (60 ,30) and (20, 90) Z = 2 x +
3y
So substituting these points we get
at (20,30), z = 2 × 20 + 3 × 30 = 40 + 90 = 130
at (60 ,30), z = 2 ×60 + 3× 30 = 120 + 90 = 210
at (20, 90) , z = 2 ×20 + 3 × 90 = 40 + 270 = 310
Here , 310 is maximum hence solution is
x = 20 and y = 90

10) Min Z = 40 x + 30 y , subject to constraints

60x + 20y ≥ 1200
10x +15y ≥ 600
5x + 7y ≤ 350
x,y≥0
 Solution :- Let us consider lines as
60x + 20y = 1200 -----------------------(1)
x 0 20
y 60 0
(x , y ) (0, 60 ) ( 20 , 0)
10x +15y = 600 ------------------------(2)
x 0 60
y 40 0
(x , y ) ( 0 , 40 ) ( 60 , 0 )
5x + 7y = 350 ------------------------(3)
x 0 70
y 50 0
(x , y ) ( 0 , 50 ) ( 70 , 0 )
Let us draw the graph of the given lines
Y

90

80

70

60 (0 , 60 )

50 ( 4.375 , 46. 875 )

( 0 , 50 )
40
( 0 , 40 )
30 (8.57 ,34.285 )

20

10
( 20 , 0 ) ( 70 , 0 )
( 60 , 0 )
(0 , 0) 10 20 30 40 50 60 70 80 90 100 X
Let us solve (1) and (3) by (1) – 12 × (3)we get
60x + 20y = 1200
-60x - 84y = - 4200
⟹ -64y = -3000
⟹ y = 46. 875
Hence from ( 3) we get , 5x = 350- 7 × 46.875 = 21.875
⟹ x = 4.375
By solving equation (1) and (2) we get
(1) - 6× (2)
60x + 20y = 1200
-60x - 90y = -3600
- 70y = - 2400
y = 34.285
Now from (2) we get
10x +15× 34.285 = 600
x = 8.57
Here points on the feasible region are (60,0), (70 ,0) , (4.375, 46. 875)
and (8.57 ,34.285 )
Z = 40 x + 30 y
So substituting these points we get
at (60, 0), z = 40 × 60 + 30 × 0 = 240
at (70 ,0) , z = 40 ×70 + 30× 0 = 280
at (4.375, 46. 875), z = 40 ×4.375 + 30 × 46.875 = 1581.25
at (8.57 ,34.285 ) , z = 40 ×8.57 + 30 × 34.285 = 1371.35
Here , 240 is maximum hence solution is
x = 60 and y = 0

12) Min z = 4x + 5y subject to constraints

x ≥ 10
y ≥ 10
25x + 20y ≤ 500
20x + 15y ≥ 300
x,y≥0
Solution :- Let us consider lines as
x = 10 --------------------------------------(1)
y = 10 ---------------------------------------(2)
25x + 20y = 500 -------------------------(3)
x 0 20
y 25 0
(x , y ) ( 0 , 25 ) ( 20 , 0 )
20x + 15y = 300 -------------------------(4)
x 0 15
y 20 0
(x , y ) ( 0 , 20 ) ( 15 , 0 )

Let us draw the graph of the given lines

 Y

45

40
y = 10
35

30
( 0 , 25 )
25

20
( 0 , 20 )

15 (12 , 10 )

(10, 10) x = 10
10 ( 10 ,12.5 )

( 10 , 0 ) (15 , 0 ) ( 20 , 0 )
(0 , 0) 5 10 15 20 25 30 35 40 45 50 X

Let us put x = 10 and y = 10 in equation (3) to get the points on the feasible
region.
25x + 20y = 500
25 × 10 + 20𝑦 = 500
20y = 500 – 250 = 250
y = 12.5
25x + 20× 10 = 500
25x = 500 – 200 = 300
x = 12
Here points on the feasible region are (12 , 10), (10,10) and (10 , 12.5)
Z=4x+5y
At (12 , 10) , Z = 4 × 12 + 5 × 10 = 48 + 50 = 98
At (10,10) , Z = 4 × 10 + 5 × 10 = 40 + 50 = 90
At (10 , 12.5) , Z = Z = 4 × 10 + 5 × 12.5 = 104.5
Here minimum is 90 hence the optimal solution is x = 10 and y = 10
Formulation of LPP
Q1.A company produces two products P1 and P2. One unit of P1 requires 40 machine hours
and 40 labour hours . One unit of P2 requires 20 machine hours and 160 labour hours .
Availability of machine hours is 800 and of labour hours is 1600, Profit per unit of P1 and P2
is Rs 10 and Rs15 respectively, Formulate as LPP and solve by graphical method to find the
optimal solution.
Solution :-
Let us formulate this LPP
Let us suppose x and y number of P1 and P2 be produced.
Profit per unit of P1 and P2 is Rs 10 and Rs15 respectively.
Hence objective function is
Max Z = 10x + 15y subject to the constraints
Product P1 Product P2 (y) Availability
(x)
Machine Hour 40 20 800
Labour Hour 40 160 1600
Hence , we get
40x + 20y ≤ 800
40x + 160y ≤ 1600
x,y≥0
Let us find the points on the line
40x + 20y = 800-------------------------------------( 1 )
x 0 20
y 40 0
(x , y ) ( 0 , 40 ) ( 20 , 0 )
40x + 160y = 1600 --------------------------------( 2 )
x 0 40
y 10 0
(x , y ) ( 0 , 10 ) ( 40 , 0 )
 Y
45
( 0 , 40 )
40

35

30

25

20

15
( 0 , 10 )
10 120 40
( , )
7 7
5

( 20 , 0 ) ( 40 , 0 )

(0 , 0) 5 10 15 20 25 30 35 40 45 50 X

Let us solve equation ( 1) and (2) : by (1 ) – ( 2 ) we get

40x + 20y = 800
- 40x - 160y = -1600
Hence - 140 y = - 800
800 40
y= =
140 7
40
Now substituting y = in ( 1 ) we get
7
40
40 x + 20 × = 800
7
20 20 120
x+ = 20 ⟹ 𝑥 = 20 − =
7 7 7
120 40
Hence on the feasible region the points are (0 , 0 ) , ( 40 , 0 ), ( , ) and (
7 7
0 , 40 )
at (0 , 0 ) , z = 0
at ( 40 , 0 ) , z = 10 × 40 + 15 × 0 = 400
120 40 120 40 1200 600
at ( , ) , z = 10 × + 15 × = + = 257.14
7 7 7 7 7 7
at ( 0 , 40 ) , z = 10 × 0 + 15 × 40 = 𝟔𝟎𝟎
Hence minimum is 600 hence the optimal solution is
x = 0 and y = 40 and z = 600
2)A company produces two products X and Y . One unit of X requires 4
machine hours , 10 labour hours and 8 units of material . One unit of Y requires
10 machine hours , 10 labour hours and 2 units of material . Capacity of
machine hour and labour hours are 1000 and 1500 respectively. At least 400
units of material must be utilized. Profit per unit of X and Y is Rs 20 and Rs 25
respectively. Formulate as LPP and solve by graphical method to find the
optimal solution.
Solution :-
Let us formulate this LPP
Let us suppose x and y number of X and Y be produced.
Profit per unit of X and Y is Rs 20 and Rs 25 respectively.
Hence objective function is
Max Z = 20x + 25y subject to the constraints

Product X Product Y Availability

(x) (y) / Atleast use
Machine Hour 4 10 1000
Labour Hour 10 10 1500
Material 8 2 400
Hence , we get
4x + 10y ≤ 1000
10x + 10y ≤ 1500
8x + 2y ≥ 400
x,y≥0
Let us find the points on the line
4x + 10y = 1000-------------------------------------( 1 )
x 0 250
y 100 0
(x , y ) ( 0 , 100) ( 250 , 0 )
10x + 10y = 1500--------------------------------( 2 )
x 0 150
y 150 0
(x , y ) ( 0 ,150 ) ( 150 , 0 )
8x + 2y = 400 ------------------------------------(3)
x 0 50
y 200 0
(x , y ) ( 0 , 200) ( 50 , 0 )

Let us plot these points on the graph.

 Y
225
( 0 , 200 )
200

175

150 ( 0 , 150 )

125

100 ( 0, 100)

75 (27.77, 88.88) (83.33, 66.66)

50

25
( 150 , 0 ) ( 250 , 0 )
( 50 , 0 )
(0 , 0) 25 50 75 100 125 150 175 200 225 250 X

Let us solve 1st and 2nd line by (1) – (2 ) we get

4x + 10y = 1000
-10x - 10y = -1500
we get , -6x = -500
Hence , x = 83.33
From ( 2 ) we get
10× 83.33 + 10𝑦 = 1500
10y = 1500-833.33
y = 66.66
Let us solve equation (1) and (3) by (1) - 5 × (3) we get
4x + 10y = 1000
40x - 10y = -2000
we get , -36x = -1000
x = 27.77
Now substituting x= 27.22 in (1) we get
111.11+10y = 1000
Hence , y = 88.88
The points on the feasible region are (50 , 0),(150 , 0) , (83.33, 66,66) , (27.77 ,
88.88)
The objective function is Z = 20x + 25y
At (50, 0) , Z = 20 × 50 + 0 = 1000
At (150, 0) , Z = 20 × 150 + 0 = 3000
At (83.33, 66,66) , Z = 20 × 83.33 + 25 × 66.66 = 3333.16
At (27.77, 88.88) , Z = 20 × 27.77 + 25 × 88.88 = 2777.4
Hence 3333.16 is maximum hence optimal solution is
x = 83.33 and y = 66.66

3. Two nutrients V1 and V2 are found in two foods A and B. One unit of A
contains 15 units of V1 and 20 units of V2. One unit of B contains 12 units of
V1 and 40 units of V2. Minimum daily requirement of V1 and V2 is 120 and
240 units respectively. Cost per unit of A and B is Rs 4 and Rs 6 respectively.
Formulate as LPP and solve by graphical method to find the optimal solution.
Solution :-
Let us formulate this LPP
Let us suppose x and y number of A and B be purchased.
Cost per unit of A and B is Rs 4 and Rs 6 respectively.
Hence objective function is
Min Z = 4x + 6y subject to the constraints
Food A Food B Minimum
(x) (y) Requirement
V1 15 12 120
V2 20 40 240

Hence , we get
15x + 12y ≥ 120
20x + 40y ≥ 240
x,y≥0
Let us find the points on the line
15x + 12y = 120-------------------------------------( 1 )
x 0 8
y 10 0
(x , y ) ( 0 , 10) (8,0)

20x + 40y = 240--------------------------------( 2 )

x 0 12
y 6 0
(x , y ) (0,6) ( 12 , 0 )
Let us plot these points on the graph.
 Y
18

16

14

12

10 ( 0 , 10 )

6 (0,6)

4 (5.333, 3.333)

(8,0) ( 12 , 0 )

(0 , 0) 2 4 6 8 10 12 14 16 18 20 X
Let us now solve the equation (1) and (2) to get the point of intersection of these
two lines .
By (1)× 4 − (2) × 3 we get
60x + 48y = 480
-60x - 120y = -720
We get , - 72 y = -240 ⟹ y = 3.333
From ( 2) 20x + 40× 3.333 = 240 ⟹ x = 5.333
Hence points on the feasible region are (0 ,10) ,( 5.33 , 3.33) , (12, 0 ) , Z = 4x +
6y
At ( 0 , 10) , Z = 4× 0 + 6 × 10 = 60
At ( 5.33 , 3.33 ) , Z = 4× 5.33 + 6 × 3.33 = 𝟒𝟏. 𝟑
At ( 12 , 0 ) , Z = 4× 12 + 6 × 0 = 48
Hence , minimum is 41.3 hence optimal solution is x = 5.33 , y = 3.33

4. A company produces two products tables and chairs. Cost per unit per table
and chair is Rs 20 and Rs 30 respectively. One unit of table requires 4 labour
hours and 3 machine hours. One unit of chair requires 5 labour hour and 4
machine hour. At least 200 labour hour and not more than 240 machine hours
should be used. At least 30 tables and 20 chairs should be produced. Formulate
as LPP and solve by graphical method to find the optimal solution.
Solution :- Let us formulate this LPP
Let us suppose x and y number of tables and chairs be produced.
Cost per unit of table and chair is Rs20 and Rs30 respectively.
Hence objective function is
Min Z = 20x + 30y subject to the constraints
Table Chair
(x) (y)
Labour hour 4 5 At least 200
Machine hours 3 4 not more than 240
Hence , we get
4x + 5y ≥ 200
3x + 4y ≤ 240
x,y≥0
Let us find the points on the line
4x + 5y = 200-------------------------------------( 1 )
x 0 50
y 40 0
(x , y ) ( 0 , 40 ) ( 50 , 0)
3x + 4y = 240--------------------------------( 2 )
x 0 80
y 60 0
(x , y ) ( 0 , 60 ) ( 80 , 0 )
Let us plot these points on the graph.

Y
90

80

70

60 ( 0 , 60 )

50

40
( 0 , 40 )
30

20

10
( 80 , 0 )
( 50 , 0 )
(0 , 0) 10 20 30 40 50 60 70 80 90 100 X
Here the lines are not intersecting and the points on the feasible region are (50 ,
0) , (80 , 0) , (0 , 40) and (0 , 60)
Objective function is Min Z = 20x + 30y
At (50 , 0) , Z = 20× 50 + 30 × 0 = 1000
At (80 , 0) , Z = 20× 80 + 30 × 0 = 1600
At (0 , 40) , Z = 20× 0 + 30 × 40 = 𝟏𝟐𝟎𝟎
At (0 , 60) , Z = 20× 0 + 30 × 60 = 1800
As 1200 is minimum hence the optimal solution is x = 0 , y = 40

Q5. A company produces two products P and Q. 1 unit of product P requires4

units of machine 1 and 4 units of machine 2. 1 unit of product Q requires2 units
of machine 1 and 6 units of machine 2. capacities of M1 and M2 are 32 units
and 48 units respectively. Maximum market demand for P is 4 units . Profit per
unit of P and Q is Rs 6 and Rs 12 respectively . Formulate as LPP and solve by
graphical method to find the optimal solution.

Solution :-
Let us formulate this LPP
Let us suppose x and y number of P and Q be produced.
Profit per unit of P and Q is Rs 6 and Rs 12 respectively.
Hence objective function is
Max Z = 6x + 12y subject to the constraints
P Q Capacities
(x) (y)
Machine 1 4 2 32
Machine 2 4 6 48
Hence , we get
4x + 2y ≤ 32
4x + 6y ≤ 48
x≤4
x,y≥0
Let us find the points on the line
4x + 2y = 32-------------------------------------( 1 )
x 0 8
y 16 0
(x , y ) ( 0 ,16) (8,0)
4x + 6y = 48--------------------------------( 2 )
x 0 12
y 8 0
(x , y ) (0,8) ( 12 , 0 )
x= 4 ------------------------------------------(3)
Let us plot these points on the graph.

Y
18
( 0 , 16 )
16

14
x=4
12

10

8 (0,8)

6
( 4 , 5.33)

2
(4,0) (8 , 0) ( 12 , 0 )

(0 , 0) 2 4 6 8 10 12 14 16 18 20 X

When we will solve ( 2) and (3) we get putting x = 4 in (2)

4× 4 + 6y = 48
y = 5.333
Hence the points on the feasible region are (0 ,0) ,( 0 , 8 ) , ( 4 , 0 ) and ( 4 ,
5.33) .
The objective function is Z = 6x + 12y
At ( 0 , 0 ) , Z = 6× 0 + 12 × 0 = 0
At ( 0 , 8 ) , Z = 6× 0 + 12 × 8 = 𝟗𝟔
At ( 4 , 0 ) , Z = 6× 4 + 12 × 0 = 24
At ( 4 , 5.33 ) Z = 6× 4 + 12 × 5.33 = 87.96
Here 96 is the maximum hence optimal solution is x = 0 , y = 8

Q6.ABC Ltd manufacture tables and Chairs. They have just acquired a new
workshop that can operate 48 hours a week. Production of a table will take 2
hours and chair will require 3 hours. Each table will contribute Rs 40 to profit
and a chair will contribute Rs 80 to profit. The marketing department has
determined that maximum of 15 tables and 10 chairs can be sold every week. .
Formulate as LPP and solve by graphical method to find the optimal solution.
Solution :- Let us formulate this LPP
Let us suppose x and y number of tables and chairs be produced.
Each table will contribute Rs 40 to profit and a chair will contribute Rs 80 to
profit.Hence objective function is
Max Z = 40x + 80y subject to the constraints
Table Chair Availability
(x) (y)
Production Time 2 3 48
Hence , we get
2x + 3y ≤ 48
Maximum of 15 tables and 10 chairs can be sold every week
x ≤ 15 , y ≤ 10
x,y≥0
Let us find the points on the line
2x + 3y = 48-------------------------------------( 1 )
x 0 24
y 16 0
(x , y ) ( 0 ,16) ( 24 , 0 )
x = 15 ---------------------------------------------(2)
y = 10 ---------------------------------------------(3)
Let us plot these points on the graph.

Y
27

24
x = 15
21

18
( 0 , 16 )
15

12 ( 9 , 10 )
( 0 , 10 ) y = 10
9

6 ( 15 , 6 )

3
( 24 , 0 )
( 15 , 0 )

(0 , 0) 3 6 9 12 15 18 21 24 27 30 X
 To get the point of intersection let us solve (1) and (2) and then (1) and (3)
equations.
When , x = 15 , 2× 15 + 3y = 48 , y = 6
When , y = 10 , 2× 𝑥+ 3× 10 = 48 , y = 9
Hence the points on the feasible region are ( 0 , 0 ) , ( 15 , 0 ) , ( 15 , 6 ) , ( 9 , 10
) and ( 0 ,10 )
The objective function is Z = 40x + 80y
At ( 0 , 0 ) , Z = 40× 0 + 80 × 0 = 0
At ( 15 , 0 ) , Z = 40× 15 + 80 × 0 = 600
At ( 15 , 6 ) , Z = 40× 15 + 80 × 6 = 600 + 480 = 1080
At ( 9 , 10 ) , Z = 40× 9 + 80 × 10 = 360 + 800 = 𝟏𝟏𝟔𝟎
At ( 0 , 10 ) , Z = 40× 0 + 80 × 10 = 800
Hence 1160 is maximum hence optimal solution is x = 9 and y =10
Simplex Method
Working Rules for Simplex :-
(a) If some given variable is missing in the basis then we will take value of that
variable = 0
(b) For maximization optimal solution all the values of
( Cj – Zj ) ≤ 0
(c) The minimum ratio column the lesser value will be selected
as out going variable.
(d) In key column if zero is there below the key element then in new table same
row will be written without any change.
In key column if 1 is there below the key element then that old row is taken and
new key row is subtracted to for the next new table.

Solved Examples
Q1 ) Solve the problem by simplex method :-
Max Z = 10x1 + 20 x2 subject to
10x1 + 4x2 ≤ 40
6x1 + 8 x2 ≤ 48
x1 , x2 ≥ 0
Solution :- The standard form of the given LPP is
Max Z = 10x1 + 20 x2 + 0s1 + 0s2 subject to
10x1 + 4x2 + s1 + 0 s2 = 40
6x1 + 8 x2 + 0 s1 + s2 = 48
x1 , x2 , s1 , s2 ≥ 0
Cj 10 20 0 0 Minimum
 Cb X B x1 x2 s1 s2 Ratio
0 s1 40 10 4 1 0 40/4 = 10
0 s2 48 6 8 0 1 48/ 8 = 𝟔 →
Zj 0 0 0 0
Cj - Zj 10 20 0 0
↑
0 s1 16 7 0 1 -1/2
20 x2 6 3/4 1 0 1/8
Zj 15 20 0 5/2
Cj - Zj -5 0 0 -5/2

Here all the values of Cj – Zj is either zero or negative hence the solution is
optimal.
Therefore , x1 = 0 ( as it is not present in the basis )
x2 = 6
and Z = 10 × 0 + 20 × 6 = 120
Calculation of Second Table First Row
(Old First Row ) – 4 × (New Second Row )
40 10 4 1 0
24 3 4 0 -½
16 7 0 1 -1/2
Calculation of Second Table Zj Row
3
First column = 0× 7 + 20 × = 15
4
Second column = 0× 0 + 20 × 1 = 20
Third column = 0× 1 + 20 × 0 = 0
−1 1 5
Fourth column = 0× ( ) + 20 × =
2 8 2

Q2 ) Solve the problem by simplex method :-

Max Z = 6x1 + 12 x2 subject to
4x1 + 2x2 ≤ 32
4x1 + 6 x2 ≤ 48
x1 ≤ 4
x1 , x2 ≥ 0
Solution :- The standard form of the given LPP is
Max Z = 6x1 + 12 x2 + 0s1 + 0s2 +0s3 subject to
4x1 + 2x2 + s1 + 0s2 +0s3 = 32
4x1 + 6 x2 + 0s1 + s2 + 0s3 = 48
x1 + 0 x2 + 0s1 + 0s2 + s3 = 4
x1 , x2 , s1 , s2 , s3 ≥ 0
 Cj 6 12 0 0 0 Minimum
Cb X B x1 x2 s1 s2 s3 Ratio
0 s1 32 4 2 1 0 0 32/2 = 16
0 s2 48 4 6 0 1 0 48/ 6 = 8 →
0 s3 4 1 0 0 0 1 --
Zj 0 0 0 0 0
Cj - Zj 6 12 0 0 0
↑
0 s1 16 8/3 0 1 -1/3 0
12 x2 8 2/3 1 0 1/6 0
0 s3 4 1 0 0 0 1
Zj 8 12 0 2 0
Cj - Zj -2 0 0 -2 0

Here all the values of Cj – Zj is either zero or negative hence the solution is
optimal.
Therefore , x1 = 0 ( as it is not present in the basis )
x2 = 8
and Z = 6 × 0 + 12 × 8 = 96
Calculation of Second Table First Row
(Old First Row ) – 2 × (New Second Row )
32 4 2 1 0 0
-16 -4/3 -2 0 - 1/3 0
16 8/3 0 1 -1/3 0
Calculation of Second Table Zj Row
8 2
First column = 0× + 12 × + 0 × 1 = 8
3 3
Second column = 0× 0 + 12 × 1 + 0 × 0 = 12
Third column = 0× 1 + 12 × 0 + 0 × 0 = 0
−1 1
Fourth column = 0× ( ) + 12 × + 0 × 0 = 2
3 6
Fifth column = 0× 0 + 12 × 0 + 0 × 1 = 0

3) Solve the problem by simplex method :-

Max Z = 100x1 + 80 x2 subject to
6x1 + 4x2 ≤ 7200
2x1 + 4 x2 ≤ 4000
x1 , x2 ≥ 0
Solution :- The standard form of the given LPP is
Max Z = 100 x1 + 80 x2 + 0s1 + 0s2 subject to
 6x1 + 4x2 + s1 + 0s2 = 7200
2x1 + 4 x2 + 0s1 + s2 = 4000
x1 , x2 , s1 , s2 ≥ 0
Cj 100 80 0 0 Minimum
Cb X B x1 x2 s1 s2 Ratio
0 s1 7200 6 4 1 0 7200/6 = 1200→
0 s2 4000 2 4 0 1 4000/2 = 2000
Zj 0 0 0 0
Cj - Zj 100 80 0 0
↑
100 x1 1200 1 2/3 1/6 0 1200
=1800
2/3
0 s2 1600 0 8/3 -1/3 1 1600
= 600→
8/3
Zj 100 200/3 50/3 0
Cj - Zj 0 40/3 -50/3 0
↑
100 x1 800 1 0 1/4 -1/4
80 x2 600 0 1 -1/8 3/8
Zj 100 80 15 5
Cj - Zj 0 0 -15 -5
Here all the values of Cj – Zj is either zero or negative hence the solution is
optimal.
Therefore , x1 = 800
x2 = 600
and Z = 800 × 100 + 600 × 80 = 80000 + 48000 = 12800
Calculation of Second Table second Row
(Old second Row ) – 2 × (New first Row )
4000 2 4 0 1
-2400 -2 -4/3 -1/3 0
1600 0 8/3 -1/3 1
Calculation of Second Table Zj Row
First column = 100× 1 + 0 × 0 = 100
Second column = 100× 2/3 + 0 × 8/3 = 200/3
1 −1 50
Third column =100× + 0 × =
6 3 3
Fourth column = 100× 0 + 0 × 1 = 0

Calculation of Third Table first Row

(Old first Row ) – 2/3 × (New second Row )
1200 1 2/3 1/6 0
-400 0 -2/3 1/12 -1/4
 800 1 0 1/4 -1/4
Calculation of Third Table Zj Row
First column = 100× 1 + 80 × 0 = 100
Second column = 100× 0 + 80 × 1 = 80
1 −1
Third column =100× + 80 × = 15
4 8
−1 3
Fourth column = 100× + 80 × = 5
4 8

4. Solve the problem by simplex method :-

Max Z = 9 x1 + 4 x2 subject to
4x1 + 3x2 ≤ 12
4 x1 + x2 ≤ 8
4 x1 + 9x2 ≤ 8
x1 , x2 ≥ 0
Solution :- The standard form of the given LPP is
Max Z = 9 x1 + 4 x2 + 0s1 + 0s2 + 0s3 subject to
4x1 + 3x2 + s1 + 0s2 + 0s3 = 12
4x1 + x2 + 0s1 + s2 + 0s3 = 8
4x1 + 9x2 + 0s1 + 0s2 + s3 = 8
x1 , x2 , s1 , s2 ≥ 0
Cj 9 4 0 0 0 Minimum
Cb X B x1 x2 s1 s2 s3 Ratio
0 s1 12 4 3 1 0 0 12/4 = 3
0 s2 8 4 1 0 1 0 8/4 = 2
0 s3 8 4 9 0 0 1 8/4 = 2 →
Zj 0 0 0 0 0
Cj - Zj 9 4 0 0 0
↑
0 s1 4 0 -6 1 0 -1
0 s2 0 0 -8 0 1 -1
9 x1 2 1 9/4 0 0 1/4
Zj 9 81/4 0 0 9/4
Cj - Zj 0 -65/4 0 0 -9/4
As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.
x1 = 9 , x2 = 0 and Z = 9× 9 + 4 × 0 = 𝟖𝟏
Calculation of Second Table First Row
(Old First Row ) – 4 × (New third Row )
12 4 3 1 0 0
-8 -4 -9 -0 -0 -1
4 0 -6 1 0 -1
Calculation of Second Table second Row
(Old First Row ) – 4 × (New third Row )
8 4 1 0 1 0
-8 -4 -9 -0 -0 -1
0 0 -8 0 1 -1
Calculation of Second Table Zj Row
First column = 0× 0 + 0 × 0 + 9 × 1 = 9
9 81
Second column = 0× (−6) + 0 × (−8) + 9 × =
4 4
Third column =0× 1 + 0 × 0 + 9 × 0 = 0
Fourth column = 0× 0 + 0 × 1 + 9 × 0 = 0
1 9
Fifth column = 0× (−1) + 0 × (−1) + 9 × ( ) =
4 4
Hence , x1 = 2 and x2 = 0 , Z = 9 × 2 + 4 × 0 = 18

5. Solve the problem by simplex method :-

Max Z = 40x1 + 80x2 subject to
2x1 + 3x2 ≤ 48
x1 ≤ 15
x2 ≤ 10
x1 , x2 ≥ 0
Solution :-
Standard Form of the given LPP
Z = 40x1 + 80x2 + 0s1 + 0s2 + 0s3 subject to
2x1 + 3x2 + 1s1 + 0s2 + 0s3 = 48
x1 + 0 x2 + 0s1 + 1s2 + 0s3 = 15
0 x1 + x2 +0s1 + 0s2 + 1s3 = 10
x1 , x2 , s1 , s2 , s3 ≥ 0
Cj 40 80 0 0 0 Minimum
Cb X B x1 x2 s1 s2 s3 Ratio
0 s1 48 2 3 1 0 0 48/3=16
0 s2 15 1 0 0 1 0 -
0 s3 10 0 1 0 0 1 10/1=10 →
Zj 0 0 0 0 0
Cj - Zj 40 80 0 0 0
↑
0 s1 18 2 0 1 0 -3 18/2 = 9→
0 s2 15 1 0 0 1 0 15/1 = 15
80 x2 10 0 1 0 0 1 -
Zj 0 80 0 0 80
Cj - Zj 40 0 0 0 -80
 ↑
40 x1 9 1 0 1/2 0 -3/2
0 s2 6 0 0 -1/2 1 3/2
80 x2 10 0 1 0 0 1
Zj 40 80 20 0 20
Cj - Zj 0 0 -20 0 -20
As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.
x1 = 9 , x2 = 10 and Z = 40× 9 + 80 × 10 = 360 + 800 = 𝟏𝟏𝟔𝟎
Calculation of Second Table First Row
(Old First Row ) – 3 × (New third Row )
48 2 3 1 0 0
-30 -0 -3 -0 -0 -3
18 2 0 1 0 -3
Calculation of Second Table Zj Row
First column = 0× 2 + 0 × 1 + 80 × 0 = 0
Second column = 0× 0 + 0 × 0 + 80 × 1 = 80
Third column =0× 1 + 0 × 0 + 80 × 0 = 0
Fourth column = 0× 0 + 0 × 1 + 80 × 0 = 0
Fifth column = 0× (−3) + 0 × 0 + 80 × 1 = 80
Calculation of Third Table Second Row
(Old Second Row ) – (New First Row )
15 1 0 0 1 0
-9 -1 -0 -1/2 -0 3/2
6 0 0 -1/2 1 3/2
Calculation of Third Table Zj Row
First column = 40× 1 + 0 × 0 + 80 × 0 = 40
Second column = 40× 0 + 0 × 0 + 80 × 1 = 80
1 −1
Third column =40× + 0 × ( ) + 80 × 0 = 20
2 2
Fourth column = 40× 0 + 0 × 1 + 80 × 0 = 0
−3 3
Fifth column = 40× ( ) + 0 × ( ) + 80 × 1 = 20
2 2

6. A firm manufactures Two products desk chairs and book shelves with help of
machinery M1 and labour. To produce one unit of desk chairs 20 machine hrs
and 50 labour hrs are required. Also to produce 1 unit of book shelves 10
machine hrs and 50 labour hrs are required. Machine hrs and labour hrs can be
utilized maximum 500 hrs and 300 hrs respectively. Let the profit per unit of
chair and shelve be Rs 100 and Rs 40 respectively Formulate the given problem
as LPP and solve it by simplex method.
Solution :-
Let us suppose x and y number of desk chairs and book shelves be
manufactured.
Let the profit per unit of chair and shelve be Rs 100 and Rs 40 respectively ,
hence
Max Z = 100x + 40 y subject to
Desk chairs(x) Book shelves (y) Availibility
Machin Hour 20 10 500
Labour Hour 50 50 300
20 x + 10 y ≤ 500
50x + 50 y ≤ 300
x,y ≥0
The standard form is
Z = 100x + 40 y + 0s1 + 0s2 subject to
20 x + 10 y + 1s1 + 0s2 = 500
50x + 50 y + 0s1 + 1s2 = 300
x , y , s1 , s2 ≥ 0
Cj 100 40 0 0 Minimum
Cb X B x y s1 s2 Ratio
0 s1 500 20 10 1 0 500/20 = 25
0 s2 300 50 50 0 1 300/50 = 6 →
Zj 0 0 0 0
Cj - Zj 100 40 0 0
↑
0 s1 380 0 -10 1 -2/5
100 X 6 1 1 0 1/50
Zj 100 100 0 2
Cj - Zj 0 -60 0 -2
As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.
x = 6 , y = 0 and Z = 100× 6 + 40 × 0 = 𝟔𝟎𝟎
Calculation of Second Table First Row
(Old First Row ) – 20 × (New second Row )
500 20 10 1 0
-120 -20 -20 -0 -2/5
380 0 -10 1 -2/5
Calculation of Second Table Zj Row
First column = 0× 0 + 100 × 1 = 100
Second column = 0× (−10) + 100 × 1 = 100
Third column = 0× 1 + 100 × 0 = 0
−2 1
Fourth column = 0× ( ) + 100 × ( ) = 2
5 50
 7. Solve the problem by simplex method :-
Max Z = 30x1 + 40x2 + 20x3 subject to
10x1 + 12x2 + 7x3 ≤ 10000
7x1 + 10x2 + 8x3 ≤ 8000
x1 + x2 + x3 ≤ 1000
x1 , x2 , x3 ≥ 0
Solution :-
Standard Form :-
Z = 30x1 + 40x2 + 20x3 + 0 s1 + 0s2 + 0s3 subject to
10x1 + 12x2 + 7x3+ 1 s1 + 0s2 + 0s3 = 10000
7x1 + 10x2 + 8x3 + 0 s1 + 1 s2 + 0s3 = 8000
x1 + x2 + x3 + 0 s1 + 0s2 + 1 s3 = 1000
x1 , x2 , x3 , s1 , s2 , s3 ≥ 0
Cj 30 40 20 0 0 0 Minimum
Cb X B x1 x2 x3 s1 s2 s3 Ratio
0 s1 100 10 12 7 1 0 0 10000/12=833.33
00
0 s2 800 7 10 8 0 1 0 8000/10= 800→
0
0 s3 100 1 1 1 0 0 1 1000/1= 1000
0
Zj 0 0 0 0 0 0
Cj – Zj 30 40 20 0 0 0
↑
0 s1 400 1.6 0 -2.6 1 -1.2 0 400/1.6 = 250→
40 x2 800 0.7 1 0.8 0 0.1 0 800/0.7=1142.85
0 s3 200 0.3 0 0.2 0 -0.1 1 200/ 0.3=666.67
Zj 28 40 32 0 4 0
Cj – Zj 2 0 -12 0 -4 0
↑
30 x1 250 1 0 -1.625 0.625 0.75 0
40 x2 625 0 1 1.9375 -0.4375 -0.425 0
0 s3 125 0 0 0.6875 -0.1875 -0.3225 1
Zj 30 40 28.75 1.25 5.5 0
Cj – Zj 0 0 -8.75 -1.25 -5.5
As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.
x1 = 250 , x2 = 625 , x3 = 0 and Z = 30× 𝟐𝟓𝟎 + 𝟒𝟎 × 𝟔𝟐𝟓 + 𝟐𝟎 × 𝟎 =
𝟑𝟐𝟓𝟎𝟎

Calculation of Second Table third Row

(Old third Row ) – (New second Row )
1000 1 1 1 0 0 1
-800 -0.7 -1 -0.8 0 -0.1 0
200 0.3 0 0.2 0 -0.1 1
Calculation of Second Table first Row
(Old first Row ) – 12 × (New second Row )
10000 10 12 7 1 0 0
-9600 -8.4 -12 -9.6 0 -1.2 0
400 1.3 0 -2.6 1 -1.2 0
Calculation of Second Table Zj Row
First column = 0× 1.6 + 40 × 0.7 + 0 × 0.3 = 28
Second column = 0× 0 + 40 × 1 + 0 × 0 = 40
Third column = 0× (−2.6) + 40 × (0.8) + 0 × (0.2) = 32
Fourth column = 0× 1 + 40 × 0 + 0 × 0 = 0
Fifth column = 0× (−1.2) + 40 × (0.1) + 0 × (−0.1) = 4
Six column = 0× 0 + 40 × 0 + 0 × 1 = 0

Calculation of Second Table third Row

(Old third Row ) – 0.3 ×(New first Row )
200 0.3 0 0.2 0 -0.1 1
-75 -0.3 -0 +0.4875 - 0.1875 -0.225 0

125 0 0 0.6875 -0.1875 -0.3225 1

Calculation of Second Table second Row

(Old second Row ) – 0.7 × (New second Row )
800 0.7 1 0.8 0 0.1 0
-175 -0.7 0 1.1375 -0.4375 - 0.525 0
625 0 1 1.9375 -0.4375 -0.425 0
Calculation of Second Table Zj Row
First column = 30× 1 + 40 × 0 + 0 × 0 = 30
Second column = 30× 0 + 40 × 1 + 0 × 0 = 40
Third column = 30× (−1.625) + 40 × 1.9375 + 0 × 0.6875
= - 48.75 + 77.5 = 28.75
Fourth column = 30× 0.625 + 40 × (−0.4375) + 0 × (−0.1875)
= 18.75 - 17.5 = 1.25
Fifth column = 30× 0.75 + 40 × (−0.425) + 0 × (−0.125)
= 22.5 -17 = 5.5
Six column = 30× 0 + 40 × 0 + 0 × 1 = 0
 8). Solve the problem by simplex method :-
Max Z = 3 x1 + 2 x2 + 5 x3 subject to
x1 + 2x2 + 2x3 ≤ 8
3x1 + 2x2 + 6x3 ≤ 12
2x1 + 3x2 + 4x3 ≤ 12
x1 , x2 , x3 ≥ 0
Solution :-
Standard Form :-
Z = 3x1 + 2x2 + 5x3 + 0 s1 + 0s2 + 0s3 subject to
1x1 + 2x2 + 2x3+ 1 s1 + 0s2 + 0s3 = 8
3x1 + 2x2 + 6x3 + 0 s1 + 1 s2 + 0s3 = 12
2x1 + 3x2 + 4 x3 + 0 s1 + 0s2 + 1 s3 = 12
x1 , x2 , x3 , s1 , s2 , s3 ≥ 0
Cj 3 2 5 0 0 0 Minimum
Cb X B x1 x2 x3 s1 s2 s3 Ratio
0 s1 8 1 2 2 1 0 0 8/2 = 4
0 s2 12 3 2 6 0 1 0 12/6 = 2→
0 s3 12 2 3 4 0 0 1 12/4 = 3
Zj 0 0 0 0 0 0
Cj – Zj 3 2 5 0 0 0
↑
0 s1 4 0 4/3 0 1 -1/3 0 -
5 x3 2 1/2 1/3 1 0 1/6 0 2/(1/2) = 4 →
0 s3 4 0 5/3 0 0 -2/3 1 -
Zj 5/2 5/3 5 0 5/6 0
Cj – Zj ½ 1/3 0 0 -5/6 0
↑
0 s1 4 0 4/3 0 1 -1/3 0
3 x1 4 1 2/3 2 0 1/3 0
0 s3 4 0 5/3 0 0 -2/3 1
Zj 3 2 6 0 1 0
Cj – Zj 0 0 -1 0 -1 0
As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.
x1 = 4 , x2 = 0 , x3 = 0 and Z = 3× 𝟒 + 𝟐 × 𝟎 + 𝟓 × 𝟎 = 𝟏𝟐
Calculation of Second Table first Row
(Old first Row ) – 2 × (New second Row )
8 1 2 2 1 0 0
-4 -1 -2/3 -2 0 -1/3 0
4 0 4/3 0 1 -1/3 0
Calculation of Second Table third Row
(Old third Row ) – 4 × (New second Row )
 12 2 3 4 0 0 1
-8 -2 -4/3 -4 0 -2/3 0
4 0 5/3 0 0 -2/3 1
A minimization LPP can be solved using the following methods :-
(1) Graphical Method ( only for two variable sums)
(2) Big – M Method ( for any number of variable)
(3) Dual simplex Method

Dual simplex Method :- ( for any number of variable)

Primal Dual
1) Minimization Problem, Min Z 1) Maximization Problem , Max Z*
2)Constraints are ≥ type 2)Constraints are ≤ type
3)Decision variables are x and y 3)Decision variables are x’ and y’

Examples of Primal and Dual

Primal Dual
1)Max Z = 3x1 + 2x2 Min Z* = 4y1 + 10y2
Subject to Subject to
x1 + x2 ≤ 4 1 y1+2 y2 ≥ 3
2x1 + x2 ≤ 10 1 y1 + 1 y2 ≥ 2
x1 , x2 ≥ 0 y1 , y2 ≥ 0

2) Min Z = 4x + 6y Max Z* = 120x’ + 240y’

Subject to Subject to
15x+12y ≥ 120 15x’ + 20y’ ≤ 4
20x + 40y ≥ 240 12 x’ + 40 y’ ≤ 6
x,y≥0 x' , y’ ≥ 0
Consider , Max Z* = 120x’ + 240y’
Subject to 15x’ + 20y’ ≤ 4
12 x’ + 40 y’ ≤ 6
x' , y’ ≥ 0
Standard Form :-
Z* = 120x’ + 240y’+ 0 s1 + 0s2 subject to
15x’ + 20y’ + 1 s1 + 0s2 = 4
12 x’ + 40 y’ + 0 s1 + 1 s2 = 6
x’ , y’, s1 , s2 ≥ 0
Cj 120 240 0 0 Minimum
Cb X B x’ y’ s1 s2 Ratio
0 s1 4 15 20 1 0 4/20 = 0.2
0 s2 6 12 40 0 1 6/40 = 0.15→
 Zj 0 0 0 0
Cj – Zj 120 240 0 0
↑
0 s1 1 9 0 1 -0.5 1/9 = 0.111→
240 y’ 0.15 0.3 1 0 0.025 0.15/0.3 = 0.5
Zj 72 240 0 6
Cj – Zj 48 0 0 -6
↑
120 x’ 0.111 1 0 0.111 -0.055
240 y’ 0.116 0 1 -0.0333 0.270
Zj 120 240 5.328 58.2
Cj – Zj 0 0 -5.328 -58.2

As all elements of (Cj – Zj) ≤ 0 hence we got the optimal solution.

x = 5.328 , y = 58.2 and Z = 5.328 × 𝟒 + 𝟔 × 58.2 = 𝟑𝟕𝟎. 𝟓𝟏𝟐
Calculation of Second Table first Row
(Old first Row ) – 20 × (New second Row )
4 15 20 1 0
-3 -6 -20 -0 -0.5
1 9 0 1 -0.5
Calculation of Third Table second Row
(Old second Row ) – 0.3 × (New first Row )
0.5 0.3 1 0 0.25
-0.0333 -0.3 -0 -0.0333 0.245
0.1167 0 1 -0.0333 0.270
Dual Simplex Method
Solve the following LPP by dual simplex method :-
Min Z = 4 x1 + 3 x2 subject to
200 x1 + 100 x2 ≥ 4000
x1 + x2 ≥ 50
40 x1 + 40 x2 ≥ 1400
x1 , x2 ≥ 0
Solution :- Here Primal is Min Z = 4 x1 + 3 x2 subject to
200 x1 + 100 x2 ≥ 4000
x1 + x2 ≥ 50
40 x1 + 40 x2 ≥ 1400
x1 , x2 ≥ 0
Hence dual be Max Z* = 4000y1 + 50 y2 + 1400 y3 subject to
200y1 + y2 + 40 y3 ≤ 4
100 y1 + y2 + 40 y3 ≤ 3
 y1 , y2 , y3 ≥ 0
The standard form is
Max Z* = 4000y1 + 50 y2 + 1400 y3 + 0 s1 + 0 s2
200y1 + y2 + 40 y3 + 1 s1 + 0 s2 = 4
100 y1 + y2 + 40 y3 + 0 s1 + 1 s2 = 3
y1 , y2 , y3 , s1 , s2 ≥ 0
Cj 4000 50 1400 0 0 Minimum
Cb X B x1 x2 x3 s1 s2 Ratio
0 s1 4 200 1 40 1 0 4/200 =0.02→
0 s2 3 100 1 40 0 1 3/100=0.03
Zj 0 0 0 0 0
Cj - Zj 4000 50 1400 0 0
↑
400 x1 0.02 1 0.005 0.2 0.005 0 0.02/0.2=0.1
0
0 s2 1 0 0.5 20 -0.5 1 1/20=0.05→
Zj 4000 20 800 20 0
Cj - Zj 0 30 600 0 0
↑
400 x1 0.01 1 0 0 0.01 -0.01 -
0
140 x3 0.05 0 0.025 1 -0.025 0.05 0.05/0.025=2→
0
Zj 4000 35 1400 5 30
Cj - Zj 0 15 0 -5 -30
↑
400 x1 0.01 1 0 0 0.01 -0.01 0.01/0.01=1→
0
50 x2 2 0 1 40 -1 2 -
Zj 4000 50 2000 -10 60
Cj - Zj 0 0 -600 10 -60
↑
0 s1 1 100 0 0 1 -100 -
50 x2 3 100 1 40 0 -98 -
Zj 5000 50 2000 0 -4900
Cj - Zj -1000 0 -600 0 4900

Here s2 is having positive value 4900 but in the key column there is no positive
term hence no out going variable . Hence the solution is unbounded or infinity.
The value of Z keeps increasing infinitely.
Calculation of Second Table second Row
(Old second Row ) – 100 ×(New first Row )
3 100 1 40 0 1
-2 -100 -0.5 -20 -0.5 0
1 0 0.5 20 -0.5 1
Calculation of Third Table first Row
(Old first Row ) – 0.2 × (New second Row )
0.02 1 0.005 0.2 0.005 0
0.01 0 -0.005 -0.2 0.005 -0.01
0.01 1 0 0 0.01 -0.01

Exercise :
Graphical Method :-
Q1. Solve by graphical method :
Max Z = 40 X1 + 80 X2
Subject to 2X1 + 2X2 ≤ 48
X1 ≤ 15
X2 ≤ 10
X1 , X2 ≥ 0
Q2. Solve by graphical method :
Min Z = 50 X1 + 20 X2
Subject to X1 + X2 ≤ 600
X1 + X2 ≥ 300
6X1 + 2X2 ≥ 1200
X1 , X2 ≥ 0
Q3.A Company produces two products X and Y . 1 unit of product X requires
12 labour hour. 1 unit of product Y requires 10 labour hour . Availability of
labour hours is 120. Minimum market demand for X is 8 and maximum market
demand for Y is 10 units. Profit per unit of X and Y is Rs 4 and Rs 6
respectively. Formulate and solve as graphical method.
Q4. A Company produces two products X and Y . 1 unit of product X requires
4 machine , 10 labour hour and 8 units of material . 1 unit of product Y requires
10 machine hour , 10 labour hour and 2 units of material. . Capacity of machine
hours and labour hours is 1000 and 1500. At least 400 units of material must be
utilized . Profit per unit of X and Y is Rs 20 and Rs 25 respectively. Formulate
and solve as graphical method.
Q5. Vitamin V1 and V2 are found in two foods F1 and F2. One unit of F1
contains 10 units of V1 and 5 units of V2. One unit of F2 contains 5 units of V1
and 15 units of V2.Minimum requirement of V1 and V2 are 200 and 300 units
respectively, Cost per unit of F1 and F2 is Rs 5 and Rs 8 respectively.
Formulate and solve as graphical method.

Simplex Method
Q1. Solve the problem by simplex method :-
Max Z = 30x1 + 30x2 subject to
3x1 + x2 ≤ 30000
x1 ≤ 8000
x2 ≤ 12000
x1 , x2 ≥ 0

Q2. Solve the problem by simplex method :-

Max Z = 2 x1 + 5 x2 subject to
2x1 + x2 ≤ 20
3 x1 + 4 x2 ≤ 24
x1 , x2 ≥ 0

Q3. Solve the problem by simplex method :-

Max Z = 8 x1 + 20 x2 subject to
2x1 + x2 ≤ 80
3 x1 + 4 x2 ≤ 96
x1 , x2 ≥ 0

Q4. Solve the problem by simplex method :-

Max Z = 10x1 + 6x2 + 6x3 subject to
3x1 + 2x2 + 2x3 ≤ 240
2x1 + 3x2 + 3x3 ≤ 270
x1 ≤ 60
x1 , x2 , x3 ≥ 0

Q5. Solve the following minimization LPP by dual simplex method :

Min Z = 600x + 500 y Subject to
2x + y ≥ 80
x + 2y ≥ 60
x,y≥0
 Chapter 2
Transportation Problem
A typical transportation table looks like
Ware Houses P Q R S Supply
Plants
A C11 C12 C13 C14 S1
X11 X12 X13 X14
B C21 C22 C23 C24 S2
X21 X22 X23 X24
C C31 C32 C33 C34 S3
X31 X32 X33 X34
Demand D1 D2 D3 D4

S1 = Supply from Plant A

S2 = Supply from Plant B
S3 = Supply from Plant C
D1 = Demand of the ware house P
D2 = Demand of the ware house Q
D3 = Demand of the ware house R
D4 = Demand of the ware house S
Cij = unit cost of transportation from source i to destination j
Xij = Quantity transportation in number of units from i to destination j

Solution of transportation can be done in two steps

Step 1 : Finding IBFS ( initial basic feasible solution ) using this methods
(a) NWCR ( North west corner Rule )
(b) LCM ( Least Cost Method )
(c) VAM method ( Vogel’s Approximation Method )
Step 2 : Checking IBFS using modified distribution Method ( MODI method )

Transportation Theory
Full Forms :-
IBFS = Initial Basic feasible solution
NWCR = North West Corner Rule
LCM = Least Cost Method
VAM = Vogel’s Approximate Method
MODI Method = Modified Distribution method
Q1 . What are the methods to find IBFS in a transportation problem ?
Ans :- (a) NWCR (b) LCM (c)VAM
Q2. What do you mean by unbalanced transportation problem ?
Ans :- A transportation problem is unbalanced if total supply is not equal to
total demand.
Q3. What do you mean by unbalanced transportation problem ?
Ans :- A transportation problem is prohibited or restricted when there is a
condition in the problem that transportation is not possible on one or more
routes.
Q4.Which transportation problem is known as maximization problem ?
Ans :- A transportation problem is of maximization type if the objective
function is to maximize total profit.
Q5. Which transportation problem is known as minimization problem ?
Ans :- A transportation problem is of minimization type if the objective function
is to minimization total cost.
Q6. When degeneracy occurs in a transportation problem ?
Ans :- Degeneracy occurs when in a transformation table number of allocations
are less than ( number of rows + number of columns – 1).
Q7. What do you mean by a non-degenerate solution in a transportation
problem ?
Ans :- If in a transportation table the number of allocations are equal to (
number of rows + number of columns – 1) then it is called a non degenerate
solution.
Q10. How the test of optimality is calculated in a transportation problem ?
Ans :- Testing for optimality is done by calculating u , v and Δ. Where
Occupied cell = u + v , Δ = cost – ( u + v).
Q11. How the degeneracy in an transportation problem is removed ?
Ans :- To remove degeneracy we add an imaginary entry called epsilon (𝜖 )
Q12 . Where to place epsilon (𝝐 ) ?
Ans :- Epsilon (𝜖 ) is placed in an independent cell ( a cell which does not form
any loop with other occupied cells ) with least cost .
Q13. What Transportation cost should we put in a prohibited cell ?
Ans :- No quantity can be allocate in a prohibited cell. So transportation cost for
that cell is treated as M ( infinity )
Q14. In case of unbalanced transportation problem what cost should be
given in dummy row / column ?
Ans :- In case of unbalanced transportation problem 0 is allocated as cost in all
cells of dummy row / column .
Q15.What are types of loop can be constructed in MODI method ?
Ans :- (1) Four corner loop (2) six corner loop
Q16. What is the meaning of opportunity cost (𝚫 )?
Ans :- Δ represents the change in cost for an empty cell.
Q17. When loop is constructed in a transportation problem ?
Ans :- If opportunity cost (Δ) in an unoccupied cell is negative then cost
reduction option is possible . In this case a loop is constructed from the negative
value cell.
Q18. What is test of feasibility in a transportation problem ?
Ans :- The total allocations in each row and column in an transportation table
must match with demand and supply of the row and column .
Q19. What is the formula for opportunity cost (𝚫 ) 𝐢𝐧 𝐌𝐎𝐃𝐈 𝐦𝐞𝐭𝐡𝐨𝐝 ?
Ans :- The formula for opportunity of cost = Cost – ( u + v)
Q20. How u and v variables are calculated in MODI method ?
Ans:- The formula for calculating u and v is
Cost of the cell = u + v
Q21. What is alternative optimal solution in a transportation problem ?
Ans :- Alternative optimal solution or multiple optimal solution means there are
two sets of solutions which provide the same optimal cost or optimal profit .
Q22. How to identify alternative optimal solution from a transportation
problem ?
Ans :- If there is a empty cell with zero 𝚫 value then it means that the problem
is having alternative optimal solutions .
Q23 . How to solve maximization transportation problem ?
Ans :- In case of maximization transportation problem the profit table is first
converted into regret table.
Q24. How the total cost for a particular cell in a transportation problem is
calculate ?
Ans :- Total cost in a particular cell = Unit cost × Quantity transported
Solved Example :-
Find the IBSC using (a) NWCR (b)LCM (c)VAM method
Ware Houses W1 W2 W3 W4 Supply
Plants
A 42 32 50 26 11

B 34 36 28 46 13

C 64 54 36 82 19

Demand 6 10 12 15
Solution:- Let us find the IBFS using
NWCR
Ware Houses W1 W2 W3 W4 Supply
Plants
A 42 32 50 26 11
6 5 5
B 34 36 28 46 13
5 8 8
C 64 54 36 82 19
4 15 15
Demand 6 10 5 12 4 15 43

Total cost = 6×42 + 32×5 +36×5 +28×8+ 36× 4 + 82 × 15 = 2190

LCM
Ware Houses W1 W2 W3 W4 Supply
Plants
A 42 32 50 26 11
11
B 34 36 28 46 13
1 12 1
C 64 54 36 82 19
5 10 4 9 4
Demand 6 10 12 15 43
5
Total cost = 26×11 + 34×1 +28×12 +64×5+ 54× 10 + 82 × 4 == 1844
VAM Method
Ware Houses W1 W2 W3 W4 Supply Row penalties
Plants
A 42 32 50 26 11 6
11
B 34 36 28 46 13 6 6 8 8
6 3 4 9 3
C 64 54 36 82 19 18 18 18 18
7 12 7
Demand 6 10 12 15 43
7 4
Column 8 4 8 20↑
Penalties 30 18 8 36↑
30↑ 18 8
18↑ 8

Total cost = 26×11 + 34×6 +36×3 +46×4+ 54 × 7 + 36 × 12 = 1592

Example 2
A company has three plants A , B , C for which capacities 7 , 10 and 18 and its
warehouses P , Q , R and S which demands 5 ,8 ,7 and 15. Find the IBSC using
(a) NWCR (b)LCM (c)VAM method
Ware Houses P Q R S Supply
Plants
A 38 60 100 24 7

B 140 60 80 120 10

C 80 20 120 40 18

Demand 5 8 7 15

Solution :-
Let us find the IBFS using
NWCR
Ware Houses P Q R S Supply
Plants
A 38 60 100 24 7
5 2 2
B 140 60 80 120 10
6 4 4
C 80 20 120 40 18
3 15 15
Demand 5 8 7 15 35
6 3
Total cost = 38×5 + 60×2 +60×6 +80×4+ 120 × 3 + 40 × 15
= 1950

LCM Method
Ware Houses P Q R S Supply
Plants
A 38 60 100 24 7
7
B 140 60 80 120 10
3 7 3
C 80 20 120 40 18
2 8 8 10 2
Demand 5 8 7 15 35
2 8
Total cost = 24×7 + 140×3 +80×7 +80×2+ 20 × 8 + 40 × 8
= 1788
VAM Method
Ware P Q R S Supply Row penalty
Houses
Plants
A 38 60 100 24 7 14 36 76 76
2
5 2
B 140 60 80 120 10 20 20 40 40
3
7 3
C 80 20 120 40 18 20 20 80
8 10 10 ←
Demand 5 8 7 15 35
Column 42↑ 40 20 16
Penalty 40↑ 20 16
20 16
20 96↑
Total cost= 38×5 + 24×2 +80×7 +120×3+ 20 × 8 + 40 × 10
= 1758

Example 3
A company has 3 plants P1 , P2 and P3 . It supplies to 3 ware houses D1 , D2 ,
D3 . Find the optimal solution by VAM and MODI Method

Ware Houses D1 D2 D3 Supply

Plants
P1 32 28 22 50

P2 26 36 34 40

P3 28 28 24 60

Demand 20 95 35
Solution :- Let us find the IBFS by VAM method

Ware Houses D1 D2 D3 Supply Row

Plants penalty
P1 32 28 22 50 6 6
15 35 15 ←
P2 26 36 34 40 8 2
20 20 20 ←
P3 28 28 24 60 4 4
60
Demand 20 95 35 150
80 20
2 0 2
0 2
Here the rim condition = m + n -1 = 3 +3 – 1= 5
The solution has all 5 allocations hence it is a non-degenerate solution.
Let us check this IBFS by modified distribution method
Ware Houses D1 D2 D3 Supply ui
Plants
P1 32 28 22 50 u1 = 28
14 15 35
P2 26 36 34 40 u2 = 36
20 20 4
P3 28 28 24 60 u3 = 28
10 60 2
Demand 20 95 35 150

vj v1 = v2 = v3 =
-10 0 -6

Now considering occupied sells we get

u1 + v2 = 28
u1 + v3 = 22
u2 + v1 = 26
u2 + v2 = 36
u3 + v2 = 28
As v2 is repeated thrice so let us consider
v2 = 0
Hence we get u1 = 28 , u2 = 36 , u3 = 28
And , v3 = 22 - u1 = 22 -28 = - 6
v1 = 26 - u2 = 26 – 36 = -10
Let us calculate cij - (ui + vj) for not occupied sells
For , P1D1 = c11 - (u1 + v1) = 32 – ( 28 – 10 ) = 32 – 18 = 14
P2D3 = c23 - (u2 + v3) = 34 – ( 36 – 6 ) = 34 – 30 = 4
P3D1 = c31 - (u3 + v1) = 28 – ( 28 – 10 ) = 28 – 18 = 10
P3D3 = c33 - (u3 + v3) = 24 – ( 28 – 6 ) = 24 – 22 = 2
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 28×15 + 35×22 +26×20 +36×20+ 28× 60
= 4110

4) For the following transportation problem find the optimal solution using
Modified Distribution Method .

D1 D2 D3 D4 Supply
Plants
P1 10 12 9 6 70

P2 7 3 7 7 60

P3 6 6 9 11 90

Demand 60 40 60 20 220
180
Solution :- VAM Method

D1 D2 D3 D4 Dummy Supply Row

Plants D5 Penalties
P1 10 12 9 6 0 70 6 3 3 3
10 20 40 30 10 ← ←
P2 7 3 7 7 0 60 3 4 0 0
40 20 20 ←
P3 6 6 9 11 0 90 6 0 5 2
60 30 30 ←
Deman 60 40 60 20 40 220
d 40
30
Colum 1 3 2 1 0
n 1 3 2 1
Penalti 1 2 1
es 2 1
Here Rim condition is
=m+n-1=3+5–1=7
Hence 7 allocations should be there for non degenerate solution and which is
satisfied in this sum.
D1 D2 D3 D4 D5 Supply ui
Plants
P1 10 12 9 6 0 70 u1
4 7 10 20 40 =0
P2 7 3 7 7 0 60 u2 =
3 40 20 3 2 -2
P3 6 6 9 11 0 90 u3
60 1 30 5 0 =0
Demand 60 40 60 20 40 220
vj v1 v2 v3 = v4 = 6 v5 =0
=6 =5 9
Now considering occupied sells we get
u1 + v3 = 9
u1 + v4 = 6
u1 + v5 = 0
u2 + v2 = 3
u2 + v3 = 7
u3 + v1 = 6
u3 + v3 = 9
As u1 is repeated thrice so let us consider , u1 = 0
Hence we get v3 = 9 , v4 = 6 , v5 = 0
And , u3 = 9 – v3 = 9 -9 = 0
v1 = 6 – u3 = 6 – 0 = 6
u2 = 7 - v3 = 7 – 9 = -2
v2 = 3 - u2 = 3 – (-2) = 5
Let us calculate cij - (ui + vj) for not occupied sells
For , P1D1 = 10 – ( 0 + 6) = 10 – 6 = 4
P1D2 = 12 – ( 0 + 5 ) = 7
P2D1 = 7– ( -2 + 6 ) = 3
P2D4 = 7 – ( -2 + 6 ) = 3
P2D5 = 0 – (-2 + 0 ) = 2
P3D2 = 6 - ( 0 + 5 ) = 1
P3D4 =11 – (0 + 6) = 5
P3D5 = 0 – ( 0 + 0 ) = 0
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 10×9 + 20×6 +40×0 +40×3+ 20×7+60× 6 + 30×9
= 1100

5) A company has four ware houses W1 , W2 , W3 , W4

and three factories F1 , F2 , F3. Find the optimal transportation cost.
 Ware Houses W1 W2 W3 W4 Supply
Plants
F1 12 6 20 25 800

F2 6 11 15 12 600

F3 9 15 17 7 1000

Demand 400 500 700 800 2400

Solution :- Here total demand matches with total supply. Hence it is a balanced
transportation problem

VAM Method
Ware W1 W2 W3 W4 Supply Row Penalties
Houses
Plants
F1 12 6 20 25 800 6 8
300 500 300 ← ←
F2 6 11 15 12 600 5 6 6 3
100 500 500 ←
F3 9 15 17 7 1000 2 2 2 10
200 800 200 ←
Demand 400 500 700 800 2400
100 200
Column 3 5 2 5
penalties 3 2 5
3 2 5
2 5
Here the rim condition is = 3 + 4 -1 = 6
As there are 6 allocations hence it is a non degenerate solution.
Modi Method :-
Ware Houses W1 W2 W3 W4 Supply Ui
Plants
F1 - 12 6 20 25 800 u1= 4
300 500 -1 + 14
F2 + 6 11 15 12 600 u2=
100 11 500 - 7 -2
F3 9 15 17 7 1000 u3= 0
1 13 200 800
Demand 400 500 700 800 2400

Vj v1=8 v2=2 v3=17 v4=7

Now considering occupied sells we get

u1 + v1 = 12
u1 + v2 = 6
u2 + v1 = 6
u2 + v3 = 15
u3 + v3 = 17
u3 + v4 = 7
As u1 is repeated thrice so let us consider , u3 = 0
Hence we get v3 = 17 , v4 = 7 ,
And , u2 = 15 – v3 = 15 -17 = -2
v1 = 6 – u2 = 6 +2 = 8
u1 = 12 – v1 = 12 – 8 = 4
v2 = 6 – u1 = 6 – 4 = 2
Let us calculate cij - (ui + vj) for not occupied sells
F1 W3= 20-(4+17)= -1
F1 W4 = 25-(4+7)=14
F2W2=11-(-2+2) = 11
F2W4=12-(-2+7)= 7
F3W1= 9 – (0 + 8 ) = 1
F3W2=15 – ( 0 + 2) = 13
As we got negative in cell F1W3 the solution is not optimal.
Let us form the four loop as shown in the diagram above.
Out of two negative cells minimum allocation is 300. So adding 300 in positive
cell and subtracting 300 in negative cell we get the new table as below
Ware Houses W1 W2 W3 W4 Supply Ui
Plants
F1 12 6 20 25 800 u1=20
1 500 300 15
F2 6 11 15 12 600 u2=15
400 10 200 7
F3 9 15 17 7 1000 u3=
1 12 200 800 17
Demand 400 500 700 800 2400

Vj v1= v2= v3= 0 v4=

-9 -14 -10
Now considering occupied sells we get
u1 + v2 = 6
u1 + v3 = 20
u2 + v1 = 6
u2 + v3 = 15
u3 + v3 = 17
u3 + v4 = 7
As the variable v3 is repeated thrice so lets take v3 = 0
so we get u1 = 20 u2 = 15 , u3 = 17
so , v2 = 6 -20 = -14 , v1 = 6 -15 = -9 , v4 = 7 -17 = -10
Let us calculate cij - (ui + vj) for not occupied sells
F1 W1= 12-(20-9) = 1
F1 W4 = 25-(20-10)=15
F2W2=11-(15-14) = 10
F2W4=12-(15-10)= 7
F3W1= 9 – (17 - 9 ) = 1
F3W2=15 – ( 17-14) = 12
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost
= 6×500 + 20×300 +400×6 +200×15+ 200×17+800× 7
= 22800

6) A company is transporting its units from three manufacturing factories P1 ,

P2 , P3 to four distribution centres A , B , C , D. The supply and demand for
units with cost of transportation is given in the table below. Find the optimal
transportation cost using VAM and MODI method.
Distribution A B C D Supply
Centre
Factories
P1 10 11 7 4 25

P2 7 13 6 11 28

P3 4 9 8 10 17

Demand 15 30 11 14 70
 Solution :-
VAM method

Distribution A B C D Supply Row Penalties

Centre
Factories
P1 10 11 7 4 25 3 3 4
11 14 11
P2 7 13 6 11 28 1 1 7
17 11 17 ←
P3 4 9 8 10 17 4 4 1
15 2 2 ←
Demand 15 30 11 14 70
28 2
Column 3 2 1 6↑
penalties 3 2 1
2 1

Rim Condition = 3 + 4 -1 = 6 , hence the solution is nondegenerate solution.

Modi Method :-

Distribution Centre A B C D Supply ui

Factories
P1 10 11 7 4 25 u1=11
4 11 3 14
P2 + 7 13 6 11 28 u2=
-1 17 - 11 5 13
P3 4 9 8 10 17 u3=9
15 - 2 + 6 8
Demand 15 30 11 14 70

vj v1=-5 v2=0 v3=-7 v4=-7

Now considering occupied sells we get
u1 + v2 = 11
u1 + v4 = 4
u2 + v2 = 13
u2 + v3 = 6
u3 + v1 = 4
u3 + v2 = 9
As v2 is repeated thrice so let us consider , v2 = 0
Hence we get u1 = 11 , u2 = 13 , u3 = 9
And , v4 = 4 – u1 = 4 -11 = -7
v3 = 6 – u2 = 6 -13 = -7
v1 = 4 – u3 = 4-9 = -5
Let us calculate cij - (ui + vj) for not occupied sells
P1A= 10-(11-5) = 4
P1C = 7-(11-7) = 3
P2A=7-(13-5) = -1
P2D=11-(13-7)= 5
P3C= 8 – (9 - 7 ) = 6
P3D =10 – (9 -7 ) = 8
As we got negative in cell P2A the solution is not optimal.
As in two negative cell we have 15 and 17 as allocation we have to select
minimum out of these.
So adding and subtracting 15 in positive and negative cell respectively we get
 Distribution A B C D Supply ui
Centre
Factories
P1 10 11 7 4 25 u1=
5 11 3 14 -2
P2 7 13 6 11 28 u2= 0
15 2 11 5
P3 4 9 8 10 17 u3=
1 17 6 8 -4
Demand 15 30 11 14 70

vj v1=7 v2=13 v3=6 v4=6

Now considering occupied sells we get

u1 + v2 = 11
u1 + v4 = 4
u2 + v1 = 7
u2 + v2 = 13
u2 + v3 = 6
u3 + v2 = 9
As u2 is repeated thrice so let us consider , u2 = 0
Hence we get v1 = 7 , v2 = 13 , v3 = 6
And , u1 = 11 – v2 = 11 -13 = -2
v4 = 4 – u1 = 4 – (-2) = 6
u2 = 13 – 13= 0
u3 = 9- v2 = 9 - 13 = - 4
Let us calculate cij - (ui + vj) for not occupied sells
P1A= 10 - (-2 + 7 ) = 5
P1C = 7- (-2 + 6) = 3
P2D=11- ( 0 + 6)= 5
P3C= 8 – (-4 + 6 ) = 6
P3D =10 – (-4 + 6 ) = 8
P3A=4-(-4+7) = 1
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 11×11 + 4×14 +15×7 +2×13+ 11× 6+ 9×17
= 527

7) A company has three plants A , B and C and supplies to to four warehouses

W1 , W2 , W3 , W4. The supply and demand for units with cost of
transportation is given in the table below .Find the optimal transportation cost
using VAM and MODI method.
Warehouses W1 W2 W3 W4 Supply
Plants
A 100 300 140 120 500

B 160 140 180 20 600

C 30 174 158 162 400

Demand 200 700 500 100

Solution :-VAM Method
Warehouses W1 W2 W3 W4 Supp Row Penalties
Plants ly
A 100 300 140 120 500 20 20 160
𝜖 500 ←
B 160 140 180 20 600 120 120 40
500 100 100 ←
C 30 174 158 162 400 128 4 16
200 200 200 ←
Demand 200 700 500 100 1500
200
Column 70 34 18 100
penalties 34 18 100
34 18
Here the rim condition is = 3 + 4 – 1 = 6
But we have 5 allocations. Hence it is a case of degenerate solution.
Now to match with the rim condition we need to allocate 𝜖 in such a cell which
is independent as well as have least cost.
Here AW1 is the cell which is independent as well as it’s cost is also least. So
we put 𝜖 in this cell so that this cell will consider as an occupied cell.
Now let us check the IBFS using MODI method
MODI Method

Warehouses W1 W2 W3 W4 Supply ui
Plants
A - 100 300 140 120 500 u1= 0
𝜖 56 500 -4 +
B 160 + 140 180 20 600 u2=
164 500 144 100 - -104
C 30 174 158 162 400 u3=
200+ 200 - 88 108 -70
Demand 200 700 500 100 1500

vj v1= v2= v3= v4=

100 244 140 124

Now considering occupied sells we get

u1 + v1 = 100
u1 + v3 = 140
u2 + v2 = 140
u2 + v4 = 20
u3 + v1 = 30
u3 + v2 = 174
As u1 is repeated thrice so let us consider , u1 = 0
Hence we get v1 = 100 , v3 = 140 ,
So , u3 = 30 -100= -70
And , v2 = 174 – (-70) = 174 +70 = 244
u2 = 140 - v2 = 140- 244 = -104
v4 = 20 – u2 = 20 –(-104) = 20 + 104 = 124
Let us calculate cij - (ui + vj) for not occupied sells
AW2= 300 - (0+244) = 56
AW4 = 120 – ( 0 + 124 ) = -4
BW1 = 160 – (-104 + 100) = 164
BW3 = 180 - ( -104 + 140 ) = 144
CW3 = 158- ( - 70 + 140 ) = 88
CW4 = 162 – ( -70 + 124 ) = 108
As we got a negative in cell AW4 the solution is not optimal.
Hence to remove the negative cell we got a six loop where we have one
negative cell and remaining all five occupied cells.
Here we have three negatively marked cells and in that one cell contains 𝜖.
So for this sum we will simply shift 𝜖 from AW1 to the negative cell AW4 and
we will continue MODI method.
So new table is as follows
Warehouses W1 W2 W3 W4 Supply ui
Plants
A 100300 140 120 500 u1= 0
4 60 500 𝜖
B 160 140 180 20 600 u2=
164 500 140 100 -100
C 30 174 158 162 400 u3=
200 200 84 108 -66
Demand 200 700 500 100 1500

vj v1= v2= v3= v4=

96 240 140 120

Now considering occupied sells we get

u1 + v3 = 140
u1 + v4 = 120
u2 + v2 = 140
u2 + v4 = 20
u3 + v1 = 30
u3 + v2 = 174
As u1 is repeated thrice so let us consider , u1 = 0
Hence we get v4 = 120 , v3 = 140 ,
So , u2 = 20 -120= -100
And , v2 = 140 – (-100) = 240
u3 = 174 - v2 = 174- 240 = -66
v1 = 30 – u3 = 30 –(-66) = 96
Let us calculate cij - (ui + vj) for not occupied sells
AW1= 100 –(0+96) = 4
AW2 = 300 - ( 0 + 240) = 60
BW1 = 160 – ( 96 -100) = 164
BW3 = 180 - (-100 + 140 ) = 140
CW3 = 158 – ( -66 + 120 ) = 84
CW4 = 162 – (-66 + 120 ) = 108
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 140×500 +140×500+20×100+30×200+174× 200
= 182800

8) There are three plants A , B and C with capacities 1200 , 800 and 2000 units.
They supply to four warehouses P , Q , R , S with demands 600 , 500 , 1400 and
500 units. The supply and demand for units with cost of transportation is given
in the table below .Find the optimal transportation cost using VAM and MODI
method.
Warehouses P Q R S
Plants
A 40 50 20 50

B 30 80 40 80

C 70 40 70 40

Solution :-
Let us find the IBFS by VAM Method
 Warehouses P Q R S T Supp Row Penalties
Plants ly
A 40 50 20 50 0 1200 20 20
1200 ←
B 30 80 40 80 0 800 30 10 10 10
600 200
C 70 40 70 40 0 2000 40 0 0 30
500 500 1000
Demand 600 500 1400 500 1000 4000

Column 10 10 20 10 0
Penalties 10 10 20 10
40 40↑ 30 40
40 30 40↑

Rim condition = 3 + 5 -1 = 7
As the allocation is only 6 so rim condition is not satisfied. Therefore it is a
degenerate solution .
So let us place the 𝜖 in such a cell which is
(i) independent
(ii) have least cost
MODI Method :-
Warehouses P Q R S T Supply Ui
Plants
A 40 50 + 20 50 0 1200 u1=
30 10 1200 10 𝜖 - 0
B 30 80 - 40 80 0 800 u2
600 20 200 20 -20+ =20
C 70 40 70 40 0 2000 u3 =
60 500 50 500 1000 0
Demand 600 500 1400 500 1000 4000

Vj v1 v2 v3 v4 v5 =
=10 = 40 =20 =40 0
Now considering occupied sells we get
u1 + v3 = 20
u1 + v5 = 0
u2 + v1 = 30
u2 + v3 = 40
u3 + v2 = 40
u3 + v4 = 40
u3 + v5 = 0
let us consider , u1 = 0
Hence we get v3 = 20 , v5 = 0 ,
So , u3 = 0
And , v4 = 40
v2 = 40
u2 = 40 – 20 = 20
v1 = 30 – 20 = 10
Let us calculate cij - (ui + vj) for not occupied sells
AP = 40 – ( 0 + 10) = 30
AQ = 50 – ( 0 + 40 ) = 10
AS = 50 – ( - 20 + 40 ) = 30
BQ = 80 –( 40 + 20 ) = 20
BS = 80 –( 40 + 20 ) = 20
BT = 0 – ( 20 + 0 ) = -20
CP = 70 – ( 0 + 10 ) = 60
CR = 70 – ( 0 + 20 ) = 50
Here in BT cell we have negative hence the solution is not optimal.
S0 let us construct a 4 loop using the cells AR , AT , BR , BT
As epsilon is in one of the negative signed cells hence here we need to simply
shift epsilon from AT cell to BT cell and construct the new table.
Warehouses P Q R S T Supply Ui
Plants
A 40 50 20 50 0 1200 u1=
30 30 1200 30 20 -20
B 30 80 - 40 80 0 800 u2
600 40 200 40 𝜖 =0
C 70 40 70 40 0 2000 u3 =
40 500 30 500 1000 0
Demand 600 500 1400 500 1000 4000

Vj v1 v2 v3 v4 v5 =
=30 = 40 =40 =40 0
Now considering occupied sells we get
u1 + v3 = 20
u2 + v1 = 30
u2 + v5 = 0
u2 + v3 = 40
u3 + v2 = 40
u3 + v4 = 40
u3 + v5 = 0
let us consider , u3 = 0
Hence we get v2 = 40 , v5 = 0 , v4 = 40
So , u2 = 0
And , v3 = 40
u1 = - 40 + 20 = - 20
v1 = 30
Let us calculate cij - (ui + vj) for not occupied sells
AP = 40 – ( -20 + 30) = 30
AQ = 50 – ( -20 + 40 ) = 30
AS = 50 – ( - 20 + 40 ) = 30
AT = 0 – ( -20 + 0 ) = 20
BQ = 80 –( 40 + 0 ) = 40
BS = 80 – ( 0 + 40 ) = 40
CP = 70 – ( 0 + 30 ) = 40
CR = 70 – ( 0 + 40 ) = 30
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 20×1200 + 30×600 + 40×200 + 40×500 + 40× 500 + 0× 1000
= 90000
8)There are 4 plants P1 , P2 , P3 and P4 which produce 5000 , 8000 , 7000 and
10000 units. They stored in three storage L1 , L2 , L3 with capacities 7000 ,
9000 and 1800 units. The supply and demand for units with cost of
transportation is given in the table below .Find the optimal transportation cost
using VAM and MODI method.
 Storage L1 L2 L3 Supply
Factory
P1 2 7 4 5000

P2 3 3 1 8000

P3 5 4 7 7000

P4 1 6 2 10000

Demand 7000 9000 18000

Solution :- Here total supply = 30000 and total demand = 34000. Hence it is an
unbalanced transportation problem. Lets make the problem balanced first
Storage L1 L2 L3 Supply
Factory
P1 2 7 4 5000

P2 3 3 1 8000

P3 5 4 7 7000

P4 1 6 2 10000

P5 0 0 0 4000

Demand 7000 9000 18000 34000

VAM Method
 Storage L1 L2 L3 Supply Row Penalties
Factory
P1 2 7 4 5000 2 2
5000 ←
P2 3 3 1 8000 2 2 2
8000 ←
P3 5 4 7 7000 1 1 1 1
2000 5000 2000
P4 1 6 2 10000 1 1 1 1
10000
P5 0 0 0 4000 0
4000 𝜖
Demand 7000 9000 18000 34000
2000 5000 10000
Column 1 ↑3 1
Penalties 1 1 1
2 1 1
4 2 ↑5
Here Rim Condition = m + n – 1 = 3 + 5 - 1 = 7
But number of allocation is only 6 . So it is a case of degenerate solutions. Let
us put the 𝜖 in the cell P5L3 as this independent cell is having minimum cost.
MODI Method
Storage L1 L2 L3 Supply Ui
Factory
P1 2 7 4 5000 u1 = 1
5000 6 3
P2 3 3 1 8000 u2 =1
1 2 8000
P3 - 5 + 4 7 7000 u 3= 4
2000 5000 3 2000
P4 1 6 2 10000 u4= 2
-2 4 10000
P5 0 - 0 0 4000 u5 = 0
-1 + 4000 𝜖
Demand 7000 9000 18000 34000
2000 5000 10000
Vj v1= 1 v2= 0 v3= 0
Now considering occupied sells we get
u1 + v1 = 2
u2 + v3 = 1
u3 + v1 = 5
u3 + v2 = 4
u4 + v3 = 2
u5 + v2 = 0
u5 + v3 = 0
let us consider , v3 = 0
Hence we get u2 = 1 , u4 = 2 ,
So , u5 = 0
And , v2 = 0
u3 = 4
v1 = 1
u1 = 1
Let us calculate cij - (ui + vj) for not occupied sells
P1L2 = 7 – ( 1 + 0) = 6
P1L3 = 4 – ( 1 + 0 ) = 3
P2L1 = 3 – ( 1 + 1 ) = 1
P2L2 = 3 - ( 1+ 0 ) = 2
P3L3 = 7 – ( 4 + 0 ) = 3
P4L1 = 1 – ( 2 + 1 ) = -2
P4L2 = 6 – ( 2 + 0 ) = 4
P5L1 = 0 – ( 0 + 1 ) = -1
Here in TWO cells we have negative hence the solution is not optimal. So let us
construct a 4 loop using the cells P3L1 , P3L2 , P5L2 , P5L1. As in two
negative cells we have 4000 and 2000 allocations we will select 2000 and 2000
will be added in positive cell and subtracted from the negative cells and
construct the new table.

Storage L1 L2 L3 Supply Ui
 Factory
P1 2 7 4 5000 u1 = 2
5000 5 2
P2 3 3 1 8000 u2 =1
2 2 8000
P3 5 4 7 7000 u3= 4
1 7000 3
P4 + 1 6 - 2 10000 u4= 2
-1 4 10000
P5 - 0 0 0 4000 u5 = 0
2000 2000 𝜖 +
Demand 7000 9000 18000 34000

v1= 0 v2= 0 v3= 0

Vj
Now considering occupied sells we get
u1 + v1 = 2
u2 + v3 = 1
u3 + v2 = 4
u4 + v3 = 2
u5 + v1 = 0
u5 + v2 = 0
u5 + v3 = 0
let us consider , u5 = 0
Hence we get v1 = 0 , v2 = 0 , v3 = 0
u1 = 2
u2 = 1
u3 = 4
u4 = 2
Let us calculate cij - (ui + vj) for not occupied sells
P1L2 = 7 – ( 2 + 0) = 5
P1L3 = 4 – ( 2 + 0 ) = 2
P2L1 = 3 – ( 1 + 0 ) = 2
P2L2 = 3 - ( 1+ 0 ) = 2
P3L1 = 5 – ( 4 + 0 ) = 1
P3L3 = 7 – ( 4 + 0 ) = 3
P4L1 = 1 – ( 2 + 0 ) = -1
P4L2 = 6– ( 2 + 0 ) = 4
Here in P4L1 cell we have negative hence the solution is not optimal.
So let us construct a 4 loop using the cells P4L1 , P4L3 , P5L3 , P5L1. As in
two negative cells we have 2000 and 10000 allocations we will select 2000 and
2000 will be added in positive cell and subtracted from the negative cells and
construct the new table.
Storage L1 L2 L3 Supply Ui
Factory
P1 2 7 4 5000 u1 = 3
5000 4 1
P2 3 3 1 8000 u2 =1
3 2 8000
P3 5 4 7 7000 u3= 4
2 7000 3
P4 1 6 2 10000 u4= 2
2000 4 8000
P5 0 0 0 4000 u5 = 0
1 2000 2000
Demand 7000 9000 18000 34000

v1=-1 v2= 0 v3= 0

Vj
Now considering occupied sells we get
u1 + v1 = 2
u2 + v3 = 1
u3 + v2 = 4
u4 + v1 = 1
u4 + v3 = 2
u5 + v2 = 0
u5 + v3 = 0
let us consider , v3 = 0 , u2 = 1 , u4 = 2 , u5 = 0
Hence we get v1 = 1- 2 = -1 , v2 = 0 ,
u1 = 2+1 = 3
u3 = 4
Let us calculate cij - (ui + vj) for not occupied sells
P1L2 = 7 – ( 3 + 0) = 4
P1L3 = 4 – ( 3 + 0 ) = 1
P2L1 = 3 – ( 1 -1 ) = 3
P2L2 = 3 - ( 1+ 0 ) = 2
P3L1 = 5 – ( 4 -1 ) = 2
P3L3 = 7 – ( 4 + 0 ) = 3
P4L2 = 6– ( 2 + 0 ) = 4
P5L1 = 0 – ( -1 + 0 ) = 1
As all the values of cij - (ui + vj) ≥ 0 then the solution is optimal solution.
Total cost = 2×5000 + 1×8000 + 4×7000 + 1×2000 + 2× 8000 + 0× 2000 + 0×
2000
= 64000

9) There are 4 warehouses W1 , W2 , W3 and W4 and three factory F1 , F2 , F3

. The supply and demand for units with cost of transportation is given in the
table below .Find the optimal transportation cost using VAM and MODI
method.
Warehouses W1 W2 W3 W4 Supply
Factory
F1 7 8 5 2 14
F2 5 10 4 9 20
F3 2 7 6 9 16
Demand 15 10 12 13 50
Solution :-
VAM Method :-
Warehouses W1 W2 W3 W4 Supply Row penalties
Factory
F1 7 8 5 2 14 3 2 3
1 13 1
F2 5 10 4 9 20 1 1 6
8 12 8 ←
F3 2 7 6 9 16 4 4 1
15 1 1 ←
Demand 15 10 12 13 50
9 8
Column 3 1 1 7↑
penalties 3 1 1
1 1
Rim Condition is = 4 + 3 – 1 = 6 and allocations are also 6 so the solution is
non degenerate.
 Exercise :-
Q1) A company is transporting its units from three factories F1 , F2, F3 to four
warehouses W1 , W2 , W3 and W4. The supply and demand of units with
transportation cost per unit are given below : (8M)
Plants Warehouses Supply in
W1 W2 W3 W4 units
F1 7 8 5 2 14
F2 5 10 4 9 20
F3 2 7 6 9 16
Demand in 15 10 12 13
units
Find IBFS by (i) NWCR (ii) LCM and (iii) VAM method

Q2) A company is transporting its units from three plants P1 , P2, P3 to four destination
centers D1 , D2 , D3 and D4. The supply and demand of units with transportation cost per
unit are given below :
Plants Destination centers Supply in
D1 D2 D3 D4 units
P1 10 11 7 4 25
P2 7 13 6 11 28
P3 4 9 8 10 17
Demand in 15 30 11 14 70
units
Find IBFS by (i) NWCR (ii) LCM and (iii) VAM method.

Q3) A company is transporting its units from three plants P1 , P2, P3 to four
destination centers D1 , D2 , D3 and D4. The supply and demand of units with
transportation cost per unit are given below :
Plants Destination centers Supply in
D1 D2 D3 D4 units
P1 12 6 20 25 400
P2 6 11 15 12 300
P3 9 15 17 7 500
Demand in 200 250 350 400
units
Find IBFS by (i) NWCR (ii) LCM and (iii) VAM method.

Q4) There are 3 storage locations L1 , L2 and L3 and 4 production units F1 , F2 ,

F3 . The supply and demand for units with cost of transportation is given in the
table below .Find the optimal transportation cost using VAM and MODI
method.
Warehouses W1 W2 W3 W4 Supply
 Factory
F1 2 6 3 7 500

F2 3 9 8 3 700

F3 1 4 1 2 800

Demand 500 400 900 200 2000

Q5). A company has three plants A , B , C for which capacities are 7 , 10 and 18
units. It has four warehouses P , Q , R , S for which demands are 5 , 8 , 7 and 15
units. Unit transportation cost is given in Rs.Find the optimal solution using
VAM and MODI method. (15M)
WH W1 W2 W3 W4
Plant
A 38 60 100 24
B 140 60 80 120
C 80 20 120 40

Q6). A company has three factories F1 , F2 , F3 with production capacities of

11 , 13 and 19 units. It has four warehouses W1 , W2 , W3 and W4 with
demands 6 , 10, 12 and 15 units. Unit cost of transportation is given from each
factory to each warehouses. Find the optimal solution using VAM and MODI
method.
To W1 W2 W3 W4
From
F1 42 32 50 26
F2 34 36 28 46
F3 64 54 36 82

Q7) Supply , Demand & Unit transportation cost data is given. Find the optimal
solution using VAM and MODI method.
To W X Y Supply
From
A 16 24 24 152
 B 48 72 48 164
C 24 48 72 154
Demand 144 204 82

Chapter 03
 Assignment Problem :-
Definition :-
In assignment problem we allocate resources to activities on one to one
basis. Assignment problem is a special type of linear programming problem and
can be formulated as a LPP
In assignment problem we allocate resources to activities one to one
basis. The most popular and efficient method for solving an assignment problem
is Hungarian Method.

Some Application of Assignment Problem :-

(1) In a factory some products are produced with the help of different
machines . One machine can produce only one type of product . so we
need to find assignment of machines and products one to one basis.
(2) There are sales regions and sales executives. Assignment should be
done in one to one basis to get maximum profit
(3) Employees are to be assign different types of job one to one basis.

Q1. What is the method used to solve assignment problem ?

Ans :- Hungarian method is used to solve a assignment problem.
Q2. Hungarian method is used for which type of assignment problems ?
Ans :- Hungarian method is used for minimization type of assignment problems.
Q3.When an assignment problem is called unbalanced ?
In an assignment problem if number of rows are not equal to number of
columns then it is called an unbalanced assigned problem.
Q4. In an unbalanced assignment problem what cost value is given in a
dummy row or column ?
Ans :- In an unbalanced assignment problem 0(zero) is given in a dummy row
or column.
Q5. What are the main steps in Hungarian method ?
Ans :- The steps are (a) Row minimization
(b) Column Minimization
(c ) Test for Optimality
(d) Giving Assignment.

Q6. What do you mean by alternative optimal solution in an Assignment

Problem ?
Ans :- A solution of an assignment problem is called alternative optimal
solution if it gives same final answer as the main solution.
Q7. What is prohibited assignment problem ?
Ans :- An assignment is called prohibited assignment problem if assignment is
not possible for a specific resources to a specific activities.
Q8 . In case of prohibited assignment problem which cost is given in a
prohibited cell ?
Ans :- Cost for a prohibited assignment should be taken as M in the prohibited
cell , which represents infinite as assignment is not possible in the specific cell .
Q9. How maximization assignment problem is solved by Hungarian
Method ?
Ans :- For a case of maximization assignment problem the profit table is
converted into regret table and then the same process is continued.
Q10 How to test optimality in an assignment problem ?
Ans :- We cover all the zeros with minimum possible number of lines and the
solution is optimal if number of lines = size of matrix( the assignment problem
matrix).
Q11. In assignment problem how assignment is done ?
Ans :- In assignment problem assignment is done in one to one basis.

Q1. In a LPP simplex method artificial variables are used in which type of
problem ?
Ans :- In a LPP simplex method artificial variables are used in Minimization
type of problem .
Q2. Which method is used to solve minimization LPP ?
(a) Graphical Method
(b) Dual Simplex Method
(c) Big M simplex method
Q3. What are the signs used for the artificial variable coefficient M in an
LPP Problem objective function ?
Ans :- For maximization the sign of M in objective function is – ( negative)
For minimization the sign is + ( plus ).
Q4. In a LPP simplex method what is the condition for the optimal solution
?
Ans :- In a LPP simplex method the condition for the optimal solution is all Cj
- Zj value of non basic variable is either zero or positive.
Q5.How to identify multiple optimal solution in a simplex method ?
Ans :- In LPP simplex method multiple optimal solution is possible if Cj -Zj
value of non basic variable is zero.
Q6. How to identify unique optimal solution in a simplex method ?
Ans :- In LPP simplex method unique solution is possible if Cj -Zj value of all
non basic variable is non zero.

Examples :-
Four Order Assignment Problem
Q1. In a factory 4 workers are to perform 4 jobs . Cost is given in Rs
thousands. Find optimal assignment of workers and tasks. Is there
alternate optimal solution exists ? If yes show alternate solution also.

Workers Jobs
P Q R S
A 60 50 40 45
B 40 45 55 35
C 55 70 60 50
D 45 45 40 45

Solution :- Hungarian Method of solving Minimization problem

Row Minimization
Workers Jobs
P Q R S
A 20 10 0 5
B 5 10 20 0
C 5 20 10 0
D 5 5 0 5
Column Minimization
Workers Jobs
P Q R S
A 15 5 0 5
B 0 5 20 0
C 0 15 10 0
D 0 0 0 5

Lets start covering the zeros :-

Workers Jobs
 P Q R S
A 15 5 0 5
B 0 5 20 0
C 0 15 10 0
D 0 0 0 5
Hence number of lines = 4
Order of the matrix = 4
Hence the solution is optimal.
Lets find the assignment
Workers Jobs
P Q R S
A 15 5 0 5
B 0 5 20 0
C 0 15 10 0
D 0 0 0 5

Alternative Assignment is possible for this problem.

Workers Jobs
P Q R S
A 15 5 0 5
B 0 5 20 0
C 0 15 10 0
D 0 0 0 5

Hence we got two assignment as :

A →R 40 A →R 40
B→ S 35 B→ P 40
C→ P 55 C→ S 50
D→ Q 45 D→ Q 45
Total = 175 Total = 175

Five Order Assignment Problem

Q2. In a factory five jobs are to be assigned on one to one basis to five workers.
Cost of each employee and job combination are given . Find optimal assignment
of employee and jobs and find optimal cost.
J1 J2 J3 J4 J5
W1 28 22 26 20 27
W2 17 16 18 20 22
W3 11 13 14 16 17
W4 13 12 11 8 10
W5 11 10 5 8 9
Solution :-
Row Minimization
J1 J2 J3 J4 J5
W1 8 2 6 0 7
W2 1 0 2 4 6
W3 0 2 3 5 6
W4 5 4 3 0 2
W5 6 5 0 3 4

Column Minimization
J1 J2 J3 J4 J5
W1 8 2 6 0 5
W2 1 0 2 4 4
W3 0 2 3 5 4
W4 5 4 3 0 0
W5 6 5 0 3 2

Hence we got lines = 5 = Order of Matrix

Therefore the solution is optimal.
J1 J2 J3 J4 J5
W1 8 2 6 0 5
W2 1 0 2 4 4
W3 0 2 3 5 4
W4 5 4 3 0 0
W5 6 5 0 3 2

Hence assignment is as follows :

W1 → J4 20
W2 → J2 16
W3 → J1 11
W4 → J5 10
W5 → J3 6
Total = 63
Unbalanced Assignment Problem
Q3. Five tasks 1, 2, 3, 4 and 5 are to be performed and only four employees A
, B , C , D are available . One employee can perform only one task. Find the
optimal assignment and cost. Which tasks will not be performed ?
1 2 3 4 5
A 17 16 14 18 15
B 25 23 21 24 22
C 23 20 22 23 25
D 13 10 12 14 11
Solution :-
As number of rows is not equal to number of columns hence we need to include
a dummy row E with all entries equal to zero .
Row Minimization :-
1 2 3 4 5
A 3 2 0 4 1
B 4 2 0 3 1
C 3 0 2 3 5
D 3 0 2 4 1
Dummy E 0 0 0 0 0
Hence number of lines = 3 but order of matrix = 5
So the solution is not optimal.
Minimum uncovered element = 1
So we will subtract 1 from all uncovered elements and where the lines are
overlapping in that cell we have to add 1.
1 2 3 4 5
A 2 2 0 3 0
B 3 2 0 2 0
C 2 0 2 2 4
D 2 0 2 3 0
Dummy E 0 1 1 0 0
Number of lines = 4 but order of Matrix = 5
Hence the solution is not optimal.
Minimum uncovered element = 2
1 2 3 4 5
A 0 2 0 1 0
B 1 2 0 0 0
C 0 0 2 0 4
D 0 0 2 1 0
Dummy E 0 3 3 0 2
Number of lines = 5= order of Matrix
Hence the solution is optimal.
1 2 3 4 5
A 0 2 0 1 0
B 1 2 0 0 0
C 0 0 2 0 4
D 0 0 2 1 0
Dummy E 0 3 3 0 2

Hence assignment is as follows :

A →5 15
B→ 3 21
C→ 1 23
D→ 2 10
E→ 4 0
Total = 69

Unbalanced Assignment Problem

Q4. Four tasks 1 , 2, 3, 4 are to be performed and 5 employee A , B , C , D and

E are available. One employee can perform only one task. Find the optimal
assignment of employees and tasks and determine which employee will seat
ideal after the assignment. Also find the total cost.
1 2 3 4
W1 17 16 14 18
W2 25 23 21 24
W3 23 20 22 23
W4 13 10 12 14
W5 15 22 25 11
Solution :- As row number is not equal to column number it is an unbalanced
Assignment Problem. Lets write a dummy column so make both the numbers
equal with each other.
1 2 3 4 Dummy 5
W1 17 16 14 18 0
W2 25 23 21 24 0
W3 23 20 22 23 0
W4 13 10 12 14 0
W5 15 22 25 11 0
Column Minimization :
1 2 3 4 5
W1 4 6 2 7 0
W2 12 13 9 13 0
W3 10 10 10 12 0
W4 0 0 0 3 0
W5 2 12 13 0 0

Here number of lines = 3 but order of matrix = 5

Hence the solution is not optimal.
Minimum uncovered element = 2. So subtracting 2 from all uncovered elements
and adding in place of overlapping lines we get
1 2 3 4 5
W1 2 4 0 7 0
W2 10 11 7 13 0
W3 8 8 8 12 0
W4 0 0 0 5 2
W5 0 10 11 0 0
No of lines = 4 and order of matrix = 5
Hence the solution is not optimal. Minimum uncovered element = 2
1 2 3 4 5
W1 0 2 0 5 0
W2 8 9 7 11 0
W3 6 6 8 10 0
W4 0 0 2 5 4
W5 0 10 13 0 2
Hence number of lines = 4 and order of matrix = 5
The solution is not optimal. Min uncovered element =6
 1 2 3 4 5
W1 0 2 0 5 6
W2 2 3 1 5 0
W3 0 0 2 4 0
W4 0 0 2 5 10
W5 0 10 13 0 8
Hence number of lines = 5 = order of matrix
Hence the solution is not optimal.
1 2 3 4 5
W1 0 2 0 5 6
W2 2 3 1 5 0
W3 0 0 2 4 0
W4 0 0 2 5 10
W5 0 10 13 0 8
Hence assignment is as follows :
W1 → 3 14
W2 → 5 0
W3 → 3 33
W4 → 2 10
W5 → 4 0
Total = 57

Maximization Assignment Problem

Q5. A company has to appoint one sales executive in four areas. Profit potential
of executives is given below in thousands. Find optimal assignment and find the
optimal cost of sales
Executives Areas
A1 A2 A3 A4
E1 70 54 56 74
E2 56 68 58 80
E3 70 48 64 66
E4 48 64 50 56

Solution :- Profit Table

Executives Areas
A1 A2 A3 A4
E1 70 54 56 74
E2 56 68 58 80
E3 70 48 64 66
E4 48 64 50 56
 Regret Table
Executives Areas
A1 A2 A3 A4
E1 10 26 24 6
E2 24 12 22 0
E3 10 32 16 14
E4 32 16 30 24

Row Minimization :-
Executives Areas
A1 A2 A3 A4
E1 4 20 18 0
E2 24 12 22 0
E3 0 22 6 4
E4 16 0 14 8

Column Minimization :-
Executives Areas
A1 A2 A3 A4
E1 4 20 12 0
E2 24 12 16 0
E3 0 22 0 4
E4 16 0 8 8
Number of lines = 3
Order of Matrix = 4
Hence the solution is not optimal solution.
Minimum uncovered element = 4

Executives Areas
A1 A2 A3 A4
E1 0 16 8 0
E2 20 8 12 0
E3 0 22 0 8
E4 16 0 8 12
Number of lines = 4 = order of matrix
Hence the solution is optimal.
 Executives Areas
A1 A2 A3 A4
E1 0 16 8 0
E2 20 8 12 0
E3 0 22 0 8
E4 16 0 8 12

Hence assignment is as follows :

E1 → A1 70
E2 → A4 80
E3 → A3 64
E4 → A2 64
Total = 278

Prohibited Unbalanced Assignment Problem

Q6 . Five employees A , B , C , D and E are to be assigned machines M1 , M2 ,
M3 , M4 on one to one basis. Cost data is given. Employee B can not be
assigned machine M2 and employee C can not be assigned machine M3. Find
the optimal assignment of employees and machine and optimal cost.

Workers Machines
M1 M2 M3 M4
A 14 12 10 13
B 12 X 8 10
C 22 18 X 20
D 18 15 17 21
E 10 9 6 8

Solution :-
It is an unbalanced problem so we need to add a dummy column
Workers Machines
M1 M2 M3 M4 M5
A 14 12 10 13 0
B 12 M 8 10 0
C 22 18 M 20 0
D 18 15 17 21 0
E 10 9 6 8 0
Column Minimization :-
Workers Machines
M1 M2 M3 M4 M5
A 4 3 4 5 0
B 2 M 2 2 0
C 12 9 M 12 0
D 8 6 11 13 0
E 0 0 0 0 0
Number of lines = 2 , Order of Matrix = 5
Hence the solution is not optimal.
Minimum uncovered element = 2
Workers Machines
M1 M2 M3 M4 M5
A 2 1 2 3 0
B 0 M 0 0 0
C 10 7 M 10 0
D 6 4 9 11 0
E 0 0 0 0 2
Number of lines = 3 , Order of Matrix = 5
Hence the solution is not optimal.
Minimum uncovered element = 1
Workers Machines
M1 M2 M3 M4 M5
A 1 0 1 2 0
B 0 M 0 0 1
C 9 6 M 9 0
D 5 3 8 10 0
E 0 0 0 0 3
Number of lines = 4 , Order of Matrix = 5
Hence the solution is NOT optimal.
Min uncovered element = 3
Workers Machines
M1 M2 M3 M4 M5
A 1 0 1 2 3
B 0 M 0 0 4
C 6 3 M 6 0
D 2 0 5 7 0
E 0 0 0 0 6
Number of lines = 4 , Order of Matrix = 5
Hence the solution is NOT optimal .

Workers Machines
M1 M2 M3 M4 M5
A 0 0 0 1 3
B 0 M 0 0 5
C 5 3 M 5 0
D 3 0 4 6 0
E 0 1 0 0 7
Number of lines = 5 , Order of Matrix = 5
Hence the solution is optimal .

Workers Machines
M1 M2 M3 M4 M5
A 0 0 0 1 3
B 0 M 0 0 5
C 5 3 M 5 0
D 3 0 4 6 0
E 0 1 0 0 7
Hence assignment is as follows :
A → M1 14
B → M3 8
C → M5 0
D → M2 15
E → M4 8
Total = 45

Prohibited Maximization Assignment Problem

Q7. Four workers W1 , W2 , W3 and W4 are to be assigned four machines M1 ,
M2 , M3 , M4 .Profit potential for each worker -machine combination is given.
Worker W2 can not be assigned machine M3. Find the optimal assignment.
Workers Machines
M1 M2 M3 M4
W1 24 32 26 29
W2 31 38 X 34
W3 28 24 30 26
W4 26 25 29 21
Solution :- Profit Table
 Workers Machines
M1 M2 M3 M4
W1 24 32 26 29
W2 31 38 X 34
W3 28 24 30 26
W4 26 25 29 21
Regret Table
Workers Machines
M1 M2 M3 M4
W1 14 6 12 9
W2 7 0 M 4
W3 10 14 8 12
W4 12 13 9 17
Row Minimization
Workers Machines
M1 M2 M3 M4
W1 8 0 6 3
W2 7 0 M 4
W3 2 6 0 4
W4 3 4 0 8
Column Minimization
Workers Machines
M1 M2 M3 M4
W1 6 0 6 0
W2 5 0 M 1
W3 0 6 0 1
W4 1 4 0 5
Number of lines = 4 , Order of Matrix = 4
Hence the solution is optimal
Workers Machines
M1 M2 M3 M4
W1 6 0 6 0
W2 5 0 M 1
W3 0 6 0 1
W4 1 4 0 5
Hence assignment is as follows :
W1 → M4 29
W2 → M2 38
W3 → M1 28
W4 → M3 29
Total = 124
Unbalanced Maximization Problem
Q8. A company has to appoint one sales executive each areas. Profit potentials
of executives is given below in Rs. Find the optimal assignment.
Executives Areas
A1 A2 A3
S1 840 700 560
S2 600 500 400
S3 600 500 400
S4 480 400 320

Solution:- This is unbalanced problem so to balance it we need to add one

column
Profit Table
Executives Areas
A1 A2 A3 A4
S1 840 700 560 0
S2 600 500 400 0
S3 600 500 400 0
S4 480 400 320 0
Regret Table
Executives Areas
A1 A2 A3 A4
S1 0 140 280 840
S2 240 340 440 840
S3 240 340 440 840
S4 360 440 520 840
Row Minimization
Executives Areas
A1 A2 A3 A4
S1 0 140 280 840
S2 0 100 200 600
S3 0 100 200 600
S4 0 80 160 80
Column Minimization
Executives Areas
A1 A2 A3 A4
S1 0 60 120 760
S2 0 20 40 520
S3 0 20 40 520
S4 0 0 0 0
Number of Lines = 2
Order of Matrix = 4
So the solution is not optimal.

Executives Areas
A1 A2 A3 A4
S1 0 40 100 740
S2 0 0 20 500
S3 0 0 20 500
S4 20 0 0 0
Number of Lines = 3
Order of Matrix = 4
So the solution is not optimal.
Executives Areas
A1 A2 A3 A4
S1 0 40 80 720
S2 0 0 0 480
S3 0 0 0 480
S4 40 20 0 0
Number of Lines = 4
Order of Matrix = 4
So the solution is optimal.
Executives Areas
A1 A2 A3 A4
S1 0 40 80 720
S2 0 0 0 480
S3 0 0 0 480
S4 40 20 0 0

Hence assignment is as follows :

S1 → A1 840
S2 → A2 500
A3 → A3 400
S4 → A4 00
Total = 1740

Unbalanced Prohibited Maximization Problem

Q9. Five sales executives are to be assigned four sales areas. Sales potential is
given for each employee in each area. Find the optimal assignment. Executive A
can not be assigned sales area , C can not be assigned area II and executive E
can not be assigned area III
I II III IV
A 25 32 40 X
B 29 36 33 31
C 26 X 34 30
D 25 28 30 32
E 21 30 X 24

Solution:- This is unbalanced problem so to balance it we need to add one

column
Profit Table
I II III IV V
A 25 32 40 X 0
B 29 36 33 31 0
C 26 X 34 30 0
D 25 28 30 32 0
E 21 30 X 24 0
Regret Table
I II III IV V
A 15 8 0 M 40
B 11 4 7 9 40
C 14 M 6 10 40
D 15 12 10 8 40
E 19 10 M 16 40
Row Minimization
I II III IV V
A 15 8 0 M 40
B 7 0 3 5 36
C 8 M 0 4 34
D 7 4 2 0 32
E 9 0 M 6 30

Column Minimization
I II III IV V
A 8 8 0 M 10
B 0 0 3 5 6
C 1 M 0 4 4
D 0 4 2 0 2
E 2 0 M 6 0
Number of Lines = 4
Order of matrix = 5
The solution is not optimal.

I II III IV V
A 7 7 0 M 9
B 0 0 4 5 6
C 0 M 0 3 3
D 0 4 3 0 2
E 2 0 M 6 0
Number of Lines = 5
Order of matrix = 5
The solution is optimal.
I II III IV V
A 7 7 0 M 9
B 0 0 4 5 6
C 0 M 0 3 3
D 0 4 3 0 2
E 2 0 M 6 0

Hence assignment is as follows :

A → III 40
B → II 36
C→ I 26
D → IV 32
E→ V 00
Total = 134

Exercise :-
1) In a plant there are 5 jobs A , B , C , D and E which are to be assigned to
5 employees P , Q , R , S and T. Cost is given in Rs. Find the optimal
assignment of employees and jobs.
Employees Jobs
A B C D E
P 320 260 350 380 400
Q 270 240 260 320 350
R 280 220 310 340 370
S 100 100 160 160 220
T 110 70 140 160 210
(Ans :- Total cost =1140)
2)The municipal corporation of a city has decided to carry out road repairs in
four main areas of the city. The company has invited tenders and 5 contractors
have sent in their bids . One road will be awarded to only one contractor. Find
the optimal assignment. Which contractor will be unsuccessful in his bid ?
Contractors Roads
R1 R2 R3 R4
C1 18 28 38 30
C2 14 34 40 38
C3 18 36 42 36
C4 20 24 36 38
C5 20 30 42 32
(Ans :- Total cost =108)
3)A company wants to appoint 4 salesman in 4 districts . Sales projection in Rs
for each salesman is given in each district. How should the company appoint the
salesman to achieve total sales ?
Salesman Districts
A B C D
C1 420 168 240 70
C2 360 336 1120 210
C3 420 240 336 84
C4 126 168 224 56
(Ans :- Total cost =1836)
4) In the modification of a plant layout of a factory BMS auto parts four new
machines M1 , M2 , M3 and M4 are to be installed in a machine shop. There are
five vacant places A , B , C , D and E which are suitable for the installation.
Because of extra large size M2 can not be placed at C and M3 can not be placed
at A. The cost of installing machines location wise in hundred rupees is as
follows. Find the optimal assignment .
A B C D E
M1 9 11 15 10 11
M2 12 9 X 10 9
M3 X 11 14 11 7
M4 14 8 12 7 8
(Ans :- Total cost = 32)
5) A company has 4 sales executives which need to be appointed on one to one
basis in 3 sales areas. Profit potential for each executive-area is given in Rs
thousands. Find optimal assignment of executives and territories to maximize
total profit. Which sales executive will remain idle ?
Territory T1 T2 T3
Executives
E1 60 67 90
E2 80 83 95
E3 70 72 82
E4 85 95 110
(Ans :- Total cost = 265)
 Chapter 4
NETWORK ANALYSIS I
Basic Concepts
1) CRM = Full form is Critical Path Method

2) An Activity = An activity is any task or operation which consumes or will

consume any type of resources.
Resources Can be man hour , time , capital , machine hour etc
Example :-
A
5
A is the activity and 5 is the time to complete this activity.
3) An Event :- A event represents a specific point of time or an
accomplishment in the project.
A
1 5 2

1 is the start of activity A

2 is the end of activity A
4) Sequential Event :- Two or more activities are sequential in nature if end
of an activity is the starting point of next activity.

1 A 2 B 3
5 6
Types of activities

1) Preceding or Predecessor Activity :- Activities that must be completed

prior to the start of another activity is called preceding activity
2) Succeeding or successor Activity :- Activity that can not be started until
one or more preceding activities are completed is called successor
activity.
3) Concurrent Activity :- Activities which can be accomplished
simultaneously are called concurrent activities.
B 3
1 A 2 3
5 C
2 4
 4) Merge event :- An event which represents end or completion of multiple
activities is called merge event.
3 C
3 5
4 D
2
5) Burst Event :- An event which represents start of multiple activities is
called burst event.
5
C 3
3 B
2 4

6) Merge , Burst Event :- An event which is merge as well as burst event is

called merge and burst event
C E
1 4 2
D F
2 3
Fulkerson’s Rule for Numbering of Events :-

No event can be numbered until all preceding events have been numbered. For
any activity ( i , j ) , i < j .It means the number of head event is always larger
then number of tail event for every activity.
(1) Number of first event in the project = 1
(2) Delete all arrows leaving the initial node.
(3) Continue the numbering by identifying all nodes which have no incoming
arrows. Assign consecutive numbers to these nodes i.e. 2 , 3, 4 etc.
(4) Repeat step b and c until the last node.

Interdependency :-

A project consists of many activities. Before representing the project on the

network diagram, the project should be broken down in smaller activities. Then
we should establish interdependency relationships between activities. Mainly
three types of relationships need to be established:
(a) Precedence Relationship
(b) Concurrent Relationship
(c) Subsequence Relationship.

Critical Path
Critical path is the longest path in the network diagram. It is the path with
maximum duration .
Critical Path represents the project competition time.
Project competition time = length of critical path.

Sub-Critical Path :-
Sub critical path is second longest path in the network diagram .

Non- Critical Activities :-

Activities which are not on the critical path are non-critical activities .

Critical Activities :-
Critical activities are the ones which are a part of the critical path.

Forward Pass Calculation :-

Forward Pass Calculation gives the earliest occurrence time of each event in the
network. Alternatively it also gives ES and EF of each activities in the network.

Backward Pass Calculations :-

Forward Pass Calculation gives the latest occurrence time of each event in the
network. Alternatively it also gives LS and LF of each activities in the network.

Time Estimation in Network Analysis :-

tij
i j

ij : Activity ij
i is the number of tail event
j is the number of head event
tij is the time required for the activity I j
ESij is the earliest starting time of the activity i j
EFij is the earliest finish time of the activity i j
LSij is the latest starting time of the activity i j
LFij is the latest finishing time of the activity i j
Ei is the earliest occurrence time of the activity i
Li is the latest occurrence time of the activity i
Ej is the earliest occurrence time of the activity j
Lj is the latest occurrence time of the activity j
(1) Earliest starting time of activity is denoted by EST and defined by
EST = ESij = Ei
(2) Earliest finish time of activity is denoted by EFT and defined by
EFT = EFij = ESij + tij
(3) Latest finish time of activity is denoted by LFT and defined by
LFT = LFij = Lj
(4) Latest start time of activity is denoted by LST and defined by LST
= LSij = LFij - tij
Slack of an Event :-
Slack of an event is the amount of time by which an event can be
delayed beyond its earliest occurrence time without affecting total
project competition time .
There are two slack :
Tail Slack = Li – Ei for the tail event i
Head Slack = Lj – Ej for the head event
Float :-
Float means amount of time by which the competition of an activity
can be delayed without delaying the total project competition.
Types of floats :-
Total Floats :-It is the amount of time by which the completion of an
activity can be delayed beyond the earliest possible finishing time
without affecting total project competition time.
TF = LST- EST
Free Float :- It is the amount of time by which the completion of an
activity can be delayed beyond the earliest finishing time without
affecting earliest possible start of a subsequent activity.
FF = TF – Head Slack
Independent Float :- It is the amount of time by which the start of
an activity can be delayed with out affecting the earliest start of a
subsequent activity.
IF= FF -Tail Slack
Interfering Float :- It is that part of total float which reduces the
float of a subsequent activity.
Interfering Float = Head Slack

Advantage of CPM :-
(1) Identification of critical and non-critical activities. This helps in diverting
resources from non-critical to critical activities.
(2) Computation of floats and slacks. This helps in delaying non-critical
activities to the extent of float available.
(3) Increase in overall effectiveness and efficiency in project management.

Limitations of CPM:-
(1) CPM is based on the assumption that the time required for performing
each activity is known with certainty. This may not be true in real life
situations.
(2) CPM does not incorporate statistical analysis in determining time
estimates for activities .
(3) CPM is suitable only for situations which have definitely start and end
point.
SOLVED EXAMPLES :
Example1
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.

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

Time 2 4 3 2 1 2 3

3 D 5 F
A B 4 2 2
1 2 7
2 C G
3 4 E 6 3
1
Possible Paths Duration
1-2-3-5-7 ( A-B-D-F) 2+4+2+2 =10
1-2-4-6-7 ( A- C-E-G) 2+3+1+3 = 9
As 10 is maximum hence critical path is 1-2-3-5-7 with duration 10

Example 2
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time
Activities 1-2 2-3 2-4 3-5 4-6 5-7 6-7 7-8
Time 2 3 5 3 6 4 2 1
Solution :-
3 D 5 F
A B 3 4 H
1 2 3 7 8
2 C E G 1
5 4 6 6 2

Possible Paths Duration

1-2-3-5-7-8 ( A-B-D-F-H) 2+3+3+4+1=13
1-2-4-6-7-8 ( A- C-E-G-H) 2+5+6+2 +1 = 16
As 16 is maximum hence critical path is 1-2-4-6-7-8 with duration 16
Example 3
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time .
Activity A B C D E F G H
Preceding Activity - A A B C D E F, G
Time 2 2 4 3 2 2 3 1
Solution :- D
3 3 5
A B 2 F
1 2 2 7 H 8
2 C 4 G 1
4 E 6 3
2
Possible Paths Duration
1-2-3-5-7-8 ( A-B-D-F-H) 2+2+3+2+1=10
1-2-4-6-7-8 ( A- C-E-G-H) 2+4+2+3 +1 = 12
As 12 is maximum hence critical path is 1-2-4-6-7-8 with duration 12

Example 4
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time. Also identify sub critical
path.
Activity A B C D E F G
Preceding Activity - - A B B C, D E
Time 4 6 2 8 2 4 5

C
A 3 2 4 F
1 4 D 4 6
B 8 G
6 2 E 5 5
2
Possible Paths Duration
A–C–F 4+ 2 + 4 =10
B–D-F 6 + 8 + 4 = 18
B–E–G 6 + 2 + 5 = 13
As 18 is maximum hence critical path is B – D - F with duration 18
And 13 is the second highest so B – E – G is the sub critical path.

Example 5
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time. Also identify sub critical
path.
Activity 1-2 1-3 1-4 2-5 3-6 4-7 5-8 6-8 7-8
Time 3 4 6 5 6 5 4 7 4
Find earliest and latest starting and finishing time of each activities.
2 D 5
A 3 8 5 8 13 G
3 4
1 B 3 E 6 H 8
00 4 4 4 6 10 10 7 17 17
C I
6 4 F 7 4
6 8 5 1113
Possible Paths Duration
1–2–5-8 3+ 5 + 4 =12
1–3-6 -8 4 + 6 + 7 = 17
1–4–7-8 6 + 5 + 4 = 15
As 17 is maximum hence critical path is 1 – 3 – 6 - 8 with duration 17

Forward Pass and Backward Pass

Event Number Earliest Latest
Occurrence Occurrence
1 E1 = 0 L1 = 0

2 E2 = 3 L2 = 8
3 E3 = 4 L3 = 4
4 E4 = 6 L4 = 8
5 E5 = 3 L5 = 13
6 E6 = 10 L6 = 10
7 E7 = 11 L7 = 13
8 E8 = 17 L8 = 17

Example 6
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.
Activities Preceding Activities Time
A - 4
B - 5
C - 7
D A 6
E B 7
F C 6
G D 5
H E 8
I F 5
Find earliest and latest starting and finishing time of each activities .
2 D 5
A 4 9 6 10 15 G
4 5
1 B 3 E 6 H 8
00 5 5 5 7 12 12 8 20 20

7 C I
4 F 7 5
7 9 6 13 15
Possible Paths Duration
1 – 2 – 5 - 8 (A- D – G ) 4+ 6 + 5 =15
1–3-6 -8 (B–E–H) 5 + 7 + 8 = 20
1 – 4 – 7 - 8 ( C – F – I) 7 + 6 + 5 = 18
As 20 is maximum hence critical path is 1 – 3 – 6 – 8 ( B – E – H ) with
duration 20
Forward Pass and Backward Pass
Event Number Earliest Latest
Occurrence Occurrence
1 E1 = 0 L1 = 0

2 E2 = 4 L2 = 9
3 E3 = 5 L3 = 5
4 E4 = 7 L4 = 9
5 E5 = 10 L5 = 15
6 E6 = 12 L6 = 12
7 E7 = 13 L7 = 15
8 E8 = 20 L8 = 20

Slack of an Event :-
Slack of an event is the amount of time by which an event can be delayed
beyond its earliest occurrence time without affecting total project competition
time .
There are two slack :
Tail Slack = Li – Ei for the tail event i
Head Slack = Lj – Ej for the head event
Float :-
Float means amount of time by which the competition of an activity can be
delayed without delaying the total project competition.
Types of floats :-
Total Floats :-It is the amount of time by which the completion of an activity
can be delayed beyond the earliest possible finishing time without affecting
total project competition time.
TF = LST- EST
Free Float :- It is the amount of time by which the completion of an activity
can be delayed beyond the earliest finishing time without affecting earliest
possible start of a subsequent activity.
FF = TF – Head Slack
Independent Float :- It is the amount of time by which the start of an activity
can be delayed with out affecting the earliest start of a subsequent activity.
IF= FF -Tail Slack
Interfering Float :- It is that part of total float which reduces the float of a
subsequent activity.
Interfering Float = Head Slack

Example 7
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.

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

Time 2 2 1 4 8 5 3 1 5 4 3

1. Find earliest and latest starting and finishing time of each activities.
2. Calculate , total float , free float , independent float and interfering float
3. Calculate slack of each activity.
2 F 5 H 8
A 2 2 7 4 6 11 1 11 12 K
1 B 3 E 7 I 4 3 9
0 0 2 2 2 5 7 8 1515
1 C 8 F J
4 G 6 5
1 7 3 10 10
Acti EST= EFT LST LFT= Head Tail Total Free Indep Interf
vity Ei Lj Slack Slack Float Float Float= Float=
Lj-Ej Li-Ei = LST-
=TF-HS FF-TS HS
EST
1-2 E1= 0 0+2= 7-2 = L2= 7 L2-E2 L1-E1 5 - 0 = 5 – 5 = 0 – 0 5
(2) 2 5 =5 =0 5 0 =0
1-3 E1= 0 0+2= 2-2 = L3=2 L3-E3 L1-E1 0-0 0-0 0-0 0
(2) 2 0 =0 =0 =0 =0 =0
1-4 E1= 0 0+1= 7 – 1 L4=7 L4-E4 L1-E1 6-0 = 6 – 6 = 0-0 6
(1) 1 =6 =6 =0 6 0 =0
2-5 E2= 2 2+4= 11 – L5= L5-E5 L2-E2 7-2 = 5 – 5 = 0 – 5 5
(4) 6 4 =7 11 =5 =5 5 0 = -5
3-6 E3= 2 2+8= 10-8 L6= L6-E6 L3-E3 2-2 = 0-0 0-0 0
(8) 10 =2 10 =0 =0 0
3-7 E3= 2 2+5= 8-5 L7= 8 L7-E7 L3-E3 3-2 = 1 – 1 = 0-0 1
(5) 7 =3 =1 =0 1 0 =0
4-6 E4= 1 1+3= 10-3 L6= L6-E6 L4-E4 7-1 = 6-0= 6 6-6 = 0
(3) 4 =7 10 =0 =6 6 0
5-8 E5= 6 6+1= 12-1 L8= L8-E8 L5-E5 11-6 = 5-1= 4 4-5 = 1
(1) 7 = 11 12 =1 =5 5 -1
6-9 E6= 10 10+5 15 –5 L9= L9-E9 L6-E6 10-10 0 – 0 = 0 – 0 0
(5) = 15 =10 15 =0 =0 =0 0 =0
7-8 E7= 7 7+4= 12-4 L8= L8-E8 L7-E7 8-7 = 1-1 = 0 0-1 = 1
(4) 11 =8 12 =1 =1 1 -1
8-9 E8= 11 11+3 15-3 L9= L9-E9 L8-E8 12-11 1-0 = 1 1-1 = 0
(3) =14 = 12 15 =0 =1 =1 0
Possible Paths Duration
1 – 2 – 5 - 8 - 9 (A- F- H - K – G ) 2+ 4+ 1 + 3 =10
1–3-7 -8-9 (B–E–I-K) 2+ 5 + 4+ 3 = 13
1–3–6-9(B–F–J) 2 + 8 + 5 = 15
1 – 4 – 6 -9 ( C – G – J ) 2 + 3 + 5 = 10
As 15 is maximum hence critical path is 1 – 3 – 6 - 9 ( B – F – J ) with duration
15.
Example 8
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.
Activity A B C D E F G H
Preceding Activity - A A B B,C B D E,F

Time 8 2 4 3 6 3 1 4
1. Find earliest and latest starting and finishing time of each activities.
 2. Calculate , total float , free float , independent float and interfering float
3. Calculate slack of each activity.
3 D 5 G
B 1012 3 13 21 1
1 A 2 2 3 F 7
00 8 8 8 C H 2222
4 4 E 6 4
12 12 6 18 18
Possible Paths Duration
1 – 2 – 3 - 5 - 7 (A- B- D – G ) 8+ 2+ 3 + 1 =14
1–2-3 -6-7 (A–B–F-H) 8+ 2 + 3 + 4 = 15
1 – 2 – 4 – 6 - 7 ( A- C – E – H ) 8 + 4 + 6 + 4 = 22
As 22 is maximum hence critical path is 1 – 2 – 4 – 6 - 7 ( A- C – E – H )with
duration 22
Acti EST= EFT LS LFT Head Tail Total Free Indep Interf
vity Ei T =Lj Slack Slack Float Float Float= Float=
Lj-Ej Li-Ei = =TF-HS FF-TS HS
LST-
EST
A E1 = 0 0 + 8 8-8 L2 = L2- L1- 0-0 = 0-0 = 0 0 – 0 00
1-2 =8 =0 8 E2= 0 E1 = 0 =0
(8) 0
B E2 = 8 8 + 2 12- L3= L3- L2- 10-8 = 2-2 = 0 0 – 0 2
2-3 = 10 2= 12 E3= 2 E2= 2 =0
(2) 10 0
C E2 = 8 8+4 12- L4 = L4-E4 L2- 8–8 0–0= 0–0 0
2-4 = 12 4= 12 =0 E2= = 0 0 =0
(4) 8 0
D E3 = 10+3 21- L5 = L5- L3- 18-10 8-8 = 0 0 – 2 8
3-5 10 = 13 3 = 21 E5= 8 E3= = 8 = -2
(3) 18 2
E E4 = 12+6 18- L6 = L6-E6 L4- 12 – 0–0= 0–0 0
4-6 12 = 18 6 = 18 =0 E4 = 12 = 0 0 =0
(6) 12 0
F E3 = 10+3 18- L6 = L6-E6 L3- 15 – 5–0= 5–2 0
3-6 10 = 13 3 = 18 =0 E3= 10 = 5 5 =3
(3) 15 2
G E5 = 13+1 22- L7 = L7-E7 L5- 21-13 8-0 = 8 8–8 0
5-7 13 = 14 1 = 22 =0 E5= =8 =0
(1) 21 8
H E6 = 18+4 22- L7= L7-E7 L6- 18-18 0–0= 0–0 0
6-7 18 = 22 4= 22 =0 E6 = =0 0 =0
(4) 18 0

Example 9
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.

Activity A B C D E F
Preceding Activity - - A A,B C,D D

Time 4 2 5 3 1 2

2 C 4
A 4 4 5 9 9 1 E
1 4 3 5
00 2 D F 10 10
B 3 2
2 6
Possible Paths Duration
1 – 2 – 4 - 5 (A - C – E ) 4+ 5+ 1 =10
1-3 -4-5 (B–D-E) 2+3+1=6
1–3–5 (B–F) 2+2=4

As 10 is maximum hence critical path is 1 – 2 – 4 - 5 ( A - C – E ) with duration

10.
Acti EST= EFT LS LF Head Tail Total Free Indep Interf
vity Ei T T= Slack Slack Float Float Float= Float=
Lj Lj-Ej Li-Ei = LST- =TF-HS FF-TS HS
EST
A E1 = 0 0 + 4 4-4 L2 L2- L1- 0- 0 = 0 0-0 = 0 0-0 = 0
1-2 =4 =0 =4 E2=0 E1=0 0
(4)
B E1 = 0 0+2 6– L3= L3- L1- 4-0 = 4 4–4= 0-0 = 4
1-3 =2 2= 6 E3 = E1 = 0 0
(2) 4 4 0
C E2 = 4 4 + 5 9-5 L4 L4- L2- 4 – 4 = 0 0-0 = 0 0-0 = 0
2– =9 =4 = 9 E4 = E2=0 0
4 0
(5)
D E3 = 2 2 +3 9– L4 L4- L3- 6–2=4 4–0= 4-4 = 0
3-4 =5 3= =9 E4 = E3 = 4 0
(3) 6 0 4
E E4 = 9 1 +9 10 - L5 L5 – L4- 9 – 9 = 0 0-0 = 0 0-0 = 0
4-5 = 10 1 = = E5 = E4 = 0
(1) 9 10 0 0
F E3 = 2 2 + 2 10 – L5 L5 – L3- 8–2=6 6–0= 6–4 0
3-5 =4 2= = E5 = E3 = 6 =2
(2) 8 10 0 4

Example 10
A small project consists of following activities. Construct the network diagram
and find the critical path and project competition time.
Activity A B C D E F G H
Preceding Activity - - - A B C D,E F
Time 3 2 4 4 2 2 8 5
1. Find earliest and latest starting and finishing time of each activities.
2. Calculate , total float , free float , independent float and interfering float
3. Calculate slack of each activity.
 2
A 3 3 3 D
4
1 B 3 E 5 G 7
00 2 2 5 2 7 7 8 1515

C H
4 4 F 6 5
4 8 2 6 10

Possible Paths Duration

A-D-G 3+ 4+ 8 =15
B-E-G 2 + 2 + 8 = 12
C-F - H 4+ 2 + 5 = 11
As 15 is maximum hence critical path is A-D-G with duration 15.
Activit EST EF LS LFT Head Tail Total Free Indep Interf
y = Ei T T =Lj Slack Slack Float Float Float=F Float=
Lj-Ej Li-Ei = LST- =TF- F-TS HS
EST HS
A E1 3 0 L2=3 L2- L1- 0-0= 0 0-0= 0-0= 0 0
1-2 E2=0 E1=0 0
=0
(3)
B E1 = 2 3 L3 = L3-E3 L1- 3-0= 3 3-3 0-0= 0 3
1-3 0 5 =3 E1=0 =3
(2)
C E2 = 4 4 L4=8 L4-E4 L1- 4- 0 = 4-4= 0-0= 0 4
1-4 3 =4 E1=0 4 0
(4)
D E3 = 7 3 L5=7 L5- L2- 3-3 = 0 0-0= 0-0= 0 0
2-5 2 E5=0 E2=0 0
(4)
E E3 = 4 5 L5 = L5- L3-E3 = 5-2 =3 3-0 = 3-3 = 0 0
3-5 2 7 E5= 0 3 3
(2)
F E4 = 6 8 L6 = L6- L4-E4 = 8-4 =4 4-4 = 0-4 = 4
4-6 4 10 E6= 4 4 0
-4
(2)
G E5 = 15 7 L7 = L7- L5-E5= 7-7 = 0 0 – 0 0-0= 0 0
5-7 7 15 E7=0 0 =0
(8)
H E6 = 11 10 L7= L7- L6-E6= 10 – 6 4-0 = 4–4= 0
6-7 6 15 E7=0 4 =4 4 0
(5)

Exercise :-
Q1. A small project consists of following activities. Construct the network
diagram and find the critical path and project competition time.
Activity 1-2 1-3 2-3 2-4 2-5 3-5 4-6 5-6
Time 3 1 zero 2 5 7 4 3
Find earliest and latest starting and finishing time of each activities.
Calculate , total float , free float , independent float and interfering float
Calculate slack of each activity.

Q2. A small project consists of following activities. Construct the network

diagram and find the critical path and project competition time.
Activity 1-2 2-3 2-4 2-5 3-6 4-8 5-7 6-8 7-8
Time 5 3 2 1 4 6 5 7 2
Find earliest and latest starting and finishing time of each activities.
Calculate , total float , free float , independent float and interfering float
Calculate slack of each activity.

Q3.A small project consists of following activities. Construct the network

diagram and find the critical path and project competition time.

Activity A B C D E F G
Preceding Activity - A A B B,C D, E E
 Time 8 2 4 3 6 3 1
Find earliest and latest starting and finishing time of each activities.
Calculate , total float , free float , independent float and interfering float
Calculate slack of each activity.

Q4.A small project consists of following activities. Construct the network

diagram and find the critical path and project competition time.
Activity A B C D E F G
Preceding Activity - - A A B,C D E

Time 4 6 4 3 3 1 2
Find earliest and latest starting and finishing time of each activities.
Calculate , total float , free float , independent float and interfering float
Calculate slack of each activity.

5. A small project consists of following Activities

Activity Time (days)
A(1-2) 3
B(1-3) 4
C(1-4) 6
D(2-5) 5
E(3-6) 6
F(4-7) 5
G(5-8) 4
H(6-8) 7
I(7-8) 4
(i)Draw the network diagram and find the critical path and project completion
time
(ii) Find earliest and latest starting and finishing times of all activities.
(iii) Find total float , head slack and tail slack of each activity.

6. A small project consists of following Activities

Activity Time (days)
1-2 2
1-3 2
1-4 1
2-5 4
3-6 8
3-7 5
 4-6 3
5-8 1
6-9 5
7-8 4
8-9 3
(i)Draw the network diagram and find the critical path and project completion
time
(ii) Find earliest and latest starting and finishing times of all activities.
(iii) Calculate total free interfering and independent float for each activities.

Q7) A small project consists of following Activities

Activity Preceding Activity Time (days)
A - 4
B - 5
C - 7
D A 6
E B 7
F C 6
G D 5
H E 8
I F 5
(i)Draw the network diagram and find the critical path and project completion
time
(ii) Find earliest and latest starting and finishing times , total float and free float
of all activities.
 Chapter 4.2
Network Analysis II
Project Crashing: -
Definition: -
The process of shorting the critical path to achieve earlier completion of project
is called project crashing.
Some definitions
Direct Costs of a Project :- This include costs of materials , machinery , tools ,
man hours etc.
Indirect costs of a project :- These include rent , overheads , administrative
costs etc . Indirect cost vary with time. They are expressed in per day basis.
Normal Time :- The normal time is the activity duration under normal
circumstances.
Crash Time :- The minimum possible time in which an activity can be
completed is called as crash time.
Normal cost :- Direct cost associated with the normal completion time .
Crash cost : The direct cost associated with crash time of an activity.
Always Crash time < Normal Time
Crash cost > Normal costs
Cost Slope
The cost slop of an activity is the increase in direct cost per day of crashing.
𝐶𝑟𝑒𝑎𝑠ℎ 𝐶𝑜𝑠𝑡−𝑁𝑜𝑟𝑚𝑎𝑙 𝐶𝑜𝑠𝑡
Cost Slope =
𝑁𝑜𝑟𝑚𝑎𝑙 𝑇𝑖𝑚𝑒−𝐶𝑟𝑎𝑠ℎ 𝑇𝑖𝑚𝑒

Optimal Cost and Optimal Time

Optimal cost is the point of minimum total cost.
Optimal project competition time is that duration for which total project cost is
minimum. It is the project competition time corresponding with optimal cost.
Notes on Crashing
• Total Normal Cost = Direct Normal Cost + Indirect normal cost
• Only Critical activities should be crashed.
• Start Crashing the project with the critical activity having the lowest rank.
 • In case of Multiple critical path all the critical paths are crashed
simultaneously. This is known as Parallel Crashing.
• Crash an activity which is common to all critical paths.
Main objectives of Project Crashing: -
1) To reduce the project completion time below its normal completion time.
2) To find out the optimal project cost.
3) To find the optimal project competition time.
4) To find out decrease in the indirect cost due to crashing.
Solved Examples
Example 1
A small project consists of following activities
Activity Normal Time Crash Time Normal Cost Crash Cost
1-2 3 1 25 27.5
2-3 4 2 38 44
2-4 3 3 29 29
2-5 8 7 36 37
3-6 4 2 28 30
4-6 6 4 22 23
5-7 5 4 20 24
6-7 3 1 18 22
Indirect cost is Rs 1500 per week
Find (a) Normal project completion time and cost.
(b) Optimal project completion time and optimal project cost.
(c) Minimum project completion time and minimum project cost.

Solution :-
Activity Normal Crash Normal Crash Crushable Cost slope Rank
Time Time Cost Cost Limit
1-2 3 1 25 27.5 3-1=2 2.5/2=1.25 3
2-3 4 2 38 44 4-2=2 6/2=3 5
2-4 3 3 29 29 3-3=0 - -
 2-5 8 7 36 37 8-7=1 1 2
3-6 4 2 28 30 4-2=2 2/2=1 2
4-6 6 4 22 23 6-4=2 1/2=0.5 1
5-7 5 4 20 24 5-4=1 4 6
6-7 3 1 18 22 3-1=2 4/2=2 4

3 E
A B 4 4
H
1 2 C 4 F 6 7
3
3 3 6
D G
8 5 5

Crashing Paths Path Path Direct cost Indirect Cost Total Cost
1-2-3-6- 1-2- 1-2-5-7
7 4-6-7
Before Crashing 14 15 16 25+38+29+36+28+22+ 1500X 3 = 4500 4500+216=4716
20+18 =216

Crashing 2-5 by 14 15 16-1=15 216 + 1=217 4500 217+4500=4717

one Day
Crashing 1-2 by 14-1=13 15- 15-1=14 217+1.25=218.25 1500 X 2=3000 3000+218.25=321
one Day 1=14 8.25
Crashing 1-2 by 13-1=12 14- 14-1=13 218.25+1.25=219.5 1500 X 2=3000 3000+219.5=3219.
one Day 1=13 5
Crashing 5-7 and 12-1=11 13- 13-1=12 219.5 +0.5 +4=224 1500 X 2=3000 3000+224=3224
4-6 by one Day 1=12
Hence Optimal time = 14 days with optimal cost = 3218.25

Example 2
A small project consists of following activities
Activity Normal Crash Normal Crash
Time Time Cost Cost
1-4 10 7 20 30
1-2 8 6 15 20
2-4 5 4 8 14
2-3 6 4 11 15
3-4 Zero zero zero zero
2-5 8 5 9 15
5-6 5 4 5 8
4-6 12 8 3 4
Indirect cost is Rs 2800 per week
Find (a) Normal project completion time and cost.
(b) Optimal project completion time and optimal project cost.
(c) Minimum project completion time and minimum project cost.
Solution :-

Activity Normal Crash Normal Crash Crushable Cost slope Rank

Time Time Cost Cost Limit
1-4 10 7 20 30 10-7=3 10/3= 3.33 5
1-2 8 6 15 20 8-6=2 5/2 = 2.5 3
2-4 5 4 8 14 5-4=1 6/1= 6 6
2-3 6 4 11 15 6-4=2 4/2 = 2 2
3-4 Zero zero zero zero zero- zero zero
zero=zero
2-5 8 5 9 15 8-5=3 6/3= 2 2
5-6 5 4 5 8 5-4=1 3/1= 3 4
4-6 12 8 3 4 12-8=4 ¼ = 0.25 1

A 4
10 C 5 E 0 I 12
1 B 2 D 3 6
8 6 G
D 5
8 5
Crashing Paths Path Path Path Direct cost Indirect Total Cost
Cost
1- 4 -6 1-2-4-6 1-2-3-4-6 1-2-5-6
Before 22 25 26 21 71 2800× 4 11200+71=
Crashing =11200 11271
Crashing 4-6 22- 25-1= 26-1= 25 21 71+ 0.25 = 71.25 11200 11200+71.25=
by 1 Day 1=21 24 11271.25
Crashing 1-2 1500 X 3000+218.25=
by one Day 2=3000 3218.25
Crashing 1-2 1500 X 3000+219.5=3
by one Day 2=3000 219.5
Crashing 5-7 1500 X 3000+224=32
and 4-6 by 2=3000 24
one Day

EXERCISE
Q1. A small project consists of following activities
Activity Normal Time Normal Cost Crash Time Crash Cost
1-2 7 1000 4 1300
1-3 8 1400 7 1440
1-4 6 750 4 900
2-5 9 1200 7 1350
3-6 5 1500 5 1500
4-7 6 1150 5 1220
5-8 4 800 3 850
6-8 4 600 1 840
7-8 4 400 3 450
Indirect cost is Rs 150 per day
Find (a) Normal project completion time and cost.
(b) Optimal project completion time and optimal project cost.
 (c) Minimum project completion time and minimum project cost.

Q2. A small project consists of following activities

Activity Proceeding Normal Time Crash Time Crash Cost ( Cost slope )
Activity
A - 3 1 40
B - 4 2 50
C B 0 0 nil
D A&C 5 3 20
E B 3 2 30
F D 3 2 10
G E 2 1 20
Normal project cost is Rs 1500 and indirect cost is 60 per week
Find (a) Normal project completion time and cost.
(b) Optimal project completion time and optimal project cost.
(c) Minimum project completion time and minimum project cost.
Q3) For the data given in the table below draw the network. Crash
systematically the activities and determine the optimal duration and cost.
Activities Intermediate Time Cost
Predecessor Normal Crash Normal Crash
A - 4 3 60 90
B - 6 4 150 250
C - 2 1 38 60
D A 5 3 150 250
E C 2 2 100 100
F A 7 5 115 175
G D,E ,B 4 2 100 240
Indirect costs varies as follows :-
Days 15 14 13 12 11 10 9 8 7 6
Costs 600 500 400 250 175 100 75 50 35 25

Q4) For the data given in the table below draw the network. Crash
systematically the activities and determine the optimal duration and cost.
Indirect costs is Rs 100 per week.
 Activities Time Cost
Normal Crash Normal Crash
1-2 3 2 300 450
2-3 3 3 75 75
2-4 5 3 200 300
2-5 4 4 120 120
3-4 4 1 100 190
4-6 3 2 90 130
5-6 3 1 60 110

Q5) For the data given in the table below draw the network. Crash
systematically the activities and determine the optimal duration and cost.
Indirect costs is Rs 70 per day.
Activities Time Cost
Normal Crash Normal Crash
1-2 8 6 100 200
1-3 4 2 150 350
2-4 2 1 50 90
2-5 10 5 100 400
3-4 5 1 100 200
4-5 3 1 80 100
 Chapter 4.3
Network Analysis III
PERT (Programme Evaluation and Review Technique)

Time Estimation in PERT

Optimistic Time ( a )
It is the earliest possible completion time of an activity. Hence it is the shortest
time.

Pessimistic Time ( b )
It is the maximum possible time taken by an activity for completion hence it is
the longest time.

Most Likely Time ( m )

It is the time in which the activity will be completed most often when it is
repeated a number of times
Always a < m < b

Expected Time ( te) :

When we combine the values of optimistic , most likely and Pessimistic time in
a statistical manner we can arrive at the expected time of an activity.
𝑎+4𝑚+𝑏
te =
6

Note :-
1) Duration of the critical path = expected project completion time.
2) Calculate variance of the critical path by adding variance of all critical
activities of all critical activities.
3) SD of critical path = √varience of critical path
𝑏−𝑎
𝜎=
6
4) Z is the value which is the variable need to calculate probability of project
completion for a specific due date.
𝐷𝑢𝑒 𝑑𝑎𝑡𝑒−expected 𝑝𝑟𝑜𝑒𝑐𝑡 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑖𝑜𝑛 𝑑𝑎𝑡𝑒
Z=
√𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝑣𝑎𝑟𝑖𝑒𝑛𝑐𝑒
𝑏−𝑎 2 (𝑏−𝑎)2
5) Variance = [ 𝜎 ]2 = [ ] =
6 36
6) Z is the value which is variable need to calculate probability of project
completion for a specific due date.
 𝐷𝑢𝑒 𝐷𝑎𝑡𝑒−𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑖𝑡𝑖𝑜𝑛 𝐷𝑎𝑡𝑒
Z=
√𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

7) Three time estimation in PERT are (i) Optimistic time (ii) Pessimistic Time
(iii)Most likely Time
8) Compare PERT And CPM
CPM PERT
In CPM there is only one time given In PERT there are three-time
for each activity estimates. Optimistic time, most
likely time and Pessimistic Time.
After drawing the network we find We draw the network using Expected
critical path which gives us project time and then we find critical path
competition time. which gives us expected project
competition time
There is no Probability information in In PERT Probability is associated
CPM. with project competition time.
There is no standard derivation and We find variance and standard
variance for activities . deviation of critical activities .

Solved Examples
Example1 : -
For a small project the given data is as follows
Activity Preceding Optimistic Activity Most Likely Pessi
Activity Time mistic Time
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
From the above information:
(i) Find probability of project completion in 32 weeks.
(ii) Find probability of project completion in 27 weeks.
(iii) Find probability of project not completing in 30 weeks.
(iv) Project completion time for 95% probability.
 Solution: -
Activity Preceding Optimistic Most Pessi 𝑎+4𝑚+𝑏 𝑏−𝑎 Variance
te = SD=
6 6
Activity Activity Likely mistic =(𝑆𝐷)2
Time Time
2 + 16 + 12 12 − 2 10 100
A - 2 4 12 =5 =
6 6 6 36
10 + 48 + 26 26 − 10 16 256
B - 10 12 26 = 14 =
6 6 6 36
8 + 36 + 10 10 − 8 2 4
C A 8 9 10 =9 =
6 6 6 36
10 + 60 + 20 20 − 10 10 100
D A 10 15 20 = 15 =
6 6 6 36
7 + 30 + 11 11 − 7 4 16
E A 7 7.5 11 =8 =
6 6 6 36
8 + 36 + 10 9−9 0 0
F B, C 9 9 9 =9 =
6 6 6 36
3 + 14 + 7 7−3 4 16
G D 3 3.5 7 =4 =
6 6 6 36
H E, F, G 5 5 5 5 + 20 + 5 5−5 0 0
=5 =
6 6 6 36

D
2 15 4
A
5 E
C 9 8 4 G 6
1
H
B 5
14
F
3 9 5

Paths Duration
A- D – G – H (1 – 2 – 4 – 5 - 6) 5 + 15 + 4 + 5 = 29
A – E – H (1 – 2 – 4 – 5 - 6) 5 + 8 + 5 = 18
A - C – F – H (1 – 2 – 3 – 5 - 6) 5 + 9 +9 + 5 = 28
B – E – H (1 – 2 – 4 – 5 - 6) 4 + 9 + 5 = 28

Variance of the critical path

= sum of variance of critical activities
= variance of A + variance of D + variance of G + variance of H
100 100 16 0 216
= 36 + 36 + 36 + 36 = 36 = 6
SD of critical path = √6 = 2.449
 𝐷𝑢𝑒 𝑑𝑎𝑡𝑒−expected 𝑝𝑟𝑜𝑒𝑐𝑡 𝑐𝑜𝑚𝑝𝑙𝑒𝑡𝑖𝑜𝑛 𝑑𝑎𝑡𝑒 ? −29
Z= =
√𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝑣𝑎𝑟𝑖𝑒𝑛𝑐𝑒 2.449
(i) P (32 days) means

32 −29
Z= = 1.224 = 1.22
2.449

0.5

0 1.22

P ( Z = 1. 22) = 0.375 ( from normal distribution table )

+ 0.5
P ( Z = 1. 22) = 0.82

(ii) P( 27 days)
27 −29 2
Z= =− = −0.816
2.449 2.449

0.5

-0.816 0
P ( Z = −0.816) = 0.2939 ( from normal distribution table )
(iii) P (not in 30 days) = 1- P(in 30 days)
P(in 30 days)
30−29 1
Z= = = 0.408
2.449 2.449

0.5

0 0.408
 P ( Z = 0.408) = 0.5+ 0.1591 ( from normal distribution table )
= 0.6591
P (not in 30 days) = 1- P(in 30 days)
= 1- 0.6591
= 0.3409
(iv) Projection completion with 95% confidence limit =0.95
So under normal curve = 0.95 – 0.5 = 0.45
For that z = 1.65
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 𝐸𝑥𝑝 𝐷𝑎𝑡𝑒
= 1.65
𝑆𝐷
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 29
= 1.65
2.449
Due date = 1.65 × 2.449 + 29 = 33.04 ≅ 33 days

Example2 : -
For a small project the given data is as follows
Activity Preceding Optimistic Activity Most Likely Pessi
Activity Time mistic Time
A - 2 5 8
B - 2 5 14
C A 4 6 14
D A 5 7 15
E B, C 2 3 10
F D 3 3 3
G E 1 2 3
From the above information find the probability that the project will
complete in
(i) 18 days (ii) 21 days (iii) 16 days
(iv) find 90% assurance of the project competition date.

Solution: -
Activity Preceding Optimistic Most Pessi 𝑎+4𝑚+𝑏 𝑏−𝑎 Variance
te = SD=
6 6
Activity Activity Likely mistic =(𝑆𝐷)2
Time Time
2 + 20 + 8 8−2 6 0
A - 2 5 8 =5 =
6 6 6 36
2 + 20 + 14 14 − 2 12 144
B - 2 5 14 =6 =
6 6 6 36
4 + 24 + 14 14 − 4 10 100
C A 4 6 14 =7 =
6 6 6 36
5 + 28 + 15 15 − 5 10 100
D A 5 7 15 =8 =
6 6 6 36
2 + 12 + 10 10 − 2 4 16
E B, C 2 3 10 =4 =
6 6 6 36
 3 + 12 + 3 3−3 0 0
F D 3 3 3 =3 =
6 6 6 36
1+8+3 3−1 4 16
G E 1 2 3 =2 =
6 6 6 36

2 D
4 F
8
A
3
5
C 7 6
1
G
B 2
6 E
3 5
4

Paths Duration
A- D - F 5 + 8 + 3 = 16
A–C–E–G 5+7+4+2 = 18
B–E–G 6 + 4 + 2 = 12
Hence project competition time = 18
SD = √𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 𝑝𝑎𝑡ℎ
Now variance of the critical path = sum of variance of the critical activities
= variance of A + variance of C + variance of E + variance of G
36+100+64+4
= = 5.67
36
SD = √5.67 = 2.38
18−18
P (18 days) = P (Z = 2.38 ) = 𝑃 (𝑍 = 0) = 0.5

0.5
 0.5

-0.84 0
16−18
P (16 days) = P (Z = ) = 𝑃 (𝑍 = −0.84) = 0.2995
2.38
(from normal distribution table)
21−18 3
Z= = = 1.26
2.38 2.38

0.5

0 1.26
21−18
P (21 days) = P (Z = ) = 𝑃 (𝑍 = 1.26)
2.38
= 0.5 + 𝑎𝑟𝑒𝑎 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑍 = 0 to Z = 1.26
= 0.5 + 0.3962
(from normal distribution table)
P ( 90% assurance ) = 0.9
Area under in one part of axis = 0.9 – 0.5 = 0.4
For area 0.4 we get z = 1.28
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 𝐸𝑥𝑝 𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝐶𝑜𝑚𝑝𝑙𝑒𝑡𝑖𝑡𝑖𝑜𝑛
= 1.28
𝑆𝐷
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 18
= 1.28
2.38
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 = 1.28 × 2.38 + 18 = 21.046 ≅ 21 days

Example 3 : -
For a small project the given data is as follows
Activity Optimistic Most Pessi
Time Likely mistic
(a) Time(m) Time(b)
1-2 1 2 3
2-3 1 4 9
2-4 1 3 5
2-5 1 2 3
3-6 1 2 9
4-7 1 2 3
5-8 2 4 8
6-7 5 7 9
7-9 3 5 7
8-9 2 3 4

Answer the following questions :-

1. Find the probability of project completion in 24 days

2. Find the probability of project completion in 19 days
3. Find the probability of not completing project in 22 days
4. Find the project completion time for 75% probability .

Solution :-
Activity Optimistic Most Pessi 𝑡𝑒 𝑏−𝑎 Variance
SD =
𝑎 + 4𝑚 + 𝑏 6 𝑏−𝑎 2
Time Likely mistic
=( )
(a) Time(m) Time(b) = 6 6

1-2 1 2 3 1+8+3 3−1 2 4

=2 =
6 6 6 36
2-3 1 4 9 1+8+9 9−1 8 64
=3 6
=6
6 36
2-4 1 3 5 1 + 12 + 5 4 16
=3
6 6 36
2-5 1 2 3 1+8+3 2 4
=2
6 6 36
3-6 1 2 9 1+8+9 8 64
=3
6 6 36
4-7 1 2 3 1+8+3 2 4
= 2
6 6 36
5-8 2 4 8 2+8+8 6 36
=3
6 6 36
6-7 5 7 9 5 + 28 + 9 4 16
=7
6 6 36
7-9 3 5 7 3 + 20 + 7 4 16
=5
6 6 36
8-9 2 3 4 2 + 12 + 4 2 4
=3
6 6 36

3 E 6
3
H
B 7
3
F I 9
1 A C 7
2 4 2 5
2 3
D 2 J
3
5 G 8
3
Paths Duration
1–2–3–6–7–9 2+3+3+7+5= 20
1–2–4–7–9 2+3+2+5 = 12
1–2–5–8–9 2+2+3+3= 10
Hence the critical activities are 1 – 2 , 2 – 3 , 3 – 6 , 6 – 7 and 7 – 9 .
So the variance of the critical path
= variance (1 – 2) + variance (2 – 3) + variance (3 – 6) + variance (6 – 7) +
variance(7 – 9)
4 64 64 16 16 164
= + + + + = = 4.56
36 36 36 36 36 36

SD of the critical path = √4.56 = 2.135

24−20
Z= = 1.87
2.135

0.5

0 1.87
24−20
P (24 days) = P (Z = ) = 𝑃 (𝑍 = 1.87)
2.135
=0.5 + area between z=0 to z=1.87
= 0.5 + 0.4693 = 0.9693
(from normal distribution table)
19−20
Z= = −0.468
2.135

0.5

-0.468 0
19−20
P (19 days) = P (Z = ) = 𝑃 (𝑍 = −0.468)
2.135
= 0.5 - area between z=0 to z= - 0.468
= 0.5 - 0.1772 = 0.3228
(from normal distribution table)
P( 22 Days )
22−20
Z= = 0.936
2.135

0.5

0 0.936
P ( Z = 0.936) = 0.5+ area between z=0 to z= 0.936
= 0.5+ 0.3264 ( from normal distribution table )
= 0.8264
P (not in 22 days) = 1- P(in 22 days)
= 1- 0.8264
= 0.1736
The project competition with 75% confidence probability = 0.75
Hence area in one part = 0.75- 0.5 = 0.25
In normal distribution table area 0.2552 is for Z = 0.7
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 𝐸𝑥𝑝 𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝐶𝑜𝑚𝑝𝑙𝑒𝑡𝑖𝑡𝑖𝑜𝑛
= 0.7
𝑆𝐷
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 − 20
= 0.7
2.135
𝐷𝑢𝑒 𝐷𝑎𝑡𝑒 = 0.7 × 2.135 + 20 = 21.4945 ≅ 22 days
 EXERCISE
Q1) For the following project draw PERT network and find expected project
completion time
Activity Preceding Optimistic Most Likely Pessimistic
Activity Time(a) Time(m) Time(b)
A - 2 4 6
B - 3 6 9
C A 1 4 7
D A 2 3 4
E B,C 1 3 5
F D 1 1 1
G E 1 2 3
Answer the following questions :-
1) Find the probability of project completion in 15 days
2) Find the probability of project completion in 12 days
3) Find the project completion time for 80% probability .

Q2) For the following project draw PERT network and find expected project
completion time
Activity Optimistic Most Likely Pessimistic
Time(a) Time(m) Time(b)
1-2 5 5 5
1-3 1 3 5
2-3 00 00 00
2-4 1 2 9
2-5 1 2 3
3-5 3 6 9
4-6 1 1.5 5
5-6 1 3 5
6-7 1 2 3
Answer the following questions :-
1) Find the probability of project completion in 18 days
2) Find the probability of project completion in 15 days
3) Find the project completion time for 90% probability .
4) ) Find the probability of project non completion in 17 days.

Q3) Three time estimates are given for each activity of following project.
(8M)
Activity Optimistic Time Most Likely Pessimistic Time
Time
1-2 1 2 3
1-3 2 3 4
1-4 1 4 7
2-4 4 8 12
2-5 2 3 10
3-6 1 2 9
4-6 4 5 6
5-6 3 3 3
(i)Draw network diagram and find total project completion time
(ii)What will be project completion time for 85% confidence of completion..( at
Z= 1.04 the table value is 0.3508)

Q4) Three time estimates are given for each activity of following project.
Activity Optimistic Time Most Likely Pessimistic Time
Time
1-2 6 6 24
1-3 6 12 18
1-4 12 12 30
2-5 6 6 6
3-5 12 30 48
4-6 12 30 42
5-6 18 30 54
(i)Draw network diagram and find total project completion time
(ii)What will be project completion time for 90% confidence of completion.( at
Z= 1.29 the table value is 0.4015)

Q5) Three time estimates are given for each activity of following project.
(8M)
Activity Optimistic Time Most Likely Pessimistic Time
Time
1-2 2 4 6
1-3 3 6 9
 2-3 1 4 7
2-4 2 3 4
3-5 1 3 5
4-6 1 1 1
5-6 1 2 3
(i)Draw network diagram and find total project completion time
(ii)What will be the probability of project completion in 15 days..( at Z= 1.42
the table value is 0.4222).
 Chapter 4
Game Theory
Basic Definitions :-
Game theory deals with suc business situation or problems where multiple
parties are involved in conflict through nteraction of their alternative decisions.
Teminology of Game Theory :-
(1) Player :- Various participants or decision makers are called “Players”.
(2) Strategies :- Each player has a finite number of alternatives or course of
actions available to it. These are called strategies.
(3) Play :- A play occures when each layer selects one of its strategies.
(4) Pay-off :- Pay off is the outcome of the interaction of selected strategies of
opponents in the game.
(5) Pay-off Matrix :- The table which represents the outcome of the game for
all possible combinations of interactions of opposing strategies is called Pay-
off table.
Maximim / Minimax Method

(1) Row Minima: For each row select minimum pay off value.
(2) Column Maxima: For each column select maximum pay off value.
(3) Saddle point: The saddle point occurs when in a payoff matrix
Maximin of Row = Minimax of Columns

Types of Game
1) Pure Strategy Game :- If saddle point is available in a game then that game
is called as pure strategy game.
2) Zero Sum Game :- If in a game the gains of the winner are equal to the loss
of all other players then it is called zero sum game.
3) Two person Zero Sum Game :- When there are two players with the gain of
the winner is equal to the loss of other player then it is called two person zero
sum game.
4) n person Game: - If there are more than two player it is called ‘ n person
game’.
5) Non zero Sum Game: - If players are willing to communicate and cooperate
with each other , then the objective is mutual benefit. The focus is on arriving at
right decision which benefits all the player in some way. This is called ‘non
zero sum game ‘ as the sum of gains of all players is not equal to zero.
6) Mixed Strategy Game: - If the saddle point is not available in the game then
the game is called as mixed strategy game.

Rules used in Principle of Dominance: -

(1) Rule for Rows: - If all the elements in a Row are less than or equal to the
corresponding elements in another Row, then this row is said to be dominated
by another row and can be eliminated from the game matrix to reduce the order
of the matrix.
(2) Rules for Columns: -- If all the elements in a Column are greater than or
equal to the corresponding elements in another Column, then this column is said
to be dominated by another column and can be eliminated from the game matrix
to reduce the order of the matrix.

Example :-
(1) Following pay off matrix refers to a two player game , player A and player
B. Find the Maximim strategy. Find Minimax strategy. What is the value of the
game ?
Player B
1 2 3 4
𝟏 500 260 200 210
𝟐 −50 −100 − 40 240
Player A [ ]
𝟑 200 400 160 −20
𝟒 250 300 100 50

Example 02
Following pay off matrix refers to a two-player game , player P and player Q.
Find the Maximim strategy. Find Minimax strategy. What is the value of the
game ?
Player B
1 2 3
𝟏 130 100 105
Player A 𝟐 [−50 −20 120 ]
3 200 80 −10
 Decision Theory
Decision theory is a branch of applied mathematics that deals with the formal representation of
choices under uncertainty. It provides a framework for making decisions when outcomes are
uncertain. Decision problems are often represented using decision trees, payoff matrices, or other
graphical models. Here, I'll provide a simple example of a decision problem and how decision theory
can be applied.

Example: The decision theory by insurance:

Let's consider a simple decision problem involving the purchase of insurance. Suppose you have a
valuable item (e.g., a smartphone) that might get lost or stolen. You have two options: either buy
insurance for $50 or not buy insurance. Now, let's consider the possible outcomes and their associated
payoffs (monetary values):

1. If the item is lost or stolen and you bought insurance.

Payoff: Insurance covers the cost of the item, so you lose only the $50.
2. If the item is lost or stolen and you didn’t buy insurance.
Payoff: You lose the entire value of the item.
3. If the item is not lost or stolen and you bought insurance.
Payoff: You lose the $50 premium.
4. If the item is not lost or stolen and you didn’t buy insurance.
Payoff: No loss; you keep the item.

In process of decision making there are number of steps:-

(1) Problem identification
(2) Collection of all necessary information
(3) Identification of available alternatives.
(4) Doing cost benefit analysis for each alternatives
(5) Selecting the most appropriate alternatives
(6) Implementing the decision.

Definitions: -
An event or State of Nature: -
An event or a state of nature is a phenomenon which occurs in the external environment e.g.
demand situation.
States of nature are not under the control of decision marker.

A decision or Strategy: -
A decision or a strategy is a course of action which is available to the decision maker to
encounter certain possible states of nature or events. There fore a decision or a strategy is
under the control of the decision maker.

Risk :-
A situation of Risk means the situation when respective probabilities of various states of
nature are known to the decision maker.
Uncertainty: -
A situation of uncertainty means the situation when no possibilities information is available
about possible states of nature.

Payoff: -
Payoff represents the revenue or profit associated with a particular strategy or course of
action(decision).

Regret: -
Regret represents the opportunity cost or loss associated with a particular strategy or course
of action(decision).

Techniques in decision Making Under Risk :-

EMV: Expected Monetary Value
EPPI: Expected Payoff with Perfect Information
EVPI: Expected Value of Perfect Information
EOL: Expected Opportunity Loss

Meaning of EPPI , EOL and EVPI:

EPPI: -
Under normal probabilistic conditions, the decision maker would select that strategy which
gives maximum EMV.

EOL: -
EOL = Sum of ( each probabilities × corresponding Regret )

EVPI: -
It is the maximum amount that should be spent on market research to obtain perfect
information about possible occurrence of states of nature.

Techniques in decision Making Under Uncertainty: -

(1) Maximin (Profit) or Minimax (Loss) criterion

Maximin criterion is also called criterion of pessimism.
The basic principle of minimax criterion is same as that of Maximin criterion

(2) Maximax (Profit) or Minimin (Loss) criterion

Maximax criterion is also called criterion of optimism.
The basic principle of minimin criterion is same as that of Maximax criterion.

(3) Hurwicz Alpha Criterion: -

The maximin and Maximax criterion are the two extremes, extremely negative and extremely
positively. Hurwicz alpha criterion is a middle of the road approach. Alpha is selected by the
decision marker from his past experience.

(4) Laplace Criterion

The principle of Laplace criterion is that if there is no reason for any event to occur it will not
occur.

(5) Minimax Regret (Opportunity Loss) Criterion

Regret represents the opportunity loss of decision in case of a specific event.
Opportunity loss of a decision = Maximum pay off of any decision – Pay off decision under
consideration (for a given event)

Conclusion Regarding Various Decision Criterion :-

(1) Different criterion are likely to recommend different decisions
(2) No single decision criterion can be called as the best criterion.
(3) Which decision criterion to select will depend on the decision markers risk approach, past
experience, recent market trends , business environment , etc.

Q. What is the meaning of Decision Making under Risk?

Ans: - When the probabilities of the outcomes associated with each decision are known the
process of decision making is called ‘decision making under risk ‘.

Q. What is the meaning of Decision making under uncertainty?

Ans: - When the probabilities of the outcomes associated with each decision are not known
the process of decision making is called “decision making under uncertainty “.

Q. Explain the meaning of the concept of perfect information while taking decision
under risk .
Ans: - Perfect information means the decision maker knowns which outcome will arise.
Hence he can take the decision which best suits the outcome that is going to arise.

Decision Making Under Risk

Q1. For the following pay off table find the Optimal Decision using EMV techniques and
calculate EPPI and EVPI. Construct EOL table and find the optimal decision using EOL
techniques.
States of Nature Course of Action Probability
A1 A2 A3 A4
S1 50 400 -50 0 0.15
S2 300 0 200 300 0.45
S3 -150 100 0 300 0.25
S4 50 0 100 0 0.15

Solution: -
Now EMV for supply A1
= 50 × 0.15 + 300 × 0.45 − 150 × 0.25 + 50 × 0.15 = 112.5.
EMV for supply A2
=400 × 0.15 + 0 × 0.45 + 100 × 0.25 + 0 × 0.15= 85
EMV for supply A3
=−50 × 0.15 + 200 × 0.45 + 0 × 0.25 + 100 × 0.15 = 97.5.
EMV for supply A4
= 0 × 0.15 + 300 × 0.45 + 300 × 0.25 + 0 × 0.15 = 𝟐𝟏𝟎.
Hence by EMV criterion supply A4 is the optimal decision.
Now let us calculate EVPI and EPPI
EPPI = sum of (Probability × Maximum Pay off)
= 0.15 × 300 + 0.45 × 400 + 0.25 × 200 + 0.15 × 300 = 320
EVP I = EPPI – Max EMV
= 320-210
= 90

Let us calculate opportunity of loss table:

States of Nature Course of Action Probability
A1 A2 A3 A4
S1 350 0 450 400 0.15
S2 100 400 200 100 0.45
S3 550 300 400 100 0.25
S4 350 400 300 400 0.15

Now EOL for supply A1

= 350 × 0.15 + 100 × 0.45 + 550 × 0.25 + 350 × 0.15 =.287.5
EOL for supply A2
= 0 × 0.15 + 400 × 0.45 + 300 × 0.25 + 400 × 0.15= 315
EOL for supply A3
=450 × 0.15 + 200 × 0.45 + 400 × 0.25 + 300 × 0.15 = 302.5.
EOL for supply A4
=400 × 0.15 + 100 × 0.45 + 100 × 0.25 + 400 × 0.15 = 𝟏𝟗𝟎.
Hence by EOL criterion supply A4 is the optimal decision.

Q2. For the following pay off table find the Optimal Decision using EMV techniques.
Construct EOL table and find the optimal decision using EOL techniques.
Product Course of Action
Acceptance Probability Full Partial Minimum
Good 0.2 80 70 50
Fair 0.4 50 45 40
Poor 0.4 -25 -10 0
Solution: -
Now EMV for Full action
= 80 × 0.2 + 50 × 0.4 − 0.4 × 25 = 26.
EMV for Partial action
= 70 × 0.2 + 45 × 0.4 − 0.4 × 10 = 28
EMV for Minimum Action
= 50 × 0.2 + 40 × 0.4 − 0.4 × 0 = 26
Hence by EMV criterion Partial is the optimal decision.

Let us calculate opportunity of loss table:

 Product Course of Action
Acceptance Probability Full Partial Minimum
Good 0.2 0 10 30
Fair 0.4 30 35 40
Poor 0.4 105 90 80
Now EOL for Full action
= 0 × 0.2 + 30 × 0.4 + 0.4 × 105 = 54.
EOL for Partial action
= 10 × 0.2 + 35 × 0.4 + 0.4 × 90 = 52
EOL for Minimum Action
= 30 × 0.2 + 40 × 0.4 + 0.4 × 80 = 54
Hence by EOL criterion Partial is the optimal decision.

Q3. A company manufactures a vaccine whose cost of production is Rs 200 and selling Price
is Rs 350 . The shelf life of the vaccine is only one month , after which it has to be disposed
off without any selling value. Possible demand situation and their respective probability are
as under :-
Demand 10 20 30 40 50
Probability 0.1 0.2 0.3 0.3 0.1
Construct and payoff table and find the Optimal Decision using EMV techniques and
calculate EPPI and EVPI. Construct EOL table and find the optimal decision using EOL
techniques.

Solution: -
C.P. = 200, S.P. = 350, Profit = 350-200= 150
Hence required payoff table
Demand 10 20 30 40 50
Supply
Probability 0.1 0.2 0.3 0.3 0.1
10 150× 10 = 150× 10 = 150×10=1500 150×10= 1500 150×10
1500 1500 =1500
20 150×10 – 150×20 = 150×20 = 3000 150×20 = 150×20 =
200×10=−500 3000 3000 3000
30 150×10 – 200× 150×20 – 150×30 = 4500 150×30 = 150×30 =
20=−2500 200×10=1000 4500 4500
40 150×10 – 200× 150×20 – 150×30 – 150×40 = 150×40 =
30 =−4500 200×20 = -1000 200×10 = 2500 6000 6000
50 150×10 – 200× 150×20 – 200× 150×30 – 200× 150×40 – 150× 50 =
40 =−6500 30 = -3000 20 = 500 200×10 = 4000 7500

Now EMV for supply 10

=1500 × 0.1 + 1500 × 0.2 + 1500 × 0.3 + 1500 × 0.3 + 1500 × 0.1 = 1500.
EMV for supply 20
=−500 × 0.1 + 3000 × 0.2 + 3000 × 0.3 + 3000 × 0.3 + 3000 × 0.1 = 2650.
EMV for supply 30
=−2500 × 0.1 + 1000 × 0.2 + 4500 × 0.3 + 4500 × 0.3 + 4500 × 0.1 = 𝟑𝟏𝟎𝟎.
EMV for supply 40
=−4500 × 0.1 − 1000 × 0.2 + 2500 × 0.3 + 6000 × 0.3 + 6000 × 0.1 = 2500.
EMV for supply 50
=−6500 × 0.1 − 3000 × 0.2 + 500 × 0.3 + 4000 × 0.3 + 75000 × 0.1 = 850.
Hence by EMV criterion supply 30 is the optimal decision.

Now let us calculate EVPI and EPPI

EPPI = sum of (Probability × Maximum Pay off)
= 0.1 × 1500 + 0.2 × 3000 + 0.3 × 4500 + 0.3 × 6000 + 0.1 × 7500 = 4650

EVP I = EPPI – Max EMV

= 4650 – 3100
= 1650

Let us calculate opportunity of loss table:

Demand 10 20 30 40 50
Supply
Probability 0.1 0.2 0.3 0.3 0.1
10 6000 6000 6000 6000 6000
20 8000 4500 4500 4500 4500
30 10000 6500 3000 3000 3000
40 12000 8500 5000 1500 1500
50 14000 10500 7000 3500 0

Now EOL for supply 10

=6000 × 0.1 + 6000 × 0.2 + 6000 × 0.3 + 6000 × 0.3 + 6000 × 0.1 = 6000.
EOL for supply 20
=8000 × 0.1 + 4500 × 0.2 + 4500 × 0.3 + 4500 × 0.3 + 4500 × 0.1 = 4850.
EOL for supply 30
=10000× 0.1 + 6500 × 0.2 + 3000 × 0.3 + 3000 × 0.3 + 3000 × 0.1 = 𝟒𝟒𝟎𝟎.
EOL for supply 40
=12000 × 0.1 + 8500 × 0.2 + 5000 × 0.3 + 1500 × 0.3 + 1500 × 0.1 = 5000.
EOL for supply 50
=14000 × 0.1 + 10500 × 0.2 + 7000 × 0.3 + 3500 × 0.3 + 0 × 0.1 = 5600.
Hence by EOL criterion supply 30 is the optimal decision.

Q4. A shop keeper wants to know how much stock of new product to keep for festival season
so that revenue can be optimal. Projection market demands are 100, 200, 300 or 400 units
with probabilities of 0.2 , 0.3 , 0.3 and 0.2 respectively. Hence the stock level can be 100,
200, 300 or 400 units. variable costs per unit is Rs 20 and selling price is Rs 30. Unsold
quantities can be disposed of at revenue loss of Rs 5 per unit. Construct and payoff table and
find the Optimal Decision using EMV techniques and calculate EPPI and EVPI. Construct
EOL table and find the optimal decision using EOL technique.

Solution: -
Sell price = 30, Cell Price = 20, Profit = 10

Demand 100 200 300 400

Supply
Probability (0.2) (0.3) (0.3) (0.2)
100 100× 10 = 100× 10 = 100× 10 = 100× 10 =
1000 1000 1000 1000
200 100× 10 − 200×10=2000 200×10=2000 200×10=2000
100 ×5= 500
300 100× 10 − 200× 10 − 300×10 = 3000 300×10 = 3000
200 ×5= 0 100 ×5= 1500
400 100× 10 − 200× 10 − 300× 10 − 400×10 = 4000
300 ×5= -500 200 ×5= 1000 100 ×5= 2500

Now EMV for supply 100

=1000 × 0.2 + 1000 × 0.3 + 1000 × 0.3 + 1000 × 0.2 = 1000
EMV for supply 200
= 500 × 0.2 + 2000 × 0.3 + 2000 × 0.3 + 2000 × 0.2 = 1700.
EMV for supply 300
=0 × 0.2 + 1500 × 0.3 + 3000 × 0.3 + 3000 × 0.2 = 𝟏𝟗𝟓𝟎.
EMV for supply 400
=−500 × 0.2 + 1000 × 0.3 + 2500 × 0.3 + 4000 × 0.2 = 750.
Hence by EMV criterion supply 300 is the optimal decision.

Now let us calculate EVPI and EPPI

EPPI = sum of (Probability × Maximum Pay off)
= 0.2 × 1500 + 0.3 × 2000 + 0.3 × 3000 + 0.2 × 4000 = 4650
=2600
EVP I = EPPI – Max EMV
= 2600 –1950
= 650

Let us calculate opportunity of loss table:

Demand 100 200 300 400
Supply
Probability 0.2 0.3 0.3 0.2
100 3000 3000 3000 3000
200 3500 2000 2000 2000
300 4000 2500 1000 1000
400 4500 3000 1500 0

Now EOL for supply 100

=3000 × 0.2 + 3000 × 0.3 + 3000 × 0.3 + 3000 × 0.2 = 3000
EOL for supply 200
= 3500 × 0.2 + 2000 × 0.3 + 2000 × 0.3 + 2000 × 0.2 = 2300.
EOL for supply 300
=4000 × 0.2 + 2500 × 0.3 + 1000 × 0.3 + 1000 × 0.2 = 𝟐𝟎𝟓𝟎.
EOL for supply 400
=4500 × 0.2 + 3000 × 0.3 + 1500 × 0.3 + 0 × 0.2 = 2250.
Hence by EOL criterion supply 300 is the optimal decision.

Decision Making Under Uncertainty

Solved Examples

Q1. A company has under consideration three variants of new products. The variants are
Super , Excel and Ultra. It can launch only one variant in the market. Find the appropriate
decision for each of the following decision criterion using Maximim , maximax , Laplace
and Minimax regret .
Acceptance Product Variant
Super Excel Ultra
20000 60 50 35
15000 35 40 30
10000 15 25 20
5000 -10 5 10

Solution: -
Acceptance Product Variant
Super Excel Ultra
20000 60 50 35
15000 35 40 30
10000 15 25 20
5000 -10 5 10
Maximum 60 50 35
Minimum -10 5 10

Maximin = Max {-10, 5, 10} = 10

Hence Ultra is the optimal decision.

Maximax = max {60, 50, 35} = 60

Hence Super is the optimal decision.

Laplace Criterion
60+35+15−10
For (Super) = = 26.25
4
50+40+25+5
For (Excel) = = 30
4
35+30+20+10
For (Ultra) = = 23.75
4
Hence using Laplace criterion, optimal decision is Excel.

For Hurwitz Alpha Criterion 𝛼 = 0.6

Net payoff for each decision
For (Super) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 60 + 0.4 × (−10) = 𝟑𝟐
For (Excel) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 40 + 0.4 × 30 = 22
For (Ultra) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 35 + 0.4 × 10 = 25
Hence by Hurwitz Alpha Criterion, optimal decision is Super.

Regret Table
Super Excel Ultra
20000 0 10 25
15000 25 20 30
10000 45 35 40
5000 70 55 50
Maximum 70 55 50

Minimax Regret: -
Minimum of maximums = min {70, 55, 50} = 50.
Hence using minimax regret criterion, optimal decision is ultra

Q2. A company has set up following pay off table for the sales returns of their product. Three
strategies S1, S2 , S3 are identified to deal with three uncertain nature ( N1 , N2 , N3 ) .Find
the appropriate decision for each of the following decision criterion using Maximim ,
maximax , Laplace , Hurwicz ( alpha = 0.7 ) and Minimax regret .
Demand Product Variants
S1 S2 S3
N1 800 500 300
N2 350 300 100
N3 400 550 0

Solution: -
Demand Product Variants
S1 S2 S3
N1 800 500 300
N2 350 300 100
N3 400 550 0
Maximum 800 550 300
Minimum 350 300 0
Maximin = Max {350, 300, 0} = 350
Hence S1 is the optimal decision.

Maximax = max {800, 550, 300} = 800

Hence S1 is the optimal decision.

Laplace Criterion
800+350+400
For (S1) = = 𝟓𝟏𝟔. 𝟔𝟔𝟔
3
500+300+550
For (S2) = = 450
3
 300+100+0
For (S3) = = 133.33
3
Hence using Laplace criterion, optimal decision is S1.

For Hurwitz Alpha Criterion 𝛼 = 0.6

Net payoff for each decision
For (S1) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 800 + 0.4 × 350 = 620
For (S2) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 550 + 0.4 × 300 = 450
For (S3) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 300 + 0.4 × 0 = 180.
Regert Table
Demand Product Variants
S1 S2 S3
N1 0 300 500
N2 450 500 700
N3 400 250 800
Maximum 450 500 800
Minimax Regret: -
Minimum of maximums = min {450, 500, 800} = 450.
Hence using minimax regret criterion, optimal decision is S1.

Q3) A company has three variants of a product and its estimated level of sales is
also given in the following payoff table. Find the appropriate decision for each
of the following decision criterion using Maximim , maximax , Laplace ,
Hurwicz ( alpha = 0.7 ) and Minimax regret .
Product Varient Estimated Sales
15000 10000 5000
V1 30 10 10
V2 40 15 5
V3 55 20 3

Solution:-
Product Estimated Sales Maximum Minimum
Varient 15000 10000 5000
V1 30 10 10 30 10
V2 40 15 5 40 5
V3 55 20 3 55 3

Maximin = Max {10, 5, 3} = 10

Hence product V1 is the optimal decision.

Maximax = max {30, 40, 55} = 55

Hence product V3 is the optimal decision.

Laplace Criterion
30+10+10
For (V1) = = 𝟏𝟔. 𝟔𝟔
3
40+15+5
For (V2) = = 20
3
55+20+3
For (V3) = = 26
3
Hence using Laplace criterion, optimal decision is product V3.

For Hurwitz Alpha Criterion 𝛼 = 0.6

Net payoff for each decision
For (S1) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 30 + 0.4 × 10 = 22
For (S2) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 40 + 0.4 × 5 = 26
For (S3) = alpha × Maximum Pay-off + (1 – alpha) × Minimum Pay-off
= 0.6 × 55 + 0.4 × 3 = 34.2
Hence product V3 is the optimal decision.

Regert Table
Product Estimated Sales Maximum
Varient 15000 10000 5000
V1 25 45 45 45
V2 15 40 50 50
V3 0 35 52 52

Minimum of maximums = min {45, 50, 52} = 45.

Hence using minimax regret criterion, optimal decision is V1.

Decision Tree Analysis: -

A decision tree is the geometrical representation of sequence of inter related
decisions and outcomes.
A decision tree displays all decision alternatives, a set of possible events
corresponding with each alternative and probability of each event.

Steps in Decision Tree Analysis: -

(1) Identify decision alternatives
(2) Identify events corresponding to each decision alternatives.
(3) Assess and assign probabilities of occurrence to all events
(4) Use expected value criterion to identify the best decision alternatives.

Terminologies in Decision Tree: -

Decision Nodes
The points from which decision alternatives emerge. Represented by sequence.
Event Nodes
The point from which outcomes of event emerge. Represented by circles.
Brunches
Brunches of the tree emerge from decision nodes and event nods. From decision
nodes they emerge as decision alternatives and from event nodes they emerge as
possible outcome of that event.
Risk
Probability of occurrence of each possible outcome.
Forward pass
The computation stage in which we calculate the economic consequences of
each sequence outcome nodes.

Backward pass
The evaluation stage in which we calculate EMV at each event node and
selection of optimal decision alternatives at each decision node.

Decision Tree Solved Examples:

Q1) Draw the Decision Tree for the following Data using EMV and find
optimal decision
ALTERNATIVES STATES OF NATURE
S1 S2 S3
A1 20 500 300
A2 350 300 100
A3 400 550 0
PROBABILITIES 0.2 0.5 0.3

Solution: - S1(0.2)
5 20 20× 0.2

2 S2(0.5) 6 500 500× 0.5 = 344

A1
S3(0.3) 7 300 300× 0.3

S1(0.2)
8 350 350× 0.2
1 3 S2(0.5) 9 300 300× 0.5 =250
A2
 S3(0.3) 10 100 100× 0.3

S1(0.2) 11 400 400× 0.2

A3 4 S2(0.5) 12 550 550 × 0.5 = 355

13 0 0 × 0.3
S3(0.3)

According to decision tree method A3 is the best decision.

Q2) Draw the Decision Tree for the following Data using EMV and find
optimal decision
Model Acceptance Probability Model Type
X Y Z
Excellent 0.3 120 100 60
Moderate 0.5 80 60 50
Poor 0.3 -30 -20 0
Solution: - Excellent(0.3)
5 120 120× 0.3

2 Moder(0.5) 6 80 80× 0.5 = 70

X
Poor(0.2) 7 -30 - 30× 0.2

Excellent(0.3)
8 100 100× 0.3
1 3 Moder(0.5) 9 60 60× 0.5 = 56
Y
Poor(0.2) 10 -20 -20× 0.2

Excellent(0.3) 11 60 60× 0.3

Z 4 Moder(0.5) 12 50 50 × 0.5 = 43

13 0 0 × 0.2
Poor(0.2)

According to decision tree method model X is the best decision.

Exercise
Q1) Following payoff matrix has been constructed by a company for four strategies S1 , S2 ,
S3 and S4 which can be adopted to ensure for possible states of nature N1 , N2 ,N3 and N4
Calculate EPPI ,EVPI and EOL for the given problem.
Pay- Offs
States of Nature N1 N2 N3 N4
 Probabilities 0.2 0.1 0.3 0.4
Strategy S1 1200 1200 1200 1200
Strategy S2 1040 1280 1280 1280
Strategy S3 880 1080 1360 1360
Strategy S4 700 840 1080 1440

Q2) Following payoff matrix has been constructed by a company for four strategies A1 , A2 ,
A3 and A4 which can be adopted to ensure for possible states of nature N1 , N2 ,N3 and N4.
Calculate EPPI ,EVPI and EOL for the given problem.
Pay- Offs
States of Nature N1 N2 N3 N4
Probabilities 0.2 0.1 0.3 0.4
Strategy A1 600 600 600 600
Strategy A2 520 640 640 640
Strategy A3 440 540 680 680
Strategy A4 350 4200 540 720

Q3) Following payoff matrix has been constructed by a company for four strategies S1 , S2 ,
S3 and S4 which can be adopted to ensure for possible states of nature N1 , N2 ,N3 and N4.
Calculate EPPI ,EVPI and EOL for the given problem
Pay- Offs
States of N1 N2 N3 N4
Nature
Probabilities 0.1 0.3 0.5 0.1
Strategy S1 5000 5000 5000 5000
Strategy S2 4200 5200 5200 5200
Strategy S3 3400 4400 5400 5400
Strategy S4 2600 3600 4600 5600

Q4) The demand for a seasonal product is as given below:

Demand during the season: 40 45 50 55 60 65
Probability: 0.10 0.20 0.30 0.25 0.10 0.05
The product costs Rs 60 per unit and sells at Rs 80 per unit. If the unit is not sold within the
season they will no have any market value. Construct and payoff table and find the Optimal
Decision using EMV techniques and calculate EPPI and EVPI. Construct EOL table and find
the optimal decision using EOL technique.

Q5) The number of customers and the probability distribution is given for a product. The
selling price is Rs6,000 and cost price is Rs2000. Unsold item is disposed with a scrap value
Rs 1000.
Number of Customers: 100 200 300 400 500
Probability: 0.1 0.1 0.2 0.4 0.2
Construct and payoff table and find the Optimal Decision using EMV techniques and
calculate EPPI and EVPI. Construct EOL table and find the optimal decision using EOL
technique.

Q6) A Consumer goods company has set up following pay off table for the sales returns of
their product. 3 strategies are identified to deal with three uncertain states of nature. . Suggest
best action using (i) Hurwicz with coefficient a =0.7 (ii) Minimax Regrets (Iv) Laplace
Criterion.
Actions States of Nature
E1 E2 E3 E4
A1 26 26 18 22
A2 22 22 22 22
A3 13 34 18 18
A4 22 30 18 18
A5 18 20 20 18

Q7) A Pay off profits of 3 strategies corresponds to 3 states of natures given below. Suggest
best action using (i) Maximin criterion (ii) Maximax Criterion (iii) Minimax Regrets (Iv)
Laplace Criterion.
States of Nature A1 A2 A3
S1 700 500 300
S2 300 450 300
S3 150 0 300

Q8) A Pay off profits of 5 actions corresponds to 4 states of natures given below. Suggest
best action using (i) Maximin criterion (ii) Maximax Criterion (iii) Minimax Regrets (Iv)
Laplace Criterion.
Actions States of Nature
E1 E2 E3 E4
A1 26 26 18 22
A2 22 22 22 22
A3 13 34 18 18
A4 22 30 18 18
A5 18 20 20 18

Q9) In the given payoff table below is given three types of crops and their production
quantity related to amount of rainfall.
Rainfall Types of Crop
Crop 1 Crop 2 Crop 3
Substantial 7000 2500 4000
Moderate 3500 3500 4000
Light 1000 4000 3000
Draw the Decision Tree for the following Data using EMV and find optimal decision.
According to previous years data probability of substantial, moderate, and light rainfall is 0.2,
0.3 and 0.5
Q10) Faced with a new opportunity management evaluates three course of actions against
sales levels in the new market area as follows :
Sales Probability Types of Action
Operate as always Expand Built Capacity
Under 30,000 0.1 20 -20 -40
30,000 to 50,000 0.5 30 -40 0
Over 50,000 0.4 40 60 80
Draw the Decision Tree for the following Data using EMV and find optimal decision.