NAME ROHIT CHOUDHARY

PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)

SEMESTER II
COURSE CODE & NAME DMBA205-OPERATIONS RESEARCH
ROLL NO. 2314504381

Assignment Set – 1

1. What is Operations Research? Explain the Methodology used to

solveOperationsResearch Problems in brief.

Ans 1.

Operations Research

The field of operations research (OR) makes use of statistical analysis, mathematical models, and
optimization approaches to support problem-solving and decision-making. It entails using
scientific approaches to tackle challenging issues so that businesses can become more efficient
and make better judgments. Manufacturing, logistics, banking, healthcare, and
telecommunications are just a few of the sectors and industries that employ OR.

Techniques Utilized to Address Issues in Operations Research

Formulation of the Problem It is necessary to characterize the problem precisely before

beginning any operations research problem-solving process. This entails determining the goals,
limitations, and contributing factors. The problem must be formulated in a logical or
mathematical framework in order for the analysis to follow.

Model Creation The next stage after formulating the problem is to create a mathematical model
that captures the actual circumstances. This model might be stochastic, meaning there is
uncertainty involved, or deterministic, meaning all inputs and outcomes are known. The model
offers a foundation for study and aids in a deeper understanding of the issue.

Gathering and Examining Data An essential component of operations research is data. Gathering
pertinent data that the model will use is crucial. After that, this data is examined to find links,
patterns, and trends that can aid in making decisions. Statistical analysis is a popular tool for data
analysis and inference.

Model Resolution The next stage is to identify a solution for the issue after creating the model
and examining the data. This calls for the application of numerous mathematical approaches,
including queuing theory, simulation, network analysis, integer programming, and linear
programming. These methods assist in determining the optimal course of action and optimizing
the solution. Solution Validation After a solution has been found, it is critical to validate it to
make sure it is workable and ideal. This entails determining if the solution meets all requirements
and accomplishes the intended goals. Validation is essential since it guarantees that the solution
is workable and feasible to apply in the actual world.

Execution and Observation Implementing the solution in the actual world and keeping an eye on
its performance is the last step in solving an operations research problem. This entails monitoring
important data and adjusting as needed to guarantee the efficacy of the solution. Making sure the
solution works as intended and adds value for the company depends on implementation and
monitoring.

To sum up, operations research is a useful tool that firms may use to enhance their operations
and make better decisions. Using sophisticated analytical techniques and a methodical approach,
OR helps businesses solve challenging issues, streamline operations, and accomplish goals more
successfully.

2. Solve the following linear programming problem using its Dual form:

Minimize Z = 3x1 + 4x2

Subject to: 4x1 + x2 ≥ 30

-x1 - x2 ≤ -18
 x1 +3x2 ≥ 28

where x1, x2 ≥ 0

Ans 2.

The dual form of this primal problem is:

Maximize W =30 y 1−18 y 2+28 y 3

Subject to:

4 y 1− y 2+ y ≤ 3

y 1+ 3 y ≥ 24

y 1, y 2, y3≥0

Now, we will solve the dual problem:

Maximize W =30 y 1−18 y 2+28 y 3

Subject to:

4 y 1− y 2+ y 3 ≤ 3

y 1+ 3 y ≥ 2

y 1, y 2, y3≥0

First, let's convert the inequalities to equations:

4 y 1− y 2+ y 3=3

y 1+ 3 y 2=4

Now, we can solve these equations to find the values of y 1 , y 2, and y 3.

To solve the dual problem, we first convert the inequalities to equations:

 4 y 1− y 2+ y 3=3
y 1+3 y 2=4

Now, we can solve these equations to find the values of y 1 , y 2, and y 3.

From the first equation, we have:

4 y 1− y 2+ y 3=3 ⟹ 4 y 1= y 2− y 3+3

Substituting y 1=
√ 2− p−β +3
into the second equation, we get:
4

y 2− y 3+ 3
+3 y 2=4 ⟹ y 2− y 3+3+12 y 2=16 ⟹13 y 2− y 3=13
4

Solving these two equations simultaneously, we get:

13 y 2− y 3 ¿ 13
4 y1 ¿ y 2− y 3+3

3
y + 13
Now, we substitute y 2= into the primal constraint y 1+ 3 y 2 ≥ 4 to find the value of y 1 :
13

y 1+ 3 ( y 3+1313 ) ≥ 4 ⟹ y 1 ≥ 52−313y 3−39 ⟹ y 1≥ 13−313 y 3

The dual problem is maximized when y 1 takes the minimum value that satisfies the constraint.
13−3 y 3
Since y 1≥ , the minimum value of y 1 occurs when y 3=0 .
13

13
Substituting y 3=0 into the equations, we get y 2=1 and y 1= =1.
13

Therefore, the optimal solution for the dual problem is y 1=1 , y 2=1, and y 3=0 , with the
maximum value of

W =30 ×1−18 ×1+28 × 0=12.

3. A firm marketing a product has four salesman S1, S2, S3 and S4. There are three
customers to whom a sale of each unit to be made. The chance of making a sale to a
customer depend on the salesman customer support. The data depicts the probability with
which each of the salesman can sell to each of the customers.
 Salesman

Customer S1 S2 S3 S4

C1 0.7 0.4 0.5 0.8

C2 0.5 0.8 0.6 0.7

C3 0.3 0.9 0.6 0.2

If only one salesman is to be assigned to each of the customers, what combination of

salesman and customers shall be optimal. Give further that the profit obtained by selling
one unit of C1 is Rs. 500, whereas it is respectively Rs 450 and Rs. 540 for sale to C2 and
C3. What is the expected profit?

Ans 3a.

Multiply each customers profit value with the probability of each salesman and customer
Customer Salesmen
S1 S2 S3 S4
C1 0.7*500 0.4*500 0.5*500 0.8*500
C2 0.5*450 0.8*450 0.6*450 0.7*450
C3 0.3*540 0.9*540 0.6*540 0.2*540

We have to assign on salesmen to one customer

Since there are four salesman and three customers we have to add one customer (dummy
cell) So the matrix (table) will be as follow:

Customer Salesmen
S1 S2 S3 S4
C1 350 200 250 400
C2 225 360 270 315
C3 162 486 324 108
C4 0 0 0 0

Row Deduction
Customer Salesmen
S1 S2 S3 S4
 C1 0
150 50 200
C2
0 135 45 90
C3
54 378 216 0
C4 0
0 0 0

Optimal Assignment
C1 to S2 =200
C2 to S1 =225
C3 to S4 =108
C4 to S3 =000
Total Expected Profit is Rs. 533

Assignment Set – 2

1. What is Monte Carlo simulation? Explain Monte Carlo Simulation Procedure in brief.

Ans 1.

Monte Carlo Simulation: A Powerful Tool for Decision Making

A computational method for evaluating the influence of risk and uncertainty in decision-making
processes is Monte Carlo simulation. This approach, which takes its name from the well-known
Monte Carlo Casino in Monaco, which is well-known for its games of chance, models several
possible outcomes in a problem by utilizing random sampling and probability distributions. It
gives decision-makers a spectrum of potential outcomes and the likelihood that each will occur
for any course of action, assisting them in calculating the risk and coming to more informed
conclusions.
Methodology for Monte Carlo Simulation

There are multiple crucial steps in the Monte Carlo simulation process:

Formulation of the Problem: Clearly defining the issue and all relevant variables is the first step.
This entails determining the choice that needs to be taken, the uncertain variables influencing the
choice, and the scope of potential results.

Model Development: The problem is then represented by a mathematical model that is created.
The linkages between the variables and the probability distributions that characterize the system's
uncertainty are included in this model.

Random Sampling: To produce potential results, Monte Carlo simulation uses random sampling.
Based on the given probability distributions for each variable, random numbers are produced.

Runs of the Simulation: The simulation is run several times, indicating several possible outcomes
in each run. Usually, there are enough runs to guarantee a trustworthy assessment of the results.

Examination of the Outcomes: The results of the simulation runs are examined to ascertain the
range of potential outcomes and their likelihoods. Understanding the decision's risk and
uncertainty is made possible by this approach.

Ultimately, a decision is taken in light of the simulation's outcomes. The simulation's information
can be used by the decision-maker to weigh the advantages and disadvantages of various
possibilities and come to a well-informed decision.

An illustration of a Monte Carlo simulation

Take a project manager who has to determine how long a construction project will take to finish,
for instance. The project's timeframe could be impacted by a number of unpredictable factors,
including unanticipated delays, resource availability, and weather. The project manager can
create alternative possibilities for the project's completion time by modeling these aspects using
probability distributions and Monte Carlo simulation.

The project manager can evaluate the possibility of finishing the project within budget and on
schedule, as well as identify any potential risks, based on the simulation results. Making
decisions on the distribution of resources, scheduling, and risk management techniques can be
aided by this knowledge.

A useful technique for making decisions in difficult and unclear circumstances is the Monte
Carlo simulation. It gives decision-makers a methodical approach to evaluate risks and
uncertainties and supports them in making better decisions. Organizations can enhance their
decision-making procedures and get better results by using Monte Carlo simulation to simulate
several scenarios and analyze the outcomes.

2. Asmallprojectiscomposedofsevenactivities,whosetimeestimatesarelistedin the table

below:

Estimated Duration (Weeks)

Activity (i – j) Optimistic Most LikelyPessimistic

1–2 1 1 7

1–3 1 4 7

1–4 2 2 8

2–5 1 1 1

3–5 2 5 14

4–6 2 5 8

5–6 3 6 15

Draw the network diagram of activities in the project.

Find the expected duration and variance for each activity. What is the expected project
length?

Calculate the variance and standard deviation of the project length. What is the
probability that the project will be completed atleast 4 weeks earlier than expected time.
 Z 0.67 1.00 1.33 2.00

Prob. 0.2514 0.1587 0.0918 0.0228

Ans 2.

Making use of time estimates t 0 ,t m and t p, the calculations for expected time t e and variance σ 2
for activities are shown in table below:

Activity Time Duration (Weeks)

( )
2
t p−t o
t o +4 t m +t p 2
σ =
Sequence 6
to tm

1−2 1 1 7 2 1

1−3 1 4 7 4 1

1−4 2 2 8 3 1

2−5 1 1 1 1 0

3−5 2 5 14 6 4

4−6 2 5 8 5 1

5−6 3 6 15 7 4

1−4 2 2 8 3 0

2−5 1 1 1 1 4
 3−5 2 5 14 6 1

4−6 2 5 8 5 4

5−6 3 6 15 7

1. The network diagram can be drawn as follows:

Network Diagram

The evpecned duration and variance of each activity is given in table above. We now calculate
the expected

Variwes Paths Length of the Path

 1−2−5−6 1−2−5−6=2+1+7 ¿ 10 weeks

1−3−5−6 1−3−5−6=4+6 +7 ¿ 17 weeks

1−4−6 1−4−6=3+5 ¿ 8 weeks

Among these putis, the critical path is 1−3−5−6=17 weeks

2. Wuriance of the project length is the sum of the variances of the activities on the critical path.
Hence, Variance,

σ =1+4 +4=9 deys (trom table above). Therefore, Standard deviation of the project σ =√ 9=3
2

weeks

Phobubiliry that the project will be completed atleast 4 weeks earlier than expected time is given
by;

P(x <13)=P Z<

[ T α −T s
σα ] [
= P Z<
13−17
3 ]
= P[ Z<−1.33]=1−0.9082=0.0918

3. There is a game between the two players A and B where A is maximizing player and B is
minimizing player. Player A wins B’s coin if the two coins total are equal to odd number
and losses his coin if total to two coins is even. It is game of 1, 2, 5, 10 and 50 rupees coins.
Determine the payoff matrix, the optimal strategies for each player and the value of the
game to A.

Ans 3.

To solve this, let's first construct the payoff matrix:

Let's represent the coins as 1, 2, 5, 10, and 50 rupees, respectively. Player A is the maximizing
player and Player B is the minimizing player. The possible totals can be odd (win for A) or even
(loss for A). The matrix will have rows for Player A's choices and columns for Player B's
choices, and the entries will represent the payoff to A.

Here's the payoff matrix:

| 1 2 5 10 50

-------------------------

1 | 0 -1 1 -1 1

2 | -1 0 -1 1 -1

5 | 1 -1 0 1 -1

10 | -1 1 -1 0 1

50 | 1 -1 1 -1 0

In this matrix:

 A positive number represents a win for A (A gains B's coin).

 A negative number represents a loss for A (A loses their coin to B).

 Zero represents no change in coins.

To find the optimal strategies for each player, we can use the concept of mixed strategies. Let 𝑝p
be the probability that A chooses 1 rupee, 𝑞q be the probability that A chooses 2 rupees, 𝑟r be
the probability that A chooses 5 rupees, 𝑠s be the probability that A chooses 10 rupees, and 𝑡t be
the probability that A chooses 50 rupees.

Let's assume B's optimal strategy is to randomize their choices such that all coins are equally
likely to be chosen. This assumption simplifies the calculation, and it's often the case in such
games where one player is maximizing and the other is minimizing.

The expected payoff for A when choosing 1 rupee is:

𝐸1=𝑝(−1)+𝑞(1)+𝑟(−1)+𝑠(1)+𝑡(1)=𝑞+𝑠+𝑡−𝑝−𝑟

Similarly, the expected payoffs for A when choosing 2, 5, 10, and 50 rupees are:
𝐸2=𝑝(1)+𝑞(−1)+𝑟(1)+𝑠(−1)+𝑡(−1)=𝑝+𝑟−𝑞−𝑠−𝑡

𝐸5=𝑝(−1)+𝑞(1)+𝑟(−1)+𝑠(1)+𝑡(−1)=𝑞+𝑠−𝑝+𝑟−𝑡

𝐸10=𝑝(1)+𝑞(−1)+𝑟(1)+𝑠(−1)+𝑡(1)=𝑝+𝑟−𝑞−𝑠+𝑡

𝐸50=𝑝(−1)+𝑞(1)+𝑟(−1)+𝑠(1)+𝑡(0)=𝑞+𝑠−𝑝+𝑟

To find the optimal strategy for A, we need to find the values of p, q, r, s, and t that maximize
A's expected payoff while considering the constraints p+q+r+s+t=1 and 𝑝,𝑞,𝑟,𝑠,𝑡≥0

The optimal strategy for B is to choose all coins with equal probability, i.e., 𝑞=𝑟=𝑠=𝑡=0.2

By solving the above system of equations, we can find the optimal strategies for A and the value
of the game to A.

Let's solve for the optimal strategies for A and the value of the game to A.

1. Optimal Strategy for A:

We want to maximize E1, E2, E5, E10, and E50 subject to the constraint 𝑝+𝑞+𝑟+𝑠+𝑡=1 and
𝑝,𝑞,𝑟,𝑠,𝑡≥0

Let's set up the equations:

 𝐸1=𝑞+𝑠+𝑡−𝑝−𝑟

 𝐸2=𝑝+𝑟−𝑞−𝑠−𝑡

 𝐸5=𝑞+𝑠−𝑝+𝑟−𝑡

 𝐸10=𝑝+𝑟−𝑞−𝑠+𝑡

 𝐸50=𝑞+𝑠−𝑝+𝑟

 𝑝+𝑞+𝑟+𝑠+𝑡=1

2. Solving the System of Equations:

 Adding all equations, we get: 2𝑝+2𝑞+2𝑟+2𝑠+2𝑡=2

 Dividing by 2, we get: 𝑝+𝑞+𝑟+𝑠+𝑡=1 which is our constraint.

  Therefore, the equations are consistent with the constraint.

3. Optimal Strategies:

 The equations are symmetrical, so any permutation of the solutions is also valid.

 One possible optimal strategy for A is p=0.2, q=0.2, r=0.2, s=0.2, 𝑡=0.2t=0.2.

4. Value of the Game to A:

Using the optimal strategy, the expected payoff to A is

𝐸total=0.2×𝐸1+0.2×𝐸2+0.2×𝐸5+0.2×𝐸10+0.2×𝐸50

Calculating Etotal, we get the value of the game to A.

Let's calculate 𝐸totalEtotal to find the value of the game to A.

Substituting the optimal strategy p=0.2, q=0.2, r=0.2, s=0.2, t=0.2 into the expressions for E1, E2
, E5, E10, and E50:

𝐸1=0.2(−1)+0.2(1)+0.2(−1)+0.2(1)+0.2(1)=0

𝐸2=0.2(1)+0.2(−1)+0.2(1)+0.2(−1)+0.2(−1)=−0.2

𝐸5=0.2(−1)+0.2(1)+0.2(−1)+0.2(1)+0.2(−1)=−0.2

𝐸10=0.2(1)+0.2(−1)+0.2(1)+0.2(−1)+0.2(1)=0.2

𝐸50=0.2(−1)+0.2(1)+0.2(−1)+0.2(1)+0.2(0)=0

Now, calculating the total expected payoff to A:

𝐸total=0.2×𝐸1+0.2×𝐸2+0.2×𝐸5+0.2×𝐸10+0.2×𝐸50

𝐸total=0×0.2+(−0.2)×0.2+(−0.2)×0.2+0.2×0.2+0×0.2

𝐸total=0−0.04−0.04+0.04+0

𝐸total=−0.08

So, the value of the game to Player A is -0.08, which means, on average, Player A loses 0.08
rupees per game against an optimal strategy from Player B.