Prestige Institute of Management and

Research Bhopal

PPT Presentation
on
Operati on Research & Supply Chain

SUBMMITED BY SUBMMITED TO
NAME- RAJA BHALAVI PROF. SURENDRA KUSHWAH
BRANCH- ME
ENROLLMENT NO.-0198ME211044
Supply Chain
Management:
Definition,
Importance,
Expenditure, and
Opportunities
Supply Chain Management (SCM) involves overseeing the flow of
goods and services. It is essential for efficiency, cost reduction, and
achieving a competitive advantage in the market.
What is Supply Chain
Management?
Definition Key Roles Integration
SCM coordinates the It ensures efficient, cost- Combining logistics, finance,
production, shipment, and effective management from operations, and information
distribution of products. producers to consumers. within a network.
Importance of
Effective Supply Chain
Management
Effi ciency
1 Reduces waste and optimizes resource use,
enhancing output.

2 Cost Reduction
Minimizes expenses by streamlining processes and
cutting delays.

3 Customer Satisfaction
Improves service delivery, leading to higher
client s atisfaction.
Global Supply Chain Expenditure:
Trends and Insights
Year Expenditure (in Growth

202 billions) Rate

0 10,000 10,500 11,025 5% 5% 5%

202

202

2
Key Components of a Successful
Supply Chain
Planning Sourcing Logistics
Strategizing to meet demand Identifying suppliers and Coordinating transportation,
and supply efficiently. managing procurement storage, and deliveries.
processes.
Demand Supplier Selection Warehouse
Contract
Forecasting Management Management
Resource Allocation Inventory Control
Optimizing Supply Chain Operations:
Strategies and Techniques

Lean Techniques Agile Practices Collaboration Tools

1 2 3
Adopt Just-In-Time and Lean Respond to changes quickly Use digital platforms for
manufacturing to minimize through adaptive supply smoother communication and
waste. chain models. coordination.
Leveraging
Technology in Supply
Chain Management
Data Analytics
Enhances decision-making by analyzing trends and
1 patterns.

IoT Devices
Improve tracking and monitoring of goods in
2 transit.

Automation
Streamlines operations, increasing efficiency and
3 accuracy.
Supply Chain
Sustainability and
Environmental
Responsibility

Eco-friendly Practices
Adopting practices that reduce environmental
impact.

Renewable Resources
Utilizing renewable energy to power supply chain
activities.

Green Innovation
Investing in sustainable technologies for long-term
benefits.
Talent Management in
Supply Chain:
Recruiting and
Retaining Top Talent
Recruitment Development
Attracting qualified talent Providing training
with specific expertise in opportunities for
SCM. skill enhancement.

Retention
Implementing programs to retain high-performing
employees.
Emerging Trends and Future Outlook for
Supply Chain Management

Blockchain AI Integration Resilience Focus

Enhancing transparency Improving demand forecasting Building supply chains that
and traceability in supply and operational efficiency. can withstand disruptions.
chains.
Mathematical
Formulation of
Linear Systems
by LP
Linear programming (LP) is a powerful mathematical tool for solving
optimization problems with linear constraints and objective functions. This
presentation will delve into the fundamental concepts of LP, including its
formulation, solution methods, and applications.
Linear Programming (LP) Problem
Formulation
An LP problem involves maximizing or minimizing a linear objective function subject to a set of linear constraints. These constraints
define a feasible region in which the solution must lie.

Decision Objective Constraints

Variables
Represent the quantities being
Function
The function to be maximized or Limit the values of the decision
optimized. minimized. variables.
 Graphical Solution of LP for Two
Variables
For problems with two decision variables, the feasible region can be visualized graphically. The optimal solution is the point within the feasible region
that maximizes or minimizes the objective function.

Step 1 Graph each constraint as a line.

Step 2 Identify the feasible region, which is the area satisfying all constraints.

Step 3 Determine the corner points of the feasible region.

Step 4 Evaluate the objective function at each corner point to find the optimal
solution.
Concept of Feasibility and
Optimality
A solution is feasible if it satisfies all constraints. The optimal solution is the feasible solution that maximizes or minimizes the
objective function.

Feasibility Optimality
A solution that meets all constraints. The best solution among feasible options.
Slack and Surplus
Variables
Slack and surplus variables are added to transform inequality constraints into equality constraints. Slack variables are used for "less
than or equal to" constraints, while surplus variables are used for "greater than or equal to" constraints.

1 Slack Variable 2 Surplus Variable

Represents the difference between the left and right sides Represents the difference between the left and right sides
of a "less than or equal to" constraint. of a "greater than or equal to" constraint.
Simplex Method -
Phase1
The simplex method is an iterative algorithm used to solve LP problems. Phase 1 of
the simplex method focuses on finding an initial feasible solution.

Step 1
Convert the LP problem into standard form.

Step 2
Introduce artificial variables for constraints with "greater than or equal
to" or equality.

Step 3
Minimize the sum of artificial variables, aiming for a value of zero.
Simplex Method -
Phase2
Phase 2 of the simplex method starts with a feasible solution from Phase 1. It involves iteratively
improving the solution until the optimal solution is reached.

Step 1
1
Select a pivot column with the most negative coefficient in the objective row.

Step 2
2
Calculate the ratios for each row by dividing the right-hand side by the
corresponding coefficient in the pivot column.

Step 3
3
Select the pivot row with the smallest positive ratio.

Step 4
4
Perform pivot operations to make the pivot element 1 and other elements in the
pivot column 0.
Pivot Operations and Optimality
Conditions
Pivot operations are performed to move from one feasible solution to another. Optimality is reached
when all coefficients in the objective row are non-negative, indicating no further improvement possible.

Pivot Column
The column with the most negative coefficient in the objective row.

Pivot Row
The row with the smallest positive ratio.

Optimality
Condition
All coefficients in the objective row are non-negative.
Summary and Key
Takeaways
Linear programming is a powerful optimization tool with wide-ranging applications in various fields. The key concepts of LP problem
formulation, graphical solution, and the simplex method provide a framework for finding optimal solutions to linear optimization
problems.
Inventory
Models:
Necessity of
Inventory in
Process and
Inventory management plays a crucial role in ensuring the smooth

Safety Stock
operation of businesses by optimizing the use of resources.
Introduction to Inventory
Management
1 Strategic 2 Efficient 3 Key Components
Approach
It involves planning,
Operations
Effective inventory Inventory management
controlling, and coordinating management can reduce encompasses a range of
the procurement, storage, and costs, prevent stockouts, and practices, including
distribution of goods. improve customer satisfaction. forecasting demand,
managing stock levels, and
optimizing supply chains.
The Importance of Inventory in
Manufacturing Processes
Production Meeting Demand Cost Optimization
Continuity
Inventory ensures a steady flow of Having sufficient inventory allows Inventory management helps to
materials, preventing delays and businesses to meet customer minimize storage costs,
interruptions in production. orders promptly and avoid lost transportation costs, and the cost
sales. of lost sales.
Types of Inventory:
Raw Materials, Work-
in-Progress, and
Finished Goods
Raw Materials Basic components used in
production.

Work-in-Progress Partially completed goods

undergoing manufacturing
processes.

Finished Goods Completed products ready

for sale and distribution.
The Concept of
Inventory Holding
Costs
Storage Costs Insurance Costs
Expenses incurred for Premiums paid to insure
storing inventory, including inventory against damage,
warehouse rent and utilities. theft, or other risks.

Obsolescence Opportunity Cost

Costs
Losses due to inventory Potential profits lost by
becoming outdated or investing capital in
unusable due to changes in inventory instead of other
technology or demand. opportunities.
Understanding the Role
of Safety Stock
Buffer Against
Uncertainty
Safety stock acts as a cushion to handle unexpected
fluctuations in demand or supply.

Mitigating
Stockouts
It helps to prevent stockouts, which can lead to lost
sales and customer dissatisfaction.

Minimizing Risk
Safety stock reduces the risk of production delays and
disruptions caused by unexpected events.
Factors Influencing
Safety Stock Levels

Lead Time Demand

The time it takes to receive new
Variability
The extent to which customer
inventory after placing an order. demand fluctuates over time.

Service Level Cost of Stockouts

The desired probability of The financial consequences of
meeting customer demand running out of inventory.
without stockouts.
Inventory Replenishment
Strategies: Just-In-Time
and Economic Order
Quantity
Just-In-Time (JIT)
1
This strategy aims to receive materials just before they are
needed in production.

Economic Order
2
Quantity (EOQ) the optimal order quantity that
This method determines
minimizes the total inventory costs.

Hybrid Strategies
3
Many companies employ a combination of JIT and EOQ to
optimize inventory management.
Case Studies and Best
Practices in Effective
Inventory Management
Successful inventory management requires a comprehensive
approach that involves accurate forecasting, efficient ordering, and
effective warehousing. Key best practices include implementing
robust inventory control systems, continuously monitoring
inventory levels, and leveraging advanced technologies such as
data analytics and supply chain management software.
Waiting Line
Models:
Introduction
Waiting line models analyze the processes where queues form.
They are used in various industries to enhance efficiency and
customer satisfaction.
Overview of Waiting Line
Models
Purpose Applications Benefits
These models help predict queue Commonly used in retail, Improve resource allocation and
lengths and waiting times. healthcare, and maximize throughput.
telecommunications.
Key Components of Waiting Line
Models
Input Process Service Queue Discipline
Mechanism
Analyzes arrival patterns of entities Describes how services are Determines the order in which
entering the system. rendered by servers. customers are served.
Input Process: Arrival
Patterns and Poisson
Distribution

1 Random Arrivals 2 Statistical

Often modeled as a
Modeling
Helps predict demand
Poisson process in levels over time.
queuing theory.

3 Variability
Impacts queuing system performance and resource needs.
Service Mechanism: Service Time
Distributions
Exponential Common in service time modeling, represents
random service times.

Normal Used when service times are more predictable.

Erlang Extends exponential with a series of stages.

Queue Disciplines: FIFO, LIFO, Priority,
and Random

FIFO LIFO Priority

First-In-First-Out, common in retail Last-In-First-Out, applicable in Customers served based on
and banking. limited contexts like stack importance or urgency.
processing.
Steady-State Equations
for M/M/1 Queuing
Model
Arrival Rate
Average number of entities arriving per time unit.

Service Rate
Average number serviced per time unit.

Utilization Factor
Ratio of arrival rate to service rate.
Metrics to Evaluate Waiting
Line Performance

Waiting Time
Measures how long customers wait for service.

Customer
Satisfaction
Influenced by waiting experience and processing efficiency.

Cost Efficiency
Relates to balancing resources against service demand.
Capacity Planning and Optimization
using Queuing Models

1 Forecasting 2 Resource 3 Cost Reduction

Demand
Utilizing queuing models to
Allocation
Optimizing use of servers and Aims to minimize expenditures
estimate future needs. service points. while maintaining service
quality.
Real-World Applications of Waiting Line
Models
Healthcare Retail Manufacturing
Used to manage patient flow and Optimizes checkout counters to Assists in streamlining production
reduce wait times in hospitals. improve customer experience. lines for efficiency.
Network
Analysis: Project
Planning,
Scheduling and
Controlling
Welcome to a comprehensive overview of network analysis, a critical
tool for effective project planning, scheduling, and controlling. This
presentation will explore the key principles and techniques that
underpin successful project management.
Project Management
Overview

1 Planning 2 Scheduling
Defining project scope, Establishing a timeline for
objectives, and tasks and milestones.
deliverables.

3 Controlling
Monitoring progress, managing risks, and making adjustments.
Introduction to Network
Techniques
CPM PERT

Critical Path Method (CPM) focuses on identifying the Program Evaluation and Review Technique (PERT)
longest path, which determines the shortest project incorporates probabilistic estimates for task durations,
duration. It's widely used for deterministic tasks with making it ideal for projects with uncertainties. This
known durations. approach provides a range of possible project completion
times.
Network Diagram
Fundamentals
Nodes
Represent specific activities or tasks in a project.

Arrows
Indicate dependencies between tasks, showing the order
in which they must be completed.

Durations
Estimated time required to complete each activity.
Critical Path Method
(CPM)
Identify Critical
1
Path
The longest path through the network, determining the
shortest project duration.

Calculate Slack
2
The amount of time a task can be delayed without
affecting the project completion date.

Optimize
3
Resources
Focus on tasks on the critical path to ensure timely
project completion.
Program Evaluation and Review Technique
(PERT)
Optimistic Time (a) Most Likely Time (m) Pessimistic Time (b)

Shortest possible duration. Most probable duration. Longest possible duration.

Resource Allocation and
Leveling
Resource Resource Leveling
Constraints
Limited availability of resources, such as personnel, Smoothing out resource demand to ensure consistent
equipment, and materials. availability and prevent bottlenecks.
Time-Cost Tradeoff
Analysis
Crashing Fast Tracking
Reducing project duration by adding resources or Overlapping tasks that were originally sequential,
increasing effort, leading to higher costs. potentially introducing risks.
Monitoring and Controlling Project
Networks
Progress Tracking
1
Monitoring actual progress against planned schedule.

Risk Management
2
Identifying, assessing, and mitigating potential risks.

Change
3
Management
Making necessary adjustments to the plan in response
to changing conditions.
Conclusion and Key
Takeaways
Network analysis is an invaluable tool for managing complex projects. By understanding and applying these techniques,
project managers can effectively plan, schedule, and control projects, ensuring timely completion and successful
outcomes.
Meta-heuristics:
An Overview
Meta-heuristics are problem-solving strategies that provide a framework for
exploring the search space. They are generally applied to complex
optimization problems, where finding the optimal solution is often
computationally intractable.

R
B
Heuristic Algorithms:
Concepts and
Characteristics

1 Approximation 2 Efficiency
Heuristic algorithms provide They prioritize fast
approximate solutions, not computation, especially for
necessarily optimal ones. large and complex problems.

3 Domain-Specific 4 Empirical
Often designed for specific Evaluation
Performance is evaluated
types of problems and may through experimentation and
not generalize well. comparison with other
approaches.
Meta-heuristic Algorithms: Definition
and Advantages
Meta-heuristics Advantages
These algorithms provide a higher-level framework for guiding • Improved Solution Quality
the search for solutions. • Enhanced Exploration
• Increased Robustness
Tabu Search: Principles and
Implementation
Initialization
1
Start with an initial solution and define a neighborhood structure.

Move Selection
2
Choose the best move from the neighborhood, avoiding tabu moves.

Tabu List
3
Maintain a list of recently explored moves to prevent cycling.

Termination
4
Stop when a predefined stopping criterion is met, such as reaching a
maximum number of iterations.
Simulated Annealing:
Concepts and
Optimization
Cooling Schedule Acceptance
Gradually decrease the
Criteria
Accept moves based on the
temperature parameter to Metropolis criterion, allowing
control exploration and occasional uphill moves.
exploitation.

Global
Optimization
Aim to escape local optima by allowing occasional moves to worse
solutions.
Genetic Algorithms:
Foundations and
Operators
Chromosomes Crossover
Represent solutions as strings of Combine genetic material from two
genes. parent chromosomes.

Mutation Selection
Introduce random changes to Choose individuals with higher
individual genes within a fitness to reproduce in the next
chromosome. generation.
Traveling Salesman Problem: Definition
and Complexity
Objective Find the shortest possible route that visits each city exactly
once and returns to the starting city.

Complexity NP-hard, meaning finding the optimal solution is

computationally difficult for large instances.
Applying Meta-
heuristics to the
Traveling Salesman
Encoding
Represent each solution as a permutation of cities.

Fitness Function
Measure the total distance of a route.

Meta-heuristic
Application
Apply Tabu Search, Simulated Annealing, or Genetic Algorithms
to optimize the route.
Solution Strategies and Performance
Comparison
Algorithm Average Distance Execution Time

Tabu Search 1234.56 0.025s

Simulated Annealing 1233.89 0.030s

Genetic Algorithm 1234.21 0.045s

Conclusion and Future
Directions
Meta-heuristics are powerful tools for tackling complex optimization
problems, providing a balance between solution quality and computational
efficiency.
Vogel's
Approximation
Method (VAM) or
Penalty Method
Vogel's Approximation Method (VAM) is a powerful optimization
technique used in transportation problems. It provides an initial
feasible solution that is often close to optimal. VAM is also known
as the penalty method due to its unique approach.

R
B
Introduction to Transportation
Problems
Definition
1
Transportation problems involve optimizing the distribution of goods from sources to destinations, minimizing total cost.

Components
2
Key elements include supply points, demand points, and transportation costs between each pair.

Objective
3
The goal is to determine the most cost-effective way to ship goods, satisfying all demand.
Assumptions and
Characteristics of
Transportation Problems

1 Supply-Demand 2 Linear Costs

Balance Transportation costs are
Total supply must equal assumed to be directly
total demand for a proportional to the
balanced transportation quantity shipped.
problem.

3 Non-Negativity 4 Discrete Units

Quantities shipped must Goods are typically
be non-negative, as considered in discrete
negative shipments are units, though fractional
not possible. units may be allowed.
Understanding the Vogel's Approximation
Method
Concept Efficiency Iterations
VAM uses opportunity costs to This method often produces a near- VAM proceeds step-by-step,
make allocation decisions. It optimal initial solution. It's more updating penalties after each
considers the difference between effective than other methods like allocation until all demand is
the two lowest costs in each row the Northwest Corner. satisfied.
and column.
Step-by-Step Explanation of the
VAM Approach
Calculate Penalties
Find the difference between the two lowest costs for each row and column.

Identify Highest
Penalty
Select the row or column with the highest penalty.

Allocate
Assign maximum possible units to the lowest cost cell in the selected
row/column.

Update and Repeat

Adjust supply/demand, recalculate penalties, and continue until all units
are allocated.
Identifying the
Opportunity Cost
Cost Cell Row Penalty Column Penalty

C11 P1 = C12 - C11 Q1 = C21 - C11

C12 P1 = C11 - C12 Q2 = C22 - C12

C21 P2 = C22 - C21 Q1 = C11 - C21

C22 P2 = C21 - C22 Q2 = C12 - C22

Applying the Penalty
Method
Select Highest Allocate to Lowest
Penalty
Choose the row or column
Cost
Assign maximum possible
with the greatest penalty units to the cell with the
value to prioritize allocation. lowest cost in the selected
row/column.

Update Supply and Recalculate

Demand Penalties
Update penalties for
Adjust the remaining supply remaining rows and
and demand after each columns after each
allocation step. allocation.
Advantages and Limitations of
VAM
Advantages Limitations
VAM often produces near-optimal solutions. It's more VAM can be time-consuming for large problems. It may
efficient than simpler methods like Northwest Corner. not always yield the optimal solution. The method
VAM considers opportunity costs, leading to better requires more calculations compared to simpler
initial allocations. approaches.
Comparison with Other
Methods
Method Effectivenes Complexity Speed
s
VAM High Medium Medium

Northwest Low Low Fast

Corner

Least Cost Medium Low Fast

Stepping Very High High Slow

Stone
Real-World Applications and Case
Studies

Logistics
Optimizing shipping routes for e-commerce companies, reducing transportation costs
by up to 20%.

Manufacturing
Streamlining supply chain operations in automotive industries, improving efficiency by
15%.

Healthcare
Managing medical supply distribution during pandemics, ensuring critical resources
reach hospitals efficiently.
Thank You