Subject code: MB
0032
(2 credits)
Set 1
Marks 60
SUBJECT NAME: OPERATIONS RESEARCH
Answer: Operations Research (OR) in the USA, South Africa and Australia, and Operational
Research in Europe and Canada, is an interdisciplinary branch of applied mathematics and formal
science that uses methods such as mathematical modeling, statistics, and algorithms to arrive at
optimal or near optimal solutions to complex problems. It is typically concerned with optimizing
the maxima (profit, assembly line performance, crop yield, bandwidth, etc) or minima (loss, risk,
etc.) of some objective function. Operations research helps management achieve its goals using
scientific methods. The terms operations research and management science are often used
synonymously.
When a distinction is drawn, management science generally implies a closer relationship to the
problems of business management. The field of operations research is closely related to Industrial
engineering. Industrial engineers typically consider Operations Research (OR) techniques to be a
major part of their toolset. Some of the primary tools used by operations researchers are statistics,
optimization, probability theory, queuing theory, game theory, graph theory, decision analysis,
and simulation. Because of the computational nature of these fields, OR also has ties to computer
science, and operations researchers use custom-written and off-the-shelf software.
The standard form of the linear programming problem is used to develop the procedure for
solving a general programming problem.
x1, x2, ... .xn are called decision variable. Subject to the constraints
c1, c2,…. Cn, a11, a12,…. amn are all known constants
There are many real life situations where an LPP may be formulated. The following examples
will help to explain the mathematical formulation of an LPP.
Example-1. A diet is to contain at least 4000 units of carbohydrates, 500 units of fat and 300
units of protein. Two foods A and B are available. Food A costs 2 dollars per unit and food B
costs 4 dollars per unit. A unit of food A contains 10 units of carbohydrates, 20 units of fat and 15
units of protein. A unit of food B contains 25 units of carbohydrates, 10 units of fat and 20 units
of protein. Formulate the problem as an LPP so as to find the minimum cost for a diet that
consists of a mixture of these two foods and also meets the minimum requirements.
Suggested answer:
• Total cost = 2x + 4y
Linear programming is applicable only to problems where the constraints and objective function
are linear i.e., where they can be expressed as equations which represent straight lines. In real life
situations, when constraints or objective functions are not linear, this technique cannot be used.
• Factors such as uncertainty, weather conditions etc. are not taken into consideration.
• There may not be an integer as the solution, e.g., the number of men required may be a
fraction and the nearest integer may not be the optimal solution.
i.e., Linear programming techniques may give practical valued answer which is not desirable. •
Only one single objective is dealt with while in real life situations, problems come with multi-
objectives.
• Parameters are assumed to be constants but in reality they may not be so.
Q.No.3: Describe the different steps needed to solve a problem by simplex method.
Dantzig's simplex method should not be confused with the downhill simplex method (Spendley
1962, Nelder and Mead 1965, Press et al. 1992). The latter method solves an unconstrained
minimization problem in n dimensions by maintaining at each iteration n+1 points that define a
simplex. At each iteration, this simplex is updated by applying certain transformations to it so that it
"rolls downhill" until it finds a minimum.
The Simplex Method is "a systematic procedure for generating and testing candidate vertex
solutions to a linear program." (Gill, Murray, and Wright, p. 337) It begins at an arbitrary corner
of the solution set. At each iteration, the Simplex Method selects the variable that will produce
the largest change towards the minimum (or maximum) solution. That variable replaces one of its
compatriots that is most severely restricting it, thus moving the Simplex Method to a different
corner of the solution set and closer to the final solution. In addition, the Simplex Method can
determine if no solution actually exists. Note that the algorithm is greedy since it selects the best
choice at each iteration without needing information from previous or future iterations.
The Simplex Method solves a linear program of the form described in Figure 3 . Here, the
coefficients c
j represent the respective weights, or costs, of the variables xi. The minimized
statement is similarly called the cost of the solution. The coefficients of the system of equations
are represented by a
ij, and any constant values in the system of equations are combined on the
right-hand side of the inequality in the variables b
i.
Combined, these statements represent a linear program, to which we seek a solution of minimum
cost.
Solving this linear program involves solutions of the set of equations. If no solution to the set of
Once a solution to the linear program has been found, successive improvements are made to the
solution. In particular, one of the non-basic variables (with a value of zero) is chosen to be
increased so that the value of the cost function, , decreases. That variable is then
increased, maintaining the equality of all the equations while keeping the other nonbasic variables
at zero, until one of the basic (nonzero) variables is reduced to zero and thus removed from the
basis. At this point, a new solution has been determined at a different corner of the solution set.
The process is then repeated with a new variable becoming basic as another becomes nonbasic.
Eventually, one of three things will happen. First, a solution may occur where no nonbasic
variable will decrease the cost, in which case the current solution is the optimal solution. Second,
a non-basic variable might increase to infinity without causing a basic variable to become zero,
resulting in an unbounded solution. Finally, no solution may actually exist and the Simplex
Method must abort. As is common for research in linear programming, the possibility that the
Simplex Method might return to a previously visited corner will not be considered here.
The primary data structure used by the Simplex Method is "sometimes called a dictionary, since the
values of the basic variables may be computed (‘looked up’) by choosing values for the
nonbasic variables." (Gill, Murray, and Wright, p. 337) Dictionaries contain a representation of the
set of equations appropriately adjusted to the current basis. The use of dictionaries provide an intuitive
understanding of why each variable enters and leaves the basis. The drawback to dictionaries,
however, is the necessary step of updating them which can be time-consuming. Computer
implementation is possible, but a version of the Simplex Method has evolved with a more efficient
matrix-oriented approach to the same problem. This new implementation became known as the
Revised Simplex Method.
The steps of the Simplex Method also need to be expressed in the matrix format of the
Revised
Simplex Method. The basis matrix, B, consists of the column entries of A corresponding to the
ii. It imbibes Inter - disciplinary team approach. Since no single individual can have a thorough
knowledge of all fast developing scientific knowhow, personalities from different scientific and
managerial cadre form a team to solve the problem.
The scientific method in OR study generally involves the following three phases:
iii) Action Phase: It consists of making recommendations for the decision process by those who
first posed the problem for consideration or by anyone in a position to make a decision,
influencing the operation in which the problem is occurred.
Canonical forms:
The general Linear Programming Problem (LPP) defined above can always be put in the
following form which is called as the canonical form:
Subject to
a11 x1 + a12 x2 +…………….. +a1n xn < b1
a21 x1 + a22 x2 +…………….. +a2n xn < b2
Any LPP can be put in the cannonical form by the use of five elementary transformations:
1. The minimization of a function is mathematically equivalent to the maximization of the
2. Any inequality in one direction (< or >) may be changed to an inequality in the opposite
direction (> or <) by multiplying both sides of the inequality by -1.
For example 2x
1+3x2 > 5 is equivalent to -2x1-3x2 < -5.
3. An equation can be replaced by two inequalities in opposite direction. For example, 2x1+3x2 =
5 can be written as 2x
1+3x2 < 5 and 2x1+3x2 > 5 or 2x1+3x2 < 5 and - 2x1 - 3x2 < - 5.
4. An inequality constraint with its left hand side in the absolute form can be changed into two
regular inequalities. For example: | 2x1+3x2 | < 5 is equivalent to 2x1+3x2 < 5 and
2x1+3x2 > -
5 or - 2x1 - 3x2 < 5.
5. The variable which is unconstrained in sign (i.e., > 0, < 0 or zero) is equivalent to the
difference between 2 nonnegative variables. For example, if x is unconstrained in sign then x
2. Introduce surplus variables (Si’s) and Artificial Variables (Ai) for “>” type of constraint.
4. Cost (Cj) of slack and surplus variables will be zero and that of Artificial variable will be “M”
Find Zj Cj for each variable.
5. Slack and Artificial variables will form Basic variable for the first simplex table. Surplus
variable will never become Basic Variable for the first simplex table.
6. Zj = sum of [cost of variable x its coefficients in the constraints - Profit or cost coefficient of the
variable].
7. Select the most negative value of Zj - Cj. That column is called key column. The variable
corresponding to the column will become Basic variable for the next table.
8. Divide the quantities by the corresponding values of the key column to get ratios select the
minimum ratio. This becomes the key row. The Basic variable corresponding to this row will be
replaced by the variable found in step 6.
9. The element that lies both on key column and key row is called Pivotal element.
10. Ratios with negative and “a” value are not considered for determining key row.
11. Once an artificial variable is removed as basic variable, its column will be deleted from next
iteration.
12. For maximisation problems decision variables coefficient will be same as in the objective
function. For minimization problems decision variables coefficients will have opposite signs as
compared to objective function.
13. Values of artificial variables will always is - M for both maximisation and minimization
problems.
From the above resource allocation model, the primal problem has n economic activities and m
resources. The coefficient cj in the primal represents the profit per unit of activity j.
Resource i, whose maximum availability is bi, is consumed at the rate aij units per unit of activity
j.
At the optimum, the relationship holds as a strict equation. Note: Here the sense of optimization is
very important. Hence clearly for any two primal and dual feasible solutions, the values of the
objective functions, when finite, must satisfy the following inequality.
The strict equality, z = w, holds when both the primal and dual solutions are optimal.
Consider the optimal condition z = w first given that the primal problem represents a resource
allocation model, we can think of z as representing profit in Rupees. Because bi represents the
number of units available of resource i, the equation z = w can be expressed as profit (Rs) = Σ
(units of resource i) x (profit per unit of resource i) This means that the dual variables yi,
represent the worth per unit of resource i [variables yi are also called as dual prices, shadow
prices and simplex multipliers]. With the same logic, the inequality z < w associated with any two
feasible primal and dual solutions is interpreted as (profit) < (worth of resources) This
relationship implies that as long as the total return from all the activities is less than the worth of the
resources, the corresponding primal and dual solutions are not optimal. Optimality is reached only
when the resources have been exploited completely, which can happen only when the input equals the
output (profit). Economically the system is said to remain unstable (non optimal) when the input (worth
of the resources) exceeds the output (return). Stability occurs only when the two quantities are equal.
Q.No.5: How can use the Matrix Minimum method of finding the initial basic
feasible solution in the transportation problem.
Answer: The Initial basic feasible solution using Matrix Minimum Method
Let us consider a T.P involving m-origins and n-destinations. Since the sum of origin capacities
equals the sum of destination requirements, a feasible solution always exists.
Any feasible solution satisfying m + n - 1 of the m + n constraints is a redundant one and hence can
be deleted. This also means that a feasible solution to a T.P can have at the most only m + n -
1 strictly positive component, otherwise the solution will degenerate.
It is always possible to assign an initial feasible solution to a T.P. in such a manner that the rim
requirements are satisfied.
This can be achieved either by inspection or by following some simple rules. We begin by
imagining that the transportation table is blank i.e. initially all xij = 0. The simplest procedures for
initial allocation discussed in the following section.
Step 1:Determine the smallest cost in the cost matrix of the transportation table. Let it be cij ,
Allocate xij = min ( ai, bj) in the cell ( i, j)
Step 2: If xij = ai cross off the ith row of the transportation table and decrease bj by ai go to step
3.
if xij = bj cross off the ith column of the transportation table and decrease ai by bj go to step 3.
if xij = ai= bj cross off either the ith row or the ith column but not both.
Step 3: Repeat steps 1 and 2 for the resulting reduced transportation table until all the rim
requirements are satisfied whenever the minimum cost is not unique make an arbitrary choice
among the minima.
Q.No.6: Describe Integer Programming Problem? Describe the Gomory’s All-I.P.P.
method for solving the I.P.P. problem.
If all the variables are constrained to take only integral value i.e. k = n, it is called an all (or pure)
integer programming problem. In case only some of the variables are restricted to take integral
value and rest (n - k) variables are free to take any non negative values, then the problem is
known as mixed integer programming problem.
The iterative procedure for the solution of an all integer programming problem is as follows:
Step 1: Convert the minimization I.P.P. into that of maximization, if it is in the minimization
form. The integrality condition should be ignored.
Step 2: Introduce the slack or surplus variables, wherever necessary to convert the inequations
into equations and obtain the optimum solution of the given L.P.P. by using simplex algorithm.
a) If the optimum solution contains all integer values, an optimum basic feasible integer solution has
been obtained.
b) If the optimum solution does not include all integer values then proceed onto next step.
Step 4: Examine the constraint equations corresponding to the current optimum solution. Let
these equations be represented by
or write is as
f ko
Step 5: Express each of the negative fractions if any, in the k th row of the optimum simplex
table as the sum of a negative integer and a nonnegative fraction.
Step 7: Starting with this new set of equation constraints, find the new optimum solution by dual
simplex algorithm. (So that Gsla (1) is the initial leaving basic variable).
Step 8: If this new optimum solution for the modified L.P.P. is an integer solution. It is also
feasible and optimum for the given I.P.P. otherwise return to step 4 and repeat the process until an
optimum feasible integer solution is obtained.
ASSIGNMENTS
Subject code: MB
0032
(3 or 4 credits)
Set 2
Marks 60
SUBJECT NAME : OPERATIONS RESEARCH
Limitations of OR
The limitations are more related to the problems of model building, time and money factors.
i) Magnitude of computation: Modern problem involve large number of variables and hence to find
interrelationship, among makes it difficult.
ii) Non - quantitative factors and Human emotional factor cannot be taken into account.
iii) There is a wide gap between the managers and the operation researches
iv) Time and Money factors when the basic data is subjected to frequent changes then
incorporation of them into OR models is a costly affair.
v) Implementation of decisions involves human relations and behaviour.
2. What are the characteristics of the standard form of L.P.P.? What is the
standard form of L.P.P.? State the fundamental theorem of L.P.P..
The inequality constraints can be changed to equations by adding or subtracting the left hand side of
each such constraints by a nonnegative variable. The nonnegative variable that has to be added to a
constraint inequality of the form < to change it to an equation is called a slack variable. The non-
negative variable that has to be substracted from a constraint inequality of the form ³ to change it
to an equation is called a surplus variable. The right hand side of a constraint equation can be
made positive by multiplying both sides of the resulting equation by (-1) wherever necessary.
The remaining characteristics are achieved by using the elementary transformations introduced with
the canonical form.
Phase I: Formulate the new problem by eliminating the original objective function by the sum of
the artificial variables for a minimization problem and the negative of the sum of the artificial
variables for a maximization problem. The resulting objective function is optimized by the
simplex method with the constraints of the original problem. If the problem has a feasible
solution, the optimal value of the new objective function is zero (which indicates that all artificial
variables are zero). Then we proceed to phase II. Otherwise, if the optimal value of the new
objective function is non zero, the problem has no solution and the method terminates.
Phase II : Use the optimum solution of the phase I as the starting solution of the original
problem. Then the objective function is taken without the artificial variables and is solved by
simplex method.
Examples:
7) Use the two phase method to
Maximise z = 3x1 - x2
Subject to 2x1 + x2 > 2
x1 + 3x2 < 2
x2 < 4,
x1, x2 > 0
Phase I :
Consider the new objective,
Maximize Z* = - A1
Subject to 2x1 + x2 - S1 + A1 = 2
x1 + 3x2 + S2 = 2
x2 + S3 = 4,
x1, x2, S1, S2, S3, A1 > 0.
x2 + S3 = 4
x1, x2, S1, S2, S3 > 0
Answer: This model studies the minimization of the cost of transporting a commodity from a
number of sources to several destinations. The supply at each source and the demand at each
destination are known. The transportation problem involves m sources, each of which has
available ai (i = 1, 2, …..,m) units of homogeneous product and n destinations, each of which
requires bj (j = 1, 2…., n) units of products. Here ai and bj are positive integers. The cost cij of
transporting one unit of the product from the i th source to the j th destination is given for each i and j.
The objective is to develop an integral transportation schedule that meets all demands from the
inventory at a minimum total transportation cost.
It is assumed that the total supply and the total demand are equal.
The condition (1) is guaranteed by creating either a fictitious destination with a demand equal to the
surplus if total demand is less than the total supply or a (dummy) source with a supply equal to the
shortage if total demand exceeds total supply. The cost of transportation from the fictitious destination
to all sources and from all destinations to the fictitious sources are assumed to be zero so that total cost
of transportation will remain the same.
The solution to T.P is obtained in two stages. In the first stage we find Basic feasible solution by any
one of the following methods a) Northwest corner rale b) Matrix Minima Method or least cost
method c) Vogel’s approximation method. In the second stage we test the B.Fs for its
optimality either by MODI method or by stepping stone method.
Step1: The first assignment is made in the cell occupying the upper left hand (north west) corner
of the transportation table. The maximum feasible amount is allocated there, that is x11 = min
(a1,b1)
So that either the capacity of origin O1 is used up or the requirement at destination D1 is satisfied or
both. This value of x11 is entered in the upper left hand corner (small square) of cell (1, 1) in the
transportation table
Step 2: If b1 > a1 the capacity of origin O, is exhausted but the requirement at destination D1 is
still not satisfied , so that at least one more other variable in the first column will have to take on a
positive value. Move down vertically to the second row and make the second allocation of
magnitude
x21 = min (a2, b1 - x21) in the cell (2,1). This either exhausts the capacity of origin O2 or
satisfies the remaining demand at destination D1.
If a1 > b1 the requirement at destination D1 is satisfied but the capacity of origin O1 is not
completely exhausted. Move to the right horizontally to the second column and make the second
allocation of magnitude x12 = min
(a1 - x11, b2) in the cell (1, 2) . This either exhausts the remaining capacity of origin O1 or
satisfies the demand at destination D2 .
If b1 = a1, the origin capacity of O1 is completely exhausted as well as the requirement at
destination is completely satisfied. There is a tie for second allocation, An arbitrary tie breaking
choice is made. Make the second allocation of magnitude x12 = min (a1 - a1, b2) = 0 in the cell (1,
2) or x21 = min (a2, b1 - b2) = 0 in the cell (2, 1).
Step 3: Start from the new north west corner of the transportation table satisfying destination
requirements and exhausting the origin capacities one at a time, move down towards the lower
right corner of the transportation table until all the rim requirements are satisfied.
6. Describe the Branch and Bound Technique to solve an I.P.P. problem.
Sometimes a few or all the variables of an IPP are constrained by their upper or lower bounds or
by both. The most general technique for the solution of such constrained optimization problems is
the branch and bound technique. The technique is applicable to both all IPP as well as mixed
I.P.P. the technique for a maximization problem is discussed below: