Chapter No.1 Introduction To Opretional Research

Prof Parth Chitalia TYBMS – Operations Research Operations Research
CHAPTER NO.1 INTRODUCTION TO OPRETIONAL RESEARCH

1.1 INTRODUCTION:-
Management is the process of making decisions based on the available set of data & suitable assumptions, if
any. Every management activity is based on decision making process. The success of any business enterprise
depends to a significant extent on the decision making ability of its managers and extent on the decision making
ability of its manager and executives.
A successful manager is the one who has mastered the art of decision making while working under situations of
uncertainty. He has to take into account the resource ability of his organization, possible competitive actions by
competitors and other micro and macro-economic factors.
In modern business management, the importance of decision making has increased even more due to following
reasons:-
1. Globalization of economy
2. Increasing competition from local and foreign players
3. Dynamic and ever changing business environment
4. Technological advancement
5. Importance of protecting the bottom line (profit) of balance sheet.
6. Protecting interests of stakeholders
7. Formulation of new partnerships (Joint venture) or mergers and acquisitions of global scale.
The process of decision making will more scientific if a merger uses quantitative decision making
models.
Operational Research:- deals with quantitative models which can be applied under various problem situations.
It provide a manager necessary quantitative tools to make a better decision.
1.2 HISTORICAL BACKGROUND OF OPERATIONS RESEARCH:-
Though the exact beginning of operation research is difficult to mark, we say that industrial revolution brought
a scientific approach to decision making. Operations research grew more during the Second World War. It was
used to find solutions on how to use scare military resources to fight war.
Since it was use to carry out military operations, it was called ‘Operations Research.’ After the war was over,
operations research techniques were adopted by industry. Later on, with advent computers, development of
operations research was even faster. Problem solving became easier using combination of OR techniques and
computer problems.
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Definition of Operational Research:-
One of the classical definition of OR is – “Operations Research is the application of scientific methods,
techniques and tools to problems involving the operations of system so as to provide those in control of
operations with optimum solutions of the problems.”
In other words, we can say that OR is a collection of different quantitative methods which can be used for
solving problems in various functional areas such as – production, transportation, physical distribution,
project management ect.
Features of OR:-
1) Decision Making: - OR is used for obtaining numerical solutions to problems. Based on these numerical
solutions, the manager can make decision making.
2) Scientific nature: - OR is quantitative in nature, not qualitative. Hence, it is not judgmental in nature.
The problem is clearly defined. Numerical data is collected. This data is analyzed using the appropriate
technique and the solution is obtained.
3) Well Defined goals and objectives:- The problem is clearly stated. The objectives are quantitative in
nature and realistic.
4) Computer Programming:- A computer program can be created for a particular OR technique to solve
problems involving large set of data.
1.3 METHODOLOGY OF OPERATIONS RESEARCH:-

The application of OR generally involves following steps:-
1. Problem formulation
2. Constructing a mathematical model and representing the problem in the format of the model.
3. Data collection
4. Substituting the data in the model and then solving the mathematical model to obtain solution.
5. Interpretation of solution
6. Decision making (Accepting, modifying or rejecting solution)
(1) Problem Formulation: - the first step is to identify the problem and then representing it precisely. This
includes steps starting from problem discovery and ending in problem definition.
(2) Model Construction: - After defining the problem, a model needs to be developed to represent the
problem. Models can be –
a) Physical Model: - It is a physical representation of the real situation. E.g :- model of a proposed building,
model of solar system, model of a fighter plane etc.
b) Symbolic Model: - symbolic models use symbols, letters, and numbers etc. to represent things associated
with real life situations. Symbolic model can be verbal or mathematical. Verbal model is a descriptive. It
describes the situation in words. Mathematical model uses symbols and uses mathematical relationships.
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E.g. in word, area of a rectangle is the product of its length and breadth. In symbols we will
express it as
A = 1.b
Where –
A = area, l = length, b = breadth
c) Deterministic Models: in this case there is no uncertainty. The values of all the variables and all possible
outcomes are known with certainty.
d) Probabilistic Models: - In this case, some or all the variables are random in nature. They do not have
fixed values. They can take different values from time to time, under different situations. Probabilistic
need to be assigned to these different values. (e.g. market demand)
3) Data Collection: - After formulating the model, we need to collect data related with value of
variables. This data will the final solution. Hence, data collection is extremely important. Inaccurate or
insufficient data will result in poor solution.
4) Substitute data in the Model: - Then we substitute the data in the model, apply the appropriate
mathematical technique and solve the model to get solution.
5) Interpretation of Solution: - Interpretation of solutions is subjective in nature. How one manager

interprets a solution can differ from how another manager reads the same solution. Past experience,
attitude, bias, influence of surrounding etc.are some of the factors which affect interpretation.
6) Decision Making: - Based on the interpretation of the solution, the final decision will be taken. The
manager may completely accept the solution, completely reject the solution or accept it partly.
Model Validation: - A model needs to be tested to check whether it can predict the behavior of the real
situation. The validity of the model can be tested by comparing the results predicted by the model with
actual results.
1.4 OPERATIONS RESEARCH TECHNIQUES:-

Quantitative techniques can be classified in two groups, statistical techniques and programming techniques.
A) Statistical techniques: - Statistical techniques are applied in statistic for data collection, data
organization and data analysis. Some of the examples are:
1. Mean, median and mode
2. Mean deviation and standard deviation
3. Probability theory
4. Regression analysis and correlation analysis
5. Sampling
6. Statistical quality control
B) Programming Techniques: - these are OR techniques. These techniques involve problem formulation,
building mathematical models, substituting data in mathematical models, testing the model, using
appropriate OR technique to solve the problem, obtaining optimal solution. Some example are:
1) Linear programming
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2) Transportation problem
3) Assignment problems
4) Critical path method
5) Decision theory
6) Inventory management
1.5 APPLICATION AREAS FOR OPRATIONS REASEARCH TECHNIQUES:-

OR techniques are applied to variety f business problems. Some examples are:
A) Production Management:-
1. To calculate loss of time due to waiting time, queuing time etc.
2. To decide optimum allocation of jobs and optimum sequence in which jobs should be sequenced.
B) Personnel Management : -
1. To study labor turnover
2. To do human resource planning
3. To decide number of personnel requires to be kept on standby in case of demand for higher
manpower
C) Inventory Management : -
1. To study economic lot size to be ordered
D) Marketing Management: -
1. To decide optimal product mix for maximum profit
2. Media selection for advertising for maximum reach
3. Sales forecasting
E) Transportation Management: -
1. To determine transportation schedule for minimum cost or minimum time
F) Project Management: -
1. To identify critical and non-critical activities of a project.
2. To determine minimum project completion time.
3. To determine optimal project
G) Financial Management: -
1. To decide investment portfolio to maximize return on investment
1.6 LIMITATIONS OF OPERATIONS RESEARCH : -
1. In construction of mathematical models, sometimes assumptions are necessary to simplify model

constriction. But over-simplification of a model or too many assumptions can make unrealistic.
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2. OR techniques are quantitative in nature. Hence, these techniques do not consider qualitative or intangible
factors such as customer perceptions, employee motivation levels, quality of executives, advantages of
experience etc.
3. All business situations cannot be responded with quantitative techniques. Some business situations require
gut feeling, initiative or managerial judgments. OR techniques cannot be applied in such situations.
CONCEPT QUESTIONS
1. Define operations Research?
Ans: - OR deals with quantitative models which can be applied under various problem situations. It provides a
manager with necessary quantitative tools to make a better decision. One of the classical definitions of OR is
“Operations Research” is the application of scientific methods, techniques an tools to problems involving the
operations of system so as to provide those in control of operations with optimum solutions to the problems”.
Or is a collection of different quantitative methods which can be used for solving problems in various functional
areas such as – production, transportations, finance, project management, physical distribution etc.
2. What are the major application areas for OR techniques?
Ans: - Refer section 1.5.
3. What are the main limitations of OR techniques?
Ans: - Refer Section 1.6.
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CHAPTER 2. Linear Planning Programming – Formulation Method
1. A factory manufactures two products A and B to manufacture one unit A, 1.5 machine hours and 2.5 labours
hours are required. To manufacture product b, 2.5 machine hours and 1.5 labour hours required. In a month,
300 machine hours and 240 labour hours are available. Profit per unit, for a Rs.50 and for B is Rs. 40.
Formulate as LPP.
2. A company produces three products A, B, C. For manufacturing three raw materials P, Q, R is used. Profit
per unit: - A:-Rs.5, B:-3, c:-Rs 4.
Resources requirement s/units:
Raw material P Q R
Product
A ----- 20 50
B 20 30 ----
C 30 20 40
Maximum raw material availability:

P=80 units, Q=100 units, R=150 Units Formulate LPP
3. An investor is considering investing in two securities A and B .the risk and return associated with these
securities is different. Security A gives return of 9% and has risk factor 5 on scale of zero to 10. Security B
gives return of 15% but has risk factor of 8. Total amount to be invested Rs 5, 00,000. Total minimum returns
on the investments should be 12 5. Maximum combined risk not is more then 6. Formulate LPP.
4. Mr. Akshay wants to invest in to two mutual funds A & B. his total investment is Rs. 1, 00,000 and not more
than Rs. 7,00,000 will be invested in a single fund. Fund A gives return of 15% p.a 7 fun B gives returns of
20% p.a. the risk taking factor rating on a scale of 0-10 are, for A-4 and for B-8. Minimum desired returns are
17.5% and maximum tolerable risk factor is 6 for Mr. Akshay. Formulate LPP
5. An advertising agency is planning to launch an ad camping. Media under consideration are T.V. Radio &
Newspaper. Each medium has different reach potential and different cost. Minimum 10, 00,000 household are
to be reached T.V. Expenditure on newspapers should not be more than 10.00 lacks. Total advertising budget is
rs.20 million. Following data is available:-
Medium Cost Per Unit (Rs) Reach per Unit (No. of Household)
T.V. 2,00,000 20,00,000
Radio 80,000 10,00,000
Newspaper 40,000 2,00,000
6. M/s. NMK Enterprises wish to launch an advertising camping targeted at two of target audiences-Monthly
income < Rs. 25,000. Total adv. Budget is Rs. 5, 00,000. The company plans to use two media – T.V and radio
Cost per advisement is Rs. 1, 00,000 for T.V. and Rs. 40,000 for radio. Minimum 4 T.V. ads should be shown
whereas upper limit for Radio ad is 6. Reach per ad is as below:-
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Income >25,000 Income <25,000
T.V. 4,50,000 50,000
Radio 1,20,000 1,80,000
Formulate as LPP to maximize reach for total number of target audience.
7. Vitamins B1 and B2 are found in two foods F1 and f2. 1 unit of F1 contains 3 units of B1 and 4 units of B2. 1
unit of F2 contains 5 unit of f2 contains 5 units of B1 and 3 units of B2. Minimum daily prescribed consumption
of B1 & B2 is 50 and 60 units respectively cost per unit of F1& F2 is Rs.6 & Rs. 3 respectively. Formulate LPP.
8. Two nutrients N1 & N2 are recommended for athletes which are available in two products P1 & P2.
Minimum daily intake for N1 & N2 is 30 and 40 units respectively cost for 1 unit for P1 & P2 is Rs. 100 & Rs.
150 respectively 1 unit of P1 contains 3 units of N1 and 5 units of N2. 1 unit of P2 contains 5 units of N1 and 7
units of N2. Formulate as LPP.
9. A manager at an oil company wants to find optimal mix of two blending processes. Formulate as LPP :- Data:
Process Input (Crude oil) Output (Gasoline)

Grade A Grade B X Y
P1 6 4 6 9
P2 5 6 5 5
Profit per operation: - Process1 (P1) –Rs.4, 000
Process2 (P2) –Rs.5, 000
Maximum availability of crude oil: - Grade A – Rs.500 units
Grade B – Rs.400 units
Minimum demand for gasoline: - X - 300 units
Y – 200 units
10. A farmer has 200 acres of land. He produces three products X, Y & Z. Average yield per acre for X,Y & Z
is 4000,6,000, and 2000 kg. Selling price of X,Y and Z is Rs. 2, 1.5 & 4 per kg respectively, Each product needs
fertilizers. Cost of fertilizers is Rs. 1per kg. per acre for fertilizer for X,Y 7 Z is 200,200 & 100 kg respectively.
Labour requirement for X, Y & Z is 10, 12 & 10 man-hours per acre. Cost of labour is Rs.40 per man hour.
Maximum avability of labour is 20,000 man-hours. Formulate as LPP to maximize profit
11. Suzan and co. manufactures two items X1 and X2.it purchase raw material which are then proceed on three
machines. The per unit cost of the raw material of item X1 and X2 are Rs.2 and Rs. 3 respectively. These items
are sold in market at Rs.5 and Rs.6 per unit respectively. The running cost for these processing machines are
Rs.20 and Rs.14 and Rs.17.50 per hour respectively. The capabilities are given below:-
Machines Items x1 Items X2

A 25/hr 40/hr
B 28/hr 35/hr
C 35/hr 25/hr
Formulate these information as a LPP.
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12. A firm assembles and sells two products P1 and P2. Two assembly operations are performed. Capabilities
are as below:
Operation 1: 200 units /day of p1 OR
300 units /day of P2
Operation 2: 100 units/day of P1 OR
200 units /day of P2
Profit per unit: P1: Rs: 10, P2:6. Formulate LPP.
13. A factory manufactures two products P and Q. To manufactures one unit of P,3 machine hours and 4 labour
hours are required. To manufacture one unit of Q,5 machine hours and 3 labour hours are required. Profit per
unit for P & Q is Rs. 10 & Rs.8 respectively. Availability of machine hours & labour hours (per week) is 160 &
140 respectively. Formulate as LPP.
14. A company produces three products X,Y,Z for which it uses three raw materials P,Q,R.
Product Raw material

P Q R
X 4 6 ----
Y ----- 4 10
Z 6 4 8
Maximum availability of raw material is: - P: 16 units, Q: 20 units, R: 30 units. Profit per unit is:-X: Rs: 6, Y:
Rs 10, Z: Rs: 8.Formulate as LPP
15.Nutrients A & B are to be given on daily basis to farm animals. Minimum daily requirement of A & B is 80
& 100 units respectively. Two products P1 and P2 contain A & B. One unit of P2 contains 8 units A and 4 units
of B. cost per unit for P1 & P2 is Rs.10 and Rs.5 respectively. Formulate as LPP minimize cost.
16. A company produces two models of machine, M1 and m2 Both the models are processed in foundry and
machine shop profit per unit for M1 and M2 is Rs. Rs.400 and Rs.200 respectively. The machine capabilities
are:
Model Foundry Machine shop

M1 100 units OR 150 units OR
M2 180 units 250 units
Formulate as LPP to maximize profit.
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CONCEPT QUESTION
1) Explain the concept of linearity in linear programming?
Ans: - in LPP it is assumed that the production and output is directly proportional to avaibility of
resources or input. Mathematically, we can say that Y = f(X) i.e Y (Output) is a linear function of X
(input). Y is the dependent variable and X is the independent variable.
If we represent this equation on a graph showing output at various levels of input, the result will be a
straight line.
Y (Output)
X (Resources)
In other words, the output will increase or decrease in the same proportion of increase or decrease of
resources, i.e. if resources are increased by 50%, output will increase by 50%.
2. Explain what is meant by decision variables, objective function and constraints in linear
programming?
Ans: - Decision variables: - Decision variables are entities (e.g products) whose values or quantity is to
be determined from the solution of the LPP. Hence, these are unknowns in the problem. Decision
variables are represented by X1, X 2 etc.
Objective function: - it specifies the objective of finding the solution i.e. maximization of profit (Max.
Z) or minimization of cost (Min.Z). The value of objective function is denoted by Z.
Constraints: - Constraints are the restrictions or limitations imposed on the problem. Constraints can be
related with availability of resources, supply or demand conditions etc. there are three types of
constraints – Less than or equal to (<)
Greater than or equal than to (>) Equal (=)

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2) What are limitations of linear programming?
Ans: - Limitations of LP are
Linear relationship is necessary in objective function as well as in constraints.
LP cannot be used to solve a problem having multiple objectives.
Quantitative factors cannot be incorporated in the formulation of LP.
Economy of scale and learning curve effect cannot be incorporated in LP.
3) What are the different types of constraints in linear programming?
Ans: - in LP, there are three of constraints:
A) Than or equal to (<)
This type of constraint represents the maximum capacity of a resource or upper limit of a decision
variable; e.g:- maximum availability of a resources or maximum market demand for a product. The
value of LHS (left hand side) of the constraint can be equal to or less then the prescribed limit in the
RHS.e.g. maximum demand for X1 is 100 units is represented as: X1 < 100
b) Greater than or equal to >
This type of constraint represents the minimum consumption of a resources or lower limit of a decision
variable; e.g. minimum utilization or consumption of a resource or minimum supply of a product. The
value of LHS (left hand side) of the constraint can be equal to or more than the prescribed limit in the
RHS.
c) Equal to (=)
This type of constraint represents an exact equality. The value of LHS should be exactly equal to the
value of RHS. Here there is no maximum or minimum limit. The variable/s on the LHS can take only
one exact value which is equal to the limit given in the RHS.
E.g Daily production of product X3 is 500 units is represented as X3: = 500
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CHAPTER 3. LINEAR PLANNING PROGRAMMING – GRAPHICAL METHOD
1. A company manufactures two products A and Both products are processed on two machines M1 and M2.
M1 M2
A 6 hrs/ unit 2 hrs/ unit
B 4 hrs/ units 4 hrs/ unit
Availability 7200 hrs/ month 4000 hrs/ month
Profit per unit for A is Rs.100 and for B is Rs. 80.find out monthly production of A and B to maximize
profit by graphical method.
2. A firm is engaged in animal breeding. The animals are to be given nutition supplements every day. There
are two products A and B which contains the three required nutrients.
Nutrients Quantity/unit Minimum Requirement

A B
1 72 12 216
2 6 24 72
3 40 20 200
Product cost per unit is A-Rs.40, B-Rs.80.find out quantity of product A & B to be given to provide minimum
nutritional requirement.
3. A firm makes two products P1 and P2 and has production capacity of 18 tons per day. P1 & P2 require same
production capacity. The firms supply at least 4 t of P1 & 6t of P2 per day. Each tone of P1 & P2 requires
60hrs.of machine work each. Maximum machine hours available are 720.profit per tone for P1 is Rs.240.
Find optimal solution by graphical method.
4. A firm produces two products P and Q. Daily production upper limit is 600 units for total production, but at
least 300 total units must be produce every day. Machine hour’s consumption per unit is 6 for p and 2 for Q.
At least 1200 machine hours must be used daily. Manufacturing costs per unit are Rs.50 for P and Rs.20 for
Q. find optimal solution the LPP graphically.
5. Consider a firm that produces two products X1 and X2 with three fixed resource Z1, Z2, Z3. The profit
contribution is Rs. 20 per unit of X1 and Rs 25 per unit of X2 sold. Production of a unit of X1 requires 10
units of Z1 and 15 units of Z2, while that of X2 requires 10 units of Z2 and 30 units of Z3, Z1,Z2, Z3 are
available in amount of 5000, 9000 and 12000 respectively. Find the profit maximizing product mix by
graphical method
6. M/s print well Pvt. Ltd are facing a tight financial squeeze and hence are attempting cost saving wherever
possible. The current contract is to print a book in hard cover and in paperback. The cost of hard cover type
is Rs.600per 100 copies and Rs. 500 per 100 copies of paperback type. The company decides to run their
two printing presses PI and PII for at least 80 hours and 60 hours respectively every week. PI can produce
100 hard cover books in 2 hr and 100 paper backs in 2 hrs. Determine how many books of each type should
be produced to minimize costs. Use simplex or graphical method of LPP
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7. GJ bottling Ltd. Have bottling plants, one located at H and the other at J. each plant bottles three soft drinks
namely, A B and C number of bottled per day is as follows:
Drink Plant at
G J
A 1500 1500
B 3000 1000
C 2000 5000
A market survey indicates that during the last month, three will be demand of at least 20,000 bottles of A. at
least 41,000 bottles of B and at least 44,000 bottles of C. The operating costs per day for plants at G and J are
600 and 400 rupees respectively. For how many days each plant be run next month to minimize operating costs,
while still meeting the market demand? Use graphical method of linear method of linear programming.
8. United fabrications make two types of automobile parts say A and B. It buys castings that are to be
machined, bored and polished. The capacity of machining is 25 per hour for A and 40 per hour for B and
capacity of boring is 28 per hour for A and 35 per hour for B and the capacity for polishing is 35 per hour
for A and 25 per hour for B casting for part A costs Rs.2 each and for B they cost Rs.3 each. They sell for
Rs.5 and Rs.6 respectively. The three machines have running cost of Rs.20, Rs. 14 and rs.17.5 per hour.
Assuming that any combination of parts A and B can be sold, what product mix maximizes the profit?
Formulate it as a linear programming problem and solve graphically.
9. Solve the following linear programming problem graphically and interpret the result.
Maximize z=8X1+16X2
Subject to:-
X1+X2< 200
X2 < 125
3X1+6X2< 900
X1+X2 > 0
10. A furniture manufacturer makes two products- chair and tables. Processing of these products is done on
two types of machines A and B. A chair requires 2 hours on machine type A on machine type B.A table requires
5 hours on machine type and no time on machine type B. There are 16 hours/ day available on machine type A
and 30 hours/day on machine type B. profits gained by the manufacturer from a chair and a table are Rs.2/- and
Rs.10/- respectively. What should be the daily production of each of the two products? Use graphical or simplex
method of linear programming to find the solution.
11. A confectioner sells two products A & B. The contribution of a is Rs. 30 and B is also Rs.30. The products
are produced in a commen production process. The production process has a capacity of 30,000 man-hours. It
takes 3 man-hours to produce a unit of A and 1 an hour to produce a unit of B. The market for the product has
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been surveyed and confectioner knows that a maximum number of 12,000 units of B be sold. Formulate this as
a linear programming problem to maximize contribution and solve either by simplex method or graphically.
12. ABC Ltd manufactures tables and chairs. They have just acquired a new workshop that can operate 48 hrs a
week. Production of the table will require 2 hrs and chair will required 3 hrs of production time. Each table will
contribute rs.40 to profit while a chair contributes Rs. 80. The marketing department has determined that
maximum of 15 tables and 10 chairs can sold every week. Formulate the linear programming model and
determine the optimum product mix of table and chairs that will maximize profits for the company, by using
graphical method or simplex method of linear programming.
13. Solve by graphical method max Z = 50X1+60X2
Subject to: X1< 6
X2<3
5X1+8X2>40
-40X1+8X2<8
CONCEPT QUESTION
1) What is mean by feasible region of solution in LPP graphical method?
Ans: - the feasible region of solution means that part of graphical solution which satisfies all the constrains of
the problem. There may be different types of constrains in the problem e.g. <, > etc the feasible region is a
common region is common region to all constrains.
To find the feasible region, we should eliminate all those part of the solution which are not common to all
constrain. The remaining region is one that is the feasible region of solution
Types of constrains Location of feasible region
< Inside the constraint line
> Outside the constraint line
= On the constraint line
2) Explain “infeasibility” in LPP using graphical sketch?
Ans:- Infeasibility means there there is no feasible solution to the problem. Infeasibility occurs due to
contradictory nature of constraints. The constraints are of same nature that is impossible to find the feasible
solution that can satisfy all the constrains.
Following sketch explains infeasibility
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There is no common feasible region for line AB and line CD hence, solution is infeasible.
3) What is mean by redundant constraint in LPP? Show with the graphical sketch
Ans;- A redundant constraint is the one which does not affect the optimal solution. Even if that constraint is not
considered, we can still obtain the solution to the problem. Since the constraint is not required for obtaining the
optimal solution, it is called redundant constraint.
Following sketch explain redundancy (redundant constraint)
The feasible region for the above problem is OABC. The 3 rd constraint does not affect the feasible region.
4) What is iso-profit line or iso-cost line in graphical solution?
Ans:- Iso- profit or Iso- cost line passes through the point of optimal solutionon the feasible region. Iso- profit
line passes through the corner point with maximum profit. Iso- cost passes through the corner point with
minimum cost.
Slope of the Iso-profit or Iso-cost line is obtained from objective function of the problem
Following example describes how to obtain slope of the Iso-profit line:
Max.Z = 100Z1 + 80X2
How to find the slope of Isc-profit line:
Equation of a straight line: y = mx + c
Where, m=slop of straight line
In our case, y means ‘X2”and ‘X’ means ‘X1’
C means ‘Z’ X2 = m.X1+Z

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Converting original objective function in this format:
Z = 100X1+80X2
80X2 = Z-100X1 = -100X1+Z
80X2 = Z -100x1 = -100X1+Z
X2 = -100/80 X1 + Z/80
X2 = -5/4 * X1+Z/80
Slope of Iso profit line =-5/4
Negative sign indicates that line slope from left to right downwards. And slope will be 5/4. Every 4 units on X
axis for 5 units on Y axis.
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CHAPTER 4.LINEAR PLANNING PROGRAMMING – SIMPLEX
1. Max.Z = 100 X1+80X2
Subject to constraints:
6X1+4X2 < 7200
2X1+4X2 < 4000
X1, X2 > 0
Find optimal solution by simplex method
2. Padma ltd. makes three different kinds of chairs. All can be made profitably in this company, but
the company’s monthly production is constrained by the limited amount of labor, wood and screws
available each month. The director will choose the combination of chairs that maximize his revenue
in view of the information given in the following table:
Input Arm Executive Officer Monthly availability

Chair chair chair
Labour (hours) 12 7 9 1260
Wood (board 22 18 16 19008
feets)
Screw(kg) 2 4 3 396
Selling price(in 4000 2000 5000 ------
Rs.)
Formulate the above problem as a linear programming problem solve it by simplex method
3) Use simplex method to show that the following linear programming prolem is temporarily
degenerate:
Maximize Z = 9X1+4X2
Subject to the constraints,
4X1+3X2 <12
4X1+X2 < 8
X1, X2 > 0
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3. Solve the following LPP by simplex method

Max. Z = 3X1+5X2
Subject to:
X1+X3 = 4
X2+X4 =6
3X1+2X2+X5 = 12
X1 X2 X3, X4, X5 > 0
Does degeneracy occur in this problem?

Max Z = 3X1+2X2+5X3
Subject to:
X1+2X2+2X3 < 8
3X1+2X2+6X3 < 12
2X1+3X2+4X3 < 12
X1, X2, X3 > 0
Identify alternate optimal solution, if any
6. A manufacturer has three products A,B and C. these products are produced on three machines
M1,M2 and M3. The processing time required per unit of these products are as under:
Product Processing time per unit (machine hrs)

M1 M2 M3
A 3 2 1
B 2 3 ----
C 2 3 ----
Spare capacity per 240 270 60
week (hrs)
Product A gives a profit of Rs. 10 per unit while products B and C generate a profit of Rs.6 per unit.
Formulate LPP and solve by simplex method.
7. Using simplex method, solve the following LPP. Is it a degenerate solution?
Max. Z = 3X1+5X2
Subject to:
X1+X3 = 4
2X2+X4 =6
X1+2X2+X5 =12
X1 X2 X3, X4, X5 > 0
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8. Solve the following maximization LPP by simplex method
Max. Z = 2000X1+ 1800X2
Subject to:
X1+X2 < 10
1000X1+800X2 < 9000
X1, X2 > 0
9. Maximize Z = 45X1+55X2
Subject to constraints:
6X1+3X2 < 120
4X1+10X2 < 180
X1, X2 > 0
1) Solve the above profit maximization LPP using simplex method
2) What are the values of decision variables and the maximum profit as per your solution?
3) Explain how you determine if the solution is unique
Max. Z = 30X1+40X2+20X3
Subject to:
10X1+12X2+7X3 < 10000
7X1+10X2+8X3 < 8000
X1+X2+X3 < 1000
X1, X2, X3 > 0
11. Minimum requirements of diet are 4000 units of vitamins, 50 units of minerals and 1400 units of
calories per day. Two products A & B are available at a price of Rs.4 and Rs.3 per unit.1unit of
minerals and 40 calories. 1 unit of product B contains 100 units of vitamins, 2 units of minerals and 40
calories. Find optimal product mix to minimize total cost by simplex method.
18
12. Solve the following minimization LPP by simplex method
Min. Z = 25 X1+30X2
Subject to:
4X1+3X2 > 60
2X1+3X2 >36
X1, X2 > 0
Concept Questions
1) Why an optimal solution to unbounded maximization LPP cannot be found in simplex method?
Ans: -In simplex method, a solution is said to be unbounded when there is an incoming variable (i.e. key
column), but there is no outgoing variable (no key row). This happens when there is no positive ratio. All the
ratios are zero, Negative or infinity in nature.
Hence, it is not possible to proceed to the next table. It means the solution can extend up to infinity as there is
an incoming variable, but no outgoing variable. Hence, there is not possible to find an optimal solution to an
unbounded LPP.
2) Explain slack , surplus and artificial variables in simplex
Ans: - Slack, surplus and artificial variables are used to convert the LPP formulation in standard form.
a) Slack variables: - it is represented by “S” and it is added to the LHS of a less than or equal to constraint
to convert it in standard form. It represents utilized capacity of a resource. Its coefficient in the objective
function = zero.
b) Surplus variable: - it is also represented by “S” it is subtracted from LHS of a “greater than or equal to”
constraint to convert it in standard form. Its coefficient in the objective function = zero.
c) Artificial variables: - It is represented by “A” it is added to the LHS of a greater than or equal to
constraint to convert it in standard form. Its coefficient in the objective functions in “M” which
represents infinity.
“M” has positive (+) sign in minimization problem and negative (-) sign in maximization problem.
3) What are key columns, key row and key element in a simplex table?
Ans:- (a) Key columns: - it represents the incoming or entering variable for the next simplex table. In
maximization problem, key column is the column with maximum positive ^ value. In minimization problem,
key column is column with maximum negative ^ value.
(b) Key row: - it represents outgoing or departing variable in the simplex table. It is the basis variable which
has minimum positive ratio. In the next simplex table, this outgoing variable is replaced with the incoming
variable.
19
(c) Key element: - it is the value in the simplex table which is at the intersection of key column and key row.
4) What are basis and non- basis variables in a simplex table?
Ans: - (a) Basis variables: - basis variables in a simplex table mean those variables which are present in the
basis of that simplex table. These are the variables which are that particular solution.
(b) Non- Basis: - non basis variables in a simplex table mean the variables which are not in the basis of that
simplex table. These are the variables which are not in the basis of that simplex table. These are the variables
which are not part of a particular solution.
In the test of optimality, we determine if it is possible to improve the solution by replacing one of the basic
variables with on of the non- basis variables.
(5) What is meant by scare and abundant resources in a simplex solution?
Ans: -a) Scare Resources: - these are the resources that are completely consumed in the production process.
Hence, there is unutilized quantity of scare resources is zero.
Slack variable representing this resources is absent in the basis of optimal solution.
b) Abundant resources: - these are resources which are not consumed completely in the production process.
There is some unutilized capacity, full capacity is not used. It means there is some slack quantity which is equal
to the unutilized capacity.
Slack variable representing this resource is present in the basis of optimal solution. The quantity of slack
variable determines the unutilized capacity of the resources.
5. How do you decet degeneracy in simplex solution?
Ans: - Degeneracy (r degenerate solution) occurs in simplex in following cases:-
a) There is a tie in the key row. There are two equal minimum positive replacement ratios. It means there
are actually two outgoing variables for one incoming variable.
OR
b) The quantity value of a basis variable is zero. It means the variable is in the solution as a basis variable,
but with zero quantity. It means in reality, it is a non- basis variable.
7) Explain what is mean by infeasible solution in simplex
Ans: - (a) in the quantity column, there is negative value. It means a basis variable is having negative quantity.
Which is not possible as any variable can take either / zero positive value.
(b) An artificial variable present in the solution as a basis variable. It is not possible as coefficient of artificial
variable is infinity.
20
8) How to detect and find alternate optimal solution or multiple optimal solutions in simplex?
Ans: - (a) to detect alternate optimal solution, we check the ^ values of the non basis variables in the last (i.e
optimal) table. If any non- basis ^ value is equal to zero, it means there is an alternate optimal solution.
(b) to find alternate optimal solution, we should take the column of non basis variable having zero ^ value as
the key column. Then we calculate rations and select the minimum positive ratio as the key row. The next table
that we obtain is the alternate optimal solution.
9) What is meant by shadow price of a resource?
Ans: - shadow price of a resource means the value of one extra unit of the resources. In other words, it is profit
contribution made by one unit of the resource. Hence, it is a maximum price that should be paid for one unit of
that resource.
Shadow price is found in the Zj row under the slack variables.
E.g. if the Zj value of slack variable S1 is 5, it means the shadow price of resources no. 1 is Rs.5. Hence, the
company should pay at the most Rs. 5 to acquire one extra unit of that resource.
The shadow price of an abundant resource is always zero, because there is unutilized capacity.
----------------------------- ALL THE BEST -----------------------------
21
CHAPTER 5. TRANSPORTATION PROBLEM
 Introduction :-
People thought the transportation problem up early in the Second World War. It was used to determine how to
move troops (located, for example, at training basis in deferent parts of the United States) to battlegrounds in
Europe and Asia. This chapter is devoted to special problem that belong to the so called transportation class.
These special problems are quite important from the practical point of view. Their practical importance arise
because several real situations can be described by system of equation that fall into the transportation class,
Sizeable of Linear problem have been made in this field.
 Three Types of Transportation Problem

1. Vogel’s Approximation Method (VAM)
2. North West Corner Method (NWCM)
3. Least Cost Method / Matrix Minima Method (LCM)
1. A company has three factories F1, F2, F3 with production capacities of 11, 13 and 19 units (in
thousands). It has4 wahrehousesW1, W2, W3,W4 with demands of 6,10,12 and15 units (In
thousands).units cost of transport is given from each To W1 W2 W3 W4
factory to each warehouse.Based on the above From
information, F1 42 32 50 26
1) Construct a transport table F2 34 36 28 46
2) Find initial feasible solution by F3 64 54 36 82
a) North west corner method (NWCM)
b) Least cost method (LCM)
c) Vogel’s approximation method (VAM)
2. A company has three plans A, B, C for which

WH P Q R S
Plant capacities are 7,10,18 units. It has four warehouses P,Q ,R,S
A 38 60 100 24 for which demands are 5,8,7 and 15 units. Unit transportation
B 140 60 80 120 cost is given in Rs. Find initial feasible solution by
C 80 20 120 40 NWCR LCM VAM
3. Supply, demand & unit transportation cost data is given. Find IFS by NCWR, LCM, VAM
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
22
4. AB Ltd. a chemical company has to plants with daily chemical production of 6 lac and 9 lac litres
respectively. The plants must fulfil the needs of its three distribution centres which have total chemical
requirement of 7, 5 and 3 lac litre respectively. The cost of transporting one lac litres of chemical from
each plant to each distribution centres is given in hundreds of rupees given below. Formulate this LPP.
Distribution Centres
Source D1 D2 D3 Supply
Plant 1 2 3 11 6
Plant 2 1 9 6 9
Demand 7 5 3
5. Consider the following transportation problems involving minimisation of cost (in Rs,)
Distribution Centres
Source D1 D2 D3 D4 Supply
S1 12 6 20 25 400
S2 6 11 15 12 300
S3 9 15 17 7 500
Demand 200 250 350 400
a. Find the optimal solution to this problem and determine the total cost of transportation
b. Analysis the solution obtained by you and the answer the following questions.
a. Is the optimal solution unique? Is there is any alternative optimal solution identify it
b. The transport is willing to provide a discount of 25% on the freight on the route S2D4 should the
offer be accepted?
c. How the cost would be affected if it is decided to transport 50units from S2D4.
6. A cement company has three factories which manufacture cement which is then transported to four
distribution centres. The quantities of monthly production of each factory, the demand of each distribution
centre are the associated transportation costs per quintal are given as follow:
Distribution Centres Monthly production
Factories W X Y Z (in quintals)
A 10 8 5 4 7000
23
B 7 9 15 8 8000
C 6 10 14 8 10000
Monthly 6000 6000 8000 5000

Deamand
6. A company has three plants and 4 warehouses. The supply and demand in units and corresponding
transportation costs in Rs. per unit are given below. On the basis of past experience, following dispatch
schedule has been finalized.
Warehouses Supply
Capacity
Plants I II III IV
(in units)
A 10 8 5000 7 12 5000
B 12 13 6 4500 10 1500 6000
C 8 7000 10 500 12 14 1500 9000
Demand 7000 5500 4500 3000 20000
Answer the following questions with justification
i) Is the above solution optimal? Find the optimal solution?
ii) Calculate the total minimum transportation cost as per the optimal solution.
iii) If the transport carrier offer 10%discount on route C to iii, should the management accept the offer? Analyse
the optimal solution to find the answer
8. A company is spending Rs.1200 on transportation of finished goods from three plants to four distribution
centres every month with unit cost of transportation are given in the following table
Distribution Centres Monthly capacities
D1 D2 D3 D4 (Units)
F1 20 30 50 15 7
F2 70 35 40 60 10
F3 40 12 60 25 18
Demand 5 8 7 15 35
24
a) Find the optimal solution to give minimum cost schedule to transport finished goods to market.
b) What can be the maximum savings every month by optimal scheduling?
9. M/s ABC & co. interested developing advertising

Age groups
camping that will reach to the persons belonging to
four different age groups. Advertising camping can Media 16-20 21-25 26-35 36 & abv
be conducted through media M1, M2, and M3 are
40, 30, and 20 mns respectively. Also the minimum M1 12 7 10 10
desired exposure for each age group according to the
M2 10 9 12 10
media employed. In addition, maximum exposure
levels possible in each of the media, namely M1, M2 M3 14 12 9 12
and M3 are 40, 30 and 20mns respectively. Also the
minimum desired exposure with in age group, namely 16-20, 21-25, 26-35 and 36 and the above, are 30, 25,
15 and 10 mns. The objectives are to minimize the cost of abstaining the minimum exposure level in each age
group.
i) Formulate the above as a transportation problem, and find the optimal solution
ii) Solve this problem if the policy is to be provide at least 4 million exposures through M1 in the 16-
20age group and at least 8 million exposures through M1 in the age group 21-25
10. A company BMS Private limited three plants and four

Warehouses
warehouses. The supply and demand in units and the
corresponding transportation cost per rs. Per unit are Plants I II III IV Supply
given. The table below has been taken from the solution
procedure of the transportation problem. A 4 5 3 6 500
i) Find IFS by VAM method to the above B 3 6 7 3 700

transportation problem.
C 1 4 1 2 800
ii) Test the IFS for optimality and if required
Improve it to optimality and calculate Demand 500 400 900 200
minimum total transportation cost
iii) Is there any alternate optimal solution? Justify
11. A company has four plants with capacities of 5,000, 10,000, W/H P Q R
7,000,3,000 units. It has three warehouses with demands of 5,000, 8,000 Plant
& 10,000 units. Transportation cost per unit (in Rs.) A 14 6 12
B 8 12 16
Find optimal transportation schedule & optimal cost C 10 16 8
D 16 8 6
25
12. A glass manufacturing units P1,P2,P3 and P4 producing 5000,8000,7000, and 10000 items per day. The
company has three storage locations. L1, L2 and L3 having
Store Location L1 L2 L3 capacity for 7.000 9.000 and 18.000 items to accommodate every
day .The transportation cost from factory to storage location in
P1 2 7 4 Rs./unit is given in the following cost matrix.
P2 3 3 1 i) Though the cost of transportation from factory P4 to storage
Factory location L1isgiven in the cost matrix, yet this route cannot be use
P3 5 4 7
due to certain operational constrained.
P4 1 6 2
Determined an initial feasible transportation schedule using VAM
for the above problems and also calculate the total transportation
cost for this transportation schedule.
13. M/s ITC has 3 plants situated at Chennai, Nagpur and Udaipur having monthly manufacturing capacity
of1600 units, 1200 units, and 1700 units respectively. These plants supply finished products to their four
warehouses suited at Mumbai, Delhi, Hyderabad and Kolkata having their monthly demand of 1000 units,1200
units,800 units and 1200 units respectively.The transportation cost per unit (in Rupees) from plants to
warehouses is as follows
Plants Warehouses
Mumbai Delhi Hyderabad Kolkata
Chennai 17 28 15 8
Nagpur 68 14 38 58
Udaipur 38 6 68 18
The shipment from Chennai to Hyderabad and Nagpur to Delhi are not possible due to certain operational
problems. Determined the feasible solution for the above problem by applying VAM and calculate total
transportation costs.
14. A company can produce 200 units of a product every month under normal production capacity. The market
demand for next three months is 220 units, 250 units, and 240 units, which must be completely satisfied.
The company also has overtime capacity of 50units per month. Cost of production is Rs 10 per unit. In
overtime, the production cost increases by Rs. 2 per unit. Products produced in a month can be stored for
meeting demand in future.in that case; company will incur a storage cost of Rs. 1 per unit per month.
Formulate as a transportation problem and find optimal production schedule for the three month period.
26
15. A company has3 warehouses W1,W2 and W3 from where it

To Profit per unit (Rs)
supplies products to 3 markets M1,M2 and M3.Availability at
warehouses is 2000,1500 and 1000 units. Market requirements are From M1 M2 M3
1200, 1800, and 1000 units. Profit potential per unit form each
warehouse to each market is as follows: W1 25 22 23
Find optimal transportation schedule to maximise total profit W2 15 20 18
W3 18 17 16
16.A company has three plants P1, P2 and P3 and three

W/H Profit per unit (Rs)
warehouses W1, W2 and W3. Profit per unit from each plant
to each warehouse is given in Rs. Plant W1 W2 W3
P1 58 56 60
Plant Capacity Warehouse Demand
P2 50 54 46
P1 2000 W1 1500
P2 2000 W2 3000 P3 70 74 76
P3 2000 W3 1500
Find optimal solution and optimal profit.
To Profit per unit (Rs)

17.A company has three warehouses W1 W2 and W3 from
From M1 M2 M3
where it supplies products to 3 markets M1, M2 and
M3.Availability of warehouses is 2000, 1500 &1000units. W1 25 22 23
Market requirements are 1200,1800, & 1000 units.
W2 15 20 18
Profit potential per unit from each warehouse to each market is
as given below: W3 18 17 16
Find optimal transportation schedule to maximize total prof

To
18. A company supplies a product from 3 warehouse to 3 markets.
Supply at warehouses A, B and C is 2500, 1500 and 1000 units. From P Q R
Demanded at market P,Q and R is 2000,1000 and 2000 units.
A 20 30 25
Due to operational constraints, it is not possible to transport any
quality from warehouse B to market Q. B 15 21 19
Determined optimal transportation schedule and optimal profit. C 12 16 14
27
19. A company has 3 plants and 3 warehouses. The supply and demand in units and corresponding
transportation cost in Rs. Per unit are given below. On basis of past experience following dispatched schedule
has been finalized.
Warehouses Supply
capacity(in
Plan (Transportation cost in Rs/ Units) units)
I II III
A 40(300) 70 90 300
B 12 8(300) 30 (100) 400
C 60 90 45 (200) 200
Demand(In 300 300 300

units)
a) Please improve the above solution to optimality.

b) Study the solution found by you and answer the following questions with justification:
i) Is there and alternate optimal solution?
ii) Find the total minimum transportation costs?
iii) If the route C to II is used by how much amount the total transportation cost would go up for every
unit transported?
iv) What should be the minimum decrease in the unit cost of the cell A-II so that the company will using
this route?
CONCEPTUAL QUESTIONS
1) Why is a non- degenerate solution a prerequisite for optimality test of a transportation solution?
Ans: - To find out the optimal solution to transportation problem, we need to test the available solution for
optimality by MODI (modified distribution) method. This is done by first calculating values of “u” and “v” and
then finding the values of opportunity cost (^) for each empty cell.
But we can calculate values of “u” and “v” if the solution is a degenerate solution and hence, we cannot proceed
further. In that case, to satisfy the test of non-degeneracy, we need to take “epsilon” in the solution.
Hence, a non-degeneracy solution is a prerequisite for optimality test of a transportation solution.
2) What are the various method of finding an initial feasible solution to a transportation problem?
Ans: - there are many methods available to find initial feasible solution to transportation problem. Tree most
commonly used methods are explained below:
28
A) North West Corner Rule (NCWR): In this method, we start giving allocation fron the first North West
Corner and so on. This is an inefficient method as there is no consideration for minimum cost.
B) Least Cost Method (LCM): In this method, we start allocation from the lowest cost in the table, and then
we proceed to next available lowest cost and so on. This is a better method then NCWR as importance is
given to lower costs and higher cost allocations are avoided.
C) Vogel’s Approximation Methods (VAM): In this method, we calculate penalties for each row and
column in the table. Penalty is a relative difference between two lowest costs for each row and column.
Then we start the allocation from the maximum penalty and corresponding minimum cost. VAM is most
often proved to be the best method as it gives an initial solution which is very near to the optimal
solution.
3) Which tests are applied to a transportation solution before we test it for optimality?
Ans: - Following two tests are applied to a transportation solution before we test it for optimality:
a) Test of feasibility:- The solution must be feasible. The total of allocation in each row and column must
match with demand or supply of that row or column.
b) Test of non-degeneracy:- the solution must be non-degenerate i.e. it should satisfy the rim condition.
The number of allocations in the table should be equal to (m+n-1) where, “m” means number of rows
“n” means number of columns. If the solution fails this test, it means it is a degenerate solution. We
should remove the degeneracy by introducing epsilon in the solution.
4) How to solve unbalanced transportation problem?
Ans: - It is solve using following steps:-
1. First we balance the problem by introducing a dummy either on supply side or a demand side as
necessary. Profit for dummy row or column will be zero.
2. Then we convert the maximization problem into minimization by converting the profit table into regret
table. To do this, we subtract all profit values (including dummy values) from the maximum profit value
in the table.
3. After converting in minimization, we solve the problem by normal method i.e. finding IFS and then
testing the IFS for optimality and improving it if necessary.
4. When we obtain optimal solution, we multiply each allocation by original profit value to arrive at
optimal profit.
29
5) Explain the algorithm of modification distribution method to obtain optimal solution to a

transportation problem.
Ans: - 1. Test the solution for non- degeneracy. If there is degeneracy, remove it by adding epsilon.
2. Calculate the values of “U” and “V” from the occupied cells using the formula [^ = cost – (u+v)]
3. Calculate opportunity cost (^) for each empty cell using the formula [^ = cost – (u+v)
4. If there are any negative (^) values, it means there is scope for cost reduction and the present solution is not
optimal.
5. In that case, construct a closed loop from the empty cell having most negative ^ value. E.g. if two negative ^
are -3 and -5, then start loop from -5.
6. Then write the next table by changing the allocation values at the loop corners and repeat the steps from
beginning.
7. The procedure is repeated until we get all ^ values as positive or zero.
6) How do you detect and find alternate optimal solution (multiple optimal solutions) in a transportation
solution?
Ans:- Alternate optimal solution or multiple optimal solutions mean there are two sets of solutions which
provide the same optimal profit:
1. In the optimal solution to a transportation problem, if there is an empty cell with zero ^ value, it means there
is alternative optimal solution.
2. To find alternative optimal solution, we should construct a closed loop from the empty cell with zero ^. The
new table we obtain after looping is the alternate optimal solution.
------------------------------------- ALL THE BEST -------------------------------------
30
CHAPTER 6. ASSIGNMENT PROBLEM
 INTRODUCTION :-
Imagine, if in a printing press there is one machine and one operator is there to operate. How would
you employ the worker? Your immediate answer will be, the available operator will operate the machine. Again
suppose there are two machines in the press and two operators are engaged at different rates to operate them.
Which operator should operate which machine for maximising profit?
Similarly, if there are n machines available and n persons are engaged at different rates to operate
them. Which operator should be assigned to which machine to ensure maximum efficiency? While answering
the above questions we have to think about the interest of the press, so we have to find such an assignment by
which the press gets maximum profit on minimum investment. Such problems are known as "assignment
problems".
 OBJECTIVE OF ASSIGNMENT PROBLEM :-
After completion of this lesson you will be able to:
 formulate the assignment problem

 know Hungarian method to find proper assignment
 employ Hungarian method to find proper assignment
 HOW TO SOLVE THE PROBLEM:-
Step No.1 Check if the problem is balanced or unbalanced. If no. of rows= no. of columns, problem is balanced.
If unbalanced take dummy row or columns as required. All values for dummy=0.
Step No.2 Check if the problem is of minimization type (cost) or minimization type (profit). If maximization,
convert to minimization by finding regret matrix.
Step No.3 Do row minima. Find minimum value in each row and subtract it from all values in that row.
Step No.4 Do column minim. Find minimum value in each column and subtract it from all values in that
column.
Step No.5 Check for optimality. Draw minimum number of straight lines to cover all zeros in the matrix. If
minimum no. of lines= size of matrix (e.g 4*4, 5*5 etc) then solution is optimal. If not, do iteration.
Iteration: - A) find minimum uncovered values
B) Subtract it from all uncovered values
C) Add it to all double covered values (i.e. intersection values)
D) All other values remain same
Step No.6 Again check for optimality. Continue procedure till we get optimal solution.
31
PRACTICE PROBLEM
Job
Sum No.1
Employee P Q R S
In a plant 4 employees are to be assigned 4jobs on one to
one basis the cost in Rs. Thousand for each employee to do A 60 50 40 45
each job is given. Find the optimal combination of
B 40 45 55 30
employees and job to minimize total cost
C 55 70 60 50
D 45 45 40 45
Job
Sum No.2 Employee A B C D E
In a factory there are 5 employees and 5 jobs are to be I 160 130 175 190 200
done on a one to one basis. Time required (in min) is
given for each employee job combination. Find optimal II 135 120 130 160 175
solution assignment of employees & jobs to minimize
total time. III 140 110 155 170 185
IV 50 50 80 80 110
V 55 35 70 80 105
Job
Sum No.3
Worker J1 J2 J3 J4
In a factory 4 workers are there and 4 jobs are to be done.
W1 120 100 80 90 Time required for each worker and jobs is given in minutes.
Find optimal assignment of workers and jobs and optimal total
W2 80 90 110 70 time.
Is this a case of alternate optimal solution? If yes, show
W3 110 140 120 100 alternate optimal solution,
W4 90 90 80 90
32
Sum No.4
Job I II III IV
A company has 4 machines to do 3 jobs. Each job can be assigned
to only one machine. The cost of each job-machine combination is Worker
given in the table below in Rupees. Find optimal assignment which
will minimize the cost.Answer the following questions: A 9 12 14 18
1. Is there any alternate solution? B 4 6 8 9

2. Is it possible to maintain the same minimum cost as per
optimal solution if job B is assigned to either machine II or C 5 7 9 11
machine III?
3. Dose any machine remain idle as per optimal assignment?
Sum No.5
A B C D E In the modification of a plant layout of a factory BMS auto

parts, four new machines M1, M2, M3 and M4 are to be
M1 9 11 15 10 11 installed in a machine shop. There are 5 vacant places A, B,
C, D and E which are suitable for the installation. Because
M2 12 9 X 10 9
of extra-large size, M2 cannot be placed at C and M3 cannot
be placed at A. The cost of installing machines location
M3 X 11 14 11 7 wise in hundred rupees. Find optimal assignment.
M4 14 8 12 7 8
Sum No.6
Salesman Territory
A sales manager has to assign salesman to four territories.
T1 T2 T3 T4
He has four candidates of varying experience and
capacities. The manager assesse the possible profit for each S1 35 27 28 37
salesman in each territory as given below
S2 28 34 29 40
Find optimal assignment of salesman to the territories so
total profit is maximum. S3 35 24 32 33
S4 24 32 25 28
33
Sum No.7
A bread distribution van of santosh bakery has to supply To Bakery Outlet Outlet Outlet
bread at different outlets A, B and C in the morning. It A B C
collects the bread from bakery and distributes to the outlets From
A, B and C only in the morning. The van has to visit outlets
Bakery __ 4 7 3
once only and all the outlets have to be supplied with
morning fresh bread. The distance of the outlets A, B and C Outlet A 4 __ 6 3
from the bakery is given in following table. The van stars
from bakery and has to come back to the bakery after Outlet B 7 6 __ 7
visiting each outlet only once. Which route should be
selected by the van so that the total distance travelled by it is Outlet C 3 3 7 __
minimized? What is the total distance travelled by the van?
Find the alternate route, if any?
Sum No.8
Jobs
The following is the cost matrix (cost in Rs. 1000) of
Clerks J1 J2 J3 J4
assigning 4 clerks to 4 key purchasing jobs. Clerk 1 cannot
be assigned to job 1 __ 5 2 0
Find optimal assignment to minimize total cost. Each clerk 2 4 7 5 6
can handle only one job. Write an alternate optimal solution
if it exits 3 5 8 4 3
4 3 6 6 2
Sum No.9
A company solicits bids on each of the 4 Jobs Contractor

projects from five contractors. Only one
project may be assigned to any contractor. A B C D E
The bids received (in thousands of rupees)
are given in the accompanying table. 1 18 25 22 26 25
Contractor D feels unable to carry out 2 26 29 26 27 24
projects 3 and therefore, submits on bid.
3 28 31 30 __ 31
4 26 28 27 26 19
a) Use the Hungarian method to find the
sets of assignments.
b) What is the minimum total achievable cost?
34
Sum No.10 The following information is
Jobs(cost in hundred rupees)
available regarding 4 different jobs to be
performed about the clerks capable of A B C D
performing the jobs. Cost of each
assignment is given in the table below: I 4 7 5 6
CLERKS II __ 8 7 6
III 3 __ 5 3
IV 8 6 4 2
Sum No.11
Engineer Rate per day No of jobs Job types No. of jobs Rakesh nagiria and associates, an
(100rs) finished per day engineering company is engaged
M 5 12 W 190 in consultancy for 4 types of
N 6 14 X 170 jobs, employing 4 consultant
O 3 8 Y 145 engineers on daily payment basis
P 4 10 Z 190 to finish the job. Are different for
different engineers. As per the employment conditions only one type of job is to be given to one engineer. The
engineer is paid for full day even if he works for a part of the day. Find the least cost allocation jobs to
engineers for the following data: If one of the engineers is to be replaced, which engineer is to be marked for
replacement and why?
Sum No.12
Titanic Inc has required 15th floor of a building having 4 rooms Manager
to locate its regional office. These rooms are to be assigned one
room each to one managers. Each room has its own advantage M1 M2 M3 M4
and disadvantages. Each of the managers are asked to rank their 1502 1501 1503 1502
rooms 1501,1502, 1503 and 1504. Their preference was recorded
as follows: 1503 1504 1501 1504
Most of the manager did not list all the rooms since they were 1504 ___ 1502 1503
not satisfied with some of these rooms. Assuming that
preferences can be qualified by ranks, find as to which manager ___ ___ 1504 ___
should be assigned to which room so that their total preference
ranking in minimized. (Small rank means highest preference)
35
Sum No.13
An engineering company has branches in

Branch City
Mumbai, Calcutta, Delhi and Nagpur. A branch
Manager
manager is to be appointed one at each city, out Mumbai Calcutta Delhi Nagpur
of 4 candidates A, B, C and D. Depending on the
branch manager and the city, the monthly A 2 3 1 1
business in the city varies in lakhs of rupees as
B 5 8 3 3
per details below:
C 4 9 5 1
Suggest which manager should be assigned to
which city so as to get maximum total monthly D 8 7 8 4
business
Sum No.14
Distribution company Sonata has four territories open for 4 transport

Territory Potential (in
Rs.) companies available for assignment. The territories are not equally rich
I Rs. 60,000 in their economic activity potentials. It is estimated that a typical
II Rs. 50,000 transport company operating in each territory would bring in following
annual economic activity potential measured in rupees
III Rs. 40,000
IV Rs. 30,000 The four transport companies are also considered to differ in ability. It
is estimated that, working under the same condition, their yearly
turnover would be proportionately as follows:
Transport company A B C D
Proportion 7 5 5 4
If the criterion is the maximum expected total economic activity potential, the intuitive answer is to assign the
best transport company to the potentially richest territory, the next best transport company to the second
potentially richest territory and so on. Verify this answer by assignment method
Sum No.15
Products
PQR ltd produces 4 different products viz.
pen, ink pencil and rubber using 4 workers Workers Pen Ink Pencil Rubber
viz. Alok, Satish, Vaze and Rathod, who are
Alok 6 10 14 12
capable of producing any of the four
products and they work effectively for 7 Satish 7 5 3 4
hours a day. The time(in minutes) required
for producing each of the product are given Vaze 6 7 10 10
in the following matrix along with the profit
Rathod 20 10 15 15
(Rs per unit).Find out the Assignment of
workers to product which will minimize the
Profit (Rs/units) 3 2 4 1
profit.
36
Sum No.16
A college head of the department has to

Course 1 Course 2 Course 3 Course 4
provide teachers to all courses offered by his
department for imparting highest possible Professor 1 60 40 60 70
quality of education. He has got three
professors and one teaching assistant .4 Professor 2 20 60 50 70
courses must be offered. After detailed
Professor 3 20 30 40 60
analysis and evaluation the head of the
department has arrived at the following TA 30 10 30 40
relative ratings (100= best rating) regarding
the ability of each instructor to teach each of the 4 courses respectively.
How should the head of the department assign his staff to the courses to optimize educational quality in his
department.
CONCEPTUAL QUESTIONS
1) Explain the algorithm of Hungarian method to solve an assignment problem?
Ans: - (a) Check if the problem is balanced or unbalanced. If no. of rows= no. of columns, problem is balanced.
If unbalanced take dummy row or columns as required. All values for dummy=0.
(b) Check if the problem is of minimization type (cost) or minimization type (profit). If maximizat ion, convert
to minimization by finding regret matrix.
(c) Do row minima. Find minimum value in each row and subtract it from all values in that row.
(d) Do column minim. Find minimum value in each column and subtract it from all values in that column.
(e) Check for optimality. Draw minimum number of straight lines to cover all zeros in the matrix. If minimum
no. of lines= size of matrix (e.g 4*4, 5*5 etc) then solution is optimal. If not, do iteration.
(f) Iteration: - A) find minimum uncovered values
B) Subtract it from all uncovered values
C) Add it to all double covered values (i.e. intersection values)
D) All other values remain same
g) Again check for optimality. Continue procedure till we get optimal solution.
37
2) How do you detect and find multiple optimal solutions in solution to an assignment problem?
Ans: - An assignment problem may have more than one optimal solution , which is called multiple optimal
solution. The meaning of multiple optimal solutions is – the total cost or profit will remain same for different
sets or combinations of allocations. It means we have the flexibility of assigning different allocation while still
maintaining minimum (optimal) cost or maximum (optimal) profit.
We can detect multiple optimal solutions when there are multiple zeros in any column or row in the final
(optimal) table in the assignment problem.
It means we have an option of allocating different assignments to a particular job or worker
3) How do you resolve degeneracy (matrix fails the test for presence of optimal solution) in an
assignment problem?
Ans: - when the matrix fails the test for presence of optimal solution, we need to perform “iteration” to improve
the solution (i.e. to remove degeneracy).
In “iteration”, we perform following operations for writing the next table:
A) Find minimum uncovered values in the present matrix.

B) Subtract it form all uncovered values in the matrix.
C) Add it to all double covered values (i.e. intersection values) in the matrix.
D) All other values in the matrix remain same.
4) Compare Assignment problem with transportation problem
Ans: - Following are the points of difference:
Assignment Problem Transportation Problem

1) It is a problem of finding optimal 1) It is the problem of finding optimal
allocation of two variables, such as transportation schedule from Supply
workers & jobs. centres to Demand centres.
2) Method of solution is Hungarian 2) To find initial feasible solution, we use

method VAM, LCM, or NWCR. To find optimal
solutions, we use MODI(modified
distribution method)
3) The problem is unbalanced of rows is 3) The problem is unbalanced when total

not equal to number of columns. supply is not equal to total demand.
----------------------------------- ALL THE BEST -----------------------------------
38
CHAPTER 7. Network Analysis (Critical Path Method)
 INTRODUCTION:-
CPM and PERT are techniques are used in Project Management. A project consists of several activities
and events. An Activity which has to be performed using certain resources. An event either starts of an
operation or completion of an operational.
CPM (Critical Path Method) and PERT (Programme Evolution and Review Technique) are used for
planning and scheduling of projects in an optimal manner so that resources do not remain idle.
 OBJECTIVE OF NETWORK ANALYSIS:-

A. Relationship Between Activities
B. Minimum Project Completion Time
C. Minimum Project Cost
D. Minimization of cost for given total time
E. Minimization of time for a given total cost
F. Minimization of Idle Resources
 BASIC CONCEPT :-
1. An Activity :- An activity is any task or operation which consume or will consume any type of resources,
Resources are mainly msn hours, time capital etc
2. An Event: - An event represent a specific point of time or an accomplishment in the project.
3. Sequential Activities:- Two or more activities are sequential in nature if end of an activity is starting point
of next activity.
4. Proceeding and Processor Activity: - An activity that must be completed prior to start of another activit y
is called processing activity.
5. Succeeding and Successor Activity :- An Activity that cannot be started until one or more preceding
activities are complete is called Succeeding Activity
6. Concurrent activity: - Activity which can be accomplished or preferred simultaneously are called con
current activity.
7. Merge Event: - An event which represent end or completion of multiple activities is called merge
activities.
8. Burst Activity: - An event which represents start of multiple activities is called burst activities.
9. Merge and Burst Activity: - An event which is merge as well as burst event is called merge and burst
activities.
 Construction of Network Diagram :-

1. Each activity is represented by one and only one arrow in the netork.Hence no single activity can be
represented twice in the network.
2. Each arrow represent one and only one activity in the netork.Hence one arrow cannot represent multiple
activities.
3. Before an activity can be started all preceding activity must be completed.
4. The network diagram is logical and graphical representation of dependency relationship between various
activities in a project. Hence length of arrow is immaterial.
39
5. The flow of diagram is from left to right
6. The numbering of events is done from left to right. Hence event numbers significant start of the project.
The last event in the network diagram (Event with highest number) signifies completion of the project.
FULKERSON’s Rule for Numbering of Events:-
No event can be numbered until all preceding Event have been numbered. For any activity (I,j) (I j) It means
number of head event is always larger then number of tail event for any activity.
a. Number of first event in the project =1 (Initail Node =1)
b. Delete all arrows leaving the initial node
c. Continuous numbering by identifying all nodes which have no incoming arrows. Assign consecutive number
to these nodes ie 2,3,4 etc
d. Repeat step b and c until the last node.(ie event representing project completion)is numbered.
7. Arrow should be straight. No bent and curved.
8. Arrow should not cross each other until and unless absolutely necessary.
9. Each activity has a head and tail event.
10. Angle between the arrows should be as large as possible.
PRACTICLE SUMS
Ex. 1: For the following set of activities, draw network diagram.
Activity Preceding Activity

A -
B A
C A
D B
E C
F D
G E
H F and G
Ex. 2: Draw network diagram for following set of activities.

A -
B -
C A
D B
E C
F D
G E and F
40
Ex. 3 : Draw network diagram for following set of activities.

A -
B A
C A
D B
E C
F D
G E

A -
B A
C A
D B
E B
F C and E
G D
H F
I G and H
Activity
1–2
1–3
2–4
3–5
4–5
4–6
5–6
6–7
Ex. 6: Activities A and B are starting activities of the project. Activity C can be started only after both A and B
are completed.
Activity Time (days) Preceding Activity

A 6 Nil
B 4 Nil
C 3 A&B
41
Ex. Activity Preceding Activity Time (days) 7:
A - 4
B - 7
C A 5
D B 4
E C 3
F C and D 2
Ex.8:
Activity Preceding Activity Time (days)
A - 3
B - 5
C A 6
D B 3
E C 4
F E 2
Ex. 9
A - 3
B A 7
C A 4
D B 3
E C 2
F D and E 2
G D and E 4
Ex.10:

A - 5
B - 2
C A 3
D B 2
E C and D 3
Ex. 11
A - 5
B - 7
C A 4
D B 6
E C and D 3
F D 4
42
Ex. 12: For the following project:
1) Draw network diagram.

2) Find critical path and project completion time.
3) Identify critical and non – critical activities.
A - 6
B A 5
C A 2
D B 4
E C 2
F D 1
G D&E 5
H F&G 3

A - 4
B A 3
C A 5
D B 1
E B&C 2
F D&E 2
G E 3

Activity Time (days)
1–2 4
1–3 5
2–4 3
3–5 2
4–6 2
5–6 4
43

1–2 3
1–3 1
2–3 Zero
2–4 2
2–5 5
3–5 7
4–6 4
5–6 3
Ex. 16:

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

3) Find earliest and latest starting and finishing times of each activity.
4) Find total float, free float, independent float and interfering float for each activity.
Ex. 17: Draw network diagram.Find critical path and project completion time.
Find earliest and latest starting and finishing times of each activity. Find floats and slacks for all activities.
A - 4
B A 6
C A 2
D B 6
E B 3
F C&D 4
G E 1
H F 2
44
Ex. 18:A small assembly plant assembles PC’s through 9 interlinked activities. The time duration for which is
given below:
Activity Duration (hrs.)

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
1) Draw a network diagram for it.
2) Calculate and tabulate 9for each activity.
Earliest Start (ES), Earliest Finish (EF), Latest Start (LS) and Latest Finish (LF) times.
3) Find the critical and sub critical paths.
4) Calculate and tabulate Total float, free float, Interfering float and Independent float.
Ex.19: Following are the details of estimated times of activities for a certain project.
Activity A B C D E F
Immediate predecessor/ Activity - A A B, C - E
Estimated Time (Weeks) 2 3 4 6 2 8
1) Find the critical path and expected time of the project.

2) Calculate the earliest start time and earliest finish time for each activity.
3) Calculate the slack for each activity.
Ex. 20: Activities involved in a small project are given below along with relevant information.
Activity 1–2 1–3 2–3 2–4 3–4 4–5

Duration in days 20 25 10 12 6 10
1) Construct the network and find critical path.

2) Find and tabulate earliest start time, earliest finish time, latest start time, latest finish time and total float.
Verify the critical path found earlier.
PRACTICE SUMS
1) A small project contains of following activities. Construct a network diagram for the project and identify
critical path and project completion time.
Activity 1–2 2–3 2–4 3–5 4–6 5–7 6–7

Time (days) 2 4 3 2 1 2 3
45
2) A small project contains of following activities. Construct a network diagram for the project and identify
Activity 1–2 2–3 2–4 3–5 4–6 5–7 6–7 7–8

Time (days) 2 3 5 3 6 4 2 1
4. A small project contains of following activities. Construct a network diagram for the project and identify
Activity 1–2 1–3 2–4 2–5 3–5 4–6 5–6 6–7

Time (days) 5 7 3 4 3 2 4 1
Activity A B C D E F G H
Preceding Activity -- A A B C D E F, G
Time (days) 2 2 4 3 2 2 3 1
Activity A B C D E F G
Preceding Activity -- -- A B C C D, E
Time (days) 4 2 6 4 4 8 3
critical path and project completion time
Preceding Activity -- -- A A, B C D E, F
Time (days) 2 5 3 3 4 2 2
Preceding Activity -- -- A B C, D D E, F
Time (days) 5 8 3 4 6 4 3
critical path and project completion time
Preceding Activity -- -- A B C C, D
Time (days) 8 6 5 4 7 2
46
critical
Activity A B C D E F path
Preceding Activity -- -- A B C D and
Time (days) 4 8 6 10 5 2
project completion time.
critical path and project completion time. Also identify sub – critical path.
Preceding Activity -- -- A B B C, D E
Time (days) 4 6 2 8 2 4 5
Preceding Activity -- -- A A, B C D
Time (days) 6 4 5 8 7 10
critical path and project completion time. Also identify sub – critical path.
Preceding Activity -- -- A B C C, D E, F
Time (days) 4 6 3 4 3 2 3
Preceding Activity -- A A B B, C D E
Time (days) 3 2 3 4 2 8 6
Activity 1–2 2–3 2–4 2–5 3–6 4–8 5–7 6–8 7–8
Time (days) 5 3 2 1 4 6 5 7 2
Preceding Activity -- -- A, B C C D E
Time (days) 5 8 4 3 2 4 2
Activity 1–2 2–3 2–4 3–5 4–6 5–6 5–7 6–7
Time (days) 4 6 7 4 2 ZERO 2 1
47
Find: a) Earliest and latest starting and finishing times.
b) Slacks for the activities
c) Total, free, independent and interfering floats of actities.
Preceding Activity -- - - A B C D, E F
Time (days) 3 2 4 4 2 2 8 5
Find: a) Earliest and latest starting and finishing times for each activity.
b) Tail slack and Head Slacks for the activities.
c) Total, free, independent and interfering floats of activities.
Activity A B C D E F G H I
Preceding Activity - - - A B C D, E B F
Time (days) 4 8 5 5 6 3 7 4 9
b) Total Float.
Verify the critical path found earlier using total float values.
Activity A B C D E F G H I J
Preceding Activity - - - A B C C D E, F G
Time (days) 5 2 3 6 4 3 4 4 3 4
b) Total Float.
c) slacks for the activities.
Preceding Activity - - A A B, C D E
Time (days) 4 6 4 3 3 1 2
Find: a) Earliest and latest starting and finishing times for each activity.
b) Total Float for each activity.
c) Total slack and Head slack for each activity.
Preceding Activity - A A B B, C B D E, F
Time (days) 8 2 4 3 6 3 1 4
48
CHAPTER 8. NETWORK ANALYSIS (PROJECT CRASHING)
 Objectives of this Chapter :-
a) To reduce the project completion time below its normal completion time.
b) To find out the optimal project cost (minimum project cost)
c) To find out optimal project completion time i.e. time corresponding with optimal project cost.
d) To find out the minimum project completion time. This is the time which corresponds with the limit of
project crashing. It is not possible to crash the project below this time.
e) To find out the increase in direct cost due to crashing of critical activities.
f) To find out decrease in the indirect cost due to crashing.
PRACTICAL SUMS
1) For the data given in the table below, draw the network. Crash systematically the activities and
determine the optimal project duration and cost
Activity 1-2 1-3 2-4 2-5 3-4 4-5
Normal 8 4 2 10 5 3
time(days)
Normal Cost 100 150 50 100 100 80
(Rs.)
Crash Time 6 2 1 5 1 1
(days)
Crashed cost (Rs) 200 350 90 400 200 100
Indirect cost is Rs.70 per day
2) The time and the cost estimates and precedence relationships of different activities constituting a project
are given below
Intermediate Time (days) Direct cost (Rs)
Activity Predecessor(s) 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,F 4 2 100 240
49
Indirect cost varies as follows
Days 15 14 13 12 11 10 9 8 7 6
Cost(Rs) 600 500 400 250 175 100 75 50 35 25
a) Draw an arrow diagram for the project
b) Determine the project duration which will return in minimum total project cost
c) Is minimum project completion time different from optimal project completion time?
3) The following table gives data on normal time and cost and crash time and cost for a project
Duration (Weeks) Total cost (Rs)
Activity 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
a) Draw the network and find the critical path and the normal project duration
b) Find out the total float and free float for each activity
c) If the indirect cost of Rs 100 per week find out the optimal duration by crashing and the corresponding
project costs
d) With the crash duration indicated what would be the minimum crash duration possible ignoring indirect
costs?
4. The following table shows details of a project. Indirect cost Rs. 200 per day. Assume a total normal of Rs.
4050 for entire project
Nodes Normal Time Cash Time Cost slope for crashing

(days) (days) (Rs./day)
1-2 4 3 200
1-3 2 2 0
1-4 5 4 150
2-3 7 5 100
2-5 7 6 200
3-5 2 1 150
4-5 5 4 200
50
a) Construct the project network and identify the critical path. What is the normal duration and
corresponding total cost of the project?
b) Crash the project systematically and find out minimum cost and optimal time and also find out the
additional cost required to reach the optimal time
c) Find the total cost required to reach minimum time?
5. A small marketing project consists of job in the table given below with each job is listed its normal time and
crash time in days. The cost Rs. Per day of crashing each job is also given
Activity Normal Time (days) Cash Time Cost of crashing (Rs per
(days) day)
1-2 9 6 20
1-3 8 5 25
1-4 15 10 30
2-4 5 3 10
3-4 10 6 15
4-5 2 1 40
a) Draw the network diagram and find the normal project length
b) If overhead costs are Rs. 60 per day and assuming normal project cost as Rs.1000, what is the optimal
project length and minimum cost total?
6. The following table shows the details of a project, indirect cost is Rs. 200 per week.
Normal Crash
Nodes Time Cost Time Cost
(Weeks) (Rupees) (Weeks) (Rupees)
1-2 8 1500 6 2000
1-4 10 2000 7 3000
2-4 5 800 4 1400
2-3 6 1100 4 1500
2-5 8 900 5 1500
3-4 0 0 0 0
4-6 12 300 8 400
5-6 5 500 4 800
a) Construct the project network and identify the critical path, what is the normal duration and
corresponding total cost of the project?
51
b) Crash the project systematically and find out minimum cost and find out the additional cost and optimal
time and also find out the additional costs required to reach the optimal time.
7. Questions:-
a) Draw network diagram and find critical path

b) What is normal project completion time and normal cost?
c) What is optimal project cost and optimal project completion time?
d) What is minimum project completion time?
Optimal project completion time. What is additional cost for crashing network to minimum time from
normal time?
A small project consist of 8 activities on the basis of following data answer the questions given below
Time (days) Cost (Rs)
Nodes
Preceding Normal Crash Crash Normal
Activity
A -- 6 5 200 80
B -- 4 2 400 200
C -- 5 3 300 140
D A 4 2 400 280
E C 3 1 500 350
F B 4 2 400 220
G D 3 1 280 200
H E 2 1 130 100
Indirect cost is Rs. 100 per day
7. A small project consists of 7 activities based on the following information, answer the questions given
below:
Indirect cost is Rs. 250 per week and Normal project cost is Rs. 5000
Questions:-
1) Find normal completion time and normal project cost

2) What is optimal project cost and optimal project completion time?
3) What is minimum project completion time?
52
Preceding Time (Weeks) Crash cost per
Activity week (Rs)
Activity Normal Crash
A -- 8 6 200
B -- 7 4 150
C A 4 3 145
D A 6 4 110
E B 3 2 100
F C 4 3 80
G D,E 4 2 70
9. Following 7 activities are involved in completion of a small project
Preceding Time (Hrs) Crash cost per

Activity week (Rs)
Activity Normal Crash
A -- 3 1 40
B -- 4 2 50
C B 0 0 0
D A&C 5 3 20
E B 3 2 30
F D 3 2 10
G E 2 1 20
Determine which is the quickest possible time in which the project can be completed and how much is the
additional cost for this purpose .Normal project cost is Rs. 1500
10. A small project consist of 9 activities
1) Draw the network diagram and find normal completion time and normal cost of the project
2) The company wants to complete the project in 10 days. Is it possible, what will be the additional cost of
activities for
3) Which will be critical activities after 10 days. Normal project cost is Rs. 1000
53
Preceding Time (Days) Crash cost

Activity
Activity Normal Crash (Rs/day)
A -- 5 2 30
B A 3 2 20
C A 4 2 40
D B 2 2 0
E C 3 2 35
F D 2 1 20
G E 3 2 45
H A 2 1 30
I H 3 2 10
CONCEPT QUESTION
1) What is meant by project crashing?
Ans: - In CPM we draw the network diagram and find critical path. The duration of the critical path is the
earliest time in which the project can be completed under normal circumstances.
But, sometimes the project manager may wants to complete the project in a shorter duration. In that case some
or all the critical activities will need to be completed in a shorter time than their normal completion time. For
this purpose extra resources are have to be used.
This process of completing the project in less than normal completion time is called project crashing.
2) What are the objectives of project crashing?
Ans: - Objectives:-
g) To reduce the project completion time below its normal completion time.
h) To find out the optimal project cost (minimum project cost)
i) To find out optimal project completion time i.e. time corresponding with optimal project cost.
j) To find out the minimum project completion time. This is the time which corresponds with the limit of
project crashing. It is not possible to crash the project below this time.
k) To find out the increase in direct cost due to crashing of critical activities.
l) To find out decrease in the indirect cost due to crashing.
54
3) What is time-cost trade- off in CPM?
Ans: -the execution of a project involves two types of costs, direct cost and indirect cost
a) Direct Costs : - these include cost of materials, machinery, tools, manhours etc. when we estimates the
duration of various activities in the project, it is assumed that normal amount of labour & machines will
be required to complete these activities. The estimation of direct cost is done based on the normal
amount of resources required. This estimation gives us minimum possible direct cost required to
complete the project. When we want to complete project in a shorter period than critical path, we will
need to more resources. Hence direct cost will increased.
b) Indirect cost: - these include rent, overhead, administrative costs, etc. indirect costs vary with time. They
are expressed on per day (or per week etc.) basis.
Hence, when we shorten the project completion time, total indirect cost reduces.
Total project cost = direct cost + indirect cost
4) Explain “normal time, normal cost, crash time, crash cost” in project crashing?
Ans: - a) Normal Time: - the normal time is the activity duration under normal circumstances.
b) Normal cost: - the direct cost is associated with normal completion time. This is the minimum direct cost
required for performing that activity.
c) Crash time: - the minimum possible time in which an activity can be completed.
d) Crash cost: - the direct cost associated with crash time of an activity can be completed.
When an activity, is crashed, its direct cost will increased.
Crash time < Normal time
Crash cost > Normal cost
55
The time – direct cost relationship can be represented graphically like this:
5) Explain the steps involved in crashing?
Ans :- a) Draw a network diagram using normal time activities.
b) Find critical path and normal project completion time.
c) Calculate the total normal cost of project.
d) Total normal cost = direct normal cost + indirect normal cost
e) Prepare a table showing for each activity
1) Cost slope
2) Maximum cashable limit and,
3) Rank in ascending order for cost slope
f) Crashing: only critical activities should be crashed. Hence, start crashing the project with the critical activity
having the lowest rank.
g) Cost computation: after every crashing, compute new direct cost, new and new total cost. This will help us in
identifying the point of optimal cost.
h) Parallel Crashing: as we continue to crash the project, other path in the project will also reduce along with the
critical path. We may come across the situation where we will help multiple critical paths.
Then we must crash all the critical paths simultaneously.
This we can do in two ways:-
I) Crash an activity which is common to all paths. OR

II) Crash on each activity from each critical path by same duration.
Prepare a table showing for each activity
i) Continue the crashing procedure till we reach the point of optimal total cost.
56
CHAPTER 9. NETWORK ANALYSIS (PERT)
1. A small project consists of seven activities. Optimistic, most likely and pessimistic time
estimates are given for each activity.
Time (Days)
Activity Preceding Activity Optimistic Most likely Pessimistic
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
1) Draw the PERT network and find expected completion time of project
2) What is the probability that the project will be completed in?
a) 18 days b. 21 days c.16 days
3) If the project manager wants an assurance of 95% that the project is completed on time, how
many days before the scheduled date he should start the project.
2. M/s Motwani limited have taken up a special project consisting of 10 activities whose three
point time estimates are listed in the table below. Activities are marked with their node numbers
Activity Time Estimates in weeks
Optimistic Most likely Pessimistic
1-2 1 2 3
1-3 1 2 3
1-4 1 2 3
2-5 4 9 20
3-5 2 5 14
3-7 3 6 15
5-7 1 2 9
4-6 2 4 6
6-7 3 3 3 4
7-8 4 4
57
a) Draw network diagram and find expected completion time of project

b) Identify critical path
c) Find the probability that the project is completed in 17 weeks
d) What is the probability that the project will not be completed in 20 weeks?
e) If the project includes a penalty clause of Rs.1000 per week for any delay beyond 19 weeks.
What is the probability of paying a penalty of more than Rs, 5000?
f) If the project manager wants to complete the project with 95% confidence of completion?
g) If the project manager wants to complete the project with 95% confidence in 21 weeks, by
how much time should he crash the average project completion time?
3. The data for PERT network is given in the following table

Time Estimates in weeks
Activity
1-2 2 4 6
1-3 6 6 6
1-4 6 12 24
2-3 2 5 8
2-5 11 14 28
3-4 15 24 45
3-6 3 6 9
4-6 9 15 27
5-6 4 10 16
a. Draw a network and estimate the expected duration of the project and corresponding
variance
b. What is the probability that the project will be completed between 45 to 54 days?
c. What is the probability of completing the project within 30 days?
4. The owner of a chain of fast-food restaurants has to install computer system for the accounting
and inventory control. A company sent the following information about the system installation.
a. Construct a network diagram for this project
b. Calculate the earliest start/ finish (EST/EFT) and latest start/ finish (LST/LFT) for each activity.
Hence find critical path.
c. Compute the expected project completion time.
d. What is that the project will be completed within 55 days?
e. How many days before should the company start the project so as to complete it within the time
99% assurance?
58
Time estimate(in days)
Activity Activity Description Immediate Most Most Most

Predecessor Optimistic likely Pessimistic
A Select the computer model ---- 4 6 8
B Design input/output system A 5 7 9
C Design monitoring system A 4 8 12
D Assemble computer hardwar B 15 20 25
E Develop the main programs B 10 18 26
F Develop input/output routine C 8 9 16
G Create data base E 4 8 12
H Install the system D,F 1 2 3
I Test and implement G,H 6 7 8
5. A project manager has made following 3 points time estimates for various actives of a project
Three point estimate in days
Events
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
a) Draw the PERT network and find out the expected project completion time.
b) What project completion will have 90% confidence of completion?
c) If there is a huge penalty for exceeding the project completion deadline of 4 days beyond
estimated completion time (50% confidence), what is the probability of being penalized?
59
6. A project manager has made following 3 points time estimates for various activities.
Events Three point estimate in days
1-2 2 2 14
1-3 2 8 14
1-4 4 4 16
2-5 2 2 2
3-5 4 10 28
4-6 4 10 16
5-6 6 12 30
6-7 2 4 6
a) Draw the PERT network and find out the expected project completion time.
b) What project completion will have 90% confidence of completion?
c) If there is a huge penalty for exceeding deadline of 44 weeks, what is the probability of being
penalized?
7. M/s BMS have taken up a special project consisting of 8 activities whose three point time
estimates are listed in the table below. Activities are marked with their node numbers
Activity Time estimates in weeks
node
Optimistic Most likely Pessimistic time
numbers
time time
1-2 1 3 5
1-3 2 4 6
1-4 3 5 7
2-5 5 6 7
3-5 5 7 9
4-6 6 8 10
5-6 7 9 11
6-7 2 3 4
1) Draw the PERT network for the project and identify the critical path
2) Prepare a chart to show estimated time for each activity and standard deviation and variance for
critical activities from time estimates as given above
3) If 21 weeks deadline is imposed, what is the probability that the project will ne finished within
that time?
60
4) If the project manager wants to be 99 % certain that the project should be completed on schedule
what will be the project duration?
8. Details of 9 activities of a project are as follows.
Activity Time estimates in weeks
node
Optimistic Most likely Pessimistic time
numbers
time time
1-2 2 5 14
1-6 2 5 8
2-3 5 11 29
2-4 1 4 7
3-5 5 11 17
4-5 2 5 14
6-7 3 9 27
5-8 2 2 8
7-8 7 13 31
a) Draw the network diagram an determine various paths and their durations
b) Calculate the probability of completion of the project in 38 days
c) Calculate the project duration if the probability of project completion is to 94.5%
CONCEPT TESTING
Q.1 What are three time estimates in PERT?
Optimistic Time: - It is the earliest possible completion time of an activity. Hence it is shortage time. An
activity will get completed in optimistic time when everything happen accordingly to the plan. Nothing goes
wrong. There are no delays postponements etc.
Pessimistic Time:- It is the maximum possible time taken by an activity for completion. Hence it is longest
time. An activity will be completed in pessimistic time when there are delays postponement lack of
coordination and communication etc. Pessimistic time does not include major catastrophes such as natural
calamities strikes war etc.
Most Likely Time: - It is the time in which the activity will be completed most often when it is repeated a
number of times. Suppose we repeat a particular activity 100 times. Then it is gets completed in most likely
time in 70 or 80 number of times, Most likely times is neither too optimistic (ie we don’t assume that everything
will go as per plan) nor to pessimistic (we don’t assume that there will be significant delay).Hence mostly likely
time has a value somewhere in between optimistic and pessimistic time.
61
Q.2 What are the different between CPM and PERT?
CPM PERT
In CPM is only one time given for each In PERT there are three times
activity. estimated.Otimastic time, Most likely time
and Pessimistic Time. From these we find
expected time for completion of an activity.
After Drawing the network we find We draw the network using expected time and
critical path which gives us projected then we find critical path which gives us
completion time. expected projection completion time.
There is no probability information Probability is associated with project
CPM completion time. The probability of
completion the project in that duration is 0.5
In other words the probability that the project
will be completed in expected project
completion time is 50%
There is no standard deviation and We find standard deviation and variance of
variance for activities. We assume that critical activity and from that we find variance
all activities will be completed in and standard deviation of the critical path
specified time.
As there is no probability there is no We can find “Z” Value and from “Z” value
relation with normal distribution table. the probability of completing the project in
specified duration time.
Q.3 Explain PERT algorithm for Project
a. Identify all activities in the project
b. Developing a network diagram for activities based on precedence or concurrence relationship of activities
c. Identify ; optimistic most likely and pessimistic time for each activities
d. Calculate the expected time (te) for each activity
e.Using expected time for each activity find the total project completion time and critical path
f. calculating variance of each activity

g. Calculate variance of critical path by adding variance of all critical activities
h. Using the value of critical path (expected project completion time) and SD of critical path calculate z value
to determine probability of project completion for specific due date
i. From the z value obtained above calculate probability of project completion for the due date using normal
probability table
62
Normal Probability Table

Area Under the Standard Normal Curve From 0 to z
63
CHAPTER10. DECISION THEORY
 Introduction :-
Decision making means selecting the best course of action from the available alternatives to achieve the
objectives. In the process of decision making there are number of steps:-
Example:-
a. Problem of identification
b. Collection of all necessary information
c. Identification of available alternatives
d. Doing cost benefit analysis for each alternatives
e. Selecting the most appropriate alternatives (decision)
f. Implementing the decision
Decision theory is the study of making optimal choice from a given set of available alternatives. Various
models available for decision making can be classified in four general categories. The basis for
classification is the type of situation and the ability to predict the consequences of each alternative.
Category Title Meaning

Decision Making Deterministic Situation where the alternatives and consequences of each
under certainty Models alternatives is known with certainty
Decision Making Stochastic Situation where alternatives are known but the
under Risk Model consequences of alternatives are probabilistic in nature.
Decision Making Uncertain Situation where we cannot assign any probabilistic to
under Uncertainty Situation alternatives.
Decision Making Competitive Situation where the consequences of each decision
Under Conflict Strategy (Alternative) will be influenced by the act of competitor
PRACTICAL SHEET
1) Following payoff matrix has been constructed by a company for four strategies S1,S2, S3, and S4 which can
be adopted to encounter for possible states of nature N1, N2, N3 and N4
Pay-off (Rs)
States of nature N1 N2 N3 N4
Probability 0.1 0.3 0.5 0.1
Strategy 1 5000 5000 5000 5000
Strategy2 4200 5200 5200 5200
Strategy3 3400 4400 5400 5400
Strategy4 2600 3600 4600 5600
64
a) Calculate EMV for each strategy

b) Identify optimal decision
c) Calculate EPPI (expected payoff with perfect information)
d) Calculate EVPI (expected value of perfect information)
e) Construct regret & EOL table
2. A retailer wants to decide how much stock of a product ‘X’ to be kept for the next month. Monthly
demand can be 10, 20, 30 or 40 units. Demand probabilities are 0.2, 0.3, 0.4 and 0.1 respectively.
The selling price of the product is Rs.30 and its purchasing cost is Rs.20 if any units are unsold quantity
can be disposed of at a scrap value of Rs 5 per unit.
a) Construct a payoff table suing above data
b) Using EMV technique, find optimal decision
c) Calculate EPPI and EVPI
3. A retailer wants to buy a product from a dealer. The product is supplied only in lots of 100. The
probabilities of market demand based on past experience are:
Market demand Probability
100 0.15
200 0.35
300 0.25
400 0.15
500 0.1
Find:
1) Prepare pay-off table and calculate EMV of each decision alternative
2) How much quantity should the retailer buy from the decision?
3) If a market research firm can provide perfect information about market demand, what is the
maximum amount the retailer should pay the firm for obtaining perfect information? Cost of product
is Rs 20 per unit. The retailer will sell the product at Rs.45 per unit. But unsold products will not
have any scrap or salvage value.
4. Following pay off matrix has

been constructed by a company Pay-off matrix for profits in Rs
for their strategies under various States of nature N1 N2 N3 N4
unknown states of nature the
probability information also have Probability 0.1 0.3 0.5 0.1
been tabulated. Calculate EPPI
(expected payoff under perfect Strategy S1 500 500 500 500
information) and EVPI (expected Strategy S2 420 520 520 520
payoff under perfect
information) for the company. Strategy S3 340 440 540 540
Strategy S4 260 360 460 560
65
5. A company wants to launch a new model of a car it has option of launching either premium model or
economy model. Only one model can be launched. The market acceptance of the new product can be
classified under 4 categories- very high, high, and
Profit (Rs)
moderate and low. The projected profit or loss for each
Market Acceptance
model and each type of market acceptance is given below. Premium Economy
Identify which project company launch using following
decision criteria. Very High 70,000 80,000
1) Maximin criterion High 40,000 30,000
Moderate 15,000 20,000
2) Maximax criterion
Low 10,000 -1,000
3) Hurwitz alpha criterion (a=0.75)
4) Laplace criterion
5) Minimax regret criterion
6. A Pay-off profit of 3 strategies Conditional Pay-off table (profits) Acts

correspond to 3 states of nature is States of A1 A2 A3
given below. Suggest best action using Nature
i) maximin criterion ii) Maximax S1 700 500 300
criterion iii) Minimax criterion iv) S2 300 450 300
S3 150 0 300
Laplace criterion
7. A Consumer goods company has set up following

pay off table for the sales return of their product. S1 S2 S3
Three strategies (S1, S2, S3) are identified to deal N1 800 500 300
N2 350 300 100
with three uncertain nature (N1,N2 ,N3)
N3 400 550 0
You are required to identify right strategy
under following criteria
i) Maximin
ii) Minimax regret
iii) Laplace
8. From the following matrix, the States of nature

elements of which indicate profits: Actions E1 E2 E3 E4
Obtain the decision using the A1 26 26 18 22
following principles of decision A2 22 22 22 22
making: A3 13 34 18 18
A4 22 30 18 18
a) Minimax regret criteria
A5 18 20 20 18
b) Laplace criteria
66
9. A consumer goods company has set
up following pay off table for the N1 N2 N3
sales returns of their product. Three S1 7,00,000 3,00,000 1,50,000
S2 5,00,000 4,50,000 0
strategies (S1,S2,S3) are identified to
S3 3,00,000 3,00,000 3,00,000
deal with three uncertain states of
nature (N1,N2,N3) You are required to identify right strategy under following criteria
1) Hurwicz with coefficient of confidence a = 0.7
2) Laplace
3) Minimax regret
10. M/s BMS ltd. have three strategic alternatives.

Pay-off Rs. alternatives
A1, A2 and A3 to encounter three possible states
of nature- low demand, medium demand and high States of Nature A1 A2 A3
demand. The probabilities associated with states
of nature are 0.2, 0.5 and 0.3 respectively. Low demand 1000 600 0
Projected pay-off matrix given below: Medium demand 500 200 400
High demand -200 400 700
a) Construct a decision tree and represent all
relevant information on it
b) Using EMV technique, find the best course of action
11. Construct the decision tree for the following

Machine Profit (Rs. Lakhs)
problem and using EMV criteria choose the best
alternatives for the purchase of a machine. Poor Fair Good
Market being poor, fair and good at a choose
20%, 50%, and 30% respectively M1 5 7 11
M2 -3 10 15
M3 -10 5 20
12. A toy manufacturing company is bringing out a type of toy. The company is attempting to decide whether
they bring out full, partial or minimal
product line. The company has three Product Product Line
levels of product acceptance and has Acceptance Probability
estimated profit form the first year of Full Partial Minimal
production. The relevant data are shown Good 0.20 80 70 50
in the following table Fair 0.40 50 45 40
Construct decision tree and suggest the Poor 0.40 -25 -10 0
best alternative for the company
67
13. An Alfa industry has to decide whether to set up a large plant or a small plant for its new range of
refrigerators. A large plant will cost the
States of nature (Demand Levels)
company Rs. 25 lac while a small plant
Course of action
will cost Rs.12 lac. An extensive market High Moderate Low
survey and the cost-profit analysis carried
out by the company revel the following Large plant 100 60 20
estimates for sales (in lac of Rs.) over the Small plant 25 35 45
next 10 year.Construct a decision tree and Probability 0.5 0.3 0.2
determine the best decision using EMV
method
14. Fast track ltd is evaluating four alternatives single period investment opportunities whose returns are based
on states of economy. Possible states of nature (states of economy) and associated probability distribution
are given below
State of nature Fair Good Great
Probability 0.2 0.5 0.3
The returns in Rupees for each investment opportunity and each state of nature are as follows:
State of Economy
Alternatives Fair Good Great
A1 1000 3000 6000
A2 500 4500 6800
A3 0 5000 8000
A4 -4000 6000 8500
Construct decision tree & suggest the best alternatives for investment
CONCEPT QUESTION
Q.1 Explain in brief concept of
a) Decision making under risk

b) Decision making under uncertainty
Ans: - a) Decision making under risk: -when the probabilities of outcomes associated with each decision are
know, the process of decision making is called ‘decision making under risk’.
EMV technique is used for decision making, in this process, we calculate the pay of associated with each
decision- outcome combination and prepare a pay-off table. Then using probability information, we calculate
the EMV (Expected monetary value)of each decision. For each decision EMV is sum of multiplication of
probability and pay-off. The decision having a highest EMV is selected as optimal decision.
68
b) Decision making under uncertainty: - when the probabilities of the outcome associates with each decision
are not known, the process of decision making is called decision making under uncertainty.
In this process five decision criteria are available for decisions making these are: -
i) Maximax criterion: - optimistic approach. Selecting the maximum out of maximum

ii) Maximin criterion: - pessimistic approach. Selecting the maximum out of minimum pay-off
iii) Laplace criterion:-Neutral approach. Treating all outcomes as equally possible, and hence taking the
average of all pay-off.
iv) Hurwicz criterion: - the alpha value represents the probability of maximum payoff. Hence, (1-
alpha) represents the probability of minimum pay-off. Using the formula to arrive at net pay-off
associated with each decision.
v) Minimax Regret criterion: - regret is the opportunity loss. Calculating the regret, and then identifying
the maximum regret associated with each decision and finally selecting the decision which has
minimum of maximum regret.
Q.2 Explain the concept of perfect information while taking decision under risk?
Ans: - perfect information means, the decision maker knows which outcome will areise. Hence, he can take the
decision which best suits the outcome that is going to arise.
e.g if the decision maker knows that demand for a product is going to be 200 units, then he will maintain a stock
of exactly 200 units, so there will be no over-stocking or under-stocking. So it means, if we have perfect
information, for any outcome, our pay –off will be the maximum out of all available pay-offs for that outcome.
In decision making under risk, probability is associated with each outcome. Hence, we can calculate the
expected pay-off that is associated with availability of perfect information. This is called EPPI (expected pay-
off with perfect information).
EPPI is the sum of multiplication of each probability and maximum pay-off associated with that probability.
From EPPI, we can calculate EVPI (expected value of perfect information) EVPI is a difference between EPPI
and the maximum EMV calculated earlier.
EVPI = EPPI – maximum EMV
EVPI is the additional payoff that can be generated if we have perfect information.
Q.3 What is a decision tree? What are various step involved in construction and analysis of decision tree?
Ans: - In decision making under risk and decision making under uncertainty, we have seen decision which are
one time decisions.’ Those are called static decision.
But there can be another type of decisions where there are a series or sequence of decisions. The outcome of
first decision will affect the selection of alternative for the next level of decision. These are called sequential
decisions. Such problem involving sequential decisions are graphically represented and solved using decision
trees
69
Decision Tree: - A decision tree is a graphical representation of sequence of inter-related decision and
outcomes.
A decisions tree displays decision alternatives, a set of possible events corresponding with each alternative and
probability of each event.
Steps in decision tree analysis:-
A) Identify decision alternatives

B) Identify events corresponding to each decision alternatives.
C) Assess and assign probabilities of occurrence to all events.
D) Use expected value criterion to identify the best decision alternative
Terminology of Decision Tree:-
a) Decision Nodes: - the points from which decision alternatives emerge. Represented by squares.
b) Events nodes: - The point from which outcomes of event emerge.
c) Branches: - branches of the tree emerge from the decision nodes and event nodes. From decision nodes,
they emerge as decision alternatives and from event nodes, they emerge as decision alternatives and
from event nodes as possible outcomes of events.
d) Risk: - probability of occurrence each possible outcome.
e) Backward pass: - the evaluation stage in which we calculate EMV at each event node and selection of
optimal decision alternative at each decision node.
========================== ALL THE BEST ==========================
70
CHAPTER 11. GAME THEORY
Introduction:-
Every Business situation involves more then one party. The parties involves could be individual small firms and
corporates. A number of alternatives are available to each party for decision making. The outcome of business
decision does not depend on alternatives selected by one party alone but on the interaction between the
decisions of all parties involved in the situation. Game Theory deals with such business situation or problems
where multiple parties are involved in the conflict through interaction of their alternatives or decisions.
Terminology of GAME theory :-
1. Players: - The various participants or decision makers in the game makers in the game are called
players. A game must have minimum two players (or competitors).A game having two competitors
opposing each other is called two person game and game having more then 2 players is called (n-person
game)
2. Strategies:- Each players has finite number or alternative or course of action available to it.These are
called strategies.Eg:- A company XYZ is facing the problem of finalizing its “pricing policy”
a. Charges a price higher then the competitors
b. Charge a price equal to the competitors
c. Charge the price lower then the competitors
3. Play: - A play occurs when each player select one of its strategies. Two basics assumptions are there:-
a. All the players choose their respective strategy simultaneously
b. No player knows the choice made by its opponents until it has made its own decision.
4. Payoff: - Payoff is the outcome of the interaction of selected strategies of opponents in the game.
Positive payoff is gain and negative payoff is loss.
5. Payoff Matrix: - The table which represents the outcomes of the game (ie Payoff) for all possible
combinations of interaction of opposing strategies is called payoff table. If there are two players in game
say “A” and “B” and if m represent the number of strategies available to “A” and n represent the number
of strategies available to “B” the payoff matrix will be of size (m X n)
M= Number of Row
N = Number of Column
Eg:- A payoff matrix for two players game (players X & Y) is given below
N= number of strategies for X=2
M= number of strategies for Y=3
6. Row Minima :- From each row select minimum payoff value
7. Column Maxima:- From each column select maximum payoff value
8. Maximum :- Maximum value out of minimum in Row Minima
9. Minimax:- Minimum value out of maximum in column maxima
10. Saddle Point:- The saddle point occurs when in a payoff matrix.
71
TYPES OF GAMES:-
1. Based on “number of Players”:- When there are two players in a game it is called “two person game”
If there are more than two players it is called “n person game”
2. Based on “nature of interest of players”:- When the players in the game are antagonistic to each other
there is only one winner at the cost of all other players. Hence the gain of the winner are equal to total
losses of all other players.This is called “zero sum game” as the sum of the gain of all the players in the
game is zero.
3. Based on “availability of saddle point”:- If the saddle point is available in the game it is called pure
strategy game.If the saddle point is not available in the game it is called mixed strategy game.
Practice Sums
1) Find the optimal strategies for X and Y in the following game. Also find the value of the game.
Player Y
I II III
Player x I 100 80 40
II -70 60 -20
2) Find the optimal strategies for P and Q in the following game. Also find the value of the game.
Player Q
I II III
Player P I 130 100 105
II -50 -20 120
III 200 80 -10
4) Find the optimal strategies for firms A and B in the following game. Also find the value of the game
Firm B
I II III
Firm A I 220 150 170
II -50 40 -20
III 140 120 100
72
4) Find the optimal strategies for firms Alpha and Beta in the following game. Also find the value of game.
Beta
I II III
Alpha I -100 -50 70
II -50 40 -200
III 100 120 150
5) Find the optimal strategies for X and Y in the following game. Also find the value of the game.
Player Y
I II III
Player X I 100 120 150
II 100 115 135
III -50 -80 200
73
CHAPTER 12. SEQUENCING THEORY
Introduction:- In any manufacturing process material flow through a succession of machines or work situation
to get transformed into finished goods. It is important to properly schedule the operations so that the
manufacturing facilities (eg machines) are properly utilized. The idle time of machines (the time interval during
which a machine remains vacant) should be minimized. Also the total cycle time of the manufacturing process
(called as Elapsed Time) should also be minimized.
Basic Terminology:-
1. Processing Time: - The time required by each job at each machine.

2. Processing Order: - The order in which machines is required for completing the job.
3. Elapsed Time:- The time between the starting of the first job and completion of last job
4. Idle Time:- The time during which a machine remain waiting or vacant during the total elapsed time
5. Job Sequence:- The order of completion of job.
Principle Assumption:-
1. Each Machine can perform only one type of operation and can undertake only one job at a time
2. Only one machine of each type is available
3. All job require the same sequence of operation
a. In a two machines problem, each job is processed first on machine A and then on Machine B
b. In a three machine problem, the sequence of operations is A , B and C
4. The processing time of all job on all machines are known and remain constant
5. Each job must be completed before another job is taken up for processing
6. No job is required more urgently then the other
7. Transmit time to move a job from one machine to another is negligible.
Process “N” Jobs through Three Machines (A, B & C)
1. The problem of processing “n” jobs on three machines can be converted into a problem of two machines
if ANY ONE of the following condition satisfied:-
a. The smallest time for any job on the first machine is greater than or equal to the largest time for any
job on the second machine. A(min) ) B(Max)
b. The smallest time for any job on the third machine is greater than or equal to the largest time for any
job on the second machine. C (Min) ) B(Max)
2. If any one of the above condition satisfied the problem can be converted into two fictious machines
say G & H
For deciding the sequence of Allocations
Time of G = Time of A + Time of B
Time of H = Time of B + Time of C
3. Utilizing the factious machines G and H the sequence of allocations is decided.
4. For calculation of Elapsed time the original time value of machine A , B and C are used.
5. Idle time of each machine is calculated.
74
1) There are five jobs I,II,III,IV and V which need to be

Machines
processed on two machines A and B in the order AB (i.e.
first on machine A and then on machine B). The Jobs A B
processing time for these jobs on machine A and B is
given below: Processing Time (Hrs)
Determine:- I 16 6
1. Sequence of job to minimize total elapsed time. II 8 4

2. Idle time for each machine
III 2 10
IV 8 12
V 10 14
2) Four jobs I, II, III and IV are to be processed

Processing Time (Hrs)
on two machines A and B in the order AB.
Jobs Machine A Machine B
Find:
a) Total elapsed time (minimum) I 26 47

b) Idle time for each machine II 19 45
III 48 19
IV 16 34
3) Five jobs I, II, III, IV, V are to be processed on two

Processing Time (Min)
machines. A and B in the order AB.
Find:-
I 45 35
a) Total elapsed time (minimum)
III 20 25
IV 15 5
V 10 18
75
4) Six jobs I, II, III, IV, V, VI are to be processed on two
Processing Time (Min)
machines. A and B in the order AB.
Find:-
I 5 8
III 10 3
IV 9 4
V 6 3
VI 8 9
5) Five jobs I, II, III, IV, V are to be processed on Processing Time (Min)
three machines. A, B and C in the order ABC
Jobs Machine A Machine B Machine C
Find:-
I 22 21 23
b) Idle time for each machine A, B, C. II 25 22 24
III 23 19 22
IV 22 20 25
V 24 19 20
6) Five jobs I, II, III, IV, V are to be processed Processing Time (Min)
on three machines. A, B and C in the order Jobs Machine A Machine B Machine C
ABC
I 20 12 11
Find:-
II 26 15 13
b) Idle time for each machine A, B, C. III 24 10 17
IV 22 8 14
V 23 18 16
------------------------------------------------ ALL THE BEST ------------------------------------------------
76

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Prof Parth Chitalia TYBMS – Operations Research Operations Research

CHAPTER NO.1 INTRODUCTION TO OPRETIONAL RESEARCH

1.2 HISTORICAL BACKGROUND OF OPERATIONS RESEARCH:-

Definition of Operational Research:-

1.3 METHODOLOGY OF OPERATIONS RESEARCH:-

5) Interpretation of Solution: - Interpretation of solutions is subjective in nature. How one manager

1.4 OPERATIONS RESEARCH TECHNIQUES:-

1.5 APPLICATION AREAS FOR OPRATIONS REASEARCH TECHNIQUES:-

1. To decide optimal product mix for maximum profit

2. Media selection for advertising for maximum reach

1. To determine transportation schedule for minimum cost or minimum time

1. To identify critical and non-critical activities of a project.

2. To determine minimum project completion time.

3. To determine optimal project

1. To decide investment portfolio to maximize return on investment

1.6 LIMITATIONS OF OPERATIONS RESEARCH : -

1. In construction of mathematical models, sometimes assumptions are necessary to simplify model

1. Define operations Research?

2. What are the major application areas for OR techniques?

Ans: - Refer section 1.5.

3. What are the main limitations of OR techniques?

Ans: - Refer Section 1.6.

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Maximum raw material availability:

Process Input (Crude oil) Output (Gasoline)

Process2 (P2) –Rs.5, 000

Maximum availability of crude oil: - Grade A – Rs.500 units

Grade B – Rs.400 units

Minimum demand for gasoline: - X - 300 units

Machines Items x1 Items X2

Operation 1: 200 units /day of p1 OR

300 units /day of P2

Operation 2: 100 units/day of P1 OR

200 units /day of P2

Profit per unit: P1: Rs: 10, P2:6. Formulate LPP.

Product Raw material

Model Foundry Machine shop

1) Explain the concept of linearity in linear programming?

Greater than or equal than to (>) Equal (=)

2) What are limitations of linear programming?

Ans: - Limitations of LP are

Linear relationship is necessary in objective function as well as in constraints.

LP cannot be used to solve a problem having multiple objectives.

Quantitative factors cannot be incorporated in the formulation of LP.

Economy of scale and learning curve effect cannot be incorporated in LP.

3) What are the different types of constraints in linear programming?

Ans: - in LP, there are three of constraints:

A) Than or equal to (<)

b) Greater than or equal to >

E.g Daily production of product X3 is 500 units is represented as X3: = 500

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Nutrients Quantity/unit Minimum Requirement

13. Solve by graphical method max Z = 50X1+60X2

Subject to: X1< 6

1) What is mean by feasible region of solution in LPP graphical method?

Types of constrains Location of feasible region

< Inside the constraint line

> Outside the constraint line