INTERNAL ASSESSMENT SET - 1

1.What is Operations Research? Discuss the importance of O.R. in decision making

process.

Definition : “The use of scientific methods to provide criteria for decisions regarding man,
machine, and systems involving repetitive operations.”

• OR is system-oriented. OR scrutinises the problem from an organisation’s perspective. The

results can be optimal for one part of the system, while the same can be unfavourable for
another part of the system.
• OR imbibes an inter–disciplinary team approach. Since no single individual can have a
thorough knowledge of all the fast-developing scientific know-how, personalities from
different scientific and managerial cadre form a team to solve the problem.
• OR uses scientific methods to solve problems.
• OR increases effectiveness of the management’s decision-making ability.
• OR uses computers to solve large and complex problems.
• OR offers a quantitative solution.
• OR also takes into account the human factors

Important Operations Management Decisions

Many decisions are involved in operations management, but some are more important than
others.

Quality Management: Quality management decisions ensure that products and services
meet or exceed customer expectations. It is one of the most critical aspects of operations
management because it can directly impact customer satisfaction and loyalty.

Design Strategy: Design strategy decisions involve creating a plan for how products and
services will be produced. It includes everything from deciding on the best production
methods to selecting the right materials and suppliers.

Resource Planning Operations managers are responsible for making decisions about
allocating resources within an organization. It includes both human and material resources.

Process and Capacity Design: The operations manager must also be involved in process and
capacity design decisions. The operations manager is responsible for ensuring that the
facilities can handle the volume of work required and that the processes can meet the desired
quality levels. If the operations manager is not involved in these decisions, likely, the facility
will not be able to meet the needs of the business.

Inventory Management: Another key area of operations management is inventory

management. Inventory management is about ensuring that a company has the right products
in stock at the right time. To make sure that a company has the right amount of inventory on
hand, operations managers need to be able to make quick and efficient decisions. It is the
most critical decision in operations management that will save you a lot of money.
Supply Chain Management: The operations decisions are made to create value through the
transformation process. The operations manager is responsible for the efficient and effective
use of resources to produce goods and services. The operations manager makes decisions
about the use of technology, quality control, capacity planning, and inventory management.

Human Resource Decision: Operations management is a field of business concerned with

producing goods and services and involves the management of resources such as raw
materials, equipment, and labor. Human resources will always be an important decision-
making area that operations managers face. The reason is that operations managers must
manage workers to achieve company objectives while ensuring the safety of employees. With
decision matrix, SWOT analysis, and cost-benefit analysis, operations managers can make
strategic decisions.

Scheduling Decision: It is the decision that involves creating a schedule for the production
process. This includes deciding when to start and finish each task and how much time to allot
for each task. This decision is crucial because it can impact the overall efficiency of the
production process. It will directly impact the lead time, which is the amount of time it takes
to produce a product.

Location Decision: The decisions operations managers affect not only the company they
work for but also the community around them. A bad decision can lead to a loss of money
and jobs, while a good decision can create new opportunities and wealth. The location you
choose for your business operations is one of the most important decisions you will make to
prosper your company. Considering the cost of land and labor, availability of resources, and
proximity to the market will help make a well-informed decision.

Decision Making Is The Lifeblood of Operations Management Operations management is

all about making decisions. Every day, operations managers are confronted with choices that
will directly impact the efficiency and effectiveness of their operations.

2.Use Two-Phase Simplex Method to solve the following linear programming problem:

Max Z = 5x1 + 8x2

Subject to 3x1 + 2x2 ≥ 3, x1 + 4x2 ≥ 4, x1 + x2 ≤ 5 & x1 ≥ 0, x2 ≥ 0

Answer

Standard LPP

Max Z = 5x1 + 8x2

Subject to

3x1 + 2x2 - s1+ a1 = 3

x1 + 4x2 - s2+ a2 = 4

x1 + x2 + s3 = 5

x1 , x2 , s1, s2, s3, a1, a2 ≥ 0

Auxiliary LPP

Max Z* = 0x1 + 0x2 + 0s1 + 0s2 + 0s3 -1a1 -1a2

Subject to

3x1 + 2x2 - s1+ a1 = 3

x1 + 4x2 - s2+ a2 = 4

x1 + x2 + s3 = 5

x1 , x2 , s1, s2, s3, a1, a2 ≥ 0

As all Δj ≥ 0, Max Z* = 0 and no artificial vector appears in the basis, we move to phase II.
Phase II

As all Δj ≥ 0, optimal basic feasible solution is achieved.

Thus the solution is Max Z = 40, x1 = 0, x2 = 5

"Simulation is an appropriate substitute for mathematical evaluation of a model in many

situations. Although it too involves assumptions, they are manageable. The use of simulation
enables us to provide insights into certain management problem where mathematical evaluation
of a model is not possible."
1. In various cases, mathematical programming and experimentation with the actual
system are unable to solve various complex important managerial decision problems
and if it is possible then it will be costly. In simulation solution is obtained by
experimentation with a model of the system with affecting the real system.
2. With the help of simulation management can predict the occurrence of difficulties and
bottlenecks due to the introduction of new machines, equipment or process. Thus,
simulation eliminates the requirement of costly trial and error method of trying out the
new concept on real methods and equipment.
3. Operating personnel and non-technical managers can easily understand the simulation
technique because it is relatively free from mathematics. This helps in getting the
propose plans accepted and implemented.
4. Simulation models are comparatively flexible and can be changed according to the
changing environments of the real situation.
 5. Computer simulation can increase the performance of a system over several years and
large calculations are done in few minutes of computer running time.
6. In comparison to mathematical model Simulation technique is easier to use and it is
superior technique to the mathematical analysis.
7. In the operations of complex plans, simulation is used for training the operating and
managerial staff. It is very important technique to train the people before putting into
their hands in the real system. Simulated exercises have been developed to teach the
trainee for gaining sufficient exercise and experience.
1. Project Evaluation and Review Technique (PERT) :
PERT is appropriate technique which is used for the projects where the time required or
needed to complete different activities are not known. PERT is majorly applied for
scheduling, organization and integration of different tasks within a project. It provides the
blueprint of project and is efficient technique for project evaluation .
2. Critical Path Method (CPM) :
CPM is a technique which is used for the projects where the time needed for completion of
project is already known. It is majorly used for determining the approximate time within
which a project can be completed. Critical path is the largest path in project management
which always provide minimum time taken for completion of project

Difference between PERT and CPM :

S.No. PERT CPM

PERT is that technique of project CPM is that technique of project

management which is used to manage management which is used to manage
1.
uncertain (i.e., time is not known) only certain (i.e., time is known)
activities of any project. activities of any project.

It is event oriented technique which It is activity oriented technique which

2. means that network is constructed on means that network is constructed on
the basis of event. the basis of activities.

3. It is a probability model. It is a deterministic model.

It majorly focuses on time as meeting It majorly focuses on Time-cost trade

4. time target or estimation of percent off as minimizing cost is more
completion is more important. important.

It is appropriate for high precision time It is appropriate for reasonable time

5.
estimation. estimation.

6. It has Non-repetitive nature of job. It has repetitive nature of job.

There is no chance of crashing as there There may be crashing because of

7.
is no certainty of time. certain time boundation.
6.What is two-person zero sum game? Reduce the following game by dominance property
and solve it:

Player B
B1 B2 B3 B4 B5
1 3 2 7 4
Player A 3 4 1 5 6
6 5 7 6 5
2 0 6 3 1

A two-person zero-sum game is a game where:

• Two players participate.
• The gain of one player is the loss of the other.
Consider a two-person zero-sum game with the players A and B. Let
A,A ,...Am21 be the m courses of action for player A. Let BB ...Bn,2,1 be the
n courses of action for player B. Let ij = ,2,1i (a ..... = ,2,1j;m .... )n be the pay-off (gain) of
player A when he plays the course of action, Ai and player B plays the course of action
Bj . Then, the matrix depicted in figure is the payoff (gain) matrix of player A.

This is a m*n game. Here, aij is A’s gain and B’s loss. Therefore, (-aij ) is the gain of B. To
obtain the pay-off matrix of B, write (- aij ) in the place of aij in the above matrix and then
write the transpose of the matrix.
From the question name the matrix:

Player B
B1 B2 B3 B4 B5
A1 1 3 2 7 4
Player A A2 3 4 1 5 6
A3 6 5 7 6 5
A4 2 0 6 3 1
In the pay-off matrix, each pay-off in the third row exceeds the corresponding pay-off in the
first & fourth row. Therefore, A3 dominates A1&A4 . So,
A1&A4 is deleted. Hence the reduced matrix is as follows: