Centre for Distance and Online Education

NAME ABHISHEK SINGH

ROLL NUMBER- 2314515260

ASSIGNMENT

SESSION FEBRUARY - MARCH 2024

PROGRAM MASTER OF BUSINESS ADMINISTRATION
(MBA)
SEMESTER II
COURSE CODE & NAME DMBA205- OPERATIONS RESEARCH
CREDITS 04
NUMBER OF ASSIGNMENTS 02
& MARKS 30 MARKS EACH

Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately 400 - 450 words. Each question is followed by an evaluation scheme.

Q.No Assignment Set – 1 Marks Total

Questions Marks
1. What is Operations Research? Explain the Methodology used to 4+6 10
solve Operations Research Problems in brief.
2. Solve the following linear programming problem using its Dual 4+6 10
form:
Minimize Z = 3x1 + 4x2
Subject to: 4x1 + x2 ≥ 30
-x1 - x2 ≤ -18
x1 +3x2 ≥ 28
where x1, x2 ≥ 0
3. A firm marketing a product has four salesman S1, S2, S3 and S4. 10
There are three customers to whom a sale of each unit to be made.
The chance of making a sale to a customer depend on the salesman
customer support. The data depicts the probability with which each
of the salesman can sell to each of the customers.

Salesman
Customer S1 S2 S3 S4
C1 0.7 0.4 0.5 0.8
C2 0.5 0.8 0.6 0.7
C3 0.3 0.9 0.6 0.2

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

what combination of salesman and customers shall be optimal.
Give further that the profit obtained by selling one unit of C1 is Rs.

Page 1 of 10
 Centre for Distance and Online Education
500, whereas it is respectively Rs 450 and Rs. 540 for sale to C2
and C3. What is the expected profit?

Q.No Assignment Set – 2 Marks Total

Questions Marks
4. What is Monte Carlo simulation? Explain Monte Carlo 4+6 10
Simulation Procedure in brief.
5. A small project is composed of seven activities, whose time 2+4+4 10
estimates are listed in the table below:

Estimated Duration (Weeks)

Activity (i – j) Optimistic Most Pessimistic
Likely
1–2 1 1 7
1–3 1 4 7
1–4 2 2 8
2–5 1 1 1
3–5 2 5 14
4–6 2 5 8
5–6 3 6 15

i) Draw the network diagram of activities in the project.

ii) Find the expected duration and variance for each activity.
What is the expected project length?
iii) Calculate the variance and standard deviation of the
project length. What is the probability that the project
will be completed at least 4 weeks earlier than expected
time.

Z 0.67 1.00 1.33 2.00

Prob. 0.2514 0.1587 0.0918 0.0228
6. There is a game between the two players A and B where A is 4+4+2 10
maximizing player and B is minimizing player. Player A wins B’s
coin if the two coins total are equal to odd number and losses his
coin if total to two coins is even. It is game of 1, 2, 5, 10 and 50

Page 2 of 10
 Centre for Distance and Online Education
rupees coins. Determine the payoff matrix, the optimal strategies
for each player and the value of the game to A.

Assignment set – 1
Questions
1. What is operations research? Explain the methodology used to solve operations
research problems in brief.
Operation research is a scientific method of providing executive departments with a
quantities basis for decisions regarding the operations under their control”.
Methodology of operation research: Quantitative basis for decision making is provided to
managers by. It enhances a manager’s ability to make long range plans and to solve the
routine problems of running a enterprise/concern or is a systematic and logical approach to
provide a rational footing for taking decisions. Operation research, like scientific research is
based on scientific methodology which involves following steps.
1. Formulating the problem:
Or is a research into the operation of a man machine organisation and must consider the
economics of the operation in formulating a problem for o.r. Study analysis must be made of
the following major components:
(i) the environment. (ii) the objectives. (iii) the decision maker. (iv) the alternative courses of
action and constraints out of the above four component, environment is most comprehensive
as it provides a setting for the remaining three. The operation researcher shall attend
conferences, pay visits, send observation and perform research work thus succeeds in getting
sufficient date to formulate the problems.
2. Constructing a model to represent the system under study:
Once the project is approved by the management, the next step is to construct a model for the
system under study. The operation researcher can now construct the model to show the
relations and interrelations between a cause and effect or between an action and a reaction.
Now the aim of operation researcher is to develop a model which enables him to forecast the
effect of factors crucial to the solution of given problem. The proposed model may be tested
and modified in order to work under stated environmental constraints. A model may also be
modified if the management is not satisfied by its performance.
3. Deriving solution from the model:
A solution may be extracted from a model either by conducting experiments on it i.e., by
simulation or by mathematical analysis. No model will work appropriately if the data is not
appropriate. Such information may be available from the results of experiments or from
hunches based on experience. The data collection can clearly effect the models output
significantly.

Page 3 of 10
 Centre for Distance and Online Education

4. Testing the model and the solution derived from it:

As has been pointed out earlier a model is never a perfect representation of reality. But if
properly formulated and correctly manipulated, it may be useful in providing/predicting the
effect of changes in control variables on overall system effectiveness. The usefulness or
utility of a model is checked by finding out how well it predicts the effect of these changes.
Such an analyse is usually known as sensitivity analysis. The utility or validity of the solution
can be verified by comparing the results obtained without applying the solution with the
results obtained when it is used.
5. Establishing controls over the solution:
The next phase for the operation researcher is to explain his findings to the management. It
may be pointed out that he should specify those conditions under which the solution can be
utilized. He should also point out weaknesses if any so that management will know what risks
they are taking while employing the model to generate results. Thus he should also specify
the limits with in which the results obtained from using the model are valid. He should also
define those conditions under which the model will not work.
6. Implementation of the solution:
The last phase of the operation research methodology is implementation of solutions obtained
in the previous steps. In operation research though decision making is scientific but its
implementation involves so many behavioural issues. Therefore the implementing authority
has to resolve the behavioural issues. He has to sell the idea of utility of o.r not only to the
workers but also to superiors.
2. Solve the following linear programming problem using its dual form:
The correct option is a the lpp has multiple optimal solution
linear programming problem (lpp)

maximize, z=3x1+2x2

constraints:

x1≤4...(i)

x2≤6...(ii)

3x1+2x2≤18...(iii)

x1≤0, x2≤0...(iv)

Page 4 of 10
 Centre for Distance and Online Education

because objective functions have slope same as constraint (iii) i.e. Objective function is
parallel to constraint. Therefore the lpp has multiple optimal solutions.

For example at point b,

maximum, z=3x1+2x2

=3(4)+2(3)=18

and at point c,

maximum, z = 3(2) + 2(6) = 18

3. A firm marketing a product has four salesman S1, S2, S3 and S4. There are three
customers to whom a sale of each unit to be made. The chance of making a sale to a
customer depend on the salesman customer support. The data depicts the probability
with which each of the salesman can sell to each of the customers.
Salesman
Customer S1 S2 S3 S4
C1 0.7 0.4 0.5 0.8
C2 0.5 0.8 0.6 0.7
C3 0.3 0.9 0.6 0.2
If only one salesman is to be assigned to each of the customers, what combination of
salesman and customers shall be optimal. Give further that the profit obtained by selling one
unit of C1 is Rs. 500, whereas it is respectively Rs 450 and Rs. 540 for sale to C2 and C3.
What is the expected profit?

Page 5 of 10
 Centre for Distance and Online Education
For Salesman S1:
- Expected profit for selling to C1: 0.7 * Rs. 500 = Rs. 350
- Expected profit for selling to C2: 0.5 * Rs. 450 = Rs. 225
- Expected profit for selling to C3: 0.3 * Rs. 540 = Rs. 162

For Salesman S2:

- Expected profit for selling to C1: 0.4 * Rs. 500 = Rs. 200
- Expected profit for selling to C2: 0.8 * Rs. 450 = Rs. 360
- Expected profit for selling to C3: 0.9 * Rs. 540 = Rs. 486

For Salesman S3:

- Expected profit for selling to C1: 0.5 * Rs. 500 = Rs. 250
- Expected profit for selling to C2: 0.6 * Rs. 450 = Rs. 270
- Expected profit for selling to C3: 0.6 * Rs. 540 = Rs. 324

For Salesman S4:

- Expected profit for selling to C1: 0.8 * Rs. 500 = Rs. 400
- Expected profit for selling to C2: 0.7 * Rs. 450 = Rs. 315
- Expected profit for selling to C3: 0.2 * Rs. 540 = Rs. 108
Now, we can determine the optimal combination:
- S1 to C1: Rs. 350
- S2 to C3: Rs. 486
- S3 to C2: Rs. 270
- S4 to C1: Rs. 400
The expected profit for the optimal combination is the sum of these profits:
Rs. 350 + Rs. 486 + Rs. 270 + Rs. 400 = Rs. 1506
Therefore, the expected profit for the optimal combination of salesman and customers is Rs.
1506.

Page 6 of 10
 Centre for Distance and Online Education
Assignment set – 2
Questions
4. What is monte Carlo simulation? Explain monte Carlo simulation procedure in brief.
Monte Carlo simulation is a type of computational algorithm that uses repeated random
sampling to obtain the likelihood of a range of results of occurring. Also known as the monte
Carlo method or a multiple probability simulation, monte Carlo simulation is a mathematical
technique that is used to estimate the possible outcomes of an uncertain event. The monte
Carlo method was invented by john von Neumann and Stanislaw clam during world war ii to
improve decision making under uncertain conditions. It was named after a well-known casino
town, called Monaco, since the element of chance is core to the modelling approach, similar
to a game of roulette. Unlike a normal forecasting model, monte Carlo simulation predicts a
set of outcomes based on an estimated range of values versus a set of fixed input values. In
other words, a monte Carlo simulation builds a model of possible results by leveraging a
probability distribution, such as a uniform or normal distribution, for any variable that has
inherent uncertainty. It, then, recalculates the results over and over, each time using a
different set of random numbers between the minimum and maximum values. In a typical
monte carlo experiment, this exercise can be repeated thousands of times to produce a large
number of likely outcomes.
Monte carlo simulations are also utilized for long-term predictions due to their accuracy. As
the number of inputs increase, the number of forecasts also grows, allowing you to project
outcomes farther out in time with more accuracy. When a monte carlo simulation is complete,
it yields a range of possible outcomes with the probability of each result occurring.
One simple example of a monte carlo simulation is to consider calculating the probability of
rolling two standard dice. There are 36 combinations of dice rolls. Based on this, you can
manually compute the probability of a particular outcome. Using a monte carlo simulation,
you can simulate rolling the dice 10,000 times (or more) to achieve more accurate
predictions.
5. A small project is composed of seven activities, whose time estimates are listed in
the table below:

Estimated Duration (Weeks)

Activity (i – j) Optimistic Most Pessimistic
Likely
1–2 1 1 7
1–3 1 4 7
1–4 2 2 8
2–5 1 1 1
3–5 2 5 14
4–6 2 5 8
5–6 3 6 15

i) Draw the network diagram of activities in the project.

ii) Find the expected duration and variance for each activity. What is the expected project
length?
iii) Calculate the variance and standard deviation of the project length. What is the
Page 7 of 10
 Centre for Distance and Online Education
probability that the project will be completed at least 4 weeks earlier than expected
time.

Z 0.67 1.00 1.33 2.00

Prob. 0.2514 0.1587 0.0918 0.0228
Explanation:
i) Network diagram:

The network diagram is a visual representation of the project activities and their
dependencies. Here's the diagram based on the given activities:

1 --> 2

1 --> 3

1 --> 4

2 --> 5

3 --> 5

4 --> 6

5 --> 6

ii) Expected duration and variance for each activity:

Using the formula for expected duration (te) and variance (σ²) for each activity:

te = (Optimistic + 4 × Most Likely + Pessimistic) / 6

σ² = ((Pessimistic - Optimistic) / 6)²

Here are the calculations:

| Activity | te | σ² |

| --- | --- | --- |

| 1-2 | 2 | 1.78 |

| 1-3 | 4 | 2.78 |

| 1-4 | 2 | 1.78 |

| 2-5 | 1 | 0 |

| 3-5 | 5 | 4.5 |
| 4-6 | 5 | 2.25 |

| 5-6 | 6 | 4.5 |

Page 8 of 10
 Centre for Distance and Online Education

iii) Expected project length:

The expected project length is the sum of the expected durations of the critical path activities.
The critical path is the longest path in the network diagram. Based on the diagram, the critical
path is:

1 --> 3 --> 5 --> 6

Expected project length = te(1-3) + te(3-5) + te(5-6) = 4 + 5 + 6 = 15 weeks

iv) Variance and standard deviation of the project length:

The variance of the project length is the sum of the variances of the critical path activities:

σ²(project) = σ²(1-3) + σ²(3-5) + σ²(5-6) = 2.78 + 4.5 + 4.5 = 11.78

Standard deviation (σ) = √σ² = √11.78 ≈ 3.43 weeks

v) Probability of completing the project at least 4 weeks earlier than expected:

To find the probability, we need to calculate the z-score:

z = (Expected project length - Target duration) / Standard deviation

= (15 - 11) / 3.43

= 4 / 3.43

≈ 1.17

Using the z-table, we find that the probability corresponding to z = 1.17 is approximately
0.1210. So, the probability of completing the project at least 4 weeks earlier than expected is
approximately 12.10%.

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

Payoff Matrix
Page 9 of 10
 Centre for Distance and Online Education
1 2 5 10 50
1 0, 0 1, -1 0, 0 1, -1 0, 0
2 -1, 1 0, 0 -1, 1 0, 0 -1, 1
5 0, 0 1, -1 0, 0 1, -1 0, 0
10 -1, 1 0, 0 -1, 1 0, 0 -1, 1
50 0, 0 1, -1 0, 0 1, -1 0, 0
Optimal Strategies
Player A (Maximiser) should play the mixed strategy:
Choose 2 and 10 rupees coins with probability 1/2 each.
Player B (Minimizer) should play the mixed strategy:
Choose 1 and 5 rupees coins with probability 1/2 each.
Value of the Game to A
The value of the game to A is 0. This means that in the long run, playing the optimal strategy,
A will neither win nor lose on average.

Page 10 of 10