OPERATIONS RESEARCH

L.NAGENDRABABU ROLLNO.27







Operations research project
ON
Transportation Problem















OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27







As any good work is incomplete without acknowledging the people who
made it possible, this acknowledgement is incomplete without thanking our
family, friends, and our faculty, without whose support this project wouldn't
have taken shape.

Since we have joined NALSAR we have gained so much knowledge, which
has been possible due to the well-managed education imparted to us under
conditions, which are quite conducive to learning, at our CMS.

We express our sincere gratitude to our teacher of Operations Research ,
who has helped us clarify our concepts by sharing his valued experiences in
his teaching, research and training which have thereby become an
unconscious part of our ideas and thoughts while analyzing the Operations
Research project work on Management of MGBS Bus Depot.
Without his sincere help and guidance the project report would have not
been a possible.

We thank all our team members who had worked hard to make the report to
its present form.

Lastly we would like to thank our families for their continuing support,
blessings and encouragement.




OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27

Introduction
OPERATIONAL RESEARCH
What is Operations Research
Definitions
To dene anything non-trivial like beauty or mathematics is very dicult
indeed. Here is a reasonably good denition of Operations Research:
Operations Research (OR) is an interdisciplinary branch of applied
mathematics and formal science that uses methods like mathemati- cal
modeling, statistics, and algorithms to arrive at optimal or near optimal
solutions to complex problems.
Denition is problematic: to grasp it we already have to know, e.g., what is
formal science or near optimality.From a practical point of view, OR can be
dened as an art of optimization, i.e., an art of nding minima or maxima of
some objective function, and to some extend an art of dening the
objective functions. Typical objective functions are
prot,
assembly line performance,
crop yield,
bandwidth,
loss,
waiting time in queue,
risk.
From an organizational point of view, OR is something that helps manage- ment achieve
its goals using the scientic process.

The terms OR and Management Science (MS) are often used synonymously. When a
distinction is drawn, management science generally implies a closer relationship to
Business Management. OR also closely relates to Industrial Engineering. Industrial
engineering takes more of an engineering point of view, and industrial engineers typically
consider OR techniques to be a major part of their tool set. Recently, the term Decision
Science (DS) has also be coined to OR. (If OR is the Science of Better the ORists
should have gured out a better name for it.)


OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27

OR Tools
Some of the primary tools used in OR are
statistics,
optimization,
probability theory,
queuing theory,
game theory,
graph theory,
decision analysis,
simulation.
Because of the computational nature of these elds, OR also has ties to com- puter
science, and operations researchers regularly use custom-written soft- ware.In this course
we will concentrate on optimization, especially linear opti- mization.
OR Motto and Linear Programming
The most common OR tool is Linear Optimization, or Linear Programming (LP).
Remark.
The Programming in Linear Programming is synonym for optimization. It has at
least historically nothing to do with computer- programming.
LP is the ORists favourite tool because it is
simple,
easy to understand,
robust.
Simple means easy to implement, easy to understand means easy to explain (to you
boss), and robust means that its like the Swiss Army Knife: perfect for nothing, but
good enough for everything.
Unfortunately, almost no real-world problem is really a linear one thus LP is perfect
for nothing. However, most real-world problems are close enough to linear problems
thus LP is good enough for everything.

OR Motto. Its better to be quantitative and nave than qualitative and pro- found.
Operational Research (OR) is the use of advanced analytical techniques to improve
decision making. It is sometimes known as Operations Research, Management Science or
Industrial Engineering. People with skills in OR hold jobs in decision support, business
analytics, marketing analysis and logistics planning as well as jobs with OR in the title.
Why is OR needed?
Because it makes sense to make the best use of available resources. Todays global
markets and instant communications mean that customers expect high-quality products
and services when they need them, where they need them. Organisations, whether public
or private, need to provide these products and services as effectively and efficiently as
possible. This requires careful planning and analysis the hallmarks of good OR. This is
usually based on process modelling, analysis of options or business analytics.
Examples of OR in action
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
Scheduling: of aircrews and the fleet for airlines, of vehicles in supply chains, of orders
in a factory and of operating theatres in a hospital.
Facility planning: computer simulations of airports for the rapid and safe processing of
travellers, improving appointments systems for medical practice.
Planning and forecasting: identifying possible future developments in
telecommunications, deciding how much capacity is needed in a holiday business.
Yield management: setting the prices of airline seats and hotel rooms to reflect changing
demand and the risk of no shows.
Credit scoring: deciding which customers offer the best prospects for credit companies.
Marketing: evaluating the value of sale promotions, developing customer profiles and
computing the life-time value of a customer.
Defence and peace keeping: finding ways to deploy troops rapidly.


Some OR methods and techniques
Computer simulation: allowing you to try out approaches and test ideas for
improvement.
Optimisation: narrowing your choices to the very best when there are so many
feasible options that comparing them one by one is difficult.
Probability and statistics: helping you measure risk, mine data to find valuable
connections and insights in business analytics, test conclusions, and make reliable
forecasts.
Problem structuring: helpful when complex decisions are needed in situations
with many stakeholders and competing interests.
Operational research (OR) encompasses a wide range of problem-solving techniques and
methods applied in the pursuit of improved decision-making and efficiency, such as
simulation, mathematical optimization, queueing theory and other stochastic-process
models, Markov decision processes, econometric methods, data envelopment analysis,
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
neural networks, expert systems, decision analysis, and the analytic hierarchy process.[6]
Nearly all of these techniques involve the construction of mathematical models that
attempt to describe the system. Because of the computational and statistical nature of
most of these fields, OR also has strong ties to computer science and analytics.
Operational researchers faced with a new problem must determine which of these
techniques are most appropriate given the nature of the system, the goals for
improvement, and constraints on time and computing power.
The major subdisciplines in modern operational research, as identified by the journal
Operations Research, are:
Computing and information technologies
Environment, energy, and natural resources
Financial engineering
Manufacturing, service sciences, and supply chain management
Marketing Engineering
Policy modeling and public sector work
Revenue management
Simulation
Stochastic models
Transportation.


Linear Programming
In mathematics, linear programming (LP) is a technique for optimization of a linear
objective function, subject to linear equality and linear inequality constraints. Informally,
linear programming determines the way to achieve the best outcome (such as maximum
profit or lowest cost) in a given mathematical model and given some list of requirements
represented as linear equations. More formally, given a polytope (for example, a polygon
or a polyhedron), and a real-valued affine function

Defined on this polytope, a linear programming method will find a point in the polytope
where this function has the smallest (or largest) value. Such points may not exist, but if
they do, searching through the polytope vertices is guaranteed to find at least one of
them.
Linear programs are problems that can be expressed in canonical form:
Maximize: ctx
Subject to: Ax<=b
Represents the vector of variables (to be determined), while and are vectors of
(known) coefficients and is a (known) matrix of coefficients. The expression to be
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
maximized or minimized is called the objective function ( in this case). The
equations are the constraints which specify a convex polyhedron over which
the objective function is to be optimized.
Linear programming can be applied to various fields of study. Most extensively it is used
in business and economic situations, but can also be utilized for some engineering
problems. Some industries that use linear programming models include transportation,
energy, telecommunications, and manufacturing. It has proved useful in modeling diverse
types of problems in planning, routing, scheduling, assignment, and design.
Linear Programming Assumptions
Linear programming requires linearity in the equations as shown in the above structure.
In a linear equation, each decision variable is multiplied by a constant coefficient with no
multiplying between decision variables and no nonlinear functions such as logarithms.
Linearity requires the following assumptions:
1) Proportionality - a change in a variable results in a proportionate change in that
variable's contribution to the value of the function.
2) Additivity - the function value is the sum of the contributions of each term.
3) Divisibility - the decision variables can be divided into non-integer values, taking on
fractional values. Integer programming techniques can be used if the divisibility
assumption does not hold.In addition to these linearity assumptions, linear programming
assumes certainty; that is, that the coefficients are known and constant.
The Effect of ConstraintsConstraints exist because certain limitations restrict the
range of a variable's possible values. A constraint is considered to be binding if
changing it also changes the optimal solution. Less severe constraints that do not
affect the optimal solution are non-binding.
Tightening a binding constraint can only worsen the objective function value, and
loosening a binding constraint can only improve the objective function value. As such,
once an optimal solution is found, managers can seek to improve that solution by finding
ways to relax binding constraints.
Route planning
Network arises in numerous settings and in variety of guises. Transportation, electrical
networks pervade our daily lives. Many network optimization models are special types of
linear programming models. Route planning or the shortest path problem is one of them.
In this problem we consider an undirected and connected network with 2 special nodes,
called source and destination. Associated with each link is nonnegative distance. The
objective is to find the shortest path from the source to the destination. A relatively
straightforward algorithm is available for this problem. The essence of this procedure is
that it fans out from the origin, identifying the shortest path to each node of the network in
the ascending order of their shortest distances from the origin, thereby solving the
problem when destination node is reached.
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
The Transportation Problem
There is a type of linear programming problem that may be solved using a simplified
version of the simplex technique called transportation method. Because of its major
application in solving problems involving several product sources and several
destinations of products, this type of problem is frequently called the transportation
problem. It gets its name from its application to problems involving transporting
products from several sources to several destinations. Although the formation can be used
to represent more general assignment and scheduling problems as well as transportation
and distribution problems. The two common objectives of such problems are either (1)
minimize the cost of shipping m units to n destinations or (2) maximize the profit of
shipping m units to n destinations.
Let us assume there are m sources supplying n destinations. Source capacities,
destinations requirements and costs of material shipping from each source to each
destination are given constantly. The transportation roblem can be described using
following linear programming mathematical model and usually it appears in a
transportation tableau.
There are three general steps in solving transportation problems.
We will now discuss each one in the context of a simple example. Suppose one company
has four factories supplying four warehouses and its management wants to determine the
minimum-cost shipping schedule for its weekly output of chests. Factory supply,
warehouse demands, and shipping costs per one chest (unit) are shown below.

Data for Transportation Problem

At first, it is necessary to prepare an initial feasible solution, which may be done in
several different ways; the only requirement is that the destination needs be met within
the constraints of source supply.

The Transportation Matrix
The transportation matrix is where supply availability at each factory is shown in the far
right column and the warehouse demands are shown in the bottom row. The unit shipping
costs are shown in the small boxes within the cells. It is important at this step to make
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
sure that the total supply availabilities and total demand requirements are equal. Often
there is an excess supply or demand. In such situations, for the transportation method to
work, a dummy warehouse or factory must be added. Procedurally, this involves inserting
an extra row (for an additional factory) or an extra column (for an ad warehouse). The
amount of supply or demand required by the dummy equals the difference between the
row and column totals.
It deals with sources where a supply of some commodity is available and destinations
where the commodity is demanded. The classic statement of the transportation problem
uses a matrix with the rows representing sources and columns representing destinations.
The algorithms for solving the problem are based on this matrix representation. The costs
of shipping from sources to destinations are indicated by the entries in the matrix. If
shipment is impossible between a given source and destination, a large cost of M is
entered. This discourages the solution from using such cells. Supplies and demands are
shown along the margins of the matrix. As in the example, the classic transportation
problem has total supply equal to total demand.

Matrix model of a transportation problem.
The network model of the transportation problem is shown in Fig. 10. Sources are
identified as the nodes on the left and destinations on the right. Allowable shipping links
are shown as arcs, while disallowed links are not included.

OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
Network flow model of the transportation problem.
Only arc costs are shown in the network model, as these are the only relevant parameters.
All other parameters are set to the default values. The network has a special form
important in graph theory; it is called a bipartite network since the nodes can be divided
into two parts with all arcs going from one part to the other.On each supply node the
positive external flow indicates supply flow entering the network. On each destination
node a demand is a negative fixed external flow indicating that this amount must leave
the network.

Optimum solution, z = 46.
Variations of the classical transportation problem are easily handled by modifications of
the network model. If links have finite capacity, the arc upper bounds can be made finite.
If supplies represent raw materials that are transformed into products at the sources and
the demands are in units of product, the gain factors can be used to represent
transformation efficiency at each source. If some minimal flow is required in certain
links, arc lower bounds can be set to nonzero values.
Problems faced by MGBSBus Depot
1). The Director of Roadways, Uttar Pradesh, Knows that the problem of existing
temporary bus stand in MGBSis the increased waiting cost on behalf of the customers. It
is known that customers arrive at a Poisson process at the rate of 100 per hour. The time
required to deal with a customer has an exponential distribution with a mean service time
of 30 seconds. The director feels that the cost of loss in customer goodwill due to waiting
in queue is Rs. 10 per minute.
The diector has been approached with the following two alternatives:-

Proposal 1 is to shift the entire operations to a new location i.e. Old MGBus
Depot. The cost of transfer and designing a new facility is Rs. 4.56 crores. Its
been assumed that the new facility will be operatatble with an estimated life of 10
years. The new facility will reduce the average service time to 15 seconds.

Proposal 2 is to shift the entire operations to a less populated area and designing a
new facility with an estimated cost of Rs. 6.25 crores. The new facility will result
in reduction in average service time to 10 seconds.

OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
The director wants to evaluate the best proposal he should undertake so as to reduce the
total cost of operations.

(The Bus-Stand is operatable for 12 hours in a day for 360 days in a year).

Solution

Inter arrival time() = 100 per hour
Mean service time () = 30 seconds=120 per hour
Cost of waiting(Cw) = 10 per minute =600 per hour
Model used --- (M/M/1):(/GD)

Total number of passenger waiting in que(Lq) = / (- )
= 100/120(120-100)
= 4.167
Total cost of waiting = LqCw
= 4.167 600
= 2500.2

Proposal 1.
Inter arrival time() = 100 per hour
Mean service time () = 15 seconds=240 per hour
Cost of waiting(Cw) = 10 per minute =600 per hour
Model used --- (M/M/1):(/GD)


Total number of passenger waiting in que(Lq) = / (- )
= 100/240(240-100)
= .297
Total cost of waiting = LqCw
= .297 600
= 178.57
Initial cost =initial investment/10yrs36012=45600000/43200=1055.55

Total cost = Initial cost + Total cost of waiting

=1055.55 + 178.57=1234.12

Proposal 1.
Inter arrival time() = 100 per hour
Mean service time () = 10 seconds=360 per hour
Cost of waiting(Cw) = 10 per minute =600 per hour
Model used --- (M/M/1):(/GD)

Total number of passenger waiting in que(Lq) = / (- )
= 100/360(360-100)
OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27
= .107

Total cost of waiting = LqCw
= .107 600
= 64.10
Initial cost =initial investment/10yrs36012=62500000/43200=1446.75

Total cost = Initial cost + Total cost of waiting

=1446.75 + 64.10=1510.85


Hence cost is minimum in proposal therefore proposal 1 will be selected.

2). The management of the MGBSBus Stand is thinking of inaugurating a new
Superfast bus service consisting of three new buses from MGBSBus Stand. The buses
are of three categories namely Marcopolo, Tata SE202, Echier Super105.The locations
are KOTI, AMERPET and YJUNCTION. The cost structur is as follows:-

KOTI AMERPET YJUNCTION
Distance 30 85 105
Proposed Ticket
Charge
20 50 70

The Capacity of buses and the running cost per kilometer is as follows:-

Marcopolo Tata SE202 Echier Super105
Capacity 60 70 80
Cost of Running 10 15 17

Thus, the profit for the respective routes are as follows:-

KOTI AMERPET YJUNCTION
Marcopolo 900 2150 3150
Tata SE202 950 2225 3625
Echier Super105 1090 2555 3815










OPERATIONS RESEARCH
L.NAGENDRABABU ROLLNO.27