CA5103: MANAGEMENT SCIENCE

3rd Departmental Examination

I. LECTURE

MODULE 5.1: DISTRIBUTION AND NETWORK MODELS

The Definition of Supply Chain

➔ It describes the set of all interconnected resources involved in producing and distributing a
product; it is designed to satisfy customer demand for a product at minimum cost (Anderson, et
al., 2018).
➔ It refers to the sequence of organizations, their facilities, functions, and activities, that are involved
in producing and delivering a product or service (Benton, 2010).

The Types of Problems in Supply Chain Models/Network Flow Problems (Anderson, et al., 2018)

Transportation Problems Transshipment Problems Assignment Problems

ILLUSTRATION OF THE SUPPLY CHAIN (STEVENSON, 2018)

The Definition of Logistics

➔ It is the part of a supply chain involved with the forward and reverse flow of goods, services, cash,
and information (Bowersox et al., 2010).

Questions Regarding Decision Making in Managing Supply Chains (Anderson, et al., 2018)

Where to produce the product? How much should be produced?

Where should it be sent? How to design a supply chain to satisfy customer

demand for a product at minimum cost?

1
The Definition of Transportation Problem
➔ The transportation problem seeks to minimize the total shipping costs of transporting goods
from 𝑚 origins (each with a supply 𝑠 ) to 𝑛 destinations (each with a demand 𝑑 ), when the unit
𝑖 𝑗
shipping cost from an origin, 𝑖, to a destination, 𝑗, is 𝑐 .
𝑖𝑗
➔ The network representation for a transportation problem with two sources and three
destinations is given in the next illustration.

NETWORK REPRESENTATION OF A TRANSPORTATION PROBLEM

Important Notes:
➔ C’s are transportation costs.
➔ Circles and squares are nodes.
➔ Arrows distribution routes from source (𝑖) to destination (𝑗).

TOTAL SUPPLY EXCEEDS TOTAL TOTAL DEMAND EXCEEDS TOTAL SUPPLY:

DEMAND:
Add a dummy origin with supply equal to the
No modification of LP Formulation is shortage amount.
necessary.
Assign a zero-shipping cost per unit.

The amount “shipped” from the dummy origin (in

the solution) will not be shipped.

SAMPLE PROBLEM 1: TRANSPORTATION PROBLEM 1

➔ Acme Block Company has orders for 80 tons of concrete blocks at three suburban locations:
Northwood -- 25 tons, Westwood -- 45 tons, and Eastwood -- 10 tons.
➔ Acme has two plants, each of which can produce 40 tons per week.
➔ Delivery cost (in dollars) per ton from each plant to each suburban location is shown below.
➔ How should end-of-week shipments be made to fill the above orders?

2
 DELIVERY COST (IN DOLLARS)
NORTHWOOD WESTWOOD EASTWOOD
PLANT 1 24 30 40
PLANT 2 30 40 42

NETWORK REPRESENTATION OF THE ACME BLOCK PROBLEM

STEPS IN SOLVING TRANSPORTATION PROBLEM 1

Define the Objective Function:

➔ Minimize the total delivery cost.
◆ Min: (delivery cost per ton from each plant to each suburban location) x (number of
tons delivered from each plant to each suburban location).
➔ Min Z: 24𝑥11 + 30𝑥12 + 40𝑥13 + 30𝑥21 + 40𝑥22 + 42𝑥23

Define the Constraints:

➔ Supply Constraints:
◆ (1) 𝑥 + 𝑥 + 𝑥 ≤ 40
11 12 13
◆ (2) 𝑥 +𝑥 +𝑥 ≤ 40
21 22 23
➔ Demand Constraints:
◆ (3) 𝑥 + 𝑥 = 25
11 21
◆ (4) 𝑥 +𝑥 = 45
12 22
◆ (5) 𝑥 +𝑥 = 10
13 23
➔ Non-Negativity of Variables:
◆ 𝑥 𝑖𝑗 ≥ 0, 𝑖 = 1, 2 𝑎𝑛𝑑 𝑗 = 1, 2, 3

3
 Balanced Table:
Total Supply = Total Demand

SAMPLE PROBLEM 2: TRANSPORTATION PROBLEM 2

➔ The Navy has 9,000 pounds of material in Albany, Georgia that it wishes to ship to three
installations: San Diego, Norfolk, and Pensacola.
➔ They require 4,000, 2,500, and 2,500 pounds, respectively.
➔ Government regulations require equal distribution of shipping among the three carriers.
➔ The shipping costs per pound for truck, railroad, and airplane transit are shown below.
➔ Formulate and solve a linear program to determine the shipping arrangements (mode,
destination, and quantity) that will minimize the total shipping cost.

DESTINATION

MODE SAN DIEGO NORFOLK PENSACOLA

TRUCK $12 $6 $5

RAILROAD $20 $11 $9

AIRPLANE $30 $26 $28

STEPS IN SOLVING TRANSPORTATION PROBLEM 2

Define the Decision Variables:

➔ We want to determine the pounds of material, 𝑥 , to be shipped by mode 𝑖 to destination 𝑗.
𝑖𝑗
➔ The following table summarizes the decision variables:

San Diego Norfolk Pensacola

Truck x11 x12 x13
Railroad x21 x22 x23
Airplane x31 x32 x33

4
Define the Objective Function:
➔ Minimize the total shipping cost.
◆ Min: (shipping cost per pound for each mode per destination pairing) x (number of
pounds shipped by mode per destination pairing).
➔ Min Z: 12𝑥 + 6𝑥 + 5𝑥 + 20𝑥 + 11𝑥 + 9𝑥 + 30𝑥 + 26𝑥 + 28𝑥
11 12 13 21 22 23 31 32 33

Define the Constraints:

➔ Equal Use of Transportation Modes:
◆ (1) 𝑥 + 𝑥 + 𝑥 = 3000
11 12 13
◆ (2) 𝑥 +𝑥 +𝑥 = 3000
21 22 23
◆ (3) 𝑥 +𝑥 +𝑥 = 3000
31 32 33
➔ Destination Material Requirement:
◆ (1) 𝑥 + 𝑥 + 𝑥 = 4000
11 12 13
◆ (2) 𝑥 +𝑥 +𝑥 = 2500
21 22 23
◆ (3) 𝑥 +𝑥 +𝑥 = 2500
31 32 33
➔ Non-Negativity of Variables:
◆ 𝑥 ≥ 0, 𝑖 = 1, 2, 3 𝑎𝑛𝑑 𝑗 = 1, 2, 3
𝑖𝑗

SAMPLE PROBLEM 3: TRANSPORTATION PROBLEM 3 (UNBALANCED)

➔ The table below shows an unbalanced transportation problem wherein total plant capacity
exceeds the total demand requirement.

PLANT STORE 1 STORE 2 STORE 3 PLANT

CAPACITY

PLANT 1 ₱8 per unit ₱5 per unit ₱4 per unit 250

PLANT 2 ₱9 per unit ₱6 per unit ₱3 per unit 200

STORE DEMAND 80 140 200 420/450

➔ The next table shows the unbalanced transportation problem wherein a dummy variable has
been inputted.

PLANT STORE 1 STORE 2 STORE 3 STORE 4 PLANT

(DUMMY) CAPACITY

PLANT 1 ₱8 per unit ₱5 per unit ₱4 per unit ₱0 per unit 250

PLANT 2 ₱9 per unit ₱6 per unit ₱3 per unit ₱0 per unit 200

STORE 80 140 200 30 450/450

DEMAND

5
 NETWORK REPRESENTATION OF TRANSPORTATION PROBLEM 3 (WITH DUMMY STORE)

STEPS IN SOLVING TRANSPORTATION PROBLEM 3 (UNBALANCED)

Define the Objective Function:
➔ Minimize the total transportation cost.
◆ Min: (transportation cost per unit for each mode per destination pairing) x (number of
units transported by mode per destination pairing).
➔ Min Z: 8𝑥11 + 5𝑥12 + 4𝑥13 + 0𝑥14 + 9𝑥21 + 6𝑥22 + 3𝑥23 + 0𝑥24
Define the Constraints:
➔ Equal Use of Transportation Modes:
◆ (1) 𝑥 + 𝑥 + 𝑥 + 𝑥 = 250
11 12 13 14
◆ (2) 𝑥 +𝑥 +𝑥 +𝑥 = 200
21 22 23 24
➔ Destination Material Requirement:
◆ (1) 𝑥 + 𝑥 = 80
11 21
◆ (2) 𝑥 +𝑥 = 140
12 22
◆ (3) 𝑥 +𝑥 = 200
13 23
◆ (4) 𝑥 +𝑥 = 30
14 24
➔ Non-Negativity of Variables:
◆ 𝑥 𝑖𝑗 ≥ 0, 𝑖 = 1, 2, 𝑎𝑛𝑑 𝑗 = 1, 2, 3

Summary of Steps in Solving Transportation Problem (Minimization)

Set up a balanced transportation table (Note: If

Read and understand the problem and its given unbalanced "total supplies not equal to total
conditions. demand" create a dummy variable with a
transportation cost equal to "0").

Represent the Transportation Problem with a Formulate the General Linear Programming
network model. Model.

Solve the problem.

6
The Definition of Transshipment Problems
➔ Transshipment problems are transportation problems in which a shipment may move through
intermediate nodes (transshipment nodes) before reaching a particular destination node.
➔ Transshipment problems can be converted to larger transportation problems and solved by a
special transportation program.

SAMPLE PROBLEM 4: TRANSSHIPMENT PROBLEM (ZERON INDUSTRIES)

➔ The Northside and Southside facilities of Zeron Industries supply three firms (Zrox, Hewes,
Rockrite) with customized shelving for its offices.
➔ They both order shelving from the same two manufacturers, Arnold Manufacturers
➔ and Supershelf, Inc.
➔ Currently weekly demands by the users are 50 for Zrox, 60 for Hewes, and 40 for Rockrite.
➔ Both Arnold and Supershelf can supply at most 75 units to its customers.
➔ Additional data is shown below:

Because of long standing contracts based on past orders, unit costs from the manufacturers to the
suppliers are:
ZERON N ZERON S
ARNOLD 5 8
SUPERSHELF 7 4

The costs to install the shelving at the various locations are:

ZROX HEWES ROCKRITE

ZERON N 1 5 8

ZERON S 3 4 4
➔ With all of the information above and recalling the previous steps, solve the transshipment
problem.
➔ Conduct the linear programming formulation and define the decision variables of the given
problem.
➔ Identify the objective function, constraints, and construct a network representation of the said
transshipment problem.

NETWORK REPRESENTATION OF THE ZERON INDUSTRIES PROBLEM

7
 STEPS IN SOLVING TRANSSHIPMENT PROBLEM (ZERON INDUSTRIES)

Define the Decision Variables:

➔ 𝑥 = amount shipped from manufacturer 𝑖 to supplier 𝑗.
𝑖𝑗
➔ 𝑥 = amount shipped from supplier 𝑗 to customer 𝑘.
𝑗𝑘
➔ Where:
◆ 𝑖 = 1 (Arnold), 2 (Supershelf)
◆ 𝑗 = 3 (Zeron N), 4 (Zeron S)
◆ 𝑘 = 5 (Zrox), 6 (Hewes), 7 (Rockrite)
Define the Objective Function:
➔ Minimize overall shipping cost.
➔ Min Z: 12𝑥 + 6𝑥 + 5𝑥 + 20𝑥 + 11𝑥 + 9𝑥 + 30𝑥 + 26𝑥 + 28𝑥 + 28𝑥
13 14 23 24 35 36 37 45 46 47
Define the Constraints:
➔ Amount Out of Arnold
◆ 𝑥 +𝑥 ≤ 75
13 14
➔ Amount Out of Supershelf
◆ 𝑥 + 𝑥 ≤ 75
23 24
➔ Amount through Zeron N
◆ 𝑥 +𝑥 −𝑥 −𝑥 +𝑥 = 0
13 23 35 36 37
➔ Amount through Zeron S
◆ 𝑥 +𝑥 −𝑥 −𝑥 +𝑥 = 0
14 24 45 46 47
➔ Amount into Zrox
◆ 𝑥 + 𝑥 = 50
35 45
➔ Amount into Hewes
◆ 𝑥 + 𝑥 = 60
36 46
➔ Amount into Rockrite
◆ 𝑥 + 𝑥 = 40
37 47
➔ Non-Negativity of Variables
◆ 𝑥 ≥ 0, 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑖 𝑎𝑛𝑑 𝑗.
𝑖𝑗
The Definition of Assignment Problem
➔ An assignment problem seeks to minimize the total cost assignment of m workers to m jobs, given
that the cost of worker 𝑖 performing job 𝑗 is 𝑐 .
𝑖𝑗
➔ It assumes all workers are assigned and each job is performed.
➔ An assignment problem is a special case of a transportation problem in which all supplies and all
demands are equal to 1; hence assignment problems may be solved as linear programs.
NETWORK REPRESENTATION OF AN ASSIGNMENT PROBLEM

8
Assignment Problem (LP Formulation Special Cases)

NUMBER OF AGENTS EXCEED NUMBER OFTASKS: NUMBER OF TASKS EXCEED NUMBER OFAGENTS:
Add enough dummy agents to equalize thenumber of
agents and the number of tasks.
Extra agents simply remain unassigned.
The objective function coefficients for these newvariables
would be zero.
THE ASSIGNMENT ALTERNATIVE ARE
AN ASSIGNMENT IS UNACCEPTABLE:
EVALUATED IN TERMS OF REVENUE OR
PROFIT:
Solve as a maximization problem. Remove the corresponding decision variable.
AN AGENT IS PERMITTED TO WORK 𝑡 TASKS:

SAMPLE PROBLEM 5: ASSIGNMENT PROBLEM (ELECTRICAL)

➔ An electrical contractor pays his subcontractors a fixed fee plus mileage for work performed.
➔ On a given day the contractor is faced with three electrical jobs associated with various projects.
➔ Given below are the distances between the subcontractors and the projects:

PROJECTS
SUBCONTRACTOR A B C
WESTWIDE 50 36 16
FEDERATED 28 30 18
GOLIATH 35 32 20
UNIVERSAL 25 25 14

➔ How should the contractors be assigned so that total mileage is minimized?

➔ Conduct linear programming formulation and define the objective function and constraints of the
given assignment problem.

NETWORK REPRESENTATION OF ASSIGNMENT PROBLEM (ELECTRICAL CONTRACTOR)

9
MODULE 5.2: ANALYTICAL AND COMPUTER SOLUTIONS OF TRANSPORTATION
PROBLEMS

Determination of a Starting Feasible Solution (Uy, et al., 2013)

➔ The general definition of the transportation model requires that:

➔ A starting basic feasible solution must include 𝑚 + 𝑛 − 1 basic variables, also known as the
Rim Requirement.

Analytical Solution of Transportation Problem

NORTHWEST CORNER METHOD (NWC)

➔ It provides a straightforward technique for obtaining the initial solution (systematic, easily
understandable method).
➔ The costs are not relevant in determining the initial solution.

STEPS IN USING THE NORTHWEST CORNER METHOD (UY, ET AL., 2013)

STEP 1:
Starting with the northwest most (upper left hand)
corner, allocate the smaller amount of either the
row supply or the column demand thereby
exhausting the supply and demand requirements.
STEP 3:
Once a cell is identified as per step 2, it becomes
the new northwest cell.
STEP 2:
Subtract from the row supply and from the column
demand the amount allocated.
If the column demand is now zero, move to the cell
next on the right; if the row supply is zero, move
down the cell in the next row. If both are zero,
move first to the next cell on the right, place0, then
down one cell.
STEP 4:
Repeat the above steps 1 to 3 until all remaining
supply and demand is gone.

Allocate an amount as in step 1.

SAMPLE PROBLEM 1: ANALYTICAL SOLUTION USING NORTHWEST CORNER METHOD

➔ Find the initial basic feasible solution using the Northwest Corner Method.
◆ Note: Consider the Acme Block Company transportation problem below.

NORTHWOOD WESTWOOD EASTWOOD PLANT SUPPLY

PLANT 1 24 30 40 40

PLANT 2 30 40 42 40

DEMAND 25 45 10 80/80

10
SOLUTION FOR SAMPLE PROBLEM 1:
STEP 1:
Begin in the upper left hand corner of the table by
allocating the 25 units of resources (smaller amount of
either row supply or column demand) to exhaust the
requirements.

STEPS 2 AND 3:
Subtract 25 from the row supply in Plant 1 (40) and
allocate the said amount of resources (15) of Plant1 to
Westwood.

Note: The resources in row 1 are fully allocated

(exhausted).

STEP 4:
Repeat steps 1 to 3 until all resources are
exhausted and all requirements are satisfied.

Note: A solution becomes basic if the number of

occupied cells, i.e. cells with allocations is
𝑚 + 𝑛 − 1, where 𝑚 represents the number of
rows and 𝑛, the number of columns (if 𝑚 = 2 and
𝑛 = 3 then 𝑚 + 𝑛 − 1 = 4, thus the basic
feasible solution must include 4 basic variables).
RESULT:
The total cost in this solution is obtained by multiplying
the cells allocation to the shipping cost per unit.

𝑍 = 24(25) + 30(15) + 40(30) + 42(10) = 2670

SAMPLE PROBLEM 2: ANALYTICAL SOLUTION USING NORTHWEST CORNER METHOD

➔ Find the initial basic feasible solution using the Northwest Corner Method.

DESTINATION
MODE REGULATIONS
SAN DIEGO NORFOLK PENSACOLA

TRUCK 12 6 5 3000

RAILROAD 20 11 9 3000

AIRPLANE 30 26 28 3000

MATERIAL 4500 2500 2500 9000/9000

REQUIREMENTS

11
SOLUTION FOR SAMPLE PROBLEM 2:

RESULT:
𝑍 = 12(3000) + 20(1000) + 11(2000) + 26(500) + 28(2500) = 161, 000

LEAST COST METHOD (MINIMUM CELL)

➔ It involves sequentially allocating the resources to the cells with the minimum cost to obtain the
initial solution.
➔ The Least Cost Method (LCM) yields not only an initial feasible solution but also one that is
close to optimal in small transportation problems.
➔ This method is “heuristic” in nature.
◆ Note: If there is a tie for a lowest-cost cell during any allocation, we may choose any of
these cells for allocation.
◆ If a single allocation exhausts the capacity of a row and satisfies the requirement of a
column, we place a zero in one of the bordering cells (Uy et al., 2013).

STEPS IN USING THE LEAST COST METHOD (UY, ET AL., 2013)

STEP 1: STEP 2:
Select the cell with the lowest available cost. Choose the next lowest-cost cell and make an
allocation in view of the remaining capacity and
Allocate as much as possible in view of the requirement of its row and column.
capacity of its row and the destination requirement
of its column.

STEP 3:
Repeat the process until all remaining supply and demand is exhausted.

SAMPLE PROBLEM 3: ANALYTICAL SOLUTION USING LEAST COST METHOD

FROM/TO NORTHWOOD WESTWOOD EASTWOOD PLANT SUPPLY

PLANT 1 24 30 40 40

PLANT 2 30 40 42 40

DEMAND 25 45 10 80/80

12
SOLUTION FOR SAMPLE PROBLEM 3:
STEP 1:
Select the cell with the least cost and allocate the shipment to
exhaust either the supply of plants or meet the demand
requirements.

Note: The lowest cost is 24 (in cell Plant 1 to Northwood).

STEP 2:
Choose the next lowest cost cell (with cost of 30) then make
allocation of15 units of resources meeting all the supplies in
Plant 1.

STEP 3 AND RESULT:

Repeat the process until all remaining supply anddemand is
exhausted.

𝑍 = 24(25) + 30(15) + 40(30) + 42(10) = 2670

SAMPLE PROBLEM 4: ANALYTICAL SOLUTION USING LEAST COST METHOD

DESTINATION
MODE REGULATIONS
SAN DIEGO NORFOLK PENSACOLA
TRUCK 12 6 5 3000
RAILROAD 20 11 9 3000
AIRPLANE 30 26 28 3000
MATERIAL 4500 2500 2500 9000/9000
REQUIREMENTS

SOLUTION FOR SAMPLE PROBLEM 4:

RESULT:
𝑍 = 5(2500) + 6(500) + 11(2000) + 20(1000) + 30(3000) = 147, 500

13
MODIFIED DISTRIBUTION METHOD (MODI)
➔ An evaluation procedure used to examine if it is more desirable to move a shipment into one of
the unused cells.
➔ It aims to determine whether a better schedule of shipments from plants to warehouses can be
developed
➔ It is used to compute improvement indices for each unused cell without drawing all of the closed
paths.

STEPS IN USING THE MODI METHOD (UY, ET AL., 2013)

STEP 1: STEP 2:
For each solution, compute the 𝑅 and 𝐾 values for Calculate the improved indices for all empty or
the occupied or used cells in the table using the unused cells using:
formula:
Improvement Index: 𝐼 = 𝐶 − (𝑅 + 𝐾 )
𝑖𝑗 𝑖𝑗 𝑖 𝑗
𝑅 + 𝐾 = 𝐶 , where 𝑅 is always set to 0.
𝑖 𝑗 𝑖𝑗 1

STEP 3: STEP 4:
Select the unused cell with the largest negative Trace the close path for the unused cell having
index. the largest negative index.

Note: If all indices are equal to or greater than

zero, the solution is optimal.
STEP 5: STEP 6:
Develop an improved solution. Repeat steps 1 to 5 until an optimal solution has
been found.

SAMPLE PROBLEM 5: ANALYTICAL SOLUTION USING THE MODI METHOD

FROM/TO NORTHWOOD WESTWOOD EASTWOOD PLANT SUPPLY

PLANT 1 24 30 40 40
PLANT 2 30 40 42 40
DEMAND 25 45 10 80/80

SOLUTION FOR SAMPLE PROBLEM 5:

STEP 1:
Begin with the same initial solution obtained using NWC.

To compute R and K values, consider the occupiedor used cells.

Note: There are four occupied cells (Plant 1 to Northwood,

Plant 1 to Westwood, Plant 2 to Westwood and Plant 2 to
Eastwood).

14
15
 STEP 2: STEP 3:
After the row and column values are computed, the next step Since the improvement index in the unused cell
is to evaluate each unused/unoccupied cells by computing
(row 2 to column 1) is negative (𝐼 =− 4), the
their improvement indices using 𝐼𝑖𝑗 = 𝐶𝑖𝑗 − (𝑅𝑖 + 𝐾𝑗) 21
solution is not yet optimal.
Thus, I13 = C13 – (R1 + K2) and I22 = C21 – (R2 + K1) are
computed.

Note: There are two unused cells in the problem

and their improvement indices are: I13 = 8 and I21 = - 4.

STEPS 4 AND 5:
Develop a new improved solution by tracing a close path for
the cell having the largest negative
index (𝐼 =− 4).
21

This is done by placing plus and minus signs at alternate

corners of the path, beginning with a plussign at the unused
cell (row 2 to column 1).

The smallest number in a negative position in the close path

indicates the quantity that can be assigned to the unused cell
being entered in the solution.

This quantity is added to all cells in the close path with plus
sign and subtracted from those cells withminus signs.

STEP 6:
Evaluate now the unused cells in this new solution
and repeat the process until all indices are equal
to or greater than zero.

RESULT:
Thus, the minimum cost is:

𝑍 = 30(40) + 30(25) + 40(5) + 42(10) = 2570

16
 SAMPLE PROBLEM 6: ANALYTICAL SOLUTION USING THE MODI METHOD
➔ Use the MODI method to determine the optimal allocation of the given transportation.
◆ Note: Consider the initial solution obtained in LCM.

DESTINATION
MODE REGULATIONS
SAN DIEGO NORFOLK PENSACOLA
TRUCK 12 6 5 3000
RAILROAD 20 11 9 3000
AIRPLANE 30 26 28 3000
MATERIAL 4500 2500 2500 9000/9000
REQUIREMENTS

SOLUTION FOR SAMPLE PROBLEM 6:

𝑍 = 12(1000) + 6(2000) + 11(500) + 9(2500) + 30(3000) = 142, 000

MODULE 5.3: ASSIGNMENT PROBLEM

The Definition of Assignment Problem

➔ It is a special form of transportation problem where the supply at each source and the demand
at each destination are each limited to one unit (Uy, et al., 2013).
➔ It is a problem wherein one agent is being assigned to one and only one task (Anderson, et al.,
2019).
➔ It has an objective of minimizing the overall cost of completing the job, or, alternately, of
maximizing the overall profit (Anderson et al., 2019)

SAMPLE PROBLEM 1: ANALYTICAL SOLUTION OF ASSIGNMENT PROBLEM

➔ The Fowle Marketing Research faces the task of assigning a project leader (agent) to each
client (task).
➔ Currently, three individuals have no other commitments and are available for the project leader
assignments.
➔ The three projects have approximately the same priority, and management wants to assign
project leaders to minimize the total number of days required to complete all three projects.
➔ If a project leader is to be assigned to one client only, which assignments should be made
(Anderson, et al., 2019, p.274)?

17
 ESTIMATED PROJECT COMPLETION TIMES (DAYS) FOR THE FOWLE MARKETING
RESEARCH ASSIGNMENT PROBLEM
PROJECT LEADER CLIENT
1 2 3
TERRY 10 15 9
CARLE 9 18 5
MCCLYMONDS 6 14 3

Here, the supply is always one project leader,

and the demand is for only one client.

The first table is already in the proper form for the

Assignment Tableau.

Since supply and demand are always one, it is not Note: The cost of assigning project leader to a
necessary to include supply and demand rows in client is the time it takes that project leader to
the tableau. complete the client’s task.

SOLUTION FOR SAMPLE PROBLEM 1:

STEP 1:
Develop an opportunity cost table by subtracting the
least cost in each row from every element of the row.

These computations are referred to as row reductions.

This shows the best course of action for each row, and
the penalty or “lost opportunity” is developed for all
other row values.
STEP 2:
Subtract the minimum value in each column ofthe
first reduced matrix from all entries in that column.

This is the second reduced cost matrix.

These computations are called column reductions.

STEP 3:
Test for optimality by determining if an assignment with
a total reduced cost of zero is possible from the second
reduced cost matrix.
If so, the solution is optimal.
An assignment can be made in the tablewherever a
zero is present
An optimal solution results when each of the three
project leaders can be uniquely assigned toa different
client.
Notice from Table 2a that the assignment of project
leader Terry to Client 1 means that no other project
leader can be assigned to that Client 1.
Also, the assignment of project leader Carle toClient
3 means that no other project leader can be assigned
to that Client 3.
Once this assignment is made, the zero row in
McClymonds is infeasible, which indicates that there is
no unique optimal assignment for Client 3.
Therefore, Table 2a does not contain an optimal
solution.

18
STEP 4:
Draw horizontal and vertical lines to cover all
zeros.

Use a small number of lines as possible (zeros

must be covered with as few lines as possible).
Table 2b shows that two lines are enough tocover
The table is optimal when the number of lines all the zeros.
equals the number of rows or columns.
The two lines indicate that there are only two
unique assignments, and three are required for
an optimal solution.
STEP 5:
Subtract the smallest number not covered by a
line from all the elements not covered and add this
number to all elements lying at the intersection of
two lines.
Note: The minimum value not covered by a line
The second iteration for this model with the in Table 2b is 2.
appropriate changes is shown in Table 3.
Note that in Table 3, no matter how you draw the
lines, at least three are needed to cover all the
zeros.

This indicates that three unique assignments can

be made and that an optimal solution has been
reached.

In making the assignments, project leader Terry

is assigned to Client 2, project leader Carle is
assigned to client 3 and project leader
McClymonds is assigned to Client 1.
Here, each of the project leaders can be uniquely
assigned to the different clients.

STEP 6: Note: Like a transportation problem, an

Repeat steps 4 and 5 if the solution is not assignment model can be unbalanced when
optimal. supply exceeds demand or demand exceeds
supply.
In either case, a dummy column or a dummy row
will be added to the table to balance the model.

19
SAMPLE PROBLEM 2: ANALYTICAL SOLUTION OF ASSIGNMENT PROBLEM
➔ Suppose a company has four jobs that must be assigned to four machines.
➔ The cost it takes each machine to complete each job is given by the table below.

MACHINE/JOB 𝐽 𝐽 𝐽 𝐽
1 2 3 4

𝑀 25 31 35 23
1

𝑀 15 20 24 30
2

𝑀 22 19 17 16
3

𝑀 26 21 29 32
4

SOLUTION FOR SAMPLE PROBLEM 2:

The assignment will be as follows:

Machine 1 to Job 4, Machine 2 to Job 1, Machine 3 to Job 3 and, Machine 4 to Job 2

The cost of matrix in this assignment: 𝑍 = 23 + 15 + 17 + 21 = 76

20
21
 CA5103: MANAGEMENT SCIENCE
4th Departmental Examinations

I. LECTURE

MODULE 6: PROJECT SCHEDULING (PERT/CPM)

Introduction to Project Scheduling (PERT/CPM)

➔ It is divided into two parts:
◆ Project Scheduling Based on Expected Activity Times
◆ Project Scheduling Considering Uncertain Activity Times

PERT CPM

➔ It is called the Program Evaluation and
Review Technique.
➔ It was developed by the U.S. Navy for the
Polaris Missile Project.
➔ It was developed to handle uncertain activity
times.
➔ It is called the Critical Path Method.
➔ It was developed by DuPont & Remington
Rand.
➔ It was developed for industrial projects for
which activity times generally were
known.

➔Today’s project management software packages have combined the best features of both
approaches.
➔ PERT and CPM have been used to plan, schedule, and control a wide variety of projects:
◆ R&D of new products and processes.
◆ Construction of buildings and highways.
◆ Maintenance of large and complex equipment.
◆ Design and installation of new systems.
➔ PERT/CPM is used to plan the scheduling of individual activities that make up a project.
➔ Projects may have as many as several thousand activities.
➔ A complicating factor in carrying out the activities is that some activities depend on the
completion of other activities before they can be started.

QUESTIONS THAT CAN BE ANSWERED THROUGH PERT/CPM

What is the total time to complete the project? What are the scheduled start and finish dates
for each specific activity?

Which activities are critical and must be How long can non-critical activities be delayed
completed exactly as scheduled to keep the before they cause an increase in the project
project on schedule? completion time?

Project Networks
➔ A project network can be constructed to model the precedence of the activities.

1
ILLUSTRATION OF A PROJECT NETWORK

NOTE:
➔ The nodes of the network represent the activities.
➔ The arcs of the network reflect the precedence relationships of the activities.
➔ A critical path for the network is a path consisting of activities with zero slack.

SAMPLE 1: FRANK’S FINE FLOATS

➔ Frank’s Fine Floats is in the business of building elaborate parade floats.
➔ Frank ‘s crew has a new float to build and wants to use PERT/CPM to help them manage the
project.
➔The table on the next slide shows the activities that comprise the project as well as each activity’s
estimated completion time (in days) and immediate predecessors.
➔ Frank wants to know the total time to complete the project, which activities are critical, and the
earliest and latest start and finish dates for each activity.

ACTIVITY DESCRIPTION IMMEDIATE COMPLETION TIME

PREDECESSORS (DAYS)

A Initial Paperwork - 3

B Build Body A 3

C Build Frame A 2

D Finish Body B 3

E Finish Frame C 7

F Finish Paperwork B, C 3

G Mount Body to Frame D, E 6

H Install Skirt on Frame C 2

2
 PROJECT NETWORK FOR SAMPLE 1

Earliest Start and Finish Times

STEPS IN SOLVING SAMPLE 1: FRANK’S FINE FLOATS

STEP 1:
Make a forward pass through the network as follows:
➔For each activity 𝑗 beginning at the start node, compute:
◆ Earliest Start Time = the maximum of the earliest finish times of all activities
immediately preceding activity 𝑗 (this is 0 for an activity with no predecessors).
◆ Earliest Finish Time = Earliest Start Time + Time to complete activity 𝑗.
The project completion time is the maximum of the Earliest Finish Times at the Finish node.

Latest Start and Finish Time

STEP 2:
Make a backwards pass through the network as follows:
➔ Move sequentially backwards from the finish node to the start node.
➔At a given node, 𝑗, consider all activities ending at node 𝑗.
➔For each of these activities, 𝑗, compute:

3
 ◆ Latest Finish Time = the minimum of the latest start times beginning at node 𝑗
(for node 𝑗, this is the project completion time).
◆ Latest Start Time = Latest Finish Time - Time to complete activity 𝑗.

Determining the Critical Path

STEP 3:
Calculate the slack time for each activity by:
➔ Slack = Latest Start - Earliest Start; or
➔ Slack = Latest Finish - Earliest Finish

A critical path is a path of activities, from the Start node to the Finish node, with 0 slack times.
➔ Critical Path: A > C > E > G

The project completion time equals the maximum of the activities’ earliest finish times.
➔ Project Completion Time: 18 days

4
 STEPS OF THE CRITICAL PATH PROCEDURE

STEP 1: STEP 2: STEP 3:

Develop a list of the activities
that make up the project.
STEP 4:
Draw a project network
depicting the activities and
immediate predecessors listed
in steps 1 and 2.
STEP 7:
Use the difference between the
latest start time and the earliest
start time for each activity to
determine the slack for each
activity.
Determine the immediate Estimate the completion time for
predecessor(s) for each activity each activity.
in the project.
STEP 5: STEP 6:
Use the project network and the Use the project completion time
activity time estimates to identified in step 5 as the latest
determine the earliest start and finish time for the last activity
the earliest finish time for each and make a backward pass
activity by making a forward through the network to identify
pass through the network. the latest start and latest finish
time for each activity.
The earliest finish time for the
last activity in the project
identifies the total time required
to complete the project.
STEP 8: STEP 9:
Find the activities with zero Use the information from steps
slack; these are the critical 5 and 6 to develop the activity
activities. schedule for the project.

Uncertain Activity Times

➔ In the three-time estimate approach, the time to complete an activity is assumed to follow a
Beta distribution.
➔An activity’s mean completion time is:
◆ a = the optimistic completion time estimate
◆ b = the pessimistic completion time estimate
◆ m = the most likely completion time estimate

➔ An activity’s completion time variance is:

◆ a = the optimistic completion time estimate
◆ b = the pessimistic completion time estimate

➔ In the three-time estimate approach, the critical path is determined as if the mean times for the
➔ activities were fixed times.
➔ The overall project completion time is assumed to have a normal distribution with mean equal
to the sum of the means along the critical path and variance equal to the sum of the variances
along the critical path.

5
SAMPLE 2: ABC ASSOCIATES
➔ Consider the following project:

PROJECT NETWORK FOR SAMPLE 2

ACTIVITY EXPECTED TIMES & EARLIEST AND LATEST TIMES & SLACK
VARIANCES

6
A critical path is a path of activities, from the Start node to the Finish node, with 0 slack times.
➔ Critical Path: A > C > F > I > K

The project completion time equals the maximum of the activities’ earliest finish times.
➔ Project Completion Time: 23 hours

SAMPLE 3: EARTHMOVER, INC.

➔ EarthMover is a manufacturer of road construction equipment including pavers, rollers, and

graders.
➔The company is faced with a new project, introducing a new line of loaders.
➔ Management is concerned that the project might take longer than 26 weeks to complete without
crashing some activities.

7
PROJECT NETWORK (PERT) FOR SAMPLE 3

EARLIEST/LATEST TIMES

CRITICAL ACTIVITIES

8
9