Course Pack OR-BBA 2020

COURSE PACK
FOR
INTRODUCTION
TO
OPERATIONS RESEARCH
BBA V SEM
Course Instructors: Dr. Parul Agrawal

Mrs. Bhawna Duggal
Dr. Nancy Goel
Course Leader: Mrs. Bhawna Duggal
Bharati Vidyapeeth University Institute of Management & Research, New Delhi

An ISO 9001:2015 Certified Institute
“A+” Grade Re-Accreditation by NAAC
------------------------ ------------------------ ------------------------

Forwarded by
Forwarded by
Program Coordinator Approved by Director
HOD
1|Page For Internal Circulation

Index
Unit Topic Page No.
Course Outline
 Course Overview
 Learning Outcomes
 List of Modules
 Evaluation Criteria 1-14
 Books Recommendation
 Session Plan
 Mapping lecture with course learning outcomes
 Contact Details
Introduction to Operations Research

 Definition of Operations Research
 History of Operations Research
 Characteristics of Operations Research
1 15-19
 Application/ Scope of Operations Research
 Process of Operations Research
 Advantages of Operations Research
 Limitations of Operations Research
Linear Programming Problem (LPP)

 Definition
 Components of LPP
 Assumptions underlying LPP
 Graphic Solution to LPP
 Advantages of LPP
2 20 – 31
 Limitations of LPP
 Practice Questions
Formulation
Graphical Method
 Additional Notes (if any)

Transportation Problem
 Inputs
 Objective
 Transportation Methods
 North-West Corner Rule
 Least Cost Method
3 32 – 42
 Vogel’s Approximation Method
 Test for optimality
 Special Cases in Transportation Problems
 Flow Charts
Assignment Problem
 Hungarian Assignment Method
 Variations of the Assignment Problem
 Multiple Optimal Solutions:
 Maximization Case in Assignment Problem:
4. 43 – 51
 Unbalanced Assignment Problem
 Prohibition in Assignment Problem
 Flow Chart
Simulation
 Process of Simulation
5.  Monte Carlo Simulation 52 – 57
6. 58 - 68
Network Analysis
 Rules of Network Construction
 Floats

 PERT
 Difference between PERT & CPM
Z Table
Random No. Table
7. 69-87
Previous year Question Papers (Internal)
Previous year Question Papers (University)

BHARATI VIDYAPEETH DEEMED UNIVERSITY
INSTITUTE OF MANAGEMENT AND RESEARCH
Course Outline
BBA-Sem V
ACADEMIC YEAR 2019-20
1. Course Code: J010330 Credits: 4

2. Course Title: Introduction to Operations Research
3. Course Overview:
An operation research (OR) is the discipline of applying advanced analytical methods to help make better
decisions. It uses mathematical modeling, analysis, and optimization in a holistic approach to improving our
knowledge of systems and designing useful, efficient systems. Its applications range from engineering to
management and from industry to the public sector.
Operations Research (OR) is the application of mathematical techniques and analysis to problem solving in
business and industry, in particular to carrying out more efficiently tasks such as scheduling, or optimizing
the provision of services. OR is an interdisciplinary topic drawing from mathematical modeling,
optimization theory, game theory, decision analysis, statistics, and simulation to help make decisions in
complex situations. This course in OR concentrates on mathematical modeling and optimization: for
example maximizing production capacity, or minimizing risk. The course covers a variety of mathematical
techniques for linear optimization, and the theory behind them. Examples will be presented from important
application areas, such as the emergency services, telecommunications, transportation, and manufacturing.
This module aims to introduce students to use quantitative methods and techniques for effective decisions–
making; model formulation and applications that are used in solving business decision problems.
1. To provide students with basic skills and knowledge of operations research and its application.
2. To make students Understand how to translate a real-world problem, given in words, into a
mathematical formulation.
3. To introduce the students how to use variables for formulating complex mathematical models in
management science.
4. To introduce the students to the use of basic methodology for the solution of LPP, Transportation,
Assignment, PERT/CPM, Simulation etc. and Critically analyzing and interpreting results.
5. Students must be able to apply the techniques used in operations research to solve real life problems.
The students are expected to review the course readings and the indicated portion of the prescribed
text for class discussions prior to attending each session.

4. Learning Outcomes:
After undergoing this course, the student will be able to:
1. Understand how to translate a real-world problem, given in words, into a mathematical formulation.
2. How to use different models of OR to solve real life problems.
3. How the scarce resources can be utilized in an efficient manner.
4. Find the ways to achieve the organization objectives: minimizing cost & maximizing profit/output.
5. Critically analyze and interpret results.
Specific knowledge:
(a) Formulate a Linear Program (LP) or translate into standard form, and use the Graphical Method to
solve.
(c) Formulation and solution of network problems using PERT and CPM.
(d) How to solve transportation & Assignment Problems for time cost & distance optimization.
(e) Better understand the topic of Simulation and its use in practical problems.
5. List of Topics/ Modules:
Topic/ Module Contents/ Concepts
 History
Module I: Introduction to Operations  Meaning & Significance

Research  Scope and Limitations
 Applications of OR in Business & Management
Module II: Linear Programming
 Definition and Components of LPP
Problem
 Formulation of LPP model,
 Solution
 Max/Min Problems, Graphical Method
 Application and Limitation
 Sensitivity Analysis

Module III: Transportation Problems  Formulation
 Initial Feasible Solution using North West Corner
Rule, Row Minima Method, Column Minima
Method, Matrix Minimum Method, VAM
 Optimality Check
 Finding optimal solution/s.
Module IV: Assignment Problem  Meaning, Definition and application of assignment
problem.
 Hungarian Method
 Assignment Problem for Max/ Min Cases.
Module V: Simulation  Introduction
 Monte Carlo Technique
 Business Application
 Limitations
Module VI: Network Analysis  PERT and CPM Techniques
 Introduction to Networks
 Key terms in Network Analysis, Network Models –
PERT/ CPM
 Network Components and Precedence
Relationships
 CPM, PERT
 Determination of PERT times
 Determining critical path
 Floats and Slacks

6. Evaluation Criteria:
Component Description Weight

age for
100
marks
It will be based on conceptual questions and situation specific application

1.End Term oriented questions. End term exam will cover both pre mid-term and post
60 %
Exams mid-term course coverage. Course readings are an integral component of
learning in this course.
There will be two Internal exams of 10 % weight age each. They will be
based on conceptual questions and situation specific application oriented
2.Mid Term
questions. Course readings are an integral component of learning in this 20 %
Exams
course. At least one of the questions will be based on these readings
which will not be specified to the students.
Students will be awarded marks for active and constructive participation

in class. Students are also required to submit reflective notes individually
3.Class
at the end of each class. (Reflective notes are collection of notes,
Participation & 10%
Reflective Notes observation, thoughts and learning that the students have experienced
after attending the class. The reflective notes will include only the key
learning and key takeaways which the students got from the class.)
Students will be Evaluated 4 times through any of the CES activities

4. Continuous which includes Class test, Case Studies, Quiz on Moodle, Presentations
Evaluation System etc. Their knowledge may be tested through class tests at the end of each 10 %
(CES)
module. They may also be asked to give presentations on the topics
allotted to them and at the end of the complete syllabus they will required
to appear in the quiz on moodle.

7. Recommended/ Reference Text Books and Resources:
Text Books 1.Vohra, N. D, Quantitative Techniques in Management, 4th Ed, Tata McGraw Hill,
2010.
Course Reading 1. Gupta, P. K., & Hira, D. (2010). Operations Research. S. Chand & Company Ltd.
2. Sharma, J. K. (2013). Operations Research (5th ed.). Mcmillan Publishers India
Ltd.
3. Taha : An Introduction to Operations Research, PHI
You tube Links https://youtu.be/1CnFjNOewEU
https://youtu.be/ILWbaWrjgU4
https://youtu.be/-aIV14ZLqOM
8. Session Plan:
Reading Due
by the students
Schedule Topic to be discussed Learning Outcome
before coming
to the class
Quantitative Techniques in Management
Module I - Overview of Operation Research
by N.D.Vohra, 4th Edition
History of OR; Meaning & Significance of
OR Chapter-1 How to use different
1
Scope & Limitations of OR Page No. 3 - 12 models of OR to solve
Applications of OR in Business real life problems
Module II - Linear Programming
Theoretical concepts of Linear programming To develop the skill and

problems ability to translate a
Chapter-2
2 Page No. 19 - given real – life situation
Formulation of Linear programming 25 into a linear
problems programming format.
Formulation of Linear programming Page No. 19 -

3
problems 25
Enhancement of
4 Discussion/Evaluation on Assignment given -
analytical skills
How to minimizing cost
Solution by graphical methods-
5 Page No. 25-29 & maximizing
Maximization Problem
profit/output.

Solution by graphical methods-Minimization
6 Page No. 29-32
Problem
Example 2.11-
7 Solution by graphical methods-Mix Problem
2.21
Special Cases in LPP (Multiple & Enhancement of

8 Page No. 32-37
Unbounded) analytical skills
Sensitivity analysis(theory) Notes given

10
Doubts handling -
Module III - Transportation Problems
Introduction about transportation problem Chapter-5 How OR model is used
11 Page No. 204- to optimize the

Solution by North West Corner Method 209 transportation cost
Page No. 210-

Solution by Least Cost Method Enhancement of Problem
211
12 solving and analytical
Solution by Row Minima , column Minima
Notes given skills
Method
How OR model is used
Page No. 211-
13 Solution by Vogel's Approximation Method to optimize the
214
transportation cost
Page No. 211-
14 Solution by Vogel's Approximation Method
214
Enhancement of Problem
Optimum Solution by Stepping stone Page No. 214-
15 solving and analytical
method 220
skills
Page No. 220-
16 Optimum Solution by Modi method
224
Special Cases – Unbalanced, Maximization, Page No. 224- Enhancement of
17
Restricted 235 analytical skills
18 Special Cases-Degeneracy in T. Problems P. No. 224-235
Enhancement of
analytical skills
20 Class Test-1 -
10 | P a g e For Internal Circulation

Module IV - Assignment Problems
Chapter-6 How to use different

Assignment problem-Theoretical
Page No. 288 - models of OR to solve
Background
298 real life problems
21
Page No. 288 -
Hungarian Method of solution
298
How this method is used
to minimize the time,
Page No. 288 -
22 Hungarian Method of solution cost & distance while
298
assigning/allocating
work
Page No. 299 -
23 Special Cases – Maximization, Restriction
305
Enhancement of
Page No. 299 -
24 Special Cases – Multiple Solutions analytical skills
305
Enhancement of
Applications of Assignment Problem Notes Given analytical skills
25
Discussion/Evaluation on Assignment given -
26 Class Test-2 -
Module V - Simulation
Chapter-17
27 Introduction to Simulation Page No. 878- How to use different
888 models of OR to solve
Page No. 878- real life problems
Monte Carlo Method-Practical Problems
888
Page No. 889- Enhancement of

28 Monte Carlo Method-Practical Problems
905 analytical skills
How OR models are

Page No. 878-
29 Business Applications & Limitations used to solve the
888
business problems
Enhancement of
Discussion/Evaluation on Assignment given -
analytical skills
30 Class Test-III -

Module VI - Network Analysis
31
Introduction to Networks
Chapter-12
Network Models-PERT/CPM Page No. 608 -
616
How to achieve time and
cost optimization by
Network components & precedence using this model of OR
relationship in projects
Page No. 617 -

32 Representing a Project as a Network
619
Page No. 619 -

33 Critical Path Method
620
Page No. 621 -

34 Floats –Total, Free & Independent Floats
624
Page No. 638 -

35 PERT-project completion time with three 643
time estimates Enhancement of
analytical skills
Page No. 638 -

36 PERT-calculation of probability & 643
completion time
38 Quiz on Moodle -

9. MAPPING LECTURE WITH COURSE LEARNING OUTCOMES
LO1 LO2 LO3 LO4 LO5
LECTURE1 High
LECTURE2 High Medium
LECTURE10 High
LECTURE11 High Medium Low
LECTURE17 High
LECTURE18 High
LECTURE19 High
LECTURE20 High

LECTURE25 High
LECTURE28 High
LECTURE29 High
LECTURE30 High

LECTURE37 High
LECTURE38 High
10. Contact Details:
Name of the Instructor: Mrs. Bhawna Duggal; Dr. Parul Agrawal, Ms. Nisha Nandal
Office Location: Paschim Vihar

Telephone: 011-25285808, ext. 274, 221
Email: b16_dhawan@yahoo.co.in, Parul_agrawal@yahoo.com

Unit 1 – Introduction to Operations Research
Operations
The activities carried out in an organization.
Research
The process of observation and testing characterized by the scientific method.
Operations Research is a quantitative approach to decision making based on the scientific method of problem
solving.
Definitions of Operations Research
 Operations research is the application of the methods of science to complex problems in the direction
and management of large systems of men, machines, materials and money in industry, business,
government and defence. The distinctive approach is to develop a scientific model of the system
incorporating measurements of factors such as chance and risk, with which to predict and compare the
outcomes of alternative decisions, strategies or controls. The purpose is to help management in
determining its policy and actions scientifically.
—Operational Research Society, UK
 Operations research is concerned with scientifically deciding how to best design and operate man–
machine systems usually requiring the allocation of scarce resources.
—Operations Research Society, America
 It is the use of scientific knowledge through interdisciplinary team effort for the purpose of
determining the best utilization of limited resources.
—Hamdy A Taha
 The application of scientific method to study of operations of large complex organizations or

activities. It provides top level administrators with a quantitative basis for decisions that will increase
the effectiveness of such organizations in carrying out their basic purpose.
—Committee on OR of National Research Council

History of Operations Research
 Strategic and tactical problems – World war-II
The term ‘operations research’ was coined as a result of research on military operations during
World War II. Since expecting adequate solutions from individuals or specialists in a single discipline
was unrealistic, groups of individuals who collectively were considered specialists in mathematics,
economics, statistics and probability theory, engineering, behavioural, and physical science were
formed. In Britain, Col. P. M. S. Blackett was assigned the problem of analysing the coordination of
radar equipment at gun sites
 Adoption in other fields
After the war, scientists who had been active in the military operations research (OR) groups made
efforts to apply operations research approach to civilian problems, related to business, industry,
research and development, etc.
 Economic and industrial boom
After World War II, economic and industrial boom resulted in continuous mechanization,
automation, decentralization of operations and division of management functions. Therefore
application of operations research to managerial decision-making became popular.
Characteristics of Operations Research
 Use of Scientific Methods
 Use of Models to represent the complex relationship
 Interdisciplinary approach
 Provision of a quantitative basis for decision making
 Methodological Approach
 Decision-making
 Operations Economy
Applications/Scope of Operations Research
 Areas
• Finance
• Production
• Marketing
• Personnel

 Techniques
• Linear Programming
• Decision Models
• Network Theory
• Inventory Control
• Queuing Theory
• Sequencing
• Game Theory
• Simulation

Process of Operations Research

Advantages of Operations Research
 Better Decision-making
 Better control
 Better Co-ordination
 Helpful in complex situations
 Resolve conflicts
 Improves Productivity
Limitations of Operations Research
 Magnitude of Computation
 Non-Quantifiable Factors
 Distance between User and Analyst
 Time and Money Costs
 Implementation

Unit 2- Linear Programming Problem
Definitions
Linear programming is a mathematical technique useful for allocation of ‘scarce’ or ‘limited’ resources, to
several competing activities on the basis of a given criterion of optimality.
The word ‘linear’ refers to linear relationship among variables in a model. That is, a change in one variable
causes a resulting proportional change in other variable. The word ‘programming’ refers to the solution of a
problem that involves the economic allocation of limited resources, by choosing a particular course of action
or strategy among various alternative strategies in order to achieve a desired objective.
Components of an LPP
• Decision Variables
• Objective Function
 To maximize or minimize
• Constraints
 Involving ≤, =, or ≥ sign
• Non-negativity Condition
 Variables to be non-negative
Assumptions underlying Linear Programming
 Proportionality
 Additivity
 Continuity
 Certainty
 Finite Choices

Graphic Solution to LPPs
 Plot constraints
 Mark feasible region which should be a convex set
 Evaluate corner points/use iso-profit or iso-cost lines to get optimal solution
 Redundant constraints
 Binding constraints
 Non-binding constraints
Solutions to LPPs
• Unique Optimal Solution
• Multiple Optimal Solutions
• Infeasibility: No feasible solution
• Unbounded Solution
Advantages of Linear Programming
• Linear programming helps in attaining the optimum use of productive resources. It also indicates the
use of productive factors effectively by selecting and distributing (allocating) these resources.
• Linear programming technique improves the quality of decisions. In other words, decision-making
approach becomes more objective and less subjective.
• Linear programming technique provides possible and practical solutions by taking into account the
constraints operating outside the problem.
• Linear programming also helps in re-evaluation of the outcome due to a course of action under
changing conditions. This helps to adjust the remainder of the decision process for best results.

Limitations of Linear Programming
• Linear programming treats all relationships among decision variables as linear. However, in real life
neither the objective function nor the constraints concerning business and industrial problems are
linearly related to the variables.
• While solving an LP model, there is no guarantee to get an integer valued solution. Rounding off the
solution to the nearest integer will not yield an optimal solution. In such cases, integer programming is
used to ensure integer value to the decision variables.
• Linear programming model does not take into consideration the effect of time and uncertainty.
• Parameters of LP model are assumed to be constant but in real-life situations, they are neither known
nor constant.
• A LP model has single objective function, whereas in real-life situations we may come across
conflicting multi-objective problems. In such cases, a goal programming model is used to get
satisfactory value of such objectives.

Practice Questions
Q-1 A firm produces three products A, B & C each of which passes through three departments:
Fabrication, Finishing & Packaging. Each unit of product A requires 3, 4 & 2; a unit of product B requires 5, 4
& 4 while each unit of product C requires 2, 4 & 5 hours respectively in the three departments. Every day 60
hrs are available in the fabrication department, 72 hrs in the finishing department and 100 hrs in the packaging
department. The unit contribution of product A is Rs. 5, of product B is Rs. 10 and of product C is Rs. 8.
Formulate the problem as LPP.
Q-2 The agricultural research institute suggested the farmer to spread out at least 4800 kg of special
phosphate fertilizer and not less than 7200 kg of a special nitrogen fertilizer to raise the productivity of crops
in his fields. There are two sources for obtaining these – mixtures A and mixtures B. Both of these are
available in bags weighing 100kg each and they cost Rs.40 and Rs.24 respectively. Mixture A contains
phosphate and nitrogen equivalent of 20kg and 80 kg respectively, while mixture B contains these ingredients
equivalent of 50 kg each. Write this as an LPP and determine how many bags of each type the farmer should
buy in order to obtain the required fertilizer at minimum cost.
Q-3 Chocolate India Ltd. produces three varieties of Chocolates – Hard, mild & soft from three different
inputs I1, I2 & I3. One unit of Hard requires 2 units of I 1 and 4 unit of I2. One unit of mild requires 5 units of I 1,
4 units of I2 and 3 units of I3 and one unit of soft requires 10 units of I 1 & 15 units of I3. The total available of
inputs in the company’s warehouse is as under:
I1 - 100 units
I2 - 400 units
I3 - 50 units
The profit per unit for hard, mild & soft are Rs. 20, Rs. 30 and Rs. 40 respectively. Formulate the problem so
as to maximize the total profit by using linear programming.
Q-4 Safe & sound Investment Ltd. wants to invest up to Rs. 10 lakhs into various bonds. The ma nagement
is currently considering four bonds, the detail on return & maturity of which are as follows:
Bonds Types Returns Maturity Time

α Govt. 22% 15 years
β Govt. 18% 5 years
γ Industrial 28% 20 years
θ Industrial 16% 3 years
The company has decided not to put less than half of its investment in the government bonds and that the
average age of the portfolio should not be more than 6 years. The investment should be such which maximizes
the return on investment, subject to the above restriction. Formulate the above as a LP problem.

Q-5 To maintain good health, a person must fulfill certain minimum daily requirements of several kinds of
nutrients. For the sake of simplicity let us assume that only three kinds of these needs to be considered
calcium, protein vitamin A. also assume that the person’s diet is to consist of only 2 food items, I & II; whose
prices & nutrient content’s are given in the following table. Find out the optimal combination of the two food
items that will satisfy the daily requirements & entail the least cost.
Foods Calcium Protein Qty Vitamin A Qty Cost per Unit

F1 10 5 2 6
F2 4 5 6 1
Daily Min. Requirements 20 20 12
Q-6 A steel plant manufactures two grades of steel S1 & S2. Data given below shows the total resources
consumed & profit per unit associated with S1 & S2 .iron and labor are the only resources which are consumed
in the manufacturing process. The manager of the firm wishes to determine the different units of S1 & S2 which
should be manufactured to maximize the total profit.
Resource utilized Unit-requirement Amount Available

S1 S2
Iron (kg) 30 20 300
labour (Hours) 5 10 110
Profit (Rs.) 6 8
Q-7 A manufacturer produces two types of models M1 and M2.Each model of the type M1 requires 4
hours of grinding and 2 hours of polishing; whereas each model of M2 requires 2 hours of grinding and 5
hours of polishing. The manufacturer has 2 grinders and 3 polishers. Each grinder works for 40 hours a week
and each polisher works 60 hours a week. Profit on M1 model is Rs.3.00 and on model M2 is
Rs.4.00.Whatever produced in a week is sold in the market. How should the manufacturer allocate his
production capacity to the two types of models, so that he makes maximum profit in a week? = 3
X
Q-8 Alpha Limited produces & sells 2 different products under the brand name black & white. The profits
per unit on these products are Rs. 50 & Rs. 40 respectively. Both black & white employ the same
manufacturing process which has a fixed total capacity of 50,000 man-hours. As per the estimates of the
marketing research department of Alpha Limited, there is a market demand for maximum 8,000 units of Black
& 10,000 units of white. Subject to the overall demand, the products can be sold in any possible combination.
If it takes 3 hours to produce one unit of black & 2 hours to produce one unit of white, formulate the about as
a linear programming model.
4X1 + 2X2 < 80 2X1 + 5X2 < 180 X1, X2 > 0

Q-9 A person wants to decide the constituents of a diet which will fulfill his daily requirements of proteins,
Fats & carbohydrates at the minimum cost. The choice is to be made from four different types of
foods. The yield per unit of these foods is:
Yield Per Unit Cost per Unit

Food Type
Proteins Fats Carbohydrates (Rs.)
1 3 2 6 45
2 4 2 4 40
3 8 7 7 85
4 6 5 4 65
Minimum
800 200 700
Requirement
Formulate the linear programming model for the problem.
Q-10 High Quality furniture Ltd. manufactures two products, tables & chairs. Both the products have to be
processed through two machines Ml & M2 the total machine-hours available are: 200 hours ofM1 and 400
hours of M2 respectively. Time in hours required for producing a chair and a table on both the machines is as
follows:
Time in Hours
Machine Table Chair
M1 7 4
M2 5 5
Profit from the Sale of table is Rs. 40 and that from a chair is Rs. 30, determine optimal mix of tables & chairs
so as to maximize the total profit.

Q-11 Good Results Company manufactures & sells in the export market three different kinds of products P 1,
P2 & P3. The anticipated sales for the three products are 100 units of P 1, 200 units of P2 & 300 units of P3. As
per the terms of the contract Good results must produce at least 50 units of P 1 & 70 units of P3. Following is
the break – up of the various production lines:
Product Production Hours per Unit Unit Profit

(Rs.)
Department Department Department Department

(A) (B) (C) (D)
P1 0.05 0.06 0.07 0.08 15
P2 0.10 0.12 0.30 20
P3 0.20 0.09 0.07 0.08 25
Available 40.00 45.00 50.00 55.00

hours
Management is free to establish the production schedule subject to the above constraints.
Formulate as a linear programming model assuming profit maximization criterion for Good Results Company.
Q-12 The management of Surya Chemicals is considering the optimal mix of two possible processes. The values of
input & output for both these process are given as follows:
Process Inputs Units Outputs Units
I1 I2 O1 O2
X 2 6 3 7
Y 4 8 5 9
Maximum 500 units of Input I1 and 300 units of I2 are available to Surya Chemicals in the local market. The
forecasted demand for outputs OI & O2 are at least 5,000 units & 7,000 units respectively. The respective

profits from process X & Y are Rs. 1,000 & Rs. 2,000 – per production run. You are required to formulate the
above as a linear programming model.
Solve using Graphical Method
Q-13 A small scale industry manufactures electrical regulators, the assembly of which is being
accomplished by a small group of skilled workers, both men and women. Due to the limitations of space and
finance, the number of workers employed cannot exceed 11 and their salary bill not more than Rs. 60,000 per
month. The male members of the skilled workers are paid Rs. 6000 per month, while the female worker doing
the same work as the male member get Rs. 5000 member contributes Rs. 10,000 per month to total return of
the industry, while the female worker contributes Rs. 8500 per month. Determine the number of male and
female workers to be employed in order to maximize the monthly total return.(maximization- bounded-
unique)
Q-14 Maximize: z=2x1 + x2 (Bounded- Unique)
Constraints:
x1 + 2x2 ≤ 360
x1 + x2 ≤ 6
x1 - x2 ≤ 2
x1 - 2x2 ≤ 1
x1, x2 ≥ 0
Q-15 MD Ltd. has two bottling plants, one located at Solan and the other at Mohan Nagar. Each plant
produces three drinks; whisky, beer and fruit juices name A, B, C respectively. The number of bottles
produced per day is as follows:
Plant at
Solan Mohan Nagar
Whisky 1500 1500
Beer 3000 1000
Fruit Juices 2000 5000

A market survey indicates that during the month of April, there will be a demand of 20,000 bottles of whisky,
40,000 bottles of beer and 44,000 bottles of fruit juices. The operating costs per day for plants at Solan and
Mohan Nagar are 600 & 400 monetary units. For how many days each plant is run in April so as to minimize
the production cost while still meeting the market demand?(Unbounded- Minimization- Unique)
Q-16 Use the graphical method to solve the LP problem. (Minimize- Bounded with negative coordinates-
Unique (negative) solution)
Minimize Z = − x1 + 2x2
Subject to the constraints
−x1 + 3x2  10
x1 + x2  6
x1 − x2  2
And x1, x2 ≥ 0.
Q-17 Solve the following problem graphically (Maximize- Unbounded- Infinite)
Max Z= 5X1+4X2
Subject to X1-2X2 ≤ 1
X1+2X2 ≥ 3
X1, X2 ≥ 0
Q-18 Solve the following problem graphically: (Maximize- Bounded- Unique)
Max Z= -X1+2X2
Subject to
X1-X2≤ -1
-0.5 +X2 ≤ 2
X1, X2 ≥ 0
Q-19 Maximize Z=4x1 + 3x2 (Bounded- Multiple optimal)
3x1 + 4x2 ≤ 24
8x1 + 6x2 ≤ 48
x1 ≤ 5
x2 ≤ 6
x1, x2 ≥ 0
Q-20 Maximize: z=4x1 + 2x2 (Unbounded- Infeasible)
Constraints:
2x1 + 3x2 ≤ 18
x1 + x2 ≥ 10
x1, x2 ≥ 0
Q-21 An advertising firm desires to reach two types of audiences- customers with annual income of more
than Rs. 40,000 (target audience A) and customers with annual income of less than Rs. 40,000 (target
audience B). The total advertising budget is Rs.2, 00,000. One programme of T.V advertising costs Rs.50, 000
and one programme of radio advertising costs Rs. 20,000. Contract conditions ordinarily require that there
should be atleast3 programmes on T.V and the number of programmes on Radio must not exceed 5. Survey
indicates that a single T.V programme reaches 7, 50,000 customers in target audience A and 1, 50,000 in
target audience B. One Radio programme reaches 40,000 customers on target audience A and 2, 60,000 in
target audience B. Formulate this as a LPP and determine the media mix to maximize the total reach using
graphic method. (Maximize- Bounded- Unique)

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Unit III: Transportation Problems
Inputs:
 Sources with availability
 Destinations with requirements
 Unit cost of transportation from various sources to destinations
Objective:
 To determine schedule of transportation to minimize total transportation cost
Transportation Method
Step 1
Balance the problem if Aggregate Demand and Aggregate Supply are unequal; place an M in the cost cell if
some route is prohibited; and convert into equivalent minimization problem if it is a maximization problem.
Step 2
Obtain initial solution
 North-West Corner Rule: considers only demand and availability
 Least Cost Method: considers unit cost, demand and availability
 Vogel’s Approximation Method: considers cost differences, demand and availability
Step 3
Test for optimality
For this, check if the number of occupied cells = m + n – 1
If yes, obtain ui and vj values and calculate ∆ij values for unoccupied cells
 If all ∆ij values are ≤ 0, it is optimal solution
 If all ∆ij values are negative, it is unique optimal solution
 If some ∆ij value/s = 0 while others are negative, there are multiple optimal solutions
In case of non-optimal solution go to step 4

Step 4
Improve non-optimal solution
(a) Begin with cell having largest ∆ij, draw a closed path:
 Move alternately between rows and columns
 Stop only at occupied cells
 Start with a + sign in the cell of origin, place – and + signs alternately on cells on the
path
(b) Consider cells with – sign, choose the least quantity in them, add it to each cell with + sign and subtract it
from each cell with – sign
(c) Obtain revised solution and go back to step 3
Special Cases in Transportation Problem

Unbalanced Transportation Problem
A problem is known to be unbalanced problem if Aggregate Demand and Aggregate Supply are unequal; the
first step is to make it balanced by adding a dummy row or dummy column as per the requirement & placing
zero in all the cost cells of that dummy row or dummy column.
Transportation Problem of Maximization
If a problem is of maximization (instead of cost profit /saving is given) then convert it into equivalent
minimization problem by subtracting all the values from the highest value.
Prohibition in Transportation Problem
If some routes are prohibited in the problem then place an M (which denotes vary high cost) in the cost cell
which is prohibited and then solve in usual manner.
Degeneracy in Transportation Problem
If the basic feasible solution of a transportation problem with m origins and n destinations has fewer than
m+n-1 positive cij (Occupied cells), the problem is said to be a degenerate transportation problem.
Degeneracy occurs at two stages:
1) Initial Stage
2) During testing the optimal solution. (Prevents testing optimality of the solution)
Degeneracy is removed by placing an infinitesimally small value ε (Epsilon) in each of the required number
of independent cells

Practice Questions
Q-1 Find out the initial feasible solution using:
i) North West Corner Method,

ii) Least Cost Method/ Matrix Minima Method
iii) Row Minima method
iv) Column Minima Method
v) Vogel’s Approximation Method
Distribution Centers
A B C D Supply
Plants P 2 3 11 7 6
Q 1 0 6 1 1
R 5 8 15 9 10
Requirements 7 5 3 2
Q-2 Find the optimal transportation cost using: MODI Method
P Q R S Supply
A 12 10 12 13 500
B 7 11 8 14 300
C 6 16 11 7 200
Demand 180 150 350 320 1000
Q-3 Given the following transportation problem:
Market
Warehouse Supply
A B C
1 10 12 7 180
2 14 11 6 100
3 9 5 13 160
4 11 7 9 120
Demand 240 200 220
It is known that currently nothing can be sent from warehouse 1 to market A and from warehouse 3 to market
C. Solve the problem and determine the least cost transportation schedule. Is the optimal solution obtained by
you is unique? If not, what is/ are the other optimal solution/s?

Q-4 The following matrix gives the distance in kms, f rom source of supply to the destination. The shipping
cost is Rs. 10per km. What shipping schedule should be used to minimize total cost?
D1 D2 D3 D4 D5 Supply
S1 5 8 6 6 3 8
S2 4 7 7 6 5 5
S3 8 4 6 6 4 9
Demand 4 4 5 4 8
Q-5 Determine a transportation schedule to minimize cost using NWC Rule.
D1 D2 D3 Supply
S1 8 5 6 120
S2 15 10 12 80
S3 3 9 10 80
Demand 150 80 50
Q-6 There are four warehouses located at A, B, C and D with capacity of 90, 50, 80 and 60 tons
respectively. A supply has to be made in 3 cities P, Q and r with a demand of 120, 100 and 110 tons
respectively. The shipping cost per ton is given below:-
P Q R
A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7
 Shipments are prohibited from A to P. Find out the minimum cost.
Q-7 A company supplies the product from its warehouses to 4 cities. The profit per unit is given below.
Warehouse/City 1 2 3 4 Supply
A 6 6 11 15 80
B 4 6 10 12 120
C 6 4 7 6 150
D 4 10 14 14 70
E 8 8 7 9 90
Demand 100 200 120 80

Q-8 The table below records transportation costs per unit of a product from origins O1, O2, O3 and O4 to
destinations D1, D2, D3, D4 and D5. The capacities of the four origins are respectively 55, 45, 30 and 50
while the requirements of the five destinations are respectively 40, 20, 50, 30 and 40.Employing Vogel’s
Approximation Method, or otherwise, make the initial allocations to the origins to satisfy the requirements of
the destinations and test the optimality of these allocations. Use Modified Distribution Method (MODI) for
obtaining an optimal solution that would minimize the total cost of transportation.
Destination
Origin Capacity
D1 D2 D3 D4 D5
O1 12 4 9 5 9 55
O2 8 1 6 6 7 45
O3 1 12 4 7 7 30
O4 10 15 6 9 1 50
Requirement 40 20 50 30 40
Find the total cost implied by the solution. Is the solution unique? If not, find an alternative solution as
well.
Q-9 A company has four warehouses and six stores. The warehouses altogether have a surplus of 22 units of a
given commodity, divided among them as follows:
Warehouses 1 2 3 4
Surplus 5 6 2 9
The six stores altogether need 22 units of the commodity. Individual requirements at stores 1, 2,3,4,5 and 6
are 4, 4, 6, 2, 4 and 2 units respectively.
Cost of shipping one unit of commodity from warehouse to stores in rupees is given in the matrix below:
Stores
Warehouses
1 2 3 4 5 6
1 9 12 9 6 9 10
2 7 3 7 7 5 5
3 6 5 9 11 3 11
4 6 8 11 2 2 10
How the products should be shipped from the warehouses to the stores so that the transportation cost is
minimum?

Q-10 A company has received a contract to supply gravel to three new construction projects located in towns A, B
and C. The construction engineers have estimated that the required amounts of gravel which will be needed at these
construction projects are:
Project Location Weekly Requirements

(Truckloads)
A 72
B 102
C 41
The company has 3 gravel pits located in towns X, Y and Z. The gravel required by the construction project can be
supplied by three pits. The amount of gravel that can be supplied by each pit is as follows:
Plant: X Y Z
Amount Available 76 82 77
(Truckloads)
The company has computed the delivery cost from each pit to each project site. These costs (in Rs.) are shown in the
following table:
Project Location
A B C
Pit
4 8 8
16 24 16
8 16 24
Schedule the shipment from each pit to each project in such a manner that it minimizes the total transportation
cost within the constraints imposed by pit capacities and project requirements. Also find the minimum cost.
Q-11 Find the optimum solution to the following transportation problem in which the cells contain the
transportation cost in rupees.
W1 W2 W3 W4 W5 Available
F1 7 6 4 5 9 40
F2 8 5 6 7 8 30
F3 6 8 9 6 5 20
F4 5 7 7 8 6 10
Required 30 30 15 20 5 100

Q-12 XYZ tobacco Company purchases tobacco and stores in warehouses located in the following four
cities:
Warehouse Location(City) A B C D
Capacity (Tons) 90 50 80 60
The warehouse supply tobacco to cigarette companies in three cities that have the following demand:
Cigarette Company Demand (Tons)

Bharat 120
Janta 100
Red Lamp 110
The following railroad shipping costs per tonne (in hundred rupees) have been determined:
Warehouse Location Bharat Janta Red Lamp

A 7 10 5
B 12 9 4
C 7 3 11
D 9 5 7
Because of railroad construction, shipments are temporarily prohibited from warehouse at city A to Bharat
Cigarette Company.
a) Find the optimum distribution for XYZ Tobacco Company.

b) Are there multiple optimum solutions? If yes, identify them.
Q-13 Find the initial solution for the transportation problem by VAM method. Also obtain the optimum solution by
MODI Method.
Market
Plant Supply
M1 M2 M3 M4
P1 6 4 9 1 40
P2 20 6 11 3 40
P3 7 1 0 14 50
P4 7 1 12 6 30
Demand 90 30 50 30

Q-14 A company manufacturing air – coolers has two plants located at Mumbai and Kolkata with a capacity of 200
units and 100 units per week respectively. The company supplies the air – coolers to its four showrooms situated at
Ranchi, Delhi, Lucknow and Kanpur which have a maximum demand of 75, 100, 100 and 30 units respectively. Due to
the differences in raw material cost and transportation cost, the profit per unit in rupees differs which is shown in the
table below:
Ranchi Delhi Lucknow Kanpur

Mumbai 90 90 100 110
Kolkata 50 70 130 85
Plan the production program so as to maximize the profit. The company may have its production capacity at
both plans partly or wholly unused.
Q-15 A product is manufactured at four factories A, B, C and D. Their unit production costs are Rs. 2, Rs. 3, Re 1 and
Rs. 5, respectively. Their production capacities are 50, 70, 30 and 50 units, respectively. These factories supply the
product to four stores, demands of which are 25, 35, 105 and 20 units respectively. Unit transportation cost in rupees
from each factory to each store is given in the table below:
Stores
Factories I II III IV
A 2 4 6 11
B 10 8 7 5
C 13 3 9 12
D 4 6 8 3
Determine the extent of deliveries from each of the factories to each of the stores, so that the total production
and transportation cost is the minimum.
Q-16 A company has factories at F1, F2 and F3 that supply products to warehouses at W1, W2 and W3. The weekly
capacities of the factories are 200, 160 and 90 units, respectively. The weekly warehouse requirements are 180, 120
and 150 units, respectively. The unit shipping costs (in rupees) are as follows:
Warehouse
Factory Supply
W1 W2 W3
F1 16 20 12 200
F2 14 8 18 160
F3 26 24 16 90
Demand 180 120 150 450
Determine the optimal distribution for this company in order to minimize its total shipping cost.

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Unit IV: Assignment Problem
Assignment problem arises when each assignee (workers, salesmen, vehicles, contracts, etc.) is to be assigned
to exactly one task (sales regions, machines, checkout counters, routes, bidders, etc.) with an objective to
minimize the total cost/time/distance or to maximize total profit.
The problem of assignment arises because resources that are available have varying degree of efficiency for
performing different tasks. The cost, profit or time of performing different tasks is also different.
Assignment Problem
• Can be solved by complete enumeration
• Can be formulated and solved as a transportation problem
• Can be formulated and solved an LPP (a 0-1 IPP)
• Can be solved by Hungarian Assignment Method (HAM)
• HAM is most efficient of all methods
Hungarian Assignment Method
Step 1
 Balance the problem if it is unbalanced
 Place an M as the cost element if some assignment is prohibited
 Convert into equivalent min problem if it is a max problem
Step 2
Obtain zeros in every row and column by row reductions and column reductions
Step 3
Cover all zeros by least number of horizontal/ vertical lines
If number of lines = n move to step 4 else make adjustment: select least uncovered value; subtract it from
every uncovered value; and add to each one at intersection of lines
Again cover zeros with lines to find if you could go to 4
Step 4
Make assignments by considering zeros

Variations of the Assignment Problem
Multiple Optimal Solutions:
While making assignments, it is possible to have two or more ways to strike off a certain number of
zeros. This indicates that there are multiple optimal solutions with the same optimal value of objective
function.
Maximization Case in Assignment Problem:
If an assignment problem is for maximization of profit/revenue, then such problems are solved by
converting given data on profit/revenue into cost data as follows:
Locate largest payoff element in the assignment table and then subtract all elements of the table from
this element. The new assignment problem, so obtained, can be solved by using the Hungarian
method.
Unbalanced Assignment Problem
Hungarian method requires that the number of columns and rows in the assignment matrix be equal.
Otherwise, assignment problem is called an unbalanced problem. To make given matrix a square
matrix, dummy row(s) or column(s) are added (with zeros cost elements).
Prohibition in Assignment Problem
If some routes are prohibited in the problem then place an M (which denotes vary high cost) in the
cost cell which is prohibited and then solve in usual manner.

Practice Questions
Q-1 To stimulate interest and provide an atmosphere for intellectual discussion, the finance faculty in
management school decides to hold special seminars on 4 contemporary topics- leasing, portfolio
management, mutual funds and swaps & options. Such seminars would be held once per week in the
afternoons. However, scheduling these seminars (1 for each topic and not more than 1 seminar in the
afternoon) has to be carefully done so that the number of students unable to attend is kept minimum. A
study indicates that the number of students who cannot attend a particular seminar on a specific day is as
follows:
Swaps &
Leasing Portfolio Management Mutual Funds
Options
Monday 50 40 60 20
Tuesday 40 30 40 30
Wednesday 60 20 30 20
Thursday 30 30 20 30
Friday 10 20 10 30
Find an optimal schedule of the seminars. Also find out the total number of students who will be missing at
least 1 seminar.
Q-2 A solicitor’s firm employs typists on hourly piece-rate basis for their daily work. There are 5 typists
and their charges and speed are different. According to an earlier understanding, only 1 job is given to 1
typist and the typist is paid for a full hour even when he works for a fraction of an hour. Find the least cost
allocation for the following data:
No. of pages
Typist Rate/hr (Rs) Job No. of pages
typed/hr
A 5 12 P 199
B 6 14 Q 175
C 3 8 R 145
D 4 10 S 298
E 4 11 T 178

Q-3 In a multi-storied building, there are 5 rooms to be assigned to 5 managers. Each room has its own
advantages and disadvantages. They are all of different shapes and sizes. Each of the 5 managers was
asked to rank their preferences amongst the rooms. Their preferences are recorded in the below table:
Manager
M1 M2 M3 M4 M5
302 302 303 302 301
303 304 301 305 302
304 305 304 304 304
301 305 303
302
Most of the managers did not list all the 5 rooms since they were not satisfied with some of these rooms.
Assuming that their preferences can be quantified in numbers, find out as to which manager should be
assigned to which room so that their total preference ranking is minimum.
Q-4 A firm produces 4 products. There are 4 operators capable of producing any of these 4 products. The
firm records 8 hrs a day and allows 30 min for lunch. The processing time in minutes and profit for
each of the products is given below. Find the optimal assignment of products to operators.
Operator A B C D
1 15 9 10 6
2 10 6 9 6
3 25 15 15 9
4 15 9 10 10
Profit/Unit 8 6 5 4

Q-5 A company has 4 sales representatives who are to be assigned 4 sales territories. The monthly sales
increase estimated for each sale representatives are shown below. Suggest optimal assignment so as to
maximize total sales per month.
Sales Sales Territories

Representatives I II III IV
A 200 150 170 220
B 160 120 150 140
C 190 195 190 200
D 180 175 160 190
If for certain reasons, sales representative B cannot be assigned to sales territory III, will the optimal
assignment schedule be different? If so, find that schedule and its effect on sales.
Q6. An airline, operating 7 days a week, has given the following schedule of its flights between New Delhi
and Mumbai. The crews should have a minimum of 5 hours between the flights. Obtain the pairing of
flights that minimizes layover time away from home. For any given pairing, the crew will be based at the
city that results in the smallest layover.
New Delhi-Mumbai Mumbai-New Delhi
Flight No. Departure Arrival Flight No. Departure Arrival
101 5 A.M. 7 A.M. 201 7 A.M. 9 A.M.
102 7 A.M. 9 A.M. 202 8 A.M. 10 A.M.
103 1 P.M. 3 P.M. 203 1 P.M. 3 P.M.
104 7 P.M. 9 P.M. 204 6 P.M. 8 P.M.

Q-7 A company proposes to undertake a national promotional campaign for its newly developed product. It
has decided to schedule a series of 1 minute commercials during peak audience viewing hours of 1 P.M. - 5
P.M. To reach the widest possible audience the company wants to schedule 1 commercial on each of the
networks & to have only 1 commercial appear during each of the 4 one-hour time blocks. The exposure
ratings for each hour, which represent the number of of viewers per Rs. 10,000 spent, are given below:
Network
Viewing Hours A B C D
1-2 P.M. 27.1 18.1 11.3 9.5
2-3 P.M. 18.9 15.5 17.1 10.6
3-4 P.M. 19.2 18.5 9.9 7.7
4-5 P.M. 11.5 21.4 16.8 12.8
a) Which network should be scheduled each hour to provide maximum audience exposure?
b) How would schedule change if it is decided not to use network A between 1-3 P.M.?

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Unit 5- Simulation
It is the imitation of the operation of a real-world process or system over time. The act of simulating
something first requires that a model be developed; this model represents the key characteristics or
behaviors/functions of the selected physical or abstract system or process.
The model represents the system itself, whereas the simulation represents the operation of the system over
time.
Simulation is used in many contexts, such as simulation of technology for performance optimization, safety

engineering, testing, training, education, and video. Often, computer experiments are used to study simulation
models. Simulation is also used with scientific modeling of natural systems or human systems to gain insight
into their functioning.[2] Simulation can be used to show the eventual real effects of alternative conditions and
courses of action. Simulation is also used when the real system cannot be engaged, because it may not be
accessible, or it may be dangerous or unacceptable to engage, or it is being designed but not yet built, or it
may simply not exist.[3]
Key issues in simulation include acquisition of valid source information about the relevant selection of key
characteristics and behaviors, the use of simplifying approximations and assumptions within the simulation,
and fidelity and validity of the simulation outcomes.
The most commonly used method for simulation is Monte Carlo Method. 'Monte Carlo Simulation' A
problem solving technique used to approximate the probability of certain outcomes by running multiple trial
runs, called simulations, using random variables.
Process of Simulation
 Simulation: a descriptive method
 To simulate is to replicate a system
 Phases of simulation process:
 Definition of the problem and statement of objectives
 Construction of an appropriate model
 Experimentation with the model constructed
 Evaluation of the results of simulation
Monte Carlo Simulation
• Uses random numbers to generate data
• Process calls for:
 Determination of random number intervals
 Obtaining random numbers and finding the input values corresponding to them
 Carrying out needed simulation
• Is used extensively in areas like capital budgeting; inventory control; queuing analysis; and
project management.
Practice Questions
Que.1 The weekly demand for laptops at a dealer’s shop is as follows:
Demand 0 1 2 3 4 5 6
No of Days 5 16 28 12 14 15 10
Simulate the demand for the next two weeks using the following random numbers.
39, 20, 19, 75, 82, 36, 05, 10, 90, 88, 64, 50, 57, 29
Que-2 The no. of Airhostesses reporting sick at a leading airline company is distributed as follows:
No of
0 1 2 3 4 5 6
Airhostesses
Probability .10 .17 .30 .20 .10 .08 .05
Simulate the absenteeism pattern of the airhostesses for the next two weeks using the following random
numbers.
10, 25, 36, 82, 79, 44, 75, 80, 19, 20, 66, 75, 99, 75
Que-3 At a bill counter customers arrival and service times are distributed as follows:
Inter Arrival Times (In Mins) Probability Service Times (In Mins) Probability
2 .05 2 .05
4 .25 3 .15
6 .45 4 .35
8 .15 5 .30
10 .10 6 .07
7 .08
Assuming that the counter opens at 8.00 AM, Simulate the arrival and Service pattern for the next 10
customers using the following random numbers.
For Inter arrival times: 21, 65, 75, 84, 35, 65, 72, 44, 90, 24
For Service times: 16, 75, 26, 44, 86, 95, 56, 28, 37, 29
Hence compute the waiting times of the customer & server.

Que-4 The occurrence of rain in a city on a day is dependent on whether it rained on the previous day: if it
rained on the previous day the rain distribution is given as follows:
Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain 4 cm Rain 5 cm Rain
Probability .50 .25 .15 .05 .03 .02
If it did not rain on the previous day the rain distribution is given by:
Event No Rain 1 cm Rain 2 cm Rain 3 cm Rain
Probability .75 .15 .06 .04
Simulate the city’s whether for ten days & determine by simulation the total days without rain as well as the
total rain fall during the period using the following random numbers:
67, 63, 39, 55, 29, 78, 70, 6, 78, 76
Assume that for the first day of the simulation it had not rain the day before.
Que-5 Find out the total inventory cost for 15 weeks of a company whose demand during lead time as well as
lead time distribution are given as follows:
Demand 0 1 2 3
Lead Time 2 3 4
Probability .20 .65 .15
The reorder point is 6 units & reorder quantity is 12 units. If the Ordering cost is Rs. 100 per order, holding
cost is Rs. 4/ unit, Shortage cost is Rs. 60 per unit. Assume initial inventory of 10 units.
Random No. (Lead Time): 47, 74
Random No. (Demand): 57, 77, 25, 99, 09, 79, 79, 48, 05, 24, 47, 65, 56, 52, 17,

Que-6 The manager of a warehouse is interested in designing an inventory control system for its products.
The demand of the products comes from various retail outlets & it receives its stock from a factory
whose lead time is not constant. The manager wants to determine best release orders so as to minimize
stock outs yet keeping the total inventory cost at acceptable levels. Based on the study following data
are available:
Demand 0 1000 2000 3000
Lead Time 2 3 4
Probability .30 .40 .30
If the Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit, Shortage cost is Rs. 10 per unit. Determine
10 simulation runs if the ordering policy suggests that whenever inventory level becomes less than or equal to
2000 units, an order equal to 4000 units is placed. Assume inventory of 3000 units in hand.
Random Nos. (Lead Time): 29, 33, 44, 57, 72
Random Nos. (Demand): 31, 70, 53, 86, 32, 78, 26, 64, 45, 12
Also find out total inventory cost if reorder level is 2000 units & reorder quantity is 3000 units.
Que-7 A company trading motor car spares wishes to determine the level of stock. The demand is not certain
& the lead time for stock replenishment is 2 days. Following data is also available:
Demand 3 4 5 6 7
Probability .10 .20 .30 .30 .10
Carry out simulation for a period of 10 days. The Ordering cost is Rs. 50 per order, holding cost is Rs. 2/ unit.
If the ordering policy is to order 20 units with reorder point at 15 units and inventory in hand is 20 units,
calculate total inventory cost using following Random Nos.
73, 44, 4, 39, 89, 8, 44, 74, 11, 64

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Unit-6 Network Analysis
Rules of Network Construction
1. Each activity is represented by one arrow
2. An activity can begin only when all its predecessors are done
3. Length and bearing of arrows is of no consequence
4. Arrow direction indicates general progression in time – tail events represent start while head
events represent end of activities
5. Events are identified by numbers while activities are represented by their starting and ending
events
6. A network should have only one initial and one final node
7. Introduce as few dummy activities as may be necessary
8. Looping is not permitted
Floats
 Total float is the amount of time by which an activity may be delayed without delaying the
project completion
 Caution: interpret total floats of activities carefully - all cannot be used independently
 Free float is that part of total float which can be used without affecting floats of the succeeding
activities
 The part of total float which is not free is called interfering float
 Independent float is the amount of time which can be used without affecting the head and the
tail events
Total Float ≥ Free Float ≥ Independent Float
 Total float = Latest start time – Earliest start time
 Free float = Total float – Head event slack
 Interfering float = Total float – Free float
 Independent float = Free float – Tail event slack, or zero, whichever is higher

PERT (Program Evaluation & Review Technique)
 Uses three time estimates for every activity: optimistic (a), most likely (m) and pessimistic (b)
 They are used to obtain expected times and their variances
Expected time = (a+4×m+b)/6; and
Variance = [(b – a)/6]2
 Obtain critical path using expected times and identify critical activities
 Add variances for critical activities to get variance for completion time and find its square root
to get standard deviation
 With expected duration and standard deviation, calculate probabilities of project completion
using normal distribution
PERT/Cost
 A modification of PERT which allows planning, monitoring and controlling of project cost and
duration
 Budgeting process allows to determine how much money is to be spent every time unit
(week/month) over planned duration of project
 Budgets are prepared on the basis of earliest and latest start times of activities
 Comparisons are made continuously between the actual costs and budgeted amounts
 Comparisons are also made between percentage of work done and percentage of budgeted
amount spent: if former is smaller than the later, we have budget overrun

Practice Questions
Q-1 Draw the Network diagram.
Activity Immediate predecessor

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

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

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

A -
B -
C Optimistic Time -
Most Likely Pessimistic
Activity Predecessor
D A,B
(WK) (WK) (WK)
A -E 2 4B,C 6
B -F 6 6A,B 6
C -G 6 12 C 24
D AH 2 D,E,F
5 8
E AI 11 14 D 23
F B, DJ 8 10 G 12
G B,DK 3 6G 9
H C, FL 9 15H,J 27
I EM 4 10 K 16
N I,L
Q-5 Draw the Network diagram and calculate critical path.
Expected completion Time

(weeks)
A - 5
B A 2
C A 6
D B 12
E D 10
F D 9
G D 5
H B 9
I C,E 1
J G 2
K F,I,J 3
L K 9
M H,G 7
N M 8
Q-6 Draw the Network diagram and calculate the following:

What is the Probability of completing the project one week before the expected time?
Calculate the schedule time of completion with 95% probability
Activity Optimistic Time (Days) Most Likely (Days) Pessimistic (Days)
1-2 3 6 15
1-6 2 5 14
2-3 6 12 30
2-4 2 5 8
3-5 5 11 17
4-5 3 6 15
5-8 1 4 7
6-7 3 9 27
7-8 4 19 28
a. Calculate the critical path & expected completion time

b. Calculate the probability of completing the jobs in 41 days.

Optimistic Time Most Likely

Activity Pessimistic (Days)
(Days) (Days)
1-2 1 2 3
2-3 1 2 3
2-4 1 3 5
3-5 3 4 5
4-5 2 3 4
4-6 3 5 7
5-7 4 5 6
6-7 6 7 8
7-8 2 4 6
7-9 4 6 8
8-10 1 2 3
9-10 3 5 7


(Days) (Days)
1-2 3 5 8
1-3 2 3 5
1-5 2 3 4
2-3 1 2 5
2-6 7 8 9
3-4 1 3 6
3-5 2 4 6
4-5 1 2 4
5-6 1 2 3

b. Calculate the schedule time of completion with 98% probability


(Days) (Days)
1-2 5 8 10
1-3 18 20 22
1-4 26 33 40
2-5 16 18 20
2-6 15 20 25
3-6 6 9 12
4-7 7 10 12
5-7 7 8 9
6-7 3 4 5

b. Calculate the probability OF COMPLETING THE PROJECT IN 41.5 DAYS.

(Days) (Days)
1-2 1 2 9
2-3 1 4 7
2-4 2 4 12
3-4 0 0 0
3-5 2 3 4
3-7 6 8 16
4-5 4 6 8
4-6 3 5 7
5-6 ½ 1 3/2
5-7 5 7 15
6-7 3 5 13

b. Calculate the probability OF COMPLETING THE PROJECT IN 25 DAYS.
c. Calculate the schedule time of completion with 98% probability


(Days) (Days)
10-20 4 8 12
20-30 1 4 7
20-40 8 12 16
30-50 3 5 7
40-50 0 0 0
40-60 3 6 9
50-70 3 6 9
50-80 4 8 6
60-100 4 6 8
70-90 4 8 12
80-90 2 5 8
90-100 4 10 16


(Days) (Days)
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


Optimistic Time
Activity Most Likely (Days) Pessimistic (Days)
(Days)
1-2 1 4 7
1-3 5 10 17
2-4 3 3 3
2-6 1 4 7
3-4 8 15 26
3-5 2 4 8
4-5 5 5 5
5-6 2 5 8
b. Calculate the probability OF COMPLETING THE PROJECT IN 5 days more than the expected time.
Activity Optimistic Time (Days) Most Likely (Days) Pessimistic (Days)
1-2 1 2 3
1-3 1 2 3
1-4 0 0 0
2-5 1 2 3
2-6 2 5 8
3-7 3 4 5
4-8 3 5 7
5-9 4 6 8
6-9 2 3 4
7-8 3 4 5
8-9 4 6 8


NOTES
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Bharati Vidyapeeth Deemed University,
Institute of Management and Research (BVIMR), New Delhi
1st Internal Examination
Subject Introduction to Operations Research (BBA –V) Course Code: J010326
Max. Marks: 40 Max. Time: 2 Hours
Instructions: 1. Attempt all questions
2. Show the detailed calculations, wherever required
Q. 1 Attempt any five questions. Answer in 50 words [5 x 2]
a) Explain Unbalanced Transportation Problem with the help of an example.
b) Find the initial Basic Feasible Solution using NWC method:
P Q R SUPPLY
A 7 5 10 100
B 20 9 23 50
C 8 21 7 200
DEMAND 120 170 60
c) Find the initial Basic Feasible Solution using Least Cost method:
W1 W2 W3 SUPPLY
I 4 6 8 300
II 4 2 9 200
III 8 7 10 500
DEMAND 400 200 300
d) Write the applications of Linear Programming.

e) Explain infeasibility in LPP with example.
f) Write the various steps of solving transportation problem using Vogel’s Approximation Method.
g) Explain how to deal with Maximization case in transportation with a suitable example.
h) What is Degeneracy in transportation Problems?
Q. 2 Attempt any two questions. Answer in 200 words [2x 5]
a) Discuss the advantages & limitations of LPP.
b) Explain the graphical method of solving Linear Programming Problems?
c) What is the history of Operations Research?
Q.3 Attempt any two questions. Answer in 200 words [2 x 5]
a) A medical scientist claims to have found a cure for the common cold that consists of three drugs called
K, S and H. His results indicate that the minimum daily adult dosage for effective treatment is 10 mg.
of drug K, 6 mg. of drug S, and 8 mg. of drug H. Two substances are readily available for preparing
pills or drugs. Each unit of substance A contains 6 mg., 1 mg. and 2 mg. of drugs K, S and H
respectively, and each unit of substance B contains 2 mg, 3 mg, and 2 mg., of the same drugs.
Substance A costs Rs. 3 per unit and substance B costs Rs. 5 per unit. Find the least-cost combination
of the two substances that will yield a pill designed to contain the minimum daily recommended adult
dosage.
b) A car company is faced with an allocation problem resulting from rental agreement that allow cars to
be transported to locations other than those which they were originally rented. At the present time
there are two centers with 15 and 13 cars available respectively and 4 locations requiring 9, 6, 7 and 9
cars respectively. The unit transportation costs between the location are given below:-
Destinations/ Sources D1 D2 D3 D4
S1 45 17 21 30
S2 14 18 19 31
Obtain the minimum cost schedule.

c) Use the graphical method to solve the LPP.
Minimize Z = -X + 2Y
-X+ 3Y ≤ 10
X+Y≤6
X–Y≤2
And X, Y ≥ 0
Q.4 Attempt any one. Answer in 600 words [10 x 1]
a) An airplane can carry a maximum of 200 passengers. A profit of Rs. 200 is made on each of the first class ticket
and a profit of Rs 300 is made on each of economy class ticket. The airline reserves at least 20 seats for first
class. However, at least 4 times as many passengers prefer to travel by economy class than by the first class.
How many tickets of each class must be sold in order to maximize profit for the airline? Formulate the problem
and find the solution using graphical method.
b) Consider the transportation Problem presented in the following table:-
Distribution Centre
Plant D1 D2 D3 D4 Supply
P1 19 30 50 12 7
P2 70 30 40 60 10
P3 40 10 60 20 18
Requirement 5 8 7 15 35

Determine the optimal solution of the above problem.
Bharati Vidyapeeth Deemed University,

Institute of Management and Research (BVIMR), New Delhi
2nd Internal Examination
Course BBA Semester V Subject: Introduction to Operations Research Course Code: J010330
Max. Marks: 40 Max. Time: 2:00 Hours
-----------------------------------------------------------------------------------------------------------------------------------
Instructions: - (use of Simple 10 digits Calculator is allowed)
Q. 1 Attempt any five questions: [5 x 2]
a) Draw the Network diagram
Activity A B C D E F G H I J
Predecessor - A - C B,C C F D,E,G D,E H,I
b) Define critical path.

c) Define Total Float.
d) What do you understand with expected time?
e) Define Independent Float
f) How do you balance an unbalanced assignment problem?
g) How do you handle maximization case in Assignment Problem? Show with example.
h) Discuss advantages & disadvantages of Monte Carlo Method.
Q. 2 Attempt any two questions: [2 x 5]
a) Differentiate between PERT & CPM
b) Write short note on simulation.
c) Discuss Hungarian method of solving assignment problem.
Q.3 Attempt any two questions: [2 x 5]
a) A Sales Manager wishes to assign four sales territories to four sales persons. The Sales person differ in
their Sales acumen and consequently the sales expected to be effected in each territory are different for
each sales person. The estimates of sales per month in thousands of rupees for each sales person in
each territory are given below:
Sales Person/Sales
T1 T2 T3 T4
territories
P 56 25 32 45
Q 45 21 54 26
R 21 54 36 45
S 34 35 28 52
Find an optimal schedule to maximize the total sales revenue.

b) A company selling water heaters examines it sales over the past 50 days and notes the following:
Hot Water Heater Sales per day No. of days this heater was sold
4 6
5 5
6 9
7 12
8 8
9 7

10 3
Using the following random numbers, simulate the demand for next 20 days and also calculate the
average demand per day?
10, 24, 03, 32, 23, 59, 95, 34, 34, 51, 08, 48, 66, 97, 03, 96, 46, 74, 77, 44
c) Complete the following table:
Activity Predecessor Duration ES EF LS LF TF HS FF TS IF

A I 12 12 24 0 0
B H,F 14 39 53 0 0
C D 20 19 42 3 10
D I 7 12 29 10 0
E C,G 11 39 53 0 3
F A,D 7 24 39 0 5
G A,D 13 24 42 3 5
H A 15 24 39 0 0
I - 12 0 12 0 0
Q.4 Attempt any one question: an [1 x 10]
a) Draw Network diagram, Calculate Critical path. Expected project Completion time. Also calculate the
probability of completing the project in less than 5 days & greater than 3 days of expected completion
time of the project.
Activity Predecessor Optimistic time (Days) Most Likely time (Days) Pessimistic Time (Days)
A - 7 9 17
B A 5 7 15
C A 1 8 9
D B 9 13 23
E B 6 10 20
F B,C 10 15 20
G B,.C 5 6 13
H D,F 12 17 28
b) Inter arrival and service times studied over past few years for a single channel queuing system revealed the
following patterns:
Inter Arrival Times (In Mins) Probability Service Times (In Mins) Probability
2 .19 1 .15
4 .22 3 .28
6 .32 5 .30
8 .17 7 .17
10 .10 9 .10
Using the following random no, simulate the queue behavior for a period of 60 minutes. Also calculate
waiting time of server & customers.
Random No. for inter arrival time: 19 32 59 81 27 45 26 52 77 46 85 83 34 42 43 07 17 23

Random No for Service times: 08 27 74 96 48 07 65 78 92 49 12 63 10 06 97 53 48 7


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COURSE PACK

Course Instructors: Dr. Parul Agrawal

Bharati Vidyapeeth University Institute of Management & Research, New Delhi

------------------------ ------------------------ ------------------------

1|Page For Internal Circulation

Unit Topic Page No.

Introduction to Operations Research

Linear Programming Problem (LPP)

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1. Course Code: J010330 Credits: 4

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After undergoing this course, the student will be able to:

5. List of Topics/ Modules:

Topic/ Module Contents/ Concepts

Module I: Introduction to Operations  Meaning & Significance

 Max/Min Problems, Graphical Method

 Application and Limitation

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Component Description Weight

It will be based on conceptual questions and situation specific application

Students will be awarded marks for active and constructive participation

Students will be Evaluated 4 times through any of the CES activities

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Module II - Linear Programming

Theoretical concepts of Linear programming To develop the skill and

Formulation of Linear programming Page No. 19 -

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Special Cases in LPP (Multiple & Enhancement of

9 Discussion/Evaluation on Assignment given -

Sensitivity analysis(theory) Notes given

Module III - Transportation Problems

Introduction about transportation problem Chapter-5 How OR model is used

11 Page No. 204- to optimize the

Page No. 210-

18 Special Cases-Degeneracy in T. Problems P. No. 224-235

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Chapter-6 How to use different

Page No. 889- Enhancement of

How OR models are

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Page No. 617 -

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Page No. 638 -

37 Discussion/Evaluation on Assignment given -

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LO1 LO2 LO3 LO4 LO5

LECTURE2 High Medium

LECTURE3 High Medium

LECTURE4 High Medium

LECTURE5 High Medium

LECTURE6 High Medium

LECTURE7 High Medium

LECTURE8 High Medium