Or Notes

LECTURE NOTES
ON
OPERATION RESEARCH
2018 – 2019
IV B. Tech I Semester (JNTUA-R15)

Dr.Lakshmi Tulasi Chavali Chadalawada Ramanamma Engineering College
DUAL LINEAR PROGRAMMING PROBLEMS
Introduction
For every linear programming problem there is a corresponding linear programming problem
called the dual. If the original problem is a maximization problem then the dual problem is
minimization problem and if the original problem is a minimization problem then the dual problem is
maximization problem. In either case the final table of the dual problem will contain both the solution to
the dual problem and the solution to the original problem.
The solution of the dual problem is readily obtained from the original problem solution if the
simplex method is used.
The formulation of the dual problem also sometimes referred as the concept of duality is helpful
for the understanding of the linear programming. The variable of the dual problem is known as the dual
variables or shadow price of the various resources. The dual problem is easier to solve than the original
problem. The dual problem solution leads to the solution of the original problem and thus efficient
computational techniques can be developed through the concept of duality. Finally, in the competitive
strategy problem solution of both the original and dual problem is necessary to understand the complete
problem.
Dual Problem Formulation
If the original problem is in the standard form then the dual problem can be formulated using the
following rules:
The number of constraints in the original problem is equal to the number of dual variables. The
number of constraints in the dual problem is equal to the number of variables in the original
problem.
The original problem profit coefficients appear on the right hand side of the dual problem
constraints.
If the original problem is a maximization problem then the dual problem is a minimization
problem. Similarly, if the original problem is a minimization problem then the dual problem is a
maximization problem.
The original problem has less than or equal to (≤) type of constraints while the dual problem has
greater than or equal to (≥) type constraints.
The coefficients of the constraints of the original problem which appear from left to right are
placed from top to bottom in the constraints of the dual problem and vice versa.
The Dual Linear Programming Problem is explained with the help of the following Example.
Example
Consider the following product mix problem:
Three machine shops A, B, C produces three types of products X, Y, Z respectively. Each product
involves operation of each of the machine shops. The time required for each operation on various
products is given as follows:
Machine Shops
Products A B C Profit per unit
X $12
10 7 2
Y $3
2 3 4
Z $1
1 2 1
Available Hours 100 77 80
The available hours at the machine shops A, B, C are 100, 77, and 80 only. The profit per unit of
products X, Y, and Z is $12, $3, and $1 respectively.
Solution:
The formulation of Linear Programming (original problem) is as follows:
Maximize
12x1 + 3x2 + x3
Subject to:
10x1 + 2x2 + x3 ≤ 100
7x1 + 3x2 + 2x3 ≤ 77
2x1 + 4x2 + x3 ≤ 80
x1, x2, x3 ≥ 0
We introduce the slack variables s4, s5 and s6 then the equalities becomes as:
Maximize
12x1 + 3x2 + x3
Subject to:
10x1 + 2x2 + x3 + s4 = 100
7x1 + 3x2 + 2x3 + s5 = 77
2x1 + 4x2 + x3 +s6 = 80
x1, x2, x3, s4, s5, s6 ≥ 0
Form the above equations, the first simplex table is obtained is as follows:
CB Basic Cj 12 3 1 0 0 0
Variable XB x1 x2 x3 s4 s5 s6
0 s4 100 10 2 1 1 0 0
0 s5 77 7 3 2 0 1 0
0 s6 80 2 4 1 0 0 1
zj-cj -12 -3 -1 0 0 0
Note that the basic variables are s4, s5 and s6. Therefore CB1 = 0, CB2 = 0, CB3 = 0.
The smallest negative element in the above table of z1 – c1 is -12. Hence, x1 becomes a
basic variable in the next iteration.
Determine the minimum ratios
Min 100, 72, 80 = 10

10 7 2
Here the minimum value is s4, which is made as a non-basic

variable. The next Table 2 is calculated using the following rules:
The revised basic variables are x1, s5, s6. Accordingly we make CB1=22, CB2=0 and CB3=0.
Since x1 is the incoming variable we make x1 coefficient one by dividing each element of row 1 by 10.
Thus the numerical value of the element corresponding to x 2 is 2/10, corresponding to x3 is 1/10,
corresponding to s4 is 1/10, corresponding to s5 is 0/10 and corresponding to s6 is 0/10 in Table 2.
The incoming basic variable should only appear in the first row. So we multiply first
row of Table 2 by 7 and subtract if from the second row of Table 1 element by element.
Thus,
The element corresponding to x1 in the second row of Table 2 is zero
The element corresponding to x2 is 3 – 7 * 2 = 16
1010
By using this way we get the elements of the second and the third row in Table 2.
Similarly, the calculation of numerical values of basic variables in Table 2 is done
CB Basic Cj 22 6 2 0 0 0
12 x1 10 1 2/10 1/10 1/10 0 0
0 s5 7 0 16/10 13/10 -7/10 1 0
0 s6 60 0 18/5 4/5 -1/5 0 1
zj-cj 0 -3/5 1/5 6/5 0 0
z2-c2 = -3/5. So x2 becomes a basic variable in the next iteration.

Determine the minimum of the ratios
10, 7 , 60
Min 2 16 18 = Min 50, 70, 300 = 70
10 10 5 16 18 16
So that the variable s5 will be a non basic variable in the next iteration.
6. From Table 2, the Table 3 is calculated using the rules (i), (ii) and (iii) mentioned above.
CB Basic Cj 12 3 1 0 0 0
12 x1 73/8 1 0 -1/16 3/16 -1/8 0
3 s5 35/8 0 1 13/16 -7/16 5/8 0
0 s6 177/4 0 0 -17/8 11/8 -9/4 1
zj-cj 0 0 11/16 15/16 3/8 0
Since all the zi – cj ≥ 0, the optimum solution is as:
x1 = 73/8 and x2 = 35/8 and
The Maximum Profit is: $981/8 = $122.625

Suppose an investor is deciding to purchase the resources A, B, C. What offers is he going to produce?
Let, assume that W1, W2 and W3 are the offers made per hour of machine time A, B and C respectively.
Then these prices W1, W2 and W3 must satisfy the conditions given below:
W1, W2, W3 ≥ 0
Assume that the investor is behaving in a rational manner; he would try to bargain as much as possible
so that the total annual payable to the produces would be as little as possible. This leads to the following
condition:
Minimize
100W1 + 77W2 + 80W3
The total amount offer by the investor to the three resources viz. A, B and C required to produce
one unit of each product must be at least as high as the profit gained by the producer per unit.
Since, these resources enable the producer to earn the specified profit corresponding to the
product he would not like to sell it for anything less assuming he is behaving rationally. This leads to the
following conditions:
10w1 + 7w2 + 2w3 ≥ 12
2w1 + 3w2 + 4w3 ≥ 3
w1 + 2w2 + w3 ≥ 1
Thus, in this case we have a linear problem to ascertain the values of the variable w1, w2, w3. The
variables w1, w2 and w3 are called as dual variables.
Note:
The original (primal) problem illustrated in this example
considers the objective function maximization
contains ≤ type constraints
has non-negative constraints
This original problem is called as primal problem in the standard form.
Dual Problem Properties
The following are the different properties of dual programming problem:
If the original problem is in the standard form, then the dual problem solution is obtained from the zj –
cj values of slack variables.
For example: In the Example 4.1, the variables s4, s4 and s6 are the slack variables. Hence the dual
problem solution is w1 = z4 – c4 = 15/16, w2 = z5 – c5 = 3/8 and w3 = z6 – c6 = 0.
The original problem objective function maximum value is the minimum value of the dual problem
objective function.
For example:
From the above Example 4.1 we know that the original problem maximum values is 981/8 = 122.625.
So that the minimum value of the dual problem objective function is
100*15/16 + 77*3/8 + 80*0 = 981/8
Here the result has an important practical implication. If both producer and investor analyzed the
problem then neither of the two can outmanoeuvre the other Shadow Price: A resource shadow price is
its unit cost, which is equal to the increase in profit to be realized by one additional unit of the resource.
For example:
Let the minimum objective function value is expressed as:
100*15/16 + 77*3/8 + 80*0
If the first resource is increased by one unit the maximum profit also increases by 15/16, which is the
first dual variable of the optimum solution. Therefore, the dual variables are also referred as the resource
shadow price or imputed price. Note that in the previous example the shadow price of the third resource
is zero because there is already an unutilized amount, so that profit is not increased by more of it until
the current supply is totally exhausted.
In the originals problem, if the number of constraints and variables is m and n then the
constraint and variables in the dual problem is n and m respectively. Suppose the slack variables in the
original problem is represented by y1, y1, ….., yn and the surplus variables are represented by z1, z2, …,
zn in the dual problem.
Suppose, the original problem is not in a standard form, then the dual problem structure is
unchanged. However, if a constraint is greater than or equal to type, the corresponding dual variable is
negative or zero. Similarly, if a constraint in the original problem is equal to type, then the
corresponding dual variables is unrestricted in sign.
Example 4.2
Consider the following linear programming
problem Maximize
22x1 + 25x2 +19x3
Subject to:
18x1 + 26x2 + 22x3 ≤ 350
14x1 + 18x2 + 20x3 ≥180
17x1 + 19x2 + 18x3 = 205
x1, x2, x3 ≥ 0
Note that this is a primal or original problem.
The corresponding dual problem for this problem is as follows:
Minimize
250w1 + 80w2 +105w3
Subject to:
18w1 + 4w2 + 7w3 ≥ 22
26w1 + 18w2 + 19w3 ≥ 25
22w1 + 20w2 + 18w3 ≥ 19
w1 ≥ 0, w2 ≤, and w3 is unrestricted in sign (+ or -).
Now, we can solve this using simplex method as usual.
Simple Way of Solving Dual Problem
Solving of dual problem is simple; this is illustrated with the help of the following Example.
Example :
Minimize
P = x1 + 2x2
Subject to:
x1 + x2 ≥ 8
2x1 + y ≥ 12
x1 ≥ 1
Solution:
Step 1: Set up the P-matrix and its transpose

1 1 8
2 1 12
P= 1 0 1
1 2 0
Pivoting
w1 w2 w3 s1 s2 g z
Pivoting about the 2 we get:

1 2 1 1 0 0 1
1/2 0 -1/2 -1/2 1 0 3/2
-2 0 5 6 0 1 6
w1 w2 w3 s1 s2 g z
1/2 1 1/2 1/2 0 0 1/2

1 1 0 0 1 0 2
-8 -12 -1 0 0 1 0
w1 w2 w3 s1 s2 g z
1/2 1 1/2 1/2 0 0 1/2

1/2 0 -1/2 -1/2 1 0 3/2
-2 0 5 6 0 1 6
The most negative entry in the bottom row to the left of the last column is -2. The smallest non-
negative ratio is the 1/2 in the first row. This is the next pivot element.
w1 w2 w3 s1 s2 g z
1/2 1 1/2 1/2 0 0 1/2

1/2 0 -1/2 -1/2 1 0 3/2
Pivoting about the -2 0 5 6 0 1 6 1/2:
Since there are no negative entries in the bottom row and to the left of the last column, the
process is complete. The solutions are at the feet of the slack variable columns.
Therefore, w1 w2 w3 s1 s2 g z
The optimum solution

1 2 1 1 0 0 1
provided by x1 = 8 and x2 = 0
0 -1 -1 -1 1 0 1
The Minimum Value
is: 8 0 4 7 8 0 1 8
Least Cost Method

The least cost method is also known as matrix minimum method in the sense we look for the row
and the column corresponding to which C ij is minimum. This method finds a better initial basic feasible
solution by concentrating on the cheapest routes. Instead of starting the allocation with the northwest
cell as in the North West Corner Method, we start by allocating as much as possible to the cell with the
smallest unit cost. If there are two or more minimum costs then we should select the row and the column
corresponding to the lower numbered row. If they appear in the same row we should select the lower
numbered column. We then cross out the satisfied row or column, and adjust the amounts of capacity
and requirement accordingly. If both a row and a column is satisfied simultaneously, only one is crossed
out. Next, we look for the uncrossed-out cell with the smallest unit cost and repeat the process until we
are left at the end with exactly one uncrossed-out row or column.
Example:
The least cost method of determining initial basic feasible solution is illustrated with the help of problem
presented in the section 1.1.
Capacity
1 9 13 36 51
50
50
24 12 16 20 1
100 60
60 40
14 33 1 23 26
50 50 50
150 100 50
Requirement 100 60 50 50 40
50
The Least Cost method is applied in the following manner:
We observe that C11=1 is the minimum unit cost in the table. Hence X 11=50 and the first row is
crossed out since the row has no more capacity. Then the minimum unit cost in the uncrossed-out row and
column is C25=1, hence X25=40 and the fifth column is crossed out. Next C 33=1is the minimum unit cost,
hence X33=50 and the third column is crossed out. Next C 22=12 is the minimum unit cost, hence X 22=60 and
the second column is crossed out. Next we look for the uncrossed-out row and column now C 31=14 is the
minimum unit cost, hence X31=50 and crossed out the first column since it was satisfied. Finally C 34=23 is
the minimum unit cost, hence X34=50 and the fourth column is crossed out.
So that the basic feasible solution developed by the Least Cost Method has transportation cost is
1 * 50 + 12 * 60 + 1 * 40 + 14 * 50 + 1 * 50 + 23 * 50 = 2710
Note that the minimum transportation cost obtained by the least cost method is much lower than
the corresponding cost of the solution developed by using the north-west corner method.
Vogel Approximation Method (VAM):
VAM is an improved version of the least cost method that generally produces better solutions.
The steps involved in this method are:
Step 1: For each row (column) with strictly positive capacity (requirement), determine a penalty by
subtracting the smallest unit cost element in the row (column) from the next smallest unit cost element
in the same row (column).
Step 2: Identify the row or column with the largest penalty among all the rows and columns. If the
penalties corresponding to two or more rows or columns are equal we select the topmost row and the
extreme left column.
Step 3: We select Xij as a basic variable if Cij is the minimum cost in the row or column with largest
penalty. We choose the numerical value of Xij as high as possible subject to the row and the column
th th
constraints. Depending upon whether ai or bj is the smaller of the two i row or j column is crossed out
Step 4: The Step 2 is now performed on the uncrossed-out rows and columns until all the basic
variables have been satisfied.
Example 1.4:
Consider the following transportation problem
Destination
Origin 1 2 3 4 ai
1 20 22 17 4 120
2 24 37 9 7 70
3 32 37 20 15 50
bj 60 40 30 110 240
Note: ai=capacity (supply)

bj=requirement (demand)
Now, compute the penalty for various rows and columns which is shown in the following table:
Destination
Origin 1 2 3 4 ai Column
Penalty
1 20 22 17 4 120 13
2 24 37 9 7 70 2
3 32 37 20 15 50 5
bj 60 40 30 110 240
Row Penalty 4 15 8 3
Look for the highest penalty in the row or column, the highest penalty occurs in the second
column and the minimum unit cost i.e. cij in this column is c12=22. Hence assign 40 to this cell i.e.
x12=40 and cross out the second column (since second column was satisfied. This is shown in the
following table:
Origin ai
Destinatio Colum
n n
1 2 3 4
Penalty
1 20 22 40 17 4 80 13
2 24 37 9 7 70 2
3 32 37 20 15 50 5
24
bj 60 40 30 110 0
The next highest penalty in the uncrossed-out rows and columns is 13 which occur in the first row
and the minimum unit cost in this row is c14=4, hence x14=80 and cross out the first row. The
modified table is as follows:
Destination
Penalty
1 20 22 17 4 0 13
40 80
2 24 37 9 7 70 2
3 32 37 20 15 50 5
bj 60 40 30 110 240
The next highest penalty in the uncrossed-out rows and columns is 8 which occurs in the third
column and the minimum cost in this column is c23=9, hence x23=30 and cross out the third column
with adjusted capacity, requirement and penalty values. The modified table is as follows:
Destination
Penalty
1 20 22 17 4 0 13
40 80
2 24 37 9 7 40 17
30
3 32 37 20 15 50 17
bj 60 40 30 110 240
The next highest penalty in the uncrossed-out rows and columns is 17 which occurs in the
second row and the smallest cost in this row is c24=15, hence x24=30 and cross out the fourth column
with the adjusted capacity, requirement and penalty values. The modified table is as follows:
Destinatio
n
Penalty
1 20 22 17 4 0 13
40 80
2 24 37 9 7 10 17
30 30
3 32 37 20 15 50 17
bj 60 40 30 110 240
The next highest penalty in the uncrossed-out rows and columns is 17 which occurs in the
second row and the smallest cost in this row is c21=24, hence xi21=10 and cross out the second row
with the adjusted capacity, requirement and penalty values. The modified table is as follows:
Destination
Penalty
1 20 22 17 40 13
40 80
2 24 37 9 7 0 17
10 30 30
3 32 37 20 15 50 17
bj 60 40 30 110 240
The next highest penalty in the uncrossed-out rows and columns is 17 which occurs in the third
row and the smallest cost in this row is c31=32, hence xi31=50 and cross out the third row or first
column. The modified table is as follows:
Origin Destination ai Column
1 2 3 4
Penalty
1 20 22 17 4 0 13
40 80
2 24 37 9 7 0 17
10 30 30
3 32 37 20 15 0 17
50
30 110 240
bj 60 40
The transportation cost corresponding to this choice of basic variables
is 22 * 40 + 4 * 80 + 9 * 30 + 7 * 30 + 24 * 10 + 32 * 50 = 3520
Modified Distribution Method

The Modified Distribution Method, also known as MODI method or u-v method, which
provides a minimum cost solution (optimal solution) to the transportation problem. The following are
the steps involved in this method.
Step 1: Find out the basic feasible solution of the transportation problem using any one of the three
methods discussed in the previous section.
Step 2: Introduce dual variables corresponding to the row constraints and the column constraints. If
there are m origins and n destinations then there will be m+n dual variables. The dual variables
corresponding to the row constraints are represented by ui, i=1,2,…..m where as the dual variables
corresponding to the column constraints are represented by vj, j=1,2,…..n. The values of the dual
variables are calculated from the equation given
below ui + vj = cij if xij > 0
Step 3: Any basic feasible solution has m + n -1 x ij > 0. Thus, there will be m + n -1 equation to
determine m + n dual variables. One of the dual variables can be chosen arbitrarily. It is also to be noted
that as the primal constraints are equations, the dual variables are unrestricted in sign.
Step 4: If xij=0, the dual variables calculated in Step 3 are compared with the cij values of this allocation
as cij – ui – vj. If al cij – u i – vj ≥ 0, then by the theorem of complementary slackness it can be shown
that the corresponding solution of the transportation problem is optimum. If one or more cij – u i – vj <
0, we select the cell with the least value of cij – ui – vj and allocate as much as possible subject to the
row and column constraints. The allocations of the number of adjacent cell are adjusted so that a basic
variable becomes non-basic.
Step 5: A fresh set of dual variables are calculated and repeat the entire procedure from Step 1 to Step 5.
Example:
For example consider the transportation problem given below:
Suppl
y
1 9 13 36 51
50
24 12 16 20 1 10
0
14 33 1 23 26
15
0
Deman 100 70 50 40 40 300

d
Step 1: First we have to determine the basic feasible solution. The basic feasible solution using least
cost method is
x11=50, x22=60, x25=40, x31=50, x32=10, x33=50 and x34=40
Step 2: The dual variables u1, u2, u3 and v1, v2, v3, v4, v5 can be calculated from the corresponding cij
values, that is
u1+v1=1 u2+v2=12 u2+v5=1 u3+v1=14
u3+v2=33 u3+v3=1 u3+v4=23
Step 3: Choose one of the dual variables arbitrarily is zero that is u3=0 as it occurs most often in the
above equations. The values of the variables calculated are
u1= -13, u2= -21, u3=0
v1=14, v2=33, v3=1, v4=23, v5=22
Step 4: Now we calculate cij – ui – vj values for all the cells where xij=0 (.e. unallocated cell by the
basic feasible solution)
That is
Cell(1,2)= c12-u1-v2 = 9+13-33 = -11
Cell(1,3)= c13-u1-v3 = 13+13-1 = 25
Cell(1,4)= c14-u1-v4 = 36+13-23 = 26
Cell(1,5)= c15-u1-v5 = 51+13-22 = 42
Cell(2,1)= c21-u2-v1 = 24+21-14 = 31
Cell(2,3)= c23-u2-v3 = 16+21-1 = 36
Cell(2,4)= c24-u2-v4 = 20+21-23 = 18
Cell(3,5)= c35-u3-v5 = 26-0-22 = 4
Note that in the above calculation all the cij – ui – vj ≥ 0 except for cell (1, 2) where c12 – u1 – v2 =
9+13-33 = -11.
Thus in the next iteration x12 will be a basic variable changing one of the present basic variables non-
basic. We also observe that for allocating one unit in cell (1, 2) we have to reduce one unit in cells (3, 2)
and (1, 1) and increase one unit in cell (3, 1). The net transportation cost for each unit of such
reallocation is
-33 -1 + 9 +14 = -11
The maximum that can be allocated to cell (1, 2) is 10 otherwise the allocation in the cell (3, 2) will be
negative. Thus, the revised basic feasible solution is
x11=40, x12=10, x22=60, x25=40, x31=60, x33=50, x34=40
Unbalanced Transportation Problem

In the previous section we discussed about the balanced transportation problem i.e. the total
supply(capacity) at the origins is equal to the total demand (requirement) at the destination. In this
section we are going to discuss about the unbalanced transportation problems i.e. when the total supply
is not equal to the total demand, which are called as unbalanced transportation problem.
In the unbalanced transportation problem if the total supply is more than the total demand then
we introduce an additional column which will indicate the surplus supply with transportation cost zero.
Similarly, if the total demand is more than the total supply an additional row is introduced in the
transportation table which indicates unsatisfied demand with zero transportation cost.
Example:
Consider the following unbalanced transportation problem
Warehouses
w Suppl
Plant w1 w2 3 y
20 17 25
X 400
10 10 20
Y 500
Demand 400 400 500

In this problem the demand is 1300 whereas the total supply is 900. Thus, we now introduce an
additional row with zero transportation cost denoting the unsatisfied demand. So that the modified
transportation problem table is as follows:
Warehouses
Plant w1 w2 Supply
w3
20 17 25
X 400
10 10 20
Y 500
Unsatisfied
0 0 0
Demand 400
Demand 400 400 500 1300
Now we can solve as balanced problem discussed as in the previous sections.

Degenerate Transportation Problem
In a transportation problem, if a basic feasible solution with m origins and n destinations has less than
m+n -1 positive Xij i.e. occupied cells, then the problem is said to be a degenerate transportation
problem. The degeneracy problem does not cause any serious difficulty, but it can cause computational
problem wile determining the optimal minimum solution.
There fore it is important to identify a degenerate problem as early as beginning and take the
necessary action to avoid any computational difficulty. The degeneracy can be identified through the
following results:
“In a transportation problem, a degenerate basic feasible solution exists if and only if some
partial sum of supply (row) is equal to a partial sum of demand (column). For example the following
transportation problem is degenerate. Because in this problem
a1 = 400 = b1
a2 + a3 = 900 = b2 + b3
Warehouses
Plant w1 w2 Supply (ai)
w3
20 17 25
X 400
10 10 20
Y 500
Unsatisfied
0 0 0
demand 400
Demand (bj) 400 400 500 1300

There is a technique called perturbation, which helps to solve the degenerate problems.
Perturbation Technique:
The degeneracy of the transportation problem can be avoided if we ensure that no partial sum of
ai (supply) and bj (demand) is equal. We set up a new problem where
ai = ai +d i = 1, 2, ……, m
bj = bj j = 1, 2, ……, n -1
bn = bn + md d>0
This modified problem is constructed in such a way that no partial sum of ai is equal to the bj.
Once the problem is solved, we substitute d = 0 leading to optimum solution of the original problem.
ASSIGNMENT PROBLEM
Introduction
The Assignment Problem can define as follows:
Given n facilities, n jobs and the effectiveness of each facility to each job, here the problem is to
assign each facility to one and only one job so that the measure of effectiveness if optimized. Here the
optimization means Maximized or Minimized. There are many management problems has a assignment
problem structure. For example, the head of the department may have 6 people available for assignment
and 6 jobs to fill. Here the head may like to know which job should be assigned to which person so that
all tasks can be accomplished in the shortest time possible. Another example a container company may
have an empty container in each of the location 1, 2,3,4,5 and requires an empty container in each of the
locations 6, 7, 8,9,10. It would like to ascertain the assignments of containers to various locations so as
to minimize the total distance. The third example here is, a marketing set up by making an estimate of
sales performance for different salesmen as well as for different cities one could assign a particular
salesman to a particular city with a view to maximize the overall sales.
Note that with n facilities and n jobs there are n! possible assignments. The simplest way of
finding an optimum assignment is to write all the n! possible arrangements, evaluate their total cost and
select the assignment with minimum cost. Bust this method leads to a calculation problem of formidable
size even when the value of n is moderate. For n=10 the possible number of arrangements is 3268800.
Assignment Problem Structure and Solution
The structure of the Assignment problem is similar to a transportation problem, is as follows:
1 2 … n
1 c11 c12 … c1n 1
2 c21 c21 … c2n 1
. . . . .
Workers
. . . .
. . . .
n cn1 cn2 … cnn 1
1 1 … 1
th th
The element cij represents the measure of effectiveness when i person is assigned j job. Assume that
th
the overall measure of effectiveness is to be minimized. The element x ij represents the number of i
th th th
individuals assigned to the j job. Since i person can be assigned only one job and j job can be
assigned to only one person we have the following
xi1 + xi2 + ……………. + xin = 1, where i = 1, 2,.............., n
x1j + x2j + ……………. + xnj = 1, where j = 1, 2,.............., n
and the objective function is formulated as
Minimize c11x11 + c12x12 +................+ cnnxnn
xij ≥ 0
The assignment problem is actually a special case of the transportation problem where m = n and
ai = bj = 1. However, it may be easily noted that any basic feasible solution of an assignment problem
contains (2n – 1) variables of which (n – 1) variables are zero. Because of this high degree of degeneracy
the usual computation techniques of a transportation problem become very inefficient. So, hat a separate
computation technique is necessary for the assignment problem.
The solution of the assignment problem is based on the following results:
“If a constant is added to every element of a row/column of the cost matrix of an assignment
problem the resulting assignment problem has the same optimum solution as the original assignment
problem and vice versa”. – This result may be used in two different methods to solve the assignment
problem. If in an assignment problem some cost elements cij are negative, we may have to convert them
into an equivalent assignment problem where all the cost elements are non-negative by adding a suitable
large constant to the cost elements of the relevant row or column, and then we look for a feasible
solution which has zero assignment cost after adding suitable constants to the cost elements of the
various rows and columns. Since it has been assumed that all the cost elements are non-negative, this
assignment must be optimum. On the basis of this principle a computational technique known as
Hungarian Method is developed. The Hungarian Method is discussed as follows.
Hungarian Method:
The Hungarian Method is discussed in the form of a series of computational steps as follows,
when the objective function is that of minimization type.
Step 1:
From the given problem, find out the cost table. Note that if the number of origins is not equal to the
number of destinations then a dummy origin or destination must be added.
Step 2:
In each row of the table find out the smallest cost element, subtract this smallest cost element from each
element in that row. So, that there will be at least one zero in each row of the new table. This new table
is known as First Reduced Cost Table.
Step 3:
In each column of the table find out the smallest cost element, subtract this smallest cost element from
each element in that column. As a result of this, each row and column has at least one zero element. This
new table is known as Second Reduced Cost Table.
Step 4:
Now determine an assignment as follows:
For each row or column with a single zero element cell that has not be assigned or
eliminated, box that zero element as an assigned cell.
For every zero that becomes assigned, cross out all other zeros in the same row and for
column.
If for a row and for a column there are two or more zero and one can’t be chosen by
inspection, choose the assigned zero cell arbitrarily.
The above procedures may be repeated until every zero element cell is either assigned
(boxed) or crossed out.
Step 5:
An optimum assignment is found, if the number of assigned cells is equal to the number of rows (and
columns). In case we had chosen a zero cell arbitrarily, there may be an alternate optimum. If no
optimum solution is found i.e. some rows or columns without an assignment then go to Step 6.
Step 6:
Draw a set of lines equal to the number of assignments which has been made in Step 4, covering all the
zeros in the following manner
Mark check (√) to those rows where no assignment has been made.
Examine the checked (√) rows. If any zero element cell occurs in those rows, check (√) the
respective columns that contains those zeros.
Examine the checked (√) columns. If any assigned zero element occurs in those columns,
check (√) the respective rows that contain those assigned zeros.
The process may be repeated until now more rows or column can be checked.
Draw lines through all unchecked rows and through all checked columns.
Step 7:
Examine those elements that are not covered by a line. Choose the smallest of these elements and
subtract this smallest from all the elements that do not have a line through them.
Add this smallest element to every element that lies at the intersection of two lines. Then the
resulting matrix is a new revised cost table.
Example:
Problem
A work shop contains four persons available for work on the four jobs. Only one person can work on
any one job. The following table shows the cost of assigning each person to each job. The objective is
to assign person to jobs such that the total assignment cost is a minimum.
Jobs
1 2 3 4
20 25 22 28
A
15 18 23 17
Persons B
19 17 21 24
C
25 23 24 24
D
Solution
As per the Hungarian Method

Step 1: The cost Table
Jobs
1 2 3 4
20 25 22 28
A
15 18 23 17
Persons B
C 19 17 21 24
D 25 23 24 24
Step 2: Find the First Reduced Cost Table
Jobs
1 2 3 4
0 5 2 8
A
0 3 8 2
Persons B
2 0 4 7
C
2 0 1 1
Step 3: Find the Second Reduced Cost Table
Jobs
1 2 3 4
0 5 1 7
A
0 3 7 1
Persons B
2 0 3 6
C
2 0 0 0
Step 4: Determine an Assignment
By examine row A of the table in Step 3, we find that it has only one zero (cell A1) box this zero
and cross out all other zeros in the boxed column. In this way we can eliminate cell B1.
Now examine row C, we find that it has one zero (cell C2) box this zero and cross out (eliminate) the
zeros in the boxed column. This is how cell D2 gets eliminated.
There is one zero in the column 3. Therefore, cell D3 gets boxed and this enables us to eliminate
cell D4.
Therefore, we can box (assign) or cross out (eliminate) all zeros.
The resultant table is shown below:
Jobs
1 2 3 4
0 5 1 7
A
0 3 7 1
Persons B
C 2 3 6
D 2 0 0
Step 5: 0
The solution obtained in Step 4 is not optimal. Because we were able to make three assignments
when four were required.
Step 6:
Cover all the zeros of the table shown in the Step 4 with three lines (since already we made
three assignments).
Check row B since it has no assignment. Note that row B has a zero in column 1, therefore check
column1. Then we check row A since it has a zero in column 1. Note that no other rows and columns
are checked. Now we may draw three lines through unchecked rows (row C and D) and the checked
column (column 1). This is shown in the table given below:
Jobs
1 2 3 4
0 5 1 7
A
0 3 7 1
Persons B
C 2 3 6
D 2 0 0
Step 7:
Develop the new revised table.
Examine those elements that are not covered by a line in the table given in Step 6. Take the smallest
element in this case the smallest element is 1. Subtract this smallest element from the uncovered
cells and add 1 to elements (C1 and D1) that lie at the intersection of two lines. Finally, we get the
new revised cost table, which is shown below:
Jobs
1 2 3 4
0 4 0 6
A
0 2 6 0
Persons B
C 3 0 3 6
D 3 0 0 0
Step 8:
Now, go to Step 4 and repeat the procedure until we arrive at an optimal solution (assignment).
Step 9:
Determine an assignment
Examine each of the four rows in the table given in Step 7, we may find that it is only row C which
has only one zero box this cell C2 and cross out D2.
Note that all the remaining rows and columns have two zeros. Choose a zero arbitrarily, say A1 and box
this cell so that the cells A3 and B1 get eliminated.
Now row B (cell B4) and column 3 (cell D4) has one zero box these cells so that cell D4 is eliminated.
Thus, all the zeros are either boxed or eliminated. This is shown in the following table
Jobs
1 2 3 4
4 0 6
0
A
0 2 6
Persons B
C 3 3 06
D 3 0 0
Since the number of assignments equal to the number of rows (columns), the assignment
shown in the above tale is optimal. 0
The total cost of assignment is: 78 that is A1 + B4 + C2 + D3
20 + 17 + 17 + 24 = 78
2.3 Unbalanced Assignment Problem 0
In the previous section we assumed that the number of persons to be assigned and the number of jobs
were same. Such kind of assignment problem is called as balanced assignment problem. Suppose if
the number of person is different from the number of jobs then the assignment problem is called as
unbalanced.
If the number of jobs is less than the number of persons, some of them can’t be assigned any job. So that
we have to introduce on or more dummy jobs of zero duration to make the unbalanced assignment
problem into balanced assignment problem. This balanced assignment problem can be solved by using
the Hungarian Method as discussed in the previous section. The persons to whom the dummy jobs are
assigned are left out of assignment.
Similarly, if the number of persons is less than number of jobs then we have introduce one or
more dummy persons with zero duration to modify the unbalanced into balanced and then the problem
is solved using the Hungarian Method. Here the jobs assigned to the dummy persons are left out.
Example:
Solve the following unbalanced assignment problem of minimizing the total time for performing all
the jobs.
Jobs
1 2 3 4 5
5 2 4 2 5
A
2 4 7 6 6
B
Workers C 6 7 5 8 7
D 5 2 3 3 4
E 8 3 7 8 6
F 3 6 3 5 7
Solution
In this problem the number of jobs is less than the number of workers so we have to introduce a
dummy job with zero duration.
The revised assignment problem is as follows:

Jobs
1 2 3 4 5 6
5 2 4 2 5 0
A
2 4 7 6 6 0
B
Workers C 6 7 5 8 7 0
D 5 2 3 3 4 0
E 8 3 7 8 6 0
F 3 6 3 5 7 0
Now the problem becomes balanced one since the number of workers is equal to the number jobs.
So that the problem can be solved using Hungarian Method.
Step 1: The cost Table

Jobs
1 2 3 4 5 6
5 2 4 2 5 0
A
2 4 7 6 6 0
Workers B
C 6 7 5 8 7 0
D 5 2 3 3 4 0
E 8 3 7 8 6 0
F 3 6 3 5 7 0
Step 2: Find the First Reduced Cost Table
Jobs
1 2 3 4 5 6
5 2 4 2 5 0
A
2 4 7 6 6 0
B
Workers C 6 7 5 8 7 0
D 5 2 3 3 4 0
E 8 3 7 8 6 0
F 3 6 3 5 7 0
Step 3: Find the Second Reduced Cost Table

Jobs
1 2 3 4 5 6
3 0 1 0 1 0
A
0 2 4 4 2 0
B
Workers C 4 5 2 6 3 0
D 3 0 0 1 0 0
E 6 1 4 6 2 0
F 1 4 0 3 3 0
Step 4: Determine an Assignment

By using the Hungarian Method the assignment is made as follows:
Jobs
1 2 3 4 5 6
A 3 0 1 0 1 0
2 4 4 2 0
B
4 5 2 6 3
Workers C 0
D 3 0 0 1 0
E 6 1 4 6 2 0
F 1 4 3 3 0
Step 5:
The solution obtained in Step 4 is not optimal. Because we were able to make five assignments
when six were required.
Step 6:
Cover all the zeros of the table shown in the Step 4 with five lines (since already we made five
assignments).
Check row E since it has no assignment. Note0 that row B has a zero in column 6, therefore check
column6. Then we check row C since it has a zero in column 6. Note that no other rows and columns are
checked. Now we may draw five lines through unchecked rows (row A, B, D and F) and the checked
column (column 6). This is shown in the table given below:
Jobs
1 2 3 4 5 6
A 3 0 1 0 1 0
2 4 4 2 0
B
4 5 2 6 3
Workers C 0
D 3 0 0 1 0
E 6 1 4 6 2 0
F 1 4 3 3 0
0
Step 7:
Develop the new revised table.
Examine those elements that are not covered by a line in the table given in Step 6. Take the
smallest element in this case the smallest element is 1. Subtract this smallest element from the
uncovered cells and add 1 to elements (A6, B6, D6 and F6) that lie at the intersection of two lines.
Finally, we get the new revised cost table, which is shown below:
1 2 3 4 5 6
0
Dr. CH. Lakshmi Tulasi Chadalawada Ramanamma Engineering College
3 0 1 0 1 1
A
0 2 4 4 2 1
B
Workers C 3 4 1 5 2 0
D 3 0 0 1 0 1
E 5 0 3 5 1 0
F 1 4 0 3 3 1
Step 8:
Now, go to Step 4 and repeat the procedure until we arrive at an optimal solution
(assignment).
Step 9:
Determine an assignment
Jobs
1 2 3 4 5 6
3 0 1 0 1 1
A
2 4 4 2 1
B
Dr. CH. Lakshmi Tulasi Chadalawada Ramanamma Engineering College
Workers C 30 4 1 5 2
D 3 0 0 1 1
E 5 3 5 1 0 0
F 1 4 3 3 1
Since the number of assignments equal to the number of rows (columns), the assignment
shown in the above tale is optimal.
Thus, the worker A is assigned to Job4, worker B is assigned to job 1, worker C is
assigned to job 6, worker D is assigned to job 5, worker E is assigned to job 2, and worker F
is assigned to job 3. Since the Job 6 is dummy so that worker C can’t be assigned.
The total minimum time is: 14 that is A4 + B1 + D5 + E2 + F3
2 + 2 + 4 + 3 + 3 = 14
Dr. Lakshmi Tulasi Chavali Chadalawada Ramanamma Engineering College
DYNAMIC PROGRAMMING
NETWORK PROBLEMS
Introduction
A network consists of several destinations or jobs which are linked with one another. A
manager will have occasions to deal with some network or other. Certain problems pertaining to
networks are taken up for consideration in this unit.
SHORTEST PATH PROBLEM
Imagine a salesman or a milk vendor or a post man who has to cover certain previously
earmarked places to perform his daily routines. It is assumed that all the places to be visited
by him are connected well for a suitable mode of transport. He has to cover all the locations.
While doing so, if he visits the same place again and again on the same day, it will be a loss
of several resources such as time, money, etc. Therefore he shall place a constraint upon
himself not to visit the same place again and again on the same day. He shall be in a position
to determine a route which would enable him to cover all the locations, fulfilling the
constraint.
The shortest route method aims to find how a person can travel from one location to
another, keeping the total distance traveled to the minimum. In other words, it seeks to
identify the shortest route to a series of destinations.
EXAMPLE
Let us consider a real life situation involving a shortest route problem.
A leather manufacturing company has to transport the finished goods from the
factory to the store house. The path from the factory to the store house is through certain
intermediate stations as indicated in the following diagram. The company executive wants to
identify the path with the shortest distance so as to minimize the transportation cost. The
problem is to achieve this objective.
Store house
Factory 40 2 95 4
35 65 70 6
40
1 5
100 3
20
The shortest route technique can be used to minimize the total distance from a node
designated as the starting node or origin to another node designated as the final node.
In the example under consideration, the origin is the factory and the final node is the store house.
STEPS IN THE SHORTEST ROUTE TECHNIQUE
The procedure consists of starting with a set containing a node and enlarging the set by
choosing a node in each subsequent step.
Step 1:
First, locate the origin. Then, find the node nearest to the origin. Mark the distance between
the origin and the nearest node in a box by the side of that node.
In some cases, it may be necessary to check several paths to find the nearest node.
Step 2:
Repeat the above process until the nodes in the entire network have been accounted for. The
last distance placed in a box by the side of the ending node will be the distance of the
shortest route. We note that the distances indicated in the boxes by each node constitute the
shortest route to that node. These distances are used as intermediate results in determining
the next nearest node.
SOLUTION FOR THE EXAMPLE PROBLEM

Looking at the diagram, we see that node 1 is the origin and the nodes 2 and 3 are
neighbours to the origin. Among the two nodes, we see that node 2 is at a distance of 40 units
from node 1 whereas node 3 is at a distance of 100 units from node 1. The minimum of {40,
100} is 40. Thus, the node nearest to the origin is node 2, with a distance of 40 units. So, out of
the two nodes 2 and 3, we select node 2. We form a set of nodes {1, 2} and construct a path
connecting the node 2 with node 1 by a thick line and mark the distance of 40 in a box by the
side of node 2. This first iteration is shown in the following diagram.
ITERATION No. 1
Now we search for the next node nearest to the set of nodes {1, 2}. For this purpose,
consider those nodes which are neighbours of either node 1 or node 2. The nodes 3, 4 and 5
fulfill this condition. We calculate the following distances.
The distance between nodes 1 and 3 = 100.
Minimum of {100, 35, 95, 65} = 35.
Therefore, node 3 is the nearest one to the set {1, 2}. In view of this observation, the set
of nodes is enlarged from {1, 2} to {1, 2, 3}. For the set {1, 2, 3}, there are two possible
paths, viz. Path 1 → 2 → 3 and Path 1 → 3 → 2. The Path 1 → 2 → 3 has a distance of 40 +
35 = 75 units while the Path 1 → 3 → 2 has a distance of 100 + 35 = 135 units.
Minimum of {75, 135} = 75. Hence we select the path 1 → 2 → 3 and display this path
by thick edges. The distance 75 is marked in a box by the side of node 3. We obtain the
following diagram at the end of Iteration No. 2.
ITERATION No. 2
REPEATING THE PROCESS
We repeat the process. The next node nearest to the set {1, 2, 3} is either node 4 or node 5.
Node 4 is at a distance of 95 units from node 2 while node 2 is at a distance of 40 units from node 1.
Thus, node 4 is at a distance of 95 + 40 = 135 units from the origin.
As regards node 5, there are two paths viz. 2 → 5 and 3 → 5, providing a link to the
origin. We already know the shortest routes from nodes 2 and 3 to the origin. The minimum
distances have been indicated in boxes near these nodes. The path 3 → 5 involves the
shortest distance. Thus, the distance between nodes 1 and 5 is 95 units (20 units between
nodes 5 and 3 + 75 units between node 3 and the origin). Therefore, we select node 5 and
enlarge the set from {1, 2, 3} to {1, 2, 3, 5}. The distance 95 is marked in a box by the side
of node 5. The following diagram is obtained at the end of Iteration No. 3.
ITERATION No. 3
Now 2 nodes remain, viz., nodes 4 and 6. Among them, node 4 is at a distance of 135
units from the origin (95 units from node 4 to node 2 + 40 units from node 2 to the origin).
Node 6 is at a distance of 135 units from the origin (40 + 95 units). Therefore, nodes 4 and 6
are at equal distances from the origin. If we choose node 4, then travelling from node 4 to
node 6 will involve an additional distance of 40 units. However, node 6 is the ending node.
Therefore, we select node 6 instead of node 4. Thus the set is enlarged from {1, 2, 3, 5} to
{1, 2, 3, 5, 6}. The distance 135 is marked in a box by the side of node 6. Since we have got
a path beginning from the start node and terminating with the stop node, we see that the
solution to the given problem has been obtained. We have the following diagram at the end
of Iteration No. 4.
ITERATION No. 4
MINIMUM DISTANCE
Referring to the above diagram, we see that the shortest route is provided by the
path 1 → 2 3 → 5 → 6 with a minimum distance of 135 units.
Replacement
models
Introduction:
The replacement problems are concerned with the situations that arise when some items such as
men, machines and usable things etc need replacement due to their decreased efficiency, failure or
breakdown. Such decreased efficiency or complete breakdown may either be gradual or all of a sudden.
If a firm wants to survive the competition it has to decide on whether to replace the out dated
equipment or to retain it, by taking the cost of maintenance and operation into account. There are two
basic reasons for considering the replacement of an equipment. They are Physical impairment or
malfunctioning of various parts. Obsolescence of the equipment.
The physical impairment refers only to changes in the physical condition of the equipment itself.
This will lead to decline in the value of service rendered by the equipment, increased operating cost of
the equipments, increased maintenance cost of the equipment or the combination of these costs.
Obsolescence is caused due to improvement in the existing Tools and machinery mainly when the
technology becomes advanced therefore, it becomes uneconomical to continue production with the same
equipment under any of the above situations. Hence the equipments are to be periodically replaced.
Some times, the capacity of existing facilities may be in adequate to meet the current demand. Under
such cases, the following two alternatives will be considered. Replacement of the existing equipment
with a new one Argument the existing one with an additional equipments.
Type of Maintenance
Maintenance activity can be classified into two
types Preventive Maintenance
Breakdown Maintenance
Preventive maintenance (PN) is the periodical inspection and service which are aimed to detect
potential failures and perform minor adjustments a requires which will prevent major operating problem
in future. Breakdown maintenance is the repair which is generally done after the equipment breaks
down. It is offer an emergency which will have an associated penalty in terms of increasing the cost of
maintenance and downtime cost of equipment, Preventive maintenance will reduce such costs up-to a
certain extent. Beyond that the cost of preventive maintenance will be more when compared to the cost
of the breakdown maintenance.
Total cost = Preventive maintenance cost + Breakdown maintenance cost.
This total cost will go on decreasing up-to P with an increase in the level of maintenance up-to a
point, beyond which the total cost will start increasing from P. The level of maintenance corresponding
to the minimum total cost at P is the Optional level of maintenance this concept is illustrated in the
follows diagram
The points M and N denote optimal level of maintenance and optimal cost
respectively Types of replacement problem
The replacement problem can be classified into two categories. Replacement of assets that deteriorate
with time (replacement due to gradual failure, due to wear and tear of the components of the machines)
this can be further classified into the following types. Determination of economic type of an asset.
Replacement of an existing asset with a new asset. Simple probabilistic model for assets which will fail
completely (replacement due to sudden failure).
Determination of Economic Life of an asset
Any asset will have the following cost components
Capital recovery cost (average first cost), Computed form the first cost (Purchase price) of the asset.
Average operating and maintenance cost.
Total cost which is the sum of capital recovery cost (average first cost) and average operating and
maintenance cost.
A typical shape of each of the above cost with respect to life of the asset is shown below
From figure, when the life of the machine increases, it is clear that the capital recovery cost
(average first cost) goes on decreasing and the average operating and maintenance cost goes on increasing.
From the beginning the total cost goes on decreasing upto a particular life of the asset and then it starts
increasing. The point P were the total cost in the minimum is called the Economic life of the asset. To
solve problems under replacement, we consider the basics of interest formula. Present worth factor
denoted by (P/F, i,n). If an amount P is invested now with amount earning interest at the rate i per year,
then the future sum (F) accumulated after n years can be obtained.
P - Principal sum at year Zero
th
F - Future sum of P at the end of the n year
i - Annual interest rate
- Number of interest periods. Then
n
the formula for future sum F = P ( 1 + i )
n
P = F/(1 +i) = Fx (present worth factor)
If A is the annual equivalent amount which occurs at the end of every year from year one through n
years is given by
A = P x i (1 +i)n
n
(1 +i) - 1
= P ( A / P, i, n )
= P x equal payment series capital recovery factor
Example:
A firm is considering replacement of an equipment whose first cost is Rs. 1750 and the scrap value is
negligible at any year. Based on experience, it is found that maintenance cost is zero during the first year
and it increases by Rs. 100 every year thereafter.When should be the equipment replaced if
i = 0%
i = 12%
Solution :
Given the first cost = Rs 1750 and the maintenance cost is Rs. Zero during the first years and
then increases by Rs. 100 every year thereafter. Then the following table shows the calculation.
Calculations to determine Economic life
(a) First cost Rs. 1750 Interest rate = 0%
Summation Average cost Average first Average

Maintenan
End of ce cost at of of cost if total cost
year (n) maintenanc maintenance replaced at through the
end of year e through the the given given year
Cost given year year and

A B (Rs) C (Rs) D (in Rs) E (Rs) F (Rs)
1750
C= B C/A A D+E
1 0 0 0 1750 1750
2 100 100 50 875 925
3 200 300 100 583 683
4 300 600 150 438 588
5 400 1000 200 350 550
6 500 1500 250 292 542
7 600 2100 300 250 550
8 700 2800 350 219 569
The value corresponding to any end-of-year (n) in Column F represents the average total cost of
using the equipment till the end of that particulars year.
In this problem, the average total cost decreases till the end of the year 6 and then it increases.
Hence the optimal replacement period is 6 years ie the economic life of the equipment is 6 years.
(e) When interest rate i = 12%
When the interest rate is more than 0% the steps to get the economic life are summarized in the following
table.
Calculation to determine Economic life

First Cost = Rs. 1750 Interest rate = 12%
Mai Presen Summation
t
nten worth as of present (A/P,
En ance beginning worth of Present 12%,n) Annual
n
d cost of years maintenanc simulator =i (1+i) equipment
of maintena
(P/F,12v,n) n
ye at 1 of e costs nce cost (1+i) -1 total cost

ar end maintenanc through the and first through the
of e costs given year giver year
(n) year cost G
s
A B C D E F G H
C=
B 1 E+
n
(iR) (1+12/100) BxC D Rs. 1750 FxG
1 0 0.8929 0 0 1750 1.1200 1960
2 100 0.7972 79.72 79.72 1829.72 0.5917 1082.6
3 200 0.7118 142.36 222.08 1972.08 0.4163 820.9
4 300 0.6355 190.65 412.73 2162.73 0.3292 711.9
5 400 0.5674 226.96 639.69 2389.69 0.2774 662.9
6 500 0.5066 253.30 892.99 2642.99 0.2432 642.7
7 600 0.4524 271.44 1164.43 2914.430 0.2191 638.5
8 700 0.4039 282.73 1447.16 3197.16 0.2013 680.7
Identify the end of year for which the annual equivalent total cost is minimum in
column. In this problem the annual equivalent total cost is minimum at the end of year hence
the economics life of the equipment is 7 years.
Simple probabilistic model for items which completely fail
Electronic items like bulbs, resistors, tube lights etc. generally fail all of a sudden,
instead of gradual failure. The sudden failure of the item results in complete breakdown of
the system. The system may contain a collection of such items or just an item like a single
tube-light. Hence we use some replacement policy for such items which would minimize the
possibility of complete breakdown. The following are the replacement policies which are
applicable in these cases.
i) Individual replacement policy :
Under this policy, each item is replaced immediately after failure.
ii) Group replacement policy :
Under group replacement policy, a decision is made with regard the replacement at what
equal internals,
all the item are to be replaced simultaneously with a provision to replace the items
individually which
fail during the fixed group replacement period. Among the two types of replacement polices,
we have to decide which replacement policy we have to follow. Whether individual
replacement policy is better than group replacement policy. With regard to economic point of
view. To decide this, each of the replacement policy is calculated and the most economic one
is selected for implementation.
Exercise :
List and explain different types of
maintenance Discuss the reasons for
maintenance.
Distinguish between breakdown maintenance and preventive maintenance.
Distinguish between individual and group replacement polices.
A firm is considering replacement of an equipment whose first cost is Rs.4000 and
the scrap value is negligible at the end of any year. Based on experience, it has been found
that the maintenance cost is zero during the first year and it is Rs.1000 for the second year. It
increase by Rs.300 every years thereafter. When should the equipment be replace if i = 0%
When should the equipment be replace if i = 12%
Ans . a) 5 years b) 5 years
A company is planning to replace an equipment whose first cost is Rs.1,00,000. The
operating and maintenance cost of the equipment during its first year of operation is
Rs.10,000 and it increases by Rs. 2,000 every year thereafter. The release value of the
equipment at the end of the first year of its operation is Rs.65,000 and it decreases by
Rs.10,000 every year thereafter. Find the economic life of the equipment by assuming the
interest rate as 12%.
[Ans : Economic life = 13 years and the corresponding annual equivalent cost = Rs.
34,510]
The following table gives the operation cost, maintenance cost and salvage value at
the end of every year of machine whose purchase value is Rs. 12,000. Find the economic life
of the machine assuming.
The interest rate as 0%
The interest rate as
15%
Operation cost at Maintenance cost Salvage value at the end
End of the end of year at the end of year of year (Rs)
year (Rs) (Rs)
1 2000 2500 8000
2 3000 3000 7000
3 4000 3500 6000
4 5000 4000 5000
5 6000 4500 4000
6 7000 5000 3000
7 8000 5500 2000
8 9000 6000 1000
Ans :
Economic life of the machine = 2 years

Economic life of the machine = 2
years
PROJECT NETWORK
KEY CONCEPTS
Certain key concepts pertaining to a project network are described below:
1. Activity
An activity means a work. A project consists of several activities. An activity takes time.
It is represented by an arrow in a diagram of the network. For example, an activity in house
construction can be flooring. This is represented as follows:
flooring
Construction of a house involves various activities. Flooring is an activity in this project. We can say
that a project is completed only when all the activities in the project are completed.
2. Event
It is the beginning or the end of an activity. Events are represented by circles in a project
network diagram. The events in a network are called the nodes.
Example:
Stop Start Stop
Punchig
Starting a punching machine is an activity. Stopping the punching machine is another activity.
3. Predecessor Event
The event just before another event is called the predecessor event.
4. Successor Event
The event just following another event is called the successor event.
Example: Consider the following.
1 6
2 4
5
In this diagram, event 1 is predecessor for the event

2. Event 2 is successor to event 1.
Event 2 is predecessor for the events 3, 4 and
5. Event 4 is predecessor for the event 6.
Event 6 is successor to events 3, 4 and 5.
5. Network
A network is a series of related activities and events which result in an end product or
service. The activities shall follow a prescribed sequence. For example, while constructing a house,
laying the foundation should take place before the construction of walls. Fitting water tapes will be
done towards the completion of the construction. Such a sequence cannot be altered.
6. Dummy Activity
A dummy activity is an activity which does not consume any time. Sometimes, it may be
necessary to introduce a dummy activity in order to provide connectivity to a network or for the
preservation of the logical sequence of the nodes and edges.
7. Construction of a Project Network
A project network consists of a finite number of events and activities, by adhering to a
certain specified sequence. There shall be a start event and an end event (or stop event). All
the other events shall be between the start and the end events. The activities shall be marked by
directed arrows. An activity takes the project from one event to another event.
An event takes place at a point of time whereas an activity takes place from one point of
time to another point of time.
CONSTRUCTION OF PROJECT NETWORK DIAGRAMS
Problem 1:
Construct the network diagram for a project with the following activities:
Event Event Activity Predecessor
Activity
12 A -
13 B -
14 C -
25 D A
36 E B
46 F C
56 G D
Solution:
The start event is node 1.
The activities A, B, C start from node 1 and none of them has a predecessor activity. A
joins nodes1 and 2; B joins nodes 1 and 3; C joins nodes 1 and 4. So we get the following:
This is a part of the network diagram that is being constructed.

Next, activity D has A as the predecessor activity. D joins nodes 2 and 5. So we get
A D
1 2 5
Next, activity E has B as the predecessor activity. E joins nodes 3 and 6. So we get
B E
1 3 6
Next, activity G has D as the predecessor activity. G joins nodes 5 and 6. Thus we obtain
D G
1 2 5
Since activities E, F, G terminate in node 6, we get
5 G
3 6
E
F
4
6 is the end event.

Combining all the pieces together, the following network diagram is obtained for the given
project:
D
2 5
A E G
1
B 3 6
C F
We validate the diagram by checking with the given data.

CRITICAL PATH METHOD (CPM)
INTRODUCTION
The critical path method (CPM) aims at the determination of the time to complete a project
and the important activities on which a manager shall focus attention.
ASSUMPTION FOR CPM
In CPM, it is assumed that precise time estimate is available for each activity.
PROJECT COMPLETION TIME
From the start event to the end event, the time required to complete all the activities of the
project in the specified sequence is known as the project completion time.
PATH IN A PROJECT
A continuous sequence, consisting of nodes and activities alternatively, beginning with the
start event and stopping at the end event of a network is called a path in the network.
CRITICAL PATH AND CRTICAL ACTIVITIES
Consider all the paths in a project, beginning with the start event and stopping at the end
event. For each path, calculate the time of execution, by adding the time for the individual
activities in that path.
The path with the largest time is called the critical path and the activities along this path are
called the critical activities or bottleneck activities. The activities are called critical because they
cannot be delayed. However, a non-critical activity may be delayed to a certain extent. Any
delay in a critical activity will delay the completion of the whole project. However, a certain
permissible delay in a non –critical activity will not delay the completion of the whole project. It
shall be noted that delay in a non-critical activity beyond a limit would certainly delay the
completion the whole project. Sometimes, there may be several critical paths for a project. A
project manager shall pay special attention to critical activities.
Problem 1:
The following details are available regarding a project:
Activity Predecessor Duration (Weeks)
Activity
A - 3
B A 5
C A 7
D B 10
E C 5
F D,E 4
Determine the critical path, the critical activities and the project completion time.
Solution:
First let us construct the network diagram for the given project. We mark the time
estimates along the arrows representing the activities. We obtain the following diagram:
Start event B D End event
5 3 10
A
1 2
3 5 F 6
4
C
Consider the paths, beginning with the start node and stopping with the end node. There are
two such paths for the given project. They are as follows:
Activity Predecessor Duration EST EFT LST LFT

A - 3 0 3 0 3
B A 7 3 10 3 10
C A 5 3 8 10 15
D B 10 10 20 10 20
E C 5 8 13 15 20
F D,E 4 20 24 20 24
Critical Path is A B D F
Project duration is 24 weeks
Programme Evaluation Review Technique

INTRODUCTION
Programme Evaluation and Review Technique (PERT) is a tool that would help a project
manager in project planning and control. It would enable him in continuously monitoring a
project and taking corrective measures wherever necessary. This technique involves statistical
methods.
ASSUMPTIONS FOR PERT
Note that in CPM, the assumption is that precise time estimate is available for each activity
in a project. However, one finds most of the times that this is not practically possible.
In PERT, we assume that it is not possible to have precise time estimate for each activity
and instead, probabilistic estimates of time alone are possible. A multiple time estimate approach
is followed here. In probabilistic time estimate, the following 3 types of estimate are possible:
Pessimistic time estimate ( tp )
Optimistic time estimate ( to )
Most likely time estimate ( tm
)
The optimistic estimate of time is based on the assumption that an activity will not
involve any difficulty during execution and it can be completed within a short period. On the
other hand, a pessimistic estimate is made on the assumption that there would be unexpected
problems during the execution of an activity and hence it would consume more time. The most
likely time estimate is made in between the optimistic and the pessimistic estimates of time.
Thus the three estimates of time have the relationship
to t m tp .
Practically speaking, neither the pessimistic nor the optimistic estimate may hold in reality
and it is the most likely time estimate that is expected to prevail in almost all cases. Therefore, it
is preferable to give more weight to the most likely time estimate.
We give a weight of 4 to most likely time estimate and a weight of 1 each to the pessimistic
and optimistic time estimates. We arrive at a time estimate ( te ) as the weighted average of these
estimates as follows:
t 4t t
te o m p
6
Since we have taken 6 units ( 1 for tp , 4 for tm and 1 for to ), we divide the sum by 6. With
this time estimate, we can determine the project completion time as applicable for CPM.
Since PERT involves the average of three estimates of time for each activity, this method is
very practical and the results from PERT will be have a reasonable amount of reliability.
MEASURE OF CERTAINTY
The 3 estimates of time are such that
t o t m tp .
Therefore the range for the time estimate is t p to .
The time taken by an activity in a project network follows a distribution with a standard deviation of
one sixth of the range, approximately.
t p to
i.e., The standard deviation =
6
2
t t
and the variance = 2 p o
The certainty of the time estimate of an activity can be analysed with the help of the
variance. The greater the variance, the more uncertainty in the time estimate of an activity.
Problem 1:
Two experts A and B examined an activity and arrived at the following time estimates.
Expert Time Estimate
to tm tp
A 4 6 8
B 4 7 10
Determine which expert is more certain about his estimates of time:
Solution:
2
2 t p to
Variance ( ) in time estimates =

6
842 4
In the case of expert A, the variance
=
6 9
10 4 2
As regards expert B, the variance = 1

6
So, the variance is less in the case of A. Hence, it is concluded that the expert A is more
certain about his estimates of time.
Determination of Project Completion Time in PERT
Problem 2:
Find out the time required to complete the following project and the critical activities:
Activity Predecessor Optimistic time Most likely time Pessimistic time
Activity estimate (to days) estimate (tm days) estimate (tp days)
A - 2 4 6
B A 3 6 9
C A 8 10 12
D B 9 12 15
E C 8 9 10
F D, E 16 21 26
G D, E 19 22 25
H F 2 5 8
I G 1 3 5
Solution:
From the three time estimates tp , tm and to , calculate te for each activity. We obtain the
following table:
Activity Optimistic 4 x Most likely Pessimistic to+ 4tm+ tp Time estimate
time estimate time estimate time estimate

t o 4 tm tp
(to) (tp) t
e
A 2 16 6 24 4
B 3 24 9 36 6
C 8 40 12 60 10
D 9 48 15 72 12
E 8 36 10 54 9
F 16 84 26 126 21
G 19 88 25 132 22
H 2 20 8 30 5
I 1 12 5 18 3
Time for the path: 4+10+9+ 6+3 = 32 days.

Compare the times for the four paths.
Maximum of {48, 31, 49, 32} = 49.
We see that Path III has the maximum time.
Therefore the critical path is Path III. i.e., 1 2 4 5 6 8.
The critical activities are A, C, E, F and H.
The non-critical activities are B, D, G and I.
Project time (Also called project length) = 49 days.
UNIT I
INTRODUCTION TO OPERATIONS RESEARCH
Introduction
The British/Europeans refer to "operational research", the Americans to "operations research" -
but both are often shortened to just "OR" - which is the term we will use.
Another term which is used for this field is "management science" ("MS"). The
Americans sometimes combine the terms OR and MS together and say "OR/MS" or "ORMS".
Yet other terms sometimes used are "industrial engineering" ("IE") and "decision science"
("DS"). In recent years there has been a move towards a standardization upon a single term for
the field, namely the term "OR".
Operation Research is a relatively new discipline. The contents and the boundaries of the
OR are not yet fixed. Therefore, to give a formal definition of the term Operations Research is a
difficult task. The OR starts when mathematical and quantitative techniques are used to
substantiate the decision being taken. The main activity of a manager is the decision making. In
our daily life we make the decisions even without noticing them. The decisions are taken simply
by common sense, judgment and expertise without using any mathematical or any other model
in simple situations. But the decision we are concerned here with are complex and heavily
responsible. Examples are public transportation network planning in a city having its own layout
of factories, residential blocks or finding the appropriate product mix when there exists a large
number of products with different profit contributions and production requirement etc.
Operations Research tools are not from any one discipline. Operations Research takes
tools from different discipline such as mathematics, statistics, economics, psychology,
engineering etc. and combines these tools to make a new set of knowledge for decision making.
Today, O.R. became a professional discipline which deals with the application of scientific
methods for making decision, and especially to the allocation of scarce resources. The main
purpose of O.R. is to provide a rational basis for decisions making in the absence of complete
information, because the systems composed of human, machine, and procedures may do not
have complete information.
Operations Research can also be treated as science in the sense it describing,
understanding and predicting the systems behavior, especially man-machine system. Thus O.R.
specialists are involved in three classical aspect of science, they are as follows:
i) Determining the systems behavior
ii) Analyzing the systems behavior by developing appropriate models
iii) Predict the future behavior using these models
The emphasis on analysis of operations as a whole distinguishes the O.R. from other research
and engineering. O.R. is an interdisciplinary discipline which provided solutions to problems of
military operations during World War II, and also successful in other operations.
Stages of Development of Operations Research

The stages of development of O.R. are also known as phases and process of O.R, which
has six important steps. These six steps are arranged in the following order:
Step I: Observe the problem

environment Step II: Analyze and define
the problem Step III: Develop a model
Step IV: Select appropriate data input
Step V: Provide a solution and test its
reasonableness Step VI: Implement the solution
O.R. Tools and Techniques

Operations Research uses any suitable tools or techniques available. The common frequently used
tools/techniques are mathematical procedures, cost analysis, electronic computation. However, operations
researchers given special importance to the development and the use of techniques like linear
programming, game theory, decision theory, queuing theory, inventory models and simulation. In addition
to the above techniques, some other common tools are non-linear programming, integer programming,
dynamic programming, sequencing theory, Markov process, network scheduling (PERT/CPM), symbolic
Model, information theory, and value theory. There is many other Operations Research tools/techniques
also exists. The brief explanations of some of the above techniques/tools are as follows:
Linear Programming:
This is a constrained optimization technique, which optimize some criterion within some
constraints. In Linear programming the objective function (profit, loss or return on investment) and
constraints are linear. There are different methods available to solve linear programming.
Game Theory:
This is used for making decisions under conflicting situations where there are one or more
players/opponents. In this the motive of the players are dichotomized. The success of one player tends to
be at the cost of other players and hence they are in conflict.
Decision Theory:
Decision theory is concerned with making decisions under conditions of complete certainty about
the future outcomes and under conditions such that we can make some probability about what will happen
in future.
Queuing Theory:
This is used in situations where the queue is formed (for example customers waiting for service,
aircrafts waiting for landing, jobs waiting for processing in the computer system, etc). The objective here
is minimizing the cost of waiting without increasing the cost of servicing.
Inventory Models:
Inventory model make a decisions that minimize total inventory cost. This model successfully
reduces the total cost of purchasing, carrying, and out of stock inventory.
Simulation:
Simulation is a procedure that studies a problem by creating a model of the process involved in the
problem and then through a series of organized trials and error solutions attempt to determine the best
solution. Some times this is a difficult/time consuming procedure. Simulation is used when actual
experimentation is not feasible or solution of model is not possible.
Non-linear Programming:
This is used when the objective function and the constraints are not linear in nature. Linear
relationships may be applied to approximate non-linear constraints but limited to some range, because
approximation becomes poorer as the range is extended. Thus, the non-linear programming is used to
determine the approximation in which a solution lies and then the solution is obtained using linear
methods.
Dynamic Programming:
Dynamic programming is a method of analyzing multistage decision processes. In this each
elementary decision depends on those preceding decisions and as well as external factors.
Integer Programming:
If one or more variables of the problem take integral values only then dynamic programming
method is used. For example number or motor in an organization, number of passenger in an aircraft,
number of generators in a power generating plant, etc.
Markov Process:
Markov process permits to predict changes over time information about the behavior of a system is
known. This is used in decision making in situations where the various states are defined. The probability
from one state to another state is known and depends on the current state and is independent of how we
have arrived at that particular state.
Network Scheduling:
This technique is used extensively to plan, schedule, and monitor large projects (for example
computer system installation, R & D design, construction, maintenance, etc.). The aim of this technique is
minimize trouble spots (such as delays, interruption, production bottlenecks, etc.) by identifying the critical
factors. The different activities and their relationships of the entire project are represented
diagrammatically with the help of networks and arrows, which is used for identifying critical activities and
path. There are two main types of technique in network scheduling, they are:
Program Evaluation and Review Technique (PERT) – is used when activities time is not known
accurately/ only probabilistic estimate of time is available.
Critical Path Method (CPM) – is used when activities time is know accurately.
Information Theory:
This analytical process is transferred from the electrical communication field to O.R. field. The
objective of this theory is to evaluate the effectiveness of flow of information with a given system. This is
used mainly in communication networks but also has indirect influence in simulating the examination of
business organizational structure with a view of enhancing flow of information.
Applications of Operations Research

Today, almost all fields of business and government utilizing the benefits of Operations Research.
There are voluminous of applications of Operations Research. Although it is not feasible to cover all
applications of O.R. in brief. The following are the abbreviated set of typical operations research
applications to show how widely these techniques are used today:
Accounting:
 Assigning audit teams effectively

 Credit policy analysis
 Cash flow planning
 Developing standard costs
 Establishing costs for byproducts
 Planning of delinquent account strategy
Construction:
 Project scheduling, monitoring and control
 Determination of proper work force
 Deployment of work force
 Allocation of resources to projects
Facilities Planning:
 Factory location and size decision
 Estimation of number of facilities required
 Hospital planning
 International logistic system design
 Transportation loading and unloading
 Warehouse location decision
Finance:
 Building cash management models
 Allocating capital among various alternatives
 Building financial planning modelsInvestment analysis
 Portfolio analysis
 Dividend policy making
Manufacturing:
 Inventory control
 Marketing balance projection
 Production scheduling
 Production smoothing
Marketing:
 Advertising budget allocation

 Product introduction timing
 Selection of Product mix
 Deciding most effective packaging alternative
Organizational Behavior / Human Resources:
 Personnel planning
 Recruitment of employees
 Skill balancing
 Training program scheduling
 Designing organizational structure more effectively
Purchasing:
 Optimal buying
 Optimal reordering
 Materials transfer
Research and Development:
 R & D Projects control
 R & D Budget allocation
 Planning of Product introduction
Limitations of Operations Research
Operations Research has number of applications; similarly it also has certain limitations. These
limitations are mostly related to the model building and money and time factors problems involved in its
application. Some of them are as given below:
Operations Researchers job needs a mathematician or statistician, who might not be aware of the
business problems. Similarly, a manager is unable to understand the complex nature of Operations
Research. Thus there is a big gap between the two personnel.
Magnitude of Calculations
The aim of the O.R. is to find out optimal solution taking into consideration all the factors. In this
modern world these factors are enormous and expressing them in quantitative model and establishing
relationships among these require voluminous calculations, which can be handled only by machines.
Money and Time Costs
The basic data are subjected to frequent changes, incorporating these changes into the operations
research models is very expensive. However, a fairly good solution at present may be more desirable than
a perfect operations research solution available in future or after some time.
Non-quantifiable Factors
When all the factors related to a problem can be quantifiable only then operations research provides
solution otherwise not. The non-quantifiable factors are not incorporated in O.R. models. Importantly O.R.
models do not take into account emotional factors or qualitative factors.
Implementation
Once the decision has been taken it should be implemented. The implementation of decisions is a
delicate task. This task must take into account the complexities of human relations and behaviour and in
some times only the psychological factors.
LINEAR PROGRAMMING –GRAPHICAL METHOD
Introduction to Linear Programming
Linear Programming is a special and versatile technique which can be applied to a variety of
management problems viz. Advertising, Distribution, Investment, Production, Refinery Operations, and
Transportation analysis. The linear programming is useful not only in industry and business but also in
non-profit sectors such as Education, Government, Hospital, and Libraries. The linear programming
method is applicable in problems characterized by the presence of decision variables. The objective
function and the constraints can be expressed as linear functions of the decision variables. The decision
variables represent quantities that are, in some sense, controllable inputs to the system being modeled. An
objective function represents some principal objective criterion or goal that measures the effectiveness of
the system such as maximizing profits or productivity, or minimizing cost or consumption. There is always
some practical limitation on the availability of resources viz. man, material, machine, or time for the
system. These constraints are expressed as linear equations involving the decision variables. Solving a
linear programming problem means determining actual values of the decision variables that optimize the
objective function subject to the limitation imposed by the constraints.
The main important feature of linear programming model is the presence of linearity in the
problem. The use of linear programming model arises in a wide variety of applications. Some model may
not be strictly linear, but can be made linear by applying appropriate mathematical transformations. Still
some applications are not at all linear, but can be effectively approximated by linear models. The ease with
which linear programming models can usually be solved makes an attractive means of dealing with
otherwise intractable nonlinear models.
Linear Programming Problem Formulation
The linear programming problem formulation is illustrated through a product mix problem. The
product mix problem occurs in an industry where it is possible to manufacture a variety of products. A
product has a certain margin of profit per unit, and uses a common pool of limited resources. In this case
the linear programming technique identifies the products combination which will maximize the profit
subject to the availability of limited resource constraints.
Example:
Suppose an industry is manufacturing two types of products P1 and P2. The profits per Kg of the two
products are Rs.30 and Rs.40 respectively. These two products require processing in three types of
machines. The following table shows the available machine hours per day and the time required on each
machine to produce one Kg of P1 and P2. Formulate the problem in the form of linear programming
model.
Profit/Kg P1 P2 Total available Machine

Rs.30 Rs.40 hours/day
Machine 1 3 2 600
Machine 2 3 5 800
Machine 3 5 6 1100
Solution:
The procedure for linear programming problem formulation is as follows:
Introduce the decision variable as follows:

Let x1 = amount of P1
x2 = amount of P2
In order to maximize profits, we establish the objective function as
30x1 + 40x2
Since one Kg of P1 requires 3 hours of processing time in machine 1 while the corresponding
requirement of P2 is 2 hours. So, the first constraint can be expressed as
3x1 + 2x2 ≤ 600
Similarly, corresponding to machine 2 and 3 the constraints
are 3x1 + 5x2 ≤ 800
5x1 + 6x2 ≤ 1100
In addition to the above there is no negative production, which may be represented algebraically
as x1 ≥ 0 ; x2 ≥ 0
Thus, the product mix problem in the linear programming model is as follows:
Maximize
30x1 + 40x2
Subject to:
3x1 + 2x2 ≤ 600
3x1 + 5x2 ≤ 800
5x1 + 6x2 ≤ 1100
x1≥ 0, x2 ≥ 0
Formulation with Different Types of Constraints

The constraints in the previous example 2.1 are of “less than or equal to” type. In this section we are going
to discuss the linear programming problem with different constraints, which is illustrated in the following
Example.
Example :
A company owns two flour mills viz. A and B, which have different production capacities for high,
medium and low quality flour. The company has entered a contract to supply flour to a firm every month
with at least 8, 12 and 24 quintals of high, medium and low quality respectively. It costs the company
Rs.2000 and Rs.1500 per day to run mill A and B respectively. On a day, Mill A produces 6, 2 and 4
quintals of high, medium and low quality flour, Mill B produces 2, 4 and 12 quintals of high, medium and
low quality flour respectively. How many days per month should each mill be operated in order to meet the
contract order most economically.
Solution:
Let us define x1 and x2 are the mills A and B. Here the objective is to minimize the cost of the machine
runs and to satisfy the contract order. The linear programming problem is given by
Minimize
2000x1 + 1500x2
Subject to:
6x1 + 2x2 ≥ 8
2x1 + 4x2 ≥ 12
4x1 + 12x2 ≥ 24
x1 ≥ 0, x2 ≥ 0
Graphical Analysis of Linear Programming

This section shows how a two-variable linear programming problem is solved graphically, which is
illustrated as follows:
Example :
Consider the problem discussed
Maximize
30x1 + 40x2
Subject to:
3x1 + 2x2 ≤ 600
3x1 + 5x2 ≤ 800
5x1 + 6x2 ≤ 1100
x1≥ 0, x2 ≥ 0
From the first constraints 3x1 + 2x2 ≤ 600, draw the line 3x1 + 2x2 = 600 which passes through the point
(200, 0) and (0, 300). This is shown in the following graph as line 1.
3x1 + 2x2 = 600(line 1)
300
D
0 50 100 150 X1
200 275
Half Plane - A linear inequality in two variables is called as a half plane.

Boundary - The corresponding equality (line) is called as the boundary of the half plane.
Close Half Plane – Half plane with its boundary is called as a closed half plane.
In this case we must decide in which side of the line 3x1 + 2x2 = 600 the half plane is located. The
easiest way to solve the inequality for x2 is
3x1 ≤ 600 – 2x2
And for the fixed x1, the coordinates satisfy this inequality are smaller than the corresponding
ordinate on the line and thus the inequality is satisfied for all the points below the line 1.
Similarly, we have to determine the closed half planes for the inequalities 3x1 + 5x2 ≤ 800 and
5x1 + 6x2 ≤ 1100 (line 2 and line 3 in the graph). Since all the three constraints must be satisfied
simultaneously we have consider the intersection of these three closed half planes. The complete
intersection of these three closed half planes is shown in the above graph as ABCD. The region ABCD is
called the feasible region, which is shaded in the graph.
Feasible Solution:
Any non-negative value of x1, x2 that is x1 ≥ 0 and x2 ≥ 0 is known as feasible solution of the linear
programming problem if it satisfies all the existing constraints.
Feasible Region:
The collection of all the feasible solution is called as the feasible region.
LINEAR PROGRAMMING – SIMPLEX METHOD
Introduction
The Linear Programming with two variables can be solved graphically. The graphical method of
solving linear programming problem is of limited application in the business problems as the number of
variables is substantially large. If the linear programming problem has larger number of variables, the
suitable method for solving is Simplex Method. The simplex method is an iterative process, through which
it reaches ultimately to the minimum or maximum value of the objective function.
The simplex method also helps the decision maker/manager to identify the following:
Redundant Constraints
Multiple Solutions
Unbounded Solution
Infeasible Problem
Basics of Simplex Method
The basic of simplex method is explained with the following linear programming problem.
Example:
Maximize
60x1 + 70x2
Subject to:
2x1 + x2 ≤ 300
3x1 + 4x2 ≤ 509
4x1 + 7x2 ≤ 812
x1, x2 ≥ 0
Solution
First we introduce the variables

s3, s4, s5 ≥ 0
So that the constraints becomes equations, thus
2x1 + x2 + s3 = 300
3x1 + 4x2 + s4 = 509
4x1 + 7x2 + s5 = 812
Corresponding to the three constraints, the variables s3, s4, s5 are called as slack variables. Now, the
system of equation has three equations and five variables.
There are two types of solutions they are basic and basic feasible, which are discussed as follows:
Basic Solution
We may equate any two variables to zero in the above system of equations, and then the system
will have three variables. Thus, if this system of three equations with three variables is solvable such a
solution is called as basic solution.
For example suppose we take x1=0 and x2=0, the solution of the system with remaining three
variables is s3=300, s4=509 and s5=812, this is a basic solution and the variables s3, s4, and s5 are known
as basic variables where as the variables x1, x2 are known as non-basic variables.
The number of basic solution of a linear programming problem is depends on the presence of the
number of constraints and variables. For example if the number of constraints is m and the number of
n n
variables including the slack variables is n then there are at most Cn-m = Cm basic solutions.
Basic Feasible Solution

A basic solution of a linear programming problem is called as basic feasible solutions if it is
feasible it means all the variables are non-negative. The solution s3=300, s4=509 and s5=812 is a basic
feasible solution.
The number of basic feasible solution of a linear programming problem is depends on the presence
of the number of constraints and variables. For example if the number of constraints is m and the number
n n
of variables including the slack variables is n then there are at most Cn-m = Cm basic feasible solutions.
Every basic feasible solution is an extreme point of the convex set of feasible solutions and every
extreme point is a basic feasible solution of the set of given constraints. It is impossible to identify the
extreme points geometrically if the problem has several variables but the extreme points can be identified
using basic feasible solutions. Since one the basic feasible solution will maximize or minimize the
objective function, the searching of extreme points can be carry out starting from one basic feasible
solution to another.
The Simplex Method provides a systematic search so that the objective function increases in the
cases of maximization progressively until the basic feasible solution has been identified where the
objective function is maximized.
Simplex Method Computation
This section describes the computational aspect of simplex method. Consider the following linear
programming problem
Maximize
60x1 + 70x2
Subject to:
2x1 + x2 + s3 = 300
3x1 + 4x2 + s4 = 509
4x1 + 7x2 + s5 = 812
x1, x2, s3, s4 ,s5 ≥ 0
The profit Z=60x1 + 70x2 i.e. Maximize 60x1 + 70x2
The standard form can be summarized in a compact table form as
In this problem the slack variables s3, s4, and s5 provide a basic feasible solution from which the
simplex computation starts. That is s3==300, s4=509 and s5=812. This result follows because of the
special structure of the columns associated with the slacks.
If z represents profit then z=0 corresponding to this basic feasible solution. We represent by C B
the coefficient of the basic variables in the objective function and by XB the numerical values of the
basic variable.
So that the numerical values of the basic variables are: XB1=300, XB2=509, XB3=812. The
profit z=60x1+70x2 can also expressed as z-60x1-70x2=0. The simplex computation starts with the first
compact standard simplex table as given below:
CB Basic Cj 60 70 0 0 0
Variables XB x1 x2 s3 s4 s5
0 s3 300 2 1 1 0 0
0 s4 509 3 4 0 1 0
0 s5 812 4 7 0 0 1
z -60 -70 0 0 0
In the objective
function the coefficients of the variables are CB1=CB2=CB3=0. The topmost row of the Table 1 denotes
the coefficient of the variables x1, x2, s3, s4, s5 of the objective function respectively. The column under
x1 indicates the coefficient of x1 in the three equations respectively. Similarly the remaining column also
formed.
On seeing the equation z=60x1+70x2 we may observe that if either x1 or x2, which is currently
non-basic is included as a basic variable so that the profit will increase. Since the coefficient of x2 is
higher we choose x2 to be included as a basic variable in the next iteration. An equivalent criterion of
choosing a new basic variable can be obtained the last row of Table 1 i.e. corresponding to z.
Since the entry corresponding to x2 is smaller between the two negative values, x2 will be
included as a basic variable in the next iteration. However with three constraints there can be only three
basic variables.
Thus, by bringing x2 a basic variable one of the existing basic variables becomes non-basic. The
question here is How to identify this variable? The following statements give the solution to this
question.
Consider the first equation i.e. 2x1 + x2 + s3 = 300
From this equation
2x1+s3=300-x2
But x1=0. Hence, in order that s3≥0

300-x2≥0
i.e. x2≤300
Similarly consider the second equation i.e. 3x1 + 4x2 + s4 = 509 From
this equation
3x1+s4=509-4x2
But, x1=0. Hence, in order that s4≥0
509-4x2≥0
i.e. x2≤509/9
Similarly consider the third equation i.e. 4x1 + 7x2 + s5 = 812

From this equation
4x1+s5=812-7x2
But x1=0. Hence, in order that s5≥0
812-7x2≥0
i.e. x2≤812/7
Therefore the three equation lead to
x2≤300, x2≤509/9, x2≤812/7
Thus x2=Min (x2≤300, x2≤509/9, x2≤812/7) it means
x2=Min (x2≤300/1, x2≤509/9, x2≤812/7)=116
Therefore x2=116
If x2=116, you may be note from the third

equation 7x2+s5=812
i.e. s5=0
Thus, the variable s5 becomes non-basic in the next iteration.
So that the revised values of the other two basic variables are
S3=300-x2=184
S4=509-4*116=45
Refer to Table 1, we obtain the elements of the next Table i.e. Table using the following rules:
We allocate the quantities which are negative in the z-row. Suppose if all the quantities are
positive, the inclusion of any non-basic variable will not increase the value of the objective function.
Hence the present solution maximizes the objective function. If there are more than one negative values
we choose the variable as a basic variable corresponding to which the z value is least as this is likely to
increase the more profit.
th
Let xj be the incoming basic variable and the corresponding elements of the j row column be denoted
by Y1j, Y2j and Y3j respectively. If the present values of the basic variables are XB1, XB2 and XB3
respectively, then we can compute.
Min [XB1/Y1j, XB2/Y2j, XB3/Y3j] for Y1j, Y2j, Y3j>0.
Note that if any Yij≤0, this need not be included in the comparison. If the minimum occurs
th
corresponding to XBr/Yrj then the r basic variable will become non-basic in the next iteration.
Using the following rules the Table 2 is computed from the Table
The revised basic variables are s3, s4 and x2. Accordingly, we make CB1=0, CB2=0 and CB3=70.
As x2 is the incoming basic variable we make the coefficient of x2 one by dividing each element of row-
3 by 7. Thus the numerical value of the element corresponding to x1 is 4/7, corresponding to s5 is 1/7 in
Table 2.
The incoming basic variable should appear only in the third row. So we multiply the third-
row of Table 2 by 1 and subtract it from the first-row of Table 1 element by element. Thus the element
corresponding to x2 in the first-row of Table 2 is 0.
Therefore the element corresponding to x1 is 2-
1*4/7=10/7 and the element corresponding to s5 is
0-1*1/7=-1/7
In this way we obtain the elements of the first and the second row in Table 2. In Table 2 the
numerical values can also be calculated in a similar way.
CB Basic Cj 60 70 0 0 0
0 s3 184 10/7 0 1 0 -1/7
0 s4 45 5/7 0 0 1 -4/7
70 x2 116 4/7 1 0 0 1/7

zj-cj -140/7 0 0 0 70/7
Let CB1, CB2, Cb3 be the coefficients of the basic variables in the objective function. For
example in Table 2 CB1=0, CB2=0 and CB3=70. Suppose corresponding to a variable J, the quantity zj is
defined as zj=CB1, Y1+CB2, Y2j+CB3Y3j. Then the z-row can also be represented as Zj-Cj.
For example:
z1 - c1 = 10/7*0+5/7*0+70*4/7-60 = -140/7
z5 – c5 = -1/7*0-4/7*0+1/7*70-0 = 70/7
Now we apply rule (1) to Table 2. Here the only negative zj-cj is z1-c1 = -
140/7 Hence x1 should become a basic variable at the next iteration.
2. We compute the minimum of the ratio
184 , 45, 116 644 , 63 , 203

Min 10 5 4 = Min 5 = 63
7 7 7
This minimum occurs corresponding to s4, it becomes a non basic variable in next iteration.
3. Like Table 2, the Table 3 is computed sing the rules (i), (ii), (iii) as described above.
CB Basic Cj 60 70 0 0 0
0 s3 94 0 0 1 -2 1
60 x1 63 1 0 0 7/5 -4/5
70 x2 80 0 1 0 -4/5 3/5
zj-cj 0 0 0 28 -6
z5 – c5 < 0 should be made a basic variable in the next iteration.
Now compute the minimum ratios
94, 80
Min 1 3 = 94
5
Note: Since y25 = -4/5 < 0, the corresponding ratio is not taken for comparison.
The variable s3 becomes non basic in the next iteration.
3. From the Table 3, Table 4 is calculated following the usual steps.
CB Basic Cj 60 70 0 0 0
0 s5 94 0 0 1 -2 1
60 x1 691/5 1 0 4/5 -1/5 0
70 x2 118/5 0 1 -3/5 2/5 0
zj-cj 0 0 6 16 0
Note that zj – cj ≥ 0 for all j, so that the objective function can’t be improved any further.
Thus, the objective function is maximized for x1 = 691/5 and x2=118/5 and
The maximum value of the objective function is 9944.
Tow Phase and M-Method

In the last two section we discussed the simplex method was applied to linear programming
problems with less than or equal to (≤) type constraints. Thus, there we could introduce slack variables
which provide an initial basic feasible solution of the problem.
Generally, the linear programming problem can also be characterized by the presence of both
‘less than or equal to’ type or ‘greater than or equal to (≥)’ type constraints. In such case it is not always
possible to obtain an initial basic feasible solution using slack variables.
The greater than or equal to type of linear programming problem can be solved by using the
following methods:
Two Phase Method
M Method
In this section we will discuss these two methods.
Two Phase Method
We discuss the Two Phase Method with the help of the following Example 3.3.
Example
Minimize
12.5x1 + 14.5x2
Subject to:
x1 + x2 ≥ 2000
0.4x1 + 0.75x2 ≥ 1000
0.075x1 + 0.1x2 ≤ 200
x1, x2 ≥ 0
Solution
Here the objective function is to be minimized; the values of x1 and x2 which minimized this objective
function are also the values which maximize the revised objective function i.e.
Maximize
-12.5x1 – 14.5x2
We can multiply the second and the third constraints by 100 and 1000 respectively for
the convenience of calculation.
Thus, the revised linear programming problem
is: Maximize
-12.5x1 – 14.5x2
Subject to:
x1 + x2 ≥ 2000
40x1 + 75x2 ≥ 100000
75x1 + 100x2 ≤ 200000
x1, x2 ≥ 0
Now we convert the two inequalities by introducing surplus variables s3 and s4 respectively.
The third constraint is changed into an equation by introducing a slack variable s5.
Thus, the linear programming problem becomes as
Maximize
-12.5x1 – 14.5x2 = -25/2x1 – 29/2x2
Subject to:
x1 + x2 -s3 = 2000
40x1 + 75x2 -s4 = 100000
75x1 + 100x2 +s5 = 200000
x1, x2,s3,s4,s5 ≥ 0
Even though the surplus variables can convert greater than or equal to type constraints into
equations they are unable to provide initial basic variables to start the simplex method calculation. So
we may have to introduce two more additional variables a6 and a7 called as artificial variable to
facilitate the calculation of an initial basic feasible solution.
In this method the calculation is carried out in two phases hence tow phase method.
Phase I
In this phase we will consider the following linear programming problem
Maximize
-a6 –a7
Subject to:
x1 + x2 -s3 +a6 = 2000
40x1 + 75x2 -s4 + a7 = 100000
75x1 + 100x2 +s5 = 200000
x1, x2.s3,s4,s5,a6,a7 ≥ 0
The initial basic feasible solution of the problem is

a6 = 2000, a7=100000 and s5 = 200000.
As the minimum value of the objective function of the Phase I is zero at the end of the Phase I
calculation both a6 and a7 become zero.
CB Basic Cj 0 0 0 0 0 -1 -1
variables XB x1 x2 s3 s4 s5 a6 a7
-1 a6 2000 1 1 -1 0 0 1 0
-1 a7 100000 40 75 0 -1 0 0 1
0 s5 200000 75 100 0 0 1 0 0
zj-cj -41 -76 1 1 0 0 0
CB Basic Cj 0 0 0 0 0 -1
variables XB x1 x2 s3 s4 s5 a6
-1 a6 2000/3 7/15 0 -1 1/75 0 1
0 x2 4000/3 8/15 1 0 -1/75 0 0
0 s5 200000/3 65/3 0 0 4/3 1 0
zj-cj -1/15 0 1 -1/75 0 0
Here x2 becomes a basic variable and a7 becomes non basic variable in the next iteration. It is no
longer considered for re-entry in the table.
Table 2
Then x1 becomes a basic variable and a6 becomes a non basic variable in the next iteration.
CB Basic Cj 0 0 0 0 0
variables XB x1 x2 s3 s4 s5
0 x1 10000/7 1 0 -15/7 1/35 0
0 x2 4000/7 0 1 8/7 -1/35 0
0 s5 250000/7 0 0 325/7 16/21 1
zj-cj 0 0 0 0 0
The calculation of Phase I end at this stage. Note that, both the artificial variable have been
removed and also found a basic feasible solution of the problem.
The basic feasible solution is:
x1 = 10000/7, x2 = 4000/2, s5 = 250000/7.
Phase II
The initial basic feasible solution obtained at the end of the Phase I calculation is used as the initial basic
feasible solution of the problem. In this Phase II calculation the original objective function is introduced
and the usual simplex procedure is applied to solve the linear programming problem.
CB Basic Cj -25/2 -29/2 0 0 0

-25/2 x1 10000/7 1 0 -15/7 1/35 0
-29/2 x2 4000/7 0 1 8/7 -1/35 0
250000/
0 s5 7 0 0 325/7 5/7 1
143/1
zj-cj 0 0 4 2/35 0
In this Table 1 all zj-cj ≥ 0 the current solution maximizes the revised objective function.
Thus, the solution of the problem is:
x1 = 10000/7 = 1428 and x2 = 4000/7 = 571.4 and
The Minimum Value of the objective function is: 26135.3
M Method
In this method also we need artificial variables for determining the initial basic feasible solution. The M
method is explained in the next Example 3.4 with the help of the previous Example.
Example
Maximize
-12.5x1 – 14.5x2
Subject to:
x1 + x2 –s3 = 2000
40x1 + 75x2 -s4 = 100000
75x1 + 100x2 +s5 = 200000
x1, x2, s3, s4, s5 ≥ 0.
Introduce the artificial variables a6 and a7 in order to provide basic feasible solution in the second and
third constraints. The objective function is revised using a large positive number say M.
Thus, instead of the original problem, consider the following problem i.e.
Maximize
-12.5x1 – 14.5x2 – M (a6 + a7)
Subject to:
x1 + x2 –s3 + a6 = 2000
40x1 + 75x2 -s4 +a7 = 100000
75x1 + 100x2 +s5 = 200000
x1, x2, s3, s4, s5, a6, a7 ≥ 0.
The coefficient of a6 and a7 are large negative number in the objective function. Since the
objective function is to be maximized in the optimum solution, the artificial variables will be zero.
Therefore, the basic variable of the optimum solution are variable other than the artificial variables and
hence is a basic feasible solution of the original problem.
The successive calculation of simplex tables is as follows:
CB Basic Cj -12.5 -14.5 0 0 0 -M -M
-M a6 2000 1 1 -1 0 0 1 0
-M a7 100000 40 75 0 -1 0 0 1
0 s5 200000 75 100 0 0 1 0 0
zj-cj -41M -76M M M 0 0 0

+12.5 +14.5
Since M is a large positive number, the coefficient of M in the z j – cj row would decide the entering
basic variable. As -76M < -41M, x 2 becomes a basic variable in the next iteration replacing a 7. The
artificial variable a7 can’t be re-entering as basic variable.
CB Basic Cj -12.5 -14.5 0 0 0 -M
-M a6 2000/3 7/15 0 -1 1/75 0 1

-14.5 x2 4000/3 8/15 1 0 -1/75 0 0
0 s5 200000/3 65/3 0 0 4/3 1 0
zj-cj -7/15M 0 M -M/75 0 0

+143/30 +29/150
Now x1 becomes a basic variable replacing a6. Like a7 the variable a6 also artificial variable so
it can’t be re-entering in the table.
CB Basic Cj -12.5 -14.5 0 0 0

-12.5 x1 10000/7 1 0 -15/7 1/35 0
-14.5 x2 4000/7 0 1 8/7 -1/35 0
0 s5 250000/7 0 0 325/7 16/21 1
zj-cj 0 0 143/14 2/35 0
Hence
The optimum solution of the problem is x1 = 10000/7, x2 = 4000/7 and
The Minimum Value of the Objective Function is: 26135.3
Multiple Solutions
The simplex method also helps in identifying multiple solutions of a linear programming
problem. This is explained with the help of the following Example.
Example
Consider the following linear programming
problem. Maximize
2000x1 + 3000x2
Subject to:
6x1 + 9x2 ≤ 100
2x1 + x2 ≤ 20
x1, x2 ≥ 0.
Solution
Introduce the slack variables s3 and s4, so that the inequalities can be converted in to equation
as follows:
6x1 + 9x2 + s3 = 100
2x1 + x2 + s4 = 20
x1, x2, s3, s4 ≥ 0.
The computation of simple procedure and tables are as follows:
CB Basic Cj 2000 3000 0 0

variables XB x1 x2 s3 s4
0 s3 100 6 9 1 0
0 s4 20 2 1 0 1
zj-cj -2000 -3000 0 0
CB Basic Cj 2000 3000 0 0

0 x2 100/9 2/3 1 1/9 0
0 s4 80/9 4/3 0 -1/9 1
zj-cj 0 0 3000/9 0
Here zj-cj ≥ 0 for all the variables so that we can’t improve the simplex table any more. Hence it
is optimum.
The optimum solution is x1 = 0, x2 = 100/9 and
The maximum value of the objective function is: 100000/3 = 33333.33.
However, the zj-cj value corresponding to the non basic variable x1 is also zero. This indicates
that there is more than one optimum solution for the problem exists.
In order to calculate the value of the alternate optimum solution we have to introduce x1 as a
basic variable replacing s4. The next Table 3 shows the computation of this.
CB Basic Cj 2000 3000 0 0

3000 x2 20/3 0 1 1/6 1/2
2000 x1 20/3 1 0 -1/12 3/4
zj-cj 0 0 1000/3 3000

Thus,
x1 = 20/3, x2 = 20/3 also maximize the objective function and
The Maximum value of the objective function is: 100000/3 = 33333.33
Thus, the problem has multiple solutions.
Unbounded Solution
In this section we will discuss how the simplex method is used to identify the unbounded solution. This
is explained with the help of the following Example.
Example
Consider the following linear programming problem.

Maximize
5x1 + 4x2
Subject to:
x1 – x2 ≤ 8
x1 ≤ 7
x1, x2 ≥ 0.
Solution :
Introduce the slack variables s3 and s4, so that the inequalities becomes as equation as follows:
x1 + s3 = 7
x1 – x2 + s4 = 8
x1, x2, s3, s4 ≥ 0.
The calculation of simplex procedures and tables are as follows:
CB Basic Cj 5 4 0 0
0 s3 7 1 0 1 0
0 s4 8 1 -1 0 1
zj-cj -5 -4 0 0
CB Basic Cj 5 4 0 0
5 x1 7 1 0 1 0
0 s4 1 0 -1 -1 1
zj-cj 0 -4 5 0
Note that z2-c2 < 0 which indicates x2 should be introduced as a basic variable in the next
iteration. However, both y12≤0, y22≤0.
Thus, it is not possible to proceed with the simplex method of calculation any further as we
cannot decide which variable will be non basic at the next iteration. This is the criterion for unbounded
solution.
NOTE: If in the course of simplex computation zj-cj < 0 but yij ≤ 0 for all i then the problem has no
finite solution.
But in this case we may observe that the variable x 2 is unconstrained and can be increased
arbitrarily. This is why the solution is unbounded.
3.8 Infeasible Solution
This section illustrates how to identify the infeasible solution using simplex method. This is explained
with the help of the following Example.
Example
Consider the following problem.
Minimize
200x1 + 300x2
Subject to:
2x1 + 3x2 ≥ 1200
x1 + x2 ≤ 400
2x1 + 3/2x2 ≥ 900
x1, x2 ≥ 0
Solution
Since it is a minimization problem we have to convert it into maximization problem and
introduce the slack, surplus and artificial variables. The problem appears in the following manner after
doing all these procedure.
Maximize
-200x1 - 300x2
Subject to:
2x1 + 3x2 -s3 +a6 = 1200
x1 + x2 +s4 = 400
2x1 + 3/2x2 - s5 + a7 = 900
x1, x2, s3, s4, s5, a6, a7 ≥ 0
Here the a6 and a7 are artificial variables. We use two phase method to solve this problem.
Phase I
Maximize
-a6 –a7
Subject to:
2x1 + 3x2 -s3 +a6 = 1200
x1 + x2 +s4 = 400
2x1 + 3/2x2 - s5 + a7 = 900
x1, x2, s3, s4, s5, a6, a7 ≥ 0
The calculation of simplex procedures and tables are as follows:
CB Basic Cj 0 0 0 0 0 -1 -1
-1 a6 1200 2 3 -1 0 0 1 0
0 s4 400 1 1 0 1 0 0 1
-1 a7 900 2 3/2 0 0 -1 0 0
zj-cj -4 -9/2 1 0 1 0 0
Dr. Lakshmi Tulasi Chavali Chadalawada Ramanamma
Engineering College
CB Basic Cj 0 0 0 0 0 -1
0 x2 400 2/3 1 -1/3 0 0 0
0 s4 0 1/3 0 1/3 1 0 0
-1 a7 300 1 0 1/2 0 -1 1
zj-cj -1 0 -1/2 0 1 0
Table 2
CB Basic Cj 0 0 0 0 0 -1
0 x2 400 0 1 -1 -2 0 0
0 x1 0 1 0 1 3 0 0
-1 a7 300 0 0 -1/2 -3 -1 1
zj-cj 0 0 1/2 3 1 0
Note that zj-cj ≥ 0 for all the variables but the artificial variable a7 is still a basic
variable. This situation indicates that the problem has no feasible solution.

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LECTURE NOTES

IV B. Tech I Semester (JNTUA-R15)

Dual Problem Formulation

Min 100, 72, 80 = 10

Here the minimum value is s4, which is made as a non-basic

12 x1 10 1 2/10 1/10 1/10 0 0

0 s5 7 0 16/10 13/10 -7/10 1 0

0 s6 60 0 18/5 4/5 -1/5 0 1

zj-cj 0 -3/5 1/5 6/5 0 0

z2-c2 = -3/5. So x2 becomes a basic variable in the next iteration.

3 s5 35/8 0 1 13/16 -7/16 5/8 0

0 s6 177/4 0 0 -17/8 11/8 -9/4 1

zj-cj 0 0 11/16 15/16 3/8 0

Since all the zi – cj ≥ 0, the optimum solution is as:

x1 = 73/8 and x2 = 35/8 and

The Maximum Profit is: $981/8 = $122.625

Step 1: Set up the P-matrix and its transpose

Pivoting about the 2 we get:

1/2 1 1/2 1/2 0 0 1/2

1/2 1 1/2 1/2 0 0 1/2

1/2 1 1/2 1/2 0 0 1/2

The optimum solution

Least Cost Method

Note: ai=capacity (supply)

The transportation cost corresponding to this choice of basic variables

Modified Distribution Method

Deman 100 70 50 40 40 300

Unbalanced Transportation Problem

Demand 400 400 500

Demand 400 400 500 1300

Now we can solve as balanced problem discussed as in the previous sections.

Demand (bj) 400 400 500 1300

1 c11 c12 … c1n 1

2 c21 c21 … c2n 1

n cn1 cn2 … cnn 1

As per the Hungarian Method

Step 3: Find the Second Reduced Cost Table

Step 4: Determine an Assignment

shown in the above tale is optimal. 0

The total cost of assignment is: 78 that is A1 + B4 + C2 + D3

2.3 Unbalanced Assignment Problem 0

The revised assignment problem is as follows:

Step 1: The cost Table

Step 2: Find the First Reduced Cost Table

Step 3: Find the Second Reduced Cost Table

Step 4: Determine an Assignment

Develop the new revised table.

SOLUTION FOR THE EXAMPLE PROBLEM

Summation Average cost Average first Average

Cost given year year and

Calculation to determine Economic life

ye at 1 of e costs nce cost (1+i) -1 total cost

Economic life of the machine = 2 years

Stop Start Stop

In this diagram, event 1 is predecessor for the event

Event Event Activity Predecessor

This is a part of the network diagram that is being constructed.

Since activities E, F, G terminate in node 6, we get

6 is the end event.

We validate the diagram by checking with the given data.

Activity Predecessor Duration EST EFT LST LFT

Programme Evaluation Review Technique

Determine which expert is more certain about his estimates of time:

Variance ( ) in time estimates =

As regards expert B, the variance = 1

time estimate time estimate time estimate

Time for the path: 4+10+9+ 6+3 = 32 days.

Stages of Development of Operations Research

Step I: Observe the problem

O.R. Tools and Techniques

Applications of Operations Research

 Assigning audit teams effectively

 Advertising budget allocation

Profit/Kg P1 P2 Total available Machine

The procedure for linear programming problem formulation is as follows:

Introduce the decision variable as follows: