OPERTIONS RESEARCH

CHAPTER ONE
INTRODUCTION

1.1. DEFINITION

Operations Research is defined by many authors in deferent ways .However, following

definition is proposed here.

“Operations Research is a systematic analysis of a problem through scientific methods ,carried

out by appropriate specialists, working together as a team ,constituted at the instance of
management for the purpose of finding an optimum and the most appropriate solution ,to meet
the given objective under a given set constraints.”

Meaning of Operations Research:

From the concept and definition given above, Operations Research is:
1. The application of scientific methods, techniques and tools to the problem to find an answer
2. A management tool in the hands of a manager to take a decision
3. A scientific approach to decision making process
4. An “applied research” aims at finding a solution for an immediate problem facing a society,
industry or a business enterprise .This is not “fundamental research”
5. A decision-oriented research, using scientific methods, for providing management a
quantitative basis for taking decision regarding operations under its control
6. Applied decision theory. It uses scientific, mathematical and logical means to take decisions.

1.2. DECISION MAKING

Making appropriate decision is the most VITAL aspect in management .Every one of us takes a
number decisions every day. Some are important; some are trivial. Some decisions initiate a set

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of activities; some put an end to a certain activities. In business environment right decisions at
the right times ensure success. This shows the importance of decision making.

-Problem is any variation between what was planned and what is actually have/produced.

-Problem solving can be defined as the process of identifying a difference between some actual
and some desired states of affairs and then taking action to resolve the difference.

-Decision making requires for al human being because each of us make decision every day in our
life .Thus, decision making is universal. Decision making is a rational selection among
alternatives.

Definition
Decision making is the process of selecting or choosing based on some criteria, the best
alternative among alternatives.

The decision making process:

Steps in the process of rational decision making
1. Identify and define the problem
Problem is a necessary condition for a decision. i.e: There would be no need for decisions if
problems did not exist.
2. Determine the set of alternative solutions.
3. Determine the criteria to evaluate alternatives.
=>Identifying those characteristics that are important in making the decision.
4. Analyze the alternatives.
==>The advantages and disadvantages of each alternative.
5. Select the best alternative
==> Select the best alternative that suits to solve our decision problem. In selecting the best
alternative, factors such as risk, timing and liiting factors should be considered adequately
6. Impement the solution
==> Putting the decision into action

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7. Establishing a control and evaluation system
==>On going actions need to be monitored
==>Following the decision
==>Evaluate the results and determine if a satisfactory solution has been obtained.

The Decision-Making Environment

Decisions are made under three basic conditions:
 Decision under certainty
 Decision under risk
 Decision under uncertainty

i. Decision making under conditions of certainty

The decision maker has perfect knowledge about the outcome.

In this situation, we are reasonably sure what will happen when we make a decision. The
information is available & is considered to be reliable & we know the cause & effect
relationships.
Example: If you decide to invest your money in saving account in the Commercial Bank of
Ethiopia, You are certain that you will earn three percent interest.

ii.Decision making under condition of risk

Usually, decision makers cannot have a precise knowledge about the outcome of a decision.

Decision makers may only be able to attach a probability to the expected outcomes of each
alternative.

Under this situation, one may have factual information, but it may be incomplete.

Example: If we gamble by tossing a fair coin, the probability that a tail will turn up is 50%.

iii. Decision making under conditions of uncertainty

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It is a case where neither there is complete data nor probabilities can be assigned to the
surrounding condition. It is the most difficult for a manager.

Some conditions that are uncontrollable by management include competition, government

regulations, technological advances, the overall economy, & the social & cultural tendencies of
society.

Example: A corporation that decides to expand its operation, launching a new product, or
developing of a new technology in a strong country may know little about its culture, laws,
economic environment, or politics. The political situation may be so volatile that even experts
cannot predict a possible change in government.

1.3. QUANTITATIVE ANALYSIS PROCESS

*Qualitative skill can be developed through experience. It is inherent.
The three basic quantitative analysis processes are:
1. Model development
2. Data preparation
3. Model solution

1. Model development
Model is a representation of real objects/situations

Following are types of models:

a. Physical (icon) model
This is the representation of the situation, problem or object.
It is also called Static Model. It is given in two or three dimensions. It is a representation of the
real object.
Example:
 The structure of an atom
 Model of an airplane
 Photograph of a machine

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  Layout drawing of a factory
 Glob
b. Analogue Models:
These are abstract models mostly showing inter and intra relationships between two or more
parameters.
For example:
It may show the relationship between an independent variable (input) with that of a dependent
variable (output). For instance; histogram, frequency table, cause-effect diagram, flow charts,
Gantt charts, price-demand graph, world map and others.
:Is two dimensional.

c. Mathematical models
This is also an abstract model. Here a set of relations is represented in the form of mathematical
equations, using symbols to represent various parameters.
Example:
1. (x + y) 2=x2+2xy+y2

2. Max.Z=3000x1 +2500x2
Subject to:
2x1+x2 < 40
x1+3x2 < 45
x1 < 12
x1, x2 > 0

x1 and x2 are decision variables

Objective Function:
A mathematical statement of the goal of an organization, stated as intent to maximize or to
minimize some important quantity such as profits or costs.

Max.Z=3000x1 +2500x2 is the objective function

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Constraint:
A restriction on the resources available to a firm (stated in the form of an inequality or equality.)
2 x1+x2 < 40 Resource constraints
x1+3x2 < 45 Are constraints
x1 < 12
x1, x2 > 0 x1, x2 > 0 is non-negativity constraint

2. Data presentation
Data represent the values of inputs to the model.
Max.Z=3000x1 +2500x2
Subject to:
2 x1+x2 < 40
x1+3x2 < 45
x1 < 12
x1, x2 > 0

3. Model solution
:Is optimal solution
From the above equation, x1=12, x2=11 and Max.Z= $6350

Trial and error method

In this method a certain algorithm is developed. One starting point is an initial solution, which is
the first approximation .The method of solution, is repeated with a certain set of rules so that
initial solution is gradually modified at each subsequent solution; till optimal solution is reached.
There are certain criteria laid down to check whether the solution has become an optimal
solution. These trial solutions are called Iterations and the method is called iterative process.
The classical example of trial and error method is Linear Programming
Then the next step after iteration is model testing and validation.

1.4. MANAGEMENT SCIENCE IN PRACTICE

There are various techniques used in O.R. Some of these are listed here:

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 o Probability theory
o Linear Programming
o Transportation algorithm
o Assignment problems
o Queuing Theory
o PERT/CPM Method etc
OR techniques are ’application specific’. Maximum benefit can be derived from selecting most
appropriate techniques for each specific area or problem. Appropriate selection of OR is an
equally important task. Each technique has its own advantages and limitations .In all such cases,
the ability of the Manager is tested in appropriate selection of OR technique.

CHAPTER II
LINEAR PROGRAMMING

Linear Programming is a mathematical process that as be developed to help management in

decision making involving the efficient allocation of scares resources to achieve a certain
objective.

Diagrammatically,

Scares Resource To be allocated to:

Resource constraints

Objectives Constraints

Non-negativity
Constraints
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 Maximization Minimization

LP is a method for choosing the best alternative from a set of feasible alternatives
To apply LP, the following conditions must be satisfied:
a. Objective Function
Is the goal or objective of a management, stated as intent to maximize or to minimize some
important quantity such as profits or costs?
b. Constraints
: Are limitations or restrictions imposed by the problems? And constraints include:
1. Resourse constraints
: Are restrictions that should be clearly identifiable and measurable in quantitative terms, which
arise from limitation of available resources.

Examples of limited resources:

 Plant capacity
 Raw materials availability
 Labor power
 Market demand, etc

2. Non-negativity constraints:
: Are constraints that require the decision variables not to take on negative values
c. Linearity
The Objective Function and the constraints must be linear in nature in order to have a Linear
Programming Problems (LPP).

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d. Feasible alternative
There should be a series of feasible alternative course of action available to the decision-making
determined by resource constraints. Thus, we have to choose the best alternative
Linear Programming Problems can be solved by using:
i. The Geometric method called” Graphical Method”
ii. The Algebraic method called” Simplex Method”

2.1. FORMULATION OF LP
Decision variables are the variables whose values are unknown and are searched

The coefficients of the variables in the Objective Function are called the profit or cost
coefficients. They express the rate at which the value of the Objective Function increases or
decreases by including in the solution one unit of each of the decision variables.
The coefficients of the constraints’ variables are called the input- output coefficients that indicate
the rate at which the given resources are depleted or utilized.
Example:
Max. Z=50 X 1 +80 X 2
St :
X 1 +2 X 2 ≤32
X 1 +2 X 2 ≤82
X 1 , X 2≥0

2.2. GRAPHICAL SOLUTION

To use the graphic method, the following steps are needed:
1. Identify the problem
i.e: The decision variables, the objective function and the constraints
2. Draw a graph including all the constraints and identify the feasible region
3. Obtain a point on the feasible region that optimizes the objective function-Optimal solution
4. Interprite the results

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  Graphical LP is a two-dimensional model.

A Maximization Problem
==>Maximize Z with inequalities of constraints in < form
Example: Consider two models of color TV sets; Model A and B, are produced by a company
to maximize profit. The profit realized is $300 from A and $250 from set B. The limitations are:
a. availability of only 40hrs of labor each day in the production department.
b. a daily availability of only 45 hrs on machine time
c. ability to sale 12 set of model A.

How many sets of each model will be produced each day so that the total profit will be as large
as possible?

Resources used per unit

Constraints Model A Model B Maximum Available
(X1) (X2) hrs.
Labor hr. 2 1 40
Machine hr. 1 3 45
Marketing 1 0 12
hr.
Profit $300 $250

Solution
1. Formulation of mathematical modeling of LPP
Max Z=300X1 +250X2
St:
2X1 +X2< 40
X1 +3X2< 45 LPP Model
X1 < 12
X1, X2 >0
2. Convert constraints inequalities into equalities

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 2X1 +X2 = 40
X1 +3X2= 45

2X1 +X2 = 40
X1 = 12 X2
X1=0
3. Draw the graph by intercepts 40 X1=12
2X1 +X2 = 40 ==> (0, 40) and (20, 0)
X1 +3X2= 45==> (0, 15) and (45, 0)

X1 +X2 = 45
X1 = 12==> (12, 0) 15B

X1, X2 =0
C(12,
Feasible 11)
Region
X2=0
X1
D
A 12 20 45

4. Identify the feasible area of the solution which satisfies all constrains.
5. Identify the corner points in the feasible region
A (0, 0), B (0, 15), C (12, 11) and D (12, 0)
6. Identify the optimal point
7. Interprete the result
Corners Coordinates MaxZ=300 X1
+250X2
A (0, 0) $0
B (0, 15) $3750
C (12, 11) $6350
D (12, 0) $3600

Interpretation:
12 units of product A and 11 units of product B should be produced so that the total profit will be
$6350.
Exercise:
A manufacturer of light weight mountain tents makes two types of tents, REGULAR tent and
SUPER tent. Each REGULAR tent requires 1 labor-hour from the cutting department and

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3labor-hours from the assembly department. Each SUPER tent requires 2 labor-hours from the
cutting department and 4 labor-hours from the assembly department .The maximum labor hours
available per week in the cutting department and the assembly department are 32 and 84
respectively. Moreover, the distributor, because of demand, will not take more than 12 SUPER
tents per week. The manufacturer sales each REGULAR tents for $160 and costs$110 per tent to
make. Where as SUPER tent ales for $210 per tent and costs $130 per tent to make.

Required:
A. Formulate the mathematical model of the problem
B. Using the graphic method, determine how many of each tent the company should manufacture
each tent the company should manufacture each week so as to maximize its profit?
C. What is this maximum profit assuming that all the tents manufactured in each week are sold in
that week?
Solution
_____________________________________________________________________
Labor hours per tent
Department REGULAR (X 1) SUPER(X 2) Maximum labor-hours
available per week
_____________________________________________________________________

Cutting department 1 2 32
Assembly department 3 4 84
Selling price per tent $160 $210
Cost per tent $110 $130
Profit per tent $50 $80

*The distributor will not take more than 12 SUPER tents per week. Thus, the manufacturer
should not produce more than 12 SUPER tents per week.
Let X1 =The No of REGULAR tents produced per week.
X2 =The No of SUPER tents produced per week.
X1 and X2 are called the decision variables

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 ……….Cutting department constraint
……….Assembly department constraint

Max. Z=50 X 1……….Demand

+80 X 2 constraint
St :
X 1 +2 X 2 ≤32 ……….Non-negativity constraints
3 X 1 +4 X 2 ≤84
X 2 ≤12
LPP Model X 1 , X 2≥0

Corners Coordinates MaxZ=50 X1 +800X2

A (0, 0) $0
B (0, 12) $960
C (8, 12) $1360
D (20, 6) $1480
E (28, 0) $1400

Interpretation:
The manufacturer should produce and sale 20 REGULAR tents and 6 SUPERS tents to get a
maximum weekly profit of $1480.

B Minimization Problem
==>Minimize Z with inequalities of constraints in > form
Example:
Suppose that a machine shop has two different types of machines; machine 1 and machine 2,
which can be used to make a single product .These machines vary in the amount of product
produced per hr., in the amount of labor used and in the cost of operation.
Assume that at least a certain amount of product must be produced and that we would like to
utilize at least the regular labor force. How much should we utilize each machine in order to
utilize total costs and still meets the requirement?

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 Solution
________________________________________________________________
Resource used
Machine 1 (X1) Machine (X2) Minimum
required hours
_____________________________________________________________________
X2
X1 =0
21 produced/hr
Product 20 15 100
Labor/hr 2 3 15________
Operation Cost $25
16
$30_____________________________
B (0, 12)
C(8,12) D (20, 6) X2 =0
Feasible Region
Min.Z =25 X 1 +30 X 2 X1
St : A(0,0) E (28, 0) 32
20 X 1 +15 X 2 ≥100 LPP Model

2 X 1 +3 X 2 ≥15
X 1 , X 2 ≥0

Constraint equation:
20X1 +15X2=100 ==> (0, 20/3) and (5, 0)
2X1+3X2=15 ==> (0, 5) and (7.5, 0)
X1 X2> 0
X2
X1 =0
A (0, 20/3)

Feasible Region

B (2.5, 3.33)
X2 =0

X1
5 C (7.5, 0)
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Corners Coordinates MinZ=25 X1 + 30X2
A (0, 20/3) 200

B (2.5, 3.33) 162.5

C (7.5, 0) 187.5
_______________________________________________________________
X1 =2.5
X2=3.33 and
MinZ= 162.5

Exercise:
A company owns two flour mills (A and B) which have different production capacities for
HIGH, MEDIUM and LOW grade flour. This company has entered contract supply flour to a
firm every week with 12, 8, and 24 quintals of HIGH, MEDIUM and LOW grade respectively.
It costs the Co. $1000 and $800 per day to run mill A and mill B respectively. On a day, mill A
produces 6, 2, and 4 quintals of HIGH, MEDIUM and LOW grade flour respectively.
Mill B produces 2, 2 and 12 quintals of HIGH, MEDIUM and LOW grade flour respectively.
How many days per week should each mill be operated in order to meet the contract order most
economically standardize? Solve graphically.
Solution:
No of days per week of Minimum flour in
Mil A (X1) Mill B(X2) quintals
HIGH Capacity (in quintal) 6 2 12
MEDIUM Capacity (in quintal) 2 2 8
LOW Capacity (in quintal) 4 12 24
$1000 $800

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Min. Z =100 X 1 +800 X 2
St :
6 X 1 +2 X 2 ≥12
2 X 1 +2 X 2 ≥8
4 X 1 +12 X 2 ≥24
X 1 , X 2 ≥0

Constraint equation:
6 X 1 +2 X 2 =12
2 X 1 +2 X 2 =8 (0, 6), (2, 0)
(0, 4), (4, 0)
4 X 1 +12 X 2 =24
(0, 2), (6, 0)
X 1 , X 2 =0

Corners MinZ=$1000 X1 + 800X2

(0, 6) $4800
(1, 3) $3400
(3, 1) $3800
(6, 0) $6000
X1 =1
X2=3 and
MinZ= $3400

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 X2
X1 =0
6 6X1+2 X2=12
2X1+2 X2=8
4 FR
4X1+12 X2=24
(1, 3)
(3, 1)
X2 =0
X1
2 4 6

Note:
-In maximization problems, our point of interest is looking the furthest point from the origin.
-In minimization problems, our point of interest is looking the point nearest to the origin.

2.3. SPECIAL CASES IN GRAPHICS METHODS

1. Redundant Constraint
If a constraint when plotted on a graph doesn’t form part of the boundary making the feasible
region of the problem that constraint is said to be redundant.

Example:
A firm is engaged in producing two products A and B .Each unit of product A requires 2Kg
of raw material and 4 labor-hrs for processing. Where as each unit of product B requires 3Kg
of raw materials and 3hrs of labor. Every unit of product A needs 4hrs to packaging and
every unit of product B needs 3.5hrs for packaging. Every week the firm has availability of
60Kg of raw material, 96 labor-hours and 105 hrs I the packaging department.
1 unit of product A sold yields $40 profit and 1 unit of B sod yields $35 profit.

Required:
a. Formulate this problem as a LPP

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 b. Find the optimal solution

Solution
__________________________________________________________________
Products Resource available
Resources A B per week
_____________________________________________________________________

Raw materials (Kg) 2 3 60

Labor (hr) 4 3 96
Packaging (hr) 4 3.5 105
Profit per unit $40 $35

Let X1 =The No of units of product A produced per week

X2 =The No of units of product B produced per week
a. LPP Model

Max. Z=40 X 1 +35 X 2

St :
2 X 1 +3 X 2 ≤60
4 X 1 +3 X 2 ≤96
4 X 1 +3. 5 X 2≤105
X 1 , X 2 ≥0

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X2
(0, 32)

Labor: 4X1 +3X2 = 96

(0, 30)
Packaging: 4X1 +3.5X2 = 105
(0, 20) C (18,8)
Raw material: 2X1 +3X2 = 60
FR
X1
A (0, 0) D (24, 0) (26, 0) (30, 0)

 The packaging hr is redundant.

Corners Coordinates MinZ=40 X1 + 35X2

A (0, 0) 0
B (0, 20) 700
C (18, 8) 1000
D (24, 0) 960
X1 =18
X2=8 and
MinZ= 1000

Interpretation:
The company should produce and sale 18 units of product A and 8 units of product B per week
so as to get a maximum profit of 1000.
 By this production plan the entire raw material will be consumed.
 2X1 +3X2 <60
2(18) +3(8) =60
60=60==> N o idle or unused raw material
 4X1 +3X2 <96
4(18) +3(8) <96
96=96 ==>the entire labor hour will be consumed

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 4X1 +3.5X2 <105
100<105==>There is to be idle or unused capacity of 5hrs in the packaging department.
Note:
The packaging hour’s constraint does not form part of the boundary making the feasible region.
Thus, this constraint is of no consequence and is therefore, redundant. The inclusion or exclusion
of a redundant constraint does not affect the optimal solution of the problem.

2. Multiple optimal Solutions

/Alternative optimal solutions/
-This is a situation where by a LPP has more than one optimal solution.
Multiple optimal Solutions will be found if two corners give optimal solution, then the line
segment joining these points will be the solution.
==>We have unlimited number of optimal solution with out increasing or decreasing the
objective function.

Example:
The information given below is for the products A and B.
_____________________________________________________________________
Machine hours per week Maximum available
Department Product A Product B per week
_____________________________________________________________________

Cutting 3 6 900
Assembly 1 1 200
Profit per unit $8 $16
_____________________________________________________________________
Assume that the company has a marketing constraint on selling products B and therefore it can
sale a maximum of 125units of this product.
Required:
a. Formulate the LPP of this problem
b. Find the optimal solution

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 Solution:
Let X1 =The No of units f product A produced per week
X2 =The No of units f product B produced per week
a. The LPP Model of the problem is:

Max. Z=8 X 1 +16 X 2

St :
3 X 1 +6 X 2 ≤900
X 1 +X 2 ≤200
X 2 ≤125
X 1 , X 2 ≥0

X2 X1=0
(0, 200)

(0,150)
B (0, 125)
D (100,100)
C (50, 125) X2=125 Marketing equation

Cutting: 3X1+6X2=900

FR X2=0
A (0, 0)
X1
E (200, 0) (300,0)

Corners Coordinates MaxZ=8 X1 + 16X2

A (0, 0) 0
B (0, 125) 2000
C (50, 125) 2400

D (100, 100) 2400

E (200, 100) 1600

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 Interpretation:
Both C and D are optimal solutions. Any point on the line segment CD will also lead to the same
optimal solution.
==>Multiple optimal solutions provide more choices for management to reach their objectives.

3. Infeasible Solution
A solution is called feasible if it satisfies all the constraints and the constraints and non-
negativity condition. However, it is sometimes possible that the constraints may be inconsistent
so that there is no feasible solution to the problem. Such a situation is called infeasibility.

Example:
MaxZ=20X1+30X2
St:
2X1+X2< 40
4X1+X2< 60
X1 > 30
X1, X2 > 0

Solution:

X2 X1=0
(0, 60) X1=30
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(0, 40)
 X2=0
X1

4X1+X2= 60

2X1+X2= 40

(15, 0) (20, 0) (30, 0)

Note:
-In the above graph, there is no common point in the shaded area.
-All constraints cannot be satisfied simultaneously and there is no feasible solution to the
problem.

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