Harambee University College Operation Research

Introduction
Decision-making in today‘s social and business environment has become a complex task. The
uncertainty of the future and the nature of competition and social interaction greatly increase the
difficulty of managerial decision-making. Knowledge and technology are changing rapidly, the
new problems with little or no precedents these problems and provide leadership in the
advancing global age, decision-makers cannot afford to make decisions by simply applying their
personal experiences, guesswork or intuition, because the consequences of the wrong markets,
producing the wrong products, providing inappropriate services, etc., will have major, often
disastrous consequences for organizations.

The subject Operations Research (OR) is a branch of mathematics - specially applied

mathematics, used to provide a scientific base for management to take timely and effective
decisions to their problems. It tries to avoid the dangers from taking decisions merely by
guessing or by using thumb rules. Management is the multidimensional and dynamic concept. It
is multidimensional, because management problems and their solutions have consequences in
several dimensions, such as human, economic social and political fields.

Operations Research as one of the quantitative aid to decision making offers the decision-maker
a method of evaluating every possible alternative (act or course of action) by using various
techniques to know the potential outcomes. It includes Models and modeling, linear
programming, transportation models, assignment models, decision models, project management
techniques, and queuing models.

Objectives of the Course

At the end of this course, students should be able to,

 Recognize significance of OR in managerial decision making

 Understand the different models of OR.
 Appreciate the application of OR model in solving different quantitative problems.

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CHAPTER ONE

INTRODUCTION TO OPERATIONS RESEARCH

Chapter Objectives:
Up on the completion of this unit, the learner would be able to:

 Define operations research

 Describe significance of OR
 Explain models and their importance
 Differentiate among different categories of models
 Elucidate methodology in OR
 Identify application areas of OR models
 Describe techniques in OR

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‖

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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
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.

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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. Implement the solution

==> Putting the decision into action

7. Establishing a control and evaluation system

==>Ongoing actions need to be monitored

==>Following the decision

==>Evaluate the results and determine if a satisfactory solution has been obtained.

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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

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.

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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. QUNATITIATIVE 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
 Layout drawing of a factory
 Glob
b. Analogue Models:

These are abstract models mostly showing inter and intra relationships between two or more
parameters.

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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.

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

Constraint:

A restriction on the resources available to a firm (stated in the form of an inequality or an

equation.)

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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.

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1.4. MANAGEMENT SCIENCE IN PRACTICE

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

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.

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Model Examination questions

1. Define Operations Research and explain its history.

2. Explain the decision making environment.
3. Discuss the significance and scope of OR in modern management and Ethiopian context.
4. Describe the process of Quantitative Analysis
.

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Chapter Two
2. LINEAR PROGRAMMING: Application and Model
Formulation
Unit Objectives:
Up on completion of this unit, the learner is expected to:
 Recognize problems that can be solved using LP models.
 Formulate an LP model in mathematical terms.
 Solve Linear Programming Problems (LPP) using both graphic and simplex approach.
 Explain special cases in both graphic and simplex techniques.

INTRODUCTION
In 1947, George Danzig developed the use of algebra for determining solutions to problems that
involved the optimal allocation of scarce resources. In spite of numerous potential applications in
business, response to this new technique was low due to substantial computational burden, which
is now removed with subsequent advances in computer technology and related software during
the last three decades.

The term linear implies that all the mathematical relations used in the problem are linear or
straight-line relations, while the term programming refers to the method of determining a
particular program or plan of action, i.e., the use of algorithms that is a well defined sequence of
steps that will lead to an optimal solution. Taken as a whole, the term linear programming refers
to a family of mathematical techniques for determining the optimum allocation of resources and
obtaining a particular objective when there are alternative uses of the limited or constrained
resources.

The technique of linear programming is applicable to problems in which the total effectiveness
can be expressed as linear function of individual allocations and the limitations on resources give
rise to linear equation or inequalities of the individual allocations.
The usefulness of this technique is enhanced by the availability of several user-friendly soft
wares such as STORM, TORA, QSB+, LINDO, etc. However, there is no general package for
building an LP model. Model building is an art of practice.

? Dear learner, can you make differences between solutions of LP models solved manually and
using computers utilizing soft wares?

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2.1. LINEAR PROGRAMMING MODELS

Linear programming models are mathematical representations of LP problems. Linear
programming models have certain characteristics in common. Knowledge of these characteristics
enables us to recognize problems that are amenable to a solution using LP models, and to be able
to correctly formulate an LP model. These characteristics can be

grouped as components and assumptions. The components relate to the structure of a model,
where as the assumptions reveal the conditions under which the model is valid.
2.1.1. COMPONENTS OF LP MODELS
There are four major components of LP models including: Objective function, decision variables,
constraints and parameters.

Objective and Objective Function

The objective in problem solving is the criterion by which all decisions are evaluated. It
provides the focus for problem solving. In linear programming models, a single, quantifiable
objective must be specified by the decision maker. Because we are dealing with optimization,
the objective will be either maximization or minimization. Hence, every LP problem will be
either maximization or a minimization problem. Once the objective is specified, it becomes
the measure of effectiveness against which alternate solutions are judged. An LP model
consists of a mathematical statement of the objective called the objective function.

Decision variables
They represent unknown quantities to be solved for. The decision maker can control the
value of the objective, which is achieved through choices in the levels of decision variables.
For example, how much of each product should be produced in order to obtain the greatest
profit?

Constraints
However, the ability of a decision maker to select values of the decision variables in an LP
problem is subject to certain restrictions or limits coming from a variety of sources. The
restrictions may reflect availabilities of resources (e.g., raw materials, labor time, etc.), legal
or contractual requirements (e.g., product standards, work standards, etc.), technological
requirements (e.g., necessary compressive strength or tensile strength) or they may reflect
other limits based on forecasts, customer orders, company policies, and so on. In LP model,
the restrictions are referred to as constraints. Only solutions that satisfy all constraints in a
model are acceptable and are referred to as feasible solutions. The optimal solution will be
the one that provides the best value for the objective function.

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Generally speaking, a constraint has four elements:

A right hand side (RHS) quantity that specifies the limit for that constraint. It must be
a constant, not a variable.
An algebraic sign that indicates whether the limit is an upper bound that cannot be
exceeded, a lower bound that is the lowest acceptable amount, or an equality that
must be met exactly.
The decision variables to which the constraint applies.
The impact that one unit of each decision variable will have on the right-hand side
quantity of the constraint.
Constraints can be arranged into three groups:
System constraints – involve more than one decision variable,
Individual constraints – involve only one variable, and
Non-negativity constraints – specify that no variable will be allowed to take on a
negative value. The non-negativity constraints typically apply in an LP model,
whether they are explicitly stated or not.

Parameters
The objective function and the constraints consist of symbols that represent the decision
variables (e.g., X1, X2, etc.) and numerical values called parameters. The parameters are fixed
values that specify the impact that one unit of each decision variable will have on the
objective and on any constraint it pertains to as well as the numerical value of each
constraint.
The following simple example illustrates the components of LP models:

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? Dear learner, can you give some of the examples of LP models which consist of unit and
system constraint and discuss the components of each constraint in the model?

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2.1.2. ASSUMPTIONS OF LP MODELS

Linearity (proportionality)
The linearity requirement is that each decision variable has a linear impact on the objective
function and in each constraint in which it appears. In terms of a mathematical model, a function
or equation is linear when the variables included are all to the power 1 (not squared, cubed,
square root, etc.) and no products (e.g., x1x2) appear. On the other hand, the amount of each
resource used (supplied) and its contribution to the profit (or cost) in the objective function must
be proportional to the value of each decision variable. For example, if production of one unit
requires 5 hours of a particular resource, then making 3 units of that product requires 15 hours (
3x5) of that resource.

Divisibility (Continuity)
The divisibility requirement pertains to potential values of decision variables. It is assumed that
non-integer values are acceptable. However, if the problem concerns, for example, the optimal
number of houses to construct, 3.5 do not appear to be acceptable. Instead, that type of problem
would seem to require strictly integer solutions. In such cases, integer-programming methods
should be used. It should be noted, however, that some obvious integer type situations could be
handled under the assumption of divisibility. For instance, suppose 3.5 to be the optimal number
of television sets to produce per hour, which is unacceptable, but it would result in 7 sets per two
hours, which would then be acceptable.

Certainty
This requirement involves two aspects of LP models. One aspect relates to the model parameters,
i.e., the numerical values. It is assumed that these values are known and constant. In practice,
production times and other parameters may not be truly constant. Therefore, the model builder
must make an assessment as to the degree to which the certainty requirement is met. Large
departures almost surely will have a significant effect on the model. The other aspect is the
assumption that all relevant constraints have been identified and represented in the model.
Additivity
The value of the objective function and the total amount of each resource used (or supplied),
must be equal to the sum of the respective individual contributions (profit or cost) by decision
variables.

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For example, the total profit earned from the sale of two products A and B must be equal to the
sum of the profits earned separately from A and B. Similarly, the amount of a resource consumed
for producing A and B must be equal to the sum of resources used for A and B respectively.

Non-negativity
It assumes that negative values of variables are unrealistic and, therefore, will not be considered
in any potential solutions. Only positive values and zero will be allowed and the non-negativity
assumption is inherent in LP models.

? Dear learner, can you give examples for each of the above assumptions? What will happen if the
assumptions are not met?

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2.1.3. Advantages of Linear Programming
Following are certain advantages of linear programming.

 Linear programming helps in attaining the optimum use of scarce productive resources. It
also indicates how a decision maker can employ productive resources effectively by
selecting and allocating these resources.
 LP techniques improve quality of decisions. The decision making approach of the user of
this technique becomes more objective and less subjective.
 Highlighting of bottlenecks in the production process is one of the most advantages of
this technique. For example, when a bottleneck occurs, some machines can not meet
demand while others remain idle for some of the time.
 LP also helps in re-evaluation of a basic plan for changing conditions. If conditions
change when the plan is carried out, they can be determined so as to adjust the remainder
of the plan for best results.
2.1.4. Limitations of Linear Programming
In spite of having many advantages and wide area of applications, there are some limitations
associated with this technique. These are:
 LP treats all relation ships among decision variables as linear. However, generally neither
the objective functions nor the constraints in real-life situations concerning business and
industrial problems are linearly related to variables.
 While solving an LP model, there is no guarantee that we will get integer valued
solutions. For example, in finding out how many men and machines would be required to
perform a particular job, a non integer valued solution will be meaningless. Rounding off
the solution to the nearest integer will not yield an optimal solution.
 An LP model does not take in to consideration the effect of time and uncertainty. Thus,
the LP model should be defined in such a way that any change due to internal as well as
external factors can be incorporated.

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 It deals with only with a single objective, whereas in real-life situations we may come
across conflicting multi-objective problems.
 Parameters appearing in the model are assumed to be constant but, in real life situation
they are frequently neither known nor constant.

? Dear learner, can you mention some other advantages and disadvantages of LP?
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2.1.5. FORMULATING LP MODELS
Just as it is to define a problem, careful formulation of the model that will be used to solve the
problem is important. Linear programming algorithms (solution techniques) are widely used and
understood and computer packages are readily available for solving LP problems. Consequently,
obtaining solutions is not the real issue, what is very important to note is failure to check that all
constraints have been accounted for and have been correctly formulated results in ill-structuring
of the model that can easily lead to poor decisions.

Steps in formulating LP models:

Identify the decision variables.
Determine the objective function.
Identify the constraints.
Determine appropriate values for parameters and determine whether an upper limit,
lower limit or equality is called for.
Use this information to build a model.
Validate the model.

In many cases, the decision variables are obvious; in others it might require brief discussion with
the appropriate manager. However, identifying the constraints and determining appropriate
values for the parameters can require considerable time and effort. Potential sources of
information include historical records, interviews with managers and staff, and data collection.
Validating the model will involve a critical review of the output, perhaps under a variety of
inputs, in order to decide if the results are reasonable.

2.2. LINEAR PROGRAMMING APPLICATIONS

There is a wide range of problems that lend themselves to solution by linear programming
techniques. This discussion is only meant to give an indication of the LP techniques for
managerial decision making and the apparent diversity of situations to which linear programming
can be applied. Some of these include production management (product mix, blending problems,
production planning, Assembly line balancing…), Marketing management (media selection,

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traveling sales man problem, physical distribution), Financial management (portfolio selection,
profit planning), agricultural application, military applications, personnel management (staffing
problem, Determination of equitable salary and etc.

Product Mix
Organizations often produce similar services that use the same resources. For example, labor,
material cost, etc. because of limited resources available during any time period a decision must
be made concerning how much of each product to produce or make available. Linear
programming answers what mix of output (or service) will maximize profit given the
availability of scarce resources

Diet problem
It usually involves the mixing of raw materials or other ingredients to obtain an end product that
has certain characteristics. For example, what mix of inputs will achieve the desired results in the
output for the least cost? Other applications that fall into this category include mixing feed for
livestock, mixing pet foods, mixing building materials (concrete, mortar, paint), and so on.

Blending problems
They are very similar to diet problems. Strictly speaking, however, blending problems have
additional requirement, i.e. to achieve a mix that have specific consistency. For example, how
many quarts of the different juices each with different sugar content proportion must be mixed
together to achieve one gallon that has a sugar content of 17 percent?

Portfolio selection
These problems generally involve allocating a fixed dollar amount among a variety of
investments, such as bonds, sockets, real states, etc. The goal usually is to maximize income or
total return. The problems take on an added dimension when certain other requirements are
specified (for example, no more than 40 percent of the portfolio can be invested in bonds).

Dear learner, the section below presents some examples that demonstrate how a linear
programming model is formulated. Although these examples are simplistic, they are realistic and
represent the type of problem to which linear programming can be applied. By carefully studying
each of these examples, the learner can become familiar with the process of formulating linear
programming models.
Product Mix

ABC private limited company is engaged in the production of power and traction transformers.
Both of these categories of transformers pass through three basic processes: core preparation,
core to coil assembly, and vapor phase drying. A power transformer yields a contribution of Birr

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50,000 and traction transformer contributes Birr 10,000. The time required in the production of
these two products in terms of hours for each of the processes is as follows.

Power transformer Traction Transformer

Core preparation 75 15

Core to Coil Assembly 160 30

Vapor Phase Drying 45 10

If the capacities available are 1000, 1500, and 750 machine hours in each processes

respectively, formulate the problem as LP?

Solution

Step1. Identify decision variables

Since the products to be produced are power and traction transformers using the available
resource to attain the objective set, we consider them as decision variables. This is because the
organization‘s problem here is how many of each product to produce in order to attain the
objective, which requires the management decision.

LetX1 = the no of power transformers to be produced.

X2= the no of traction transformer to be produced

Step2. Determine Objective Function

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From the problem above, we understand that the problem is maximization problem.

Hence,

Zmax = 50,000X1+ 10,000X2

This is because, each unit of X1 contributes Birr 50,000 and X2 contributes Birr

10,000 to objective function.

Step 3. Identify constraints

Here we have two constraints: structural and non-negativity constraints. The structural
constraint is the amount of machine hours available in each process.

Step 4. Determining Parameters

Parameters are already identified in the table of the problem.

Note: Step 3 and 4 can be performed simultaneously as:

75X1 + 15X2 < 1000 hrs- Core preparation process

160X1 + 30X2 < 1500 hrs- Core to Coil Assembly Machine hour constraint

45X1 + 10X2 < 750 hrs- Vapor Phase Drying

X1, X2 > 0

Step 5. Building and validating the model

Zmax = 50,000X1+ 10,000X2

Subject to:

75X1 + 15X2 < 1000 hrs

160X1 + 30X2 < 1500 hrs

45X1 + 10X2 < 750 hrs

X1, X2 > 0
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Investment Application

1. An individual investor has Birr 70,000 to divide among several investments. The alternative
investments are municipal bonds with an 8.5% return, certificates of deposits with a 10% return,
Treasury bill with a 6.5% return, and income bonds with a 13% return. The amount of time until
maturity is the same for each alternative. However, each investment alternative has a different
perceived risk to the investor; thus it is advisable to diversify. The investor wants to know how
much to invest in each alternative in order to maximize the return. The following guidelines have
been established for diversifying the investment and lessening the risk perceived by the investor.

1. No more than 20% of the total investment should be in an income bonds.

2. the amount invested in certificates of deposit should not exceed the amount invested in
other three alternatives.
3. At least 30% of the investment should be in treasury bills and certificates of deposits.
4. The ratio of the amount invested in municipal bonds to the amount invested in treasury
bills should not exceed one to three.
The investor wants to invest the entire Birr 70,000.

Required: Formulate a LP model for the problem.

Solution

Decision variables

Four decision variables represent the monetary amount invested in each investment alternative.

Let X1, X2, X3 and X4 represent investment on municipal bonds, certificates of deposits,
Treasury bill, and income bonds respectively.

Objective function

The problem is maximization because from the word problem we know that the objective of the
investor is to maximization return from the investment in the four alternatives.

Therefore, the objective function is expressed as:

Zmax = 0.085 X1+ 0.1X2+ 0.065X3+0.13X4

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Where,

Z = total return from all investment

0.085 X1=return from the investment in municipal bonds.

0. 100 X2=return from the investment in certificates in deposit

0.065 X3=return from the investment in treasury bills

0.130 X4=return from the investment in income bonds

Model Constraints

In this problem the constraints are the guide lines established for diversifying the total
investment. Each guideline is transformed in to mathematical constraint separately.

Guideline 1 above is transformed as:

X4 <20 %(70,000)  X4 <14,000

Guideline 2

X2< X1 +X3+ X4  X2 - X1 -X3- X4< 0

Guideline 3

X2+ X3> 30 %( 70,000)  X2 + X3 > 21,000

Guideline 4

X1/ X3< 1/3 3X1<X33X1-X3< 0

Finally,

X1+ X2+ X3+X4 = 70,000, because the investor‘s money equals to the sum of money invested
in all alternatives.

This last constraint differs from , and  inequalities previously developed in that there is a
specific requirement to invest an exact amount. Therefore, the possibility to invest more or
less than Birr 70,000 is not considered.

This problem contains all three types of constraints possible in LP problems: ,  and =. As
this problem demonstrates there is no restriction on mixing these types of constraints.

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The complete LPM for this problem can be summarized as:

Zmax = 0.085 X1+ 0.1X2+ 0.065X3+0.13X4

Subjected to:

X4 <14,000

X2 - X1 -X3 - X4 < 0

X2 + X3 > 21,000

3X1-X3 < 0

X1 + X2 + X3 + X4 = 70,000,

X1+ X2+ X3+X4  0

Marketing Application

2. Supermarket store chain has hired an advertising firm to determine the types and amount of
advertising it should have for its stores. The three types of advertising available are radio and
television commercials, and news papers advertisements. The retail chain desires to know the
number of each type of advertisement it should purchase in order to maximize exposure. It is
estimated that each ad or commercial will reach the following potential audience and cost the
following amount.

Exposure

Type of Advertisement (people /ad or commercial) Cost

Television commercial 20,000 Birr 15,000

Radio commercial 12,000 6,000

News paper advertisement 9,000 4,000

The company must consider the following resource constraints.

1. The budget limit for advertising is Birr 100,000

2. The television station has time available for 4 commercials.
3. The radio station has time available for 10 commercials.
4. The news paper has space available for 7 ads.
5. The advertising agency has time and staff available for producing no more than a total of
15 commercials and/or ads.
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Decision variables

Let X1 = number of television commercials

X2 = number of radio commercials

X3 = number of news paper ads

Objective function

It is not only profit which is to be maximized. In this problem the objective to be maximized is
audience exposure.

Zmax = 20,000x1 + 12,000x2 + 9,000x3, where

Z = total level of audience exposure

20,000x1 = estimated number of people reached by television commercials

12,000x2 = estimated number of people reached by radio commercials

9,000x3 = estimated number of people reached by news paper ads

Model constraints

Budget constraint

15,000x1 + 6,000x2 + 4,000x3  Birr 100,000

Capacity constraint

Television commercials and radio commercials are limited to 4 and 10 respectively and news
paper ads are limited to 7.

X1  4 television commercials

X2  10 radio commercials
X3  7 news paper ads

Policy constraint

The total number of commercials and ads can not exceed 15

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X1 + X2 + X3  15

The complete linear programming model for this problem is summarized as:

Zmax = 20,000X1 + 12,000X2 + 9,000X3

Sub. to:

15,000X1 + 6,000X2 + 4,000X3  Birr 100,000

X1 4

X2  10

X3 7
X1 + X2 + X3  15

X1, X2 , X3 0

Chemical mixture

A chemical corporation produces a chemical mixture for the customer in 1000- pound batches.
The mixture contains three ingredients- Zinc, mercury and potassium. The mixture must conform
to formula specifications (i.e., a recipe) supplied by a customer. The company wants to know the
amount of each ingredient to put in the mixture that will meet all the requirements of the mix and
minimize total cost.

The customer has supplied the following formula specifications for each batch of mixture.

1. The mixture must contain at least 200 lb of mercury

2. The mixture must contain at least 300 lb of zinc
3. The mixture must contain at least 100 lb of potassium

The cost per pound of mixture is Birr4, of zinc Birr 8 and of potassium Birr 9.

Required: Formulate LPM for the problem

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Solution

Decision variables

The model of this problem consists of three decision variables representing the amount of each
ingredient in the mixture.

X1 = number of lb of mercury in a batch

X2 = number of lb of zinc in a batch

X3 = number of lb of potassium in a batch

Objective function

Zmin = 4x1 + 8x2 + 9x3

Constraints

X1  200 lb… specification 1

X2  300 lb… specification 2

X3  100 lb… specification 3

Finally, the sum of all ingredients must equal 1000 pounds.

x1 + x2 + x3 = 1000 lb

The complete LPM of the problem is:

Zmin = 4x1 + 8x2 + 9x3

Subject to:

X1  200 lb

X2  300 lb

X3  100 lb

x1 + x2 + x3 = 1000 lb

x1, x2 , x3  0

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Activity

The manager of a department store in Adama is attempting to decide on the types and amounts of
advertising the store should use. He has invited representatives from the local radio station,
television station, and newspaper to make presentations in which they describe their audiences.

a. The television station representative indicates that a TV commercial, which costs Birr 15,000,
would reach 25,000 potential customers. The breakdown of the audience is as follows.

Male Female

Old 5,000 5,000

Young 5,000 10,000

b. The news paper representative claims to be able to provide an audience of 10,000 potential
customers at a cost of Birr 4000 per ad. The breakdown of the audience is as follows.

Male Female

Old 4,000 3,000

Young 2,000 1,000

b. The radio station representative says that the audience for one of the station‘s
commercials, which costs Birr 6000, is 15,000 customers. The breakdown of the
audience is as follows.

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Male Female

Old 1,500 1,500

Young 4,500 7,500

The store has the following advertising policy:

a. Use at least twice as many radio commercials as news paper ads.

b. Reach at least 100,000 customers
c. Reach at least twice as many young people as old people
d. Make sure that at least 30% of the audience is women.

Available space limits the number newspaper ads to 7. The store wants to know the optimal
number of each type of advertising to purchase to minimize total cost.

Required:

Formulate appropriate linear programming model.

2. An electronic company produces three types of parts for automatic machines. It purchases
casting of the parts from the local foundry and then finishes parts on drilling, shaping and
polishing machines.

The selling prices of parts A, B, and C respectively are Birr8, 10, 14. All parts made can be sold.
Casting for parts A, B and C respectively costs Birr 5, 6 and 10. The shop possesses only one of
each type of machine. Costs per hour to run each of the three machines are Birr 20 for drilling,
30 for shaping, and 30 for polishing. The capacities (parts per hour) for each part on each
machine are shown in the following table:

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Machine Capacity per hour

Part A Part B Part C

Drilling 25 40 25
Shaping 25 20 20
Polishing 40 30 40

The management of the shop wants to know how many parts of each type it should produce per
hour in order to maximize profit for an hour’s run. Formulate this problem as an LP model so as
to maximize total profit to the company.

2.3. Solving LP Models

Following the formulation of a mathematical model, the next stage in the application of LP to
decision making problem is to find the solution of the model. An optimal, as well as feasible
solution to an LP problem is obtained by choosing from several values of decision variables
x1,x2…xn , the one set of values that satisfy the given set of constraints simultaneously and also
provide the optimal ( maximum or minimum) values of the given objective function. The most
common solution approaches are to solve graphically and algebraically the set of mathematical
relationships that form the model, thus determining the values of decision variables.
2.3.1. GRAPHICAL LINEAR PROGRAMMING METHODS
Sub-unit objective:

Up on completion of this sub unit, the learner will be able to:

 Define graphic approach

 Differentiate between objective function and extreme/ corner point approach
 Solve maximization and minimization problems using the two approaches
 Describe special cases in graphic approach
Graphical linear programming is a relatively straightforward for determining the optimal solution
to certain linear programming problems involving only two decision variables. Although graphic
method is limited as a solution approach, it is very useful in the presentation of LP, in that it
gives a ―picture‖ of how a solution is derived thus a better understanding of the solution.
Moreover, graphical methods provide a visual portrayal of many important concepts.

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In this method, the two decision variables are considered as ordered pairs (X 1, X2), which
represent a point in a plane, i.e, X1 is represented on X-axis and X2 on Y-axis.

Graphical method has the following advantages:

 It is simple
 It is easy to understand, and
 It saves time.

Important Definitions
Solution The set of values of decision variables xj (j = 1,2,…, n) which satisfy the constraints of
an LP problem is said to constitute solution to that LP problem.
Feasible solution The set of values of decision variables x j (j = 1,2,…, n) which satisfy all the
constraints and non- negativity conditions of an LP problems simultaneously is said to constitute
the Feasible solution to that LP problem.
Infeasible solution The set of values of decision variables x j (j = 1,2,…, n) which do not satisfy
all the constraints and non- negativity conditions of an LP problems simultaneously is said to
constitute the infeasible solution to that LP problem.
Basic solution For a set of m simultaneous equations in n variables ( n>m), a solution obtained
by setting ( n-m) variables equal to zero and solving for remaining m equations in m variables is
called a basic solution.
The (n-m) variables whose value did not appear in this solution are called non-basic variables
and the remaining m variables are called basic variables.
Basic feasible solution A feasible solution to LP problem which is also the basic solution is
called the basic feasible solution. That is, all basic variables assume non-negative values. Basic
feasible solutions are of two types:
 Degenerate A basic feasible solution is called degenerate if value of at least one basic
variable is zero.
 Non-degenerate A basic feasible solution is called non-degenerate if value of all m
basic variables are non- zero and positive.
Optimal Basic feasible solution A basic feasible solution which optimizes the objective
function value of the given LP problem is called an optimal basic feasible solution.
Unbounded solution A solution which can increase or decrease the value of OF of the LP
problem indefinitely is called an unbounded solution.

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Example
In order to demonstrate the method, let us take a microcomputer problem in which a firm is
about to start production of two new microcomputers, X1 and X2. Each requires limited resources
of assembly time, inspection time, and storage space. The manager wants to determine how
much of each computer to produce in order to maximize the profit generated by selling them.
Other relevant information is given below:

Type 1 Type 2
Profit per unit $60 $50
Assembly time per unit 4 hrs 10 hrs
Inspection time per unit 2 hrs 1 hrs
Storage space per unit 3 cubic feet 3 cubic feet

Availability of company resources:

Resources Amount available
Assembly time 100 hrs
Inspection time 22 hrs
Storage space 39 cubic feet

The model is then:

Maximize 60X1 + 50X2
Subject to Assembly 4 X 1 +10 X 2 < 100 hrs
Inspection 2 X 1 + 1 X 2 < 22 hrs
Storage 3 X 1 + 3 X 2 < 39 cubic feet
X1, X2 > 0

Graphical solution method involves the following steps.

Step 1. Plot each of the constraints

The step begins by plotting the non-negativity constraint, which restricts our graph only to the
first quadrant. We then can deal with the task of graphing the rest of the constraints in two parts.
For example, let us take the first constraint 4X1 + 10X2 < 100 hrs. First we treat the constraint as
equality: 4X1 + 10X2 = 100. Then identify the easiest two points where the line intersects each
axis by alternatively equating each decision variable to zero and solving for the other: when
X1=0, X2 becomes 10 and when X2=0, X1 will be 25. We can now plot the straight line that is
boundary of the feasible region as we have got two points (0, 10) and (25,0).

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Step 2. Identify the feasible region

The feasible region is the solution space that satisfies all the constraints simultaneously. It is the
intersection of the entire region represented by all constraints of the problem. We shade in the
feasible region depending on the inequality sign. In our example above, for all the constraints
except the non-negativity constraint, the inequality sign is ‗less than or equal to‘ and it represents
region of the plane below the plotted lines.

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? Dear learner, can you mention some of the advantages and disadvantages of graphic
method of solving LP models?
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Step 3. Locate the optimal solution.

The feasible region contains an infinite number of points that would satisfy all the constraints of
the problem. Point that will make the objective function optimum will be our optimal solution.
This point is always found among the corner points of the solution space.

Once the constraints are plotted and feasible region is determined, we use either of the two
graphic methods of Graphic approach to find a solution for LP model consisting of only two
decision variables:
i) The extreme point enumeration method
ii) The objective (Iso-profit or cost) function line approach

2.3.1.1.The Objective Function Approach

This approach involves plotting an objective function line on the graph and then using that line to
determine where in the feasible solution space the optimal point is. We use the same logic as
plotting a constraint line except that it is not an equation until we equate it to some right hand
side quantity. Any quantity will do till we find a line that would last touch the feasible solution
space.

The optimal solution to an LP problem will always occur at a corner point because as the
objective function line is moved in the direction that will improve its value (e.g., away from the
origin in our profit maximization problem), it will last touch one of these intersections of
constraints. Then we determine which two constraints intersect there (in our case inspection and
storage constraints) and solve the equations simultaneously to obtain the mix of the two decision
variables that gives the value of the objective function at the optimum. Simultaneously solving
inspection and storage equations, we find the quantity of type 1 microcomputer to be produced
(X1) = 9 and that of type 2 (X2) = 4 giving the maximum profit of 60(9) + 50(4) = Birr740

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Note: The maximization problems the movement of the iso-lines is outward from the origin;
while for minimization the movement is inward to the origin.
2.3.1.2. The Extreme Point Approach
Corner or extreme point graphic method states that for problems that have optimal solutions, a
solution will occur at the corner point in the case of unique solution, while in the case of multiple
solutions, at least one will occur at a corner point as these multiple solutions will be
combinations of those points between two corner points. The necessary steps for this approach is
after graphing the problem, we determine the values of the decision variables at each corner
point of the feasible region either by inspection or using simultaneous equations. We then
substitute the values at each corner point into the objective function to obtain its value at each
corner point and select the one with the highest value of the objective function (for a maximum
problem) or lowest value (for a minimum problem) as the optimal solution.
i) Extreme Method of Solving Maximization Problems with < constraint

Maximization of objective function involves finding the point where the combination of
products results in maximum value of objective function. The constraints are connected with
< sign. The solution space lies below the slant line and is bounded by the line segments. The
origin and other points below the slant lines are in the solution space (i.e., feasible region).

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Using this method for our example, simultaneously solving for corner points a, b, c, and d, we
find corresponding profit values of 500, 700, 740, and 660, respectively giving us the same
solution as the above one at C. Therefore, the optimal solution is x1= 9 units and x2 = 4 units
while the optimal value of objective function is 740.
Interpretation:
For a firm to maximize its profit (740), it should produce 9 units of the Model I microcomputer
and 4 units of model II.

? Dear learner, what are the values of decision variables at each corner point? (Hint: Solve
simultaneously those lines which intersected each other). Can you mention some of the
characteristics of the LP graphs consisting of  sign?
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ii) Extreme Method of Solving Minimization Problems with > constraints

Solving minimization problems involve where the objective functions (like cost function) will be
minimum. The constraints are connected to RHS values with > sign. But, in real world problems,
mixes of constraint is also possible. The value of RHS involves the lowest value of the
constraint.

The solution space lies above the slant lines and it is not enclosed. It extends indefinitely above
the lines in the first quadrant. This means simply that cost increases without limit as more and
more units are produced. The minimum cost will occur at a point along the inner boundary of the
solution space. The origin and other points below the lines are not in the solution space.

Example

Zmin = 0.1x+0.07y

Subject to:

6x+2y > 18

8x+10y > 40

y>1

x,y > 0

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Find the values of x and y which makes the objective function minimum?

Solution
Coordinates

Corner point x y Zmin=0.1x+0.07y

A 0 9 0.63

B 25/11 24/11 0.38

C 15/4 1 0.445

? Dear learner, can you draw a graph for the above problem and determine values for each
corner point of the feasible region?
What difference can you make between LP problems consisting of > and <signs?
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SLACK VERSUS SURPLUS
Slack is the amount of a scarce resource that is unused by a given solution. Slack can potentially
exist in a < constraint. Slack variables are considered in the objective function by using a
coefficient of zero for each of them. When all the constraints are written as equalities after
adding a slack variable to each of them, the linear program is said to be in standard form. For
example, in the Assembly constraint 4X1 +10X2 < 100 hrs, the slack value is 100 – [4(9)
+10(4)] = 24.
Surplus on the other hand is the amount by which the optimal solution causes a > constraint to
exceed the required minimum amount. It can be determined in the same way that slack can, i.e.,
substitute the optimal values of the decision variables into the left side of the constraint and
solve. The difference between the resulting value and the original right hand side amount is the
amount of surplus. Surplus should also be accounted for in the objective function by using
coefficients of zero likewise.

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? Dear learner, can you find slack and surplus amounts of the constraints in the above problems?
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2.3.1.3. Graphical Solutions for the Special Cases of LP

i) Unboundedness
Unboundedness occurs when the decision variable increased indefinitely without violating any of
the constraints. The reason for it may be concluded to be wrong formulation of the problem such
as incorrectly maximizing instead of minimizing and/or errors in the given problem. Checking
equalities or rethinking the problem statement will resolve the problem.

Example:
Max Z = 10X1 + 20X2
Subject to 2X1 + 4X2 > 16
X1 + 5X2 > 15
X1, X2 > 0

Following the above listed steps of graphical solution method, we find the following graph for
the above model:

The shaded area represents the set of all feasible solutions and as can be seen from the graph, the
solution is unbounded.

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ii) Redundant Constraints

In some cases, a constraint does not form a unique boundary of the feasible solution space. Such
a constraint is called a redundant constraint. A constraint is redundant if its removal would not
alter the feasible solution space. Redundancy of any constraint does not cause any difficulty in
solving an LP problems graphically. Constraints appear redundant when it may be more binding
(restrictive) than others.

iii) Infeasibility
In some cases after plotting all the constraints on the graph, feasible area (common region) that
represents all the constraint of the problem cannot be obtained. In other words, infeasibility is a
condition that arises when no value of the variables satisfy all the constraints simultaneously.
Such a problem arises due to wrong model formulation with conflicting constraints.
For example,
Max Z = 3X1+2X2
Subject to: 2X1 + X2 < 2
3X1 + 4X2 > 12
X1, X2 > 0

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iv) Multiple optimal solutions

Recall the optimum solution is that extreme point for which the objective function has the largest
value. It is of course possible that in a given problem there may be more than one optimal
solution.
There are two conditions that should be satisfied for an alternative optimal solution to exist:
 The given objective function is parallel to a constraint that forms the boundary of the
feasible region. In other words, the slope of an objective function is the same as that
of the constraint forming the boundary of the feasible region; and
 The constraint should form a boundary on the feasible region in the direction of
optimal movement of the objective function. In other words, the constraint should be
an active constraint.
Note: The constraint is said to be an active or binding or tight, if at optimality the left hand
side equals the right hand side. In other words, an equality constraint is always active. An
inequality sign may or may not be active.

For example
Max Z = 8X1+16X2
Subject to: X1 + X2 < 200 ……. C1
3X1 + 6X2 < 900 ……. C2
X2 < 125 ……. C3
X1, X2 > 0

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In the problem above, using extreme point method and solving for values of corner points
simultaneously, the objective function assumes its maximum value of 2,400 at two corner points
B (50,125) and C (100,100). Therefore, the optimal solution is found on the line segment
connecting the two corner points. One benefit of having multiple optimal solutions is that for
other (perhaps qualitative) reasons, a manager may prefer one of them to the others, even though
each would achieve the same value of the objective function. In practical terms, one of the two
corner points is usually chosen because of ease in identifying its values.
Other corner points are computed by identifying the two corner points and keeping the value of
the objective function constant, where 50  X1  100 and 100  X1  125. By selecting one
value for one of the decision variables from the domain, we determine the value for another
decision variable keeping the objective function‘s value. Let X 1 = 80.
Then, Z = 8X1+16X2  2400 = 8(80) +16X2
16X2 = 1760
X2 = 110

? Dear learner, can you identify other combination of decision variables that
will optimize the objective function and can you check whether the two
conditions for multiple solution is satisfied?
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2.3.1.4. Mix of constraints

It is only in some cases that the maximization problems consist of constraints connected to the
RHS value with only <. By the same token, constraints of minimization problems are not always
connected to their RHS with>. This is to mean that both maximization and minimization
problems may consist of constraints connected to RHS with a mix of algebraic signs ( <, >, =).

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Example
Z Min a) 1500x+2400y
Subjected to:
4x+Y>24 …I
2x+3y>42 …II
X+4y>36 …III
X<14 …IV
y<14 …V
x, y>0

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Plot the constraints.

2x+3y>42
2x+3y=42 y
If x=0,

2x+3y=42

2(0) +3y=42

2(0) +3y=42 24_(0,24)

y=42/3 IV

y=14
The coordinates (0,14)
If y=0, 18 _ I

2x+3y=42

2x+3(0)=42 A (2.5,14) (14,14)

x=42/2 B V

x=21 (0, 14) E (3, 12)

Constraint III 12 _
X+4y>36 Feasible
X+4y=36 region multiple solution line
If x=0, (0,9) (double lined)

 x+4y=36

 y=36/4 6_ C (14, 5.5)

 y=9

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The coordinates (0, 9) D

If y=0, (12,6) II III x

x+4(0) =36 (0, 0)

x =36 (6,0) (14,0) (21,0) (36,0)

The coordinates (36, 0) 6 12 18 24 36

1 2 3 4 5

Corner constraints Coordinates Objective functions

points intersected x y 1500x+2400y

A I&V 2.5 14 37,350

B IV&V 14 14 54,600

C III&IV 14 5.5 34,200

D II&III 12 6 32,400

E I&II 3 12 33,300

The minimum value of the objective function is 32,400. Therefore, the optimum solution is
found at the corner point D, where constraint II&III are intersected. Hence, optimal solution: x
=12, y = 6.

? Dear learner, how would the above optimal solution change if only objective function if modified
as Zmin1600x+2400y while all other constraints remain as they are?

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2.4. Comparison of the two graphical solution methods

After having plotted the constraints of the given LP problem and identified the feasible solution
space, select one of the graphical solution methods and proceed to solve the given LP problem.

Extreme Point method Objective function / Iso-profit (or cost)

Method
i) Identify coordinates of each of the extreme (or i) determine the slope x 1,x2 of the objective
corner points of feasible region by either drawing function and join intercepts to reveal the
perpendiculars on x and y axis or by solving the profit or cost line.
two intersecting equations.
ii) compute the profit(cost) at each extreme points ii) In case of maximization, maintain the
by substituting that point‘s coordinates in to the same slope through a series of parallel
objective function. lines, and move the line up and to the right
until it touches the feasible region at only
one point.
But in case of minimization, move down
to the left until it touches only one point in
the region.
.
iii) Identify the optimal solution at that extreme iii) Compute the coordinates of the point point
with a highest profit in a maximization touched by iso-profit (or cost) line on the
problem or lowest cost in minimization
problem on the feasible region
. . iv) Compute the profit or cost

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Summary
 The term linear programming refers to a family of mathematical
techniques for determining the optimum allocation of resources and
obtaining a particular objective when there are alternative uses of the
limited or constrained resources.
 The linear programming models exhibit certain common characteristics:
An objective function to be maximized or minimized, a set of constraints,
decision variables for measuring the level of activity, and linearity among
all constraint relationships and the objective function.
 The graphic approach to the solution LP problems is not efficient means of
solving problems. For one thing, drawing accurate graphs is tedious. More
over the graphic approach is limited to models with only two decision
variables.

 Special cases that one face solving a problem graphically include: Mix of
constraints, unbounded solution, infeasibility, redundancy, multiple
solution

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Model examination questions

1. Peniel House and Furniture manufacturer produces two products: Beds and Chairs. Each unit
of Bed requires 3 hrs in molding unit, 4hrs in painting unit, and 1 hr in finishing. On the other
hand, each unit of Chair requires 3 hrs in molding unit, 2 hrs in the paint shop and 2 hours in
finishing. Each week, there are 210 hrs available in molding, 200hrs in painting, and 120 hrs in
finishing unit. The demand for Beds can not exceed 40 units per week. Each unit of Bed
contributes Birr 20 to profit, while each unit of chair contributes Birr 30. Determine the number
of units of each product per week to maximize the profit? (Use Graphic Method to solve the
given LP problem).

2. A firm plans to purchase at least 200 quintals of scrap containing high metal quality metal X
and low quality metal Y. It decides that the scrap to be purchased must contain at least 100
quintals of X-metal and not more than 35 quintals of Y-metal. The firm can purchase the scrap
from two suppliers ( A and B) in unlimited quantities. The percentage of X and Y metals in
terms of weight in the scrap supplied by A and B is given below.
Metals Supplier A Supplier B
X 25% 75%
Y 10% 20%
The price of A‘s scrap is Birr 200 per quintal and that of B is Birr 400 per quintal. The firm
wants to determine the quantities that it should buy from the two suppliers so that total cost is
minimized? (Use graphic approach)
3. Personal Mini Warehouses is planning to expand its successful Orlando business into Tampa.
In doing so, the company must determine how many storage rooms of each size to build. Its
objective and constrains follow:

Maximize monthly earnings= 50X1 +20X2

Subject to:
2X1+4X2<400 (Advertising budget available)
100X1 +50X2<8,000(Square footage required)
X1 <60(Rental limit expected)
X1 X2>0
Where
X1=Number of large spaces developed
X2=Number of large spaces developed
(Use graphical method)

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3. The owner of a telephone subscription service specializes in taking order for two magazines x
and y. She has formulated the following model that describes the unit contribution to profit and
the use of scarce resources involved.

Zmax=0.6x+0.9y
Subject to:
6x+12y< 480 min … I
10x+6y< 480min … II
X > 20 … III
X, y>0
4. A firm makes two products X and Y, and has a total production capacity of 9 tons per day, x
and y requiring the same production capacity. The firm has a permanent contract to supply at
least two tones of x and at least three tones of y per day to another company. Each tone of x
requires 20 machine hours of production time and each tone of y requires 50 machine hours of
production time. The daily maximum possible number of machine hours is 360. The entire firm‘s
output can be sold and the cost per ton is 100 and 120 birr respectively and the selling price per
ton of x and y is 180 and 240 Birr respectively. It is required to determine the production
schedule for maximum profit using graphic approach? What is the maximum profit?
5. Repi Soap Company wishes to make a new detergent from two of its current soaps: Soap A
and soap B. The company wants the new detergent to contain at least 20 ounces of cleaning
ingredient D. Each pound of soap A costs $0.2 and contains 5 ounces of D, whereas each pound
of B costs 0.25 and one ounce of D. Furthermore, for ecological reasons, the amount of soap A
must be no more than that of soap B. Finally, the new mixture must weight exactly 12 pounds.
How many pounds of each soap should be used in the mixture in order to meet the above
requirements at a minimum cost? What is the minimum cost? (Use graphic approach)

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Chapter Three
Solution methods to Linear Programming Problems
3.1. THE SIMPLEX METHOD
Over View
Dear learner, in our previous section we tried to thoroughly discuss about graphic approach of
LP problems, where the LP consists of only two decision variables. But, the real world problems
may consist of even very large number of decision variables which cannot be solved using
graphic approach. Therefore, in this section we will try to see about simplex method, which is
more comprehensive as compared to graphic approach.

? Dear learner, discuss the differences and similarities between graphic and simplex approaches of
solving LPM

_________________________________________________________________________________
Section objective:
_________________________________________________________________________________
Up on completion of this section, the learner will be able t:
_________________________________________________________________________________
_________________________________________________________________________________
 Define simplex approach and concepts in simplex approach
_________________________________________________________________________________
 Standardize LP models
_________________________________________________________________________________
 Differentiate between slack, surplus and artificial variables
____________________________________________________________________________--------
 Solve both maximization and minimization problems using simplex approach
-------------------------------------------------------------------------------------------------------------------
 Explain special cases in simplex method and how to handle them
The graphical method of solving linear programming problems is a simple way to find a solution
since the optimum solution is searched among the corner points of the solution space. However,
the graphical method is restricted to problems with two decision variables. When the number of
variables and the number of constraints increase, it becomes difficult to visualize the solution
space. As a result, the graphical method cannot be employed successfully in such cases. In order
to avoid this limitation, the simplex method, or iterative or step by step method is efficient
method for solving linear programming problems, which was developed by George B.Datzing in
1947.

The simplex method is an algebraic procedure that starts with a feasible solution that is not
optimal and systematically moves from one feasible solution to another until an optimal solution
is found. Incase of the graphical approach, optimal solution occurs at the extreme points where
the constraints intersect. Solutions where constraints intersect are called basic solutions, and
those satisfying all of the constraints together with non-negativity constraints are called basic
feasible solutions.
Constraints are generally expressed using inequalities either in ‗less than‘ or ‗greater than‘ or in
mixed form. Thus, constraints are not in standard form, meaning they should be converted into
equalities. To convert the inequality constraint into equality, we introduce slack or surplus
variables. In economic terminology, slack variables represent unused capacity and surplus
variables represent excess amount. The contribution (cost or profit) associated with the slack and

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surplus variables is zero. An inequality of the ‗less than or equal to‘ type is transformed into
equality by introducing a non-negative slack variable, as follows: -

Example
Non Standard form Standard form
X1+2X2 <= 6 X1+2X2+S1= 6
, where X1 and X2 are decision variables and S1 is a slack variable, added to the
smaller side of the inequality.

On the other hand, an inequality with ‗greater than or equal to‘ type is changed into equality by
subtracting surplus variable as follows: -

Example
Non Standard form Standard form
X1+2X2 <=6 X1+2X2+S1=6
, where X1 & X2 are decision variables and S1 is a slack variable, added to the
smaller side of the inequality.

As stated above, since both the slack and surplus variables are insignificant with no contribution
in the objective function, they are represented with coefficient of zero in the objective function.

To find a unique solution, the number of variables should not exceed the number of equations.
When the number of variables is more than the number of equations, the number of solutions is
unlimited. So as to get a unique solution, we have to set at least (n-m) variables to zero, where n
is the number of variables and m is the number of equalities. Those variables that are set to zero
are called non basic variables indicating they are not in the solution. The variables that are in
solution are called basic variable.
.
To demonstrate the simplex method, we will use the microcomputer problem with the following
objective function and constraints.
The Microcomputer Problem, which was discussed in graphic approach, can be standardized as:

Max. Z = 60X1+50X2+0S1+0S2+0S3
Subject to 4X1+10X2+S1 = 100
2X1+X2+S2 = 22
3X1+3X2+S3 = 39
, where X1 & X2 are decision variables and S1, S2 & S3 are slack variables.
Here, the number of variables (5) is greater than the number of equations (3). Therefore, the
decision variables are set to zero and we have
X1 = 0, X2 = 0, S1 = 100, S2 = 22, and S3 = 39.
This solution will serve as an initial feasible solution. An initial feasible solution is a first
solution used to generate other basic feasible solutions. The initial basic feasible solution is
obtained by setting all the decision variables to zero. As a result, the initial basic feasible solution

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is entirely composed of the slack variables. X1 & X2 are non basic variables since they are not in
solution. S1, S2 & S3 are basic variables since they are in solution.

A tableau is a system of displaying the basic feasible solution, the constraints of the standard
linear programming problem as well as the objective function in a tabular form. A tableau is
useful in summarizing the result of each iteration, i.e. the process of moving from one
solution/corner to another solution/corner in order to select the optimal solution.

THE SIMPLEX ALGORITHM

2.3.2.1. Maximization case
The solution steps of the simplex method can be outlined as follows:
Step1. Formulate the linear programming model of the real world problem, i.e., obtain a
mathematical representation of the problem's objective function and constraints.
Step2. Express the mathematical model of L.P. problem in the standard form by adding slack
variables in the left-hand side of the constraints and assign a zero coefficient to these
in the objective function.
Thus we can restate the problem in terms of equations:

Maximize Z = C1X1+ C2X2 + ... +CnXn + OS1 + OS2 +... +0Sm

Subject to a11X1+a12X2+... + a1nxn+s1i =b1
a2lX1+al22X2+... + a2nXn+S2 = b2
amlXl + am2 X2 +... + amNxn + Sm = bm
, where X1, X2... Xn and S1, S2 ... Sm are non-negative.

Note that the slack variables have been assigned zero coefficients in the objective function. The
reason is that these variables typically contribute nothing to the value of the objective function.
Step 3. Design the initial feasible solution. An initial basic feasible solution is obtained by setting
the decision variables to zero.
X1= X2 = ... = Xn = 0. Thus, we get S1 = b1, S2 = b2 ... Sm = bm.

Step 4. Set up the initial simplex tableau. For computational efficiency and simplicity, the initial
basic feasible solution, the constraints of the standard LPP as well as the objective
function can be displayed in a tabular form, called the simplex tableau as shown
below:

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Initial Simplex Tableau

Cj C1 C2 ... Cn,, 0 0 ... 0 Quantity Column Ratio
(Contribution Per Unit) XB/am
n
Basic variables CB X1, X2, ... Xn S1 S2 ... Sm b(=Xj)
S1 CB1 a11 a12 ... a1n 1 0 ... 0 b1=Xb1
S2 CB2 a21 a22 ... a2n 0 1 ... 0 b2=Xb2
Sm CBm am1 am2…amn 0 0 ... 1 bm=Xbm
Zj=∑CBiXj 0 0 ... 0 0 0 ... 0 ∑CBiXj
Cj-Zj C1-Z1 C2-Z2 ... Cn-Zn
(Net contribution per
unit)

The interpretation of the data in the above tableau is given as under. Other simplex tableau will
have similar interpretations.
In the first row labeled "Cj", we write the coefficients of the variables in the objective
function. These values will remain the same in subsequent tableaus.
The second row shows the major column headings.
In the first column of the second row, under the label "Basic variables" (also called
Product mix column), the basic variables are listed.
In the second column of the second row, under the label "CB", the coefficients of the
current basic variables in the objective function are listed. Thus the coefficients of S 1,
S2... Sm, which are included in the initial feasible solution, are written in the CB column.
The values listed under the non-basic variables (X1, X2… Xn) in the initial simplex
tableau consists of the coefficients of the decision variables in the constraint set. They
can be interpreted as physical rates of substitution.
The values listed under the basic variables (S 1, S2... Sm) in the initial simplex tableau
represents the coefficients of the slack variables in the constraints set.
In the next column (also called Quantity column), we write the solution values of the
basic variables.
To find an entry in the Zj row under a column, we multiply the entries of that column by
the corresponding entries of ‗CB‘ column and add the results, i.e., Z j= ∑CBiXj. The Zj
row entries will all be equal to zero in the initial simplex tableau. The other Z j entries
represent the decrease in the value of objective function that would result if one of the
variables not included in the solution were brought into the solution. The Z j entry under
the ―Quantity Column" gives the current value of the objective function.
The last row labeled "Cj-Zj", called the index row or net evaluation row, is used to
determine whether or not the current solution is optimal or not. The calculation of C j-Zj

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row simply involves subtracting each Zj value from the corresponding Cj value for that
column, which is written at the top of that column. We observe that Cj -Zj, values are
meaningful for the non basic variables only. This is because for a basic variable, Z j= 1 x
Cj = Cj so that Cj-Zj=Cj-Cj= 0.

Note: The entries in the Cj - Zj, row represent the net contribution to the objective function
that results by introducing one unit of each of the respective column variables. A plus value
indicates that a greater contribution can be made by bringing the variable for that column into the
solution. A negative value indicates the amount by which contribution would decrease if one unit
of the variable for that column were brought into the solution. Index row elements are also
known as the shadow prices (or accounting prices)
Step 5. We test if the current solution is optimum or not. If all the elements or entries in the Cj-
Zj row (i.e., index row) are negative or zero, then the current solution is optimum. If
there exists some positive number, the current solution can be further improved by
removing one basic variable from the basis and replacing it by some non-basic one.
So start trying to improve the current solution in line with the following steps.

Step 6. Further, iterate towards an optimum solution. To improve the current feasible solution,
we replace one current basic variable (called the departing variable) by a new non-
basic variable (called the entering variable).
We now determine the variable to enter into the solution mix, the entering variable. One
way of doing this is by identifying the column with the largest positive value in the C j - Zj
row of the simplex table. The column with the largest positive entry in the C j - Zj row is
called the key or pivot column. The non-basic variable at the top of the key column is the
entering variable that will replace a basic variable.
Next, we determine the departing variable to be replaced in the basis solution. This is
accomplished by dividing each number in the quantity column by the corresponding
number in the key column selected in identifying the entering variable. We compute the
ratio b1/a1j, b2/a2j... bm/amn. This is called replacement ratio.

Replacement Ratio (RR) = Solution Quantity (Q)

Corresponding values in pivot column

The row with the minimum ratio is the key row or pivot row. The corresponding variable
in the key row (the departing variable) will leave the basis.
We identify the key or pivot element. This is the number that lies at the intersection of the
key column and key row of a given simplex tableau.
Step 7. Evaluate the new solution by constructing a second simplex tableau. After identifying the
entering and departing variable, all that remains is to find the new basic feasible
solution by constructing a new simplex tableau from the current one.
Now we evaluate or update the new solution in the following way:
New values for the key row are computed by simply dividing every element of the key
row by the key element to obtain a unit vector (1) in the key element.

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The new values of the elements in the remaining rows for the new simplex table can be
obtained by performing elementary row operations on all rows so that all elements except
the key element (1) in the key column are zero, i.e. unit vector.
New entries in the CB column and XB column are entered in the new table of the current
solution.
Compute the values of the Cj - Zj row. If all the numbers in Cj - Zj row are either negative
or zero, an optimum solution has been obtained.

Step 8. If any of the numbers in Cj - Zj row are positive, repeat the steps (6-7) again until an
optimum solution has been obtained.
Note: Rules for Ties. In choosing a key column and a key row, whenever there is a tie between
two numbers, the following rules may be followed:
The column farthest to the left may be selected if there is a tie between two numbers in
the index row.
The nearest ratio to the top may be selected whenever there is a tie between two
replacement ratios in the ratio column.
Example (Maximization Case)
Finding the initial Feasible Solution
As discussed above, the initial feasible solution is found by setting the decision variables to zero.
Max Z = 60X1+50X2+0S1+0S2+0S3
Subject to 4X1+10X2+S1 = 100
2X1+ X2+S2 = 22
3X1+ 3X2+S3 = 39
X1, X2 > = 0

Initial Simplex tableau

Cj 60 50 0 0 0 Quantity
Basic V. X1 X2 S1 S2 S3
S1 0 4 10 1 0 0 100
S2 0 2 1 0 1 0 22
S3 0 3 3 0 0 1 39
Zj 0 0 0 0 0 0
Cj-Zj 60 50 0 0 0

Interpretation of the Initial Feasible Solution

To be noted first is that the values of each basic variable (variables that are in solution) is
composed of a single 1 and the rest 0‘s. This is called a unit vector. Basic variables will have a
unit vector. Moreover, ‗1‘ will appear in the same row that the variable appears in. The unit
vector concept will help us in developing subsequent tableaus when we want to change the list of
variables that are in solution.

The Zj row in the quantity column indicates that the value of the objective function is 0.

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The values in the Cj-Zj row indicate the net contribution of the variables if one unit of each
variable is added into that solution. For example, the 60 in column X 1 indicates that bringing one
unit of X1 would increase the value of the objective function by $60. The same is true for the X 2
column, i.e. bringing one unit of X2 would increase the value of the objective function by $50.
On the other hand, since the slack variables are at their maximum, their values in the C j-Zj

row are all 0. According to what has been said before, we have the following rule in order to
identify an optimal solution.
A simplex solution in a maximization problem is optimal if the C j-Zj row consists of entirely
zeros and negative numbers, i.e. there are no positive values in the row.

So for our case in the initial tableau, we have two positive values under the non-basic variables,
which indicate that further improvement of the solution is possible. As a result, we go for the
optimal solution by developing the second simplex tableau.

Developing the Second Simplex Tableau

In the initial feasible solution, the slack variables form entirely the basic variables and the
decision variables entirely form the non-basic variables. Since further improvement is possible,
one of the decision variables will be brought into the solution and one of the current basic
variables will be leaving the solution. ‗Which non-basic variable should be brought into the
solution and which basic variable should leave the solution?‘ is a major concern here.

In answering the first question, the non-basic variable that should enter the solution should be the
one with the highest positive value in the C j-Zj row since bringing that non-basic variable into
the solution would make the highest contribution to the solution (objective function) and result in
the largest profit potential. As a result, the variable with the highest value in the C j-Zj row of the
initial simplex tableau is the X1 column with a value 60. Therefore, X1 should enter the basis or
the solution mix. The X1 column is now called the pivot column. The numbers in this column (4
2 3) indicate the amount of the basic variables needed to get one unit of X 1. For example, the
number 4 indicates that 4 units of the first slack are needed to obtain one unit of X 1.
Since X1 has the highest profit potential, we need to make as much X 1 units as possible. The
amount of X1 that can be made depends on the values in the pivot column and the amount of
slack available shown under the quantity column. By dividing the values in the pivot column by
their respective values in the quantity column, we can identify the variable that is most limiting.
The values obtained by dividing will help us in determining the variable that should leave the
solution.

Cj 60 50 0 0 0 Quantity
Basic V. X1 X2 S1 S2 S3

S1 0 4 10 1 0 0 100 100/4 = 25
S2 0 2 1 0 1 0 22 22/2 = 11
S3 0 3 3 0 0 1 39 39/3 = 13
Zj 0 0 0 0 0 0
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Cj-Zj 60 50 0 0 0

Pivot Column
Pivot Row Pivot Element

In interpreting the ratios obtained by the division, I only the constraint was the first one, we
could make 25 units of X1. But there are also other constraints. Therefore, the one with the
smallest non-negative ratio is the most restrictive since it determines the amount of X 1. In this
particular case, there is only enough of the second constraint to make 11 units of X 1. In making
the 11 units of X1, the second resource (S2) will be down to zero indicating that S2 will leave out
the solution mix. The row of the leaving variable is called the pivot row. The intersection of the
pivot row and the pivot column is called the pivot element. As a rule,
The leaving variable is the one with the smallest non-negative ratio.

If a zero is obtained in the results of division, none of the corresponding variable is needed to
obtain one unit of the entering variable. If a negative value is obtained in the division, bringing
the entering variable into the solution would increase the amount of the basic variable. These
values will not limit the amount of the entering variable. Therefore, there is no need to divide the
quantity column by zero or negative.

Since we have determined the leaving and the entering variables and since the initial feasible
solution can be improved further, we need to develop the second tableau in order to find the
optimal solution. In developing the second tableau, we should compute for revised values of the
constraint equations, the Zj row and the Cj-Zj row and remember that the variables in solution
will have a unit vector, with a value of 1 in the intersection of the column and the row of the
basis, i.e. the pivot element.

To obtain a unit vector in the basis column, we perform elementary row operations resulting in
new row values by either multiplying/dividing all the elements in a row by a constant or
adding/subtracting the multiple of a row to or from another row.

In computing for the new row values from our initial simplex tableau, we first multiply the
second constraint by ½ obtaining the values as follows:
1X1+1/2X2+0S1+1/2S2+0S3 = 11, which results in making the pivot element 1.
Next, we multiply the above new row values by 4 and subtract it from the first constraint
obtaining the following results:
0X1+8X2+1S1+2S2+0S3 = 56.
Then, we multiply the new row values in the pivot row by 3 and subtract it from the third
constraint resulting as follows:
0X1+3/2X2+0S1-3/2S2+1S3 = 6.
Having these new row values, we develop the second simplex tableau as shown below.

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Second Simplex Tableau

Cj 60 50 0 0 0 Quantity
Basic V. X1 X2 S1 S2 S3
S1 0 0 8 1 -2 0 56
X2 60 1 1/2 0 1/2 0 11
S3 0 0 3/2 0 -3/2 1 6
Zj 60 30 0 30 0 660
Cj-Zj 0 20 0 -30 0

Interpretation of the Second Simplex Tableau

The profit obtained at this point of solution is $660. In the Cj-Zj row, we search for the highest
positive value. If there is, it means that we can further improve this solution. Therefore, we have
a positive value in the Cj-Zj row which indicates that this is not the optimal solution. As a result,
we go for the next tableau.
Developing the Third Tableau
Here, we select the entering and the leaving variables. The entering variable is the one with the
highest Cj-Zj row value which is the X2 column. This means that bringing one unit of X2 into the
solution increases profit by $20. Therefore, the X2 will be the entering variable designated as the
pivot column.

To determine the leaving the variable, we divide the values in the pivot column by their
corresponding row values in the quantity column. The result obtained, as shown in the table
below indicates that S3 is the leaving variable with the smallest non-negative ratio. This means
that S3 is the most limiting resource for how much units of X2 can be made.

Cj 60 50 0 0 0 Quantity
Basic V. X1 X2 S1 S2 S3
S1 0 0 8 1 -2 0 56 56/8 = 7
X2 60 1 1/2 0 1/2 0 11 11/(1/2) = 22
S2 0 0 3/2 0 -3/2 1 6 6/(3/2) = 4
Zj 60 30 0 30 0 660
Cj-Zj 0 20 0 -30 0

Pivot Row
Pivot Column Pivot Element

After identifying the entering and the leaving variables, we perform elementary row operations
as follows. To obtain a unit vector with 1 in the pivot element, we multiply the pivot row by 2/3
resulting as follows:
0X1+1X2+0S1+-1S2+2/3S3 = 4
Then, multiply the above new row values by 8 and subtract it from the first constraint (row)
resulting as follows:
0X1+0X2+1S1+6S2+-16/3S3 = 24.

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For row 2, first multiply the new row values in the pivot row by ½ and subtract it from the
second row resulting as follows:
1X1+0X2+0S1+1S2+-1/3S3 = 9.
And the third tableau looks like the following.

Third Simplex Tableau

Cj 60 50 0 0 0 Quantity
Basic V. X1 X2 S1 S2 S3
S1 0 0 0 1 6 -16/3 56
X1 60 1 0 0 1 -1/3 11
X2 50 0 1 0 -1 2/3 6
Zj 0 0 10 40/3 0 740
Cj-Zj 0 0 -10 -40/3 0

Interpreting the Third Tableau

All the values in the Cj-Zj row are zero and negative indicating that there can no be additional
improvement. This makes the third tableau to contain the optimal solution with the following
basic variables:
S1 = 24, X1 = 9, and X2 = 4 producing a maximum profit of $740.
This means that in order to achieve the maximum profit, the company should produce 9 units of
X1 and 4 units of X2 leaving 24 hours of unused resource of the second constraint.

SIMPLEX MAXIMIZATION WITH MIXED CONSTRAINTS

(= AND >= CONSTRAINTS)

The Big M Method—introducing slack, surplus and artificial variables

If any problem constraint has negative constants on the right side, multiply both sides by
-1 to obtain a constraint with a non-negative constant. (If the constraint is an inequality,
this will reverse the direction of the inequality.)
Introduce a slack variable in each <= constraints.
Introduce a surplus variable and an artificial variable in each >= constraint.
Introduce an artificial variable in each '='constraint.
For each artificial variable Ai, add -MAi to the objective function in case of
maximization and

+MAi in case of minimization. Use the same constant M for all artificial variables.
Form the simplex tableau for the modified problem.
Solve the modified problem using the simplex method.
Relate the solution of the modified problem to the original problem:
If the modified problem has no solution, then the original problem has no
solution.
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If any artificial variables are non-zero in the solution to the modified problem,
then the original problem has no solution.
Note. The artificial variables are introduced for the limited purpose of obtaining an initial
solution and are required for the constraints of >= type or the constraints with '=' sign. It is not
relevant whether the objective function is of the minimization or the maximization type.

Obviously, since artificial variables do not represent any quantity relating to the decision
problem, they must be driven out of the system and must not remain in the final solution (and if
at all they do, it represents a situation of infeasibility). This can be ensured by assigning an
extremely high cost to them. Generally, a value M is assigned to each artificial variable, where
M represents a number higher than any finite number. For this reason, the method of solving the
problems where artificial variables are involved is termed as the 'Big M Method'. When the
problem is of the minimization nature, we assign in the objective function a coefficient of +M to
each of the artificial variables. On the other hand, for the problems with the objective function of
maximization type, each of the artificial variables introduced has a coefficient -M.

In case of equality constraints, a slack variable is not acceptable since these constraints require a
precise amount. To overcome this problem, artificial variables are introduced which are added to
= and >= constraints. They have no physical representation for their purpose is to allow the use
of simplex process. As a result, they should not appear in the final optimal solution. Assignment
of coefficients for artificial variables depends on the type of the problem, whether it is a
maximization or a minimization problem. In case of maximization problem, a large negative
contribution or coefficient in the objective function would ensure the removal of artificial
variables from the optimal solution, commonly represented by -M. For minimization problems,
introducing a large positive coefficient would ensure the non-existent of artificial variables in the
optimal solution, commonly represented by M.

In addition to this, a slack is not allowed in >= constraints since they can only happen an excess
amount that is more than the minimum amount of a constraint. This excess amount is represented
by a surplus variable and is subtracted from the constraint.
Example – Maximization Problems with Mixed Constraints
Assume the following maximization problem with mixed constraints.
Max. Z = 6X1+8X2
Subject to X2 <= 4
X1+X2 = 9
6X1+2X2 >= 24

In solving for this problem, introducing a slack variable is not acceptable since they represent
unused capacity and there is no unused capacity in = and >= constraints. Therefore, for >=
constraints, we introduce a surplus variable and for both >= and = constraints we introduce
artificial variables resulting as follows.

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Max Z = 6X1+8X2+0S1+0S2-MA2-MA3
Subject to X2+ S1 = 4
X1+X2+A2 = 9
6X1+2X2-S3+A3 = 24
X1, X2 > = 0
Wouldn‘t it be possible to set A2 as A1 and A3 as A2 in the above standardized LPM form?

Developing the Initial Simplex Tableau

In the initial tableau, we list the variable in the order of decision variable, slack/surplus variables
and finally artificial variables. And for constraints, use artificial variables, and/or slack variables
and/or surplus variables for the initial solution. Therefore the initial tableau for the problem is
represented as follows.

Initial Simplex Tableau

Cj 6 8 0 0 -M -M Quantity
Basic V. X1 X2 S1 S3 A2 A3
S1 0 0 1 1 0 0 0 4
A2 -M 1 1 0 0 1 0 9
A3 -M 6 2 0 -1 0 1 24
Zj -7M -3M 0 +M -M -M -33M
Cj-Zj 6+7M 8+3M 0 -M 0 0

Since this is a maximization problem, the entering variable is the one with the maximum C j-Zj
value. Therefore, the variable with the maximum C j-Zj is X1, the decision variable. And the
leaving variable is with the minimum non-negative ratio which is A3, the artificial variable. Since
this artificial variable is not needed we remove it from the next tableau.
Developing the Second Simplex Tableau
After identifying the entering and the leaving variable, the usual elementary row operations are
performed to obtain a unit vector in the entering variable column. The end result after performing
the row operations is as follows which shows the second tableau.
Second Simplex Tableau
Cj 6 8 0 0 -M Quantity
Basic V. X1 X2 S1 S3 A2
S1 0 0 1 1 0 0 4
A2 -M 0 2/3 0 1/6 1 5
X1 6 1 1/3 0 -1/6 0 4
Zj 6 2-2/3M 0 -1-M/6 -M 24-5M
Cj-Zj 0 6+2/3M 0 1+M/6 0

Again here, we identify the leaving the entering variables, i.e. the pivot row and the pivot column
respectively. The entering variable with the highest C j-Zj row value is X2 and the leaving variable
with the smallest ratio is S1.

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Developing the Third Simplex Tableau

Selecting the entering and leaving variables, we go for obtaining a unit vector in the pivot
column by using the elementary row operations. We get the following third tableau.

Third Simplex Tableau

Cj 6 8 0 0 -M Quanti
Basic V. X1 X2 S1 S3 A2 ty
X2 8 0 1 1 0 0 4
A2 -M 0 0 -2/3 1/6 1 7/3
X1 6 1 0 -1/3 -1/6 0 8/3
Zj 6 8 6+2/3M -1-M/6 -M 48-7/3
Cj-Zj 0 0 -6-2/3M 1+M/6 0

Similarly, we identify the entering and the leaving variables which are S 3 and A2 respectively
representing the maximum Cj-Zj value and the minimum ratio.

Developing the Fourth Simplex Tableau

Perform elementary row operations usual to have a unit vector in the entering variable column
and you will get the following fourth tableau.
Fourth Simplex Tableau
Cj 6 8 0 0 Quantity
Basic V. X1 X2 S1 S3
X2 8 0 1 1 0 4
S3 0 0 0 -4 1 14
X1 6 1 0 -1 0 5
Zj 6 8 2 0 62
Cj-Zj 0 0 -2 0

This tableau represents the final tableau since we have only zeros and negative values in the C j-
Zj row which indicates that it is the optimal solution. So we have the following results for each of
the variables and the profit obtained.
X1 = 5, X2 = 4, S3 = 14, and Profit = 62

MINIMIZATION LINEAR PROGRAMMING PROBLEMS

Big M-method

/Charnes Penalty Method/

The Big-M Method is a technique, which is used in removing artificial variables from the basis
.In this method; we assign coefficients to artificial variables, undesirable from the objective
function point of view. If objective function Z is to be minimized, then a very large positive price
(called penalty) is assigned to each artificial variable. Similarly, if Z is to be maximized, then a

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very large negative cost (also called penalty) is assigned to each of these variables. Following are
the characteristics of Big-M Method:

a. High penalty cost (or profit) is assumed as M

b. M as a coefficient is assigned to artificial variable A in the objective function Z.
c. Big-M method can be applied to minimization as well as maximization problems with the
following distinctions:
i. Minimization problems
-Assign +M as coefficient of artificial variable A in the objective function
Z of the minimization problem.

ii. Maximization problems:

-Here –M is assigned as coefficient of artificial variable A in the objective
function Z of the maximization problem.

d. Coefficient of S (slack/surplus) takes zero values in the objective function Z

e. For minimization problem, the incoming variable corresponds to the highest negative value
of Cj-Zj.
f. The solution is optimal when there is no negative value of Cj-Zj.(For minimization LPP case)
The various steps involved in using simplex method for minimization problems are:
Step 1. Formulate the linear programming model, and express the mathematical model of L.P.
problem in the standard form by introducing surplus and artificial variables in the
left hand side of the constraints. Assign a 0 (zero) and +M as coefficient for surplus
and artificial variables respectively in the objective function. M is considered a very
large number so as to finally drive out the artificial variables out of basic solution.
Step 2. Next, an initial solution is set up. Just to initiate the solution procedure, the initial basic
feasible solution is obtained by assigning zero value to decision variables. This
solution is now summarized in the initial simplex table. Complete the initial simplex
table by adding two final rows Z, and Cj - Zj. These two rows help us to know whether
the current solution is optimum or not.
Step 3. Now; we test for optimality of the solution. If all the entries of C j - Zj, row are positive,
then the solution is optimum. However, this situation may come after a number of
iterations. But if at least one of the Cj - Zj values is less than zero, the current solution
can be further improved by removing one basic variable from the basis and replacing
it by some non-basic one.
Step 4. (i) Determine the variable to enter the basic solution. To do this, we identify the column
with the largest negative value in the Cj - Zj row of the table.
(ii) Next we determine the departing variable from the basic solution. If an artificial
variable goes out of solution, then we discard it totally and even this variable may not
form part of further iterations. Same procedure, as in maximization case, is employed
to determine the departing variable.

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Step 5. We update the new solution now. We evaluate the entries for next simplex table in
exactly the same manner as was discussed earlier in the maximization case.

Step 6. Step (3—5) are repeated until an optimum solution is obtained.

So the following are the essential things to observe in solving for minimization problems:
The entering variable is the one with the largest negative value in the C j-Zj row while the
leaving variable is the one with the smallest non-negative ratio.
The optimal solution is obtained when the Cj-Zj row contains entirely zeros and positive
values.

Example: Assume the following minimization problem.

Min Z = 7X1+9X2
Subject to 3X1+6X2 >= 36
8X1+4X2 > = 64
X1, X2 > = 0

We introduce both surplus and artificial variables into both constraints as follows.

Min Z = 7X1+9X2+0S1+0S2+MA1+MA2
Subject to 3X1+6X2 –S1+A1 = 36
8X1+4X2-S2+A2 = 64
X1, X2 > = 0

So the subsequent tableaus for this problem are shown below. To remind in these tableaus is in
transforming from one tableau to another, we perform elementary row operations to obtain the
unit vector in the pivot column for the entering variable into the solution.
Initial Simplex Tableau
Cj 7 9 0 0 M M Quant
Basic X1 X2 S1 S2 A1 A2 ity
V.
A M 3 6 -1 0 1 0 36
1
A M 1 4 0 -1 0 1 64
2
Zj 11M 10M -M -M M M 50M
Cj-Zj 7-11M 9-10M M M 0 0

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Second Simplex Tableau

Cj 7 9 0 0 M Quantity
Basic V. X1 X2 S1 S2 A1
A1 M 0 9/2 -1 3/8 1 12
X1 7 1 ½ 0 -1/8 0 8
Zj 7 7/2+9/2M -M 3/8M-7/8 M 56+12M
Cj-Zj 0 11/2-9/2M M 7/8-3/8M 0

Third Simplex Tableau

Cj 7 9 0 0 Quantity
Basic V. X1 X2 S1 S2
X2 9 0 1 -2/9 1/12 8/3
X1 7 1 0 1/9 -1/6 20/3
Zj 7 9 -11/9 -5/12 212/3
Cj-Zj 0 0 11/9 5/12

The third tableau represents a final tableau since it is the optimal solution with entirely zeros and
non-negative values in the Cj-Zj row.

Therefore, the optimal solution is: X1 = 20/3 and X2 = 8/3 and value of objective function is
212/3.
Summary
Coefficient of extra variables Presence of
Types of variables in
in the objective function
Extra variables to be added the initial
MaxZ solution mix
constraint
MinZ

< Add only slack variable 0 Yes

0

Subtract surplus variable 0 No

> and 0

Add artificial variable -M Yes

+M

= Add artificial variable -M Yes

+M

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? Dear learner, why do you think that artificial variables did not appear in the optimal solution?
What is the guarantee not to get artificial variable in the optimal solution?

2.4. SPECIAL ISSUES

Several special situations which one many encounter during the application of simplex method
are summarized below:
Non-feasible Solution/ Infeasibility

A situation with no feasible solution may exist if the problem was formulated incorrectly.
Infeasibility comes about when there is no solution that satisfies all of the problem‘s constraints.

In the simplex method, an infeasible solution is indicated by looking at the final tableau
Whenever the optimality criteria is satisfied but still there exist an artificial variable in the basis
or solution mix, this is the indication of infeasibility.

Example:

Minimization case

Cj 5 8 0 0 M

BV X1 X2 S1 S2 A2 Q

5 X1 1 1 -2 3 0 200

8 X2 0 1 1 2 0 100

M A2 0 0 0 -1 1 20

Zj 5 8 -2 31-M M 1,800+200M

0 0 2 M-31
Cj - Zj
0

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Even though all Cj - Zj are positive or 0(i.e. the criterion for an optimal solution in a
minimization case), no feasible solution is possible because an artificial variable (A2) remains
in the solution mix.

Unbounded Solution
No finite solution may exist in problems that are not bounded. This means that a variable can be
infinitely large without violating a constraint. In the simplex method, the condition of
unboundedness will be discovered prior to reaching the final tableau. We will note the problem
when trying to decide which variable to remove from the solution mix.

The procedure in unbounded solution is to divide each quantity column number by the
corresponding pivot column number. The row with the smallest positive ratio is replaced. But if
the entire ratios turn out to be negative or undefined, it indicates that the problem is unbounded.

Note: A negative ratio means that increasing that variable would increase resources. A zero
ratio means that increasing the variable would not use any resources.

Example:

Maximization case:

Cj 6 9 0 0

SV X1 X2 S1 S2 Q

9 X2 -1 1 2 0 30

0 S2 -2 0 -1 1 10

-9 9 18
Zj 270
0

Cj - Zj 15 0 -18
0 Pivot Column
The solution in the above case is not optimal because not all Cj - Zj entries are 0 or negative, as
required in a maximization problem. The next variable to enter the solution should be X1.To
determine which variable will leave the solution, we examine the ratios of the quantity column
numbers to their corresponding numbers in the X1 or pivot column. Since both pivot column
numbers are negative, an unbounded solution is indicated.

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Note: When unbounded solutions occur, no outgoing variable will exist.

Degeneracy

/Tie for leaving basic variable (key row)/

If there is a tie for the smallest ratio, this is a signal that degeneracy exists. Degeneracy can occur
right in the first (initial tableau). This normally happens when the number of constraints is less
than the number of variables in the LP model. Such problems can be overcome by trial and error
method. If this is resolved by a proper selection of the key element, degeneracy can be avoided.
The main drawback to degeneracy is the increase in the computation, which reduces the
efficiency of the simplex method considerably.

Example

Cj 5 8 2 0 0 0

SV X1 X2 X3 S1 S2 S3 Q

8 X2 1/4 1 1 -2 0 0 10 RR

0 S2 4 0 1/3 -1 1 0 20

0 S3 2 0 2 2/5 0 1 10
10/1/4=40

2 8 8 16 0
Zj 80
0
20/4= 5 Tie for the smallest ratio

Cj - Zj 3 0 -6 -16 0 Indicates degeneracy.

0 Degeneracy could lead to a
10/2= 5
situation known as cycling, in which the simplex algorithm alternatives back and forth between
the same non-optimal solutions, i.e., it puts a new variable in, then takes it out in the next
tableau, puts it back in, and so on.

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One simple way of dealing with the issue is to select either row (S2 or S3 in this case) arbitrary. If
we are unlucky and cycling does occur, we simply go back and select the other row. However,
the number of iterations required to arrive at the optimal solution can be minimized by adopting
the following rule:

 Divide the coefficient of slack variables in the simplex table where degeneracy is
detected by the corresponding positive numbers of the key column in the row, starting
from left to right.
 The row which contains smallest ratio comparing from left to right column wise becomes
the key row.

For the above example:

Column

Row s2 s3

s2 1 0

s3 0 1

Divide the coefficients by the corresponding element of the key column, we obtain the
following:

Column

Row s2 s3

s2 ¼= ¼ 0/4=0

s3 0/2 =0 ½=1/2

Comparing the ratios from left to right column wise until they are not equal, the minimum ratio
occurs for the second row (0). Therefore, s3 is selected to leave the basis.

Note: When there is a tie between a slack and artificial variable to leave the basis, the
preference shall be given to artificial variable to leave the basis and there is no need to apply the
procedure for resolving such cases.

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Two incoming variables

/ Or Tie for entering variables/

In order to break this tie, the selection for the key column (entering variable) can be made
arbitrary. However; the number of solution can be minimized by adopting the following rules:

1. If there is a tie between two decision variables, then the selection can be made arbitrary.

2. If there is a tie between a decision variable and a slack (or surplus) variable, then select the
decision variable to enter into basis first.

3. If there is a tie between slack or surplus variable, then selection can be made arbitrary.

Example:

If the equation is max Z:

Cj

SV X1 X2 S1 S3 Q

Zj

5 2 5
Cj - Zj
0

In such a case,X1 is the entering variable

Multiple Optimum Solutions

This situation occurs when there can be infinite number of solutions possible for a given
problem. This situation can be recognized in a simplex method when one of the non-basic
variables in the Cj-Zj, row have a value of zero. This is to mean in the optimal solution when non
basic variable (variable not in the basis) has a zero value in C-Z row, this is the indication of
existence of multiple solution. To obtain the other solution, we will make a non- basic variable
with a zero C-Z value to enter in to the basis and solve in the same way as the one we did in the
previous discussion.

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Example:

Maximization problem

Cj 3 2 0 0

BV X1 X2 S1 S2 Q

2 X2 3/2 1 1 0 6

0 S2 1 0 1/2 1 3

3 2 2
Zj 12
0

Cj - Zj 0 0 -2
0
MaxZ=3X1+2X2

X1=0, X2=6, S2=3 and MaxZ=12 or: X1=3, X2=3/2 and MaxZ=12

The Cj - Zj value of the non-basic variable (X1) is 0. Thus, this shows the existence of alternative
optimal solution. Can you identify more alternative optimal solutions?

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? Dear learner, can you raise examples of your own for each of the above special issues and

show how each relate to graphic approach?

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Summary
 The simplex method is an algebraic procedure that starts with a feasible
solution that is not optimal and systematically moves from one feasible
solution to another until an optimal solution is found
 The variations described in general simplex approach include;
maximization and minimization problems, mixed constraint problems,
problems with multiple optimal solution, problems with no feasible
solution, undounded problems, tied pivot columns and rows.
 Multiple optimal solution are identified by Cj-Zj(or Zj- Cj) =0 for a non
basic variable. To determine the alternate solution(s), enter the non
basic variable(s) with a Cj-Zj value equal to zero.
 An infeasible problem is identified in the simplex procedure when an
optimal solution is achieved and one or more of the basic variables are
artificial.
 The unbounded problems are identified in the simplex procedure when
it is not possible to select a pivot row- that is, when the replacement
ratio is negative or undefined.
 Degeneracy occurs when there is a tie for pivot row.

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Model examination questions

1. The crumb and Custard bakery makes cakes and pies. The main ingredients are flour and
sugar. The following linear programming model has been developed for determining the number
of cakes and pies (x1 and x2 to produce each day to maximize profit.
Max Z=x1 + 5x2
Subject to:
8x1+10x2< 25(flour, lb)
2x1+4x2< 16(sugar, lb)
x1< 5(demand for cakes)
x1,x2 >0
Solve this model using graphical and simplex method and compare the answers.
2. A transistor radio Co., manufactures models A, B, and C which have profit contribution of
Birr 16, Birr 30 and Birr 50 respectively. The weekly minimum production requirements are 20
for model A, 120 for model B, and 60 for model C. Each type of radio requires a certain amount
of time for the manufacturing of component parts, assembly and packaging. Specifically a dozen
unit of model A requires 3 hrs for manufacturing of component parts, 4b hrs for assembly and 1
hr for packaging. The corresponding figure for a dozen unit of model B is 3.5, 5 and 1.5 and for a
dozen unit of C are 5, 8, and 3 hrs. During the forth coming week, the company has availability
of 120 hrs of manufacturing, 160 hrs of assembly, and 45 hrs of packaging time.

Required:

a) Formulate the scheduling problem as LPM.

b) Solve the problem using simplex method

c) Identify basic and non basic variables at each iteration

3. A company has two plants, each of which produces and supplies two products: A and B. The
plants can each work up to 16 hrs a day. In plant 1, it takes 3 hrs to prepare and pack 1000
gallons of A and 1 hr to prepare and pack 1 quintal of B. In plant 2, it takes 2 hrs to prepare and
pack 1000 gallons of A and 1.5 hrs to prepare and pack a quintal of B. In plant 1, it costs Birr
15,000 to prepare and pack 1000 gallons of A and Birr 28,000 to prepare and pack a quintal of B,
whereas these costs are Birr 18,000 and Birr 26,000 respectively in plant 2. The company is
obliged to produce daily at least 10,000 gallons of A and 8 quintals of B.

a) Formulate the problem as LPM to find out as to how the company should organize its

production so that the required amounts of the two products be obtained at minimum cost.

b) Solve the problem using simplex method

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4. A manufacturing company is engaged in producing three types of products: A, B, and C. The

production department produces each day components sufficient to make 50 units of A, 25 units
of B, and 30 units of C. The management is confronted with the problem of optimizing the daily
production of products in assembly department where only 100 man hrs are available daily to
assemble the products. The following additional information is available.

Type of product Profit contribution per unit (Birr) Assembly time per product (hrs)

A 12 0.8

B 20 1.7

C 45 2.5

The company has a daily order commitment for 20 units of product A, and a total of 15 units of
product B and C.

Required:

a) Formulate the problem as LPM so as to maximize the total profit?

b) Solve the problem using the algebraic method

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Chapter Four
4. Transportation Models
 Dear learners, in the previous chapters we have discussed about linear programming, which is
more general. In this chapter we will discuss about special types of linear programming models
called Transportation and Assignment Models

Unit objectives:

Up on completion of this unit, you will be able to:

 Differentiate between linear programming and transportation and assignment models

 Explain advantages of transportation and assignment models
 Identify different techniques to find solution for transportation models.

Transportation Models

Sub section objectives

Up on completion of this section, the learner will be able to:

 Explain transportation models

 Identify application areas of transportation models
 Formulate LP model for transportation problems
 Describe methods of finding initial feasible solution
 Check for optimality of transportation model using stepping stone and MODI techniques.
 Elucidate special cases in transportation models
Introduction

Dear learner, in the previous chapter we have been thoroughly discussed about LP models and
their applications. In this chapter we will try to see special types of LP models which are
Transportation and Assignment Models. Though it is possible to solve the two problems using
simplex method, the process would result in rather large simplex tableaus and numerous simplex
iterations. Because of the unique characteristics of each problem, however, alternative solutions
methods requiring considerably less mathematical computation than the simplex method have
been developed.

The purpose of using an LP model for transportation problems is to minimize transportation

costs, taking into account the origin supplies, the destination demands, and the transportation
costs. The transportation method is similar in certain respects to the simplex technique because
both involve an initial feasible solution that is evaluated to determine if it can be improved.

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Moreover, both involve displaying initial and improved solutions in a series of tableaus or tables.
However, the transportation method requires considerably less computational effort. In addition,
it is not unusual to discover that the initial feasible solution in a transportation problem is the
optimum. Examples of transportation problems include shipments from warehouses to retail
stores, shipment from factories to warehouses, shipments between departments within a
company, and production scheduling.

? Discuss similarities and differences between transportation models and simplex

approach?

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FORMULATING THE MODEL

A transportation problem typically involves a set of sending locations, which are referred to as
origins, and a set of receiving locations, which are referred to as destinations. In order to
develop a model of a transportation problem, it is necessary to have the following information:

a. Supply quantity (capacity) of each origin.

b. Demand quantity of each destination.
c. Unit transportation cost for each origin-destination route.
Assumptions

The transportation algorithm requires the assumption that:

 All goods be homogeneous, so that any origin is capable of supplying any destination,
and
 Transportation costs are a direct linear function of the quantity shipped over any route.
 Though it will be modified later in our discussion, we shall add one additional
requirement that the total quantity available is equal to the total demand.

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Example

Let‘s consider an example. Harley‘s Sand and Gravel Pit has contracted to provide topsoil for
three residential housing developments. Topsoil can be supplied from three different ―farms‖ as
follows:

Farm Weekly capacity (cubic yards)

A 100

B 200

C 200

Demand for the topsoil generated by the construction projects is:

Project Weekly demand(cubic yards)

1 50
2 150
3 300

The manager of the sand and gravel pit has estimated the cost per cubic yard to ship over each of
the possible routes:

Cost per cubic yard to

From Project #1 Project #2 Project #3

Farm A Birr4 Birr 2 Birr 8

Farm B 5 1 9

Farm C 7 6 3

This constitutes the information needed to solve the problem.

The next step is to arrange the information into a transportation table. This is shown in the
following table.

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Transportation table for Harley‘s sand and gravel

To:

From: Project Project Project Supply

4 2 8
#1 #2 #3
From:
Farm A 100
5 1 9

Farm B 200
7 6 3

Farm C 200

Demand 50 150 300

 Note: It is possible to write this transportation problem in the form of LPM.

Nine ( 3x3) decision variables are there and the objective function is minimization.

LPM for this problem is:

Zmin: 4x11 + 2x12 +8x13 + 5x21 + x22 + 9x23 + 7x31 + 6x32 + 3x33

Subject to:

x11 + x12 +x13  100

x21 + x22 + x23  200 Capacity/ Source constraint

x31 + x32 + x33  200

x11 + x21 + x3 1  50

x12 + x22 +x32  150 Demand/Destination constraint

x13 + x23 + x33  300

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This can be rewritten as:

Zmin: 4x11 + 2x12 +8x13 + 5x21 + x22 + 9x23 + 7x31 + 6x32 + 3x33

Subject to:

x11 + x12 + x13  100

x21 + x22 + x23  200

x31 + x32 + x33  200

x11 + x21 + x31  50
x12 + x22 + x32  150

x13 + x23 + x33  300

x11 , x12, x13 ,x21, x22 , x23 , x31, x32 , x33 0

FINDING AND INITIAL FEASIBLE SOLUTION

The starting point of the transportation method is a feasible solution. For an assignment to be
feasible, two conditions must be fulfilled:

 A feasible solution is one in which assignments are made in such a way that all
supply and demand requirements are satisfied.
 The number of nonzero (occupied) cells should equal one less than the sum of the
number of rows and the number of columns in a transportation table. In the case of
a table with 3 rows and 3 columns, the number of occupied cells should be 3 + 3 -1
= 5 in order to be able to use the transportation algorithm. Sometimes, fewer
occupied or completed cells appear in a solution. When that happens, the solution

is referred to as a degenerated solution; such a solution requires modification in order to be able

to determine if it is optimal. This topic will be covered later on.

A number of different approaches can be used to find an initial feasible solution. Three of these
are described here:

The northwest-corner method.

An intuitive approach/Least cost method
Vogel‘s / Penalty Method

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The Northwest-Corner Method

The northwest corner method is a systematic approach for developing an initial feasible solution.
Its chief advantages are that it is simple to use and easy to understand. Its chief drawback is that
it does not take transportation costs into account. Consequently, such a solution may require
much additional effort to obtain the optimal solution.

The northwest corner method gets its name because the starting point for the allocation process is
the upper left-hand (Northwest) corner of the transportation table. For the Harley problem, this
would be the cell that represents the route from Farm A to Project #1. The following set of
principles guides the allocation:

i. Begin with the upper left-hand cell, and allocate as many units as possible to that
cell. This will be the smaller of the row supply and the column demand. Adjust
the row and column quantities to reflect the allocation.
ii. Remain in a row or column until its supply or demand is completely exhausted or
satisfied, allocating the maximum number of units to each cell in turn, until all
supply has been allocated (and all demand has been satisfied because we assume
total supply and demand are equal).
Initial Feasible Solution for Harley using Northwest-corner method

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To:

Project Project Project Supply

#1 #2 #3
From:

4 2 8

Farm A 50 50 100

(first) (second)

5 1 9

Farm B 100 100 200

(third) (fourth)

7 6 3

Farm C 200 200

(last)

Demand 50 150 300 500

The total cost is found by multiplying the quantities in ―completed‖ (i.e. nonempty) cells by the
cell‘s unit cost and, then, summing those amounts. Thus:

Total cost = 50(4) + 50(2) + 100(1) + 100(9) + 200(3) = $1900

As noted earlier, the main drawback of the northwest-corner method is that it does not consider
cell (route) costs in making the allocation. Consequently, if this allocation is optimal, that can be
attributed to chance rather than the method used.

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The Intuitive Approach

This approach, also known as the minimum-cost method, uses lowest cell cost as the basis for
selecting routes. The procedure is as follows:

i. Identify the cell that has the lowest unit cost. If there is a tie, select one arbitrarily.
Allocate a quantity to this cell that is equal to the lower of the available supply for the
row and the demand for the column.
ii. Cross out the cells in the row or column that has been exhausted (or both, if both have
been exhausted), and adjust the remaining row or column total accordingly.
iii. Identify the cell with the lowest cost from the remaining cells. Allocate a quantity to
this cell that is equal to the lower of the available supply of the row and the demand
for the column.
iv. Repeat steps (ii) and (iii) until all supply and demand have been exhausted.
The initial feasible solution for the Harley problem completed using the above steps is shown
below.

Initial Feasible Solution for the Harley problem using the Intuitive approach

To:

Project Project Project Supply

#1 #2 #3
From:

4 2 8

Farm A 50 50 100

5 1 9

Farm B 150 50 200

7 6 3

Farm C 200 200

Demand 50 150 300 500

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We can easily verify that this is a feasible solution by checking to see that the row and column
totals of the assigned cell quantities equal the supply and demand totals for the rows and
columns. Now let us compute the total cost of this solution and compare it to that of the
northwest corner solution.

Total cost = 50(4) + 50(8) + 150(1) + 50(9) + 200(3) = $1800

Compared to the plan generated using the Northwest-corner method, this one has a total cost that
is $100 less. This is due to the fact that the previous one did not involve the use of cost
information in allocating units.

Vogel’s Approximation Method (VAM)

The third method for determining an initial solution, Vogel‘s Approximation Method (also called
VAM), is based on the concept of penalty cost or regret. If a decision maker incorrectly chooses
from several alternative courses of action, a penalty may be suffered (and the decision maker
may regret the decision that was made). In transportation problem, the courses of action are the
alternative routes and a wrong decision is allocating to a cell that does not contain the lowest
cost.

This method is preferred over the other two methods because the initial feasible solution
obtained with VAM is either optimal or very close to the optimal. With VAM the basis of
allocation is unit cost penalty i.e. that column or row which has the highest unit cost penalty
(difference between the lowest and the next highest cost) is selected first for allocation and the
subsequent allocations in cells are also done keeping in view the highest unit cost penalty.

Steps in VAM

1. Construct the cost, requirement, and availability matrix i.e. cost matrix with column and
row information.
2. Compute a penalty for each row and column in the transportation table. The penalty is
merely the difference between the smallest cost and the next smallest cost element in
that particular row or column.
3. Identify the row and column with the largest penalty. In this identified row (column),
choose the cell which has the smallest cost and allocate the maximum possible quantity to
this cell. Delete the row (column) in which capacity (demand) is exhausted. When there
is a tie for penalty, select one arbitrarily. After allocation, cross that row or column and
disregard it from further consideration.
4. Repeat steps 1 to 3 for the reduced table until the entire capabilities are used to fill the
requirement at different warehouses.
5. From step 4 we will get initial feasible solution. Now for initial feasible solution find the
total cost.

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The solution for our problem is as follows:

To: Project Project Project Supply Penalty

From: #1 #2 #3
Hc NHC Hc- NHC
4 2 8

Farm A 100

5 1 9
8 4 4
Farm B 150 200
1
7 6 3

Farm C 200
9 5 4 selected
Demand 50 150 300

7 6 1
HC 7 6 9 First allocation

NHC 5 2 8

Penalt 2 4 1

HC: Highest cost

NHC: Next Highest cost

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Table2 Penalty

To: Hc NHC Hc- NHC

From:
Project Project Project Supply
4 2 8
#1 #2 #3
Farm A 100
8 4 4
5 1 9

Farm B 150 200 50

9 5 7 6 3 4
Farm C 200 200
2
Demand 50 150 300 100

7 3 4 selected

Penalty 2 - 1 Second allocation

Table 3

Third To: Project Project Project Supply

allocation From: #1 #2 #3 Penalty
4 2 8
3
Farm A 50 100 50
4 selected
5 1 9

Farm B 150 200 50

7 6 3
4
Farm C 200 200

Demand 50 150 300 100

Penalty 1 - 1

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Table 4

Since there is no penalty for the remaining cells, we allocate for these cells according to their
cost.

To: Project Project Project #3 Supply

From: #1 #2
4 2 4 8

Farm A 50 50 100

5 1 50 9 50
5
Farm B 150 200
Fourth allocation
7 6 3 50

Farm C 200 200

Demand 50 150 300 100 50

Fifth allocation

Therefore the final allocation will be:

To:
From:
Project Project Project #3 Supply
4 2 8
#1 #2
Farm A 50 50 100
4
5 1 50 9

Farm B 150 200

7 6 3

Farm C 200 200

5

Demand 50 150 300

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Total cost:

1x150 + 3x200+4x50 + 8x50 + 9x50

= Birr 1800

? Dear learners, could you make comparison among costs of the three
approaches? Why do you think cost of North West corner method has the highest
cost?

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Evaluating a Solution for Optimality

The test for optimality for a feasible solution involves a cost evaluation of empty cells (i.e.,
routes to which no units have been allocated) to see if an improved solution is possible. We shall
consider two methods for cell evaluation:

The Stepping-stone method

The MODI method

The stepping-stone method involves a good deal of more effort than the MODI method.
However, it provides an intuitive understanding of the evaluation process. Moreover, when a
solution is not optimal, the distribution plan must be revised by reallocating units into and out of
various cells, and only the stepping-stone method can be used for the reallocation.

The Stepping-stone method

The Stepping-stone method involves tracing a series of closed paths in the transportation table,
using one such path for each empty cell. The path represents a shift of one unit into an empty
cell, and it enables the manager or analyst to answer a ―what-if‖ question: What impact on total
cost would there be if one unit were shifted into an unused route? The result is a cost change per
unit shifted into a cell. If the shift would result in a cost savings, the stepping-stone path also can
be used to determine the maximum number of units that can be shifted into the empty cell, as
well as modifications to other completed cells needed to compensate for the shift into the
previously unused cell.

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Reconsider the initial feasible solution we found using the northwest-corner method. Only the
unoccupied cells need to be evaluated because the question at this point is not how many units to
allocate to a particular route but only if converting a cell from zero units to nonzero (a positive
integer) would decrease or increase total costs. The unoccupied cells are A-3, B-1, C-1, and C-2.
They must be evaluated one at a time, but in no particular order.

Rules for tracing Stepping-stone paths:

i. All unoccupied cells must be evaluated. Evaluate cells one at a time.

ii. Except for the cell being evaluated, only add or subtract in occupied cells. (It is
permissible to skip over unoccupied cells to find an occupied cell from which the path
can continue.)
iii. A path will consist of only horizontal and vertical moves, starting and ending with the
empty cell that is being evaluated.
iv. Alter + and – signs, beginning with a + sign in the cell being evaluated.

 Note that it is not necessary to actually alter the quantities in the various cells to reflect the
one-unit change, the + and – signs suffice.

The general implication of the plus and minus signs is that cells with + signs mean one unit
would be added, cells with a – sign indicate one unit would be subtracted. The net impact of such
a one-unit shift can be determined by adding the cell costs with signs attached and noting the
resulting value. Thus, for cell B-1, we have a net change of +2 (i.e., 5+2-4-1) which means that
for each unit shifted into cell B-1, the total cost would increase by $2.

Computed in similar way, the evaluations of cells C-1, A-3, and C-2 result in +10, -2, and +11
respectively. The negative value for cell A-3 indicates an improved solution is possible: For each
unit we can shift into that cell, the total cost will decrease by $2. The following table shows how
empty cell C-1 can be evaluated using the Stepping stone method.

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Evaluation path for cell C-1

To:

Project Project Project Supply

#1 #2 #3
From:

4 2 8

Farm A 50 50 100

–- +

5 1 9

Farm B 100 100 200

– +

7 6 3

Farm C + – 200 200

Demand 50 150 300 500

The MODI method

The MODI (Modified Distribution) method of evaluating a transportation solution for optimality
involves the use of index numbers that are established for the rows and columns. These are based
on the unit costs of the occupied cells. The index numbers can be used to obtain the cell
evaluations for empty cells without the use of stepping-stone paths.

There is one index number for each column and one for each row. These can be conveniently
displayed along the left and upper edges of a matrix. The index numbers are determined in such a
way that for any occupied cell, the sum of the row index and the column index equal the cell‘s
unit transportation cost:

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Row index + Column index = Cell cost

ri + kj = cij

The index numbers are determined sequentially in a manner dictated by the position of occupied
cells. The process always begins by assigning a value of zero as the index number of row 1.

The method will be illustrated by developing index numbers for the initial feasible solution for
the Harley problem generated by the northwest-corner method. We begin assigning a value of
zero for row 1. Once a row index has been established, it will enable us to compute column index
numbers for all occupied cells in that row. Similarly, once a column index number has been
determined, index numbers for all rows corresponding to occupied cells in that column can be
determined. The complete set of row and column index numbers is shown in the following table.

Cell evaluations for Northwest Corner solution for the Harley Problem using the MODI method

k1 k2 k3
+4 +2 +10
To:
Project Project Project Supply
From: #1 #2 #3
4 2 8
r1 0 Farm A 50 50 100
-2

5 1 9
r2 -1 Farm B 100 100 200
+2

7 6 3
r3 -7 Farm C 200 200
+10 +11

Demand 50 150 300 500

The cell evaluations (improvement potentials) for each of the unoccupied cells are determined
using the relationship:

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Cell evaluation = Cell cost – Row index – Column index

eij = cij – ri – kj

For example, the cell evaluations for A-3 is 8 – 0 – 10 = -2. Similarly, the evaluation for B-1 is
+2, for C-1, +10, and for C-2, it is +11. Note that they agree with the values we computed earlier
using the stepping-stone method.

When cell evaluations are positive or zero, an optimal solution has been found. If one or more is
negative, the cell with the largest negative should be brought into solution because that route has
the largest potential for improvement per unit. In this case, we found that cell A-3 had an
evaluation of –2, which represented an improvement potential of $2 per unit. Hence, an
improved solution is possible.

DEVELOPING AN IMPROVED SOLUTION

Developing an improved solution to a transportation problem requires focusing on the

unoccupied cell that has the largest negative cell evaluation. Improving the solution involves
reallocating quantities in the transportation table. More specifically, we want to take advantage
of the improvement potential of cell A-3 by transferring as many units as possible into that cell.
The stepping-stone path for that cell is necessary for determining how many units can be
reallocated while retaining the balance of supply and demand for the table. The stepping-stone
path also reveals which cells must have quantity changes and both the magnitude and direction
of changes. The + signs in the path indicate units to be added, the – signs indicate units to be
subtracted. The limit on subtraction is the smallest quantity in a negative position along the cell
path. With each iteration (new solution), it is necessary to evaluate the empty cells to see if
further improvement is possible. This requires use of either the MODI or the Stepping-stone
method. Both will yield the same values.

After reallocating the units using the stepping stone method, the empty cells will be A-2, B-1, C-
1 and C-2. Suppose we use the MODI method for evaluation. After assigning all the row and
column indices, we find the cell evaluations to be as follows:

Cell A-2: 2 – 0 – 0 = +2

Cell B-1: 5–1–4= 0

Cell C-1: 7-(-5)- 4 = +8

Cell C-2: 6-(-5)- 0 = +11

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Because none of these numbers is negative, this is an optimal solution. You may recall that this
was the same solution obtained using the intuitive method for the initial feasible solution. At that
point, it was determined that the total cost for the distribution plan was $1800.

Optimal Solution for the Harley problem

+4 0 +8
To:
Project Project Project Supply
From: #1 #2 #3
4 2 8
+2
0 Farm A 50 50 100

0 5 1 9
+1 Farm B 150 50 200

+8 +11
7 6 3
-5 Farm C 200 200

Demand 50 150 300 500

? Dear learner, which of the two approaches for improvement is lengthy and difficulty to
use?

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__________________________________________________________________________
_____________________________________________________

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SPECIAL ISSUES

There are a number of special issues in relation to the transportation model. They are:

i. Determining if there are alternate optimal solutions.

ii. Defining and handling degeneracy (too few occupied cells to permit evaluation of a
solution).
iii. Avoiding unacceptable or prohibited route assignments.
iv. Dealing with problems in which supply and demand are not equal.
v. Solving maximization problems.

Alternate Optimal Solutions

Sometimes, transportation problems have multiple optimal solutions. In such instances, it can be
useful for a manager to be aware of alternate solutions, because this gives the manager an option
of bringing non-quantitative considerations into the decision.

In the case of the transportation problem, the existence of an alternate solution is signaled by an
empty cell‘s evaluation equal to zero. In fact, you may have noted that cell B-1 had an evaluation
equal to zero in the final solution of the Harley problem. We can find out what that alternate
solution is by reallocating the maximum number of units possible around the stepping-stone path
for that cell. After the cell evaluation of, and reallocating units to cell B-1, we find the following
table to be an alternate optimal solution.

Alternate optimal solution for the Harley problem

To:
Project Project Project Supply
From: #1 #2 #3
4 2 8
Farm A 100 100
5 1 9
Farm B 50 150 200
7 6 3
Farm C 200 200

Demand 50 150 300 500

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Degeneracy

A solution is degenerate if the number of occupied cells is less than the number of rows plus the
number of columns minus one. i.e., there are too few occupied cells to enable all the empty cells
to be evaluated. In the case of the stepping-stone method, this means that there will be at least
one empty cell for which an evaluation path cannot be constructed. For the MODI method, it
means that it will be impossible to determine all of the row and column index numbers.
Obviously, some modification has to be made to determine if such a degenerate solution is
optimal. The modification is to treat some of the empty cells as occupied cells. This is
accomplished by placing a delta () in one of the empty cells. The delta represents an extremely
small quantity (e.g., 0.001 unit); it is so small that supply and demand for the row and column
involved will be unaffected even without modifying other quantities in the row or column, and so
small that total cost will not change.

The purpose of the delta is to enable evaluation of the remaining empty cells. The choice of
location for the delta can be somewhat tricky: some empty cells may be unsuitable if they do not
enable evaluations of the remaining empty cells. Moreover, the delta cannot be placed in a cell
which later turns out to be in a negative position of a cell path involved in reallocation because
delta will be the ―smallest quantity in a negative position‖ and shifting that minute

quantity around the cell path will leave the solution virtually unchanged. Consequently, a certain
amount of trial and error may be necessary before a satisfactory location can be identified for
delta.

The technique can be demonstrated for the degenerate alternate solution of the Harley problem.
Suppose that after some experimentation, cell A-1 has been selected for the location of delta. The
resulting index numbers generated using MODI and the improvement potential for empty cells
based on delta in cell A-1 are shown in the following table. This confirms that the solution is
optimal

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Harley Alternate Solution Modified for Degeneracy

+4 0 +8
To:
Project Project Project Supply
From: #1 #2 #3
4 2 8
+2
0 Farm A Δ 100 100
5 1 9
0
+1 Farm B 50 150 200

7 6 3
-5 Farm C +8 +11 200 200

Demand 50 150 300 500

Unacceptable Routes

In some cases, an origin-destination combination may be unacceptable. This may be due to

weather factors, equipment breakdowns, labor problems, or skill requirements that either
prohibit, or make undesirable, certain combinations (routes).

Suppose that in the Harley problem route A-3 was suddenly unavailable because of recent
flooding. In order to prevent that route from appearing in the final solution (as it originally did),
the manager could assign a unit cost to that cell that was large enough to make that route
uneconomical and, hence, prohibit its occurrence. One rule of thumb would be to assign a cost
that is 10 times the largest cost in the table (or a very big +M). Then, this revised problem could
be solved using either of the methods we have discussed earlier. Note that the prohibited route
may appear in a non-optimal solution, but it will be eliminated by the time the optimal solution is
reached.

Dear learner, would you find the optimal solution if route A-3 is not available? How do you
compare the cost with the original cost?

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Unequal Supply and Demand

Up to this point, examples have involved cases in which supply and demand were equal. As you
might guess, there are situations in which the two are not equal. When such a situation is
encountered, it is necessary to modify the original problem so that supply and demand are equal.
This is accomplished by adding either a dummy column or a dummy row; a dummy row

is added if supply is less than demand and a dummy column is added if demand is less than
supply. The dummy is assigned unit costs of zero for each cell, and it is given a supply (if a row)
or a demand (if a column) equal to the difference between supply and demand. Quantities in
dummy routes in the optimal solution are not shipped. Rather, they serve to indicate which
supplier will hold the excess supply, and how much, or which destination will not receive its
total demand, and how much it will be short.

Let‘s consider an example. Suppose that Farm C in the Harley problem has experienced an
equipment breakdown, and it will be able to supply only 120 cubic yards of topsoil for a period
of time. Therefore, total supply will be 80 units less than total demand. This will require adding
a dummy origin with a supply of 80 units. The final solution is shown in the following table.
We interpret the solution indicating that Project #3 will be short by 80 units per week until the
equipment is repaired. Note, though, that this analysis has considered only transportation costs,
and that other factors, such are shortage costs or schedules of the projects, may dictate some
other course of action.

If the intuitive approach is used to obtain the initial feasible solution when a dummy is involved,
make assignments to the dummy last. Hence, begin by assigning units to the cell with the lowest
nonzero cost, then the next lowest nonzero cost, and so on. For the Harley problem this would
mean that units would be assigned first to cell B-2 because its cost of $1 is the lowest nonzero
cell cost.

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Solution using the Dummy Origin

To:
Project Project Project Supply
From: #1 #2 #3
4 2 8
Farm A 50 50 100

5 1 9
Farm B 150 50 200

7 6 3
Farm C 120 120
0 0 0
Dummy 80 80

Demand 50 150 300 500

? Dear learner, would you complete the above case by evaluating the assignments?
What would assignments in the dummy row or column in the optimal solution indicate?

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Maximization

Some transportation type problems concern profits or revenues rather than costs. In such cases,
the objective is to maximize rather than to minimize. Such problems can be handled by adding
one additional step at the start: Identify the cell with the largest profit and subtract all the other
cell profits from that value. Then replace the cell profits with the resulting values. These values
reflect the opportunity costs that would be incurred by using routes with unit profits that are less
than the largest unit profit. Replace the original unit profits with these opportunity cost solution.
This will be identical to maximizing the total profit.

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For example, suppose in the Harley problem, the cell values had been unit profits instead of unit
costs. Cell B-3 had the largest dollar value: $9. Hence, each cell‘s dollar amount would be
subtracted from 9. For cell A-1, the resulting opportunity cost would have been 9-4 = 5 and so
on. Cell B-3 would have an opportunity cost of 0 making it the most desirable route.

The remainder of the steps for developing an initial feasible solution, evaluation of empty cells,
and reallocation are identical to those used for cost minimization. When the optimal distribution
plan has been identified, use the original cell values (i.e., profits) to compute the total profit for
that plan.

? Dear learner, would you complete the above case by evaluating the assignments? Which
one would you consider the original price or opportunity cost of each cell to calculate the
total profit in the optimal solution?

___________________________________________________________________________
___________________________________________________________________________
_________________________________________________________

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ACTIVITY
1. A transportation problem involves the following costs, supply, and demand.

To
From 1 2 3 4 Supply
1 $5 750 300 450 12
2 00 800
65 400 600 17
0
40
3 700 500 550 11
0
Demand 10 10 10 10

a. Find the initial solution using the northwest corner method, the minimum cell cost
method, and Vogel's Approximation Method. Compute total cost for each.
a. Using the VAM initial solution, find the optimal solution using the modified distribution
method (MODI).
2. Oranges are grown, picked, and then stored in warehouses in Tampa, Miami, and
Fresno. These warehouses supply oranges to markets in New York, Philadelphia, Chicago,
and Boston. The following table shows the shipping costs per truckload ($100s), supply,
and demand.

To
From New York Philadelphia Chicago Boston Supply
Tampa 9 14 12 17 200
Miami 11 10 6 10 200
Fresno 12 8 15 7 200
Demand 130 170 100 150
Because of an agreement between distributors, shipments are prohibited from Miami to
Chicago.
a. Set up the transportation tableau for this problem and determine the initial solution using
the minimum cell cost method.
b. Solve using MODI.
c. Are there multiple optimum solutions? Explain. If so, identify them.
d. Formulate this problem as a linear programming model.
3. Steel mills in three cities produce the following amounts of steel:
Location Weekly Demand (tones)
Bethlehem 130
Birmingham 210
Gary 320
620

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These mills supply steel to four cities where manufacturing plants have the following
demand.
Location Weekly Demand (tons)
1. Detroit 130
1. St. Louis 70
2. Chicago 180
3. Norfolk 240
Shipping costs per ton of steel are as follows

To
From 1 2 3 4
A $14 9 16 18
B 11 8 7 16
C 16 12 10 22

Because of a truckers' strike, shipments are presently prohibited from Birmingham to

Chicago.
a. Set up a transportation tableau for this problem and determine the initial solution.
Identify the method used to find the initial solution.
b. Solve this problem using MODI.
c. Are there multiple optimum solutions? Explain. If so, identify them.
d. Formulate this problem as a general linear programming model.

4. Below is a linear programming problem.

minimize Z = 17x11 + l0x12 + 15x13 + llX21 + 14x22 + l0x23 + 9x31 + 13x32 + llx33 + 19x41 + 8x42
+ 12x43
Subject to
x11 + x 12 + x 13 = 120
x 21 + x 22 + x 23 = 70
x 31 + x 32 + x 33 = 180
x 41 + x 42 + x 43 = 30
x l1 + x 21 + x 31 + x 41 = 200
x 12 + x 22 + x 32 + x 42 = 120
x 13 + x 23 + x 33 + x 43 = 80

a. Set up the transportation tableau for this problem and determine the initial solution
using VAM.
b.Solve using the stepping-stone method.
c.Calculate the optimal allocation and total cost

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Chapter Five
Assignment problems
In the previous chapter, we discussed about the transportation problem. Now we consider
another type of special linear programming problem, called the assignment problem.

Chapter objectives:

Up on completion of this Chapter, the learner will be able to:

 Define assignment model

 Formulate LP model for assignment problems
 Identify areas of application
 Find optimal allocation or solution to the model
 Deal with special cases of the model

? Dear learner, can you make any difference between assignment and transportation problems?
__________________________________________________________________________________
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____________________________________________________

There are many situations where the assignment of people or machines and so on, may be called
for. Assignment of workers to machines, clerks to various counters, salesmen to different sales
areas, service crews to different districts, are typical examples of these. The assignment is a
problem because people posses varying abilities fro performing different jobs and, therefore, the
costs of performing the jobs by different people are different. Obviously, if all persons could do a
job in the same time or at the same cost then it would not matter who of them is assigned the job.
Thus, in assignment problem, the question is how should the assignment be made in order that
the total cost involved is minimized (or the total value is maximized when pay-offs are given in
terms of, say, profits).

A typical assignment problem follows:

Example

A production supervisor is considering how he should assign the four jobs that are
performed, to four of the workers working under him. He want to assign the jobs to the
workers such that the aggregate time to perform the job in the least. Based on the previous
experience, he has the information on the time taken by the four workers in performing
these jobs, as given in below

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Job

Worker A B C D

1 45 40 51 67

2 57 42 63 55

3 49 52 48 64

4 41 45 60 55

Example

A computer centre has got four Expert Programmers. Centre needs four application
programmers to be developed. The head of dept., estimate the computer required by the
respective experts to develop the application programs as follows. Make appropriate
selection of experts.

Program
A B C D
Expert

1 120 100 80 90

2 80 90 110 70

3 110 140 120 100

4 90 90 80 90

THE ASSIGNMENT PROBLEM: Definition

1. The Assignment Problem (A.P) is a special case of Transportation Problem (T.P) under

the condition that the number of origins is equal to the number of destinations,

i.e. m=n

Hence assignment is made on the basis of 1:1

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Number of jobs equal to number of machines or persons.

Each man or machine is loaded with one and only one job.
Each man or machine is independently capable of handling any of the jobs
being presented.
Loading criteria must be clearly specified such as ― minimizing operating time
or ― maximizing profit‖, or ― minimizing production cost‖ or minimizing
production cycle time e.t.c
2.
A.P
The Assignment Problem (A.P.) is a special case of Transportation Problem
(T.P.) in which the number of sources and destinations are the same, and the
objective is to assign the given job (task) to most appropriate machine
(person) so as to optimize the objective like minimizing cost.

Cost Vector (Cij)

Cost vector (Cij) is the cost of assigning ith job (Task) to jth machine (person),

Assignment Vector (Xij) is defined as follows

Xij = 0; If ith job (Task) is not assigned by jth machine (person) or

Xij = 1; If ith job (Task) is assigned to jth machine (person).

Cost Matrix (Cij)

Assignment problem is stated in the form of (n*n) matrix. This is called cost
matrix. This is illustrated as given below.

Cij = cost of assigning ith job to jth machine

(Symbols j = Job (Task) M = Machine (person)

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General Assignment Problem Table

M 1 2 3 … k … n

1 C11 C12 C13 … C1k … C1n

2 C21 C22 C23 … C2k … C2n

3 C31 C32 C33 … C3k … C3k

… … … … … … … …

k Ck1 Ck2 Ck3 … Ckk … Ckn

… … … … … … … …

n Cn1 Cn2 Cn3 … Cnk … Cnn

Effective Matrix
A cost Matrix in A.P. is called an ―Effectiveness Matrix‖ when there is at least
one zero in each row and column. Following is an example of Effectiveness
Matrix.

1 2 3 4

1 0 1 3 4

2 5 0 6 0

3 7 8 0 9

4 0 4 3 8

3. Mathematical Modeling of an A.P.

Let there be ‗n‘ jobs in a manufacturing plant. Let there be ‗n‘ machines to process the
product. A job i (i = 1, 2,…, n) when processed in a machine j (j = 1,2,…, n), it is
assumed to incur a cost of Cij.

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The assignment is made in such a way that one job is associated with one machine (see
assumption). Hence we have the following:

n n
 i  1Xij  1 =  j  1Xij  1

Where: - xij is the assignment- vector discussed earlier

Cij is the cost vector associated with the assignment vector x ij.

Total assignment cost (Z) is, therefore, given by the following:

 
n n
Z= i 1 j 1
Cij * xij

Thus the mathematical formulation of assignment Problem is given as follows:

Minimize

 
n n
Z= i 1 j 1
Cij * xij

Subject to

n
 i  1Xij  1 i = 1, 2, 3… n

n
 j  1Xij  1 j = 1, 2, 3…, n

This special structure of A.P. makes solution much easy compared to the conventional T.P

Remark:

1. It may be noted that assignment problem is a variation of transportation problem with two
characteristics (i) the cost matrix is square matrix, and (ii) the optimum solution fro the problem
would always be such that there would be only one assignment in a given row or column of the
cost matrix.

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2. In assignment problem if a constant is added or subtracted from every element of any row or
column in the given cost matrix then an assignment that minimizes the total cost in one matrix
also minimizes the total cost in the other matrix.

HUNGARIAN ASSIGNEMNT METHOD (HAM)

A method, designed specially to handle the assignment problems in an efficient way, called the
Hungarian Assignment Method, is available, which is based on the concept of opportunity cost.
It is shown in figure 6.1 and discussed here. For a typical balanced assignment problem
involving a certain number of persons and an equal number of jobs, and with an objective
function of the minimization type, the method is applied as listed in the following steps;

Step 1. Locate the smallest cost element in each row of the cost table. Now subtract this smallest
from each element in that row. As a result, there shall be at least one zero in each row
of this new table, called the Reduced Cost Table (Row Reduction).

Step 2. In the reduced cost table obtained, consider each column and locate the smallest element
in it. Subtract the smallest value from every other entry in the column. As a
consequence of this action, there would be at least one zero in each of the rows and
columns of the second reduced cost table (Column Reduction).

Step 3. Draw the minimum number of horizontal and vertical lines (not diagonal ones) that are
required to cover the entire ‗zero‘ elements. If the number of lines drawn is equal to n
(the number of rows/columns) the solution is optimal, and proceeds to step 6. If the
number of lines drawn is smallest than n, go to step 4.

Step 4. Select the smallest uncovered (by the lines) cost element. Subtract this element from all
uncovered elements including itself and add this element to each value located at the
intersection of any lines. The cost elements through which only one line passes
remain unaltered.

Step 5. Repeat steps 3 and 4 until an optimal solution is obtained.

Step 6. Given the optimal solution, make the job assignments as indicated by the ‗zero‘ elements.
This done as follows:

a) Locate a row which only ‗zero‘ element. Assign the job corresponding to this element to
its corresponding person. Cross out the zero‘s, if any, in the column corresponding to the
element, whish is indicative of the fact that the particular job and person are no more
available.
b) Repeat (a) for each of such rows which contain only one zero. Similarly, perform the
same operation in respect of each column containing only one ‗zero‘ element, crossing
out the zero(s), if any, in the row in which the element lies.

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c) If there is no row or column with only a single ‘zero‘ element left, then select a
row/column arbitrarily and choose one of the jobs (or persons) and make the assignment.
Now cross the remaining zeros in the column and row in respect of which the assignment
is made.
d) Repeat steps (a) through (c) until all assignments are made.
e) Determine the total cost with reference to the original cost table.

Example

Solve the assignment problem given in Illustrative Example 1 for optimal solution using HAM.
The information is reproduced in the following table

Time Taken (in minutes) by 4 workers

Job

Worker A B C D

1 45 40 51 67

2 57 42 63 55

3 49 52 48 64

4 41 45 60 55

The solution to this problem is given here in a step-wise manner.

Step 1: The minimum value of each row is subtracted from all elements in the row. It is shown in
the reduced cost table, also called opportunity cost table, given as follows.

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Reduced Cost Table 1

Job

Worker A B C D

1 5 0 11 27

2 15 0 21 13

3 1 4 0 16

4 0 4 19 14

Step 2: For each column of this table, the minimum value is subtracted from all the other values.
Obviously, the columns that contain a zero would remain unaffected by this operation. Here only
the fourth column values would change. The table below shows this.

Reduced Cost Table 2

Job

Worker A B C D

1 5 0 11 14

2 15 0 21 0

3 1 4 0 3

4 0 4 19 1

Step 3: Draw the minimum number of lines covering all zeros. As a general rule, we should first
cover those rows/columns which contain larger number of zeros. The above table is reproduced
in the next table and the lines are drawn.

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Reduced Cost Table3

Job

Worker A B C D

1 5 0 11 14

2 15 0 21 0

3 1 4 0 3

4 0 4 19 1

Step 4: Since the number of lines drawn is equal to 4(=n), the optimal solution is obtained. The
assignments are made after scanning the rows and columns for unit zeros. Assignments made are
shown with squares, as shown in the following table.

Assignment of Jobs

Job

Worker A B C D

1 5 0 11 14

2 15 0 X 21 0

3 1 4 0 3

4 0 4 19 1

Assignments are made in the following order. Rows 1, 3, and 4 contain only one zero each. So
assign 1-B, 3-C and 4-A. Since worker 1 has been assigned job B, only worker 2 and job E are
left for assignment. The final pattern of assignments is 1-B, 2-D, 3-C, and 4-A, involving a total
time of 40+55+48+41=184 minutes. This is the optimal solution to the problem-the same as
obtained by enumeration and transportation methods.

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Example

Using the following cost matrix, determine (a) optimal assignment, and (b) the cost of
assignments.

Reduced Cost Table 1

Job

Machinist 1 2 3 4 5

A 10 3 3 2 8

B 9 7 8 2 7

C 7 5 6 2 4

D 3 5 8 2 4

E 9 10 9 6 10

Iteration 1: Obtain row reductions.

Reduced Cost Table 1

Job

Machinist 1 2 3 4 5

A 8 1 1 0 6

B 7 5 6 0 5

C 5 3 4 0 2

D 1 3 6 0 2

E 3 4 3 0 4

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Iteration 2: Obtain column reductions and draw the minimum number of lines to cover all
zeros.

Reduced Cost Table2

Job

Machinist 1 2 3 4 5

A 7 0 0 0 4

B 6 4 5 0 3

C 4 2 3 0 0

D 0 2 5 0 0

E 2 3 2 0 2

Since the number of lines covering all zeros is less than the number of columns/rows, we modify
the Table 6.13. The least of the uncovered cell values is 2. This value would be subtracted from
each of the uncovered values and added to each value lying at the intersection of lines
(corresponding to cells A-4, D-4, A-5 and D-5). Accordingly, the new table would appear as
shown as follows.

Iteration 3

Job

Machinist 1 2 3 4 5

A 7 0 0 X 2 6

B 4 2 3 0 3

C 2 0 X 1 0 X 0

D 0 2 5 2 2

E 0 X 1 0 0 X 2

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The optimal assignments can be made as the least number of lines covering all zeros in Table
6.14 equals 5. Considering rows and columns, the assignments can be made in the following
order:

i. Select the second row. Assign machinist B to job 4. Cross out zeros at cells C-4 and E-4.
ii. Consider row 4, Assign machinist D to job 1. Cancel the zero at cell E-1.
iii. Since there is a single zero in the row, put machinist E to job 3 and cross out the zero at
A-3.
iv. There being only a single left in each of the first and third rows, we assign job 2 to
machinist A and job 5 to C.
The total cost associated with the optimal machinist-job assignment pattern A-2, B-4, C-5, D-1
and E-3 is 3+2+4+3+9 = 21

Special Issues

When we solve assignment problems, there are cases which are treated differently from the usual
way.

Unbalanced Assignment Problems

The Hungarian Method of solving an assignment problem requires that the number of
columns should be equal to the number of rows. They are equal, the problem is balanced
problem, and when not, it is called an unbalanced problem. Thus, where there are 5 workers
and 4 machines, or when there are 4 workers and 6 machines, for instance, we have
unbalanced situations in which one-to-one match is not possible. In case the machines are in
excess, the excess machine(s) would remain idle and so is the case when men are in excess-
the number of excess people would get an assignment.

In such situations, dummy column(s)/row(s), whichever is smaller in number, are inserted

with zeros as the cost elements. For example, when the given cost matrix is of the dimension
4*5, a dummy row would be included. In each column in respect of this row, a ‗zero‘ would
be placed. After this operation of introducing dummy columns/rows, the problem is solved in
the usual manner.

Example:

A company has 4 machines to do 3 jobs. Each job can be assigned to one and only one
machine. The cost of each job on each machine is given below. Determine the job
assignments which will minimize the total cost.

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Machine

W X Y Z

A 18 24 28 32
Job
B 8 13 17 18

C 10 15 19 22

Constrained/Prohibited/ Assignment Problems

It happens sometimes that a worker cannot perform a certain job or is not to be assigned a
particular job. To cope with this situation, the cost of performing that job by such person is
taken to be extremely large (which is written as M). Then the solution to the assignment
problem proceeds in the manner discussed earlier. The effect of assigning prohibitive cost to
such person-job combinations is that they do not figure in the final solution.

Example:

You are given the information about the cost of performing different jobs by different
persons. The job-person marking X indicates that the individual involved cannot perform the
particular job. Using this information, state (i) the optimal assignment of jobs, and (ii) the
cost of such assignment,

Job

J1 J2 J3 J4 J5

P1 27 18 X 20 21
person

Job

P2 31 24 21 12 17

P3 20 17 20 X 16

P4 22 28 20 16 27

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Solution: - Balancing the problem not assigning a high cost to the pairings P1-J3 and P3-
J4, we have the cost given in the table below.

Job

J1 J2 J3 J4 J5

P1 27 18 M 20 21

P2 31 24 21 12 17
person

Job
P3 20 17 20 M 16

P4 22 28 20 16 27

P5 0 0 0 0 0
dummy

Now we can derive the reduced cost table as shown in table shown below. Note that the cells
with prohibited assignments continue to be shown with the cost element M, since M is defined to
be extremely large so that subtraction or addition of value does not practically affect it. To test
optimality, lines are drawn to cover all zeros. Since the number of lines covering all zeros is less
than n, we select the lowest uncovered cell, which equals 4. With this value, we can obtain the
revised reduced cost table, shown in the final table.

Reduced Matrix

Job

J1 J2 J3 J4 J5

P1 9 0 M 2 3

P2 19 12 9 0 5
person

Job

P3 4 1 44 M 0

P4 6 12 4 0 11

P5 0 0 0 0 0
dummy

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Reduced Matrix

Job

J1 J2 J3 J4 J5

P1 9 0 M 2 3

P2 19 12 9 0 5
person

Job
P3 4 1 4 M 0

P4 6 12 4 0 11

P5 0 0 0 0 0
dummy

Assignment of Job

Job

J1 J2 J3 J4 J5

P1 9 0 M 2 3

P2 15 8 9 0 1
person

Job

P3 4 1 4 M 0

P4 2 8 0 0 X 7

P5 0 0X 0X 0 0 X
dummy

The number of lines covering zeros is equal to 5(=n), hence the optimal assignment can be
made. The assignment is: P1-J2, P2-J4, P3-J5, P4-J3, while job J1 would remain unassigned.
This assignment pattern would cost 18+12+16+20=66 in the aggregate.

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Unique Vs Multiple Optimal Solution

In the process of making assignments, it was stated earlier that we select a row/column with
only a single zero to make an assignment. However, a situation may wherein the various
rows and columns, where assignment are yet to be done, have all multiple zeros. In such
cases, we get multiple optimal solutions to the given problem. In any of the problems
discussed so far, we have not experienced such a situation. Hence, each one of them has had
a unique optimal solution. When a problem has a unique optimal solution, it means that no

other solution to the problem exists which yields the same objective function value (cost,
time, profit e. t. c) as the one obtained from the optimal solution derived. On the other hand
in a problem with multiple optimal solutions, there exists more than one solution which all is
optimal and equally attractive. Consider the following example.

Example:

Solve the following assignment problem and obtain the minimum cost at which all the jobs
can be performed.

Job (cost in ’00 Br.)

Worker 1 2 3 4 5

A 25 18 32 20 21

B 34 25 21 12 17

C 20 17 20 32 16

D 20 28 20 16 27

Solution: This problem is unbalanced since number of jobs is 5 while the number of workers
is 4. We first balance it by introducing a dummy worker E, as shown in table below.

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Balancing the Assignment Problem

Job (cost in ’00 Br.)

Worker 1 2 3 4 5

A 25 18 32 20 21

B 34 25 21 12 17

C 20 17 20 32 16

D 20 28 20 16 27

E 0 0 0 0 0

Step 1: Obtain reduced cost values by subtracting the minimum value in each row from
every cell in the row. This is given in Table below.

Reduced Cost 1

Job (cost in ’00 Br.)

Worker 1 2 3 4 5

A 7 0 14 2 3

B 22 13 9 0 5

C 4 1 4 16 0

D 4 12 4 0 11

E 0 0 0 0 0

Since there is at least one zero in each row and column, we test it for optimality.
Accordingly, lines are drawn. All zeros are covered by 4 lines, which is less than 5 (the order
of the given matrix). Hence, we proceed to improve the solution. The least uncovered value
is 4. Subtracting from every uncovered value and adding it to every value lying at the
intersection of lines, we get the revised values as shown below.

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Reduce cost 2 and Assignment

Job (cost in ’00 Br.)

Worker 1 2 3 4 5

A 7 0 14 6 3

B 18 9 5 0 1

C 4 1 4 20 0

D 0 8 0 0 X 7

E 0 X 0 X 0 4 0 X

The solution given in the reduced cist 2 table is optimal since the number of lines covering
zeros matches with the order of the matrix. We can, therefore, proceed to make assignments.
To begin with, since each of the columns has multiple zeros, we cannot start making
assignments considering columns and have, therefore, to look through rows. The first row
has a single zero. Thus, we make assignment A-2 and cross out zero at E-2.

Further, the second and the third rows have one zero each. We make assignments B-4 and C-
5, and cross out zeros at D-4 and E-5. Now, both the rows left two zeros each and so have
both the columns. This indicates existence of multiple optimal solutions. To obtain the
solutions, we select zeros arbitrarily and proceed as discussed below.

i. Select the zero at D-1, make assignment and cross out zeros at D-3 and E-1 (as both,
worker D and job 1, are not available any more). Next, assign worker E to job 3,
corresponding to the only zero left. Evidently, selecting the zero at E-3 initially would have
the effect of making same assignments.
ii. Select the zero at D-3, make assignment and cross at D-1 and E-3. Next, make assignment
at the only zero left at E-1. Obviously, selecting the zero at E-1 making assignment in the
first place would lead to the same assignments.
To conclude, the problem has two optimal solutions as given below.

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Solution 1 (’00 Br.) Solution 2 (’00 Br.) cost

Worker Job cost Worker Job cost

A 2 18 A 2 18

B 4 12 B 4 12

C 5 16 C 5 16

D 1 20 D 3 20

Job left 3 Job left 1

Total 66 Total 66

Maximization Case in Assignment Problem

In some situations, the assignment problem may call for maximization of profit, revenue,
e.t.c. as the objective. For example, we may be faced with the problem of assignment of
salesmen in different regions in which they can display different qualities in making sales

(reflected in amounts of sales executed by them). Obviously, assignment would be made in

such a way that the total expected revenue is maximized.

For dealing with a maximization problem, we first change it into an equivalent minimization
problem. This is achieved by subtraction each of the elements of the given pay-off matrix
from a constant (value) k. Thus, we may simply put a negative sign before each of the pay-
off values (which is equivalent to subtracting each value from zero). Usually, the largest
value of all values in the given matrix is located and then each one of the values is subtract
from it (the largest value is taken so as to avoid the appearance of negative signs). Then the
problem is solved the same way as a minimization problem is.

Example:

A company plans to assign 5 salesmen to 5 districts in which it operates. Estimates of sales

revenue in thousands of birr for each salesman in different districts are given in the following
table. In your opinion, what should be the placement of the salesmen if the objective is to
maximize the expected sales revenue

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District

Salesman D1 D2 D3 D4 D5

S1 40 46 48 36 48

S2 48 32 36 29 44

S3 49 35 41 38 45

S4 30 46 49 44 44

S5 37 41 48 43 47

Solution: Since it is a maximization problem, we would first subtract each of the entries in
the table from the largest one, which equals 49 here. The resultant data are given in Table
below.

Opportunity Loss Matrix

District

Salesman D1 D2 D3 D4 D5

S1 9 3 1 13 1

S2 1 17 13 20 5

S3 0 14 8 11 4

S4 19 3 0 5 5

S5 12 8 1 6 2

Now, we will proceed as usual.

Step 1: Subtract value in each row from every value in the row. The resulting values are
given in table below.

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Reduced cost Table 1

District

Salesman D1 D2 D3 D4 D5

S1 8 2 0 12 0

S2 0 16 12 19 4

S3 0 14 8 11 4

S4 19 3 0 5 5

S5 11 7 0 5 1

Step 2: Subtract minimum value in each column in reduced cost table 1 from each value in
the column. Test for optimality by drawing lines to cover zeros. These are shown in table
below (in the Reduced cost Table 2)

Reduced cost Table 2

District

Salesman D1 D2 D3 D4 D5

S1 8 0 0 7 0

S2 0 14 12 14 4

S3 0 12 8 6 4

S4 19 1 0 0 5

S5 11 5 0 0 1

Since the number of lines covering all zeros is fewer than n, we select uncovered cell value,
which equals 4. With this, we can modify the table as given in the Reduced Cost Table 3.

Steps 4, 5, 6: Find improved solution. Test for optimality and make assignments.

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Reduced cost Table 3

District

Salesman D1 D2 D3 D4 D5

S1 12 0 0 X 7 0 X

S2 0 10 8 10 0 X

S3 0 X 8 4 2 0

S4 23 1 0 0 X 5

S5 15 5 0 X 0 1

More than one optimal assignment is possible in this case because of the existence of
multiple zeros in different rows and columns. The possible assignments are:

S1-D2, S2-D5, S3-D1, S4-D3, S5-D4; or

S1-D2, S2-D1, S3-D5, S4-D3, S5-D5; or

S1-D2, S2-D1, S3-D1, S4-D4, S5-D3; or

S1-D2, S2-D1, S3-D5, S4-D4, S5-D

Each of these assignment patterns would lead to expected aggregated sales equal to 231 thousand
birr.

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Summary

 The purpose of using an LP model for transportation problems is to minimize

transportation costs, taking into account the origin supplies, the destination demands, and
the transportation costs
 A transportation problem typically involves a set of sending locations, which are referred
to as origins, and a set of receiving locations, which are referred to as destinations.
 For allocation to be feasible, two conditions must be fulfilled:
 A feasible solution is one in which assignments are made in such a way that all
supply and demand requirements are satisfied.
 The number of nonzero (occupied) cells should equal one less than the sum of the
number of rows and the number of columns in a transportation table
 A number of different approaches can be used to find an initial feasible solution. Which
include:
The northwest-corner method.
An intuitive approach/Least cost method
Vogel’s / Penalty Method
 The test for optimality for a feasible solution involves a cost evaluation of empty cells (i.e.,
routes to which no units have been allocated) to see if an improved solution is possible.
Two methods for cell evaluation:
The Stepping-stone method
The MODI method
 The Assignment Problem (A.P.) is a special case of Transportation Problem (T.P.) in which
the number of sources and destinations are the same, and the objective is to assign the
given job (task) to most appropriate machine (person) so as to optimize the objective like
minimizing cost.

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 Activity
1. An electronics firm produces electronic components, which it supplies to various
electrical manufacturers. Quality control records indicate that different employees produce
different numbers of defective items. The average number of defects produced by each
employee for each of six components is given in the following table.

Component
Employee A B C D E F
2
1 30 24 16 26 30
2
12
2 22 28 14 30 20
23
2
3 18 16 25 14 12
2
3
4 14 22 18 23 21
0
2
5 25 18 14 16 16
8
6 32 14 10 14 18 2
0
0

Determine the optimal assignment that will minimize the total average
number of defects per month.
2. The Bunker manufacturing firm has five employees and six machines, and wants to
assign the employees to the machines so as to minimize cost. A cost table showing the
cost incurred by each employee on each machine is given below.
Machine
Employee A B C 0 E F
1 $12 7 20 14 8 10
2 10 14 13 20 9 11
3 5 3 6 9 7 10
4 9 11 7 16 9 10

5 10 6 14 8 10 12

Because of union rules regarding departmental transfers, employee 3 cannot be assigned

to machine E and employee 4 cannot be assigned to machine B. Solve this problem,
indicate the optimal assignment, and compute total minimum cost.

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4. A university department head has five instructors to be assigned to four different courses.
All of the instructors have taught the courses in the past and have been evaluated by the
students. The rating for each instructor for each course is given in the following table (a
perfect score is 100).

Course
Instructor A B C D
1 80 75 90 85
2 95 90 90 97
3 85 95 88 91
4 93 91 80 84
5 91 92 93 88

The department head wants to know the optimal assignment of instructors to courses that
will maximize the overall average evaluation. The instructor who is not assigned to teach a
course will be assigned to grade exams. Solve this problem using the assignment method.

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Unit Six

Net works and Project Management

Unit Objectives

After completing this chapter you should be able to:

 Define what a project is.

 Describe the different types of networks
 Use CPM to evaluate project‘s time
 Discuss the use of PERT in solving problems of project
 Describe the concept of crashing

6.1. Introduction

It is essential to identify the various activities involved in the execution of Projects. The large
and complex projects of any organization involve a number of interrelated activities, which
might be performed independently, simultaneously, or one after the other. Modern management
has designed a network models approach to solve the problem associated with the allocation of
scarce resources of manpower, material, money and time to these interrelated activities.

? Dear learner, can you define the word project from your previous experiences and what you heard
about it

_______________________________________________________________________________________
_______________________________________________________________________________________
________________________________________________________________
A project can be defined as being a series of activities designed to achieve a specific objective,
and which has a definite beginning and a definite end. For network analysis to be of use, the
project must be capable of being split into a number of discrete activities, which relate together
in a logical and well-defined manner.

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Network analysis involves the breaking down of a project into its constituent activities, and the
presentation of these activities in diagrammatic form.

Networks are one of the important tools of management science which easily solve problem by
presenting in visual formats. The shortest route problem, minimum spanning tree and maximal
flow models are useful for solving problems associated with allocation of scarce resources, time,
cost, and material consumption. Moreover, CPM and PERT, which we will discuss later on also
contributed a lot for complex projects management under different situations.

Planning and Scheduling with Gantt chart

? Dear learner, do you know what a Gant chart is? Have you ever used it for any purpose?
_____________________________________________________________________________
_____________________________________________________________________________
________________________________________________________

It is a popular tool for planning and scheduling simple projects. It enables a manager to initially
schedule project activities and, then, to monitor progress over time by comparing planned
progress to actual progress.

In order to prepare the chart, first identify the major activities that would be required. Next, time
estimates for each activity were made, and the sequence of activities was determined. Once they
were to occur.

The obvious advantage of Gantt chart is its simplicity, and this accounts for its popularity.
However, it fails to reveal certain relationships among activities that can be crucial to effective
project management.

Consequently, Gantt charts are most useful for simple projects; say where activities are
simultaneous or where a string of sequential activities is involved. On more complex projects,
Gantt charts can be useful for initial project planning, which then gives way to the use of
network diagrams.

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6.2 NETWORK DIAGRAMS

? Dear learner, could you discuss about importance of network diagrams with your colleagues?

________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________

Drawing a logic diagram is a skill requiring practice and ingenuity, and for major projects may
require two or three attempts before a satisfactory network or diagram is completed correctly.
Computer packages are often used to carry out this process, cutting drastically the time taken.

6.2.1. Basic Components of Network Diagram

i) Network

It is the graphic representation of logically and sequentially connected arrows and nodes
representing activities and events of a project. Networks are also called arrow diagram.

ii) Activity

An activity represents some action and is a time consuming effort necessary to complete a
particular part of the overall project. Thus each and every activity has a point where it ends.

It is represented in the network by an arrow.

Here A is called an activity.

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The straight lines connecting the circles represent a task that takes time or resources; these lines
are called activities. The arrow heads show the direction of the activity.

The beginning and end points of an activity are called events or nodes. Event is a point in the line
and does not consume any resource. A numbered circle represents it. The head event has always
a number higher than the tail event.

Activity

Tail Head

Merge and burst events

It is not necessary an event to be the ending event of the only one activity but can be the ending
event of two or more activities. Such event is defined as a Merge event.

Merge event

If the event happened to be the beginning event of two or more activities, it is defined as a Burst
event.
Burst event

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iii) Preceding, succeeding and concurrent activities

Activities, which must be accomplished before a given event can occur, are termed as preceding
activities. Activities, which cannot be accomplished until any event has occurred, are termed as
succeeding activities. Activities that can be accomplished concurrently are known as concurrent
activities.

This classification is relative, which means that one activity can be proceeding to a certain event,
and the same activity can be succeeding to some other event or it may be a concurrent activity
with one or more activities.

? Dear learner, can you define the following terms?

a) Preceding activity____________________________________________________
b) Succeeding activities_________________________________________________
c) Concurrent activities__________________________________________________

iv) Dummy Activity

Certain activities, which neither consume time nor resources but are used simply to represent a
connection or a link between the events, are known as dummies. It is shown in the network by a
dotted (broken) line.

The purpose of introducing dummy activity is:

 To maintain uniqueness in the numbering system as every activity may have

distinct set of events by which the activity can be identified.

 To maintain a proper logic in the network.

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A
B

Dummy

v) Numbering the Events

After the network is drawn in a logical sequence, every event is assigned a number. The number
sequence must be in such a way that it should reflect the flow of the network. In event
numbering, the following rules should be observed:

i. Event numbers should be unique.

ii) Event numbering should be carried out a sequential basis from

left to right.

iii) The initial event, which has all outgoing arrows with no incoming arrow, is
numbered 0 or 1.

iv) The head of an arrow should always bear a number higher than the one
assigned at the tail of the arrow.

v) Gaps should be left in the sequence of event numbering to accommodate

subsequent inclusion of activities, if necessary.

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6.2.2. Rules for drawing a network

 A complete network should have only one point of entry -the start event, and one point of
exit -the finish event.
 Every activity must have one preceding event -the tail, and one following event - each
activity has one head.

 Several activities may use the same tail event, and the same head event, but no two
activities may share the same head and tail events.
 Time flows from left to right.
 An activity must be completed in order to reach the end-event.
 Dummy activities should only be introduced if absolutely necessary.

6.2.3. Convention for Drawing Networks

In addition to the rules described above, certain conventions are followed for the sake of clarity
and uniformity. There are two slightly different conventions for constructing the net work
diagrams. Under one convention, the arrows are used to designate activities, where as under the
other convention, the nodes are used to designate activities. These conventions are referred to as
activity- on-arrow (A-O-A) and activity – on- node (A-O-N) respectively. In order to avoid
confusion, the discussion here focuses primarily on activity- on- arrow convention. When we use
this convention:

 Networks proceed from left to right -the start event is at the left hand side of the diagram
and the end event at the right hand side

 Networks are not drawn to scale.

 Arrows representing activities should have their head to the right of their tail unless it is
impossible to draw the network in that way.
 Events or nodes should be numbered so that an activity always moves from a lower
numbered event to a higher one. This convention is relatively easy to accomplish in a
simple network but in a complex network it may be necessary to number in tens to allow

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for extra activities to be added without the need for a complete renumbering of the whole
diagram
 Lines that cross should be avoided if possible
 The start event may be represented as a line instead of a circle, particularly when several
activities may begin at the start point.
6.2.4. Common Errors in Drawing Networks

There are three types of errors, which are most common in network construction. These are:

a) Formation of a loop: If an activity were represented as going back in time, a closed loop
would occur. In a network diagram looping error is also known as cycling error. Cycling
(looping) in a network can result through a simple error or while developing the activity plans,
one tries to show the repetition of an activity before beginning the next activity.

A closed loop would produce an endless cycle in computer programmers with a built- in routine
for detection or identification of the cycle. Thus one property of a correctly constructed network
diagram is that it is non-cyclic.

B
A

c) Dangling: No activity should end without being joined to the end event. If it is not so, a
dummy activity is introduced in order to maintain the continuity of the system. Such end-
events other than the end of the project as a whole are called dangling events. All
activities must contribute to the progression of the network or be discarded as irrelevant.

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B
AB E

Dangling
D
CB
B F

c) Redundancy: If a dummy activity is the only activity emanating from an event, it can be
eliminated.

Dummy D F

A
C
E
B

? Dear learner, can you mention and discuss on the common mistakes made in drawing net
work diagrams.

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______________________________________________________________________

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6.3. TYPES OF NETWORK MODELS

Section objective:

Up on completion of this section, the learner will be able to:

 Identify the three models of network

 Explain their importances
 Distinguish among the three models of network
6.3.1. The Shortest Route Problem

The objective of this network model is to obtain the shortest path in which one can minimize
distance, time or costs involved form the origin to destination.

If we have ―n‖ location in the network, the total steps required to solve the shortest route
problem will be n-1. The determination of shortest route involves labeling procedure in which
each node is assigned with two numbers where by the 1st label represent distance from the
original (source) node and the 2nd number refers the node that immediately precede the labeled
node. The labeling procedure begins with the original node where the label will be (O, S) to
indicate the distance is zero and it is starting point.

In the shortest route algorithm nodes are labeled either permanently to indicate the final labeling
or temporary labeling to indicate that the labeling might be revised. Labels remain temporary
until it can be ascertained that no shorter route to a node exists.

The Shortest Route Algorithm

Step 1: Start at node 1 and find the distance from node 1 to other nodes that can be directly
reached form node 1. Temporarily label each of these nodes with their distance from node 1
followed by a comma and a number 1. Then select the node that has smallest distance from node
1, and make its label permanent. This can be done by shading the node.

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Step 2: Find the distance from the new permanent node to each non permanent nodes that can
reached directly form this node. Temporarily label each of these nodes with the cumulative
distance from node 1 if a node has no label. Or, change the earlier assigned temporary label of a
node if its cumulative distance from node 1 through the new permanent node is less than the
previous temporary label. Then permanently label (shade) the node that has the smallest
cumulative distance form node 1.

Step 3: Repeat the preceding steps until all nodes have permanent labels.

Step 4: Identify the shortest route to each node from node 1 by working backward through the
tree according to the nodes label specified on the node.

Example :

Find the shortest route of the following network starting form node one. Travel between nodes
can be in either direction. 13

4 5
7

8 6
3
1

7
1

16 6
4

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1st step

Shade node 1 and temporarily label node 2, 3 and 4, which can be directly reached from node 1.
The label should show the distance from node 1.
(5.1)

2
13
5
4
(O, S) (8, 1)
(
8 7
3 5
1 6

7
1
(7, 1)
16 6
4

2nd Step

Select the node, which has the smallest distance from node 1, and label it permanent and shade
the node (i.e. node 2), then temporarily label nodes that can be directly reached from node 2.
Therefore node 5 is labeled as (18, 2.)

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(5, 1)

2
13
5
4 (18,2)
(O, S)
(8,1)
8
3 5
7 7 6
7, 1
1
1 16
6

3rd Step

Identify the smallest distance from node 1 i.e. from node 3, 4, and 5, which have values of 8, 1,
7,1 and 18,2 respectively. Permanently label and shade node 4, which has the smallest distance
of 7. Identify non-permanent labels; directly reached from this node and temporarily label it by
the distance from node 1.
(5,1)

13

5 (18, 2)
4
(O, S) (8, 1)
8 7 5
3 3
1
6
7
3
(7,1) (23, 4)
1
3
4 16 6

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4th Step

The node with the smallest temporary label is node 3. Thus, its label becomes permanent and the
node is shaded. Node 3 can be reached directly from node 1 through node 4 with the same
distance of 8 (i.e. tie exists). Next, find each non-Permanent label that can be reached directly
from node 3. Node 5 is the only node with a value of (18, 2). However, the cumulative distance
of node 5 from node 1 through node 3 is 15 (i.e. 8+7=15). Because the route through node 3 is
shorter, we update the temporary label of node 5 to reflect this shorter route.

(5,1)
2
13
5 (15, 3)
(O, S)
(18,2)
(8,1) tie
7
1 8 5
3

7 1 6
(7, 1)
(23,4)
4 16
6

5th Step

Identify the node, which have smallest label from the un-shaded nodes or temporary labels. Node
5 with a distance of 15,3 is selected and becomes permanent label.

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(5,1)

2
13
5 4 (15,3)
(8,1) 18,2
(O,S) tie
8 3 7 5
1 6
7 (7,1) 1 (23,4)
16
4 6

6th Step

The only node which is not shaded and can be reached directly from the new permanent node is
node 6. Using this route, its cumulative distance from node 1 would be 15+6=21. Because this is
less than its current table update label to 21, 5 and make permanent & shade it.

2
13 (15, 3)
5
4 18,2
(O,S)
8, 1 tie

8 7 5
1 3 6
(21,5)
7
(7,1)
1 (23,4)

16 6
4

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Permanent label of the final network indicates the shortest distance of each node from node 1
(the starting node). In order to identify the route that yields the shortest distance to a particular
node, it is necessary to work backtracking. The shortest route of the nodes from node 1 to each
node is summarized below.

Node Distance Shortest Route Alternative Route

2 5 1-2 -

3 8 1-3 1-4-3

4 7 1-4 -

5 15 1-3-5 1-4-3-5

6 21 1-3-5-6 1-4-3-5-6

6.3.2. Minimum Spanning Tree Model

The minimum spanning tree problem involves in connecting all of the nodes of a network using
as little of the connecting material as possible. For example, the nodes might represent oil
storage tanks, and lines represent pipeline that are used to carry the oil between tanks. The cost
of the pipeline would be proportional to the length of the pipeline used. Hence, the objective
would be to connect all of the tanks using as little pipeline as possible. Similar activities include
designing communication systems by using minimum amount of wiring, designing highway
networks by using minimal amounts of materials etc.

Algorithm of Minimum Spanning Tree

Step 1. Start at any node, (usually, node 1 is used as the starting point), identify the node that
has shortest distance from node 1 and connect it to the node 1 using a line. If a tie occurs, break
it arbitrarily

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Step 2. Find the shortest distance form the existing portion of the tree (i.e. the connected nodes)
to a node that is not yet connected. Make the connecting line from previously connected tree to
the new node which has shortest distance.

Step 3. Continue until all nodes have been connected to the tree.

Step 4. To find the total (minimal) length of the connecting distance, sum up their values.

Example:

Consider the following network where the nodes represent fuel storage tanks and the connecting
lines represent possible pipeline connections. The numbers on the lines represent the distance in
meters for a particular pipeline connection. Determine the spanning tree for the network storage
tanks and the amount of pipe that will be needed to make the connections.

26
22
6
2 4
24
13 18

27 33
5
1
20 30
32
18

49 7
3

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Arbitrarily choose node 1 as a starting node consider all branches incident on it. They are 1-2 and
1-3 with distance of 13 and 18 respectively. Since 1-2 is the shortest, select this line and connect
it. Now node 1 and 2 are connected.

Next consider all arcs incident either on node 1 or node 2 that connect to other nodes. Such lines
are 1-3, 2-3 and 2-4 with a distance of 18, 20 and 22 respectively. Node 1-3 with a distance of 18
of selected. Now the connected nodes are 1, 2, and 3.

The next step will be to identify the shortest line that is incident to node 3 and 4. These are 3-5,
3-7, 4-5 and 4-6 with a distance of 30, 49, 18 and 26. Since 4-5 is the shortest distance, include it
in the network.

Continue in this manner until all nodes are connected with their shortest distance. The network
solution for the above problem is shown on the following figure

The length of pipe that will be needed for this system can be found by summing the line lengths
(distance): i.e. 18+13+22+18+24+32= 127 meters.

6.3.3. The Maximal Flow Problem

The objective of maximal flow problem is to find the maximum amount of flow of fluid, traffic,
information; etc that can be transported through a capacity limited network. The network is
composed of a source, a sink and connecting arcs of nodes. Flow in each arc is measured by the
amount that can be transported during a unit of time. Flow can be one way only but it is possible
to have two direct arcs between nodes.

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Assumption of maximal flow problem

 It is assumed that there is a single input node (called a source) and a single output node
(called a sink).
 There is flow conservation, i.e. the flow out of any node is equal to the flow into that
node.
 Junctions or nodes cannot serve as a store, i.e. any flow arriving at a node is transferred
immediately to another location.
Algorithm of Maximal flow model

Rule for Maximal Flow

1. Arbitrarily select a continuous path from the source node to the sink node that has a
positive flow capacity. Flow capacity of a path is determined by the smallest branch
capacity along the path chosen in the direction of flow.
2. In this continuous path determine the arc with the minimum flow capacity.
3. Reduce all the quantities along this path by the amount transported (i.e. minimum of
the path)
4. Repeat step 1- step 3 until all paths are used.
5. To get the maximum flow of the network, add all flows of the path.
Example:

Determine the maximum flow through the system of pipeline. The flow is from node 1 to node 4.

10 2 6

2
1 4

3 6

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Step 1. Choose any path that will allow a positive flow from the source (node 1) to the sink
(node

4). the possible paths are 1-2-4, 1-2-3-4, 1-3-4 and 1-3-2-4. Suppose arbitrary select path 1-2-4.

The maximum flow of 10 (Node 1-2) is limited by the 6 capacity of node 2-4. Therefore adjust
the capacity of the total path of 1-2-4 by flow of 6. (i.e. reduce by 6)

2
6

1 4 6
6 6
3

Here, branch 2-4 is fully loaded and no additional flow to this path. But, path 1-2 still accept
additional flow of 4. Therefore, we can use path 1-2-3-4 to pass 2 units through path 1-2-3-4.

2
2 0

0
2+6 1
4
6+2
3
4

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The flow capacity of 1-2-3-4 is fully utilized. i.e. no further positive flow is allowed through this
path. But there is a positive flow through path 1-3-4. Therefore a flow of 3 can be assigned to
this path. The resulting network will be as shown below.

2 0
2

2
3+2+6 4 6+2+3
1

0 1

At this point, no additional flow is possible because no path has a positive flow capacity. Hence
the situation is optimal and maximal flow rate is 11 (6+2+3 = 11).

? Dear learner, please discuss on the different type of network models and their application areas.

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PLANNING TOOLS

Having completed the work breakdown structure, it will be possible to construct a project
network.

6.4.6.2.2. Gantt chart

The Gantt chart is a timeline chart. It clearly shows when each task is to begin, the time it will
take to complete each task, and which tasks will be going on simultaneously. You may want to
use more than one level of Gantt chart.

A Gantt chart, named after its inventor, shows the activities of a project, the same as CPA.
However, these activities are presented as a bar chart with the start and finishing times clearly
identified.

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6.4.6.2.3. Critical Path Method

This is a diagrammatic representation which shows the various activities in a project. The aim
of the CPA is to identify how those activities link together and to show the critical path or the
sequence of activities where a delay will result in the overall project being delayed. An activity is
said to be critical if a delay in its start will cause a further delay in the completion of the entire
project.

The sequence of critical activities in a network is called the critical path. It is the longest path in
the network from the starting event to the ending event and defines the minimum time required
to complete the project. In the network it is denoted by double line. This path identifies all the
critical activities of the project. Hence, for the activity (i,j) to lie on the critical path, following
condition must be satisfied.

a) ESi= LSi

b) EFi = LFj

c) ESj- ESi = LFj- LFi = tij.

ES i, EF j, are the earliest start, and finish time of the event j and i. LS i, LF j, are the latest start,
finish time of the event j and i.

The procedure of determining the critical path

Step 1. List all the jobs and then draw arrow (network) diagrams. Each job indicated by an arrow
with the direction of the arrow showing the sequence of jobs. The length of the arrow has no
significance. The arrows are placed based on the predecessor, successor, and concurrent

relation within the job.

Step2. Indicate the normal time ( tij) for each activity ( i,j) above the arrow which is
deterministic.

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Step 3. Calculate the earliest start time and the earliest finish time for each event and write the

earliest time Ei for each event i. Also calculate the latest finish and latest start times.

Step 4. Indurate the various times namely normal time, earliest time and latest time on the arrow

diagram.

Step 5. Determine the total float for each activity by taking the difference between the earliest
start and the latest start time.

Step 6. Identify the critical activities and connect them with the beginning event and the ending

event in the network diagram by double line arrows. This gives the critical path.

Step 7. Calculate the project duration.

Example:

A small maintenance project consists of the following jobs whose precedence relationship is
given below.

Job 1-2 1-3 2-3 2-5 3-4 3-6 4-5 4-6 5-6 6-7

Duration 15 15 3 5 8 12 1 14 3 14
( days)

Required:

a) Draw an arrow diagram representing the project.

b) Find the total float for each activity.

c) Find the critical path and the total project duration.

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Solution:

i) The network diagram that represents the project is as follows

5 5
15
2

1 1 3
3 4 7
14
15 14
8
3 12
6

ii) The total float for each activity

To determine the total float first the earliest start and finish; late start and finish are computed.

Forward pass calculation

In this we estimate the earliest start and the earliest finish time.

ESj given by:

ESj= Max (ESj, tij)

Where Esi is the earliest time and tij is the normal time for the activity (i,j).

ES1=0

ES2= ES1 + t15= 0 + 15=15

ES3= Max ( ES 2 + t23, Es1 + 13)

= Max ( 15 +3, 0+15) = 18

ES4= ES3+ t34 = 18+8 = 26

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ES5 = Max ( ES 2 + 25, ES4 + t45)

= Max ( 15 +5, 26+1) = 27

ES6 = Max ( ES3+t36, ES4+ t46, ES5+t56)

= Max ( 18+12, 26+24, 27+3)

= 40

ES7 = ES6 + t67 = 40 +14 = 54

Backward pass Calculation

In this we calculate the earliest finish and latest start time Lfi, given by LFi = Min ( LFj-tij)
where LFj is the latest finish time for the event j.

LF7 = 54

LF6= LF7 = t67 = 54-14 = 40

LF5= LS 6-t56= 40-3 = 37

LF4 = Min ( LS5-t45, LS6-t46)

= Min ( 37-1, 40-14) = 26

LF3 = Min ( LF4-t34, LF6-t35)

= Min ( 26-8, 40-12) = 18

LF2 = Min ( LF5 - t25, LF3-t23)

= Min ( 37-5, 18-3) = 15

LF 1 = Min ( LF3-t13, LF2-t12)

= Min ( 18-15, 15-150=0

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The following table given the calculation for critical path and total float.

Earliest Latest
Normal Total float LFj-
Activity Start Finisgh Start Finish
time ESj or LFi-ESi
ESi ESj LFi LFj

1-2 15 0 15 0 15 0

1-3 15 0 15 3 18 3

2-3 3 15 18 15 18 0

2-5 5 15 20 32 37 17

3-4 8 18 26 18 26 0

3-6 12 18 30 28 40 10

4-5 1 26 40 26 40 0

5-6 3 27 30 37 40 10

6-7 14 40 54 40 54 0

iii)The critical path

From the above table we observe that the activities 1-2, 2-3, 3-4, 4-6, 6-7 are the critical
activities.

The critical path is given by, 1-2-3-4-6-7

The total projection is given by 54 days.

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6.4.6.2.4. Project Evaluation and Review Technique (PERT)

PERT is a time-oriented technique designated to cater for projects where it is not possible to
estimate the exact duration of the activity. It uses statistical theory to estimate how long a project
is likely to last, and the probability of completing the project by a particular date.

PERT involves four key activities

PERT

PERT is a further development of the CPA approach which deals with the influence of changes
in time on the cost of a project. In summary, the approach involves four key activities:

1. Estimating the normal duration for an activity and the normal cost associated with this
time period.
2. Estimating the extent to which this normal duration may be reduced and the additional
costs of doing so. The additional costs may arise from the hiring of additional systems
staff or the overtime worked by existing staff. However, the additional costs do not
always relate to human resources and may, for example, involve additional payments to
secure faster methods of delivering the supplies required. Further, not all activities are
capable of being reduced in terms of time, and for those where reductions may be
achieved, the costs may rise more steeply as successively more time is saved on the
activity. In this, the reductions usually plateau at a lower limit in terms of duration and it
proves impossible to secure further reductions.
3. Addressing those activities on the critical path, so that each activity is ranked in terms of
the cost of saving one week of time. Starting with the activity that costs least to save a
week, and moving down the list in terms of the ranking, produces an assessment of the
time that it is possible to save on the total project time and the consequent increase in
total costs for each incremental week saved. The process is complicated by the fact that
initial changes in the duration of activities on the critical path may result in a change in
the direction of the critical path requiring the consideration of the time/cost trade-off of
other activities.

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4. The project managers assessing the potential benefits of saving time on the project
against the incremental costs of doing so. The application of the time/cost trade-off is
not only useful before the start of a project, but can become a useful aid to the project
manager in controlling the project, as it will indicate the costs associated with proposed
changes in future activities and the time that may be saved.
Formulation of PERT Network

The project under consideration can be presented graphically as a network. Such a

presentation is based on the following assumptions: Turban (1991: 520-521)

1. The project can be subdivided into a set of predictable, independent activities, each of
which has a clear beginning and an end.
2. Each activity can be sequenced on to its predecessors or successors. An activity
cannot start until all its predecessors are completed.
3. The network is not cyclical, that is, each activity is executed one and only once
during the life of the project. Any repeating activity is considered a different activity.
4. Activity times may be estimated, either as a single- point estimate (CPM) or as a
three-point estimate (PERT).
5. The duration of the activities is independent of each other.

Computing Algorithm for PERT (Network and Activity Slack Time, Earliest and Latest
Activity Times)

In managing the activities of a project, it is some times useful to know how soon or how late an
individual activity can be started or finished without affecting the scheduled completion date of
the total project.

Four symbols are commonly used to designate the earliest and latest activity times.

ES= The earliest start time for an activity. The assumption is that all predecessor activities are
started at their earliest starting time.

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EF= The earliest Finish the time for an activity. The assumption is that the activity starts on its
ES and takes its expected time, T.

Therefore,

EF= Es + t

LF= The latest finish in time for an activity without delaying the project. The assumption is
that successive activities take their expected time.

LS= The latest start time for an activity without delaying the project.

LS= LF - t

The process of calculating ES and EF times involves calculations in sequence from left to right (
in the network) and is some times referred to as a forward pass of calculations. Thus, the ES of
an activity can be determined by summing the times of all preceding activities where two paths
converge at node the, longest path (time wise) govern.

The process of calculating ES and EF times involves calculations in sequence from left to right
(in the network) and is some times referred to as a forward pass of calculations. Thus, the ES of
an activity can be determined by summing the times of all preceding activities where two paths
converge at node, the longest path (time wise) governs.

Example 1: Computation of earliest start and latest start times for the activities in the net work
model for 2 simple data collection project.

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Sequence Activity

1-2 Design questionnaire

2-3 Prepare questionnaire

3-4 Prepare Time Table

3-5 Select interviewers

3-6 Select target respondents

4-5 Arrange facilities

4-6 Notify the respondents

5-6 Train the interviewers

6-7 Undertake the interview

7-8 Organize the collected data

Computation of Activity Slack Time

Example:

Time estimates for the activities are shown in days on the diagram.

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6 6 5
7
7 8
5
8 4
1 2 3 6 4
4

6
5

Required:

a) Determine the critical path

b) How much slack time is available in the path containing notifying the respondents?

Solution Time

a. 1-2 -3-5-6-7-8 36 days

b. 1-2-3-4-5-6-7-8 38 days

c. 1-2-3-4-6-7-8 32 days

d. 1-2-3-6-7-8 31 days

The length of any path can be determined by summing the expected times of the activities on that
path. The path with the longest time is of particular interest because it determines the projects
completion time. If there are any delays along the longest path, here will be corresponding delays
in project completion time. So to shorten the project completion time one must focus on the
longest path. This longest path is so called the critical path and its activities are referred to as
critical activities.

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Thus, one the above example, the critical path corresponds to path B with a time requirement of
38 days.

A path slack is the difference between the length of a given path and the length of the critical
path. Thus, the slack corresponding to path C is;

Slack = Time for critical path - Time for = 38 - 32 = 6 days

Thus, slacks for the paths can be:

Path Slack

A 38-36 2

B 38-38 0

C 38-32 6

D 38-31 7

In conclusion, the expected length of the project is 44 days.

With regard to identification of the earliest start, earliest finish, latest start and latest finish times,
observing the following diagram is instrumental.

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Activity ES EF LS LF Activity Slack ( LS-ES)

1-2 0 5 0 5 0-0=0

2-3 5 13 5 13 5-5=0

3-4 13 17 13 17 13-13=0

3-5 13 19 15 21 15-13=2

3-6 13 19 20 26 20-13=7

4-5 17 21 17 21 17-17=0

4-6 17 20 23 26 23-17=6

5-6 21 26 21 26 21-21=0

7-8 31 38 31 38 31-31=0

The computation of earliest times involves "forward pass" through the network and the
computation of the latest times involves a "back-ward pass" through the network. Hence for
finding the LS and LF, we must begin with the earliest finish time of the last activities (i.e. the
project length) and use that time as latest finish time for the last activity.

PERT Under Probabilistic Time Estimates

PERT develops both a measure of central tendency (a mean) and a measure of dispersion ( a
standard deviation) of the time required to complete each activity of a project. Having been
provided with these two parameters of the completion time distributions for a project
probabilities of finishing the project in any specified lessen or greater time than the mean time
can be readily determined.

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Probabilistic time estimates can be made with the help of the following three estimates.

1. Optimistic time estimate (to)

It is a time required for the completion of an activity under optimum conditions.

2. Pessimistic time (tp)

It is a time estimate under worst conditions.

3. The most likely time estimate (tm)

It is the most probable amount that will be required.

Thus by making use of the above, one can estimate project completion times as;

Expected time = te = to + 4tm + tp, Where t is time

Standard deviation =  = tp-t0

Variance = 2= ( tp - to)2

36

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Example: Estimated duration:

Activity Optimistic Most likely Pessimistic

1-2 3 5 7

2-3 4 8 12

3-4 2 4 6

3-5 3 6 9

3-6 3 6 9

4-5 2 4 6

4-6 1 3 6

5-6 2 5 8

6-7 2 5 14

7-8 4 7 10

Having been provided with this information, let us try to find the following facts;

a) Find the expected duration and variance of each activity

b) Find the expected duration of the project.

c) Calculate the variance and standard deviation of project length and what is the probability
that the project will be completed:

1. at least 4 days earlier than expected?

2. no more than 4 days later than expected?
d) If the project due date is 41 days what is the probability of meeting the due date.

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Solution

Ze
Expected path
Paths Activity to tm tp To+4tm+tp length ( E the S2
path)
6
4
1-2-3-5-6-7-8 1-2 3 5 7 5 37 /9
16/9
2-3 4 8 12 8

3-5 3 6 9 6 1

5-6 2 5 8 5 1

6-7 2 5 14 6 4

7-8 4 7 10 7 1
4
1-2-3-4-5-6-7-8 1-2 3 5 7 5 39 /9
16
2-3 4 8 12 8 Critical path /9
4
3-4 2 4 6 4 /9
4
4-5 2 4 6 4 /9

5-6 2 5 8 5 1

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Path Activity (2 path)  Path

1-2-3-5-6-7-8 1-2 83 / 9
2-3
3-5
83
5-6 /9
6-7
7-8
1-2-3-4-5-6-7-8 1-2 82 / 9
2-3
3-4
82
4-5 /9
5-6 Project variance
6-7
7-8
1-2-3-4-6-7-8 1-2 285 / 36
2-3
285/
3-4 36
4-6
6-7
7-8
1-2-3-6-7-8 1-2 74 / 9
74/9
2-3
3-6
6-7
7-8
Thus, project variance is 82/9 and standard deviation of 82 / 9 . To assist our calculations, let us
approximate the values as: Variance = 9 and standard deviation as 3.

To respond to last questions the application of Poisson probability distribution is mandatory.

Thus;

The Poisson formula: Z = x-µ where X = specified time

µ = expected time

δ = standard time

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Therefore, to find the probability that the project will be completed at least 4 days earlier than
expected;

Z= X-N = Z= 35-39 = -1.33

δ 3

So, p (Z<-1.33)

= p(X< 35)

= 0.0918

= 9.18%

Z -1.33 0

And the probability that the project will be completed at a no more than 4 days later than
expected is ;

Z= 43-39 = 4/3 = 1.33

P= ( X<43) = P(Z<1.33)

= 0.9082

= 90.82%

N 1.33

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In responding to requirement E, the probability of meeting the due date is;

Z= 41-39 = 2/3 = 0.67

p ( X< 41) = p (Z< 0.67)

= 0.7486

= 74.86%
N 0.67

6.4.6.4. Time – cost Trade Offs – Crashing

Section objectives:

 Define crashing
 Describe purpose of crashing
 Explain basic concepts in crashing
 Elucidate the limitations of crashing
 Illustrate the crashing process

Estimates of activity times for projects are usually made for some given level of resources. In
many situations it is possible to reduce the length of a project by injecting additional resources.

The impetus to shorten projects may reflect effects to avoid late penalties, to take advantage of
monetary incentives for timely completion of project, or to free resources for use on other
projects. In many cases however, the desire to shorten the length of a project merely reflects an
attempt to reduce the indirect costs associated with running the project, such as facilities and
equipment costs, supervision, and labor and presumed costs. Managers often have certain options
at their disposal that allow them to shorten, or crash, certain options at their disposal

that options are using additional personnel or more efficient equipment and relaxing work
specifications. Hence, a project manager may be able to shorten a project, there by realizing a

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savings on indirect project costs by increasing direct expenses to speed up the project. The goal
in evaluating time-and trade-offs is to identify a plan that will minimize the sum of the indirect
and direct project costs.

Crashing -is accelerating project of those critical activities that have the lowest ratio of
incremental cost to incremental time saved

Crash time -is the minimum time in which activity can be completed in case additional remoras
are inducted.

Crash cost -is the total cost of completing an activity in crash time.

The objective of project crash cost analysis is to reduce the total projected completion time (to
avoid late penalties, to take advantage of monetary incentives for timely completion of a project,
or to free resources for we on other the projects), while minimizing the cost of crashing.

Project completion time can be shortened only by crashing critical activities, which follows that
not all project activities should be crashed. However, when activities are crashed, the critical
path may change, requiring further crashing of previously non-critical activates in order to
further reduce the project completion time. In a nutshell, crashing means adding extra resources,
and managers are usually interested in speeding up project at the least additional cost.
In order to make a rational decision about which activities (if any) to crash and the extent of
crashing desirable, a manager needs the following information:

1. Regular time and crash time estimates for each activity (normal)
2. Regular (normal) cost and crash cost estimates for ―
3. A list of activates that are on the critical path

 Note: Activities on critical path are potential candidates for crashing between shortening
non critical activities would not have an impact on total project duration and
activities are crashed according to crashing costs. Crash those activities with the
lowest cost first. Moreover, crashing should continue as long as the cost to crash
is less than the benefit received from crashing. These benefits might take the form
of incentive payments for early completion of the project as part of a government
contract, or they might reflect savings in the indirect project costs, or both

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The general procedure for crashing is:

1. Obtain estimates of regular and crash times and costs for each activity.
2. Determine the lengths of all paths and path slack times.
3. Determine which activities are on the critical path.
4. Crash critical activities, in order of increasing costs, as long as crashing costs do not
exceed benefits.
 Note that two or more paths may become critical as the original critical path becomes
shorter, so that subsequent improvements will require simultaneous shortening of two or
more

paths. In some cases it will be most economical to shorten an activity that is on two or more
of the critical paths. This is true whenever the crashing cost for a joint activity is less than the
sum of crashing one activity on each separate path.

Cost/time = Crash cost - Normal Cost

Normal time – Crash time

Crash Normal
Time

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Example:

Using information below develop an optimum time – cost solution. Assume that indirect project
costs are birr 1000 per day.

Normal Crash Cost/day

Activity
time time to crash

a 6 6 -

b 10 8 500

c 5 4 300

d 4 1 700

e 9 7 600

f 2 1 800

10
6 b 2 End
Start a f
5 9 e
C 4
d

Solution

Step 1. Determine activities on critical path and non critical path and their lengths.

Path Length
1-2-5-6 18
1-3-4-5-6 20 Critical path

2. Rank the critical path activates in order of lowest crashing cost and determine the no of
days each can be crashed.

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Activity Cost/day to crash Available crash day

c 300 1
e 600 2
d 700 3
f 800 1

3. Begin shortening the project, one day at a time, and check after each reduction to see
which path is critical.
4. 1. Shorten activity C by one day – length becomes 19 days
2. Shorten e by one day since shortening c is not possible. – length 18 days.

3. Since there are two critical paths, further improvement will necessitate

shortening one activity on each.

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SUMMARY

Path Activity Crash cost per day)

No reduction possible
1-2-5-6 a
(6-6) = 0
b 500*
f 800
No further reduction
1-3-4-5 c
possible
d 700
e 600*
f 800
Path Length after Crashing ―n‖ days
n =0 1 2 3

18 18 18 17
1-2-5-6

20 19 18 17
1-3-4-5-6
Activity to be
- c d f
crashed
Cost of crashing 300 600 800

Saving 700 400 200

 Note: The next activities to be crashed were ‗e‘ and‗d‘. However, if the two activities were
crashed, the total cost will be greater than (600+ 700 = 1300) the benefit (i.e., 1000/day).
Therefore, we stop the crashing at this point.

Total cost of crashing will be the normal cost of the activities plus the crash cost.

? Dear learner, can you compute the total cost of the above problem?
________________________________________________________________
_____________________________________________________

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Advantage and limitation of PERT

PERT and similar scheduling techniques can provide important services for the project manager.
Among the most useful features are:

 Use of these techniques forces the manager to organize and quantify available
information and to recognize where additional information is needed.
 The techniques provide a graphical display of the project and its major activities.
 The techniques identify (a) activities that should be closely watched because of the
potential for delaying the project and (b) other activities that have slack time and,
therefore can be delayed without affecting the project completion time. This rises the
possibility of reallocating resources in order to shorten the project completion.

No analytical technique is without limitations. Among the more important limitations of

PERT are:

 In developing the project net work, one or more important activities may be omitted.
 Precedence relationships may not all be correct as shown.
 Time estimates usually include a fudge factor: managers feel uncomfortable about
time estimates because they appear to commit themselves to completion within a
certain time period.
 The use of a computer is essential for large projects.

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Summary

 Projects are composed of a unique set of activities established to realize a given set of
objectives during a limited life span. The non routine nature of project activities places a
set of demands on the project manager, which are different in many respects than those
required for the manager of more traditional operations activities, both in planning and
coordination the work.
 PERT and CPM are the two commonly used techniques for developing and monitoring
projects. Although each technique is developed independently and expressly different
purposes, time and practice has erased most of the original differences so that now little
distinction can be made between the two. Either one provides the manager with a rational
approach to project planning along with a graphical display of project activities. Both
depict the sequential relationships that exist among activities and reveal to managers
which activity must be completed on time in order to achieve timely completion of the
project. Managers can use that information to direct their attention towards the most
critical activities.
 In some cases it may be possible to shorten the length of a project by shortening one or
more of the project activities. Typically such gains are achieved by the use of additional
resources, although in some cases it may be possible to transfer resources among project
activities. Generally, projects are shortened either to the point where the cost of
additional reduction would exceed the benefit of additional reduction or to the point
where further improvements, although desirable, would be physically impossible.

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