OPERATIONS RESEARCH

EDITION 2010

OPERATIONS RESEARCH-INDEX

SNO 1

TOPIC ASSIGNMENT PROBLEMS

PAGE NOS

2
3 4 5 6 7

TRANSPORTATION PROBLEMS
LINEAR PROGRAMMING PROBLEMS NETWORK ANALYSIS QUEUEING THEORY GAMES THEORY INVENTORY MANAGEMENT

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

1. An automobiles dealer wishes to put five repairmen to five different jobs. The repairmen have somewhat different kinds of skills and they exhibit different levels of efficiency from one job to another. The dealer has estimated the number of man-hours that would be required for each job-man combination. This is given in the table form as follows: JOB MAN A 1 2 3 4 5 11 9 13 21 14 B 17 7 16 24 10 C 8 12 15 17 12 D 16 6 12 28 11 E 20 15 16 26 15

Find the optimum assignment that will result in minimum man-hours needed.

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

2. A Solicitors firm employ typists for piece-meal work on an hourly basis. There are five typists available and their charges and speeds are different. Accordingly to an earlier understanding only one job is given to one typist and typist is paid for for full hour even if he works for a fraction of an hour. Find the least cost allocation. Typist A B C D E Rate per hour (Rs) 5 6 3 4 4 No of pages Typed per hour 12 14 8 10 11 Jobs P Q R S T No of pages 200 176 150 300 180

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

3. GBMC have decided to carry out repairs of five main roads in the city before the onset of the monsoon. Five contractors have submitted quotations as under. It is the policy of GBMC to award not more than one contact to a contractor. If the objective of the GBMC is to minimize the total cost, how should they award the contracts? How much expenditure should be budgeted? Roadways Contractor C1 R1 18 R2 19 R3 14 R4 25 R5 NB

C2
C3

17
19

18
21

13
18

22
20

24
26

C4
C5

17
14

22
21

15
10

24
NB

27
25 5

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

4. The government solicits five different proposals with the intent of giving one job to each of the companies. The bid amounts in thousands of rupees are given below with an X denoting no bid submitted. Find the optimal assignment to companies such that the total cost is minimum? Proposals

Company
A

1 50

2 85

3 100

4 75

5 80

B
C D E

80
70 X 85

85
80 90 80

95
85 95 90

X
75 70 80

90
80 85 90

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

5. MM consultants have six consultants available to be assigned to do six jobs for clients. However because of technical deficiencies in particular area, consultant B cannot do the job 3 and consultant F cannot do job 6. The cost incurred to complete the available assignments are given the table below: Jobs Consultants A B C D E F 1 7 8 9 6 5 8 2 7 9 10 6 5 4 3 3 11 8 9 10 4 6 5 13 10 12 5 10 8 13 12 10 9 6 11 10 8 13 12 -

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

6. An ad agency wants to allocate its five managers to five rooms of different sizes and shapes. Each room has its own advantages and disadvantages. The managers were asked to rank their preferences amongst the rooms 301,302,303,304 and 305.Find out as to which manager should be assigned to which room, so that their total preference ranking is minimum. Manager M1 302 Room M2 302 M3 303 M4 302 M5 301

303
304 -

304
305 301 -

301
304 305 302

305
304 303 -

302
304 8

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

7. Schedule the training seminars in five working days of the week so that the number of students unable to attend is kept to the minimum. Days Monday Tuesday Wednesday Thursday Friday Leasing 50 40 60 30 10 Portfolio management 40 30 20 30 20 Private Mutual Fund 60 40 30 20 10 Equity Research 20 30 20 30 30

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

8.
Five workers are available to work with the machines and the respective cost in Rs associated with each worker-machine assignment is given below. A sixth machine is available to replace one of the existing machines and associated cost are given below: Machine Workers

M1
1200 400 800 500

M2
300 1100 200 700 800

M3
600 1000 800 900

M4
500 900 600 400

M5
500 700 1200 600

M6
900 300 500 1000 -

W1 W2 W3 W4 W5

Determine the allocation of workers to old machines at minimum cost. Determine whether the new machine can be accepted or not. Determine the savings, if any, in cost.

10

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

9.
A departmental store agency runs five stores located at different parts of Mumbai. Each store is administered by a manager appointed by agency. The agency reimburses the car travel expenses incurred by managers in commuting to work from their residence to the stores to which they are assigned. The basis of reimbursements is: A fixed sum of Rs 300/- per month for repairs/maintenance. A variable amount at the rate of Rs 1.60 per kilometer of travel incurred during the month is paid extra. All stores work for 25 days in a month. The distance in kilometers from a managers residence to the stores is given in the table which follows. Find the optimal assignment of the managers to the stores so that the monthly expenditure to be incurred by the agency on car travel of managers is minimum. Manager A requests the agency to assign him Store S1, which is closest to his residence, as he has been medically advised not to take long journeys. If the agency agrees to this request, how should the present assignments be changed and how much extra will it cost the agency?

11

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

Stores (Distance in kms)

Managers S1 S2 S3 S4 S5

A
B C D E

4
7 8 11 9

10
16 6 12 14

12
16 9 15 19

18
22 19 12 18

17
18 21 13 14

12

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

10.
The Marketing Director of a multinational company is faced with the problem of assigning five Senior marketing managers to six zones. From past experience he knows that the efficiency percentage by sales depends a lot on marketing manager zone combination given in the table below:

Marketing Manager A B C D E

Zones

1
71 79 73 91 88

2
81 83 70 94 89

3
85 67 81 84 77

4
80 74 82 89 87

5
76 72 76 81 67

6
78 83 89 80 74

As a adviser to the company, recommend which zone should be manned by a junior manager so as to maximize the overall efficiency of the company.

13

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

11. An airline that operates seven days in a week has time table shown below. Crews must have a minimum layover of five hours between flights. Obtain the pairing of flights that minimize layover time away from home. For any given pair the crew will be based at the city that

results in smaller layover.

Delhi-Jaipur Flight No 101 102 103 104 Departure 7 A.M. 8 A.M. 1.30 P.M. 6.30 P.M. Arrival 8 A.M. 9 A.M. 2.30 P.M. 7.30 P.M.

14

OPERATIONS RESEARCH-ASSIGNMENT PROBLEMS

Jaipur-Delhi Flight No 201 202 Departure 8A.M. 8.30 A.M. Arrival 9.15A.M. 9.45 A.M.

203
204

12 Noon
5.30 P.M.

1.15 P.M.
6.45 P.M.

For each pair also mention the place where the crew should be based.

15

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

Solve the following transportation problems for the optimum cost: 1. Warehouse Plant

D1
6 4 6 70

D2
5 8 3 90

D3
1 7 9 80

D4
3 2 5 60

Supply

01 02 03 Demand

100 125 75 300

16

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

2.

Warehouse Plant D1 3 2 5 50 D2 1 6 1 60 D3 3 1 4 90 D4 5 3 8 100 Supply

01 02 03 Demand

120 95 85 300

17

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

3.

Warehouse Plant D1 4 1 3 70 D2 5 3 7 80 D3 1 4 6 50 D4 2 5 3 100 Supply

01 02 03 Demand

120 85 95 300

18

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

4.

Warehouse Plant D1 7 4 2 20 D2 3 2 6 50 D3 8 5 5 50 D4 6 10 1 80 Supply

01 02 03 Demand

60 100 40 200

19

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

5.

Warehouse
Plant D1 4 3 1 50 D2 5 6 4 40 D3 3 7 1 90 D4 6 3 2 20 Supply

01 02 03 Demand

50 70 80 200

20

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

6.

Warehouse Plant D1 4 1 2 50 D2 2 4 3 90 D3 1 2 6 35 D4 5 3 1 25 Supply

01 02 03 Demand

50 70 80 200

21

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

7.

Warehouse

Plant

D1
15

D2
24

D3
11

D4
12

Supply

01

5000

02
03 Demand

25
12 3000

20
12 2500

14
22 3500

16
13 4000

4000
7000

22

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

8.

A company has three factories at locations A,B and C which supplies to three warehouses located at D,E and F. Monthly factory capacities are 10,80 and 15 units respectively. Monthly warehouse requirements are 75,20 and 50 units respectively. Unit shipping cost in Rs are given below.

Warehouse

Factory

D 5 6

E 1 4

F 7 6

A B

The penalty cost for not satisfying demand at the warehouse D,E and F are Rs five, Rs three, and Rs two per unit respectively. Determine the optimal distribution for the company using any of the known algorithms.

23

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

9.

Shreyas Construction Company is interested in taking loans from banks for some of its projects P,Q,R,S, T. The rates of interest and the lending capacity differ from bank to bank. All these projects are to be completed .The relevant details are provided in the following table:

Interest rate in percentage for project

Bank
Private Bank Nationalized Bank Co-operative Bank Amount Required (in 000)

Max Credit(in 000) Any Amount 400 250

20 16 15 200

18 16 15 150

18 16 15 200

17 15 13 125

17 16 14 75

Advice the company as to how it should take loans so that the total interest payable will be least.

24

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

10.

A manufacturer must produce a product in sufficient quantity to meet contractual sales in next four months. The production capacity and unit cost of production varies from month to month The product produced in one month may be held for sale in later months, but at an estimated storage cost of Re 1 per unit per month. No storage cost is incurred for goods sold in the same month in which they are produced. There is no opening inventory and none is desired at the end of four months. The necessary details are given in the following table:

Month 1

Contracted Sales 20

Maximum Production 40

Unit Cost of Production 14

2
3 4

30
50 40

50
30 50

16
15 17

How much should the manufacturer produce each month to minimize total cost?

25

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

11.
Given below is an intermediate table in the solution of a transportation problem. With reference to this table, answer the following questions(giving reasons):Is this solution feasible? Is this solution optimal? If not obtain the optimal solution. Does the problem have an alternate optimum solution? If so, find one such solution. What will be the minimum decrease in cost on the routeBD1 before the company starts using this route?

Destinations Factory A B C Demand D1 10 12 8(7000) 7000 D2 8(5000) 13 10(500) 5500 D3 7 6(4500) 12 4500 D4 11 10(1500) 14(1500) 3000

Availability

5000 6000 9000

26

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

12.
A company manufacturing television sets has four plants with a capacity of 125,250,175 and 100 units respectively. The company supplies TV sets to its four showrooms which have demand of 100,400,90 and 60 units respectively. Due to the difference in the raw material cost and the transportation cost, the profits per unit(in Rs) differ which are given in the following table:Showroom Plants A B I 90 100 II 100 105 III 120 130 1V 110 117

C
D

111
130

109
125

110
108

120
113

The demand of showroom I must be supplied from Plant A. By using VAM,plan the production programme so as to maximize profit. Also determine the maximum profit.

27

OPERATIONS RESEARCH-TRANSPORTATION PROBLEMS

13.
A firm owns six facilities at six places. It has manufacturing plants at places A,B and C with daily production of 50,40 and 60 units respectively. At point D,E and F it has three warehouses with daily demands of 20,95 and 35 units respectively. The per unit shipping cost is given in the following table. If the firm wants to minimize its total transportation cost, how should it route its products?

Plant A

Warehouse D 6 E 4 F 1

B
C

3
4

8
4

7
2
28

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS 1. A manufacturing firm produces two products A and B.Each of these products must be processed through two different machines. One machine has 12 hours and the second machine has 8 hours of available capacity. Each unit of product A requires two hours of time on both the machines. Each unit of product B requires three hours of time on the first machine and one hour on the second machine. The incremental profit of Rs 6 per unit of product A and Rs 7 per unit of product B and the firm can sell as many units of each product it can manufacture. The objective of the frm is to maximize profits. The problem is to determine how many units of product A and product b should be produced within the limits of available machine capacities.

29

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

2. A firm makes two types of furniture's: chairs and tables. The profit contribution from each product as calculated by the accounting department is Rs 20 per chair and Rs 30 per table. Both products are processed on the three machines M1, M2 and M3.The time required by each product and total time available per week on each machine are as follows: Machine M1 M2 M3 Chair 3 5 2 Table 3 2 6 Available hours per week 36 50 60

How should the manufacturer schedule his production in order to maximize profit?

30

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

3. A small scale factorys production is limited to two industrial products, Alpha and Beta. The contributions for each product have been computed by its accounting department as Rs 10 for Alpha and Rs 12 for Beta. Each product passes through three departments of the plant. The time requirements for each product and total time available are as follows: Hours required Department Alpha 1 2 3 2 3 1 Beta 3 2 1 Available hours per month 1500 1500 600

Determine the quantities of products Alpha and Beta to be manufactured for maximum contribution to the company.

31

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS 4.

A jobbing shop has three machine groups, namely lathes, milling machines and grinders. It has an idle capacity of 350 hours,500 hours and 150 hours per week respectively. It is offered products A,B and C to be manufactured. Each unit of product A yields Rs 30,product B Rs 12 and product C Rs 15.The time taken by each unit of the three products on different machines are given in table below:

Product A B C

Lathe 5 4 0

Milling 9 3 5

Grinder 3 0 2

How many quantity of product A,B and C must be manufactured every week to yield maximum profit? What capacity of each machine remains idle after making these products? 32

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS 5. Nahar Electronics Limited manufacture transistors in two models A and B whose contribution to profit is Rs 30 and Rs 20 respectively. Each type has to be processed and completed in two main departments viz, manufacturing and assembly. Following table indicates time in hours per set of each category in each department: Product Department A 1 3 B 2 2 Capacity in hours per week 80 120

Manufacturing Assembly

Give your advice to them to manufacture quantity of each product to maximize profit.

33

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS Write the dual linear programming problem of each of the following primals: 1. Max Z= 40 x1+60x2 Subject to

5x1+2x2 20
4x1+32x236 x1,x2 0

2. Min Z=20x1+30x2 Subject to 2x1+3x2 6

1x1+2x2 4
1x1+1x25 x1,x2 0 34

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

3. Max Z=24x1+20x2 Subject to

5x1+4x2 80
3x1+5x2 20 x1,x2 0

4. Max Z= 4x1+8x2+6x3 Subject to 2x1+4x2-1x2 8

-1x1-1x2+1x3 -4
1x1+2x2+3x3 -6 4x1+1x2+2x3 4 x1,x2,x30 35

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

5. Max Z= 2x1+3x2 Subject to 2x1-3x2 10 1x1+2x2 6 1x1 2 1x24 2x1+1x2 20 x1,x20 6. Max Z=6x1+8x2 Subject to 1x1+2x2 40 3x1+2x2 = 20 x1,x2 0

36

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

7. Min Z= 20 x1+40 x2 Subject to 4x1+3x2 60 4x1+5x2 40 1x1+4x2 20 1x1+2x2 = 16

x1,x2 0

8. Max Z= 3x1+2x2+3x3 Subject to 2x1+2x2+1x3 20 2x1-1x2-1x3 12 x1,x2 0, x3 is unrestricted 37

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS SENSITIVITY ANALYSIS

Rule 1:-

Any change in the objective coefficient of a basic variable:

(i) Affects only the coefficients in the index row under the columns of the non basic variables. Each new coefficient equals coefficient in the index row before change plus multiplied by the corresponding coefficient in the row of the variable whose objective function is being changed. (ii) Affects profit.The revised profit equals profit before change plus multiplied by the coefficient in the solution column in the row of the variable whose objective coefficient is being changed,

38

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

Rule2: Any change in the objective coefficient of a non basic variable: (i) Affects only the coefficients in the index row under the column of the variable whose objective coefficient is being changed. The new coefficient equals coefficient before change minus . (ii) Does not affect profit. Rule3: Any change in the availability of a scarce resource:

(i) Affects the values of the solution column of the optimal simplex table. Each value equals old value plus multiplied by corresponding element under the column of the slack variable of the resource whose availability is being changed.
(ii) Affects profit. Revised profit equals old profit plus multiplied by corresponding element in the index row under the column of the slack variable of the resource whose availability is being changed. Rule 4: Any change in the availability of an abundant resource : Affects only the value of the corresponding slack variable in the solution column. Revised value equals value before change plus .

39

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS SENSITIVITY ANALYSIS

1.Pai Engineering Works manufactures three products P1, P2 and P3. All these products pass through three machines m1, M2 and M3.The time required to process each unit of the products on each machine and the available capacity of the machines is as under:

Time required per unit (minutes) Product P1 P2 P3 Available capacity per week (minutes) M1 4 4 4 1200 M2 3 4 3 900 M3 2 1 1 400

The profit per unit to be realised from the manufacture of the products are Rs 20,Rs 12 and Rs 8 respectively.

40

OPERATIONS RESEARCH-LINEAR PROGRAMMING PROBLEMS

How many units of each product be produced to maximize profit. Within what range of profit of each product the solution will remain optimal? Within what range of the capacity of M3 will the solution remain optimal? If the manufacturer can sell another product P4 which requires 3 minutes of machine M1 and 5 minutes each on machine M2 and M3, would it be worthwhile manufacturing P4. Discuss the effect on product mix if product P3 is dropped? What reduction in the consumption per unit of non-basic variable will bring it into the basis?

41

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.1 Draw the network for the following dependencies:

42

OPERATIONS RESEARCH-NETWORK ANALYSIS

43

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.2 The following list of activities must be accomplished in order to complete a construction project: Activity Time (in weeks) Predecessors

A
B C D

3
8 4 2

None
None A, B B

E
F G H

1
7 5 6

A
C E, F D, F

I
J Construct a network diagram for this project.

8
9

G, H
I

Find the critical path and the duration of the project.

44

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.3 The following table lists the activities of a maintenance project.

Activity
1-2 1-3 1-4

Duration (in months)

2 2 1

2-5
3-6 3-7 4-7

4
5 8 3

5-8
6-8 7-9 8-9

1
4 5 3

Draw the project network.

Find the critical path and duration of the project.

45

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.4 Draw the network for the following dependencies and identify critical path. Also find the project duration.

Activity

1-2

1-3

1-4

2-3

2-6

3-5

3-6

4-5

5-6

5-7

6-7

Duration
(Months)

12

46

OPERATIONS RESEARCH-NETWORK ANALYSIS Q.5 The following table gives the activities in a construction project and other relevant information: Activity Preceding Activity 1-2 1-2 1-3, 2-3 2-4, 3-4 Normal Time (Days) 20 25 10 12 5 10 Crash Time (Days) 17 25 8 6 2 5 Normal Cost (Rs.) 600 200 300 400 300 300 Crash Cost (Rs.) 720 200 440 700 420 600

1-2 1-3 2-3 2-4 3-4 4-5

(a) Draw the activity network of the project. (b) Find the Critical Path (c) Using the above information, crash or shorten the activity step by step until the shortest duration is reached. 47

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.6. The table below provides cost and time estimates of seven activities of a project:
Time estimates (weeks) Direct cost estimates (Rs. in thousand) Normal 10 15 20 7 8 10 12 Crash 15 21 24 7 15 16 36

Activity
Normal 1-2 1-3 2-4 3-4 3-5 4-6 5-6 2 8 4 1 2 5 6 Crash 1 5 3 1 1 3 2

(i) Draw the project network corresponding to normal time. (ii) Determine the critical path and the normal duration and normal cost of the project.

(iii) Crash the activities so that the project completion time reduces to 9 weeks, with minimum additional cost.

48

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.7. The Basic Time Data for the jobs in a project are as follows:

Normal Activity A B C D E F G H Time (Days) 3 6 2 4 2 7 4 3 Cost (Rs.) 140 215 160 130 170 165 210 110 Time (Days) 2 5 1 3 1 4 3 2

Crash Cost (Rs.) 210 275 240 180 250 285 290 160

Total

1300

1890
49

OPERATIONS RESEARCH-NETWORK ANALYSIS

The activity (job) dependencies are as follows: (i) A, B, C are starting activities.

(ii) Activities D, F, E can start when A is completed. (iii) Activity G can start after B and D are completed. (iv) Activity H can start after C and E are completed.

(v)

Activities G, F and H are the final activities.

Draw the network and indicate the critical path. What is the total time required to complete the project? If the project is to be completed in 9 days, what is the minimum cost to be incurred? What is the least cost schedule?

50

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.8. Normal and Crash times and costs are given below for a plant expansion project. Activity Preceding Activity Normal Time (Months) Crash Time (Months) Normal Cost (Rs.000) Crash Cost (Rs.000)

A B C D E F G H

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

3 6 3 2 1 5 7 4

2 4 2 1 1 3 6 3

40 200 20 20 20 150 120 160

50 300 35 32 20 190 150 195

If the Company has Rs.7,76,000 available for this project, how should the funds be allocated to minimize overall completion time, to the nearest 0.1 month? What is the minimum completion time?

51

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.9. The details of activities in a building project are given below: Activity Preceding Activity A A C E B,D F,G Normal Time (Days) 9 14 4 6 14 6 5 2 Cost (Rs.) 12000 14000 2000 44000 1600 4000 4000 12000 Time (Days) 6 4 3 4 13 6 3 1 Crash Cost (Rs.) 18000 24000 2400 56000 1800 4000 4800 14000

A B C D E F G H

Find the minimum (crashed) schedule using CPM Technique. 52

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.10. List of activities for erecting a canteen in a factory is given below with other relevant details. Job A must precede all others while Job E must follow others. Apart from this, other jobs can run concurrently. Code Normal Duration (Days) A B C D E (i) (ii) 5 6 4 5 3 Cost (Rs.) 3000 1200 1000 1200 1600 Crash Duration (Days) 4 2 3 3 3 Cost (Rs.) 4000 2000 1800 2000 1600

Draw the network and identify critical path. Crash the network fully to find out minimum duration.

(iii) If indirect costs are Rs.300 per day, find the time-cost trade-off for the project. 53

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.11. The table below shows jobs, their normal time and cost as well as crash time and cost for a project. Job 1-2 1-3 2-3 2-4 3-4 3-5 4-6 5-6 Normal Time (Days) 6 8 4 3 Dummy 9 10 3 Cost (Rs.) 1400 2000 1100 800 900 2500 500 Crash Time (Days) 4 5 3 2 6 6 2 Cost (Rs.) 1900 2800 1500 1400 1600 3500 800

Indirect cost for the project is Rs.300/- per day. (i) ( ii) Draw the network of the project and identify the critical path. Using the above data, find the different minimum cost schedules between normal and crash points to arrive at the optimum duration and its associated cost.

54

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.12. The data for PERT network is displayed in the table. Determine the critical path and the expected duration of completion of the entire project. Give answers to the following: (i) What is the probability that the project duration will exceed 60 days? (ii) (iii) What is the chance of completing the project between 45 days and 54 days? If it becomes known later that the duration of the three time estimates for activity 4-6 has to be revised to 14-20-32, what impact does this have on project completion time? What is the probability that the project can now be completed before 46 days? Activity Nodes 1-2 1-3 1-4 2-3 2-5 3-4 3-6 4-6 5-6 Time Duration (Days) a 2 6 6 2 11 15 3 9 4 m 4 6 12 5 14 24 6 15 10 b 6 6 24 8 23 45 9 27 16

(a) Optimistic time

(m) Most likely

(b) Pessimistic

55

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.13. The following table gives the relevant data of the activities in a PERT project. (i) Draw an arrow diagram of the project. (ii) Calculate the expected duration and variance of the critical path. (iii) Assess the probability that the project will take more than 41 days. (iv) What is the probability that project will be completed in 31 days or less time. Activity Optimistic 1-2 7-8 2-3 4-5 3-5 5-8 1-6 2-4 6-7 3 4 6 3 5 1 2 2 3 Duration (Days) Most Likely 6 19 12 6 11 4 5 5 9 Pessimistic 15 28 30 15 17 7 14 8 27

56

OPERATIONS RESEARCH-NETWORK ANALYSIS

Q.14. A project is characterized by the following activity time: Activity 1-2 1-3 2-4 3-3 3-5 4-5 4-6 5-6 Optimistic Time To Days 1 3 4 9 1 10 5 5 Pessimistic Time To Days 5 7 8 11 5 20 13 9 Most Likely Time To Days 3 5 6 10 3 12 6 5.5

(a) Find the critical path and the project completion time.
(b) (c) (d) Find the standard deviation of the distribution of the expected project length. What is the probability that the project will be completed in 35 days? What is the expected project completion time, if you are allowed to qualify the same with a chance of 95%?

57

OPERATIONS RESEARCH-MRP TECHNIQUE

WEEKS 1 1. Skate board assembly requirement LT = 2 weeks order placement 2 3 4 5 100

2. Fibreglass board requirement L.T. = 1 week order placement

3. Wheel subassembly requirement L.T. = 2 weeks order placement. Wheel structure requirement L.T. = 1 week order placement. 4. Wheels requirement. L.T. = 1 week order placement.

58

OPERATIONS RESEARCH-MRP TECHNIQUE

WEEKS 1 1. Skate board assembly Gross requirement on hand 20 Net requirement Order release 2 3 4 5 6 150

2. Fibreglass board
3. Wheel subassembly 4. Wheel structure 5. Wheels

Gross requirement on hand 30 Net requirement Order release

Gross requirement on hand 40 Net requirement Order release Gross requirement on hand 50 Net requirement Order release Gross requirement on hand 500 Net requirement Order release

200
225

59

OPERATIONS RESEARCH-QUEUEING THEORY

Q.1 Customers arrive at a banking office window being manned by a single individual at a rate of 25 per hour. The time required to serve a customer has exponential distribution with a mean of 120 seconds. Find all operating characteristics of the queueing system. Q.2 On an average 10 customers arrive per hour at the stamp counter of a post-office, the number of arrivals being poisson distributed. The clerk takes on an average 3 minutes per customer, the time following a negative exponential distribution. Customers follow FIFO queue discipline and any number may join the system. (A) Find : i) the probability of the clerk being idle,

ii) the average number of customers in the system and queue, iii) the mean time spent by a customer in the queue and system. (B) If in part (A) the clerk adopts a Work-to-Rule policy and takes on an average 4 minutes per customer. Find the waiting time of a customer in the queue and system now. 60

OPERATIONS RESEARCH-QUEUEING THEORY

Q.3 On average customers arrive at a check-out point in a supermarket every 3 minutes. The single cashier is capable of serving on average 30 customers per hour. Service times and inter-arrival times follow a negative exponential distribution. (a) What is the probability of a customer arriving and having to wait for service?

(b) What is the probability of a customer arriving and finding at least one customer already at the check out?
(c) What is the average number of customers at the check-out at any moment?

(d) What is the length of time that a customer would expect to spend in the system?
(e) What is the average number of customers at the check-out who are not being served? 61

OPERATIONS RESEARCH-QUEUEING THEORY

Q.4 A departmental store has a single cashier. During the rush hours, customer arrive at the rate of 20 customers per hour. The average number of customers that can be processed by the cashier is 24 per hour. Assume that the conditions for use of the single channel queueing model apply. Find: (a) The utilization parameter. (b) The probability that the queueing system is idle. (c) The average time that the cashier is free on a 10-hour working day. (d) The expected number of customers in the store. (e) The expected number of customers waiting for cashiers service.

(f) The average length of queues that have at least one customer.
(g) The expected time a customer would spend in the queue. (h) The expected time a customer would spend in the store. 62

OPERATIONS RESEARCH-QUEUEING THEORY

Q. 5 In a bank with a single server, there are two chairs for waiting customers. On an average one customer arrives every 10 minutes and each customer takes 5 minutes for getting served. Making suitable assumptions, find:
(a) Probability that an arrival will get a chair to sit down. (b) Probability that an arrival will have to stand. (c) Expected waiting time of a customer. Q.6 A coin-operated telephone is installed in a canteen for the use of the staff. On average 8 people per hour use the phone and their calls last 3 minutes. The staff association think that enough use is made of the phone to justify the installation of a second instrument, but the telephone company say that they will only do this when they are convinced that the staff would have to wait on average for at least 3 minutes to use the phone. Assuming that all calculations are based on simple queueing theory, what rate of use will have to be achieved before the need for a second telephone is justified? 63

OPERATIONS RESEARCH-QUEUEING THEORY

Q. 7

On average 96 patients per 24 hours require the service of an emergency clinic. Also, on average, a patient requires 10 minutes of active attention. Assume that the facility can handle only one emergency at a time. Suppose that it costs the clinic Rs.400 per patient treated to obtain an average servicing time of 10 minutes and that each minute of decrease in this average time would cost Rs.50 per patient treated. How much would have to be budgeted by the clinic to decrease the average size of the queue from 1 1/3 patients to patient.

64

OPERATIONS RESEARCH-QUEUEING THEORY

Q. 8 In the Central Railway Station, 15 computerised reservation counters are available. A customer can book his/her ticket in any train on any day in any one of these computerized reservation counters. The average time spent by each clerk is 5 minutes. Average arrivals per hour during three types of activity periods have been calculated and customers have been surveyed to determine how long they are willing to wait during each type of period. Type of period Peak Normal Low Arrivals per hour 110 60 30 Customers Acceptable waiting time 15 minutes 10 minutes 5 minutes

Making suitable assumptions on this queueing process, determine how many counters should be kept open during each type of period.

65

OPERATIONS RESEARCH-QUEUEING THEORY

Q. 9 A duplicating machine in an office is used by the secretaries to make copies. The average rate of service is 10 jobs/hour. Generally duplicating jobs come up randomly at 7 jobs/hour, yet queues have been noticed at the machine. If the secretaries time cost Rs.30 per hour, determine: (a) Machine utilization. (b) Percentage of time a secretary coming for duplication has to wait. (c) Average time spent in the system. (d) Average cost per day towards waiting for and operating the machine. Q. 10 The XYZ Corporation is considering leasing 1 of 2 possible duplicating machines. The mark I is capable of duplicating 20 jobs per hour at a cost of Rs.500 per day. Alternatively, the Mark II can duplicate 24 jobs per hour at the cost of Rs.800 per day. The duplicating centre is open 10 hours a day with an average arrival of 18 jobs per hour. The duplication is performed by employees randomly arriving from various departments whose average hourly wage is Rs.50. Should the company lease Mark I or Mark II? 66

OPERATIONS RESEARCH-GAMES THEORY

Games Theory deals with such problems where actions and interactions of competing firms gives rise to conditions of business conflict (i.e., competitive situations). Typical examples of competitive situations are: (i) Firms trying to snatch each others market share.

(ii) Military attacks.

(iii) Selection of best advertising media. Terminology of Games Theory

(i) Players :
The participants in the game who act as decision-makers are called players. (ii) Strategies : A finite number of possible courses of action available to a player are called strategies. 67

OPERATIONS RESEARCH-GAMES THEORY

(iii) Play : A play occurs when each player selects one of his strategies. (iv) Pay-off : Every combination of strategies of players determines an outcome called pay-off. (v) Pay-off matrix : The gains resulting from a game if presented in the form of a table is called pay-off matrix.

(vi) Maximin :
A maximum element among the row minima is called maximin.

68

OPERATIONS RESEARCH-GAMES THEORY

(vii) Minimax : A minimum element among the column maxima is called minimax. (viii) Saddle Point : A saddle point is that element of the matrix which represents the maximin value of a player and minimax value of his opponent. (ix) Value of the game : The value of the game is the expected gain to a player if he and his opponent use their best strategies.

69

OPERATIONS RESEARCH-GAMES THEORY

TYPES OF GAMES

Two-person game

Multiple-person game

Two-person zero sum game

Two-person non-zero sum game

Pure strategy game

Mixed strategy game

2 x 2 game

2 x n or mx2 game

mxn game

70

OPERATIONS RESEARCH-GAMES THEORY

PURE STRATEGY GAMES Pure strategy games are those in which players stay with one strategy throughout the game. 1. Find the optimal strategies of X and Y in the following game. Also find value of the game. Y 1 1 2 X 3 9 6 -2 2 3 5 4 3 1 5 3 4 8 6 3 5 0 7 8

4
5

5
0

6
1

2
3

2
4

1
3

71

OPERATIONS RESEARCH-GAMES THEORY

PURE STRATEGY GAMES 2. Solve the following game to determine the optimal strategies for M and N. Also obtain the value of the game. N 3 1 2 0

6
M 4 6

7
5 2

4
4 2

6
6 1

72

OPERATIONS RESEARCH-GAMES THEORY

Mixed Strategy Games

Games without saddle point are called Mixed Strategy Games. Players in the mixed strategy games need to play more than one strategy to optimize their gains (or losses). The strategies to be followed and the proportion of time each strategy should be played can be determined by the players in advance of the game. Mixed strategies are advantageous since opponent is always kept guessing.
Solve the following two persons 2x2 mixer strategy games: B (i) A 10 7 Y (iii) X -7 -5 -4 -7 73 5 8 (ii) M 1 N -4

-4

OPERATIONS RESEARCH-GAMES THEORY

Solve the following 2 persons 2 x 2 or m x 2 game by dominance method:

B 6 (i) A -1 4 5 1 9 2 -2 6

Management (ii) 10 13 15

Union

6
3

9
6

16
12

74

OPERATIONS RESEARCH-GAMES THEORY

Solve the following 2 persons 2 x 2 or m x 2 game by dominance method: B 6 (i) A -1 4 5 1 9 2 -2 6

Management (ii) Union 10 6 3 13 9 6 15 16 12

(iii) A and B play a game in which each has three coins: a 5 paise, a 10 paise and a 20 paise coin. Each player selects a coin without the knowledge of the others choice. If the sum of the coins is an odd amount, A wins Bs coins and if the sum is even, B wins As coins. Find the best strategy for each player and the value of the game. 75

OPERATIONS RESEARCH-GAMES THEORY

(iv) Two firms F1 and F2 make colour and black and white television sets. F1 can make either 300 colour sets in a month or an equal number of black & white sets and make a profit of Rs.200 per colour set and Rs.150 per black & white set. F2, on the other hand, makes either 600 colour sets or 300 colour and 300 black & white sets, or 600 black & white sets per month. It also has the same profit margin on the two sets as F1. Each month there is a market of 300 colour sets and 600 black & white sets and the manufacturers would share market in the proportion in which they manufacture a particular type of set. Write the pay-off matrix of F1 per month. Obtain F1 and F2s optimal strategies and value of the game. Solve the following 2 persons 2xn or mx2 game by sub-game method. B (i) A 4 3 2 2 8 12 76 (ii) X -2 5

Y
0 2 7 -1

OPERATIONS RESEARCH-GAMES THEORY

Limitations of Games Theory

o
o o

Rarely the managerial decisions are taken in an environment of two parties.

The competing parties of the game in actual situation neither have equal information nor they have equal intelligence. The pay-offs in the game matrix are extremely difficult to establish.

o
o

Games theory assumes that the gain of one player is the loss of other player. Many a time it is not so. There may be situations when both parties can earn.
Strategies in real life situations unlike those in game theory are played for a fairly long time.

77

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

1. Using the following data, obtain the EOQ and the total cost associated with the policy of ordering quantities of that size.

Annual Demand= Rs 20,000

Ordering cost= Rs 150 per order Inventory carrying cost= 24% of average inventory value 2. A factory follows an EOQ system for maintenance stocks of one of its component requirements. The annual demand is for Rs 24,000 units, the cost of placing order is Rs 300, the component cost is Rs 60 per unit. The inventory carrying cost is 24%.

Find the optimal interval for placing orders, assuming a year equivalent to 360 days.
If it is decided to place only one order per month, how much extra cost would the factory incur per year as a consequence of this decision?

78

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

3.
A manufacturing company has determined from an analysis of its accounting and production data for its certain part that (a) its demand is 9000 units per annum and is uniformly distributed over the year, (b) its cost is Rs 2 per unit, (c) the inventory carrying charge is 9% of the inventory value.

Further, it is known that the lead time is uniform and equals working days, and that the total working days in the year are 300.
Determine: The economic order quantity; The optimum number of orders per annum; The total ordering and holding cost associated with the policy of ordering an amount equal to EOQ; The re-order level; The number of days stock at re-order level; The length of the inventory cycle; The amount of savings that would be possible by switching to the policy of ordering EOQ determined in (a) from the present policy of ordering the requirements of this part thrice a year; and The increase in the total cost associated with ordering (i) 20% more, and (ii) 40% less than EOQ.

79

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

4.
Yogesh keeps his inventory in special containers. Each container occupies 10 sq ft of store space. Only 5,000 sq ft of space is available. The annual demand for the inventory item is 9,000 containers, priced at Rs 8 per container. The ordering cost is estimated at Rs 40 per order, and the annual ordering cost amount of 25% of the inventory value. Would you recommend to Yogesh to increase his storage space? If so, how much should be the increase?

5.
A wholesaler supplies 30 stuffed dolls each day to various shops. Dolls are purchased from the manufacturer in lots of 120 each at Rs 1,200 per lot. Every order incurs a handling charge of Rs 60 plus a freight charge of Rs 250 per lot. Multiple and fractional lots can be ordered, and all orders are met the next day. The incremental cost is Rs 0.60 per year to store a doll in inventory. The wholesaler finances inventory investments by paying its holding company 2% monthly for borrowed funds. How man dolls should be ordered at a time in order to minimize the total annual inventory cost? Assume that there are 250 weekdays in a year. How frequently should he order ?

80

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

6. A manufacturing company has a contract to supply 5,000 units of an item per year to a dealer. For this item, the company estimates that the ordering cost is Rs 150 every time that an order is made while the carrying cost per annum is reckoned to be 20% of the unit price. The company is negotiating with a dealer who offers to give the following quantity discount.

Order size
Less than 1,000 1,000-2,999 3,000-4,999 5,000 or more

Price per unit (Rs)

500 450 400 350

Recommend to the company the best inventory policy with regard to this item.

81

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

7.
A company uses 8,000 units of aproduct as raw material, costing 10 per unit. The
administrative cost per purchase is Rs 40. The holding cost is 28% of the average inventory. The company is following an optimal purchase policy and places orders according to the EOQ. It has been offered a quantity discount of one per cent if it purchases its entire requirement only four times a year. Should the company accept the offer of quantity discount of one per cent? If not, what minimum discount should the company demand?

8.
A manufacturing company needs 2,500 units of a particular component every year. The company buys it at the rate of Rs 30 per unit. The order processing cost for this part is estimated at Rs 15 and the cost of carrying a part in stock comes to about Rs 4 per year. The company can manufacture this part internally. In that case, it saves 20% of the price of the product. However, it estimates a set-up cost of Rs 250 per production run. The annual production rate would be 4,800 units. However, the inventory holding cost remains unchanged. Determine the EOQ and the optimal number of orders placed in a year. Determine the optimum production lot size and the average duration of the production run. Should the company manufacture the component internally or continue to purchase it from the supplier?

82

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

9.
An aircraft uses high tensile bolts at an approximately constant rate of 50,000 numbers per year. The bolts cost is Rs 20 each and the purchase department estimated the cost at Rs 200 to place an order. The opportunity cost on working capital is 20% per year. No shortages are allowed. How frequently should orders be placed and what is economic order quantity? If orders could be executed only once in two months, the ordering quantity would be higher than the optimal quantity. By this what would be the percentage change in the total relevant cost? The company finds, to its error, that the cost of placing an order was Rs 5,000 and carrying cost was 15% per year and not the earlier data, how much was the company losing per year on inventory, because of imperfect information? Working on the new ordering cost and carrying cost, the company receives the following offer from the supplier: Upto 20,000 pieces per order, the price is Above 20,000 pieces up to 30,000 Above 30,000 pieces up to 45,000 Above 45,000 pieces Should they make use of this offer? If the entire requirement has to be bought in a single order, what should be justifiable unit price offer to the company? Rs 20 per unit Rs 19.50 per unit Rs 19.25 per unit Rs 19 per unit

83

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

10.
The annual demand for a component is 2,08,000 units at a steady weekly rate of 4,000 units. An appropriate formula for calculating the economic batch quantity for production of a component which is being used (at the rate of s) and produced (at the rate of r per week) at the same time is

EBQ=

2ACo
___________

(1-s/r)ip
_____

The initial cost of installing the line for producing the component was Rs 6,000 for a maximum production capacity of 8,000 per week. The operating cost at full capacity is Rs 100 per week for labour, Rs 600 per week for material, Rs 300 per week for variable overhead and Rs 250 per week for fixed overhead. The cost of preparing the production order, producing drawings is Rs 40 each time production is required. Storage cost including interest has been calculated at Rs 2 per unit per annum. Calculate the most economic quantity that should be produced each time the line is set up. Advice the management if it now thinks that there is an opportunity to produce special one off order for 50,000 components for delivery in six months time. Your answer should consider quantitative and qualitative factors.

84

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

11.
A dealer supplies you the following information with regard to a product dealt in by him: Annual demand Ordering cost : 10,000 units : Rs 10 per order

Inventory carrying cost : 20% of the value of inventory per year Price : Rs 20 per unit

The dealer is considering the possibility of allowing some back-order (stock out) to occur. He has estimated that the annual cost of back-ordering will be 25% of the value of inventory. What should be the optimum number of units of the product he should buy in one lot? What quantity of the product should be allowed to be back-ordered, if any? What should be the maximum quantity of inventory at any time of the year?

Would you recommend to allow back-ordering? If so what would be the annual cost saving by adopting the policy of back-ordering?

85

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

12.
The demand for an item is deterministic and constant over time at 600 units per year. The item cost is Rs 50 per unit and the cost of placing an order is estimated to be Rs 5. The inventory carrying cost is 20% and the shortage cost is Re 1 per unit per month. Find the optimal ordering quantity if stock outs are permitted and the units can be backordered at the shortage cost indicated. What will the company lose if stock outs are permitted?

13.
You are given the following information in regard to an item: Annual usage = 20,000units

Ordering cost
Carrying cost Unit cost Lead time

=Rs 160 per order

= 20% of the average inventory investment = Rs 2 =10 working days

Total working days

= 250 per annum

It is observed in past that the demand during lead time has been upto maximum level of 150 units per day. Keeping this level in mind, what safety stock would you recommend? Also determine (a) the re-order level when the safety stock level suggested by you is kept in stock, (b) average level of inventory stock held, and (c) the ordering and carrying cost associated with this fixed order inventory policy?

86

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

14. For a Fixed Order Quantity System, find out the various parameters for an item with the following data:

Annual consumption -10,000 units, cost per unit-Re 1, set up cost-Rs 12 per production run, the inventory carrying cost-Re 0.24 per unit, Past lead times:15 days,25 days, 12 days, 14 days, 30 days, 17 days.
15. Daily demand for a product AX-303 is normally distributed with mean equal to 60 units and a standard deviation of 6 units. The lead time is constant at 9 days (working). The cost of placing an order is Rs 20 and the annual ordering cost is 20% of the unit price of Rs 10. A 95% service level is desired for the customers, who place orders during the re-order period. You are requested to determine the order quantity and the re-order level for the item in question, assuming that there are 300 working days during the year. 87

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

16.
CD Ltd sells an electric motor but finds that it runs out of stock on occasions and thus loses the contribution on missed sales. The following information is available: Estimated demand Purchase price Rs 12,000 per year Rs 100 each

Selling price
Lead time Cost of holding motor EOQ

Rs 155 each
5 days guaranteed Rs 20 per year 1,200 motors

The company works five days in a week for 48 weeks in a year. The demand figures for the last 27 weeks are given in the table below:-

Motors sold No of days

30

40

50

60

70

80

90

Total

10

20

50

30

15

135

At present, CD Ltd uses a re-order level of 250 motors and does not carry any safety stock because of the guaranteed delivery time. Ideally, it wishes to satisfy customers on an average at least 95% of the time while minimizing the associated cost. You are required To estimate the annual stock-out cost of using the present re-order level;

To calculate what re-order level would enable the company to meet its 95% requirement.

88

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

17. Your companys experience of being out-of-stock in respect to key items is as follows:
Stock out (No of units) 2,000 1,600 1,000 400 200 0 Total Number of Times 4 8 12 16 40 320 400

Assume that the stock out cost is Rs 100 per unit. The carrying cost of inventory is Rs 50 per unit. Determine the optimal level of stock out inventory (safety stock).

89

OPERATIONS RESEARCH-INVENTORY MANAGEMENT

18. Perform ABC analysis using the following data:

Item 1 2 3 4

Units 700 2,400 150 60

Unit price Item (Rs) 5.00 3.00 10.00 22.00 7 8 9 10

Units 6,000 300 30 2,900

Unit price(Rs) 0.20 3.50 8.00 0.40

5
6

3,800
4,000

1.50
0.50

11
12

1,150
410

7.10
6.20
90

91

Illustration : For Z=1.96, shaded area is .4750 out of total area of 1