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OPERATIONS RESEARCH 1

Operations research (OR) is an analytical method of problem-solving and decision-


making that is useful in the management of organizations. 

It is the application of scientific and especially mathematical methods to the


study and analysis of problems involving complex systems. — called also operational
research.

 Employing techniques from other mathematical sciences, such as modeling, 


statistics, and optimization, operations research arrives at optimal or near-optimal
solutions to complex decision-making problems.

 Operations research is often concerned with determining the extreme values of


some real-world objective: the maximum (of profit, performance, or yield) or minimum
(of loss, risk, or cost). Originating in military efforts before World War II, its techniques
have grown to concern problems in a variety of industries.

 
 Historical Origin and Development
 Operations Research is a ‘war baby’. It is because, the first problem attempted to
solve in a systematic way was concerned with how to set the time fuse bomb to be
dropped from an aircraft on to a submarine. during the Second World War.

  The military management in England invited a team of scientists to study the


strategic and tactical problems related to air and land defense of the country. The
problem attained importance because at that time the resources available with
England was very limited and the objective was to win the war with available
meager resources. The resources such as food, medicines, ammunition,
manpower etc., were required to manage war and for the use of the population of
the country.
Purpose:

1. It was necessary to decide upon the most effective utilization of the available
resources to achieve the objective.

2. It was also necessary to utilize the military resources cautiously. Hence, the
Generals of military, invited a team of experts in various walks of life such as
scientists, doctors, mathematicians, business people, professors, engineers etc.,
and the problem of resource utilization is given to them to discuss and come out
with a feasible solution. These specialists had a brainstorming session and came
out with a method of solving the problem, which they coined the name “Linear
Programming”. This method worked out well in solving the war problem.
Operations is used to refer to the problems of military and the word
Research is use for inventing new method. As this method of solving the
problem was invented during the war period, the subject is given the name
‘OPERATIONS RESEARCH’ and abbreviated as ‘O.R.’

 Operations Evaluation, Operations Research, System Analysis, System


Evaluation, Systems Research, Quantitative methods, Optimization
Techniques and Management Science etc. But most widely used one is
OPERATIONS RESEARCH.
 DECISION MAKING AND SOME ASPECTS OF DECISION
 A decision is the conclusion of a process designed to weigh the relative uses or
utilities of a set of alternatives on hand, so that decision maker selects the best
alternative which is best to his problem or situation and implement it

 Decision Making involves all activities and thinking that are necessary to
identify the most optimal or preferred choice among the available alternatives.

 The basic requirements of decision-making are

(i) A set of goals or objectives,

(ii) Methods of evaluating alternatives in an objective manner,

(iii) A system of choice criteria and a method of projecting the repercussions of


alternative choices of courses of action.
 Decisions may be classified in different ways, depending upon the criterion or the purpose of
classification.

1. Decisions (depending on the purpose)

 Purpose:

- Strategic Related to external Environment

- Administrative Resource utilization of an organization.

- Operational Related to day –to-day Repetitive work.

2. Decision depending on nature

 Purpose:

- Programmed decisions meant for repetitive and well-structured problems. Inventory Problems,
Product Mix Problems, etc.

- Non-Programmed decisions meant for non-routine, novel, ill-structured problems. Policy matters
Product market mix, plant location Etc.
3. Decisions (Depending on the persons involved)

- Individual

- Managerial

4. Decisions (Depending on the Sphere of interest)

- Economic

- Social

- Business

- Political

- Social

5. Decisions (depending on the time horizon)

- Static (One decision for entire planning period)

- Dynamic (Decisions are sequential)


 Decisions may also be classified depending on the situations such as
degree of certainty. For example,

1. Decision making under certainty

2. Decision making under Uncertainty and

3. Decision making under risk.

The first two are two extremes and the third one is falls between
these two with certain probability distribution
 OBJECTIVE OF OPERATIONS RESEARCH

The objective of Operations Research is to provide a scientific basis to the


decision maker for solving the problems involving the interaction of various
components of an organization by employing a team of scientists from various
disciplines, all working together for finding a solution which is in the best interest of
the organization as a whole. The best solution thus obtained is known as optimal
decision.
 DEFINITION OF OPERATIONS RESEARCH

Operations Research is the art of winning wars without actually fighting. - Aurther
Clarke  

Operations Research is the art of giving bad answers to problems where otherwise
worse answers are given. - T.L. Satty.

 Operations Research is Research into Operations. - J. Steinhardt

 Operations Research is defined as Scientific method for providing executive


departments a quantitative basis for decisions regarding the operations under their
control. - P.M. Morse and G.E. Kimball.

 Operations Research is th study of administrative system pursued in the same


scientific way system in Physics, Chemistry and Biology are studied in natural
sciences.
Operations Research is the application of scientific methods, techniques and
tools to operation of a system with optimum solution to the problem. - Churchman,
Ackoff and Arnoff

Operations Research is the application of the theories of Probability,


Statistics, Queuing, Games, Linear Programming etc., to the problems of War,
Government and Industry.

Operations Research is the use of Scientific Methods to provide criteria or


decisions regarding man-machine systems involving repetitive operations.

Operations Research is applied decision theory. It uses any scientific,


mathematical or logical means to attempt to cope with problems that confront the
executive, when he tries to achieve a thorough going rationally in dealing with his
decision problem. - D.W. Miller and M.K. Starr.
 Operations Research is not accepted by many due to following reasons:

1. Operations Research is not a well-defined science like Physics, Chemistry etc. All
these sciences are having well defined theory about the subject matter, whereas
operations research do not claim to know or have theories about operations.

Operations Research is not scientific research into the control of operations.


It is only the application of mathematical models or logical analysis to the
problem solving.

2. The objective of operations research says that the decisions are made by
brainstorming of people from various walks of life. This indicates that operations
research approach is inter- disciplinary approach, which is an important character of
operations research.
 Blaise Pascal and Christian Huygens solved problems involving
complex decisions (problem of points) by using game-theoretic ideas and 
expected values;

 Pierre de Fermat and Jacob Bernoulli, solved these types of problems


using combinatorial reasoning instead. 

 Charles Babbage's research into the cost of transportation and sorting


of mail led to England's universal "Penny Post" in 1840, and to studies into the
dynamical behavior of railway vehicles in defense of the GWR's broad gauge.

 Beginning in the 20th century, study of inventory management could be


considered the origin of modern operations research with 
economic order quantity developed by Ford W. Harris in 1913.
Operational research may have originated in the efforts of military
planners during World War I (convoy theory and Lanchester's laws). 

Percy Bridgman brought operational research to bear on problems in


physics in the 1920s and would later attempt to extend these to the social
sciences.  

The primary purpose of the research project is to determine the use of
operational research techniques in the process of improving managerial
decisions.
 LINEAR PROGRAMMING
 Linear Programming is a mathematical technique for finding the best use of an
organizational resources. It is a quantitative analysis technique for optimizing an
objective function given a set of constraints on problems.

 Linear – used to describe a relationship between two or more variables, a


relationship which is directly and precisely proportional.

 Programming – refers to the use of certain mathematical techniques to get the


best possible solution to a problem involving limited resources.

 Linear Programming Problems - are special class of mathematical programming


problems for which the objective functions and all the constraints are linear.
 Why linear programming important?

 It is one of the best resources for any business. It allows for objective based
decisions and can reduce waste of all kinds.

LP is implemented virtually in all industries, including the military,


manufacturing, and production; airlines, marketing mix determination; financial
decision making; production scheduling; workforce assignment; resource
blending and farming.
 History of LP
 Fourier - helped created the Fourier – Motzkin elimination algorithm to solve
for integer and real solution.

 Kantorovich - a Russian mathematician , who developed the linear


optimization in 1939. This system was used during World War II – to plan
expenses and reduced costs to the military while increasing enemy financial
leave.

 Dantzig - published the Simplex Method of Kantorovich in 1947.  

 Khachiyan - the first person to prove that LP problem can be solved in


polynomial time in1979.
 Karmarkar - introduced an interior point method to solve problems in 1984.

1.Linear optimization is used in many fields, especially, microeconomics and


company management in the business setting.

2. LP is often used to reduce costs or maximize profits while using a limited


number of resources. The system is also used in operation research where it can
solve multi-commodity flow issues and networks flow problems.

3. LP include strategic games like chess, manufacturing resource conservation,


transportation system for buses and trains and military budgeting.
 Characteristics of Linear Programming

1. The firm must have an objective to achieve which can be expressed as a


function.

2. There must be an alternative cause of action, one of which will achieve the
objective.

3. Resources must be in limited supply

4. Must be able to express the firm’s objective and its limitations as


mathematical equations or inequalities, and there must be linear equations or
inequalities.

 Inequality – is an important relationship in linear programming.


 Technical Issues in Linear Programming

1. Extreme Points

 If a linear programming problem has an optimal solution, it is found at


least one of the extreme points or corners of the feasible region.

Is it possible for linear programming problem to fail to have an optimal


solution? Yes.

2. Infeasible – means there is none which satisfy all constraints, graphically,


infeasibility in the case where there is no feasible region which satisfies all
constraints.
3. Unboundedness - the second way that a linear programming problem can
fail to have an optimal solution is if the objective can be made infinitely large
without violating any of the constraints.

4. Redundancy – a constraints which does not affect the feasible region.

5. Alternative Optima
 BASIC OR CONCEPTS

 "OR is the representation of real-world systems by mathematical models together with the

use of quantitative methods (algorithms) for solving such models, with a view to optimizing."

 We can also define a mathematical model as consisting of:

 - Decision variables, which are the unknowns to be determined by the solution to the
model.

 - Constraints to represent the physical limitations of the system  An objective function

 - An optimal solution to the model is the identification of a set of variable values which are
feasible (satisfy all the constraints) and which lead to the optimal value of the objective function.

 - An optimization model seeks to find values of the decision variables that optimize
(maximize or minimize) an objective function among the set of all values for the decision
variables that satisfy the given constraints.
 Example

The Two Mines Company own two different mines that produce an ore which, after
being crushed, is graded into three classes: high, medium and low-grade. The
company has contracted to provide a smelting plant with 12 tons of high-grade, 8
tons of medium-grade and 24 tons of low-grade ore per week. The two mines have
different operating characteristics as detailed below

Mine Cost per day (£'000) Production (tons/day)

High Medium Low

X 180 6 3 4

Y 160 1 1 6
 Consider that mines cannot be operated in the weekend. How many days per week should
each mine be operated to fulfill the smelting plant contract?

 Solution

 What we have is a verbal description of the Two Mines problem. What we need to do is to
translate that verbal description into an equivalent mathematical description.

 In dealing with problems of this kind we often do best to consider them in the order:

  Variables

  Constraints

  Objective

 This process is often called formulating the problem (or more strictly formulating a
mathematical representation of the problem).
 Variables

These represent the "decisions that have to be made" or the "unknowns".

 We have two decision variables in this problem:

 x = number of days per week mine X is operated

 y = number of days per week mine Y is operated

 Note here that x ≥ 0 and y ≥ 0


 Constraints

 It is best to first put each constraint into words and then express it in a mathematical form.

 ore production constraints - balance the amount produced with the quantity required under
the smelting plant contract

 Ore

 High 6x + 1y ≥ 12

 Medium 3x + 1y ≥ 8

 Low 4x + 6y ≥ 24

 days per week constraint - we cannot work more than a certain maximum number of
days a week e.g. for a 5 day week we have

 x≤5 y≤5
 Mathematical representation of the problem:

Objective

minimize: 180x + 160y

subject to

6x + y ≥ 12

3x + y ≥ 8

4x + 6y ≥ 24

x ≤ 5 y ≤ 5 x, y ≥ 0
 Note:

 The mathematical problem given above has the form

 all variables continuous (i.e. can take fractional values)

 a single objective (maximize or minimize)

 the objective and constraints are linear i.e. any term is either a constant
or a constant multiplied by an unknown (e.g. 24, 4x, 6y are linear terms but xy or
x 2 is a non-linear term)

 Any formulation which satisfies these three conditions is called a linear


program (LP).
 Some of the major application areas to which LP can be applied are:

  Work scheduling  Production planning & Production process

 Capital budgeting  Financial planning

 Blending (e.g. Oil refinery management)  Farm planning

 Distribution  Multi-period decision problems

Inventory model Financial models

Work scheduling

 Note: that the key to formulating LP's is practice. However a useful hint is that
common objectives for LP's are maximize profit/minimize cost
 FORMULATING LINEAR PROGRAMMING

 Methods of Solving Linear Programming

1. By Graphical Method

2. Simplex Method

 Graphical Method

Problem:

Dimensions Ltd., makes two possible products ; tables and chairs; which must be processed through
assembly and finishing departments. Assembly has 60 hours available per week; finishing can handle
up to 48 hours of work a week. Manufacturing one table requires 4 hours in assembly and 2 hours in
finishing. Each chairs requires 2 hours in assembly and 4 hours in finishing.

 If profit is $8 per table and $6 per chair, the problem is to determine the best possible combination
of tables and chairs to produce and sell in order to realize the maximum profit.
Tables Chairs
Hours per unit of Hours per

Products Week

Assembly 4 2 60
       

Finishing 2 4 48
     

Profit per unit $8 $6  


 Solution :

Maximize Profit: P = $ 8 T + $ 6 C

Subject to : 4T + 2C ≤ 60

2T + 4C ≤ 48

By Graphical Solution

Equations: 4T + 2C = 60

2T + 4C = 48
 Set T = 0 4T + 2C = 60 2T + 4C = 48

2C = 60 4C = 48

C = 30 C = 12

 Set C = 0 4 T + 2C = 60 2T + 4C = 48

4T = 60 2T = 48

T = 15 T = 24

 
 Solving Point by Elimination

4T + 2C = 60 Multiply by (-2) = -8T - 4C = -120


2T + 4C = 48 2T + 4C = 48
----------------------------
-6T 0 = -72
Substitute T = 12 T = 12
2T + 4C = 48
2(12) + 4C = 48
4C = 48 – 24
C = 6
 Test the four points from the graph: T = 12 ; C = 6
  From the equation: 8T + 6 C = 0
 
 
A ( 0,0 ) = 8T + 6C = 0
B ( 0, 12 ) = 8 (0) + 6 (6) = 36
C ( 15, 0 ) = 8 ( 12) + 6 ( 0) = 96 
D ( 12, 6 ) = 8(12) + 6 (6) = 132
 

 Therefore , Point D yields the higher weekly profit = 132 where you the
plant can manufacture 12 tables and 6 chairs.
 Problem:

 A rancher is mixing two types of food; Brand X and Y for his cattle. If each
serving is required to have 60 grams of protein and 30 grams of fats, were
Brand A has 15 grams of protein and 10 grams of fats and cost 80 cents per
unit. Brand B contains 20 grams of proteins and 5 grams of fats and cost 50
cents per unit. How much of each type should be used to minimize cost to the
rancher?
 Composition A B Total
Fats 15 20 60
Proteins 10 5 30
Cost per unit $0.80 $0.50
Solution:

Let X = Brand A

Y = Brand B  

Objective:

Minimize Cost : C = 0.80 X + 0.50 Y Constrains: 15X + 20 Y ≥ 60

10X + 5Y ≥ 30

By Graphical Solution

Equations: 15X + 20Y = 60

10X + 5Y = 30
 Set X = 0 15X + 20Y = 60 10X + 5Y = 30
20Y = 60 5Y = 30
Y = 3 Y = 6

 Set Y = 0 15X + 20Y = 60 10X + 5Y = 30


15X = 60 10X = 30

X = 4 X = 3

Plot on the graph

Solving point by elimination

15X + 20Y = 60 15X + 20Y = 60


10X + 5Y = 30 Multiply by ( -4) -40X - 20Y = -120
----------------------------
-25X 0 = -60
X = 2.4
Substitute X = 2.4
  10X + 5Y = 30
10( 2.4 ) + 5Y = 30
5Y = 30 – 24
5Y = 6
Y = 1.2
  From equation : C = 0.80X + 0.50 Y = 0
From the graph points:

A ( 0, 0) = 0

B ( 0, 3) = 0.80X + 0.50Y = 0 0.80(0) + 0.50 ( 3) = 1.5

C ( 0,6 ) = 0.80X + 0.50 Y = 0 0.80 ( 0) + 0.50 ( 6) = 3

D (2.4 , 1.2 ) = 0.80X + 0.50Y =0 0.8( 2.4) + .5(1.2) = 2.52  

Therefore , Point D yields the minimum cost of 2.4 and 1.2 which cost $ 2.52.
Problem 3.

A garden shop wishes to prepare a special supply of fertilizer at a minimal cost by mixing two
fertilizers A and B. the mixture is to contain at least

45 units of phosphate

36 units of nitrate

40 units of ammonium

Fertilizer A costs $0.97 / lb

Fertilizer B cost $ 1.89 /lb

  Fertilizer A Fertilizer B no. of units

Phosphate 5 3 45

Nitrate 2 3 36

Ammonium 2 5 40

Cost / lb $0.97 $ 1.89

 
 How many pounds of each fertilizer should the shop use in order to minimize
their cost.

Solution : Let x = # lbs of Fertilizer A

Y = # lbs of Fertilizer B  

Minimize Cost = $0.97 X + $ 1.89 Y 2

Constraints: 5X + 3Y ≥ 45

2X + 3Y ≥ 36

2X + 5Y ≥ 30

Solve by graphical method :


 Solving for Points : 5X + 3Y = 45 eq. 1

2X + 3Y = 36 eq. 2

2X + 5Y = 40 eq. 3

Eq. 1 5X + 3Y = 45 Eq. 2 2X + 3Y = 36

X=0 3Y = 45 3Y = 36

Y = 45 / 3 Y = 36 / 3

Y = 15 Y = 12

Eq. 3 2X + 5Y = 40

5Y = 40

Y = 8 
Solving when Y = 0

5X + 3Y = 45 2X + 3Y = 36 2X + 5Y = 40

5X = 45 2X = 36 2X = 40

X = 9 X = 18 X = 20

 Points: (X,Y) = 9,15 (X,Y) = 18, 12 (X,Y) = 20,8

 Construct a graph:

Note feasible region is outside of the graph.


Intersection Points : A: 0,0 B: 0,15 C: 9,0 15,2 D: 0,12

E: 18,0 F: 0,8 G: 20,0 H: 3,10

I: 15,2

 Solving for point H: ( 3,10 ) because only this point that do not contain zero,0

5X + 3Y = 45 eq. 1

2X + 3Y = 36 eq. 2

By elimination : multiply eq. 1 by (-1)

5X + 3Y = 45 - 5X - 3Y = - 45

2X + 3Y = 36 2X + 3Y = 36

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

-3X + 0 = - 9

X = 3
Substitute : X = 3 5X + 3Y = 45

5(3) + 3Y = 45

15 + 3Y = 45

3Y = 45 – 15

3Y = 30

Y = 10

  Point H : 3, 10

 Solving for point I : (15,2 ) 2X + 3Y = 36 multiply (- 1)

2X + 5Y = 40 -2X - 3Y = - 36

2X + 5Y = 40

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

2Y = 4

Y = 2
Substitute: y = 2 2X + 3Y = 36
2X + 3(2) = 36
2X + 6 = 36
X = 15

Point : I : X,Y = 15, 2

Minimize cost: I: 15,2 = ( 0.97)( 15) + (1.89) ( 2) = 18.33


H: 3,10 = (0.97) (3) + ( 1.89) (10) = 21.81

 Therefore : I : = 18.33 minimum cost


Phosphate: 5X + 3Y = (5)(15) + (3)(2) = 81
Nitrate : 2X + 3Y = (2) (15) + (3)(2) = 36
Ammonium: 2X + 5Y = (2) (15) + (5)(2) = 40
 
 

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