Operation research is the branch management studies uses to take managerial decision with
accuracy on the basis of scientific mathematical procedures. The significant role of operation
research has been proved after the Second World War. Wherein actual theories of operation
research were implemented and benefitted by British army. Invariably, then after world has come to
know the power of operation research in the field of resource management. The fields of the
resource management rely on the principle of ‘Use minimal resources to get maximum profit or to
minimize the losses’.
Afore said statement made the mission line of the management science and the branch of operation
research came in lime light. The operation research is the pool of tools and techniques invented by
various scientists and management tycoons which are very useful for taking complicated managerial
decisions. The techniques sought under the title of operation research are dividing complex problem
in to multiple sub problems. Integration of the solutions to the individual sub problems gives
solution to the main problem. This technique popularly known as ‘Divide and Conquer’. The
Americans pronounces Operations research and the Europeans to Operational research. However
the management science of decision making shortened known as OR.
*Phases :-Operation research follows structured route of implementation called as various phases of
operation research. The approach to solution of operation research can be divided into three logical
phases.
1. Observation Phase-This is an initial phase of OR. Wherein the actual OR problem identified along
with objectives of organization. It may have various variables to the specific objectives. This phase of
OR ends with the structured formulation of the understood objectives and constraints. Rationale
called as mathematical formulation of operation research problem.
2. Operational Phase-The second phase of OR is operational phases. After formulation of the
mathematical model of the OR the solution to the OR problem actual obtained after this phase. This
phase consist various tools, techniques and model of the Operation research solution such as
assignment model, LPP model, transportation model etc. The operational phase of the OR begins
with relevant data collection then after data executed with aforesaid models which gives solutions
to the problem defined in the first phase of OR.
3. Action Phase-During this phase, by considering various assumption, constraints, and solution pool
researcher has to suggest one solution as a final solution for operation research problem.
*Characteristics:-Operation research is the division of mathematics and statistics, which gives
solution to the Business problem by checking, for all its possible solutions and helps to select a
suitable solution amongst them.
•Interdisciplinary groups: The model spurs out after the OR should have support of multiple
disciplines. Involvement of the people from various discipline aids the research and preparation of
scientific model.
•Application of Scientific Methods: The OR follows the characteristics of basic scientific
Methodology. Often, the principles of Statistics and mathematics are valid in the OR context. The OR
studies cannot be conducted in the laboratory and findings cannot be applied in natural scenario.
Therefore, the theories of statistics and mathematics are required to defend obtained result.
*Scope and Application:-
There is ample scope have been associated with operation research when it comes to managerial
decision making domain.
Application:-
The study of Management is known as the study of linear equations. Utmost business problems can
convert in the linear equations. The Markov analysis and simulation technique of the OR gives best
solution to the marketing field.
•In the field of finance and accounting:-Dividend polices, investment, portfolio management and
cash flow analysis are the most influenced areas of finance wherein the theory and tools of
operation research often been used.
•In the field of Human Resources management:-The various decision making and manpower
management theory of Human resource management are borrowed from the operation research
domain. Assignment model of OR is a representative example of the same. Assignment model
merely used to assign correct job to efficient [Link] also seems a good tool to decision
organization structure.
Application of OR in the field of Production and Operational Management The PERT and CPM are the
widely used techniques of Operation research which gives efficient solutions for execution of various
production and operation
*Limitation:-The study of operation research consists the model as the part of solution.
These models are constructed on the base of certain assumptions and variables. All the factors
involved in the model construction cannot be predictable or measurable. Hence OR solutions are
valid under certain conditions only.
The solution models are reflections of the real life situations. Hence, it cannot replace to the reality
of life.
The Operation research tools and techniques can fail in consideration of dynamic variables which
generate during the problem formulation.
Slack Variable:-If an inequality involves _< then it can be converted in to anequation by adding a new
non negative variable from LHS of the inequality. This new non negative variable is called as slack
variable.
•Surplus variable: If an inequality involves ≥ then it can be converted in to an equation by
substrating a new non negative variable from LHS of the inequality. This new non negative variable is
called as surplus variable.
Vogel’s Approximation Method (VAM) is one of the methods used to calculate the initial basic
feasible solution to a transportation problem. However, VAM is an iterative procedure such that in
each step, we should find the penalties for each available row and column by taking the least cost
and second least cost. In this article, you will learn how to find the initial basic feasible solution to a
transportation problem such that the total cost is minimized.
Vogel’s Approximation Method Steps
Below are the steps involved in Voge’s approximation method of finding the feasible solution to a
transportation problem.
Step 1: Identify the two lowest costs in each row and column of the given cost matrix and then write
the absolute row and column difference. These differences are called penalties.
Step 2: Identify the row or column with the maximum penalty and assign the corresponding cell’s
min(supply, demand). If two or more columns or rows have the same maximum penalty, then we
can choose one among them as per our convenience.
Step 3: If the assignment in the previous satisfies the supply at the origin, delete the corresponding
row. If it satisfies the demand at that destination, delete the corresponding column.
Step 4: Stop the procedure if supply at each origin is 0, i.e., every supply is exhausted, and demand
at each destination is 0, i.e., every demand is satisfying. If not, repeat the above steps,
Project Evaluation and Review technique:-The CPM methods rely on the single mean value of
activities. However, it is unrealistic to consider single value of project estimation for finding elapsed
time of every activity. Although any activity has to be study with three possible durations as-
• Most Pessimistic time
• Most optimistic time and • Most likely time.
If everything goes according to the plan and gets completed within the scheduled time then
completion of activity is called as activity completion in optimistic time. If the same activity passes
through all possible hurdles then it is known as pessimistic duration of activity. However, in general
practice the activity follows average time; it is known as most likely time.
But while posting time in the network diagram, it has to convert in to the average time by using the
formula given below
Expected time = (te) = (to+4tm+tp) ____
Where, to = optimistic time 6 tm = most likely time
tp = pessimistic time
te = Expected time
Laplace Criteria:-This is based on the principle of insufficient reasonand is used in the case when the
probabilities of different states of nature are not known. It is based on the assumption that for any
act, the different states of nature have the same probability.
The probability associated with Laplace criteria is equal likely. Therefore each act has equal chance
to come in selection.
p1=P(Si) = 1 / m ; i=1,2,....m are state of natures.
Or
Average payoff = probability of state of nature x Payoff value for the combination of alternative i and
state of nature j.
May also be interpreted as the Expected Monetary Value (EMV) for the act Aj
Expected Opportunity Loss:-
The expected opportunity loss is also known as the expected value of regret. EOL is the difference
between the highest profit value and actual profit value. The minimum EOL is always preferred to
take correct decision. Mathematically it is noted as-
E.Ở.L(state of nature Nj)=
lij = opportunity loss due to state of nature Nj and course of action Sj
pi= Probability of occurrence of state of nature Nj.
Expected Value of Perfect Information (E.V.P. I.):
If decision maker get perfect information about each state of nature about their occurrence, then by
choosing a course of action that yields the desired payoff made easy. The exected value of perfect
information is calculated as-
E.V.P.I = (Expected profit with perfect information) – (Expected profit without perfect information)
Or
Where, pi = is probability of state of nature Ni pij = best payoff act
EMV*= maximum of expected monetary value.
The probability that a truck has to wait can be determined using the concept of the Poisson
distribution. The Poisson distribution can be used to model the arrival of trucks, while the
exponential distribution can be used to model the loading times.
Let λ be the arrival rate of trucks per unit time, which is equal to the reciprocal of the average time
between arrivals. In this case, λ = 1/5 = 0.2 trucks per minute.
The probability of no truck arrivals in a given 5-minute interval is given by:
P(0 arrivals) = e^(-λ) = e^(-0.2) ≈ 0.8187
Therefore, the probability of at least one truck arrival in a 5-minute interval is:
P(at least 1 arrival) = 1 - P(0 arrivals) ≈ 0.1813
This means that the probability that a truck has to wait is approximately 0.1813.
The waiting time of a truck that waits can be determined using the exponential distribution with the
same λ value as before. The cumulative distribution function (CDF) of the exponential distribution is
given by:
F(x) = 1 - e^(-λx)
where x is the waiting time in minutes.
The probability density function (PDF) of the exponential distribution is:
f(x) = λe^(-λx)
The expected waiting time for a truck that has to wait is given by the mean of the distribution, which
is:
E(x) = 1/λ = 5 minutes
Therefore, on average, a truck that has to wait can expect to wait for 5 minutes.
To calculate the expected waiting time of contractor trucks per day, we first need to determine the
number of contractor trucks that arrive per day. Since 40% of the trucks belong to contractors, the
arrival rate of contractor trucks is 0.4 times the overall arrival rate:
λ_contractor = 0.4λ = 0.08 trucks per minute
The expected waiting time for a contractor truck can be calculated using the exponential distribution
with λ = λ_contractor:
E(waiting time for contractor truck) = 1/λ_contractor = 12.5 minutes
To determine the expected waiting time per day, we need to know the number of contractor trucks
that arrive per day. Assuming that the loading station operates for 8 hours a day (480 minutes), the
expected number of contractor trucks that arrive per day is:
E(number of contractor trucks per day) = λ_contractor * 480 = 38.4 trucks
Therefore, the expected waiting time for contractor trucks per day is:
E(total waiting time for contractor trucks per day) = E(waiting time for contractor truck) * E(number
of contractor trucks per day)
= 12.5 minutes * 38.4 trucks
= 480 minutes or 8 hours
This means that on average, contractor trucks can expect to wait for a total of 8 hours per day.
An animal feed company must produce 200 kg of a mixture consisting of ingredients si and %.. The
ingredient xi costs Rs. 3 per kg and x: cost Rs. 5 per kg. Not more than 80 kg of x. can he used and
atleast 60 kg of x; must be used. Formulate IPP for the minimum cost mixture ?
To formulate the IPP (Integer Programming Problem) for the minimum cost mixture, we can use the
following decision variables:
Let x1 be the amount of ingredient x1 (in kg) to be used in the mixture.
Let x2 be the amount of ingredient x2 (in kg) to be used in the mixture.
The objective is to minimize the cost of the mixture, which is given by:
Minimize: 3x1 + 5x2
subject to the following constraints:
The total amount of mixture to be produced is 200 kg:
x1 + x2 = 200
Not more than 80 kg of x1 can be used:
x1 <= 80
At least 60 kg of x2 must be used:
x2 >= 60
Non-negativity constraints:
x1 >= 0, x2 >= 0
The IPP can be written in standard form as follows:
Minimize: 3x1 + 5x2
subject to:
x1 + x2 = 200
x1 <= 80
x2 >= 60
x1 >= 0
x2 >= 0
Note that the IPP is an example of a linear programming problem with integer constraints. The
solution to this problem can be found using various optimization algorithms, such as branch-and-
bound or cutting-plane methods.
Artificials Variables:-
In Operations Research, artificial variables are introduced to convert inequality constraints into
equality constraints. This is done to enable the use of the simplex method for linear programming,
which can only handle problems with equality constraints.
The addition of artificial variables involves introducing new variables into the problem that do not
correspond to any physical quantity, but rather serve as placeholders to aid in the optimization
process. The objective function is modified to minimize the sum of these artificial variables, and
constraints are added to ensure that the artificial variables are non-negative.
Once the artificial variables have been added, the simplex method is used to solve the modified
problem. If the optimal solution involves any non-zero artificial variables, then the original problem
is infeasible. If all the artificial variables are zero, then the optimal solution of the modified problem
corresponds to a feasible solution of the original problem.
After obtaining the optimal solution of the modified problem, the artificial variables are removed
from the solution to obtain the optimal solution of the original problem.
While the use of artificial variables can be computationally expensive and may increase the size of
the problem, it allows for the use of the simplex method, which is a powerful tool for solving linear
programming problems.
The Least Cost Method is a technique used in Operations Research for solving transportation
problems. It is a method of finding the initial feasible solution of a transportation problem, where
the objective is to minimize the total transportation cost of goods from sources to destinations.
The Least Cost Method starts by selecting the cell with the lowest cost in the transportation matrix
and allocating as much as possible to that cell. The allocation process continues to the next cell with
the lowest cost until either all available supply is exhausted or all demand is satisfied.
If the supply and demand are not equal after the initial allocation, the method requires the creation
of an artificial row or column with zero transportation costs. The process is then repeated until a
feasible solution is obtained.
One advantage of the Least Cost Method is that it is easy to apply and provides a good starting
solution for other more sophisticated transportation algorithms. However, it may not always lead to
the optimal solution and can also be sensitive to changes in the transportation cost matrix.
The Hungarian method is a combinatorial optimization algorithm that is commonly used in
Operations Research to solve the assignment problem, which involves assigning a set of tasks to a
set of agents, with each agent having a certain cost or benefit associated with performing each task.
The Hungarian method works by constructing a matrix of costs or benefits, and then iteratively
selecting the optimal assignment of tasks to agents, and adjusting the costs or benefits accordingly.
The algorithm is guaranteed to find the optimal solution in polynomial time, making it a popular
choice for solving assignment problems.
The Hungarian method was developed by Hungarian mathematicians Dénes Kőnig and Jenő Egerváry
in the 1930s, and it has since been widely used in a variety of fields, including economics, computer
science, and logistics. It has also been extended to solve more complex optimization problems, such
as the quadratic assignment problem and the linear sum assignment problem.
The Poisson distribution is commonly used in Operations Research to model random events that
occur over time or space. Here are a few examples:
Queuing Theory: The Poisson distribution can be used to model the arrival rate of customers in a
queuing system. For example, a bank may use the Poisson distribution to estimate the number of
customers that will arrive at a particular time of day.
Inventory Management: The Poisson distribution can be used to model the demand for a product
over a certain period of time. This information can be used to determine the optimal level of
inventory to hold in order to minimize costs.
Maintenance and Repair: The Poisson distribution can be used to model the number of equipment
failures that occur over a certain period of time. This information can be used to schedule preventive
maintenance and repairs.
Quality Control: The Poisson distribution can be used to model the number of defects in a product or
process. This information can be used to monitor and improve quality control processes.
Traffic Engineering: The Poisson distribution can be used to model the number of vehicles arriving at
a particular intersection or section of roadway over a certain period of time. This information can be
used to optimize traffic flow and reduce congestion.
Overall, the Poisson distribution is a versatile tool in Operations Research for modeling random
events and can be applied to many different types of problems.
The assignment problem is a classic problem in operations research that deals with assigning a
number of agents to a number of tasks in the most optimal way. The objective of the assignment
problem is to minimize the total cost or maximize the total profit of the assignment.
In the case of minimizing the total cost, the problem can be formulated as a transportation problem,
where the cost of assigning an agent to a task is represented as the cost of transporting a unit of
goods from a source to a destination. The goal is to find the optimal assignment that minimizes the
total cost of transportation.
On the other hand, in the case of maximizing the total profit, the problem can be formulated as a
profit maximization problem, where the profit of assigning an agent to a task is represented as the
revenue generated from completing the task. The goal is to find the optimal assignment that
maximizes the total profit.
To solve the assignment problem, various optimization techniques can be used, such as the
Hungarian algorithm, the auction algorithm, and the network simplex algorithm. These algorithms
can be used to find the optimal assignment that either minimizes the total cost or maximizes the
total profit, depending on the objective function of the problem.
Decision trees are a useful tool in the field of Operations Research for modeling decision-making
processes. A decision tree is a graphical representation of a decision-making process, which can help
to identify the optimal decision in a complex situation with multiple possible outcomes.
In Operations Research, decision trees can be used to model various types of decision problems,
including:
Decision-making under uncertainty: When there is uncertainty about the outcome of different
decisions, decision trees can be used to model the probabilities of different outcomes and help to
identify the optimal decision.
Decision-making under risk: When the outcome of different decisions is known, but there is risk
involved, decision trees can be used to calculate the expected value of each decision and help to
identify the optimal decision.
Sequential decision-making: In some situations, decisions need to be made sequentially, and the
outcome of each decision can affect the subsequent decisions. Decision trees can be used to model
these sequential decision-making processes and help to identify the optimal sequence of decisions.
Decision trees are particularly useful in situations where there are multiple possible outcomes and
where the decision-maker must weigh the potential costs and benefits of each option. By modeling
the decision-making process in a clear and concise way, decision trees can help decision-makers to
better understand the options available to them and to make more informed decisions.
