Or Final Project (1) ....

PROJECT ON OPERATION RESEARCH
OR PROJECT ON TRANSPORTATION AND

LPP
1
ACKNOWLEDGEMENT
We think if any of us honestly reflects on who we are, how we got here, what we think we
might do well, and so forth, we discover a debt to others that spans written history. The work
of some unknown person makes our lives easier every day. We believe it's appropriate to
acknowledge all of these unknown persons; but it is also necessary to acknowledge those
people we know have directly shaped our lives and our work.
Apart from the efforts of the group members, the success of this project depends largely on the
encouragement and guidelines of many others. I take this opportunity to express my gratitude
to the people who have been instrumental in the successful completion of this report.
I would like to show my greatest appreciation to Prof. Pankaj who acted as mentor through out
the duration of our project. I can’t say thank you enough for the tremendous support that Sir
has given during the entire project. Without his efficient management and skills we would not
be able to complete our project successfully. I feel motivated and encouraged every time.
Without his support and help this project would not have materialized.
2
Index
S.No Particular Page No.

1 Transportation Problem Background 4
1.1 Objective 4-5
1.2 Problem Description 5-8
1.3 Analysis 1 10-18
1.4 Analysis 2 18-30
1.5 Final Table 30
2 LPP Problem Background 31
2.1 Objective 32
2.2 Problem Description 33-35
2.3 Analysis 38-47
2.4 Advantages and Limitations of LPP 47-49
Transportation problem based on calculating expenditure while selecting

new location
Background
3
The Texago Corporation is a large, fully integrated petroleum company based in the United
States. The company produces most of its oil in its own oil fields and then imports the rest of
what it needs from the Middle East. An extensive distribution network is used to transport the
oil to the company’s refineries and then to transport the petroleum products from the refineries
to Texago’s distribution centers. The locations of these various facilities are given in Table 1.
Texago is continuing to increase market share for several of its major products. Therefore,
management has made the decision to expand output by building an additional refinery and
increasing imports of crude oil from the Middle East. The crucial remaining decision is where
to locate the new refinery. The addition of the new refinery will have a great impact on the
operation of the entire distribution system, including decisions on how much crude oil to
transport from each of its sources to each refinery (including the new one) and how much
finished product to ship from each refinery to each distribution center.
Objective
The three key factors for management’s decision on the location of the new refinery are –
1. The cost of transporting the oil from its sources to all the refineries, including the new one.
2. The cost of transporting finished product from all the refineries, including the new one, to
the distribution centers.
3. Operating costs for the new refinery, including labor costs, taxes, the cost of needed supplies
(other than crude oil), energy costs, the cost of insurance, the effect of financial incentives
provided by the state or city, and so forth. (Capitol costs are not a factor since they would be
essentially the same at any of the potential sites.)
The situation the company was facing: According to this case study the Texago corporation has
to build a new refinery and for that purpose they have selected three locations.The locations
they have selected are –
4
Table 1
Potential sites for Texago’s new refineries and their main advantages
Potential Site Main Advantages
1. Near California oil fields
Near Los Angeles, California 2. Ready access from Alaska oil fields
3. Fairly near San Francisco distribution center
1. Near Texas oil fields
Near Galveston, Texas 2. Ready access from Middle East imports
3. Near corporate headquarters
1. Low operating costs
Near St. Louis, Missouri 2. Centrally located for distribution centers
3. Ready access to crude oil via Mississippi River
Table 2
Location of Texago’s current facilities
5
Type of Facility Locations
1. Texas
Oil fields 2. California
3. Alaska
1. Near New Orleans, Louisiana
Refineries 2. Near Charleston, South Carolina
3. Near Seattle, Washington
1. Pittsburgh, Pennsylvania
2. Atlanta, Georgia
Distribution centers 3. Kansas City, Missouri
4. San Francisco, California
The following table shows the annual demand of crude oil that is converted into petroleum and
the annual supply of crude oil by the various oil fields.
6
Table 3
Refinery Crude oil Needed Oil Field Crude Oil produced

Annually (Million annually (Million
barrels) Barrels)
New Orleans 100 Texas 80
Charleston 60 California 60
Seattle 80 Alaska 100
New one 120 Total 240
Total 360 Needed Imports(360-240) 120
According to the case study the of Texago Corporation the management wants all the
refineries, including the new one, to operate at full capacity. Therefore, the task force begins by
determining how much crude oil each refinery would need to receive annually under these
conditions. and this is mentioned in the above schedule.
As we can see ,the right side of the table 3 shows the current annual output of crude oil from
the various oil fields. These quantities are expected to remain stable for some years to come.
Since the refineries need a total of 360 million barrels of crude oil, and the oil fields will
produce a total of 240 million barrels, the difference of 120 million barrels will need to be
imported from the Middle East.
Since the amounts of crude oil produced or purchased will be the same regardless of which
location is chosen for the new refinery, the task force concludes that the associated production
or purchase costs (exclusive of shipping costs) are not relevant to the site selection decision.
On the other hand, the costs for transporting the crude oil from its source to a refinery are very
relevant. These costs are shown in Table 4 for both the three current refineries and the three
potential sites for the new refinery.
Also very relevant are the costs of shipping the finished product from a refinery to a
distribution center. Letting one unit of finished product correspond to the production of a
refinery from 1 million barrels of crude oil, these costs are given in Table 5. The bottom row of
7
the table shows the number of units of finished product needed by each distribution center. The
final key body of data involves the operating costs for a refinery at each potential site.
Estimating these costs requires site visits by several members of the task force to collect
detailed information about local labor costs, taxes, and so forth. Comparisons then are made
with the operating costs of the current refineries to help refine these data.
In addition, the task force gathers information on one-time site costs for land, construction, and
so forth, and amortizes these costs on an equivalent uniform annual cost basis. This process
leads to the estimates shown in Table 6.
Analysis (Six Applications of a Transportation Problem)
Armed with these data, the task force now needs to develop the following key financial
information for management:
1. Total shipping cost for crude oil with each potential choice of a site for the new refinery.
2. Total shipping cost for finished product with each potential choice of a site for the new
refinery.
Table 4 Cost data for shipping crude oil to a Texago refinery
Cost per Unit Shipped (Millions of Dollars per Million Barrels) Refinery or
Potential Refinery
New Los St.

Orleans Charleston Seattle Angeles Galveston Louis
Texas 2 4 5 3 1 1
California 5 5 3 1 3 4
Sources
Alaska 5 7 3 4 5 7
Middle East 2 3 5 4 3 4
8
Table 5 Cost data for shipping finished product to a distribution center
Cost per Unit Shipped (Millions of Dollars) Distribution

Center
San
Pittsburgh Atlanta Kansas City Francisco
New
Orleans 6.5 5.5 6 8
Refinery
Charleston 7 5 4 7
Seattle 7 8 4 3
Los Angeles 8 6 3 2
Galveston 5 4 3 6
Potential
Refinery St. Louis 4 3 1 5
Number of units needed 100 80 80 100
Table 6 Estimated operating costs for a Texago refinery at each potential site
Site Annual Operating Cost (Millions of Dollars)
Los Angeles 620
Galveston 570
St. Louis 530
To calculate costs, once a site is selected, an optimal shipping plan will be determined and
then followed. Therefore, to find either type of cost with a potential choice of a site, it is
9
necessary to solve for the optimal shipping plan given that choice and then calculate the
corresponding cost.
Analysis 1:
All these values in the following tables are calculated from the Table 4 and these are selected
on the basis of whichever site you have selected. These values will change according to the
location selected and the total cost is calculated on that basis. The optimal solution is obtained
for each location using using Vogel’s Approximation method.
1. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including Los

Angeles)
The changing cells Shipment Quantity give Texago management an optimal plan for
shipping crude oil if Los Angeles is selected as the new site for the refinery
Unit Cost ( $ millions ) New Orleans Charleston Seattle Los Angeles
Texas 2 4 5 3
California 5 5 3 1
Oil Fields
Alaska 5 7 3 4
Middle East 2 3 5 4
10
11
Total cost = (40x2) + (40x3) + (60x1) + (80x3) + (20x4) + (60x2) + (60x3)
= $880 million.
12
2. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including

Galveston)
The changing cells Shipment Quantity give Texago management an optimal plan for shipping
crude oil if Galveston is selected as the new site for a refinery
Unit Cost ( $ millions ) New Charleston Seattle Galveston

Orleans
Texas 2 4 5 1
California 5 5 3 3
Oil Fields
Alaska 5 7 3 5
Middle East 2 3 5 3
13
Total = (20x2) + (60x1) + (60x3) + (20x5) + (80x3) + (60x2) + (60x3)

= $ 920million
14
3. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including St. Louis)
The changing cells Shipment Quantity give Texago management an optimal plan for
shipping crude oil if St. Louis is selected as the new site for a refinery
Unit Cost ( $ millions ) New Charleston Seattle St. Louis

Orleans
Texas 2 4 5 1
California 5 5 3 4
Oil Fields
Alaska 5 7 3 7
Middle East 2 3 5 4
15
16
Total = (80x1) + (20x5) + (40x4) + (20x5) + (80x3) + (80x2) + (40x3)

= $ 960 million
If Los Angeles were to be chosen as the site for the new refinery (Fig. 2), the total annual cost
of shipping crude oil in the optimal manner would be $880 million. If Galveston were chosen
instead , this cost would be $920 million, whereas it would be $960 million if St. Louis were
chosen.
17
So according to the calculations the cost for transportation will be minimum if Los Angeles is
selected as new site for refinery . But only this factor is not sufficient to for Texago
Corporation to finalize its location of new site therefore it considered other conditions like
what is the cost for shipping finished product from Los Angeles, Galveston and St.Louis to
distribution centers which are Pittsburgh ,Atlanta, Kansas City and San Francisco..
Analysis 2 :
The analysis of the cost of shipping finished product is similar. The data in all the figures
shows the Matrix model for this transportation problem, where rows come directly from the
first values of Table 5. The New Site row would be filled in from one of the next three rows of
Table 5, depending on which potential site for the new refinery is currently under evaluation.
Since the units for finished product leaving a refinery are equivalent to the units for crude oil
coming in, the data in Supply come from the left side of Table 3.
For each of the three alternative sites, three separate separate calculations have been used for
planning the shipping of crude oil and the shipping of finished product. However, another
option would have been to combine all this planning into a single spreadsheet model for each
site and then to simultaneously optimize the plans for the two types of shipments.
1. Texago Corp. Site-Selection Problem (Shipping to D.C.’s When Choose Los

Angeles)
finished product if Los Angeles is selected as the new site for a refinery
Unit Cost ( $ millions ) Pittsburgh Atlanta Kansas City San Francisco
New Orleans 6.5 5.5 6 8
Charleston 7 5 4 7
Refineries
Seattle 7 8 4 3
Los Angeles 8 6 3 2
18
19
20
Total = (80x6.5) + (20x5.5) + (60x5) + (20x7) + (60x3) + (80x3) + (40x2)

= $1.57 billion
2. Texago Corp. Site-Selection Problem (Shipping to D.C.’s When Choose Galveston)
21
The changing cells ShipmentQuantit give Texago management an optimal plan for shipping
finished product if Galveston is selected as the new site for a refinery
Charleston 7 5 4 7
Refineries
Seattle 7 8 4 3
St. Louis 5 4 3 6
22
23
24
Total = (6.5x20) + (5.5x80) + (40x4) + (40x4) + (20x7) + (80x3) + (80x5) + (40x3)
= $1.63 billion
25
3.Texago Corp. Site-Selection Problem (Shipping to D.C.’s When Choose St. Louis)
finished product if St. Louis is selected as the new site for a refinery
Charleston 7 5 4 7
Refineries
Seattle 7 8 4 3
St. Louis 4 3 1 5
26
27
Total(St. Louis) =(60x6.5) + (40x5.5) + (40x5) + (20x7) + (80x3) + (40x4) + (80x1)
= $1.43 Billion
From a purely financial viewpoint, St. Louis is the best site for the new refinery. This site
would save the company about $200 million annually as compared to the Galveston alternative
and about $150 million as compared to the Los Angeles alternative. As we can see from the
above calculation when Los Angeles is chosen as a location for refinery then the cost for
shipping to distribution center is coming $1570 million and if Galveston is chosen as the
location for the new refinery then the cost comes upto $1630 million whereas for St.Louis the
28
cost for shipping to distribution center is $1430 million which a clear savings of $150 and $200
million which is mentioned above.
Final Table
Total Cost of Total Cost of Operating Cost for Total Variable

Shipping Shipping Finished New Refinery Cost
Site Crude Oil Products
Los Angeles $880 million $1.57 billion $620 million $3.07 billion
Galveston $920 million $1.63 billion $570 million $3.12 billion
St. Louis $960 million $1.43 billion $530 million $2.92 billion
Table 7 shows the total the total variable cost of each prospective site that were selected for
refinery .
Total Variable Cost =Total Cost of shipping Crude Oil + Total Cost of Shipping Finished
Products + Operating Cost for New Refinery
As we can see from the table 7 that total variable cost for the location St. Louis comes out to
be minimum among the 3 location selected and the total variable cost for the St. Louis is $
2.92 billion and therefore St. Louis selected as the location for refinery by Texago Corporation.
Linear Programming based Effective Maintenance and Manpower Planning

Strategy: A Case Study
29
In this study, maintenance related data of a cocoa processing industry in Akure, Ondo State of
Nigeria were collected, classified and analyzed statistically. Linear Programming (LP) model
was formulated based on the outcomes of the analyzed data. The data analyzed includes
maintenance budget, maintenance cycle, production capacity and waiting time of production
facilities in case of failure. Data were analyzed based on manpower cost, machine depreciation
cost and the spare part cost, which were assumed to be proportion to the number/magnitude of
the breakdowns. The generated LP model was solved using software named “TORA”. The
results of the model showed that four maintenance crews were needed to effectively carryout
maintenance jobs in the industry. The sensitivity analysis showed that the results have a wide
range of feasibility.
In any production firm there are two sub systems, human and technical. The two sub-systems
must be balanced and coordinated in order to function effectively. Many studies have been
carried out on how to make maintenance and manpower planning effective in a production
firm.
In previous studies, models adopted to analyze prevailing situation include:

1)Simulation model
2)Queue model
3)Utility model
4)Network analysis.
In this study, linear programming technique is used to analyze maintenance operations and
manpower planning in a production firm used to analyze maintenance operations and
manpower planning in a production firm that was used as a case study.
Objective
30
In pursuing the objective of the study, data were collected, classified, analyzed and the linear
programming model was formulated based on the data analyzed. The department whose data
was studied is the maintenance section of a production firm (Cocoa Processing Industry) in
Akure, Ondo State of Nigeria, which is responsible for the keeping of the plant and machinery
used for cocoa processing in operable condition. The data were collected through the use of
questionnaires and oral interview among employees in the maintenance section of the firm.
The data that were collected include the following: number and list of all the machines; types
of maintenance applied; budget on the maintenance; factors affecting maintenance; present
level of manpower planning in maintenance department; maintenance cycle of each of the
machines; and the waiting time of each of the machines.
After the collection of the data a close monitoring of the maintenance operations of the
production section was done over a period of two weeks to make ensure reliability of the data.
The major machines on which scheduled or time based preventive maintenance was carried out
include machine one:
(1) Cleaning and destoner,
(2) Dryer
(3) Winnower
(4) Reactor
(5) Roaster
(6) Map mill
(7) Liquor press
(8) Butter press
(9) Boiler.
The factors affecting the maintenance operation of the firm include understaffing in the
maintenance section, mismanagement of budgetary allocation, inadequate tools, equipment and
spare part.
Table1: Budget for Maintenance Operation
31
Manpower remuneration for the production N 6,900,000:00

section.
Total allocation for spare part for N 4,000,000:00

maintenance of the machine.
Total cost for depreciation of the machine. N52,000,000:00
Table2: Maintenance Cycle, Production Capacity and Waiting Time.
M/C Maintenance Waiting Production Capacity

Cycle, (Hrs) Time (Tons/hr)
(Codes) (H1)
1 720 (i) 1 3
2 1384 (ii) 2 2
3 5760 (iii) 2.5 2
4 1800 (iv) 3.33 2
5 2000 (v) 5 2.5
6 720 (vi) 6 1.5
7 2000 (vii) 8 1.5
8 1600 (viii) 1 2.5
9 2000 (ix) 3 1.5
The variables used are:
X1 = Number of crew allocated to machine 1

.
.
32
.
.
.
.
Objective:
The objective is to maximize the percentage production hour available per maintenance cycle
of each machine. That is minimize the waiting time of each machine.
Table3: Maintenance Cost Analysis

Machine 1 2 3 4 5 6 7 8 9 Max.
Availa
ble
cost/hr.
Manpower cost/hr. 13.49 15.74 5.62 17.90 28.10 53.96 44.97 6.75 16.86 347.22
Spare part cost/hr. 20.99 24.50 8.75 27.99 43.73 83.96 69.96 10.50 26.24 850.69
Depreciation cost/hr 826.97 432.40 137.83 344.57 334.57 826.94 344.57 413.49 344.57 9027.7
8
Table4: Production and Maintenance Hour Analyses
Machine S/N Number of repairs in a Max. hrs. available for % Production hrs. Available/
year repair in a year production cycle.
1 12 12 99.8
2 4 14 99.8
33
3 2 5 99.9
4 5 16 99.8
5 5 25 99.7
6 12 48 99.4
7 5 40 99.6
8 6 6 99.9
9 5 15 99.8
Conditions for application of simplex method
In order that the simplex method may be applied to a linear programming problem, the
following two conditions have to be satisfied.
1. The R.H.S of each of the constraint, bi should be non negative. If an LPP has a
constraint for which a negative resource value is given, it should be in first step,
converted into a positive value by multiplying both sides of the constraint by -1.
2. Each of the decision variables of the problem should be non negative.
The working of the simplex method proceeds by preparing a series of tables called simplex
tableaus.
Unbounded solution
If at any iteration no departing variable can be found corresponding to entering variable, the
value of the objective function can be increased indefinitely, i.e., the solution is unbounded.
Multiple (infinite) solutions
34
If in the final tableau, one of the non-basic variables has a coefficient 0 in the Z-row, it
indicates that an alternative solution exists. This non-basic variable can be incorporated in the
basis to obtain another optimal solution. Once two such optimal solutions are obtained, infinite
number of optimal solutions can be obtained by taking a weighted sum of the two optimal
solutions.
Infeasible solution
If in the final tableau, at least one of the artificial variables still exists in the basis, the solution
is indefinite.
Minimization versus maximization problems

As discussed earlier, standard form of LP problems consist of a maximizing objective function.
Simplex method is described based on the standard form of LP problems, i.e., objective
function is of maximization type. However, if the objective function is of minimization type,
simplex method may still be applied with a small modification. The required modification can
be done in either of following two ways.
1. The objective function is multiplied by −1 so as to keep the problem identical and

‘minimization’ problem becomes ‘maximization’. This is because of the fact that minimizing a
function is equivalent to the maximization of its negative.
2. While selecting the entering nonbasic variable, the variable having the maximum
coefficient among all the cost coefficients is to be entered. In such cases, optimal solution
would be determined from the tableau having all the cost coefficients as nonpositive (≤0 ) Still
one difficulty remains in the minimization problem. Generally the minimization problems
consist of constraints with ‘greater-than-equal-to’ ( ≥) sign. For example, minimize the price
(to compete in the market); however, the profit should cross a minimum threshold. Whenever
the goal is to minimize some objective, lower bounded requirements play the leading role.
Constraints with ‘greater-than-equal-to’ ( ≥) sign are obvious in practical situations.
The Equations Formed(According to the Tables):
35
The general linear program is of the form.
Max. Z* = 0.998X1 + 0.998X2 + 0.999X3 +0.998X4 + 0.997X5 + 0.994X6 +0.996X7 +

0.999X8 + 0.998X9
Subject to:
13.49X1 + 15.74X2 +5.62X3 + 17.90X4 + 28.1X5 + 53.96X6 + 44.97X7 + 6.75X8 +0.998X9 ≤ 347.22
20.99X1 + 24.5X2 + 8.75X3 + 27.99X4 + 43.73X5 + 83.96X6 + 69.96X7 + 10.5X8 +26.24X9 ≤ 850.69
826.97X1 + 432.4X2 + 137.83X3 + 344.57X4 + 344.57X5 + 826.97X6 + 344.57X7 + 413.49X8 +

344.57X9 ≤ 9027.78
Constraints on the maximum hour available for maintenance in each maintenance cycle:
X1 ≤ 1, X2 ≤ 2, X3 ≤ 2.5, X4 ≤ 3.33, X5 ≤5, X6 ≤ 4, X7 ≤ 8, X8 ≤ 1, X9 ≤ 3
Non-negativity X1≥0, X2≥0, X3≥0, … X9≥0

`
Output
36
37
38
39
40
Iteration 7
Sensitivity
41
The simplex algorithm is an iterative procedure for finding, in an systematic manner, the
optimal solution to a linear programming problem. Simplex method selects the optimal
solution from among the set of feasible solutions to the problem. By using this technique we
42
can consider a minimum number of feasible solutions to obtain an optimal one. This technique
is also helpful in determining that whether a given solution is optimal or not.
For applying simplex method to the solution of an LPP, first of all, an approximately selected
set of variables is introduced in the problem. The iterative process begins by assigning values
only to these variables and the primary variables of the problem are all set equal to zero. The
algorithm then replaces one of the initial variables by another variable—the variable which
contributes most to the desired optimal enters in, while the variable creating the bottleneck to
the optimal solution goes out. This improves the value of the objective function. This
procedure of substitution of variables is repeated until no further improvement in the objective
function value is possible. The algorithm terminates there indicating that the optimal solution is
reached, or that the given problem has no solution.
Sensitivity Analysis
Sensitivity analysis is used for ascertaining the limits within which objective coefficients can
be changed, limits within which quantities can be changed and the limits within which
constraint coefficients can be changed without affecting the solution.
1. limits of cj’s
2. limits of bi’s
3. limits of aij’s
In other words, Sensivity analysis is used for ascertaining how sensitive the existing solution is
to the above mentioned three changes.
Limits can be fixed for each quantity within which it can be changed without affecting the
existing solution and the shadow price of each resource.
1. Changes in objective function coefficients, cj’s
43
Under this we consider as to how the changes in the coefficients of the decision variables in the
objective function, shall influence the optimal solution.
We determine that whether the change of profit per unit of a product, that is currently being
produced, causes a change in the optimal solution to the problem. over a certain range, a
change, positive or negative, in the unit profit would not cause a change in the optimal
solution.
The least positive value provides the answer as to how much the profit could increase without
changing the solution. The least negative value is the maximum decrease in the profit that
would not cause a change in the profit.
2. Changes in the bi values: Right hand side ranging
Under this we determine the range over which each of the shadow price will remain valid.
The following two steps are used to determine the limits-:

a) Find the ratio of bi and the corresponding slack variable coefficient in the last table.
b) Find the least positive and the least negative ratio.
Least positive ratio gives the amount by which resource can be reduced and the least negative
ratio gives the amount by which given resources can be increased without affecting the shadow
price and the solution.
If the resource is not fully utilized, it can be reduced to the extend it is unutilized and it can be
increased to any extend without affecting the solution.
3. Change in the Technological coefficients,aij’s
44
In context of production problems ,aij values are determined by the technological

consideration. Due to technological improvements ,the time required for processing a particular
product may be reduced, which might or might not affect the optimal product mix.
Now after conducting a sensivity analysis of the problem we have obtained the following
results.
The objective coefficient of variable X1 ranges between 0.30 to infinity which leads to
reducing the cost by 0.70(1-0.30).
The objective coefficient of variable X2 ranges between 0.34 to infinity which can reduce the
cost by 0.66
cost by 0.87
The objective coefficient of variable X4 ranges between 0.40 to infinity which reduces the cost
by 0.60
cost by 0.37
The objective coefficient of variable X6 ranges between –infinity to 1.20 which can reduce the
cost by 0.20
The objective coefficient of variable X7 ranges between 0.83 to 1.60 which can reduce the cost
by 0.00
cost by 0.85
45
cost by 0.98
Advantages of Linear Programming
 The linear programming technique helps to make the best possible use of available
productive resources (such as time, labour, machines etc.)
46
 In a production process, bottle necks may occur. For example in a factory some
machines may be in a great demand while others may lie idle for sometime. A
significant advantage of linear programming is highlighting of such bottle necks.
 The quality of decision making is improved by this technique because the decisions are
made objectively and not subjectively.
 By using this technique, wastage of resources like time and money may be avoided.
Limitations of Linear Programming
 Linear programming is applicable only to problems where the constraints and the
objective function are linear i.e,where they can be expressed as equations which
represent straight lines.In real life situations,when constraints or objective functions are
not linear, this technique cannot be used.
 Factors such as uncertainty, weather conditions etc. are not taken into consideration.
 There may not be an integer as the solution, e.g., the number of men required may be a
fraction and the nearest integer may not be the optimal solution.
 i.e., Linear programming technique may give practical valued answer which is not
desirable.
 Only one single objective is dealt with while in real life situations, problems come with
multi-objectives.
 Parameters are assumed to be constants but in reality they may not be so.
47
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PROJECT ON OPERATION RESEARCH

OR PROJECT ON TRANSPORTATION AND

S.No Particular Page No.

1.1 Objective 4-5

1.2 Problem Description 5-8

1.3 Analysis 1 10-18

1.4 Analysis 2 18-30

1.5 Final Table 30

2 LPP Problem Background 31

2.2 Problem Description 33-35

2.3 Analysis 38-47

2.4 Advantages and Limitations of LPP 47-49

Transportation problem based on calculating expenditure while selecting

Potential Site Main Advantages

1. Near California oil fields

3. Fairly near San Francisco distribution center

1. Near Texas oil fields

Near Galveston, Texas 2. Ready access from Middle East imports

3. Near corporate headquarters

1. Low operating costs

Near St. Louis, Missouri 2. Centrally located for distribution centers

3. Ready access to crude oil via Mississippi River

Location of Texago’s current facilities

Type of Facility Locations

Oil fields 2. California

1. Near New Orleans, Louisiana

Refineries 2. Near Charleston, South Carolina

3. Near Seattle, Washington

Distribution centers 3. Kansas City, Missouri

4. San Francisco, California

Refinery Crude oil Needed Oil Field Crude Oil produced

New Orleans 100 Texas 80

Seattle 80 Alaska 100

New one 120 Total 240

Total 360 Needed Imports(360-240) 120

Analysis (Six Applications of a Transportation Problem)

Table 4 Cost data for shipping crude oil to a Texago refinery

New Los St.

Table 5 Cost data for shipping finished product to a distribution center

Cost per Unit Shipped (Millions of Dollars) Distribution

Number of units needed 100 80 80 100

Site Annual Operating Cost (Millions of Dollars)

Los Angeles 620

St. Louis 530

1. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including Los

Unit Cost ( $ millions ) New Orleans Charleston Seattle Los Angeles

Total cost = (40x2) + (40x3) + (60x1) + (80x3) + (20x4) + (60x2) + (60x3)

2. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including

Unit Cost ( $ millions ) New Charleston Seattle Galveston

Total = (20x2) + (60x1) + (60x3) + (20x5) + (80x3) + (60x2) + (60x3)

3. Texago Corp. Site-Selection Problem (Shipping to Refineries, Including St. Louis)

Unit Cost ( $ millions ) New Charleston Seattle St. Louis

Total = (80x1) + (20x5) + (40x4) + (20x5) + (80x3) + (80x2) + (40x3)

1. Texago Corp. Site-Selection Problem (Shipping to D.C.’s When Choose Los

Unit Cost ( $ millions ) Pittsburgh Atlanta Kansas City San Francisco

New Orleans 6.5 5.5 6 8

Total = (80x6.5) + (20x5.5) + (60x5) + (20x7) + (60x3) + (80x3) + (40x2)

2. Texago Corp. Site-Selection Problem (Shipping to D.C.’s When Choose Galveston)

Unit Cost ( $ millions ) Pittsburgh Atlanta Kansas City San Francisco

New Orleans 6.5 5.5 6 8

Total = (6.5x20) + (5.5x80) + (40x4) + (40x4) + (20x7) + (80x3) + (80x5) + (40x3)

Unit Cost ( $ millions ) Pittsburgh Atlanta Kansas City San Francisco