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SIKKIM MANIPAL UNIVERSITY DEPARTMENT OF DISTANCE EDUCATION ASSIGNMENT SEMESTER 2 FULL NAME ROLL NUMBER LEARNING CENTER SUBJECT NAME SUBJECT CODE BOOK ID MODULE NO : Galchar Pankaj N : 521113886 : 1771 : Operations Research : MB0048 : B1301 : SET 2

DATE OF SUBMISSION AT THE LEARNING CENTRE : 19-June-2012 FACULTY SIGNATURE :

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Master of Business Administration-MBA Semester 2nd MB0047 Operations Research - 4 Credits Assignment Set- 2
Q.1 What is model in OR ? disscuss different models available in OR. ANS:
A model is an idealized representation or abstraction of a real-life system. The objective of a model is to identify significant factors that affect the real-life system and their interrelationships. A model aids the decision-making process as it provides a simplified description of complexities and uncertainties of a problem in a logical structure. The most significant advantage of a model is that it does not interfere with the real-life system. A broad classification of OR models You can broadly classify OR models into the following types. a. Physical Models include all form of diagrams, graphs and charts. They are designed to tackle specific problems. They bring out significant factors and interrelationships in pictorial form to facilitate analysis. There are two types of physical models: a. Iconic models b. Analog models Iconic models are primarily images of objects or systems, represented on a smaller scale. These models can simulate the actual performance of a product. Analog models are small physical systems having characteristics similar to the objects they represent, such as toys. b. Mathematical or Symbolic Models employ a set of mathematical symbols to represent the decision variable of the system. The variables are related by mathematical systems. Some examples of mathematical models are allocation, sequencing, and replacement models. c. By nature of Environment: Models can be further classified as follows: a. Deterministic model in which everything is defined and the results are certain, such as an EOQ model. b. Probabilistic Models in which the input and output variables follow a defined probability distribution, such as the Games Theory. d. By the extent of Generality Models can be further classified as follows: a. General Models are the models which you can apply in general to any problem. For example: Linear programming. b. Specific Models on the other hand are models that you can apply only under specific conditions. For example: You can use the sales response curve or equation as a function of only in the marketing function.

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Types of OR Models A model is an idealised representation or abstraction of a real-life system. The objective of a model is to identify significant factors that affect the real-life system and their interrelationships. A model aids the decision-making process as it provides a simplified description of complexities and uncertainties of a problem in a logical structure. The most significant advantage of a model is that it does not interfere with the real-life system.

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1 A broad classification of OR models :

You can broadly classify OR models into the following types. A. Physical Models : include all form of diagrams, graphs and charts. They are designed to tackle specific problems. They bring out significant factors and interrelationships in pictorial form to facilitate analysis. There are two types of physical models: a. Iconic models b. Analog models Iconic models are primarily images of objects or systems, represented on a smaller scale. These models can simulate the actual performance of a product. Analog models are small physical systems having characteristics similar to the objects they represent, such as toys. B. Mathematical or Symbolic Models employ a set of mathematical symbols to represent the decision variable of the system. The variables are related by mathematical systems. Some examples of mathematical models are allocation, sequencing, and replacement models.

C. By nature of Environment: Models can be further classified as follows: a. Deterministic model in which everything is defined and the results are certain, such as an EOQ model. b. Probabilistic Models in which the input and output variables follow a defined probability distribution, such as the Games Theory. D. By the extent of Generality Models can be further classified as follows: a. General Models are the models which you can apply in general to any problem. For example: Linear programming. b. Specific Models on the other hand are models that you can apply only under specific conditions. For example: You can use the sales response curve or equation as a function of only in the marketing function. 4|Page

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Q.2 Write dual of Max Z = 4x1+5x2 Subject to 3x1+x215 X1+2x210 5x1+2x220 X1, X20
Ans Min W = 15Y1 + 10Y2 + 20Y3 Subject to 3Y1 + Y2 + 5Y3 4 Y1 + 2Y2 + 2Y3 5 Y1, Y2, Y3 0

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Q.3. write a note on monte-carlo simulation. Ans:

A technique which has had a great impact in many different fields of computational science is a technique called "Monte Carlo Simulation." This technique derives its name from the casinos in Monte Carlo - a Monte Carlo simulation uses random numbers to model some sort of a process. This technique works particularly well when the process is one where the underlying probabilities are known but the results are more difficult to determine. A great deal of the CPU time on some of the fastest computers in the world is spent performing Monte Carlo simulations because we can write down some of the fundamental laws of physics but cannot analytically solve them for problems of interest. An example of how a Monte Carlo simulation can be used in everyday life is a project one of my students did in a FORTRAN class - he wanted to find the best strategy for winning money at blackjack. The conventional approach (using just statistics) would be to write down the probability of having a particular combination (such as having an Ace and a Five with the dealer showing a Jack) and then calculating the expected payoff from each possible scenario (hit or no hit, but then you must calculate what to do if you get a seven after a hit). If you start thinking about all of the possible it quickly becomes overwhelming. This problem, however, works very well as a Monte Carlo simulation. We know the underlying probabilities (drawing any particular card out a deck is 1/52 or if there are 5 decks in a shoe it is 1/5*52) and so all we need are the "rules" to use. In this case, the student wrote a program which would randomly generate a shoe of 5 decks of cards. It would then "deal" the cards to him and the "dealer." The "dealer" always followed the standard rules (hit on 16 and stay on 17) and the student programmed in the betting stratagy he wanted to test (on what combinations he would hit or stay, double, split, etc.). Then he would run the program and have it generate several hundred shoes and keep track of the winnings (or losings) and print the results at the end (this would take about an hour on a PC). One can then test various stratagies and see how they will actually work out in the long run. Let us do a simple example of a Monte Carlo simulation to illustrate the technique. First, let us consider the following problem, we want to make a simulation that will allow us to find the value of pi. We will do this in the following way: consider a square that has one corner at the origin of a coordinate system and has sides of length 1 - it will obviously have an area of 1. Now consider inscribing a quarter of a circle inside of this with a radius of 1 - we know that its area is pi/4. We can a Monte Carlo simulation to find the relative area of the circle and square and then multiply the circle's area by 4 to find pi. In particular, the way we will find the area of the circle is to note the

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following: for a point (X,Y) to be inside of a circle of radius 1, its distance from the origin (X2+Y2) will be less than or equal to 1. We can generate thousands of random (X,Y) positions and determine whether each of them are inside of the circle. Each time it is inside of the circle, we will add one to a counter. After generating a large number of points, the ratio of the number of points inside the circle to the total number of points generated will approach the ratio of the area of the circle to the area of the square.
Given that there are so many possible names, it might be too much to ask our little simulation to produce theexact set of names that exist in the documents. Not that it would be intrinsically wrong to ask the simulation toproduce real names, but you could easily run into either of two practical problems: 1. You might have to run far too many simulations before you nd one that produces more than a few of thenames that actual Englishmen had. It could well be that the set of possible names was far larger than the set of Englishmen, for instance. If so, even a correct simulation might well produce the names of Englishmenin some alternate universe names that they might have had, had their mothers married someone dierent.This could mean that you run out of time or money before you nd a good solution. 2. You might nd that you need to know too many things to get the s o l u t i o n t o m a t c h i n e n o u g h d e t a i l . Suppose you needed to know the probability that each possible nickname could end up in a name? Onecannot deduce that information without looking at some data; if looking at descriptive nicknames in otherlanguages is not sucient, your only hope would be to put an adjustable parameter in for the probabilityof each nickname, an d hope that the data will actually allow you to choose these values. By doing that, you will probably end up with a family of models that has too many adjustable parameters forthe available data. Aside from taking longer and costing more, you will nd that many of these models in thefamily are equally good ts to the available data, and consequently, there are many possible combinationsof adjustable parameters that are equally likely, given the data.

The real problem is that, along with many possible value s of these parameters that you might not reallycare abut, any adjustable parameters that you actually Do care about may well become quite uncertain, too. Consequently, it might be more practical, rather than matching names in detail, to match classes of names,and to see how well the simulation generates names in the right class, even if the names are not exactly the same. F o r o u r e x a m p l e h e r e , o u r c l a s s e s w i l l b e names of one, two, three, ...

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Q.4 Explain PERT PERT Some key points about PERT are as follows: PERT was developed in connection with an R&D work. Therefore, it had to cope with the uncertainties that are associated with R&D activities. In PERT, the total project duration is regarded as a random variable. Therefore, associated probabilities are calculated so as to characterise it. It is an event-oriented network because in the analysis of a network, emphasis is given on the important stages of completion of a task rather than the activities required to be performed to reach a particular event or task. PERT is normally used for projects involving activities of non-repetitive nature in which time estimates are uncertain. It helps in pinpointing critical areas in a project so that necessary adjustment can be made to meet the scheduled completion date of the project. Phases of PERT-CPM 1. Project Planning: In the project planning phase, you need to perform the following activities:

Identify various tasks or work elements to be performed in the project. Determine requirement of resources, such as men, materials, and machines, for carrying out activities listed above. Estimate costs and time for various activities. Specify the inter-relationship among various activities. Develop a network diagram showing the sequential inter-relationships between the various activities. 2. Project Scheduling: Once the planning phase is over, scheduling of the project is when each of the activities required to be performed, is taken up. The various steps involved during this phase are listed below:

Estimate the durations of activities. Take into account the resources required for these execution in the most economic manner. Based on the above time estimates, prepare a time chart showing the start and finish times for each activity. Use the time chart for the following exercises. To calculate the total project duration by applying network analysis techniques, such as forward (backward) pass and floats calculation To identify the critical path To carry out resource smoothing (or levelling) exercises for critical or scarce resources including re-costing of the schedule taking into account resource constraints 3. Project Control: Project control refers to comparing the actual progress against the estimated schedule. If significant differences are observed then you need to re-schedule the project to update or revise the uncompleted part of the project.

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Q.5 Explain Maximini-minimax principle Ans :
Solving a two-person zero-sum game : Player A and player B are to play a game without knowing the other players strategy. However, player A would like to maximize his profit and player B would like to minimize his loss. Also each player would expect his opponent to be calculative. Suppose player A plays A1. Then, his gain would be a11, a12, ... , a1n, accordingly Bs choice would be B1,B2, , Bn. Let 1 = min { a11, a12, , a1n. Then, 1 is the minimum gain of A when he plays A1 (1 is the minimum pay-off in the first row. Similarly, if A plays A2, then his minimum gain is 2, the least pay-off in the second row. You will find corresponding to As play A1, A2, , Am, the minimum gains are the row minimums 1, 2, , m. Suppose A chooses the course of action where i is maximum. Then the maximum of the row minimum in the pay-off matrix is called maximin. The maximin is = max I { min j (aij) } Similarly, when B plays, he would minimise his maximum loss. The maximum loss to B is when Bj is j = max i ( aij ). This is the maximum pay-off in the j th column. The minimum of the column maximums in the pay-off matrix is called minimax. The minimax is = min j { max I (aij) } If = = v (say), the maximin and the minimax are equal and the game is said to have saddle point. If < , then the game does not have a saddle point. Saddle point : In a two-person zero-sum game, if the maximin and the minimax are equal, the game has saddle point. Saddle point is the position where the maximin (maximum of the row minimums) and minimax (minimum of the column maximums) coincide. If the maximin occurs in the rth row and if the minimax occurs in the sth column, the position (r, s) is the saddle point. Here, v = ars is the common value of the maximin and the minimax. It is called the value of the game. The value of a game is the expected gain of player A, when both the players adopt optimal strategy. Note: If a game has saddle point, (r, s), the players strategy is pure strategy. Solution to a game with saddle point : Consider a two-person zero-sum game with players A and B. Let A1, A2, ,Am be the courses of action for player A. Let B1, B2, ,Bn be the courses of action for player B. The saddle point of the game is as follows: 1. The minimum pay-off in each row of the pay-off matrix is encircled. 9|Page

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2. The maximum pay-off in each column is written within a box. 3. If any pay-off is circled as well as boxed, that pay-off is the value of the game. The corresponding position is the saddle point. Let (r, s) be the saddle point. Then, the suggested pure strategy for player A is Ar. The suggested pure strategy for player B is Bs. The value of the game is ars. Note: However, if none of the pay-offs is circled or boxed, the game does not have a saddle point. Hence, the suggested solution for the players is mixed strategy.

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Q 6. Write short notes on the following:
a. Linear Programming b. transportation Ans :Linear Programming :Linear programming focuses on obtaining the best possible output (or a set of outputs) from a given set of limited resources. The LPP is a class of mathematical programming where the functions representing the objectives and the constraints are linear. Optimization refers to the maximization or minimization of the objective functions. You can define the general linear programming model as follows: Maximize or Minimize: Z = c1X1 + c2X2 + --- +cnXn Subject to the constraints, a11X1 + a12X2 + --- + a1nXn ~ b1 a21X1 + a22X2 + --- + a2nXn ~ b2 am1X1 + am2xX2 + --- + amnXn ~ bm and X1, X2, .., Xn 0 Where, cj, bi and aij (i = 1, 2, 3, .. m, j = 1, 2, 3 ------- n) are constants determined from the technology of the problem and Xj (j = 1, 2, 3 ---- n) are the decision variables. Here ~ is either (less than), (greater than) or = (equal). Note that, in terms of the above formulation the coefficients cj, bi and aij are interpreted physically as follows. If bi is the available amount of resources i, where aij is the amount of resource i that must be allocated to each unit of activity j, the worth per unit of activity is equal to cj. Transportation :Transportation model is an important class of linear programs. For a given supply at each source and a given demand at each destination, the model studies the minimization of the cost of transporting a commodity from a number of sources to several destinations. The transportation problem involves m sources, each of which has available ai (i = 1, 2 m) units of homogeneous product and n destinations, each of which requires bj (j = 1, 2., n) units of products. Here ai and bj are positive integers. The cost cij of transporting one unit of the product from the ith source to the jth destination is given for each i and j. The objective is to develop an integral transportation schedule that meets all demands from the inventory at a minimum total transportation cost. It is assumed that the total supply and the total demand are equal. mi=1 ai = nj=1 bj (1) The condition (1) is guaranteed by creating either a fictitious destination with a demand equal to the surplus if total demand is less than the total supply or a (dummy) source with a supply equal to the shortage if total demand exceeds total supply. The cost of transportation from the fictitious destination to all sources and from all destinations to the fictitious sources are assumed to be zero so that total cost of transportation will remain the same. The standard mathematical model for the transportation problem is as follows. 11 | P a g e

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Let Xij be number of units of the homogenous product to be transported from source i to the destination j. Then objective is to Minimize Z = mi=1 nj=1 CIJ Xij Subject to mi=1 ai, i = 1, 2, 3, -------------, m and nj=1 bj, j = 1, 2, 3, -------------, n (2) With all XIJ 0 A necessary and sufficient condition for the existence of a feasible solution to the transportation problem (2) is: mi=1 ai = nj=1 bj

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