Advanced Operations Research

By: Muzna Abid

Institute of Quality & Technology Management,

University of the Punjab
 Books for reference

 Operations Research (8th edition) by Hamdy A. Taha.

 An Introduction to Management Science (13th

edition) by Andersen, Sweeney, Williams, Camm,
Martin.

 Introduction to Operations Research (9th edition) by

Frederick S. Hiller, Gerald J. Lieberman.
Marks Distribution for this
module

 Mid Exam: 35
 Final Exam: 40
 Sessional: 25
(Assignments,
Attendance, Class
participation,
Quizzes)
Introduction to Operations Research
 The origins of Operations Research can be traced back to decades, when
early attempts were made to use a scientific approach in the
management of organizations.
 Management science is the synonym used for operations Research.
 As its name implies ---- Research on operations
 Operations: OR is applied to problems that concern how to conduct
and coordinate the operations (i.e. activities) within an organizations.
 Research: The research part of the name means that OR uses an
approach that resembles the way research is conducted. The scientific
method is used to investigate the problem of concern.
Introduction Continued…
 Step wise process in order to apply OR:
1. In particular, the process begins by carefully observing & formulating
the problem, including gathering all relevant data.
2. Construct a scientific (typically mathematical) model that attempts to
abstract the essence of real problem.
This model is hypothesized.
*Model is a sufficient and precise representation of essential features of the
situation.
3. Model Validation: We made some hypothesis (assumptions) about real
problem & now some experiments are conducted to test this hypothesis.
4. Modify the model if needed & eventually verify some form of
hypothesis.
Characteristics of OR
 It is concerned with the practical management of the organization.
 Provides understandable conclusions to the decision maker.
 OR has a characteristic of broad view point.
( This does not imply that the study of each problem must give
explicit consideration to all aspects of the organization rather, the
objectives being sought must be consistent with those of overall
organizations).
“Objective function”
OR frequently attempts to search for a best solution (referred to as
optimal solution) for the model.
“Search for optimality is an important theme in OR.”
Overview of the OR Modeling Approach

Defining the problem and gathering the data:

 This includes:
Determining such things as the appropriate objectives, Constraints
on what can be done, interrelationships b/w the area to be studied
and other areas of the organization.
 Problem definition- is the crucial one because it greatly affects
how relevant the conclusions of the study will be. It is difficult to
extract a ‘right’ answer from the ‘wrong’ problem.
 One of the most important aspect of problem definition is making
sure appropriate objectives are made.
Formulating a mathematical model:
 The next phase is to reformulate the problem that is easy for
analysis. The conventional method is to formulate a
mathematical model.

 A model?
 It is an idealized representation of a real life situation.
Common examples include model airplane, portraits, globes
and so on.
 A mathematical model?
 The are expressed in terms of mathematical symbols and
expressions. For example F=ma, E=mc^2
 Flow chart of the process of transforming model
inputs into outputs

*The uncontrollable inputs are those the decision maker cannot influence.
*The uncontrollable inputs can either be known or unknown.
Types of Models
 SYMBOLIC MODELS: Symbolic (i.e., algebraic, numerical, logical) models
represent the properties of the real life system through the means of symbols,
mathematical equations, computer programs and simulation models are also symbolic
models.
 DETERMINISTIC MODELS: Deterministic models are models which do not
contain the element of probability. Deterministic models involve optimization.
 Examples are: Linear programming, Non – linear programming, Integer
programming, Network optimization, and Dynamic programming.
 STOCHASTIC MODELS: stochastic models are models which contain the
element of probability. Stochastic models characterize/estimate system
performance.
 Examples are: Queuing theory, Stochastic processes, Reliability theory, and
Simulation techniques.
OR Techniques
 One of the first attempts of classification was devised by Rivett and
Ackoff (1963). This classification is not complete because still more and
more techniques can be added in the following list.
 Linear Programming
 Assignment Problems
 Transportation Problems
 Integer Programming
 Network Analysis
 Queuing Theory
 Inventory Control Models
 Decision Theory and Game Theory
 Simulation
 Dynamic Programming
 Goal Programming
Introduction to Linear programming
(LP):
 Linear Programming uses a mathematical model to describe
the problem of concern.
 The adjective linear means that all the mathematical
functions in this model are required to be linear functions.
 The term programming here is essentially a synonym for
planning.
 “ Linear programming involves the planning of activities to
obtain an optimal result.”
Linear Programming (LP)
 We attempt to maximize (or minimize) a linear function of the
decision variables. (Objective Function)
 The values of the decision variables must satisfy a set of
constraints, each of which must be a linear inequality or linear
equality.
 A sign restriction on each variable. For each variable Xi the sign
restriction can either say
 Xi ≥ 0,
 Xi ≤ 0,
 Xi unrestricted.
Linear Programming (LP)
PRODUCT (PRODUCTION) MIX PROBLEM # 1:

A firm is engaged in producing two products ‘A’ and ‘B’. Each

unit of product ‘A’ requires 3Kg of raw material and 5 labor
hour for processing, where as each unit of product ‘B’
requires 6Kg of raw material and 4 labor hours of the same
type. Every month the firm has the availability of 60Kg of
raw material and 70 Labor hours. One unit of product ‘A’ sold
earns profit Rs. 30 and one unit of product ‘B’ sold gives Rs.
40 as profit.
Formulate this problem as linear programming problem to
determine as to how many units of each of the products
should be produced per month so that the firm can earn
maximum profit, assume all unit produced can be sold in the
market.
 Decision Variables: Let X1 and X2 be the number of products ‘A’
and ‘B’ respectively.

 Objective Function:
 Product – A: As, ‘X1’ are the units of product ‘A’, So, Product ‘A’
contributes a profit of Rs. 30X1 from one unit of product.
 Product – B: As, X2 are the units of product ‘B’, So, Product ‘B’
contributes a profit of Rs. 40X2 from one unit of product.

 Maximize Z = 30X1 + 40X2

CONSTRAINTS:
Material Constraint: 3X1 + 6X2 ≤ 60
Labor Constraint: 5X1 + 4X2 ≤ 70
Non–negativity Constraint: As X1 and X2, being the number of units
produced of products ‘A’ and ‘B’ cannot have negative values thus,
X1≥0 and X2≥0. i.e. X1,X2 ≥ 0.

The Complete LP problem model is:

Maximize: Z = 30X1 + 40X2
Subject to:
3X1 + 6X2 ≤ 60
5X1 + 4X2 ≤ 70
X1 , X2 ≥ 0
Assumptions in LP Model
 LINEARITY OR PROPORTIONALITY:
 Proportionality means that the objective function and constraint coefficients are
strictly proportional to the decision variable (e.g., If the first unit of production requires
‘2’ hours of labor so it must the 50th and 100th unit also requires ‘2’ hours of labor).
 DIVISIBILITY:
 Divisibility means that non integer (fractional) values of the decision variables are
acceptable. (e.g., LP allows a production program which uses 400 units of electronic
component and 68.33 man hours of labor time to produce 40 units of black and
white television sets and 25.7 units of colored television sets per week. If a fraction of
a product cannot be produced, Integer Programming is a special technique which
can be used for finding non-fractional values of resource usage and decision
variables).
 CERTAINTY:
 Certainty means that the values of the parameters are known and constant.
Assumptions in LP Model
 ADDITIVITY:
 Additivity means the total effect of each decision variable (Profit, Cost, etc.) must
equal the sum of the effects contributed by each decision variable and terms of each
constraint must be additive (Total amount of resource consumed or provided) must
equal the sum of the resources used (or provided) by each decision variable.
 (e.g., if an objective is to maximize profit equal to Rs. 10 per unit of the first product
made plus Rs. 5 per unit of the second product made, and if one unit of each product
is actually produced, then the profit contributions of Rs. 10 and Rs. 5 must be added
up to produce a sum of Rs. 15).
 NON–NEGATIVITY:
 Non – negativity means that the decision variables are permitted to have only the
values which are greater than or equal to zero.
 Development & Formulation of LP Model
PRODUCT (PRODUCTION) MIX PROBLEM # 2: Four varieties of ties produced:
1. one is an expensive, all-silk tie,
2. one is an all-polyester tie, and
3. two are blends of polyester and cotton.
The table on the following slide illustrates the cost and availability (per monthly production planning period) of
the three materials used in the production process
 Monthly cost & availability of material
 The following table summarizes the contract demand for each of
o the four styles of ties,
o the selling price per tie, and
o the fabric requirements of each variety.

o Fifth Avenue’s goal is to maximize its monthly profit. It must decide upon a policy for product mix.
PORTFOLIO SELECTION PROBLEM:
Mr. Ali has Rs. 70, 000 to investment in several alternatives. The
alternative investments are national certificates with an 8.5% return,
Defense Savings Certificates with a 10% return, NIT with a 6.5% return,
and khas deposit with a return of 13%. Each alternative has the same
time until maturity. In addition, each investment alternative has a different
perceived risk thus creating a desire to diversify. Ali wants to know how
much to invest in each alternative in order to maximize the return.
The following guidelines have been established for diversifying
the investments and lessening the risk;
 No more than 20% of the total investment should be in khas
deposit.
 The amount invested in Defense Savings Certificates should not
exceed the amount invested in the other three alternatives.
 At least 30% of the investment should be in NIT and Defense
Savings Certificates.
 The ratio of the amount invested in national certificates to the
amount invested in NIT should not exceed one to three.
Formulate the problem as a LP model.
Linear programming (Graphical
Method)
 An important aspect of the graphical method is the ability to graph
lines showing the constraints and the objective function of the
linear program.
 In linear programming terminology, any unused capacity for a ≤
constraint is referred to as the slack associated with the constraint.
 Slack variables are added to the formulation of the linear
programming problem, to represent the slack or idle capacity.
 Unused capacity makes no contribution to the profit, thus, slack
variables have coefficient of zero in the objective function.
Slack & Surplus
 Slack
A ≤ B
A +x=B

 Surplus ( Negative slack)

A≥B
A=B+x
A–x=B
Problem (solve using Graphical method)

Z = 3A + 3B
s.t.
2A + 3B ≤ 12
6A + 4B ≤ 24
Standard form:
Z = 3A + 3B + 0S1 + 0S2
s.t.
2A + 3B + S1 = 12
6A + 4B + S2 = 24
Note (from practical point of view)
Linear programming (Graphical
Method)
Example: (The Reddy Mikks Company)
Reddy Mikks produces both interior and exterior paints from two raw materials, M1 and M2. the
following table provides the basic data of the problem:

Tons of raw material per ton of

Exterior paint Interior paint Maximum daily

availability (tons
Raw material M1 6 4 24
Raw material M2 1 2 6
Profit per ton ($1000) 5 4

A market survey indicates that the daily demand for interior paint cannot exceed that for exterior paint
by more than 1 ton. Also, the maximum daily demand for interior paint is 2 tons.
Reddy Mikks wants to determine the optimum(best) product mix of interior and exterior paints that
maximize the total daily profit.
Decision variables: That we seek to determine.
x1= Tons produced daily of exterior paint
x2= Tons produced daily of interior paint
Objective Function: That we need to optimize (maximize or minimize).
Total profit from exterior paint = 5x1 (thousand) dollars
Total profit from interior paint = 4x2 (thousand) dollars
Z represent the total daily profit (in thousand of dollars), the objective function of the company is
Maximize Z = 5x1 +4x2
Constraints: That solution must satisfy.
Material restriction:
6x1+4x2 ≤ 24 (Raw material M1)
x1 + 2x2 ≤ 6 (Raw material M2)
Market restriction:
x2 ≤ x 1 + 1
x2 – x1 ≤ 1
Demand restriction:
x2 ≤ 2
Non negativity constraint:
x1 ≥ 0 ; x2 ≥ 0
*Thus, the non-negativity of the variables restricts the solution-space to the first quadrant.
 The feasible solution space of the problem represents the area in the first quadrant in which all the
constraints are satisfied.
 Any point in or on the boundary of the area ABCDEF is part of the feasible solution space.
 All parts outside the area are infeasible.
 The determination of the optimum solution requires identifying the direction in which the profit function
Maximize Z = 5x1 +4x2 increases.
 As the number of constraints and variables increases, the number of corner points (promising solution
points) also increases.

Corner Point (x1, x2) Z

A (0,0) 0
B (4,0) 20
C (3,15) 21 (Optimum)
D (2,2) 18
E (1,2) 13
F (0,1) 4
 Therefore 3 tons of exterior paint produced & 15 tons of interior paint produced is the
optimum product mix that maximizes the total daily profit.
Minimization Problem
Moore's Meatpacking company produces a hot dog mixture in 1,000 pound batches.
The mixture contains two ingredients _ chicken and beef.
The cost per pound of each of these ingredients as follows:

Ingredient  Cost

Chicken $3

Beef $5

Each batch has the following recipe requirements:

a. at least 500 pounds of chicken.
b. At least 200 pounds of beef.
The ratio of chicken to beef must be at least 2 to 1.
The company wants to know the optimal mixture of ingredients that will minimize cost.
 Formulate a linear programming model for this problem.
 Problem (solve using Graphical method)

The time required to produce the first type of toy is 6 hours , 8 hours , and
12 hours in machines A , B , and C respectively. The time required to
produce the second type of toy is 8 hours , 4 hours , and 4 hours in
machines A , B , and C respectively .
The maximum available time ( in hours ) for the machines A , B , and C are
380 , 300 , 404 respectively . The profit on the first type of toy is $5 per
unit while on the second type of toy is $3 per unit .
Formulate the problem as a LP problem so as to maximize profit .