GROUP MEMBERS

Roll Nos. 25 26 31 49 53 50

Names: Sumaiya Sakhani Urmi Sampat Sonia Verma Shahan Engineer Aseem Shah Asees Ghura

ACKNOWLEDGEMENT:

We have taken efforts in this project. However, it would not have been possible without the kind support and help of Prof. Nimalan. We would like to extend our sincere thanks to him. We are highly indebted to Prof. Nimalan for the guidance and constant supervision as well as for providing necessary information regarding the project & also for the support in completing the project. We would like to express our gratitude towards our co-mates for their kind co-operation and encouragement which helped us in completion of this project. We would like to express our special gratitude and thanks to Nimalan Sir for giving us such attention and time. Our thanks and appreciations also go to our college, classmates and other group members who have willingly helped each other out with their abilities.

Operations Research
Introduction:
Research applied to operations was practically prior to the World War II. The first record of a modern operations research effort is that of the Antiaircraft Command Research Group organized in 1940 in the United Kingdom to study problems arising from the interaction of radar equipment and anti aircraft guns. Besides radar operational improvements, studies included such activities as antisubmarine operations, aerial mining of the sea, merchant convoy size determination, ship man oeuvres under aerial attack, and statistical analysis of bomb damage. Organizations of professional operations researches were formed early in the post war period. Operations research techniques were utilized in India firstly in 1949, when an Operations Research unit was established at the Regional Research Laboratory, Hyderabad.

Characteristics of OR:
It addresses decision making problems. It has inter disciplinary team approach. Uses scientific approach for an optimum solution. Can handle maximization and minimization type problems. Can handle problems with various constraints and restrictions.

Techniques of OR:
1. Assignment of Jobs to Facilities. 2. Transportation Problems. 3. Linear Programming Problem. 4. Competitive Strategies or Game Theory. 5. Decision Analysis. 6. Network analysis (PERT/CPM).

Applications of OR:
1.

1.

1.

Financial Management: To build cash management models Management of Portfolio investment. Forecasting cash flows and long term capital needs. Optimum equipment replacement policies. Assigning audit teams effectively. Production Management: Balancing output level and market demand. Determination of Production schedule. Use in quality control. Machine scheduling problems. Determining landing and takeoff schedules. Marketing Management: Determining optimum product mix. Determining advertising outlay between different media. Choice of marketing strategy. Find the least cost shipment routes.

1.

Deciding sales mans travel plans. Human Resource Development: Scheduling training programs. Determining employment of permanent and temporary workers. Deciding shift allocations and allocation of sales force to various activities.

Limitations of OR:
a) It needs a clear statement of objectives and the assumptions regarding constraints. b)The manager has to define precisely the relationship between the different variables. c) The solution depends on correctness of the model build. d)Requires lengthy calculations. e) Many factors may affect decisions and some of these may be difficult to be quantified.

Linear Programming Problem:

Linear programming (LP, or linear optimization) is a mathematical method for determining a way to achieve the best outcome (such as maximum profit or lowest cost) in a given mathematical model for some list of requirements represented as linear relationships. Linear programming is a specific case of mathematical programming (mathematical optimization).

Introduction:
More formally, linear programming is a technique for the optimization of a linear objective function, subject to linear equality and linear inequality constraints. Its feasible region is a convex polyhedron, which is a set defined as the intersection of finitely many half spaces, each of which is defined by a linear inequality. Its objective function is a real-valued affine function defined on this polyhedron. A linear programming algorithm finds a point in the polyhedron where this function has the smallest (or largest) value if such point exists. Linear programs are problems that can be expressed in canonical form:

where x represents the vector of variables (to be determined), c and b are vectors of (known) coefficients and A is a (known) matrix of coefficients. The expression to be maximized or minimized is called the objective function (cTx in this case). The equations Ax b are the constraints which specify a convex polytope over which the objective function is to be optimized. (In this context, two vectors are comparable when every entry in one is less-than or equal-to the corresponding entry in the other. Otherwise, they are incomparable.) Linear programming can be applied to various fields of study. It is used most extensively in business and economics, but can also be utilized for some engineering problems. Industries that use linear programming models include transportation, energy, telecommunications, and manufacturing. It has proved useful in modeling diverse types of problems in planning, routing, scheduling, assignment, and design.

Assumptions:
Linear programming is a mathematical technique for solving constrained maximization and minimization problems when there are many constraints and the objective function to be optimized, as well as the constraints faced, are linear (i.e., can be represented by straight lines). Linear programming was developed by the Russian mathematician L. V. Kantorovich in 1939 and extended by the American mathematician G. B. Danzig in 1947. Its acceptance and usefulness have been greatly

enhanced by the advent of powerful computers, since the technique often requires vast calculations. Firms and other organizations face many constraints in achieving their goals of profit maximization, cost minimization, or other objectives. With only one constraint, the problem can easily be solved with the traditional techniques presented in the previous two chapters. In order to maximize output subject to a given cost constraint (iso cost), the firm should produce at the point where the isoquant is tangent to the firms iso-cost. Similarly, in order to minimize the cost of producing a given level of output, the firm seeks the lowest iso-cost that is tangent to the given isoquant. In the real world, however, firms and other organizations often face numerous constraints. For example, in the short run or operational period, a firm may not be able to hire more labor with some type of specialized skill, obtain more than a specified quantity of some raw material, or purchase some advanced equipment, and it may be bound by contractual agreements to supply a minimum quantity of certain products, to keep labor employed for a minimum number of hours, to abide by some pollution regulations, and so on. To solve such constrained optimization problems, traditional methods break down and linear programming must be used. Linear programming is based on the assumption that the objective function that the organization seeks to optimize (i.e., maximize or minimize), as well as the constraints that it faces, is linear and can be represented graphically by straight lines. This means that we assume that input and output prices are constant, that we have constant returns to scale, and that production can take place with

limited technologically fixed input combinations. Constant input prices and constant returns to scale mean that average and marginal costs are constant and equal (i.e., they are linear). With constant output prices, the profit per unit is constant, and the profit function that the firm may seek to maximize is linear. Similarly, the total cost function that the firm may seek to minimize is also linear. The limited technologically fixed input combinations that a firm can use to produce each commodity result in isoquants that are not smooth but will be made up of straight line segments. Since firms and other organizations often face a number of constraints, and the objective function that they seek to optimize as well as the constraints that they face are often linear over the relevant range of operation, linear programming is very useful.

Examples of Application of LPP:

Product Mix Problem It decides the combination of various types of products which are supposed to be manufactured with available resources keeping in mind to maximize profit or to minimize cost. Advertising Problem It decides the number of advertising units of respective media which are supposed to be bought to maximize the audience exposure. Staffing Problem

It decides a large restaurant, hospital, education institute or a MNC to meet their manpower needs at all hours with minimum number of employees. Investment Problem To select specific areas for investments among the alternative so as to maximize ROI & minimize risk. Transportation Problem To decide how many units are to be transported from a specific origin to a specific destination so that the overall transportation cost is minimum. Assignment Problem To allocate different jobs to different entities to achieve maximum profit or minimum cost.

Terminology Of Linear Programming:

A typical linear program has the following components: 1. An objective function. 2. Constraints or restrictions. 3. Non-negativity restriction. And the following terms are commonly used to describe a typical L.P.P. Decision variables: Decision variables are the unknowns whose values are to be determined from the solution of the problem. E.g. decision variables in the furniture manufacturing problem are say the tables and chairs whose values or actual units of production are to be found from the solution of the problem. These variables should be inter-related in terms of consumption of resources. For example, both tables and chairs require carpenters time and also wood and

other resources and any change in the quantity produced of table affects the production level of chairs. Secondly the relationship among the variables should be linear. Objective function: A firms objectives are expressed as a function of decision variables. It represents the mathematical equation of the goals of the firm in terms of unknown values of the decision variables. Thus if the objective is to maximize net profits in a furniture manufacturing problem, then profits are expressed as function of (dependent on) the net per unit profits of table and chair and the number of units produced (of tables and chairs). Constraints: A constraint represents the limitations imposed on the values of decision variables in the solution. These limitations exist due to limited availability of resources as well as the requirements of these resources in the production of each unit of the decision variable. For example manufacturer of a table requires certain amount of time in a certain department and the department works only for a given period, (say 8 hours in a day for 5 days in a week). The constraints may represent some other type of limitations also. As in the production of a commodity the market demand can put an upper limit on the value of the decision variable in the optimal solution. Thus, the constraints define the limits within which a solution to the problem must be found. These constraints must be capable of expression in mathematical form of an equality or inequality. Linear relationships: Linear programming deals with problems in which the objective function and the constraints can be expressed as linear functions.

Hence, when the problem is solved graphically, in a two variable case the constraints the objective function, gives a straight line on a two dimensional graph. Equations and inequalities: Equations are represented by = (equality) sign. They are specific statements. But many business problems cannot be neatly expressed in equations (called strict equality). Instead of precise statements, we may have only minimum or maximum requirements or availability. For example we may state that available labour time is 40 hours per week, hence, labour time used in production should be less than or equal to 40 hours per week. We thus need inequalities. Less than or equal to relationship is written as () and () sign indicates greater than or equal to relationship. Most of the constraints in a LPP are expressed as inequalities. They indicate the upper or the lower limits of resource use or production level. They do not express exact levels. Thus, they allow for many possibilities of the optimal values of the decision variable i.e. more than one combination of the decision variables may give the same optimal value of the objective function. Non-negativity restrictions: The solution to the problem implies finding values of the decision variables. These must be non-negative. As one cannot think of manufacture of -4 tables or -6 chairs i.e. negative production. Hence, decision variable should assume either zero or positive values. If we denote two decision variables as x 1 and x 2 then the non negativity restriction is expressed as x 1 0; x 2 0.

-aseem

Advantages:
Efficient use of factors of production. Scientific decision making. Streamlined resource allocation.

Assumptions in LP:
Available quantities of resources and consumption per unit from resources is known exactly and with certainty Production of finished products is possible in any fractions, so is consumption of resources. All external factors are constant. The problem involves only one major objective.

Limitations of LP:
Linearity is necessary in objective function and constraints. If there are multiple objectives to be achieved, LP cannot be used. All costs and benefits related to the problem may not be quantifiable. Economy of scale and learning curve effect cannot be incorporated in LP.

Steps involved in Solving LPP:

The steps followed in solving a linear programming problem are: 1. Express the objective function of the problem as an equation and the constraints as inequalities. 2. Graph the inequality constraints, and define the feasible region. 3. Graph the objective function as a series of isoprofit (i.e., equal profit) or iso-cost lines, one for each level of profit or costs, respectively. 4. Find the optimal solution (i.e., the values of the decision variables) at the extreme point or corner of the feasible region that touches the highest isoprofit line or the lowest iso-cost line. This represents the optimal solution to the problem subject to the constraints faced.

Linear Programming: Profit Maximization

Formulation of the Programming Problem. Profit Maximization Linear

Most firms produce more than one product, and a crucial question to which they seek an answer is how much of each product (the decision variables) the firm should produce in order to maximize profits. Usually, firms also face many constraints on the availability of the inputs they use in their production activities. The problem is then to determine the output mix that maximizes the firms total profit subject to the input constraints it faces. In order to show the solution of a profit maximization problem graphically, we assume that the firm produces only two products: product X and product Y. Each unit of product X contributes $30 to profit and to covering overhead (fixed) costs, and each unit of product Y contributes $40. Suppose also that in order to produce each unit of product X and product Y, the firm requires inputs A, B, and C in the proportions indicated in Table W-1. That is, each unit of product X requires 1 unit of input A, one-half unit of input B, and no input C, while 1 unit of product Y requires 1 A, 1 B, and 0.5 C. Table W1 also shows that the firm has available only 7 units of input A, 5 units of input B, and 2 units of input C per time period. The firm then wants to determine how to use the available inputs to produce the mix of products X and Y that maximizes its total profits.

The first step in solving a linear programming problem is to express the objective function as an equation and the constraints as inequalities. Since each unit of product X contributes $30 to profit and overhead costs and each unit of product Y contributes $40, the objective function that the firm seeks to maximize is Max z = 30 Qx+ 40 Qy ---- Equation 1 where Max z is the total contribution to profit and overhead costs faced by the firm (henceforth simply called the profit function), and X and Y refer, respectively, to the quantities of product X and product Y that the firm produces. Thus, Equation W-1 postulates that the total profit (contribution) function of the firm equals the per-unit profit contribution of product X times the quantity of product X produced plus the per-unit profit contribution of product Y times the quantity of product Y that the firm produces. Let us now go on to express the constraints of the problem as inequalities. From the first row of Table W1, we know that 1 unit of input A is required to produce each unit of product X and product Y and that only 7 units of input A are available to the firm per period of time. Thus, the constraint imposed on the firms production by input A can be expressed as, Qx + Qy 7 ------ Equation 2 That is, the 1 unit of input A required to produce each unit of product X times the quantity of product X produced plus the 1 unit of input A required to produce each unit of product Y times the quantity of product Y produced must be equal to or smaller than the 7 units of input A available to the firm. The inequality sign indicates that the firm can use up to, but no more than,

the 7 units of input A available to it to produce products X and Y. The firm can use less than 7 units of input A, but it cannot use more. From the second row of Table W-1, we know that onehalf unit of input B is required to produce each unit of product X and 1 unit of input B is required to produce each unit of product Y, and only 5 units of input B are available to the firm per period of time. The quantity of input B required in the production of product X is then 0.5 x, while the quantity of input B required in the production of product Y is 1 y and the sum of 0.5 x and 1 y can be equal to, but it cannot be more than, the 5 units of input B available to the firm per time period. Thus, the constraint associated with input B is 0.5 Qx + 1 Qy 5 ------- Equation 3 From the third row in Table W-1, we see that input C is not used in the production of product X, one-half unit of input C is required to produce each unit of product Y, and only 2 units of input C are available to the firm per time period. Thus, the constraint imposed on production by input C is 0.5 Qy 2 -------- Equation 4 In order for the solution to the linear programming problem to make economic sense, however, we must also impose non negativity constraints on the output of products X and Y. The reason for this is that the firm can produce zero units of either product, but it cannot produce a negative quantity of either product (or use a negative quantity of either input). The requirement that x and y (as well as that the quantity used of each input) be nonnegative can be expressed as

Qx, Qy 0 We can now summarize the linear programming formulation of the above problem as follows: Max z = 30 Qx+ 40 Qy (objective function) Qx + Qy 7 (input A constraint) 0.5 Qx + 1 Qy 5 (input B constraint) 0.5 Qy 2 (input C constraint) Qx, Qy 0 (non negativity constraint) Thereby by solving the above algebraic equations (mathematical model) we get the following graphs:

Shahan Linear Programming: Cost Minimization:

Most firms usually use more than one input to produce a product or service, and a crucial choice they face is how much of each input (the decision variables) to use in order to minimize the costs of production. Usually firms also face a number of constraints in the form of some minimum requirement that they or the product or service that they produce must meet. The problem is then to determine the input mix that minimizes costs subject to the constraints that the firm faces. In order to show how a cost minimization linear programming problem is formulated and solved, assume that the manager of a college dining hall is required to prepare meals that satisfy the minimum daily

requirements of protein (P), minerals (M), and vitamins (V). Suppose that the minimum daily requirements have been established at 14P, 10M, and 6V. The manager can use two basic foods (say, meat and fish) in the preparation of meals. Meat (food X) contains 1P, 1M, and 1V per pound. Fish (food Y) contains 2P, 1M, and 0.5V per pound. The price of X is $2 per pound, and the price of Y is $3 per pound. This information is summarized in Table W-3. The manager wants to provide meals that fulfill the minimum daily requirements of protein, minerals, and vitamins at the lowest possible cost per student. The above linear programming problem can be formulated as follows: Minimize C = 2Qx +3Qy (objective function) Subject to, 1Qx + 2Qy = 14 (protein constraint) 1Qx + 1Qy = 10 (minerals constraint) 1Qx + 0.5Qy = 6 (vitamins constraint) Qx, Qy = 0 (non negativity constraint)

By solving the problem algrebically we get the following graph:

The Corner point theorem :

If the feasible region is bounded, then the objective function has both a maximum and a minimum value and each occur at one or more corner points. If the feasible region is unbounded ,the objective function may not have a maximum or a minimum. But if a maximum or minimum value exists, it will occur at one or more corner points. Example : Minimize 2x + 4y

subject to : x + 2y 10 ; 3x + y 10 x0,y0

Asees ghrrah

Special Cases in Linear Programming:

Infeasibility: Infeasible means not possible. Infeasible solution happens when the constraints have contradictory nature. It is not possible to find a solution which can satisfy all constraints. In graphical method, infeasibility happens when we cannot find feasible region. Example 14: Max z = 4x + 3y Subject to, 2x +3y 6 x + 4y10 x,y 0

Since there is no common feasible area the solution is infeasible. Constraints are not favorable.

Unbounded LPP: Unbounded means infinite solution. A solution which has infinity answer is called unbounded solution. In graphical solution, the direction with respect to origin is as follows:

Max Min Z Away Towards the Origin from

origin

Minimization

Maximization

Now in a maximization problem, if we have following Feasible region: there is no upper limit away from the origin, hence the answer is Infinity. y

Max Z.

x This is Called Unbounded solution. urmi Redundancy: a constraint is called redundant when it does not affect the solution. The feasible region does not depend on that constraint.

Even if we remove the constraint from the solution, the answer is not affected. y Max Z= 5x + 8y Subject to, (0,12) 3x + 2y 3x + 2y 24 24 x 16 x + 3y 12
redundant

x16

x,y B

(0,4)A

X+3y1

(0,0)o C(8,0) (12,0) (16,0) x

The feasible region for the above problem is OABC. The 3rd constraint does not affect the feasible region. Hence, the constraint, (x 16) is a redundant constraint. Alternate Optimal Solution: Multiple or alternate optimal solutions mean a problem has more than one solution which gives the optimal answer. There are two or more sets of solution values which give maximum profit or minimum cost. In graphical method, we come to know that there is optimal solution which is Alternate when: The isoprofit or isocost line is parallel to one of the boundaries of feasible region (they have the same slope value)

y
0,20 0 0,15 0,12 5

x
1 2

Slope = -1/2 200

y125 A c B

3x + 6y 900

0
D (200,0)
(300,0)

x Feasible Region: OABCD. There were two optimal solutions: At corner point B & C ISO profit line: Max Z = 8x + 16y Z = 8x + 16y 16y = -8x + Z y = -8x+Z16 Slope = -12 The iso-profit line is exactly parallel to boundary BC. Hence any point on line BC will give Optimal solution. -sumaiya

Case Study Problems: me

Q1 } Agashe and co. tries to reach target audiences belonging to two different monthly income groups the first with incomes greater than rupees 15000 and the second with income of less than rupees 15000. The total advertising budget is rupees 200000. Advertising on TV cost rupees 50000 for one program, whereas advertising on radio cost rupees 20000 for one program. For contract reason at least 3 programs must be given on TV and the number of radio programs are limited to 5 only. One TV programs covers 450000 audiences belonging to income group having more than rupees 15000 monthly incomes where as it reaches to 50000 audiences belonging to below rupees 15000 monthly income group. Similarly one radio programs reaches to 20000 and 80000 audiences belonging to above rupees 15000 and below 15000 monthly income groups respectively. Formulate the linear programming problem and using graphical method determines the media mix as o to maximize the total number of target audience. Comment on the solution. Solution:

Decision Variable: Let, x= number of TV programs released. y = number of Radio programs released. Objective Function: Max Z (target audience) Max Z = 500000 x + 100000 y Constraints: Budget constraint : 50000 x + 20000 y Advertising constraint: x3 and y 5 Non negative restriction: x, y
0 200000

Answer Statement: 4 programs on TV should be Released and 0 programs on radio to maximize total target audience i.e. 200000. Comments: y programs)
5

is a redundant constraint. (Radio

Q 2} A television manufacturing firm is planning to produce television sets of various designs and specifications. The televisions are marked on the basis of its overall quality appearance and warranty. the market research survey and the firms past experience indicates that all the 3 types flat screen ,black screen and normal TV sets will all be sold whichever is produced. However the firm plans to test the market response first by manufacturing only 200 sets of all the 3 types all of which 1 will be definitely be sold because of reputation of the firm. The manufacturing firm wants to decide how many of flat screens and how many of black screen TV sets the firm should produce whereas the number of TV sets of normal type is automatically decided on the basis of first two types. All the 3 types on TV sets differ significantly in their quality tube costs and their other electronic

features. The following table summarizes the estimated prices for the 3 types of TV sets and the corresponding expenses for the firm. The manufacturing firm has hired a high-tech plant to manufacture these TV sets at fixed charges of rupees 200000 for a period of one month Types of TV sets Prices and other material charges Flat screen 4750 Black screen 2500 Normal 2200 10000 7000 6500 Tube cost 3000 2200 1900 Labor

In planning the production the following considerations must be taken into account: 1) The marketing management and manufacturing conditions require that at least 120 TV sets be of flat and black screen types. 2) At least 35% but not more than 70% must be of black screen TV sets 3) At least 10% of the TV sets must be of flat screen types 4) At least 30% of the total sets must be of normal type. 5) The maximum numbers of flat screen TV sets can be manufactured at the plant. plant is restricted to 60 only.

a) The manufacturing firm wishes to determine the number of TV sets to produce for each type, so as to maximize to profit. b) Formulate the following as LPP c) Rewrite the above LPP in terms of two decision variables taking advantages of the fact that all 200 TV sets will be sold. Find the optimal using graphical method for the restated LPP, interpret you results. Solution: Decision variable; Let x1 be the total number of units of Flat Screen TVs. Let x2 be the total number of units of Black Screen TVs. Let x3 be the total number of units of normal Screen TVs. Therefore, Max Z = 2250 x1 + 2300 x2 + 2400 x3 Subject to; x1 + x2 + x3 = 20 ; x2 84 ; x1 + x2 x1 12 ; ; x2
60

120

42

x3

x1

60.

Non negative Restriction; x1, x2 , x3 0 (Rewrite in terms of 2 decision variables) x1 + x2 + x3 = 200 let, x3 = 200 x1 x2 (Substitute this equation in place of x3) Max Z = 2250x1+ 2300x2 + 2400 (200 x1 x2) 200000 = 2250x1 + 2300x2 + 480000 2400x1 2400x2 200000 Max Z = 280000 150x1 100x2

Subject to, x1 + x2 120 ; x2 84 ; 200 x1 x2 x1+x2 140 x1 60

60

x2 42 x1 12

Non negativity constraint: x1 + x2 + x3 0 Answer Statement: 36 units of Flat Screen, 84 units of black Screen and 80 units of Normal TV should be produced to maximize profit of Rs. 266200/Comments: x1 12 and x2 42 are Redundant Constraints.

Q3} M/S Print well Pvt. Ltd are facing a tight financial squeeze and hence are attempting cost saying, wherever possible. The current is to print a book in hard cover and is paperback. The cost of hard cover type is Rs. 600/- per 100 copies of paperback type. The company decides to run their 2 printing presses P1 and P2 for at least 80 hours and 60 hours respectively every week. P1 can produce 100 hard cover book in 1 hour and 100 paper backs in hour. P2 can produce 100 hard cover books in ! hour and 100 paper backs in 2 hours. Determine how many books of each type should be produced to minimize costs. Use graph to solve. Decision variable: Let, x = no. of units produced of Hardcover books. y= no. of books produced of paperback books. Objective function: Min Z: 6x + 5y Constraints: P1 0.6 minutes x + 0.6 minutes y
60hours

4800minutes 80 x

P2
hours)

0.6 minutes x + 1.2 minutess y

3600minutes (60 x 60

Non negative restriction: The number of units produced of HC and PB cant be negative. x, y 0

Answer statement: There should be 0 hardcover books produced and 8000 paperback books produced so as to minimize the cost to Rs. 40000. Comment: 0.6 x +1.2 y = 3600 is a redundant constraint.

Bibliography:
http://www2.isye.gatech.edu/~wcook/papers/infeas.pdf http://math.tutorvista.com/algebra/graphical-method.html http://www.mathyards.com/lse/mm/LinearProgramming.pdf http://www.phpsimplex.com/en/graphical_method_example.html http://www.wikipedia.com