OPERATIONS RESEARCH

MBA
Second Semester

Bharathidasan University
Centre for Distance and Online Education
Chairman:
Dr. M. Selvam
Vice-Chancellor
Bharathidasan University
Tiruchirappalli-620 024
Tamil Nadu
Co-Chairman:
Dr. G. Gopinath
Registrar
Bharathidasan University
Tiruchirappalli-620 024
Tamil Nadu
Course Co-Ordinator:
Dr. A. Edward William Benjamin
Director-Centre for Distance and Online Education
Bharathidasan University
Tiruchirappalli-620 024
Tamil Nadu
The Syllabus is Revised from 2021-22 onwards

Reviewer
Dr. S.A. Sirajudeen, Associate prof. & Head PG & research, Dept of management studies, JJ College of arts & science,
Pudukottai - 622 422.

Authors
S. Kalavathy, (Units: 1.3, 2.1-2.2, 2.3.4-2.4, 2.6-2.10, unit-3, 5.1-5.6, 5.8-5.12)
C.R. Kothari, (Units: 1.1-1.2, 1.4-1.12, 2.3-2.3.3, 2.5, unit-4, 5.7)

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COURSE INTRODUCTION

Operations research approach has become a new tool for managing conventional management problems. In fact,
operational research techniques do constitute a scientific methodology of analysing the problems of the business
world. They provide an improved basis for taking management decisions. The practice of OR helps in tackling
intricate and complex problems such as that of resource allocation, product-mix, inventory management, sequencing
and scheduling, replacement, and a host of similar problems of modern business and industry.
With IT facilities becoming widely available, the significance and scope of OR has grown, and is still growing.
Hence, OR is now an integral part of courses of computer science, economics, business management, public
administration and several other disciplines.
Keeping all these in view, the book Operations Research introduces the basic elements of OR in the simplest
possible way and explains how the various approaches in OR are applied by managers.
Designed in keeping with the self-instruction mode format, each unit of the book begins with an outline of the
Learning Objectives followed by an Introduction to the topic. The content is then presented in a simple and easy-
to-understand manner, and is interspersed with Check Your Progress questions to test the reader’s understanding
of the topic. A list of Possible Questions is also provided at the end of each unit.
The book is divided into five units.
Unit 1: Introduction to Operations Research
Unit 2: Linear Programming Problem
Unit 3: Transportation and Assignment Models
Unit 4: Game Theory
Unit 5: Network Models
 Operations Research

DETAILED SYLLABUS

Unit 1: Nature and Scope of Operations Research, Significance of OR, Problem Formulation, Methodology
of OR, Applications and Scope of OR, Basic OR Models.
Unit 2: Formulation of LP, Solving LP Problems, Special Cases in LP, Concept of Duality and Sensitivity
Analysis.
Unit 3: Transportation Problem, Transportation Models, Optimum Solution using MODI Method, Special
Cases, Transshipment Model, Assignment Problem.
Unit 4: Game Theory: Basic Concepts, Pure and Mixed Strategies with Saddle Point, Limitations of
Game Theory.
Unit 5: Construction of Networks, Determination of Floats and Slack Times, Determination of Critical
Paths, Determination of PERT Times, Crashing, Resource Allocation and Levelling.
 CONTENTS

UNIT 1 INTRODUCTION TO OPERATIONS RESEARCH 1-32

1.1 Learning Objectives
1.2 Introduction
1.3 Nature and Scope of Operations Research
1.4 Significance of OR
1.5 Problem Formulation
1.6 Methodology of OR
1.7 Applications and Scope of OR
1.8 Basic OR Models
1.8.1 OR Techniques
1.9 Let Us Sum Up
1.10 Further Reading
1.11 Answers to Check Your Progress
1.12 Possible Questions
1.13 Learning Outcomes

UNIT 2 LINEAR PROGRAMMING PROBLEM 33-83

2.1 Learning Objectives
2.2 Introduction
2.3 Formulation of LP
2.3.1 Meaning of Linear Programming
2.3.2 Fields where Linear Programming can be Used
2.3.3 Components of a Linear Programming Problem
2.3.4 Formulation of a Linear Programming Problem
2.4 Solving LP Problems
2.4.1 Procedure for Solving LPP by Graphical Method
2.4.2 Some Important Definitions
2.4.3 Canonical and Standard Forms of LPP
2.4.4 Simplex Method
2.5 Special Cases in LP
2.5.1 Degeneracy
2.5.2 Non-Feasible Solution
2.5.3 Unbounded Solution
2.5.4 Multiple Solution or Alternate Optima
2.6 Concept of Duality and Sensitivity Analysis
2.6.1 Formulation of a Dual Problem
2.6.2 Definition of a Dual Problem
2.6.3 Important Results in Duality
2.6.4 Sensitivity Analysis
2.7 Let Us Sum Up
2.8 Further Reading
2.9 Answers to Check Your Progress
2.10 Possible Questions
2.11 Learning Outcomes

UNIT 3 TRANSPORTATION AND ASSIGNMENT MODELS 85-142

3.1 Learning Objectives
3.2 Introduction
3.3 Transportation Problem
3.4 Transportation Models
 3.4.1 Finding the Initial Basic Feasible Solution
3.4.2 North West Corner Rule
3.4.3 Least Cost or Matrix Minima Method
3.4.4 Vogel’s Approximation Method (VAM)
3.5 Optimum Solution using MODI Method
3.6 Special Cases
3.6.1 Maximization Case in a Transportation Problem
3.6.2 Degeneracy in Transportation Problems
3.6.3 Unbalanced Transportation
3.6.4 Alternate Solution
3.7 Transshipment Model
3.8 Assignment Problem
3.8.1 Mathematical Formulation of the Assignment Problem
3.8.2 Hungarian Method Procedure
3.8.3 Maximization in Assignment Problem
3.9 Let Us Sum Up
3.10 Further Reading
3.11 Answers to Check Your Progress
3.12 Possible Questions
3.13 Learning Outcomes

UNIT 4 GAME THEORY 143-170

4.1 Learning Objectives
4.2 Introduction
4.3 Game Theory: Basic Concepts
4.3.1 Types of Games
4.3.2 Value of a Game
4.4 Pure and Mixed Strategies with Saddle Point
4.4.1 Method of Dominance
4.4.2 Linear Programming Solution to Two-Person Zero-Sum Games
4.5 Limitations of Game Theory
4.6 Let Us Sum Up
4.7 Further Reading
4.8 Answers to Check Your Progress
4.9 Possible Questions
4.10 Learning Outcomes

UNIT 5 NETWORK MODELS 171-216

5.1 Learning Objectives
5.2 Introduction
5.3 Construction of Networks
5.3.1 Basic Terms
5.3.2 Common Errors
5.3.3 Rules of Network Construction
5.3.4 Time Analysis
5.4 Determination of Floats and Slack Times
5.5 Determination of Critical Paths
5.6 Determination of PERT Times
5.6.1 PERT Procedure
5.7 Crashing
5.8 Resource Allocation and Levelling
5.9 Let Us Sum Up
5.10 Further Reading
5.11 Answers to Check Your Progress
5.12 Possible Questions
5.13 Learning Outcomes
Introduction to Operations Research Unit-1

UNIT 1 INTRODUCTION TO
OPERATIONS RESEARCH
UNIT STRUCTURE
1.1 Learning Objectives
1.2 Introduction
1.3 Nature and Scope of Operations Research
1.4 Significance of OR
1.5 Problem Formulation
1.6 Methodology of OR
1.7 Applications and Scope of OR
1.8 Basic OR Models
1.8.1 OR Techniques
1.9 Let Us Sum Up
1.10 Further Reading
1.11 Answers to Check Your Progress
1.12 Possible Questions
1.13 Learning Outcomes

1.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

 Explain the nature and scope of operations research
 Explain the methodology of OR
 Explain the role of OR in managerial decision-making
 Analyse the significance of OR
 Explain the basic OR models

1.2 INTRODUCTION

This unit introduces you to operations research, where you will first trace the
evolution of OR. You will then learn the various techniques in OR which are applied
in taking decisions by management. You will understand the significance of
operations research in today’s business environment. You will also learn about some
of the basic OR models.

1.3 NATURE AND SCOPE OF OPERATIONS RESEARCH

The term, ‘Operations Research’ was first coined by J.F. McCloskey and F.N.
Trefethen in 1940. This new science came into existence in a military context.
During World War II, military management called on scientists from various
disciplines and organized them into teams to assist in solving strategic and tactical
Operations Research 15
Unit-1 Introduction to Operations Research
problems, relating to air and land defence of the country. Their mission was to
formulate specific proposals and plans for aiding the military commands to arrive at
decisions on optimal utilization of scarce military resources and efforts and also to
implement the decisions effectively. This new approach to the systematic and scientific
study of the operations of the system was called Operations Research (OR) or
operational research. Hence, OR can be referred to as ‘an art of winning the war
without actually fighting it.’
Definitions
Operations research (OR) has been defined so far in various ways and it is perhaps
still too young to be defined in some authoritative way. It is not possible to give
uniformly-acceptable definitions of OR. The following are definitions proposed by
various specialists in the field of OR. These have been changed according to the
development of the subject.
OR is a scientific method of providing executive departments with a
quantitative basis for decisions regarding the operations under their control.
Morse and Kimbal (1946)
OR is the scientific method of providing the executive with an analytical and
objective basis for decisions. P.M.S. Blackett (1948)
OR is the art of giving bad answers to problems to which otherwise worse
answers are given. T.L. Saaty (1958)
OR is a systematic method oriented study of the basic structures,
characteristics, functions and relationships of an organization to provide the
executive with a sound, scientific and quantitative basis for decision-making.
E.L. Arnoff and M.J Netzorg
OR is a scientific approach to problem solving for executive management.
H.M. Wagner
OR is an aid for the executive in making his decisions by providing him with
the quantitative information based on the scientific method of analysis.
C.Kittee
OR is the scientific knowledge through interdisciplinary team effort for the
purpose of determining the best utilization of limited resources.
H.A. Taha (2006)
The various definitions given here, bring out the following essential
characteristics of operations research:
(i) Systems orientation
(ii) Use of interdisciplinary terms
(iii) Application of scientific methods
(iv) Uncovering new problems
(v) Quantitative solutions
(vi) Human factors
Scope of Operations Research
There is great scope for economists, statisticians, administrators and technicians
working as a team to solve problems of defence by using the OR approach. Besides
16 Operations Research
Introduction to Operations Research Unit-1

this, OR is useful in various other important fields such as the following:

(i) Agriculture
(ii) Finance
(iii) Industry
(iv) Marketing
(v) Personnel management
(vi) Production management
(vii) Research and development
Phases of Operations Research
The procedure to be followed in the study of OR, generally involves the following
major phases:
(i) Formulating the problem
(ii) Constructing a mathematical model
(iii) Deriving a solution from the model
(iv) Testing the model and its solution (updating the model)
(v) Controlling the solution
(vi) Implementation

1.4 SIGNIFICANCE OF OR

OR has gained increasing importance since World War II in the technology of business
and industry administration. It greatly helps in tackling the intricate and complex
problems of modern business and industry. OR techniques are, in fact, examples of
the use of scientific method of management. The significance of OR can be well
understood under the following heads:
(i) OR provides a tool for scientific analysis: OR provides the executives with
a more precise description of the cause and effect relationship and risks
underlying the business operations in measurable terms and this eliminates
the conventional intuitive and subjective basis on which managements used
to formulate their decisions decades ago. In fact, OR replaces the intuitive
and subjective approach of decision-making by an analytical and objective
approach. The use of OR has transformed the conventional techniques of
operational and investment problems in business and industry. As such, OR
encourages and enforces disciplined thinking about organizational problems.
(ii) OR provides solution for various business problems: The OR techniques
are being used in the field of production, procurement, marketing, finance
and other allied fields. Problems like: ‘How best can the managers and
executives allocate the available resources to various products so that in a
given time the profits are maximum or the cost is minimum? Is it possible
for an industrial enterprise to arrange the time and quantity of orders of its
Operations Research 17
Unit-1 Introduction to Operations Research

stocks such that the overall profit with given resources is maximum? How far
is it within the competence of a business manager to determine the number of
men and machines to be employed and used in such a manner that neither
remains idle and at the same time the customer or the public has not to wait
unduly long for service?’, and similar other problems can be solved with the
help of OR techniques. Similarly, we might have a complex of industries—
steel, machine tools and others—all employed in the production of one item,
say steel. At any particular time we have a number of choices of allocating
resources, such as money, steel and tools for producing autos, building steel
factories or tool factories. What should be the policy which optimizes the
total number of autos produced over a given period? OR techniques are capable
of providing an answer in such a situation.
Planning decisions in business and industry are largely governed by the picture
of anticipated demands. The potential long range profits of the business may
vary in accordance with different possible demand patterns. The OR techniques
serve to develop a scientific basis for coping with the uncertainties of future
demands. Thus, in dealing with the problem of uncertainty over future sales
and demands, OR can be used to generate ‘a least risk’ plan.
At times, there may be a problem in finding an acceptable definition of long
range company objectives. Management may be confronted with different
viewpoints—some may stress the desirability of maximizing net profit whereas
others may focus attention primarily on the minimization of costs. OR techniques
(especially that of mathematical programming, such as linear programming)
can help resolve such dilemmas by permitting systematic evaluation of the best
strategies for attaining different objectives. These techniques can also be used
for estimating the worth of technical innovations as also of potential profits
associated with the possible changes in rules and policies.
How much changes can be there in the data on which a planning formulation is
based without undermining the soundness of the plan itself? How accurately
must managements know the cost coefficients, production performance figures
and other factors before it can make planning decisions with confidence? Many
of the basic data required for the development of long-range plans are uncertain.
Such uncertainties though cannot be avoided, but through various OR
techniques, the management can know how critical such uncertainties are and
this in itself is a great help to business planners.
(iii) OR enables proper deployment of resources: OR renders valuable help in
PERT: Enables us to proper deployment of resources. For instance, Programme Evaluation and
determine the earliest Review Technique (PERT) enables us to determine the earliest and the latest
and the latest times for times for each of the events and activities and thereby helps in the identification
each of the events and of the critical path. All these help in the deployment of resources from one
activities and thereby activity to another to enable the project completion on time. This technique
helps in the
identification of the
thus provides for determining the probability of completing an event or project
critical path. itself by a specified date.

18 Operations Research
Introduction to Operations Research Unit-1
(iv) OR helps in minimizing waiting and servicing costs: The waiting line or
queuing theory helps the management in minimizing the total waiting and
servicing costs. This technique also analyses the feasibility of adding facilities
and thereby helps the business people in taking a correct and profitable
decision.
(v) OR enables the management to decide when to buy and how much to
buy: The main objective of inventory planning is to achieve balance between
the cost of holding stocks and the benefits from stock holding. Hence, the
technique of inventory planning enables the management to decide when to
buy and how much to buy.
(vi) OR assists in choosing an optimum strategy: Game theory is specially used
to determine the optimum strategy in a competitive situation and enables the
businessmen to maximize profits or minimize losses by adopting the optimum
strategy.
(vii) OR renders great help in optimum resource allocation: The linear
programming technique is used to allocate scarce resources in an optimum
manner in problems of scheduling, product mix, and so on. This technique is
popularly used by modern managements in resource allocation and in affecting
optimal assignments.
(viii) OR facilitates the process of decision-making: Decision theory enables the Decision theory:
businessmen to select the best course of action when information is given in Enables the
businessmen to select
the probabilistic form. Through decision tree (a network showing the logical the best course of
relationship between the different parts of a complex decision and the action when
alternative courses of action in any phase of a decision situation) technique, information is given in
probabilistic form.
executive’s judgement can systematically be brought into the analysis of the
problems. Simulation is another important technique used to imitate an
operation or process prior to actual performance. The significance of
simulation lies in the fact that it enables in finding out the effect of alternative
courses of action in a situation involving uncertainty where mathematical
formulation is not possible. Even complex groups of variables can be handled
through this technique.
(ix) Through OR management you can know the reactions of the integrated
business systems: The Integrated Production Models technique is used to
minimize cost with respect to workforce, production and inventory. This
technique is quite complex and is usually used by companies having detailed
information concerning their sales and costs statistics over a long period.
Besides, various other OR techniques also help management people in taking
decisions concerning various problems of business and industry. The
techniques are designed to investigate how the integrated business system
would react to variations in its component elements and/or external factors.
(x) OR techniques help a lot in the preparation of future (or would be)
managers: OR techniques substitute a means for improving the knowledge
and skill of youngsters in the field of management.

Operations Research 19
Unit-1 Introduction to Operations Research

CHECK YOUR PROGRESS-1

1. List some characteristic features of OR.

2. Why is OR considered to be a science as well as an art?
3. What happens in cases where analytical as well as numerical methods cannot
be used to derive the solution?
4. What are the various classifications of problems in OR?
5. When is an allocation problem referred to as a linear programming problem?
6. What is the objective in search problems?

1.5 PROBLEM FORMULATION

Nature of the Problem

To formulate a problem correctly one must know what a problem is and must
understand the nature of the problem. A problem is said to exist when we have the
following conditions satisfied1:
(i) There must be an individual or a group, which has some difficulty or problem.
(ii) There must be some objectives to be attained. If one wants nothing, one
cannot have a problem.
(iii) There must be alternative means (or the courses of action) for attaining the
objective(s) one wishes to attain. This in other words means that there must
be atleast two means available. If there is no choice of means, one cannot
have a problem.
(iv) There must remain doubt with regard to selection of alternatives, i.e., the
relative efficiency of the alternative means must differ.
(v) There must be some environment(s) to which the difficulty pertains.
The nature of the problem must be understood in context of the above points
before its formulation takes place. It is only after this that the problem must be
stated along with the objective(s) and the bounds within which it is to be studied. In
fact, this involves the task of laying down boundaries within which we shall study
the problem with a predetermined objective in view. In brief, the task of formulating
the problem consists in making various components of the problem explicit.
Formulating the Objectives
Generally, the objectives of an organization may either be retentive or acquisitive.
Retentive objectives are concerned with preserving either resources of value, such as

1
All these conditions have been narrated as components of a research problem by Ackoff Russel, L. in
1961. The Design of Social Research. Chicago: Chicago University Press.

20 Operations Research
Introduction to Operations Research Unit-1

money, time, energy, etc., or states such as comfort, safety, stability, and the like. In
other words, retentive objectives are concerned with what is consumed by courses of
action and as such can easily be translated as minimizing objectives. On the other
hand, we may have acquisitive objectives which are concerned with acquiring resources
or attaining states and can easily be translated as maximizing objectives. Essentially
then we may have either minimizing objectives or maximizing objectives. Accordingly,
profits, sales, revenues, output and the like are always to be maximized and cost,
time and the like are to be minimized.
Formulation of the problem and the objective often requires a detailed knowledge
of how the concerning system operates, which can be learnt through performing a
system analysis, which is a process analogous to the physical examination that a
doctor performs on his patient after initial discussion of symptoms. Such an analysis
can provide the background information required in formulating the problem and the
model required to solve it.2
Measure of Performance
After understanding the nature of the problem and after identifying the courses of
action, the uncontrolled variables and the objectives, it is necessary to construct a
measure of performance that can be used to determine which alternative is best and
what function of this measure (usually described as the objective function) should
be used as the criterion of best solution of the concerning problem. Selecting a
criterion of the best solution often requires a good knowledge of decision theory.
The type of appropriate criterion depends on the state of knowledge of outcomes
that we assume to be available. Usually, we may have one of the three situations
with regard to the state of outcomes, viz., deterministic situation or state of certainty,
stochastic situation or risk situation, and finally the situation of uncertainty. They
are discussed as follows.
(i) Deterministic situations: These are situations in which each course of action
Deterministic
results in only one outcome. In such situations, the probability of each outcome situations: Situations
is known or believed to be either equal to unity or zero. Because of this, the in which each course of
criterion or the measure of performance used in deterministic situations is that action results in only
of the maximization of utility. one outcome.

(ii) Stochastic situations: These are situations in which each course of action can
result in alternative outcomes; the probabilities of which are known or can be
estimated. The criterion that is generally accepted as the most appropriate in
such situations is that of maximizing the expected utility and is often termed
as either the Expected Monetary Value (EMV) criterion or the Expected
Opportunity Loss (EOL) criterion. To select the best alternative, we select
that alternative of which EMV is highest possible (or EOL is the lowest
possible).
(iii) Uncertainty situations: These are situations in which each course of action
can result in alternative outcomes, the probabilities of which cannot be assigned,
as the decision-maker does not know which outcomes can or will occur. This

2
Ackoff, Russell L. and Maurice W. Sasieni. 1968. Fundamental of Operations Research. New York:
John Wiley and Sons. pp. 25–29.

Operations Research 21
Unit-1 Introduction to Operations Research

means that the decision-maker has to act with imperfect information in such a
situation. Consequently, there is no single best criterion for selecting a strategy
to deal with such a situation. Accordingly, various criteria have been developed
for selecting a course of action in uncertainty situations. The following criteria
deserves mention in this context:
(i) Maximin decision rule
(ii) Maximax decision rule
(iii) Minimax decision rule (or regret rule)
(iv) Hurwicz decision rule
(v) Laplace decision rule
Nothing can be said as to which one of these criteria is the best criterion in any given
situation involving uncertainty. The choice for the selection must be left to the decision-
maker who must resort to his own judgement, skill and experience.
Thus, problem formulation, which is considered as the first phase of an OR
study, requires a statement of the problem’s components that include the controllable
or the decision variables, the uncontrollable parameters or the environment, the
constraints on the variables and also the objective along with an appropriate measure
of performance.
Model Construction
After problem formulation, modelling plays an important part in OR. In fact, it is
considered as the essence of operations research approach. Modelling permits the
operational researcher to test rigorously the implications of new plans, new schemes
and new ideas. The term modelling generally refers to the idea of constructing a
model of the given problem and then deriving the solution from it for the problem
under consideration. Modelling is a device used to arrive at a well-structured view
of reality. By analysing or experimenting on models, we can usually determine how
changes in the relevant system will affect its performance.
What is a model?
Model: A physical or A model is a physical or symbolic representation of the relevant aspects of the
symbolic reality or system with which one is concerned. In other words, a model is a means
representation of the of portraying the system or reality of concern to the decision-maker. As such, the
relevant aspects of the concept of a model generally implies a series of connected and identifiable
reality or system with
relationships that essentially demonstrate the proposition: if this action, then this
which one is
concerned. result. Thus, ‘the model, being an abstraction of the assumed real system, identifies
the pertinent relationships of the system in the form of an objective and a set of
constraints.’3
Types of models
Models can be of several types, but models commonly referred are as follows:
 Iconic models: Iconic model is a pictorial or visual representation of certain
aspects of a system. In iconic models, the relevant properties of the real thing
are represented by the properties themselves, usually with a change of scale.

3
Taha, Hamdy A. 2003. Operations Research, Fourth edition. New Jersey: Prentice Hall. p. 6.

22 Operations Research
Introduction to Operations Research Unit-1

Such models generally look like what they represent, but differ in size. An
iconic model is said to be ‘scaled down’ or ‘scaled up’ as the dimensions of the
model are smaller or bigger than those of the real thing. For instance, iconic
models of the sun housed in planetoriums, the model of a huge building or of
an airplane or of an automobile for exhibition purposes are scaled down; whereas
models of the atom or of a cell used for, say teaching purposes are scaled up.
Similarly, maps, photographs, drawings also constitute examples of iconic
models. Iconic models, such as models of aircraft, machine, engine or of any
tangible thing may also be termed as physical models. Iconic models are
generally specific, concrete and easy to observe, but are difficult to manipulate
for experimental purposes and are not very useful for the purpose of prediction.
Moreover, such models represent a static event only.
 Analogue models: Analogue models use one set of properties to represent
another set of properties. They are more abstract than iconic models. However,
such models are easier to manipulate and can represent dynamic situations.
Graphs representing time series, stock market changes or other phenomenons,
flow charts, demand curves, frequency graphs are examples of analogue models
for they use geometrical magnitudes and location to represent a wide variety of
variables and the relationships between them. Similarly, a hydraulic system
can be used as an analogue model of electrical, traffic and economic systems.
Maps in different colours, each colour in a map representing a particular
characteristic, such as blue colour representing water, brown representing land,
and so on, are also termed as analogue models. Such models are generally
more useful than iconic models because of their relatively greater capacity to
represent the characteristics of the real system.
 Symbolic or mathematical models: In symbolic models, the components of
what is represented and their interrelationships are given by symbols. These
models use letters, numbers and other types of symbols to represent variables
and the relationships between them. Such models generally assume the form
of equations or inequalities depicting the relationships amongst the variables
of the system which they represent. For instance, a mathematical equation
representing a relationship between constants and variables may be considered
a symbolic model. Thus, a symbolic model means a mathematical description
of an activity, which expresses the relationships among the various elements
with sufficient accuracy that it can be used to predict the actual outcome
under any expected set of circumstances. Symbolic models are most general
and precise and also are most abstract in nature. They are usually the easiest
to manipulate experimentally.
A great advantage of such models is that they lend themselves easily for
manipulation on computers. In most OR applications, it is assumed that the
objective and constraints can be expressed mathematically as functions of
decision variables. In such a case we say that we are dealing with a symbolic
or a mathematical model. Important symbolic or mathematical models often
used in operations research are as follows:
(i) Allocation models: They are used in finding a solution of optimizing a
given objective such as profit maximization under certain restrictions.

Operations Research 23
Unit-1 Introduction to Operations Research

(ii) Scheduling models: They are used in determining an optimum sequence

of performing certain operations of jobs with a view to minimize overall
time and/or cost. PERT and other network techniques fall under this
category.
(iii) Queuing models: They represent the random arrival of customers at a
service station where the facility is limited and the object of such models
happens to be to minimize the costs of both servicing and waiting.
(iv) Inventory models: These models relate mainly to optimizing inventory
levels. The main emphasis in such models is on minimizing the total costs
associated with inventories.
(v) Replacement models: These models are concerned with replacement
strategies.
(vi) Competitive models: These models are concerned with the determination
of optimum strategies under competitive conditions. Game theory models
are examples of competitive theory.
These wide variety of models used in OR give rise to a corresponding number
of solution techniques, such as linear, integer, dynamic, non-linear
programming that represent algorithms for solving the models.
 Simulation models: At times, however, it may not be possible to depict a real
system in mathematical formulation, i.e., it may just happen that a
mathematical model of a given problem cannot be constructed and as such
we may adopt simulation models.
Simulation models differ from mathematical models in that the relationships
between input and output are not explicitly stated. A simultation model breaks down
the modelled system into basic modules that are then linked to one another by a well-
defined logical relationship (in the form of IF/THEN).
Some other models
(i) Functional, operational, and accounting models: A functional model is a model
without values specified for the constants and as such the variables can only be
identified in abstract mathematical notation. A functional model specifies the
form of the relationship, but not the exact value of the relationship. However,
when the values which must be associated with some measurable quantity in
the environment being represented have been identified, we have an operating
model. For instance, Yi= ai+ biXi is an example of a functional model, but
when we identify the values of the two constants such as a1 = 4 and b1 = 3 or
a2 = 5 and b2= 4 then we can write the said model either as Y1 = 4 + 3X1 or Y2
= 5 + 4X2 and in this form it is known as an operating model. Certain equations
are essentially tautologies because they merely represent addition of values to
give a total value; thus, in a sense they are related to accounts. Suppose, if we
are given Y1 and Y2. The total production, Yi is equal to Y1 + Y2. This is nothing
but an accounting statement. Does it constitute a model? In business world we
assume it to be a model (and consider it an accounting model) because it does
appear to represent symbolically relevant aspects of the reality with which we
are often concerned.

24 Operations Research
Introduction to Operations Research Unit-1

(ii) Prediction, improvement and optimization models: Mostly this classification

is stated in context of managerial analysis. Optimization models are the result
of quantitative analysis and allow the measurable criterion to assume the highest
or the lowest possible value, given the model structure and constraints.
Improvement models are the result of system analysis and consequently the
highest value of the criterion is chosen from among the alternatives
investigated. Either of these models depends upon inputs which predict
outcomes of relationship; thus, they depend upon a prediction model.4
(iii) Static, dynamic, linear and non-linear models: According to Joseph Wright
Forrester, all models possess differing degrees of various characteristics, viz.,
staticness, linearity, stability and openness. In view of this, models can as
well be classified as static model or dynamic model, linear model or non-
linear model. A static model is one in which time plays no role, i.e, the
relationships do not vary with time. As against this, a dynamic model contains
time-varying interactions. A linear model is one in which all of the equations
or inequalities are linear, but a model which contains one or more non-linear
equations is known as a non-linear model. In case of non-linear models, the
degree of non-linearity may vary greatly from model to model.
(iv) Stable and unstable models: In the words of Forrester, ‘A stable system is
one that tends to return to its initial condition after being disturbed. It may
overshoot and oscillate like a single pendulum that is set in motion, but the
disturbances decline and die out. In an unstable system that starts at rest, an
initial disturbance is amplified, leading to growth or oscillations whose
amplitude increases.’5 Another sub-element of stability is concerned with the
presence of steady state or transient models. Using the words of Forrester
again, we can say that a steady state pattern is one that is repetitive with time
in which the behaviour in one period is of the same nature as any other period;
whereas the transient behaviour refers to those changes where the character
of the system changes with time.6
(v) Open and close models: On the basis of the characteristic of openness, a
model can be classified either as an open model or as a closed model. A
closed model is one that internally generates the values of variables through
time by the interaction of variables one on another; whereas the open model
is one in which some variables are supplied from the external environment.
Properties of a good model
We can list down the properties of a good model as follows:
(i) A good model must represent the reality or the system with which it is
concerned as accurately as possible and must not compromise with any of
the critical elements of the system. However, this does not mean that a model
should be as close as possible to reality in every respect for then it would
require an infinite length of time to construct such a model, which at times may

4
Schellenberger. Robert E. 1969. Managerial Analysis. Richard D. Irwin Inc. pp. 88–89.
5
Joseph Wright Forrester, Industrial Dynamics. 1961. Massachusetts: Pegasus Communications, p.51.
6
Ibid.

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Unit-1 Introduction to Operations Research

even be beyond human comprehension. Thus, a good model must be economical

of time and also be readily workable. Usable approximate models are much
better than more exact models that cannot be used.
(ii) Since a model happens to be a simplified representation of an empirical situation;
it must possess the characteristic of predicting outcomes reasonably well and
must be consistent with effective action.
(iii) A good model must be simple enough so as to be readily understood and, if
necessary, must be capable of being modified quickly and effectively.
(iv) A good model must identify the factors that can influence the course of a
particular decision and must also determine how these factors interact to
produce departures from the expected or desired outcome.7
(v) A model must make certain assumptions about the structure of the problem
under study for no system of equations can produce meaningful results if it
consists entirely of unknown, but the number of assumptions should be as
small as possible in a good model.
(vi) A good model is one that is capable of answering in case when small
perturbations take place in the data. This sensitivity of the model, i.e., its
capacity to answer in context of small changes constitutes an important virtue
of a good model.
Advantages of modelling
There are several advantages that result from modelling. Important ones are as
follows:
(i) The main advantage of modelling is that the model formulated under it can
be manipulated in a variety of ways until the best solution of the problem
under consideration is found. The actual system or the organization can then
be operated in an optimum fashion with a minimum of costly experiments
and adjustments. For instance, models of aircraft are always tested in wind
tunnels before production is started.
(ii) Models can be used on a ‘what if’ basis to explore the possible future
consequences of decisions that might be made today and this enables the
creative manager to test the implications of new plans, new schemes and new
ideas that are most critical to the success or failure of a particular project.
Modelling, thus helps in finding avenues for research and improvements.
Modelling: Provides
(iii) Modelling provides an easy and systematic approach for studying the problem
an easy and systematic concerned. Through this technique, the problem under study becomes
approach for studying controllable. Had the models been as complex and difficult to control as
the problem concerned. reality, then there would have been no advantage in their use. In fact, modelling
strips a natural phenomenon of its bewildering complexity and duplicates the
essential behaviour of the natural phenomenon with a few variables, simply
related.

7
Johnson, Rodney D. and Bernard R. Siskin. 1977. Quantitative Techniques for Business Decisons.
New Jersey: Prentice Hall p. 3.

26 Operations Research
Introduction to Operations Research Unit-1
(iv) Modelling provides an opportunity to explore a broad range of solutions and to
estimate the sensitivity of the solution to changes in individual elements or in
combinations of these elements. This in turn will enable the decision-maker to
move away safely from the precise optimum point by a given margin in order
to accommodate other factors. Thus, modelling indicates the limitations and
scope of an activity.
(v) Model building and analysis does not replace intuition and judgement; it rather
supports them with tools for handling complexity and uncertainty with which
the human intuition cannot cope unaided. In a sense, the use of a model frees
the intuition and permits it to concentrate on those problems to which it is
particularly suited.8
(vi) Modelling enables quick and economical experimentation for finding an
optimum solution for a given problem. The results of such experiments can
be evaluated to determine which strategy is most consistent with a desired
objective. Besides, the validity of the model (i.e., whether the model results
in a reliable prediction of the system’s performance?) can be checked and in
case of even little doubt, the model can accordingly be modified quickly and
effectively.
Deriving Solutions from Models
(a) Abstraction
Abstraction: The first
Abstraction happens to be the first step in modelling and consists in selecting the step in modelling and
critical factors or variables from the empirical situation. There are usually an consists in selecting
the critical factors or
uncountable number of ‘facts’ in any empirical situation and the decision-maker
variables from the
must intelligently abstract those factors which he considers to be most relevant to empirical situation.
the problem he faces. Relevance has two charactreristics: (i) There may be variables
which affect the environment, but whose impact is negligible and as such they are
not considered relevant; (ii) There are some variables which do not affect the
environment and thus need not be even considered tentatively as a part of the model.
Essentially, the model must deal with the relevant aspects of the reality with which
we are concerned. For instance, one can classify automobiles in several ways: on
the basis of car’s origin one can differentiate between domestic and foreign cars;
they can as well be classified on the basis of age, cost or manufacturer. One can as
well classify them on the basis of body style, colour, size of engine or on the basis
of the other factor. The point is that all these factors are valid in a particular situation.
However, if someone is interested in conducting the study of the effect of the weather
on automobiles, the paint colour would be very useful in such a study. If one is,
however, concerned with automobile accidents, then the classification on the basis
of colour would be useless and the classification on the basis of engine type and
size would be considered as appropriate and valuable.
(b) Model building
The next step in modelling is that of model building. The relevant factors or variables
selected as stated in (a) are put in some logical manner, so that they form a model of

8
Lindsay, Franklin A. 1958. New Techniques for Management Decision Making. New York: McGraw-
Hill consultant Reports on Current Business Problems. p. 9.

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Unit-1 Introduction to Operations Research

the given problem. In model building, it is generally considered desirable to simplify

reality but only to the point where there is no significant loss of accuracy. In fact, the
decision-maker tries his level best to construct the simplest possible model that predicts
outcomes reasonably well and is amenable to quick modification in case there is need
for the same models to be represented in a variety of ways, but in the relatively recent
past, emphasis is laid on the development of symbolic models particularly with regard
to business problems. As such, one often talks about symbolic models in context of
model building. The question then is: ‘How to construct a mathematical model for a
given problem?’ The answer depends on that the variables and parameters which are
relevant and are also capable of quantitative measurement of some form must be put
in logical manner indicating the necessary relationships along with constraints and
the objective function. Such an arrangement is often described as a model of the
given problem. It is not possible to prepare a manual of constructions for model
building as much depends upon the imagination, insight and experience of the decision-
maker himself. However, past experience of model building proves a good guide in
developing an appropriate model. Accordingly, we give the following types of
illustrative symbolic models:
 Case 1 (Total Expense model): Symbolic model can just be presented in the
equation form. A very simple model of total expense can be as follows:
T = a + bX
where, T = total costs; a = fixed costs; b = variable costs; X = number of
units.
This model can be used as a predictor of the total costs associated with a
given level of output, of course with certain assumptions. This model implies
that total costs are dependent upon the number of units produced. Thus, T is
the dependent variable and X is the independent variable in the given context.
On the other hand, a and b are constants (or the parameters) of the given
model. The model thus represents the relationship between the total cost on
one hand and number of units produced along with given constants on the
other. If the object happens to have the total costs at its minimum level, then
we have to find that value of X corresponding to which T happens to be
minimum possible.
 Case 2 (Milkman’s model): Consider the situation of a milkman who must
decide how many cases of milk to order to maximize his expected profits. He
buys a certain number of milk cases each day and sells some or all of them.
He makes a profit on each one he sells. However, the unsold case brings him
a loss. The demand for milk cases in the market varies from day to day, but
the probability that any specified number of milk cases will be sold on a
particular day can be determined on the basis of past data. We can develop
the model for this type of problem by identifying the relevant variables and
assigning symbols to them as follows:
n = The number of milk cases ordered per day
p = The profit made on each milk case sold
l = The loss incurred on each milk case unsold

28 Operations Research
Introduction to Operations Research Unit-1

d = The demand i.e., the number of milk cases that could be sold per day
if n  d
pr (d) = The probability that the demand will equal supply on a randomly selected
day
P = Net profit per day (negative P represents a loss)
If the demand on a particular day exceeds the number ordered, i.e., If d > n, his
profit would be P(d > n) – n.p
On the other hand, if demand does not exceed the number ordered, his profit
would be as follows:
P(n  d) = d.p – (n – d).1
Then the exacted net profit per day ( P ) can be expressed as follows:
n 
P   P  d  dp –  n – d  l    P d n. p
d 1 d n1

This is a decision model under risk situation, wherein P is the measure of

performance, n is the controlled variable, d is an uncontrolled variable, and p
and I are uncontrolled constants. To solve the problem represented through
this model, we should find the value of n that maximizes P .
 Case 3 (Linear Programming model): A simple linear programming model
can be stated as follows:
n

Maximize: Z = c j X j ( j = 1,2,...... n) (Objective Function)

j1
Subject to the constraints:
n

 aij Xj bi (i = 1,2,...... m) (Constraints concerning resources)

j1
and Xj  0 (Non-negativity condition)
The linear programming model pertains to maximization case. It assumes prior
knowledge of all the coefficients, i.e., it operates only under conditions of
certainty. It has three components, viz., the objective function, constraints and
the non-linearity condition. The various assumptions are the linearity of the
objective function and that of the constraints, additivity of resources and
divisibility of decision variables. Non-negativity condition implies that no X
can be negative. The model requires the determination of n production activities
pursued at level X subject to a limited amount of m resources being available.
Each unit of the jth activity yields a return of c, and uses an amount aij of the ith
resource. Z denotes the optimal value of the objective function for a given
system.
 Case 4 (Simple inventory model concerning economic lot size): After the
model has been built, certain conclusions may be derived about its behaviour
by means of logical analysis. Some mathematical calculations are often

Operations Research 29
Unit-1 Introduction to Operations Research

required for obtaining the solution to the model. The solution to the model
means those values of the controllable variables that optimize the given objective.
If the logic adopted in deriving the conclusions from the model is correct, then
the solution to the model will also serve as the effective solution for the empirical
problem represented by the said model.
(c) The question of error
It should always be remembered that the solution derived from the model always
contains some degree of error because of the abstraction process under which the
decision-maker may select the wrong variables, or not enough variables for constructing
his model. If the error involved is not big enough to disturb the validity of the concerned
model, then we generally do not mind the error and accordingly accept the solution
provided by the model. However, when the error becomes significant, then we have
to rethink about the model. The question of when the error becomes so large that the
conclusions must be modified before it can be adopted as a solution, is one of judgement
of the decision-maker depending upon his experience and knowledge of the given
situation.
(d) Updating the model
A good model is one which gives valid results and permits reliable prediction of the
system’s performance. As such the model once built up to represent a system must be
continuously updated to take account of the past, present and future specifics of the
problem. This, in other words, means that the model should be modified as soon as
one or more of the controlled variables change significantly increasing the size of the
error involved.
A word of caution in modelling
The usefulness of modelling has already been stated, but one must note that the same
follows only when the model happens to be a reasonable approximation of reality. If
the model is a good representation of the problem, the solution of the model will be a
good solution of the problem. However, the solution of a poor model, even though it
may be an exact one, will not be a good solution of the problem. Hence, the construction
of the model and the translation of the results to the actual problem must be done with
utmost care. The key to successful modelling is to represent the decision situation as
accurately as possible and in particular, not to compromise the critical elements of the
problem. For this purpose the problem must be well defined before constructing the
model along with a clear and precise specification of all relevant factors and the
interrelationships among them.
It should also be noted that though many problems can be easily represented in
the form of models, but there may be problems in respect of which we may not
construct reasonably good models. Accordingly, we must construct an appropriate
model of a problem if we can, otherwise we must use an intuitive or heuristic approach
to solve the given problem. ‘Finally, if a problem is so complex that it cannot be
modelled adequately for solution by one of the available methods or it cannot be
solved adequately with a heuristic method, then the problem solver usually resorts to
simulation. Of course, simulation is not the answer to all problems; nevertheless, it
does have a great deal of merit in studying large, complex systems where the
components are highly interrelated.’9

9
Gillett, Billy E. 2008. Introduction to Operations Research, Thirty- second reprint. New York: McGraw-
Hill Publishing Company Ltd. p. 6.

30 Operations Research
Introduction to Operations Research Unit-1

CHECK YOUR PROGRESS-2

1. List the three types of states under which decisions are made.
2. What are the two methods of simulation?
3. How is OR useful to personnel management?
4. What are some of the problems concerning defence management?

1.6 METHODOLOGY OF OR

The methodology of OR generally involves the following steps:

(i) Formulating the problem: The first step in an OR study is to formulate the
problem in an appropriate form. Formulating a problem consists of identifying,
defining and specifying the measures of the components of a decision model.
This means that all quantifiable factors, which are pertinent to the functioning
of the system under consideration are defined in mathematical language:
variables (factors which are not controllable), and parameters or coefficient,
along with the constraints on the variables and the determination of suitable
measures of effectiveness.
(ii) Constructing the model: The second step consists in constructing the model,
by which we mean that appropriate mathematical expressions are formulated
which describe interrelations of all variables and parameters. In addition,
one or more equations or inequalities are required to express the fact that
some or all of the controlled variables can only be manipulated within limits.
Such equations or inequalities are termed as constraints or the restrictions.
The model must also include an objective function, which defines the measure
of effectiveness of the system. The objective function and the constraints,
together constitute a model of the problem that we want to solve. This model
describes the technology and the economics of the system under consideration
through a set of simultaneous equations and inequalities.
(iii) Deriving the solution: Once the model is constructed, the next step in an
OR study is that of obtaining the solution to the model, i.e., finding the
optimal values of the controlled variables—values that produce the best
performance of the system for specified values of the uncontrolled variables.
In other words, an optimum solution is determined on the basis of the various
equations of the model satisfying the given constraints and interrelations of
the system, and at the same time maximizing profit or minimizing cost or
coming as close as possible to some other goal or criterion. How the solution
can be derived depending on the nature of the model. In general, there are
three methods available for the purpose, viz., the analytical methods, the
numerical methods and the simulation methods. Analytical methods involve

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Unit-1 Introduction to Operations Research

expressions of the model by mathematical computations and the kind of

mathematics required depends upon the nature of the model under
consideration. This sort of mathematical analysis can be conducted only in
some cases without any knowledge of the values of the variables, but in
others the values of the variables must be known concretely or numerically.
In latter cases, we use the numerical methods, which are concerned with
iterative procedures through the use of numerical computations at each step.
The algorithm (or the set of computational rules) is started with a trial or
initial solution and continued with a set of rules for improving it towards
optimality. The initial solution is then replaced by the improved one and
the process is repeated until no further improvement is possible. However,
in those cases where the analytical as well as the numerical methods cannot
be used for deriving the solution then simulation methods are used, i.e.,
experiments are conducted on the model in which values of the uncontrolled
variables are selected with the relative frequencies dictated by their
probability distributions. The simulation methods involve the use of
probability and sampling concepts, and are generally used with the help of
computers. Whichever method is used, our objective is to find an optimal
or nearoptimal solution, i.e., a solution which optimizes the measure of
effectiveness in a model.
(iv) Testing the validity: The solution values of the model, obtained as stated
in the previous step, are then tested against actual observations. In other
words, effort is made to test the validity of the model used. A model is
supposed to be valid if it can give a reliable prediction of the performance
of the system represented through the model. If necessary, the model may
be modified in the light of actual observations and the whole process is
repeated till a satisfactory model is attained. The operational researcher
quite often realizes that his model must be a good representation of the
system and must correspond to reality, which in turn requires this step of
testing the validity of the model in an OR study. In effect, performance of
the model must be compared with the policy or procedure that it is meant
to replace.
(v) Controlling the solution: This step of an OR study establishes control over
the solution by proper feedback of information on variables, which might
have deviated significantly. As such, the significant changes in the system
and its environment must be detected and the solution must accordingly be
adjusted. This is particularly true when solutions are rules for repetitive
decisions or decisions that extend over time.
(vi) Implementing the results: Implementing the results constitutes the last step
of an OR study. Because the objective of OR is not merely to produce reports
but to improve the performance of systems, the results of the research must
be implemented, if they are accepted, by the decision-makers. It is through
this step that the ultimate test and evaluation of the research is made and it is
in this phase of the study the researcher has the greatest opportunity for learning.
Thus the procedure for an OR study generally involves some major steps, viz.,
formulating the problem, constructing the mathematical model to represent the system
32 Operations Research
Introduction to Operations Research Unit-1

under study, deriving a solution from, the model, testing the model and the solution so
derived, establishing controls over the solution and lastly putting the solution to work-
implementation. (Although the said phases and the steps are usually initiated in the
order listed in an OR study, it should always be kept in mind that they are likely to
overlap in time and interact, i.e., each phase usually continues until the study is
completed.)
Flow chart showing OR approach
OR approach can as well be illustrated by the following flow chart shown is Figure 1.1.

Facts, opinions Define the

and symptoms problem
of the problem

Technical, Determine
financial factors affecting
and economic the problem
information (variables,
from all sources constraints and Model Tools
assumptions) development of trade

Develop objective Maximize OR

and alternative or Tech-
solutions Minimize niques
function

Detailed Analyse
information alternatives
on factors and deriving
optimum solution
Computer
service
Determination (may be used)
of validity
recommend action
control and
implementation

Fig. 1.1 OR Approach Flow Chart

1.7 APPLICATIONS AND SCOPE OF OR

OR techniques, having their origin with war operations analysis during the World
War II have since then assisted defence management to a larger extent. Defence
management being vitally concerned with problems of logistics, such as provisioning,
distributing, search and forecasting, OR has given valuable help in decision
formation. Although OR originated in context of military operations, its impact
nowadays can be observed in many other areas. It has successfully entered into
different research areas relating to modern business and industry. In fact, it is being
reckoned as an effective scientific technique to solve several managerial decision-
making problems, such as inventory management problems, resource allocation
problems, problems relating to replacement of both men as well as machines,

Operations Research 33
Unit-1 Introduction to Operations Research

sequencing and scheduling problems, queuing problems, competitive problems, search

problems, and the like.10
Big and Small Organizations
OR approach, through being practised by big organized business and industrial units,
is equally applicable to small organizations. For instance, whenever a departmental
store faces the problem, such as employing additional sales girls, purchasing an
additional, van, one can apply some techniques of the operation research to minimize
cost and maximize benefit for each such decision. As such it is often said that wherever
there is a problem there is scope for applying operations research techniques.
Military, business and research
In recent years of organized development, operations research has successfully entered,
apart from its military and business applications, into several other areas of research.
For instance, the basic problem in most of the developing countries in Asia and Africa
is to remove poverty as quickly as possible. There is a considerable scope to solve
this problem by applying OR techniques. Similarly, with the explosion of population
and consequent shortage of food, every country is facing the problem of optimum
allocation of land for various crops in accordance with the climatic conditions and
available facilities. The problem of optimal distribution of water from a source, like a
canal for irrigation purposes, is faced by each developing country. Hence, a good
amount of scientific work related to the OR can be done in this direction. Thus, there
is considerable scope of applying OR techniques for solving problems relating to
national planning. National planning can be largely improved if optimum coordination
can be arrived at through central planning agency by resorting to operations research
models and techniques. In India, there is a promising field for application of operations
research techniques in this direction.
Finance
In the field of finance, the progress of operations research has been rather slow.
Financial institutions have many situations similar to those prevailing in other
commercial organizations. Investment policy must maximize the return on it, keeping
the factor of risk below a specified level. Long range corporate objectives of an
institution are always studied along with functional objectives of individual
departments, consistency between the two being essential for corporate planning.
In particular, banking institutions require precise and accurate forecasting on cash
management and capital budgeting. Linear programming models for many problems
and quadratic programming formulation for some complex problems may prove
the usefulness of operations research techniques to credit institutions.
Hospital management, health planning, transportation system, etc.
The application of operations research techniques can as well be noticed in context
of hospital management, health planning programmes, transportation system and
in several other sectors. For instance, hospital management quite often faces the
problem of allotting its limited resources, of its multiphased activities. Optimum

10
All such problems are described later in this unit.

34 Operations Research
Introduction to Operations Research Unit-1

allocation of resources, so as to ensure a certain desirable level of service to patients,

can be reached through OR. Similarly, for operating a transportation service profitably,
an optimum schedule for vehicles and crews becomes necessary. Punctuality, waiting
time, total travel time, speed of the vehicles and agreement with trade unions of crews
are some of the variables to be taken into account while preparing optimum schedules,
which can be worked out utilizing OR techniques.
As stated earlier, OR is generally concerned with problems that are tactical
rather than strategic in nature, i.e., its use to long range organizational planning
problems is very much limited, but one can hope that with further developments
taking place in the field, ‘Operations Research will be able to deal with organizations
in their entirety, rather than with slices through them. Managers who currently have
to treat the whole with only intuition and experience as their guides, will then have
the methods of science at their disposal as well11’.
This description brings home the point that during the last four decades, the
scope of OR has extensively been widened and hopefully shall attain new strides by
the end of the present century. The art of systems analysis, so well developed in the
military context, will spread to other contexts—notably such civil government branches
as criminal justice, urban problems, housing, health care, education and social services.
There is growing awareness amongst the people that unless they make themselves
familiar with OR techniques, they would not be able to understand and appreciate the
problems of modern business units. With computer facilities becoming widespread
the significance and scope of OR is likely to grow in the coming years. In fact, the
future holds great promise for the growth of the OR in power, scope and practical
importance and utility. OR will continue its currently vigorous efforts to reach out to
new arenas of exploration and application.
OR and Modern Business Management
From what has just been stated, we can say that OR renders valuable service in the
field of business management. It ensures improvement in the quality of managerial
decisions in all functional areas of management. The role of OR in business
management can be summed up as follows:
 Helps the directing authority: OR techniques help the directing authority
in optimum allocation of various limited resources, viz., men, machines,
money, material, time, etc., to different competing opportunities on an
objective basis for achieving effectively the goal of a business unit. They
help the chief of executive in broadening management vision and perspectives
in the choice of alternative strategies to the decision problems, such as
forecasting manpower, production capacities and capital requirements and
plans for their acquisition.
 Useful to the production management: OR is useful to the production
management in (i) selecting the building site for a plant, scheduling and
controlling its development and designing its layout; (ii) locating within the
plant and controlling the movements of required production materials and

11
Ackoff Russell L., and Maurice W. Sasieni. 1968. Fundamentals of Operations Research, New York:
John Wiley and Sons. pp. 447.

Operations Research 35
Unit-1 Introduction to Operations Research

finished goods inventories; (iii) scheduling and sequencing production by

adequate preventive maintenance with optimum number of operatives by proper
allocation of machines; and (iv) calculating the optimum product-mix.
 Useful in personal management: OR is useful to the personnel management
to find out (i) optimum manpower planning (ii) the number of persons to be
maintained on the permanent or full- time roll; (iii) the number of persons to
be kept in a work pool intended for meeting the absenteeism; (iv) the optimum
manner of sequencing and routing of personnel to a variety of jobs; and (v) in
studying personnel recruiting procedures, accident rates and labour turnover.
 Help in marketing management: OR techniques equally help the marketing
management to determine (i) where distribution points and warehousing
should be located, their size, quantity to be stocked and the choice of
customers; (ii) the optimum allocation of sales budget to direct selling and
promotional expenses; (iii) the choice of different media of advertising and
bidding strategies; and (iv) the consumer preferences relating to size, colour,
packaging, etc., for various products as well as to outbid and outwit
competitors.
 Useful in financial management: OR is also very useful to the financial
management in (i) finding long-range capital requirements as well as how to
generate these requirements; (ii) determining optimum replacement policies;
(iii) working out a plan for the firm; (iv) developing capital investments plans;
and (v) estimating credit and investment risks.
In addition to all this, OR provides the business executives an understanding
of the business operations which gives them new insights and capability to determine
better solutions for several decision-making problems with great speed, competence
and confidence. When applied on the level of management where policies are
formulated, OR assists the executives in an advisory capacity but on the operational
level where production, personnel, purchasing, inventory and administrative
decisions are made, it provides management with a means for handling and
processing information. Thus, in brief, OR can be considered as scientific method
of providing executive departments with a quantitative basis for taking decisions
regarding operations under their control.
Limitations of OR
OR though is a great aid to management, as outlined, but still it cannot be a substitute
for decision-making. The choice of a criterion as to what is actually best for a
business enterprise is still that of an executive who has to fall back upon his
experience and judgement. This is so because of the several limitations of OR.
Important limitations are given as follows:
(i) The inherent limitations concerning mathematical expressions: OR
involves the use of mathematical models, equations and similar other
mathematical expressions. Assumptions are always incorporated in the
derivation of an equation or model and such an equation or model may be
correctly used for the solution of the business problems. This happens when
the underlying assumptions and variables in the model are present in the

36 Operations Research
Introduction to Operations Research Unit-1

concerning problem. If this caution is not given due care, then there always
remains the possibility of wrong application of OR techniques. Quite often the
operations researchers have been accused of having many solutions without
being able to find problems that fit.
(ii) High costs are involved in the use of OR techniques: OR techniques usually
prove very expensive. Services of specialized persons are invariably called
for (and along with it the use of computer) while using OR techniques. As
such only big concerns can think of using such techniques. Even in big business
organizations we can expect that OR techniques will continue to be of limited
use simply because they are not in many cases worth their cost. As opposed
to this, a typical manager, exercising intuition and judgement, may be able to
make a decision very inexpensively. Thus, the use of OR is a costlier affair
and this constitutes an important limitation of OR.
(iii) OR does not take into consideration the intangible factors, i.e., non-
measurable human factors: OR makes no allowance for intangible factors,
such as skill, attitude, vigour of the management people in taking decisions,
but in many instances success or failure hinges upon the consideration of
such non-measurable intangible factors. There cannot be any magic formula
for getting an answer to management problems; much depends upon proper
managerial attitudes and policies.
(iv) OR is only a tool of analysis and not the complete decision-making process:
It should always be kept in mind that OR alone cannot make the final decision.
It is just a tool and simply suggests best alternatives, but in the final analysis
many business decisions will involve human element. Thus, OR is at best a
supplement rather than a substitute for management; subjective judgement is
likely to remain a principal approach to decision-making.
(v) Other limitations: Among other limitations of OR, the following deserve
mention:
a. Bias: The operational researchers must be unbiased. An attempt to
shoehorn results into a confirmation of management’s prior preferences
can greatly increase the likelihood of failure.
b. Inadequate objective functions: The use of a single objective function
is often an insufficient basis for decisions. Laws, regulations, public
relations, market strategies, etc., may all serve to overrule a choice arrived
at in this way.
c. Internal resistance: The implementation of an optimal decision may
also confront internal obstacles, such as trade unions or individual
managers with strong preferences for other ways of doing the job.
d. Competence: Competent OR analysis calls for the careful specification
of alternatives, a full comprehension of the underlying mathematical
relationships and a huge mass of data. Formulation of an industrial
problem to an OR set programme is quite often a difficult task.
e. Reliability of the prepared solution: At times a non-linear relationship is
changed to linear for fitting the problem to linear programming pattern.
This may disturb the solution.

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Unit-1 Introduction to Operations Research

1.8 BASIC OR MODELS

Broadly speaking, problems in OR can be put into one of the following categories:
(i) Allocation
(ii) Replacement
(iii) Sequencing
(iv) Routing
(v) Inventory
(vi) Queuing
(vii) Competitive
(viii) Search
Allocation problems: (i) Allocation problems: They involve the allocation of resources to activities in
Involve the allocation such a manner that some measure of effectiveness is optimized. If the resource
of resources to is people who can each perform any one of the given jobs in different amounts
activities in such a of time and the measure of effectiveness is the total time to perform all of the
manner that some
measure of
jobs when one and only one person is allocated to each job, then the allocation
effectiveness is problem is known as an assignment problem. We may as well talk of a
optimized. transportation problem when a manufacturer produces a certain commodity
at a number of factory sites and ships the commodity to different stores located
at different points, and wants to determine the number of units to ship from
each factory site to each store to minimize the overall shipping cost while
satisfying the given constraints, regarding the factory capacity to supply and
the store requirement. In case the measure of effectiveness can be described as
a linear function of different variables subject to several linear constraints
involving the variables, then the allocation problem is usually given the name
of a linear programming problem. Quite often the problem relating to product-
mix, optimizing a given profit or cost function with linearity assumption,
constitutes a linear programming problem.
(ii) Replacement problems: They are concerned with situations that arise when
some items (such as machines, electric light bulbs, etc.) need replacement
because the same may deteriorate with time or may break down completely
or may get outdated due to new developments. Replacement problems thus
occur when one must decide the optimal time to replace equipment for one
reason or the other.
(iii) Sequencing problems: They are the problems concerned with placing items
in a certain sequence or order for service. For instance, N-jobs requiring
different amounts of time on different machines must each be processed on
M-machines in the same order with no passing between machines, then the
question: ‘How should the jobs be ordered for processing to minimize the
total time to process all of the jobs on all of the machines’ constitutes an example
of a sequencing problem.
(iv) Routing problems: They are problems related to finding the optimal route
from an origin to a destination when a number of alternative routes are
38 Operations Research
Introduction to Operations Research Unit-1

available. For instance, a salesman may wish to visit each of N-cities once and
only once before returning to his headquarter, then his problem is: ‘In what
order should he visit the cities so that the overall distance travelled is minimized?’
Such a problem is referred to as a routing problem.
(v) Inventory problems They are problems with regard to holding or storing
resources. The decisions required generally entail the determination of how
much of a resource to acquire or when to acquire it. The problem of deciding
how much of a certain commodity to hold in an inventory is one of real
concern to business and industrial houses. If a customer requires a certain
quantity of the commodity but it is not available, then this could mean a lost
sale. On the other hand, if the excess of the commodity is carried into an
inventory, then the inventory carrying costs may be uneconomical. Hence,
the inventory problem is the problem of determining the level of inventory
that will optimize the measure of effectiveness.
(vi) Queuing problems: They are what are known as waiting-line problems and
involve waiting for service. Queuing problems encircle us from the time we
rise in the morning until we retire at night. In business, several types of
interruptions occur: facilities break down and require repair, power failures,
workers or the needed material do not show up where and when expected.
Allocation of facilities considering such interruptions be done and to do so
means solving a queuing problem.
(vii) Competitive problems: They arise when two or more people are competing
for a certain resource which may range from an opponent’s king in a game of
chess to a larger share of the market in business world. Many times a
competitive problem involves bidding for a contract to perform a service.
(viii) Search problems: They are problems concerned with searching for
information that is required to make a certain decision. The problem
concerning exploring for valuable natural resources like oil or some other
mineral is an example of a search problem. Similarly, searching the ocean for
enemy ships is another example of a search problem. In case of search
problems, the objective is to minimize the costs associated with collecting
and analysing data, to reduce decision errors and also to minimize the costs
associated with the decision errors themselves.
Since its inception, OR has been applied to a wide variety of problems
(as stated already), most of which have been tactical problems rather than strategic
ones. Characteristics which differentiate the tactical problems from strategic ones
are as follows:
(i) One problem is more tactical than another if the effect of its solution
has a shorter duration. Thus, a problem involving what to produce
tomorrow is more tactical than that of where to build an additional plant.
(ii) One problem is the more strategic larger portion of the organization is
directly affected by its solution.
(iii) One problem involves more the determination of ends, goals or objectives.

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Unit-1 Introduction to Operations Research

Thus, one cannot say that a particular problem is either tactical or strategic in absolute
sense, but we can simply say that a particular problem is more or less tactical or
strategic than another with respect to the said characteristics. OR
is generally concerned with problems that are tactical, rather than strategic in
nature.
1.8.1 OR Techniques
Mathematical models have been constructed for the categorized OR problems and
methods for solving the models are available in many cases. Such methods are
usually termed as OR techniques. Some of the important OR techniques often used
by decision-makers in modern times in business and industry are as follows:
(i) Linear programming: This technique is used in finding a solution for
optimizing a given objective, such as profit maximization or cost minimization
under certain constraints. This technique is primarily concerned with the
optimal allocation of limited resources for optimizing a given function. The
name Linear programming is because of the fact that the model in such cases
consists of linear equations indicating linear relationship between the different
variables of the system. Linear programming technique solves product-mix
and distribution problems of business and industry. It is a technique used to
allocate scarce resources in an optimum manner in problems of scheduling,
product-mix and so on. Key factors under this technique include an objective
function, choice among several alternatives, limits or constraints stated in
symbols and variables assumed to be linear.
(ii) Waiting line or queuing theory: Waiting line or queuing theory deals with
mathematical study of queues. The queues are formed whenever the current
demand for service exceeds the current capacity to provide that service.
Waiting line technique concerns itself with the random arrival of customers
at a service station where the facility is limited. Providing too much of capacity
will mean idle time for servers and will lead to waste of money. On the other
hand, if the queue becomes long there will be a cost due to waiting of units in
the queue. Waiting line theory, therefore, aims at minimizing the costs of
both servicing and waiting. In other words, this technique is used to analyse
the feasibility of adding facilities and to assess the amount and cost of waiting
time. With its help we can find the optimal capacity to be installed, which
will lead to a sort of an economic balance between cost of service and cost of
waiting.
(iii) Inventory control/planning: Inventory planning aims at optimizing inventory
levels. Inventory may be defined as a useful idle resource which has economic
value, e.g., raw materials, spare parts, finished products, etc. Inventory
planning, in fact, answers the two questions, viz., how much to buy and when
to buy? Under this technique the main emphasis is on minimizing costs
associated with holding of inventories, procurement of inventories and the
shortage of inventories.
(iv) Game theory: Game theory is used to determine the optimum strategy in a
competitive situation. The simplest possible competitive situation is that of
two persons playing zero-sum game, i.e., a situation in which two persons are
involved and one person wins exactly what the other loses. More complex
40 Operations Research
Introduction to Operations Research Unit-1

competitive situations of real life can as well be imagined where game theory
can be used to determine the optimum strategy.
(v) Decision theory: Decision theory concerns with making sound decisions under
conditions of certainty, risk and uncertainty. As a matter of fact, there are three
different kinds of under which decisions are made, viz., deterministic, stochastic
and uncertainty; the decision theory explains how to select a suitable strategy
to achieve some object or goal under each of these three states.
(vi) Network analysis: Network analysis involes the determination of an optimum
sequence of performing certain operations concerning some jobs in order to
minimise overall time and/or cost. Programme Evaluation and Review
Technique (PERT), Critical Path Method (CPM) and other network techniques,
such as Gantt Chart comes under Network Analysis. Key concepts under this
technique are network of events and activities, resource allocation, time and
cost considerations, network paths and critical paths.
(vii) Simulation: Simulation is a technique of testing a model that resembles a real
life situation. This technique is used to imitate an operation prior to actual
performance. Two methods of simulation are there—Monte Carlo method of
simulation and System simulation method. The former one, using random
numbers, is used to solve problems which involve conditions of uncertainty
and the mathematical formulation is impossible. However, in case of System
simulation, there is a reproduction of the operating environment and the system
allows for analysing the response from the environment to alternative
management actions. This method draws samples from a real population instead
of drawing samples from a table of random numbers.
(viii) Integrated production models: This tecnnique aims at minimizing cost with
respect to workforce, production and inventory. This technique is a highly
complex one and is used only by big business and industrial units. This technique
can be used only when sales and costs statistics for a considerable long period
are available.
(ix) Some other OR techniques: In addition, there are several other techniques,
such as non-linear programming, dynamic programming, search theory, the
theory of replacement, and so on. A brief mention of some of these is as follows.
a. Non-linear programming: It is that form of programming in which some
or all of the variables are curvilinear. In other words, this means that
either the objective function or constraints or both are not in linear form.
In most of the practical situations, we encounter non-linear programming
problems, but for computation purpose we approximate them as linear
programming problems. Even then there may remain some non-linear
programming problems which may not be fully solved by presently known
methods.
b. Dynamic programming: It refers to a systematic search for optimal
solutions to problems that involve many highly complex interrelations
that are, moreover, sensitive to multistage effects such as successive time
phases.

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c. Heuristic programming: It is also known as discovery method and refers

to step-by-step search toward an optimum when a problem cannot be
expressed in mathematical programming form. The search procedure
examines successively a series of combinations that lead to stepwise
improvements in the solution and the search stops when a near optimum
has been found.
d. Integer programming: It is a special form of linear programming in
which the solution is required in terms of integral numbers (i.e., whole
numbers) only.
e. Algorithmic programming: It is just the opposite of Heuristic
programming. It may also be termed as near mathematical programming.
This programming refers to a thorough and exhaustive mathematical
approach to investigate all aspects of the given variables in order to obtain
optimal solution.
f . Quadratic programming: It refers to a modification of linear
programming in which the objective equations appear in quadratic form,
i.e., they contain squared terms.
g. Parametric programming: It is the name given to linear programming
when the latter is modified for the purpose of inclusion of several objective
equations with varying degrees of priority. The sensitivity of the solution
to these variations is then studied.
h. Probabilistic programming: It also known as stochastic programming
and refers to linear programming that include an evaluation of relative
risks and uncertainties in various alternatives of choice for management
decisions.
i. Search theory: It concerns itself with search problems. A search problem
is characterized by the need for designing a procedure to collect
information on the basis of which one or more decisions are made. This
theory is useful in places in which some events are known to occur, but
the exact location is not known. The first search model was developed
during World War II to solve decision problems connected with air patrols
and their search for submarines. Advertising agencies’ search for
customers, personnel departments’ search for good executives, etc., are
some of the examples of search theory’s application in business.
j. The theory of replacement: It is concerned with the prediction of
replacement costs and determination of the most economic replacement
policy. There are two types of replacement models—one type of models
deals in replacing equipment that deteriorate with time and the other type
of models helps in establishing replacement policy for those equipment
which fail completely and instantaneously.
All these techniques are not simple, but involve higher mathematics. The tendency
today is to combine several of these techniques and form than into more sophisticated
and advanced programming models.

42 Operations Research
Introduction to Operations Research Unit-1

CHECK YOUR PROGRESS-3

1. How do you formulate a problem correctly?

2. What is the requirement for selecting a criterion of best solution?
3. List the requirements of problem formulation.
4. What is the meaning of symbolic model?

ACTIVITY

1. ‘OR is a very powerful tool and analytical process that offers the presentation
of an optimum solution in spite of its limitations.’ Discuss.
2. Model building is the essence of the OR approach. Discuss.

1.9 LET US SUM UP

 There have been various definitions for Operations Research like applied
declsion-making, quantitative common sense and making of economic decision.
 An OR study generally involves three phases, viz., the judjement phase, the
research phase and the action phase. Of these three, the research phase is the
longest and the largest, but the remaining two phases are very important since
they provide, respectively, the basis for and implementation of the research
phase.
 Mathematical models have been constructed for the categorized OR problems
and methods for solving the models are available in many cases. Such methods
are usually termed as OR techniques.
 OR has gained increasing importance since World War II in the technology of
business and industry administration.
 OR, though a great aid to management, cannot be a substitute for decision-
making. The choice of a criterion as to what is actually best for a business
enterprise is still that of an executive who has to fall back upon his experience
and judgement.
 OR techniques, having their origin with war operations analysis during World
War II have since then assisted defence management to a larger extent.

Operations Research 43
Unit-1 Introduction to Operations Research

 To formulate a problem correctly, one must know what a problem is and must
understand the nature of the problem.
 Generally, the objectives of an organization may either be retentive or acquisitive.
Retentive objectives are concerned with preserving either resources of value
such as money, time and energy, or states such as comfort, safety, stability and
the like.
 Modelling plays an important part in operational research. In fact, it is considered
as the essence of operations research approach.

1.10 FURTHER READING

Taha, Hamdy A. 2010. Operations Research: An Introduction. New Delhi. Prentice
Hall.
M.Selvam (2014) Maritime Logistics and Documentation , Lakshmi
Publications , New Delhi
M.Selvam (2013) Quality Management, Lakshmi Publications , New Delhi

1.11 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress–1

1. Some of the characteristics of OR are as follows:
(i) Interdisciplinary team approach
(ii) Systems approach
(iii) Scientific method
(iv) Use of models
(v) Reduces complexity
2. As science, OR provides mathematical techniques and algorithms for solving
appropriate decision problems. OR is an art because success in all the phases
that precede and succeed the solution of a problem largely depends on the
creativity and personal ability of the decision-making analysts.
3. In those cases where analytical as well as numerical methods cannot be used
for deriving the solution, then simulation methods are used, i.e., experiments
are conducted on the model in which values of uncontrolled variables are selected
with the relative frequencies dictated by their probability distributions.
4. Broadly speaking, problems in OR can be put into one of the following
categories:
(i) Allocation
(ii) Replacement
(iii) Sequencing
(iv) Routing
(v) Inventory
(vi) Queuing
44 Operations Research
Introduction to Operations Research Unit-1

(vii) Competitive
(viii) Search
5. In case the measure of effectiveness can be described as a linear function of
different variables subject to several linear constraints involving the variables,
then the allocation problem is usually referred to as a linear programming
problem.
6. In case of search problems, the objective is to minimize the costs associated
with collecting and analysing data, to reduce decision errors and also to minimize
the costs associated with the decision errors themselves.
Check Your Progress–2
1. There are three different types of states under which decisions are made, viz.,
deterministic, stochastic and uncertainty, and the decision theory explains how
to select a suitable strategy to achieve some object or goal under each of these
three states.
2. Two methods of simulation are Monte Carlo method of simulation and System
simulation method.
3. OR is useful to personnel management in the following ways:
(i) It finds out the optimum manpower planning.
(ii) It finds out the number of persons to be maintained on a permanent or
full-time roll.
(iii) It finds out the number of workers to be kept in a work pool intended for
meeting the absenteeism.
4. Defence management is concerned with problems of logistic, like provisioning,
distribution, search and forecasting.
Check Your Progress–3
1. To formulate a problem correctly, one must know what a problem is and must
understand the nature of the problem.
2. Selecting a criterion of the best solution often requires a good knowledge of
decision theory: The type of appropriate criterion depends on the state of
knowledge of outcomes that we assume to be available.
3. Problem formulation, which is considered as the first phase of an OR study,
requires a statement of the problem’s components that include the controllable
or the decision variables, the uncontrollable parameters or the environment,
the constraints on the variables and also the objective along with an appropriate
measure of performance.
4. A symbolic model is a mathematical description of an activity, which expresses
the relationships among the various elements with sufficient accuracy that it
can be used to predict the actual outcome under any expected set of
circumstances.

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Unit-1 Introduction to Operations Research

1.12 POSSIBLE QUESTIONS

Short-Answer Questions
1. Write a short note on the important OR techniques used in modern business
and industrial units.
2. What is the role of OR techniques in business and industry?
3. Write a short note on OR describing some of its important techniques.
4. Write a note on the various phases in solving an OR problem.
5. Write a note on problem formulation in operational research.
6. What are the properties of a good model?
7. Outline the important types of OR models.
8. What are the important aspects pertaining to modelling?
9. ‘Modelling enables quick and economical experimentation for finding an
optimum solution to a given problem.’ Do you agree? Give reasons for your
answers.
Long-Answer Questions
1. Define OR. Explain some of its features.
2. Discuss the limitations of OR techniques.
3. Is it possible to make all business decisions with the assistance of OR? Give
detailed reasons to support your answer.
4. Explain the different possible solutions with regard to the state of outcomes
and the appropriate criterion to be used for selecting the best course of action
for each such situation.
5. Enumerate the advantages of modelling in OR.

1.13 LEARNING OUTCOMES

 The nature and scope of operations research

 The methodology of OR
 The role of OR in managerial decision-making
 The significance of OR

46 Operations Research
Linear Programming Problem Unit-2

UNIT 2 LINEAR PROGRAMMING

PROBLEM
UNIT STRUCTURE
2.1 Learning Objectives
2.2 Introduction
2.3 Formulation of LP
2.3.1 Meaning of Linear Programming
2.3.2 Fields where Linear Programming can be Used
2.3.3 Components of a Linear Programming Problem
2.3.4 Formulation of a Linear Programming Problem
2.4 Solving LP Problems
2.4.1 Procedure for Solving LPP by Graphical Method
2.4.2 Some Important Definitions
2.4.3 Canonical and Standard Forms of LPP
2.4.4 Simplex Method
2.5 Special Cases in LP
2.5.1 Degeneracy
2.5.2 Non-Feasible Solution
2.5.3 Unbounded Solution
2.5.4 Multiple Solution or Alternate Optima
2.6 Concept of Duality and Sensitivity Analysis
2.6.1 Formulation of a Dual Problem
2.6.2 Definition of a Dual Problem
2.6.3 Important Results in Duality
2.6.4 Sensitivity Analysis
2.7 Let Us Sum Up
2.8 Further Reading
2.9 Answers to Check Your Progress
2.10 Possible Questions
2.11 Learning Outcomes

2.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

 Explain the meaning of linear programming
 Analyse the various fields where LP can be applied
 Formulate an LP problem
 Write the procedure for solving an LP problem
 Solve an LP problem using the simplex method
 Explain the concept of duality and sensitivity analysis

Operations Research 33
Unit-2 Linear Programming Problem

2.2 INTRODUCTION
This unit introduces you to linear programming, where you will first learn the various
components of an LP problem. You will also learn how to formulate an LP problem.
The unit describes the steps involved in solving LP problems by the graphical method,
which uses two decision variables. You will also learn about the standard and
canonical forms of LPP. There are certain special cases in linear programming,
about which you will learn, including degeneracy, non-feasible solutions and alternate
optima. You will also learn about duality and sensitivity analysis and learn to
formulate a dual problem.

2.3 FORMULATION OF LP

Decision-making has always been very important in the business and industrial
world, particularly with regard to the problems concerning production of
commodities. Which commodity/commodities should be produced?; in what
quantities and by which process or processes should they be produced? are the
main questions before a production manager. Alfred Marshall, in this connection
points out that the businessman always studies his production function and input
prices and substitutes one input for another till his costs become the minimum
possible. This sort of substitution, in the opinion of Marshall, is done by the
businessman’s trained instinct rather than with formal calculations. But now there
does exist a method of formal calculations often termed as Linear Programming.
This method was first formulated by a Russian mathematician L.V. Kantorovich,
but it was developed later in 1947 by George B. Dantzig ‘for the purpose of scheduling
the complicated procurement activities of the United States Air Force’. Today, this
method is being used in solving a wide range of practical business problems. The
advent of electronic computers has further increased its applications to solve many
other problems in industry. It is being considered as one of the most versatile
management techniques.
2.3.1 Meaning of Linear Programming
Linear Programming (LP) is a major innovation since World War II in the field of
business decision-making, particularly under conditions of certainty. The word
‘Linear’ means that the relationships are represented by straight lines, i.e., the
relationships are of the form y = a + bx and the word ‘Programming’ means taking
decisions systematically. Thus, LP is a decision-making technique under given
Linear
Programming: constraints on the assumption that the relationships amongst the variables
Generally used in representing different phenomena happen to be linear. In fact, Dantzig originally
solving maximization called it ‘programming of interdependent activities in a linear structure’, but later
(sales or profit on shortened it to ‘Linear Programming’. LP is generally used in solving
maximization) or
maximization (sales or profit maximization) or minimization (cost minimization)
minimization (cost
minimization) problems subject to certain assumptions. Putting in a formal way, ‘Linear
problems subject to Programming is the maximization (or minimization) of a linear function of variables
certain assumptions. subject to a constraint of linear inequalities.’ Hence, LP is a mathematical technique

34 Operations Research
Linear Programming Problem Unit-2

designed to assist the organization in optimally allocating its available resources

under conditions of certainty in problems of scheduling, product-mix, and so on.
2.3.2 Fields where Linear Programming can be Used
The problem for which LP provides a solution may be stated as, maximize or
minimize for some dependent variable which is a function of several independent
variables when the independent variables are subject to various restrictions. The
dependent variable is usually some economic objective such as profits, production,
costs, workweeks, tonnage to be shipped, and so on. More profits are generally
preferred to less profits and lower costs are preferred to higher costs. Hence, it is
appropriate to represent either maximization or minimization of the dependent
variable as one of the firm’s objective. LP is usually concerned with such objectives
under given constraints with linearity assumptions. In fact, it is powerful to take in
its stride a wide range of business applications. The applications of LP are numerous
and are increasing everyday. LP is extensively used in solving resource allocation
problems. Production planning and scheduling, transportation, sales and advertising,
financial planning, portfolio analysis, corporate planning, etc., are some of its most
fertile application areas. More specifically, LP has been successfully applied in the
following fields:
(i) Agriculture: LP can be applied in farm management problems as it
relates to the allocation of resources such as acreage, labour, water supply
or working capital in such a way that it maximizes net revenue.
(ii) Contract awards: Evaluation of tenders by recourse to LP guarantees
that the awards are made in the cheapest way.
(iii) Industries: Applications of LP in business and industry are of the most
diverse type. Transportation problems concerning cost minimization can
be solved by this technique. The technique can also be adopted in solving
problems of production (product-mix) and inventory control.
Thus, LP is the most widely used technique of decision-making in business and
industry in modern times in various fields.
2.3.3 Components of a Linear Programming Problem
There are certain basic concepts and notations to be first understood for easy adoption
of the LP technique. A brief mention of such concepts is as follows:
(i) Linearity. The term linearity implies straight line or proportional
relationships among the relevant variables. Linearity in economic theory
is known as constant returns, which means that if the amount of the
input doubles, the corresponding outputs and profits are also doubled.
Linearity assumption, thus, implies that two machines and two workers
can produce twice as much as one machine and one worker; four
machines and four workers twice as much as two machines and two
workers, and so on.
(ii) Process and its level. Process means the combination of particular inputs
to produce a particular output. In a process, factors of production are
used in fixed ratios, of course, depending upon technology and as such
no substitution is possible with a process. There may be many processes
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Unit-2 Linear Programming Problem

open to a firm for producing a commodity and one process can be

substituted for another. There is, thus, no interference of one process
with another when two or more processes are used simultaneously. If a
product can be produced in two different ways, then there are two
different processes (or activities or decision variables) for the purpose
of a linear programme.
(iii) Criterion function. This is also known as the objective function which
states whether the determinants of the quantity should be maximized or
minimized. For example, revenue or profit is such a function when it is
to be maximized or cost is such a function when the problem is to
minimize it. An objective function should include all the possible
activities with the revenue (profit) or cost coefficients per unit of
production or acquisition. The goal may be either to maximize this
function or to minimize this function. In symbolic form, let ZX denote
the value of the objective function at the X level of the activities included
in it. This is the total sum of individual activities produced at a specified
level. The activities are denoted as j =1, 2,..., n. The revenue or cost
coefficient of the jth activity is represented by Cj. Thus, 2X1, implies
that X units of activity j = 1 yields a profit (or loss) of C1 = 2.
(iv) Constraints or inequalities. These are the limitations under which one
has to plan and decide, i.e., restrictions imposed upon decision variables.
For example, a certain machine requires one worker to operate; another
machine requires at least four workers (i.e., > 4); there are at most 20
machine hours (i.e., < 20) available; the weight of the product should
be, say 10 lbs. and so on, are all examples of constraints or what are
known as inequalities. Inequalities like X > C (reads X is greater than C
or X < C (reads X is less than C) are termed as strict inequalities. The
constraints may be in the form of weak inequalities like X  C (reads X
is less than or equal to C) or X  C (reads C is greater than or equal to
C). Constraints may be in the form of strict equalities like X = C (reads
X is equal to C).
Let bi denote the quantity b of resource i available for use in various
production processes. The coefficient attached to resource i is the quantity
of resource i required for the production of one unit of product j.
(v) Feasible solutions. These are all those possible solutions which can be
worked upon under given constraints. The region comprising all feasible
solutions is referred to as Feasible Region.
(vi) Optimum solution. Optimum solution is the best of all the feasible
solutions.
General form of the linear programming model
Linear programming problem mathematically can be stated as follows:
Choose the quantities,
Xj > 0 (j = 1,..., n) ...(2.1)

36 Operations Research
Linear Programming Problem Unit-2

This is also known as the non-negativity condition and in simple terms means
that no X can be negative.
To maximize,
n

Z  C j X j ...(2.2)
j1

Subject to the constraints,

n

 aij X j  bi (i = 1,...,m) ...(2.3)

j 1

This is the usual structure of a linear programming model in the simplest possible
form. This model can be interpreted as a profit maximization situation, where n
production activities are pursued at level Xj which have to be decided upon, subject
to a limited amount of m resources being available. Each unit of the jth activity
yields a return C and uses an amount aij of the ith resource. Z denotes the optimal
value of the objective function for a given system.
Assumptions or conditions to be fulfilled
LP model is based on the assumptions of proportionality, certainty, additivity,
continuity and finite choices.
Proportionality is assumed in the objective function and the constraint
inequalities. In economic terminology, this means that there are constant returns to
scale, i.e., if one unit of a product contributes ` 5 toward profit, then 2 units will
contribute ` 10, 4 units ` 20, and so on.
Certainty assumption means the prior knowledge of all the coefficients in the
objective function, the coefficients of the constraints and the resource values. LP
model operates only under conditions of certainty.
Additivity assumption means that the total of all the activities is given by the
sum of each activity conducted separately. For example, the total profit in the
objective function is equal to the sum of the profit contributed by each of the products
separately.
Continuity assumption means that the decision variables are contiunous.
Accordingly, the combinations of output with fractional values, in case of product-
mix problems, are possible and obtained frequently.
Finite choices assumption implies that finite number of choices are available
to a decision-maker and the decision variables do not assume negative values.
2.3.4 Formulation of a Linear Programming Problem
The procedure for mathematical formulation of an LPP consists of the following
steps:
Step 1: The decision variables of the problem are noted.
Step 2: The objective function to be optimized (maximized or minimized) as a
linear function of the decision variables is formulated.

Operations Research 37
 Unit-2 Linear Programming Problem

Step 3: The other conditions of the problem such as resource limitation, market
constraints, interrelations between variables, and so on, are formulated as linear
inequations or equations in terms of the decision variables.
Step 4: The non-negativity constraint from the considerations is added so that the
negative values of the decision variables do not have any valid physical interpretation.
The objective function, the set of constraints and the non-negative constraint
together form a linear programming problem.
General formulation of a linear programming problem
The general formulation of the LPP can be stated as follows:
In order to find the values of n decision variables x1 x2 ... xn to maximize or
minimize the objective function,
Z  C1 x1  C2 x2 …  Cn xn ... (2.4)

a11x1  a12 x2 ⋯ a1n xn (, , )b1 

a x  a x ⋯ a x (, , )b 
2 
:
21 1 22 2 2n n


 ... (2.5)
a x  a x ⋯ a x (, , )b 
i1 1 i2 2 in n i 

: 

am1 x1  am 2 x2 ⋯  amn xn ()bm 


Here, the constraints can be inequality  or  or even in the form of an equation

(=) and finally satisfy the non-negative restrictions:
x1  0, x2  0… xn  0 ... (2.6)

Matrix form of a linear programming problem

The LPP can be expressed in the matrix form as follows:
Maximize or minimize Z = Cx  Objective function
Subject to Ax (  ) b  Constant equation
b > 0, x  0  Non-negativity restrictions
Where, x = (x1, x2 ⋯ xn )
C = (C1 , C2 ⋯Cn )

 b1   a11a12 ⋯a1n 
 a a ⋯a 
b =  b  A   21 22 2n

 2 : 
 bm   a a ⋯a 
m1 m 2 mn

Example 2.1: A manufacturer produces two types of models, M1 and M2. Each
model of the type M1 requires 4 hours of grinding and 2 hours of polishing, whereas

38 Operations Research
Linear Programming Problem Unit-2

each model of the type M2 requires 2 hours of grinding and 5 hours of polishing. The
manufacturers have 2 grinders and 3 polishers. Each grinder works 40 hours a week
and each polisher works for 60 hours a week. The profit on M1 model is ` 3.00 and on
model M2 is ` 4.00. Whatever is produced in a week is sold in the market. How
should the manufacturer allocate his production capacity to the two types of models,
so that he may make the maximum profit in a week?
Solution:
Decision variables: Let X1 and X2 be the number of units of M1 and M2.
Objective function: Since the profit on both the models are given, we have to
maximize the profit, viz
Max Z = 3X1 + 4X2
Constraints: There are two constraints: one for grinding and the other for
polishing.
The number of hours available on each grinder for one week is 40 hours.
There are 2 grinders. Hence, the manufacturer does not have more than 2 × 40 = 80
hours for grinding. M1 requires 4 hours of grinding and M2 requires 2 hours of
grinding.
The grinding constraint is given by,
4 X1  2 X 2  80
Since there are 3 polishers, the available time for polishing in a week is given
by 3 × 60 = 180. M1 requires 2 hours of polishing and M2 requires 5 hours of polishing.
Hence, we have 2X1 + 5X2  180
Thus, we have,
Max Z = 3X1 + 4X2
Subject to 4 X1  2 X 2  80

2 X1  5 X 2  180

X1 , X 2  0
Example 2.2: A firm produces two different types of products, Product M and Product
N. The firm uses the same machinery for manufacturing both the products. One unit
of Product M requires 10 minutes while one unit of Product N requires 2 minutes.
The maximum hours the machine can function optimally for a week is 35 hours.
The raw material requirement for Product M is 1 kg while that of Product N is 0.5
kg. Also, the market constraint on product M is 600 kg, while that of Product N is
800 units per week. The cost of manufacturing Product M is ` 5 per unit and it is sold
at ` 10; while the cost of Product N is ` 6 per unit and sold at ` 8 per unit. Calculate
the total number of units of Product M and Product N that should be produced per
week, so as to derive maximum profit.
Solution:
Decision variables: Let X1 and X2 be the number of products of A and B.

Operations Research 39
Unit-2 Linear Programming Problem

Objective function: Cost of product A per unit is ` 5 and is sold at ` 10 per unit.
 Profit on one unit of product A = 10 – 5 = 5.
 X1 units of product A contribute a profit of ` 5X1 from one unit of product.
Similarly, profit on one unit of B = 8 – 6 = 2.
:. X2 units of product B contribute a profit of ` 2X2.
 The objective function is given by,
Max Z  5 X1  2 X 2
Constraints: Time requirement constraint is given by,

10 X1  2 X 2  (35 60)
10 X1  2 X 2  2100
Raw material constraint is given by,
X1  0.5X 2  600
Market demand on product B is 800 units every week.
 X2  800
The complete LPP is,
Max Z  5 X1  2 X 2

Subject to, 10 X1  2 X 2  2100

X1  0.5 X 2  600
X 2  800
X1 , X 2  0

Example 2.3: A person requires 10, 12 and 12 units of chemicals A, B and C

respectively for his garden. A liquid product contains 5, 2 and 1 units of A, B and C
respectively per jar. A dry product contains 1, 2 and 4 units of A, B, C per carton. If
the liquid product sells for ` 3 per jar and the dry product sells for ` 2 per carton, what
should be the number of jars that needs to be purchased, in order to bring down the
cost and meet the requirements?
Solution:
Decision variables: Let X1 and X2 be the number of units of liquid and dry
products.
Objective function: Since the cost for the products is given, we have to
minimize the cost.
Min Z = 3X1 + 2X2
Constraints: As there are three chemicals and their requirements are given,
we have three constraints for these three chemicals.

40 Operations Research
Linear Programming Problem Unit-2

5X 1  X 2  10
2 X1  2 X 2  12
X1  4 X 2  12

Hence, the complete LPP is,

Min Z = 3X1 + 2X2
Subject to,

5X 1  X 2  10
2 X1  2 X 2  12
X1  4 X 2  12
X1 , X 2  0

Example 2.4: A paper mill produces two grades of paper, X and Y. Because of raw
material restrictions, it cannot produce more than 400 tonnes of grade X and 300
tonnes of grade Y in a week. There are 160 production hours in a week. It requires
0.2 and 0.4 hours to produce a tonne of products X and Y respectively with
corresponding profits of ` 200 and ` 500 per tonne. Formulate this as an LPP to
maximize profit and find the optimum product mix.
Solution:
Decision variables: Let X1 and X2 be the number of units of the two grades of
paper, X and Y.
Objective function: Since the profit for the two grades of paper X and Y are
given, the objective function is to maximize the profit.
Max Z = 200X1 + 500X2
Constraints: There are two constraints, one with reference to raw material,
and the other with reference to production hours.
Max Z = 200X1 + 500X2
Subject to,

X1  400
X 2  300
0.2 X1  0.4 X 2  160

Non-negative restriction X1, X2  0

Example 2.5: A company manufactures two products, A and B. Each unit of B takes
twice as long to produce as one unit of A and if the company were to produce only A,
it would have time to produce 2000 units per day. The availability of the raw material
is enough to produce 1500 units per day of both A and B together. Product B requiring
a special ingredient, only 600 units of it can be made per day. If A fetches a profit of
` 2 per unit and B a profit of ` 4 per unit, find the optimum product mix by the graphical
method.

Operations Research 41
Unit-2 Linear Programming Problem

Solution: Let X1 and X2 be the number of units of products A and B respectively.

The profit after selling these two products is given by the objective function,
Max Z = 2X1 + 4X2
Since the company can produce at the most 2000 units of the product in a day
and Product B requires twice as much time as that of Product A, production restriction
is given by,
X1  2 X 2  2000
Since the raw material is sufficient to produce 1500 units per day of both
A and B, we have X1  X 2  1500.
There are special ingredients for Product B; hence, we have X2  600.
Also, since the company cannot produce negative quantities X1  0 and
X2  0.
Hence, the problem can be finally put in the form:
Find X1 and X2 such that the profits, Z = 2X1 + 4X2 is maximum.

Subject to, X1  2 X 2  2000

X1  X 2  1500
X 2  600
X1 , X 2  0

Example 2.6: A firm manufacturers 3 products A, B and C. The profits are ` 3,

` 2 and ` 4 respectively. The firm has 2 machines and the following is the required
processing time in minutes for each machine on each product.

Product
A B C
Machines C 4 3 5
D 3 2 4

Machines C and D have 2000 and 2500 machine minutes respectively. The
firm must manufacture 100 units of A, 200 units of B and 50 units of C, but not more
than 150 units of A. Set up an LP problem to maximize the profit.
Solution: Let X1, X2, X3 be the number of units of the product A, B, C respectively.
Since the profits are ` 3, ` 2 and ` 4 respectively, the total profit gained by the
firm after selling these three products is given by,
Z  3X1  2 X 2  4 X 3
The total number of minutes required in producing these three products at
Machine C is given by 4X1 + 3X2 + 5X3 and at Machine D is given by 3X1 + 2X2 +
4X3.

42 Operations Research
Linear Programming Problem Unit-2

The restrictions on machines C and D are given by 2000 minutes and 2500
minutes.

4 X1  3X 2  5X 3  2000
3X1  2 X 2  4 X 3  2500
Also, since the firm manufactures 100 units of A, 200 units of B and 50 units
of C, but not more than 150 units of A, the further restriction becomes,

100  X1  150
200  X 2  0
50  X 3  0

Hence, the allocation problem of the firm can be finally put in the form:
Find the value of X1, X2, X3 so as to maximize,
Z = 3X1 + 2X2 + 4X3
Subject to the constraints,

4 X1  3X 2  5X 3  2000
3X1  2 X 2  4 X 3  2500

100  X1  150, 200  X 2  0,50  X 3  0

Example 2.7: A peasant has a 100-acres farm. He can sell all potatoes, cabbage or
brinjals and can increase the cost to get ` 1.00 per kg for potatoes, ` 0.75 a head for
cabbage and ` 2.00 per kg for brinjals. The average yield per acre is 2000 kg of
potatoes, 3000 heads of cabbage and 1000 kg of brinjals. Fertilizers can be bought
at ` 0.50 per kg and the amount needed per acre is 100 kg each for potatoes and
cabbage and 50 kg for brinjals. The manpower required for sowing, cultivating and
harvesting per acre is 5 man-days for potatoes and brinjals and 6 man-days for
cabbage. A total of 400 man-days of labour is available at ` 20 per man-day. Solve
this example as a linear programming model to increase the peasant’s profit.
Solution: Let X1, X2, X3 be the area of his farm to grow potatoes, cabbage and
brinjals respectively. The peasant produces 2000X1 kg of potatoes, 3000X2 heads of
cabbage and 1000X3 kg of brinjals.
 The total sales of the peasant will be,
= ` (2000X1 + 0.75 × 3000X2 + 2 × 1000X3)
 Fertilizer expenditure will be,
= ` 20 (5X1 + 6X2 + 5X3)
:. Peasant’s profit will be,
Z = Sale (in `) – Total expenditure (in `)
= (2000X1 + 0.75 × 3000X2 + 2 × 1000X3) – 0.5 × [100(X1 + X2) + 50X2]
–20 × (5X1 + 6X2 + 5X3)
Z = 1850X1 + 2080X2 + 1875X3

Operations Research 43
Unit-2 Linear Programming Problem

Since the total area of the farm is restricted to 100 acres,

X1+ X 2+ X 3 100
Also, the total man-days manpower is restricted to 400 man-days.
5 X1  6 X 2  5 X 3  400
Hence, the peasant’s allocation problem can be finally put in the form:
Find the value of X1, X2 and X3 so as to maximize,
Z = 1850X1 + 2080X2 + 1875X3
Subject to,

X1  X 2  X 3  100
5X 1  6 X 2  5X 3  400
X1 , X 2 , X 3  0

Example 2.8: ABC Company produces two products: juicers and washing machines.
Production happens in two different departments, I and II. Juicers are made in
Department I and washing machines in Department II. These two items are sold
weekly. The weekly production should not cross 25 juicers and 35 washing machines.
The organization always employs a total of 60 employees in the two departments. A
juicer requires two man-weeks’ labour, while a washing machine needs one man-
week’s labour. A juicer makes a profit of ` 60 and a washing machine contributes a
profit of ` 40. How many units of juicers and washing machines should the organization
make to achieve the maximum profit? Formulate this as an LPP.
Solution: Let X1 and X2 be the number of units of juicers and washing machines to be
produced.
Each juicer and washing machine contributes a profit of ` 60 and ` 40. Hence,
the objective function is to maximize Z = 60X1 + 40X2.
There are two constraints which are imposed: weekly production and labour.
Since the weekly production cannot exceed 25 juicers and 35 washing machines,
X1  25
X 2  35
A juicer needs two man-weeks of hard work and a washing machine needs
one man-week of hard work and the total number of workers is 60.
2X1+ X 2 60
Non-negativity restrictions: Since the number of juicers and washing machines
produced cannot be negative, we have X1  0 and X 2  0.
Hence, the production of juicers and washing machines problem can be finally
put in the form of a LP model given as follows:
Find the value of X1 and X2 so as to maximize,
Z = 60X1 + 40X2

44 Operations Research
Linear Programming Problem Unit-2

Subject to,
X1  25
X2  35
2 X1  X 2  60
and X1, X 2 0

CHECK YOUR PROGRESS-1

1. List the various fields where LP problems are frequently applied.

2. Define ‘linearity’.
3. What does the assumption ‘finite choices’ in an LP problem imply?

2.4 SOLVING LP PROBLEMS

Simple linear programming problems with two decision variables can be easily
solved by the graphical method.
2.4.1 Procedure for Solving LPP by Graphical Method
The steps involved in the graphical method are as follows:
Step 1: Consider each inequality constraint as an equation.
Step 2: Plot each equation on the graph as each will geometrically represent a
straight line.
Step 3: Mark the region. If the inequality constraint corresponding to that line
is , then the region below the line lying in the first quadrant (due to non-negativity of
variables) is shaded. For the inequality constraint  sign, the region above the line in
the first quadrant is shaded. The points lying in the common region will satisfy all the
constraints simultaneously. The common region, thus obtained, is called the feasible
region.
Step 4: Allocate an arbitrary value, say zero, for the objective function.
Step 5: Draw a straight line to represent the objective function with the arbitrary
value (i.e., a straight line through the origin).
Step 6: Stretch the objective function line till the extreme points of the feasible
region. In the maximization case, this line will stop farthest from the origin and
passes through at least one corner of the feasible region. In the minimization case,
this line will stop nearest to the origin and passes through at least one corner of the
feasible region.
Step 7: Find the coordinates of the extreme points selected in Step 6 and find
the maximum or minimum value of Z.
Note: As the optimal values occur at the corner points of the feasible region,
it is enough to calculate the value of the objective function of the corner points of

Operations Research 45
Unit-2 Linear Programming Problem
the feasible region and select the one which gives the optimal solution, i.e., in the case
of a maximization problem, the optimal point corresponds to the corner point at which
the objective function has the maximum value and in the case of minimization, the
corner point which gives the objective function the minimum value is the optimal
solution.
Example 2.9: Solve the following LPP by the graphical method.
Minimize Z = 20X1 + 10X2
Subject to, X1 + 2X2  40
3X1 + X2  30
4X + 3X  60
1 2
X,X 0
1 2
Solution: Replace all the inequalities of the constraints by equation,
X1 + 2X2 = 40 If X1 = 0  X 2 = 20
If X2 = 0  X 1 = 40
:. X1 + 2X2 = 40 passes through (0, 20) (40, 0).
3X1 + X2 = 30 passes through (0, 30) (10, 0).
4X1+ 3X2 = 60 passes through (0, 20) (15, 0).
Plot each equation on the graph.

X1

The feasible region is ABCD.

C and D are points of intersection of lines.
X1+ 2X2 = 40, 3X1+ X2 = 30
And, 4X1+ 3X2= 60
On solving, we get C = (4, 18) and D=(6, 12)
Corner Points Value of Z = 20X1 + 10X2
A (15, 0) 300
B (40, 0) 800
C (4, 18) 260
D (6, 12) 240 (Minimum value)
 The minimum value of Z occurs at D (6, 12). Hence, the optimal solution is
X1 = 6, X2= 12.

46 Operations Research
Linear Programming Problem Unit-2

Example 2.10: Find the maximum value of Z = 5X1 + 7X2 .

Subject to the constraints,
X1+ X 2 4
3X1+ 8X 2 24
10X1+ 7X 2 35
X 1, X 2 > 0
Solution: Replace all the inequalities of the constraints by forming equations.
X1 + X2 = 4 passes through (0, 4) (4, 0)
3X1 + 8X2 = 24 passes through (0, 3) (8, 0)
10X1 + 7X2 = 35 passes through (0, 5) (3.5, 0)
Plot these lines in the graph and mark the region below the line, as the inequality
of the constraint is  and is also lying in the first quadrant.
X2

C
B

X1
O

The feasible region is OABCD.

B and C are points of intersection of lines,
X1 + X2 = 4, 10X1 + 7X2 = 35
And, 3X1 + 8X2 = 24
On solving we get,
B = (1.6, 2.3)
C = (1.6, 2.4)
Corner Points Value of Z = 5X1 + 7X2
O (0, 0) 0
A (3.5, 0) 17.5
B (1.6, 2.3) 25.1
C (1.6, 2.4) 24.8 (Maximum value)
D (0, 3) 21
 The maximum value of Z occurs at C (1.6, 2.4) and the optimal solution is
X1 = 1.6, X2 = 2.4.

Operations Research 47
Unit-2 Linear Programming Problem
Example 2.11: A company makes 2 types of hats. Each Hat A needs twice as much
labour time as Hat B. If the company is able to produce only Hat B, then it can make
about 500 hats per day. The market limits daily sales of Hat A and Hat B to 150 and
250 hats. The profits on Hat A and Hat B are ` 8 and ` 5, respectively. Solve graphically
to get the optimal solution.
Solution: Let X1 and X2 be the number of units of type A and type B hats respectively.
Maximize Z = 8X1 + 5X2
Subject to, 2X1 + 2X2  500
X1  150
X2  250
X,X 0
1 2
First rewrite the inequality of the constraint into an equation and plot the lines
in the graph.
2X1 + X2 = 500 passes through (0, 500) (250, 0).
X1 = 150 passes through (150, 0).
X2 = 250 passes through (0, 250).
We mark the region below the lines lying in the first quadrant, as the inequality
of the constraints are  . The feasible region is OABCD. B and C are points of
intersection of lines:
2X1 + X2 = 500, where X1 = 150 and X2 = 250
On solving, we get B = (150, 200)
C = (125, 250)
X2
X1 = 150

D (0, 250) C (125, 250) X2 = 250

B (150, 200)

O 400 500 X1

Corner Points Value of Z = 8X1 + 5X2

O (0, 0) 0
A (150, 0) 1200
B (150, 200) 2200
C (125, 250) 2250 (Maximum Z = 2250)
D (0, 250) 1250

48 Operations Research
Linear Programming Problem Unit-2
The maximum value of Z is attained at C (125, 250).
 The optimal solution is X1 = 125, X2 = 250
i.e., The company should produce 125 hats of type A and 250 hats of type B in
order to get the maximum profit of ` 2250.
Example 2.12: By graphical method, solve the following LPP.
Maximize Z = 3X1 + 4X2
Subject to, 5X1 + 4X2  200
3X1 + 5X2  150
5X1 + 4X2  100
8X1 + 4X2  80
and X , X  0
1 2

Solution:
X2

C (0, 30)

(0, 25) D

X1
(0, 0)

The feasible region is given by OABCD.

Corner Points Value of Z = 3X1 + 4X2
O (20, 0) 60
A (40, 0) 120
B (30.8, 11.5) 138.4 (Maximum value)
C (0, 30) 120
D (0, 25) 100
 The maximum value of Z is attained at B (30.8, 11.5).
 The optimal solution is X1 = 30.8, X 2= 11.5.
Example 2.13: Use graphical method to solve the following LPP.
Maximize Z = 6X1 + 4X2
Subject to, –2X1 + X2  2
X1 – X2  2
3X1 + 2X2  9
X1, X2  0

Operations Research 49
Unit-2 Linear Programming Problem

Solution:
X2

– – X1
–

The feasible region is given by ABC.

Corner Points Value of Z = 6X1 + 4X2
A (2, 0) 12
B (3,0) 18
90
C (13/5, 3/5)  18 (Maximum value)
5
The maximum value of Z is attained at C (13/5, 3/5).
 The optimal solution is X1 = 13/5, X2= 3/5.
Example 2.14: Use graphical method to solve the following LPP.
Minimize Z = 3X1 + 2X2
Subject to, 5X1 + X2  10
X1 + X2  6
X1 + 4X2 12
X,X 0
1 2
Solution: Corner Points Value of Z = 3X1 + 2X2
A (0, 10) 20
B (1, 5) 13 (Minimum value)
C (4, 2) 16
D (12, 0) 36

(1, 5)

50 Operations Research
Linear Programming Problem Unit-2

Since the minimum value is attained at B (1,5), the optimum solution is,
X1 = 1, X2 = 5
Note: In this problem, if the objective function is maximization then the solution
is unbounded, as maximum value of Z occurs at infinity.
Some more cases
There are some linear programming problems which may have:
(i) A unique optimal solution
(ii) An infinite number of optimal solutions
(iii) An unbounded solution
(iv) No solution
The following examples will illustrate these cases.
Example 2.15: Solve the following LPP by the graphical method.
Maximize Z = 100X1 + 40X2
Subject to, 5X1 + 2X2  1000
3X1 + 2X2  900
X1 + 2X2  500
and X + X  0
1 2

Solution:

The solution space is given by the feasible region OABC.

Corner Points Value of Z = 100X1+ 40X2
O (0, 0) 0
A (200, 0) 20,000
B (125, 187.5) 20,000 (Maximum value of Z)
C (0, 250) 10,000
 The maximum value of Z occurs at two vertices A and B.
Since there are infinite number of points on the line, joining A and B gives the
same maximum value of Z.
Thus, there are infinite number of optimal solutions for the LPP.

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Unit-2 Linear Programming Problem

Example 2.16: Solve the following LPP.

Maximize Z = 3X1 + 2X2
Subject to, X1 + X2  1
X1 + X2  3
X1, X2  0
Solution: The solution space is unbounded. The value of the objective function at the
vertices A and B are Z (A) = 6, Z (B) = 6. But, there exist points in the convex region
for which the value of the objective function is more than 8. In fact, the maximum
value of Z occurs at infinity. Hence, the problem has an unbounded solution.
Hence, no feasible solution.
X2

(0, 3)

(2, 1)

X1 X1

–
X2

When there is no feasible region formed by the constraints in conjunction with

non-negativity conditions, then no solution to the LPP exists.
Example 2.17: Solve the following LPP.
Maximize Z = X1 + X2
Subject to the constraints,
X1 + X2  1
–3X1 + X2  3
X 1, X 2  0
X2

– X1

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Linear Programming Problem Unit-2

Solution:
There being no point (X1, X2) common to both the shaded regions, it is not possible to
find a feasible region for this problem. So, the problem cannot be solved. Hence, the
problem has no solution.
2.4.2 Some Important Definitions
1. A set of values X1, X2 ... Xn which satisfies the constraints of the LPP is called
its solution.
2. Any solution to a LPP which satisfies the non-negativity restrictions of the
LPP is called its feasible solution.
3. Any feasible solution which optimizes (minimizes or maximizes) the objective
function of the LPP is called its optimum solution.
4. Given a system of m linear equations with n variables (m < n), any solution
which is obtained by solving m variables keeping the remaining n – m variables
zero is called a basic solution. Such m variables are called basic variables
and the remaining variables are called non-basic variables.
5. A basic feasible solution is a basic solution which also satisfies the condition
in which all basic variables are non-negative.
Basic feasible solutions are of two types:
(i) Non-degenerate: A non-degenerate basic feasible solution is the basic
feasible solution which has exactly m positive Xi (i = 1, 2, ..., m), i.e.,
none of the basic variables is zero.
(ii) Degenerate: A basic feasible solution is said to be degenerate if one or
more basic variables are zero.
6. If the value of the objective function Z can be increased or decreased
indefinitely, such solutions are called unbounded solutions.
2.4.3 Canonical and Standard Forms of LPP
The general LPP can be expressed in the following forms, namely canonical or
standard forms.
In the standard form, irrespective of the objective function, namely maximize
or minimize, all the constraints are expressed as equations. Moreover, RHS of each
constraint and all variables are non-negative.
Characteristics of the standard form
(i) The objective function is of maximization type.
(ii) All constraints are expressed as equations.
(iii) The right hand side of each constraint is non-negative.
(iv) All variables are non-negative.
Characteristics of the canonical form
(i) The objective function is of maximization type.
(ii) All constraints are of ‘’ type.
(iii) All variables Xi are non-negative.
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Unit-2 Linear Programming Problem

In the canonical form, if the objective function is of maximization, all the

constraints other than non-negativity conditions are ‘’ type. If the objective function
is of minimization, all the constraints other than non-negative conditions are ‘’ type.
Notes:
1. Minimization of a function Z is equivalent to maximization of the negative
expression of this function, i.e., Min Z = –Max (–Z).
2. An inequality in one direction can be converted into an inequality in the
opposite direction by multiplying both sides by (–1).
3. Suppose you have the constraint equation,
a11 x1+a12x2 +. ..... +a1n xn = b1
This equation can be replaced by two weak inequalities in opposite directions.
a11x 1+ a 12x 2+...... + a m x n b 1
a11 x1+ a12 x2 +...... + a1n xn  b1
4. If a variable is unrestricted in sign, then it can be expressed as the difference
of two non-negative variables, i.e., if X is unrestricted in sign, then X = X  –
1 i i
X , where X , X , X  are  0.
i i i i

5. In the standard form, all constraints are expressed as equations, which is

possible by introducing some additional variables called slack variables and
surplus variables so that a system of simultaneous linear equations is obtained.
The necessary transformation will be made to ensure that bi  0.
Definition
(i) If the constraints of a general LPP be,
n

a j 1
ij xi  bi (i  1, 2, ..., m),

then the non-negative nvariables Si, which are introduced to convert the inequalities
() to the equalities a
j 1
ij xi  Si  bi (i  1, 2, ..., m) , are called slack variables.

Slack variables are also defined as the non-negative variables which are added
in the LHS of the constraint to convert the inequality ‘’ into an equation.
(ii) If the constraints of a general LPP be,
n

a
j 1
ij x j  bi (i  1, 2, ..., m) ,

then the non-negative variables

n
Si which are introduced to convert the
inequalities ‘’ to the equalities a
j 1
ij x j – Si  bi (i  1, 2, ..., m) are called surplus
variables.
Surplus variables are defined as the non-negative variables which are removed
from the LHS of the constraint to convert the inequality ‘’ into an equation.

54 Operations Research
Linear Programming Problem Unit-2

2.4.4 Simplex Method

The simplex method is an iterative procedure for solving an LPP in a finite number of
Simplex method: An
steps. This method provides an algorithm which consists of moving from one vertex
iterative procedure for
of the region of feasible solution to another in such a manner that the value of the solving an LPP in a
objective function at the succeeding vertex is less or more as the case may be at the finite number of steps.
previous vertex. This procedure is repeated and since the number of vertices is finite,
the method leads to an optimal vertex in a finite number of steps or indicates the
existence of an unbounded solution.
Definition
(i) Let XB be a basic feasible solution to the LPP.
Max Z = CX
Subject to AX= b and X  0, such that it satisfies X B= B–1b,
Here, B is the basic matrix formed by the column of basic variables.
The vector CB = (CB1, CB2 … CBm), where CBj are components of C associated
with the basic variables is called the cost vector associated with the basic feasible
solution XB.
(ii) Let XB be a basic feasible solution to the LPP.
Max Z = CX, where AX= b and X  0.
Let CB be the cost vector corresponding to XB. For each column vector aj in
A1, which is not a column vector of B, let
m
a j   aijbj
i 1

m
Then the number Z j   C Bi aij is called the evaluation corresponding to aj
i 1

and the number (Zj – Cj) is called the net evaluation corresponding to j.
Simplex algorithm
While solving an LPP by simplex algorithm, an important assumption is the existence
of an initial basic feasible solution. The following steps are involved in finding an
optimum solution.
Step 1: It is first imperative to find out whether minimization or maximization
is the objective function of the given LPP. If minimization is the objective function,
then the LPP should be converted into a maximization problem,
Min Z = –Max (–Z)
Step 2: All values of bi (i = 1, 2, …, m) should be positive. Any negative bi
value present should be converted into positive value by multiplying with –1.
Step 3: The problem should be then expressed in the standard form. This can
be done by introducing slack/surplus variables to convert the inequality constraints
into equations.

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Unit-2 Linear Programming Problem

Step 4: Get an initial basic feasible solution to the problem in the form
–1
XB = B b and put it in the first column of the simplex table. Form the initial simplex
table shown as follows:

Step 5: Compute the net evaluations Zj – Cj by using the relation:

Zj – Cj = CB (aj – Cj)
Examine the sign of Zj – Cj:
(i) If all Zj – Cj  0, then the initial basic feasible solution XB is an optimum
basic feasible solution.
(ii) If at least one Zj – Cj > 0, then go to the next step as the solution is not
optimal.
Step 6: To find the entering variable, i.e., key column.
If there are more than one negative Zj – Cj, the most negative of them should
be chosen. Let it be Zr – Cr for some j = r. This gives the entering variable Xr and is
indicated by an arrow at the bottom of the rth column. If there are more than one
variable having the same most negative Zj – Cj, then any one of the variable can be
selected arbitrarily as the entering variable.
(i) If all Xir  0 (i = 1, 2, …, m) then there is an unbounded solution to the
given problem.
(ii) If at least one Xir > 0 (i = 1, 2, …, m), then the corresponding vector Xr
enters the basis.
Step 7: To find the leaving variable or key row:
Compute the ratio (XBi /Xkr, Xir>0)
If the minimum of these ratios be XBi /Xkr, then choose the variable Xk to leave
the basis called the key row and the element at the intersection of the key row and
the key column is called the key element.
Step 8: Form a new basis by dropping the leaving variable and introducing
the entering variable along with the associated value under CB column. The leaving
element is converted to unity by dividing the key equation by the key element and
all other elements in its column to zero by using the formula:
New element = Old element

Product of elementsKey
in the 
key row and key column 
element
–
 
Step 9: Repeat the procedure of Step (5) until either an optimum solution is
obtained or there is an indication of unbounded solution.

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 Linear Programming Problem Unit-2
Example 2.18: Use the simplex method to solve the following LPP.
Maximize Z = 3X1 + 2X2
Subject to, X1  X 2  4
X1  X 2  2
X1 , X 2  0
Solution: By introducing the slack variables S1, S2, convert the problem into its standard
form.
Max Z = 3X1 + 2X2 + 0S1 + 0S2
Subject to, X1  X 2  S1  4
X1  X 2  S2  2
X1 , X 2 , S1 , S2  0
X 
X X S S   1 
X  4
 11 1
2
1
1
0   2   
2

   S1  2
 1 1 0 1  
S 2 


An initial basic feasible solution is given by,

XB = B–1b,
Here, B = I2, XB = (S1, S2)
i.e., (S1, S2) = I2 (4, 2) = (4, 2)
Initial Simplex Table
Zj = CB aj
 0  1
Z C  C a C   3  3
1 1 B 1 1    
 0   1
Z  C  C a  C   0  (11)  2  2
2 2 B 2 2  
 0 
Z  C  C a  C   0  (1 0)  0  0
3 3 B 3 3  
 0
Z  C  C a  C   0 (01)  0  0
4 4 B 4 4  
 0 
Cj 3 2 0 0
XB
CB B XB X1 X2 S1 S2 Min
X1
0 S1 4 1 1 1 0 4/1 = 4
0 S2 2 1 –1 0 1 2/1 = 2
Zj 0 0 0 0 0
Zj – C j –3 –2 0 0

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 Unit-2 Linear Programming Problem

Since there are some Zj – Cj = 0, the current basic feasible solution is not
optimum.
Since Z1 – C1= –3 is the most negative, the corresponding non-basic variable
X1 enters the basis.
The column corresponding to this X1 is called the key column.

X 
Ratio = Min  X Bi , X ir  0 
 ir 


 4 2 
= Min 1 ,1  , which corresponds to S2
 
 The leaving variable is the basic variable S2. This row is called the key
row. Convert the leading element X21 to units and all other elements in its column n,
i.e., (X1) to 0 by using the formula:
New element = Old element –
Product
 of elements in the key row and key column 

Key element
 
To apply this formula, first we find the ratio, namely

The element to be zero 1

 1
Key element 1
Apply this ratio, for the number of elements that are converted in the key
row. Multiply this ratio by the key row element shown as follows:
1×2
1×1
1 × –1
1×0
1×1
Now, subtract this element from the old element. The element to be converted
into 0 is called the old element row. Finally, you have
4–1×2=2
1–1×1=0
1 – 1 × –1 = 2
1–1×0=1
0 – 1 × 1 = –1
 The improved basic feasible solution is given in the following simplex table.

58 Operations Research
Linear Programming Problem Unit-2

First iteration
Cj 3 2 0 0
XB
CB B XB X1 X2 S1 S2 Min
X2

0 S1 2 0 2 1 –1 2/2 = 1
3 X1 2 1 –1 0 1 –
Zj 6 3 –3 0 0
Zj – Cj 0 –5 0 0

Since, Z2 – C2 is the most negative, X2 enters the basis.

 XB 
To find Min , X i2  0 
 X 
 i2 
 2 
Min  2 
 
This gives the outgoing variables. Convert the leaving element into 1. This is
done by dividing all the elements in the key row by 2. The remaining elements are
converted to 0 by using the following formula.

Here, – 12 is the common ratio. Put this ratio 5 times and multiply each ratio
by the key row element.
1
 2
2
1
 0
2
1
 2
2
–1/2 × 1
–1/2 × –1
Subtract this from the old element. All the row elements which are converted
into 0 are called the old elements.
 1 
2     2  3
2
 
1 – (–1/2 × 0) = 1
–1 – (–1/2 × 2) = 0
0 – (–1/2 × 1) = 1/2
1 – (–1/2 × 1) = 1/2

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Unit-2 Linear Programming Problem

Second iteration

Cj 3 2 0 0

Ca B X0 X1 X2 S1 S2
2 X2 1 0 1 1/2 –1/2

3 X1 3 1 0 1/2 1/2
Zj 11 3 2 5/2 1/2
Zj–Cj 0 0 5/2 1/2

Since all Zj – Cj  0, the solution is optimum. The optimal solution is Max

Z = 11, X1 = 3, and X2 = 1.
Example 2.19: Solve the LPP when,
Maximize Z = 3X1 + 2X2
Subject to, 4 X1  3X 2  12
4 X1  X 2  8
4 X1  X 2  8
X1 , X 2  0
Solution: Convert the inequality of the constraint into an equation by adding slack
variables S1, S2, S3.
Max Z = 3X1 + 2X2 + 0S1 + 0S2 + 0S3
Subject to, 4 X1  3X 2  S1  12
4 X 1  X 2  S2  8
4 X 1  X 2  S3  8
X1 , X 2 , S1 , S2 , S3  0
X 
X X S S S   1 
X  12
 41 3 1 0 0   2
2 1 2 3
 
   S1   8 
  
 4 1 0 1 0   2  8 

4 1 0 0 1  S  
   S 
 3 
Initial table

Cj 3 2 0 0 0
XB
CB B XB X1 X2 S1 S2 S3 Min
X1
0 S1 12 4 3 1 0 0 12/4 = 3
0 S2 8 4 1 0 1 0 8/4 = 2
0 S3 8 4 –1 0 0 1 8/4 = 2

Zj 0 0 0 0 0 0
Zj – Cj –3 –2 0 0 0

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 Linear Programming Problem Unit-2

 XB 
 Z1 – C 1 is most negative, X1 enters the basis and the Min  , X i1  0 
X
  i1 
= Min (3, 2, 2) gives S3 as the leaving variable.
Convert the leaving element into 1 by dividing the key row elements by 4 and
the remaining elements into 0.
First iteration
Cj 3 2 0 0 0
XB
CB B XB X1 X2 S1 S2 S3 Min
X2
0 S1 4 0 4 1 0 –1 4/4 = 1
0 S2 0 0 2 0 1 –1 0/2 = 0

3 X1 2 1 –1/4 0 0 1/4 –
Zj 6 3 –3/4 0 0 3/4
Zj – Cj 0 –11/4 0 0 3/4

4 4
8 8  0 12  8 4
4 4
4 4
4 40 4 40
4 4
4 4
1  1  2 3  1  4
4 4
4 4
0 0  0 1 0 1
4 4
4 4
1 0 1 0 0 0
4 4
4 4
0  1  1 0  1  1
4 4
Since, Z2  C2   3 4 is the most negative, X2 enters the basis.

To find the outgoing variable, find Min  XB , X i 2  0  .

 X i 2 
4 0 
Min  , , 1
4 2 
First iteration
Therefore, S2 leaves the basis. Convert the leaving element into 1 by dividing the
key row elements by 2 and the remaining elements in that column into 0 using the
formula,

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Unit-2 Linear Programming Problem

New element = Old element

– Product of elements in the key row and key column 


Key element
 
Cj 3 2 0 0 0
XB
CB B XB X1 X2 S1 S2 S3 Min
S3

0 S1 4 0 0 1 –2 1 4/1 = 4

2 X2 0 0 1 0 1
2
– 12 –
3 X1 2 1 0 0 1/8 1/8 2/1/8 = 16
Zj 6 3 2 0 11/8 –5/8
Zj – Cj 0 0 0 11/8 –5/8

Second iteration
Since Z5 – C5 = –5/8 is the most negative, S3 enters the basis, and
X  4 2 
Min  S B , S i3   Min  1 , 1/18 
 i3   
Therefore, S1 leaves the basis. Convert the leaving element into 1 and the
remaining elements into 0.
Third iteration
Cj 3 2 0 0 0
CB B XB X1 X2 S1 S2 S3
0 S3 4 0 0 1 –2 1
2 X2 2 0 1 1/2 –1/2 0
3 X1 3/2 1 0 –1/8 3/8 0
Zj 17/2 3 2 5/8 1/8 0
Zj – Cj 0 0 5/8 1/8 0

Since all Zj – Cj  0, the solution is optimum and it is given by X1 = 3/2, X2 = 2

and Max Z = 17/2.
Example 2.20: Using simplex method solve the following LPP.
Maximize Z = X1 + X2 + 3X3

Subject to, 3X1  2 X 2  X 3  3

2 X1  X 2  2 X 3  2
X1 , X 2 , X 3  0

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Solution: Rewrite the inequality of the constraints into an equation by adding slack
variables.
Max Z = X1 + X2 + 3X3 + 0S1 +0S2

Subject to, 3X1  2 X 2  X 3  S1  3

2 X 1  X 2  2 X 3  S2  2
The initial basic feasible solution is,

X1  X 2  X 3  0
S1  3, S2  2 and Z  0
 X1 X2 X3 S1 S2 
3 2 1 1 0 
 
2 1 2 0 1 
 
1 1 3 0 0 


Cj 3 2 0 0 0
XB
CB B XB X1 X2 X3 S1 S2 Min
X3
0 S1 3 3 2 1 1 0 3/1 = 3
0 S2 2 2 1 2 0 1 2/2 = 1
Zj 0 0 0 0 0 0
Zj – Cj –1 –1 –3 0 0

Since Z3 – C3 = –3 is the most negative, the variable X3 enters the basis. The
column corresponding to X3 is called the key column.
X 
To determine the key row or leaving variable, find Min  X B , X 3  0 
 3 
Min   3,  1
3 2

1

2


 
Therefore, the leaving variable is the basic variable S2, the row is called the
key row and the intersection element 2 is called the key element.
Convert this element into 1 by dividing each element in the key row by 2 and
the remaining elements in that key column into 0 using the formula,
New element = Old element

– Product of elements in the key row and key column 


Key element
 

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First iteration

Since all Zj – Cj  0, the solution is optimum and it is given by X1 = 0, X2 = 0,

X3 = 1, Max Z = 3.
Example 2.21: Use the simplex method to solve the following LPP.
Minimize Z = X2 – 3X3 + 2X5

Subject to, 3X 2  X 3  2 X 5  7
2 X 2  4 X 3  12
4 X 2  3X 3  8X 5  10
X 2, X3, X5  0

Solution: Since the given objective function is of minimization you should convert
it into maximization using Min Z = –Max(–Z).
Max Z = –X2 + 3X3 – 2X5
Subject to, 3X 2  X 3  2 X 5  7
2 X 2  4 X 3  12
4 X 2  3X 3  8X 5  10

You have to rewrite the inequality of the constraints into an equation by adding
slack variables S1, S2, S3 and the standard form of LPP becomes,
Max Z = –X2 + 3X3 – 2X5 + 0S1 + 0S2 + 0S3

Subject to, 3X 2  X 3  2 X 5  S1  7
2 X 2  4 X 3  S2  12
4 X 2  3X 3  8X 5  S3  10
X 2 , X 3 , X 5 , S1 , S2 , S3  0
 The initial basic feasible solution is given by,
S1=7, S2=12, S3=10. (X2=X3=X5=0)

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Initial table
Cj –1 3 –2 0 0 0
XB
CB B XB X2 X3 X5 S1 S2 S3 Min
X3
0 S1 7 3 –1 2 1 0 0 –
0 S2 12 –2 4 0 0 1 0 12/4=3
 S3 10 –4 3 8 0 0 1 10/3=3.33
Zj 0 0 0 0 0 0 0
Zj – Cj 1 –3 2 0 0 0

Since, Z2 – C2 = – 3 < 0, the solution is not optimum.

The incoming variable is X3 (key column) and the outgoing variable (key row)
is given by,

Min  XB  , Xi3  0   Min , 

 12 10 
 Xi3   4 3 
Hence, S2 leaves the basis.
First iteration
Cj –1 3 –2 0 0 0
XB
CB B XB X2 X3 X5 S1 S2 S3 Min
X2

0 S1 10 5/2 0 2 1 1/4 0 10/5/2=4

3 X3 3 –1/2 1 0 0 1/4 0 –
 S3 1 –5/2 0 8 0 –3/4 1 –
Zj 9 –3/2 3 0 0 3/4 0
Zj – Cj –1/2 0 2 0 3/4 0

Since Z1 – C1 < 0, the solution is not optimum. Improve the solution by allowing
the variable X2 to enter into the basis and the variable S1 to leave the basis.
Second iteration

–1/2

Since, Zj – Cj  0, the solution is optimum.

 The optimal solution is given by Max Z = 11

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X2 = 4, X3 = 5, X5 = 0
 Min Z = –Max (–Z) = –11
 Min Z = –11, X2= 4, X 3= 5, X 5= 0
Example 2.22: Solve the following LPP using the simplex method.
Maximize Z = 15X1 + 6X2 + 9X3 + 2X4
Subject to, 2X + X + 5X + 6X  20
1 2 3 4
3X + X + 3X + 25X  24
1 2 3 4

7X1 + X4  70
X,X,X,X 0
1 2 3 4
Solution: Rewrite the inequality of the constraint into an equation by adding slack
variables S1, S2 and S3. The standard form of LPP becomes,
Max Z = 15X1 + 6X2 + 9X3 + 2X4 + 0S1 + 0S2 + 0S3
Subject to, 2X1 + X2 + 5X3 + 6X4 + S1 = 20
3X1 +X2+ 3X3 + 25X4 + S2 = 24
7X1+ X4 + S3 = 70
X,X,X,X,S,S,S 0
1 2 3 4 1 2 3
The initial basic feasible solution is S1 = 20, S2 = 24, S3 = 70
(X = X2 = X3 = X4 = 0 non-basic)
The intial simplex table is given by,
Cj 15 6 9 2 0 0 0
XB
CB B XB X1 X2 X3 X4 S1 S2 S3 Min
X1
0 S1 20 2 1 5 6 1 0 0 20/2=10
0 S2 24 3 1 3 25 0 1 0 24/3=8

 S3 70 7 0 0 1 0 0 1 70/7=10
Zj 0 0 0 0 0 0 0 0
Zj – Cj –15 –6 –9 –2 0 0 0

 As some of Zj – Cj  0, the current basic feasible solution is not optimum.

Z1 – C1 = –15 is the most negative value, and hence, X1 enters the basis and the
variable S2 leaves the basis.
First iteration
Cj 15 6 9 2 0 0 0
XB
CB B XB X1 X2 X3 X4 S1 S2 S3 Min
X2
0 S1 4 0 1/3 3 –32/3 1 –2/3 0 4/1/3=12
15 X1 8 1 1/3 1 25/3 0 1/3 0 8/1/3=24
 S3 14 0 –7/3 –7 –172/3 0 –7/3 1 –
Zj 120 15 5 15 125 0 5 0
Zj – C j 0 –1 6 123 0 5 0

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Since Z2 – C2 = –1 < 0; the solution is not optimal, and therefore, X2 enters the
basis and the basic variable S1 leaves the basis.
Second iteration
Cj 15 6 9 2 0 0 0
XB
CB B XB X1 X2 X3 X4 S1 S2 S3 Min
X2
0 S1 4 0 1/3 3 –32/3 1 –2/3 0 4/1/3=12
15 X1 8 1 1/3 1 25/3 0 1/3 0 8/1/3=24
 S3 14 0 –7/3 –7 –172/3 0 –7/3 1 –
Zj 120 15 5 15 125 0 5 0
Zj – Cj 0 –1 6 123 0 5 0

Since all Zj – Cj  0, the solution is optimal and is given by,

Max Z = 132, X1 = 4, X2 = 12, X3 = 0, X4 = 0
Example 2.23: Solve the following LPP using the simplex method.
Maximize Z=3X1 + 2X2 + 5X3
Subject to, X1 + 2X2 + X3  430
3X1 + 2X3  460
X + 4X  420
1 2
X,X,X 0
1 2 3
Solution: Rewrite the constraint into an equation by adding slack variables S1, S2,
S3. The standard form of LPP becomes,
Maximize Z = 3X1 + 2X2 + 5X3 + 0S1 + 0S2 + 0S3
Subject to,X1 + 2X2 + X3 + S1 = 430
3X1 + 2X3 + S2 = 460
X1 + 4X2 + S3 = 420
X,X,X,S,S,S 0
1 2 3 1 2 3
The initial basic feasible solution is,
S1 = 430, S2 = 460, S3 = 420 (X1 = X2 = X3 = 0)
Initial table
Cj 3 2 5 0 0 0
XB
CB B XB X1 X2 X3 S1 S2 S3 Min
X3

0 S1 430 1 2 1 1 0 0 430/1=430
0 S2 460 3 0 2 0 1 0 460/2=230
0 S3 420 1 4 0 0 0 1

Zj 0 0 0 0 0 0 0
Zj–Cj –3 –2 –5 0 0 0

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Since some of Zj – Cj  0, the current basic feasible solution is not optimum.

Since Z3 – C3 = –5 is the most negative, the variable X3 enters the basis. To find the
variable leaving the basis, find
 XB   430 460 
Min ,X  0  = Min  430,  230 

 
i3  
 1



 2 
 X i3 
 The variable S2leaves the basis.
First iteration
Cj 3 2 5 0 0 0
XB
CB B XB X1 X2 X3 S1 S2 S3 Min
X2

0 S1 200 –1/2 2 0 1 1/2 0 200/2=100

5 X3 230 3/2 0 1 0 1/2 0
0 S3 420 1 4 0 0 0 1 420/4=105

Zj 1150 15/2 0 0 0 5/2 0

Zj–Cj 9/2 –2 0 0 5/2 0

Since Z2 – C2 = –2 is negative, the current basic feasible solution is not

optimum. Therefore, the variable X2 enters the basis and the variable S1 leaves the
basis.

2.5 SPECIAL CASES IN LP

2.5.1 Degeneracy
Sometimes, a linear programming problem may have a degenerate situation.
Degeneracy is revealed when a basic variable acquires a zero value (rather than a
negative or positive value) or in the final solution, either the number of basic variables
is not equal to the number of constraints, or the number of zero variables does not
equal the number of decision variables. The instance of degeneracy is usually
preceded by a tie for an existing variable and an arbitrary selection for it. If this is
resolved by a proper selection of pivot element degeneracy can be avoided.
2.5.2 Non-Feasible Solution
A linear programming problem may be unsolved mathematically due to the
contradictory nature of the constraints. Such an instance is referred to as a non-
feasible solution. A solution is also non-feasible if an artificial variable appears in
the basis of the solution which was considered to be optimal.
2.5.3 Unbounded Solution
If the coefficient of the entering variable is either negative or zero, implying that
this variable can be increased indefinitely without ever violating the feasibility, the
maximization problem has an unbounded solution.

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2.5.4 Multiple Solution or Alternate Optima

The optimal solution may not be unique if one of the non-basic variables has a zero
coefficient. The non-basic variable in the basis will neither increase nor decrease
the value of the objective function. Thus, the problem has an alternate solution
which is also optimal.

2.6 CONCEPT OF DUALITY AND SENSITIVITY

ANALYSIS
Every LPP (called the primal) is associated with another LPP (called its dual). Either
of the problem can be considered as primal with the other as dual.
Two reasons are attributed to the importance of the concept of duality:
(i) If a large number of constraints and a lesser number of variables constitute
the primal, then the procedure for computation can be minimized by converting
the primal into its dual and then finding its solution.
(ii) While taking future decisions regarding the activities being programmed, the
interpretation of the dual variables from the cost or economic point of view
proves extremely useful.
2.6.1 Formulation of a Dual Problem
In the formulation of a dual problem, it should be first converted into its canonical
form. Formulation of a dual problem involves the following modifications:
(i) The objective function of minimization in the primal should be converted
into that of maximization in the dual and vice versa.
(ii) The number of constraints in the dual will be equal to the number of variables
in its primal and vice versa.
(iii) The right-hand side constraints in the dual will be constituted by the cost
coefficients C1, C2 ... Cn in the objective function of the primal and vice
versa.
(iv) While forming the constraints for the dual, the transpose of the body matrix
of the primal problem should be considered.
(v) The variables in both problems should be positive, that is, there should be no
negative values.
(vi) If the variable in the primal is unrestricted in sign, then the corresponding
constraint in the dual will be an equation and vice versa.
2.6.2 Definition of a Dual Problem
Let the primal problem be
Max Z = C1x1 + C2x2 + ... + Cnxn
Subject to a11 x1  a12 x2 …  a1n xn  b1
a21x1  a22 x2 …  a2n xn  b2
⁝
am1 x1  am2 x2 …  amn xn  bm
x1 , x2 ⋯xn  0

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Dual: The dual problem is defined as

Min Z1 = b w + b w + ... + b w
1 1 2 2 m m
Subject to a11w1  a21w2 …  am1wm  C1
a12 w1  a22 w2 …  am2 wm  C2
⁝
a1n w1  a2nw2 …  amnwn  Cn
w1 , w2 ⋯wm  0
Here, w1, w2, w3 ... wm are called dual variables.
Example 2.24: Write the dual of the following primal LP problem.
Max Z = x1+ 2x2 + x3

Subject to 2x1  x2  x3  2
2x1  x2  5x3  6
4x1  x2  x3  6
x1 , x2 , x3  0

Solution: Since the problem is not in the canonical form, we interchange the
inequality of the second constraint.
Max Z = x1+ 2x2 + x3

Subject to 2x1  x2  x3  2
2x1  x2  5x3  6
4x1  x2  x3  6
and x1 , x2 , x3  0

Dual: Let w1, w2, w3 be the dual variables.

Min Z1 = 2w + 6w + 6w
1 2 3

Subject to 2w1  2w2  4w3  1

w1  w2  w3  2
w1  5w2  w3  1
w1 , w2 , w3  0

Example 2.25: Find the dual of the following LPP.

Max Z = 3x1– x2 + x3

Subject to 4x1  x2  8
8x1  x2  3x3  12
5x1  6x3  13
x1, x2 , x3  0

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Solution: Since the problem is not in the canonical form, we interchange the inequality
of the second constraint.
Max Z = 3x1– x2 + x3

Subject to 4x1  x2  0x3  8

8x1  x2  3x3  12
5x1  0x2  6x3  13
x1 , x2 , x3  0

Max Z = Cx
Subject to Ax  B
x0

 1  
x 8 

C  (3 11)  x b  12 
 
2  
x   13 
 3  

4 1 0 
 
A  8 1 3 
 
5 0 6 
 
Dual: Let w1, w2, w3 be the dual variables. The dual problem is
Min Z1 = bTW
Subject to ATW  CT and W  0

 1 
w
i.e., Min Z =1(8 12 13) w 
 2 
 w 
 3 

 4 8 5   w1   3 
Subject to  1 1 0 w    1
   2   
0 3 6   w   1 
   3   
Min Z1 = 8w1 – 12w2 + 13w3

Subject to 4w1  8w2  5w3  3

w1  w2  0w3  1
0w1  3w2  6w3  1
w1 , w2 , w3  0

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Example 2.26: Write the dual of the following LPP.

Min Z = 2x2 + 5x3

Subject to x1  x2  2
2x1  x2  6x3  6
x1  x2  3x3  4
x1 , x2 , x3  0
Solution: Since the given primal problem is not in the canonical form, we interchange
the inequality of the constraint. Also, the third constraint is an equation. This equation
can be converted into two inequations.
Min Z = 0x1 + 2x2 + 5x3

Subject to x1  x2  0x3  2
2x1  x2  6x3  6
x1  x2  3x3  4
x1  x2  3x3  4
x1 , x2 , x3  0

Again on rearranging the constraint, we have

Min Z = 0x1 + 2x2 + 5x3

Subject to x1  x2  0x3  2
2x1  x2  6x3  6
x1  x2  3x3  4
 x1  x2  3x3  4
x1 , x2 , x3  0

Dual: Since there are four constraints in the primal, we have four dual variables,
namely w , w , w, w
1 2 3 3
Max Z = 2w – 6w + 4w – 4w
1 2 3 3

Subject to w1  2w2  w3  w3 0

w1  w2  w3  w3 2
0w1  6w2  3w3  3w3 5
w1 , w2 , w3, w3  0

Let w3  w3  w3

Max Z   2w1  6w2  4(w3  w3)

Subject to w1  2w2  (w3  w3) 0

w1  w2  (w3  w3) 2

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Finally, we have, 0w1  6w2  3(w3  w3)  5

Max Z   2w1  6w2  4w3

Subject to w1  2w2  w3  0
w1  w2  w3  2
0w1  6w2  3w3  5
w1 , w2  0, w3 is unrestricted.

Example 2.27: Give the dual of the following problem.

Max Z = x + 2y

Subject to 2x  3y  4
3x  4 y  5
x  0 and y unrestricted.

Solution: Since the variable y is unrestricted, it can be expressed as y  y  y,

y, y  0 . On reformulating the given problem, we have

Max Z  x  2( y  y)

Subject to 2x  3 ( y  y)  4

3x  4 ( y  y)  5
3x  4 ( y  y)  5
x, y, y  0

Since the problem is not in the canonical form we rearrange the constraints.
Max Z = x + 2y – 2y

Subject to 2x  3y  3y  4

3x  4 y  4 y  5
3x  4 y  4 y  5.
Dual: Since there are three variables and three constraints, in dual we have
three variables, namely w , w, w
1 2 2

Min Z   4w1  5w2  5w2



Subject to 2w1  3w2  3w2  1

3w1  4w2  4w2  2
3w1  4w2  4w2  2
w1 , w2, w2  0
Let w = w – w, so that the dual variable w is unrestricted in sign. Finally, the
2 2 2 2
dual is
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Min Z1  4w 1 5 (w 2 5w2)

2w1  3 (w2  w2)  1

Subject to 3w1  4 (w2  w) 2
3w1  4 (w2  w)  2

i.e., Min Z1 = –4w 1 + 5w2

Subject to 2w1  3w2  1

3w1  4w2  2
3w1  4w2  2

w1  0 and w2 is unrestricted.
i.e., Min Z1 = –4w 1 + 5w2

Subject to 2w1  3w2  1

3w1  4w2  2
3w1  4w2  2

i.e., Min Z1 = –4w 1 + 5w2

Subject to –2w1 + 3w2  1
–3w1 + 4w2  2, w 1  0 and w 2 is unrestricted.
Example 2.28: Write the dual of the following primal LPP.
Min Z = 4x1 + 5x2 – 3x3

Subject to x1  x2  x3  22
3x1  5x2  2x3  65
x1  7x2  4x3  120

x1+ x 2 0 and x 3is unrestricted.

Solution: Since the variable x3 is unrestricted, x3  x3  x3 . Also, bring the problem
into the canonical form by rearranging the constraints.

Min Z = 4x1 + 5x2 – 3 (x3  x3)

Subject to x1  x2  (x3  x3)  22

x1  x2  x3  x3  22
3x1  5x2  2 (x3  x3)  65
x1  7x2  4 (x3  x3)  120
x1, x2 , x3  x3  0

Min Z = 4x1 + 5x2 – 3x3  3x3

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Subject to x1  x2  x3  x3  22

 x1  x2  x3  x3  22
3x1  5x2  2x3  2x3  65
x1  7x2  4x3  4x3  120
x1, x2 , x3  x3  0
Dual: Since there are four constraints in the primal problem, in dual there are
four variables, namely w1, w2, w2 , w3 so that the dual is given by
Max Z   22(w1  w1)  65w2  120w3
Subject to w1  w1 3w2  w3  4
w1  w1 5w2  7w3  5
w1  w1 2w2  4w3  3
w1  w1 2w2  4w3  3
w1  w1 2w2  4w3  3
w1, w1, w2 , w3  0
Let w1  w1  w11 , i.e., the variable w1 is unrestricted.
i.e. Max Z   22(w1  w1)  65w2  120w3
Subject to w1  w1 3w2  w3  4
w1  w1 5w2  7w3  5
(w1 w1)  2w2  4w3  3
(w1 w1 ) 2w2  4w3  3
i.e., Max Z   22w1  65w2  120w3
Subject to w1  3w2  w3  4
w1  5w2  7w3  5
w1  2w2  4w3  3
w1  2w2  4w3  3
Finally, we have
Min Z   22w1  65w2  120w3

Subject to w1  3w2  4w3  4

w1  5w2  7w2  5
w1  2w2  4w3  3
w , w  0 and w is unrestricted.
2 3 1

2.6.3 Important Results in Duality

1. A primal will always constitute the dual of a dual.
2. In a dual, if one is a minimization problem, then the other will be a
maximization problem.

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Unit-2 Linear Programming Problem

3. Both the LPP and its dual should have feasible solution, so as to arrive at an
optimal solution.
4. The fundamental duality theorem states that in an LPP if the primal problem
has a finite optimal solution, then its dual also has a finite optimal solution.
Moreover, both the problems have the same optimal values of their objective
function, that is, Max Z = Min Z. The solution of the other problem can be read
from the Zj – Cj row below the columns of slack and surplus variables.
5. The existence Theorem states that there will be no feasible solution for a problem
if either problem in an LPP has an unbounded solution.
6. The complementary slackness theorem states that:
(i) If a primal variable is positive, then its dual constraint will be an equation
at the optimum and vice versa.
(ii) If a primal constraint is an inequality, then the corresponding dual
variable is zero at the optimum and vice versa.
2.6.4 Sensitivity Analysis
The optimal solution of a linear programming problem is formulated using various
methods. You have learned the use and importance of dual variables to solve an
LPP. Here, you will learn how sensitivity analysis helps to solve repeatedly the real
problem in a little different form. Generally, these scenarios crop up as an end result
of parameter changes due to the involvement of new advanced technologies and the
accessibility of well-organized latest information for key (input) parameters or the
Sensitivity analysis: ‘what-if’ questions. Thus, sensitivity analysis helps to produce optimal solution of
Helps to produce simple perturbations for the key parameters. For optimal solutions, consider the simplex
optimal solution of algorithm as a ‘black box’ which accepts the input key parameters to solve LPP as
simple perturbations shown below:
for the key parameters.
Simplex
Algorithm

Linear Optimal
Program Solution

Example 2.29: Illustrate sensitivity analysis using simplex method to solve the
following LPP:
Maximize Z = 20x1 + 10x2

Subject to, x1  x2  3
3x1  x2  7
And x1, x2  0
Solution: Sensitivity analysis is done after making the initial and final tableau using
the simplex method. Add slack variables to convert it into equation form.

76 Operations Research
Linear Programming Problem Unit-2

Maximize Z = 20x1 + 10x2 + 0S1 + 0S2

Subject to, x1  x2  S1  0S2   3

3x1  x2  0S1  S2  7
Where x1, x2 0
To find basic feasible solution we put x1 = 0 and x2 = 0. This gives Z = 0, S1 = 3
and S2 = 7. The initial table will be as follows:
Initial table
Cj 20 10 0 0
XB
CB B XB X1 X2 S1 S2 Min
Xi
0 S1 3 1 1 1 0 3/1 = 3
0 S2 7 3 1 0 1 7/3 = 2.33
Zj 0 0 0 0 0
Zj – Cj –20 –10 0 0

XB
Find X for each row and also find minimum for the second row. Here,
i

Zj – Cj is maximum negative (–20). Hence, x1 enters the basis and S2 leaves the
basis. It is shown with the help of arrows.
Key element is 3, key row is second row and key column is x1. Now convert
the key element into entering key by dividing each element of the key row by key
element using the following formula:
New element = Old element

– Product
 of elements in the key row and key column 

Key element
 
The following is the first iteration table:
Cj 20 10 0 0

CB B XB X1 X2 S1 S2
0 S1 2/3 0 2/3 1 –1/3 2 2
/ =1
3 3
20 X1 7/3 1 1/3 0 1 7 1
/ =7
3 3
Zj 140/3 20 20/3 0 20
Zj – Cj – 0 –10/3 0 20

Since Zj – Cj has one value less than zero, i.e., negative value hence this is not
yet the optima solution. Value –10/3 is negative hence x2 enters the basis and S1
leaves the basis. Key row is upper row.
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Unit-2 Linear Programming Problem

Cj 20 10 0 0

CB B XB X1 X2 S1 S2
 X2 1 0 1 3/2 –1/2
20 X1 4/3 1 0 0 4/3
Zj 110/3 20 10 0 25
Zj – Cj 0 0 0 25
4
Z – C  0 for all, hence optimal solution is reached, where x  , x = 1,
j j 1 2
3
80 110
Z + 10 = .
3 3

CHECK YOUR PROGRESS-2

1. What are the two types of basic feasible solutions?

2. What are unbounded solutions?
3. What is the role of a slack variable?
4. List the various characteristics of the canonical form.
5. What are surplus variables?
6. What is a non-feasible solution?

ACTIVITY

1. Egg contains 6 units of vitamin A per gram and 7 units of vitamin B per
gram and 12 units of vitamin B per gram and costs 20 paise per gram. The
daily minimum requirement of vitamin A and vitamin B are 100 units and
120 units respectively. Find the optimal product mix.
2. A firm has available 240, 370 and 180 kg of wood, plastic and steel
respectively. The firm produces two products A and B. Each unit of A
requires 1, 3 and 2 kg of wood, plastic and steel respectively. The
corresponding requirement for each unit of B are 3, 4 and 1 respectively.
If A sells for ` 4, and B for ` 6, determine how many units of A and B
should be produced in order to obtain the maximum gross income. Use
the simplex method.

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Linear Programming Problem Unit-2

2.7 LET US SUM UP

 Linear programming is a decision-making technique under given constraints

on the assumption that the relationships among the variables representing
different phenomena happen to be linear.
 LP is the most widely used technique of decision-making in business and
industry. Thus, it finds application in production planning and scheduling,
transportation, sales and advertising, financial planning, portfolio analysis,
corporate planning, and many other fields.
 Criterion function, which is also known as objective function, is a component
of LP problems. It states whether the determinants of quantity should be
maximized or minimized.
 Feasible solutions are all those possible solutions which can be worked upon
under given constraints.
 Simple linear LP problems with two decision variables can be easily solved
using the graphical method.
 A set of values X , X , …X , which satisfies the constraints of the LPP is
1 2 n
called its solution.
 An LP problem can have either a unique optimal solution, or an infinite number
of optimal solutions or an unbounded solution or it can have no solution.
 There are two types of basic feasible solutions, namely degenerate and non-
degenerate.
 In the standard form of LPP, all constraints are expressed as equations; while
in the standard form all constraints are expressed as equations by introducing
additional variables called slack variables and surplus variables.
 Simplex method is an iterative procedure used for solving an LPP in a finite
number of steps.

2.8 FURTHER READING

Gupta, P.K. and D.S. Hira. 2002. Introduction to Operations Research. New Delhi:
S. Chand & Co.
Jensen, Paul A. and Jonathan F. Bard. 2003. Operations Research Models and
Methods. New York: John Wiley & Sons.
Taha, H.A. 2006. Operations Research: An Introduction. New Delhi: Prentice-Hall
of India.
M.Selvam (2014) Maritime Logistics and Documentation , Lakshmi Publications ,
New Delhi
M.Selvam (2013) Quality Management, Lakshmi Publications , New Delhi

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Unit-2 Linear Programming Problem

2.9 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress–1

1. LP has been successfully applied in the following fields:
(i) Agriculture: LP can be applied in farm management problems as it
relates to the allocation of resources such as acreage, labour, water supply
or working capital in such a way that it maximizes net revenue.
(ii) Contract awards: Evaluation of tenders by recourse to LP guarantees
that the awards are made in the cheapest way.
(iii) Industries: Applications of LP in business and industry are of the most
diverse type. Transportation problems concerning cost minimization can
be solved by this technique. The technique can also be adopted in solving
problems of production (product-mix) and inventory control.
2. The term linearity implies straight line or proportional relationships among
the relevant variables.
3. Finite choices assumption implies that finite number of choices are available
to a decision-maker and the decision variables do not assume negative values.
Check Your Progress–2
1. Basic feasible solutions are of two types:
(i) Non-degenerate: A non-degenerate basic feasible solution is the basic
feasible solution which has exactly m positive Xi (i = 1, 2, ..., m), i.e.,
none of the basic variables is zero.
(ii) Degenerate: A basic feasible solution is said to be degenerate if one or
more basic variables are zero.
2. If the value of the objective function Z can be increased or decreased
indefinitely, such solutions are called unbounded solutions.
3. Slack variables are used to convert a problem into the standard form.
4. The following are the various characteristics of the canonical form:
(i) The objective function is of maximization type.
(ii) All constraints are of ‘’ type.
(iii) All variables Xi are non-negative.
5. Surplus variables are defined as the non-negative variables which are removed
from the LHS of the constraint to convert the inequality ‘’ into an equation.
6. A linear programming problem may be unsolved mathematically due to the
contradictory nature of the constraints. Such an instance is referred to as a
non-feasible solution.

2.10 POSSIBLE QUESTIONS

Short-Answer Questions
1. What is meant by proportionality in linear programming?
2. What do you understand by certainty in linear programming?
3. What are the basic constituents of an LP model?

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Linear Programming Problem Unit-2

4. What are slack variables? Where are they used? Explain in brief.
5. What is the simplex method?
6. Does every LPP solution have an optimal solution? Explain.
Long-Answer Questions
1. A company manufactures 3 products A, B and C. The profits are: ` 3, ` 2 and
` 4 respectively. The company has two machines and given below is the
required processing time in minutes for each machine on each product.
Products
Machines A B C
I 4 3 5
II 2 2 4
Machines I and II have 2000 and 2500 minutes respectively. The company
must manufacturers 100 A’s 200 B’s and 50 C’s but no more than 150 A’s.
Find the number of units of each product to be manufactured by the company
to maximize the profit. Formulate the above as a LP Model.
2. A company produces two types of leather belts A and B. A is of superior
quality and B is of inferior quality. The respective profits are ` 10 and ` 5 per
belt. The supply of raw material is sufficient for making 850 belts per day.
For belt A, a special type of buckle is required and 500 are available per day.
There are 700 buckles available for belt B per day. Belt A needs twice as
much time as that required for belt B and the company can produce 500 belts
if all of them were of the type A. Formulate a LP Model for the above problem.
3. The standard weight of a special purpose brick is 5 kg and it contains two
ingredients B1 and B2, where B1 costs ` 5 per kg and B2 costs ` 8 per kg. Strength
considerations dictate that the brick contains not more than 4 kg of B1 and a
minimum of 2 kg of B2 since the demand for the product is likely to be related to
the price of the brick. Formulate the above problem as a LP Model.
4. In a chemical industry two products A and B are made involving two operations.
The production of B also results in a by product C. The product A can be sold
at ` 3 profit per unit and B at ` 8 profit per unit. The by product C has a profit
of ` 2 per unit but it cannot be sold as the destruction cost is ` 1 per unit.
Forecasts show that upto 5 units of C can be sold. The company gets 3 units of
C for each units of A and B produced. Forecasts show that they can sell all the
units of A and B produced. The manufacturing times are 3 hours per unit for A
on operation one and two respectively and 4 hours and 5 hours per unit for B on
operation one and two respectively. Because the product C results from
producing B, no time is used in producing C. The available times are 18, and
21 hours of operation one and two respectively. How much of A and B need to
be produced keeping C in mind, to make the highest profit. Formulate the
above problem as LP Model.
5. A company produces two types of hats. Each hat of the first type requires as
much labour time as the second type. If all hats are of the second type only, the
company can produce a total of 500 hats a day. The market limits daily sales of
the first and second type to 150 and 250 hats. Assuming that the profits per hat

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Unit-2 Linear Programming Problem

are ` 8 for type B, formulate the problem as a linear programming model in

order to determine the number of hats to be produced of each type so as to
maximize the profit.
6. Solve the following by graphical method:
(i) Max Z = X1 – 3X2
Subject to, X1 + X2  300
X1 – 2X2  200
2X
1
+ X2  100
X2  200
X,X 0
1 2

(ii) Max Z = 5X + 8Y
Subject to, 3X + 2Y  36
X + 2Y  20
3X + 4Y  42
X, Y  0
(iii) Max Z = X – 3Y
Subject to, X + Y  300
X – 2Y  200
X + Y  100
Y  200
and X, Y  0
7. Solve graphically the following LPP:
Max Z = 20X1 + 10X2
Subject to, X1 + 2X2  40
3X1 + X2  30
4X1 + 3X2  60
and X , X  0
1 2

8. A company produces two different products A and B. The company makes a

profit of ` 40 and ` 30 per unit on A and B respectively. The production
process has a capacity of 30,000 man hours. It takes 3 hours to produce one
unit of A and one hour to produce one unit of B. The market survey indicates
that the maximum number of units of product A that can be sold is 8000 and
those of B is 12000 units. Formulate the problem and solve it by graphical
method to get maximum profit.
9. Using simplex method, find non-negative values of X1, X2 and X3 when
(i) Max Z = X1 + 4X2 + 5X3
Subject to the constraints,
3X1 + 6X2 + 3X3  22
X1 + 2X2 + 3X3  14 and
3X1 + 2X2  14
X1, X2, X3  0

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 Linear Programming Problem Unit-2

(ii) Max Z = X1 + X2 + 3X3

Subject to, 3X1 + 2X2 + X3  2
2X1 + X2 + 2X3  2
X1, X2, X3  0
(iii) Max Z = 10X1 + 6X2
Subject to, X1 + X2  2
2X1 + X2  4
3X1 + 8X2  12
X 1, X 2  0
(iv) Max Z = 30X1 + 23X2 + 29X3
Subject to the constraints,
6X1 + 5X2 + 3X3  52
6X1 + 2X2 + 5X3  14
X1, X2, X3  0
(v) Max Z = X1 + 2X2 + X3
Subject to, 2X1 + X2 – X3  –2
–2X1 + X2 – 5X3  6
4X1 + X2 + X3  6
X1, X2, X3  0
10. A manufacturer is engaged in producing 2 products X and Y, the contribution
margin being ` 15 and ` 45 respectively. A unit of product X requires 1 unit of
facility A and 0.5 unit of facility B. A unit of product Y requires 1.6 units of
facility A, 2.0 units of facility B and 1 unit of raw material C. The availability
of total facility A, B and raw material C during a particular time period are
240, 162 and 50 units respectively.
Find out the product-mix which will maximize the contribution margin by
simplex method.

2.11 LEARNING OUTCOMES

 The meaning of linear programming
 The various fields where LP can be applied
 Formulate an LP problem
 The procedure for solving an LP problem
 Solve an LP problem using the simplex method
 The concept of duality and sensitivity analysis

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Transportation and Assignment Models Unit-3

UNIT 3 TRANSPORTATION AND

ASSIGNMENT MODELS
UNIT STRUCTURE
3.1 Learning Objectives
3.2 Introduction
3.3 Transportation Problem
3.4 Transportation Models
3.4.1 Finding the Initial Basic Feasible Solution
3.4.2 North West Corner Rule
3.4.3 Least Cost or Matrix Minima Method
3.4.4 Vogel’s Approximation Method (VAM)
3.5 Optimum Solution using MODI Method
3.6 Special Cases
3.6.1 Maximization Case in a Transportation Problem
3.6.2 Degeneracy in Transportation Problems
3.6.3 Unbalanced Transportation
3.6.4 Alternate Solution
3.7 Transshipment Model
3.8 Assignment Problem
3.8.1 Mathematical Formulation of the Assignment Problem
3.8.2 Hungarian Method Procedure
3.8.3 Maximization in Assignment Problem
3.9 Let Us Sum Up
3.10 Further Reading
3.11 Answers to Check Your Progress
3.12 Possible Questions
3.13 Learning Outcomes

3.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

 Find an initial basic feasible solution
 Explain the various methods of finding an initial solution
 Use the MODI method for finding an optimal solution
 Explain the various special cases of a transportation problem
 Solve an assignment problem using the Hungarian method
 Explain how to maximize an assignment problem

3.2 INTRODUCTION

After reading this unit, you will be able to explain the transportation problem, which
is a subclass of an LPP (linear programming problem). Transportation problems deal
with the objective of transporting various quantities of a single homogeneous
commodity initially stored at various origins, to different destinations, in a way that
keeps transportation cost at a minimum.
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Unit-3 Transportation and Assignment Models

You will learn about the applications of the transportation problem and the solutions
and rules to solve such problems. The solution of any transportation problem is obtained
in two stages, initial solution and optimal solution. There are three methods of obtaining
an initial solution. These are: North West Corner Rule, Least Cost Method and Vogel’s
Approximation Method (VAM). VAM is preferred since the solution obtained this
way is very close to the optimal solution. The optimal solution of any transportation
problem is a feasible solution that minimizes the total cost. An optimal solution is the
second stage of a solution obtained by improving the initial solution. MODI method is
used to obtain optimal solutions and optimality tests.
The unit also discusses the basic concepts of an assignment problem. It can be
presented in the form of an n×n cost matrix of real numbers. You will also learn to
solve an assignment problem using the Hungarian method. The unit also explains
maximization in assignment problems.

3.3 TRANSPORTATION PROBLEM

Transportation
The transportation problem is one of the subclasses of LPP (Linear Programming
problem: The Problem) in which the objective is to transport various quantities of a single
objective is to transport homogeneous commodity that are initially stored at various origins to different
various quantities of a destinations in such a way that the transportation cost is minimum. To achieve this
single homogeneous objective we must know the amount and location of available supplies and the
commodity that are
initially stored at
quantities demanded. In addition we must know the costs that result from transporting
various origins to one unit of commodity from various origins to various destinations.
different destinations in
such a way that the Elementary Transportation Problem
transportation cost is Consider a transportation problem with m origins (rows) and n destinations
minimum.
(columns). Let Cij be the cost of transporting one unit of the product from the ith
origin to jth destination, ai the quantity of commodity available at origin i, bj the
quantity of commodity needed at destination j. Xij is the quantity transported from
ith origin to jth destination. This transportation problem can be stated in the following
tabular form.

X X X X

X X X X

X X X

X X X X

i=1 j=1

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Transportation and Assignment Models Unit-3

The linear programming model representing the transportation problem is given

by,
m n
Minimize Z   Cij X ij
i 1 j 1
Subject to the constraints,
n

 Xij  ai i  1, 2, ..., n
j 1
(Row Sum)
m


i 1
Xij  bj j  1, 2, ..., n
(Column Sum)
Xij  0 For all i and j
The given transportation problem is said to be balanced if,

i.e., the total supply is equal to the total demand.

Definitions
Feasible solution: Any set of non-negative allocations (Xij>0) which satisfies Feasible solution: Any
set of non-negative
the row and column sum (rim requirement) is called a feasible solution. allocations (Xij>0)
Basic feasible solution: A feasible solution is called a basic feasible solution which satisfies the row
and column sum (rim
if the number of non-negative allocations is equal to m + n – 1, where m is the
requirement).
number of rows and n the number of columns in a transportation table.
Non-degenerate basic feasible solution: Any feasible solution to a
transportation problem containing m origins and n destinations is said to be non-
degenerate, if it contains m + n – 1 occupied cells and each allocation is in
independent positions.
The allocations are said to be in independent positions if it is impossible to
form a closed path. Closed path means by allowing horizontal and vertical lines and
when all the corner cells are occupied.
The allocations in the following tables are not in independent positions.

The allocations in the following tables are in independent positions.

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Unit-3 Transportation and Assignment Models

Degenerate basic feasible solution: If a basic feasible solution contains less

than m + n – 1 non-negative allocations it is said to be degenerate.

3.4 TRANSPORTATION MODELS

3.4.1 Finding the Initial Basic Feasible Solution

Optimal solution: A Optimal solution is a feasible solution (not necessarily basic) which minimizes the
feasible solution (not total cost.
necessarily basic)
which minimizes the The solution of a transportation problem (TP) can be obtained in two stages,
total cost. namely initial solution and optimum solution.
Initial solution can be obtained by using any one of the three methods, viz.
(i) North West Corner Rule (NWCR)
(ii) Least Cost Method or Matrix Minima Method
(iii) Vogel’s Approximation Method (VAM)
VAM is preferred over the other two methods, since the initial basic feasible
solution obtained by this method is either optimal or very close to the optimal
solution.
The cells in the transportation table can be classified into occupied cells and
unoccupied cells. The allocated cells in the transportation table are called occupied
cells and the empty cells in the transportation table are called unoccupied cells.
The improved solution of the initial basic feasible solution is called optimal
solution which is the second stage of solution, that can be obtained by MODI
(Modified Distribution Method).
3.4.2 North West Corner Rule
Step 1: Starting with the cell at the upper left corner (North West) of the transportation
matrix we allocate as much as possible so that either the capacity of the first row
is exhausted or the destination requirement of the first column is satisfied, i.e.,
X11 = Min (a1,b1).
Step 2: If b1>a1, we move down vertically to the second row and make the second
allocation of magnitude X22 = Min(a2 b1 – X11) in the cell (2, 1).
If b1<a1, move right horizontally to the second column and make the second
allocation of magnitude X12 = Min (a1, X11 – b1) in the cell (1, 2).
If b1 = a1, there is a tie for the second allocation. We make the second allocations
of magnitude,

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Transportation and Assignment Models Unit-3

X12 Min (a1  a1 , b1 )  0 in the cell (1, 2)

or, X 21 Min (a2 , b1  b1 )  0 in the cell (2,1)
Step 3: Repeat steps 1 and 2 moving down towards the lower right corner of the
transportation table until all the rim requirements are satisfied.
Example 3.1: Obtain the initial basic feasible solution of a transportation problem
whose cost and rim requirement table is as follows:

Solution: Since a = 34 = b , there exists a feasible solution to the transportation

i j
problem. We obtain the initial feasible solution as follows.
The first allocation is made in the cell (1, 1), the magnitude being
X11 = Min (5, 7) = 5.
The second allocation is made in the cell (2, 1) and the magnitude of the
allocation is given by X21 = Min (8, 7 – 5) = 2.

The third allocation is made in the cell (2, 2) the magnitude X22 = Min (8 – 2, 9)
= 6.
The magnitude of the fourth allocation is made in the cell (3, 2) given by
X32 = Min (7, 9 – 6) = 3.
The fifth allocation is made in the cell (3, 3) with magnitude X33 = Min (7 – 3, 14)
= 4.
The final allocation is made in the cell (4, 3) with magnitude X43 = Min
(14, 18 – 4) = 14.
Hence, we get the initial basic feasible solution to the given TP and is given by,
X11 = 5; X21 = 2; X22 = 6; X32 = 3; X33 = 4; X43 = 14
Total Cost = 2 × 5 + 3 × 2 + 3 × 6 + 3 × 4 + 4 × 7 + 2 × 14
=10 + 6 + 18 + 12 + 28 + 28 = ` 102

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Unit-3 Transportation and Assignment Models

Example 3.2: Determine an initial basic feasible solution to the following

transportation problem using North West Corner Rule.

Solution: The problem is a balanced TP, as the total supply is equal to the total
demand. Using the steps we find the initial basic feasible solution as given in the
following table.

The solution is given by,

X11 = 6; X12 = 8; X22 = 2; X23 = 14; X33 = 1; X34 = 4
Total Cost = 6 × 6 + 4 × 8 + 2 × 9 + 2 × 14 +6 × 1 + 2 × 4
= 36 + 32 + 18 + 28 + 6 + 8 = ` 128
3.4.3 Least Cost or Matrix Minima Method
Step 1 : Determine the smallest cost in the cost matrix of the transportation table.
Let it be Cij. Allocate Xij = Min (ai, bj) in the cell (i, j).
Step 2: If Xij = ai cross off the ith row of the transportation table and decrease
bj by ai. Then go to Step 3.
If Xij = bj cross off the jth column of the transportation table and decrease ai
by bj. Go to Step 3.
If Xij = ai = bj cross off either the ith row or the jth column, but not both.
Step 3: Repeat steps 1 and 2 for the resulting reduced transportation table until all the
rim requirements are satisfied. Whenever the minimum cost is not unique, make an
arbitrary choice among the minima.
Example 3.3: Obtain an initial feasible solution to the following TP using Matrix
Minima Method.

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Transportation and Assignment Models Unit-3

Solution: Since ai = b j = 24, there exists a feasible solution to the TP using the
steps in the least cost method, the first allocation is made in the cell (3, 1) the magnitude
being X31 = 4. This satisfies the demand at the destination D1 and we delete this
column from the table as it is exhausted.

The second allocation is made in the cell (2, 4) with magnitude X24 = Min (6, 8)
= 6. Since it satisfies the demand at the destination D4, it is deleted from the table.
From the reduced table, the third allocation is made in the cell (3, 3) with magnitude
X33 = Min (8, 6) = 6. The next allocation is made in the cell (2, 3) with magnitude X23
of Min (2, 2) = 2. Finally, the allocation is made in the cell (1, 2) with magnitude X12
= Min (6, 6) = 6. Now, all the requirements have been satisfied and hence, the initial
feasible solution is obtained.
The solution is given by,
X12 = 6; X23 = 2; X24 = 6; X31 = 4; X33 = 6
Since the total number of occupied cells = 5 < m + n – 1
We get a degenerate solution.
Total cost   ×    ×    ×    ×    × 
       ` 28
Example 3.4: Determine an initial basic feasible solution for the following TP, using
the Least Cost Method.

Solution: Since a i = b j, there exists a basic feasible solution. Using the steps in
least cost method we make the first allocation to the cell (1, 3) with magnitude X13
= Min (14, 15) = 14 (as it is the cell having the least cost).
This allocation exhausts the first row supply. Hence, the first row is deleted.
From the reduced table, the next allocation is made in the next least cost cell (2, 3)
which is chosen arbitrarily with magnitude X23 = Min (1, 16) = 1. This exhausts the
third column destination.
From the reduced table, the next least cost cell is (3, 4) for which allocation
is made with magnitude Min (4, 5) = 4. This exhausts the destination D4 requirement.

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Delete this fourth column from the table. The next allocation is made in the cell
(3, 2) with magnitude X32 = Min (1, 10) = 1 which exhausts the third origin capacity.
Hence, the third row is exhausted. From the reduced table, the next allocation is
given to the cell (2,1) with magnitude X21 = Min (6, 15) = 6. This exhausts the first
column requirement. Hence, it is deleted from the table.
Finally, the allocation is made to the cell (2, 2) with magnitude X22 = Min
(9, 9) = 9 which satisfies the rim requirement. These allocations are shown in the
following transportation table:

(I Allocation) (II Allocation)

(III Allocation) (IV Allocation)

(V, VI Allocation)
The following table gives the initial basic feasible solution.

The solution is given by,

X13=14; X21=6; X22= 9; X23= 1; X32= 1; X34= 4
Transportation cost,
= 14 × 1 + 6 × 8 + 9 × 9 + 1 × 2 + 3 × 1 + 4 × 2
= 14 + 48 + 81 + 2 + 3 + 8 = ` 156

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3.4.4 Vogel’s Approximation Method (VAM)

The steps involved in this method for finding the initial solution are as follows.
Step 1: Find the penalty cost, namely the difference between the smallest and the
next smallest costs in each row and column.
Step 2: Among the penalties as found in Step (1) choose the maximum penalty. If
this maximum penalty is more than one (i.e., if there is a tie) choose any one
arbitrarily.
Step 3: In the selected row or column as by Step (2) find out the cell having the
least cost. Allocate to this cell as much as possible depending on the capacity and
requirements.
Step 4: Delete the row or column which is fully exhausted. Again, compute
the column and row penalties for the reduced transportation table and then go to
Step (2). Repeat the procedure until all the rim requirements are satisfied.
Note: If the column is exhausted, then there is a change in row penalty and vice
versa.
Example 3.5: Find the initial basic feasible solution for the following transportation
problem using VAM.

Solution: Since a = b = 950, the problem is balanced and there exists a feasible
i j
solution to the problem.
First, we find the row and column penalty PI as the difference between the
least and the next least cost. The maximum penalty is 5. Choose the first column
arbitrarily. In this column, choose the cell having the least cost name (1, 1). Allocate
to this cell with minimum magnitude (i.e., Min (250, 200) = 200.) This exhausts the
first column. Delete this column. Since a column is deleted, there is a change in
row penalty PII while column penalty PII remains the same. Continuing in this manner,
we get the remaining allocations as given in the following table.
I Allocation II Allocation

1
1

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III Allocation IV Allocation

V Allocation VI Allocation

Finally, we arrive at the initial basic feasible solution which is shown in the
following table.

There are six positive independent allocations which equals to m + n –1 =

3 + 4 – 1. This ensures that the solution is a non-degenerate basic feasible solution.
 Transportation cost
 11 × 200 + 13 × 50 + 18 × 175 + 10 × 125 + 13 × 275 + 10 × 125
= ` 12,075
Example 3.6: Find the initial solution to the following TP using VAM.

Solution: Since a = b , the problem is a balance TP. Hence, there exists a feasible
i j
solution.

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Finally, we have the initial basic feasible solution as given in the following
table.

There are six independent non-negative allocations equal to m + n – 1 = 3 +

4 – 1 = 6. This ensures that the solution is non-degenerate basic feasible.
 Transportation cost
= 3 × 45 + 4 × 30 + 1× 25 + 2 × 80 + 4 × 45 + 1 + 75
= 135 + 120 + 25 + 160 + 180 + 75
= ` 695

CHECK YOUR PROGRESS-1

1. What is a transportation problem?

2. What must one know to achieve the objectives of a transportation problem?
3. How are transportation problems presented?
4. Give the mathematical presentation of a transportation problem.
5. Define feasible, basic, non-degenerate solutions of a transportation problem.

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3.5 OPTIMUM SOLUTION USING MODI METHOD

Optimality Test
Once the initial basic feasible solution has been computed, the next step in the problem
is to determine whether the solution obtained is optimum or not.
Optimality test can be conducted to any initial basic feasible solution of a TP,
provided such allocations has exactly m + n – 1 non-negative allocations, where m is
the number of origins and n is the number of destinations. Also, these allocations
must be in independent positions.
To perform this optimality test, we shall discuss the modified distribution method
(MODI). The various steps involved in the MODI method for performing optimality
test are as follows.
MODI Method
Step 1: Find the initial basic feasible solution of a TP by using any one of the three
methods.
Step 2: Find out a set of numbers ui and vj for each row and column satisfying
ui + vj = Cij for each occupied cell. To start with, we assign a number ‘0’ to any row or
column having the maximum number of allocations. If this maximum number of
allocations is more than 1, choose any one arbitrarily.
Step 3: For each empty (unoccupied) cell, we find the sum ui and vj written in the
bottom left corner of that cell.
Step 4: Find out for each empty cell the net evaluation value  = C –(u +v ) and
ij ij i j
which is written at the bottom right corner of that cell. This step gives the optimality
conclusion,
(i) If all ij > 0 (i.e., all the net evaluation values) the solution is optimum
and a unique solution exists.
(ii) If ij  0 then the solution is optimum, but an alternate solution exists.
(iii) If at least one ij < 0 , the solution is not optimum. In this case, we go to
the next step, to improve the total transportation cost.
Step 5: Select the empty cell having the most negative value of ij. From this cell we
draw a closed path by drawing horizontal and vertical lines with the corner cells
occupied. Assign signs ‘+’ and ‘–’ alternately and find the minimum allocation from
the cell having the negative sign. This allocation should be added to the allocation
having the positive sign and subtracted from the allocation having the negative sign.
Step 6: The previous step yields a better solution by making one (or more) occupied
cell as empty and one empty cell as occupied. For this new set of basic feasible
allocations, repeat from Step (2) till an optimum basic feasible solution is obtained.

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Example 3.7: Solve the following transportation problem.

Solution: We first find the initial basic feasible solution by using VAM. Since
a = b the given TP is a balanced one. Therefore, there exists a feasible solution.
i j

Finally, we have the initial basic feasible solution as given in the following
table.

From this table, we see that the number of non-negative independent allocations
is 6 = m+ n – 1 = 3 + 4 –1.
Hence, the solution is non-degenerate basic feasible.
 The initial transportation cost
= 11 × 13 + 3 × 14 + 4 × 23 + 6 × 17 + 17 × 10 + 18 × 9 = ` 711
To find the optimal solution: We apply the MODI method in order to determine the
optimum solution. We determine a set of numbers ui and vj for each row and column,
with ui+vj = Cij for each occupied cell. To start with we give u2 = 0 as the second
row has the maximum number of allocation.
Now, we find the sum ui and vj for each empty cell and enter at the bottom left
corner of that cell.
C21 = u2 + v1 = 17 = 0 + v1 = 17  v1 = 17

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C23 = u2 + v3 = 14 = 0 + v3 = 14  v3 = 14
C24 = u2 + v4 = 23 = 0 + v4 = 23  v4 = 23
C14= u 1+ v 4= 13 = u 1+ 23 = 13  u 1= 10
C33= u +3 v =3 18 = u + 314 = 18  u = 43
Next, we find the net evaluations  = C – (u + v ) for each unoccupied cell
ji ij i j
and enter at the bottom right corner of that cell.
Initial table

Since all ij > 0, the solution is optimal and unique. The optimum solution is
given by,
X14 = 11; X21 = 6; X23 = 3; X24 = 4; X32 = 10; X33 = 9
The minimum transportation cost
= 11 × 13 + 17 × 6 + 3 × 14 + 4 × 23 + 10 × 17 + 9 × 18 = ` 711
Example 3.8: Solve the following transportation problem starting with the initial
solution obtained by VAM.

Solution: Since ai = bj the problem is a balanced TP. Therefore, there exists a
feasible solution.

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Finally, the initial basic feasible solution is given as follows:

Since the number of occupied cells = 6 = m + n – 1 and are also independent,

there exists a non-degenerate basic feasible solution.
The initial transportation cost
= 3 × 2 + 3 × 5 + 4 × 4 + 7 × 1 + 6 × 3 + 6 × 1 = ` 68
To find the optimal solution, applying the MODI method, we determine a set
of numbers ui and vj for each row and column, such that ui + vj = Cij for each
occupied cell. Since the third now has the maximum number of allocations we give
number u3 = 0. The remaining numbers can be obtained as follows.
C31 = u3 + v1 = 7 = 0 + v1 =7  v1 = 7
C32 = u3 + v2 = 6 = 0 + v2 = 6  v2 = 6
C33 = u3 + v3 = 6 = 0 + v3 = 6  v3 = 6
C23= u 2+ v 3= 5 = u 2+ 6 = 5  u 2= –1
C24= u 2+ v 4= 4 = –1 + v 4= 4  v 4= 5
C11= u +1 v =1 2 = u + 17 = 2  u = –5
1

We find the sum ui and vj for each empty cell and enter at the bottom left corner
of the cell. Next, we find the net evaluation  given by  = C – (u + v ) for each
ij ij ij i j
empty cell and enter at the bottom right corner of the cell.
Initial table

v1 v2 v3 v4

Since all ij > 0, the solution is optimum and unique. The solution is given by,
X11 = 3; X23 = 3; X24 = 4, X31 = 1; X32 = 3; X33 = 1
The total transportation cost
= 2 × 3 + 3 × 5 + 4 × 4 + 7 × 1 + 6 × 3 + 6 × 1 = ` 68

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CHECK YOUR PROGRESS-2

1. List the approaches used with transportation problems for determining the
starting solution.
2. Define the optimal solution to a transportation problem.
3. State the necessary and sufficient conditions for the existence of a feasible
solution to a transportation problem.
4. What is the purpose of the MODI method?

3.6 SPECIAL CASES

3.6.1 Maximization Case in a Transportation Problem

In this, the objective is to maximize the total profit for which the profit matrix is
given. For this, first we have to convert the maximization problem into minimization
by subtracting all the elements from the highest element in the given transportation
table. This modified minimization problem can be solved in the usual manner.
Example 3.9: There are three factories A, B and C which supply goods to four
dealers D1, D2, D3 and D4. The production capacities of these factories are 1000,
700 and 900 units per month respectively. The requirements from the dealers are
900, 800, 500 and 400 units per month respectively. The per unit return (excluding
transportation cost) are ` 8, ` 7 and ` 9 at the three factories. The following table
gives the unit transportation costs from the factories to the dealers.

Determine the optimum solution to maximize the total returns.

Solution: Profit/Return–Transportation cost. With this we form a transportation
table with profit.

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Profit Matrix

This profit matrix is converted into its equivalent loss matrix by subtracting all
the elements from the highest element, namely 8. Hence, we have the following
loss matrix.

We use VAM to get the initial basic feasible solution.

The initial solution is given in the following table:

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Since the number of allocated cells = 5 < m + n – 1 = 6, the solution is degenerate.

To resolve this degeneracy, we add an empty cell (1, 3) by allocating a non-negative
quantity .
This cell is the least cost cell and is of independent position. The initial basic
feasible solution is given as follows:
Initial table

The number of allocations = 6 = m + n – 1 and the 6 allocations are in independent

position. Hence, we can perform the optimality test using MODI method.

D1 D2 D3 D4 ui
2 2 2 4
A 200 800 0
 1 3
4 6 2 3
B 700 2
4 2 4 2 3 0
3 2 1 0
C 500 400 –1
1 2 1 1
ui 2 2 2 1

Since all the net evaluation ji > 0 are non-negative, the initial solution is optimum.
The optimum distribution is
A  D1 = 200 units
A  D2 = 800 units
A  D3 =  units
B  D1 = 700 units
C  D3 = 500 units
A  D4 = 400 units
The total profit or max. return
= 200  6 + 6  800 + 4  700 + 7  500 + 8  400
= ` 15,500

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Example 3.10: Solve the following transportation problem to maximize the profit.

Solution: Since the given problem is to maximize the profit, we convert this into loss
matrix and minimize it. For converting it into minimization type, we subtract all the
elements from the highest element 90. Hence, we have the following loss matrix.

Since a = b there exists a feasible solution which can be obtained by VAM.

i j

The initial basic feasible solution is given in the following table.

As the number of independent allocated cells = 6 = m + n – 1, the solution is non-

degenerate.

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Optimality test using MODI method

Since all the net evaluations ij > 0 the solution is optimum and unique. The
optimum solution is given by,
X12 = 23; X21 = 6; X24 = 30; X31 = 17; X33 = 16
The optimum profit = 23 × 51 + 6 × 80 + 42 × 8 + 81 × 30 + 90 × 17 + 66 × 16
= ` 7005
3.6.2 Degeneracy in Transportation Problems
In a TP, if the number of non-negative independent allocations is less than m + n – 1,
where m is the number of origins (rows) and n is the number of destinations, (columns)
then it results in degeneracy. This may occur either at the initial stage or at the
subsequent iteration.
To resolve this degeneracy, we adopt the following steps.
Step 1: Among the empty cells, we choose an empty cell having the least cost which
is of an independent position. If there are more than one cell, choose any one
arbitrarily.
Step 2: To the cell as chosen in Step (1) we allocate a small positive quantity > 0.
The cells containing ‘’ are treated like other occupied cells and degeneracy
is removed by adding one (more) accordingly. For this modified solution, we adopt
the steps involved in MODI method till an optimum solution is obtained.
Example 3.11: Solve the transportation problem for minimization.

Solution: Since a = b the problem is a balanced TP. Hence, there exists

i j
a feasible solution. We find the initial solution by North West Corner rule as
given here.

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Since, the number of occupied cells = 5 = m + n – 1, and all the allocations are
independent, we get an initial basic feasible solution.
The initial transportation cost
= 10 × 2 + 4 × 10 + 5 × 1 + 10 × 3 + 1 × 30 = 20 + 40 + 5 + 30 + 30 = ` 125
To find the optimal solution (MODI method): We use the previous table to apply
the MODI method. We find out a set of numbers ui and vj for which ui + vj = Cij, only
for occupied cells. To start with, as the maximum number of allocations is 2 in
more than one row and column, we choose arbitrarily column 1, and assign a number
0 to this column, i.e., v1 = 0. The remaining numbers can be obtained as follows.
C11= u 1+ v 1= 2 = u 1+ 0 = 2  u 1= 2
C21= u 2+ v 1= 4  u 2= 4 – 0 = 4
C22= u 2+ v 2= 1  v 2 = 1 – u2 = 1 – 4 = –3
C32 = u3 + v2 = 3 = u3 = 3 – v2 = 3 – (–3) = 6
C33 = u3 + v3 = 1 = v3 = 1 – u3 = 1 – 6 = –5
Initial table

v1 v2 v3

We find the sum of ui and vj for each empty cell and write at the bottom left
corner of that cell. Find the net evaluations  = C – (u + v ) for each empty cell and
ij ij i j
enter at the bottom right corner of the cell.
The solution is not optimum as the cell (3, 1) has a negative ij value. We
improve the allocation by making this cell (3, 1) as an allocated cell. We draw a
closed path from this cell and assign the signs ‘+’ and ‘’ alternately. From the cell
having the negative sign we find the minimum allocation given by Min (10, 10) =
10. Hence, we get two occupied cells.

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(2, 1) (3, 2) becomes empty and the cell (3, 1) is occupied and results in a
degenerate solution. (Degeneracy in subsequent iteration).
Number of allocated cells = 4 < m  n  1  5
We get degeneracy. To resolve the degeneracy we add the empty cell (1, 2) and
allocate >0. This cell namely (1, 2) is added as it satisfies the two steps for resolving
the degeneracy. We assign a number 0 to the first row, namely u1 = 0; we get the
remaining numbers as follows.
C11
C12
C31
C33
C22
Next, we find the sum of uj and vj for the empty cell which is entered at the
bottom left corner of that cell and also the net evaluation   C – (u + v ) for each
ij ij i j
empty cell which is entered at the bottom right corner of the cell.
Iteration table

The modified solution is given in the following table. This solution is also optimal
and unique as it satisfies the optimality condition that all ij > 0.

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X11= 10: X 22= 15; X 33= 30; X 12= ; X 31= 10

Total cost = 10 × 2 + 2 ×  + 15 × 1 + 10 × 1 + 30 × 1
= 75 + 2  = ` 75
Example 3.12: Solve the following transportation problem whose cost matrix is
given below.

Solution: Since a = b , the problem is a balanced transportation problem. Hence,

i j
there exists a feasible solution. We find the initial solution by North West Corner
Rule.

We get the total number of allocated cells = 7 = 4 + 4 – 1. As all the allocations

are independent, the solution is non-degenerate.
The total transportation cost
= 1 × 21 + 5 × 13 + 3 × 12 + 3 × 1 + 12 × 2 + 2 × 2 + 17 × 4
= ` 221
To find the optimal solution (MODI Method): We determine a set of numbers ui
and vj for each row and each column with uj + vj = Cij for each occupied cell. To start
with we give 0 to the third column as it has the maximum number of allocations.

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Initial table

A B C D

C23= u 2+ v 3= 1  u 2= 1 – 0  
C33= u 3+ v 3= 2  u 3= 2 – v 3= 2 – 0 = 2
C43 = u4 + v3 = 2  u4 = 2 – 0 = 2
C44 = u4 + v4 = 4  v4 = 4 – 2 = 2
C22 = u2 + v2 = 3  v2 = 3 – u 2 = 2
C12 = u1 + v2 = 5  u1 = 5 – v2 = 3
C11= u 1+ v 1= 1  v 1= 1 – u 1= 1 – 3 = –2
We find the sum ui and vj for each empty cell and enter at the bottom left corner
of that cell. We find the net evaluation ij = C ij – (u i + v j) for each empty cell and enter
at the bottom right corner of that cell. The solution is not optimum as some of ij <0.
We choose the most negative ij , i.e., –2. There is a tie between the cell (1, 4) and (3,
2), but we choose the cell (3, 2) as it has the least cost. From this cell, we draw a
closed path and assign ‘+’ and ‘–’ signs alternately and find the minimum allocation
from the cell having ‘–’ sign.
Thus, we get, Min (12, 12) = 12. Hence, one empty cell (3, 2) becomes occupied
and two occupied cells (2, 2) (3, 3) becomes empty resulting in degeneracy
(Degeneracy in subsequent iteration). By adding and subtracting this minimum
allocation, we get the modified allocation as given in the following table. For this
modified allocations, we repeat the steps in the MODI method.
First iteration table

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The number of allocations  6 < m  n  1  7. We add the cell (3,3) as it is the

least cost empty cell which is of independent position. Give a small quantity > 0.
This removes the degeneracy.
The modified allocation is given in the following table.

The solution is not optimum. The next negative value of ij = –4 (the cell
(1, 4)).
The minimum allocation is Min (13, , 17) = . Proceeding in the same
manner, we have the second iteration table given as follows.
Second iteration table

As the solution is not optimum, we improve the solution by using the steps
involved in the MODI method. The most negative value of ij = – 2. The minimum
allocation is Min (13 – , 15, 17 – ) = 13 – .

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Third iteration table

The solution is improved by adding and subtracting the new allocation given
by Min (2 + , 4) = (2 +).
Fourth iteration table

Since all ij  0, the solution is optimum (alternate solution exists). The solution
is given by

The total transportation cost

21 × 1 + 3 × 13 + 3 (13 – ) + 2 (2 + ) + 2 (12 + ) + 2 (17 + ) + 4 (2 – )
= 169 –  = ` 169
Example 3.13: A company has three plants A, B, C and three warehouses X, Y, Z.
The number of units available at the plants is 60, 70, 80 and the demand at X, Y, Z
are 50, 80, 80 respectively. The unit cost of the transportation is given in the following
table.

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Find the allocation so that the total transportation cost is minimum.

Solution:

Since a = b = 210, the problem is a balanced one. Hence, there exists a

i j
feasible solution. Let us find the initial solution by the least cost method.

Here, the least cost cell is not unique, i.e., the cells (2, 1) (1, 3) and (3, 2) have
the least value 3. So, choose the cell arbitrarily. Let us choose the cell (2, 1) and
allocate with magnitude Min (70, 50) = 50. This exhausts the first column. Now,
delete this column. The reduced transportation table is given by,

Continuing in this manner, we finally arrive at the initial solution which is

shown in the following table.

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The number of allocated cells is 4 < m + n – 1 = 5. This results in degeneracy

(Initial stage). To remove this degeneracy, we add an empty cell (3, 3) whose cost is
minimum and is of independent position. Allocate to this cell a small quantity >0.
Hence, we have the initial solution given in the following table:

The total number of occupied cells = 5 = m + n – 1 = 5. These are also of

independent position. This solution is non-degenerate.
The solution is given by
X13= 60; X 21= 50; X 23= 20; X 32= 80; X 33= 
The total transportation cost
= 3 × 60 + 3 × 50 + 9 × 20 + 3 × 80 + 5 × 
= ` 750 + 5  = ` 750
To find the optimal solution: We apply the steps involved in the MODI method to
the previous table. We find a set of numbers ui and vj for which ui + vj = Cij is
satisfied for each of the occupied cell. To start with, we assign a number 0 to the
third column (i.e., v3 = 0) as it has the maximum number of allocations. The remaining
numbers are obtained as follows.

Since, all ij > 0 we obtain an optimum solution.

The solution is given by,
X13 = 60; X21 = 50; X23 = 20; X32 = 80; X33 = 
Total transportation cost = 3 × 60 + 3 × 50 + 9 × 20 + 3 × 80 + 5 × 
= ` 750 + 5  = ` 750

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3.6.3 Unbalanced Transportation

The given TP is said to be unbalanced if a  b , i.e., if the total supply is not equal
i j
Unbalanced
to the total demand.
Transportation: The
There are two possible cases. given TP is said to be
unbalanced if the total

 a  b
m n supply is not equal to
Case (i): i j the total demand.
i=1 j 1

If the total supply is less than the total demand, a dummy source (row) is
included in the cost matrix with zero cost; the excess demand is entered as a rim
requirement for this dummy source (origin). Hence, the unbalanced transportation
problem can be converted into a balanced TP.

 a  b
m n
Case (ii): i j
i=1 j 1

i.e., the total supply is greater than the total demand. In this case, the
unbalanced TP can be converted into a balanced TP by adding a dummy destination
(column) with zero cost. The excess supply is entered as a rim requirement for the
dummy destination.
Example 3.14: Solve the transportation problem when the unit transportation costs,
demands and supplies are as given below:

Solution: Since the total demand b  215 is greater than the total supply a 195,
j i
the problem is an unbalanced TP.
We convert this into a balanced TP by introducing a dummy origin O4 with cost
zero and giving supply equal to 215 – 195 = 20 units. Hence, we have the converted
problem as follows:

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As this problem is balanced, there exists a feasible solution to this problem.

Using VAM, we get the initial solution.

The initial solution to the problem is given by,

There are seven independent non-negative allocations equal to m + n – 1. Hence,

the solution is non-degenerate.
The total transportation cost
= 6 × 65 + 5 × 1 + 5 × 30 + 2 × 25 + 4 × 25 + 7 × 45 + 20 × 0
= ` 1010
To find the optimal solution: We apply the steps in the MODI method to the previous
table.

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5 0

11

10
25 45

Since all  ij 0, the solution is not optimum; hence, we introduce the cell (3,1)
as this cell has the most negative value of  ij. We modify the solution by adding and
subtracting the minimum allocation given by Min (65, 30, 25). While doing this, the
occupied cell (3, 3) becomes empty.
First iteration table

As the number of independent allocations are equal to m+n–1, we check the

optimality.
Since all ij  0, the solution is optimal and an alternate solution exists as
14 = 0. Therefore, the optimum allocation is given by,
X11 = 40; X12 = 30; X22 = 5; X23 = 50; X31 = 25; X34 = 45; X41 = 20
The optimum transportation cost,
= 6 × 40 + 1 × 30 + 5 × 5 + 2 × 50 + 10 × 25 + 7 × 45 + 0 × 20
= ` 960
Example 3.15: A product is produced by 4 factories F1, F2, F3 and F4. Their unit
production costs are ` 2, 3, 1 and 5 respectively. The production capacity of the
factories are 50, 70, 40 and 50 units respectively. The product is supplied to 4 stores
S1, S2, S3 and S4, the requirements of which are 25, 35, 105 and 20 respectively.
Find the transportation plan such that the total production and transportation
cost is minimum. The unit costs of transportation are given as follows:

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Solution: We form the transportation table which consists of both production and
transportation costs.

Total capacity = 200 units

Total demand = 185 units
Therefore, a i > b j. Hence, the problem is unbalanced. We convert it into a
balanced one by adding a dummy store S5 with cost 0 and the excess supply is given
as the rim requirement to this store, namely (200–185) units.

The initial basic feasible solution is obtained by the least cost method. We get
the solution containing eight non-negative independent allocations equal to m + n –
1. So the solution is a non-degenerate solution.
The total transportation cost
= 4 × 25 + 6 × 5 + 8 × 20 + 10 × 50 + 8 × 20 + 4 × 30 + 13 × 55 + 0 × 15
= ` 1785
To find the optimal solution: We apply MODI method to the previous table as it has
m + n – 1 independent non-negative allocations.

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Initial table

The solution is not optimum as the cell (4, 5) has a negative net evaluation
value, i.e., 45 = –3. We draw a closed path from this cell and have a modified
allocation by adding and subtracting the allocation Min (35, 20) = 20. This modified
allocation is given in the following table.
First iteration table

Since all the values of ij  0 the solution is optimum, but an alternate solution
exists.
The optimum solution or the transportation plan is given by,
X11 = 25 units; X32 = 30 units
X12 = 5 units; X43 = 15 units
X13 = 20 units; X44 = 20 units
X23 = 70 units; X45 = 15 units
This is the surplus capacity that is not transported but is manufactured in
factory F4. The optimum production with transportation cost
= 4 × 25 + 6 × 5 + 8 × 20 + 10 × 70 + 4 × 30 + 8 × 20 + 13 × 15 + 0 × 15
= ` 1465

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3.6.4 Alternate Solution

You know that the optimal solution of any LPP occurs at the extreme point of the
feasible solution when the solution is unique. No other solution will give the similar
value of the objective function. However, sometimes a given LPP may have more
than one solution and the result is similar for the optimal objective function value
and is termed as alternate solution. For an alternate solution, the following two
Alternate solution: A
given LPP may have
conditions are necessary:
more than one solution 1. The slope of the objective function should be similar as constraint which
and the result is similar forms the edge of the feasible region.
for the optimal
objective function 2. The constraint must be an active constraint, i.e., in the path of optimal progress
value. of the objective function.
Basically, an active constraint is the constraint which passes through one of the
extreme points of the feasible region.

3.7 TRANSSHIPMENT MODEL

In a transshipment model, the objects are supplied from various specific sources to
various specific destinations. It is also economic if the shipment passes via the
transient nodes which are in between the sources and the destinations. It is different
from transportation problem where the shipments are directly sent from a specific
source to a specific destination, whereas in the transshipment problem the main
goal is to reduce the total cost of shipments. Hence, the shipment passes via one or
more intermediary nodes before it reaches its desired specific destination. Basically,
there are two methods of evaluating transshipment problems as discussed below.
The following is the schematic illustration of the sources and destinations
acting as transient nodes of a simple transshipment problem.
S1 D1

S2 D2

S3 D3

Sj Di

Sm Dn

Fig. 3.1 Schematic Diagram of Simple Transshipment Model

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Figure 3.1 shows the shipment of objects from source S1 to destination D2.
Shipment from source S1 can pass via S2 and D1 before it reaches the desired destination
D2. Because the shipment passes via the particular transient nodes, this arrangement
is named as transshipment model. The goal of the transshipment problem is to discover
the optimal shipping model so that the total transportation cost is reduced.
Figure 3.2 shows a different approach where the number of first starting nodes
and also the number of last ending nodes is the sum of the total number of sources
and destinations of the original problem. Let B be the buffer which should be
maintained at every transient source and transient destination. Considering it as a
balanced problem, buffer B at the least may be equal to the sum of total supplies or
the sum of total demands. Therefore, a constant B is further added to all the starting
nodes and the ending nodes as shown below:

a1 + B S1 S1 B
a2 + B S2 S2 B

a3 + B S3 S3 B

aj + B Sj Sj B

am + B Sm Sm B
B D1 D1 b1 + B

B D2 D2 b2 + B

B D3 D3 b3 + B

B Di Di bi + B

B Dn Dn bn + B
Sources Destinations
Fig. 3.2 Modified Version of Simple Transshipment Problem

Here in the modified version of simple transshipment model, the destinations

D1, D2, D3, ..., Di,..., Dn are incorporated as added starting nodes which basically
acts as the transient nodes. Hence, these do not have the original supplies and at
least the supply of every transient node must be equal to B. Therefore, every transient
node is assigned B units of supply value. Also, the sources S1, S2, S3,..., Sj..., Sm are
incorporated as added ending nodes which basically act as the transient nodes. These
nodes too do not have the original demands but every transient node is assigned B
units of demand value. To make it a balanced problem, B is further added to every
starting node and to the ending nodes. Hence, the problem resembles a usual
transportation problem and can be solved to obtain the optimum shipping plan.
Example 3.16: The following is the transshipment problem with 4 sources and 2
destinations. The supply values of the sources S1, S2, S3 and S4 are 100, 200, 150 and

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350 units respectively. The demand values of destinations D1 and D2 are 350 and 450
units respectively. Transportation cost per unit between various defined sources and
destinations are given in the following table. Solve the transshipment problem.

Destination

S1 S2 S3 S4 D1 D2

S1 0 4 20 5 25 12

S2 10 0 6 10 5 20

Source S3 15 20 0 8 45 7

S4 20 25 10 0 30 6

D1 20 18 60 15 0 10

D2 10 25 30 23 4 0

Solution: In the above table the number of sources is 4 and the number of destinations
is 2. Therefore, the total number of starting nodes and the ending nodes of the
transshipment problem will be 4 + 2 = 6.
The following is the detailed format of the transshipment problem after including
transient nodes for the sources and destinations. Here, the value of B is added to all
the rows and columns.

Destination Supply

S1 S2 S3 S4 D1 D2

S1 0 4 20 5 25 12 100+800=900

S2 10 0 6 10 5 20 200+800=1000

S3 15 20 0 8 45 7 150+800=950
Source
S4 20 25 10 0 30 6 350+800=1150

D1 20 18 60 15 0 10 800

D2 10 25 30 23 4 0 800

800 800 800 800 350+800=1150 450+800=1250

The optimal solution and the corresponding total cost of transportation is

` 5,600. The allocations defined in the main diagonal cells are ignored. The
diagrammatic representation of the optimal shipping pattern of the shipments related
to the off-diagonal cells is shown below:

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S1
100 D1
300
S2
50
150
S3
D2
350
S4
Optimal Shipping Pattern

3.8 ASSIGNMENT PROBLEM

The assignment problem is one of the fundamental combinatorial optimization

problems. It helps to find a maximum weight identical in nature in a weighted Assignment problem:
bipartite graph. The assignment problem is also termed as a special case of Helps to find a
maximum weight
transportation problem. identical in nature in a
Suppose there are n jobs to be performed and n persons are available for weighted bipartite
doing these jobs. Assume that each person can do each job at a time, though with graph.
varying degrees of efficiency. Let Cij be the cost if the ith person is assigned to the
jth job. The solution to the problem is to find an assignment (which job should be
assigned to which person on one-one basis) so that the total cost of performing all
jobs is minimum. Problems of this kind are known as assignment problems.
The assignment problem can be stated in the form of n × n cost matrix [Cij] of
real numbers as given in the following table:
Jobs
1 2 3... j... n
1 C11 C12 C13 ... C1 j ... C1n 
2 C C C ... C ... C 
 21 22 23 2j 2n 
3 C31 C32 C33... C3 j ... C3n 
 
Persons  
i Ci1 Ci 2 Ci3... Cij ... C in
 
 
⁝
n Cn1 Cn2 Cn3 ... Cnj ... Cnn 

 


3.8.1 Mathematical Formulation of the Assignment Problem

Mathematically, the assignment problem can be stated as,
n n
Minimize Z =  C
i 1 j 1
x i  1, 2, …, n
ij ij

j  1, 2,…, n

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Subject to the restrictions:

1 if the ith person is assigned jth job
xij  
0 if not
n

x
j 1
ij  1 (one job is done by the ith person)

and  xij  1 (only one person should be assigned the jth job)
i 1

Where xij denotes that the jth job is to be assigned to the ith person.
3.8.2 Hungarian Method Procedure
The solution of an assignment problem can be arrived at by using the Hungarian
method. The steps involved in this method are as follows:
Step 1: Prepare a cost matrix. If the cost matrix is not a square matrix then
add a dummy row (column) with zero cost element.
Step 2: Subtract the minimum element in each row from all the elements of
the respective rows.
Step 3: Further modify the resulting matrix by subtracting the minimum
element of each column from all the elements of the respective columns. Thus,
obtain the modified matrix.
Step 4: Then, draw the minimum number of horizontal and vertical lines to
cover all zeroes in the resulting matrix. Let the minimum number of lines be N.
Now, there are two possible cases.
Case (i) If N = n, where n is the order of matrix, then an optimal assignment
can be made. So make the assignment to get the required solution.
Case (ii) If N < n, then proceed to Step 5.
Step 5: Determine the smallest uncovered element in the matrix (element
not covered by N lines). Subtract this minimum element from all uncovered elements
and add the same element at the intersection of horizontal and vertical lines. Thus,
the second modified matrix is obtained.
Step 6: Repeat steps (3) and (4) until we get the Case (i) of Step 4.
Step 7: (To make zero assignment) Examine the rows successively until a
row with exactly single zero is found. Circle (O) this zero to make the assignment.
Then mark a cross (×) over all zeroes if lying in the column of the circled zero
showing that they cannot be considered for future assignment. Continue in this
manner until all the zeroes have been examined. Repeat the same procedure for the
columns also.
Step 8: Repeat Step 6 successively until one of the following situation arises:
Case (i) If no unmarked zero is left, then the process ends.
Case (ii) If there are more than one unmarked zero in any column or row, then
circle one of the unmarked zeroes arbitrarily and mark a cross in the cells
of remaining zeroes in its row or column. Repeat the process until no
unmarked zero is left in the matrix.
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Step 9 Thus, exactly one marked circled zero in each row and each column of
the matrix is obtained. The assignment corresponding to these marked circled zeroes
will give the optimal assignment.
Example 3.17: Using the following cost matrix determine (i) Optimal job assignment
(ii) The cost of assignments.
Job
1 2 3 4 5
A 10 3 3 2 8 
B  9 7 8 2 7 
 
Mechanic C  7 5 6 2 4 

D  3 5 8 2 4  

E 9 10 9 6 10 

Solution: Select the smallest element in each row and subtract this smallest element
from all the other elements in its row.

Subtract the minimum element from each column and subtract this element
from all the elements in its column. With this we get the first modified matrix.

In this modified matrix, we draw the minimum number of lines to cover all
zeroes (horizontal and vertical).

Number of lines drawn to cover all zeroes is N = 4.

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The order of matrix is n = 5.

Hence, N < n, less than the order of matrix.
Now, we get the second modified matrix by subtracting the smallest uncovered
element from the remaining uncovered elements and adding it to the element at the
point of intersection of lines.

Number of lines drawn to cover all zeroes is N = 5.

The order of matrix is n = 5.
Hence, N = n, which is order of matrix. Now, we determine the optimum
assignment.
Assignment

The first row contains more than one zero. So proceed to the second row. It
has exactly one zero. The corresponding cell is (B, 4). Circle this zero, thus making
an assignment. Mark (×) for all other zeroes in its column to show that they cannot
be used for making other assignments. Now, Row 5 has a single zero in the cell
(E, 3). Make an assignment in this cell and cross the second zero in the third column.
Now, Row 1 has a single zero in Column 2, i.e., in the cell (A, 2).
Make an assignment in this cell and cross the other zeroes in the second
column. This leads to a single zero in Column 1 of the cell (D, 1). Make an assignment
in this cell and cross the other zeroes in the fourth row. Finally, we have a single
zero left in the third row making an assignment in the cell (C, 5). Thus, we have the
following assignment.
Job Mechanic Cost
1 D 3
2 A 3

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3 E 9
4 B 2
5 C 4
` 21
Therefore, 1D, 2A, 3E, 4B, 5C with minimum cost ` 21.
Example 3.18: A company has 5 jobs to be done on five machines. Any job can be
done on any machine. The cost of doing the jobs in different machines are as follows.
Assign the jobs for different machines so as to minimize the total cost.

Solution: We form the first modified matrix by subtracting the minimum element
from all the elements in the respective rows and also in the respective columns.

Since each column has the minimum element 0, we have the first modified
matrix. Now we draw the minimum number of lines to cover all zeroes.

The number of lines drawn to cover zeroes is N = 4, which is less than the
order of matrix which is n = 5.
We find the second modified matrix by subtracting the smallest uncovered
element from all the uncovered elements and adding to the element which is at the
point of intersection of lines.

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The number of lines drawn to cover all zeroes is N = 5 = n = 5, which is the

order of matrix. Hence, we can form an assignment.
Assignment

All the five jobs have been assigned to five different machines.
Here, the optimal assignment is as follows:
Job Machine
1 B
2 E
3 C
4 A
5 D
Minimum (Total cost) = 8+12+4+6+12 = ` 42
Example 3.19: Four different jobs can be done on four different machines and
down time costs are prohibitively high for changeovers. The following matrix gives
the cost in rupees of producing Job i on Machine j:
Machine
Jobs M1 M2 M3 M4
J1 5 7 11 6
J2 8 5 9 6
J3 4 7 10 7
J4 10 4 8 3

How should the jobs be assigned to the various machines so that the total cost
is minimized?
Solution: First we form a modified matrix by subtracting the least element in the
respective row and respective column.

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M1 M2 M3 M4
J1 0 2 6 1
J2 3 0 4 1
J3 0 3 6 3
J4 7 1 5 0

Since the third column has no zero element, we subtract the smallest element 4
from all the elements.

M1 M2 M3 M4
J1 0 2 2 1
J2 3 0 0 1
J3 0 3 2 3
J4 7 1 1 0

M1 M2 M3 M4
J1 0 2 2 1
J2 3 0 0 1
J3 0 3 2 3
J4 7 1 1 0
Now, we draw the minimum number of lines to cover all zeroes.
The number of lines drawn to cover all zeroes is N = 3, which is less than the
order of matrix, which is n = 4.
Hence, we form the second modified matrix, by subtracting the smallest
uncovered element from all the uncovered elements and adding to the element which
is at the point of intersection of lines.
M1 M2 M3 M4
J1 0 1 1 1
J2 4 0 0 2
J3 0 2 1 3
J4 7 0 0 0

N=3<n=4
M1 M2 M3 M4
J1 0 0 0 0
J2 5 0 0 2
J3 0 1 0 2
J4 8 0 0 0

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N = 4 = n = 4 = Order of matix
M1 M2 M3 M4
J1 ×
0 × 0 ×0 0
J2 5 0 ×
0 2
J3 0 1 ×
0 2
J4 8 ×
0 0 ×
0
Hence, we can make an assignment.
Since no rows and no columns have single zero, we have different assignments
(Multiple solution).
Optimal assignment
Job Machine
J1 M4
J2 M2
J3 M1
J4 M3

Minimum (Total cost)

6+5+4+8 = ` 23

Alternate solution M1 M2 M3 M4
J1 0 0 0 0
J2 5 0 0 2
J3 0 1 0 2
J4 8 0 0 0

J1 M 1; J 2 M 2; J 3 M 3; J 4M 4
Minimum (Total cost) 5+5+10+3 = ` 23
Example 3.20: Solve the following assignment problem in order to minimize the
total cost. The following cost matrix gives the assignment cost when different operators
are assigned to various machines.
Operators
I II III IV V
A 30 25 33 35 36
B 23 29 38 23 26
Machines C 30 27 22 22 22

D 25 31 29 27 32
 
E  27 29 30 24 32 

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Solution: We form the first modified matrix by subtracting the least element from all
the elements in the respective rows and then in the respective columns.

Since each column has the minimum element 0, the first modified matrix is
obtained. We draw the minimum number of lines to cover all zeroes.

The number of lines drawn to cover all zeroes is N = 4, which is less than the
order of matrix n = 5. Hence, we form the second modified matrix by subtracting
the smallest uncovered element from the remaining uncovered elements and add to
the element which is at the point of intersection of lines.
I IIIII IV V
A5 0 5 10 8
B  0 6 12 0 0
C 11 8 0 3 0
 
 D0 6 1 2 4
E  3 5 3 0 5 

N = 5, i.e, the number of lines drawn to cover all zeroes is equal to the order
of matrix. Hence, we can make the assignment.
Here, N = 5 = n = 5 = Order of matrix

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The optimum assignment is

Operators Machines
I D
II A
III C
IV E
V B
The optimum cost is given by,
25 + 25 + 22 + 24 + 26 = ` 122

CHECK YOUR PROGRESS-3

1. What is an assignment problem?

2. How is an assignment problem presented to find the minimum cost?
3. Name the method used for solving assignment problems.

3.8.3 Maximization in Assignment Problem

In this, the objective is to maximize the profit. To solve this, we first convert the
given profit matrix into the loss matrix by subtracting all the elements from the
highest element of the given profit matrix. For this converted loss matrix we apply
the steps in Hungarian method to get the optimum assignment.
Example 3.21: The owner of a small machine shop has four mechanics available
to assign jobs for the day. Five jobs are offered with expected profit for each mechanic
on each job which are as follows:
Job

A B C D E
1 62 78 50 101 82
2 71 84 61 73 59
Mechanic
3 87 64 111 71 81
4 48 64 87 77 80

Find using the assignment method, the assignment of mechanics to the job that
will result in a maximum profit. Which job should be declined ?

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Solution: The given profit matrix is not a square matrix as the number of jobs is not
equal to the number of mechanics. Hence, we introduce a dummy Mechanic 5 with
all the elements 0.
Job

A B C D E
1 62 78 50 101 82

2 71 84 61 73 59

3 87 92 111 71 81
Mechanic  
4 48
 64 87 77 80

5 0 0 0 0 0 

Now, we convert this profit matrix into loss matrix by subtracting all the
elements from the highest element 111.
Loss Matrix
A B C D E
1  49 33 61 10 29 
 
2 40 27 50 38 52 
 
3  24 19 0 40 30 
 
31 
4  63 47 24 34 
5 111 111 111 111 111

We subtract the smallest element from all the elements in the respective row.

A B C D E
1 39 23 51 0 19
2 13 0 23 11 25
 
3 24 19 0 40 30
 
 439 23 0 10 7
5  0 0 0 0 0 

Since each column has minimum element as zero, we draw the minimum
number of lines to cover all zeroes.

A B C D E
1 39 23 51 0 19
2 13 0 23 11 25
3 24 19 0 40 30
4 39 23 0 10 7
5 0 0 0 0 0

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Here, the number of lines drawn to cover all zeroes is N = 4, which is less than
the order of the matrix.
The second modified matrix is formed by subtracting the smallest uncovered
element from the remaining uncovered elements and adding to the element which
is at the point of intersection of lines.

A B C D E
1 39 30 58 0 19
2 6 0 23 4 18
3 17 19 0 33 23
4 32 23 0 3 0
5 0 7 7 0 0
Here, N = 5 = n = 5. Order of matrix.
We make the assignment.

A B C D E
1 39 30 58 0 19
2 6 0 23 4 18
3 17 19 0 33 23
4 32 23 0 3 0
5 0 7 7 0 0
The optimum assignment is
Job Mechanic
A 5
B 2
C 3
D 1
E 4
Since the fifth mechanic is a dummy, Job A assigned to fifth Mechanic is
declined.
The maximum profit is given by 84 + 111 + 101 + 80 = ` 376
Example 3.22: A marketing manager has 5 salesmen and there are 5 sales districts.
Considering the capabilities of the salesmen and the nature of 12 districts, the
estimates made by the marketing manager for the sales per month (in 1000 rupees)
for each salesmen in each district would be as follows.

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Find the assignment of salesmen to the districts that will result in the maximum
sales.
Solution: We are given the profit matrix. To maximize the profit, first we convert it
into loss matrix which can be minimized. To convert it in to loss matrix, we subtract
all the elements from the highest element 41. Subtract the smallest element from all
the elements in the respective rows and colums, to get the first modified matrix.
Loss Matrix

A B C D E
1  8 2 0 12 0
2  0 16 12 19 4
3  0 14 8 11 4

4 19 3 0 5 5 

5 11 7 0 5 1 

We now draw the minimum number of lines to cover all zeroes.

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A B C D E
1 8 0 0 7 0
2 0 14 12 14 4
3 0 12 8 6 4
4 9 1 0 0 5
5 11 5 0 0 1
N=4<n=5
We subtract the smallest uncovered element from the remaining uncovered
elements and add to the elements at the point of intersection of lines, to get the
second modified matrix.

A B C D E
1 9 0 1 8 0
2 0 13 12 14 3
3 0 11 8 6 3
4 9 0 0 0 4
5 11 4 0 0 0
Again, N = 4 < n = 5. Repeat the above step.

A B C D E
1 12 0 1 8 0
2 0 10 9 11 0
3 0 8 5 3 0
4 12 0 0 0 4
5 14 4 0 0 0
N = 5 = n = 5 = Order of matrix. Hence, we make the assignment.
Assignment
A B C D E
1 12 0 1 8 0
2 0 10 9 11 0
3 0 8 5 3 0
4 12 0 0 0 4
5 14 4 0 0 0
Since no row or column has single zero, we get a multiple solution.

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(i) The optimum assignment is:

1  B, 2  A, 3  E, 4  C, 5  D.
With maximum profit (38 + 40 + 37 + 41 +35) = ` 191
(ii) The optimum assignment is:
1  B, 2  A, 3  E, 4  D, 5  C.
Maximum profit (38 + 40 + 37 + 36 + 40) = ` 191

CHECK YOUR PROGRESS-4

1. What is an unbalanced assignment? How can it be balanced?

2. How is the presence of an alternate optimal solution established?
3. How do you convert the maximization assignment problem into a
minimization one?
4. How will you solve an assignment problem if profit is to be maximized?

ACTIVITY

1. Vogel’s Approximation Method results in the most economical initial basic

feasible solution. How?
2. What kind of solution would you get when the net change in value of all
unoccupied cells is non-negative?
3. If 4 jobs are to be assigned to 5 machines, how will you proceed to solve
this problem?

3.9 LET US SUM UP

 A transportation problem is a subclass of linear programming problem. It is

solved in two stages: i) Finding an initial solution and ii) Finding the optimal
solution.
 There are three methods to obtain the initial solution. Of these, Vogel’s
Approximation Method is the most preferred since the initial basic feasible
solution obtained by this method is either optimal or very close to the optimal
value.
 The optimal solution is found using the MODI method.
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 A given transportation problem is said to be unbalanced if the total supply is

not equal to the total demand.
 If the number of non-negative independent allocations in a transportation
problem is less than m + n – 1, where m is the number of origins and n is the
number of destinations, it results in degeneracy.
 An assignment problem is one of the fundamental combinatorial optimization
problems and helps to find a maximum weight identical in nature in a weighted
bipartite graph.
 The solution of an assignment problem can be arrived at using the Hungarian
method.
 An assignment problem is balanced if the cost matrix is a square matrix;
otherwise, it is termed as unbalanced.
 To convert an unbalanced assignment problem into a balanced problem,
dummy rows or columns are added with all entries as 0s.

3.10 FURTHER READING

Jensen, Paul A. and Jonathan F. Bard. 2003. Operations Research Models and
Methods. New York: John Wiley & Sons.
Kalavathy, S. Operations Research. 2002. New Delhi: Vikas Publishing House Pvt.
Ltd.
Taha, H.A. 2006. Operations Research: An Introduction. New Delhi: Prentice-Hall
of India.
M.Selvam (2014) Maritime Logistics and Documentation , Lakshmi Publications
New Delhi
M.Selvam (2013) Quality Management, Lakshmi Publications , New Delhi

3.11 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress–1

1. Transportation problem deals with transportation of various quantities of a
single homogeneous commodity initially stored at various origins to different
destinations at the minimum cost.
2. To achieve the objectives of transportation problem, one must know:
(i) Amount and location of available supplies, (ii) Quantity demanded at
destination and (iii) Costs of transporting one unit of commodity from various
origins to various destinations.
3. Transportation problems are presented in the tabular form with m rows (as
origins) and n columns (as destinations). Every cell of this table has cost as Cij
of transporting one unit of product from ith origin to jth destination and Xij
which is the quantity transported from ith origin to jth destination.

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4. If there are m origins and n destinations and Cij be the cost of transporting one
unit of product from ith origin to jth destination and Xij be the quantity transported
from ith origin to jth destination, and Z is the cost given as: Z =  C ij X ijwhere
1<= i <= n and 1 <= j <= m.
5. Feasible solution: Any set of non-negative allocations (Xij>0) which satisfies
the row and column sum (rim requirement) is called a feasible solution.
Basic feasible solution: A feasible solution is called a basic feasible solution
if the number of non-negative allocations is equal to m + n – 1, where m is the
number of rows and n the number of columns in a transportation table.
Non-degenerate basic feasible solution: Any feasible solution to a
transportation problem containing m origins and n destinations is said to be
non-degenerate, if it contains m + n – 1 occupied cells and each allocation is
in independent positions.
Check Your Progress–2
1. The following approaches are used:
(i) North West Corner Rule
(ii) Least Cost Method (Matrix Minima)
(iii) Vogel’s Approximation Method
2. The basic feasible solution to a transportation problem is said to be optimal if
it minimizes the total transportation cost.
3. The necessary and sufficient condition for the existence of a feasible solution
is a solution that satisfies all conditions of supply and demand.
4. The purpose of MODI method is to get the optimal solution of a transportation
problem.
Check Your Progress–3
1. An assignment problem is a problem of finding an assignment of jobs among
persons so that total cost of performing all jobs is at minimum.
2. An assignment problem can be stated in the form of n × n matrix [Cij] with i
rows and j columns of real numbers. Here, Cij is the cost when ith person is
assigned jth job.
3. Hungarian method is used to solve assignment problems.
Check Your Progress–4
1. In Assignment problem the cost matrix of the assignment problem is not a
square matrix, the problem is said to be unbalanced. To make it balanced,
extra row(s) or column(s) are added with zero elements.
2. If the final cost matrix contains more than the required number of zeroes at
independent positions, then it indicates the presence of an alternate optimal
solution.
3. The maximization assignment problem can be converted into a minimization
assignment problem by subtracting all the elements in the given profit matrix
from the highest element in that matrix.
4. The given profit matrix can be converted into a loss matrix or minimization
type by subtracting all the elements from the highest element of the given

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matrix. For this minimization problem steps of the Hungarian method are applied
to get an optimal assignment.

3.12 POSSIBLE QUESTIONS

Short-Answer Questions
1. What is an unbalanced transportation problem?
2. How will you convert an unbalanced transportation problem into a balanced
one?
3. List the merits and limitations of the North West Corner rule.
4. How will you identify if a transportation problem has an alternate optimal
solution or not?
5. What is the number of non-basic variables in a balanced transportation
problem?
6. What are the numbers of non-basic variables for 4 rows and 5 columns?
7. While dealing with North West Corner rule, when does one move to the next
cell in next column?
8. What is the coefficient of Xij of constraints in a transportation problem?
9. What is an initial basic feasible solution?
10. When does degeneracy occur in an m × n transportation problem?
11. What is a cost matrix?
12. How does a cost matrix help solve assignment problems?
13. Write the first three steps of the Hungarian procedure for solving an assignment
problem.
14. While solving a problem using the Hungarian method, at what stage are you
able to make an assignment? Explain in brief.
15. While solving a problem using the Hungarian method, what is the condition
that indicates an unique optimal solution?
16. What do you mean by maximization in an assignment problem?
17. State the mathematical form of an assignment problem.
Long-Answer Questions
1. What do you understand by transportation model?
2. Define feasible solution, basic solution, non-degenerate solution, optimal
solution in a transportation problem.
3. Explain the following briefly with examples:
(i) North West Corner Rule
(ii) Least Cost Method
(iii) Vogel’s Approximation Method

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4. Explain degeneracy in a transportation problem. Describe a method to resolve

it.
5. What do you mean by an unbalanced transportation problem? Explain the
process of converting an unbalanced transportation problem into a balanced
one.
6. Give the mathematical formulation of a transportation problem.
7. Write an algorithm to solve a transportation problem.
8. Obtain the initial solution for the following transportation problem using
(i) North West Corner Rule (ii) Least Cost Method (iii) VAM
Destination
A B C Supply
1 2 7 4 5
Source

2 3 3 1 8
3 5 4 7 7
4 1 6 2 14
Demand 7 9 18 34
9. Solve the following transportation problem where the cell entries denote the
unit transportation costs.
Destination
A B C D Supply
P 5 4 2 6 20
Origin Q 8 3 5 7 30
R 5 9 4 6 50
Demand 10 40 20 30 100

10. Solve the following transportation problem.

Destination
1 2 3 Capacity
1 2 2 3 10
Source 2 4 1 2 15
3 1 3 1 40
Demand 20 15 30
11. Find the minimum transportation cost.
Warehouse
D1 D2 D3 D4 Supply
F1 19 30 50 10 7
Factory F2 70 30 40 60 9
F3 40 8 70 30 18
Demand 5 8 7 14

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12. Solve the following transportation problem using Vogel’s Approximation

Method.
Warehouse
A B C D E F Available
1 9 12 9 6 9 10 5
2 7 3 7 7 5 5 6
Factory
3 6 5 9 11 3 11 2
4 6 8 11 2 2 10 9
Requirement 4 4 6 2 4 2
13. Solve the following transportation problem.
Destination
A B C D Supply
1 1 2 3 4 6
Source 2 4 3 2 0 8
3 0 2 2 1 10
Demand 4 6 8 6

14. Solve the following transportation problem.

Destination
A B C D Supply
1 11 20 7 8 50
Source 2 21 16 20 12 40
3 8 12 8 9 70
Demand 30 25 35 40

15. Solve the following transportation problem to maximize the profit.

Destination
A B C D Supply
1 40 25 22 33 100
Source 2 44 35 30 30 30
3 38 38 28 30 70
Demand 40 20 60 30

16. Explain the assignment problem using a suitable example.

17. Explain the significance and applications of an assignment problem.
18. Explain the algorithm for solving an assignment problem.
19. How can you maximize an objective function in an assignment problem?
20. Write the steps for finding a solution using the Hungarian method.

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21. Solve the following assignment problems:

(i) A B C D (ii) Men
A B C D
I 1 4 6 3
II 9 7 10 9 I 10 25 15 20
 

III 4 5 11 7 II 15 30 5 15
Job
   III 35 20 12 24
 IV  8 7 8 5  
IV 17 25 24 20 

Men
(iii) (iii)
A B C D E
I 1 3 2 8 8
 II 2 4 3 1 5
Tasks III 5 6 3 4 6
 
IV 3 1 4 2 2
V 1 5 6 5 4 


22. There are five jobs to be assigned, one each to 5 machines. The associated
cost matrix is as follows.
Machine
1 2 3 4 5
A 11 17 8 16 20
9 
B  7 12 6 15 
Jobs C 13
 16 15 12 16 
D 21
 24 17 28 26 
E 14 10 12 11 15 

How should the job be assigned to various machines?

23. A company is faced with the problem of assigning 4 machines to 6 different
jobs (one machine to one job only). The profits are estimated as follows.
Machine
A B C D
1 3 6 2 6
2 7 1 4 4
 
3 3 8 5 8
Job 4 6 4 3 7 
 
5 5 2 4 3

 
6 5 7 6 4

Solve the problem to maximize the profit.
24. Determine the optimum assignment schedule for the following assignment
problem. The cost matrix is as follows.

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Machine
1 2 3 4 5 6
A 11 17 8 16 20 15
B 9 13
 7 12 6 15 
C 13 16 15 12 16 8 
 
D 21 24 17 28 2 15
E 14 10 12 11 15 6 
If job C cannot be assigned to machine 6, will the optimum solution change?

3.13 LEARNING OUTCOMES

 Find an initial basic feasible solution
 The various methods of finding an initial solution
 Use the MODI method for finding an optimal solution
 The various special cases of a transportation problem

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UNIT 4 GAME THEORY

UNIT STRUCTURE
4.1 Learning Objectives
4.2 Introduction
4.3 Game Theory: Basic Concepts
4.3.1 Types of Games
4.3.2 Value of a Game
4.4 Pure and Mixed Strategies with Saddle Point
4.4.1 Method of Dominance
4.4.2 Linear Programming Solution to Two-Person Zero-Sum Games
4.5 Limitations of Game Theory
4.6 Let Us Sum Up
4.7 Further Reading
4.8 Answers to Check Your Progress
4.9 Possible Questions
4.10 Learning Outcomes

4.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

 Explain the concept of game theory
 Discuss two-person zero-sum games and the value of a game
 Deal with pure and mixed strategies with saddle point
 Reduce the size of a game using dominance
 Solve a game using the linear programming method

4.2 INTRODUCTION

Competition is a watchword of modern life. We say that a competitive situation

exists if two or more individuals make decisions in a situation that involves
conflicting interests and in which the outcome is controlled by the decisions of all
the parties concerned.We assume that in a competitive situation, each participant
acts in a rational manner and tries to resolve the conflict of interests in his favour. It
is in this context that the game theory has been developed. Professor John von
Neumann and Oscar Morgenstern, in their book The Theory of Games and Economic
Behaviour, provided a new approach to many problems involving conflict
situations—an approach now widely used in economics, business administration,
sociology, psychology and political science, as well as in military training.
Fundamentally, the theory of games attempts to provide an answer to the question:
what may be considered a rational course of action for an individual confronted
with a situation whose outcome depends not only upon his own actions, but also
upon the actions of others who, in turn, are faced with a similar problem of choosing
a rational course of action? In fact, game theory is simply the logic of rational
decisions.
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Unit-4 Game Theory

In this unit, you will look into the basic concepts of game theory. You will
also learn about pure and mixed strategies, the use of dominance and linear
programming.

4.3 GAME THEORY: BASIC CONCEPTS

Game: Represents a The term ‘game’ represents a conflict between two or more parties. Game theory is
conflict between two or really the ‘science of conflict’. It is not concerned with finding an optimum or
more parties.
winning strategy for a particular conflict situation, but it provides general rules
concerning the logic that underlies strategic behaviour of all types.
Game theory applies to those competitive situations that are technically known
as ‘competitive games’ or simply ‘games’. Situations, in order to be termed games,
must possess the following properties:
(i) The number of competitors is finite.
(ii) There is a conflict of interests between the participants.
(iii) Each of the participants has available to him a finite list of possible
courses of action, i.e., several choices of appropriate actions; this list
being not necessarily the same for each competitor.
(iv) The rules governing these choices are specified and known to all the
players; a play of the game results when each of the players chooses a
single course of action from the list of courses available to him.
(v) The outcome of the game is affected by the choices made by all the
players; the choices are made simultaneously so that no competitor
knows his opponent’s choice until he is already committed to his own.
(vi) The outcome for all the specific sets of choices by all the players is
known in advance and numerically defined. The outcome of a play
consists of the particular set of courses of action undertaken by the
competitors. Each outcome determines a set of payments (positive,
negative or zero), one to each competitor.
Illustration of a Game
When a competitive situation meets all the above stated criteria, we can call it a
game. This can be made clear by an example of a simple game. Suppose there are
two opponents X and Y. We can think of them as sitting across a table from each
other and each with two buttons in front of him. We shall denote player X’s buttons
, m and n and player Y’s buttons as r and t; thus each player has two choices open to
him. We also presume a partition between them so that neither can see in advance
which button his opponent is going to press. At a signal from a third party, each
player presses one of his buttons. The results of each of the possible four combinations
is known in advance to both of the players; the uncertainty inherent in the game
arises from the fact that neither player knows what button his opponent will press
next. Every time the third party signals, each player presses one of his buttons and
the game thus continues. At the end of, say, a hundred ‘plays’, the game is over and
the points won by each of the players are totalled and the winner is determined. It is

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assumed that both players are of equal intelligence and that each actively attempts
to win the game.
This sort of simple game can be illustrated in tabular form as follows:
A Simple Game in Tabular Form
Player Y
Button r Button t
Button X wins X wins
m 2 points 3 points
Button Y wins Y wins
n 3 points 1 point

In the above table, the plays open to each of the opponents and the resulting
gains or losses (called pay-offs) have been shown. This game is biased against
Player Y because if Player X presses button m for each play of the game, Player Y
cannot win; in fact, Player Y faces a choice between losing 2 points on each play if
he responds by pressing Button r or losing 3 points on each play if he responds by
pressing Button t. Player Y will respond each time by pressing Button r since this
represents his least loss alternative. Thus, Player X will win 2 points on each play of
the game. We can similarly present a game biased against Player X wherein X has
no chances winning and at best an minimize his losses like Player Y in the above
stated case.
But all simple games cannot be said to have such simple solutions. This can
be illustrated by the following example of a game:
A Simple Game in Tabular Form
Player Y
Button r Button t
Button Y wins X wins
m 4 points 3 points
Button X wins Y wins
n 1 point 2 points
In the above case, it is not as simple as it was in the earlier example to determine
the individual player’s strategies. We can see from the game that Player X would
not press his button m, hoping to win 3 points on each play simply because Player Y
could counter with button r and win 4 points himself. Similarly, Player Y would not
press button hoping to win 4 points on every play because Player X could counter
with his button n and win 1 point himself. In such a situation, therefore, it is
advantageous for the players to play each of their choices (buttons) a part of the
time only. How to calculate the proportion of time to allot to each choice shall be
discussed a little later.
Standard Conventions in Game Theory
In order to eliminate the necessity for written descriptions of the ‘pay-offs’ (as we
have shown in the above two examples), a standard set of conventions has been

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established in game theory. It is the usual practice to omit a description like ‘Player
X wins two points’ and replace it with integer 2. The positive algebraic sign which
is assumed to accompany this number indicates that it is Player X who benefits
from this pay-off. Similarly, instead of saying ‘Player Y wins three points’ one simply
indicates this with the value –3, the minus sign indicating that it is Player Y who
benefits from this particular pay-off.
Another standard convention that is usually followed is that Player X has choices
between the rows and Player Y has choices between the columns.
Keeping these two conventions in view we can write the above stated two
illustrations of games as follows:
Illustration 1 Illustration 2
Player Y Player Y

2 3 –4 3
Player X Player X
–3 –1 1 –2
A further convention in game theory is known as matrix notation. In this
case, games are represented in the form of a matrix (a rectangular array of numbers
deriving from matrix algebra). When games are expressed in this fashion, the resulting
matrix is commonly known as a pay-off matrix. The above stated two illustrations
can be put in the form of pay-off matrices as follows:
Illustration 1 Illustration 2
Player Y Player Y
2 3 4 3 
Player X 3 1 Player X  1 2
   
The term strategy is often talked about in game theory. It refers to the total
pattern of choices employed by any player. It may be defined as a complete set of
plans of action specifying precisely what the player will do under every possible
future contingency that might occur during the play of the game. For example, if
Player X chooses to play his first row half of the time and his second row half of the
time, his strategy for the game is 1/2, 1/2. Thus, the strategy of a player is the
decision rule he uses for making the choice from his list of courses of action. The
strategy could be a pure or mixed one. When a player plays one row all the time (or
one column all the time) he is said to be adopting a pure strategy. In a mixed strategy,
Player X will play each of his rows a certain part of the time and Player Y will play
each of his columns a certain part of the time. In business, a close analogy is when,
for example, a manager follows a certain course of action A until an alternate course
of action B appears to be more profitable. Later on, should Action A appear more
attractive again, the manager switches back to it.
4.3.1 Types of Games
Games can be of several types. The important ones are as follows:
1. Two-person games and n-person games. In two-person games, the players
may have many possible choices open to them for each play of the game but
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the number of players remains only two. But games can also involve many
people as active participants, each with his own set of choices for each play
of the game. A game of three players can be named as three-person game.
Thus, in case of more than two persons, the game is generally named an n
person game.
2. Zero-sum and non-zero-sum games. A zero-sum game is one in which the Zero-sum and non-
sum of the payments to all the competitors is zero for every possible outcome zero-sum games: The
of the game. In other words, in such a game the sum of the points won equals sum of the payments to
all the competitors is
the sum of the points lost, i.e., one player wins at the expense of the other
zero for every possible
(others). A two-person matrix game is always a zero-sum game since one outcome of the game.
player loses what the other wins. In a non-zero-sum game, the sum of the
pay-offs from any play of the game may be either positive or negative but not
zero. A well-known example of a non-zero-sum game is the case of two
competing firms, each with a choice regarding its advertising campaign. We
may assume that the market is quite small so that sales remains at nearly the
same level regardless of whether the firms engage in advertising or not. If
neither firm advertises, they both save the cost of advertising and thus each
receives a positive benefit or pay-off (representing a non-zero-sum outcome).
In the event both firms spend equal amounts of money on advertisement,
neither firms’ sales will increase (given the equal quality of the advertising
campaigns) and thus both firms will have incurred the cost of advertising
without any benefits. Since both firms will lose money, this is clearly a non-
zero-sum outcome.
3. Games of perfect information and games of imperfect information. Whatever
strategy is adopted by either player, if the same can also be discovered by his
competitor, then such games are known as games of perfect information. In
games of imperfect information, neither player knows the entire situation
and must be guided in part by guesswork as to what the real situation is.
4. Games with finite, i.e., limited number of moves (or plays) and games with
unlimited number of moves. Games with finite number of moves are those
where the number of moves is limited to a fixed magnitude before play begins.
If the game could continue over an extended period of time and no limit is
put on the number of moves, it is referred to as a game with an unlimited
number of moves.
5. Constant-sum games. In some situations, a zero-sum game is correctly referred
to as a constant-sum game. Take for example, a competitive struggle for market
share by two firms (a duopoly). In such a case, every percentage point gained
by one of the firms is necessarily lost by the other. This situation is ordinarily
called a two-person, zero-sum game. But strictly speaking, this is a constant-
sum rather than a zero-sum game because the sum of the two market shares is
the fixed number 100 (per cent), not zero. It should, however, be remembered
that ‘there is no significant analytic difference between the constant-sum and
the zero-sum games. This is because there is no change in strategic possibilities
from a given game to another game in which some constant amount that cannot
be changed by players is added to the original pay-offs.’

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4. 2 × 2 two-person games and 2 × m and m × 2 games. Two person zero-sum

games with only two choices open to each player are denoted as 2 × 2 two
person games, but games in which one of the players has more than two
choices of rows or columns and in which the other player has exactly two
choices are referred to as m × 2 or 2 × m games respectively.
7. 3 × 3 and larger games. Two-person zero-sum games can be of size 3 × 3
and larger. If each of the two players has three choices then the game is of
3 × 3 type and if the choices open to any of the player or to both the players
are more than three, the game is referred to as of a larger size.
3 × 3 and larger games quite often present complications and in such
situations, linear programming as a solution method may allow us to find
the optimum strategies.
8. Negotiable (or cooperative) and non-negotiable (or non-cooperative) games.
Negotiation amongst players is possible in n-person and non-zero-sum games
but the same is not necessarily required. On this basis, we can divide the
analysis of such games into two parts—games in which the participants can
negotiate and games in which negotiation is not permitted. The former type
of games are known as negotiable games and the latter are known as non-
negotiable games.
4.3.2 Value of a Game
In game theory, the concept ‘value of a game’ is considered very important. It refers
to the average pay-off per play of the game over an extended period of time. This
can be explained by an example. Suppose the two games are as follows:
Player Y Player Y

 3 4 7 2 
Player X 6 2 Player X 3 1
   
Game one Game two
(with a positive value) (with a negative value)
In game one, Player X would play his first row on each play of the game and
Y would respond by playing his first column each time in order to minimize his
losses. Since Player X wins three points on each play of the game, his average
winnings per play will also be 3 as long as the game is played. The value of the game
is thus 3 with an implicit positive algebraic sign which denotes that Player X wins the
game. But in game two, Player Y plays his first column on each play of the game and
Player X responds by playing his second row on each play of the game in order to
minimize losses. As a result, Y wins 3 points on each play of the game. Since the
average pay-off per play is –3, the value of this game is –3, the minus sign indicating
that Y is the winner.
But determining the value of the game is not always as simple as in the case of
these two examples. In case the players determine that their best alternative is to play
each row or each column a certain part of the time, calculating the value of the game
becomes a bit more complex.

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Now we shall see the process of determination of optimum strategies and the
value of a game with the help of some illustrations.
Example 4.1: Determine the optimum strategies for the two players X and Y and find
the value of the game from the following pay-off matrix:
Player Y
 3 1 4 2 
1 3 7 0 
Player X  
 4 6 2 9
Solution: For determining the optimum strategies, the cautious approach is to assume
the worst and act accordingly. If Player X plays with first row strategy, then Player
Y will play with second column the win one point, otherwise he will lose 3, 4 and 2
if he plays with column, 13 and 4 respectively. If Player X plays with second row
strategy, then the worst would happen to him only when Player Y plays with the
third column because in that case Y would win 7 points. If Player X plays with third
row strategy, then the worst he can expect is losing 9 points when Y plays with the
fourth column. In this problem then, Player X should adopt first row strategy because
only then his loss will be minimum. Thus, Player X can make the best of the situation
by aiming at the highest of these minimal pay-offs. This decision rule is known as
‘maximin strategy’.
Looking from the perspective of Player Y, we can say that if Y plays with
column first strategy the maximum he can lose is 4 points if Player X adopts the
strategy of row three. If Player Y plays with column 2 strategy, there is no question of
any loss whatever may be the strategy of Player X. In such a case, player X will adopt
the strategy of row 1, for only then his loss will be minimum. If Player Y plays with
column 3 strategy, the maximum he can lose is 4 points if X adopts the strategy of
row 1. If Y adopts the strategy of column 4, he can lose at the most 2 points if X adopts
the strategy of row 1. In this problem then, Y should adopt the column 2 strategy and
thereby ensure a victory of 1 point which is the maximum in the given case. Thus,
Player Y can make the best of the situation by aiming at the lowest of these maximum
pay-offs (viz. 4, –1, 4, 2). Thus, he should seek the minimum among the maximum
pay-offs. This decision rule is known as ‘minimax strategy’.
Thus, Player Y will play his second column on each play and Player X will
respond by playing his first row on each play. In this way, Y will win 1 point and X
will lose 1 point in each play. Hence, this is a two-person zero-sum game with a
pure strategy. Since Y will win 1 point and X will lose 1 point in each play, the value
of the game is –1. This pay-off –1 is then a saddle point in the given game and can
be marked (encircled) as follows:
Player Y
 3 1 4 2 
 
Player X 1 3 7 0 
 
 4 6 2 9

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 

4.4 PURE AND MIXED STRATEGIES WITH

SADDLE POINT
Saddle point: The The saddle point in a pay-off matrix is the smallest value in its row and the largest
smallest value in its value in its column. The saddle point is also known as the equilibrium point in the
row and the largest
value in its column.
theory of games. An element of a matrix that is simultaneously the minimum of the
row in which it occurs and the maximum of the column in which it occurs is a
saddle point of the matrix game. In a game having a saddle point, the optimum
strategy for Player X is always to play the row containing a saddle point and for
Player Y to play the column that contains a saddle point. The saddle point also gives
the value of such a game. The saddle point in the pay-off matrix of a game may or
may not exist. If there is a saddle point, we can easily find out the optimum strategies
and the value of the game by what is known as solution by saddle point without
having to do too many calculations. But when the saddle point is not there, then we
have to use algebraic methods for working out the solutions of the game problems.
Game Problems of Mixed Strategy
Example 4.2: Find the optimum strategies and the value of the game from the
following pay-off matrix concerning a two-person game:
Player Y

1 4
Player X  
5 3 
Solution: In the given game, there is no saddle point because there is no one value
which is smallest in its row and largest in its column. Therefore, the players have to
resort to mixed strategy, i.e., Player X will play each of his rows a certain part of
time and Player Y will play each of his columns a certain part of the time. The
question then is to determine the proportion of time a player should spend on his
respective rows and columns. This can be done by the use of the following algebraic
method:
Let Q equal the proportion of time Player X spends playing the first row, then
1 – Q must equal the time he spends playing his second row (because one equals the
time available for play). Similarly, suppose Player Y spends time R in playing the
first column and 1 – R be the time he spends on playing the second column. All these
can be stated as follows:
Player Y

Q 1 4
Player X 1  Q  

5 3 
Now, we must find the values of Q and R. Let us analyse the situation from X’s
viewpoint. He would like to devise a strategy that would maximize his winning
(or minimize his losses) irrespective of what his opponent Y does. For this, X would
like to divide his play between his rows in such a manner that his expected winnings

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or losses, when Y plays the first column equal to his expected winnings or losses
when Y plays the second column. (Expected winnings indicate the sum, overtime, of
the pay-offs that will be obtained multiplied by the probabilities that these pay-offs
will obtain). In our case, we can calculate the same as follows:
X’s Expected Winnings
When Y plays When Y plays
column one column two
X plays row one: (1) (Q) (4) (Q)
Q of the time
X plays row two: 5(1– Q) 3(1 – Q)
1 – Q of the time
X’s total expected winnings Q + 5(1 – Q) 4Q + 3 (1 – Q)
Equating the expected winnings of X when Y plays column 1 with when Y
plays column 2, we can find the value of Q as follows:
Q + 5(1 – Q) = 4Q + 3(1 – Q)
Q + 5 – 5Q = 42 + 3 – 3Q
–5Q = –2
or Q = 2/5
1 – Q = 3/5
This means that Player X should play his first row 2/5 of the time and his
second row 3/5 of the time if he wants to maximize his expected winnings from the
game.
Similarly, the losses of Y can be worked out as follows:
Y’s Expected Losses
Equating the expected losses of Y when X plays row 1 with when X plays
row 2, we can find the value of R as follows:
R + 4(l – R) = 5R+ 3(1 – R)
R + 4 – 4R = 5R + 3 – 3R
or –5R = –1
or R = 1/5
1 – R = 4/5
This means that Player Y should play his first column 1/5 of the time and his
second column 4/5 of the time if he wants to minimize his expected losses in the
game.
Now we can illustrate the original game with the appropriate strategies for
each of the player as follows:
Player Y

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 1 4
2/5
Player X  
3/ 5  5 3 
An alternative method (or the short-cut method) for finding the above
strategies is as follows:
Original game
Y
1 4
X 
5 3 
Step 1: Subtract the smaller pay-off in each row from the larger one and the smaller
pay-off in each column from the larger one.
Y
1 4 3 (i.e., 4 – 1 = 3)
X 
5 3 2 (i.e., 5 – 3 = 2)
(i.e., 5 – 1 = 4) (i.e., 4 – 3 = 1)
Step 2: Interchange each of these pairs of subtracted numbers found in Step 1 above.
Y
1 4 2
X 
5 3 3
1 4
Step 3: Put each of the interchanged numbers over the sum of the pair of the numbers.
Y
1 4 2 /(2  3)
X 
5 3 3/(2  3)
1/(1  4) 4 /(1  4)
Step 4: Simplify the fraction to obtain the proper proportions or the required strategies.
Y
1 4 2 / 5
X 
5 3 3/ 5
1/ 5 4 / 5
Now we determine the value of the game. Looking at the game from X’s point
of view we can argue that:
(i) During the 1/5 of the time that Y plays column 1, X wins 1 point 2/5 of the
time (when X plays row 1) and 5 points 3/5 of the time (when X plays
row 2).
(ii) During the 4/5 of the time that Y plays column 2, X wins 4 points 2/5 of
the time (when X plays row 1) and 3 points 3/5 of the time (when X plays
row 2).

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Thus, the total expected winnings of player X is the sum of the above two
statements, that is,
1   2  3  4   2  3 
(1)  (5)  (4)  (3)
5   5   5   5   5   5  
 1  17  4  17
        
 5  5   5   5 
17 8
 
25 25
85

25
17

5
Thus, the value of the game is 17/5 which means that Player X can expect to
win an average pay-off of 17/5 points for each play of the game if he adopts the
strategy we have determined above. If the value of the game determined above had
a negative sign, it would simply signify that Y was the winner. The same result can
also be achieved by looking at the game from Y’s point of view and carrying out
similar calculations.
First Alternative Method (or Short-cut Method) for Determining the Value of a
Game
Under this, we calculate:
X’s expectations when Y plays column 1
X’s expectations when Y plays column 2
Y’s expectations when X plays row 1
Y’s expectations when X plays row 2
In all these four cases, the answer remains the same. Hence, any one of these
calculations is sufficient to determine the value of the game. The logic behind this
approach is the same as that of determining the optimum strategies. (In the case of
Player X, we determined a strategy that guaranteed X the same winnings, irrespective
of his opponent’s choice of columns). This can be illustrated in Figure 4.1 as follows:

1 4 17
Player 5 5 5

1 4
5 5
Player X 2 2
5 1 5

2
(1× ) + (5× 3) = 17 17
5 5 5 5

5
3

17
5

Fig. 4.1 Diagrammatic Form of Determining the Value of a Game

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Second Alternative Method for Determining the Value of a Game Using the
Probabilities of each Pay-off
In a simple 2 × 2 game without a saddle point, each player’s strategy consists of two
probabilities denoting the portion of the time he spends on each of his rows or
columns. Since each player plays a random pattern, we can list the probabilities of
each pay-off (in our given question) as follows:

Pay-off Strategies which produce Probability of this

this pay-off pay-off
2 1 2
1 Row 1 column 1  
5 5 25
2 4 8
4 Row 1 column 2  
5 5 25
3 1 3
5 Row 2 column 1  
5 5 25

3 4 12
3 Row 2 column 2  
5 5 25
Sum = 1.0

The value of the game can be found out by taking the sum of the products of
each of these pay-offs and their respective probabilities.
For the given problem, this can be worked out as follows:
Pay-off Probability of the Product of the first two
pay-off columns

2 2
1
25 25

4 8 32
25 25

5 3 15
25 25

3 12 36
25 25

85
Total =
25
= 17 (Value of the game)
5

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4.4.1 Method of Dominance

The concept of dominance is very useful for reducing the size of the game. Applying
this concept we can, at times, convert a bigger game into a smaller game. Hence,
we should examine the possibility of reducing the game size by the principle of
dominance.
Rules for Dominance
(a) If all the elements in a column are greater than or equal to the corresponding
elements in another column, then that column is dominated.
(b) Similarly, if all the elements in a row are less than or equal to the corresponding
elements in another row, then that row is dominated.
Dominated rows or columns may be deleted, which reduces the size of the
game. Always look for dominance when solving a game.
This becomes clearer from the following illustration:
Example 4.3: Determine the optimum strategies and the value of the game from
the following 2×m pay-off matrix game for X:
Player Y

6 3 1 0 3
Player X 3 2 4 2 1
 
Solution: There is no saddle point in the above game. Hence, mixed strategies will
have to be adopted by the two players. Further, if we look at the given pay-off
matrix from Y’s point of view, we find that he chooses not to play columns 1, 2 or 4,
since either column 3 or column 5 (both with two negative pay-offs) offers a better
alternative irrespective of the actions of Player X. We can say then that columns 1,
2 and 4 are dominated by the remaining two columns, viz. number 3 and 5, and
hence, would never be played by Y. As soon as Y decides never to play his first,
second and fourth columns, the game is reduced to size 2 × 2 as stated below:
Player Y
1 3
Player X 4 1
 
Now, the optimum strategies and the value of the game can be easily found
out as per the method stated in Example 4.2. The calculations can be shown as
follows:
Games as stated above.
Y

1 3

X 4 1 
 

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Step 1: Substracting the pay-offs

Y
1 3 2 (i.e., 1  (3)  2)
X 4 1 3 (i.e., 1 (4)  3)
 
3 2
(i.e., –1 – (–4) = 3 (i.e., –1 – (–3) = 2)

Step 2: Pairs interchanged

Y

1 3 2
X 4 1 3
 
2 3

Step 3: Pairs over the sum

1 3 3 / (3  2)
X 4 1 2 / (3  2)
 
2 / (2 + 3) 3 / (3 + 2)

Step 4: Fractions simplifed and optimum strategies determined

Y
2/5 3/ 5
3/ 5 1 3
X 2/5 4 1 
 
 
Value of the Game
  3  2
 1   4  


 5   5 


 3 8 11
   
 
5 5 5
Example 4.3 is an example of solving the problem by what is known as the
method of dominance.
Graphical method. The graphical method can only be used in games with no
saddle point and having pay-off m × n matrices where either m or n is two. The
graphical method enables us to substitute a much simpler 2 × 2 matrix for the original
m × 2 or 2 × n matrix. We will illustrate this in Example 4.4.
We will apply the graphical short-cut by plotting on two different vertical axis,
the two pay-offs corresponding to each of the five columns. The pay-off numbers in
the first row are plotted on axis 1 and those in the second row on axis 2, which

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should be drawn at some distance away from the first axis but should be parallel to
the first axis as shown in the following figure:
Axis 1 Axis 2
A —
6 — — 6
5 — — 5
4 — B— 4
3 — — 3
2 — — 2
1 — — 1
0 — — 0
–1 — — –1
T
–2 — — –2
–3K — L — –3
–4 — — –4
–5 — — –5
–6 — — –6

Thus, the two pay-off numbers 6 and 3 in the first column are denoted
respectively by point A on axis 1 and point B on axis 2. Line AB then denotes Y’s
move of the first column. By plotting the pay-off numbers of each of the remaining
four columns on the two axes, we obtain five lines like the line AB, which correspond
to the given five moves of Y.
If using a thick line we draw the segments which bound the figure from the
bottom, namely the segments AT and LT and mark the highest point (7) on this
boundary, the two lines passing through it identify the two critical moves of Y,
which combined with the two of X, yield the following 2×2 matrix:

1 3

X 4 1 
 
The optimal strategies now can be determined in the way explained earlier.
Example 4.4: Determine the optimum strategies and the value of the game from
the following pay-off matrix concerning a 2 person 4×2 game.
Y
6 2
3 4
X 
 2 9

7  
 1
Solution: There is no saddle point in the given game. This game also cannot be
reduced by dominance (as we did in Example 4.3) because there is no row which is
always preferred by X irrespective of what Y might do.

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Player X can actually think of this 4 × 2 game as six sub-games, each of size 2 × 2
(because he can choose not to play any two of his rows if he so desires). These six
sub-games can be listed as follows:

Y
2 3
5
25
5 6  Sub - game No. (i)
1
X 4 3 4

5 
Strategies have been noted in this matrix pay-off.
 6  12  18
The value of the game is  5   5   =  = –3.60
  5


Y
7 8
15
215
6  Sub - game No. (ii)
11

9
15
X 4 2

15 
Strategies have been noted in this matrix pay-off.

 11   4   66   8  58
The value of the game is 15  6    2=   15    15   15   3.87
 15
   


Y
  6 2
X 7 1  Sub - game No. (iii)
 
There is a saddle point here. Hence, the value of this sub-game is –6.
Y
3 4   Sub - game No. (iv)
 2 9 
 
There is saddle point here. Hence value of this sub-game is –4.
Y
3 4
7
47
7 3  Sub - game No. (v)
6
X 1 7 1
7
 
Strategies have been noted in the matrix pay-off.
 18  7
The value of the game is    .
 7   7 

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25
= = –3.57
7
Y
8 9
7
9
7

6
2  Sub - game No. (vi)
7 1
17
X 11

17  
Strategies have been noted in the matrix pay-off.
The value of the game is,
 12  77 65
     3.82
 17  
 17 17
If we look at the values of all these sub-games, we find that the values being
negative, Y will win and X will lose in all the cases. Player X, who is making the
choice, will naturally prefer the sub-game with the smallest negative value and this
is sub-game No. (v) in our example. Thus, X will play a two-row mixed strategy
between the second and fourth rows of the original game and he will expect to lose
an average of 357 points per play of the game, which will be his minimum possible
loss. Player Y will also adopt a strategy consisting of the same number of columns.
In brief, sub-game No.(v)’s strategies will be adopted by players X and Y with a
game value equal to –3.57 in the case of the given example.
Solution through Graphic Method
The above example can also be easily worked out with the help of the graphical
method as follows.
The case of pay-off matrices having only two columns but more than two rows
is similar, except that in the diagram, we thicken the line segments which bound the
figure from the top and take the lowest point on this boundary. The following diagram
shows the pay-off numbers from each row represented as points on two vertical axes,
1 and 2.

Axis 1 Axis 2

5 5

K K
0 0
L

B1 M
–5 –5

–10 –10

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Thus, line B joins the first pay-off number –6 and –2 of the first row. Similarly,
other lines have been drawn representing pay-off numbers in the second, third and
fourth rows. The segments KP, PM and ML drawn in thick lines bound the figure
from the top and their lowest intersection M, through which two lines pass, defining
the following 2 × 2 matrix relevant for our purpose:

Y
3 4

X 1 1 
 
The optimal strategies can now be determined as usual.
4.4.2 Linear Programming Solution to Two-Person
Zero-Sum Games
If there is no saddle point in a game and reduction of the game by dominance is also
not possible, then the linear programming technique offers an efficient solution.
Hence, we shall work out the following problem by the linear programming method:
Example 4.5: Determine the optimum strategies and the value of the game for the
following pay-off matrix concerning a 3 × 3 game.

Player Y
 1 2 1
Player X 2 1 1 
 
 2 0 1 

Solution: Let us designate X1, X2 and X3 to represent the proportion of the time
Player X should spend playing his respective rows. Similarly, designate Y1,Y2 and Y3
to represent the proportion of the time Player Y should spend playing his respective
columns. We can show all these as follows:

Player Y
Y1 Y2 Y3
X1  1 2 1
Player X X 2 2 1 1 
 
X 3  2 0 1 

Our linear programming technique must give an answer to these six unknowns,
viz. X1, X2, X3, Y1, Y2 and Y3.
Starting first with the determination of Player Y’s optimum strategies, his
expectations can be written as follows:
If X adopts strategy X1, Y’s expectation is:
1Y1+2Y2–1Y3  V
If X adopts strategy X2, Y’s expectation is:
–2Y1+1Y2+1Y3  V
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If X adopts strategy X3, Y’s expectation is:

2Y1 +0Y2 +1Y3  V
where V = the value of the game
The V term on the right-hand side of the above inequalities can be removed by
dividing all the terms by V as shown below:

1Y1 2Y2 1Y3 

  
V V V

2Y1 1Y2 1Y3 

  
V V V

2Y1 0Y2 1Y3 

  
V V V
Y
If we take = , then the above stated inequalities can be put as:
Y V

Y1  2Y2  Y3  
2Y1  Y2  Y3  
2Y1  0Y2  Y3  

We know that the value of Y1 + Y2 + Y3 must be equal to one (because the total
of one’s strategies must be equal to unity), which is an important constraint under
which we must solve the game. To put this constraint into the Y form, we first
divide all its terms by V as follows:

Y1 Y2 Y3 1
  
V V V V
Y
and then, using Y  we get,
V
1
Y Y Y  . Thus, the various constraints now are,
1 2 3
V
1
Y Y Y  ...(i)
1 2 3
V

Y1  2Y2  Y3  1 ...(ii)

Y1  Y2  Y3  1 ...(iii)

2Y1  0Y2  Y3  1 ...(iv)

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Y’s objective in any game is to minimize the value of V and this is identical to
maximizing 1/V. Thus, the player’s objective is to maximize the value of Y1  Y2  Y3 ,
subject to three linear constraints [number (ii), (iii) and (iv)] stated above. All these
can be put in a formal way as follows for a linear programming solution:
Maximize:

Y1  Y2  Y3
Subject to,
Y1  2Y2  Y3  1
Y1  Y2  Y3  1
2Y1  0Y2  Y3  1
We can work out this problem by the simplex method. Since the inequalities
are of less than type, we need to add a slack variable to each of the inequalities for
obtaining the equations for the simplex method. Taking S1, S2 and S3 as the slack
variables, we can state the problem as follows:
Maximize:

Y1  Y2  Y3  0S1  0S2  0S3

Subject to,
Y1  2Y2  Y3  1
Y1  Y2  Y3  1
2Y1  0Y2  Y3  1
From the above, the first simplex tableau can be set up as follows:

Cj 1 1 1 0 0 0 Ratio
Basic Value of
Variable the Basic Y1 Y2 Y3 S1 S2 S3
X1: Variable
0 S1 1 1 2 –1 1 0 1 1

0 S2 1 –2 1 1 0 1 0 –1/2

0 S3 2 2 0 1 0 0 1 1/2 }Key Row

Zj 0 0 0 0 0 0 0

Cj – Zj +1 +1 +1 0 0 0

Key Number Key Column

Since there is a tie in Zi. Ci row, let Y1 be the first entering variable.

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The second simplex tableau is as follows:

Cj 1 1 1 0 0 0 Ratio
Basic Value of
Variable the Basic Y1 Y2 Y3 S1 S2 S3
Variable

0 S1 1/2 0 2 –3/2 1 0 -1/2 1

0 S2 2 0 1 2 0 1 0 –1/2

1 Y1 1/2 1 0 1/2 0 0 1/2  }Key Row

Zj 1/2 1 0 1/2 0 0 1/2

Cj – Zj 0 –1 –1/2 0 0 -1/2

Key Number Key Column (i.e., Y2 enters next)

The third simplex tableau is as follows:

Cj 1 1 1 0 0 0 Ratio
Basic Value of
Variable the Basic Y1 Y2 Y3 S1 S2 S3
Variable
1 Y2 1/4 0 1 -3/4 1/2 0 -1/4 -1/3

0 S2 7/4 0 0 11/4 -1/2 1 5/4 7/11

1 Y1 1/2 1 0 1/2 0 0 1/2  }Key Row

Zj 3/4 1 1 -1/4 1/2 0 1/4

Cj – Zj 0 0 –5/4 1/2 0 -1/4

Key Number Key Column (i.e., Y3 enters next)

The fourth simplex tableau is as follows:

Cj 1 1 1 0 0 0 Ratio
Basic Value of
Variable the Basic Y1 Y2 Y3 S1 S2 S3
Variable
1 8/11 0 1 0 4/11 3/11 1/11
Y2
0 7/11 0 0 1 -2/11 4/11 5/11
Y3
1 Y1 2/11 1 0 0 1/11 –2/11 3/11

Zj 17/11 1 1 1 3/11 5/11 9/11

Cj – Zj 0 0 0 -3/11 –5/11 -9/11

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Since there is no positive value in the Cj – Zj row, this indicates that we have
reached the optimum solution.
The fourth of the final simplex tableau worked out as above shows that the
value of the objective function is 17/11 and this was taken as 1/V in our problem.
Hence, the value of the game V = 11/21.
On the basis of this value, we can now convert our Y terms into Y terms as
follows:
Y
Y  1 or Y  Y .V or Y  2  11  2


1 1 1 1
V 11 17 17
Y2
Y  or Y  Y .V or Y  8  11  8
2 2 2 2
V 11 17 17
Y3
Y  or Y  Y .V or Y  7  11  7
3 3 3 3
V 11 17 17

Hence, the optimum strategies for Player Y are to play 2/17, 8/17 and 7/17 the
first, second and third columns respectively.
The optimum strategies for X can also be found out from the final simplex
tableau prepared above. They appear as entries in the Cj – Zj row under the slack
variable columns, viz. –3/11, –5/11 and –9/11. Like Y, these values are also X values
and must be reduced as follows to obtain the optimum strategies of Player X.

X  X .V or 3  11  3
1 1
11 17 17
X  X .V or 5  11  5
2 2
11 17 17
X  X .V or 9  11  9
3 3
11 17 17
Hence, the optimum strategies for Player X are to play 3/17, 5/17, and 9/17
the first, second and third rows respectively.
Short-cut Method
A short-cut method can also give the solution to the above problem which we have
just solved through the linear programming technique. But this short-cut method
applies only to games having square pay-off matrices, i.e., matrices having as many
columns as the number of rows and having a saddle point, i.e., pure strategy is not
available to any player.
We take the same illustration to explain this short-cut method:
Player Y
 1 2 1
 
Player X 2 1 1 
 2 0 1 
 

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Since the above is a 3 × 3 matrix, i.e., a square matrix and there is no saddle
point, we can use the short-cut technique.
If the probabilities of three Y-moves which Y must mix for optimal play are p,
q, r then the three pay-offs to Y corresponding to each of the three counter moves of
his opponent X must all be equal to the optimal value V of the game. Since Y’s pay-
offs against the three X-moves are respectively,

1p  2q 1r
29  1q  1r
2 p  0q  1r
we obtain three equations by equating each of these three Y- weighted pay-
offs with V, that is,
(1p + 2q – 1r) = (–2p + 1q + 1r)
= (2p + 0q + 1r) = V
or 3p + 1q – 2r = 0
and –p + 2q – 2r = 0

p q r
Hence,  
2 8 7
Consequently, Y’s mixture of his three moves, viz. first, second and third
column moves for optimal play must be in the proportion 2:8:7 (i.e., 2/17, 8/17,
7/17).
Similarly, denoting the probabilities used by X for blending his three moves by
the symbols p, q, r, we find that X’s three average pay-offs against Y’s three moves
are as follows:

1p ' 2q ' 2r '

2 p ' 1q ' 0r '
1p ' 1q ' 1r '

The equality of the three pay-offs to the optimal value of the game leads to the
three equations:
(1p – 2q + 2r) = (2p + 1q + 0r)
= (–p + 1q + 1r) = V
or –p – 3q + 2r = 0
and 2p – 3q + 1r = 0

p' q' r'

Hence,  
3 5 9
Thus for optimal play, X must blend his three moves viz., first, second and
third row moves in the proportion 3:5:9 (i.e., 3/17, 5/17, 9/17).

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4.5 LIMITATIONS OF GAME THEORY

Game theory has been used in business and industry to develop bidding tactics, pricing
policies, advertising strategies and timing of the introduction of new models in the
market. The theory provides the basis for rational decisions and thus improves the
decision-making process. In spite of all these, the theory of games suffers from certain
limitations and this questions the relevancy of game theory in practical life. The
important limitations are as follows:
(i) Businessmen do not have all the knowledge required for the theory of games.
They do not even know all of the alternative strategies available to themselves,
let alone the strategies open to their rivals.
(ii) There is a great deal of uncertainty that cannot conveniently be inserted into
game theory models. The outcome of a game may not be known with certainty
in many cases. It may, for example, depend upon the toss of a coin or upon
cutting a deck of cards. As such, we usually restrict to games with known
outcomes. This, therefore, is an important limitation.
(iii) The minimax strategy implies that the businessman minimizes the chance of
the maximum loss. It is thus a very conservative rule. It is a much less accurate
description of the dynamic businessman who is constantly in quest of profit.
(iv) The techniques of solving games involving mixed strategies particularly in
case of a larger pay-off matrix is very complicated and this lessens the
significance of this sort of analysis.
(v) Though the game theory points out some of the important aspects of
competitive situations but still it is not a model that offers complete solution,
particularly when the game does not happen to be a strictly adversary game.
For example, in an oligopoly situation a reduction in price of a commodity
may result in the expansion of the entire quantity demanded and not merely
shift demand units from one firm, say A to another firm say B. The game
theory will not be able to provide a complete solution to this sort of oligopoly
game problem.

CHECK YOUR PROGRESS-1

1. What is a pay-off matrix?

2. What are two-person games?
3. When is a player said to have adopted a pure strategy?
4. Define the saddle point of a pay-off matrix.
5. What do you understand by the principle of dominance?

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ACTIVITY

1. Make a list of common examples of application of game theory in

everyday life.
2. Prepare a chart showing various types of game theory games.

4.6 LET US SUM UP

 The word ‘game’ represents a conflict between two or more parties. Game
theory provides the general rules of the logic that underlies strategic behaviour
of all types.
 There are several types of games such as two-person games, constant-sum
games, games of perfect information, and so on.
 The concept of value of a game refers to the average pay-off per play of the
game over an extended period of time.
 The saddle point in a pay-off matrix is the smallest value in its row and the
largest value in its column.
 The concept of dominance is used for reducing a bigger game into a smaller
game.
 If there is no saddle point in a game and reduction of the game by dominance
is also not possible, then linear programming techniques can offer an efficient
solution.

4.7 FURTHER READING

Ackoff, R.L. and M.W. Sasieni. 1968. Fundamentals of Operations Research. New
York: John Wiley & Sons Inc.
Bierman, Harold, Charles Bonini and W.H. Hausman. 1973. Quantitative Analysis
for Business Decisions. Homewood (Illinois): Richard D. Irwin.
Gillett, Billy E. 2007. Introduction to Operations Research. New Delhi: Tata
McGraw-Hill.
Kalavathy, S. 2002. Operations Research. New Delhi: Vikas Publishing House.
M.Selvam (2014) Maritime Logistics and Documentation , Lakshmi Publications ,
New Delhi
M.Selvam (2013) Quality Management, Lakshmi Publications , New Delhi

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Unit-4 Game Theory

Kothari, C.R. 1982. An Introduction to Operational Research. New Delhi: Vikas

Publishing House.
Lindsay, Franklin A. New Techniques for Management Decision Making. New York:
McGraw-Hill.
Massie, Joseph L. 1986. Essentials of Management. New Jersey: Prentice-Hall.
Swarup, Kanti, P.K. Gupta and Manmohan. 2001. Operations Research. New Delhi:
Sultan Chand & Sons.

4.8 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress–1

1. When games are represented in the form of a matrix (a rectangular array of
numbers deriving from matrix algebra), the resulting matrix is known as a
pay-off matrix.
2. In a two-person game, the players may have many possible choices open to
them for each play of the game, but the number of players remains only two.
3. When a player plays one row all the time (or one column all the time), he is
said to have adopted a pure strategy.
4. The saddle point in a pay-off matrix is the smallest value in its row and the
largest value in its column.
5. Sometimes, one of the pure strategies of either player is always inferior to at
least one of the remaining ones. Such superior strategies are said to dominate
the inferior ones. In such cases of dominance, we reduce the size of the pay-
off matrix by deleting those strategies which are dominated by others.

4.9 POSSIBLE QUESTIONS

Short-Answer Questions
1. List the general rules of dominance.
2. Write a short note on the value of a game.
3. What are zero-sum and non-zero-sum games?
4. Define maximum and minimax strategies.
Long-Answer Questions
1. What are the properties that a situation should possess to be termed a game?
2. Discuss the various types of games with examples.
3. For what type of business can game theory be useful? Explain.
4. The following is a pay-off matrix in rupees for a hypothetical game:

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Strategies open to A Strategies open to B

x y z m

a 2 3 4 15
b 9 11 8 13
c 5 13 6 4

Determine the optimum strategies for A and B and also find the value of the
game. Can it be described as a game of pure strategy? If so, why?
5. For each of the following game matrices, find the optimal strategy for each
player. What is the saddle point and the value of each game? Are the games
fair?
(a) (b)
Red Black

1 2 3 1 2 3
A 3 –3 –1 A –4 –3 4
Blue White
B 0 4 –2 B 6 –2 3
C 1 3 0 C 5 –4 –5

6. Use graphical methods in solving the following games:

B
 3 3 4 
(a) A  1 1 3
  
 Y
  2 5 
(b) X 
 4 1 
7. The following matrix represents the pay-off to P1 in a rectangular game
between two persons P1 and P2.

P2
 8 15 4 –2
P1 19 15 17 16
 0 20 15 5

By the notion of dominance, reduce the game to a 2 × 4 game and solve it

graphically.

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 Unit-4 Game Theory

8. Solve the following game.

Player B
I II III IV
I  3 2 4 0 
II  3 4 2 4  
III  4 2 4 0 
 
IV  0 4 0 8 
9. Using dominance, solve the pay-off matrix given by
(i) Player B
 2 2 4 1
 6 1 12 3
Player A  
3 2 0 6
2
 3 7 7 



(ii) Player B
1 7 3 4
Player A 5 6 4 5
 
 7 2 0 3

4.10 LEARNING OUTCOMES
 The concept of game theory
 Two-person zero-sum games and the value of a game
 Pure and mixed strategies with saddle point
 Reduce the size of a game using dominance
 Solve a game using the linear programming method

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 

UNIT 5 NETWORK MODELS

UNIT STRUCTURE
5.1 Learning Objectives
5.2 Introduction
5.3 Construction of Networks
5.3.1 Basic Terms
5.3.2 Common Errors
5.3.3 Rules of Network Construction
5.3.4 Time Analysis
5.4 Determination of Floats and Slack Times
5.5 Determination of Critical Paths
5.6 Determination of PERT Times
5.6.1 PERT Procedure
5.7 Crashing
5.8 Resource Allocation and Levelling
5.9 Let Us Sum Up
5.10 Further Reading
5.11 Answers to Check Your Progress
5.12 Possible Questions
5.13 Learning Outcomes

5.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

 Explain network analysis for large projects
 List the applications of PERT and CPM for handling projects
 Construct a network of activities and events for analysis
 Highlight the importance of CPM and PERT analysis
 Explain the PERT procedure

5.2 INTRODUCTION

After reading this unit, you will understand the various aspects of network analysis
such as network scheduling, planning and control. Network scheduling is a technique
used for planning and scheduling large projects in the field of construction,
maintenance, fabrication, etc. It is a tool for minimizing problems in the execution
and controlling of critical factors in a project. Program Evaluation Review Technique
(PERT) and Critical Path Method (CPM) are two planning and control techniques
for keeping a project schedule on track to complete within the scheduled time.
You will learn the basic terms associated with the network analysis technique.
A network is a graphic representation of logically and sequentially connected arrows
and nodes, representing the activities and events, respectively of a project. An event
is the beginning and end point of an activity and is represented by a node. You will
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learn how to construct a network after going through the rules of network construction.
You will learn how to carry out the time analysis of a network model from its
estimated completion time, earliest start time, earliest finishing time, latest start
time and latest finishing time. You will also learn how to analyse the critical path of
a project to complete it within the scheduled time.

5.3 CONSTRUCTION OF NETWORKS

Network scheduling is a technique used for planning and scheduling large projects
Network scheduling: in the field of construction, maintenance, fabrication, purchasing computer system,
A technique used for etc. The technique is a method of minimizing the trouble spots such as production,
planning and
scheduling large delays and interruptions, by determining critical factors and coordinating various parts
projects in the field of of the overall job.
construction,
maintenance,
There are two basic planning and control techniques that utilize a network to
fabrication, purchasing complete a predetermined project or schedule. These are Programme Evaluation
computer system, etc. Review Technique (PERT) and Critical Path Method (CPM).
A project is defined as a combination of interrelated activities all of which must
be executed in a certain order for its completion. The work involved in a project can
be divided into three phases corresponding to the management functions of planning,
scheduling and control.
Planning: This phase involves setting the objectives of the project and the assumptions
to be made. Also, it involves the listing of tasks or jobs that must be performed to
complete a project under consideration. In this phase, men, machines and materials
required for the project, in addition to the estimates of costs and duration of the various
activities of the project, are also determined.
Scheduling: This consists of carrying out the activities according to the precedence
order and determining the following:
(i) The start and finish times for each activity
(ii) The critical path on which the activities require special attention
(iii) The slack and float for the non-critical paths
Controlling: This phase is exercised after the planning and scheduling, which involves
the following:
(i) Making periodical progress reports
(ii) Reviewing the progress
(iii) Analysing the status of the project
(iv) Management decisions regarding updating, crashing and resource allocation
5.3.1 Basic Terms
To understand the network techniques, one should be familiar with few basic terms
of which both CPM and PERT are special applications.

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Network: It is the graphic representation of logically and sequentially-connected

arrows and nodes representing the activities and events of a project. Networks are
also called arrow diagrams.
Activity: An activity represents some action and is a time consuming effort necessary
to complete a particular part of the overall project. Thus, each activity has a point of
time at which it begins and a point at which it ends.
It is represented in the network by an arrow,
A j
i
Here, A is called the activity.
Event: The beginning and end points of an activity are called events or nodes.
Event is a point in time and does not consume any resource. It is represented by a
numbered circle. The head event called the jth event has always a number higher
than the tail event called the ith event.
Activity j
i
Tail Head
Merge and burst events: It is not necessary for an event to be the ending event of
only one activity, but can be the ending event of two or more activities. Such an event
is defined as a merge event.

If the event happens to be the beginning event of two or more activities it is

defined as a burst event.

Preceding, succeeding and concurrent activities: Activities which must be

accomplished before a given event can occur are termed as preceding activities.
Activities which cannot be accomplished until an event has occurred are
termed as succeeding activities.
Activities, which can be accomplished concurrently are known as concurrent
activities.
This classification is relative, which means that one activity can be preceding
to a certain event, and the same activity can be succeeding to some other event or it
may be a concurrent activity with one or more activities.
Dummy activity: Certain activities which neither consume time nor resources, but
are used simply to represent a connection or a link between events are known as

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dummies. It is shown in the network by a dotted line. The objectives of introducing a

dummy activity are as follows:
(i) To maintain uniqueness in the numbering system as every activity may have a
distinct set of events by which the activity can be identified
(ii) To maintain a proper logic in the network

5.3.2 Common Errors

The following are the three common errors in a network construction:
1. Looping (cycling): In a network diagram, looping error is also known as cycling
error. Drawing an endless loop in a network is known as error of looping. A
loop can be formed if an activity is represented as going back in time.

2. Dangling: To disconnect an activity before the completion of all the activities

in a network diagram is known as dangling.

3. Redundancy: If a dummy activity is the only activity emanating from an event

and which can be eliminated it is known as redundancy.

5.3.3 Rules of Network Construction

There are a number of rules in connection with the handling of events and activities of
a project network that should be followed.

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(i) Try to avoid arrows which cross each other.

(ii) Use straight arrows.
(iii) No event can occur until every activity preceding it has been completed.
(iv) An event cannot occur twice, i.e., there must be no loops.
(v) An activity succeeding an event cannot be started until that event has occurred.
(vi) Use arrows from left to right. Avoid mixing two directions. Vertical and standing
arrows may be used if necessary.
(vii) Dummies should be introduced if it is extremely necessary.
(viii) The network has only one entry point called the start event and one point of
emergence called the end or terminal event.
Numbering the Events (Fulkerson’s Rule)
After the network is drawn in a logical sequence every event is assigned a number.
The number sequence must reflect the flow of the network. In numbering the events,
the following rules should be observed:
(i) Event numbers should be unique.
(ii) Event numbering should be carried out on a sequential basis from left to
right.
(iii) The initial event which has all outgoing arrows with no incoming arrow should
be numbered as 1.
(iv) All arrows emerging from all the numbered events should be deleted. This
will create at least one new start event out of the preceding events.
(v) All new start events should be numbered 2, 3, and so on. This process should
be repeated until the terminal event without any successor activity is reached.
The terminal node should be then numbered suitably.
Note: The head of an arrow should always bear a number higher than the one assigned
to the tail of the arrow.
Example 5.1: Construct a network for the project whose activities and their
precedence relationships are given as follows:

Activities A B C D E F G H I
Immediate Predecessor – A A – D B,C,E F D G,H

Solution: From the given constraints, it is clear that A, D are the starting activities
and I the terminal activity. B, C are starting with the same event and are both the
predecessors of the activity F. Also, E has to be the predecessor of both F and H.
Hence, we have to introduce a dummy activity.

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D1 is the dummy activity.

Finally, we have the following network.

Example 5.2: Construct a network for each of the projects whose activities and their
precedence relationships are given as follows:

Activity A B C D E F G H I J K
Predecessor – – – A B B C D E H, I F,G

Solution: A, B, C are the concurrent activities as they start simultaneously. B becomes

the predecessor of activity E and F. Since the activities J, K have two preceding
activities, a dummy may be introduced (if possible).

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Finally we have,

Example 5.3: Construct a network of the project whose activities are given as follows:
A<C, D, I; B<G, F; D<G, F; F<H, K; G, H<J; I, J, K<E
Solution: Given A<C, which means that C cannot be started until A is completed, i.e.,

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A is the preceding activity to C. The above constraints can be given in the following
table:

Activity A B C D E F G H I J K
Predecessor – – A A I, J,K B, D B,D F A G, H F

A, B are the starting activities, and E is the terminal activity.

Finally we have,

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Example 5.4: Construct the network for the project whose activities and precedence
relationship is given below. Show also the dummy activity.

Activities A B C D E F G H I
Immediate Predecessor – – A,B B B A,B F,D F,D C,G
Solution: A, B are concurrent activities as they start simultaneously. I is the terminal
activity. Since the activities C and F arise from both the activities A, B we need to
introduce a dummy activity.

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Example 5.5: Make a network of the project having activities and precedence
relationship as given below:
A, B, C can start simultaneously.
A<D, I; B<G, F; D<G, F; C<E; E<H, K; F<H, K; G, H<J
Solution: The given constraints can be formatted into a table.

Activity A B C D E F G H I J K
Predecessor Activity – – – A C B, D B, D B, F A G E, F

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5.3.4 Time Analysis

Once the network of a project is constructed, the time analysis of the network becomes
essential for planning various activities of the project. Activity time is a forecast of Activity time: A
the time an activity is expected to take from its starting point to its completion (under forecast of the time an
normal conditions). activity is expected to
take from its starting
The following notations can be used for basic scheduling computations. point to its completion
(i, j) = Activity (i, j) with tail event i and head event j (under normal
conditions).
Tij = Estimated completion time of activity (i, j)
ESij = Earliest starting time of activity (i, j)
EFij = Earliest finishing time of activity (i, j)
(LS)ij = Latest starting time of activity (i, j)
(LF)ij = Latest finishing time of activity (i, j)
The basic scheduling computation can be put under the following two groups.
Forward pass computations (for earliest event time)
Before starting computations, the occurrence time of the initial network event is fixed.
The forward pass computation yields the earliest start time and the earliest finish time
for each activity (i, j) and indirectly the earliest occurrence time for each event, namely
Ei. This consists of the following three steps:
Step 1: The computations begin from the start node and move towards the end node.
Let zero be the starting time for the project.
Step 2: Earliest starting time (ES)ij = Ei is the earliest possible time when an activity
can begin, assuming that all the predecessors are also started at their earliest starting
time. Earliest finish time of activity (i, j) is the earliest starting time together with
the activity time.
(EF)ij = (ES)ij + tij
Step 3: Earliest event time for event j is the maximum of the earliest finish time of
all the activities ending at that event.

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
E j = Max E j  tij
i

The computed ‘E’ values are put over the respective rectangle representing
each event.
Backward pass computations (for latest allowable time)
The latest event time (L) indicates the time by which all activities entering into an
event must be completed without delaying the completion of the project. This can be
calculated by reversing the method of calculations used for the earliest event time.
This is done in the following steps:
Step 1: For ending an event, assume E = L.
Step 2: Latest finish time for activity (i, j) is the target time for completing the project.
(LFij) = Lj
Step 3: Latest starting time of the activity (i,j) = Latest completion time (i,,j) of the
activity time.
LSij = LFij – tij
= Lj – tij
Step 4: Latest event time for event i is the minimum of the latest start time of all
activities originating from the event.


Li  Min L j – tij
j

The computed ‘L’ values are put over the respective triangle  representing
each event.

5.4 DETERMINATION OF FLOATS AND SLACK

TIMES

Float: The difference Float is defined as the difference between the latest and the earliest activity time.
between the latest and
the earliest activity
Slack is defined as the difference between the latest and the earliest event
time. time.
Hence, the basic difference between the slack and float is that slack is used
for events, only whereas float is used for activities.
There are mainly three types of floats as given below:
(i) Total float: It refers to the duration of time by which the completion of an
activity could be delayed beyond the earliest expected completion time without
affecting the overall project duration time.
Mathematically, the total float of an activity (i, j) is the difference between the
latest start time and the earliest start time of that activity.
Hence, the total float for an activity (i, j) denoted by (TF)ij is calculated by the
formula,

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(TF)ij= (Latest start – Earliest start) for activity (i, j)

i.e.,(TF )ij  LS ij – ES ij

 
or, TF ij  L j – Ei – tij

Here, Ei, Lj are the earliest time and latest time for the tail event i and head
event j and tij is the normal time for the activity (i, j). This is the most important type
of float as it concerns the overall project duration.
(ii) Free float: The time by which the completion of an activity can be delayed
beyond the earliest finish time without affecting the earliest start of a subsequent
succeeding activity.
Mathematically, the free float for activity (i, j) denoted by (FF)ij can be calculated
by the formula,

 
FFij  E j – Ei – tij
FFij  Total float – Head event slack
Head event slack = Lj – Ej
This float is concerned with the commencement of the subsequent activity.
The free float can take values from zero up to total float, but it cannot exceed
the total float. This float is very useful for rescheduling the activities with minimum
disruption of earlier plans.
(iii) Independent float: The amount of time by which the start of an activity can be
delayed without affecting the earliest start time of any immediately following
activities assuming that the preceding activity has finished at its latest finish
time.
Mathematically, independent float of an activity (i, j) denoted by IFij can be
calculated by the formula,

 
IFij  E j – Li – tij
or
IFji  Free float –Tail event slack
Where tail event slack is given by,
Tail event slack = Li – Ei
The negative independent float is always taken as zero. This float is concerned with
prior and subsequent activities.
IFij  FF ij  TFij
Notes: 1. If the total float TFij for any activity (i, j) is zero, then that activity is called
critical activity.
2. The float can be used to reduce the project duration. While doing this, the float of
not only that activity but that of other activities would also change.

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Slack. The term slack is normally asociated with events. It indicates the amount of
latitude (or the lee-way) that is available for an event to occur. It is worked out
as follows:
Slack of an event = (Latest occurance time of the event) – (earliest occurance
time of the event) or simply slack = LT – ET
It can be positive or negative depending upon whether the targetted date of
completion is later or earlier than the earliest finish time of the task respectively.
When used for activities, the term slack should be used for activities, (Activity
slack is synonymous to float). Since slack is associated with events, each activity
will have two slacks, viz. the slack of its head event or the head slack and the slack
of its tail event or the tail slack.

5.5 DETERMINATION OF CRITICAL PATHS

Critical activity: An activity is said to be critical if a delay in its start will cause a
further delay in the completion of the entire project.
Critical path: The sequence of critical activities in a network is called the critical
path. It is the longest path in the network from the starting event to the ending event
and defines the minimum time required to complete the project. In the network, it is
denoted by a double line. This path identifies all the critical activities of the project.
Hence, for the activity (i, j) to lie on the critical path, the following conditions must
be satisfied.
(i) ESi= LFi
(ii) ESj = LFj
(iii) ESj – ESi = LFj – LFi = tij
ESi, ESj, are the earliest start and finish times of the events i and j.
LFi, LFj are the latest start, finish times of the events i and j.
The iterative procedure of determining the critical path is as follows.
Step 1: List all the jobs and then draw arrow (network) diagram. Each job is indicated
by an arrow with the direction of the arrow showing the sequence of jobs. The
length of the arrows has no significance. The arrows are placed based on the
predecessor, successor, and concurrent relation within the job.
Step 2: Indicate the normal time (tij) for each activity (i, j) above the arrow which is
deterministic.
Step 3: Calculate the earliest start time and the earliest finish time for each event
and write the earliest time Ei for each event i in the . Also calculate the latest
finish and latest start time. From this we calculate the latest time Lj for each event j
and put in the .
Step 4: Tabulate the various times, namely normal time, earliest time and latest
time on the arrow diagram.
Step 5: Determine the total float for each activity by taking the difference between the
earliest start and the latest start time.

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Step 6: Identify the critical activities and connect them with the beginning event and
the ending event in the network diagram by double line arrows. This gives the critical
path.
Step 7: Calculate the total project duration.
Note: The earliest start, finish time of an activity, and the latest start, finish time of an
activity will be shown in the table. These are calculated by using the following hints.
To find the earliest time we consider the tail event of the activity. Let the starting
time of the project be ESi = 0. Add the normal time with the starting time to get the
earliest finish time. The earliest starting time for the tail event of the next activity is
given by the maximum of the earliest finish time for the head event of the previous
activity.
Similarly, to get the latest time, we consider the head event of the activity.
The latest finish time of the head event of the final activity is given by the target
time of the project. The latest start time can be obtained by subtracting the normal
time of that activity. The latest finish time for the head event of the next activity is
given by the minimum of the latest start time for the tail event of the previous activity.
Example 5.6: A project schedule has the following characteristics.

Activity 1– 2 1 –3 2–4 3–4 3 – 5 4– 9 5 – 6 5 – 7

Time(days) 4 1 1 1 6 5 4 8
Activity 6 –8 7 – 8 8 – 10 9 – 10
Time(days) 1 2 5 7
From the above information, you are required to:
(i) Construct a network diagram.
(ii) Compute the earliest event time and latest event time.
(iii) Determine the critical path and total project duration.
(iv) Compute total, free float for each activity.
Solution: First we construct the network with the given constraints. Here we get this
by just connecting the event numbers.

The following table gives the critical path, total, free floats calculation.

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Time

The earliest and latest calculations are shown below:

Forward pass calculation: In this we estimate the earliest start ESi and finish time
ESj. The earliest time for the event i is given by,

Backward pass calculation: In this, we calculate the latest finish and the latest start
time. The latest time L for an event i is given by Li = Minj (LFj – tij).
Here, LFj is the latest finish time for the event j, tij is the normal time of the
activity.
L10  22
L9  L10  t9,10  22  7  15
L8  L10  t8,10  22  5  17
L7  L8  t7,8  17  2  15
L6  L8  t6,8  17 1  16
L5  Min (L6  t5,6 , L7  t5,7 )
 Min (16  4, 15  8)  7
L4  L9  t4,9  15  5  10

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L3  Min (L4  t3,4 , L5  t3,5 )

 Min (10 1, 7  6)  1
L2  L4  t2,4  10 1  9
L1  Min (L2  t12 , L3  t13 )  Min (9  4, 11)  0.
These calculations are shown in the given table.
To find the TF (Total Float): Considering the activity 1–2, TF of (1–2) = Latest
start–Earliest start.
So, TF = 5 – 0 = 5
Similarly, TF(2–4) = LS – ES
So, TF = 9 – 4 = 5
Free float = TF – Head event slack
Consider the activity 1 – 2
FF of 1 – 2 = TF of 1 – 2 – Slack for the head event 2
So, FF = 5 – (9 – 4) (from the figure for event 2)
 FF = 5 – 5 = 0
FF of 2 – 4 = TF of 2 – 4 – Slack for the head event 4
So, FF = 5 – (10 – 5) = 5 – 5 = 0
Like this we calculate the TF and FF for the remaining activities.
From the above table we observe that the activities 1–3, 3–5, 5–7, 7–8, 8–10 are the
critical activities as their total float is 0.
Hence, we have the following critical path.
1  3  5  7  8  10, with the total project duration of 22 days.
Example 5.7: A small maintenance project consists of the following jobs whose
precedence relationships is given below:

Job 1– 2 1– 3 2–3 2 –5 3– 4 3–6 4–5 4 –5 5–6 6 –7

Duration(days) 15 15 3 5 8 12 1 14 3 14

(i) Draw an arrow diagram representing the project.

(ii) Find the total float for each activity.
(iii) Find the critical path and the total project duration.

Solution:

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Forward pass calculation: In this, we estimate the earliest start and the earliest
finish time ESj given by,
ESj  Max(ESi  tij ) , where ESi is the earliest start time and tij is the normal
i
time for the activity (i, j).
ES1  0
ES2  ES1  t15  0 15  15
ES3  Max (ES2  t23 , ES1  t13 )
 Max (15  3, 0 15)  18
ES4  ES3  t34  18  8  26
ES5  Max (ES2  t25 , ES4  t45 )
 Max (15  5, 26 1)  27
ES6  Max (ES3  t36 , ES4  t46 , ES5  t56 )
 Max (18  12, 26 14, 27  3)
 40
ES7  ES6  t67  40 14  54
Backward pass calculation: In this, we calculate the latest finish and latest start time
LFi, given by LFi= Mini(LFj–tij), where LFj is the latest finish time for the event j.
LF7  54
LF6  LF7  t67  54 14  40
LF5  LS6  t56  40  3  37
LF4  Min (LS5  t45 , LS6  t46 )
 Min (37 1, 40 14)  26
LF3  Min (LF4  t34 , LF6  t36 )
 Min (26  8, 40 12)  18
LF2  Min (LF5  t25 , LF3  t23 )
 Min (37  5, 18  3)  15
LF1  Min (LF3  t13 , LF2  t12 )
 Min (18 15, 15 15)  0
The following table gives the calculation for critical path and total float.

Time Float

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From the above table we observe that the activities 1 – 2, 2 – 3, 3 – 4, 4 – 6, 6 – 7 are

the critical activities and the critical path is given by, 1  2  3  4  6  7.
The total project completion is given by 54 days.
Example 5.8: The following table shows the jobs of a project with their duration in
days. Draw the network and determine the critical path. Also, calculate all the floats.
Jobs 1–2 1–3 1–4 2–5 3–7 4–6 5–7 5–8 6–7 6–9 7–10
Duration 10 8 9 8 16 7 7 7 8 5 12
Jobs 8–10 9–10 10–11 11–12
Duration 10 15 8 5

Solution: First we construct the network as shown below:

Forward pass calculation: In this we calculate the earliest start and the earliest
finish time for the activity and the earliest time for each event.

ES1  0
ES2  ES1  t12  0 10  10
ES3  ES1  t13  0  8  8
E4  E1  t14  0  9  9
E5  E2  t25  10  8  18
E6  E4  t46  9  7  16
E7  Max (E3  t37 , E5  t57 , E6  t67 )
 Max (8  16, 16  8, 18  7)  25
E8  E5  t58  18  7  25
E9  E6  t69  16  5  21
E10  Max (E7  t7,10 , E8  t8,10 , E9  t9,10 )
 Max (25 12, 25  10, 2115)  37
E11  E10  t10,11  37  8  45
E12  E11  t11,12  45  5  50
Backward pass calculation: In this, we calculate the latest finish and the latest start
time LFi given by,

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LFi  Min  LFj  tij 

j

L12  E12  50 (the target completion time)

L11  L12  t11,12  50  5  45
L10  L11  t10,11  45  8  37
L9  L10  t9,10  37 15  22
L8  L10  t8,10  37 10  27
L7  L10  t7,10  37 12  25
L6  Min (L9  t69 , L7  t67 )
 Min (22  5, 25  8)  17
L5  Min (L8  t58 , L7  t57 )
 Min (27  7, 25  7)  18
L4  L6  t46  17  7  10
L3  L7  t37  25 16  9
L2  L5  t25  18 10  10
L1  Min (L4  t14 , L3  t13 , L2  t12 )
 Min (10  9, 9  8, 10 10)  0
The computation of critical path and all the floats is given in the following
table.

Time

TF = Total float = LS – ES or LF – EF
FF = Free float = TF – Head event slack
IF = Independent float = FF – Tail event slack
From the above calculation we observe that the activities 1 – 2, 2 – 5, 5 – 7,
7 – 10, 10 – 11, 11 – 12 are the critical activities as their total float is 0. Hence, we
have the critical path 1  2  5  7  10  11  12 with the total project
duration as 50 days.
Example 5.9: A project consists of a series of tasks labelled A, B, ... H, I with the
following constraints:

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A<D, E; B, D<F; C<G; B<H; F, G<I; W<X, Y means X, and Y cannot start
until W is completed. You are required to construct a network using this notation.
Also, find the minimum time of completion of the project when the time of
completion of each task is given as follows.

Task A B C D E F G H I
Time(days) 23 8 20 16 24 18 19 4 10

Solution: The given constraints can be shown in the following table:

Activity A B C D E F G H I
Preceding Activity – – – A A B,D C B F,G
To determine the minimum time of completion of the project, we compute
ESi and LFi for each of the tasks (i, j) of the project. The critical path calculations
are as follows:
23
23

2 E
(23) (24)
D 39
A
(16) 39
B (8) H (4) 6
1
3 67
(20) (18) (10)
0 I 67
C F
0
(19)
4 5
G
38 57
20 57

Critical path 1 – 2 – 3 – 5 – 6

The above table shows that the critical activities are 1 –2, 2–3, 3–5, 5–7 as their
total float is zero. Hence, we have the critical path, 1  2  3  5  7 with the
total project duration (the least possible time to complete the entire project) as 67
days.
Example 5.10: Tasks A, B, ... H, I constitute a project. The notation X<Y means that
the task X must be completed before Y is started. With the notations,
A<D; A<E; B<F; D<F; C<G; C<H; F<I; G<I

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draw a graph to represent the sequence of tasks and find the minimum time of completion
of the project, when the time (in days) of completion of each task is as follows:
The above constraints can be given in the following table.
Task A B C D E F G H I
Time(days) 8 10 8 10 16 17 18 14 9

Solution: The above constraints can be given in the following table.

Activity A B C D E F G H I
Preceding Activity – – – A A B,D C B F,G

Time calculation: Using forward and backward pass calculation, we first estimate
the earliest and the latest time for each event.
ES1  E1  0
E2  E1  t12  0  8  8
E3  Max (E1  E13 , E2  t23 )
 Max (0 10, 8 10)  18
E4  E1  t14  0  8  8
E5  Max (E3  t35 , E4  t45 )
 Max (18 17, 8 18)  35
E6  Max (E2  t26 , E4  t46 , E5  t56 )
 Max (8 16, 8  14, 35  9)  44
The value of the latest time can now be obtained.
L6  E6  44 (Target completion time for the project)
L5  L6  t56  44  9  35
L4  Min (L6  t46 , L5  t45 )
 Min (44 14, 35 18)  17
L3  L5  t35  35 17  18
L2  Min (L6  t26 , L3  t23 )
 Min (44 16, 18 10)  8
L1  Min (L4  t14 , L3  t13 , L2  t12 )
 Min (17  8, 18 10, 8  8)  0

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To evaluate the critical events, all these calculations are put in the following table.
Normal
Time/Days

The above table shows that the critical events are the tasks 1 – 2, 2 – 3, 3 – 5,
5 – 6 as their total float is zero.

The critical path is given by 1  2  3  5  6 or A  D  F  I with the

total project duration as 44 days.

5.6 DETERMINATION OF PERT TIMES

The network methods discussed so far may be termed as deterministic, since

estimated activity times are assumed to be known with certainty. However, in a
research project or design of gear box or a new machine, various activities are
based on judgement. It is difficult to obtain a reliable time estimate due to the
changing technology. Time values are subject to chance variations. For such cases
where the activities are non-deterministic in nature, PERT was developed. Hence,
PERT is a probabilistic method where the activity times are represented by a
probability distribution. This probability distribution of activity times is based upon
three different time estimates made for each activity. These are as follows:
(i) Optimistic time estimate
(ii) Most likely time estimate
(iii) Pessimistic time estimate

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(i) Optimistic time estimate: It is the smallest time taken to complete the activity
if everything goes on well. There is very little chance that the activity can be
done in time less than the optimistic time. It is denoted by t0 or a.
(ii) Most likely time estimate: It refers to the estimate of the normal time the
activity would take. This assumes normal delays. It is the mode of the probability
distribution. It is denoted by tm or (m).
(iii) Pessimistic time estimate: It is the longest time that an activity would take if
everything goes wrong. It is denoted by tp or b. These three time values are
shown in the following figure.

Frequency
0 t0 tm tp

Time Distribution Curve

From these three time estimates, we have to calculate the expected time of an
activity. It is given by the weighted average of the three time estimates,

t0  4tm  t p
te 
6

 distribution with weights of 1,4,1, for t o, t mand t estimates

p
respectively.
Variance of the activity is given by,
 t – t 2
p 0 
2 =  
 6 
The expected length (duration), denoted by Tc of the entire project is the
length of the critical path, i.e., the sum of the Tcs of all the activities along the
critical path.
The main objective of the PERT analysis is to find the completion time for a
particular event within the specified date TS, given by P (Z  D) where,

Due date – Expected date of completion

D=
Project variance
Here, Z stands for standard normal variable.
5.6.1 PERT Procedure
Step 1: Draw the project network.
Step 2: Compute the expected duration of each activity using the formula.

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t0  4tm  t p
te 
6
Also, calculate the expected variance 2 of each activity.
Step 3: Compute the earliest start, earliest finish, latest start, latest finish and total
float of each activity.
Step 4: Find the critical path and identify the critical activities.
Step 5: Compute the project length variance 2 which is the sum of the variance of
all the critical activities and hence, find the standard deviation of the project
length .
Ts – Te
Step 6: Calculate the standard normal variable Z = .

Here,
TS is the scheduled time to complete the project.
Te is normal expected project length duration.
 is expected standard deviation of the project length.
Using the normal curve, we can estimate the probability of completing the
project within a specified time.
Example 5.11: The following table shows the jobs of a network along with their
time estimates.
Job 1 –2 1 – 6 2 –3 2 – 4 3 – 5 4– 5 6 –7 5–8 7 –8
a (days) 1 2 2 2 7 5 5 3 8
m (days) 7 5 14 5 10 5 8 3 17
b (days) 13 14 26 8 19 17 29 9 32
Draw the project network and find the probability that the project is completed
in 40 days.
Solution: First we calculate the expected time and standard deviation for each
activity.

to + 4tm + t p  t – t 2
2 p o 
Activity te = σ = 
6  6 
1  4  7  13  13 1 2
1–2 7   4
6  6 
2  4  5  14  14  2 2
1–6 6   4
6  6 
2  4 14  26  26  2 2
2–3  14    16
6  6 

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2  5 4  8  8  2 2
2–4 5   1
6  6 
7  4 10  19  19  7 2
3–5  11   4
6  6 
5  5  4  17  17  5 2
4–5 7   4
6  6 
5  8  4  29  29  5 2
6–7  11    16
6  6 
3  3 4  9  9  3 2
5–8 4   1
6  6 
8  4 17  32  32  8 2
7–8  18    16
6  6 

Expected project duration = 36 days

Critical path 1  2  3  5  8
Project length variance = 2= 4 +16 + 4 + 1
= 25
=5
Probability that the project will be completed in 40 days is given by,
P(Z  )

Ts – Te 40  36 4
=    0.8
 5 5
Area under the normal curve for  = 0.8,
P(Z  0.8)
= 0.5 +  (0.8) [(8) = 0.2881 (from table)]
= 0.5 + 0.2881 = 0.7881 = 78.81%

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Conclusion: If the project is performed 100 times under the same conditions, there
will be 78.81 occasions for this job to be completed in 40 days.
Example 5.12: A small project is composed of seven activities whose time estimates
are listed in the following table.

Duration (Weeks)
Likely

You are required to:

(a) Draw the project network.
(b) Find the expected duration and variance of each activity.
(c) Calculate the early and late occurrence for each event and the expected project
length.
(d) Calculate the variance and standard deviations of project length.
(e) What is the probability that the project will be completed?
(i) 4 weeks earlier than expected.
(ii) Not more than 4 weeks later than expected.
(iii) If the project due date is 19 weeks, what is the probability of meeting
the due date.
Solution: The expected time and variance of each activity is computed as shown in
the following table.

Activity a m b a+ 4tm + b b a 2
te = σ2 =
6 6

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The earliest and the latest occurrence time for each is calculated as follows:
E1 = 0; E2= 0 + 2 = 2
E3 = 0 + 4 = 4
E4 = 0 + 3 = 3
E5 = Max (2 + 1, 4 + 6) = 10
E6 = Max (10 + 7, 3 + 5) = 17
To determine the latest expected time we start from E6 being the last event and
move backwards subtracting te from each activity. Hence, we have
L6 = E6 = 17
L5 = L6 – 7 = 17 – 7 = 10
L4 = 17 – 5 = 12
L3 = 10 – 6 = 4
L2 = 10 – 1 = 9
L1 = Min (9 – 2, 4 – 4, 12 – 3) = 0
Using the above information we get the following network, where the critical
path is shown by the double line arrow.

We observe the critical path of the above network as 1  3  5  6.

The expected project duration is 17 weeks, i.e., Te = 17 weeks.
The variance of the project length is given by,
2 = 1 + 4 + 4 = 9
(i) The probability of completing the project within 4 weeks earlier than expected
is given by,
T –T
P(Z  D), where D  S
s

Due date  Expected date of completion

D
Project variance
17  4 17 13 17 4
D  
3 3 3
 1.33

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 P(Z  1.33)  0.5   (1.33)

 0.5  0.4082 (from the table)
= 0.0918 = 9.18%

Conclusion: If the project is performed 100 times under the same conditions, then
there will be 9 occasions for this job to be completed in 4 weeks earlier than expected.
(ii) The probability of completing the project not more than 4 weeks later than
expected is given by,
P (Z  D)
Ts  Te
Here, D 

where, Ts = 17 + 4 = 21
2117 4
D   1.33
3 3
P (Z  1.33)
= 0 (1.33)
. 5 +

= 0.5 + 0.4082 (from the table)

= 0.9082 = 90.82%

Conclusion: If the project is performed 100 times under the same conditions, then
there will be 90.82 occasions when this job will be completed not more than 4
weeks later than expected.
(iii) The probability of completing the project within 19 weeks is given by,
19 17 2
P(Z  D) where, D=  ∵ T  19
S
3 3
= 0.666
P (Z  0.666) = 0.5 +  (0.666)
= 0.5 + 0.2514 (from the table)
= 0.7514 = 75.14%

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Conclusion: If the project is performed 100 times under the same conditions, then
there will be 75.14 occasions for this job to be completed in 19 weeks.
Example 5.13: Consider the following project.

Activity Time Estimate in Weeks Predecessor

to tm tp

A 3 6 9 None
B 2 5 8 None
C 2 4 6 A
D 2 3 10 B
E 1 3 11 B
F 4 6 8 C,D
G 1 5 15 E

Find the path and standard deviation. Also, find the probability of completing
the project in 18 weeks.
Solution: First we calculate the expected time and variance of each activity as in
the following table:

to + 4tm + t p  t – t 2
Activity to tm tp te = σ =  p o 
2

6  6 

3  4 6  9
A 3 6 9 6 [(9 – 3)/6]2 = 1
6
30
B 2 5 8 5 [(8 – 2)/6]2 = 1
6
C 2 4 6 24/6 = 4 [(6 – 2)/6]2 = 0.444
D 2 3 10 4 1.777
E 1 3 11 4 2.777
F 4 6 8 6 0.444
G 1 5 15 6 5.444

We construct the network with the help of the predecessor relation given in
the data.

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Critical path is 1  2  4  6 or A  C  F
The project length = 16 weeks
Project length variance 2 = 1 + 0.444 + 0.444 = 1.888
Standard deviation =  = 1.374
The probability of completing the project in 18 weeks is given by:
P(Z  D)
Ts – Te
Here, D =

Ts = 18; Te = 16;  = 1.374
18 – 16
D= = 1.4556
1.374
P(Z  D) = P(Z  1.4556) = 0.5 + (1.4456)
= 0.5 + 0.4265
= 0.9265 = 92.65%

Conclusion: If the project is performed 100 times under the same conditions, then
there will be 92.65 occasions when this job will be completed by 18 weeks.
Example 5.14: The following table shows the jobs of a network along with their
time estimates. The time estimates are in days:

Job 1 –2 1 – 6 2 –3 2 – 4 3 – 5 4– 5 5 – 8 6 –7 7 – 8
a 3 2 6 2 5 3 1 3 4
m 6 5 12 5 11 6 4 9 19
b 15 14 30 8 17 15 7 27 28

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(i) Draw the project network.

(ii) Find the critical path.
(iii) Find the probability that the project will be completed in 31 days.
Solution: First we calculate the expected time and variance for each activity as shown
in the following table.
 (b – a) 
2
Activity a m b t = (a + 4m + b)/6 σ2 =   
 6
1–2 3 6 15 7 4
1–6 2 5 14 6 4
2–3 6 12 30 14 16
2–4 2 5 8 5 1
3–5 5 11 17 11 4
4–5 3 6 15 7 4
5–8 1 4 7 4 1
6–7 3 9 27 11 16
7–8 4 19 28 27 16

(i) Project network:

(ii) The critical path is given by 1  6  7  8 and the project length is given
by 44 days.
The project length variance 2 = 4 + 16 + 16 = 36

Standard deviation =  = 36 = 6
(iii) The probability of completing the project within 31 days is given by,

Ts  Te
P (Z  D), where D =


31  44
  2.1666
6

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i.e., P(Z  –2.1666) =  (2.166)

0 . 5 –

= 0.5 – 0.4886 = 0.0114 = 1.14%

Conclusion: If the project is performed 100 times under the same conditions, then
there will be 1.14 occasions when this job will be completed in 31 days.
Example 5.15: Using the data given in the previous example, find the probability
of completing the jobs on the critical path in 41 days.
Solution: Refer the previous example to find the critical path, project length and
project length variance.
The probability of completing the project within 41 days is given by,

Ts  Te
P (Z  D), where D=


41  44 3
   0.5
6 6
i.e., P (Z  – 0.5) = 0.5 –  (0.5)
= 0.5 – 0.1915 (from the table)
= 0.3085 = 30.85%

Conclusion: If the project is performed 100 times under the same condition, then
there will be 30.85 occasions, when the project will be completed in 41 days.
Example 5.16: Assuming that the expected times are normally distributed, find the
probability of meeting the schedule date as given for the network.
Activity Days
(i–j) Optimistic Most Likely Pessimistic
a m b

1–2 2 5 14
1–3 9 12 15
2–4 5 14 17
3–4 4 4 10
4–5 8 17 20
3–5 6 6 12

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Scheduled project completion date is 30 days. Also, find the date on which the
project manager can complete the project with a probability of 0.90.
Solution: The expected time te and variance for each activity is calculated in the
following table:
Activity te = (a + 4m + b)/6  2 = ((b – a)/)2
1–2 6 4
1–3 12 1
2–4 13 4
3–4 5 1
3–5 16 4
4–5 7 1

To determine the critical path, the earliest expected time and the latest
allowable time, first we draw the project network as follows:

The critical path is given by 1  3  5 and the project duration is given by 28 days.
Project length variance = 2 = 1 + 4 = 5. Standard deviation = 2 = 2.236.
The probability of completing the project within 30 days is given by,
Ts  Te  30  28  0.8944
P (Z  D), where D =
 2.236
P (Z  0.8944) = 0.5 +  (0.8944)
= 0.8133
= 81.33%
Conclusion: If the project is performed 100 times under the same conditions, then
there will be 81.33 occasions when the project will be completed within 30 days.
If the probability for the completion of the project is 0.90 then the
corresponding value of Z = 1.29.
Ts  Te
Z  1.29

Ts  28
i.e.,  1.29
2.236
 Ts = (1.29) (2.236) + 28
 Ts = 30.88 weeks

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CHECK YOUR PROGRESS-1

1. What are the management functions for the three phases of work
involved in a project?
2. What is planning?
3. What is an activity?
4. What is an event?
5. What is a network?
6. What are merge events and burst events?
7. What is a dummy activity?
8. What is a redundant activity or redundancy?
9. What is a critical activity and critical path?

5.7 CRASHING

Crashing of a project means intentionally reducing the duration of a project by Crashing:

allocating more resources to it. A project can be crashed by crashing its critical Intentionally reducing
the duration of a
activities (because the duration of a project is dependent upon the duration of its project by allocating
critical activities). The use of more workers, better equipment, overtime, etc, would more resources to it.
generate higher direct costs for individual activities. However, shortening the overall
time of the project would also reduce certain fixed and overhead expenses of
supervision, as well as indirect costs that vary with the length of the project.
We know that by adding more resources, the duration of an activity can be
reduced. If an activity gets completed in ten days with five men working on it, the
same activity can be finished in say, six days with ten men (exact mathematical
relationships do not work here) working on it. The initial direct cost was 50 man-
days (5 men x 10 days) and now it is 60 man-days (10 men x 6 days). Therefore, the
direct cost has increased by 10 man-days.
At the same time, because of the decrease in duration of the activity by four
days, the indirect cost (cost of supervision) decreases. Hence, we can conclude that
the direct and indirect costs are inversely proportional to each other, i.e., when one
increases, the other decreases.
An activity can be crashed by adding more resources only up to a definite
limit. Beyond this limit, the duration of the activity does not decrease by adding
more resources. This is due to decreasing efficiency of labour, and also increasing
confusion due to a large number of resources. In our example, if we increase the
number of workers to 15, the same activity can probably be done in four days; but
by adding ten more men (so that 20 men work on this activity), the activity time
may not decrease further.
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The crash time is the shortest time that could be achieved if all efforts
(at any reasonable cost) were made to reduce the activity time. The limit beyond
Crash time: The which the duration of the activity does not decrease by adding any amount of resources
shortest time that could is called the crash time. It is the shortest possible activity time.
be achieved if all
efforts (at any The direct cost associated with each crash time is called the crash cost.
reasonable cost) were The normal time (10 days in our example) can be defined as the duration of an
made to reduce the
activity time. activity when the minimum possible resources required for its performance are
deployed. The lowest expected activity costs are called the normal costs.
Project direct cost is the direct cost involved in all the activities of the project.
Project indirect cost is the costs associated with sustaining a project. It includes
the cost of supervision during the implementation of the project, overheads, facilities,
penalty costs and lost incentive payments. The salaries paid to the project manager/
supervisor, etc., miscellaneous costs due to delays in the project, and rewards to the
project team members for its early completion are indirect costs. Project indirect cost
is dependent upon other length of duration of the project. A project having a longer
duration will have a higher indirect cost (due to supervision required for longer
duration).
In any project, there is a direct relationship between the time taken to complete
an activity and the project cost. On one hand, it costs money to expedite a project.
Costs associated with expediting a project are called activity direct costs, and are
different from project direct costs. Some examples of activity direct costs are—hiring
more workers, buying or leasing additional equipment, drawing on additional support
facilities, etc.
If activity direct costs rise, project indirect costs will fall. Therefore, in a real
situation, we need to have a time–cost trade-off; this means the sum of activity direct
costs and project indirect costs must be minimum.
During the process of crashing a project, the critical path may get changed. At
some stage of crashing, there may even be two or more critical paths (having the
same duration) simultaneously. In such situations, one activity is chosen from each of
the critical paths and these activities are crashed by unit time to reduce the duration of
the project by unit time.
Time–cost models search for the optimum reductions in time. We seek to shorten
the length of a project to the point where the savings in indirect project costs is offset
by the increased direct expenses incurred in the individual activities.
Example 5.17: A network has four activities with expected times as shown. The
minimum feasible times and cost per day to gain reductions in the activity times are
also shown. If fixed project costs are ` 90 per day, what is the lowest cost time
schedule?

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(All costs are in ` ‘000)

2
5 4

1 4
4 6
3

Activity Minimum Time in Days Direct Costs of Time Reduction (`)

1–2 2 40 ( each day)
1–3 2 35 (first day, 80 (second day)
2–4 4 None possible
3–4 3 45 (first day), 110 (other days)

Solution:
First we must determine the critical path and critical path time cost.

Path Path Times Total Project Cost

1–2, 2–4 5+4=9
1–3, 3–4 4 + 6 = 10 10 days × ` 90/day = $ 900

For ease of reference, let us call the paths A and B respectively. Path B that is,
1–3–4 is the critical path with duration 10 days and cost ` 900.
Next, we must select the activity that can reduce critical path time at the least
cost. Select activity 1–3 at ` 35 per day, which is less than the ` 90 per day fixed
cost. Reduce activity 1–3 to 3 days. Revise the critical path time cost.

Revised Path Times Total Fixed Cost Savings over Previous Schedule
A: 5 + 4 = 9 9 × ` 90 = ` 810 ` 900 – ( 810 + 35) = ` 55
B: 3 + 6 = 9

Both paths are now critical, so we must select an activity on each path. Select
activity 1–2 at ` 40 per day and 3–4 at ` 45 per day. Reduce activity 1–2 to 4 days
and 3–4 to 5 days. Revise the critical path time cost.

Revised Path Times Total Fixed Cost Savings over Previous Schedule
A: 4 + 4 = 8 8 × 90 = ` 720 810 – (720 + 40 + 45) = ` 5
B: 3 + 5 = 8

Let us see if we can reduce the time of both paths any further. Activity 1–2 is
a good candidate on Path A, for it is still at 4 days and can go to 3 for a ` 40 cost. But
when this cost is combined with the ` 80 cost for reducing activity 1–3 another day,
the sum is greater than ` 90, so further reduction is not economically justified.
The final step in time–cost analysis is to compare the crash times and the costs
associated with them (crash costs). A sufficient number of intermediate schedules are
computed such that the total of the direct and indirect (fixed) project costs can be
plotted.

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Example 5.18: Graph the total relevant costs for the previous example, and indicate
the optimal time–cost trade-off value.

Project Indirect Activity Relevant Direct Relevant Total Cost

Length Cost Reduced Cost
(days)
10 900 None 0 900
9 810 1–3 35 810 + 35 = 845
8 720 1 – 2 and 3 – 4 35 + 85 = 120 720+40+45+35 = 840
7 630 1 – 2 and 1 – 3 120 + 120 = 240 870
6 540 1 – 2 and 3 – 4 240 + 150 = 390 930

cost .
920
.
880
.
840 .

800

6 7 8 9 10 days

This graph is called the crash–time diagram for completing the project. The
lowest total cost is to complete the project in 8 days at a cost of ` 840,000. However,
extending it to 9 days adds only ` 5000 to this cost.

5.8 RESOURCE ALLOCATION AND LEVELLING

Resource allocation (also known as resource scheduling) implies the task of allocation
of resources to various activities in such a manner that the allocation is considered
as acceptable under the given situation. The task of allocation of resources is important
as the final schedule depends upon the quantity of deployment of resources. The
basic question then is, How should the resources be allocated?
This depends upon several factors such as availability of resources, requirements
restrictions in regard to completion date, and so on. Various types of problems may
be encountered in this connection, but we shall consider only two of such problems:
(i) Resource levelling (ii) Limited resource allocation.
Resource levelling: (i) Resource levelling (also known as local smoothing) means the resource
The resource scheduling exercise in which the resource demand is evened out or levelled
scheduling exercise in
as much as possible. In other words, resource levelling refers to the scheduling
which the resource
demand is evened out of activities within the limits of the available floats in such a way that variations
or levelled as much as in resources requirements are minimized.
possible.
(ii) Limited resource allocation We often find that projects require costly items
of plant and equipment for the execution of work of which only a limited

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number is available. Such limited resources must be allocated with a lot of care
so that the total requirement should not exceed the ceiling and the utilization
factor remains high. This necessitates rescheduling of some or all of the activities
and may even involve delay in the overall completion of the project.
For resource levelling the methodology involves the following steps:
(i) Prepare the list of resources that would be required for the execution of various
activities.
(ii) Prepare the resource profiles for each resource by resource aggregation
exercise.
(iii) Identify the periods of peak and low demands.
(iv) Make an attempt to lower the peak to fill up the troughs, i.e., to make the
demand as uniform as possible. This can be done by altering the times of start
and finish of non-critical activities in accordance of their floats without
affecting the overall completion date of the project:
Example 5.19: Workout the aggregate resource requirements, day by day for the
following network.

2 8
(1)
7 4
(8)
3
3
2 (7)
4 6
1 (6) (4)
2 5
2
The figures over the arrows in brackets indicate the requirement of labour and figures
below the arrows show the duration of an activity (in days). Presuming no resource
constraint, smooth out the requirements of the resource (i.e., labour) to the extent
possible and outline the revised schedule.
Solution:
For finding the aggregate resource requirements day by day, it would be helpful to
present the given network as shown below:

2
(8)
3
(6 (7) (1) 8
1 4 6 7
(4)
5

1 2 3 4 5 6 7 8 9 10 11 DAYS

22 22 24 24 10 2 2 1 1 1 1

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The manpower requirements vary from 1–24 and variations of this size are not
acceptable. So it is necessary to smoothout the aggregate requirements. This can be
done by modifying the input of resources to non-critical activities. To begin with
activities 1–4, 4–6, 6–7, and 7–8 are critical and have to be completed without delay.
Activities 1–2, 1–3, 3–7 and 1–5 are non-critical activities. They can be delayed with
in their floats. Accordingly, let us now compute the float of each activity.

Start Finish
Activity ET LT ET LT Float
1–2 0 7 4 11 7
1–3 0 2 2 4 2
1–4 0 0 2 2 0
1–5 0 2 2 4 2
3–7 2 4 4 7 2
4–6 2 2 5 4 0
6–7 4 4 7 7 0
7–8 7 7 11 11 0
Activity 1–2 can be delayed for 7 days without affecting the overall project
completion time. If we postpone this activity for 7 days we get the following schedule:

(1)
1 4 6 7 8
(4)

1 2 3 4 5 6 7 8 9 10 11
13 13 15 15 10 2 2 10 10 10 10

Thus, with above stated modification, the variation in manpower requirements has
been smoothened from 1–24 to 2–15. We can make some further modifications as
well. Activity 1–3 can be delayed for 2 days without affecting the overall project
completion time and if we do so, we get the following schedule:

(6) (7) (2) (1)

1 4 6 7 8

1 2 3 4 5 6 7 8 9 10 11 Days
Mainpower
10 10 10 10 10 10 10 10 10 10 10
Requirements

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Thus, the pattern of resource demand has further improved. Perfect levelling has
been made possible in this particular case.
The methodology for limited resource problem involves the following:
(i) Attempt to lower the peak requirements of the resources by staggering the
inputs on non-critical activities. At times, it may become necessary to tackle
some critical activities for the purpose because of limited resource constraint
and this may mean even delays in completion of the work.
(ii) It is advantageous to re-arrange the activities in the descending order of the
magnitude of their floats as resources can be diverted from the activities
having large amounts of floats. Critical activities should only be tackled in
the end, if necessary.
(iii) The following four rules (heuristics) for resource allocation in project
scheduling with limited resources facilitate the work:
(a) Allocate the resources to activities serially in line (i.e. in the order the
activities become due for start.)
(b) When several activities compete for the same resources give preference
to activities having minimum float.
(c) If two competing activities happen to have equal floats, allocate the
resources to the activity having lower duration.
(d) Reschedule non-critical jobs; it possible to free resources for scheduling
critical jobs.

CHECK YOUR PROGRESS-2

1. What is PERT? Where is it used?

2. What are optimistic time, most likely time and pessimistic time for
activities in a project?
3. What is expected time for an activity in a project?

ACTIVITY

1. The total float of an activity i – j is 18. The latest and earliest occurrence of
events i and j are 15, 12 and 22, 10 respectively. Find the free float.
2. What is independent float when the total float of an activity i – j is 18?
Latest and earliest occurrence of events i and j are 15, 12 and 22, 10
respectively.

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5.9 LET US SUM UP

 Network scheduling is a technique used for planning and scheduling large
projects in the field of construction, maintenance, fabrication, purchasing
computer system, etc.
 PERT and CPM are the two basic planning and control techniques that utilize
a network to complete a predetermined project or schedule.
 Dummies are activities which neither consume time nor resources, but are
used simply to represent a connection between events.
 Activity time is a forecast of the time an activity is expected to take from its
starting point to its completion.
 Latest event time indicates the time by which all activities entering into that
event must be completed without delaying the completion of the project.
 Float is the difference between the latest and the earliest activity times.
 An activity is said to be critical if a delay in its start will cause a further delay
in the completion of the entire project.
 The critical path method involves the preparation of a network in the form of
an arrow diagram and its analysis to indicate the critical path.
 PERT is a probabilistic method, where the activity times are represented by a
probability distribution.
 Crashing of a project means intentionally reducing the duration of a project
by allocating more resources to it. A project can be crashed by crashing its
critical activities.
 Resource allocation implies the task of allocation of resources to various
activities in such a manner that the allocation is considered as acceptable
under the given situation.

5.10 FURTHER READING

Gupta, P.K. and D.S. Hira. 2002. Introduction to Operations Research. New Delhi:
S. Chand & Co.
Jensen, Paul A. and Jonathan F. Bard. 2003. Operations Research Models and
Methods. New York: John Wiley & Sons.
Kalavathy, S. Operations Research. 2002. New Delhi: Vikas Publishing House Pvt.
Ltd.
Taha, H.A. 2006. Operations Research: An Introduction. New Delhi: Prentice-Hall
of India.
M.Selvam (2014) Maritime Logistics and Documentation , Lakshmi
Publications , New Delhi
M.Selvam (2013) Quality Management, Lakshmi Publications , New Delhi

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5.11 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress–1

1. Management functions involved in three phases of work involved in a project
are planning, scheduling and controlling.
2. Planning is setting of objectives of the project by listing the tasks to be performed
and resources available to complete the project.
3. An activity represents an action. It is an effort that consumes time that is needed
to complete a part of the overall project.
4. An event is either start or end of an activity.
5. Network is a graphic representation of logically connected activities and events
where activities are presented as arrows and events as nodes.
6. Events that are ending of more than one activity are known as merge events
and those which are beginning of more than one activity are known as burst
events.
7. An activity that consumes neither any resource nor time, but it is there on the
network to show a link between events, is known as a dummy activity.
8. A dummy activity that is the only activity emanating from an event is a redundant
activity which can be eliminated, and this phenomenon is known as redundancy.
9. An activity is critical if delay in its start will cause further delay in completion
of the entire project and critical path is the sequence of all such activities in
the network.
Check Your Progress–2
1. PERT stands for Program Evaluation Review Technique. It is a probabilistic
method where activity times are represented by a probability distribution.
PERT is used where activities involved in a project are non-deterministic in
nature.
2. Smallest time taken to complete an activity assuming that everything goes
well is optimistic time. Most likely time is the normal time taken by an activity
assuming normal delay. Pessimistic time is the longest time required for an
activity to complete assuming everything going wrong.
3. Expected time for an activity in a project is denoted in a PERT chart and is
given by the formula as given below:
Expected time = (Optimistic time + 4  Most likely time + Pessimistic time)/6.

5.12 POSSIBLE QUESTIONS

Short-Answer Questions
1. What is a project?
2. What is dangling in a network? How can it be avoided?
3. Write basic two differences between PERT and CPM.

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4. How are time estimates used in PERT and CPM?

5. What are the different types of float?
6. Differentiate between float and slack.
7. What is the total float of a critical activity?
8. What do you mean by resource levelling?
Long-Answer Questions
1. The following table gives the activities and duration of a construction
project.

Activity 1-2 1- 3 2-3 2-4 3-4 4-5

Duration(days) 20 25 10 12 6 10

(i) Draw the network for the project.

(ii) Find the critical path.
2. A small project consits of 11 activities A, B, C, ..., K. The precedence
relationship A, B can start simultaneously. Given A<C, D, I; B<G, F; D<G, F;
F<H, K; G, H<J; I, J, K<E. The duration of the activities are as follows.

Activity A B C D E F G H I J K
Duration(Days) 5 3 10 2 8 4 5 6 12 8 9

Draw the network of the project. Summarize the CPM calculations in a tabular
form computing the total, and free floats of activities and hence determine the
critical path.
3. Draw the network and determine the critical path for the given data. Also,
calculate all the floats involved in CPM.

Jobs 1- 2 1-3 2-4 3-4 3-5 4 -5 4 -6 5 -6

Duration 6 5 10 3 4 6 10 9

4. A small maintenance project consists of the following 12 jobs.

Jobs 1-2 2-3 2-4 3-4 3-5 4 -6 5 - 8 6 -7 6 - 10 7 - 9 8 - 9 9 - 10

Duration (Days) 2 7 3 3 5 3 5 8 4 4 1 7

Draw the arrow network of the project. Summarize CPM calculations in a

tabular form calculating the three types of floats and hence determine the
critical path.
5. Consider the following data for activities in a given project.

Activity A B C D E F
Predecessor – A – B,C C D,E
Time (Days) 5 4 7 3 4 2

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Draw the arrow diagram for the project. Compute the earliest and the latest
event times. What is the minimum project completion time? List the activities
on the critical path.
6. For the following project, determine the critical path and its duration.

Activity A B C D E F G H
Predecessors – A A B B D,E D C,F,G
Time (Days) 2 4 8 3 2 3 4 8

7. A project has the following time schedule.

Activity 1- 2 1- 3 1-4 2-5 3 -6 3 -7 4 -6 5 -8 6 - 9 7 -8 8 - 9

Duration
2 2 1 4 8 5 3 1 5 4 3
(Month)

Construct the network and compute:

(i) Total float for each activity
(ii) Critical path and its duration
8. The data for a small PERT project is as given below, where a represents
optimistic time, m the most likely time and b the pessimistic time. Estimates
(in days) of the activities A, B, ..., J, K.

Activity A B C D E F G H I J K
a 3 2 6 2 5 3 3 1 4 1 2
m 6 5 12 5 11 6 9 4 19 2 4
b 5 14 30 8 17 15 27 7 28 9 12

A, B, C can start simultaneously; A  D, I; B < G, F; D < G, F; C < E; E < H,

K; F < H, K; G, H < J.
(i) Draw the arrow network of the project.
(ii) Calculate the earliest and the latest expected times to each event and
find critical path.
(iii) What is the probability that the project will be completed 2 days later
than expected?
9. The three estimates for the activities of a project are given below:

Estimate Duration (Days)

Activity a m b
1–2 5 6 7
1–3 1 1 7
1–4 2 4 12
2–5 3 6 15
3–5 1 1 1
4–6 2 2 8
5–6 1 4 7

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 Unit-5 Network Models
Draw the project network. Find out the critical path of the project and project
duration. What is the probability that the project will be completed at least 5
days earlier than expected?
What is the probability that the project will be completed by 22 days?
10. Consider the network shown in the figure below. The estimate to, tm and tp are
shown in this order for each of the activities on the top of the arcs denoting
the respective activities.
Find the probability of completing the project in 25days.

11. A project is represented by the network shown below and has the following
table:
Task A B C D E F G H I
Least time 5 18 26 16 15 6 7 7 3
Greatest time 10 22 40 20 25 12 12 9 5
Most likely time 8 20 33 18 20 9 10 8 4

Determine the following:

(i) Expected tasks time and their variance.
(ii) The earliest and the latest expected time to reach each mode.
(iii) The critical path.
(iv) The probability of completing the project within 41.5 weeks.
12. Consider a project having the following activities and their time estimates.
Draw an arrow diagram for the project. Identify the critical path and compute
the expected project completion time. What is the probability that the project
will require atleast 75 days?
Activity Predecessor Days
t0 tm tp
A – 2 4 6
B A 8 12 16
C A 14 16 30
D B 4 10 16
E C,B 6 12 18
F E 6 8 22
G D 18 18 30
H F,G 8 14 32

13. Define ‘crashing’. When is crashing preferred? Explain the procedure of

crashing a project.
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 Network Models Unit-5
5.13 LEARNING OUTCOMES
 Understand network analysis for large projects
 List the applications of PERT and CPM for handling projects
 Construct a network of activities and events for analysis
 Highlight the importance of CPM and PERT analysis
 Learn about the PERT procedure

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