FALL 2015

MBA Semester 2
MB0048: OPERATIONS RESEARCH
Q1. Describe the framework of Operations Research.
Answer: The integrated framework of operations research involves seven stages:
1. Orientation: This is the first and foremost step of operations research. In this step, a team
is formed that addresses the on-going operational problems in an organization.

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Q2. a. Explain the graphical method of solving Linear Programming Problem.

b. A paper mill produces two grades of paper viz., X and Y. Because of raw material
restrictions, it cannot produce more than 400 tons of grade X paper and 300 tons of
grade Y paper in a week. There are 160 production hours in a week. It requires 0.20
and 0.40 hours to produce a ton of grade X and Y papers. The mill earns a profit of Rs.
200 and Rs. 500 per ton of grade X and Y paper respectively. Formulate this as a
Linear Programming Problem.
a) Graphical Methods to Solve LPP
While obtaining the optimal solution to an LPP by the graphical method, the statement of the
following theorems of linear programming is used:

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Q3. a. Explain some of the important terms of the transportation problem.

b. Explain the steps of MODI (Modified Distribution) method.
Answer:
a. The important terms of the transportation problem: A basic solution to an m-origin, n
destination transportation problem can have at the most m+n-1 positive basic variables (nonzero), otherwise the basic solution degenerates. It follows that whenever the number of basic
cells is less than m + n 1, the transportation problem is a degenerate one. The degeneracy
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Q4. a. Explain the steps involved in Hungarian method of solving Assignment

problems.
b. What do you mean by unbalanced assignment problem? How do you overcome it?
Answer:
1

a) Hungarian Method Algorithm: Hungarian method algorithm is based on the concept of

opportunity cost and is more efficient in solving assignment problems. The following steps
are adopted to solve an AP using the Hungarian method algorithm.

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Q5. a. Explain Monte Carlo Simulation.
b. Hindustan Bakery is popular for its delicious fruit cakes. The table below shows the
daily demand for the bakerys cakes.
Daily Demand
0
15
25
35
45
50
Probability
0.01
0.15
0.2
0.5
0.12
0.02
Simulate the demand for cakes for 10 days using the following sequence of random
numbers: 22, 26, 48, 53, 93, 89, 42, 91, 25, 20
If 35 cakes are baked every day in Hindustan Bakery, determine the inventory stock. In
addition, estimate the daily average demand for cakes on the basis of simulated data.
a) Monte-Carlo Simulation: The Monte-Carlo method is a simulation technique in which
statistical distribution functions are created by using a series of random numbers. This
approach has the ability to develop many months or years of data in a matter of few minutes
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Q6. a. State the assumptions of game theory.
b. What are the characteristics of Markov chain?
c. What are the rules for prioritising jobs?
a) Assumptions of game theory
A competitive game has the following assumptions:
1. The number of players or competitors is finite.
2. Each player has finite number of courses of action or moves.
3. A game is played when each player adopts any one course of action.

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