SUBJECT CODE & NAME MBA205

OPERATION RESEARCH

ASSIGNMENT 2

3.
a. Explain the importance and utility of the replacement model in business organizations.
b. There are six jobs, each of which must go through two machines A and B in the order AB.
The processing time of machines (in hours) is given in Table
Job Processing
Time
Machine A Machine B

1 12 9

2 20 12

3 8 7

4 16 14

5 7 13

6 14 8

Determine a sequence for the six jobs that will minimise the elapsed time. Also calculate the
idle time for Machine A & Machine B.

Answer- In an organization, replacement problems arise when fixed assets, such as machines,
equipment, and other tools, need to be replaced due to reduced efficiency, failure or breakdown.
Sometimes, replacement takes place when more efficient equipment is available in the market or the
maintenance of the existing equipment is available in the market or the maintenance of the existing
equipment is incurring a huge cost on an organization. However, an organization needs to decide
when the replacement of new equipment would be economical. Replacement models help an
organization to determine when to replace of the organization is not affected. Theses models help
managers to answer the following questions:-

1. At what time should equipment be replaced?

2. Should the existing equipment be replaced, if the new equipment with better efficiency is
available? If yes, then when?
3. Should the time value of money be taken into account while replacing the equipment?
4. What should be the replacement plan for equipment plan for equipment that is used in large
quantities and may fail randomly
5. What kind of replacement policy should be in place for the human resource of an organization?

Replacement models, in combination with various mathematical techniques, help mangers in

developing successful replacement policies. An organization uses different types of equipment. Some
equipment deteriorates with time; for example; the efficiency of a car reduces with time. On the other
hand, some equipment, such as electric bulbs, fails instantly and needs to be replaced immediately.
An organization cannot use the same replacement policy for every kind of equipment. Different
equipment is replaced differently.

PROCESSING TIME
JOB
MACHINE A MACHINE B
1 12 9
2 20 12
3 8 7
4 16 14
5 7 13
6 14 8

Applying algorithm of Johnson,

PROCESSING TIME
JOB
MACHINE A MACHINE B
1 12 9
2 20 12
3 8 7
4 16 14
6 14 8

5 3

PROCESSING TIME
JOB
MACHINE A MACHINE B
1 12 9
2 20 12
4 16 14
6 14 8
 5 1 3

PROCESSING TIME
JOB
MACHINE A MACHINE B
2 20 12
4 16 14
6 14 8

5 1 6 3

PROCESSING TIME
JOB
MACHINE A MACHINE B
2 20 12
4 16 14

5 1 4 6 3

PROCESSING TIME
JOB
MACHINE A MACHINE B
2 20 12

The optimal sequence is as follows:

5 1 4 2 6 3

The calculation of the elapsed time corresponding to the optimal ordering is carried out using
individual processing time given as :
 PROCESSING TIME
JOB MACHINE A MACHINE B
TIME IN TIME OUT TIME IN TIME OUT
5 0 7 7 14
1 7 19 14 23
4 19 35 23 37
2 35 55 37 49
6 55 69 49 57
3 69 77 57 64