ASSIGNMENT

Set 1
OPERATIONS RESEARCH

Q1. Describe in details the different scopes of application of Operations Research.

Answer
Operation research will provide scientific basis to the decision makers for solving the
problems involving the interaction of various components of organization by employing a
team of scientists from different disciplines all working together for finding a solution
which is the best in the interest of the organization as a whole. “Operation Research:
Chruchman, Ackoff and Aruoff have defined operation research as the application of
scientific solutions to the problems”. Operation research is the use of scientific methods
to provide criteria for decisions regarding man, machine, and systems involving
repetition operations”.

Scope of Operation Research (OR)

In general, whenever there is any problem simple or complicated, the OR techniques may
be applied to find the best solution. In this section we shall try to find the scope of OR by
seeing its application in various fields of everyday.

In defense operations- In modern warfare the defense operations are carried out by a
number of independent components namely Air Force, Army and Navy. The activities in
each of these components can be further divided in four sub-components viz:
administration, intelligence, operations and training, and supply. The application of
modern warfare techniques in each of the components of military organizations requires
expertise knowledge in gains from its operations and there is always a possibility that
strategy beneficial to one component may have an adverse effect on the other. Thus in
defense operations there is a necessity to co-ordinate the activities of various components
which gives maximum benefit to the organization as a strategy is formulated by a team of
scientists drawn from various disciplines who study the strategies of different
components and after appropriate analysis of the various courses of actions, the best
course of action, the best courses of action, known as optimum strategy, is chosen.

In industry- The system of modern industries are so complex that the optimum point of
operations in its various components cannot be intuitively judged by an individual. The
business environment is always changing and any decision useful at one time may not be
so good some time later. There is always a need to check the validity of decisions
continually, against the situations. The industrial revolution with increased division of
labour and introduction of management responsibilities has made each component an
independent unit having their own goals. For example, Production department minimize
the cost of production but minimizes output. Marketing department maximizes output but
minimizes cost of unit sales. Finance department tries to optimize capital investment and
personal department appoints good people at minimum cost. Thus each department plans
their own objectives and all these objectives of various departments. OR methods in
industry can be applied in the fields of production, inventory controls and marketing,
purchasing, transportation and competitive strategies etc.

Planning- In modern times it has become necessary for every government to have careful
planning, for economic development of the country. OR techniques can be fruitfully
applied to maximize the per capital income, with minimum sacrifice and time. A
government can thus use OR for framing future economic and social policies.

Agriculture- With increase in population there is a need to increase agriculture output.

But this cannot be done arbitrarily. There are a number of restrictions under which
agricultural production is to be studied. Therefore there is a need to determine a course of
action, which serves the best user the best under the given restrictions. The problem can
be solved by the application of OR techniques.
In hospitals- The OR methods can be used to solve waiting problems in out-patients
department of big hospitals. The administrative problems of hospital organization can
also be solved by OR techniques.

In transport- Different OR methods can be applied to regulate the arrival of trains and
processing times, minimize the passengers waiting time and reduce congestion, formulate
suitable transportation policy, reducing the costs and time of trans-shipment.

Research and development- Control of R and D projects, product introduction planning

etc. and many more applications.

Q2. What do you understand by Linear Programming Problem? What are the
requirements of L.P.P.? What are the basic assumptions of L.P.P.?

Answer: Linear Programming

Linear programming problem is a class of mathematical programming in which the

functions representing the objectives and the constraints are linear. Here, by optimization,
we mean either to maximize or minimize the objective functions. The general linear
programming model is usually defined as follows:
Maximize or Minimize
Z = c1 x1 + c2 x 2 +………….. +cn x n
subject to the constraints,
a11 x1 + a12 x2 +…… …… ….+ a1n xn~ b1
a21 x1 + a22 x2 +……………..+ a2n xn~ b2
……………………………………………
……………………………………………
am1x1 + am2 x2 +……………. +amn xn~ bm
and x1 > 0, x2 > 0, …………….. xn> 0
Where cj, bi and aij (i = 1, 2, 3, ….. m, j = 1, 2, 3…….. n) are constants determined from
the technology of the problem and xj (j = 1, 2, 3 n) are the decision variables. Here ~ is
either < (less than), > (greater than) or = (equal). Note that, in terms of the above
formulation the coefficient cj,
aij, bj are interpreted physically as follows. If bi is the available amount of resources
i,where aij is the amount of resource i, that must be allocated to each unit of activity j, the
“worth” per unit of
activity is equal to cj.

Canonical forms:

The general Linear Programming Problem (LPP) defined above can always be put in the
following form which is called as the canonical form:
Maximize Z = c1 x1+c2 x2 + …….+cn xn
Subject to
a11 x1 + a12 x2 +…………….. +a1n xn<b1
a21 x1 + a22 x2 +…………….. +a2n xn< b2
……………………………………………
……………………………………………
am1x1+am2 x2 + …… + amn xn< bm
x1, x2, x3, … xn> 0.
The characteristics of this form are:
1) all decision variables are nonnegative.
2) all constraints are of < type.
3) the objective function is of the maximization type.

Any LPP can be put in the cannonical form by the use of five elementary
transformations:
1. The minimization of a function is mathematically equivalent to the maximization of
the negative expression of this function. That is, Minimize Z = c1 x1 + c2x2 + ……. + cn
xn is equivalent to
Maximize– Z = – c1 x1 – c2 x2 – … – cn xn
2. Any inequality in one direction (<or >) may be changed to an inequality in the opposite
direction (>or <) by multiplying both sides of the inequality by–1.For example 2x1+3x2
>5 is equivalent to–2x1–3x2 <–5.

3. An equation can be replaced by two inequalities in opposite direction. For example,

2x1+3x2 = 5 can be written as 2x1+3x2< 5and 2x1+3x2> 5or 2x1+3x2< 5and – 2x1 –
3x2< – 5.

4. An inequality constraint with its left hand side in the absolute form can be changed
into two regular inequalities. For example: | 2x1+3x2 | <5 is equivalent to2x1+3x2 <5
and2x1+3x2 >– 5 or – 2x1 – 3x2< 5.

5. The variable which is unconstrained in sign (i.e., >0, < 0 or zero) is equivalent to the
difference between 2 nonnegative variables. For example, if x is unconstrained in sign
then x = (x+ – x–)w here x+> 0, x–< 0

Example of a linear programming problem

A firm engaged in producing 2 models, viz., Model A and Model B, performs only 3
operations painting, assembly and testing. The relevant data are as follows:
Hours required for each unit
Unit sale Price Assembly Painting Testing
Model A Rs 50.00 1.0 0.2 0.0
Model B Rs 80.00 1.5 0.2 0.1
Total number of hours available each week are as under assembly 600, painting 100, and
testing 30. The firm wishes to determine the weekly product-mix so as to maximize
revenue.
Solution:
Z : total revenue
x1 : number of units of Model A
x2 : number of units of Model B
X1, X2: are known as decision variables
b1 : weekly hours available for assembly
b2 : weekly hours available for painting
b3 : weekly hours available for testing

Since the objective (goal) of the firm is to maximize its revenue, the model can be stated
as follows:
The objective function, Z = 50x1 + 80x2 is to be maximized subject to the constraints
1.0x1 + 1.5x2<600, (Assembly constraints)
0.2x1 + 0.2x2<100, (Painting constraints)
0.0x1 + 0.1x2<30, (Testing constraints)
And
x1>0, x2>0, The non-negativity conditions.

Q3. Describe the different steps needed to solve a problem by simplex method.

Answer: Simplex Method

To solve problem by Simplex method

1. Introduce stack variables (Si’s) for “ < ” type of constraint
2. Introduce surplus variables (Si’s) and Artificial Variables (Ai) for “>” type of
constraint.
3. Introduce only Artificial variable for “=” type of constraint
4. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will
be “M”
5. Find Zj - Cj for each variable.
6. Slack and Artificial variables will form Basic variable for the first simplex table.
Surplus variable will never become Basic Variable for the first simplex table.
7. Zj = sum of [cost of variable x its coefficients in the constraints – Profit or cost
coefficient of the variable}.
8. Select the most negative value of Zj - Cj. That column is called key column. The
variable corresponding to the column will become Basic variable for the next table.
9. Divide the quantities by the corresponding values of the key column to get ratios select
the minimum ratio. This becomes the key row. The Basic variable corresponding to this
row will be replaced by the variable found in step 6.
10. The element that lies both on key column and key row is called Pivotal element.
11. Ratios with negative and “a” value are not considered for determining key row.
12. Once an artificial variable is removed as basic variable, its column will be deleted
from next iteration.
13. For maximization problems decision variables coefficient will be same as in the
objective function. For minimization problems decision variables coefficients will have
opposite signs as compared to objective function.
14. Values of artificial variables will always is – M for both maximization and
minimization problems.
15. The process is continued till all Zj – Cj > 0

The simplex Algorithm

To test for optimality of the current basic feasible solution of the LPP, we use the
following algorithm called simplex algorithm. Let us also assume that there are no
artificial variable existing in the program.

Steps
• Locate the most negative number in the last (bottom) row of the simplex table,
excluding that of last column and call the column in which this number appears as
the work column.
• From ratios by dividing each positive number in the work column, excluding that
of the last row into the element in the same row and last column. Designate that
 element in the work column that yields the same smallest ratio as the pivot
element. If more than one element yields the same smallest ratio choose
arbitrarily one of them. If no element in t work column is non negative the
program has no solution.
• Use elementary row operations to convert the pivot element to unity (1) and then
reduce all other elements in the work column to zero.
• Replace the x-variable in the pivot row and first column by x-variable in the first
row pivot column. The variable which is to be replaced is called the outgoing
variable and the variable that replaces is called the incoming variable. This new
first column is the current set of basic variables.
• Repeat steps 1 through 4 until there are no negative numbers in the last row
excluding the last column.
• The optimal solution is obtained by assigning to each variable in the first column
that value in the corresponding row and last column. All other variables are
considered as non-basic and have assigned value zero. The associated optimal
value of the objective function is the number in the last row and last column for a
maximization program but the negative of this number for a minimization
problem.

Q4. Describe the economic importance of the Duality concept.

Answer The importance of duality concept is due to two main reasons:

a) If the primal contains a large number of constraints and a smaller number of variables,
the labour of computation can be considerably reduced by converting it into the dual
problem and then solving it.
b) The interpretation of the dual variable from the loss or economic point of view proves
extremely useful in making future decisions in the activities being programmed.
Economic interpretation of duality:
The linear programming problem can be thought of as a resource allocation model in
which the objective is to maximize revenue or profit subject to limited resources.
Looking at the problem from this point of view, the associated dual problem offers
interesting economic interpretations of the L.P resource allocation model.

We consider here a representation of the general primal and dual problems in which the
primal takes the role of a resource allocation model.
Primal
Maximize
n

z= Σ Cj.xj
j=1

subject to
n
Σ aij xj < bi, i=1,2,…,m.
j=1
xj > 0, j=1,2,….,n

Dual
Minimize
m
w= Σ bi.yi
i=1
subject to
m
Σ aij yi > ci, j =1,2,….,n.
i=1
yj > 0, i=1,2,….,m
From the above resource allocation model, the primal problem has n economic activities
and m resources. The coefficient cj in the primal represents the profit per unit of activity
j. Resource i, whose maximum availability is bj, is consumed at the rate aij units per unit
of activity j.

Economic interpretation of dual variables:

For any pair of feasible primal and dual solutions, (Objective value in the maximization
problem) ≤ (Objective value in the minimization problem) the following
At the optimum, the relationship holds as a strict important.

Note: Here the sense of optimization is very important.

Hence clearly for any two primal and dual feasible solutions, the values of the objective
functions, when finite, must satisfy the following inequality.

n m
z= Σ Cj.xj < w= Σ bi.yi
j=1 i-1

The strict equality, z-w, holds when both the primal and dual solutions are optimal.

Q5. How can you use the Matrix Minimum method to find the initial basic feasible
solution in the transportation problem?

Answer: Matrix Minimum Method:

Step 1: Determine the smallest cost in the cost matrix of the transportation table. Let it be
Cij, Allocate Xij = min (aj, bj) in the cell (i, j).

Step 2: If Xij = aj cross off the ith row of the transportation table and decrease bj by ai go
to step 3.
If xij = bj cross off the ith 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 ith 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:
Obtain an initial basic feasible solution to the following T.P using the matrix minima
method.
D1 D2 D3 D4
01 1 2 3 4 6
02 4 3 2 0 8
03 0 2 2 1 10
4 6 8 6 24
Where 0i and Di denote ith origin and jth destination respectively.

Solution: The transportation table of given T.P has 12 cells. Following the matrix minima
method.
The first allocation is made in the cells (3,1) the magnitude being x21 = 4. This satisfies
the requirement at destination D1 and thus we cross off the first column from the table.
The second allocation is made in the cell (2,4) magnitude x24 = min (6,8)= 6. Cross off
the fourth column of the table. This yields the table (i).

1 2 3 4 6

4 3 2 6 8
8
4 0 2 2 2

10
 6 6
6
2 2

4 0 2
6

There is again a tie for the third allocation. We choose arbitrarily the cell (1, 2) and
allocate x12 = min (6,6)=6 there. Cross off either the second column of the first row. We
choose to cross off the first row of the table. The next allocation of magnitude x22 = 0 is
made in the cell (3,2) cross off the second column getting table (ii).

2 6

42 0 6 2

1 2 3 4
6

4 3 2 2 6 0

0 2 2 1
0 6

We choose arbitrarily again to make the next allocation in cell (2,3) of magnitude x23 =
min (2,8) = 2 across off the second row this gives table (iii). The last allocation of
magnitude x23 = min (6, 6) = 6 is made in the cell (3, 3).
Now all the requirements have been satisfied and hence and initial feasible solution has
been determined. This solution is shown in table IV. Since the cells do not form a loop,
the solution is basic one. Moreover the solution is degenerated also. The transportation
cost according to the above route is given by:
Z=6*2+2*2+6*0+4*0+0*2+6*2=28
Q6. Describe the Integer Programming Problem. Describe the Gomory’s All-I.P.P.
method for solving the I.P.P. problem.

Answer: Integer Programming Problem

The Integer Programming Problem I P P is a special case of L P P where all or some
variables are constrained to assume non negative integer values. This type of problem has
lot of applications in business and industry where quite often discrete nature of the
variables is involved in many decision making situations. Eg. In manufacturing the
production is frequently scheduled in terms of batches, lots or runs; In distribution, a
shipment must involve a discrete number of trucks or aircrafts or freight cars.
An integer programming problem can be described as follows:
Determine the value of unknowns x1, x2, … , xn so as to optimize z = c1x1 +c2x2 + . . .+
cnxn

subject to the constraints ai1 x1 + ai2 x2 + . . . + ain xn =bi , i = 1,2,…,m and xj > 0 j = 1,
2, … ,n where xj being an integral value for j = 1, 2, … , k ≤ n.
If all the variables are constrained to take only integral value i.e. k = n, it is called an all
(or pure) integer programming problem. In case only some of the variables are restricted
to take integral value and rest (n – k) variables are free to take any non negative values,
then the problem is known as mixed integer programming problem.

Gomory’s All – IPP Method

An optimum solution to an I. P. P. is first obtained by using simplex method ignoring the
restriction of integer values. In the optimum solution if all the variables have integer
values, the current solution will be the desired optimum integer solution. Otherwise the
given IPP is modified by inserting a new constraint called Gomory’s or secondary
constraint which represents necessary condition for integrability and eliminates some non
integer solution without losing any integral solution. After adding the secondary
constraint, the problem is then solved by dual simplex method to get an optimum integral
solution. If all the values of the variables in this solution are integers, an optimum inter-
solution is obtained, otherwise another new constrained is added to the modified L P P
and the procedure is repeated. An optimum integer solution will be reached eventually
after introducing enough new constraints to eliminate all the superior non integer
solutions. The construction of additional constraints, called secondary or Gomory’s
constraints, is so very important that it needs special attention.

The iterative procedure for the solution of an all integer programming problem is as
follows:
Step 1: Convert the minimization I.P.P. into that of maximization, if it is in the
minimization form. The integrality condition should be ignored.

Step 2: Introduce the slack or surplus variables, wherever necessary to convert the in
equations into equations and obtain the optimum solution of the given L.P.P. by using
simplex algorithm.

Step 3: Test the integrality of the optimum solution

a) If the optimum solution contains all integer values, an optimum basic feasible integer
solution has been obtained.
b) If the optimum solution does not include all integer values then proceed onto next step.

Step 4: Examine the constraint equations corresponding to the current optimum solution.
n1
Σ yij, xj = bi, (i=0,1,2,……..,m1)
j=0

Where n’ denotes the number of variables and m’ the number of equations.

Step 5: Express each of the negative fractions if any, in the k the row of the optimum
simplex table as the sum of a negative integer and a nonnegative fraction.

Step 6: Find the Gomorian constraint

Step 7: Starting with this new set of equation constraints, find the new optimum solution
by dual simplex algorithm.
(So that Gsla (1) is the initial leaving basic variable).

Step 8: If this new optimum solution for the modified L.P.P. is an integer solution. It is
also feasible and optimum for the given I.P.P. otherwise return to step 4 and repeat the
process until an optimum feasible integer solution is obtained.
 ASSIGNMENT
Set 2
OPERATIONS RESEARCH

Q1. What are the important features of Operations Research? Describe in details
the different phases of Operations Research.

Answer: Important features of operation research

It is system oriented: OR studies the problem from over all point view of organizations or
situations since optimum result of one part of the system may not be optimum for some
other part.
It imbibes inter-disciplinary team approach. Since no single individual can have a
through knowledge of all fast developing scientific know-how, personalities from
different scientific and managerial cadre from a team to solve the problem.
It makes use of scientific methods to solve problems.
OR increases the effectiveness of a management decision making ability
It makes use of computer to solve large and complex programs.
It gives Quantitative solution.
It considers the human factors also.

Phases of operation research

Judgment phase: this phase consists of
Determination of the operation
Establishment of the objectives and values related to the operations.
Determination of suitable measures of effectiveness and
Formulation of the problems relative to the objectives

Research phase: This phase utilizes

Operations and data collection for a better understanding of the problems
Formulation of hypothesis and model
Observation and experimentation to test the hypothesis on the basis of additional data
Analysis of the available information and verification of the hypothesis using pre-
established measure of effectiveness.
Prediction of various results and consideration of alternative methods

Action phase: It consists of making recommendations for the decision process by those
who first posed the problem for consideration or by anyone in the position to make a
decision, influencing the operation in which the problem is occurred.

Q2. Describe a Linear Programming Problem in details in canonical form.

Canonical forms:

Answer

The general Linear Programming Problem (LPP) defined above can always be put in the
following form which is called as the canonical form:
Maximize Z = c1 x1+c2 x2 + …….+cn xn
Subject to
a11 x1 + a12 x2 +…………….. +a1n xn< b1
a21 x1 + a22 x2 +…………….. +a2n xn< b2
……………………………………………
……………………………………………
am1x1+am2 x2 + …… + amn xn< bm
x1, x2, x3, … xn> 0.
The characteristics of this form are:
1) all decision variables are nonnegative.
2) all constraints are of < type.
3) the objective function is of the maximization type.
Any LPP can be put in the cannonical form by the use of five elementary
transformations:
1. The minimization of a function is mathematically equivalent to the maximization of
the negative expression of this function. That is, Minimize Z = c1 x1 + c2x2 + ……. + cn
xn is equivalent to
Maximize– Z = – c1 x1 – c2 x2 – … – cn xn

2. Any inequality in one direction (<or >) may be changed to an inequality in the opposite
direction (>or <) by multiplying both sides of the inequality by–1.For example 2x1+3x2
>5 is equivalent to–2x1–3x2 <–5.

3. An equation can be replaced by two inequalities in opposite direction. For example,

2x1+3x2 = 5 can be written as 2x1+3x2< 5and 2x1+3x2> 5or 2x1+3x2< 5and – 2x1 –
3x2< – 5.

4. An inequality constraint with its left hand side in the absolute form can be changed
into two regular inequalities. For example: | 2x1+3x2 | <5 is equivalent to2x1+3x2 <5
and2x1+3x2 >– 5 or – 2x1 – 3x2< 5.

5. The variable which is unconstrained in sign (i.e., >0, < 0 or zero) is equivalent to the
difference between 2 nonnegative variables. For example, if x is unconstrained in sign
then x = (x+ – x–)w here x+> 0, x–< 0

Example of a linear programming problem

A firm engaged in producing 2 models, viz., Model A and Model B, performs only 3
operations painting, assembly and testing. The relevant data are as follows:
Hours required for each unit
Unit sale Price Assembly Painting Testing
Model A Rs 50.00 1.0 0.2 0.0
Model B Rs 80.00 1.5 0.2 0.1
Total number of hours available each week are as under assembly 600, painting 100, and
testing 30. The firm wishes to determine the weekly product-mix so as to maximize
revenue.

Solution:
Z : total revenue
x1 : number of units of Model A
x2 : number of units of Model B
X1, X2: are known as decision variables
b1 : weekly hours available for assembly
b2 : weekly hours available for painting
b3 : weekly hours available for testing

Since the objective (goal) of the firm is to maximize its revenue, the model can be stated
as follows:
The objective function, Z = 50x1 + 80x2 is to be maximized subject to the constraints
1.0x1 + 1.5x2<600, (Assembly constraints)
0.2x1 + 0.2x2<100, (Painting constraints)
0.0x1 + 0.1x2<30, (Testing constraints)
And
x1>0, x2>0, The non-negativity conditions.

Q3. What are the different steps needed to solve a system of equations by the
simplex method?
Answer : To solve problem by Simplex method
1. Introduce stack variables (Si’s) for “ < ” type of constraint
2. Introduce surplus variables (Si’s) and Artificial Variables (Ai) for “>” type of
constraint.
3. Introduce only Artificial variable for “=” type of constraint
4. Cost (Cj) of slack and surplus variables will be zero and that of artificial variable will
be “M”
5. Find Zj - Cj for each variable.
6. Slack and Artificial variables will form Basic variable for the first simplex table.
Surplus variable will never become Basic Variable for the first simplex table.
7. Zj = sum of [cost of variable x its coefficients in the constraints – Profit or cost
coefficient of the variable}.
8. Select the most negative value of Zj - Cj. That column is called key column. The
variable corresponding to the column will become Basic variable for the next table.
9. Divide the quantities by the corresponding values of the key column to get ratios select
the minimum ratio. This becomes the key row. The Basic variable corresponding to this
row will be replaced by the variable found in step 6.
10. The element that lies both on key column and key row is called Pivotal element.
11. Ratios with negative and “a” value are not considered for determining key row.
12. Once an artificial variable is removed as basic variable, its column will be deleted
from next iteration.
13. For maximization problems decision variables coefficient will be same as in the
objective function. For minimization problems decision variables coefficients will have
opposite signs as compared to objective function.
14. Values of artificial variables will always is – M for both maximization and
minimization problems.
15. The process is continued till all Zj – Cj > 0

The simplex Algorithm

To test for optimality of the current basic feasible solution of the LPP, we use the
following algorithm called simplex algorithm. Let us also assume that there are no
artificial variable existing in the program.
Steps
• Locate the most negative number in the last (bottom) row of the simplex table,
excluding that of last column and call the column in which this number appears as
the work column.
• From ratios by dividing each positive number in the work column, excluding that
of the last row into the element in the same row and last column. Designate that
element in the work column that yields the same smallest ratio as the pivot
element. If more than one element yields the same smallest ratio choose
arbitrarily one of them. If no element in t work column is non negative the
program has no solution.
• Use elementary row operations to convert the pivot element to unity (1) and then
reduce all other elements in the work column to zero.
• Replace the x-variable in the pivot row and first column by x-variable in the first
row pivot column. The variable which is to be replaced is called the outgoing
variable and the variable that replaces is called the incoming variable. This new
first column is the current set of basic variables.
• Repeat steps 1 through 4 until there are no negative numbers in the last row
excluding the last column.
• The optimal solution is obtained by assigning to each variable in the first column
that value in the corresponding row and last column. All other variables are
considered as non-basic and have assigned value zero. The associated optimal
value of the objective function is the number in the last row and last column for a
maximization program but the negative of this number for a minimization
problem.
Q4. What do you understand by the transportation problem? What is the basic
assumption behind the transportation problem? Describe the MODI method of
solving transportation problem.

Answer

This model studies the minimization of the cost of transporting a commodity from a
number of sources to several destinations. The supply at each source and the demand at
each destination are known. The transportation problem involves m sources, each of
which has available ai (i = 1, 2, …..,m) units of homogeneous product and n destinations,
each of which requires bj (j = 1, 2…., n) units of products. Here ai and bj are positive
integers. The cost cij of transporting one unit of the product from the i th source to the j
the destination is given for each i and j. The objective is to develop an integral
transportation schedule that meets all demands from the inventory at a minimum total
transportation cost.

The Transportation Algorithm (MODI Method)

The first approximation to (2) is always integral and therefore always a feasible solution.
Rather than determining a first approximation by a direct application of the simplex
method it is more efficient to work with the transportation table. The transportation
algorithm is the simplex method specialized to the format of table it involves:
i) finding an integral basic feasible solution
ii) testing the solution for optimality
iii) improving the solution, when it is not optimal
iv) repeating steps (ii) and (iii) until the optimal solution is obtained
The solution to T.P is obtained in two stages. In the first stage we find Basic feasible
solution by any one of the following methods a) Northwest corner rale b) Matrix Minima
Method or least cost method c) Vogel’s approximation method. In the second stage we
test the B.Fs for its optimality either by MODI method or by stepping stone method.
Modified Distribution Method / Modi Method / U – V Method.
Step 1: Under this method we construct penalties for rows and columns by subtracting the
least value of row / column from the next least value.
Step 2: We select the highest penalty constructed for both row and column. Enter that
row / column and select the minimum cost and allocate min (ai, bj)
Step 3: Delete the row or column or both if the rim availability / requirements is met.
Step 4: We repeat steps 1 to 2 to till all allocations are over.
Step 5: For allocation all form equation ui + vj = cj set one of the dual variable ui / vj to
zero and solve for others.
Step 6: Use these values to find Δij = cij – ui – vj of all Δij >, then it is the optimal
solution.
Step 7: If any Δij £ 0, select the most negative cell and form loop. Starting point of the
loop is +ve and alternatively the other corners of the loop are –ve and +ve. Examine the
quantities allocated at –ve places. Select the minimum. Add it at +ve places and subtract
from –ve place.
Step 8: Form new table and repeat steps 5 to 7 till Δij > 0
Example:
A car company is faced with an allocation problem resulting from rental agreement that
allows care to be returned to locations other than those which they were originally rented.
At the present time there are two cars with 15 and 13 simplex cars respectively and 4
locations requiring 9, 6, 7 and 9 cars respectively. The unit transportation costs (in
dollars) between the locations as given below:
Destinations: D1 D2 D3 D4
Sources S1 45 17 21 30

S2 14 18 19 31
Solution:
Since the supply and requirements are not equal it is called an unbalanced T.P in general
if Σai = Σbj then it is called an unbalanced T.P we introduced either a dummy row or a
dummy column with cost zero a quantity Σbi = Σaj respectively. Applying VAM- Method
we find B.F.S
Destinations

D1 D2 D3 D4 P1 P2 P3 P4

45 17 21 30 4 4 4 11
6 3 6 15/9/6

14 18 19 31 4 4 1 12
9 4 13/4
0 0 0 0 0 - - -
3 3

9/0 6 7/3 9/6

P1 14 17 19 30
P2 31 1 2 1
P3 - 1 2 1
P4 - - 2 1

X34 = Min [3,9] = 3 * 10 =0

X21 = Min [13,9] = 9 * 14 = 126
X12 = Min [15,6] = 6 * 17 = 102
X23 = Min [4,7] = 4 * 9 = 76
X14 = Min [6,6] = 6 * 30 = 180
Total cost 547

Testing for optimality

u1 + v2 = 17 Set u1 = 0
u1 + v3 = 21 u1 = 2
u1 + v4 = 30 u3 = 30
u2 + v1 = 14 v1 = 16
u2 + v3 = 19 v2 = 17
u3 + v4 = 0 v3 = 21
v4 = 30

For unallocated cell ij = cij – ui – vj

11 = 45 – 0 – 16 = 29
22 = 8 + 2 – 17 = 3
24 = 31 + 2 – 30 = 3
31 = 0 =+ 30 – 26 = 4
32 = 0 + 30 – 17 = 13
33 = 0 + 30 – 21 = 9

For non-allocated cells determine cij – ui – vi. Since all then quantities are non-negative,
the current solution is optimal. The minimum transportation cost is = 6 * 17 + 3 * 21 + 6
* 30 + 9 * 14 + 4 * 19 + 3.0 = 470

Which achieved by transporting * 12 = 6 cars from sources 1 to dentition 2, * 13 = 3, *14

= 6 cars from sources 1 to destinations 3 and 4 respectively; * 21 = 9 and * 33 = 4 cars
from sources 2 to destinations 1 and 3 respectively.

Q5. Describe the North-West Corner rule for finding the initial basic feasible
solution in the transportation problem.

Answer: North-West Corner rule

Step1: The first assignment is made in the cell occupying the upper left hand (north west)
corner of the transportation table. The maximum feasible amount is allocated there, that
is x11 = min(a1,b1)
So that either the capacity of origin O1 is used up or the requirement at destination D1 is
satisfied or both. This value of x11 is entered in the upper left hand corner (small square)
of cell (1, 1) in the transportation table.

Step 2: If b1 > a1 the capacity of origin O, is exhausted but the requirement at destination
D1 is still not satisfied , so that at least one more other variable in the first column will
have to take on a positive value. Move down vertically to the second row and make the
second allocation of magnitude
x21 = min (a2, b1 – x21) in the cell (2,1). This either exhausts the capacity of origin O2
or satisfies the remaining demand at destination D1.

If a1 > b1 the requirement at destination D1 is satisfied but the capacity of origin O1 is

not completely exhausted. Move to the right horizontally to the second column and make
the second allocation of magnitude x12 = min
(a1 – x11, b2) in the cell (1, 2) . This either exhausts the remaining capacity of origin O1
or satisfies the demand at destination D2.

If b1 = a1, the origin capacity of O1 is completely exhausted as well as the requirement at

destination is completely satisfied. There is a tie for second allocation, An arbitrary tie
breaking choice is made. Make the second allocation of magnitude x12 = min (a1 – a1,
b2) = 0 in the cell (1, 2) or x21 = min (a2, b1 – b2) = 0 in the cell (2, 1).

Step 3: Start from the new north west corner of the transportation table satisfying
destination requirements and exhausting the origin capacities one at a time, move down
towards the lower right corner of the transportation table until all the rim requirements
are satisfied.
Q6. Describe the Branch and Bound Technique to solve an I.P.P. problem.

Answer: Branch and Bound Technique

Sometimes a few or all the variables of an IPP are constrained by their upper or lower
bounds or by both. The most general technique for the solution of such constrained
optimization problems is the branch and bound technique. The technique is applicable to
both all IPP as well as mixed. Let the L.P.P be
Maximize
n
z= Σ cj.xj …………………………………………….. (1)
j=1
Subject to the constraints
n
z= Σ aij xj < bi i = 1,2,…,m…………………. (2)
i=1

xj is integer valued, j = 1, 2,…….,r(<n)----------------------------- (3)

xj > 0………………j = r+1,…….., n---------------------------------(4)
Further let us suppose that for each integer valued xj, we can assign lower and upper
bounds for the optimum values of the variable by
Lj<xj<Uj j = 1, 2, …r-------------------------------- (5)
The following idea is behind “the branch and bound technique”
Consider any variable sj, and let l be some integer value satisfying Lj<l<Uj – 1. Then
clearly an optimum solution to (1) through (5) shall also satisfy either the linear
constraint.
Xj>l+1------------------------------ (6)
Or the linear constraint xj < l ……………….. (7)

To explain how this partitioning helps, let us assume that there were no integer
restrictions (3), and suppose that this then yields an optimal solution to L.P.P. – (1), (2),
(4) and (5). Indicatingx1 = 1.66 (for example). Then we formulate and solve two L.P.P’s
each containing (1), (2) and (4). But (5) for j = 1 is modified to be 2 ≤ x1 ≤ U1 in one
problem and L1 ≤ x1 ≤ 1 in the other. Further each of these problems process an optimal
solution satisfying integer constraints (3)

Then the solution having the larger value for z is clearly optimum for the given I.P.P.
However, it usually happens that one (or both) of these problems has no optimal solution
satisfying (3), and thus some more computations are necessary. We now discuss step
wise the algorithm that specifies how to apply the partitioning (6) and (7) in a systematic
manner to finally arrive at an optimum solution.
We start with an initial lower bound for z, say z (0) at the first iteration which is less than
or equal
to the optimal value z*, this lower bound may be taken as the starting Lj for some xj.
In addition to the lower bound z (0) , we also have a list of L.P.P’s (to be called master
list) differing only in the bounds (5). To start with (the 0 th iteration) the master list
contains a single L.P.P. consisting of (1), (2), (4) and (5). We now discuss below, the step
by step procedure that specifies how the partitioning (6) and (7) can be applied
systematically to eventually get an optimum integer valued solution.

Branch and Bound Algorithm

At the tth iteration (t = 0,1,2,……)
Step 0: If the master list is not empty, choose an L.P.P. out of it. Otherwise stop the
process, Go to step 1.

Step 1: Obtain the optimum solution to be chosen problem. If either

i) It has no feasible solution or
ii) The resulting optimum value of the objective function z is less than or equal to
zt, then let z(t+1) = z(t) and return to step 0 otherwise go to step 2.
Step 2: If the so obtained optimum solution satisfies the integer constraints (3) then
record it. Let z=(t+1) be associated optimum value of z; return to step 0. Otherwise move
to step 3.
Step 3: Select any variable xj, j = 1, 2, ….., p. that does not have an integer value in the
obtained optimum solution to L.P.P chosen in step 0. Let xj denote this optimal value of
xj. Add two L.P.P chosen in step 0, except that in one, the lower bound on xj is replaced
by |xj| + 1. Let z(t+1); return to step 0.
Note: At the termination of the algorithm, if a feasible integer valued solution yielding
z(t) has been recorded it is optimum, otherwise no integer valued feasible solution exists.

Example:
Use branch and bound technique to solve the following L.P.P
Maximize z= 7x1 + 9x2------------------------ (1)
Subject to constraints
-x1 + 3x2 < 6--------------------------------------- (2)
7x1 + x2 < 35
0 < x1,x2<7----------------------------------------- (3)
x1,x2 are integers---------------------------------- (4)

Solution:
At the starting iteration we can consider z(0) = 0 to be lower bound, for x, since all xj=0
is feasible. The master list contains only the L.P.P. (1) (2) and (3) which is designated as
problem 1. Choose it in step 0, and in step 1. determine the optimum solution.
Z0 = 63 x1=9/2, x2= 7/2 (solution to problem 1)
Since the solution is not integer valued, proceed from step 2to step 3, and select x1. Then
since |x1|=[9/2]=4, place on the master list the following two additional problems.
Problem2: (1) (2) and 5 < x1 < 7; 0 < x2 < 7
Problem3: (1) (2) and 0 < x1 < 4; 0 < x2 < 7
Returning to step 0: with z(1) = z(0) = 0,

We choose problem 2, Step 1establishes that problem 2 has the feasible solution
Z0 = 35, x1 = 5 x2 = 0 [solution to problem (2)]……………… (5)
Since this satisfies the integer constraints, therefore at step 2 we record it by enclosing in
a rectangle and let z(2) = 35.

Returning to step 0 with z(2) = 35, we find the problem 3 is available. Step 1 determines
the following optimum feasible solution to it.
Z0 = 58, x1 = 4, x2 = 10/2 (Problem 3)
Since the solution is not integer valued, proceed from step 2 to step 3 and select x2. Then
[x2] = [10/3]= 3. We add the following additional problems on the master list:
Problem 4: (1) (2) and 0<x1<4; 4<x2<7
Problem 5: (1) (2) and 0<x1<4; 0<x2<3

Returning to step 0 with z(3) = z(2) = 35, choose problem 4 from step 1 we know that
problem 4 has no feasible solution and so we again return to step 0 with z(4)= z(3) = 35.
Only problem 5 is available in the master list. In step 1 we determine the following
optimum solution to the problem.
Z0 = 55x1 = 4x2 = 3(solution to problems)----------- (6)

Since this satisfies the integer constraints, therefore at step 2. We record it by enclosing
inside a rectangle and let z(5) = 55.

Returning to step 0, we find the master list is empty; and thus the algorithm terminates.

Now, on terminating we find that only two feasible integer solution namely (5) and (6)
have been recorded. The best of these gives the optimum solution to the given I.P.P.
Hence the optimum integer solution to the given I.P.P is
Z0 = 55, x1=4, x3=3.