UNIT-1

Operation Research:
Operation research technique is used to solve the existing problem in the decision making process. So,
the operation research is otherwise called management science. In a decision-making situation, all
variables are quantified for the purpose of analysis. Quantification of variable means that the available
information is converted in terms of money, kilograms, liters, hours, days, months and the like.

Operation research considers which is best for the company or organization or management as a whole,
not for an individual, a department, section, division or branch. Operation research was developed
during the yearly years of Second World War. Through the analysis of possible consequences of different
solutions operation research makes an attempt to diagnose and tackle a problem for arriving at the best
solution.

Meaning
Operation research is a technique used to solve all kinds of business, management, industrial and
military problems with optimum utilization of resources. Operation research applies mathematical
method to solve a problem. So, it eliminates differences of opinion. The solution given by operation
research is being accepted by all without questions. The overall interest of the management is taken
into consideration before selection of a solution.

Definition
The quantitative study of an organization in action carried out in order to find ways in which its
functions can be improved is called operation research.

“By American Encyclopedia of management”

Operation research is a scientific method of providing executive departments with a quantitative basis
for decisions regarding the operations under control.

“By Morse and Kiball”

Methodology of Operational Research
STEP 1: Defining the problem

Problem definition involves the process to identify, understand, and describe, in precise terms, the
problem or problems being faced by an organization. it would help OR specialist to define objective or
objectives to be achieved, and alternative course of action.

The analysis begins by detailed observation of the organizational structure, climate,

communication and control system, its objectives and expectations. Such information will help in
assessing the difficulty of the study in terms of costs, time requirement, resource requirement,
probability of success of the study etc.

STEP 2: Collecting Data and Constructing a Mathematical Model

After the problem is clearly defined and understood, the next step is to collect required data and then
formulate a mathematical model. Model construction consists of hypothesizing relationships between
variables subject to and not subject to control by decision maker.

STEP 3: Solving the Mathematical Model

Once a mathematical model of the problem has been formulated, the next step is to solve it, that is, to
obtain numerical values of decision variables. Obtaining these values depends on the specific form or
type, of mathematical model. Solving the model requires the use of various mathematical tools and
numerical procedures.

STEP 4: Validating the Solution

After solving the mathematical model, it is important to review the solution carefully to see that the
values make sense and that the resulting decisions can be implemented. Some of the reasons for
validating the solution are:

1. The mathematical model may not have enumerated all the limitations of the problem under
consideration.
2. Certain aspects of the problem may have been overlooked, omitted or simplified.
3. The data may have been incorrectly estimated or recorded, perhaps when entered into the
computer.

STEP 5: Implementing the Solution

The decision maker has not only to identify good decision alternatives but also to select alternatives that
are capable of being implemented. It is important to ensure that any solution implemented is
continuously reviewed and updated in the light of a changing environment. The behavioural aspects of
change are exceedingly important to the successful implementation of results. In any case, the decision
maker who is in the best position to implement results must be aware of the objective, assumption,
omissions and limitation of the model.
STEP 6: Establishing Controls over the Solution

The dynamic environment and changes within environment can have significant implications regarding
the continuing validity of models and their solutions. Thus, a control procedure has to be established for
detecting significant changes in decision variables of the problem so that suitable adjustment can be
made in the solution without having to build a model every time a significant change occurs.

Application of Operational Research:

1. Finance and Accounting
 Dividend policies, investment and portfolio management, auditing, balance sheet and
cash flow analysis.
 Claim and complaint procedure and public accounting.
 Break-even analysis, capital budgeting, cost allocation and control and financial
planning.
 Establishing cost for by-products and developing standard costs.
2. Marketing
 Selection of product-mix, marketing and export planning.
 Advertising, media planning, selection and effective packing alternatives.
 Sales effort allocation and assignment.
 Best time to launch a new product.
 Predicting customer loyalty.

3. Purchasing, Procurement and Exploration

 Optimal buying and reordering with or without price quantity discount.
 Transportation planning.
 Replacement policies.
 Bidding policies.
 Vendor analysis.

4. Production Management
a. Facilitates planning
 Location and size of warehouse or new plant, distribution centres and retail outlets.
 Logistics, layout and engineering design.
 Transportation, planning and scheduling.

b. Manufacturing
 Aggregate production planning, assembly line, blending, purchasing and inventory
control.
  Employment, training, layoffs and quality control.
 Allocating R&D budgets most effectively.

c. Maintenance and Project Scheduling

 Maintenance policies and preventive maintenance.
 Maintenance crew size and scheduling.
 Project scheduling and allocation of resources.

5. Personnel Management
 Manpower planning, wage/salary administration.
 Negotiation in a bargaining situation.
 Skills and wages balancing.
 Designing organizational structures more effectively.
 Scheduling of training programmes to maximize skill development and retention.

6. Techniques and General Management

 Decision support system and MIS; forecasting.
 Making quality control more effective.
 Project management and strategic planning.

7. Government
 Economic planning, natural resources, social planning energy.
 Urban and housing problems.
 Military, police, pollution control etc.

Operations Research Models in Practice:

1. Inventory models: - Inventory models deal with the problem of determination of how much to
order at a point in time and when to place an order. The main objective is to minimize the sun of
three conflicting inventory costs. The cost of holding or carrying extra inventory, the cost of
shortage or delay in the delivery of items when it is needed, a cost of ordering or set-up. These
are also useful in dealing with quantity discounts and selective inventory control.

2. Waiting line (or Queuing models) : - These models have been developed to establish a trade-off
between costs of providing service and the waiting time of a customer in the queuing system.
Constructing a model entails describing the components of the system. Arrival process, queue
structure and service process and solving for the measure of performance --- average length of
waiting time, average time spent by the customer in the line, traffic intensity, etc; of the waiting
system.
3. Competitive (Game Theory) models: - These models are used to characterize the behavior of
two or more opponents (called players) who compete for the achievement of conflicting goals.
These models are classified according to several factors such as number of competitors, sum of
loss and gain, and the type of strategy which would yield the best or the worst outcomes.

4. Network models: - These models are applied to the management (planning, controlling and
scheduling) of large scale projects. PERT/CPM techniques help in identifying potential trouble
spots in a project through the identification of the critical path. These techniques improve
project co-ordination and enable the efficient use of resources. Network methods are also used
to determine time-cost trade off, resource allocation and updating of activity time.

5. Sequencing models: - The sequencing problem arise whenever there is a problem in

determining the sequence ( order ) in which a number of tasks can be performed by a number of
service facilities such as hospital, plant, etc; in such a way that some measure of performance,
for example, total time to process all the jobs on all the machines, is optimized.

6. Markov-chain models: - These models are used for analyzing a system which changes over a
period of time among various possible outcomes or states. The model while dealing with such
systems describes transitions in terms of transition probabilities of various states. These models
have been used to test brand-loyalty and brand switching tendencies of consumers, where each
system state is considered to be a particular brand purchase. These have also been used in
reliability analysis, where the states of the system are the various levels of performance of the
equipment being monitored.

7. Simulation models: - These models are used to develop a method to evaluate the merit of
alternative courses of action by experimenting with a mathematical model of the problems
where various variables are random. That is, these provide a means for generating
representative sample of the measures of performance variables. Thus, repetition of the process
by using the simulation model provides an indication of the merit of alternative course of action
with respect to decision variables.

8. Decision analysis models: - These models deal with the selection of an optimal course of action
given the possible payoffs and their associated probabilities of occurrence. These models are
broadly applied to problems involving decision making under risk and uncertainty.
Linear Programming

An organization whether large or small, needs optimal utilization of their scarce or limited resources to
achieve certain objectives. The decision regarding the production of commodities is very important.
Which commodity/commodities should be produced, in what quantities and by which process. Linear
programming helps in dealing with the answers of these types of questions. This method was first
formulated by a Russian mathematician L. V. Kantorouich but it was later developed in 1947 by George
B. Dantrig for the purpose of scheduling the complicated procurement activities of United States Air
Force. Linear programming was developed as a technique to achieve the best plan out of different plans
for achieving the goal through various activities like procurement, recruitment, maintenance etc.

Linear programming is a major innovation since World War II in the field of business decision making
particularly under conditions of certainty. Linear programming is the analysis of problems in which a
linear function of a number of variables is to be optimized when these variables are subject to a number
of restraints in the form of inequalities.

Linear programming is used to maximize a profit or minimize a loss. This technique is applied when
there are several variables affecting the achievement of the objectives of an organization. Here, the
problem arises in choosing the best combination of values for these variables. There is a relationship
prevailing between the objectives and each one of the variables. The nature of relationship is linear. It
means that a slight change in anyone of the variables would lead to a change in the attainment of
objectives.

Scarce resources of an organization can be effectively utilized by applying linear programming

technique. The scarce resources may be money, materials, machines hours and the like. The available
resource is found out in its maximum quantity at any given point of time. The quantity of any resources
cannot be increased to maximum immediately but it may be possible in the long run. Under linear
programming, the management has to take a decision regarding the manner in which those limited
resources are to be properly allotted and effectively utilized.
Advantages of Linear Programming
1. Linear programming techniques improve the quality of decisions. Users of this technique
become more objective and less subjective.

2. Linear programming treats all relationships among decision variables as linear. However,
generally, neither the objective functions nor the constraints in real-life situations concerning
business and industrial problems are linearly related to the variables.

3. It deals with only single objective, where as in real life situations we may come across more than
one objective.

4. It generates large number of alternate solutions and hence it helps in reaching practical
solutions at optimum working level. It also permits modifications of the mathematical model to
suit the decision makers requirement.

5. This technique can also cater for changing situations. The changed conditions can be used to
readjust the plan decided for execution.

Suitability of Linear Programming

1. Allocation of limited resources: - Available limited resources should be properly utilized in
order to increase the total output with profit through proper allocation of resources. It involves
decisions on allocation of limited resources. Linear programming helps the management to take
a valuable decision.

2. Selection of best combination: - Best combination can be selected in order to achieve the
best results at a minimum cost. Combination may be in the area of sales or production, labour
force ( skilled, unskilled or semi-skilled )

3. Distribution of products: - A given product can be sold throughout the world. Long distance
market requires high cost of transportation which leads to decrease in profit. The profitability of
nearby market can be compared with long distance markets. At this junction, the problem with
regard to distribution of products can be solved.

4. Make or buy decision: - Large scale or organizations are usually facing the problem i.e.
whether to make a product themselves or buy it in the open market. Here, linear programming
techniques can be applied to decide which products should be produced, which should be
purchased and the like.
Scope or Areas of Linear Programming

1. Production Management :
a. Product mix – A company can produce several different products each of which requires
the use of limited production resources. In such cases it is essential to determine the
quantity of each product to be produces knowing their marginal contribution and amount of
available resource used by each of them. The objective is maximizing the total contribution
subject to all constraints.

b. Assembly time balancing – This problem is likely to arise when an item can be made by
assembling different components. The process of assembling requires some specified
sequences. The objective is to minimize the total elapse time.

c. Production is planning – This deals with the determination of a minimum cost production
plan over a planning period of an item with a fluctuating demand considering the initial
number of units in inventory. Production capacity, constraints on production, manpower
and all relevant cost factors. The objective is to minimize total operation cost.

d. Trim loss – when an item is made in standard size (e.g. glass paper sheet) the problem that
arises is to determine which combination of requirements should be produced from
standard materials in order to minimize the trim loss.

e. Blending problems – these problems arise when a product can be made from a variety of
available raw materials, each of which has a particular composition and price. The objective,
there is to determine the minimum cost blend subject to availability of the raw materials
and the minimum and maximum constraints on certain product constituents.

2. Marketing Management :
a. Travelling sales man problem – The problem of sales man is to find the shortest route
starting from a given city, visiting each of the specified cities and then returning to the
original point of departure, provided on city shall be visited twice during the tour. Such type
of problems can be solved with the help of the modified assignment technique.

b. Media selection – Linear programming technique helps in determining the advertising

media mix so as to maximize the effective exposure, subject to limitation of budget,
specified exposure rates to different market segments, specified minimum and maximum
number of advertisements in various media.

c. Physical distribution – Linear programming determine the most economic and efficient
manner of locating manufacturing plants and distribution centres for physical distribution.
3. Financial Management :
a. Profit planning – This deals with the maximization of profit margin from investment in
plant facilities and equipment, cash on hand and inventory.

b. Portfolio selection – This deals with the selection of specific investment activity among
several other activities. The objective is to find the allocation which maximize the total
expected return or minimize risk under certain limitations.

4. Personnel Management :
a. Staffing problem – Linear programming is used to allocate optimum manpower to a
particular job so as to minimize the total over time cost or total manpower.

b. Job evaluation and selection – Selection of suitable man for a specified job and
evaluation of job in organizations has been done with the help of linear programming
technique.

c. Determination of equitable salaries – Linear programming technique has been used in

determining equitable salaries and sales incentives.

5. Agricultural applications: This application falls into two categories, from economics and form
management. The former deals with agricultural economy of a nation or region, while the later
is concerned with the problems of the individual firms.

The studies of farm economics deals with inter regional competition and optimum spartial
allocation of crop production. Efficient product patterns were specified by linear programming
model under regional land resources and national demand constraints.

Linear programming can be applied in agricultural planning, e.g., allocation of limited resources
such as average, labour, water supply and working capital, etc. In such a way so as to maximize
net revenue.

6. Military applications: Military applications include the problem of selecting an air weapon
system against gorillas so as to keep them pinned down and at the sometime minimize the
amount of aviation gasoline used, a variation of transportation problem that maximizes the total
tonnage of banks dropped on a set of targets and the problem of community defense against
disaster, the solution of which yields the number of defense units that should be used in a given
attack in order to provide the required level of protection at the lowest possible cost.
Limitations of linear programming
Linear programming is a highly useful technique for solving peculiar problems, even though, it has some
limitation. These limitations are specified below.

1. It deals with only single objective, where as in real life situations we may come across more than
one objective. It means that the management does not only consider the increase of profit but
also considers labour force, Production capacity and the like. The linear programming model
cannot handle the multi-objective problems. So, linear programming cannot be applied in the
present fast developing Internet world.

2. The Linear programming does not take into consideration of the effect of time and uncertainty.
Most of the business or Industrial problems are not constant. At the same time, the result or
outcome of any solution is not definite.

3. Sometimes large-scale problems cannot be solved with Linear programming techniques even
when assistance of computer is available.

4. Linear programming assumes that a there is a direct relationship between two variables. But in
practice there is no such relationship especially in business and Industrial problems.

5. Parameters appear in the model are assumed to be constant in but in real life situation, they are
frequently neither known nor constants.
 UNIT-2
TRANSPORTATION:
All linear programming problems can be solved by simplex method, but certain special problem lends
themselves to easy solution by other methods. One such case in that of Transportation problems. It is a
typical operation Research technique intended to establish a least cost route for the transportation of
goods from the source says a company’s production plants to the various destination say its
warehouses.

The structure of transportation problem involved a large number of shipping routes from several supply
origins to several demand destinations. The objective is to determine the number of units of an item
(Commodity or product) which should be shipped from an origin to a destination in order to satisfy the
required quantity of goods or services available at each supply center, at the minimum transportation
cost and / or time.

Example: - Suppose that a manufacturer of Refrigerators has three plants situated at places called A,B
and C . Suppose further that his buyer are located in three region X, Y, Z where he has to supply them
the goods. Also, assume that the demand in the three regions and the production in different plants per
unit time period are known and equal aggregate, and further that cost of transporting one refrigerator
for each plant to each of the requirement center is given constant. The manufacturer problem is to
determine as to how we should route his product from his plant to the market places so that the total
cost involved in the transportation is minimized.

PLANT ROUTES MARKET

SUPPLY A X DEMAND

B Y

C Z
Terminology of Transportation problem
1. Balanced transportation problem: - Here the total capacity of the supply points or sources is
equal to the total demand at the destination.

2. Unbalanced Transportation Problem: - Here the total supply is not equal to the total
demand.

3. Dummy Source or Destination: - This is represented by adding an extra row or column to the
transportation table with 0 per unit cost for each of its cells. It is used to balance an unbalanced
problem by considering appropriate supply or demand for it.

4. Initial Feasible Solution: - It is a solution that satisfies the supply and demand conditions and
yet it may or may not be the optimum one. There are three methods of obtaining this solution
viz. North West Corner Method (NWCM), Least Cost Method (LCM), and Vogel’s Approximation
Method (VAM).

5. Optimum Solution: - It is the feasible solution which also gives a transportation plan with
minimum total cost. This can be obtained by using the Stepping Stone Method or Modified
Distribution Method (MODI Method), once we get the initial feasible solution.

6. Degeneracy:- For a feasible transportation optimal solution, there should be m+n-1 occupied
cells or allocations, whenever the number occupied cells is less than m+n-1, the solution is
called “degenerate” and is cannot be tested for optimality. Therefore, a special a special
procedure need to be followed as under.

Steps of North West Corner Method

1. Select the North – West corner cell in the transportation table and allocate as many units as
possible to it after checking the supply ( in row ) and the demand ( in column ) position for that
cell.

2. Reduce the supply and demand figures for the corresponding row and column accordingly.

3. Cover the row or column where the supply or demand gets fully exhausted (i.e. becomes 0) to
get a reduced transportation table.
 4. Go to step 1 and repeat the procedure until total supply is fully allocated to the cells so as to
fulfill the total demand.

Steps of Lest Cost Method

1. (a) Select a cell with minimum unit transportation cost from the table.

(b) If there are more than one cells with minimum unit cost i.e. there is a tie, then select that
cell among them where more number of units can be allocated ( after considering row supply
and column demands.) If there is a tie again, then select a cell randomly from them.

2. Allocate maximum possible number of units to it. Reduce the corresponding supply and demand
figures accordingly to get a reduced transportation table as in case of NWCM.

3. Repeat steps 1 and 2 until entire supply is exhausted to fulfill the entire demand.

Steps of Vogel’s Approximation Method

Here we go on making allocation to the minimum cost cell of a row or column for which the penalty for
not making an allocation is high.

1. Compute the penalty (i.e. the difference between the two smallest unit cost figures for the
cells) for each row and column.

2. Identify the row or column with highest penalty and choose the cell with smallest unit cost I
it.
(If there is a tie for highest penalties, select the row or column containing the minimum
cost cell, among them. If there is a tie again with minimum cost cell, then select that cell where
maximum allocation is possible and if there is a tie again with maximum allocation than we can
select any of the cell randomly)

3. Allocate maximum possible units to the selected cell reduce its row supply and column
demand accordingly. Obtain the reduced table then as done previously.

4. Recompute the penalties for the reduced table. [If a row (column) has been covered the row
(column) penalties remain unchanged]. Repeat the above procedure until the entire
demand and supply gets exhausted.
 UNIT-3
ASSIGNMENT:
Assignment is a typical optimization technique particularly useful in a situation where a certain number
of task are require to be assigned to an equal no. of facilities , on a one to one basis so that the
resultained effectiveness is optimize.

Example: - Jobs to be assign to Machines or workers, Vehicle to routes etc.

The assignment is a special case of the transportation problem where the objective is to minimize the
total cost or time of completing a number of jobs by a number of persons and maximize effectiveness
revenues, profits etc. The model is mostly used for planning. The assignment model is also useful in
solving problems such as, assignment of machine to jobs, assignment of salesman to sales territories,
travelling salesman problem etc. It may be noted that with n facilities and n jobs, there are n possible
assignments. One way of finding an optimal assignment is to write all the n possible arrangement,
evaluate their total cost and select the assignment with minimum cost. But because of many
computational procedures this method is not possible.

CHARACTERISTICS OF THE ASSIGENMETN PROBLEMS:

From the general description of the assignment problem and the methods described for solving such
problems, we can list out following characteristics of these problems.

1. The available resources are finite in number such as availability of workers, machines, project
managers, salesman, jobs etc.
2. These available resources can be assigned only on one to one basis i.e. jobs can be assigned to a
particular employee only once and after this one-to-one assignment, neither the worker, nor the
job so assigned is available for any further consideration.
3. The outcome or the results are expressed in terms of cost, time or profits.
4. The assignment methods aims at either cost minimization or profits maximization, indicating
that the assignment are made with a specific purpose of either cost, time or distance reductions
(minimization) or profits or utility maximization.
5. For one-to-one basis assignment, the problem has to be of the balanced type, otherwise it has
to be converted into a balanced problem or into a square matrix.

DIFFERENCE BETWEEN TRANSPORTATION AND ASSIGGENMENT PROBLEM

TRANSPORTATION:
 I. No. of sources and number of destination need not be equal. Hence, the cost matrix is not
necessarily a square matrix.
II. The problem is unbalanced if the total supply and the total demand are not equal.
III. The sum of capacity and the requirement value should be equal.

ASSIGGENMENT:
I. Since assignment is done on one basis, the number of sources and the number of
destination are equal. Hence the cost matrix must be square matrix.
II. The problem is unbalanced if the cost matrix is not a square matrix.
III. In compare to transportation problem it is easy to solve assignment problem.

Travelling salesman
The travelling salesman problem is like this. A salesman is assigned ‘n; cities to visit. He is given distance
between all pairs of cities and interested to visit each of the cities once in a continuous trip and return
to the origin, using the shortest route. In this context, we define the visit to the cities in a sequence,
ending at the same city where it begins including a visit to each of the cities only once, as a tour. Since a
complete cycle is involved, it makes no difference which city is the starting city. While the problem
seems trivia, there is no general algorithm available for its solution. There are large number of solving
methods but all are enumerative to some degree or another and hence become impractical for
problems of large size.
 UNIT-4

Queuing Theory or Waiting Line Theory

This theory is applicable to waiting line solution. So, this theory has the name of waiting line. In our fast
moving world, people come across waiting line every day at Bus stand, Railway station, Bank, Park,
Beach, Movie house, Hospital, Grocery shop etc. Delay in service at these centers creates loss of
customer. The queuing model helps the management to take a wise decision. Here, the additional cost
of reducing or eliminating waiting time is taken in to account.

We are all too familiar with queues in our day to day existence and perhaps there is no need to define
what a queue is. On the way to place of work often we have to wait for a bus, for the traffic lights to
turn green and then at the office premises for the lift. Cars waiting at petrol pumps for service, customer
waiting at the bank, telephone subscribers waiting for connections are all a common sight. Aircrafts get
delayed for want of a free runway. No so similar to all, are the cases of broken down machines waiting
for repairs, workmen waiting for tools and goods in production shops waiting for cranes. Even inventory
situations may be regarded as queues not only in that customer’s wait in line for goods, but also that
goods form a waiting line awaiting consumption.

All the above examples have one common feature. Customers arrive at a service centre and wait for
service. The arrival of customers is not necessarily regular and so is the time taken for service not
uniform. Queues build up during hours of demand and disappear during the lull period. Personally we
do not like to wait.

In the commercial or industrial situations, it may not be economical to have waiting lines. On the other
hand, it may not be feasible or economical to totally avoid queues. An executive dealing with the system
then would like to find the optimal facilities to be provided.

Queuing theory based on probability concepts gives an indication of the capability of a given system and
of the possible changes in its performance with modification to the system. All the constraints of the
process are not taken into account in the formulation of a queuing model. There is no maximization or
minimization of an objective function. Therefore the application of queuing theory cannot be viewed as
an optimization process. With the help of queuing theory the executive can at best make an informed
guess of what the balance between customer waiting time and service capability could be. He first
considers several alternatives, evaluates through queuing models, their effect on the system, and makes
his choice. The criteria for evaluation will be measures of efficiency of the system like the average length
of a queue, expected waiting time of a customer and the average time spent by the customer in the
system. In this approach, his success primarily depends on the alternatives considered and not so much
on the queuing models developed.
General Structure of a Queuing System
The general structure of a queuing system

Input Population Queue Service System Customer leave the station

Arrival Process Queue Structure Service Mechanism

We shall discuss in more details the various elements of a queuing system and then present
mathematical results for some specific systems. The elements of a system are:

1. Arrival Process: - The arrivals from the input population may be classified on different bases
as follows:

a. According to source: - The source of customers for a queuing system can be infinite or
finite. For example, all people of a city or state (and others) could be the potential
customers at a superbazar. The number of people being very large, it can be taken to be
infinite. On the other hand, there are many situations in business and industrial conditions
where we cannot consider the population to be infinite ---- it is finite. Thus, the ten
machines in a factory requiring repair and maintenance by the maintenance crew would
exemplify finite population. Removing one machine from a small, finite, population like this
will have a noticeable effect on the calls expected to be made by the remaining machines
than if there were a large number of machines, say 500.
EXAMPLE: For Infinite: No. of students in class, No. of employees in office, etc.
For Infinite: No. of customers in shopping mall.

b. According to numbers: - The customers may arrive for service individually or in groups.
Single arrivals are illustrated by customers visiting a beautician, students reaching at a
library counter, and so on. On the other hand, families visiting restaurants, ships discharging
cargo at a dock are examples of bulk, or batch, arrivals.
EXAMPLE: For Individual: IN Beauty-Parlor, In library.
For Group: In Cinema Hall, In Restaurant.

c. According to time: - Customer may arrive in the system at known (regular or otherwise)
times, or they might arrive in a random way. The queuing models where in customers arrival
times are known with certainty are categorized as deterministic models (insofar as this
characteristic is concerned) and are easier to handle. On the other hand , a substantial
majority of the queuing models are based on the premise that the customers enter the
system stochastically, at random points in time.
 With random arrivals, the number of customers reaching the system per unit time might be
described by a probability distribution. Although the arrivals might follow any pattern, the
frequently employed assumption, which adequately supports many real world situations, is
that the arrivals are Poisson distributed.
EXAMPLE: For Deterministic Time: IN Office, In class- room etc.
For Probabilistic Time: In Hospital, In Jewelry shop.

2. Service system: - There are two aspects of a service system ------- (a) structure of the service
system and (b) the speed of service

a. Structure of the service system: - By structure of the service system we mean how the
service facilities exist. There are several possibilities. For example, there may be

(1) A single service facility: - A library counter is an example of this. The models that
involve a single service facility are called single server models. Figure illustrate such a
model.
EXAMPLE: A LIBRARY.

Queue Service Facility

Arrivals Customer Leave

(2) Multiple, parallel facilities with single queue: - That is, there is more than one
server. The term parallel implies that each server provides the same type of facility.
Booking at a service station that has several mechanics, each handling one vehicle,
illustrates this type of model. It is shown in figure
EXAMPLE: A HOSPITAL.

Service Station

Queue customer Leave

Arrivals
 (3) Multiple, parallel facilities with multiple queues: - This type of model is different from
the earlier one only in that each of the servers has a different queue. Different cash
counters in an electricity office where the customers can make payment in respect of
their electricity bills provide an example of this type of model. Figure portrays such a
model.
EXAMPLE: A RAILWAY STATION.

Queue Service Station Customer Leave

Arrivals

(4) Service facilities in a series: - In this a customer enters the first station and gets a
portion of service and then moves on to the next station, gets some service and then
again moves on to the next station …….. and so on, and finally leaves the system, having
received the complete service. For example, machining of a certain steel item may
consist of cutting, turning, knurling, drilling,, grinding and packaging operations each of
which is performed by a single server in a series. Figure show such a situation.
EXAMPLE: A CENEMA HALL, AN AIRPORT etc.

Queue Service station Queue Service Station

Arrivals

3. Queue structure: - Another element of a queuing system is the queue structure. In the queue
structure, the important thing to know is the queue discipline which means the order by which
customers are picked up from the waiting line for service. There are a number of possibilities.
They are
 (a) First-come-first-served: - When the order of service of customers is in the order of their
arrival, the queue discipline is of the first-come-first-served type. For example, with a queue
at the bus stop, the people who came first will board the bus first.

(b) Last-come-first-served: - Sometimes, the customers are serviced in an order reverse of

the order in which they enter so that the one who join the last are served first. For example,
assume that letters to be typed, or order forms to be processed accumulate in a pile, each
new addition being put on the top of them. The typist or the clerk might process these
letters or orders by taking each new task from the top of the pile. Thus, a just arriving task
would be the next to be serviced provided that no fresh task arrives before it is picked up.
Similarly, the people who join an elevator last are the first ones to leave it.

(c) Service-in-random- order: - Random order of service is defined as: whenever a customer
is chosen for service, the selection is made in a way that every customer in the queue is
equally likely to be selected. The time of arrival of the customer is, therefore, of no
consequences in such a case.
EXAMPLE: Lottery.

(d) Priority service: - The customers in a queue might be rendered service on a priority basis.
Thus, customers may be called according to some identifiable characteristic for service.
Treatment of VIP’s in preference to other patients in a hospital is an example in point.

Queuing Models
The queuing model can be characterized as being deterministic and probabilistic. If each customer
arrives at known interval and the service time is known with certainty the queuing model shall be
deterministic in nature. If each customer arrival rate is unknown and the service time is also unknown
than the model shall be probabilistic.

Probabilistic Queuing Model

Of the numerous queuing models available, we shall consider the following models:

1. Poisson-exponential single server model- infinite population: - This model is based on the
following assumptions:

a. The arrivals follow Poisson distribution, with a mean arrival rate of, say, λ.
b. The service time has exponential distribution. Let the average service rate be μ.
c. Arrivals are from infinite population.
d. The customers are served on a first-come-first-served basis.
e. There is only a single service station.
 2. Poisson-exponential, single-server model-finite population: This model is based on the
following assumptions:

a. The arrivals follow Poisson distribution, with a mean arrival rate of, say, λ.
b. The service time has exponential distribution. Let the average service rate be μ.
c. Arrivals are from finite population.
d. The customers are served on a first-come-first-served basis.
e. There is only a single service station.
3. Poisson-exponential, multiple server model-finite population: This model is based on the
following assumptions:

a. The arrival of customers follows Poisson probability law, the average arrival rate being λ.
b. The service time has an exponential distribution.
c. There are K service stations, each of which provides identical service.
d. A single waiting line is formed.
e. The input population is infinite.
f. The service is on a first-come-first-served basis.
g. The arrival rate is smaller than the combined service rate of all K service facilities.

SEQUENCING:
Production management is a very important function in the manufacturing or services industry. The
availability of resources is limited in terms of the capacity, availability and number of machines in a
production shop, whereas there are large number of jobs to be done with variety of processes and
function to be performed. It is the responsibility of the production manager to make proper mechanic
and optimum utilization of the available resources for the production of required products. These
resources, the production can be reduced to a very large extent. The idling of the resources is not a
happy sight for the production manager. Thus by maintaining the required quality, the production level
can be increased at minimal cost only by judicious utilization of the resources, thereby establish its lead
in the market in terms of sales and profit margin, still maintaining the competitive advantage.

The need of sequencing method (models) would, therefore, arise, when there exists a problem of
sequencing or prioritizing tasks on certain number of facilities in order to reduce idle time by making
effective use of available facilities and obtain higher productivity. The need of sequencing arises
anywhere, wherever is a likelihood of queue formation such as jobs in a production shop, patients in
hospital or cars coming in for repairs in a workshops etc.
Assumption of sequencing
There are some general assumptions made to solve the sequencing problems. These are given here:

1. The processing times on various machines are independent of the order in which different jobs are
processed on them.

2. The time taken by different jobs in going from one machine to another is negligible.

3. A job once started on a machine would be performed to the point of completion u interrupted.

4. A machine cannot process more than one job at a given point of time.

5. A job would start on a machine as soon as the job and the machine on which it is to be processed
are both free.
 UNIT-5
NETWORK ANALYSIS:
A Project such as construction of a bridge, highway, power plant, marketing a new product, research
and development etc., may be defined as a collection of inter-related activities (or task) which must be
completed in a specific time according to a specified sequence and require resources such as personnel,
money, materials, facilities etc.

The growing complexities of today’s project had demanded more systematic and more effective
planning techniques with the objective of optimizing the efficiency of executing the project.

Network analysis is an important role in project management. Network analysis is a graphical

representation of activities and events used in project. Network analysis is the method of planning and
controlling projects by recording their interdependence in a diagrammatic from .PERT and CPM
represent the two well- known network- analysis techniques used to assist the managers in planning and
controlling large scale construction projects, research and development etc.

BASIC DIFFERENCE BETWEEN PERT AND CPM

In 1956-58, PERT and CPM were developed by two different groups almost simultaneously. CPM was
developed by walker from E.I. du Pont de Nemours Company to solve project scheduling problems.
During the same time, PERT was developed by team of engineers working on the Poplar’s Missile
programme of the US Navy.

Through there are no essential difference between PERT and CPM as both of them share in common the
determination of a critical path and are based on the network representation of activities and their
scheduling that determines the most critical activities to be controlled so as to meet the completion
date of the project.

PERT
1. Since PERT was developed in connection with R and D work, therefore it had to cope with
uncertainties which are associated with R and D activities. In PERT, total project duration is
regarded as a random variable and therefore associated probabilities are calculated so as to
characterize it.
2. It is an event- oriented because in the analysis of network emphasis is given an important stage
of completion of task rather than the activities required to be performed to reach to a particular
event or task.
3. PERT is normally used for projects involving activities of non-repetitive nature in which time
estimates are uncertain.
4. IT helps in pinpointing critical areas in a project so that necessary adjustment can be made to
meet the scheduled completion date of the project.
CPM
1. Since CPM was developed in connection with a construction project which consisted of routine
tasks whose resources requirement and duration was known with certainty, therefore is
deterministic.
2. CPM is suitable for establishing a trade-off for optimum balancing between schedule time and
cost of the project.
3. CPM is used for projects involving activities of repetitive nature.

SUITABILITY OF PERT/CPM
I. Large weapon system.
II. Ship Building.
III. Construction of a building or Olympic site.
IV. Planning and launching a new project.
V. Air port facilities building.
VI. Installation of computer system.
VII. Launching new products.
VIII. Creation of Road facilities.
IX. Creation of model village/town.
X. Creation of picnic spot.
XI. Creation of Colony.

ADVANTAGES OF PERT/CPM
The application of PERT and CPM control techniques brings the following advantages:

1. ENSURE PLANNING: - PERT ensures actual planning. A manager is compelled to prepare a plan
under PERT. He is requested to find out all key events and activities. Besides, the manager
should identify the sequencing of events and activities and their interrelationships. Manager
should compute the most likely time by considering all possibilities, uncertainties and pit falls.

2. Identification of favorable factors: - Computation of most likely time eliminates surprises and
wastages. This helps the management to find the favorable factors which are responsible for the
successful completion of the project in advance.

3. Savings of cost and time: - CPM focus on the events which require maximum attention. It leads
to savings of cost as well as time.

4. Taking preventive or corrective actions: - PERT/CPM disclosed the bottlenecks and potential
trouble spots well in advance. It is enough to take some preventive measures or corrective
actions.
5. Attention on critical activities: - Serious attention can be devoted on critical activities and it is
possible to speed up these activities.

6. Everything at right: - It emphasis the right action at right time in the completion of a project.

7. Making awareness of responsibilities: - It makes every manager fully aware of his

responsibilities. It is possible by understanding the relationship of one work with other works.

8. Securing co-operation: - The PERT/CPM is constantly reviewed and updated on the basis of
feedback. It helps the management to get co-operation of all departments.

9. Facilitates decision making: - Management can analyze the effects of various alternate decision
instead of conducting expensive operations. It facilitates improved decision-making.

10. Improved communication: - Each critical path and sub-critical paths are graphically represented.
For each employee (Designers, contractors, Project manager etc. ) can understand his role in the
proposed project from the graphical representation. It results in improved communication.

11. Simultaneous performance of works: - It ensures simultaneous performance of different parts

of the work. The whole project is divided into various different parts of work. Each work is
performed by different persons separately.

12. Advance control action: - PERT/CPM discloses how a delay in one activity affects all the
succeeding activities. It helps the management to take a control action well in advance.

13. Timely completion of a project: - The management can get an opportunity to shift its attention
to any critical task so that the entire project is completed in time.
Limitations of PERT/CPM
The PERT/CPM has certain limitations also. They are given below.

1. Error in estimation of time and cost: - Future is uncertainty. Three times are estimated i.e.
optimistic, pessimistic and normal. Even though, it is very difficult to estimate accurate time
required to complete a project. So, PERT is an unreliable as a control aid.

2. Application: - PERT has to be applied only to onetime non-repetitive projects. It does not help
the management to exercise control on continuous performing work.

3. Time consuming and expensive: - A lot of data have been collected to prepare PERT network. It
requires a lot of time and consumes some amount of expenses also before implementation of a
project.

BASIC TERMS
To understand the network techniques one should be familiar with a few basic terms of which both CPM
and PERT are special applications.

NETWORK: It is a graphic representation of logically and sequentially connected arrows and sequentially
connected arrows and nodes representing activities and events of a project. Networks are also called
arrow diagram.

ACTIVITY: An activity is a task or item of work to be done that consume time, effort, money and other
resources. It lies between two events. An activity is represented by an arrow with its head indicating the
sequence in which the events are to occur.

Activity
i j

EVENT: The beginning and end points are called events or node. An event represents the start or
completion of some activity. It is represented by a numbered circle.

MERGE AND BURST EVENT: 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 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.

DUMMY ACTIVITY: Certain activities which neither consume time nor resources but are used simply to
represent a connection or a link between the events are known as dummies. It is shown in the network
by dotted line. The purpose of introducing dummy activity is:

I. To maintain uniqueness in the numbering system as every activity may have distinct by which
the activity can be identified.
II. To maintain a proper logic in the network.

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 double line. This path identifies all the critical
activities of the project.

TOTAL FLOAT: - The total float of an activity represents the amount of time by which it can be delayed
without delaying the project completion date. In other words, it refers to the amount of free time
associated with an activity which can be used before, during or after the performance of this activity. It
is equal to the difference between the total time available for the performance of an activity and the
time required for its performance.

TOTAL FLOAT= (Li – Ei ) or ( Lj - Ej)

FREE FLOAT: - The free float is the part of free float which can be used without affecting the float of the
succeeding activities. Thus, it is that value of the float which is consumable when the succeeding
activities (of the activity in question) are started at their earliest times.

FREE FLOAT= TOTAL FLOAT – HEAD SLACK (DIFF. OF HEAD EVENTS TIME OF AN ACTIVITY)

INDEPENDENT FLOAT: - The independent float time of an activity is the time of float time which can be
used without affecting either the head or tail events. It represents the amount of float time available for
an activity when its preceding activities are completed at their latest and its succeeding activities begin
at their earliest time-leaving the minimum time available for its performance. Any excess of this
minimum time overt the duration of the activity is termed as the independent float associated with it.

INDEPENDENT FLOAT = FREE FLOAT – TAIL SLACK (DIFF. OF TAIL EVENTS TIME OF AN ACTIVITY)
OPTIMISTIC TIME (to): - It is the shortest time that may be required for completion of an activity, when
all resources are available and no bottlenecks is expected.

MOST LIKELY TIME (tm) : - It is the amount of time required to complete an activity under real-life
situation where there may be some bottlenecks experienced but quickly resolved without losing time.

PESSIMISTIC TIME (tp): - It is the longest time required for completion of an activity when unforeseen or
unexpected interruptions occur during its completion.

PROJECT CRASHING: The project completion time can be reduced by reducing (crashing) the normal
completion time of critical activities. The reduction in normal time of completion will increase the total
budget of the project. However, the decision maker will always look for trade-off between total cost of
project and total time required to complete it. Crashing an activity means performing it in the shortest
technically possible time by allocating to it necessary recourses. Crashing is employed to reduce the
project completion time by spending extra recourses (cost).

RULES OF NETWORK CONSTRUCTION:

I. Try to avoid arrows which cross each other.
II. Use straight line.
III. No event can occur until every activity proceeding it has been completed.
IV. An event cannot occur twice i.e. there must be no loops.
V. An event succeeding an event cannot be started until that event has occurred.
VI. Use arrows from left to right.
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 events.