Representative Theory/Concept Notes: OR Module 1 and Module 2

1. Define Operations Research (OR) and explain its importance in managerial decision making.
Operations Research (OR) is a scientific approach to decision making that uses mathematical
models, statistical analysis, and optimization techniques to solve complex managerial problems.
Importance: It helps managers allocate resources efficiently, minimize costs, maximize profits, and
improve planning and control in organizations.
2. Describe the basic components of a Linear Programming Problem (LPP) with an example.
The basic components of an LPP are:
 Decision Variables: Variables whose values are to be determined (e.g., number of units of
products).
 Objective Function: Mathematical expression to maximize or minimize (profit, cost, etc.).
 Constraints: Limitations on resources such as labor, materials, or time.
 Non-negativity Condition: Decision variables cannot take negative values.
Example: Maximize profit by deciding the number of units of Product A and Product B subject to
resource constraints.
3. Explain the assumptions of Linear Programming used in Operations Research models.
Main assumptions are:
 Linearity (Proportionality): Relationship between variables is linear.
 Additivity: Total effect equals the sum of individual effects.
 Divisibility: Decision variables can take fractional values.
 Certainty: All coefficients in the model are known with certainty.
 Non-negativity: Decision variables cannot be negative.
4. What are the steps involved in formulating a Linear Programming Problem from a real-life
situation?
Steps include:
1. Identify decision variables.
2. Define the objective function (maximize or minimize).
3. Identify constraints based on available resources.
4. Express constraints mathematically.
5. Apply non-negativity conditions to decision variables.
5. Distinguish between feasible solution and optimal solution in Linear Programming.
 Feasible Solution: Any solution that satisfies all constraints and non-negativity conditions.
 Optimal Solution: The feasible solution that provides the maximum or minimum value of
the objective function.
6. Explain the role of constraints in an LPP with a suitable illustration.
Constraints represent limitations on resources such as labor hours, raw materials, or machine time.
They restrict the possible values of decision variables.
Illustration: If only 40 labor hours are available and each product requires 2 hours, the constraint
becomes 2X ≤ 40.
7. What is the graphical method of solving an LPP? Mention the basic steps involved.
The graphical method is used to solve LPPs with two decision variables by plotting constraints on a
graph and identifying the optimal point.
Steps:
1. Convert inequalities into equations.
2. Plot each constraint on a graph.
3. Identify the feasible region.
4. Find the corner points of the feasible region.
5. Evaluate the objective function at these points to find the optimal solution.
8. Define feasible region and corner point method in the context of graphical solution of LPP.
 Feasible Region: The area on the graph that satisfies all constraints simultaneously.
 Corner Point Method: Evaluating the objective function at the vertices (corner points) of the
feasible region to determine the optimal solution.
9. Discuss any three business applications of Operations Research in management.
 Production Planning: Determining the optimal product mix to maximize profit.
 Inventory Management: Deciding optimal order quantity and stock levels.
 Transportation and Distribution: Minimizing cost of shipping goods from sources to
destinations.
10. Explain how Operations Research supports decision making in marketing, finance, or operations
management.
 Marketing: Helps in advertising budget allocation and pricing strategies.
 Finance: Assists in portfolio optimization and capital budgeting decisions.
 Operations Management: Improves scheduling, resource allocation, and logistics planning to
increase efficiency.

11. Software Apps useful in OR

 MS Excel
 Excel Solver
 QM
 AMPL
 Matlab
 Google OR Tools
 LINGO
 LINDO
 Programming Langauges like Python, R, Java, C++ etc.
  AI Applications like ChatGpt, Gemini, Perplexity.. etc.

12. OR is instrumental for for both MIS and DSS (decision support systems)
13. What are special cases in LP?
a) Multiple optimal solution
b) Infeasibility
c) Unboundedness
d) Redundancy

13. What is a binding constraint? Suppose the final solution (x1,x2) after graphical or algebraic
work out is (x1=10, x2=5)
if one of the constraint is 2x1 + 3x2 <= 35 , if we substitute the above solution in the LHS of
this inequality 2x1 + 3x2 = 2*10 + 3*5 = 35 which is same as RHS of the inequality then such a
constraint is called binding constraint as the resource gets exhausted or exactly used up.

On the other hand if the constraint was 2x1 + 3x2 <= 40 then the LHS = 35 would be < RHS= 40
and the resource is not fully used up, such constraint is called binding constraint.

Further Questions:

1. What do we call the best possible solution of an OR model? Optimal solution

2. In Linear Programming, what term is used for the set of all solutions that satisfy all
constraints? Feasible Region
3. Which point in a graphical LPP usually gives the optimal solution? Corner or Extreme Point
4. What type of relationship must exist between variables and constraints in Linear
Programming? Linear Relationship
5. If two constraints intersect in the feasible region, what is that intersection point called in
LPP? Corner Point
6. What do we call a constraint written with “≤” that does not become exactly equal at the
optimal solution? Non-Binding Constraint
7. In OR modeling, what do we call the numerical quantities we decide the values for?
Decision variables
8. Which concept ensures that the contribution of each variable is independent of other
variables in LPP? Additivity
9. What term describes a solution that violates at least one constraint? Infeasible solution
10. In the graphical method, what geometric shape is generally formed by the feasible region of
an LPP with two variables? Converx Polygon
11. What is the Generic OR framework / model?

Transporation Problem
1. What is a Transportation Network? The different routes that connect the source points and
the destination points so that the supply quantity (from source) is transferred as demanded
quantity (at destinations). It can be shown as a network graph.
2. What is a Transportation cost matrix? The matrix which shows a cross table of supply and
demand points with the cells representing cost for that route.
3. Express a TP as an LP Model.
4. List three IBFS methods: NWC, LCM, VAM
5. List two final/optimal solution methods: Stepping stone (SS), MODI
6. What condition must hold between total supply and total demand for a transportation
problem to be directly solvable? Both should be equal.
7. What do we call a transportation problem where total supply equals total demand? Balanced
TP
8. Which method allocates shipments starting from the top-left cell regardless of cost? NWC
9. Which initial solution method uses minimum transportation cost first? LCM
 10. Which method selects allocations based on the maximum penalty of opportunity loss? VAM
11. What term describes a basic feasible solution having fewer than (m + n − 1) allocations?
Degeneracy or degenerate solution
12. What symbol is used to resolve degeneracy in transportation problems? ε (epsilon)
13. Which optimality test method uses uᵢ and vⱼ potentials to evaluate unused cells? MODI
14. In the MODI method, what type of loop is formed to improve the current solution? Closed
loop (stepping stone path)
15. What do we call a route where transportation is not allowed and cost is treated as extremely
large? Prohibited or restricted route.
16. What are some special cases in TP? a. Unbalanced TP b. Restricted Route c. Case of
Profit matrix (maximization case) d. Multiple optimal solution
17. How to solve Profit Case in TP? First convert Profit matrix to Opportunity Cost (loss)
matrix by subtracting all the values from the Highest Value in the entire matrix and solve
this as a regular Transporation minimization problem using IBFS and MODI/SS method.

Assignment Problem:
1. In an assignment problem, how many tasks can be assigned to one worker? one
2. What is the maximum number of assignments in an n×n assignment matrix? n
3. Which algorithm is commonly used to obtain the optimal assignment solution? Hungarian
Assingment Method or Model - HAM
4. What operation is first performed in the Hungarian method to create zeros in rows? Row
reduction - subract minimum value in a row from all values in that row respectively.
5. After row reduction, which operation is applied to columns to create additional zeros?
Column reduction - subract minimum value in a column from all values in that column
respectively.
6. What do we call a situation where a worker cannot perform a specific job and a large cost is
assigned? Restricted assignment
7. If the number of jobs and workers are unequal, what type of row or column is added?
Dummy row/column (dummy job/worker)
8. In the Hungarian method, what is the minimum number of lines required to cover all zeros
equal to for optimality? Minimum lines should be equal to the order of the square matrix.
9. The order of a square matrix is same as either no. Of rows/no. Of columns eg. In a 3 x 3
square matrix the order is 3.
10. What are some special cases in AP ? a. Unbalanced AP b. Restricted assignment AP c.
Profit (or maximization) assignment case d. Multiple optimal solution AP
11. Give a comparison between a TP degeneracy and an AP degeneracy? In both cases a
degenrate solution requires some kind of treatment for overcoming degeracy. In case of TP
degenracy happens when m+n-1 is Not equal to no. Of allocations and giving a small
epsilon value to a non-stepping stone loop cell the equality can be achieved thus removing
degenracy. In case of AP degenracy happens when no. Of lines is not equal to the order of
square matrix, here we treat by subtracting minimum value from uncovered cells from all
the uncovered cells and adding this value to the cells at interesection of two lines, and we
repeat creation of lines till the equality is achieved.
12. Enlist three network models? Minimum Spanning Tree (MST), Maximal Flow Technique
(MFT), Shortest Route Technique(SRT)
13. MST: All nodes should get covered but not all edges will get covered for finding minimum
length of say pipeline/cables/wires to be laid in a network.
14. MFT: To find the maximum flow of say water/chemicals/ traffic from start to finish in a
network.
15. SRT: To find the shortest distance from start to finish in a network.