Quantitative Techniques
Deepthy Sai Manikandan
Topics:
Linear Programming
Transportation Problem
Assignment problem
Queuing Theory
Decision Theory
Inventory Management
Simulation
Network Analysis
LINEAR PROGRAMMING
Linear Programming
It is a mathematical technique for
optimum allocation of scarce or limited
resources to several competing
activities on the basis of given criterion
of optimality, which can be either
performance, ROI, cost, utility, time,
distance etc.
Steps
Define decision variables
Formulate the objective function
Formulate the constraints
Mention the non-negativity criteria
Components & Assumptions
Objective Proportionality
Decision Variable Addivity
Constraint Divisibility
Parameters Certainity
Non-negativity
Problem:
An animal feed company must
produce at least 200 kgs of a mixture
consisting of ingredients x1 and x2
daily. x1 costs Rs.3 per kg. and x2
Rs.8 per kg. No more than 80 kg. of
x1 can be used and at least 60 kg. of
x2 must be used. Formulate a
mathematical model to the problem.
Solution:
Minimize Z = 3x1 + 8x2
Subject to x1 + x2 >= 200
x1 <= 80
x2 >= 60
X1 >= 0 , x2 >= 0
Graphical Solution
Formulate the problem
Convert all inequalities to equations
Plot the graph of all inequalities
Find out the feasilble region
Find out the corner points
Substitute the objective function
Arrive at the solution
Problem:
Maximize Z = 60x1+50x2
subject to 4x1+10x2 <= 100
2x1+1x2 <= 22
3x1+3x2 <= 39
x1,x2 >= 0
Solution :
4x1+10x2=100 (0,10)(25,0)
2x1+x2=22 (0,22)(11,0)
3x1+3x2=39 (0,13)(13,0)
x2
22
13
10
E
D
C
A
0 B 11 13 25 x1
Z = 60x1 + 50x2
A (0,0) = 60*0+50*0 = 0
B (11,0) = 60*11+50*0 = 660
C (9,4) = 60*9+50*4 = 740
D (5,8) = 60*5+50*8 = 700
E (0,10) = 60*0+50*10 = 500
Max Z is at C (9,4) and Z = 740
TRANSPORTATION
PROBLEM
Transportation Problem
A special kind of optimisation problem
in which goods are transported from a
set of sources to a set of destinations
subject to the supply and demand
constraints. The main objective is to
minimize the total cost of
transportation.
Initial Basic Feasible Solution
North West Corner Method
Least Cost Method
Vogel’s Approximation Method
The solution is said to be feasible when
one gets (m+n-1) allotments.
Assignment Problem
It is a problem of assigning various
people, machines and so on in such a
way that the total cost involved is
minimized or the total value is
maximized.
QUEUING THEORY
Queuing Theory
A flow of customers from finite/infinite
population towards the service facility
forms a queue due to lack of capacity
to serve them all at a time.
Input Server Output
Measures
Traffic intensity
Average system length
Average queue length
Average waiting time in queue
Average waiting time in system
Probability of queue length
Queuing & cost behavior
Cost of
Total cost
service
Cost of waiting
DECISION THEORY
Decision Theory
The decision making environment
Under certainity
Under uncertainity
Under risk
Decision making under
uncertainity
Laplace Criterion
Maxmin Criterion
Minmax Criterion
Maxmax Criterion
Minmin Criterion
Salvage Criterion
Hurwicz Criterion
Inventory management
Inventory is vital to the sucessful
functioning of manufacturing and
retailing organisations. They may be
raw materials, work-in-progress, spare
parts/consumables and finished goods.
Models
Deterministic Inventory Model
Inventory Model with Price breaks
Probabilistic Inventory Model
Basic EOQ Model
Slope=0 Total cost
Minimu
m total
cost Carrying cost
Ordering cost
Optimal order qty
SIMULATION
Simulation
It involves developing a model of
some real phenomenon and then
performing experiments on the model
evolved. It is descriptive in nature and
not an optimizing model.
Process
Definition of the problem
Construction of an appropriate model
Experimentation with the model
Evaluation of the results of simulation
NETWORK ANALYSIS
PERT
CPM
Network Analysis /
Project Management
A project is a series of activities directed
to the accomplishment of a desired
objective.
PERT
CPM
CPM-Critical Path Method
Activities are shown as a network of
precedence relationship using Activity-
On-Arrow (A-O-A) network
construction.
There is single stimate of activity time
Deterministic activity time
Project Evaluation &
Review Technique
Activities are shown as a network of
precedence relationships using A-O-A
network construction.
Multiple time estimates
Probabilistic activity time
Crashing
Crashing is shortening the activity
duration by employing more
resources.
cost slope = Cc – Cn/ Tn - Tc