2.

Models and Modeling in Operational Research

2.1. Introduction
Models and modeling are fundamental to operations research and have broad application in
organizational systems.
According to Perumpalath (2005), a manageable model of reality is necessary to understand an
organization’s components and their interrelationships. Models provide descriptions and/or
simplifications of complex phenomena (Rouse & Morris, 1986). They can provide the basis for both
scientific explanations of and predictions about phenomena (Gilbert, Boulter & Rutherford, 1998).
What is Model in Operation Research?
 A model may be defined as a representation of a system (a unit or process that exists and operates
through the interaction of its parts) or a phenomenon. These representations can be in the form of
diagrams, maps, flowcharts, mathematical equations, graphs, computer simulations, or physical replicas
of the system. Models can be physical, abstract or somewhere in the middle.
 Models have two basic purposes:
 to convey the current understanding of a system or
 to generate a new understanding of the system or both.
 The aim of the model is to provide a way to assess the behaviour of a system to improve its
performance.
 Modeling refers to the process of developing a model for an existing or anticipated system,
conducting experiments using the model to gain knowledge about the performance of the system
under various operating conditions, and evaluating of the alternative management policies and
decision-making practices.
Managers can use modeling for a real-life system or phenomenon to understand the difference in the
behavior of the problem as compared with the description of the problem.

Advantages of Good Model

A good model has many advantages as follows:
 The model is easier to study than the whole system itself.
 It offers a logical and systematic approach to the problem.
 It specifies the scope and limitations of the problem.
 It reveals the nature of quantifiable factors (that can be measured in numeric terms) in a problem.
 It includes useful tools that help in removing duplication of methods used to solve a particular
problem.

2.2. Types of Models in Operation Research

Various factors can form the basis on which Operational Research models can be categorized.
A. Based on the Degree of Abstraction
 1. Mathematical models
 A mathematical model is a set of equations that are used to represent a real-life situation or
problem.
 For example, linear programming problems for maximizing profits or transportation problem.
2. Concrete models:
 These are least abstract models and a viewer can observe the shape and characteristics of the
modeled entity immediately.
 For example, a globe of the earth or 3-D model of human DNA.
3. Language models:
 Language models are more abstract than concrete models but less abstract than mathematical
models.
 For example, language model for speech recognition.
B. Based on the Function
1. Descriptive models
 A descriptive model is one in which all the operations involved in a system are represented using
non-mathematical language.
 The relationships and interactions among different operations is also defined using non-
mathematical language.
 Such models are used to define and represent a system but they cannot predict their behavior. For
example, a layout plans.
2. Predictive models
 A predictive model is developed and validated using known results
 It is used to predict future events or outcomes.
 These models are used to increase the probability of forecasting future outcomes and risks by
incorporating historical information.
 Predictive models are not easy to explain in the equation form, and simulation techniques are
often needed to generate a prediction.
 Curve and surface fitting, time series regression, or machine learning techniques may be used to
construct predictive models.
3. Normative or prescriptive models
 Such models are used for recurring problems.
 In such models, decision rules or criteria are developed for finding optimal solution. The solution
process can be programmed easily without the management’s involvement.
 For example, linear programming is a prescriptive model.
C. Based on the Structure
 1. Physical or iconic models
 A physical model is similar to the system it represents. Different physical models are used to
predict and understand systems that cannot be directly observed.
 Examples are the model of an atom, a map, a model of the universe, etc.
 There are always limitations to each physical model and it is not always possible to get a complete
representation with a physical model.
 An iconic model is one that is usually a scaled-down or scaled-up physical replica of the system it
represents.
 An iconic model is exactly or extremely similar to the system it represents.
 An aero plane model and a globe are examples of iconic models.
2. Analogue or schematic models
 Analogue models are used more frequently than iconic models
 It is used to represent dynamic situations as they represent the characteristics of a system under
study.
 For example, graphs.
 When the elements of an overall system are represented using abstract symbols, graphical
symbols or hierarchy, then, it is called as schematic modeling.
 For example, organizational chart is a schematic model.
3. Symbolic or mathematical models
 A mathematical or abstract model is one in which mathematical symbols and statements constitute
the model.
 An abstract model is needed in systems where the complexity of relationships is not possible to
represent physically or the physical representation is difficult and time-consuming.
 A lot of operational science analysis is performed using abstract/mathematical models that utilize
mathematical symbols.
 They can moreover be readily manipulated for experimentation and forecasting purposes.
 A mathematical model depicts relationships and interrelationships among the variables and other
factors relevant to solving the problem.
D. Based on the Nature of Environment
1. Deterministic model
 A deterministic model is one that allows you to precisely calculate an outcome, without the
involvement of uncertainty or unpredictability or randomness.
 With a deterministic model, one has all the data required to predict the out- come with certainty.
 The outcome of the model is completely decided by the parameter values and the initial values.
2. Probabilistic model
  A probabilistic (also called stochastic) model can handle uncertainties or randomness in the
applied inputs.
 Stochastic refers to the property of having a random probability distribution that can be statistically
analyzed but may not be predicted accurately.
 These models are more sophisticated than deterministic as they incorporate historical data to
demonstrate the probability of the occurrence of an event.
 Probabilistic models can replicate real-world scenarios better and offer a range of possible outcomes
for a problem.
E. Based on Time Horizon
1. Static models
 A static model is one that describes relationships that do not change with respect to time. Such a
model remains at an equilibrium or a steady state.
 This type of model does not account for the effect of factors that vary over time but it is still useful
in offering an initial analysis of the given problem.
 A key feature is that it only uses a set of algebraic equations.
2. Dynamic models
 a dynamic model describes time-varying relationships.
 Dynamic models offer a way of modeling the time-dependent behavior of a given system. They
keep changing according to time..
 Dynamic models use both algebraic equations and differential equations.

2.3. Major Operational Research Models

A. Allocation Models (Distribution Models)

 Allocation models are used to distribute the available resources amongst competing alternatives in a
way that allows maximum total profit or minimum total cost, depending on existing and predicted
limitations or constraints.
 These are applied to problems that contain the following elements:
a set of resources available in fixed amounts
a set of tasks, each of which utilizes a particular amount of resources
a set of costs or profit for every task and resource
 The tools for solving allocation models are linear programming, assignment problem and

transportation problem.
B. Replacement Models

 Replacement models attempt to find the ideal time to replace equipment, machinery or its parts,
an individual or capital assets due to various reasons such as scientific advancement, deterioration
due to wear and tear, accidents, failure, etc.
 Replacement models focus on methods of evaluating alternative replacement policies.
C. Queuing Models (Waiting Line Models)

 A queuing model is constructed to help predict:

 The average waiting time used up by the customer, job or item waiting in a line
 The standard length of the waiting line or queue
 The utilization factor of a queue system
 Limited resources for providing a service lead to the formation of a queue.
 This model helps to lower the sum of costs of providing and getting service and the value of the
time used up by the customer, job or item in a waiting line.
D. Network Models

 Network models are suitable for large-scale projects that have many interdependencies and
complexities of activities.
 Critical Path Method (CPM) and Program Evaluation Review Technique (PERT) techniques are
used to analyze, plan, schedule and control the various activities of complex projects which can be
explained using a network diagram.
E. Inventory Models

 Inventory models are a type of mathematical model that helps to determine the optimum level of
inventory that needs to be maintained in a production process to ensure uninterrupted service to
consumers without delivery delays.
 Inventory models help in decision-making regarding order quantity and ordering production
intervals, considering the various factors such as frequency of ordering, order placing costs,
demand per unit time, amount of inventory to be stored, inventory flow, inventory holding costs,
and cost owing to a scarcity of goods, etc.
 For example, Economic Order Quantity (EOQ) model, production order quantity model, quantity
discount model, single-period inventory model, etc.
F. Simulation Models

 A simulation model is a mathematical model that uses both mathematical and logical concepts in an
attempt to mimic a real-life scenario or system. This model in generally used to solve problems
where the number of variables and constrained relationships is significantly high.
 For example, Monte Carlo simulation model, risk analysis simulation model, agent-based modeling,
discrete event simulation, system dynamics simulation, solutions models, etc.
G. Job Sequencing Models
  Job sequencing models deal with the problem of determining the sequence in which a number of
jobs should be performed on different machines in order to maximize the efficiency of available
facilities and maximize system output.
 For job sequencing, Johnson’s rule is used. Johnson’s rule states the procedure for minimizing
makes span for scheduling a group of jobs on two workstations.
Step 1: Find the job with the shortest processing time from the jobs that have not been scheduled
yet. If two or more jobs are tied, then, choose any job randomly.

Step 2: If the shortest processing time is on workstation 1, then, allocate the job as early as possible
and, if the shortest processing time is on workstation 2, schedule the job as late as possible.

Step 3: Now, consider only the jobs left after processing of the last job and repeat steps 1 and 2
until all jobs have been scheduled.

H. Markovian Models

 A Markovian model is a probabilistic model used for modeling randomly changing systems.
 A Markovian model assumes that future states depend only on the present state and not on previous
events.
 These models are applicable in situations where the state of the system transforms from one to
another on a probability basis.
2.4. Model formulation
 Model formulation is the step where our knowledge of a natural system is translated in

mathematical form.
 In operations research, model formulation is the process of creating a mathematical
representation of a situation to help solve complex problems:
 It involves two steps:
 the construction of a conceptual model and
 the formulation of this conceptual model into mathematical equations.
 some steps in the model formulation process:
 Understand the problem
 Create a model of the problem
 Gather and generate input data for the model
 Solve or run the model
 Implement and interpret the solution in the real world
Steps in Model Formulation (Algorithm): Goal Programming
1. Define Variables and Constants. The first step in model formulation is the definition of decision
variables (x1,x2, ......, xn) and the right hand side constants. The right hand side constants may be
either available resources or specified goal levels.
 2. Formulate Constraints. The next step is to formulate a set of constraints. A constraint may be
either a system constraint or a goal constraint.
3. Develop the Objective Function. Through the analysis of the decision makers goal structure, the
objective function must be developed. If goals are classified in k ranks, the preemptive priority
factors (symbolized by P1, P2, and so on) should be assigned to deviational variables according to
their order of importance. If necessary, differential weights must be assigned to deviational
variables at the same priority level.

3. Linear Programming
3.1. Introduction
What is Linear Programming?
 It is also a form of constrained optimization, and quite possibly, the most commonly used.
 It is one of the most widely used techniques for effective decision-making. It is an optimization
technique that focuses on providing the optimal solution for allocating available resources amongst
different competing and conflicting requirements.
 To understand the meaning of linear programming, we need to first understand what is meant by
constrained optimization.
 In constrained optimization, we have to optimize the objective function (or find the best value of the
function), keeping in mind the various constraints. Therefore, the optimum feasible solution may be
somewhat lower than the maximum because of the constraints.
 As with any constrained optimization, the main elements of LP are:
 Objective function
 Constraints
 Variables
 In the context of operations research, LP can be defined as a mathematical tool that enables decision
makers to allocate limited resources amongst competing activities in an optimal manner in situations
where the problem can be expressed using a linear objective function and linear inequality constraints.
 It concerns the optimization of a function of variables (i.e. the objective function), subject to a set of
linear equations and/or inequalities (i.e. constraints).
 The objective function could be any measure of effectiveness such as cost, time, profit, capacity, etc.,
that has to be achieved in the best possible way.
 the function f of n variables x = (x1, . . . ,xn) is linear if there are constants a1, . . . , an such that:
 f (x) = a1 x1 + a2 x2 . . . + an xn
3.1.1. Historical Development of Linear Programming
 The first serious attempt at the linear programming formulation and solution of a problem was done by
Soviet mathematician and economist Leonid Kantorovich in 1939 during World War II, for planning
the transport, scheduling, and allocation of resources within the given constraints of costs and
availability.
 In 1941, American mathematician Frank Lauren Hitchcock also formulated transportation problems as
linear programs and developed a solution quite like the simplex method which was invented by
American mathematician George B. Dantzig in 1947.
 In 1979, Russian mathematician Leonid Khachi- yan first solved a linear programming problem in
polynomial time. In a major breakthrough in 1984, Indian mathematician Narendra Karmarkar
discovered a new interior-point method for solving linear programming problems.
 The scope for application of LP is wide-range as it can be adapted to analyse diverse multi-dimensional
decision-making problems. To be able to use and apply LP successfully, the formulation of a realistic
model which accurately states the objectives of the decision-making is needed, subject to the
restrictions in which the decision-making has to be made.
3.1.2. Assumptions of Linear Programming
The first and foremost assumption when using linear programming to model the real world is that a
linear model is suitable. This is an important point to consider, given the fact that the real world will
have plenty of non-linear relationships. Let us look at the other assumptions of linear programming:
 Proportionality / Linearity  Non-negative variable
 Certainty  Finiteness
 Presence of different alternatives  Divisibility
 Additivity  Continuity

Proportionality / Linearity
Linear programming assumes that any modification in the constraint inequalities will result in a
proportional change in the objective function.
Certainty
Certainty in linear programming refers to the assumption that the parameters of the objective function
coefficients and the coefficients of constraints are known with certainty. For example, profit per unit of
product, resource availability per unit, etc. are known with certainty.
Presence of different alternatives
Linear programming assumes that different courses of action are available to the decision-maker/s and
they need to decide which is the most optimal.
Additivity
Additivity means that each function in a linear programming model is the sum of the individual
contributions of the respective activities. For example, the total profit is determined by the sum of profit
contributed by each activity separately.
 Likewise, the total amount of resources used is also determined by the sum of resources used by each
activity separately. This assumption thus implies that there is no interaction among the decision
variables.
Non-negative variable
Linear programming assumes that all answers or variables are non-negative. This assumption is true in
the sense that negative values of physical quantities are not possible. It is not possible for the output in
the production problem (such as bicycles, cars, computers, etc.) to be negative.
Finiteness
Linear programming assumes about the presence of a finite number of activities. An optimal solution is
not possible in a situation where there is an infinite number of alternative activities and resource
constraints.
Divisibility
Linear programming makes the divisibility assumption that the solution has to be in whole numbers i.e.
integers. This assumption means that decision variable may take any value, including non-integer
values, as long as functional and non-negativity constraints are satisfied.
Continuity
Linear programming assumes the continuity of decision variables. This means that a combination of
outputs with fractional values plus integer values can be used.
3.1.3. Properties of Linear Programming Model
As you know by now, a linear programming model has the following conditions:
 The decision variables must have a linear  Resource constraints are required.
relationship.  It must have a non-negative constraint.
 It must have an objective function.
A linear programming model involves an objective function, well-defined decision variables, and a set
of non-negative structural constraints.
Let us try to understand these terms in the following section:
 Objective Function  Structural Constraints
 Decision Variables  Non-negativity Constraint
 Constraint Equation
Objective Function
 The goal of an LP model is to optimize (maximize or minimize) the objective function.
 In most cases, the objective is to maximize resources or profits and minimize the time or cost.
Decision Variables
 The decision variables in a linear program are a set of variables that need to be determined to solve
the problem.
 Constraint Equation
 Decision-making problems arise mostly because the availability of resources in organizations is
limited and tasks need to be performed in the most effective manner within this limit. Therefore,
problems occur within these constraints in which the optimal solution to the problem needs to be
identified.
 Basically a mathematical statement of the limits on the resources or inputs at hand.
Structural Constraints
 Structural constraints in linear programming problems expressed as inequalities: x + y ≤ 100 and
20 x + 10y ≤ 1200
 A constraint in an LP model restricts the value of the objective function, the value of decision
variables and the use of resources at hand.
Non-negativity Constraint
 Non-negativity constraint refers to a restriction added to a linear programming problem which
highlights physical quantities cannot have negative values in a solution.
 It is essential to include the element of non-negativity as a constraint in a linear programming
problem. In the above problem, the inequalities x ≥ 0, y ≥ 0 are the non-negative constraints.
3.1.4. Importance of Linear Programming
There are several advantages of linear programming as mentioned below:
 Scientific approach to problem-solving  Improves the quality of the decision
 Evaluation of all possible alternatives  Addresses bottlenecks
 Optimal utilization  Applicable to diverse problems
 Helps in re-evaluation  Formation of information base
Scientific approach to problem-solving
 LP employs a scientific approach to problem-solving. It helps to determine the best possible
outcome by representing complex relationships through linear functions. Thus, it presents a clear
picture of problems which helps in better analysis.
Evaluation of all possible alternatives
 Today’s environment presents highly complex decision-making problems to organizations which
are difficult to solve by the traditional approach.
Optimal utilization
 LP enables optimal utilization of various prevailing factors of production such as labor, raw
materials, equipment, cost, etc.
Helps in re-evaluation
 LP helps to re-assess a basic plan in case of changing conditions. If, the conditions change while the
plan has been only executed in part,
  LP can be used to determine these conditions accurately to adapt the rest of the plan for the best
outcome.
Improves the quality of the decision
 LP helps to improve quality of decisions by incorporating the limitations of the system (which are
the various restrictions which the system must conform to for the solution to be optimal).
 If deviating from the optimal path becomes inevitable, LP can also allow an easy estimation of the
costs or penalty associated with this.
Addresses bottlenecks
 Bottlenecks can cause imbalances in the production process as some machines will not be able to
face the demand even at their peak performance while others may remain idle for long periods of
time.
 LP highlights and addresses the problem of bottlenecks in the production process through
optimization.
Applicable to diverse problems
 LP is quite an accommodating mathematical technique and can be adapted to analyze diverse multi-
dimensional decision-making problems quite effectively.
Formation of information base
 LP models can help managers obtain a highly useful information database by the analysis of the
many possible alternatives taking into account the existing constraints. This database can be used to
make rational decisions regarding the allocation of valuable resources.
3.2. Formulation of Linear Programming Model
The representation of an optimization problem in a linear programming mathematical form is referred
to as the formulation of an LP model.
The basic steps in the formulation of an LP model are:
a) Identification of the decision variables
b) Identification of the constraints
c) Identification of the objective
1. Identification of the decision variables
 The first step is to define the decision variables (parameters) that govern the behavior of the
objective function.
 These decision variables are then stated in the form of linear algebraic functions or equations
2. Identification of the constraints
 Once the decision variables have been determined, the next step is to identify all the constraints
which limit the operations of an organization at a given point of time.
  These constraints need to be stated as linear functions in terms of the decision variables. The non-
negativity constraints should also be included at this stage as decision variables cannot be negative
in a physical scenario.
3. Identification of the objective
 The next step is to identify the objective that needs to be optimized and express it in terms of the
pre-defined decision variables and constraints.

3.3.