Lesson 4

LESSON 4
LINEAR PROGRAMMING: GRAPHICAL METHOD

CONTENTS
4.0 Aims and Objectives
4.1 Introduction
4.2 Essentials oI Linear Programming Model
4.3 Properties oI Linear Programming Model
4.4 Formulation oI Linear Programming
4.5 General Linear Programming Model
4.6 Maximization & Minimization Models
4.7 Graphical Method
4.8 Solving Linear Programming Graphically Using Computer
4.9 Summary oI Graphical Method
4.10 Unbounded LP Problem
4.11 Let us Sum Up
4.12 Lesson-end Activity
4.13 Keywords
4.14 Questions Ior Discussion
4.15 Terminal Questions
4.16 Model Answers to Questions Ior Discussion
4.17 Suggested Readings

4.0 AIMS AND OB1ECTIVES

In this unit we have talked about Quantitative Techniques and the
Measurement oI
Mean, Median and Mode and the various Mathematical Models and now
we will talk about linear programming and in this lesson we will learn
the graphical method oI linear programming.

4.1 INTRODUCTION
Linear programming is a widely used mathematical modeling technique
to determine the optimum allocation oI scarce resources among
competing demands. Resources typically include raw materials,
manpower, machinery, time, money and space. The technique is very
powerIul and Iound especially useIul because oI its application to many
diIIerent types oI real business problems in areas like Iinance,
production, sales and distribution, personnel, marketing and many more
areas oI management. As its name implies, the 120
Quantitative Techniques Ior Management linear programming model
consists oI linear objectives and linear constraints, which means that the
variables in a model have a proportionate relationship. For example, an
increase in manpower resource will result in an increase in work output.

4.2 ESSENTIALS OF LINEAR PROGRAMMING MODEL

For a given problem situation, there are certain essential conditions that
need to be solved by using linear programming.
1. Limited resources: limited number oI labor, material equipment and
Iinance
2. Objective: reIers to the aim to optimize (maximize the proIits or
minimize the costs).
3. Linearity: increase in labor input will have a proportionate increase in
output.
4. Homogeneity: the products, workers' eIIiciency, and machines are
assumed to be identical.
5. Divisibility : it is assumed that resources and products can be divided
into Iractions. (in case the Iractions are not possible,
like production oI one-third oI a computer, a modiIication
oI linear programming called integer programming can
be used).
4.3 PROPERTIES OF LINEAR PROGRAMMING MODEL
The Iollowing properties Iorm the linear programming model:
1. Relationship among decision variables must be linear in nature.
2. A model must have an objective Iunction.
3. Resource constraints are essential.
4. A model must have a non-negativity constraint.

4.4 FORMULATION OF LINEAR PROGRAMMING
Formulation oI linear programming is the representation oI problem
situation in a mathematical Iorm. It involves well deIined decision
variables, with an objective Iunction and set oI constraints.
Objective function
The objective oI the problem is identiIied and converted into a suitable
objective Iunction.
The objective Iunction represents the aim or goal oI the system (i.e.,
decision variables) which has to be determined Irom the problem.
Generally, the objective in most cases will be either to maximize
resources or proIits or, to minimize the cost or time.
For example, assume that a Iurniture manuIacturer produces tables and
chairs. II the manuIacturer wants to maximize his proIits, he has to
determine the optimal quantity oI tables and chairs to be produced.
Let x1 Optimal production oI tables
p1 ProIit Irom each table sold
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Linear Programming:
Graphical Method
x2 Optimal production oI chairs
p2 ProIit Irom each chair sold.
Hence, Total proIit Irom tables p1 x1
Total proIit Irom chairs p2 x2
The objective Iunction is Iormulated as below,
Maximize Z or Zmax p1 x1 p2 x2
Constraints
When the availability oI resources are in surplus, there will be no
problem in making
decisions. But in real liIe, organizations normally have scarce resources
within which the
job has to be perIormed in the most eIIective way. ThereIore, problem
situations are
within conIined limits in which the optimal solution to the problem must
be Iound.
Considering the previous example oI Iurniture manuIacturer, let w be the
amount oI
wood available to produce tables and chairs. Each unit oI table
consumes w1 unit oI
wood and each unit oI chair consumes w2 units oI wood.
For the constraint oI raw material availability, the mathematical
expression is,
w1 x1 w2 x2 w
In addition to raw material, iI other resources such as labour, machinery
and time are
also considered as constraint equations.
Non-negativity constraint
egative values oI physical quantities are impossible, like producing
negative number oI
chairs, tables, etc., so it is necessary to include the element oI non-
negativity as a constraint
i.e., x1, x2 0
4.5 GENERAL LINEAR PROGRAMMING MODEL
A general representation oI LP model is given as Iollows:
Maximize or Minimize, Z p1 x1 p2 x2 ......pn xn
Subject to constraints,
w11 x1 w12 x2 ......w1n xn or or > w1
......(i)
w21 x1 w22 x2 ......w2n xn or or > w2
......(ii)
. . . .
. . . .
. . . .
wm1 x1 wm2 x2 ......wmn xn or > wm
......(iii)
on-negativity constraint,
xi > o (where i 1,2,3 ...n)
Check Your Progress 4.1
1 What are the essentials oI LP Model?
2. Why linear programming is used?
Contd...
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Quantitative Techniques
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Aotes: (a) Write your answer in the space given below.
(b) Please go through the lesson sub-head thoroughly you will get your
answers in it.
(c) This Chek Your Progress will help you to understand the lesson
better.
Try to write answers Ior them, but do not submit your answers to the
university Ior assessment. These are Ior your practice only.

4.6 MAXIMIZATION & MINIMIZATION MODELS
Example 1: A biscuit manuIacturing company plans to produce two
types oI biscuits,
one with a round shape and another with a square shape. The Iollowing
resources are
used in manuIacturing the biscuits,
(i) Raw material, oI which daily availability is 150 kg.
(ii) Machinery, oI which daily availability is 25 machine hours.
(iii) Labour, oI which daily availability is 40 man-hours.
The resources used are shown in Table 1. II the unit proIit oI round and
square biscuits
is Rs 3.00 and Rs 2.00 respectively, how many round and square biscuits
should be
produced to maximize total proIit ?
Table 4.1: Resources Used
$olution:
Key Decision: To determine the number oI round and square biscuits to
be produced.
Decision Jariables:
Let x1 be the number oI round biscuits to be produced daily, and
x2 be the number oI square biscuits to be produced daily
Objective function: It is given that the proIit on each unit oI round
biscuits is Rs 3.00
and oI square biscuits is Rs. 2.00. The objective is to maximize proIits,
thereIore, the
total proIit will be given by the equation,
Zmax 3x12x2
Constraints: ow, the manuIacturing process is imposed by a constraint
with the limited
availability oI raw material. For the production oI round biscuits, 100x1
oI raw material is
used daily and Ior the production oI square biscuits, 115x2 oI raw
material is used daily.
It is given that the total availability oI raw material per day is 1500
grams.
ThereIore, the constraint Ior raw material is,
100x1 115x2 1500
Resources Requirement/Unit Daily availability
Round Square
Raw Material 100 115 1500 grams
Machine 10 12 720 minutes
Manpower 3 2 240 minutes
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Linear Programming:
Graphical Method
Similarly, the constraint Ior machine hours is,
10x112x2 720
and Ior the manpower is,
3x1 2x2 240
Since the resources are to be used within or below the daily available
level, inequality
sign oI less than or equal sign () is used. Further, we cannot produce
negative number
oI units oI biscuits which is a non-negative constraint expressed as,
x1 0 and x2 0
Thus, the linear programming model Ior the given problem is,
Maximize Z 3x1 2x2
100x1115x2 1500 ..........................(i)
10x112x2 720 ..........................(ii)
3x12x2 240 ..........................(iii)
where x1 0, x2 0
Example 2: Rahul Ads, an advertising company is planning a
promotional campaign Ior
the client's product, i.e., sunglasses. The client is willing to spend Rs. 5
lakhs. It was
decided to limit the campaign media to a weekly magazine, a daily
newspaper and TV
advertisement. The product is targeted at middle-aged men and women,
and the Iollowing
data was collected (Table 4.2).
Table 4.2: Data Collected
The client is interested to spend only Rs. 1 lakh on the ads in the weekly
magazine which
expecting a viewership oI a minimum oI 21 lakh people in the case oI
the television
advertising. Maximize the viewers to the advertisements.
$olution:
Key Decision: To determine number oI advertisements on weekly
magazine, daily
newspaper and TV.
Let x1 be the number oI weekly magazine advertisements.
x2 be the number oI daily newspaper advertisements.
x3 be the number oI TV advertisements.
Objective function: The objective is to maximize the number oI viewers
through all
media. The total viewers will be given by the equation,
Zmax 115000x1 205000x2 700000x3
Constraints: Firstly, the client is willing to spend Rs. 500000 on all
media,
30000x1 45000x2 125000x3 500000
or
30x1 45x2 125x3 500 ..........................(i)
Campaign media Cost per advertisement (Rs.) Expected
viewers
Weekly Magazine 30,000 1,15,000
Daily ewspaper 45,000 2,05,000
TV Advetisement 1,25,000 7,00,000
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Secondly, a minimum oI 2100000 people should view the television
advertising,
700000x3 2100000
or
x3 3 ..........................(ii)
Lastly, the client is interested to pay only Rs. 100000 in weekly
magazine advertising,
30000x1 100000
or
3x1 10 ..........................(iii)
Summarizing the LP model Ior the given problem,
Maximize Z 115000x1 205000x2 700000x3
30x1 45x2 125x3 500 ..........................(i)
x3 3 ..........................(ii)
3x1 10 ..........................(iii)
where x1, x2, x3 0
Example 3: The data given in Table 4.3 represents the shipping cost (in
Rs.) per unit Ior
shipping Irom each warehouse to each distribution centre. The supply
and demand data
oI each warehouse and distribution centre is given. Determine how many
units should be
shipped Irom each warehouse to each centre in order to minimize the
overall
transportation cost.
Table 4.3: Data Shows Shipping Cost from Warehouse to
Distribution
$olution:
Decision Jariables
Let xij be the number oI units to be shipped Irom warehouse i to
distribution centre j.
x11 be the number oI units to be shipped Irom warehouse 1 to
distribution centre 1.
Objective Function: The Table 4.3 shows the transportation cost Irom
each warehouse
to each distribution centre. ThereIore 9x11 represents the total cost oI
shipping x11 units
Irom warehouse 1 to distribution centre 1. The objective Iunction is to
minimize the
transportation cost. ThereIore, the objective Iunction is,
Minimize Z 9x11 10x1211x134x216x228x23
Constraints: The supply and demand constraints to ship the units Irom
warehouses are,
to ship the units and distribution centres must receive the shipped units.
Since the given
table is a 2 3 matrix we have a total 5 constraints apart Irom the non-
negativity
constraint. The constraints are as Iollows,
Distribution Centre
Warehouse 1 2 3 Supply
1 9 10 11 150
2 4 6 8 250
Demand 150 100 150 400
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Linear Programming:
Graphical Method
x11 x12x13 150 ..........................(i)
x21 x22 x23 250 ..........................(ii)
x11 x21 150 ..........................(iii)
x12 x22100 ..........................(iv)
x13 x23150 ..........................(v)
where xij 0 (i 1,2, and j 1,2,3)
Thus the LP model Ior the given transportation problem is summarized
as,
Minimize Z 9x11 10x1211x134x216x228x23
x11 x12 x13 150 ..........................(i)
x21 x22 x23 250 ..........................(ii)
x11 x21 150 ..........................(iii)
x12 x22 100 ..........................(iv)
x13 x23 150 ..........................(v)
where xij ~ 0 (i 1,2, and j 1,2,3)
Example 4: Sivakumar & Co., manuIactures two types oI T-shirts, one
with collar and
another without collar. Each T-shirt with collar yields a proIit oI Rs. 20,
while each Tshirt
without collar yields Rs. 30. Shirt with collar requires 15 minutes oI
cutting and 25
minutes oI stitching. Shirt without collar requires 10 minutes oI cutting
and 20 minutes oI
stitching. The Iull shiIt time is available Ior cutting in an 8 hour shiIt,
but only 6 hours are
available Ior stitching. Formulate the problem as an LP model to
maximize the proIit.
$olution:
Key decision: To determine the number oI T-shirts with collar and
without collar to be
manuIactured.
Decision variables:
Let x1 be the number oI T-shirts with collar
x2 be the number oI T-shirts without collar
Objective Function:
Zmax 20x1 30x2
Constraints:
15x1 10x2 8 60 (Cutting) ..........................(i)
25x1 20x2 6 60 (Stitching) ..........................(ii)
Aon-negativity constraints:
x1 0 , x2 0
The linear programming model is,
Zmax 20x1 30x2
15x1 10x2 480 ..........................(i)
25x1 20x2 360 ..........................(ii)
where x1 , x2 0
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Example 5: An agricultural urea company must daily produce 500 kg oI
a mixture
consisting oI ingredients x1, x2 and x3. Ingredient x1 costs Rs. 30 per
kg, x2 Rs. 50 per kg
and x3 Rs. 20 per kg. Due to raw material constraint, not more than 100
kg oI x1, 70 kg
oI x2 and 45 kg oI x3 must be used. Determine how much oI each
ingredient should be
used iI the company wants to minimize the cost.
$olution:
Let x1 be the kg oI ingredient x1 to be used
x2 be the kg oI ingredient x2 to be used
x3 be the kg oI ingredient x3 to be used
The objective is to minimize the cost,
Minimize Z 30x1 50x2 20x3
x1 x2 x3 500 (total production) .......................(i)
x1 100 (max. use oI x1) .......................(ii)
x2 70 (max. use oI x2) .......................(iii)
x3 45 (max. use oI x3) .......................(iv)
where x1, x2, x3 0 (non-negativity)
Example : Chandru Bag Company produces two types oI school bags:
deluxe and
ordinary. II the company is producing only ordinary bags, it can make a
total oI 200
ordinary bags a day. Deluxe bag requires twice as much labour and time
as an ordinary
type. The demand Ior deluxe bag and ordinary bag are 75 and 100 bags
per day
respectively. The deluxe bag yields a proIit oI Rs 12.00 per bag and
ordinary bag yields
a proIit oI Rs. 7.00 per bag. Formulate the problem as LP model.
$olution:
Let x1 be deluxe bags to be produced per day
x2 be ordinary bags to be produced per day
Objective function: The objective is to maximize the proIit. Deluxe bag
yields a proIit oI
Rs. 12.00 per bag and ordinary bag yields a proIit oI Rs. 7.00 per bag.
Maximize Z 12x1 7x2
Constraints: There are two constraints in the problem, the "number oI
bags" constraint
and "demand" constraint. It is given that the deluxe bag takes twice as
much time oI
ordinary bag and iI only ordinary bags alone are produced, the company
can make 200
bags.
The constraint is,
2x1 x2 200
The demand Ior the deluxe bag is 75 bags and ordinary bag is 100 bags
The constraints are,
x1 75
x2 100
and the non-negativity constraint is,
x1 0 , x2 0
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Linear Programming:
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The LP Iormulation is
Maximize, Z 12x1 7x2
2x1 x2 200 ..........................(i)
x1 75 ..........................(ii)
x2 100 ..........................(iii)
where x1 , x2 0
Example 7: Geetha PerIume Company produces both perIumes and
body spray Irom
two Ilower extracts F1 and F2 The Iollowing data is provided:
Table 4.4: Data Collected
The maximum daily demand oI body spray is 20 bottles oI 100 ml each.
A market survey
indicates that the daily demand oI body spray cannot exceed that oI
perIume by more
than 2 litres. The company wants to Iind out the optimal mix oI perIume
and body spray
that maximizes the total daily proIit. Formulate the problem as a linear
programming
model.
$olution:
Let x1 be the litres oI perIume produced daily
x2 be the litres oI body spray produced daily
Objective function: The company wants to increase the proIit by
optimal product mix
Zmax 7x15x2
Constraints: The total availability oI Ilower extract F1 and Ilower
extract F2 are 20 and
8 litres respectively. The sum oI Ilower extract F1 used Ior perIume and
body spray
must not exceed 20 litres. Similarly, Ilower extract F2 must not exceed 8
litres daily.
The constraints are,
8x14x2 20 (Flower extract F1)
2x13x2 8 (Flower extract F2)
The daily demand oI body spray x2 is limited to 20 bottles oI 100ml
each (i.e, 20 100
2000 ml 2 litres)
ThereIore, x2 2
Again, there is an additional restriction, that the diIIerence between the
daily production
oI perIume and body spray , x2 x1 does not exceed 2 litres, which is
expressed as
x2x1 2
(or)
x1 x2 2.
The model Ior Geetha perIumes company is,
Maximize , Z 7x1 5x2
Litres oI Extract
PerIume Body Spray Daily Availability (litres)
Flower Extract, F1 8 4 20
Flower Extract, F2 2 3 8
ProIit Per litre (Rs.) 7 5
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8x1 4x2 20 ..........(i)
2x1 3x2 8 ...........(ii)
x1 x2 2 ..............(iii)
x2 2 ......................(iv)
where x1, x2 0
Feasible $olution: Any values oI x1 and x2 that satisIy all the
constraints oI the model
constitute a Ieasible solution. For example, in the above problem iI the
values oI x1 2
and x2 l are substituted in the constraint equation, we get
(i) 8(2) 4(1) 20
20 20
(ii) 2(2) 3 (1) 8
7 8
(iii) 2 1 2
1 2
(iv) 1 2
All the above constraints (including non-negativity constraint) are
satisIied. The objective
Iunction Ior these values oI x1 2 and x2 1, are
Zmax 7(2 ) 5(1)
14 5 Rs. 19.00
As said earlier, all the values that do not violate the constraint equations
are Ieasible
solutions. But, the problem is to Iind out the values oI x1 and x2 to
obtain the optimum
Ieasible solution that maximizes the proIit. These optimum values oI x1
and x2 can be
Iound by using the Graphical Method or by Simplex Method. (The
above problem is
solved using graphical method shown on page number 117).
4.7 GRAPHICAL METHOD
Linear programming problems with two variables can be represented
and solved
graphically with ease. Though in real-liIe, the two variable problems are
practiced very
little, the interpretation oI this method will help to understand the
simplex method. The
solution method oI solving the problem through graphical method is
discussed with an
example given below.
Example 8: A company manuIactures two types oI boxes, corrugated
and ordinary
cartons. The boxes undergo two major processes: cutting and pinning
operations. The
proIits per unit are Rs. 6 and Rs. 4 respectively. Each corrugated box
requires 2 minutes
Ior cutting and 3 minutes Ior pinning operation, whereas each carton box
requires 2
minutes Ior cutting and 1 minute Ior pinning. The available operating
time is 120 minutes
and 60 minutes Ior cutting and pinning machines. Determine the
optimum quantities oI
the two boxes to maximize the proIits.
$olution:
Key Decision: To determine how many (number oI) corrugated and
carton boxes are to
be manuIactured.
Decision variables:
Let xl be the number oI corrugated boxes to be manuIactured.
x2 be the number oI carton boxes to be manuIactured
Objective Function: The objective is to maximize the proIits. Given
proIits on corrugated
box and carton box are Rs. 6 and Rs. 4 respectively.
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Linear Programming:
Graphical Method
The objective Iunction is,
Zmax 6x1 4x2
Constraints: The available machine-hours Ior each machine and the
time consumed by
each product are given.
ThereIore, the constraints are,
2x1 3x2 120 ..........................(i)
2x1 x2 60 ..........................(ii)
where x1, x2 0
raphical $olution: As a Iirst step, the inequality constraints are
removed by replacing
equal to` sign to give the Iollowing equations:
2x1 3x2 120 .......................(1)
2x1 x2 60 .......................(2)
Find the co-ordinates oI the lines by substituting x1 0 and x2 0 in
each equation. In
equation (1), put x1 0 to get x2 and vice versa
2x1 3x2 120
2(0) 3x2 120, x2 40
Similarly, put x2 0,
2x1 3x2 120
2x1 3(0) 120, x1 60
The line 2x1 3x2 120 passes through co-ordinates (0, 40) (60, 0).
The line 2x1 x2 60 passes through co-ordinates (0,60)(30,0).
The lines are drawn on a graph with horizontal and vertical axis
representing boxes x1
and x2 respectively. Figure 4.1 shows the Iirst line plotted.
Figure 4.1: Graph Considering First Constraint

8
7
6
5
4
3
2
1
1
1 2 3 4 5 6 7 8 1
No. of carton boxes x2
No. of corrugated boxes x1
2x1 + 3x2 = 12
(6
( 4
X1
X2
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The inequality constraint oI the Iirst line is (less than or equal to) type
which means the
Ieasible solution zone lies towards the origin. The no shaded portion can
be seen is the
Ieasible area shown in Figure 4.2 (ote: II the constraint type is then
the solution zone
area lies away Irom the origin in the opposite direction). ow the second
constraints line
is drawn.
Figure 4.2: Graph Showing Feasible Area
When the second constraint is drawn, you may notice that a portion oI
Ieasible area is
cut. This indicates that while considering both the constraints, the
Ieasible region gets
reduced Iurther. ow any point in the shaded portion will satisIy the
constraint equations.
For example, let the solution point be (15,20) which lies in the Ieasible
region.
II the points are substituted in all the equations, it should satisIy the
conditions.
2x1 3x2 120 30 60 120 90 120
2x1 x2 60 30 20 60 50 60
ow, the objective is to maximize the proIit. The point that lies at the
Iurthermost point
oI the Ieasible area will give the maximum proIit. To locate the point,
we need to plot the
objective Iunction (proIit) line.
Equate the objective Iunction Ior any speciIic proIit value Z,
Consider a Z-value oI 60, i.e.,
6x1 4x2 60
Substituting x1 0, we get x2 15 and
iI x2 0, then x1 10
ThereIore, the co-ordinates Ior the objective Iunction line are (0,15),
(10,0) as indicated
by dotted line L1 in Figure 4.2. The objective Iunction line contains all
possible combinations
oI values oI xl and x2.
The line L1 does not give the maximum proIit because the Iurthermost
point oI the
Ieasible area lies above the line L1. Move the line (parallel to line L1)
away Irom the
origin to locate the Iurthermost point. The point P, is the Iurthermost
point, since no area
is seen Iurther. Take the corresponding values oI x1 and x2 Irom point P,
which is 15 and
30 respectively, and are the optimum Ieasible values oI x1 and x2.

8
7
6
5
4
3
2
1
1
1 2 3 4 5 6 7 8 1
2x1 + x2 = 6
( 6
x2
P
x1
L1
L2
2x1 + 3x2 = 12
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Linear Programming:
Graphical Method
ThereIore, we conclude that to maximize proIit, 15 numbers oI
corrugated boxes and 30
numbers oI carton boxes should be produced to get a maximum proIit.
Substituting
x1 15 and x2 30 in objective Iunction, we get
Zmax 6x1 4x2
6(15) 4(30)
Maximum proIit : Rs. 210.00
4.8 SOLVING LINEAR PROGRAMMING GRAPHICALLY
USING COMPUTER
The above problem is solved using computer with the help oI TORA.
Open the TORA
package and select LIEAR PROGRAMMIG option. Then press Go
to Input and
enter the input data as given in the input screen shown below, in Figure
4.3.
Figure 4.3: Linear Programming, TORA Package (Input Screen)
ow, go to Solve Menu and click Graphical in the 'solve problem'
options. Then click
Graphical , and then press Go to Output . The output screen is displayed
with the graph
grid on the right hand side and equations in the leIt hand side. To plot
the graphs one by
one, click the Iirst constraint equation. ow the line Ior the Iirst
constraint is drawn
connecting the points (40, 60). ow, click the second equation to draw
the second line on
the graph. You can notice that a portion oI the graph is cut while the
second constraint is
also taken into consideration. This means the Ieasible area is reduced
Iurther. Click on
the objective Iunction equation. The objective Iunction line locates the
Iurthermost point
(maximization) in the Ieasible area which is (15,30) shown in Figure 4.4
below.
Figure 4.4: Graph Showing Feasible Area
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Example 9: A soIt drink manuIacturing company has 300 ml and 150 ml
canned cola as
its products with proIit margin oI Rs. 4 and Rs. 2 per unit respectively.
Both the products
have to undergo process in three types oI machine. The Iollowing Table
4.5, indicates the
time required on each machine and the available machine-hours per
week.
Table 4.5: Available Data
Formulate the linear programming problem speciIying the product mix
which will maximize
the proIits within the limited resources. Also solve the problem using
computer.
$olution: Let x1 be the number oI units oI 300 ml cola and x2 be the
number oI units oI
150 ml cola to be produced respectively. Formulating the given problem,
we get
Objective function:
Zmax 4x1 2x2
3x1 2x2 300 ............................(i)
2x1 4x2 480 ............................(ii)
5x1 7x2 560 ............................(iii)
where x1 , x2 0
The inequalities are removed to give the Iollowing equations:
3x1 2x2 300 ............................(iv)
2x1 4x2 480 ............................(v)
5x1 7x2 560 ............................(vi)
Find the co-ordinates oI lines by substituting x1 0 to Iind x2 and x2
0 to Iind x1.
ThereIore,
Line 3x2 2x2 300 passes through (0,150),(100,0)
Figure 4.5: Graphical Presentation of lines (TORA, Output Screen)
Requirement Cola 300 ml Cola 150 ml Available machinehours
per week
Machine 1 3 2 300
Machine 2 2 4 480
Machine 3 5 7 560
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Linear Programming:
Graphical Method
For objective Iunction,
The Line 4x1 2x2 0 passes through (10,20),(10,20)
Plot the lines on the graph as shown in the computer output Figure 4.5.
The objective is to maximize the proIit. Move the objective Iunction line
away Irom the
origin by drawing parallel lines. The line that touches the Iurthermost
point oI the Ieasible
area is (100, 0). ThereIore, the values oI x1 and x2 are 100 and 0
respectively.
Maximum ProIit, Zmax 4x1 2x2
4(100) 2(0)
Rs. 400.00
Example 1: Solve the Iollowing LPP by graphical method.
Minimize Z 18x1 12x2
2x1 4x2 60 ........................(i)
3x1 x2 30 ........................(ii)
8x1 4x2 120 ........................(iii)
where x1 , x2 0
$olution:
The inequality constraints are removed to give the equations,
2x1 4x2 60 ........................(iv)
3x1 x2 30 ........................(v)
8x1 4x2 120 ........................(vi)
The equation lines pass through the co-ordinates as Iollows:
For constraints,
2x1 4x2 60 passes through (0,15), (30,0).
3x1 x2 30 passes through (0,30), (10,0).
The objective Iunction,
Plot the lines on the graph as shown in Figure 4.6
Here the objective is minimization. Move the objective Iunction line and
locate a point in
the Ieasible region which is nearest to the origin, i.e., the shortest
distance Irom the
origin. Locate the point P, which lies on the x axis. The co-ordinates oI
the point P are
(15,0) or x1 15 and x2 0.
The minimum value oI Z
Zmin 18 x1 12x2
18 (15) 12 (0)
Rs. 270.00
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Figure 4.6: Graphical Presentation (Output Screen, TORA)
4.9 SUMMARY OF GRAPHICAL METHOD
$tep 1: Convert the inequality constraint as equations and Iind co-
ordinates oI the line.
$tep 2: Plot the lines on the graph.
(Aote: II the constraint is type, then the solution zone lies away Irom
the
centre. II the constraint is type, then solution zone is towards the
centre.)
$tep 3: Obtain the Ieasible zone.
$tep 4: Find the co-ordinates oI the objectives Iunction (proIit line) and
plot it on the
graph representing it with a dotted line.
$tep 5: Locate the solution point.
(Aote: II the given problem is maximization, zmax then locate the
solution point at
the Iar most point oI the Ieasible zone Irom the origin and iI
minimization, Zmin
then locate the solution at the shortest point oI the solution zone Irom the
origin).
$tep : Solution type
i. II the solution point is a single point on the line, take the
corresponding values
oI x1 and x2.
ii. II the solution point lies at the intersection oI two equations, then
solve Ior x1
and x2 using the two equations.
iii. II the solution appears as a small line, then a multiple solution exists.
iv. II the solution has no conIined boundary, the solution is said to be an
unbound
solution.
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Linear Programming:
Graphical Method
Example 11: Solve the Geetha perIume company (Example 1.7)
graphically using
computer.
The Iormulated LP model is,
Zmax 7x1 5x2
8x1 4x2 20 .........................(i)
2x1 3x2 8 .........................(ii)
x1 x2 2 .........................(iii)
x2 2 .........................(iv)
where x1, x2 0
$olution: The input values oI the problem are given to obtain the output
screen as shown
in Figure 4.7.
#esults:
PerIumes to be produced, x1 1.75 litres or 17.5 say 18 bottles oI 100
ml each
Body sprays to be produced, x2 1.50 litres or 15 bottles oI 100 ml each
Maximum proIit, Zmax Rs. 19.75
Discuss the limitations oI graphical method in solving LPP.
answers in it.
better.
Contd....
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4.10 UNBOUNDED LP PROBLEM
Example 12: Solve the Iollowing LPP graphically
Zmax 6x1 10x2
x1 6 .........................(i)
x2 10 .........................(ii)
2x1 4x2 20 .........................(iii)
where x1 0, x2 0
$olution:
The inequality constraints are converted as equations
x1 6
x2 10
2x1 4x2 20
The co-ordinates oI lines are
x1 6 passes through (6,0)
x2 10 passes through (0,10)
2x1 4x2 20 passes through (10,0), (5,0)
The given problem is maximization one. The solution point should be
located at the
Iurthermost point oI the Ieasible region.
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Linear Programming:
Graphical Method
The Ieasible zone (shaded area) shown in Figure 4.8 is open-ended, i.e.,
it has no conIined
boundary. This means that the maximization is not possible or the LPP
has no Iinite
solution, and hence the solution is unbounded.
Example 13: Solve the given linear programming problem graphically
using a computer.
Maximize Z 3x1 2x2
Subject to constraints
x1 x2 1 ..........................(i)
x1 x2 3 ..........................(ii)
x1 , x2 0
$olution: The input as required is entered into the TORA input screen,
the Iollowing
output is obtained as shown in Figure 4.9 which shows that the solution
is unbounded.
Figure 4.9: Graphical LP Solution (Output Screen, TORA)
What is unbound LP problem?
answers in it.
better.

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Thus we can say that LP is a method oI planning whereby objective
Iunction is maximised
or minimised while at the same time satisIying the various restrictions
placed on the
potential solution. In technical words, linear programming is deIined as
a methodology
whereby a linear Iunction in optimized (minimised or maximised)
subject to a set oI
linear constraints in the Iorm oI equalities or inequalities. Thus LP is a
planning technique
oI selecting the best possible (optimal) strategy among number oI
alternatives.
4.12 LESSON-END ACTIVITY
LP is about trying to get the best result (e.g. maximum proIit, least eIIort
etc.) given
some list oI constraints Linear Programming allows Ior the ethical
allocation oI scarce
or costly resources while still meeting all technical parameters. Explain
how LP
programmes are being used in selI-diverse industries an sausage making,
Iruit juice
mixing, baby cereals and milks, health Ioods, soups. Also Iacilitates in
Iormulating
receipes.
4.13 KEYWORDS
Linear Programming
Graphical Method
Maximisation
Minimisation
Constraints
ProIit
Optimality
4.14 QUESTIONS FOR DISCUSSION
1. Write True or False against each statement:
(a) LP is a widely used mathematical modeling technique.
(b) LP consists oI linear objectives and linear constraints.
(c) Divisibility reIers to the aim to optimize.
(d) Limited resources means limited number oI labour, material
equipment and
Iinance.
(e) The objective Iunction represents the aim or goal oI the system,
which has to
be determined Irom the solution.
2. Briefly comment on the following statements:
(a) Formulation oI LP is the representation oI problem situation in a
mathematical
Iorm.
(b) A model must have an objective Iunction.
(c) When Ieasible zone lies towards the origin.
(d) LP techniques are used to optimize the resource Ior best result.
(e) LP techniques are used in analyzing the eIIect oI changes.
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Linear Programming:
Graphical Method
3. Fill in the blanks:
(a) Organization normally have resources.
(b) A model has a constraint.
(c) In real liIe, the two problems are practiced very little.
(d) reIer to the products, workers`, eIIiciency, and machines
are
assumed to be identical.
(e) The Iunction represents the aim or goal oI the system.
4.15 TERMINAL QUESTIONS
1. DeIine Linear Programming.
2. What are the essential characteristics required Ior a linear
programming model?
3. What is meant by objective Iunction in LP model?
4. What is a constraint? Give a Iew examples oI constraints in real liIe
situations.
5. Enumerate the steps involved in solving a LPP by graphical approach.
6. What is the major limitation oI the graphical method?
7. List out the various constraint types in Iormulating a LP model.
8. DeIine the Ieasible area.
9. What are the possible solution types that can result in the graphical
method?
10. What is meant by an unbounded solution?
11. How are multiple solutions interpreted in the graphical method?
Exercise Problems
1. For the problem given in Example 7, Iormulate the constraints Ior the
Iollowing
without any change in R.H.S.:
(a) The Ilower extract F1 must be used at most to 15 litres and at least 5
litres.
(b) The demand Ior perIume cannot be less than the demand Ior body
spray.
(c) The daily demand oI body spray exceeds that oI perIume by at least 2
litres.
2. For the problem given in Example 1.7, determine the best Ieasible
solution among
the Iollowing values oI x1 and x2:
(a) x1 2, x2 1
(b) x1 0, x2 3
(c) x1 3, x2 1
(d) x1 5, x2 1
(e) x1 2, x2 1
(I) x1 1.75, x2 1.50
3. Determine the Ieasible space Ior each oI the Iollowing constraints:
(a) 2x1 2x2 5
(b) 5x1 10x2 60
(c) x1 x2 0
(d) 4x1 3x2 15
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Resources/Constraints Products/unit
A B
Availability
Budget (Rs.) 8 4 4000
Machine Time 2 1 1000 hours
Assembly Time 3 4 750 hours
Selling Price Rs. 20 Rs. 40
Cost Price Rs. 5 Rs. 20
(e) x2 5
(I) x1 30
4. A company manuIactures two types oI products, A and B. Each
product uses two
processes, I and II. The processing time per unit oI product A on process
I is 6
hours and on the process II is 5 hours. The processing time per unit oI
product B on
process I is 12 hours and on process II is 4 hours. The maximum number
oI hours
available per week on process I and II are 75 and 55 hours respectively.
The proIit
per unit oI selling A and B are Rs.12 and Rs.10 respectively.
(i) Formulate a linear programming model so that the proIit is
maximized.
(ii) Solve the problem graphically and determine the optimum values oI
product A
and B.
5. Formulate the Iollowing data as a linear programming model.
6. A nutrition scheme Ior babies is proposed by a committee oI doctors.
Babies can
be given two types oI Iood (I and II) which are available in standard
sized packets,
weighing 50 gms. The cost per packet oI these Ioods are Rs. 2 and Rs. 3
respectively.
The vitamin availability in each type oI Iood per packet and the
minimum vitamin
requirement Ior each type oI vitamin are summarized in the table given.
Develop a
linear programming model to determine the optimal combination oI Iood
type with
the minimum cost such that the minimum requirement oI vitamin is each
type is
satisIied.
7. Formulate the problem as a LP model
8. Solve the Chandru Bag company problem graphically.
(a) Determine the values oI x1, x2 and Zmax.
Time required (minutes/unit)
Products
Lathe Drilling Cleaning
Profit
A 25 30 15 25
B 15 5 10 30
C 20 15 10 50
Hours Available 250 400 200
Details of food type
Vitamin availability per product
Vitamin Food
Type I
Food
Type II
Minimum Daily
requirement
1 1 1 6
2 7 1 14
Cost/Packet (Rs.) 2 3
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Linear Programming:
Graphical Method
(b) II the company has increased the demand Ior ordinary bag Irom 100
to 150,
what is the new Zmax value?
(c) II the demand Ior deluxe bags has reduced to 50 bags, determine the
optimal
proIit value.
9. Solve the Iollowing linear programming model graphically:
Maximize Z 30x1 100x2
4x1 6x2 90
8x1 6x2 100
5x1 4x2 80
where x1 , x2 0
10. Solve the Iollowing LP graphically:
Maximize Z 8x1 10x2
2x1 3x2 20
4x1 2x2 25
where x1 , x2 0
11. Solve the two variable constraints using graphical method.
x1 20
x2 25
2x1 x2 60
where x1 , x2 0
12. Solve the Iollowing LP graphically using TORA.
10x1 4x2 600
7x1 10x2 300
2x1 4x2 1000
9x1 7x2 2500
5x1 4x2 1200
where x1 , x2 0
13. Solve graphically:
Maximize Z 2x1 3x2
x1 x2 0
3x1 x2 25
where x1 , x2 0
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14. Solve the Iollowing LP graphically:
Maximize Z 8x1 10x2
0.5x1 0.5x2 150
0.6x1 0.4x2 145
x1 30
x1 150
x2 40
x2 200
where x1 , x2 0
15. Determine the optimal values oI x1 and x2 and hence Iind the
maximum proIits Ior
the Iollowing LP problem:
Maximize Z 4x1 5x2
x1 3x2 2
4x1 5x2 6
where x1 , x2 0
4.16 MODEL ANSWERS TO QUESTIONS FOR
DISCUSSION
1. (a) True (b) True (c) False (d) True (e) False
3. (a) scarce (b) non-negative (c) variable (d) Homogeneity
(e) objective
4.17 SUGGESTED READINGS
William H, odel Building in ,them,tic,l Progr,mming, Wiley
ewyork.
Rohn E., "A New LP Appro,ch to Bond Portfolio ,n,gement", Journal
oI Financial
& Quantitative Analysis 22 (1987): 439-467.
Wagner H, Principles of OR, 2nd ed. Englewood CliIIs, .J: Prentice
Hall, 1975.
Moondra S.,'An LP odel for Workforce Scheduling in B,nks", Journal
oI Bank
Research (1976).
In the previous lesson we have learnt linear programming with the help
oI graphical now
we will learn the linear programming with the help oI Simplex Method
using minimization
and maximization problems and the degeneracy in LP problems and also
the Duality and
Sensitivity Analysis.
5.1 INTRODUCTION
In practice, most problems contain more than two variables and are
consequently too
large to be tackled by conventional means. ThereIore, an algebraic
technique is used to
solve large problems using Simplex Method. This method is carried out
through iterative
process systematically step by step, and Iinally the maximum or
minimum values oI the
objective Iunction are attained.
LESSON
5
LINEAR PROGRAMMING: SIMPLEX METHOD
CONTENTS
5.1 Introduction
5.2 Additional Variables used in Solving LPP
5.3 Maximization Case
5.4 Solving LP Problems Using Computer with TORA
5.5 Minimization LP Problems
5.6 Big M Method
5.7 Degeneracy in LP Problems
5.8 Unbounded Solutions in LPP
5.9 Multiple Solutions in LPP
5.10 Duality in LP Problems
5.11 Sensitivity Analysis
5.12 Let us Sum Up
5.13 Lesson-end Activities
5.14 Keywords
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The basic concepts oI simplex method are explained using the Example
1.8 oI the
packaging product mix problem illustrated in the previous chapter. The
simplex method
solves the linear programming problem in iterations to improve the
value oI the objective
Iunction. The simplex approach not only yields the optimal solution but
also other valuable
inIormation to perIorm economic and 'what iI' analysis.
5.2 ADDITIONAL VARIABLES USED IN SOLVING LPP
Three types oI additional variables are used in simplex method such as,
(a) Slack variables (S1, S2, S3...Sn): Slack variables reIer to the
amount oI unused
resources like raw materials, labour and money.
(b) Surplus variables (-S1, -S2, -S3...-Sn): Surplus variable is the
amount oI resources
by which the leIt hand side oI the equation exceeds the minimum limit.
(c) ArtiIicial Variables (a1, a2, a3.. .an): ArtiIicial variables are
temporary slack
variables which are used Ior purposes oI calculation, and are removed
later.
The above variables are used to convert the inequalities into equality
equations, as given
in the Table 5.1 below.
Table 5.1: Types of Additional Variables
5.3 MAXIMIZATION CASE
The packaging product mix problem is solved using simplex method.
Maximize Z 6x1 4x2
2x13x2 120 (Cutting machine) .....................(i)
2x1 x2 60 (Pinning machine) ......................(ii)
where x1, x2 0
Considering the constraint Ior cutting machine,
2x1 3x2 120
The inequality indicates that the leIt-hand side oI the constraints
equation has some
amount oI unused resources on cutting machine. To convert this
inequality constraint
into an equation, introduce a slack variable, S3 which represents the
unused resources.
Introducing the slack variable, we have the equation
2x1 3x2 S3 120
Similarly Ior pinning machine, the equation is
2x1 x2 S4 60
The variables S3 and S4 are known as slack variables corresponding to
the three constraints.
ow we have in all Iour variables (which includes slack variable) and
two equations. II
any two variables are equated to zero, we can solve the three equations
oI the system in
two unknowns.
Constraint Type Variable added Format
a) Less than or equal to < Add Slack Variable S
b) Greater than or equal to > Subtract surplus variable and add
artiIicial variable
-Sa
c) Equal to = Add artiIicial variable a
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Linear Programming :
Simplex Method
II variables x1 and x2 are equated to zero,
i.e., x1 0 and x2 0, then
S3 120
S4 60
This is the basic solution oI the system, and variables S3 and S4 are
known as Basic
Variables, SB while x1 and x2 known as on-Basic Variables. II all the
variables are
non-negative, a basic Ieasible solution oI a linear programming problem
is called a Basic
Feasible Solution.
Rewriting the constraints with slack variables gives us,
Zmax 6x1 4x2 0S3 0S4
2x1 3x2 S3 120 ....................(i)
2x1 x2 S4 60 ....................(ii)
where x1, x2 0
Though there are many Iorms oI presenting Simplex Table Ior
calculation, we represent
the coeIIicients oI variables in a tabular Iorm as shown in Table 5.2.
Table 5.2: Co-efficients of Variables
II the objective oI the given problem is a maximization one, enter the co-
eIIicient oI the
objective Iunction Zj with opposite sign as shown in Table 5.3. Take the
most negative
coeIIicient oI the objective Iunction and that is the key column Kc. In
this case, it is -6.
Find the ratio between the solution value and the key column coeIIicient
and enter it in
the minimum ratio column. The intersecting coeIIicients oI the key
column and key row
are called the pivotal element i.e. 2. The variable corresponding to the
key column is the
entering element oI the next iteration table and the corresponding
variable oI the key
row is the leaving element oI the next iteration table. In other words, x1
replaces S4 in the
next iteration table. Table 5.3 indicates the key column, key row and the
pivotal element.
Table 5.3
Iteration
Number
Basic
Variables
Solution
Value
1
KC
2 $3 $4
Minimum
Ratio
Equation
0 S3
S4
Zf
120
60
0
2
2
6
3
1
4
1
0
0
0
1
0
60
30
Iteration
Number
Basic
Variables
Solution
Value
1
KC
2 $3 $4
Minimum
Ratio Equation
0 S3 120 2 3 1 0 60
Kr S4 60 2 1 0 1 30
-Zf 0 -6 -4 0 0
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In the next iteration, enter the basic variables by eliminating the leaving
variable (i.e., key
row) and introducing the entering variable (i.e., key column). Make the
pivotal element
as 1 and enter the values oI other elements in that row accordingly. In
this case, convert
the pivotal element value 2 as 1 in the next interation table. For this,
divide the pivotal
element by 2. Similarly divide the other elements in that row by 2. The
equation is S4 /2.
This row is called as Pivotal Equation Row Pe. The other co-eIIicients oI
the key column
in iteration Table 5.4 must be made as zero in the iteration Table 5.5. For
this, a solver, Q,
is Iormed Ior easy calculation. Change the sign oI the key column
coeIIicient, multiply
with pivotal equation element and add with the corresponding variable
to get the equation,
Solver, Q SB (Kc Pe)
The equations Ior the variables in the iteration number 1 oI table 8 are,
For S3 Q SB ( Kc Pe)
S3 (2x Pe)
S3 2Pe ..........(i)
For Z, Q SB ( Kc Pe)
Z (( 6) Pe)
Z 6Pe ..........(ii)
Using the equations (i) and (ii) the values oI S3 and Z Ior the values oI
Table 1 are
Iound as shown in Table 5.4
Table 5.4: S3 and -Z Values Calculated
Using these equations, enter the values oI basic variables SB and
objective Iunction Z. II
all the values in the objective Iunction are non-negative, the solution is
optimal. Here, we
have one negative value 1. Repeat the steps to Iind the key row and
pivotal equation
values Ior the iteration 2 and check Ior optimality.
In the iteration 2 number oI Table 5.5, all the values oI Zj are non-
negative, Zj 0, hence
optimality is reached. The corresponding values oI x1 and x2 Ior the
Iinal iteration table
gives the optimal values oI the decision variables i.e., x1 15, x2 30.
Substituting these
values in the objectives Iunction equation, we get
Zmax 6x1 4x2
6(15) 4(30)
90 120
Rs. 210.00
Iteration
Number
Basic
Variables
Solution
Value
1
KC
2
KC
$3 $4
Minimum
Ratio Equation
0 S3 120 2 3 1 0 60
Kr S4 60 2 1 0 1 30
Zj 0 6 4 0 0
1
Kr
S3 60 0 2 1 1 30 S3 2Pe
Pe x1 30 1 0 60 S4 / 2
Zj 100 0 1 0 3 Z 6Pe
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Simplex Method
Table 5.5: Iteration Table
The solution is,
x1 15 corrugated boxes are to be produced and
x2 30 carton boxes are to be produced to yield a
ProIit, Zmax Rs. 210.00
Summary of LPP Procedure
$tep 1: Formulate the LP problem.
$tep 2: Introduce slack /auxiliary variables.
iI constraint type is introduce S
iI constraint type is introduce S a and
iI constraint type is introduce a
$tep 3: Find the initial basic solution.
$tep 4: Establish a simplex table and enter all variable coeIIicients. II
the objective
Iunction is maximization, enter the opposite sign co-eIIicient and iI
minimization,
enter without changing the sign.
$tep 5: Take the most negative coeIIicient in the objective Iunction, Zj
to identiIy the
key column (the corresponding variable is the entering variable oI the
next
iteration table).
$tep : Find the ratio between the solution value and the coeIIicient oI
the key column.
Enter the values in the minimum ratio column.
$tep 7: Take the minimum positive value available in the minimum ratio
column to
identiIy the key row. (The corresponding variable is the leaving variable
oI the
table).
$tep 8: The intersection element oI the key column and key row is the
pivotal element.
$tep 9: Construct the next iteration table by eliminating the leaving
variable and
introducing the entering variable.
$tep 1: Convert the pivotal element as 1 in the next iteration table and
compute the
other elements in that row accordingly. This is the pivotal equation row
(not
key row).
$tep 11: Other elements in the key column must be made zero. For
simplicity, Iorm the
equations as Iollows: Change the sign oI the key column element,
multiply with
pivotal equation element and add the corresponding variable.
Iteration
Number
Basic
Variables
Solution
Value
1 2 $3 $4
Minimum
Ratio
Equation
0
Kr
S3
S4
Zf
120
60
0
2
2
6
3
1
4
1
0
0
0
1
0
60
30
1
Kr
Pe
S3
x1
Zf
60
30
100
0
1
0
2

1
1
0
0
1

3
30
60
S3 2pe
S4/2
Z 6Pe
2 Pe X2
x1
Zj
30
15
210
0
1
0
1
0
0

1/4

1/2
/
5/2
S3/2
S3 Pe/2
Z Pe
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$tep 12: Check the values oI objective Iunction. II there are negative
values, the solution
is not an optimal one; go to step 5. Else, iI all the values are positive,
optimality
is reached. on-negativity Ior objective Iunction value is not considered.
Write
down the values oI x1, x2,....xi and calculate the objective Iunction
Ior
maximization or minimization.
Aote:
(i) II there are no x1, x2 variables in the Iinal iteration table, the values
oI x1 and x2 are
zero.
(ii) eglect the sign Ior objective Iunction value in the Iinal iteration
table.
5.4 SOLVING LP PROBLEMS USING COMPUTER WITH
TORA
From the MAI MEU, select LIEAR PROGRAMMIG option, and
enter the
input values oI the previously discussed problem as shown in the Figure
5.1.
Figure 5.1: Solving LPP using Computer with TORA (Input Screen
)
Click Solve Menu, and select Solve Problem Algebraic Iterations
All-Slack
Starting Solution. ow, click Go To Output screen, then the Iirst
iteration table will be
displayed. To select the entering variable, click a non-basic variable (iI
correct, the column
turns green). Similarly, select the leaving variable (iI correct, the row
turns red),
Figure 5.2.
Figure 5.2: Selecting the Leaving Variable (TORA, Output Screen)
149
Simplex Method
Then click ext Iteration button to display the next iteration table as
shown in Figure 5.3.
Figure 5.3: Next Iteration Table (TORA, Output Screen)
Again click next iteration button to get the third and Iinal iteration table.
A pop-up menu
also indicates that the solution has reached the optimal level. ow we
can notice that all
the values in the objective Iunction Zmax row are non-negative which
indicates that the
solution is optimal. The Iinal Iteration Table is shown in Figure 5.4.
Figure 5.4: Final Iteration Table (TORA, Output Screen)
From the Iinal Iteration Table, the values oI X1, X2 and Zmax are taken
to the corresponding
values in the solution column (last column) oI the simplex table.
i.e., Zmax 210.00
X1 30.00
X2 15.00
Example 1: Solve the LP problem using Simplex method. Determine the
Iollowing :
(a) What is the optimal solution?
(b) What is the value oI the objective Iunction?
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(c) Which constraint has excess resources and how much?
Zmax 5x1 6x2
2x1 x2 2000 ....................(i)
x1 800 ....................(ii)
x2 200 ....................(iii)
where x1, x2 0
$olution: Converting the inequality constraints by introducing the slack
variables,
Zmax 5x1 6x2 0S3 0S4 0S5
2x1 x2 S3 2000
x1 S4 800
x2 S5 200
Equate x1 and x2 to zero , to Iind the initial basic solution
2(0) 0 S3 2000
0 S4 800
0 S5 200
The initial basic solution is,
S3 2000
S4 800
S5 200
Establish a simplex table to represent the co-eIIicient oI variables Ior
optimal computation
as shown in Table 5.6.
Table 5.6: Simplex Table
In the Iinal table, all the values oI Zj are 0, hence optimality is
reached. The optimum
solution is,
(a) The value oI x1 800 units
x2 200 units
Iteration
Number
Basic
Variable
Solution
Value X1 X2 S3 S4 S5
Min
Ratio Equation
0 S3 2000 2 1 1 0 0 2000
S4 800 1 0 0 1 0
Kr S3 200 0 1 0 0 1 200
-Z 1200 -5 -6 0 0 0
1 S3 1800 2 0 1 0 -1 900 S3 Pe
Kr S4 800 1 0 0 1 0 800 S4
Pe X2 200 0 1 0 0 1 S5
-Z 1200 -5 0 0 0 6 Z 6Pe
2 S3 200 0 -2 1 -2 -1 S3 2Pe
Pe X1 800 1 0 0 1 0 S4
X2 200 0 1 0 0 1 X2
-Zj 5200 0 0 0 5 6 Z 5Pe
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Simplex Method
(b) Objective Iunction Zmax 5x1 6x2
5(800) 6(200)
Rs. 5200.00
(c) In the Iinal iteration Table 5.2, slack variable S3 represents the Iirst
constraint,
thereIore this constraint has excess unused resources oI 200 units.
5.5 MINIMIZATION LP PROBLEMS
In real liIe we need to minimize cost or time in certain situations. The
objective now is
minimization. Procedure Ior minimization problems is similar to
maximization problems.
The only diIIerence is, enter the coeIIicients oI the objective Iunction in
the simplex
table without changing the sign.
Another way to solve minimization problems is by converting the
objective Iunction as a
maximization problem by multiplying the equation by ( 1).
For example, iI the objective Iunction is,
Minimize Z 10x1 5x2
Convert the objective Iunction into maximization and solve
Maximize Z 10x1 5x2
5.6 BIG M METHOD
So Iar, we have seen the linear programming constraints with less than
type. We come
across problems with greater than` and equal to` type also. Each oI
these types must
be converted as equations. In case oI greater than` type, the constraints
are rewritten
with a negative surplus variable S1 and by adding an artiIicial variable a.
ArtiIicial variables
are simply used Ior Iinding the initial basic solutions and are thereaIter
eliminated. In
case oI an equal to` constraint, just add the artiIicial variable to the
constraint.
The co-eIIicient oI artiIicial variables a1, a2,... are represented by a
very high value M,
and hence the method is known as BIG-M Method.
Example 2: Solve the Iollowing LPP using Big M Method.
Minimize Z 3x1 x2
4x1 x2 4 ....................(i)
5x1 3x2 7 ....................(ii)
3x1 2x2 6 ....................(iii)
where x1 , x2 0
$olution: Introduce slack and auxiliary variables to represent in the
standard Iorm.
Constraint 4x1 x2 4 is introduced by adding an artiIicial variable a1,
i.e.,
4x1 x2 a1 4
Constraint, 5x1 3x2 7 is converted by subtracting a slack S1 and
adding an auxiliary
variable a2.
5x1 3x2 S1 a2 7
Constraint 3x2 2x2 6 is included with a slack variable S2
3x2 2x2 S2 6
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The objective must also be altered iI auxiliary variables exist. II the
objective Iunction is
minimization, the co-eIIicient oI auxiliary variable is M (and -M, in
case oI maximization)
The objective Iunction is minimization,
Minimize Z 3x1 x2 0S1 0S2 Ma1 Ma2
Zmin 3x1 x2 Ma1 Ma2
The initial Ieasible solution is (Put x1, x2, S1 0)
a1 4
a2 7
s2 6
Establish a table as shown below and solve:
Table 5.7: Simplex Table
The solution is,
x1 5/7 or 0.71
x2 8/7 or 1.14
Zmin 3 x 5 / 7 8/7
23/7 or 3.29
1. What are the diIIerent types oI additional variables used in simplex
method?
2. How will you introduce/auxiliary variables in solving LPT problem?
Iteration
Number
Basic
Variables
Solution
Value X1 X2 S1 S2
a
1
a
2
Min
Ratio Equation
0 Z 0 3 1 0 0 M M
K r a1 4 4 1 0 0 1 0 0.75
a2 7 5 3 1 0 0 1 1.6
S2 6 3 2 0 1 0 0 2
Z1 11M 9M 3 4M 1 M 0 0 0
Z ( Ma1)
M a2
1 Pe X1 1 1 / 0 0 4 a1/4
K r a2 2 0 7/4 1 0 1.14 a2 - 5Pe
S2 3 0 5/4 0 1 2.4 S2 - 3Pe
Z1 2M-3 0 7M/4
1/4
M 0 Z1 (9M
3) Pe
2 x1 5/7 1 0
1/7
0 X1 Pe/4
x2 8/7 0 1
4/7
0
7 / 4
a2
S2 22/14 0 0 10/
14
1
Z1 23/7 0 0 1/7 0
Z1 (7M/4
/ ) Pe
Contd....
153
Simplex Method
answers in it.
better.

5.7 DEGENERACY IN LP PROBLEMS
In solving linear programming problem, while improving the basic
solution, it may so
transpire that there is no scope to generate an optimal solution. This is
known as
'degeneracy' in linear programming. This occurs when there is a tie in
the minimum ratio
column. In other words, two or more values in the minimum ratio
column are the same.
To resolve degeneracy, the Iollowing method is used. Divide the key
column values (oI
the tied rows) by the corresponding values oI columns on the right side.
This makes the
values unequal and the row with minimum ratio is the key row.
Example 3: Consider the Iollowing LPP,
Maximize Z 2x1 x2
4x1 3x2 12 ...................(i)
4x1x2 8 ...................(ii)
4x1 x2 8 ...................(iii)
$olution: Converting the inequality constraints by introducing the slack
variables,
Maximize Z2x1 x2
4x1 3x2 S3 12 ...................(iv)
4x1 x2 S4 8 ...................(v)
4x1 x2 S5 8 ...................(vi)
Equating x1, x2 0, we get
S3 12
S4 8
S5 8
Table 5.8: Illustrating Degeneracy
Iteration
Number
Basic
Variables
Solution
Minimum
Ratio Equation
0 S3 12 4 3 1 0 0 3
S4 8 4 1 0 1 0 2
S5 8 4 -1 0 0 1 2
-Z 0 -2 -1 0 0 0
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For S4; 4/2 2
For S5; 4/2 2
AIter entering all the values in the Iirst iteration table, the key column is
-2, variable
corresponding is x1. To identiIy the key row there is tie between row S4
and row S5 with
same values oI 2, which means degeneracy in solution. To break or to
resolve this,
consider the column right side and divide the values oI the key column
values. We shall
consider column x2, the values corresponding to the tie values 1, 1.
Divide the key
column values with these values, i.e., 1/4, 1/4 which is 0.25 and 0.25.
ow in selecting
the key row, always the minimum positive value is chosen i.e., row S4.
ow, S4 is the
leaving variable and x1 is an entering variable oI the next iteration table.
The problem is
solved. Using computer and the solution is given in the Figure 5.5.
Figure 5.5: LPP Solved Using Computer with TORA (Output
Screen)
5.8 UNBOUNDED SOLUTIONS IN LPP
In a linear programming problem, when a situation exists that the value
objective Iunction
can be increased inIinitely, the problem is said to have an 'unbounded'
solution. This can
be identiIied when all the values oI key column are negative and hence
minimum ratio
values cannot be Iound.
Table 5.9: Illustrating Unbounded Solution
For S3; 12/-2
For X1; 8 /-1 all values are negative
For S4; 4/-4
Iteration
Value
Basic
Variable
Solution
Minimum
Ratio Equation
1 S3 12 1 -2 1 0 0
X1 8 3 -1 0 1 0
S4 4 2 -4 0 0 1
-Z 0 -4 -8 0 0 0
tie
155
Simplex Method 5.9 MULTIPLE SOLUTIONS IN LPP
In the optimal iteration table iI (Pj - Zj) value oI one or more non-basic
variable is equal
to 0, then the problem is said to have multiple or alternative solutions.
Table 5.10: Illustrating Multiple Solutions
5.10 DUALITY IN LP PROBLEMS
All linear programming problems have another problem associated with
them, which is
known as its dual. In other words, every minimization problem is
associated with a
maximization problem and vice-versa. The original linear programming
problem is known
as primal problem, and the derived problem is known as its dual
problem. The optimal
solutions Ior the primal and dual problems are equivalent.
Conversion oI primal to dual is done because oI many reasons. The dual
Iorm oI the
problem, in many cases, is simple and can be solved with ease.
Moreover, the variables
oI the dual problem contain inIormation useIul to management Ior
analysis.
Procedure
$tep 1: Convert the objective Iunction iI maximization in the primal into
minimization in
the dual and vice versa. Write the equation considering the transpose oI
RHS oI
the constraints
$tep 2: The number oI variables in the primal will be the number oI
constraints in the
dual and vice versa.
$tep 3: The co-eIIicient in the objective Iunction oI the primal will be
the RHS constraints
in the dual and vice versa.
$tep 4: In Iorming the constraints Ior the dual, consider the transpose oI
the body matrix
oI the primal problems.
Aote: Constraint inequality signs are reversed
Example 4: Construct the dual to the primal problem
Maximize Z 6x1 10x2
2x1 8x2 60 .......................(i)
3x1 5x2 45 .......................(ii)
5x1 - 6x2 10 .......................(iii)
x2 40 .......................(iv)
where x1, x2 0
$olution:
Minimize W 60y1 45y2 10y3 40y4
Pj 4 1 0 0 0
Iteration
Number
Basic
Number
Solution
Minimum
Ratio Equation
2 X2 6 5 2 0 1 0
S2 3 4 1 2 1 0
Zj 4 4 1 1 2 0
Pj Zj 0 0 -1 -2 0
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2y13y25y3 0y4 6
8y1 5y2 6y3 y4 10
where y1, y2, y3, y4 0
Example 5: Construct a dual Ior the Iollowing primal
6x1 10x2 4x3 14 ..................(i)
6x1 2x2 6x3 10 ..................(ii)
7x1 2x2 5x3 20 ..................(iii)
x1 4x2 5x3 3 ..................(iv)
4x1 7x2 4x3 20 ..................(v)
where x1, x2, x3 0
$olution: Convert 'less than' constraints into 'greater than' type by
multiplying by
(1) on both sides (i.e., Ior e.g. iii).
6x1 10x2 4x3 14
6x1 2x2 6x3 10
7x1 2x2 5x3 20
x1 4x2 5x3 3
4x1 7x2 4x3 20
The dual Ior the primal problem is,
Maximize W 14y110y220y33y420y5
6y1 6y2 7y3 y4 4y5 6
10y1 2y2 2y3 4y47y5 4
4y1 6y2 5y3 5y4 4y5 4
where y1, y2, y3, y4 and y5 0
5.11 SENSITIVITY ANALYSIS
Sensitivity analysis involves 'what iI?' questions. In the real world, the
situation is constantly
changing like change in raw material prices, decrease in machinery
availability, increase
in proIit on one product, and so on. It is important to decision makers Ior
Iind out how
these changes aIIect the optimal solution. Sensitivity analysis can be
used to provide
inIormation and to determine solution with these changes.
Sensitivity analysis deals with making individual changes in the co-
eIIicient oI the objective
Iunction and the right hand sides oI the constraints. It is the study oI how
changes in the
co-eIIicient oI a linear programming problem aIIect the optimal solution.
We can answer questions such as,
i. How will a change in an objective Iunction co-eIIicient aIIect the
optimal solution?
ii. How will a change in a right-hand side value Ior a constraint aIIect
the optimal
solution?
157
Simplex Method
For example, a company produces two products x1 and x2 with the use
oI three diIIerent
materials 1, 2 and 3. The availability oI materials 1, 2 and 3 are 175, 50
and 150 respectively.
The proIit Ior selling per unit oI product x1 is Rs. 40 and that oI x2 is
Rs. 30. The raw
material requirements Ior the products are shown by equations, as given
below.
Zmax 40x1 30x2
4x1 5x2 175 ....................(i)
2x2 50 ....................(ii)
6x1 3x2 150 ....................(iii)
where x1, x2 0
The optimal solution is
x1 Rs. 12.50
x2 Rs. 25.00
Zmax 40 12.50 30 25.00
Rs. 1250.00
The problem is solved using TORA soItware and the output screen
showing sensitivity
analysis is given in Table 5.11.
Change in objective function co-efficients and effect on optimal
solution
Table 5.11: Sensitivity Analysis Table Output
ReIerring to the current objective co-eIIicient, iI the values oI the
objective Iunction coeIIicient
decrease by 16 (Min. obj. co-eIIicient) and increase by 20 (Max. obj.
coeIIicient)
there will not be any change in the optimal values oI x1 12.50 and
x2 25.00. But there will be a change in the optimal solution, i.e. Zmax.
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Aote: This applies only when there is a change in any one oI the co-
eIIicients oI variables
i.e., x1 or x2. Simultaneous changes in values oI the co-eIIicients need
to apply Ior 100
Percent Rule Ior objective Iunction co-eIIicients.
For x1, Allowable decrease Current value - Min. Obj. co-eIIicient
40 24
Rs. 16 ------------------ (i)
Allowable increase Max. Obj. co-eIIicient Current value
60 40
Rs. 20.00 ---------------- (ii)
Similarly, For x2, Allowable decrease Rs. 10.00 ---------------- (iii)
Allowable increase Rs. 20.00 --------------- (iv)
For example, iI co-eIIicient oI x1 is increased to 48, then the increase is
48 40 Rs. 8.00. From (ii), the allowable increase is 20, thus the
increase in x1 coeIIicient
is 8/20 0.40 or 40.
Similarly,
II co-eIIicient oI x2 is decreased to 27, then the decrease is 30 - 27 Rs.
3.00.
From (iii), the allowable decrease is 10, thus the decrease in x2 co-
eIIicient is 3/10 0.30
or 30.
ThereIore, the percentage oI increase in x1 and the percentage oI
decrease in x2 is 40
and 30 respectively.
i.e. 40 30 70
For all the objective Iunction co-eIIicients that are changed, sum the
percentage oI the
allowable increase and allowable decrease. II the sum oI the percentages
is less than or
equal to 100, the optimal solution does not change, i.e., x1 and x2
values will not change.
But Zmax will change, i.e.,
48(12.50) 27(25)
Rs. 1275.00
II the sum oI the percentages oI increase and decrease is greater than
100, a diIIerent
optimal solution exists. A revised problem must be solved in order to
determine the new
optimal values.
Change in the right-hand side constraints values and effect on
optimal solution
Suppose an additional 40 kgs oI material 3 is available, the right-hand
side constraint
increases Irom 150 to 190 kgs.
ow, iI the problem is solved, we get the optimal values as
x1 23.61, x2 16.11 and Zmax 1427.78
From this, we can inIer that an additional resources oI 40 kgs increases
the proIit by
1427.78 1250 Rs. 177.78
ThereIore, Ior one kg or one unit increase, the proIit will increase by
177.78 / 40
Rs. 4.44
Dual price is the improvement in the value oI the optimal solution per
unit increase in the
right-hand side oI a constraint. Hence, the dual price oI material 3 is Rs
4.44 per kg.
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Simplex Method
Increase in material 2 will simply increase the unused material 2 rather
than increase in
objective Iunction. We cannot increase the RHS constraint values or the
resources. II
the limit increases, there will be a change in the optimal values.
The limit values are given in Table 2.10, i.e., Min RHS and Max RHS
values.
For example, Ior material 3, the dual price Rs. 4.44 applies only to the
limit range 150 kgs
to 262.50 kgs.
Where there are simultaneous changes in more than one constraint RHS
values, the 100
per cent Rule must be applied.
Reduced Cost
Reduced cost / unit oI activity

'
+

'

'
+

'

oI activity
ProIit per unit
oI activity
resourcesper unit
Cost oI consumed
II the activity's reduced cost per unit is positive, then its unit cost oI
consumed resources
is higher than its unit proIit, and the activity should be discarded. This
means that the
value oI its associated variable in the optimum solution should be zero.
Alternatively, an activity that is economically attractive will have a zero
reduced cost in
the optimum solution signiIying equilibrium between the output (unit
proIit) and the input
(unit cost oI consumed resources).
In the problem, both x1 and x2 assume positive values in the optimum
solution and hence
have zero reduced cost.
Considering one more variable x3 with proIit Rs. 50
Zmax 40x1 30x2 50x3
4x1 5x2 6x3 175 ....................(i)
2x2 1x3 50 ....................(ii)
6x1 3x2 3x3 150 ....................(iii)
where x1, x2, x3 0
The sensitivity analysis oI the problem is shown in the computer output
below in
Table 5.12.
Table 5.12: Sensitivity Analysis
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The reduced cost indicates how much the objective Iunction co-eIIicient
Ior a particular
variable would have to improve beIore that decision Iunction assumes a
positive value in
the optimal solution.
The reduced cost oI Rs.12.50 Ior decision variable x2 tells us that the
proIit contribution
would have to increase to at least 30 12.50 42.50 beIore x3 could
assume a positive
value in the optimal solution.
1 What is Duality concept?
2. What is meant by degeneracy in Linear Programming?
answers in it.
better.

5.12 LET US SUM UP
Thus LP is a planning technique oI selecting the best possible (optimal)
strategy among
number oI alternatives. The chosen strategy is said to be the best because
it involves
minimization/maximization oI source desired action e.g. maximization
oI proIits,
minimization oI costs, smoothening running oI the business.
5.13 LESSON-END ACTIVITIES
1. Linear Programming is a general method usable Ior a wide range oI
problems.
Go to any nutrition center which sells health-Iood. Bring into play the
applications
oI LP in Iormation and building.
2. LP is no doubt an vital problem. ot in this counters oI petty
problems with only a
couple oI variables, but is much bigger problem.
Exaggerate this logic with the help oI illstrations which can be matched
and linked
with you real-liIe-situations.
5.14 KEYWORDS
Slack
Simplex method
Surplus
161
Simplex Method
Variable
Solution
(a) ArtiIicial variable are imaginary and do not have any physical
meaning.
(b) Simplex method solve the LPP in iteration to enhance the value oI
the objective
Iunction.
(c) Sensitivity analysis can not be used to provide inIormation and to
determine
solution with these changes.
2. Briefly comment on the following statement:
(a) Two or more entries in the ratio column.
(b) LP is a planning techniques.
(c) LP techniques are used to optimise the resources Ior best result.
(d) LP in a part oI management science.
(e) Algebraic techniques is used to solve large problems using simplex
method.
1. Explain the procedure involved in the simplex method to determine
the optimum
solution.
2. What are slack, surplus and artiIicial variables ?
3. What is degeneracy in LP problems ? When does it occur ? How can
degeneracy
problem be resolved ?
4. What is a basic variable and a non-basic variable ?
5. Explain what is an unbounded solution in LPP.
6. DiIIerentiate between primal and dual problems.
7. Why is the simplex method more advantageous than the graphical
method?
8. What are the rules in selecting key column, key row and pivotal
element?
9. Discuss the role oI sensitivity analysis in linear programming.
10. In sensitivity analysis, explain
i. The eIIect oI change oI objective Iunction coeIIicients
ii. The eIIect oI change in the right hand side oI constraints
Exercise Problems
1. A company manuIactures three products A, B and C, which require
three raw
materials I, II and III. The table given below shows the amount oI raw
materials
required per kg oI each product. The resource availability per day and
the proIit
contribution Ior each product is also given.
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i. Formulate the problem as a linear programming problem.
ii. Solve the problem and determine the optimal product mix.
2. A metal Iabricator manuIactures three types oI windows. Each oI the
windows
needs Iour processes. The time taken on various machines diIIer due to
the size oI
windows. The time taken and available hours are given in the table
below:
The proIit contribution Ior windows A, B and C are Rs. 3.00, Rs. 4.00
and Rs. 5.00
respectively.
a. Formulate the problem.
b. Solve the problem using simplex method to maximize the proIit.
c. Determine the excess time available in each processes and by how
much.
3. Solve the Iollowing LPP using simplex method.
Maximize , Z 2x1 x2
4x1 3x2 12 .....................(i)
4x1 x2 8 .....................(ii)
4x1 x2 8 .....................(iii)
where x1, x2 0
4. Solve the Iollowing LPP:
Zmax 20x1 28x2 23x3
4x1 4x2 75 ....................(i)
2x1 x2 2x3 100 ....................(ii)
3x1 2x2 x3 50 ....................(iii)
where x1, x2, x3 0
5. Three high precision products are manuIactured by a Hi-Tech
Machine Tools
Company. All the products must undergo process through three
machining centers
A, B and C. The machine hours required per unit are,
Product
Raw Material
A B C Availability (kg)
I 4 1 6 800
II 5 6 8 1500
III 2 4 1 1200
ProIit per unit (Rs) 9 10 6
Window Type Cutting Heat Treating Forging Grinding
A 5 7 1 4
B 7 4 4 8
C 4 8 6 2
Available time (Hrs) 20 24 28 22
163
Simplex Method
The available time in machine hours per week is
It is estimated that the unit proIits oI the product are
a. Formulate the problem as a LPP.
b. Solve the problem to determine the optimal solution. What is the
number oI
units to be made on each product.
c. Does machining center C has any extra time to spare? II so, how much
spare
time is available ?
d. II additional 10 machine hours are available with machining center A,
then
what is the optimal product mix ? What is the change in the value oI
proIit ?
6. Raghu Constructions is considering Iour projects over the next 3
years. The expected
returns oI each project and cash outlays Ior these projects are listed in
the tables
given. All values are in Lacs oI Rupees.
Raghu has to decide to undertake construction projects. Ignore the time
value oI
money. As a consultant, what suggestion you would like to give Raghu
in deciding
about the projects to select. Determine the solution using TORA.
7. Solve the Iollowing LP Problem using Big M Method.
Minimize, Z 2x1 9x2 x3
x1 4x2 2x3 5 .......................(i)
3x1 x2 2x3 4 .......................(ii)
where x1, x2, x3 0
8. Solve the Iollowing LPP
Zmin 4x1 x2
Machining Center Product
I II III
A 2 4 6
B 3 6 2
C 3 2 1
Machining Center Machine Hours Per Week
A 150
B 100
C 120
Product Unit Profits (Rs)
I 3
II 4
III 6
Cash outlay (lakh Rs.)
Project
Year 1 Year 2 Year 3
Return
1 12.32 11.10 9.50 42.25
2 11.15 9.75 8.11 31.20
3 7.65 5.50 4.75 15.10
4 10.71 10.31 7.77 12.05
Available Iunds
(lakh Rs.)
110.00 40.00 35.00
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3x x2 3 .................(i)
4x 3x2 6 .................(ii)
x1 2x2 3 ................(iii)
where x1, x2 0
9. Solve the Iollowing LPP. Find whether multiple or alternate solution
exists
Maximize Z 2x1 4x2 6x3
10x1 4x2 6x3 150 ..................(i)
8x1 6x2 2x3 100 ..................(ii)
x1 2x2 x3 120 ....................(iii)
where x1, x2, x3 0
10. Write the dual oI the Iollowing LP problem
3x1 10x2 4x3 15 .......................(i)
12x1 2x2 5x3 4 ...................(ii)
5x1 4x2 2x3 10 ...................(iii)
x1 3x2 6x3 3 ...................(iv)
4x1 9x2 4x3 2 ...................(v)
where x1, x2, x3 0
11. Obtain the dual oI the Iollowing linear programming problem
Maximize Z , 4x1 9x2 6x3
10x1 10x2 2x3 6 .......................(i)
-5x1 5x3 6x3 8 .......................(ii)
14x1 2x2 5x3 20 ........................(iii)
5x1 4x2 7x3 3 ........................(iv)
8x1 10x2 5x3 2 .......................(v)
where x1, x2, x3 0
DISCUSSION
1. (a) True (b) True (c) False
Dantzig, G and M. Thapa, Line,r Progr,mming 1. Introduction,
Springer,
ew York 1997.
Simonnard M., Line,r Progr,mming. Englewood CliIIs, .J. Prentice
Hall, 1966.
Bersitman, D, and J Tsitsiklin, Introduction to Line,r Optimi:,tion,
Belmont. Mass:
Athena Publishing 1997.
Unit-II
LESSON
6
TRANSPORTATION MODEL
CONTENTS
6.1 Introduction
6.2 Mathematical Formulation
6.3 etwork Representation oI Transportation Model
6.4 General Representation oI Transportation Model
6.5 Use oI Linear Programming to Solve Transportation Problem
6.6 Formulation oI LP model
6.7 Solving Transportation Problem Using Computer
6.8 Balanced Transportation Problem
6.9 Unbalanced Transportation Problem
6.10 Procedure to Solve Transportation Problem
6.11 Degeneracy in Transportation Problems
6.12 Maximization Transportation Problem
6.13 Prohibited Routes Problem
6.14 Transhipment Problem
6.15 Let us Sum Up
6.17 Keywords
In this unit we would be able to learn the Time Management Models. i.e.
Transportation
and Assignment Models, thus would be able to learn transportation
models in this lesson
and also we will talk about transhipment problems.
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Transportation problem is a particular class oI linear programming,
which is associated
with day-to-day activities in our real liIe and mainly deals with logistics.
It helps in solving
problems on distribution and transportation oI resources Irom one place
to another. The
goods are transported Irom a set oI sources (e.g., Iactory) to a set oI
destinations (e.g.,
warehouse) to meet the speciIic requirements. In other words,
transportation problems
deal with the transportation oI a product manuIactured at diIIerent plants
supply origins)
to a number oI diIIerent warehouses dem,nd destin,tions). The
objective is to satisIy
the demand at destinations Irom the supply constraints at the minimum
transportation
cost possible. To achieve this objective, we must know the quantity oI
available supplies
and the quantities demanded. In addition, we must also know the
location, to Iind the cost
oI transporting one unit oI commodity Irom the place oI origin to the
destination. The
model is useIul Ior making strategic decisions involved in selecting
optimum transportation
routes so as to allocate the production oI various plants to several
warehouses or
distribution centers.
The transportation model can also be used in making location decisions.
The model helps
in locating a new Iacility, a manuIacturing plant or an oIIice when two
or more number
oI locations is under consideration. The total transportation cost,
distribution cost or
shipping cost and production costs are to be minimized by applying the
model.
6.2 MATHEMATICAL FORMULATION
The transportation problem applies to situations where a single
commodity is to be
transported Irom various sources oI supply (origins) to various demands
(destinations).
Let there be m sources oI supply S1, S2, ................Sm having ai ( i
1,2,......m) units oI
supplies respectively to be transported among n destinations D1, D2
...Dn with bj
( j 1,2...n) units oI requirements respectively. Let Cij be the cost Ior
shipping one unit
oI the commodity Irom source i, to destination j Ior each route. II xij
represents the units
shipped per route Irom source i, to destination j, then the problem is to
determine the
transportation schedule which minimizes the total transportation cost oI
satisIying supply
and demand conditions.
The transportation problem can be stated mathematically as a linear
programming problem
as below:
Minimize Z
=
m
i 1
=
n
j 1
cifxif
=
n
j
ij x
1
ai, i 1,2,...m (supply constraints)
=
n
i
ij x
1
bj, j 1,2,...m (demand constraints)
and xij ~ 0 Ior all i 1,2,...m and,
f 1,2,...m
169
Transportation Model 6.3 NETWORK REPRESENTATION OF
The transportation model is represented by a network diagram in Figure
6.1.
Figure 6.1: Network Transportation Model
where,
m be the number oI sources,
n be the number oI destinations,
Sm be the supply at source m,
Dn be the demand at destination n,
cij be the cost oI transportation Irom source i to destination j, and
xij be the number oI units to be shipped Irom source i to destination j.
The objective is to minimize the total transportation cost by determining
the unknowns
xij, i.e., the number oI units to be shipped Irom the sources and the
destinations while
satisIying all the supply and demand requirements.
6.4 GENERAL REPRESENTATION OF
The Transportation problem can also be represented in a tabular Iorm as
shown in
Table 6.1
Let Cij be the cost oI transporting a unit oI the product Irom ith origin to
jth destination.
ai be the quantity oI the commodity available at source i,
bj be the quantity oI the commodity needed at destination j, and
xij be the quantity transported Irom ith source to jth destination
c11 : x11
S1 D1
Supply Demand
S2 D2
Sm Dn
cmn : xmn
1 1
m n
2 2
Factory Source Destination Warehouse
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Table 6.1: Tabular Representation of Transportation Model

= =
=
n
j
j
m
i
ai b
1 1
II the total supply is equal to total demand, then the given transportation
problem is a
balanced one.
6.5 USE OF LINEAR PROGRAMMING TO SOLVE
TRANSPORTATION PROBLEM
Figure 6.2: Linear Programming Solution
Factory Warehouse
Source Destination
6000
5 5000
6
9
7
7
Supply Demand
5000 8 4000
2
4
6 3 2000
5
4000 3
Transportation cost 4000
Chennai
1
Bangalore
1
Coimbatore
2
Hyderabad
2
Madurai
3
Cochin
3
Goa
4
%o Supply
D1 D2 . Dn
From Ai
S1 C11 C12 . C1n A1
x11 x12
S2 C21 C22 . C2n A2
x21 x22
. . . . . .
. . . . . .
. . . . . .
Sm Cm1 Cm2 . Cmn Am
xm1 xm2
Bf B1 B2 . Bn
= =
= n
j
j
m
i
ai b
1 1
171
The network diagram shown in Figure 6.2 represents the transportation
model oI M/s Transportation Model
GM Textiles units located at Chennai, Coimbatore and Madurai. GM
Textiles produces
ready-made garments at these locations with capacities 6000, 5000 and
4000 units per
week at Chennai, Coimbatore and Madurai respectively. The textile unit
distributes its
ready-made garments through Iour oI its wholesale distributors situated
at Iour locations
Bangalore, Hyderabad, Cochin and Goa. The weekly demand oI the
distributors are
5000, 4000, 2000 and 4000 units Ior Bangalore, Hyderabad, Cochin and
Goa respectively.
The cost oI transportation per unit varies between diIIerent supply points
and destination
points. The transportation costs are given in the network diagram.
The management oI GM Textiles would like to determine the number oI
units to be
shipped Irom each textile unit to satisIy the demand oI each wholesale
distributor. The
supply, demand and transportation cost are as Iollows:
Table 6.2: Production Capacities
Table 6.3: Demand Requirements
Table 6.4: Transportation cost per unit
A linear programming model can be used to solve the transportation
problem.
Let,
X11 be number oI units shipped Irom source1 (Chennai) to destination 1
(B`lore).
X12 be number oI units shipped Irom source1 (Chennai) to destination 2
(Hyderabad).
X13 number oI units shipped Irom source 1 (Chennai) to destination 3
(Cochin).
X14 number oI units shipped Irom source 1 (Chennai) to destination 4
(Goa)
and so on.
Xij number oI units shipped Irom source i to destination j, where i
1,2,....m
and,
j 1,2,...n.
1 What is the transportation problem?
2. Give a tabular representation oI transportation model.
Destination Wholesale Distributor Weekly Demand (Units)
1 Bangalore 5000
2 Hyderabad 4000
3 Cochin 2000
4 Goa 4000
Supply Destination
B`lore Hyderabad Cochin Goa
Chennai 5 6 9 7
Coimbatore 7 8 2 4
Madurai 6 3 5 3
Supply Textile Unit Weekly Production (Units)
1 Chennai 6000
2 Coimbatore 5000
3 Madurai 4000
Contd....
172
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answers in it.
better.

6.6 FORMULATION OF LP MODEL
Objective function: The objective is to minimize the total transportation
cost. Using the
cost data table, the Iollowing equation can be arrived at:
Transportation cost Ior units
shipped Irom Chennai 5x116x129x137x14
shipped Irom Coimbatore 7x218x222x234x24
shipped Irom Madurai 6x313x325x333x34
Combining the transportation cost Ior all the units shipped Irom each
supply point with
the objective to minimize the transportation cost, the objective Iunction
will be,
Minimize Z
5x116x129x137x147x218x222x234x246x313x325x333x
34
Constraints:
In transportation problems, there are supply constraints Ior each source,
and demand
constraints Ior each destination.
Supply constraints:
For Chennai, x11 x12 x13 x14 6000
For Coimbatore, x21 x22 x23 x24 5000
For Madurai, x31 x32 x33 x34 4000
Demand constraints:
For B`lore, x11 x21 x31 5000
For Hyderabad, x12 x22 x32 4000
For Cochin, x13 x23 x33 2000
For Goa, x14 x24 x34 4000
The linear programming model Ior GM Textiles will be write in the next
line. Minimize
Z 5x11 6x12 9x13 7x14 7x21 8x22 2x23 4x24 6x31
3x32 5x33 3x34
X11x12x13x14 6000 ......................(i)
173
X Transportation Model 21x22x23x24 5000 .......................(ii)
X31x32x33x34 4000 ........................(iii)
X11x21x31 5000 ........................(iv)
X12x22x32 4000 ........................(v)
X13x23x33 2000 ........................(vi)
X14x24x34 4000 ........................(vii)
Where, xij ~ 0 Ior i 1, 2, 3 and j 1, 2, 3, 4.
6.7 SOLVING TRANSPORTATION PROBLEM USING
COMPUTER
Input screen Ior solving TP & LP models using TORA
Figure 6.3: TORA Screen for TP Model
Output screen using TP & LP models
Figure 6.4: TORA Screen for LP Model
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Example 1: Consider the Iollowing transportation problem (Table 6.5)
and develop a
linear programming (LP) model.
Table 6.5: Transportation Problem
$olution: Let xij be the number oI units to be transported Irom the
source i to the destination
j, where i 1, 2, 3,.m and j 1, 2, 3,.n.
The linear programming model is
Minimize Z
15x1120x1230x1310x219x2215x2314x3112x3218x33
x11x12x13 350 ..................(i)
x21x22x23 200 ...................(ii)
x31x32x33 400 ...................(iii)
x11x12x31 250 ...................(iv)
x12x22x32 400 ...................(v)
x13x23x33 300 ...................(vi)
xij ~ 0 Ior all i and j.
In the above LP problem, there are m n 3 3 9 decision variables
and
m n 3 3 6 constraints.
6.8 BALANCED TRANSPORTATION PROBLEM
When the total supplies oI all the sources are equal to the total demand
oI all destinations,
the problem is a balanced transportation problem.
Total supply Total demand

= =
=
n
j
j
m
i
ai b
1 1
The problem given in Example 3.1 represents a balanced transportation
problem.
6.9 UNBALANCED TRANSPORTATION PROBLEM
When the total supply oI all the sources is not equal to the total demand
oI all destinations,
the problem is an unbalanced transportation problem.
Total supply ' Total demand
=
m
i
ai
1
'
=
n
j
bj
1
Demand Less than Supply
In real-liIe, supply and demand requirements will rarely be equal. This is
because oI
variation in production Irom the supplier end, and variations in Iorecast
Irom the customer
Destination
Source
1 2 3 Supply
1 15 20 30 350
2 10 9 15 200
3 14 12 18 400
Demand 250 400 300
175
end. Supply variations may be because oI shortage oI raw materials,
labour problems, Transportation Model
improper planning and scheduling. Demand variations may be because
oI change in
customer preIerence, change in prices and introduction oI new products
by competitors.
These unbalanced problems can be easily solved by introducing dummy
sources and
dummy destinations. II the total supply is greater than the total demand,
a dummy
destination (dummy column) with demand equal to the supply surplus
is added. II the
total demand is greater than the total supply, a dummy source (dummy
row) with supply
equal to the demand surplus is added. The unit transportation cost Ior the
dummy column
and dummy row are assigned zero values, because no shipment is
actually made in case
oI a dummy source and dummy destination.
Example 2: Check whether the given transportation problem shown in
Table 6.6 is a
balanced one. II not, convert the unbalanced problem into a balanced
transportation
problem.
Table 6.6: Transportation Model with Supply Exceeding Demand
$olution: For the given problem, the total supply is not equal to the total
demand.
=
3
i 1
i a ' =
3
j 1
j b
since,
a 700
3
i 1
i = =
0and b 600
3
j 1
j = =
The given problem is an unbalanced transportation problem. To convert
the unbalanced
transportation problem into a balanced problem, add a dummy
destination (dummy column).
i.e., the demand oI the dummy destination is equal to,
= =

3
j 1
j
3
i 1
i a b
Thus, a dummy destination is added to the table, with a demand oI 100
units. The modiIied
table is shown in Table 6.7 which has been converted into a balanced
transportation
table. The unit costs oI transportation oI dummy destinations are
assigned as zero.
Table 6.7: Dummy Destination Added
Similarly,
II
= =
>
m
i
i
n
j
bj a
1 1
then include a dummy source to supply the excess demand.
Destination
Source
1 2 3
Supply
1 25 45 10 200
2 30 65 15 100
3 15 40 55 400
Demand 200 100 300
Destination
Source
1 2 3 4
Supply
1 25 45 10 0 200
2 30 65 15 0 100
3 15 40 55 0 400
Demand 200 100 300 100 700/700
176
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Demand Greater than Supply
Example 3: Convert the transportation problem shown in Table 6.8 into
a balanced
problem.
Table 6.8: Demand Exceeding Supply
$olution: The given problem is,
= =
>
3
1
4
1 i
f
f
f b ,
=
=
3
1
800
i
i , and 1000
4
1
= =f
f b
The given problem is an unbalanced one. To convert it into a balanced
transportation
problem, include a dummy source (dummy row) as shown in Table 6.9
Table 6.9: Balanced TP Model
6.10 PROCEDURE TO SOLVE TRANSPORTATION
PROBLEM
Step 1: Formulate the problem.
Formulate the given problem and set up in a matrix Iorm. Check whether
the problem is a balanced or unbalanced transportation problem. II
unbalanced, add dummy source (row) or dummy destination (column) as
required.
Step 2: Obtain the initial feasible solution.
The initial Ieasible solution can be obtained by any oI the Iollowing
three
methods:
i. orthwest Corner Method (WC)
ii. Least Cost Method (LCM)
iii. Vogel`s Approximation Method (VAM)
The transportation cost oI the initial basic Ieasible solution through
Vogel`s
approximation method, VAM will be the least when compared to the
other
two methods which gives the value nearer to the optimal solution or
optimal
solution itselI. Algorithms Ior all the three methods to Iind the initial
basic
Ieasible solution are given.
Destination
Source
1 2 3 4
Supply
1 10 16 9 12 200
2 12 12 13 5 300
3 14 8 13 4 300
Demand 100 200 450 250 1000/800
Source Destination
1 2 3 4 Supply
1 10 16 9 12 200
2 12 12 13 5 300
3 14 8 13 4 300
4 0 0 0 0 200
Demand 100 200 450 250 1000/1000
177
Algorithm for North-West Corner Method (NWC) Transportation
Model
(i) Select the orth-west (i.e., upper leIt) corner cell oI the table and
allocate the
maximum possible units between the supply and demand requirements.
During
allocation, the transportation cost is completely discarded (not taken into
consideration).
(ii) Delete that row or column which has no values (Iully exhausted) Ior
supply or
demand.
(iii) ow, with the new reduced table, again select the orth-west corner
cell and
allocate the available values.
(iv) Repeat steps (ii) and (iii) until all the supply and demand values are
zero.
(v) Obtain the initial basic Ieasible solution.
Algorithm for Least Cost Method (LCM)
(i) Select the smallest transportation cost cell available in the entire table
and allocate
the supply and demand.
(ii) Delete that row/column which has exhausted. The deleted
row/column must not be
considered Ior Iurther allocation.
(iii) Again select the smallest cost cell in the existing table and allocate.
(ote: In case,
iI there are more than one smallest costs, select the cells where
maximum allocation
can be made)
(iv) Obtain the initial basic Ieasible solution.
Algorithm for Vogel`s Approximation Method (VAM)
(i) Calculate penalties Ior each row and column by taking the diIIerence
between the
smallest cost and next highest cost available in that row/column. II there
are two
smallest costs, then the penalty is zero.
(ii) Select the row/column, which has the largest penalty and make
allocation in the cell
having the least cost in the selected row/column. II two or more equal
penalties
exist, select one where a row/column contains minimum unit cost. II
there is again
a tie, select one where maximum allocation can be made.
(iii) Delete the row/column, which has satisIied the supply and demand.
(iv) Repeat steps (i) and (ii) until the entire supply and demands are
satisIied.
(v) Obtain the initial basic Ieasible solution.
#emarks: The initial solution obtained by any oI the three methods must
satisIy the
Iollowing conditions:
(a) The solution must be Ieasible, i.e., the supply and demand constraints
must be
satisIied (also known as rim conditions).
(b) The number oI positive allocations, must be equal to mn-1,
where m is the
number oI rows and n is the number oI columns.
6.11 DEGENERACY IN TRANSPORTATION PROBLEMS
Step 3: Check for degeneracy
The solution that satisIies the above said conditions N m + n - 1 is a
non-degenerate basic Ieasible solution otherwise, it is a degenerate
solution.
Degeneracy may occur either at the initial stage or at subsequent
iterations.
II number oI allocations, m n 1, then degeneracy does not exist.
Go to Step 5.
II number oI allocations, m n 1, then degeneracy does exist. Go
to
Step 4.
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* *
* *
* *
* *
Step 4: Resolving degeneracy
To resolve degeneracy at the initial solution, allocate a small positive
quantity
e to one or more unoccupied cell that have lowest transportation costs,
so as
to make m n 1 allocations (i.e., to satisIy the condition m n
1).
The cell chosen Ior allocating e must be oI an independent position. In
other words, the allocation oI e should avoid a closed loop and should
not
have a path.
The Iollowing Table 6.10 shows independent allocations.
Table 6.10: Independent Allocations
The Iollowing Tables 6.10 (a), (b) and (c) show non-independent
allocations.
Table 6.10 (a): Non-Independent Allocations
Table 6.10 (b)
Table 6.10 (c)
Optimal Solution
Step 5: Test for optimality
The solution is tested Ior optimality using the ModiIied Distribution
(MODI)
method (also known as U-V method).
Once an initial solution is obtained, the next step is to test its optimality.
An
optimal solution is one in which there are no other transportation routes
that would reduce the total transportation cost, Ior which we have to
evaluate each unoccupied cell in the table in terms oI opportunity cost.
In
this process, iI there is no negative opportunity cost, and the solution is
an
optimal solution.
(i) Row 1, row 2,., row i oI the cost matrix are assigned with variables
U1, U2, .,Ui and the column 1, column 2,., column j are assigned
with variables V1, V2, .,Vj respectively.
* *
*
* *
* * *
*
* *
*
* *
179
(ii) Initially, assume any one oI U Transportation Model i values as zero
and compute the values
Ior U1, U2, .,Ui and V1, V2, .,Vj by applying the Iormula Ior
occupied cell.
For occupied cells,
Cij Ui Vj 0
Ui
Vj
(iii) Obtain all the values oI Cij Ior unoccupied cells by applying the
Iormula
Ior unoccupied cell.
For unoccupied cells,
Opportunity Cost, ij C Cij Ui Vj
Ui
Vj
II ij C values are ~ 0 then, the basic initial Ieasible solution is optimal.
Go to step 7.
II ij C values are 0 then, the multiple basic initial Ieasible solution
exists. Go to step 7.
II ij C values are 0 then, the basic initial Ieasible solution is not
optimal. Go to step 6.
Step 6: Procedure for shifting of allocations
Select the cell which has the most negative ij C value and introduce a
positive quantity called q` in that cell. To balance that row, allocate a
q`
to that row in occupied cell. Again, to balance that column put a positive
q` in an occupied cell and similarly a -q` to that row. Connecting all
the
q`s and -q`s, a closed loop is Iormed.
Two cases are represented in Table 6.11(a) and 6.11(b). In Table 6.11(a)
iI
all the q allocations are joined by horizontal and vertical lines, a closed
loop
is obtained.
The set oI cells Iorming a closed loop is
CL (A, 1), (A, 3), (C, 3), (C, 4), (E, 4), (E, 1), (A, 1)}
The loop in Table 6.11(b) is not allowed because the cell (D3) appears
twice.
Table 6.11(a): Showing Closed Loop
1 2 3 4
A
B
C
D
E
Cij
Ci
C ij
A
` `
` `
` `
180
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Table 6.11(b)
1 2 3 4
A
B
C
D
E
Conditions Ior Iorming a loop
(i) The start and end points oI a loop must be the same.
(ii) The lines connecting the cells must be horizontal and vertical.
(iii) The turns must be taken at occupied cells only.
(iv) Take a shortest path possible (Ior easy calculations).
Remarks on Iorming a loop
(i) Every loop has an even number oI cells and at least Iour cells
(ii) Each row or column should have only one ` and ` sign.
(iii) Closed loop may or may not be square in shape. It can also be a
rectangle or a stepped shape.
(iv) It doesn`t matter whether the loop is traced in a clockwise or
anticlockwise
direction.
Take the most negative ' q' value, and shiIt the allocated cells
accordingly by adding the value in positive cells and subtracting it in
the negative cells. This gives a new improved table. Then go to step
5 to test Ior optimality.
Step 7: Calculate the Total Transportation Cost.
Since all the ij C values are positive, optimality is reached and hence the
present allocations are the optimum allocations. Calculate the total
transportation cost by summing the product oI allocated units and unit
costs.
Example 4: The cost oI transportation per unit Irom three sources and
Iour destinations
are given in Table 6.12. Obtain the initial basic Ieasible solutions using
the Iollowing
methods.
(i) orth-west corner method
(ii) Least cost method
(iii) Vogel`s approximation method
Table 6.12: Transportation Model
$olution: The problem given in Table 6.13 is a balanced one as the total
sum oI supply is
equal to the total sum oI demand. The problem can be solved by all the
three methods.
North-West Corner Method: In the given matrix, select the orth-
West corner cell.
The orth-West corner cell is (1,1) and the supply and demand values
corresponding to
cell (1,1) are 250 and 200 respectively. Allocate the maximum possible
value to satisIy
the demand Irom the supply. Here the demand and supply are 200 and
250 respectively.
Hence allocate 200 to the cell (1,1) as shown in Table 6.13.
Destination
Source
1 2 3 4
Supply
1 4 2 7 3 250
2 3 7 5 8 450
3 9 4 3 1 500
Demand 200 400 300 300 1200
` `
` ` `
` `
181
Table 6.13: Allocated 200 to the Cell (1, 1) Transportation Model
ow, delete the exhausted column 1 which gives a new reduced table as
shown in
Tables 6.14 (a, b, c, d). Again repeat the steps.
Table 6.14 (a): Exhausted Column 1 Deleted
Destination
2 3 4 Supply
1 50 0
Source 2 450
3 500
400 300 350
Demand 350
Table aIter deleting Row 1
Table 6.14 (b): Exhausted Row 1 Deleted
Table aIter deleting column 2
Table 6.14 (c): Exhausted Column 2 Deleted
Finally, aIter deleting Row 2, we have
Destin ation
1 2 3 4 Supply
1 250 50
Source 2 450
3 500
D eman d 2 0 0 400 300 300
0
4 2 7 3
200
3 7 5 8
9 4 3 1
Destination
2 3 4 Supply
2 450 100
Source
3 500
350 300 300
Demand 0
7 5 8
350
4 3 1
Destination
3 4 Supply
Source 2 100 0
3 500
Demand 300 300
200
5 8
100
3 1
2 7 3
50
7 5 8
4 3 1
182
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Table 6.14 (d): Exhausted Row 2 Deleted
Destination
3 4 Supply
Source 3 500
Demand 300 200
0 0
ow only source 3 is leIt. Allocating to destinations 3 and 4 satisIies the
supply oI 500.
The initial basic Ieasible solution using orth-west corner method is
shown in Table 6.15
Table 6.15: Initial Basic Feasible Solution Using NWC Method
Transportation cost (4 200) (2 50) (7 350) (5 100)
(2 300) (1 300)
800 100 2450 500 600 300
Rs. 4,750.00
Least Cost Method
Select the minimum cost cell Irom the entire Table 6.16, the least cell is
(3,4). The
corresponding supply and demand values are 500 and 300 respectively.
Allocate the
maximum possible units. The allocation is shown in Table 6.16.
Table 6.16: Allocation of Maximum Possible Units
Destination
From the supply value oI 500, the demand value oI 300 is satisIied.
Subtract 300 Irom
the supply value oI 500 and subtract 300 Irom the demand value oI 300.
The demand oI
3 1
300 200
1 2 3 4 Supply
1 4
0
2 7 3
250
Source 2 3 7
350
5
100
8
450
3
9
33
4 3
200
1
300
500 200
Demand 200 400 300
300
0
P lant
1 2 3 4 5 S u p p ly
1
10 2 3 15 9
25
2
5 10 15 2 4
30
3
15 5 14 7 15
20
W a reh ou se
4
20 15 13 8
30
D emand 20 20 30 10 25 105
2 0
2 5
10
20
5 25
183
destination 4 is Iully satisIied. Hence, delete the column 4; as a result we
get, the table Transportation Model
Table 6.17: Exhausted Column 4 Deleted
Destination
ow, again take the minimum cost value available in the existing table
and allocate it
with a value oI 250 in the cell (1,2).
The reduced matrix is shown in Table 6.18
Table 6.18: Exhausted Row 1 Deleted
In the reduced Table 6.18, the minimum value 3 exists in cell (2,1) and
(3,3), which is a
tie. II there is a tie, it is preIerable to select a cell where maximum
allocation can be
made. In this case, the maximum allocation is 200 in both the cells.
Choose a cell
arbitrarily and allocate. The cell allocated in (2,1) is shown in Table
6.18. The reduced
matrix is shown in Table 6.19.
Table 6.19: Reduced Matrix
ow, deleting the exhausted demand row 3, we get the matrix as shown
in
Table 6.20
Table 6.20: Exhausted Row 3 Deleted
1 2 3 Supply
1
4
0
2
250
7 250
Source 2 3 7
350
5
100
450
3
9
33
4 3
200
200
Demand 200
400
150
300
Destination
2 3 Supply
2 7 5 250
Source 3
4
350
3
200
200 0
Demand
150 300
100
Desitnation
1 2 3 Supply
2
3
2000
7 5 450 250
Source 3 9 4 3 450
Demand 200 150 300
Destination
2 3 Supply
Source 2 7
150
5
100
2 5 0 0
Demand 150 100
0 0
184
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The initial basic Ieasible solution using least cost method is shown in a
single
Table 6.21
Table 6.21: Initial Basic Feasible Solution Using LCM Method
Transportation Cost (2 250) (3 200) (7 150) (5 100) ( 3
200)
(1 300)
500 600 1050 500 600 300 Rs. 3550
Vogel`s Approximation Method (VAM): The penalties Ior each row
and column
are calculated (steps given on pages 176-77) Choose the row/column,
which has the
maximum value Ior allocation. In this case there are Iive penalties,
which have the
maximum value 2. The cell with least cost is Row 3 and hence select cell
(3,4) Ior
allocation. The supply and demand are 500 and 300 respectively and
hence allocate 300
in cell (3,4) as shown in Table 6.22
Table 6.22: Penalty Calculation for each Row and Column
Since the demand is satisIied Ior destination 4, delete column 4 . ow
again calculate the
penalties Ior the remaining rows and columns.
Table 6.23: Exhausted Column 4 Deleted
D e s tin a tio n
1 2 3 4 S u p p ly P en alty
1 4
0
2 7 3
2 5 0 (1 )
S ou rce 2 3 7
350
5
100
8 4 5 0 (2 )
3
9
33
4 3
200
1
300
500
2 0 0 (2 )
D ema n d 200 400 300 300
0
(1) (2) (2) (2)
D e s tin a tio n
1 2 3 4 S u p p ly
1 4
0
2
250
7 3 250
S ou rce 2 3
200
7
1 5 00
5
1 0 00
8
450
3
9
33
4 3
2 0 0
1
300
500
D em and 200 400 300 300
0
D e s t in a t io n
1 2 3 S u p p ly P en a lty
1
4
0
2
2 5 0
7
2 5 0 0
(2 )
S o u r c e 2
3 7
3 5 0
5
1 0 0 4 5 0 (2 )
3
9
3 3
4 3
2 0 0 2 0 0 (1 )
D em a n d 2 0 0 4 0 0 3 0 0
150
( 1) (2) ( 2)
185
In the Table 6.24 shown, there are Iour maximum penalties oI values
which is 2. Selecting Transportation Model
the least cost cell, (1,2) which has the least unit transportation cost 2.
The cell
(1, 2) is selected Ior allocation as shown in Table 6.23. Table 6.24 shows
the reduced
table aIter deleting row l.
Table 6.24: Row 1 Deleted
Destination
AIter deleting column 1 we get the table as shown in the Table 6.25
below.
Table 6.25: Column 1 Deleted
Destination
Finally we get the reduced table as shown in Table 6.26
Table 6.26: Final Reduced Table
1 2 3 Supply Penalty
2
200
450
250
(2)
Source
3
200
(1)
Demand 200 150 300
(6) (3) (2)
3
7
9
3 5
4
2 3 Supply Penalty
2 250 (2)
Source
3
150
200
50 (1)
Demand
150
0
(3) T
300
(2)
7 5
4 3
Destination
3
Demand 300
0
250
50
5
3
Supply
250
0
50
0
Source 2
3
186
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The initial basic Ieasible solution is shown in Table 6.27.
Table 6.27: Initial Basic Feasible Solution
Transportation cost (2 250) (3 200) (5 250) (4 150) (3
50)
(1 300)
500 600 1250 600 150 300
Rs. 3,400.00
Example 5: Find the initial basic solution Ior the transportation problem
and hence
solve it.
$olution. Vogel`s Approximation Method (VAM) is preIerred to Iind
initial Ieasible solution.
The advantage oI this method is that it gives an initial solution which is
nearer to an
optimal solution or the optimal solution itselI.
$tep 1: The given transportation problem is a balanced one as the sum oI
supply
equals to sum oI demand.
$tep 2: The initial basic solution is Iound by applying the Vogel`s
Approximation
method and the result is shown in Table 6.29.
Destination
W1 W2 W3 W4 Supply
F1
17 5 9 65
140 (4) (4) (8) (48) (48)
F2
20 10 12 65
260 (2) (2) (8) (45) (45)
F3
15 0 5 65
360 (5) (5) (10) (50)
F4
13 1 10 65
220 (9)
Demand 200 320 250 210
(2)
(2)
(2)
(2)
(3)
(1)
(5)

(4)
(4)

(0)
(0)
(0)
(0)
(0)
50 210
10 100 250
140
220
Destination
1 2 3 4 Supply
1 4 2 7 3 250
Source 2 3 7 5 8 450
3 9 4 3 1 500
Demand 200 400 300 300
187
Table 6.29: Initial Basic Solution Found by Applying VAM
Transportation Model
Destination
$tep 3: Calculate the Total Transportation Cost.
Initial Transportation cost (2 250) (3 200) (5 250) (4
150)
(3 50) (1 300)
500 600 1250 600 150 300
Rs. 3,400
$tep 4: Check Ior degeneracy. For this, veriIy the condition,
umber oI allocations, m n 1
6 3 4 1
6 6
Since the condition is satisIied, degeneracy does not exist.
$tep 5: Test Ior optimality using modiIied distribution method. Compute
the values
oI Ui and Vj Ior rows and columns respectively by applying the Iormula
Ior occupied cells.
CijUiVj 0
Then, the opportunity cost Ior each unoccupied cell is calculated using
the
Iormula ij C Cij Ui Vj and denoted at the leIt hand bottom corner
oI
each unoccupied cell. The computed valued oI uj and vi and are shown
in
Table 6.30.
Table 6.30: Calculation of the Opportunity Cost
Destination
V1 1 V2 4 V3 -3 V4 1
Calculate the values oI Ui and Vj, using the Iormula Ior occupied cells.
Assume any one
oI Ui and Vj value as zero (U3 is taken as 0)
1 2 3 4 Supply
1
4
0
2
250
7 3
250
Source 2
3
200
7
350
5
2500
8
450
3
9
33
4
150
3
500
1
300 500
Demand 200 400 300 300
1 2 3 4 Supply
1
5
4 2
250
7
6
3
4
250 U1 2
Source 2
3
200
7
1
5
250
8
5
450 U2 -2
3
9
8
4
150
3
50
1
300
500 U3 0
Demand 200 400 300 300
188
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Cij Ui Vj 0
4 0 V2 0, V2 4
5 V2 3 0, U2 2
3 2 V1 0, V1 1
2 4 U1 0, U1 2
Calculate the values oI ij C , using the Iormula Ior unoccupied cells
ij C Cij Ui Vj
C11 42 1 5
C13 72 3 6
C14 32 1 4
C22 72 4 1
C24 82 1 5
C31 9 0 1 8
Since all the opportunity cost, ij C values are positive the solution is
optimum.
Total transportation cost (2 25) (3 200) (5 250) (4 150)
(3 50)
(1 300)
50 600 1250 600 150 300
Rs 2,950/-
Example : Find the initial basic Ieasible solution Ior the transportation
problem given in
Table 6.31.
Solution : The initial basic Ieasible solution using VAM is shown in
Table 6.32.
Table 6.32: Initial Basic Feasible Solution Using VAM
To
From
A B C
Available
I
II
III
Requirement
50
90
250
4
30
45
200
2
220
170
50
2
1
3
4
To
A B C Available
Requirement 40 0 20 0 20 0
(40) (15) (120)
(40) (15) --
3
2 2
50 30 220
90 45 170
250 200 50
I
From I
III
1 (20) (20)
0
3 (45) (45)
0
4(150) (50)
2 0
189
Check Ior degeneracy, Transportation Model
The number oI allocations, must be equal to m n 1.
i.e., mn 1
5 33 1
since 4 5, thereIore degeneracy exists.
To overcome degeneracy, the condition m n 1 is satisIied by
allocating a very
small quantity, close to zero in an occupied independent cell. (i.e., it
should not Iorm a
closed loop) or the cell having the lowest transportation cost. This
quantity is denoted by
e.
This quantity would not aIIect the total cost as well as the supply and
demand values.
Table 6.33 shows the resolved degenerate table.
Table 6.33: Resolved Degenerate Table
Total transportation cost (50 1) (90 3) (200 2) (50 2)
(250 e)
50 270 400 100 250 e
820 250 e Rs. 820 since e 0
Example 7: Obtain an optimal solution Ior the transportation problem by
MODI method
given in Table 6.34.
Solution:
$tep1: The initial basic Ieasible solution is Iound using Vogel`s
Approximation
Method as shown in Table 6.35.
To
A B C Available
Requirement 4 2 2
3
2 2
50 30 220
90 45 170
250 200 50
I
From I
III
1
3
4
Destination
D1 D2 D3 D4 Supply
S1 19 30 50 10 7
Source S2 70 30 40 60 9
S3 40 8 70 20 18
Demand 5 8 7 14
190
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Table 6.35: Initial Basic Feasible Solution Using VAM
Total transportation cost (19 5) (10 2) (40 7) (60 2) (8
8)
(20 10)
95 20 280 120 64 200
Rs. 779.00
Step 2: To check Ior degeneracy, veriIy the number oI allocations,
mn 1.
In this problem, number oI allocation is 6 which is equal mn 1.
\ m n 1
6 3 4 1
6 6 thereIore degeneracy does not exist.
Step 3: Test Ior optimality using MODI method. In Table 6.36 the
values oI &i and
Jf are calculated by applying the Iormula Cij Ui Vj 0 Ior occupied
cells , and ij C Cij Ui Vj Ior unoccupied cells respectively.
Table 6.36: Optimality Test Using MODI Method
V1 19 V2 2 V3 10 V4 10
Find the values oI the dual variables Ui and Vj Ior occupied cells.
Initially assume Ui 0,
Cij Ui Vj 0,
Destination
D1 D2 D3 D4 Supply
S1
7 (9) (9) (40) (40
2 0
S2
7 2
9 (10) (20) (20) (20)
2 0
Source
S3
8
10 18 (12) (20) (50) --
10 0
Demand 5 0 8 0 7 0 14 4 2 0
(21)
(21)
--
--
(22)
--
--
--
(10)
(10)
(10)
(10)
(10)
(10)
(10)
(50)T
19 30 50 10
70 30 40 60
40 8 70 20
Destination
D1 D2 D3 D4 Supply
S1
19
5
30
32
50
60
10
2
7 U1 0
Source S2
70
1
30
-18
40
7
60
2
9U2 -50
S3
40
11
8
8
70
70
20
10
18 U3 10
Demand 5 8 7 14
191
19 0 V Transportation Model i 0, V1 19
10 0 V4 0, V4 10
60 U2 10 0, U2 50
20 U3 10 0, U3 10
8 10 V2 0, V2 2
40 50 V3 0, V3 10
Find the values oI the opportunity cost, ij C Ior unoccupied cells,
ij C Cij Ui Vj
C12 30 0 2 32
C13 50 0 10 60
C21 70 50 19 1
C22 30 50 2 18
C31 40 10 19 11
C33 70 10 10 70
In Table the cell (2,2) has the most negative opportunity cost. This
negative
cost has to be converted to a positive cost without altering the supply
and
demand value.
Step 4: Construct a closed loop . Introduce a quantity q in the most
negative cell
(S2, D2 ) and a put q in cell (S3, D2 ) in order to balance the column
D2.
ow, take a right angle turn and locate an occupied cell in column D4.
The
occupied cell is (S3, D4) and put a q in that cell. ow, put a q in cell
(S2,
D4 ) to balance the column D4. Join all the cells to have a complete
closed
path. The closed path is shown in Figure 6.5.
Figure 6.5: Closed Path
ow, identiIy the q values, which are 2 and 8. Take the minimum
value, 2 which is the
allocating value. This value is then added to cells (S2, D2 ) and (S3, D4
) which have `
signs and subtract Irom cells (S2, D4 ) and (S3, D2 ) which have `
signs. The process
is shown in Figure 6.6
Figure 6.6
-
0 2
-
8 0
-
(S2, D2)
02 2
(S2, D4)
2-2 0
-
(S3, D2)
8-2 6
(S3, D4)
102 12
192
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Table 6.37: Closed Path
The table aIter reallocation is shown in Table 6.38
Table 6.38: After Reallocation
ow, again check Ior degeneracy. Here allocation number is 6.
VeriIy whether number oI allocations,
m n 1
6 3 4 1
6 6
thereIore degeneracy does not exits.
Again Iind the values oI Ui, Vj and ij C Ior the Table 6.39 shown earlier.
For occupied cells, Cij Ui Vj 0
19 0 V1 0, V1 19
10 0 V4 0, V4 10
20 U3 10 0, U3 10
8 10 V2 0, V2 2
30 U2 2 0, U2 32
40 50 V3 0, V3 10
Destination
D1 D2 D3 D4 Supply
S1
19
5
30
32
50
60
10
2
7
Source S2
70
1
30

18
40
7
60
2 9
S3 40
11
8
- 8
70
70
20
10
18
Demand 5 8 7 14
Destination
D1 D2 D3 D4 Supply
S1
19
5
30 50 10
2
7
Source S2
70 30
2
40
7
60
9
S3 40
8
6
70 20
12
18
Demand 5 8 7 14
193
For unoccupied cells, ij C CijUiVj
C12 30 0 20 50
C13 50 0 8 42
C21 70 32 19 19
C24 60 32 10 18
C31 40 10 19 11
C33 70 10 8 52
The values oI the opportunity cost ij C are positive. Hence the optimality
is reached.
The Iinal allocations are shown in Table 6.39.
Table 6.39: Final Allocation
V1 19 V2 2 V3 8 V4 10
Total transportation cost (19 5) (10 2) (30 2) (40 7) (8
6)
(20 12)
95 20 60 280 48 240
Rs. 743
Example 8: Solve the transportation problem
The problem is unbalanced iI S ai S bj, that is, when the total supply is
not equal to the
total demand. Convert the unbalanced problem into a balanced one by
adding a dummy
row or dummy column as required and solve.
Destination
D1 D2 D3 D4 Supply
S1
19
5
30 50 10
2
7 U1 0
Source S2
70 30
2
40
7
60
9 U2 32
S3
40 8
6
70 20
12
18 U3 10
Demand 5 8 7 14
Destination
1 2 3 Supply
1 3 5 7 10
Source 2 11 8 9 8
3 13 3 9 5
Demand 5 9 11 23
25
194
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Here the supply does not meet the demand and is short oI 2 units. To
convert it to a
balanced transportation problem add a dummy row and assume the unit
cost Ior the
dummy cells as zero as shown in Table 6.40 and solve.
Table 6.40: Dummy Row Added to TP
6.12 MAXIMIZATION TRANSPORTATION PROBLEM
In this type oI problem, the objective is to maximize the total proIit or
return. In this case,
convert the maximization problem into minimization by subtracting all
the unit cost Irom
the highest unit cost given in the table and solve.
Example 9: A manuIacturing company has Iour plants situated at
diIIerent locations, all
producing the same product. The manuIacturing cost varies at each plant
due to internal
and external Iactors. The size oI each plant varies, and hence the
production capacities
also vary. The cost and capacities at diIIerent locations are given in the
Iollowing table:
Table 6.41: Cost and Capacity of Different Plants
The company has Iive warehouses. The demands at these warehouses
and the
transportation costs per unit are given in the Table 6.42 below. The
selling price per unit
is Rs. 30/-
(i) Formulate the problem to maximize proIits.
(ii) Determine the solution using TORA.
(iii) Find the total proIit.
Particulars Plant
A B C D
Production cost per
unit (Rs.) 18 17 15 12
Capacity 150 250 100 70
Warehouse Transportation cost (Rs) - Unit-wise Demand
A B C D
1 6 9 5 3 100
2 8 10 7 7 200
3 2 6 3 8 120
4 11 6 2 9 80
5 3 4 8 10 70
Destination
1 2 3 Supply
1 3 5 7 10
2 11 8 9 8
3 13 3 9 5
Source
4 0 0 0 2
Demand 5 9 11 25
25
195
$olution. Transportation Model
(i) The objective is to maximize the proIits. Formulation oI
transportation problem as
proIit matrix table is shown in Table 6.43. The proIit values are arrived
as Iollows.
ProIit Selling Price Production cost Transportation cost
Table 6.43: Profit Matrix
Converting the proIit matrix to an equivalent loss matrix by subtracting
all the proIit
values Irom the highest value 13. Subtracting all the values Irom 13, the
loss matrix
obtained is shown in the Table 6.44
Table 6.44: Loss Matrix
(ii) To determine the initial solution using TORA
Input Screen:
Figure 6.7: TORA, Input Screen for TP Max Problem
Destination
A B C D Demand
1 6 4 10 15 100
2 4 3 8 11 200
3 10 7 12 10 120
4 1 7 13 9 80
5 9 9 7 8 70
Supply 150 250 100 70 570
Destination
A B C D Demand
1 9 11 5 0 100
2 11 12 7 4 200
3 5 8 3 5 120
4 14 8 2 6 80
5 6 6 8 7 70
Supply 150 250 100 70 570
196
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Output Screen:
Figure 6.8: TORA Output Screen (Vogel`s Method)
The Iirst iteration itselI is optimal, hence optimality is reached.
(iii) To Iind the total cost:
The total maximization proIit associated with the solution is
Total ProIit (6 10) (4 20) (10 120) (3 180) (9 70)
(10 20)
(13 80) (15 70)
60 80 1200 540 630 200 1040 1050
Rs 4800.00
6.13 PROHIBITED ROUTES PROBLEM
In practice, there may be routes that are unavailable to transport units
Irom one source
to one or more destinations. The problem is said to have an unacceptable
or prohibited
route. To overcome such kind oI transportation problems, assign a very
high cost to
prohibited routes, thus preventing them Irom being used in the optimal
solution regarding
allocation oI units.
Example 1:The Iollowing transportation table shows the transportation
cost per unit
(in Rs.) Irom sources 1,2, and 3 to destinations A, B, C. Shipment oI
goods is prohibited
Irom source 2 to destination C. Solve the transportation problem using
TORA
Table 6.45: Problem for TORA Solution
Destination
Solution: The entries oI the transportation cost are made using TORA
A B C Supply
1 25 21 19 120
2 15 7 150
3 10 12 16 80
Demand 150 125 75
197
Input Screen: Transportation Model
Figure 6.9: TP Prohibited Route TORA (Input Screen)
Output Screen:
Figure 6.10: TP Prohibited Route (TORA Output Screen)
From the output Schedule, there are no goods that are to be shipped Irom
source 2 to
destination C. The total transportation cost is Rs 4600 /-
6.14 TRANSHIPMENT PROBLEM
The transshipment problem is an extension oI the transportation problem
in which the
commodity can be transported to a particular destination through one or
more intermediate
or transshipment nodes.
Each oI these nodes in turn supply to other destinations. The objective oI
the transshipment
problem is to determine how many units should be shipped over each
node so that all the
demand requirements are met with the minimum transportation cost.
198
Ior Management
Considering a company with its manuIacturing Iacilities situated at two
places, Coimbatore
and Pune. The units produced at each Iacility are shipped to either oI the
company`s
warehouse hubs located at Chennai and Mumbai. The company has its
own retail outlets
in Delhi, Hyderabad, Bangalore and Thiruvananthapuram. The network
diagram
representing the nodes and transportation per unit cost is shown in
Figure 6.11. The
supply and demand requirements are also given.
ManuIacturing Warehouses Retail Outlets Demand
Iacility (Origin nodes) (Transshipment nodes ) (Destination nodes)
Figure 6.11: Network Representation of Transshipment Problem
Solving Transshipment Problem using Linear Programming
Let
Xij be the number oI units shipped Irom node i to node j,
X13 be the number oI units shipped Irom Coimbatore to Chennai,
X24 be the number oI units shipped Irom Pune to Mumbai, and so on
Table 6.46 shows the unit transportation cost Irom sources to
destination.
Table 6.46: TP of the Shipment
Warehouse
Facility Chennai Mumbai
Coimbatore 4 7
Pune 6 3
Warehouses Retail outlets
Delhi Hyderabad Bangalore Thiruvananthapuram
Chennai 7 4 3 5
Mumbai 5 6 7 8
Supply Demand
Coim batore
1
Pune
2
Chennai
3
Mumbai
4
Thiruvanan thapuram
8
Bangalore
7
Hyderabad
6
Delhi
5
199
Objective Transportation Model
The objective is to minimize the total cost
Minimize
Z 4X13 7X14 6X23 3X24 7X35 4X36 3X37 5X38
5X456X46 7X47 8X48
Constraints: The number oI units shipped Irom Coimbatore must be
less than or equal
to 800. Because the supply Irom Coimbatore Iacility is 800 units.
ThereIore, the constraints
equation is as Iollows:
X13 X14 800 .......... (i)
Similarly, Ior Pune Iacility
X23 X24 600 ...........(ii)
ow, considering the node 3,
umber oI units shipped out Irom node 1 and 2 are,
X13 X23
umber oI units shipped out Irom node 3 is,
X35 X36 X37 X38
The number oI units shipped in must be equal to number oI units
shipped out, thereIore
X13 X23 X35 X36 X37 X38
Bringing all the variables to one side, we get
X13 X23 X35 X36 X37 X38 0 .....(iii)
Similarly Ior node 4
X14 X24 X45X46 X47 X48 0 ......(iv)
ow considering the retail outlet nodes, the demand requirements oI
each outlet must be
satisIied. ThereIore Ior retail node 5, the constraint equation is
X35 X45 350 .................(v)
Similarly Ior nodes 6, 7, and 8, we get,
X36 X46 200 .............(vi)
X37 X47 400 .............(vii)
X38 X48 450 .............(viii)
Linear Programming Iormulation,
Minimize Z
4X137X146X223X247X354X363X375X385X456X467X
478X48
Subject to constraints ,
X13 X14 800
X23 X23 600
X13 X23 X35 X36 X37 X38 0
X14 X24 X45 X46 X47 X48 0
X35 X45 350
X36 X46 200
X37 X47 400
X38 X48 450
origin constraints
) `
destination constraints

)

`

200
Ior Management Check Your Progress 6.2
1. In the transportation model an example oI decision under certainty or
decisionmaking
under uncertainty.
2. How can the travelling sales man problem be solved using
transportation
model.
answers in it.
better.

6.15 LET US SUM UP
The use oI transportation models to minimize the cost oI shipping Irom a
number oI
source to number oI destinations. In most general Iorm, a transportation
problems has a
number oI origins and a number oI destination. A number oI techniques
are there to
compute the initial basic Ieasible solution oI a TP. These are WC,
LCM, VAM. Further
there can be an optimum solution while could obtained Irom MODI and
stepping stone.
Transportation problem can be generalized into transshipment problem
where shipment
could be Ieasible Irom origin to origin.
I hope you all are Iamiliar with the Aeroplane and Airport. The Airport
authorities take
lot oI pain in streamlining and maintaining traIIic. So that the havoc
situations could be
controlled and also there may not be any conIusion among each other.
Being an expert
in Transportation know this. Transportation programming techniques
Iacilitates. in
maintaining the traIIic rules. Apply with the help oI illustrations.
6.17 KEYWORDS
Origin : Origin oI a TP is the Irom which shipments are dispatched.
Destination : Destination oI TA is a point to where shipment are
transported.
$ource : Supply location is a TP.
Aorthwest corner : A systematic procedure Ior establishing our initial
Ieasible
solution to an optimal
Degeneracy : A situation that occurs where the number oI occupied
squares
in any solution is less than number oI row play number oI
column in a transportation basic.
201
Unbalance problem : A situation is which demand in not equal to
supply. Transportation Model
$ummary Destination : An artiIicial destination.
JAM : Vogel Approximation Method is an interactive proceeded oI
a Ieasible solution.
1 Explain the initial basic feasible solution of transportation model.
2 Is the TP model is are example of decision-making under certainty
or
decision-making under uncertainty why?
(a) TP is a special type oI liner programming
(b) Dummy rows to dummy column are assigned source values.
(c) Initial Basic solution can be obtained by MODI method.
(d) Least cost method is a best method to Iind initial basic solution.
(e) In maximisation the objective is to maximise the total proIit.
(a) Transportation problem is said to be unbalanced.
(b) Optimum solution have an edge as compared to initial basic Ieasible
solution.
(c) Transportation problem can be generalize with a transshipment
problem.
(d) Problem is known as unbalanced TP iI they are unequal.
(e) MODI distribution method provides a minimum cost solution.
(I) Degeneracy does not cause any serious diIIiculty.
(g) Transportation problem is a balanced when sum oI supply equals to
sum oI
demand.
(a) In the transportation problem are always transported
(b) Initial basis Ieasible solution through VAM will be

(c) Demand variation may occur because oI change in

preIerence
(d) TP deals with the transportation oI a manuIactured.
(e) In real liIe supply & demand requirement will be rarely

6. Differentiate between the following:
(a) MODI vs Shipping Stone
(b) LCM vs WC
(c) VAM vs MODI
1. What is a transportation problem ?
2. What is the diIIerence between a balanced transportation problem and
an
unbalanced transportation problem ?
202
Ior Management
3. What are the methods used to Iind the initial transportation cost ?
4. Which oI the initial three methods give a near optimal solution ?
5. Explain Vogel`s approximation method oI Iinding the initial solution.
6. What is degeneracy in a transportation problem ? How is it resolved ?
7. What are the conditions Ior Iorming a closed loop ?
8. How are the maximization problems solved using transportation
model ?
9. How is optimality tested in solving transportation problems ?
10. In what ways is a transshipment problem diIIerent Irom a
transportation problem ?
Exercise Problems
1. Develop a network representation oI the transportation problem Ior a
company
that manuIactures products at three plants and ships them to three
warehouses.
The plant capacities and warehouse demands are shown in the Iollowing
table:
The transportations cost per unit (in Rs.) is given in matrix.
2. Determine whether a dummy source or a dummy destination is
required to balance
the model given.
(a) Supply a1 15, a2 5, a3 4, a4 6
Demand b1 4, b2 15, b3 6, b4 10
(b) Supply a1 27, a2 13, a3 10
Demand b1 30, b2 10, b3 6, b4 10
(c) Supply a1 2, a2 3, a3 5
Demand b1 3, b2 2, b3 2, b4 2, b5 1.
3. A state has three power plants with generating capacities oI 30, 40 and
25 million
KWH that supply electricity to three cities located in the same state. The
demand
requirements (maximum) oI the three cities are 35, 40 and 20 million
KWH. The
distribution cost (Rs. in thousand) per million unit Ior the three cities are
given in
the table below:
Plant Warehouse Plant Capacity
(no. of units)
W1 W2 W3
P1 22 18 26 350
P2 12 12 10 450
P3 14 20 10 200
Warehouse demand
(no. oI units)
250 450 300
City
1 2 3
1 60 75 45
2 35 35 40
Plant
3 55 50 45
203
(a) Formulate the problem as a transportation model. Transportation
Model
(b) Determine an economical distribution plan.
(c) II the demand is estimated to increase by 15, what is your revised
plan?
(d) II the transmission loss oI 5 is considered, determine the optimal
plan.
4. Find the initial transportation cost Ior the transportation matrix given
using orth-
West corner method, Least cost method and Vogel`s Approximation
Method.
5. In problem o. 4, iI the demand Ior destination 4 increases Irom 15
units to 25
units, develop the transportation schedule incorporating the change.
6. Find the initial solution using all the three methods and hence Iind the
optimal solution
using TORA package Ior the Iollowing transportation problem. The unit
transportation cost is given in the Iollowing matrix:
7. The Sharp ManuIacturing Company produces three types oI
monoblock pumps Ior
domestic use. Five machines are used Ior manuIacturing the pumps. The
production
rate varies Ior each machine and also the unit product cost. Daily
demand and
machine availability are given below.
Demand Information
Machine Availability Details
Warehouse
1 2 3 4 5 6 Supply
A 10 25 35 16 18 22 70
B 11 22 16 18 22 19 60
Factory C 21 32 41 20 20 11 50
D 25 24 23 22 23 24 85
E 16 21 18 20 19 16 45
Demand 55 45 35 40 70 65
Product
A B C
Demand (units) 2000 15000 700
Destination
1 2 3 4 Supply
A 5 6 7 8 25
Source B 7 5 4 2 75
C 6 1 3 2 15
Demand 50 30 20 15
Machine capacity (units)
1 2 3 4 5
Available 700 1000 1500 1200 800
204
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Unit Product Cost
Determine the minimum production schedule Ior the products and
machines.
8. A company has plants at locations A, B and C with the daily capacity
to produce
chemicals to a maximum oI 3000 kg, 1000 kg and 2000 kg respectively.
The cost oI
production (per kg) are Rs. 800 Rs. 900 and Rs. 7.50 respectively.
Customer`s
requirement oI chemicals per day is as Iollows:
Transportation cost (in rupees) per kg Irom plant locations to customer`s
place is
given in table.
Find the transportation schedule that minimizes the total transportation
cost.
9. A transportation model has Iour supplies and Iive destinations. The
Iollowing table
shows the cost oI shipping one unit Irom a particular supply to a
particular destination.
The Iollowing Ieasible transportation pattern is proposed:
x11 10, x12 3, x22 9, x23 6, x33 9, x34 4, x44 9, x45 5.
Test whether these allocations involve least transportation cost. II not,
determine
the optimal solution.
10. A linear programming model is given:
Minimize Z 8x11 12x12 9x22 10x23 7x31 6x32 15x33 ,
subject to the
constraints,
Customer Chemical Required Price oIIered
1 2000 200
2 1000 215
3 2500 225
4 1000 200
Customer
1 2 3 4
A 5 7 10 12
Plant B 7 3 4 2
C 4 6 3 9
Source Destination Supply
1 2 3 4 5
1 13 6 9 6 10 13
2 8 2 7 7 9 15
3 2 12 5 8 7 13
Demand 10 15 7 10 2
Product
Machine A B C
1 150 80 75
2 120 95 60
3 112 100 60
4 121 95 50
5 125 75 50
205
x Transportation Model 11 x12 x13 60
x21 x22 x23 50 Supply constraints
x31 x32 x33 30
x11 x21 x31 20
x12 x22 x32 60 Demand constraints
x13 x23 x33 30
Formulate and solve as a transportation problem to minimize the
transportation
cost.
11. A company has Iour Iactories situated in Iour diIIerent locations in
the state and
Iour company showrooms in Iour other locations outside the state. The
per unit
sale price, transportation cost and cost oI production is given in table
below, along
with weekly requirement.
Determine the weekly distribution schedule to maximize the sales
proIits.
12. Solve the given transportation problem to maximize proIit.
Use TORA to solve the problem.
13. A computer manuIacturer has decided to launch an advertising
campaign on
television, magazines and radio. It is estimated that maximum exposure
Ior these
media will be 70, 50, and 40 million respectively. According to a market
survey, it
was Iound that the minimum desired exposures within age groups 15-20,
21-25, 26-
30, 31-35 and above 35 are 10, 20, 25, 35 and 55 million respectively.
The table
below gives the estimated cost in paise per exposure Ior each oI the
media.
Determine an advertising plan to minimize the cost.
)
`

)
`

Factory Showrooms
Cost oI production
(Rs)
1 2 3 4
A 9 4 5 3 12
B 4 4 4 4 17
C 4 6 5 6 19
D 8 7 7 4 17
Factory Weekly Capacity (units) Weekly demand (units)
A 15 10
B 20 14
C 25 20
D 20 22
Source ProIit / unit Supply
1 2 3 4 5 6
A 65 30 77 31 65 51 200
B 60 51 65 42 64 76 225
C 70 62 21 71 45 52 125
Demand 45 55 40 60 25 70
206
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Solve the problem and Iind the optimal solution, i.e., maximum
coverage at minimum
cost.
14. A garment manuIacturer has 4 units I, II, III, and IV, the production
Irom which
are received by 4 direct customers. The weekly production oI each
manuIacturing
unit is 1200 units and all the units are oI the same capacity. The
company supplies
the entire production Irom one unit to one supplier. Since the customers
are situated
at diIIerent locations, the transportation cost per unit varies. The unit
cost oI
transportation is given in the table. As per the company`s policy, the
supply Irom
unit B is restricted to customer 2 and 4, and Irom unit D to customer 1
and 3. Solve
the problem to cope with the supply and demand constraints.
15. Check whether the Iollowing transportation problem has an optimal
allocation:
16. A company dealing in home appliances has a sales Iorce oI 20 men
who operate
Irom three distribution centers. The sales manager Ieels that 5 salesmen
are needed
to distribute product line I, 6 to distribute product line II, 5 Ior product
line III and 4
to distribute product line IV. The cost (in Rs) per day oI assigning
salesmen Irom
each oI the oIIices are as Iollows:
Currently, 8 salesmen are available at center A, 5 at center B and 7 at
center C.
How many salesmen should be assigned Irom each center to sell each
product line,
in order to minimize the cost? Is the solution unique?
Warehouse
1 2 3 4 5 Supply
A 100 100
B 25 25
C 25 50 75
D 50 100 50 200
Dummy 100 100
Demand 150 50 50 100 150
Product Line
I II III IV
A 10 12 13 9
Source B 9 11 12 13
C 7 8 9 10
Media Age Groups
15-20 21-25 26-30 31-35 above 35
TV 14 9 11 11 12
Radio 11 7 6 7 8
Magazine 9 10 7 10 8
ManuIacturing
unit
1 2 3 4
A 4 6 8 3
B 4 5
C 6 5 5 9
D 7 6
207
Destination
I II III Supply
A 7 3 4 2
Source B 2 1 3 3
C 3 4 6 5
Demand 4 1 5
Distribution Area
1 2 3
A 75 95 120
Source B 250 150 80
C 300 250 140
O1
T4
T3
D7
D6
D5
O2
17. Solve the Iollowing degenerate transportation problem:
18. Three water distribution tanks with daily capacities oI 7, 6 and 9 lakh
litres
respectively, supply three distribution areas with daily demands oI 5, 8
and 9 lakh
litres respectively. Water is transported to the distribution areas through
an
underground network oI pipelines. The cost oI transportation is Rs 0.50
per 1000
litres per pipeline kilometer. The table shows the pipeline lengths
between the water
tanks and the distribution areas.
A. Formulate the transportation model
B. Use TORA to determine the optimum distribution schedule
19. In problem 18, iI the demand Ior distribution area 3 increases to 11
lakh litres,
determine a suitable distribution plan to meet the excess demand and
minimize the
distribution cost. Use TORA to solve the problem.
20. Formulate a linear programming model Ior the Iollowing
transshipment network
given below.
208
Ior Management 6.20 MODEL ANSWERS TO QUESTIONS FOR
DISCUSSION
3. (a) True (b) False (c) False (d) False (e) True
5. (a) consignment (b) least (c) customer (d) product (e) equal
Render, B. E. Stair, R.M., ,n,gement Science. A self-correcting
,ppro,ch, Boston
Allyn and Bacon, Inc.
Bowman E., Production Scheduling by the tr,nsport,tion method of LP,
'Operation
Research.
Srinivasan V., 'A tr,nsshipment model for cost m,n,gement decision.
Management
Science, Vol. 20, June 1974.
Sadleir C.D., &se of %r,nsport,tion ethod of LP in Production
Pl,nning. A C,se
Study, 'Operation Research Vol. 21. o. 4.
209
Assignment Model
LESSON
7
ASSIGNMENT MODEL
CONTENTS
7.1 Introduction
7.2 Mathematical Structure oI Assignment Problem
7.3 etwork Representation oI Assignment Problem
7.4 Use oI Linear Programming to Solve Assignment Problem
7.5 Types oI Assignment Problem
7.6 Hungarian Method Ior Solving Assignment Problem
7.7 Unbalanced Assignment Problem
7.8 Restricted Assignment Problem
7.9 Multiple and Unique Solutions
7.10 Maximization Problem
7.11 Travelling Salesman Problem
7.12 Solving Problems on the Computer with TORA
7.13 Solving Unbalanced Assignment Problem using Computer
7.14 Solving Maximization Problems Using Computers
7.15 Let us Sum Up
7.17 Keywords
In this lesson we would be able to learn assignment oI various work
activities using
various methods oI assignment problems. Solving both maximization
and minimization
problems and both bounded and unbounded solutions oI assignment
problem.
7.1 INTRODUCTION
The basic objective oI an assignment problem is to assign n number oI
resources to n
number oI activities so as to minimize the total cost or to maximize the
total proIit oI
allocation in such a way that the measure oI eIIectiveness is optimized.
The problem oI
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Ior Management
assignment arises because available resources such as men, machines,
etc., have varying
degree oI eIIiciency Ior perIorming diIIerent activities such as job.
ThereIore cost, proIit
or time Ior perIorming the diIIerent activities is diIIerent. Hence the
problem is, how
should the assignments be made so as to optimize (maximize or
minimize) the given
objective. The assignment model can be applied in many decision-
making processes like
determining optimum processing time in machine operators and jobs,
eIIectiveness oI
teachers and subjects, designing oI good plant layout, etc. This technique
is Iound suitable
Ior routing travelling salesmen to minimize the total travelling cost, or to
maximize the
sales.
7.2 MATHEMATICAL STRUCTURE OF ASSIGNMENT
PROBLEM
The structure oI assignment problem oI assigning operators to jobs is
shown in
Table 7.1.
Table 7.1: Structure of Assignment Problem
Let n be the number oI jobs and number oI operators.
tij be the processing time oI job i taken by operator j.
A Iew applications oI assignment problem are:
i. assignment oI employees to machines.
ii. assignment oI operators to jobs.
iii. eIIectiveness oI teachers and subjects.
iv. allocation oI machines Ior optimum utilization oI space.
v. salesmen to diIIerent sales areas.
vi. clerks to various counters.
In all the cases, the objective is to minimize the total time and cost or
otherwise maximize
the sales and returns.
7.3 NETWORK REPRESENTATION OF ASSIGNMENT
PROBLEM
An assignment model is represented by a network diagram in Figure 1
Ior an operator
job assignment problem, given in Table 7.2 the time taken (in mins.) by
operators to
perIorm the job.
Table 7.2: Assignment Problem
The assignment problem is a special case oI transportation problem
where all sources
and demand are equal to 1.
Operator
1 2 .. j ... n
1 t11 t12 . t1j ... t1n
2 t21 t22 .. t2j ... t2n
. .
I ti1 ti2 tij tin
. . .
Job
n tn1 tn2 tnj tnn
Operator Job
1 2 3
A 10 16 7
B 9 17 6
C 6 13 5
211
Assignment Model
Figure 7.1: Network Diagram for an Operator-job Assignment
Problem
7.4 USE OF LINEAR PROGRAMMING TO SOLVE
ASSIGNMENT PROBLEM
A linear programming model can be used to solve the assignment
problem. Consider the
example shown in Table 2, to develop a linear programming model.
Let,
x11 represent the assignment oI operator A to job 1
x21 represent the assignment oI operator B to job 1
and so on.
Formulating the equations Ior the time taken by each operator,
10 x11 16 x12 7 x13 time taken by operator A.
9 x21 17 x22 6 x23 time taken by operator B.
6 x31 13 x32 5 x33 time taken by operator C.
The constraint in this assignment problem is that each operator must be
assigned to only
one job and similarly, each job must be perIormed by only one operator.
Taking this
constraint into account, the constraint equations are as Iollows:
x11 x12 x13 1 operator A
x21 x22 x23 1 operator B
x31 x32 x33 1 operator C
x11 x21 x31 1 Job 1
Source Destination
1 10 1
16
7
9
1 1
6
1 5 1
Time Taken (in mins)
Operator
A
Operator
B
Operator
C
Job
3
Job
2
Job
1
Supply 17 Demand
6
13
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x12 x22 x32 1 Job 2
x13 x23 x33 1 Job 3
Objective function: The objective Iunction is to minimize the time taken
to complete all
the jobs. Using the cost data table, the Iollowing equation can be arrived
at:
The objective Iunction is,
Minimize Z 10 x11 16 x12 7 x13 9 x21 17 x22 6 x23 6 x31
13 x32 5 x33
The linear programming model Ior the problem will be,
Minimize Z 10 x11 16 x12 7 x13 9 x21 17 x22 6 x23 6 x31
13 x32 5 x33
subject to constraints
x11 x12 x13 1 ....................(i)
x21 x22 x23 1 ....................(ii)
x31 x32 x33 1 ....................(iii)
x11 x12 x13 1 ....................(iv)
x12 x22 x32 1 ....................(v)
x13 x23 x33 1 ....................(vi)
where, xij ~ 0 Ior i 1,2,3 and j 1,2,3.
The problem is solved on a computer, using transportation model in
TORA package.
The input screen and output screens are shown in Figure 7.1 and Figure
7.2 respectively.
Figure 7.2: TORA, Input Screen
213
Assignment Model
Figure 7.3: TORA, Output Screen
The objective Iunction value 28 mins.
Table 7.3: The Assignment Schedule
7.5 TYPES OF ASSIGNMENT PROBLEM
The assignment problems are oI two types (i) balanced and (ii)
unbalanced. II the number
oI rows is equal to the number oI columns or iI the given problem is a
square matrix, the
problem is termed as a balanced assignment problem. II the given
problem is not a
square matrix, the problem is termed as an unbalanced assignment
problem.
II the problem is an unbalanced one, add dummy rows /dummy columns
as required so
that the matrix becomes a square matrix or a balanced one. The cost or
time values Ior
the dummy cells are assumed as zero.
7.6 HUNGARIAN METHOD FOR SOLVING ASSIGNMENT
PROBLEM
Step 1. In a given problem, iI the number oI rows is not equal to the
number oI
columns and vice versa, then add a dummy row or a dummy column.
The
assignment costs Ior dummy cells are always assigned as zero.
Men Job Time Taken
(in mins.)
1 2 16
2 3 6
3 1 6
Total 28
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Step 2. Reduce the matrix by selecting the smallest element in each row
and subtract
with other elements in that row.
Step 3: Reduce the new matrix column-wise using the same method as
given in step 2.
Step 4: Draw minimum number oI lines to cover all zeros.
Step 5: II umber oI lines drawn order oI matrix, then optimally is
reached, so
proceed to step 7. II optimally is not reached, then go to step 6.
Step 6. Select the smallest element oI the whole matrix, which is NOT
COVERED
by lines. Subtract this smallest element with all other remaining
elements that
are NOT COVERED by lines and add the element at the intersection oI
lines. Leave the elements covered by single line as it is. ow go to step
4.
Step 7. Take any row or column which has a single zero and assign by
squaring it.
Strike oII the remaining zeros, iI any, in that row and column (X).
Repeat the
process until all the assignments have been made.
Step 8. Write down the assignment results and Iind the minimum
cost/time.
Note: While assigning, iI there is no single zero exists in the row or
column, choose any
one zero and assign it. Strike oII the remaining zeros in that column or
row, and repeat
the same Ior other assignments also. II there is no single zero allocation,
it means multiple
number oI solutions exist. But the cost will remain the same Ior diIIerent
sets oI allocations.
Example 1: Assign the Iour tasks to Iour operators. The assigning costs
are given in
Table 7.4.
$olution:
Step 1. The given matrix is a square matrix and it is not necessary to add
a dummy
row/column
Step 2. Reduce the matrix by selecting the smallest value in each row
and subtracting
Irom other values in that corresponding row. In row A, the smallest
value is
13, row B is 15, row C is 17 and row D is 12. The row wise reduced
matrix
is shown in Table 7.5.
Table 7.5: Row-wise Reduction
Operators
1 2 3 4
A 20 28 19 13
Tasks B 15 30 31 28
C 40 21 20 17
D 21 28 26 12
Operators
1 2 3 4
A 7 15 6 0
Tasks B 0 15 16 13
C 23 4 3 0
D 9 16 14 0
215
Step 3. Reduce the new matrix given in Table 6 by selecting the smallest
value in Assignment Model
each column and subtract Irom other values in that corresponding
column. In
column 1, the smallest value is 0, column 2 is 4, column 3 is 3 and
column 4 is
0. The column-wise reduction matrix is shown in Table 7.6.
Table 7.6: Column-wise Reduction Matrix
Step 4. Draw minimum number oI lines possible to cover all the zeros in
the matrix
given in Table 7.7
Table 7.7: Matrix with all Zeros Covered
o. oI lines drawn order
oI matrix
The Iirst line is drawn crossing row C covering three zeros, second line
is
drawn crossing column 4 covering two zeros and third line is drawn
crossing
column 1 (or row B) covering a single zero.
Step 5. Check whether number oI lines drawn is equal to the order oI the
matrix, i.e.,
3 4. ThereIore optimally is not reached. Go to step 6.
Step 6. Take the smallest element oI the matrix that is not covered by
single line,
which is 3. Subtract 3 Irom all other values that are not covered and add
3 at
the intersection oI lines. Leave the values which are covered by single
line.
Table 7.8 shows the details.
Table 7.8: Subtracted or Added to Uncovered Values and
Intersection Lines Respectively
Operators
1 2 3 4
A 7 11 3 6
Tasks B 0 11 13 13
C 23 0 0 0
D 9 12 11 0
Operators
1 2 3 4
A 7 11 3 0
Tasks B 0 11 13 13
C 23 0 0 0
D 9 12 11 0

Operators
1 2 3 4
A 7 9 0 0
Tasks B 0 9 10 13
C 26 0 0 3
D 9 9 8 0
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Step 7. ow, draw minimum number oI lines to cover all the zeros and
check Ior
optimiality. Here in Table 7.9 minimum number oI lines drawn is 4
which is
equal to the order oI matrix. Hence optimality is reached.
Table 7.9: Optimality Matrix
Step 8. Assign the tasks to the operators. Select a row that has a single
zero and
assign by squaring it. Strike oII remaining zeros iI any in that row or
column.
Repeat the assignment Ior other tasks. The Iinal assignment is shown in
Table 7.10.
Table 7.10: Final Assignment
ThereIore, optimal assignment is:
Task Operator Cost
A 3 19
B 1 15
C 2 21
D 4 12
Total Cost Rs. 67.00
Example 2: Solve the Iollowing assignment problem shown in Table
7.11 using Hungarian
method. The matrix entries are processing time oI each man in hours.
Operators
1 2 3 4
A 7 9 0
Tasks B 9 10 13
C 26 0 3
D 9 9 8
0
0
0
0

Operators
1 2 3 4
A 7 9 0 0
Tasks B 0 9 10 13
C 26 0 0 3
D 9 9 8 0
o. oI lines
drawn order oI matrix
217
Table 7.11: Assignment Problem Assignment Model
Solution: The row-wise reductions are shown in Table 7.12
Table 7.12: Row-wise Reduction Matrix
The column wise reductions are shown in Table 7.13.
Table 7.13: Column-wise Reduction Matrix
Matrix with minimum number oI lines drawn to cover all zeros is shown
in
Table 7.14.
Table 7.14: Matrix will all Zeros Covered
Men
1 2 3 4 5
I 20 15 18 20 25
II 18 20 12 14 15
1ob III 21 23 25 27 25
IV 17 18 21 23 20
V 18 18 16 19 20
Men
1 2 3 4 5
I 5 0 3 5 10
1ob II 6 8 0 2 3
III 0 2 4 6 4
IV 0 1 4 6 3
V 2 2 0 3 4
Men
1 2 3 4 5
I 5 0 3 3 7
1ob II 6 8 0 0 0
III 0 2 4 4 1
IV 0 1 4 4 0
V 2 2 0 1 1
Men
1 2 3 4 5
I 5 0 3 3 7
1ob II 6 8 0 0 0
III 0 2 4 4 1
IV 0 1 4 4 0
V 2 2 0 1 1
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Ior Management
The number oI lines drawn is 5, which is equal to the order oI matrix.
Hence optimality
is reached. The optimal assignments are shown in Table 7.15.
Table 7.15: Optimal Assignment
ThereIore, the optimal solution is:
Job Men Time
I 2 15
II 4 14
III 1 21
IV 5 20
V 3 16
Total time 86 hours
7.7 UNBALANCED ASSIGNMENT PROBLEM
II the given matrix is not a square matrix, the assignment problem is
called an unbalanced
problem. In such type oI problems, add dummy row(s) or column(s)
with the cost
elements as zero to convert the matrix as a square matrix. Then the
assignment problem
is solved by the Hungarian method.
Example 3: A company has Iive machines that are used Ior Iour jobs.
Each job can be
assigned to one and only one machine. The cost oI each job on each
machine is given in
the Iollowing Table 7.16.
$olution: Convert the 4 5 matrix into a square matrix by adding a
dummy row D5.
Men
1 2 3 4 5
I 5 3 3 7
1ob II 6 8 0 0
III 2 4 4 1
IV 0 1 4 4
V 2 2 1 1
0
0
0
0
0
Machines
A B C D E
1 5 7 11 6 7
2 8 5 5 6 5
3 6 7 10 7 3
4 10 4 8 2 4
1ob
219
Table 7.17: Dummy Row D5 Added Assignment Model
Table 7.18: Row-wise Reduction of the Matrix
Column-wise reduction is not necessary since all columns contain a
single zero. ow,
draw minimum number oI lines to cover all the zeros, as shown in Table
7.19.
Table 7.19: All Zeros in the Matrix Covered
umber oI lines drawn Order oI matrix. Hence not optimal.
Select the least uncovered element, i.e., 1, subtract it Irom other
uncovered elements,
add to the elements at intersection oI lines and leave the elements that
are covered with
single line unchanged as shown in Table 7.20.
Machines
A B C D E
1 5 7 11 6 7
2 8 5 5 6 5
1ob 3 6 7 10 7 3
4 10 4 8 2 4
D5 0 0 0 0 0
Machines
A B C D E
1 0 2 6 1 2
2 3 0 0 1 0
1ob 3 3 4 7 4 0
4 8 2 6 2 0
D5 0 0 0 0 0
Machines
A B C D E
1 0 2 6 1 2
2 3 0 0 1 0
1ob 3 3 4 7 4 0
4 8 2 6 2 0
D5 0 0 0 0 0
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Table 7.20: Subtracted or Added to Elements
Table 7.21: Again Added or Subtracted 1 from Elements
umber oI lines drawn Order oI matrix. Hence optimality is reached.
ow assign the
jobs to machines, as shown in Table 7.22.
Table 7.22: Assigning 1obs to Machines
Machines
A B C D E
1 0 1 5 0 2
2 4 0 0 1 1
1ob 3 3 3 6 3 0
4 8 1 5 1 0
D5 1 0 0 0 1
Machines
A B C D E
1 0 1 5 0 3
2 4 0 0 1 2
1ob 3 2 2 5 2 0
4 7 0 4 0 0
D5
1 0 0 0 2
Machines
A B C D E
1 1 5 0 3
2 4 0 1 2
1ob 3 2 2 5 2
4 7 0 4 0
D5 1 0 0 2
0
0
0
0
0

221
Hence, the optimal solution is: Assignment Model
Job Machine Cost
1 A 5
2 B 5
3 E 3
4 D 2
D5 C 0
Total Cost Rs.15.00
Example 4: In a plant layout, Iour diIIerent machines M1, M2, M3 and
M4 are to be
erected in a machine shop. There are Iive vacant areas A, B, C, D and E.
Because oI
limited space, Machine M2 cannot be erected at area C and Machine M4
cannot be
erected at area A. The cost oI erection oI machines is given in the Table
7.23.
Find the optimal assignment plan.
Solution: As the given matrix is not balanced, add a dummy row D5
with zero cost
values. Assign a high cost H Ior (M2, C) and (M4, A). While selecting
the lowest cost
element neglect the high cost assigned H, as shown in Table 7.24 below.
Table 7.24: Dummy Row D5 Added
Row-wise reduction oI the matrix, is shown in Table 7.25.
Area
A B C D E
M1
4 5 9 4 5
Machine M2 6 4 -- 4 3
M3
4 5 8 5 1
M4
-- 2 6 1 2
Area
A B C D E
M1
4 5 9 4 5
Machine M2 6 4 H 4 3
M3 4
5
8
5
1
M4
H 2 6 1 2
D5
0 0 0 0 0
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Table 7.25: Matrix Reduced Row-wise
Note: Column-wise reduction is not necessary, as each column has at
least one single
zero. ow, draw minimum number oI lines to cover all the zeros, see
Table 7.26.
Table 7.26: Lines Drawn to Cover all Zeros
umber oI lines drawn Order oI matrix. Hence not Optimal. Select the
smallest
uncovered element, in this case 1. Subtract 1 Irom all other uncovered
element and
add 1 with the elements at the intersection. The element covered by
single line remains
unchanged. These changes are shown in Table 7.27. ow try to draw
minimum number
oI lines to cover all the zeros.
Table 7.27: Added or Subtracted 1 from Elements
ow number oI lines drawn Order oI matrix, hence optimality is
reached. Optimal
assignment oI machines to areas are shown in Table 7.28.
Area
A B C D E
M1
0 1 5 0 1
M3
3 4 7 4 0
M4
H 1 5 0 1
D5
0 0 0 0 0
Area
A B C D E
M1
0 1 5 0 1
M3
3 4 7 4 0
M4
H 1 5 0 1
D5
0 0 0 0 0
Area
A B C D E
M1
0 1 5 1 2
M3
2 3 6 4 0
M4
H 0 4 0 1
D5
0 0 0 1 1
223
Table 7.28: Optimal Assignment Assignment Model
Hence, the optimal solution is:
Machines Area Erection Cost
M1 A 4
M2 B 4
M3 C 1
M4 D 1
D5 E 0
Total Erection Cost Rs.10.00
7.8 RESTRICTED ASSIGNMENT PROBLEM
In real practice, situations may arise where a particular machine cannot
be assigned to
an operator because he may not be skilled enough to operate it. Because
oI this, no
assignment is made Ior the operator on that machine. This situation is
overcome by
assigning a large value, or by assigning M. This will result in no
assignment made to the
restricted combinations.
Example 5: Five jobs are to be assigned to Iive men. The cost (in Rs.) oI
perIorming
the jobs by each man is given in the matrix (Table 7.29). The assignment
has restrictions
that Job 4 cannot be perIormed by Man 1 and Job 3 cannot be perIormed
by Man 4 Find
the optimal assignment oI job and its cost involved.
Area
A B C D E
M1
1 5 1 2
Machine M2 2 H 1 0
M3
2 3 6 4
M4
H 0 4 1
D5
0 0 1 1
0
0
0
0
0

Men 1 2 3 4 5
1 16 12 11 x 15
2 13 15 11 16 18
3 20 21 18 19 17
4 16 13 x 16 12
5 20 19 18 17 19
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$olution: Assign large value to the restricted combinations or introduce
M`, see
Table 7.30.
Table 7.30: Large Value Assignment to Restricted Combinations
1ob
1 2 3 4 5
1 16 12 11 M 15
2 13 15 11 16 18
Men 3 20 21 18 19 17
4 16 13 M 16 12
5 20 19 18 17 19
Table 7.31: Reducing the matrix row-wise
1ob
1 2 3 4 5
1 5 1 0 M 4
2 2 4 0 5 7
Men 3 3 4 1 2 0
4 4 1 M 4 0
5 3 2 1 0 1
Table 7.32: Reducing the matrix column-wise
1ob
1 2 3 4 5
1 3 0 0 M 4
2 0 3 0 5 7
Men 3 1 3 1 2 0
4 2 0 M 4 0
5 1 1 1 0 1
Draw minimum number oI lines to cover all zeros, see Table 7.33.
Table 7.33: All Zeros Covered
1ob
1 2 3 4 5
1 3 0 0 M 4
2 0 3 0 5 7
Men 3 1 3 1 2 0
4 2 0 M 4 0
5 1 1 1 0 1
225
ow, number oI lines drawn Order oI matrix, hence optimality is
reached (Table 7.34). Assignment Model
Allocating Jobs to Men.
Table 7.34: 1ob Allocation to Men
1ob
1 2 3 4 5
1 3 0 0 M 4
2 0 3 0 5 7
Men 3 1 3 1 2 0
4 2 0 M 4 0
5 1 1 1 0 1
Table 7.35: Assignment Schedule and Cost
As per the restriction conditions given in the problem, Man 1 and Man 4
are not assigned
to Job 4 and Job 3 respectively.
7.9 MULTIPLE AND UNIQUE SOLUTIONS
For a given Job-Men assignment problem, there can be more than one
optimal solution,
i.e., multiple solutions can exist. Two assignment schedules that give
same results are
called Multiple optimal solutions. II the problem has only one solution
then the solution
is said to be Unique solution. A problem having multiple optimal
solutions is shown in
Example 4.6.
7.10 MAXIMIZATION PROBLEM
In maximization problem, the objective is to maximize proIit, revenue,
etc. Such problems
can be solved by converting the given maximization problem into a
minimization problem.
i. Change the signs oI all values given in the table.
ii. Select the highest element in the entire assignment table and subtract
all the elements
oI the table Irom the highest element.
Example : A marketing manager has Iive salesmen and sales districts.
Considering
the capabilities oI the salesmen and the nature oI districts, the marketing
manager estimates
that sales per month (in hundred rupees) Ior each salesman in each
district would be as
Iollows (Table 7.36). Find the assignment oI salesmen to districts that
will result in
maximum sales.

Men Job Cost
1 3 11
2 1 13
3 5 17
4 2 13
5 4 17
Total Cost = Rs. 71.
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Table 7.36: Maximization Problem
$olution: The given maximization problem is converted into
minimization problem
(Table 7.37) by subtracting Irom the highest sales value (i.e., 41) with all
elements oI the
given table.
Table 7.37: Conversion to Minimization Problem
Reduce the matrix row-wise (see Table 7.38)
Table 7.38: Matrix Reduced Row-wise
Reduce the matrix column-wise and draw minimum number oI lines to
cover all the
zeros in the matrix, as shown in Table 7.39.
District
A B C D E
1 32 38 40 28 40
2 40 24 28 21 36
Salesman 3 41 27 33 30 37
4 22 38 41 36 36
5 29 33 40 35 39
District
A B C D E
1 9 3 1 13 1
2 1 17 13 20 5
Salesman 3 0 14 8 11 4
4 19 3 0 5 5
5 12 8 1 6 2
District
A B C D E
1 8 2 0 12 0
2 0 16 12 19 4
Salesman 3 0 14 8 11 4
4 19 3 0 5 5
5 11 7 0 5 1
227
Table 7.39: Matrix Reduced Column-wise and Zeros Covered
Assignment Model
Select the least uncovered element, i.e., 4 and subtract it Irom other
uncovered elements,
add it to the elements at intersection oI line and leave the elements that
are covered with
single line unchanged, Table 7.40.
Table 7.40: Added & Subtracted the least Uncovered Element
ow, number oI lines drawn Order oI matrix, hence optimality is
reached.
There are two alternative assignments due to presence oI zero elements
in cells (4, C),
(4, D), (5, C) and (5, D).
Table 7.41: Two Alternative Assignments
District
A B C D E
1 8 0 0 7 0
2 0 14 12 14 4
Salesman 3 0 12 8 6 4
4 19 1 0 0 5
5 11 5 0 0 1
District
A B C D E
1 12 0 0 7 0
2 0 10 8 10 0
Salesman 3 0 8 4 2 0
4 23 1 0 0 5
5 15 5 0 0 1
A B C D E A B C D E
1 12 0 7 0 1 12 0 7 0
2 0 10 8 10 0 2
0 10 8 10
3 8 4 2 8 4 2 0
4 23 1 0 5 23 1 0 5
5 15 5 0 1 5 15 5 0 1
0
0
0
0
0
0
0 0
0
0
1
3
4
5
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ThereIore,
Assignment 1 Assignment 2
Salesman Districts Sales Salesman Districts Sales
(in `00) Rs. (in `00) Rs.
1 B 38 1 B 38
2 A 40 2 E 36
3 E 37 3 A 41
4 C 41 4 C 41
5 D 35 5 D 35
Total Rs. 191.00 Total Rs. 191.00
7.11 TRAVELLING SALESMAN PROBLEM
The Travelling salesman problem` is very similar to the assignment
problem except that
in the Iormer, there are additional restrictions that a salesman starts Irom
his city, visits
each city once and returns to his home city, so that the total distance
(cost or time) is
minimum.
Procedure:
Step 1: Solve the problem as an assignment problem.
Step 2: Check Ior a complete cycle or alternative cycles. II the cycle is
complete, Go
to Step 4. II not, go to the Step 3.
Step 3: To start with, assign the next least element other than zero, (only
Ior Iirst
allocation) and complete the assignment. Go to Step 2.
Step 4: Write the optimum assignment schedule and calculate the
cost/time.
(Aote: II there are two non-zero values in the matrix, it means that there
are two optimal
solutions. Calculate the cost Ior the two allocations and Iind the optimal
solution.)
Example 7. A Travelling salesman has to visit Iive cities. He wishes to
start Irom a
particular city, visit each city once and then return to his starting point.
The travelling
cost (in Rs.) oI each city Irom a particular city is given below.
Table 7.42: Travelling Salesman Problem
What should be the sequence oI the salesman's visit, so that the cost is
minimum?
To city
A B C D E
A 2 5 7 1
B 6 3 8 2
From city C 8 7 4 7
D 12 4 6 5
E 1 3 2 8
229
$olution: The problem is solved as an assignment problem using
Hungarian method; an Assignment Model
optimal solution is reached as shown in Table 7.43.
Table 7.43: Optimal Solution Reached Using Hungarian Method
In this assignment, it means that the travelling salesman will start Irom
city A, then go to
city E and return to city A without visiting the other cities. The cycle is
not complete.
To overcome this situation, the next highest element can be assigned to
start with. In this
case it is 1, and there are three 1`s. ThereIore, consider all these 1`s one
by one and Iind
the route which completes the cycle.
Case 1: Make the assignment Ior the cell (A, B) which has the value 1.
ow, make the
assignments Ior zeros in the usual manner. The resulting assignments are
shown in
Table 7.44.
Table 7.44: Resulting Assignment
The assignment shown in Table 7.42 gives the route sequence
A B, B C, C D, D E and E A.
The travelling cost to this solution is
2000 3000 4000 5000 1000
Rs.15,000.00
Case 2: II the assignment is made Ior cell (D, C) instead oI (D, E), the
Ieasible solution
cannot be obtained. The route Ior the assignment will be A B C
D C. In
this case, the salesman visits city C twice and cycle is not complete.
ThereIore the sequence Ieasible Ior this assignment is
A B C D E A.
with the travelling cost oI Rs.15,000.00
To city
A B C D E
A 1 3 6
B 4 6 0
From city C 4 3 3
D 8 1 1
E 0 2 0 7
0
0
0
0

To city
A B C D E
A 3 6 0
B 4 6 0
From city C 4 3 3
D 8 0 1
E 2 0 7
1
0
0
0
1

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COMPUTER WITH
TORA
Transportation model option is used Ior assignment values. Similar to
transportation model
the cost or time values are entered in the input grid. With the constraint
that each operator
has to be assigned with one job, the supply and demand values are
entered as 1. For
example, the worked out example 1 is used Ior solving using computer.
Input screen:
Figure 7.4: Assignment Problem Using TORA (Input Screen)
Output screen:
Figure 7.5: Assignment Problem Using TORA (Output Screen)
From the output screen, the objective is to minimize cost Rs. 67.00
The assignment schedule is given below in Table 7.45.
231
Table 7.45: Assignment Schedule Assignment Model
7.13 SOLVING UNBALANCED ASSIGNMENT PROBLEM
USING COMPUTER
Worked out Example 3 has been solved again using computer. The Input
screen 4 5
matrix is shown.
Figure 7.6: Unbalanced Assignment Problems Using TORA (Input
Screen)
Output screen:
Figure 7.7: Unbalanced Assignment Problem Using TORA (Output
Screen)
Task Operator Cost
A 3 1
B 1 15
C 2 21
D 4 12
Total Cost = Rs.67.
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From the output obtained, the objective Iunction value is Rs.15.00.
The assignment schedule is given in the Table 7.46 below.
Table 7.46: Assignment Schedule
7.14 SOLVING MAXIMIZATION PROBLEMS USING
COMPUTERS
As we know, the transportation model is also used Ior solving
assignment problems.
In transportation model, the objective is to minimize the cost oI
transportation. For a
maximization problem, the objective is to maximize the proIit or returns.
While entering
the values the maximization matrix must be converted to minimization
matrix by subtracting
all the values with the highest value cell. This is shown by solving the
solved problem
Ex. 6. The given problem is maximization oI sales (Table 7.47).
Table 7.47: Maximization Problem
Taking the highest value in the given maximization matrix, i.e., 41 and
subtracting all
other values, we get the Iollowing input matrix:
Job Machine Cost
1 A 5
2 B 5
3 E 3
4 D 2
D5 C
Total Cost = Rs. 15.
District
A B C D E
1 32 38 40 28 40
2 40 24 28 21 36
Salesman 3 41 27 33 30 37
4 22 38 41 36 36
5 29 33 40 35 39
District
A B C D E
1 9 3 1 13 1
2 1 17 13 20 5
Salesman 3 0 14 8 11 4
4 19 3 0 5 5
5 12 8 1 6 2
233
Input screen: Assignment Model
Figure 7.8: Solving Maximization Using TORA (Input Screen)
Part oI the output screen is shown below in Figure 7.9.
Figure 7.9: Part of Output Screen (Enlarged)
The output given by TORA is the assignment schedule with the
objective oI minimization.
The given problem is to maximize the sales. To arrive at the maximize
sales value, add
the assigned values Irom the given matrix, as shown in Table 7.48.
Table 7.48: Assignment Schedule
* values taken Irom the given matrix.
Salesman District *Sales
(in . Rs.
1 B 38
2 E 36
3 A 41
4 C 41
5 D 35
Total Cost = Rs.11.
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1. How could can assignment problem be solved using the transportation
approach.
2. Describe the approach you would use to solve an assignment problem
with
the help oI illustration.
answers in it.
better.

7.15 LET US SUM UP
AP bring into play the allocation oI a number oI jobs to a number oI
persons in order to
minimize the completion time. Although an AP can be Iormulated as
LPP, it solved by a
special method known a Hungarian method. The Hungarian method oI
assignment
provides us with an eIIicient means oI Iinding the optimal solution
without having to
make a direct comparison oI every option. Further we will take into
consideration the
opportunity cost. This is a next best alternative cost.
Visit to your nearest Iast moving consumer goods manuIacturing
company like LG,
Samsung, Videocon, Onida etc. and apply the concept oI assignment
model to increase
its produce line.
7.17 KEYWORDS
Balanced Assigned Problem
Unbalanced Assignment Problem
Hungarian Method
Restricted Assignment Problem
Dummy job
Opportunity cost
(a) Basic objective oI an AP is to assign n-number oI resources to a
number oI
activities.
(b) Application oI AP is an allocation oI machine Ior optimum
utilization oI
space.
235
(c) Hungarian method could also be applicable to transportation model.
Assignment Model
(d) Assignment problem not consider the allocation oI number oI jobs to
a number
oI person.
(e) An optimal assignment is Iound, iI the number oI assigned cells
equal the
number oI row (columns).
2. Briefly comment on the following statement:
(a) Assignment problem are oI the types balanced and unbalanced.
(b) Cost or time value Ior the dummy cells are assumed zero.
(c) Maximization problem objective is to maximize proIit.
3. Fill in the blank:
(a) Assignment model can be applied in many .
(b) II the given matrix is not a , matrix, the AP is called
an
problem.
(c) Transportation model is used Ior values.
(d) A dummy job is an jobs.
4. Write short Notes:
(a) What is meant by matrix reduction.
(b) Describe the approach oI the Hungarian method.
1. What is an assignment problem? Give its areas oI application.
2. Explain the structure oI an assignment problem with objectives as
maximization
and minimization.
3. How can an assignment problem be solved using linear programming
? Illustrate
with a suitable example.
4. Explain the steps involved in solving an assignment problem.
5. What is meant by an unbalanced assignment problem?
6. How is an assignment problem solved when certain assignments are
restricted?
7. What is the diIIerence between a multiple and a unique solution in an
assignment
problem?
8. How is a maximization problem dealt with, in solving assignment
problems?
9. What is Travelling-salesman problem? How does it diIIer Irom an
assignment
problem?
10. Discuss how assignment problems are solved using transportation
model.
Exercise Problems
1. Consider the assignment problem having the Iollowing cost table:
a. Draw the network representation oI the problem.
b. Solve the problem and determine the optimal assignment Ior each
man.
Job
Men 1 2 3
A 7 6
B 5 8 7
C 4 5 6
236
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2. Consider the assignment problem having the Iollowing table. Use
TORA to Iind
the optimal solution that minimizes the total cost:
3. Four trucks are used Ior transporting goods to Iour locations. Because
oI varying
costs oI loading and unloading the goods, the cost oI transportation also
varies Ior
each truck. The cost details (in Rs.) is given in the table below. There is
no constraint,
and any truck can be sent to any location. The objective is to assign the
Iour trucks
to minimize the total transportation cost. Formulate and solve the
problem using
TORA.
4. A two-wheeler service station head has Iour workmen and Iour tasks
to be
perIormed daily as a routine work. BeIore assigning the work, the
service station
head carried out a test by giving each work to all the workmen. The time
taken by
workmen is given in the table, below.
How should the service station head assign the work to each workman
so as to
minimize the total time?
5. Consider an unbalanced assignment problem having the Iollowing
cost table:
Truck Location
1 2 3 4
A 525 825 320 200
B 600 750 250 175
C 500 900 270 150
D 620 800 300 160
Time Taken (in mins)
Workman
Work
1 2 3 4
A 20 28 19 13
B 15 30 16 23
C 40 17 20 13
D 17 28 22 8
Operator Task
1 2 3 4
A 12 14 15 16
B 10 11 13 21
C 8 9 17 23
Operator Job
1 2 3 4 5
A 12 14 16 11 10
B 9 13 17 9 7
C 10 12 20 7 8
D 13 10 21 6 12
E 15 9 15 11 13
237
6. Consider the Iollowing assignment problem: Assignment Model
a. Draw the network representation oI the assignment problem.
b. Formulate a linear programming model Ior the assignment problem.
7. Five operators have to be assigned to Iive machines. Depending on
the eIIiciency
and skill, the time taken by the operators diIIers. Operator B cannot
operate machine
4 and operator D cannot operator machine 2. The time taken is given in
the Iollowing
table.
Determine the optimal assignment using TORA.
8. A consumer durables manuIacturing company has plans to increase its
product
line, namely, washing machine, reIrigerator, television and music
system. The
company is setting up new plants and considering Iour locations. The
demand
Iorecast per month Ior washing machine, reIrigerator, television and
music system
are 1000, 750, 850 and 1200, respectively. The company decides to
produce the
Iorecasted demand. The Iixed and variable cost per unit Ior each location
and item
is given in the Iollowing table. The management has decided not to set-
up more
than one unit in one location.
Determine the location and product combinations so that the total cost is
minimized.
Destination Unit cost (Rs.) Supply
1 2 3 4
Source
1 30 61 45 50 1
2 25 54 49 52 1
3 27 60 45 54 1
4 31 57 49 55 1
Demand 1 1 1 1
Operator Machine
1 2 3 4 5
A 6 6 3 --- 5
B 6 7 2 5 3
C 5 6 4 6 4
D 7 --- 7 6 7
E 5 4 3 6 5
Location Fixed cost (lakhs) Variable cost / unit
WM RF TV MS WM RF TV MS
Chennai 30 35 18 16 4 3 6 2
Coimbatore 25 40 16 12 3 2 4 4
Madurai 35 32 15 10 4 2 7 6
Selam 20 25 14 12 2 1 3 7
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Ior Management
9. Solve the Iollowing travelling salesman problem so as to minimize the
cost oI travel.
10. Solve the travelling salesman problem Ior the given matrix cell
values which represent
the distances between cities.
c12 31, c13 10, c14 15,
c21 9, c23 12, c31 10,
c34 9, c41 18, c42 25.
There is no route between cities i and j iI value Ior cij is not given.
DISCUSSION
1. (a) True (b) True (c) False (d) False (e) True
3. (a) decision-making (b) square, unbalanced
(c) assignment (d) imaginary
Ross, G.T. and Soaland, R.H, 'odeling f,cility loc,tion problem ,s
gener,li:ed
,ssignment problems`, Management Science.
U.L. Gupta, D.T. Lee, J.T. Leung, An optim,l solution for the ch,nnel-
,ssignment
problem.
Abara J., Applying Integer Line,r Progr,mming to the Fleet Assignment
Problem,
InterIaces, Vol. 19, o. 41, pp. 20-28.
City
A B C D E
A -- 13 22 21 11
B 2 -- 11 16 3
C 9 9 -- 20 10
D 13 12 27 -- 16
E 12 10 28 26 --
Unit-III
In this lesson we are going to discuss the various etwork Model Like
Critical Path
Method and Project Evaluations Review Technique. The CPM in a
diagrammatical
technique whereas PERT in a unique controlling device.
8.1 INTRODUCTION
Any project involves planning, scheduling and controlling a number oI
interrelated activities
with use oI limited resources, namely, men, machines, materials, money
and time. The
projects may be extremely large and complex such as construction oI a
power plant, a
highway, a shopping complex, ships and aircraIt, introduction oI new
products and research
and development projects. It is required that managers must have a
dynamic planning
and scheduling system to produce the best possible results and also to
react immediately
to the changing conditions and make necessary changes in the plan and
schedule. A
convenient analytical and visual technique oI PERT and CPM prove
extremely valuable
in assisting the managers in managing the projects.
LESSON
8
NETWORK MODEL
CONTENTS
8.1 Introduction
8.2 PERT / CPM etwork Components
8.3 Errors to be avoided in Constructing a etwork
8.4 Rules in Constructing a etwork
8.5 Procedure Ior umbering the Events Using Fulkerson's Rule
8.6 Critical Path Analysis
8.7 Determination oI Float and Slack Times
8.8 Solving CPM Problems using Computer
8.9 Project Evaluation Review Technique, PERT
8.10 Solving PERT Problems using Computer
8.11 Cost Analysis
8.12 Let us Sum Up
8.14 Keywords
242
Ior Management
i j A is called as an Activity
A
Both the techniques use similar terminology and have the same purpose.
PERT stands
Ior Project Evaluation and Review Technique developed during
1950`s. The technique
was developed and used in conjunction with the planning and designing
oI the Polaris
missile project. CPM stands Ior Critical Path Method which was
developed by DuPont
Company and applied Iirst to the construction projects in the chemical
industry. Though
both PERT and CPM techniques have similarity in terms oI concepts,
the basic diIIerence
is, PERT is used Ior analysis oI project scheduling problems. CPM has
single time estimate
and PERT has three time estimates Ior activities and uses probability
theory to Iind the
chance oI reaching the scheduled time.
Project management generally consists oI three phases.
lanning: Planning involves setting the objectives oI the project.
IdentiIying various
activities to be perIormed and determining the requirement oI resources
such as men,
materials, machines, etc. The cost and time Ior all the activities are
estimated, and a
network diagram is developed showing sequential interrelationships
(predecessor and
successor) between various activities during the planning stage.
$cheduling: Based on the time estimates, the start and Iinish times Ior
each activity are
worked out by applying Iorward and backward pass techniques, critical
path is identiIied,
along with the slack and Iloat Ior the non-critical paths.
Controlling: Controlling reIers to analyzing and evaluating the actual
progress against
the plan. Reallocation oI resources, crashing and review oI projects with
periodical reports
are carried out.
8.2 PERT/CPM NETWORK COMPONENTS
PERT / CPM networks contain two major components
i. Activities, and
ii. Events
Activity. An activity represents an action and consumption oI resources
(time, money,
energy) required to complete a portion oI a project. Activity is
represented by an arrow,
(Figure 8.1).
Figure 8.1: An Activity
Event. An event (or node) will always occur at the beginning and end oI
an activity. The
event has no resources and is represented by a circle. The ith event and
jth event are the
tail event and head event respectively, (Figure 8.2).
Tail Event Head Event
Figure 8.2: An Event
Merge and Burst Events
One or more activities can start and end simultaneously at an event
(Figure 8.3 a, b).
(a) Merge Event (b) Burst Event
Figure 8.3
i j
A
243
Preceding and Succeeding Activities etwork Model
Activities perIormed beIore given events are known as preceding
activities
(Figure 8.4), and activities perIormed aIter a given event are known as
succeeding
activities.
Figure 8.4: Preceding and Succeeding Activities
Activities A and B precede activities C and D respectively.
Dummy Activity
An imaginary activity which does not consume any resource and time is
called a dummy
activity. Dummy activities are simply used to represent a connection
between events in
order to maintain a logic in the network. It is represented by a dotted line
in a network,
see Figure 8.5.
Figure 8.5: Dummy Activity
8.3 ERRORS TO BE AVOIDED IN CONSTRUCTING A
NETWORK
a. Two activities starting Irom a tail event must not have a same end
event. To ensure
this, it is absolutely necessary to introduce a dummy activity, as shown
in
Figure 8.6.
Incorrect Correct
Figure 8.6: Correct and Incorrect Activities
i j l
k
C
B D
A
1 2
3
4
A B
C
Dummy
1 2
A
3
1 2
Dummy
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b. Looping error should not be Iormed in a network, as it represents
perIormance
oI activities repeatedly in a cyclic manner, as shown below in Figure 8.7.
Incorrect
Figure 8.7: Looping Error
c. In a network, there should be only one start event and one ending
event as shown
below, in Figure 8.8.
Figure 8.8: Only One Start and End Event
d. The direction oI arrows should Ilow Irom leIt to right avoiding mixing
oI direction
as shown in Figure 8.9.
Incorrect
Figure 8.9: Wrong Direction of Arrows
8.4 RULES IN CONSTRUCTING A NETWORK
1. o single activity can be represented more than once in a network.
The length oI
an arrow has no signiIicance.
2. The event numbered 1 is the start event and an event with highest
number is the
end event. BeIore an activity can be undertaken, all activities preceding
it must be
completed. That is, the activities must Iollow a logical sequence (or
interrelationship)
between activities.
3. In assigning numbers to events, there should not be any duplication oI
event numbers
in a network.
4. Dummy activities must be used only iI it is necessary to reduce the
complexity oI
a network.
5. A network should have only one start event and one end event.
1
3
2
1 2
A
3
1 2
Dummy
1
3
2
245
Some conventions oI network diagram are shown in Figure 8.10 (a), (b),
(c), (d) below: etwork Model
(a) Activity B can be perIormed
only aIter completing activity A,
and activity C can be perIormed
only aIter completing activity B.
(b) Activities B and C can start
simultaneously only aIter
completing A.
(c) Activities A and B must be
completed beIore start oI
activity C.
(d) Activity C must start only aIter
completing activities A and B.
But activity D can start aIter
completion oI activity B.
Figure 8.10 (a), (b), (c), (d): Some Conventions followed in making
Network Diagrams
8.5 PROCEDURE FOR NUMBERING THE EVENTS
USING FULKERSON'S RULE
$tep1: umber the start or initial event as 1.
$tep2: From event 1, strike oII all outgoing activities. This would have
made one or
more events as initial events (event which do not have incoming
activities).
umber that event as 2.
$tep3: Repeat step 2 Ior event 2, event 3 and till the end event. The end
event must
have the highest number.
Example 1: Draw a network Ior a house construction project. The
sequence oI activities
with their predecessors are given in Table 8.1, below.
Table 8.1: Sequence of Activities for House Construction Project
Name of
the activity
Starting and
finishing event
Description of activity Predecessor Time duration
(days)
A (1,2) Prepare the house plan -- 4
B (2,3) Construct the house A 58
C (3,4) Fix the door / windows B 2
D (3,5) Wiring the house B 2
E (4,6) Paint the house C 1
F (5,6) Polish the doors / windows D 1
A
B
C
A
B
C
A
B
C
D
A B C
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$olution:
Figure 8.11: Network diagram representing house construction
project.
The network diagram in Figure 8.11 shows the procedure relationship
between the
activities. Activity A (preparation oI house plan), has a start event 1 as
well as an ending
event 2. Activity B (Construction oI house) begins at event 2 and ends at
event 3. The
activity B cannot start until activity A has been completed. Activities C
and D cannot
begin until activity B has been completed, but they can be perIormed
simultaneously.
Similarly, activities E and F can start only aIter completion oI activities
C and D
respectively. Both activities E and F Iinish at the end oI event 6.
Example 2: Consider the project given in Table 8.2 and construct a
network diagram.
Table 8.2: Sequence of Activities for Building Construction Project
$olution: The activities C and D have a common predecessor A. The
network
representation shown in Figure 8.12 (a), (b) violates the rule that no two
activities can
begin and end at the same events. It appears as iI activity B is a
predecessor oI activity
C, which is not the case. To construct the network in a logical order, it is
necessary to
introduce a dummy activity as shown in Figure 8.12.
(a)
Activity Description Predecessor
A Purchase oI Land -
B Preparation oI building plan -
C Level or clean the land A
D Register and get approval A, B
E Construct the building C
F Paint the building D
1 2 3
4
5
6
Fix the doors (2 days Paint the house (1 day
E
Construct the
house
C
Prepare the
house plan
A B
(4 days (58 days
D F
Polish the doors (1 day
Wiring the
house (2 days
C E
A
B D F
247
etwork Model
(b)
Figure 8.12: Network representing the Error
Figure 8.13: Correct representation of Network using Dummy
Activity
Example 3: Construct a network Ior a project whose activities and their
predecessor
relationship are given in Table 8.3.
Table 8.3: Activity Sequence for a Project
$olution: The network diagram Ior the given problem is shown in
Figure 8.14 with
activities A, B and C starting simultaneously.
Figure 8.14: Network Diagram
Activity A B C D E F G H J K
Predecessor - - - A B B C D E H F G
C
E
A
Dummy
B F
D
E
A C
B D F
1
2
3
4
5 8
6
7
9
A
B
C
D H
J

E
F
G
K
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Example 4: Draw a network diagram Ior a project given in Table 8.4.
Table 8.4: Project Activity Sequence
$olution: An activity network diagram describing the project is shown
in Figure 8.15,
below:
8.6 CRITICAL PATH ANALYSIS
The critical path Ior any network is the longest path through the entire
network. Since all
activities must be completed to complete the entire project, the length oI
the critical path
is also the shortest time allowable Ior completion oI the project. Thus iI
the project is to
be completed in that shortest time, all activities on the critical path must
be started as
soon as possible. These activities are called critical activities. II the
project has to be
completed ahead oI the schedule, then the time required Ior at least one
oI the critical
activity must be reduced. Further, any delay in completing the critical
activities will increase
the project duration.
The activity, which does not lie on the critical path, is called non-
critical activity. These
non-critical activities may have some slack time. The slack is the
amount oI time by
which the start oI an activity may be delayed without aIIecting the
overall completion
time oI the project. But a critical activity has no slack. To reduce the
overall project time,
it would require more resources (at extra cost) to reduce the time taken
by the critical
activities to complete.
Scheduling of Activities: Earliest Time and Latest Time
BeIore the critical path in a network is determined, it is necessary to Iind
the earliest and
latest time oI each event to know the earliest expected time (TE) at
which the activities
originating Irom the event can be started and to know the latest
allowable time (TL) at
which activities terminating at the event can be completed.
Forward Pass Computations (to calculate Earliest, Time TE)
rocedure
$tep 1: Begin Irom the start event and move towards the end event.
$tep 2: Put TE 0 Ior the start event.
$tep 3: Go to the next event (i.e node 2) iI there is an incoming activity
Ior event 2,
add calculate TE oI previous event (i.e event 1) and activity time.
Aote: II there are more than one incoming activities, calculate TE Ior all
incoming activities and take the maximum value. This value is the TE
Ior
event 2.
$tep 4: Repeat the same procedure Irom step 3 till the end event.
Activity A B C D E F G H I J K L
Immediate
Predecessor
- A B A D C, E D D H H F, H G, J
C F
B K
A E Dummy
H J
D L
G
249
Backward Pass Computations (to calculate Latest Time T etwork
Model L)
rocedure
$tep 1: Begin Irom end event and move towards the start event. Assume
that the
direction oI arrows is reversed.
$tep 2: Latest Time TL Ior the last event is the earliest time. TE oI the
last event.
$tep 3: Go to the next event, iI there is an incoming activity, subtract the
value oI TL
oI previous event Irom the activity duration time. The arrived value is
TL Ior
that event. II there are more than one incoming activities, take the
minimum
TE value.
$tep 4: Repeat the same procedure Irom step 2 till the start event.
1 What are the diIIerences between critical and non-critical?
2. Discuss procedural steps oI Hungarian method Ior solving assignment
problem.
answers in it.
better.

8.7 DETERMINATION OF FLOAT AND SLACK TIMES
As discussed earlier, the non critical activities have some slack or
Iloat. The float oI an
activity is the amount oI time available by which it is possible to delay
its completion time
without extending the overall project completion time.
For an activity i j, let
tij duration oI activity
TE earliest expected time
TL latest allowable time
ESij earliest start time oI the activity
EFij earliest Iinish time oI the activity
LSij latest start time oI the activity
LFij latest Iinish time oI the activity
%otal Float %Fij: The total Iloat oI an activity is the diIIerence between
the latest start
time and the earliest start time oI that activity.
TFij LS ij ESij ....................(1)
or
TFij (TL TE) tij ....................(2)
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Free Float FFij: The time by which the completion oI an activity can be
delayed Irom
its earliest Iinish time without aIIecting the earliest start time oI the
succeeding activity
is called Iree Iloat.
FF ij (Ej Ei) tij ....................(3)
FFij Total Iloat Head event slack
Independent Float IFij: The amount oI time by which the start oI an
activity can be
delayed without aIIecting the earliest start time oI any immediately
Iollowing activities,
assuming that the preceding activity has Iinished at its latest Iinish time.
IF ij (Ej Li) tij ....................(4)
IFij Free Iloat Tail event slack
Where tail event slack Li Ei
The negative value oI independent Iloat is considered to be zero.
Critical Path: AIter determining the earliest and the latest scheduled
times Ior various
activities, the minimum time required to complete the project is
calculated. In a network,
among various paths, the longest path which determines the total time
duration oI the
project is called the critical path. The Iollowing conditions must be
satisIied in locating
the critical path oI a network.
An activity is said to be critical only iI both the conditions are satisIied.
1. TL TE 0
2. TLj tij TEj 0
Example 8.5: A project schedule has the Iollowing characteristics as
shown in
Table 8.5
Table 8.5: Project Schedule
i. Construct PERT network.
ii. Compute TE and TL Ior each activity.
iii. Find the critical path.
$olution:
(i) From the data given in the problem, the activity network is
constructed as shown in
Figure 8.16.
Figure 8.16: Activity Network Diagram
Activity Name Time Activity Name Time (days)
1-2 A 4 5-6 G 4
1-3 B 1 5-7 H 8
2-4 C 1 6-8 I 1
3-4 D 1 7-8 J 2
3-5 E 6 8-10 K 5
4-9 F 5 9-10 L 7
1 5
7
4 5
1 2
8 1
1 6 4
1
2
3
4 9
5
7
6
8
10
251
(ii) To determine the critical path, compute the earliest, time T etwork
Model E and latest time TL Ior
each oI the activity oI the project. The calculations oI TE and TL are as
Iollows:
To calculate TE Ior all activities,
TE1 0
TE2 TE1 t1, 2 0 4 4
TE3 TE1 t1, 3 0 1 1
TE4 max (TE2 t2, 4 and TE3 t3, 4)
max (4 1 and 1 1) max (5, 2)
5 days
TE5 TE3 t3, 6 1 6 7
TE6 TE5 t5, 6 7 4 11
TE7 TE5 t5, 7 7 8 15
TE8 max (TE6 t6, 8 and TE7 t7, 8)
max (11 1 and 15 2) max (12, 17)
17 days
TE9 TE4 t4, 9 5 5 10
TE10 max (TE9 t9, 10 and TE8 t8, 10)
max (10 7 and 17 5) max (17, 22)
22 days
To calculate TL Ior all activities
TL10 TE10 22
TL9 TE10 t9,10 22 7 15
TL8 TE10 t8, 10 22 5 17
TL7 TE8 t7, 8 17 2 15
TL6 TE8 t6, 8 17 1 16
TL5 min (TE6 t5, 6 and TE7 t5, 7)
min (16 4 and 15 8) min (12, 7)
7 days
TL4 TL9 t4, 9 15 5 10
TL3 min (TL4 t3, 4 and TL5 t3, 5 )
min (10 1 and 7 6) min (9, 1)
1 day
TL2 TL4 t2, 4 10 1 9
TL1 Min (TL2 t1, 2 and TL3 t1, 3)
Min (9 4 and 1 1) 0
Table 8.6: Various Activities and their Floats
Activity Activity Earliest Time Latest Time
Name
Normal
Time
Start Finish Start Finish
Total Float
1-2 A 4 0 4 5 9 5
1-3 B 1 0 1 0 1 0
2-4 C 1 4 5 9 10 5
Contd...
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(iii) From the Table 8.6, we observe that the activities 1 3, 3 5, 5
7,7 8 and
8 10 are critical activities as their Iloats are zero.
Figure 8.17: Critical Path of the Project
The critical path is 1-3-5-7-8-10 (shown in double line in Figure 8.17)
with the project
duration oI 22 days.
Which does a critical path actually signiIy in a project i.e. in what ways
does it
diIIer Irom any other path? And What ways are its activities particularly
impossible?
answers in it.
better.

3-4 D 1 1 2 9 10 8
3-5 E 6 1 7 1 7 0
4-9 F 5 5 10 10 15 5
5-6 G 4 7 11 12 16 5
5-7 H 8 7 15 7 15 0
6-8 I 1 11 12 16 17 5
7-8 J 2 15 17 15 17 0
8-10 K 5 17 22 19 22 0
9-10 L 7 10 17 15 22 5
1 5
4
1 2 5
1
1 6 4
2
2
5 10 10 15
4 9
0 0 22 22
15 15
17 17
1 1 7 7 11 16
1
2 4 9
3 5 6
8
7
10
TE TL TE TL
7
253
etwork Model 8.8 SOLVING CPM PROBLEMS USING
COMPUTER
The worked out example, Ex. 5.5 is solved using computer.
Go to MAIN MENU and select PRO1ECT PLANNING and CPM -
CRITICAL
PATH METHOD . Enter the values oI the network problem as shown
in Figure 8.17.
Figure 8.18: Solving Network Problem on Computer Using TORA
(Input Screen)
ow select SOLVE MENU and GO TO OUTPUT SCREEN. There
are two options
Ior output, select CPM calculations. For step-by-step calculation oI
earliest time and
latest time using Iorward pass and backward pass procedure click NEXT
STEP button.
To get all the values instantly, then press ALL STEPS button. The
screen gives all the
required values to analyze the problem. You may note that at the bottom
oI the table, the
critical activities are highlighted in red colour. The output screen is
shown in Figure 8.19,
below:
Figure 8.19: Solving Network Problem on Computer Using TORA
(Output Screen)
Example 5: The Iollowing Table 8.7 gives the activities in construction
project and time
duration.
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Table 8.7: Project Schedule with Time Duration
a. Draw the activity network oI the project.
b. Find the total Iloat and Iree Iloat Ior each activity.
$olution:
a. From the activity relationship given, the activity network is shown in
Figure 8.20
below:
b. The total and Iree Iloats Ior each activity are calculated as shown in
Table 8.8
Table 8.8: Calculation of Total and Free Floats
Example : Draw the network Ior the Iollowing project given in Table
8.9.
Table 8.9: Project Schedule
Activity Normal Earliest Time Latest Time Float
time
(days) Start Finish Start Finish Total Free
1-2 20 0 20 0 20 0 0
1-3 25 0 25 5 30 5 5
2-3 10 20 30 20 30 0 0
2-4 12 20 32 23 35 3 3
3-4 5 30 35 30 35 0 0
4-5 10 35 45 35 45 0 0
Activity Preceding Activity Normal time (days)
1-2 - 20
1-3 - 25
2-3 1-2 10
2-4 1-2 12
3-4 1-3,2-3 5
4-5 2-4,3-4 10
20 12
10
10
25 5
1
2
3
4 5
Activity Preceded by Initial activity Duration (weeks)
a - 10
b A 9
c A 7
d B 6
e B 12
I C 6
g C 8
h F 8
i D 4
j g,h 11
k E 5
l I 7
255
umber the events by Fulkerson`s rule and Iind the critical path. Also
Iind the time Ior etwork Model
completing the project.
$olution: The network is drawn as shown in Figure 8.21 using the data
provided. umber
the events using Fulkerson`s rule and Iind the Earliest and Latest time
and total Iloat is
computed Ior each activity to Iind out the critical path as given Table
8.10.
Table 8.10: TL, TL and TFij Calculated
The critical path is a c I h j and the minimum time Ior the
completion oI the project
is 42 weeks.
8.9 PRO1ECT EVALUATION REVIEW TECHNIQUE, PERT
In the critical path method, the time estimates are assumed to be known
with certainty.
In certain projects like research and development, new product
introductions, it is diIIicult
to estimate the time oI various activities. Hence PERT is used in such
projects with a
Activity Duration Earliest Time Latest Time
weeks
Start Finish Start Finish
Total
Float
a 10 0 10 0 10 0
b 9 10 19 16 25 6
c 7 10 17 10 17 0
d 6 19 25 25 31 6
e 12 19 31 25 37 6
I 6 17 23 17 23 0
g 8 17 25 23 31 6
h 8 23 31 23 31 0
i 4 25 29 31 35 6
j 11 31 42 31 42 0
k 5 31 36 37 42 6
l 7 29 36 35 42 6
d i
B l
e
c Dummy j
g
I h
1 2
3 5 10
6 11
8
4 7
9
a
19 25 25 12 29 35
0 0
25 31 42 42
17 17 23 23
31 31
10 10
k
256
Ior Management
probabilistic method using three time estimates Ior an activity, rather
than a single estimate,
as shown in Figure 8.22.
Figure 8.22: PERT Using Probabilistic Method with 3 Time
Estimates
Optimistic time tO:
It is the shortest time taken to complete the activity. It means that iI
everything goes well
then there is more chance oI completing the activity within this time.
Most likely time tm:
It is the normal time taken to complete an activity, iI the activity were
Irequently repeated
under the same conditions.
Pessimistic time tp:
It is the longest time that an activity would take to complete. It is the
worst time estimate
that an activity would take iI unexpected problems are Iaced.
Taking all these time estimates into consideration, the expected time oI
an activity is
arrived at.
The average or mean (ta) value oI the activity duration is given by,
6
4
T
a
m p t + t + t
= .....................(5)
The variance oI the activity time is calculated using the Iormula,
6
4
T
a
m p t + t + t
= ...................(6)
Beta Curve
Optimistic time (tO)
Most likely time (tm)
Expected time (te)
Pessimistic time (tp)
Time duration oI activity
Probability
257
Probability for Project Duration etwork Model
The probability oI completing the project within the scheduled time (Ts)
or contracted
time may be obtained by using the standard normal deviate where Te is
the expected
time oI project completion.
s e
0 2
T T
Z
in critical path
=
.......................(7)
Probability oI completing the project within the scheduled time is,
P (T Ts) P ( Z Z0 ) (Irom normal tables) .................(8)
Example 8: An R & D project has a list oI tasks to be perIormed whose
time estimates
are given in the Table 8.11, as Iollows.
Time expected Ior each activity is calculated using the Iormula (5):
6
4
T
a
= t + tm + tp

)
6
4 + 4 6 + 8

6
36
6 days Ior activity A
Similarly, the expected time is calculated Ior all the activities.
The variance oI activity time is calculated using the Iormula (6).
1
2
2 p 0 t t

6
=

2
6
8 . 4

'
+
'

0.444
Similarly, variances oI all the activities are calculated. Construct a
network diagram and
calculate the time earliest, TE and time Latest TL Ior all the activities.
6 2 5 8
9 10
7
4 4
8
14 14
12 8
1
2
4
3
6
5
7
6 7
4 2
0 0
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Table 8.11: Time Estimates for R & D Project
a. Draw the project network.
b. Find the critical path.
c. Find the probability that the project is completed in 19 days. II the
probability is less
that 20, Iind the probability oI completing it in 24 days.
$olution:
Calculate the time average ta and variances oI each activity as shown in
Table 8.12.
Table 8.12: Te & s2 Calculated
From the network diagram Figure 8.24, the critical path is identiIied as
1-4, 4-6, 6-7, with a project duration oI 22 days.
The probability oI completing the project within 19 days is given by,
P (Z Z0)
To Iind Z0 ,
s e
0
T T
Z
in critical path

= Ss
19 22
2.777 0.444 1.777
= - + +
3
5
= - 1.3416 days
Activity
i j
Activity Name T0 tm
( in days)
tp
1-2 A 4 6 8
1-3 B 2 3 10
1-4 C 6 8 16
2-4 D 1 2 3
3-4 E 6 7 8
3-5 F 6 7 14
4-6 G 3 5 7
4-7 H 4 11 12
5-7 I 2 4 6
6-7 J 2 9 10
Activity To Tm Tp Ta o2
1-2 4 6 8 6 0.444
1-3 2 3 10 4 1.777
1-4 6 8 16 9 2.777
2-4 1 2 3 2 0.111
3-4 6 7 8 7 0.111
3-5 6 7 14 8 1.777
4-6 3 5 7 5 0.444
4-7 4 11 12 10 1.777
5-7 2 4 6 4 0.444
6-7 2 9 10 8 1.777
259
we know, P (Z Z etwork Model 0) 0.5 (1.3416) (Irom normal
tables, (1.3416) 0.4099)
0.5 0.4099
0.0901
9.01
Thus, the probability oI completing the R & D project in 19 days is
9.01. Since the
probability oI completing the project in 19 days is less than 20, we
Iind the probability
oI completing it in 24 days.
s e
0
T T
Z
o in critical path
=
.L

24 22
5
-

2
5
= 0.8944 days
P (Z Z0) 0.5 (0.8944) (Irom normal tables, (0.8944) 0.3133)
0.5 0.3133
0.8133
81.33
8.10 SOLVING PERT PROBLEMS USING COMPUTER
Example 8.8 is solved using computer with TORA. Go to MAIN
MENU, SELECT
PRO1ECT PLANNING and Click PERT Program Evaluation
Review Technique.
Enter the values as shown in Figure 8.24 below.
Figure 8.24: Solving PERT Problem Using Computer with TORA
(Input Screen)
ow, go to solve menu and click. In the output screen, select Activity
mean / Variance
option in select output option. The Iollowing screen appears as shown in
Figure 8.25.
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Figure 8.25: TORA (Output Screen), Select PERT Calculations.
Selecting the PERT calculations option. The Iollowing screen appears.
This shows the
average duration and standard deviation Ior the activities.
Figure 8.26: TORA (Output Screen) Showing Average Durations
and Standard Deviation for
Activities
8.11 COST ANALYSIS
The two important components oI any activity are the cost and time.
Cost is directly
proportional to time and vice versa. For example, in constructing a
shopping complex,
the expected time oI completion can be calculated using be time
estimates oI various
261
activities. But iI the construction has to the Iinished earlier, it requires
additional cost to etwork Model
complete the project. We need to arrive at a time / cost trade-oII between
total cost oI
project and total time required to complete it.
Aormal time. ormal time is the time required to complete the activity
at normal
conditions and cost.
Crash time. Crash time is the shortest possible activity time; crashing
more than the
normal time will increase the direct cost.
Cost Slope
Cost slope is the increase in cost per unit oI time saved by crashing. A
linear cost curve
is shown in Figure 8.27.
Figure 8.27: Linear Cost Curve
c c
t t
Crash cost C ormal cost
Cost slope
ormal time Crash time C
=
c c
t t
C
C
= .........................(9)
Example 8: An activity takes 4 days to complete at a normal cost oI Rs.
500.00. II it is
possible to complete the activity in 2 days with an additional cost oI Rs.
700.00, what is
the incremental cost oI the activity?
$olution:
Incremental Cost or Cost Slope c c
t t
C
C
=
00 500
4 2
= 7 Rs. 100.00
It means, iI one day is reduced we have to spend Rs. 100/- extra per day.
Project Crashing
Procedure for crashing
$tep1: Draw the network diagram and mark the ormal time and Crash
time.
$tep2: Calculate TE and TL Ior all the activities.
Cost
Crash cost
ormal cost
Time
Crash time ormal time
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Ior Management
$tep3: Find the critical path and other paths.
$tep 4: Find the slope Ior all activities and rank them in ascending order.
$tep 5: Establish a tabular column with required Iield.
$tep : Select the lowest ranked activity; check whether it is a critical
activity. II so,
crash the activity, else go to the next highest ranked activity.
Aote: The critical path must remain critical while crashing.
$tep 7: Calculate the total cost oI project Ior each crashing.
$tep 8: Repeat Step 6 until all the activities in the critical path are Iully
crashed.
Example 9: The Iollowing Table 8.13 gives the activities oI a
construction project and
other data.
Table 8.13: Construction Project Data
II the indirect cost is Rs. 20 per day, crash the activities to Iind the
minimum duration oI
the project and the project cost associated.
$olution: From the data provided in the table, draw the network diagram
(Figure 8.28)
and Iind the critical path.
From the diagram, we observe that the critical path is 1-2-5 with project
duration oI
14 days
The cost slope Ior all activities and their rank is calculated as shown in
Table 8.14
c c
t t
Crash cost C ormal cost
Cost slope
ormal time Crash time C
=
Activity Normal Crash
Time (days) Cost (Rs) Time (days) Cost (Rs)
1-2 6 50 4 80
1-3 5 80 3 150
2-4 5 60 2 90
2-5 8 100 6 300
3-4 5 140 2 200
4-5 2 60 1 80
6 6
8
6
5 2
5
5
0 0 14 14
11 12
5 7
1
2
3 4
5
263
etwork Model
Cost Slope Ior activity 1 2
80 50
6 4
= 30
2
= 15.
Table 8.14: Cost Slope and Rank Calculated
The available paths oI the network are listed down in Table 8.15
indicating the sequence
oI crashing (see Figure 8.29).
Table 8.15: Sequence of Crashing
Figure 8.29: Network Diagram Indicating Sequence of Crashing
The sequence oI crashing and the total cost involved is given in Table
8.16
Initial direct cost sum oI all normal costs given
Rs. 490.00
Table 8.16: Sequence of Crashing & Total Cost
Path Number of days crashed
1-2-5 14 12 11 10
1-2-4-5 13 11 11 10
1-3-4-5 12 12 11 10
Activity Cost Slope Rank
1-2 15 2
1-3 35 4
2-4 10 1
2-5 100 5
3-4 20 3
4-5 20 3
7
8 b
6 - 4
4 2-1
5 2
5 3
5 2
4
3
1
2
3 4
5
Activity
Crashed
Project
Duration
Critical Path Direct Cost
in (Rs.)
Indirect Cost
(in Rs.)
Total
Cost (in
Rs)
14 1 2 5 490 14 20 280 770
1 2(2) 12 1 2 5 490 (2 15) 520 12 20 240 760
Contd...
264
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It is not possible to crash more than 10 days, as all the activities in the
critical path are
Iully crashed. Hence the minimum project duration is 10 days with the
total cost oI
Rs. 970.00.
II an activity zero Iree Iloat, does this mean that a delay in completing
that activity
is likely to delay the completion oI data oI the project on whole.
answers in it.
better.

8.12 LET US SUM UP
etwork analysis, as stated above, is a technique related to sequencing
problems which
are linked with minimizing same measure oI perIormance oI the system
like the total
consumption time oI the project. This is a very productive technique Ior
'describing the
elements in a complex situation Ior purpose oI designing, coordinating,
planning, analysing,
controlling and making decision. The new most popular Iorm oI
learning`s PERT and
CPM.
As you know that we all live in houses. Those houses are constructed by
the construction
company like DLF, Unitech, Parsavnath, Ansals etc. You have to visit to
one oI the
construction company and analyse its modules-operandi to Iunction.
Apply the concept
oI network model (line PERT and CPM) to proper completion oI work
in time.
8.14 KEYWORDS
Critical path : Is a network and a continuous chain oI activities that
connect
the initial event to the terminal event.
Activity : An activity represents an action and consumption oI sources.
2 5 (1)
3 4 (1)
11 1 2 5
1 3 4 5
1 2 4 5
520 (1 100) (1 20)
640
11 20 220 860
2 5 (1)
2 4 (1)
3 4 (1)
10 1 2 5
1 3 4 5
1 2 4 5
640 (1 100) (1 10)
(1 20) 770
10 20 200 970
265
PE#% : Project Evaluation Review Technique is a unique and
etwork Model
important controlling device. The PERT take into
consideration the three types oI time optimistic time,
pessimistic time and likely time.
CPM : Critical Plan Method is a diagrammatical technique Ior
planning and scheduling oI projects.
Float : Is used in the context oI network analysis. Float may be
ive or ive.
Arrow : Direction shows the general progression in time.
$lack : ormally associated with events. It indicates the amount oI
latitude.
Aetwork : Is a series oI related activities which result in once produces
(or services). It is a pictorial presentation oI the various events
and activities covering a project.
Event : An event represent the start or completion oI activity.
(a) Critical path Ior any network is the longest path through the entire
network.
(b) An imaginary activity always consumes resource and time.
(c) Slack is the amount oI time by which the start oI an activity may be
delayed.
(d) Crash time is the maximum possible activity time.
(e) An activity which lies on the critical path is called non-critical
activity .
2. Briefly comment on the following:
(a) PERT/CPM system results in considerable improvements.
(b) PERT/CPM network techniques in their original developments have
essentially
time oriented techniques.
(c) CPM does not incorporate statistical analysis.
(d) Two important components oI any activity are the cost and time.
(e) Project involved planning, scheduling and controlling a number oI
interrelated
activities.
(I) Project managements in general have their phases.
(g) etwork should have only one start event and one end event.
(a) ....................... is the shortest possible activity time.
(b) CPM is a ....................... time estimate and PERT has .......................
time
estimate.
(c) Cost single is the increase in cost per ........................
(d) ....................... time is the shortest time taken to complete the
activity.
4. Write Short Notes:
(a) PERT (b) CPM (c) Events (d) Activity
(e) Crashing
266
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1. What is the diIIerence between CPM and PERT?
2. Explain the logic in constructing a network diagram. What are the
network
components?
3. List out the rules in constructing a network diagram.
4. What is a dummy activity?
5. What are critical path activities and why are they considered
important?
6. Explain the procedure Ior computing earliest time and latest time oI
an activity.
7. What is (i) Total Iloat (ii) Free Iloat and (iii) Independent Iloat ?
8. BrieIly describe PERT and its advantages.
9. Explain the terms (i) Time estimates (ii) Expected time and (iii)
Variance oI activity
time.
10. What is project crashing? Explain the procedure Ior crashing oI
project activities.
Exercise Problems
1. You are required to prepare a network diagram Ior constructing a 5
Iloor apartment.
The major activities oI the project are given as Iollows:
2. For the problem o.1 the time estimates in days are given. Determine
the Time
earliest and Time latest, and the critical activities
3. An assembly having the Iollowing sequence oI activities given along
with their
predecessor in the table below. Draw a network diagram Ior the
assembly.
Activity Description Immediate Predecessor
A Selection oI site -
B Preparation oI drawings -
C Arranging the Ior Iinance A
D Selection oI contractor A
E Getting approval Irom Govt A
F Laying the Ioundation E
G Start construction D, F
H Advertise in newspaper B, C
I Allocation oI tenants G, H
Activity A B C D E F G H I
Time (days) 3 5 7 2 5 20 60 2 10
Activity Description Predecessor
A Pick bolt & washer -
B Insert washer in screw A
C Fix the bolt in Ilange A
D Screw the nut with bolt B, C
E Pick the spanner D
F Tighten the nut E
G Place the assembly apart F
267
4. Draw a network diagram Ior the project: etwork Model
5. Determine the critical path and project duration Ior the Iollowing
project:
6. A national conIerence is planned in a college. The activities are listed
down along
with their predecessors and time taken. Prepare a network diagram and
determine
the critical activities.
7. Consider the Iollowing project with the list oI activities:
Activity Description Immediate
Predecessor
Duration (days)
A ConIirm lead speaker and topic - 5
B Prepare brochure - 1
C Send letters to other speakers B 2
D Get conIirmation Irom speakers C 5
E Send letters to participants C,D 2
F Obtain travel plans Irom speakers D 2
G Arrange Ior accommodation Ior speakers F 1
H Get handouts Irom speakers F 4
I Finalize registrations G,H 10
J Arrange hall and AV I 1
K Conduct oI programme J 1
Activity Predecessors Duration (months)
A - 1
B A 3
C B 4
D B 3
E B 3
F C 4
G D,E 5
H F 1
I G,H 4
J I 3
Activity A B C D E F G H I 1
Predecessor - A B B B C C F, G D, E, F I
Activity Immediate Predecessor Time (days)
A - 3
B - 7
C A 4
D B 2
E C,D 5
F A 6
G E,F 3
Contd....
268
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a. Construct the project network diagram.
b. Compute the earliest start time and earliest Iinish time.
c. Find the latest start and latest Iinish time.
d. Find the slack Ior each activity.
e. Determine the critical path and project duration.
Use TORA to compare and check answer.
8. You are alone at home and have to prepare a bread sandwich Ior
yourselI. The
preparation activities and time taken are given in the table below:
a. Determine the critical activities and preparation time Ior tasks given in
table.
b. Find the earliest time and latest time Ior all activities.
c. While purchasing sauce, you met a Iriend and spoke to him Ior 6
minutes. Did
this cause any delay in preparation?
9. An amusement park is planned at a suitable location. The various
activities are
listed with time estimates. Using TORA, determine the critical path.
Also, Iind
whether the amusement park can be opened Ior public within 35 days
Irom the
start oI the project work.
Activity : A B C D E F G H I J K
Time (days) : 9 6 2 7 10 3 6 1 7 2 5
The predecessor activities are given below:
Task Description Predecessor Time (minutes)
A Purchase oI bread - 20
B Take cheese and apply on bread A 5
C Get onions Irom Ireezer A 1
D Fry onions with pepper B,C 6
E Purchase sauce Ior bread - 15
F Toast Bread B,C 4
G Assemble bread and Iried onions F 2
H Arrange in plate G 1
Activity Predecessor
A -
B -
C A
D A
E C
F B
G E,F
H D
I H,E
J I
K G
J I 3
K I 4
L J 3
M K 5
L 5
269
10. Draw the network Irom the Iollowing activity and Iind the critical
path and total etwork Model
duration oI project.
11. Draw a network diagram and determine the project duration
12. Determine the critical path and project duration Ior the network
given.
Activity Duration (days)
1-2 5
1-3 3
1-4 6
2-3 8
2-5 7
3-5 2
4-5 6
Activity Duration (weeks)
1-2 2
1-4 4
1-3 7
2-5 6
3-4 (Dummy) 0
4-6 6
3-6 8
5-7 10
5-6 9
5-8 2
6-7 6
7-9 2
8-9 5
A Dummy
(5) D (0)
E G
C (8) (7) (6)
(0)Dummy H (4) (1) I
B (6) F
1
2
3 5 7
4 6
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Activity Time (Weeks) Cost (Rs)
Normal Crash Normal Crash
1-2 9 4 1300 2400
1-3 15 13 1000 1380
2-3 7 4 7000 1540
2-4 7 3 1200 1920
2-5 12 6 1700 2240
3-6 12 11 600 700
4-5 6 2 1000 1600
5-6 9 6 900 1200
Activity Predecessor Time
Optimistic Most likely Pessimistic
A - 2 5 14
B - 1 10 12
C A 0 0 6
D A 1 4 7
E C 3 10 15
F D 3 5 7
G B 1 2 3
H E,F 5 10 15
I G 3 6 9
Activity Time (Weeks) Cost (Rs)
Normal Crash Normal Crash
1-2 9 4 1300 2400
1-3 15 13 1000 1380
2-3 7 4 7000 1540
2-4 7 3 1200 1920
2-5 12 6 1700 2240
3-6 12 11 600 700
4-5 6 2 1000 1600
5-6 9 6 900 1200
13. For the PERT problem Iind the critical path and project duration.
What is the
probability that the project will be completed in 25 days?
14. The Iollowing table lists the jobs oI a network along with their
estimates.
a. Draw the project network diagram.
b. Calculate the length and variance oI the critical path.
c. What is the probability that the jobs on the critical path can be
completed in
41 days?
15. The Iollowing table gives data at normal time and cost crashed time
and project
cost.
271
etwork Model
Activity Time (weeks) Cost (Rs.)
t0 tm tp Crash
time
Normal Crash
1-2 1 5 3 1 500 900
2-3 1 7 4 3 800 1400
2-4 1 5 3 2 400 600
2-5 5 11 8 7 500 600
3-6 2 6 4 2 300 500
4-6 5 7 6 4 200 360
5-7 4 6 5 4 1000 1400
6-7 1 5 3 1 700 1060
Find the optimum project time and corresponding minimum total project
cost by
crashing appropriate activities in proper order. Show the network on
time-scale at
each step. Indicated cost per day is Rs. 400.00.
16. Solve the Iollowing project, and Iind the optimum project time and
project cost.
DISCUSSION
1. (a) True (b) False (c) True (d) False (e) False
3. (a) Crash time (b) single, three (c) unit (d) optimistic
Harry & Evartis, Introduction to PER%
S.K. Bhatnagar, Network An,lysis %echnique
272
Ior Management LESSON
9
WAITING MODEL (QUEUING THEORY)
CONTENTS
9.1 Introduction
9.2 Queuing Systems
9.3 Characteristics oI Queuing System
9.3.1 The Arrival Pattern
9.3.2 The Service Mechanism
9.3.3 The Queue Discipline
9.3.4 The umber oI Customers allowed in the System
9.3.5 The umber oI Service Channels
9.3.6 Attitude oI Customers
9.4 Poisson and Exponential Distribution
9.5 Symbols and otations
9.6 Single Server Queuing Model
9.7 Solving the Problem Using Computer with TORA
9.8 Let us Sum Up
9.10 Keywords
In this lesson we are going to talk about the queuing theory which is also
known as
waiting line. These queuing theory will Iacilitate in solving the queue
related problem oI
the industry. The most important point will be taken into consideration
in the designing
queue system which should balance service to customers.
9.1 INTRODUCTION
Queuing theory deals with problems that involve waiting (or queuing). It
is quite common
that instances oI queue occurs everyday in our daily liIe. Examples oI
queues or long
waiting lines might be
l Waiting Ior service in banks and at reservation counters.
l Waiting Ior a train or a bus.
273
Waiting Model
(Queuing Theory)
l Waiting Ior checking out at the Supermarket.
l Waiting at the telephone booth or a barber's saloon.
Whenever a customer arrives at a service Iacility, some oI them usually
have to wait
beIore they receive the desired service. This Iorms a queue or waiting
line and customers
Ieel discomIort either mentally or physically because oI long waiting
queue.
We inIer that queues Iorm because the service Iacilities are inadequate.
II service Iacilities
are increased, then the question arises how much to increase? For
example, how many
buses would be needed to avoid queues? How many reservation counters
would be
needed to reduce the queue? Increase in number oI buses and reservation
counters
requires additional resource. At the same time, costs due to customer
dissatisIaction
must also be considered.
In designing a queuing system, the system should balance service to
customers (short
queue) and also the economic considerations (not too many servers).
Queuing theory
explores and measures the perIormance in a queuing situation such as
average number
oI customers waiting in the queue, average waiting time oI a customer
and average
server utilization.
9.2 QUEUING SYSTEMS
The customers arrive at service counter (single or in groups) and are
attended by one or
more servers. A customer served leaves the system aIter getting the
service. In general,
a queuing system comprises with two components, the queue and the
service Iacility.
The queue is where the customers are waiting to be served. The service
Iacility is
customers being served and the individual service stations. A general
queuing system
with parallel server is shown in Figure 9.1 below:
Figure 9.1: A typical queuing system
9.3 CHARACTERISTICS OF QUEUING SYSTEM
In designing a good queuing system, it is necessary to have a good
inIormation about the
model. The characteristics listed below would provide suIIicient
inIormation.
1. The arrival pattern.
2. The service mechanism.
3. The queue discipline.
4. The number oI customers allowed in the system.
5. The number oI service channels.
S1
S2 (x)
.
.
.
Sn.
Customers
Arrival (x)
Queue
Queuing System
(x) Customers
Departure
(x) Customers
Departure
Service Facility
274
Ior Management
9.3.1 The Arrival Pattern
The arrival pattern describes how a customer may become a part oI the
queuing system.
The arrival time Ior any customer is unpredictable. ThereIore, the arrival
time and the
number oI customers arriving at any speciIied time intervals are usually
random variables.
A Poisson distribution oI arrivals correspond to arrivals at random. In
Poisson distribution,
successive customers arrive aIter intervals which independently are and
exponentially
distributed. The Poisson distribution is important, as it is a suitable
mathematical model
oI many practical queuing systems as described by the parameter "the
average arrival
rate".
9.3.2 The Service Mechanism
The service mechanism is a description oI resources required Ior service.
II there are
inIinite number oI servers, then there will be no queue. II the number oI
servers is Iinite,
then the customers are served according to a speciIic order. The time
taken to serve a
particular customer is called the service time. The service time is a
statistical variable
and can be studied either as the number oI services completed in a given
period oI time
or the completion period oI a service.
9.3.3 The Queue Discipline
The most common queue discipline is the "First Come First Served"
(FCFS) or
"First-in, First-out" (FIFO). Situations like waiting Ior a haircut,
ticket-booking counters
Iollow FCFS discipline. Other disciplines include "Last In First Out"
(LIFO) where
last customer is serviced Iirst, "Service In Random Order" (SIRO) in
which the
customers are serviced randomly irrespective oI their arrivals. "Priority
service" is
when the customers are grouped in priority classes based on urgency.
"Preemptive
Priority" is the highest priority given to the customer who enters into
the service,
immediately, even iI a customer with lower priority is in service. "Non-
preemptive
priority" is where the customer goes ahead in the queue, but will be
served only aIter
the completion oI the current service.
9.3.4 The Number of Customers allowed in the System
Some oI the queuing processes allow the limitation to the capacity or
size oI the waiting
room, so that the waiting line reaches a certain length, no additional
customers is allowed
to enter until space becomes available by a service completion. This type
oI situation
means that there is a Iinite limit to the maximum queue size.
9.3.5 The Number of Service Channels
The more the number oI service channels in the service Iacility, the
greater the overall
service rate oI the Iacility. The combination oI arrival rate and service
rate is critical Ior
determining the number oI service channels. When there are a number oI
service channels
available Ior service, then the arrangement oI service depends upon the
design oI the
system's service mechanism.
Parallel channels means, a number oI channels providing identical
service Iacilities so
that several customers may be served simultaneously. Series channel
means a customer
go through successive ordered channels beIore service is completed. The
arrangements
oI service Iacilities are illustrated in Figure 45. A queuing system is
called a one-server
model, i.e., when the system has only one server, and a multi-server
model i.e., when
the system has a number oI parallel channels, each with one server.
(a) Arrangement of service facilities in series
X X X X Served Customers
Customers Served Facility
275
Waiting Model
(Queuing Theory)
(1) $ingle Queue $ingle $erver
(2) $ingle Queue, Multiple $erver
(b) Arrangement of Service facilities in Parallel
(c) Arrangement of Mixed Service facilities
Figure 9.2: Arrangements of Service Facilities (a, b, c)
9.3.6 Attitude of Customers
Patient Customer: Customer arrives at the service system, stays in the
queue until
served, no matter how much he has to wait Ior service.
Impatient Customer: Customer arrives at the service system, waits Ior a
certain time
in the queue and leaves the system without getting service due to some
reasons like long
queue beIore him.
Balking: Customer decides not to join the queue by seeing the number
oI customers
already in service system.
#eneging: Customer aIter joining the queue, waits Ior some time and
leaves the service
system due to delay in service.
1ockeying: Customer moves Irom one queue to another thinking that he
will get served
Iaster by doing so.
9.4 POISSON AND EXPONENTIAL DISTRIBUTIONS
Both the Poisson and Exponential distributions play a prominent role in
queuing theory.
Considering a problem oI determining the probability oI n arrivals being
observed during
a time interval oI length t, where the Iollowing assumptions are made.
X X X X Served Customers
Served Facility
Customers
X X X X
Served Customers
Service Facility
Service Facility
Served Customers
Customers
X X X X
Served
Customer
Service Facilities
276
Ior Management
i. Probability that an arrival is observed during a small time interval (say
oI length v)
is proportional to the length oI interval. Let the proportionality constant
be l, so that
the probability is lv.
ii. Probability oI two or more arrivals in such a small interval is zero.
iii. umber oI arrivals in any time interval is independent oI the number
in nonoverlapping
time interval.
These assumptions may be combined to yield what probability
distributions are likely to
be, under Poisson distribution with exactly n customers in the system.
Suppose Iunction P is deIined as Iollows:
P (n customers during period t) the probability that n arrivals will be
observed
in a time interval oI length t
then, P (n, t)
)
n
t e
n t
(n 0, 1, 2,.....) ..................(1)
This is the Poisson probability distribution Ior the discrete random
variable n, the number
oI arrivals, where the length oI time interval, t is assumed to be given.
This situation in
queuing theory is called Poisson arrivals. Since the arrivals alone are
considered (not
departures), it is called a pure birth process.
The time between successive arrivals is called inter-arrival time. In the
case where
the number oI arrivals in a given time interval has Poisson distribution,
inter-arrival times
can be shown to have the exponential distribution. II the inter-arrival
times are independent
random variables, they must Iollow an exponential distribution with
density I(t) where,
I (t) le lt (t ~ 0) .................(2)
Thus Ior Poisson arrivals at the constant rate l per unit, the time between
successive
arrivals (inter-arrival time) has the exponential distribution. The average
Inter - arrival
time is denoted by .
.
By integration, it can be shown that E(t) /
. .................(3)
II the arrival rate l 30/hour, the average time between two successive
arrivals are
1/30 hour or 2 minutes.
For example, in the Iollowing arrival situations, the average arrival rate
per hour, l and
the average inter arrival time in hour, are determined.
(i) One arrival comes every 15 minutes.
Average arrival rate , l
15
6
4 arrivals per hour.
Average inter arrival time .
15 minutes / or 0.25 hour.
(ii) Three arrivals occur every 6 minutes.
Average arrival rate, l 30 arrivals per hour.
Average Inter-arrival time, .

3
6
2 minutes
3
1
or 0.33 hr.
(iii) Average interval between successive intervals is 0.2 hour.
Average arrival rate, l
.2
1
5 arrivals per hour.
Average Inter-arrival time, .
0.2 hour.
Similarly, in the Iollowing service situations, the average service rate per
hour, and
average service time in hours are determined.
277
Waiting Model
(Queuing Theory)
(i) One service is completed in 10 minutes.
Average service rate, m
1
6
6 services per hour.
Average service time, S
4
3
10 minutes or 0.166 hour.
(ii) umber oI customers served in 15 minutes is 4.
Average service rate, m
15
4
x 60 16 services per hour.
Average services time, S
4
3
3.75 mins or 0.0625 hour.
(iii) Average service time is 0.25 hour.
Average service rate , m 4 services per hour.
Average service time S 15 mins or 0.25 hour.
Example 1: In a Iactory, the machines break down and require service
according to a
Poisson distribution at the average oI Iour per day. What is the
probability that exactly
six machines break down in two days?
$olution: Given l 4, n 6, t 2
P(n, t) P(6, 4) when l 4
we know, P(n, t) )

.
n
t e n t
P(6,2) )
6
4 2 - 6 e.4-2

72
8 6 e.8
0.1221
Solving the Problem using Computer
Example 1 is solved using computer with TORA. Enter into TORA
package and select
Queuing Analysis option. Press 'go to input screen' to enter the values.
The input
screen is shown in Figure 9.3 given below. The numbers scenarios is 1
and the value oI
Lambda is lt 4 2 8.
Figure 9.3: Queuing Analysis Using TORA (Input Screen)
278
Ior Management
Press 'solve', to view the Queuing Analysis output . Select Scenario 1
option, to get the
result, as shown in Figure 9.4.
Figure 9.4: Queuing Analysis Using TORA (Output Screen)
In the output screen, Ior n 6 the probability, Pn is given as 0.12214.
Example 2: On an average, 6 customers arrive in a coIIee shop per hour.
Determine
the probability that exactly 3 customers will reach in a 30 minute period,
assuming that
the arrivals Iollow Poisson distribution.
$olution: Given, l 6 customers / hour
t 30 Minutes 0.5 hour
n 2
we know, P(n, t) )

.
n
t e n t
P(6,2)
)
!2
6 0.5 - 2 e 6-0.5
0.22404
Similarly, when the time taken to serve diIIerent customers are
independent, the probability
that no more than t periods would be required to serve a customer is
given by exponential
distribution as Iollows:
p(not more than t time period) 1 e mt where m average service
rate
Example 3: A manager oI a Iast Iood restaurant observes that, an
average oI 9 customers
are served by a waiter in a one-hour time period. Assuming that the
service time has an
exponential distribution, what is the probability that
(a) A customer shall be Iree within 12 minutes.
(b) A customer shall be serviced in more than 25 minutes.
279
Waiting Model
(Queuing Theory)
$olution:
(a) Given, m 9 customers / hour
t 15 minutes 0.25 hour
ThereIore, p (less than 15 minutes) l e mt
1 e 9 0.25
0.8946
(b) Given, m 9 customers / hour
t 25 minutes 0.4166 hour
ThereIore, P (more than 25 minutes) l e mt
1 e 9 0.4166
0.0235
To analyze queuing situations, the questions oI interest that are typically
concerned with
measures oI queuing system perIormance include,
l What will be the waiting time Ior a customer beIore service is
complete?
l What will be the average length oI the queue?
l What will be the probability that the queue length exceeds a certain
length?
l How can a system be designed at minimum total cost?
l How many servers should be employed?
l Should priorities oI the customers be considered?
l Is there suIIicient waiting area Ior the customers?
9.5 SYMBOLS AND NOTATIONS
The symbols and notations used in queuing system are as Iollows:
n umber oI customers in the system (both waiting and in service).
l Average number oI customers arriving per unit oI time.
m Average number oI customers being served per unit oI time.
l / m P, traIIic intensity.
C umber oI parallel service channels (i,e., servers).
Ls Average or expected number oI customers in the system (both
waiting
and in service).
Lq Average or expected number oI customers in the queue.
Ws Average waiting time in the system (both waiting and in service).
Wq Average waiting time oI a customer in the queue.
Pn Time independent probability that there are n customers in the
system
(both waiting and in service).
Pn (t) Probability that there are n customers in the system at any time t
(both waiting and in service).
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Ior Management 9.6 SINGLE SERVER QUEUING MODEL
Model 1: (MM1) : (a / FIFO)
This model is based on the Iollowing assumptions:
(i) The arrivals Iollow Poisson distribution, with a mean arrival rate l.
(ii) The service time has exponential distribution, average service rate
m.
(iii) Arrivals are inIinite population a.
(iv) Customers are served on a First-in, First-out basis (FIFO).
(v) There is only a single server.
System of Steady-state Equations
In this method, the question arises whether the service can meet the
customer demand.
This depends on the values oI l and m.
II l m, i.e., iI arrival rate is greater than or equal to the service rate, the
waiting line
would increase without limit. ThereIore Ior a system to work, it is
necessary that l < m.
As indicated earlier, traIIic intensity r = l / m. This reIers to the
probability oI time. The
service station is busy. We can say that, the probability that the system is
idle or there are
no customers in the system, P0 1 r.
From this, the probability oI having exactly one customer in the system
is P1 r P0.
Likewise, the probability oI having exactly 2 customers in the system
would be
P3 rP1 r2 P0
The probability oI having exactly n customers in the system is
Pn rnP0 rn(1-r) (l / m)n P0
The expected number oI customers in the system is given by,
Ls
n=1
n nP ) )
=

n 1
n n 1. / /
p
= p

=
1
........................(2)
The expected number oI customers in the queue is given by,
)
=
=
n 1
Ln n . 1Pn

=

=
=
n 1
n
n 1
nPn . P
) p
= p

=
. 1.
2 2
....................(3)
With an average arrival rate l, the average time between the arrivals is 1 /
l. ThereIore,
the mean waiting time in queue, wq is the product oI the average time
between the
arrivals and the average queue length,
281
Waiting Model
(Queuing Theory)
Wq
|

p |

1
1 1
....................(4)

|

|

1
Substituting )
= p
|

. .
2
Similarly the average waiting time in the system , Ws
Ws
|

p
p
|

1
1
.......................(5)
putting Ls l (m l) , we get
Ws
1
Queuing Equations
The evaluation oI Model I is listed below:
1. Expected number of customers in the system,
p
= p

=
1
L
s
2. Expected number of customers in the queue,
p
= p

=
( 1
L
2 2
q
3. Average waiting time in the system,

= 1
W
s
4. Average waiting time in the queue,
(
W
q
=
5. Average waiting time for a customer,
p
> = 1
or
(1
1
W(w/w
6. Expected length of non-empty queue,
(
L(m/m

> =
7. Probability that there are n customers in the system,
|

|

=
|

= 1.
n n
n
P P
8. Probability that there is nobody in the system,

= 1
P

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9. Probability that there is at least one customer or queue is busy,
b
P = 1P
10. %raffic intensity,

p =
Example 4: Consider a situation where the mean arrival rate (l) is one
customer every
4 minutes and the mean service time (m) is 2 minutes. Calculate the
average number
oI customers in the system, the average queue length and the time taken
by a customer
in the system and the average time a customer waits beIore being served.
$olution: Given, Average Arrival Rate l 1 customer every 4 minutes
or 15 customers
per hour
Average Service -Rate m 1 customer every 2 minutes or 24
customers per hour
(i) %he average number of customers in the system,

=
s
L
1.66
24 15
15 =

= customers
(ii) %he average queue length,
|

|

=
q
L
24 15
15
24
15

= -
1.04 customers
(iii) %he average time a customer spends in the system,

= 1
W
s

24 15
1

0.11 60 6.66 minutes
(iv) %he average time a customer waits before being served,
(
W
q
=

24(24 15
15

0.069 60
4.16 minutes
Example 5: Trucks at a single platIorm weigh-bridge arrive according to
Poisson
probability distribution. The time required to weigh the truck Iollows an
exponential
probability distribution. The mean arrival rate is 12 trucks per day, and
the mean service
rate is 18 trucks per day. Determine the Iollowing:
(a) What is the probability that no trucks are in the system?
(b) What is the average number oI trucks waiting Ior service?
(c) What is the average time a truck waits Ior weighing service to begin?
(d) What is the probability that an arriving truck will have to wait Ior
service?
283
Waiting Model
(Queuing Theory)
$olution: Given l 12 trucks per days, m 18 trucks per day.
(a) Probability that no trucks are waiting Ior service,

= P 1

18
12
= 1
0.3333 or 33.33
(b) Average number oI trucks waiting Ior service,
|

|

=
q
L
|

|

=
18 12
12
18
12
1.33 trucks
(c) Average time a truck waits Ior weighing service to begin,
(
W
q
=
18(18 12
12

=
0.1111 days or 53.3 minutes.
(d) Probability that an arriving truck will have to wait Ior service,
P0 1 P0
1 0.333
0.6667 or 66.67
1 Explain Queuing Theory giving Iew examples.
2. 'Both the Poisson and Exponential distributions play a prominent role
in queuing
theory. JusiIy the statement.
answers in it.
better.

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COMPUTER WITH
TORA
Example 5 is solved using computer with TORA.
Enter the values l 12
m 18
o. oI server 1
The input screen is shown in Figure 9.5.
Press Solve to get the output screen and select scenario 1 option in the
select output
option menu. The output screen Ior the problem is displayed as shown in
Figure 9.6.
285
Waiting Model
(Queuing Theory)
The values are
(a) P0 0.3333 (Ior n 0)
(b) Lq 1.33
(c) Wq 0.1111
(d) Pb (or)
C
p
0.66667
In the same problem, to determine the probability that there are 2 trucks
in the system,
we use the Iormula,
|

|

= P 1
n
n
|

|

=
18
12
1
18
12 2
0.4444 0.3333
0.14815 or 14.81
This can also be read in the output screen Ior n2 the probability Pn
0.14815,
Similarly, the probabilities Ior diIIerent values oI n can be directly read.
Example : A TV repairman Iinds that the time spent on his jobs has a
exponential
distribution with mean 30 minutes. II he repairs TV sets in the order in
which they come
in, and iI the arrivals Iollow approximately Poisson distribution with an
average rate oI
10 per 8 hour day, what is the repairman's expected idle time each day?
How many jobs
are ahead oI the average with the set just brought in?
$olution: Given l 10 TV sets per day.
m 16 TV sets per day.
(i) %he Probability for the repairman to be idle is,
P0 1 r
We know, r l / 30 10 / 16 0.625
P0 1 r
1 0.625 0.375
Expected idle time per day 8 0.375
3 hours.
(ii) ow many jobs are ahead of the average set just brought in

=
s
L
16 1
1

=
6
1
1.66 say 2 jobs.
Example 7: Auto car service provides a single channel water wash
service. The incoming
arrivals occur at the rate oI 4 cars per hour and the mean service rate is 8
cars per hour.
Assume that arrivals Iollow a Poisson distribution and the service rate
Iollows an
exponential probability distribution. Determine the Iollowing measures
oI perIormance:
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(a) What is the average time that a car waits Ior water wash to begin?
(b) What is the average time a car spends in the system?
(c) What is the average number oI cars in the system?
$olution: Given l 4 cars per hour, m 8 cars per day.
(a) Average time that a car waits Ior water - wash to begin,
(
W
q
=

8(8 4
4

0.125 hours or 7.5 mins.
(b) Average time a car spends in the system,

= 1
W
s

8 4
1

4
1
0.25 hours or 15 mins.
(c) Average number oI cars in the system,
8 4
4
L s
=

=

4
4
1 car.
Example 8: Arrivals at a telephone booth are considered to be Poisson
distributed with
an average time oI 10 minutes between one arrival and the next. The
length oI phone
call is assumed to be distributed exponentially, with mean 3 minutes.
(i) What is the probability that a person arriving at the booth will have to
wait?
(ii) The telephone department will install a second booth when
convinced that an arrival
would expect waiting Ior at least 3 minutes Ior phone call. By how much
should the
Ilow oI arrivals increase in order to justiIy a second booth?
(iii) What is the average length oI the queue that Iorms Irom time to
time?
(iv) What is the probability that it will take him more than 10 minutes
altogether to wait
Ior the phone and complete his call?
(v) What is the probability that it will take him more than 10 minutes
altogether to wait
Ior the phone and complete his call?
$olution: Given l 1/10 0.10 person per minute.
m 1/3 0.33 person per minute.
(i) Probability that a person arriving at the booth will have to wait,
P (w ~ 0) 1 P0
1 (1 - l / m) l / m

.33
.1
0.3
(ii) The installation oI second booth will be justiIied iI the arrival rate is
more than
the waiting time.
Expected waiting time in the queue will be,
(
W
q
=
287
Waiting Model
(Queuing Theory)
Where, E(w) 3 and l l (say ) Ior second booth. SimpliIying we get
l 0.16
Hence the increase in arrival rate is, 0.16-0.10 0.06 arrivals per minute.
(iii) Average number oI units in the system is given by,
1 .3
.3
1
L
s
=
p
= p 0.43 customers
(iv) Probability oI waiting Ior 10 minutes or more is given by
( ( (
10
P W 10 e dt
a l m l
= m l
m
( ( 0.23
10
0.3 0.23 e dt
a
0.23
10
0.069
0.23
e t
F - a
= -
0.03
This shows that 3 percent oI the arrivals on an average will have to wait
Ior 10 minutes
or more beIore they can use the phone.
Example 9: A bank has decided to open a single server drive-in banking
Iacility at its
main branch oIIice. It is estimated that 20 customers arrive each hour on
an average.
The time required to serve a customer is 3 minutes on an average.
Assume that arrivals
Iollow a Poisson distribution and the service rate Iollows an exponential
probability
distribution.
The bank manager is interested in knowing the Iollowing:
(a) What will be the average waiting time oI a customer to get the
service?
(b) The proportion oI time that the system will be idle.
(c) The space required to accommodate all the arrivals, on an average,
the space
taken by each car is 10 Ieet that is waiting Ior service.
$olution: l 20 Customers per hour, m
25
6
2.4 customers per hour.
(a) Average waiting time oI a customer to get the service,
(
W
q
=
6
2
24(24 2
2 =

=
0.208 hour or 12.5 mins.
(b) The proportion oI time that the system will be idle,

= P 1

24
2
= 1
0.166 hours or 10 mins.
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(c ) Average number oI customers waiting in the queue,
(
L
2
q
=
6
4
24(24 2
2 2
=

=
4.66 customers.
10 Ieet is required Ior 1 customer. Hence, Ior 4.66 customers, the space
required is
10 4.66 46.6 Ieet.
Example 1: In a Bank, customers arrive to deposit cash to a single
counter server
every 15 minutes. The bank staII on an average takes 10 minutes to
serve a customer.
The manager oI the bank noticed that on an average at least one
customer was waiting
at the counter. To eliminate the customer waiting time, the manager
provided an automatic
currency counting machine to the staII. This decreased the service time
to 5 minutes on
an average to every customer. Determine whether this rate oI service
will satisIy the
manager's interest. Also use computer with TORA Ior solving the
problem.
$olution:
Case 1:
15
= 6 4 customers per hour,
1
= 6 60 6 customers per hour.
Average number oI customers in the system,

=
s
L
2
4
6 4
4 =

= 2 customers.
Case 2: l 4 ,
15
= 6 12 customers per hour.
Average number oI customers in the system,
12 4
4
L
s
=

4
8

1
2
0.5, say, 1 customer.
Average number oI customers in the queue
(
L
2
q
=
6
16
12 (12 4
4 2
=

= 0.01 customers.
Since no customers are standing in the queue the manager's interest is
satisIied.
The problem is worked out using TORA. Enter the values as shown in
the input screen
below in Figure 9.7.
289
Waiting Model
(Queuing Theory)
Press Solve and go to output screen. Select comparative analysis option
in the
queuing output analysis menu. The Iollowing output screen is displayed
(Figure 9.8).
Figure 9.8: Comparative Analysis of Queuing Output Analysis
Using TORA (Output Screen)
ow, on comparing scenario 1 and scenario 2, under Ls i.e., the average
number oI
customers in the system is 2 and 0.5 respectively. In the Iirst scenario, it
means that in
the entire system, one customer will be waiting in the queue while others
are being
served. In scenario 2, only one customer is in the system and being
served, where on an
average no customer will be waiting.
Example 11: 12 counters are available in a computerized railway
reservation system.
The arrival rate during peak hours is 90 customers per hour. It takes 5
minutes to serve
a customer on an average. Assume that the arrivals joining in a queue
will not be jockeying
(i.e., move to another queue). How many counters have to be opened iI
the customers
need not to wait Ior more than 15 minutes?
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$olution: The problem is to be solved as one system comprising oI 'n'
number oI single
server queuing model.
Arrival rate, l 90 customers per hour
Service rate, m
5
6
12 per hour
Average waiting time,
6
15
Wq = 0.25 hours
Average waiting time,
(
W
q
=
i.e., 0.25 )

.
................................(i)
Let, number oI counters be x,
Considering the single server queuing system, the number oI counters
required to serve
90 arrivals per hour,
x
= substituting
x
= in equation (i),
'
+
'

=
x
x

12 12 .
/
.25
1212 . )

.25
x
=
0.25 12(12x 90) 90
3(12x 90) 90
36x 270 90
36x 360
36
= 36 x 10 counters
Hence, 10 counters are required so that an average arrival will wait less
than 15 minutes.
Example 12: In a single pump petrol station, vehicles arrive at the rate
oI 20 customers
per hour and petrol Iilling takes 2 minutes on an average. Assume the
arrival rate is
Poisson probability distribution and service rate is exponentially
distributed, determine
(a) What is the probability that no vehicles are in the petrol station?
(b) What is the probability that 1 customer is Iilling and no one is
waiting in the queue?
(c) What is the probability that 1 customer is Iilling and 2 customers are
waiting in the
queue?
(d) What is the probability that more than 2 customers are waiting?
$olution : l 20 vehicles per hour, m 60/2 30 vehicles per hour.
291
Waiting Model
(Queuing Theory)
(a) Probability that no vehicles are in the petrol station,
3
2
P 1 1 1 =

=
0.3334 or 33.34
(b) Probability that 1 customer is Iilling and no one is waiting in the
queue,
|

|

=
|

= P P 1 n
n n
|

|

=
3
2
1
3
2
P
1
1
0.6666 0.3334
0.2222 or 22.22
(c) Probability that 1 customer is Iilling and 2 customers are waiting in
the queue, i.e.,
there are 3 customers in the system,
|

|

=
3
2
1
3
2
P
3
3
0.2963 0.3334
0.09878 or 9.87
(d) Probability that more than 3 customers are in the system,
|

|

=
3
2
1
3
2
P
4
4
0.1975 0.334
0.6585 or 65.85
The calculation made Ior the above problem is represented in the TORA
output screen
shown below in Figure 9.9.
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1. The assumption oI queuing theory are so restrictive as to render
behaviour
prediction oI queuing system practically worthless Discuss.
2. Explain the meaning oI a queue and state the object oI queuing
analysis.
BrieIly describe with the help oI hypothetical example the elements oI
the
queuing system.
3. Give examples oI Iive situations/circumstances in which there in a
limited a
Iinite waiting line.
4. Elaborate the vital operating characteristis oI a queuing system.
5. What are the modules oI the Iollowing queuing system? Draw and
explains
the conIiguration oI each
(a) General store
(b) Big Bazar
(c) Railway reservation
(d) Car wash at the service center.
answers in it.
better.

9.8 LET US SUM UP
Queuers or waiting lines are very Iamiliar in day to day liIe. In general
quite oIten we
Iace the problem oI long queues Ior a bus, a movie ticket, railway
reservation, ATM
m/c and various, other situation. The queuing model are those where a
Iacility perIorm a
service. A queuing problem arises when the current services rate oI a
Iacility Iall short
oI the current Ilow rate oI customer. Thus iI the service Iacility capable
oI servicing
customers arrive there will be no pitIalls. Thus the queuing theory is
related with the
decision making process oI the business unit which relates with the
queue question and
makes decision relative to the number oI service Iacilities which are
operating.
As you are travelling Irom one place to another. You need a various
mode oI transportation
Irom one destination to other. These transportation are known as Bus,
Train, Aeroplane
etc. While taking reservation oI this particular transport. We have to go
to the reservation
counter and book tickets and Iinally Iace a huge waiting line or queue oI
passengers.
Apply the waiting line theory to regulate this problem and Iind solution
to make the
system stream-line.
293
Waiting Model
(Queuing Theory) 9.10 KEYWORDS
Balking : A customer may not like to join the queue seeing it very long
and he may not like to wait.
#eneging : He may leave the queue due to impatience aIter joining in
collusion several customers may collaborate and only one oI
them may stand in queue.
1ockeying : II there are number oI queues then one may leave one queue
to join another.
Queue length : o. oI customers waiting in the queue.
Queuing system : System consisting arrival oI customers, waiting in
queue,
picked up Ior sevice according to a certain discipline, being
serviced and departure oI customers.
$ervice station : Point where service is provided
Customer : Person or unit arriving at a station Ior service. Customer
may be a machine or person.
Waiting time : Time a customer spends in the queue beIore being
serviced.
(a) Parallel channel means, a number oI channels providing identical
services.
(b) Queuing theory is concerned with the decision making process.
(c) Customer decide not to joins the queue is Reneging.
(d) The line that Iorm in Iront oI service Iacilities is called a queue.
(e) Random arrival mean when there is how service point.
(a) In designing a queuing system, the system should balance service to
customers.
(b) Queuing theory deals with problem that involve waiting.
(c) Most oI queuing models are quite complex and cannot be easily
understood.
(d) In a single channel Iacility the output oI the queue does not pose any
problem.
(e) The object oI the queuing theory is to achieve a good economic
balance and
also to minimise the total waiting & service cost.
(a) The arrival time Ior any customer is
(b) The most common queue discipline
(c) II there is queue then has to wait Ior same lines.
(d) Cost associated with service or the Iacility are known as

(e) Waiting time is a time which customer spends in the
4. Write Short Notes:
(a) Queue discipline
(b) Service mechanism is queuing theory
(c) Queuing system
294
Ior Management 9.12 TERMINAL QUESTIONS
1. What is the queuing theory?
2. DeIine arrival rate and service rate.
3. Explain the characteristics oI MM1 queuing model.
4. BrieIly explain Service Mechanism and Queue Discipline.
5. What is system oI steady-state?
Exercise Problems
1. A Bank operates a single Iacility ATM machine. Customers arrive at
the rate oI
10 customers per hour according to Poisson probability distribution. The
time taken
Ior an ATM transaction is exponential which means 3 minutes on an
average. Find
the Iollowing:
(a) Average waiting time oI a customer beIore service.
(b) Average number oI customers in the system.
(c) Probability that the ATM is idle.
2. At an average 12 cars per hour arrive at a single-server, drive-in teller.
The average
service time Ior each customer is 4 minutes, and the arrivals and services
are
Poisson and exponentially distributed respectively. Answer the
Iollowing questions:
(a) What is the proportion that the teller is idle?
(b) What is the time spent by a customer to complete his transaction?
(c) What is the probability that an arriving car need not wait to take-up
service?
3. At a single Iacility security check at an airport, passengers arrive at
the checkpoint
on an average oI 8 passengers per minute and Iollows a Poisson
probability
distribution. The checking time Ior a customer entering security check
area takes
10 passengers per minute and Iollows an exponential probability
distribution.
Determine the Iollowing:
(a) On an average, how many passengers are waiting in queue to enter
the checkpoint?
(b) On an average, what is the time taken by a customer leaving the
checkpoint?
4. In a college computer lab, computers are interconnected to one laser
printer. The
printer receives data Iiles Ior printing Irom these 25 computers
interconnected to
it. The printer prints the Iiles received Irom these 25 computers at the
rate oI 5
data Iiles per minute. The average time required to print a data Iile is 6
minutes.
Assuming the arrivals are Poisson distributed and service times are
exponentially
(a) What is the probability that the printer is busy?
(b) On an average, how much time must a computer operator wait to
take a
print-out?
(c) On an average, what is the expected number oI operators that will be
waiting
to take a print-out?
5. Skyline pizza is a Iamous restaurant operating a number oI outlets.
The restaurant
uses a toll-Iree telephone number to book pizzas at any oI its outlets. It
was Iound
that an average oI 15 calls are received per hour and the average time to
handle
each call is 2.5 minutes. Determine the Iollowing:
295
Waiting Model
(Queuing Theory)
(a) What is the average waiting time oI an incoming caller?
(b) What is the probability that a caller gets connected immediately?
(c) II the restaurant manager Ieels that average waiting time oI a caller is
more
than 5 minutes, will lead to customer loss and the restaurant will have to
go in
Ior a second toll Iree Iacility, what should be the new arrival rate in
order to
justiIy another Iacility?
6. From historical data, a two-wheeler service station observe that bikes
arrive only
Ior water wash is at the rate oI 7 per hour per 8 hour shiIt. The manager
has a
record that it takes 5 minutes Ior water service and another 2 minutes Ior
greasing
and general check. Assuming that one bike is washed at a time, Iind the
Iollowing:
(a) Average number oI bikes in line.
(b) Average time a bike waits beIore it is washed.
(c) Average time a bike spends in the system.
(d) Utilization rate oI the bike wash.
(e) Probability that no bikes are in the system.
7. In a department at store, an automated coIIee vending machine is
installed.
Customers arrive at a rate oI 3 per minute and it takes average time oI 10
seconds
to dispense a cup oI coIIee:
(a) Determine the number oI customers in the queue.
(b) Determine the waiting time oI a customer.
(c) Find the probability that there are exactly 10 customers in the system.
8. In a toll gate, vehicles arrive at a rate oI 120 per hour. An average
time Ior a
vehicle to get a pass is 25 seconds. The arrivals Iollow a Poisson
distribution and
service times Iollow an exponential distribution. (a) Find the average
number oI
vehicles waiting and the idle time oI the check-post. (b) II the idle time
oI the
check post is less than 10, the check-post authorities will install a
second gate.
Suggest whether a second gate is necessary ?
9. A hospital has an X-ray lab where patients (both in-patient and out-
patient) arrive
at a rate oI 5 per minute. Due to variation in requirement, the time taken
Ior one
patient is 3 minutes and Iollows an exponential distribution. (a) What is
the probability
that the system is busy? and (b) What is the probability that nobody is in
the system?
10. In the production shop oI a company breakdown oI the machine is
Iound to be
Poisson with an average rate oI 3 machines per hour. Breakdown time at
one
machine costs Rs. 40 per hour to the company. There are two choices
beIore the
company Ior hiring the repairmen, one oI the repairmen is slow but
cheap, the
other is Iast but expensive. The slow-cheap repairman demands Rs. 20
per hour
and will repair the breakdown machine exponentially at the rate oI 4 per
hour. The
Iast expensive repairman demands Rs. 30 per hour and will repair
exponentially on
an average rate oI Rs.6 per hour. Which repairman should be hired?
DISCUSSION
1. (a) True (b) True (c) False
(d) True (e) False
3. (a) unpredictable (b) |First come Iirst serve (FCFS)|
(c) customer (d) service cost (e) queue
296
Ior Management 9.14 SUGGESTED READINGS
T.L. Satty, Elements of Queuing, ew York McGraw Hill Theory.
A.M. Lee, Applied Queuing thoery.
Cooper, R.B., Introduction to Queuing theory, ew York MacMillan
Co.
Morse, Philip M.Ques, Inventories & m,inten,nce, ew York John
Wiley & Sons.
Panieo, J.A., Queuing %heory. A Study of W,iting Line of Business,
Economics,
Science, Englewood, o. 3, Prentice-Hall.
Bhat, U.. '%he J,lue of Queuing %heory A Refoinder Interf,ce, Vol.
8, o. 3
pp. 27-78.
Byrd. J., %he v,lue of queuing & Interf,ces, Vol. 8, o. 3, pp. 22-26.
Render, B & Stain R.M., C,ses & re,dings in qu,ntit,tive ,n,lysis,
Boston: Allyn &
Bacon, 1982.
GraII G, 'Simple Queuing thoery s,ves &nneccess,ry Equipment,
Industrial
Engineering, Vol. 3.
Paul R.I., Stevens R.E., St,ffing service ,ctivities with w,iting the
models decision,
Science, Vol. 2
Unit-IV
The probability, theoretical probability distribution and probability
distribution oI random
variable in the three important interrelated trades which we are going to
discuss in this
head (Unit IV). As we know that probability associated with the
occurence oI various
events are determined by speciIying the condition oI a random
experiments.
10.1 INTRODUCTION
The concept oI probability originated Irom the analysis oI the games oI
chance in the
17th century. ow the subject has been developed to the extent that it is
very diIIicult to
imagine a discipline, be it Irom social or natural sciences, that can do
without it.
The theory oI probability is a study oI St,tistic,l or R,ndom
Experiments. It is the
backbone oI St,tistic,l Inference and Decision %heory that are essential
tools
oI the analysis oI most oI the modern business and economic problems.
OIten, in our day-to-day liIe, we hear sentences like 'it may rain today',
'Mr X has IiItyIiIty
chances oI passing the examination', 'India may win the Iorthcoming
cricket match
against Sri Lanka', 'the chances oI making proIits by investing in shares
oI company A
are very bright', etc. Each oI the above sentences involves an element oI
uncertainty.
LESSON
10
PROBABILITY
CONTENTS
10.1 Introduction
10.2 Classical DeIinition oI Probability
10.3 Counting Techniques
10.4 Statistical or Empirical DeIinition oI Probability
10.5 Axiomatic or Modern Approach to Probability
10.6 Theorems on Probability-I
10.7 Theorems on Probability-II
10.8 Let us Sum Up
10.10 Keywords
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A phenomenon or an experiment which can result into more than one
possible outcome,
is called a random phenomenon or random experiment or statistical
experiment. Although,
we may be aware oI all the possible outcomes oI a random experiment,
it is not possible
to predetermine the outcome associated with a particular
experimentation or trial.
Consider, Ior example, the toss oI a coin. The result oI a toss can be a
head or a tail,
thereIore, it is a random experiment. Here we know that either a head or
a tail would
occur as a result oI the toss, however, it is not possible to predetermine
the outcome.
With the use oI probability theory, it is possible to assign a quantitative
measure, to
express the extent oI uncertainty, associated with the occurrence oI each
possible outcome
oI a random experiment.
10.2 CLASSICAL DEFINITION OF PROBABILITY
This deIinition, also known as the mathematical deIinition oI
probability,
was given by J. Bernoulli. With the use oI this deIinition, the
probabilities associated with
the occurrence oI various events are determined by speciIying the
conditions oI a random
experiment. It is because oI this that the classical deIinition is also
known as 'a priori'
deIinition oI probability.
Definition
II n is the number oI equally likely, mutually exclusive and exhaustive
outcomes oI a
random experiment out oI which m outcomes are Iavourable to the
occurrence oI an
event A, then the probability that A occurs, denoted by P(A), is given by
:
) umber oI outcomes Iavourable to
umber oI exhaustive outcomes
A m
P A
n
= =
Various terms used in the above deIinition are explained below :
1. Equally likely outcomes: The outcomes oI random experiment are
said to be
equally likely or equally probable iI the occurrence oI none oI them is
expected in
preIerence to others. For example, iI an unbiased coin is tossed, the two
possible
outcomes, a head or a tail are equally likely.
2. Mutually exclusive outcomes: Two or more outcomes oI an
experiment are said
to be mutually exclusive iI the occurrence oI one oI them precludes the
occurrence
oI all others in the same trial. For example, the two possible outcomes oI
toss oI a
coin are mutually exclusive. Similarly, the occurrences oI the numbers 1,
2, 3, 4, 5,
6 in the roll oI a six Iaced die are mutually exclusive.
3. Exhaustive outcomes: It is the totality oI all possible outcomes oI a
random
experiment. The number oI exhaustive outcomes in the roll oI a die are
six. Similarly,
there are 52 exhaustive outcomes in the experiment oI drawing a card
Irom a pack
oI 52 cards.
4. Event: The occurrence or non-occurrence oI a phenomenon is called
an event.
For example, in the toss oI two coins, there are Iour exhaustive
outcomes, viz.
(H, H), (H, T), (T, H), (T, T). The events associated with this experiment
can be
deIined in a number oI ways. For example, (i) the event oI occurrence oI
head on
both the coins, (ii) the event oI occurrence oI head on at least one oI the
two coins,
(iii) the event oI non-occurrence oI head on the two coins, etc.
An event can be simple or composite depending upon whether it
corresponds to a single
outcome oI the experiment or not. In the example, given above, the
event deIined by (i)
is simple, while those deIined by (ii) and (iii) are composite events.
Example 1: What is the probability oI obtaining a head in the toss oI an
unbiased coin?
$olution: This experiment has two possible outcomes, i.e., occurrence oI
a head or tail.
These two outcomes are mutually exclusive and exhaustive. Since the
coin is given to be
unbiased, the two outcomes are equally likely. Thus, all the conditions
oI the classical
deIinition are satisIied.
Probability
301
o. oI cases Iavourable to the occurrence oI head 1
o. oI exhaustive cases 2
\ Probability oI obtaining head ) 1
2
P H = .
Example 2: What is the probability oI obtaining at least one head in the
simultaneous
toss oI two unbiased coins?
$olution: The equally likely, mutually exclusive and exhaustive
outcomes oI the experiment
are (H, H), (H, T), (T, H) and (T, T), where H denotes a head and T
denotes a tail.
Thus, n 4.
Let A be the event that at least one head occurs. This event corresponds
the Iirst three
outcomes oI the random experiment. ThereIore, m 3.
Hence, probability that A occurs, i.e., ) 3
4
P A = .
Example 3: Find the probability oI obtaining an odd number in the roll
oI an unbiased
die.
$olution: The number oI equally likely, mutually exclusive and
exhaustive outcomes,
i.e., n 6. There are three odd numbers out oI the numbers 1, 2, 3, 4, 5
and 6. ThereIore,
m 3.
Thus, probability oI occurrence oI an odd number 3 1
6 2
= = .
Example 4: What is the chance oI drawing a Iace card in a draw Irom a
pack oI 52
well-shuIIled cards?
$olution: Total possible outcomes n 52.
Since the pack is well-shuIIled, these outcomes are equally likely.
Further, since only one
card is to be drawn, the outcomes are mutually exclusive.
There are 12 Iace cards, \ m 12.
Thus, probability oI drawing a Iace card 12 3
52 13
= = .
Example 5: What is the probability that a leap year selected at random
will contain 53
Sundays?
$olution: A leap year has 366 days. It contains 52 complete weeks, i.e,
52 Sundays. The
remaining two days oI the year could be anyone oI the Iollowing pairs :
(Monday, Tuesday), (Tuesday, Wednesday), (Wednesday, Thursday),
(Thursday, Friday),
(Friday, Saturday), (Saturday, Sunday), (Sunday, Monday). Thus, there
are seven
possibilities out oI which last two are Iavourable to the occurrence oI
53rd Sunday.
Hence, the required probability
2
7
.
Example : Find the probability oI throwing a total oI six in a single
throw with two
unbiased dice.
$olution: The number oI exhaustive cases n 36, because with two dice
all the possible
outcomes are :
(1, 1), (1, 2), (1, 3), (1, 4), (1, 5), (1, 6),
(2, 1), (2, 2), (2, 3), (2, 4), (2, 5), (2, 6),
(3, 1), (3, 2), (3, 3), (3, 4), (3, 5), (3, 6),
(4, 1), (4, 2), (4, 3), (4, 4), (4, 5), (4, 6),
(5, 1), (5, 2), (5, 3), (5, 4), (5, 5), (5, 6),
(6, 1), (6, 2), (6, 3), (6, 4), (6, 5), (6, 6).
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302
Out oI these outcomes the number oI cases Iavourable to the event A oI
getting 6 are :
(1, 5), (2, 4), (3, 3), (4, 2), (5, 1). Thus, we have m 5.
( 5
36
\ P A =
Example 7: A bag contains 15 tickets marked with numbers 1 to 15.
One ticket is
drawn at random. Find the probability that:
(i) the number on it is greater than 10,
(ii) the number on it is even,
(iii) the number on it is a multiple oI 2 or 5.
$olution: umber oI exhaustive cases n 15
(i) Tickets with number greater than 10 are 11, 12, 13, 14 and 15.
ThereIore, m 5 and
hence the required probability
5
15

1
3
(ii) umber oI even numbered tickets m 7
\ Required probability
7
15 .
(iii) The multiple oI 2 are : 2, 4, 6, 8, 10, 12, 14 and the multiple oI 5 are
: 5, 10, 15.
\ m 9 (note that 10 is repeated in both multiples will be counted only
once).
Thus, the required probability

15

3
5
10.3 COUNTING TECHNIQUES
Counting techniques or combinatorial methods are oIten helpIul in the
enumeration oI
total number oI outcomes oI a random experiment and the number oI
cases Iavourable
to the occurrence oI an event.
Fundamental Principle of Counting
II the Iirst operation can be perIormed in any one oI the m ways and then
a second
operation can be perIormed in any one oI the n ways, then both can be
perIormed
together in any one oI the m - n ways.
This rule can be generalised. II Iirst operation can be perIormed in any
one oI the n1
ways, second operation in any one oI the n2 ways, ...... kth operation in
any one oI the nk
ways, then together these can be perIormed in any one oI the n1 n2
...... nk ways.
Permutation
A permutation is an arrangement oI a given number oI objects in a
deIinite order.
(a) Permutations of n objects: The total number oI permutations oI n
distinct objects
is n!. Using symbols, we can write nPn n!, (where n denotes the
permutations oI
n objects, all taken together).
Let us assume there are n persons to be seated on n chairs. The Iirst chair
can be
occupied by any one oI the n persons and hence, there are n ways in
which it can
be occupied. Similarly, the second chair can be occupied in n - 1 ways
and so on.
Using the Iundamental principle oI counting, the total number oI ways in
which n
chairs can be occupied by n persons or the permutations oI n objects
taking all at a
time is given by :
nPn n(n 1)(n 2) ...... 3.2.1 n!
(b) Permutations of n objects taking r at a time: In terms oI the
example, considered
above, now we have n persons to be seated on r chairs, where r n.
Thus, nPr n(n 1)(n 2) ...... |n (r 1)| n(n 1)(n 2) ...... (n r
1).
Probability
303
On multiplication and division oI the R.H.S. by (n - r)!, we get
n
r P
n n n n r n r
n r
n
n r
=
+

=

b 1gb 2g b 1gb g
b g
.... !
!
!
( )!
(c) Permutations of n objects taking r at a time when any object may
be repeated
any number of times: Here, each oI the r places can be Iilled in n ways.
ThereIore,
total number oI permutations is nr.
(d) Permutations of n objects in a circular order: Suppose that there are
three
persons A, B and C, to be seated on the three chairs 1, 2 and 3, in a
circular order.
Then, the Iollowing three arrangements are identical:
Figure 10.1
Similarly, iI n objects are seated in a circle, there will be n identical
arrangements oI
the above type. Thus, in order to obtain distinct permutation oI n objects
in circular
order we divide nPn by n, where nPn denotes number oI permutations in
a row.
Hence, the number oI permutations in a circular order ! )
1 !
n
n
n
=
(e) Permutations with restrictions: II out oI n objects n1 are alike oI one
kind, n2 are
alike oI another kind, ...... nk are alike, the number oI permutations are
1 2
!
! ! .... ! k
n
n n n
Since permutation oI ni objects, which are alike, is only one (i 1, 2,
...... k).
ThereIore, n! is to be divided by n1!, n2! .... nk!, to get the required
permutations.
Example 8: What is the total number oI ways oI simultaneous throwing
oI (i) 3 coins,
(ii) 2 dice and (iii) 2 coins and a die ?
$olution:
(i) Each coin can be thrown in any one oI the two ways, i.e, a head or a
tail,
thereIore, the number oI ways oI simultaneous throwing oI 3 coins 23
8.
(ii) Similarly, the total number oI ways oI simultaneous throwing oI two
dice is equal to
62 36 and
(iii) The total number oI ways oI simultaneous throwing oI 2 coins and a
die
is equal to 22 - 6 24.
Example 9: A person can go Irom Delhi to Port-Blair via Allahabad and
Calcutta using
Iollowing mode oI transport :
In how many diIIerent ways the journey can be planned?
$olution: The journey Irom Delhi to Port-Blair can be treated as three
operations; From
Delhi to Allahabad, Irom Allahabad to Calcutta and Irom Calcutta to
Port-Blair. Using
the Iundamental principle oI counting, the journey can be planned in
4-4-2 32 ways.
Delhi to Allahabad Allahabad to Calcutta Calcutta to Port-Blair
By Rail By Rail By Air
By Bus By Bus By Ship
By Car By Car
By Air By Air
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Example 1: In how many ways the Iirst, second and third prize can be
given to 10
competitors?
$olution: There are 10 ways oI giving Iirst prize, nine ways oI giving
second prize and
eight ways oI giving third prize. ThereIore, total no. ways is 10- 9- 8
720.
Alternative method:
Here n 10 and r 3, \ (
10
3
10!
720
10 3 !
= =
-
P
Example 11:
(a) There are 5 doors in a room. In how many ways can three persons
enter the room
using diIIerent doors?
(b) A lady is asked to rank 5 types oI washing powders according to her
preIerence.
Calculate the total number oI possible rankings.
(c) In how many ways 6 passengers can be seated on 15 available seats.
(d) II there are six diIIerent trains available Ior journey between Delhi to
Kanpur,
calculate the number oI ways in which a person can complete his return
journey by
using a diIIerent train in each direction.
(e) In how many ways President, Vice-President, Secretary and
Treasurer oI an
association can be nominated at random out oI 130 members?
$olution:
(a) The Iirst person can use any oI the 5 doors and hence can enter the
room in 5
ways. Similarly, the second person can enter in 4 ways and third person
can enter
in 3 ways. Thus, the total number oI ways is 5
3
5!
60
2!
P = = .
(b) Total number oI rankings are 5
5
5!
120
0!
P = = . (ote that 0! 1)
(c) Total number oI ways oI seating 6 passengers on 15 seats are
15
6
15!
9!
P = = 36,03,600.
(d) Total number oI ways oI perIorming return journey, using diIIerent
train in each
direction are 6-5 30, which is also equal to 6P2 .
(e) Total number oI ways oI nominating Ior the 4 post oI association are
130
4
130!
27,26,13,120
126!
P = = .
Example 12: Three prizes are awarded each Ior getting more than 80
marks, 98
attendance and good behaviour in the college. In how many ways the
prizes can be
awarded iI 15 students oI the college are eligible Ior the three prizes?
$olution: ote that all the three prizes can be awarded to the same
student. The prize
Ior getting more than 80 marks can be awarded in 15 ways, prize Ior
90 attendance
can be awarded in 15 ways and prize Ior good behaviour can also be
awarded in 15
ways.
Thus, the total number oI ways is nr 153 3,375.
Example 13:
(a) In how many ways can the letters oI the word EDUCATIO be
arranged?
(b) In how many ways can the letters oI the word STATISTICS be
arranged?
Probability
305
(c) In how many ways can 20 students be allotted to 4 tutorial groups oI
4, 5, 5 and
6 students respectively?
(d) In how many ways 10 members oI a committee can be seated at a
round table iI (i)
they can sit anywhere (ii) president and secretary must not sit next to
each other?
$olution:
(a) The given word EDUCATIO has 9 letters. ThereIore, number oI
permutations oI 9 letters is 9! 3,62,880.
(b) The word STATISTICS has 10 letters in which there are 3S's, 3T's,
2I's, 1A and
1C. Thus, the required number oI permutations 10!
3!3!2!1!1!
50,400.
(c) Required number oI permutations 20!
4!5!5!6!
9,77,72,87,522
(d) (i) umber oI permutations when they can sit anywhere (10-1)!
9! 3,62,880.
(ii) We Iirst Iind the number oI permutations when president and
secretary must
sit together. For this we consider president and secretary as one person.
Thus, the number oI permutations oI 9 persons at round table 8!
40,320.
\ The number oI permutations when president and secretary must not sit
together
3,62,880 - 40,320 3,22,560.
Example 14:
(a) In how many ways 4 men and 3 women can be seated in a row such
that women
occupy the even places?
(b) In how many ways 4 men and 4 women can be seated such that men
and women
occupy alternative places?
$olution:
(a) 4 men can be seated in 4! ways and 3 women can be seated in 3!
ways. Since each
arrangement oI men is associated with each arrangement oI women,
thereIore,
the required number oI permutations 4! 3! 144.
(b) There are two ways in which 4 men and 4 women can be seated
MWMWMWMWMW or WMWMWMWMWM
\ The required number oI permutations 2 .4! 4! 1,152
Example 15: There are 3 diIIerent books oI economics, 4 diIIerent
books oI commerce
and 5 diIIerent books oI statistics. In how many ways these can be
arranged on a
shelI when
(a) all the books are arranged at random,
(b) books oI each subject are arranged together,
(c) books oI only statistics are arranged together, and
(d) books oI statistics and books oI other subjects are arranged together?
$olution:
(a) The required number oI permutations 12!
(b) The economics books can be arranged in 3! ways, commerce books
in 4! ways
and statistics book in 5! ways. Further, the three groups can be arranged
in 3!
ways. \ The required number oI permutations 3! 4! 5! 3! 1,03,680.
(c) Consider 5 books oI statistics as one book. Then 8 books can be
arranged in 8!
ways and 5 books oI statistics can be arranged among themselves in 5!
ways.
\ The required number oI permutations 8! 5! 48,38,400.
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306
(d) There are two groups which can be arranged in 2! ways. The books
oI other
subjects can be arranged in 7! ways and books oI statistics can be
arranged in 5!
ways. Thus, the required number oI ways 2! 7! 5! 12,09,600.
Combination
When no attention is given to the order oI arrangement oI the selected
objects, we get a
combination. We know that the number oI permutations oI n objects
taking r at a time is
nPr . Since r objects can be arranged in r! ways, thereIore, there are r!
permutations
corresponding to one combination. Thus, the number oI combinations oI
n objects taking
r at a time, denoted by nCr , can be obtained by dividing nPr by r!, i.e.,
)
!
! ! !
n
n r
r
P n
C
r r n r
= =

.
Aote: (a) Since nCr
nCn r , thereIore, nCr is also equal to the combinations oI n
objects taking (n - r) at a time.
(b) The total number oI combinations oI n distinct objects taking 1, 2,
...... n
respectively, at a time is 1 2 n n ...... n 2n 1
n C + C + + C = - .
Example 1:
(a) In how many ways two balls can be selected Irom 8 balls?
(b) In how many ways a group oI 12 persons can be divided into two
groups oI 7 and
5 persons respectively?
(c) A committee oI 8 teachers is to be Iormed out oI 6 science, 8 arts
teachers and a
physical instructor. In how many ways the committee can be Iormed iI
1. Any teacher can be included in the committee.
2. There should be 3 science and 4 arts teachers on the committee such
that
(i) any science teacher and any arts teacher can be included, (ii) one
particular
science teacher must be on the committee, (iii) three particular arts
teachers
must not be on the committee?
$olution:
(a) 2 balls can be selected Irom 8 balls in 8
2
8!
28
2!6!
C = = ways.
(b) Since n n
r n r C C= - , thereIore, the number oI groups oI 7 persons out oI 12 is
also
equal to the number oI groups oI 5 persons out oI 12. Hence, the
required number
oI groups is 12
7
12!
792
7!5!
C = = .
Alternative Method: We may regard 7 persons oI one type and
remaining 5 persons
oI another type. The required number oI groups are equal to the number
oI
permutations oI 12 persons where 7 are alike oI one type and 5 are alike
oI another
type.
(c) 1. 8 teachers can be selected out oI 15 in 15
8
15!
6,435
8!7!
C = = ways.
2. (i) 3 science teachers can be selected out oI 6 teachers in 6C3ways
and 4
arts teachers can be selected out oI 8 in 8C4ways and the physical
instructor can be selected in 1C1way. ThereIore, the required number
oI ways 6 8 1
3 4 1 C - C - C 20 70 1 1400.
Probability
307
(ii) 2 additional science teachers can be selected in 5C2ways. The
number
oI selections oI other teachers is same as in (i) above. Thus, the required
number oI ways 5 - 8 - 1
2 4 1 C C C 10-70-1 700.
(iii) 3 science teachers can be selected in 6C3ways and 4 arts teachers
out
oI remaining 5 arts teachers can be selected in 5C4 ways.
\ The required number oI ways 6 - 5
3 4 C C 20- 5 100.
Ordered Partitions
1. Ordered Partitions (distinguishable objects)
(a) The total number oI ways oI putting n distinct objects into r
compartments
which are marked as 1, 2, ...... r is equal to rn.
Since Iirst object can be put in any oI the r compartments in r ways,
second
can be put in any oI the r compartments in r ways and so on.
(b) The number oI ways in which n objects can be put into r
compartments such
that the Iirst compartment contains n1 objects, second contains n2
objects and
so on the rth compartment contains nr objects, where n1 n2 ...... nr
n,
is given by
n!
n1 !n2 ! ...... nr ! .
To illustrate this, let r 3. Then n1 objects in the Iirst compartment can
be put
in nCn1
ways. Out oI the remaining n n1 objects, n2 objects can be put in the
second compartment in n n1Cn2
ways. Finally the remaining n n1 n2 n3
objects can be put in the third compartment in one way. Thus, the
required
number oI ways is 1
1 2
1 2 3
!
! ! !
- = n n n
n n
n
C C
n n n
2. Ordered Partitions (identical objects)
(a) The total number oI ways oI putting n identical objects into r
compartments
marked as 1, 2, ...... r, is n r 1Cr 1, where each compartment may have
none
or any number oI objects.
We can think oI n objects being placed in a row and partitioned by the (r
1)
vertical lines into r compartments. This is equivalent to permutations oI
(n r 1) objects out oI which n are oI one type and (r 1) oI another
type.
The required number oI permutations are (
(
1 !
! 1!
+ -
-
n r
n r
, which is equal to
n r 1)
n C
+ or )
)
1
1
n r
r C +
.
(b) The total number oI ways oI putting n identical objects into r
compartments is
) )
)
1
1
n r r
r C +
or )
)
1
1
n
r C

, where each compartment must have at least one
object.
In order that each compartment must have at least one object, we Iirst
put
one object in each oI the r compartments. Then the remaining (n r)
objects
can be placed as in (a) above.
(c) The Iormula, given in (b) above, can be generalised. II each
compartment is
supposed to have at least k objects, the total number oI ways is ) )
)
+

1
1
n kr r
r C ,
where k 0, 1, 2, .... etc. such that <
n
k
r
.
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308
Example 17: 4 couples occupy eight seats in a row at random. What is
the probability
that all the ladies are sitting next to each other?
$olution: Eight persons can be seated in a row in 8! ways.
We can treat 4 ladies as one person. Then, Iive persons can be seated in
a row in 5!
ways. Further, 4 ladies can be seated among themselves in 4! ways.
\ The required probability
5!4! 1
8! 14
=
Example 18: 12 persons are seated at random (i) in a row, (ii) in a ring.
Find the
probabilities that three particular persons are sitting together.
$olution:
(i) The required probability
10!3! 1
12! 22
=
(ii) The required probability =
3 3
11 55
.
Example 19: 5 red and 2 black balls, each oI diIIerent sizes, are
randomly laid down in
a row. Find the probability that
(i) the two end balls are black,
(ii) there are three red balls between two black balls and
(iii) the two black balls are placed side by side.
$olution: The seven balls can be placed in a row in 7! ways.
(i) The black can be placed at the ends in 2! ways and, in-between them,
5 red balls
can be placed in 5! ways.
2!5! 1
7! 21
= .
(ii) We can treat BRRRB as one ball. ThereIore, this ball along with the
remaining two
balls can be arranged in 3! ways. The sequence BRRRB can be arranged
in 2! 3!
ways and the three red balls oI the sequence can be obtained Irom 5 balls
in
5C3ways.
\ The required probability 5
3
3!2!3! 1
7! 7
C = .
(iii) The 2 black balls can be treated as one and, thereIore, this ball along
with 5 red
balls can be arranged in 6! ways. Further, 2 black ball can be arranged in
2! ways.
6!2! 2
7! 7
=
Example 2: Each oI the two players, A and B, get 26 cards at random.
Find the
probability that each player has an equal number oI red and black cards.
$olution: Each player can get 26 cards at random in 52C26 ways.
In order that a player gets an equal number oI red and black cards, he
should have 13
cards oI each colour, note that there are 26 red cards and 26 black cards
in
a pack oI playing cards. This can be done in 26C13
26C13 ways. Hence, the required
probability
26 26
13 13
52
26
C C
C .
Probability
309
Example 21: 8 distinguishable marbles are distributed at random into 3
boxes marked
as 1, 2 and 3. Find the probability that they contain 3, 4 and 1 marbles
respectively.
$olution: Since the Iirst, second .... 8th marble, each, can go to any oI
the three boxes in
3 ways, the total number oI ways oI putting 8 distinguishable marbles
into three
boxes is 38.
The number oI ways oI putting the marbles, so that the Iirst box contains
3 marbles,
second contains 4 and the third contains 1, are
8!
3!4!1!
\ The required probability 8
8! 1 280
3!4!1! 3 6561
= .
Example 22: 12 'one rupee' coins are distributed at random among 5
beggars A, B, C,
D and E. Find the probability that :
(i) They get 4, 2, 0, 5 and 1 coins respectively.
(ii) Each beggar gets at least two coins.
(iii) one oI them goes empty handed.
$olution: The total number oI ways oI distributing 12 one rupee coins
among 5 beggars
are 12 5 1 16
5 1 4 + - 1820
-C = C = .
(i) Since the distribution 4, 2, 0, 5, 1 is one way out oI 1820 ways, the
required probability

1
1820
.
(ii) AIter distributing two coins to each oI the Iive beggars, we are leIt
with two coins,
which can be distributed among Iive beggars in 2 5 1 6
5 1 4 + - 15
-C = C = ways.
15
1820

3
364
(iii) o beggar goes empty handed iI each gets at least one coin. 7 coins,
that are leIt
aIter giving one coin to each oI the Iive beggars, can be distributed
among Iive
beggars in 7 5 1 11
5 1 4 + - 330
-C = C = ways.
330
1820

33
182
10.4 STATISTICAL OR EMPIRICAL DEFINITION OF
PROBABILITY
The scope oI the classical deIinition was Iound to be very limited as it
Iailed to determine
the probabilities oI certain events in the Iollowing circumstances :
(i) When n, the exhaustive outcomes oI a random experiment is inIinite.
(ii) When actual value oI n is not known.
(iii) When various outcomes oI a random experiment are not equally
likely.
(iv) This deIinition doesn't lead to any mathematical treatment oI
probability.
In view oI the above shortcomings oI the classical deIinition, an attempt
was made to
establish a correspondence between relative Irequency and the
probability oI an event
when the total number oI trials become su1IIiciently large.
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310
Definition (R. Von Mises)
II an experiment is repeated n times, under essentially the identical
conditions and, iI, out oI these trials, an event A occurs m times, then the
probability that
A occurs is given by P(A) lim
x
m
n
, provided the limit exists.
This deIinition oI probability is also termed as the empirical deIinition
because the probability
oI an event is obtained by actual experimentation.
Although, it is seldom possible to obtain the limit oI the relative
Irequency,
the ratio
m
n
can be regarded as a good approximation oI the probability oI an event
Ior
large values oI n.
This deIinition also suIIers Irom the Iollowing shortcomings :
(i) The conditions oI the experiment may not remain identical,
particularly when the
number oI trials is suIIiciently large.
(ii) The relative Irequency, m
n
, may not attain a unique value no matter how large is the
total number oI trials.
(iii) It may not be possible to repeat an experiment a large number oI
times.
(iv) Like the classical deIinition, this deIinition doesn't lead to any
mathematical treatment
oI probability.
10.5 AXIOMATIC OR MODERN APPROACH TO
PROBABILITY
This approach was introduced by the Russian mathematician, A.
Kolmogorov in 1930s.
In his book, 'Foundations oI Probability' published in 1933, he
introduced probability as a
Iunction oI the outcomes oI an experiment, under certain restrictions.
These restrictions
are known as Postulates or Axioms oI probability theory. BeIore
discussing the above
approach to probability, we shall explain certain concepts that are
necessary Ior its
understanding.
$ample $pace
It is the set oI all possible outcomes oI a random experiment. Each
element oI the set is
called a s,mple point or , simple event or ,n element,ry event. The
sample space oI
a random experiment is denoted by S and its element are denoted by ei,
where i 1, 2,
...... n. Thus, a sample space having n elements can be written as :
S e1, e2, ......, en}.
II a random experiment consists oI rolling a six Iaced die, the
corresponding sample
space consists oI 6 elementary events. Thus, S 1, 2, 3, 4, 5, 6}.
Similarly, in the toss oI a coin S H, T}.
The elements oI S can either be single elements or ordered pairs. For
example, iI two
coins are tossed, each element oI the sample space would consist oI the
set oI ordered
pairs, as shown below :
S (H, H), (H, T), (T, H), (T, T)}
Finite and Infinite $ample $pace
A sample space consisting oI Iinite number oI elements is called a finite
s,mple sp,ce,
while iI the number oI elements is inIinite, it is called ,n infinite s,mple
sp,ce. The
sample spaces discussed so Iar are examples oI Iinite sample spaces. As
an example oI
inIinite sample space, consider repeated toss oI a coin till a head
appears. Various elements
oI the sample space would be :
S (H), (T, H), (T, T, H), ...... }.
Probability
311
Discrete and Continuous $ample $pace
A discrete sample space consists oI Iinite or countably inIinite number
oI elements. The
sample spaces, discussed so Iar, are some examples oI discrete sample
spaces. Contrary
to this, a continuous sample space consists oI an uncountable number oI
elements. This
type oI sample space is obtained when the result oI an experiment is a
measurement on
continuous scale like measurements oI weight, height, area, volume,
time, etc.
Event
An event is any subset oI a sample space. In the experiment oI roll oI a
die, the sample
space is S 1, 2, 3, 4, 5, 6}. It is possible to deIine various events on
this sample space,
as shown below :
Let A be the event that an odd number appears on the die. Then A 1,
3, 5} is a subset
oI S. Further, let B be the event oI getting a number greater than 4. Then
B 5, 6} is
another subset oI S. Similarly, iI C denotes an event oI getting a number
3 on the die,
then C 3}.
It should be noted here that the events A and B are composite while C is
a
simple or element,ry event.
Occurrence of an Event
An event is said to have occurred whenever the outcome oI the
experiment is an element
oI its set. For example, iI we throw a die and obtain 5, then both the
events A and B,
deIined above, are said to have occurred.
It should be noted here that the sample space is certain to occur since the
outcome oI the
experiment must always be one oI its elements.
Definition of Probability (Modern Approach)
Let S be a sample space oI an experiment and A be any event oI this
sample space. The
probability oI A, denoted by P(A), is deIined as a real value set Iunction
which associates
a real value corresponding to a subset A oI the sample space S. In order
that P(A)
denotes a probability Iunction, the Iollowing rules, popularly known as
axioms or postulates
oI probability, must be satisIied.
Axiom I : For any event A in sample space S, we have 0 P(A) 1.
Axiom II : P(S) 1.
Axiom III : II A1, A2, ...... Ak are k mutually exclusive events (i.e., A A
i f
i f
= o ,
wheref denotes a null set) oI the sample space S, then
P A A A P A k i
i
k
1 2
1
U U ...... b g b g =
=
The Iirst axiom implies that the probability oI an event is a non-negative
number less than or equal to unity. The second axiom implies that the
probability oI an
event that is certain to occur must be equal to unity. Axiom III gives a
basic rule oI
addition oI probabilities when events are mutually exclusive.
The above axioms provide a set oI basic rules that can be used to Iind
the probability oI
any event oI a sample space.
Probability of an Event
Let there be a sample space consisting oI n elements, i.e., S e1, e2,
...... en}. Since the
elementary events e1, e2, ...... en are mutually exclusive, we have,
according to axiom
III, ) )
1
n
i
i
P S P e
=
= . Similarly, iI A e1, e2, ...... em} is any subset oI S consisting oI
m
elements, where m n, then ) )
1
m
i
i
P A P e
=
= .Thus, the prob,bility of , s,mple sp,ce
or ,n event is equ,l to the sum of prob,bilities of its element,ry events.
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312
It is obvious Irom the above that the probability oI an event can be
determined iI the
probabilities oI elementary events, belonging to it, are known.
%he Assignment of Probabilities to various Elementary Events
The assignment oI probabilities to various elementary events oI a sample
space can be
done in any one oI the Iollowing three ways :
1. Using Classical Definition: We know that various elementary events
oI a random
experiment, under the classical deIinition, are equally likely and,
thereIore, can be
assigned equal probabilities. Thus, iI there are n elementary events in the
sample
space oI an experiment and in view oI the Iact that ) )
1
n
i
i
P S P e
=
= 1 (Irom
axiom II), we can assign a probability equal to 1
n
to every elementary event or,
using symbols, we can write P ei c h 1
n
Ior i 1, 2, .... n.
Further, iI there are m elementary events in an event A, we have,
PaAf 1
n
1
n
...... 1
n
am timesf m
n
= n
A i e number of elements in A
n S i e number of elements in S
b g
b g
, . .,
, . .,
We note that the above expression is similar to the Iormula obtained
under classical
deIinition.
2. Using $tatistical Definition: Using this deIinition, the assignment oI
probabilities
to various elementary events oI a sample space can be done by repeating
an
experiment a large number oI times or by using the past records.
3. $ubjective Assignment: The assignment oI probabilities on the basis
oI the statistical
and the classical deIinitions is obfective. Contrary to this, it is also
possible to have
subfective ,ssignment oI probabilities. Under the subjective assignment,
the
probabilities to various elementary events are assigned on the basis oI
the
expectations or the degree oI belieI oI the statistician. These
probabilities, also
known as person,l prob,bilities, are very useIul in the analysis oI
various business
and economic problems.
It is obvious Irom the above that the odern Definition oI probability is
a general
one which includes the classical and the statistical deIinitions as its
particular cases.
Besides this, it provides a set oI mathematical rules that are useIul Ior
Iurther
mathematical treatment oI the subject oI probability.
1 Explain Exhaustive outcomes with examples.
2. What are combinational methods?
answers in it.
better.

Probability
313
10.6 THEOREMS ON PROBABILITY - I
%heorem 1: P( 1) 0, where 1is a null set.
Proof: For a sample space S oI an experiment, we can write SUo = S .
Taking probability oI both sides, we have PbS Uog = PbSg .
Since S and o are mutually exclusive, using axiom III, we can write P(S)
P(1)
P(S). Hence, Po ) = 0 .
%heorem 2: PdAi 1 PaAf, where A is compliment oI A.
Proof: Let A be any event in the sample space S. We can write
AU A = S or P(AU A = P(S
Since A and A are mutually exclusive, we can write
P(A + P(A = P(S =1. Hence, P(A =1- P(A .
%heorem 3: For any two events A and B in a sample space S
P(A B = P(B - P(A B
Proof: From the Venn diagram, we can write
B = (A BU(A B or
( = F( ( P B P A B U A B
Since dA Bi and bA Bg are
mutually exclusive, we have
PbBg = Pd A Bi + PbA Bg
or PdA Bi = PbBg Pb A Bg .
Similarly, it can be shown that
PdA Bi = PbAg PbA Bg
%heorem 4: (Addition of Probabilities):
PbAU Bg = PbAg + PbBg PbA Bg
Proof: From the Venn diagram, given above, we can write
AU B = AUdA Bi or PbAU Bg = P AUdA Bi
Since A and dA Bi are mutually exclusive, we can write
PbAU Bg = Pb Ag + PdA Bi
Substituting the value oI PdA Bi Irom theorem 3, we get
PbAU Bg = PbAg + PbBg PbA Bg
#emarks :
1. II A and B are mutually exclusive, i.e., AB = o , then according to
theorem 1, we
have PbA Bg = 0 . The addition rule, in this case, becomes PbAU Bg
= PbAg + PbBg ,
which is in conIormity with axiom III.
Figure. 1.2
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314
2. The event AUB denotes the occurrence oI either A or B or both.
Alternatively, it
implies the occurrence oI at least one oI the two events.
3. The event AB is a compound event that denotes the simultaneous
occurrence oI
the two events.
4. Alternatively, the event AUB is also denoted by A B and the event
AB by
AB.
Corollaries:
1. From the Venn diagram, we can write PbA U Bg = 1 Pd A Bi ,
where PdA Bi is
the probability that none oI the events A and B occur simultaneously.
2. Pbexactly one oI A and B occursg = P d A BiUdA Bi
= PdA Bi + PdA Bi Since dA BiUdA Bi = o
= PbAg PbA Bg + PbBg PbA Bg (using theorem 3)
= PbAU Bg PbA Bg (using theorem 4)
3. The addition theorem can be generalised Ior more than two events. II
A, B and C
are three events oI a sample space S, then the probability oI occurrence
oI at least
one oI them is given by
PbAU BUCg = P AUbBUCg = Pb Ag + PbBUCg P AbBUCg
= PbAg + PbBUCg P bA BgUbACg
Applying theorem 4 on the second and third term, we get
= PbAg + PbBg + PbCg PbA Bg PbACg PbB Cg + PbA B
Cg .... (1)
Alternatively, the probability oI occurrence oI at least one oI the three
events can
also be written as
PbAU BUCg = 1 PdA B C i .... (2)
II A, B and C are mutually exclusive, then equation (1) can be written as
PbAUBUCg = PbAg + PbBg + PbCg .... (3)
II A1, A2, ...... An are n events oI a sample space S, the respective
equations (1),
(2) and (3) can be modiIied as
P A A A P A P A A P A A A 1 2 n i i f i f k b U ... U g = b g d i
+ d i
+ 1 1 2 b g b g n
n P A A ... A ( i j k etc. ) .... (4)
P A A A P A A A 1 2 n 1 2 n b U U ... U g = 1 d ... i .... (5)
P A A A P A n i
i
n
1 2
1
U U U ... b g b g =
=
.... (6)
(iI the events are mutually exclusive)
4. The probability oI occurrence oI at least two oI the three events can be
written as
P bA BgUbBCgUb ACg = PbA Bg + PbBCg + PbACg
3PbA BCg + PbA BCg
= PbABg + PbBCg + PbACg 2PbABCg
Probability
315
5. The probability oI occurrence oI exactly two oI the three events can
be written as
P dA BCiUdA B CiUdA BCi = P bA BgUbBCgUbACg
PbA BCg (using corollary 2)
= PbABg + PbBCg + PbACg 3PbABCg (using corollary 4)
6. The probability oI occurrence oI exactly one oI the three events can
be written as
P dA B CiUdA BCiUdA B Ci P(at least one oI the three events
occur)
- P(at least two oI the three events occur).
= PbAg + PbBg + PbCg 2PbA Bg 3PbBCg 2PbACg
+ 3PbABCg .
Example 23: In a group oI 1,000 persons, there are 650 who can speak
Hindi, 400 can
speak English and 150 can speak both Hindi and English. II a person is
selected at
random, what is the probability that he speaks (i) Hindi only, (ii) English
only, (iii) only one
oI the two languages, (iv) at least one oI the two languages?
$olution: Let A denote the event that a person selected at random speaks
Hindi and B
denotes the event that he speaks English.
Thus, we have n(A) 650, n(B) 400, nbABg = 150 and n(S) 1000,
where
n(A), n(B), etc. denote the number oI persons belonging to the
respective event.
(i) The probability that a person selected at random speaks Hindi only, is
given by
P A B
n A
n S
n A B
n S

d i
b g
b g
b g
b g
= = = 650
1000
150
1000
1
2
(ii) The probability that a person selected at random speaks English
only, is given
by P A B
n B
n S
n A B
n S

d i
b g
b g
b g
b g
= = = 400
1000
150
1000
1
4
(iii) The probability that a person selected at random speaks only one oI
the languages,
is given by
P dA BiUdA Bi = PbAg + PbBg 2PbA Bg (see corollary 2)
=
+
= + =
n A n B n A B
n S
b g b g b g
b g
2 650 400 300
1000
3
4

(iv) The probability that a person selected at random speaks at least one
oI the languages,
is given by
PbAU Bg =
+
= 650 400 150
1000
9
10
Alternative Method: The above probabilities can easily be computed by
the Iollowing
nine-square table :
From the above table, we can write
B B %ot,l
A 150 500 650
A 250 100 350
%ot,l 400 600 1000
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316
(i) PdA Bi = = 500
1000
1
2
(ii) PdA Bi = = 250
1000
1
4
(iii) P dA BiUdA Bi =
+
= 500 250
1000
3
4
(iv) PbAU Bg =
+ +
= 150 500 250
1000
9
10
This can, alternatively, be written as PbAU Bg = 1 PdA Bi = 1 =
100
1000
9
10
.
Example 24: What is the probability oI drawing a black card or a king
Irom a wellshuIIled
pack oI playing cards?
$olution: There are 52 cards in a pack, \ n(S) 52.
Let A be the event that the drawn card is black and B be the event that it
is a king.
We have to Iind PbAU Bg .
Since there are 26 black cards, 4 kings and two black kings in a pack, we
have
n(A) 26, n(B) 4 and nbAUBg = 2 Thus, PbAU Bg =
+
= 26 4 2
52
7
13
Alternative Method: The given inIormation can be written in the Iorm oI
the Iollowing
table:
From the above, we can write
PbAU Bg = 1 PdA Bi = 1 =
24
52
7
13
Example 25: A pair oI unbiased dice is thrown. Find the probability that
(i) the sum oI
spots is either 5 or 10, (ii) either there is a doublet or a sum less than 6.
$olution: Since the Iirst die can be thrown in 6 ways and the second also
in 6 ways,
thereIore, both can be thrown in 36 ways (Iundamental principle oI
counting). Since both
the dice are given to be unbiased, 36 elementary outcomes are equally
likely.
(i) Let A be the event that the sum oI spots is 5 and B be the event that
their sum is
10. Thus, we can write
A (1, 4), (2, 3), (3, 2), (4, 1)} and B (4, 6), (5, 5), (6, 4)}
We note that bABg = o , i.e. A and B are mutually exclusive.
\ By addition theorem, we have PbAU Bg = PbAg + PbBg = + = 4
36
3
36
7
36
.
(ii) Let C be the event that there is a doublet and D be the event that the
sum is less
than 6. Thus, we can write
C (1, 1), (2, 2), (3, 3), (4, 4), (5, 5), (6, 6)} and
D (1, 1), (1, 2), (1, 3), (1, 4), (2, 1), (2, 2), (2, 3), (3, 1), (3, 2), (4, 1)}
Further, bCDg (1, 1), (2, 2)}
By addition theorem, we have PbCU Dg = + = 6
36
10
36
2
36
7
18
.
B B Total
A 2 24 26
A 2 24 26
Total 4 48 52
Probability
317
Alternative Methods:
(i) It is given that n(A) 4, n(B) 3 and n(S) 36. Also nbABg = 0 .
Thus, the
corresponding nine-square table can be written as Iollows :
B B %ot,l
A
A
%ot,l
0 4 4
3 29 32
3 33 36
From the above table, we have PbAU Bg = 1 =
29
36
7
36
.
(ii) Here n(C) 6, n(D) 10, nbCDg = 2 and n(S) 36. Thus, we have
C C %ot,l
D
D
%ot,l
2 8 10
4 22 26
6 30 36
Thus, PbCUDg = 1 PdC Di = 1 =
22
36
7
18
.
Example 2: Two unbiased coins are tossed. Let A1 be the event that
the Iirst coin
shows a tail and A2 be the event that the second coin shows a head. Are
A1 and A2
mutually exclusive? Obtain P A A 1 2 b g and P A A 1 2 b U g .
Further, let A1 be the event that
both coins show heads and A2 be the event that both show tails. Are A1
and A2 mutually
exclusive? Find P A A 1 2 b g and P A A 1 2 b U g .
$olution: The sample space oI the experiment is S (H, H), (H, T), (T,
H), (T, T)}
(i) A1 (T, H), (T, T)} and A2 (H, H), (T, H)}
Also A A 1 2 b g (T, H)}, Since 1 2 An A o , A1 and A2 are not
mutually exclusive.
Further, the coins are given to be unbiased, thereIore, all the elementary
events are
equally likely.
\ P A P A P A A 1 2 1 2
2
4
1
2
2
4
1
2
1
4
b g = = , b g = = , b g =
Thus, P A A 1 2
1
2
1
2
1
4
3
4
b U g = + = .
(ii) When both the coins show heads; A1 (H, H)}
When both the coins show tails; A2 (T, T)}
Here A1 A2 A1 A2 = o and are mutually exclusive.
Thus, P A A 1 2
1
4
1
4
1
2
b U g = + = .
Alternatively, the problem can also be attempted by making the
Iollowing ninesquare
tables Ior the two cases :
(i) A2 A2 %ot,l
A1
A1
%ot,l
1 1 2
1 1 2
2 2 4
(ii) A2 A2 %ot,l
0 1 1
1 2 3
1 3 4
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318
%heorem 5: Multiplication or Compound Probability %heorem: A
compound event
is the result oI the simultaneous occurrence oI two or more events. For
convenience, we
assume that there are two events, however, the results can be easily
generalised. The
probability oI the compound event would depend upon whether the
events are independent
or not. Thus, we shall discuss two theorems; (a) Condition,l Prob,bility
%heorem, and
(b) ultiplic,tive %heorem for Independent Events.
(a) Conditional Probability %heorem: For any two events A and B in a
sample space
S, the probability oI their simultaneous occurrence, is given by
PA B) = PA)PB/ A)
or equivalently PB)PA/B)
Here, P(B/A) is the conditional probability oI B given that A has already
occurred.
Similar interpretation can be given to the term P(A/B).
Proof: Let all the outcomes oI the random experiment be equally likely.
ThereIore,
P A B
n A B
n S
A B

b g
b g
b g
b g = =
no. oI elements in
no. oI elements in sample space
For the event B/A, the sample space is the set oI elements in A and out
oI these the
number oI cases Iavourable to B is given by nbABg .
\ P B A
n A B
n A
b / g
b g
b g
=

.
II we multiply the numerator and denominator oI the above expression
by
n(S), we get P B A
n A B
n A
n S
n S
P A B
P A
b / g
b g
b g
b g
b g
b g
b g
= - =

or PbABg = PbAg.PbB / Ag .
The other result can also be shown in a similar way.
Aote: To avoid mathematical complications, we have assumed that the
elementary events
are equally likely. However, the above results will hold true even Ior the
cases where the
elementary events are not equally likely.
(b) Multiplicative %heorem for Independent Events: II A and B are
independent, the
probability oI their simultaneous occurrence is given by PbABg
= PbAg.PbBg .
Proof: We can write A = bA BgUdA Bi .
Since bA Bg and dA Bi are mutually exclusive, we have
PbAg = PbA Bg + PdA Bi (by axiom III)
= PB).PA/ B) + PB).PA/ B)
II A and B are independent, then proportion oI A's in B is equal to
proportion oI A's in
B `s, i.e., PaA/Bf PdA/Bi.
Thus, the above equation can be written as
) 600 30 400 5
200
100 100
n B
= - + - =
Probability
319
Substituting this value in the Iormula oI conditional probability theorem,
we get
PbABg = PbAg.PbBg .
Corollaries:
1. (i) II A and B are mutually exclusive and P(A).P(B) ~ 0, then they
cannot be
independent since PbA Bg = 0 .
(ii) II A and B are independent and P(A).P(B) ~ 0, then they cannot be
mutually
exclusive since PbA Bg > 0 .
2. Generalisation oI Multiplicative Theorem :
II A, B and C are three events, then
PbA BCg = PbAg. PbB / Ag. P C / bA Bg
Similarly, Ior n events A1, A2, ...... An, we can write
P A A A P A P A A P A A A
P A A A A
n
n n
1 2 1 2 1 3 1 2
2 1

...
... ... 1
b g b g b g b g
b g
=

. / . /
/
Further, iI A1, A2, ...... An are independent, we have
P A A A P A P A P A 1 2 n 1 2 n b ... g = b g. b g .... b g.
3. II A and B are independent, then A and B , A and B, A and B are also
independent.
We can write P(A B = P(A - P(A B (by theorem 3)
PaAf PaAf.PaBf PaAf 1 PaBf PaAf.PdBi , which shows that A and B
are
independent. The other results can also be shown in a similar way.
4. The probability oI occurrence oI at least one oI the events A1, A2,
...... An, is given
by ( ( 1 2 1 2 U U .... U =1- .... n n P A A A P A A A .
II A1, A2, ...... An are independent then their compliments will also be
independent,
thereIore, the above result can be modiIied as
( ( ( ( 1 2 1 2 U U .... U =1- . .... n n P A A A P A P A P A .
Pair-wise and Mutual Independence
Three events A, B and C are said to be mutually independent iI the
Iollowing conditions
are simultaneously satisIied :
P(A B = P(A.P(B, P(B C = P(B.P(C, P(AC = P(A.P(C
and P(A B C = P(A.P(B.P(C .
II the last condition is not satisIied, the events are said to be pair-wise
independent.
From the above we note that mutually independent events will always be
pair-wise
independent but not vice-versa.
Example 27: Among 1,000 applicants Ior admission to M.A. economics
course in a
University, 600 were economics graduates and 400 were non-economics
graduates;
30 oI economics graduate applicants and 5 oI non-economics
graduate applicants
obtained admission. II an applicant selected at random is Iound to have
been given
admission, what is the probability that he/she is an economics graduate?
Ior Management
320
$olution: Let A be the event that the applicant selected at random is an
economics
graduate and B be the event that he/she is given admission.
We are given n(S) 1000, n(A) 600, n(A = 400
Also, ) 600 30 400 5
200
100 100
n B
= - + - = and ( 600 30
180
100

n A B = =
Thus, the required probability is given by ( (
(
180 9
/
200 10
= = =
n A B
P A B
n B
Alternative Method: Writing the given inIormation in a nine-square
table, we have :
B B %ot,l
A
A
%ot,l
180 420 600
20 380 400
200 800 1000
From the above table we can write ( 180 9
/
200 10
P A B = =
Example 28: A bag contains 2 black and 3 white balls. Two balls are
drawn at random
one aIter the other without replacement. Obtain the probability that (a)
Second ball is
black given that the Iirst is white, (b) First ball is white given that the
second is black.
$olution: First ball can be drawn in any one oI the 5 ways and then a
second ball can be
drawn in any one oI the 4 ways. ThereIore, two balls can be drawn in 5
- 4 20 ways.
Thus, n(S) 20.
(a) Let A1 be the event that Iirst ball is white and A2 be the event that
second is black.
We want to Iind P A2/A1 c h.
First white ball can be drawn in any oI the 3 ways and then a second ball
can be
drawn in any oI the 4 ways, \ n(A1) 3 - 4 12.
Further, Iirst white ball can be drawn in any oI the 3 ways and then a
black ball can
be drawn in any oI the 2 ways, \ n A A 1 2 b g = 3- 2 = 6 .
Thus, ( (
(
1 2
2 1
1
6 1
/
12 2
= = =
n A A
P A A
n A
.
(b) Here we have to Iind P A1/A2 c h.
The second black ball can be drawn in the Iollowing two mutually
exclusive ways:
(i) First ball is white and second is black or
(ii) both the balls are black.
Thus, n(A2) 3-2 2-1 8, ( (
(
1 2
1 2
2
6 3
/
8 4
= = =
n A A
P A A
n A
.
Alternative Method: The given problem can be summarised into the
Iollowing ninesquare
table:
B B %ot,l
A
A
%ot,l
6 6 12
2 6 8
8 12 20
The required probabilities can be directly written Irom the above table.
Probability
321
Example 29: Two unbiased dice are tossed. Let w denote the number on
the Iirst die
and r denote the number on the second die. Let A be the event that w r
4 and B be
the event that w r 3. Are A and B independent?
$olution: The sample space oI this experiment consists oI 36 elements,
i.e., n(S) 36.
Also, A (1, 1), (1, 2), (1, 3), (2, 1), (2, 2), (3, 1)} and B (1, 1), (1,
2), (2, 1)}.
( ( 6 1 3 1
,
36 6 36 12
P A = = P B = =
( ( 3 1
Also (1,1), (1, 2),(2,1)}
36 12
A B = \ P A B = =
Since PbABg PbAgPbBg , A and B are not independent.
Example 3: It is known that 40 oI the students in a certain college are
girls and 50
oI the students are above the median height. II 2/3 oI the boys are above
median height,
what is the probability that a randomly selected student who is below the
median height
is a girl?
$olution: Let A be the event that a randomly selected student is a girl
and B be the
event that he/she is above median height. The given inIormation can be
summarised into
the Iollowing table :
B B %ot,l
A
A
%ot,l
10 30 40
40 20 60
50 50 100
From the above table, we can write ( 30
/ 0.6
50
P A B = = .
Example 31: A problem in statistics is given to three students A, B and
C, whose
chances oI solving it independently are
1
2
, 1
3
and 1
4
respectively. Find the probability
that
(a) the problem is solved.
(b) at least two oI them are able to solve the problem.
(c) exactly two oI them are able to solve the problem.
(d) exactly one oI them is able to solve the problem.
$olution: Let A be the event that student A solves the problem.
Similarly, we can deIine
the events B and C. Further, A, B and C are given to be independent.
(a) The problem is solved iI at least one oI them is able to solve it. This
probability is
given by ( ( ( ( 1 2 3 3
1 . . 1
2 3 4 4
P AU B UC = - P A P B P C = - =
(b) Here we have to Iind PA B)UBC)UAC)|
P A B B C A C P A P B P B P C P A P C
P A P B P C
b gUb gUb g b g b g b g b g b g b g
b g b g b g
= + +
2

1 1 1 1 1 1 1 1 1 7
2.
2 3 3 4 2 4 2 3 4 24
+ + - =
Ior Management
322
(c) The required probability is given by P dA BCiUd A B CiUdA
BCi
P(A.P(B + P(B.P(C + P(A.P(C - 3P(A.P(B.P(C

1 1 1 1
6 12 8 8
+ + -
1
4
.
(d) The required probability is given by P dA B CiUdA BCiUd A B
Ci
P(A) P(B) P(C) 2P(A).P(B) 2P(B).P(C) 2P(A). P(C)
3 P(A).P(B).P(C)
= + + + = 1 1 1 1 1 1 1 11
.
2 3 4 3 6 4 8 24
ote that the Iormulae used in (a), (b), (c) and (d) above are the
modiIied Iorms oI
corollaries (Iollowing theorem 4) 3, 4, 5 and 6 respectively.
Example 32: A bag contains 2 red and 1 black ball and another bag
contains 2 red and
2 black balls. One ball is selected at random Irom each bag. Find the
probability oI
drawing (a) at least a red ball, (b) a black ball Irom the second bag given
that ball Irom
the Iirst is red; (c) show that the event oI drawing a red ball Irom the
Iirst bag and the
event oI drawing a red ball Irom the second bag are independent.
$olution: Let A1 be the event oI drawing a red ball Irom the Iirst bag
and A2 be the
event oI drawing a red ball Irom the second bag. Thus, we can write:
n A A n A A 1 2 1 2 b g = 2 - 2 = 4, d i = 2 - 2 = 4,
n A A n A A 1 2 1 2 d i = 1- 2 = 2, d i = 1- 2 = 2
Also, nbSg = nbA A g + ndA A i + ndA A i + nd A A i = 1 2 1 2 1 2 1 2
12
Writing the given inIormation in the Iorm oI a nine-square table, we get
(a) The probability oI drawing at least a red ball is given by
P A A
n A A
n S 1 2
1 2 1 1
2
12
5
6
U

b g
d i
b g
= = =
(b) We have to Iind P A2 /A1 d i
P A A
n A A
n A 2 1
1 2
1
4
8
1
2
d / i
d i
b g
= = =

(c) A1 and A2 will be independent iI P A A P A P A 1 2 1 2 b g = b g.
b g
ow P A A
n A A
n S 1 2
1 2 4
12
1
3

b g
b g
b g
= = =
) ) )
)
)
)
1 2
1 2
8 6 1
. .
12 12 3
n A n A
P A P A
n S n S
= = - =
Hence, A1 and A2 are independent.
2 A A %ot,l
A
A
%ot,l
2
1
1
4 4 8
2 2 4
6 6 12
Probability
323
Example 33: An urn contains 3 red and 2 white balls. 2 balls are drawn
at random. Find
the probability that either both oI them are red or both are white.
$olution: Let A be the event that both the balls are red and B be the
event that both the
balls are white. Thus, we can write
nbSg = 5C = nbAg = C = nbBg = C = nbA Bg =
2
3
2
2
2 10, 3, 1, also 0
\ The required probability is P A B
n A n B
n S
b U g
b g b g
b g
=
+
= + = 3 1
10
2
5
Example 34: A bag contains 10 red and 8 black balls. Two balls are
drawn at random.
Find the probability that (a) both oI them are red, (b) one is red and the
other is black.
$olution: Let A be the event that both the balls are red and B be the
event that one is red
and the other is black.
Two balls can be drawn Irom 18 balls in 18C2 equally likely ways.
) 18
2
18!
153
2!16!
n S = C = =
(a) Two red balls can be drawn Irom 10 red balls in 10C2 ways.
) 10
2
10!
45
2!8!
n A = C = =
( (
(
45 5
Thus,
153 17
= = =
n A
P A
n S
(b) One red ball can be drawn in 10C1ways and one black ball can be
drawn in 8C1ways.
) 10 8
1 1 n B = C - C = 10 - 8 = 80 ( 80
Thus,
153
P B =
Example 35: Five cards are drawn in succession and without
replacement Irom an
ordinary deck oI 52 well-shuIIled cards :
(a) What is the probability that there will be no ace among the Iive
cards?
(b) What is the probability that Iirst three cards are aces and the last two
cards are
kings?
(c) What is the probability that only Iirst three cards are aces?
(d) What is the probability that an ace will appear only on the IiIth
draw?
$olution:
(a) ) 48 47 46 45 44
there is no ace 0.66
52 51 50 49 48
P
- - - -
= =
- - - -
(b)
Iirst three card are aces and 4 3 2 4 3
0.0000009
the last two are kings 52 51 50 49 48
P
+ - - - - = = ' ' - - - -
(c) ) 4 3 2 48 47
only Iirst three card are aces 0.00017
52 51 50 49 48
P
= - - - - =
- - - -
(d)
an ace appears only 48 47 46 45 4
0.059
on the IiIth draw 52 51 50 49 48
P
+ - - - - = = ' ' - - - -
Ior Management
324
Example 3: Two cards are drawn in succession Irom a pack oI 52 well-
shuIIled
cards. Find the probability that :
(a) Only Iirst card is a king.
(b) First card is jack oI diamond or a king.
(c) At least one card is a picture card.
(d) ot more than one card is a picture card.
(e) Cards are not oI the same suit.
(I) Second card is not a spade.
(g) Second card is not a spade given that Iirst is a spade.
(h) The cards are aces or diamonds or both.
$olution:
) 4 48 16
(a) only Iirst card is a king .
52 51 221
P
-
= =
-
Iirst card is a jack oI 5 51 5
(b) .
diamond or a king 52 51 52
P
+= - = ' ' -
at least one card is 40 39 7
(c) 1 .
a picture card 52 51 17
P
+ - = = ' ' -
not more than one card 40 39 12 40 40 12 210
(d) .
is a picture card 52 51 52 51 52 51 221
P
+ - - - = + + = ' ' - - -
)52 39 13
(e) cards are not oI the same suit .
52 51 17
P
= - =
-
)13 39 39 38 3
(I) second card is not a spade .
52 51 52 51 4
P
= - + - =
- -
second card is not a spade 39 13
(g) .
given that Iirst is spade 51 17
P
+
= = ' '
the cards are aces or 16 15 20
(h) .
diamonds or both 52 51 221
P
+ - = = ' ' -
Example 37: The odds are 9 : 7 against a person A, who is now 35 years
oI age, living
till he is 65 and 3 : 2 against a person B, now 45 years oI age, living till
he is 75. Find the
chance that at least one oI these persons will be alive 30 years hence.
$olution:
Aote: II a is the number oI cases Iavourable to an event A and ,is the
number oI cases
Iavourable to its compliment event (a , n), then odds in Iavour oI A
are a : ,and
odds against A are ,: a.
Obviously ( and (
,
P A P A
, ,
a
= =
+a +a
.
Let A be the event that person A will be alive 30 years hence and B be
the event that
person B will be alive 30 years hence.
) 7 7 ) 2 2
and
9 7 16 3 2 5
P A = = P B = =
+ +
We have to Iind PbAU Bg . ote that A and B are independent.
\ PbAU Bg = + - = 7
16
2
5
7
16
2
5
53
80
Probability
325
Alternative Method:
PbAU Bg = 1 - =
9
16
3
5
53
80
Example 38: II A and B are two events such that PbAg = PdA Bi = 2
3
1
6
, and
PbA Bg =1
3
, Iind P(B), PbAUBg , P(A/B), P(B/A), PdA U Bi , PdA Bi and PdBi.
Also examine whether the events A and B are : (a) Equally likely, (b)
Exhaustive, (c)
Mutually exclusive and (d) Independent.
$olution: The probabilities oI various events are obtained as Iollows :
PbBg = PdA Bi + PbA Bg = + =
1
6
1
3
1
2
PbAU Bg = + = 2
3
1
2
1
3
5
6
P A B
P A B
P B
b / g
b g
b g
= = - =
1
3
2
1
2
3
P B A
P A B
P A
b / g
b g
b g
= = - =
1
3
3
2
1
2
PdA U Bi = PdAi + PbBg PdA Bi = + = 1
3
1
2
1
6
2
3
PdA Bi = 1 PbAU Bg = 1 =
5
6
1
6
) = ) = = 1 1
1 1
2 2
P B P B
(a) Since P(A) P(B), A and B are not equally likely events.
(b) Since PbAU Bg 1, A and B are not exhaustive events.
(c) Since PbA Bg 0 , A and B are not mutually exclusive.
(d) Since PbAgPbBg = PbA Bg , A and B are independent events.
Example 39: Two players A and B toss an unbiased die alternatively. He
who Iirst
throws a six wins the game. II A begins, what is the probability that B
wins the game?
$olution: Let Ai and Bi be the respective events that A and B throw a
six in Ith toss, i
1, 2, .... . B will win the game iI any one oI the Iollowing mutually
exclusive events
occur: 1 1 1 1 2 2 1 1 2 2 3 3 A B or A B A B or A B A B A B , etc.
Thus, ) 5 1 5 5 5 1 5 5 5 5 5 1
B wins ......
6 6 6 6 6 6 6 6 6 6 6 6
P = - + - - - + - - - - - +
2 4
2
5 5 5 5 1 5
1 ......
36 6 6 36 5 11
1
6
+ + = + + + = - = ' ' ' ' | + ' '
Ior Management
326
Example 4: A bag contains 5 red and 3 black balls and second bag
contains 4 red and
5 black balls.
(a) II one ball is selected at random Irom each bag, what is the
probability that both oI
them are oI same colour?
(b) II a bag is selected at random and two balls are drawn Irom it, what
is the probability
that they are oI (i) same colour, (ii) diIIerent colours?
$olution:
(a) Required Probability

+
| |
Probability that ball Probability that balls
from both bags are red from both bags are black
5 4 3 5 35
8 9 8 9 72
= - + - =
(b) Let A be the event that Iirst bag is drawn so that A denotes the event
that second
bag is drawn. Since the two events are equally likely, mutually exclusive
and
exhaustive, we have ( ( 1
2
P A = P A = .
(i) Let R be the event that two drawn balls are red and B be the event
that they
are black. The required probability is given by
= PA)PR / A) + PB / A)| + PA)PR / A)+ PB / A)|

5 3 4 5
2 2 2 2
8 9
2 2
1 1 1 10 3 1 6 10 229
2 2 2 28 2 36 504
F + F + F + F + + = + =
C C C C
C C
(ii) Let C denote the event that the drawn balls are oI diIIerent colours.
The
required probability is given by
P(C = P(AP(C / A + P(AP(C / A
8 9
2 2
1 5 3 1 4 5 1 15 20 275
2 C 2 C 2 28 36 504
- - = + = + = | | |
Example 41: There are two urns U1 and U2. U1 contains 9 white and 4
red balls and U2
contains 3 white and 6 red balls. Two balls are transIerred Irom U1 to
U2 and then a ball
is drawn Irom U2. What is the probability that it is a white ball?
$olution: Let A be the event that the two transIerred balls are white, B
be the event that
they are red and C be the event that one is white and the other is red.
Further, let W be
the event that a white ball is drawn Irom U2. The event W can occur
with any one oI the
mutually exclusive events A, B and C.
P(W = P(A.P(W / A + P(BP(W / B + P(CP(W /C

9 4
2 2
13 13 13
2 2 2
5 3 9 4 4 57
11 11 11 143

+ + =
C C
C C C
Example 42: A bag contains tickets numbered as 112, 121, 211 and 222.
One ticket is
drawn at random Irom the bag. Let Ei (i 1, 2, 3) be the event that i th
digit on the ticket
is
2. Discuss the independence oI E1, E2 and E3.
Probability
327
$olution: The event E1 occurs iI the number on the drawn ticket 211 or
222, thereIore,
( 1
1
2
P E = . Similarly ( 2
1
2
P E = and ( 3
1
2
P E = .
ow PdEi Ef i =1
4
(i, j 1, 2, 3 and i j).
Since P E E P E P E i f i f d i = b g d i Ior i j, thereIore E1, E2 and
E3 are pair-wise independent.
Further, P E E E P E P E P E 1 2 3 1 2 3
1
4
b g = b g. b g. b g , thereIore, E1, E2 and E3 are not
mutually independent.
Example 43: Probability that an electric bulb will last Ior 150 days or
more is 0.7 and
that it will last at the most 160 days is 0.8. Find the probability that it
will last between 150
to 160 days.
$olution: Let A be the event that the bulb will last Ior 150 days or more
and B be the
event that it will last at the most 160 days. It is given that P(A) 0.7 and
P(B) 0.8.
The event AUB is a certain event because at least one oI A or B is bound
to occur.
Thus, PbAUBg = 1. We have to Iind PbABg . This probability is given
by
PbABg = PbAg + PbBg PbAUBg = 0.7 + 0.81.0 = 0.5
Example 44: The odds that A speaks the truth are 2 : 3 and the odds that
B speaks the
truth are 4 : 5. In what percentage oI cases they are likely to contradict
each other on an
identical point?
$olution: Let A and B denote the respective events that A and B speak
truth. It is given
that ) 2 ) 4
and
5 9
P A = P B = .
The event that they contradict each other on an identical point is given
by d A BiUdA Bi ,
where d A Bi and dA Bi are mutually exclusive. Also A and B are
independent events.
Thus, we have
P dA BiUdA Bi = PdA Bi + PdA Bi = PbAg. PdBi + PdAi. PbBg
2 5 3 4 22
0.49
5 9 5 9 45
= - + - = =
Hence, A and B are likely to contradict each other in 49 oI the cases.
Example 45: The probability that a student A solves a mathematics
problem is
2
5
and
the probability that a student B solves it is
2
3
. What is the probability that (a) the problem
is not solved, (b) the problem is solved, (c) Both A and B, working
independently oI each
other, solve the problem?
$olution: Let A and B be the respective events that students A and B
solve the problem.
We note that A and B are independent events.
b,g PdA Bi = PdAi. PdBi = - =
3
5
1
3
1
5
Ior Management
328
bbg PbAU Bg = 1 PdA Bi = 1 =
1
5
4
5
bcg PbA Bg = PbAgPbBg = - = 2
5
2
3
4
15
Example 4: A bag contains 8 red and 5 white balls. Two successive
drawings oI 3
balls each are made such that (i) balls are replaced beIore the second
trial, (ii) balls are
not replaced beIore the second trial. Find the probability that the Iirst
drawing will give 3
white and the second 3 red balls.
$olution: Let A be the event that all the 3 balls obtained at the Iirst draw
are white and
B be the event that all the 3 balls obtained at the second draw are red.
(a) When balls are replaced beIore the second draw, we have
( (
5 8
3 3
13 13
3 3
5 28
and
143 143
= = = =
C C
P A P B
C C
The required probability is given by PbA Bg , where A and B are
independent.
Thus, we have
PbA Bg = PbAg. PbBg = - =
5
143
28
143
140
20449
(b) When the balls are not replaced beIore the second draw
We have (
8
3
10
3
7
/
15
= =
C
P B A
C
. Thus, we have
PbA Bg = PbAg.PbB / Ag = - =
5
143
7
15
7
429
Example 47: Computers A and B are to be marketed. A salesman who is
assigned the
job oI Iinding customers Ior them has 60 and 40 chances
respectively oI succeeding
in case oI computer A and B. The two computers can be sold
independently. Given that
the salesman is able to sell at least one computer, what is the probability
that computer A
has been sold?
$olution: Let A be the event that the salesman is able to sell computer A
and B be the
event that he is able to sell computer B. It is given that P(A) 0.6 and
P(B) 0.4. The
probability that the salesman is able to sell at least one computer, is
given by
PbAUBg = PbAg + PbBg PbABg = PbAg + PbBg PbAg.PbBg
(note that A and B are given to be independent)
= 0.6 + 0.4 0.6 - 0.4 = 0.76
ow the required probability, the probability that computer A is sold
given that the salesman
is able to sell at least one computer, is given by
P A / A B
.
.
b U g = = . 060
076
0 789
Example 48: Two men M1 and M2 and three women W1, W2 and W3,
in a big industrial
Iirm, are trying Ior promotion to a single post which Ialls vacant. Those
oI the same
sex have equal probabilities oI getting promotion but each man is twice
as likely to get
the promotion as any women.
Probability
329
(a) Find the probability that a woman gets the promotion.
(b) II M2 and W2 are husband and wiIe, Iind the probability that one oI
them gets the
promotion.
$olution: Let p be the probability that a woman gets the promotion,
thereIore 2p will be
the probability that a man gets the promotion. Thus, we can write, P(M1)
P(M2) 2p
and P(W1) P(W2) P(W3) p, where P(Mi) denotes the probability
that i th man gets
the promotion (i 1, 2) and P(Wj) denotes the probability that j th
woman gets the
promotion.
Since the post is to be given only to one oI the Iive persons, the events
M1, M2 , W1, W2
and W3 are mutually exclusive and exhaustive.
P W W W = P + P + P W + P W + P W = 1 2 1 2 3 1 2 1 2 3
b U U U U g b g b g b g b g b g 1
1
2 2 1 or
7
p + p + p + p + p = p =
(a) The probability that a woman gets the promotion
P W W W P W P W P W 1 2 3 1 2 3
3
7
b U U g = b g + b g + b g =
(b) The probability that M2 or W2 gets the promotion
P W P PW 2 2 2 2
3
7
b U g = b g + b g =
Example 49: An unbiased die is thrown 8 times. What is the probability
oI getting a six
in at least one oI the throws?
$olution: Let Ai be the event that a six is obtained in the ith throw (i
1, 2, ...... 8).
ThereIore, ( 1
6 i P A = .
The event that a six is obtained in at least one oI the throws is
represented by
A A A 1 2 8 b U U .... U g . Thus, we have
P A A A P A A A 1 2 8 1 2 8 b U U .... U g = 1 d .... i
Since A1, A2, ...... A8 are independent, we can write
P A A A P A P A P A 1 2 8 1 2 8
8
1 1
5
6
U U U .... .... b g d i d i d i = = FH G
K J
. . .
Example 5: Two students X and Y are very weak students oI
mathematics and their
chances oI solving a problem correctly are 0.11 and 0.14 respectively. II
the probability
oI their making a common mistake is 0.081 and they get the same
answer, what is the
chance that their answer is correct?
$olution: Let A be the event that both the students get a correct answer,
B be the event
that both get incorrect answer by making a common mistake and C be
the event that
both get the same answer. Thus, we have
PAC) = PX gets correct answer).PY gets correct answer)
= 0.11- 0.14 = 0.0154 (note that the two events are independent)
Similarly,
PB C) = PX gets incorrect answer) - PY gets incorrect answer)
-PX and Y make a common mistake)
Ior Management
330
= 1 0.11)1 0.14) - 0.081 = 0.062
Further, C = bACgUbBCg or PbCg = PbACg + PbBCg , since
bACg and bBCg
are mutually exclusive. Thus, we have
P(C = 0.0154 + 0.0620 = 0.0774
We have to Iind the probability that the answers oI both the students are
correct given
that they are same, i.e.,
P A C
P A C
P C
/
.
.
b g .
b g
b g
= = =
00154
00774
0199
Example 51: Given below are the daily wages (in rupees) oI six workers
oI a Iactory :
77, 105, 91, 100, 90, 83
II two oI these workers are selected at random to serve as
representatives, what is the
probability that at least one will have a wage lower than the average?
$olution: The average wage 77 105 91 100 90 83
91
6
X
+ + + + +
= =
Let A be the event that two workers selected at random have their wages
greater than
or equal to average wage.
(
3
2
6
2
1
5
C
P A
C
\ = =
Thus, the probability that at least one oI the workers has a wage less than
the average
= = 1 4
1
5 5
Example 52: There are two groups oI subjects one oI which consists oI
5 science
subjects and 3 engineering subjects and the other consists oI 3 science
subjects and 5
engineering subjects. An unbiased die is cast. II the number 3 or 5 turns
up, a subject
Irom the Iirst group is selected at random otherwise a subject is
randomly selected Irom
the second group. Find the probability that an engineering subject is
selected ultimately.
$olution: Let A be the event that an engineering subject is selected and
B be the event
that 3 or 5 turns on the die. The given inIormation can be summarised
into symbols, as
given below :
) 1 ) 3 ) 5
, / , and /
3 8 8
P A = P A B = P A B =
To Iind P(A), we write
PbAg = PbA Bg + PdA Bi = PbBg. PbA / Bg + PdBi. Pd A / Bi
1 3 2 5 13
3 8 3 8 24
= - + - =
Example 53: Find the probability oI obtaining two heads in the toss oI
two unbiased
coins when (a) at least one oI the coins shows a head, (b) second coin
shows a head.
$olution: Let A be the event that both coins show heads, B be the event
that at least one
coin shows a head and C be the event that second coin shows a head.
The sample space
and the three events can be written as :
Probability
331
S (H, H), (H, T), (T, H), (T, T)}, A (H, H)},
B (H, H), (H, T), (T, H)} and C (H, H), (T, H)}.
Further, A B = mbH, Hgr and A C = mbH, Hgr
Since the coins are given to be unbiased, the elementary events are
equally likely, thereIore
PbAg = PbBg = PbCg = PbA Bg = PbA Cg = 1
4
3
4
1
2
1
4
, , ,
(a) We have to determine P (A/B)
P A B
P A B
P B
b / g
b g
b g
= = - =
1
4
4
3
1
3
(b) We have to determine P(A/C)
P A C
P A C
P C
b / g
b g
b g
= = - =
1
4
2
1
1
2
Exercise with Hints:
1. What is the probability oI drawing two aces at random Irom a deck oI
52 wellshuIIled
cards?
int: Two aces can be drawn Irom Iour aces in 4C2 ways.
2. Two cards are drawn at random Irom a deck oI 52 well-shuIIled cards.
What is
the probability that one oI them is an ace and the other is a queen?
int: Try as in question 1 above.
3. What is the probability oI getting all the Iour heads in Iour throws oI
an unbiased
coin?
int: n(S) 24.
4. What is the probability oI getting 5 on each oI the two throws oI a six
Iaced
unbiased die?
int: Try as in question 3 above.
5. Four cards are drawn at random without replacement Irom a pack oI
52 cards.
What is the probability that :
(a) All oI them are aces?
(b) All oI them are oI diIIerent suits?
(c) All oI them are picture cards or spades or both?
int: See example 36.
6. Find the probability oI throwing an even number Irom a single throw
oI a pair oI
unbiased dice.
int: An even number is obtained iI both dice show either odd or even
numbers.
7. A bag contains 50 balls serially numbered Irom 1 to 50. One ball is
drawn at
random Irom the bag. What is the probability that the number on it is a
multiple oI
3 or 4?
int: The number oI serial numbers that are multiple oI 3 or 4 are
integral part oI
50
L.C.. of 3 ,nd 4
.
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332
8. A bag contains 4 white and 5 red balls. Two balls are drawn in
succession at
random. What is the probability that (a) both the balls are white, (b) both
are red,
(c) one oI them is red and the other is white?
9. A bag contains 5 red, 8 white and 3 blue balls. II three balls are drawn
at random,
Iind the probability that (a) all the balls are blue, (b) each ball is oI
diIIerent colour,
(c) the drawn balls are in the order red, white and blue, (d) none oI the
balls are
white.
int: (b) This event is same as that oI drawing one ball oI each colour.
(c) n(S) 16 15 14.
10. 4 cards are drawn at random Irom a pack oI 52 well-shuIIled cards.
Find the
chance that (i) each card is oI a diIIerent suit, (ii) they consist oI a Jack,
Queen,
King and an Ace, (iii) they are 4 honours oI the same suit.
int: Honours oI a suit are its Jack, Queen, King and Ace.
11. In how many ways the letters oI the Iollowing words can be
arranged?
MAAGEMET, ASSESSMET, COMMITTEE
12. How many distinct words can be Iormed Irom the letters oI the word
MEERUT?
How many oI these words start at M and end at T?
int: Fixing M and T, determine the number oI permutations oI
remaining letters.
13. In a random arrangement oI letters oI the word DROUGHT, Iind the
probability
that vowels come together.
14. The letters oI the word STUDET are arranged at random. Find the
probability
that the word, so Iormed;
(a) starts with S,
(b) starts with S and ends with T,
(c) the vowels occupy odd positions only,
(d) the vowels occupy even positions only.
int: See examples 14 and 15.
15. How many triangles can be Iormed by joining 12 points in a plane,
given that 7
points are on one line.
int: o. oI triangles 12 7
3 3 C C.
16. In a random arrangement oI 10 members oI a committee, Iind the
probability that
there are exactly 3 members sitting between the president and secretary
when the
arrangement is done (i) in a row, (ii) in a ring.
int: Considering 5 members as one, there are 6 members. o. oI
permutations
(i) 8
3 2! - C - 3! - 6! , (ii) 8
3 2! - C - 3! - 5!
17. A six digit number is Iormed by the digits 5, 9, 0, 7, 1, 3; no digit
being repeated.
Find the probability that the number Iormed is (i) divisible by 5, (ii) not
divisible
by 5.
int: 0 cannot come at the sixth place oI a six digit number.
18. II 30 blankets are distributed at random among 10 beggars, Iind the
probability that
a particular beggar receives 5 blankets.
int: A particular beggar can receive 5 blankets in 30C5 ways and the
remaining
9 beggars in 925 ways.
Probability
333
19. A statistical experiment consists oI asking 3 housewives, selected at
random, iI
they wash their dishes with brand X detergent. List the elements oI the
sale space
S using the letter Y Ior 'yes' and Ior 'no'. Also list the elements oI the
event : "The
second woman interviewed uses brand X'. Find the probability oI this
event iI it is
assumed that all the elements oI S are equally likely to occur.
int: The sample space would consist oI eight 3-tuples oI the type
(Y,Y,Y), etc.
20. n persons are sitting in a row. II two persons are picked up at
random, what is the
probability that they are sitting adjacent to each other?
int: Two adjacent persons can be picked up in (n - 1) ways.
21. A committee oI 5 persons is to be Iormed out oI 7 Indians and 5
Japanese. Find the
probability that (a) the committee is represented only by the Indians, (b)
there are
at least two Japanese on the committee, (c) there are at least two
Japanese and
two Indians on the committee.
22. 4 letters are placed at random in 4 addressed envelopes. Find the
probability that all
the letters are not placed in right envelopes.
int: The letters can be placed in their respective envelopes in one way.
23. Find the probability that a Iamily with 4 children has (a) 2 boys and
2 girls, (b) no
boy, (c) at the most two boys, (d) at least a girl. Assume equal
probability Ior boys
and girls.
int: (a) The event can occur in 4C2 mutually exclusive ways each with
probability 1
24 .
24. One child is selected at random Irom each oI the three groups oI
children, namely,
3 girls and 1 boy, 2 girls and 2 boys, 1 girl and 3 boys. Find the
probability oI
selecting 1 girl and 2 boys.
int: The event can occur in any one oI the Iollowing mutually
exclusive ways : BBG,
BGB, GBB.
25. A can hit a target in 3 out oI 4 attempts while B can hit it in 2 out oI
3 attempts. II
both oI them try simultaneously, what is the probability that the target
will be hit?
int: Find the probability oI hitting the target at least once.
26. A and B played 12 chess matches out oI which A won 6 matches, B
won 4
matches and 2 resulted in draw. II they decide to play 3 more matches,
what is the
probability that (a) A wins all the three matches, (b) two matches end in
draw, (c)
B wins at least a match, (d) A wins at least a match, (e) A and B wins
alternatively?
int: (b) P(two matches end in draw)
2 2 10
3
12 12 12
= - - - .
27. A and B who are equally perIect players oI badminton, stopped
playing a match
when their scores were 12 and 13 respectively. II 15 points are needed to
win this
match, what are their respective probabilities oI winning?
int: A can win in Iollowing mutually exclusive ways; AAA, BAAA,
ABAA, AABA.
28. A problem in accountancy is given to Iive students. Their chances oI
solving it are
1
2
, 1
3
, 1
4
, 1
5
and 1
6
respectively. What is the probability that the problem will be
solved?
int: PbAU B U C U DU Eg = 1 PdAi. PdBi. PdC i. PdDi. PdE i.
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334
29. (a) A guard oI 12 soldiers is to be Iormed out oI n soldiers. Find the
probability
that (i) two particular soldiers A and B are together on the guard, (ii)
three
particular soldiers C, D and E are together on the guard. (iii) Also Iind n
iI A
and B are 3 times as oIten together on the guard as C, D and E.
(b) A has 6 shares in a lottery in which there are 3 prizes and 10 blanks.
B has 2
shares in a lottery in which there are 4 prizes and 8 blanks. Which oI
them
has a better chance to win a prize?
int: (a) When A and B are on the guard, remaining 10 soldiers can be
selected
in 2
10
n C ways.
(b) )=
10
6
13
6
1
C
P A
C
.
30. It is 8 to 5 against a person, who is now 40 years old, living till he is
70 and 4 to 3
against a person, now 50 years old, living till he is 80. Find the
probability that at
least one oI them would be alive 30 years hence.
31. A candidate is selected Ior interview Ior 3 posts. There are 3
candidates Ior the
Iirst, 4 Ior the second and 2 Ior the third post. What are the chance oI his
getting at
least one post?
int: Probability that he gets the Iirst post is 1
3
, etc.
32. A bag contains 6 Rupee and 9 Dollar coins. Two drawings oI 4 coins
each are
made without replacement. What is the probability that Iirst draw will
give 4 Rupee
coins and second 4 dollar coins?
33. Three tokens marked as 1, 2 and 3 are placed in a bag and one is
drawn and
replaced. The operation being repeated three times. What is the
probability oI
obtaining a total oI 6?
int: A total oI 6 can be obtained iI diIIerent number is obtained in each
operation or 2
is obtained in all the three operations. There are 3! ways oI obtaining
diIIerent
numbers.
34. A certain player, say X, is known to win with probability 0.3 iI the
track is Iast and
with probability 0.4 iI the track is slow. On Monday, there is a 0.7
probability oI a
Iast track. What is the probability that X will win on Monday?
int: Let A be the event that the track is Iast and B be the event that X
wins, then
PbBg = Pb A Bg + PdA Bi
35. The probability that a vacuum-cleaner salesman will succeed in
persuading a
customer on the Iirst call is 0.4. II he Iails, the probability oI success on
the second
call is 0.2. II he Iails on the Iirst two calls, the probability oI success on
the third
and last call is 0.1. Find the probability that the salesman makes a sale oI
vacuumcleaner
to a customer.
int: Try as in exercise 34 above.
36. There are two contractors A and B, Ior the completion oI a project.
Contractor A
does the Iirst part oI the project and then contractor B, by doing the
second part,
completes the project. B cannot start until A has Iinished. II A Iinishes
on time, B
has 85 chance oI completing the project on time. II A doesn't Iinish on
time, then
Probability
335
B has only 30 chance oI completing the project on time. II A
has 70 chance oI Iinishing his work on time, what is the probability
that the
project will be Iinished on time?
int: Find PbA Bg + Pd A Bi .
37. The probability that a person stopping at a petrol pump will ask to
have his tyres
checked is 0.12, the probability that he will ask to have his oil checked is
0.29 and
the probability that he will ask to have both oI them checked is 0.07.
(i) What is the probability that a person stopping at the petrol pump will
have
either tyres or oil checked?
(ii) What is the probability that a person who has tyres checked will also
have oil
checked?
(iii) What is the probability that a person who has oil checked will also
have tyres
checked?
38. There are three brands, say X, Y and Z, oI an item available in the
market. A
consumer chooses exactly one oI them Ior his use. He never buys two or
more
brands simultaneously. The probabilities that he buys brands X, Y and Z
are 0.20,
0.16 and 0.45 respectively.
(i) What is the probability that he doesn't buy any oI the brands?
(ii) Given that the consumer buys some brand, what is the probability
that he
buys brand X?
int: (i) The required probability = 1 PbX UY UZg, where X,Y ,nd
Zare mutually
exclusive.
39. A person applies Ior the post oI manager in two Iirms A and B. He
estimates that
the probability oI his being selected on Iirm A is 0.75, the probability oI
being
rejected in Iirm B is 0.45 and the probability oI rejection in at least one
oI the Iirms
is 0.55. What is the probability that he will be selected in at least one oI
the Iirms?
int: PbA Bg = 1 PdA U Bi .
40. (a) A student is given a true-Ialse examination with 10 questions. II
he gets 8 or
more correct answers, he passes the examination. Given that he guesses
at
an answer to each question, compute the probability that he passes the
examination.
(b) In a multiple choice question, there are Iour alternative answers out
oI which
one or more are correct. A candidate will get marks in the question only
iI he
ticks all the correct answers. II he is allowed up to three chances to
answer
the question, Iind the probability that he will get marks in the question.
int:(a) n(S) 210. o. oI Iavourable cases is 10 10 10
8 9 10 C + C + C .
(b) Total no. oI ways in which the student can tick the answers in one
attempt
24 - 1 (since at least one oI the answer is correct, thereIore, it is not
possible
that he will leave all the answers unticked).
The total no. oI ways oI selecting three solutions Irom 15 is 15C3 . ote
that it
will be in the interest oI the candidate to select a diIIerent solution in
each
attempt. Since out oI 15 solutions, only one (way oI marking the
questions) is
correct, thereIore, the no. oI ways oI selecting incorrect solutions is
14C3 .
Hence the required probability is given by
14
3
15
3
1
C
C
- .
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336
41. 200 students were admitted to an under graduate course through an
entrance test
out oI which only 150 completed it successIully. On the examination oI
their
admission data, it was Iound that 70 oI those who passed and 50 oI
those who
Iailed had a Iirst division in their senior secondary examination. Find (a)
the probability
that a student with Iirst division in the senior secondary examination is
successIul
in the under graduate course, (b) the probability that a student without
Iirst division
in senior secondary examination, is successIul in the under graduate
course, (c) the
probability that an admitted student is a Iirst divisioner in senior
secondary
examination, (d) the probability that an admitted student is unsuccessIul
in the
under graduate course.
42. 300 employees oI a Iirm were asked iI they would Iavour increasing
their working
day by one hour so that they could have a Iive day week. The results are
given in
the Iollowing table :
F,vouraFf Disf,vouraDf Neutr,laNf
enaf 102 90 48
WomenaWf 42 6 12
Find (a) P(M), (b) P(W), (c) P(F), (d) P(D), (e) P(), (I) Pb Fg ,
(g) PbW Fg , (h) PbN g , (i) PbW Ng , (j) PaF/f , (k) PaW/Ff ,
(l) PaD/Wf , (m) Pa/Nf , (n) PaN/Wf , (o) Pb Fg , (p) PbW U Dg ,
(q) Pb U Dg , (r) PbF U Dg , (s) Pb UWg , (t) Pb U F U Dg .
43. In a bridge game oI playing cards, 4 players are distributed one card
each by turn
so that each player gets 13 cards. What is the probability that a speciIied
player
gets a black ace and a king?
int: o. oI Iavourable cases are 2 4 46
1 1 11 C - C - C .
44. A bag contains 4 white and 2 black balls. Two balls are drawn
successively one
aIter another without replacement. What is the probability that (a) the
Iirst ball is
white and the second is black, (b) the Iirst is black and second is white.
int: Use conditional probability theorem.
45. (a) What is the probability that out oI 3 Iriends, Ram, Shyam and
Mohan, at least
two have the same birthday?
(b) What is the probability that out oI a group oI 4 persons, all born in
the month
oI April, at least three have same birthday?
int: Suppose that Ram states his birthday, then the probability oI
Shyam having a
diIIerent birthday is 364
365
and then the probability oI Mohan having a diIIerent
birthday is 363
365
, etc. The required probability is 364 363
1
365 365
- .
46. The probability that a man aged 70 years will die in a year is 2
3
. Find the probability
that out oI 5 men A1, A2, A3, A4 and A5, each aged 70 years, A1 will
die in a year
and will be the Iirst to die.
int: P(A1 dies Iirst out oI 5 men) 1
5
. Multiply this by the probability that at least one
oI them die in a year.
Probability
337
47. The probability oI rain tomorrow is 0.65 and the probability that the
temperature
will rise above 35C is 0.8. The probability there is no rain and
temperature remaining
below 35C is 0.1.
(a) What is the probability oI rain iI temperature rises above 35C?
(b) What is the probability that temperature remains below 35C, given
that there
is no rain?
int: Try as in exercise 38 above.
48. A bag contains 4 red and 2 black balls. Three men X, Y and Z draw
a ball in
succession, without replacement, until a black ball is obtained. Find their
respective
chances oI getting Iirst black ball.
int: X can get Iirst black ball in the Iollowing two mutually exclusive
ways: B or
WWWB, etc.
49. A and B are two candidates Ior admission to a certain course. The
probability that
A is selected is 0.80 and the probability that both A and B are selected is
at the
most 0.25. Is it possible that probability oI selection oI B is 0.50?
int: PbAU Bg 1.
50. Delhi has three independent reserved sources oI electric power to use
to prevent a
blackout in the event that its regular source Iails. The probability that
any reserved
source is available when its regular source Iails is 0.7. What is the
probability oI not
having a blackout iI the regular source Iails?
int: The required probability 1 - the probability that power is not
available Irom any
oI the reserved sources.
51. In a locality, out oI 5,000 people residing, 1,200 are above 30 years
oI age and 3,000
are Iemales. Out oI 1,200, who are above 30 years, 200 are Iemales. II a
person
selected at random is a Iemale, what is the probability that she is above
30 years oI
age?
52. The probability that both the events A and B occur simultaneously is
1
5
and the
probability oI occurrence oI neither oI them is
4
15
. Find the probabilities P(A) and
P(B) on the assumption that the events are independent.
int: Let P(A) x and P(B) y. Use the equation 1 PbAU Bg = PdA
Bi to Iind
x y. Find x y Irom it by using the equation (x y)2 (x y)2 4xy.
53. Two Iactories A and B manuIacture the same machine part. Each
part is classiIied
as having 0, 1, 2 or 3 manuIacturing deIects. The joint probabilities are
as Iollows:
(i) A part is observed to have no deIects. What is the probability that it
was
produced by Iactory A?
(ii) A part is known to have been produced by Iactory A. What is the
probability
that the part has no deIects?
(iii) A part is known to have two or more deIects. What is the probability
that it
was manuIacture by Iactory A?
F,ctory A
F,ctory B
Number of defects
0 1 2 3
0.1250 0.0625 0.1875 0.1250
0.0625 0.0625 0.1250 0.2500
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338
(iv) A part is known to have one or more deIects. What is the probability
that it
was manuIactured by Iactory B?
54. A man is dealt 4 spade cards Irom an ordinary pack oI 52 cards. II he
is given
three more cards, Iind the probability that at least one oI the additional
cards is also
a spade.
int: The probability that no spade is obtained Irom the remaining 48
cards
is
39C3
48C3
.
55. An unbiased die is thrown three times. Find the probability oI (a)
throwing 4 on the
Iirst die iI the sum oI numbers obtained in three throws is 15,
(b) obtaining a sum oI 15 when Iirst die shows 4.
int: (a) There are 10 ways oI obtaining the sum 15 out oI which 2 are
Iavourable,
(b) there are 36 cases in which Iirst die shows 4, out oI which only two
are
Iavourable.
56. A committee oI 4 has to be Iormed Irom among 3 economists, 4
engineers, 2
statisticians and 1 doctor.
(i) What is the probability that each oI the Iour proIessions are
represented on
the committee?
(ii) What is the probability that the committee consists oI doctor and at
least one
economist?
int: (ii) The required probability is obtained by Iinding the
probabilities oI the Iollowing
mutually exclusive events : 1 doc, 1 eco, 2 others}, 1 doc, 2 eco, 1
other} and
1 doc, 3 eco}.
57. Six persons toss a coin turn by turn. The game is won by the player
who Iirst
throws a head. Find the probability oI success oI the IiIth player.
58. Find the probability that an assessee Iiles his tax return and cheats on
it, given that
70 oI all the assessee Iiles returns and 20, oI those who Iile, cheat.
59. Two persons A and B throw three unbiased dice. II A throws 14, Iind
B's chances
oI throwing a higher number.
int: The event that A throws 14 is independent oI the event that B
throws a higher
number.
60. A is one oI 6 horses entered Ior a race and is to be ridden by one oI
the jockeys B
and C. It is 2 : 1 that B rides A, in which case all the horses are equally
likely to
win; iI C rides A, his chances are trebled; what are the odds against his
winning?
int: P(A wins given that he is ridden by jockey B)
1
6
P(A wins given that he is ridden by jockey C)
3
6
61. What is the probability that over a two day period the number oI
requests would
either be 11 or 12 iI at a motor garage the records oI service requests
alongwith
their probabilities are given below?
int: 11 requests can occur in 2 ways and 12 requests in 3 ways.
Daily demand : 5 6 7
Probability : 0.25 0.65 0.10
Probability
339
62. The probability that T.V. oI a company Iails during Iirst month oI its
use is
0.02. OI those that do not Iail during Iirst month, the probability oI
Iailure in the
next Iive months is 0.01. OI those that do not Iail during the Iirst six
months,
the probability oI Iailure by the end oI the Iirst year is 0.001. The
company
replaces, Iree oI charge, any set that Iails during its warranty period. II
2,000
sets are sold, how many will have to be replaced iI the warranty period is
(a)
six months, (b) one year?
int: Probability that a set Iails during Iirst year 0.02 0.98 - 0.01
0.9902 - 0.001.
63. A salesman has 60 chances oI making sales to each customer. The
behaviour oI
each successive customer is assumed to be independent. II two
customers A and
B enter, what is the probability that the salesman will make sales to A or
B?
int: PbA U Bg = 1 Pd A Bi .
64. A box contains 24 bulbs out oI which 4 are deIective. A customer
draws a sample
oI 3 bulbs at random in succession and rejects the box iI the sample
contains one or
more deIectives. What is the probability that the box is rejected?
int: The box will be rejected iI the sample contains at least one
deIective.
10.7 THEOREMS ON PROBABILITY - II
%heorem 5: (Bayes' %heorem or Inverse Probability #ule): The
probabilities assigned
to various events on the basis oI the conditions oI the experiment or by
actual
experimentation or past experience or on the basis oI personal
judgement are called
prior prob,bilities. One may like to revise these probabilities in the light
oI certain
additional or new inIormation. This can be done with the help oI Bayes'
Theorem, which
is based on the concept oI conditional probability. The revised
probabilities, thus obtained,
are known as posterior or inverse prob,bilities. Using this theorem it is
possible to
revise various business decisions in the light oI additional inIormation.
Bayes' %heorem
II an event D can occur only in combination with any oI the n mutually
exclusive and
exhaustive events A1, A2, ...... An and iI, in an actual observation, D is
Iound to have
occurred, then the probability that it was preceded by a particular event
Ak is given by
) ) )
) )
1
. /
/
. /
k k
k n
i i
i
P A P D A
P A D
P A P D A
=
=

Proof: Since A1, A2, ...... An are n exhaustive events, thereIore,
S A A An = 1 2 U . . . . . . U .
Since D is another event that can occur in combination with any oI the
mutually exclusive
and exhaustive events A1, A2, ...... An, we can write
D A D A D A D n = 1 2 b gUb gU ...... Ub g
Taking probability oI both sides, we get
P D P A D P A D P A D n b g = b g + b g + + b g 1 2 ......
We note that the events A D A D 1 2 b g, b g , etc. are mutually
exclusive.
P D P A D P A P D A i
i
n
i
i
n
i b g = b g = b g b g
= =

1 1
. / .... (1)
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340
The conditional probability oI an event Ak given that D has already
occurred, is given by
P A D
P A D
P D
P A P D A
P D k
k k k /
. /
b g
b g
b g
b g b g
b g
= =

.... (2)
Substituting the value oI P(D) Irom (1), we get
) ) )
) )
1
. /
/
. /
k k
k n
i i
i
P A P D A
P A D
P A P D A
=
=
.... (3)
Example 54: A manuIacturing Iirm purchases a certain component, Ior
its manuIacturing
process, Irom three sub-contractors A, B and C. These supply 60, 30
and 10 oI
the Iirm's requirements, respectively. It is known that 2, 5 and 8 oI
the items
supplied by the respective suppliers are deIective. On a particular day, a
normal shipment
arrives Irom each oI the three suppliers and the contents get mixed. A
component is
chosen at random Irom the day's shipment :
(a) What is the probability that it is deIective?
(b) II this component is Iound to be deIective, what is the probability
that it was supplied
by (i) A, (ii) B, (iii) C ?
$olution: Let A be the event that the item is supplied by A. Similarly, B
and C denote the
events that the item is supplied by B and C respectively. Further, let D
be the event that
the item is deIective. It is given that :
P(A) 0.6, P(B) 0.3, P(C) 0.1, P(D/A) 0.02
P(D/B) 0.05, P(D/C) 0.08.
(a) We have to Iind P(D)
From equation (1), we can write
P(D = P(A D + P(B D + P(C D
P(AP(D/ A + P(BP(D/ B + P(CP(D/C
0.6 - 0.02 0.3 - 0.05 0.1 - 0.08 0.035
(b) (i) We have to Iind P(A/D)
) ) )
)
/ 0.6 0.02
/ 0.343
0.035
P A P D A
P A D
P D
-
= = =
Similarly, (ii) ) ) )
)
/ 0.3 0.05
/ 0.429
0.035
P B P D B
P B D
P D
-
= = =
and (iii) ) ) )
)
/ 0.1 0.08
/ 0.228
0.035
P C P D C
P C D
P D
-
= = =
Alternative Method: The above problem can also be attempted by
writing various
probabilities in the Iorm oI Iollowing table :
D
D
0.035
A B C %ot,l
%ot,l
P A D P B D P C D
P A D P B D P C D

b g b g b g
d i d i d i
= = =
= = =
0 012 0 015 0 008
0 588 0 285 0 092
0965
0 600 0 300 0100 1000
. . .
. . .
.
. . . .
Probability
341
Thus P A / D
.
.
b g= 0 012
0 035
etc.
Example 55: A box contains 4 identical dice out oI which three are Iair
and the Iourth
is loaded in such a way that the Iace marked as 5 appears in 60 oI the
tosses. A die is
selected at random Irom the box and tossed. II it shows 5, what is the
probability that it
was a loaded die?
$olution: Let A be the event that a Iair die is selected and B be the event
that the loaded
die is selected Irom the box.
Then, we have ( 3
4
P A = and ( 1
4
P B = .
Further, let D be the event that 5 is obtained on the die, then
( 1
/
6
P D A = and ( 6
/
10
P D B =
Thus, P(D) P(A).P(D/A) P(B).P(D/B)
3 1 1 6 11
4 6 4 10 40
= - + - =
We want to Iind P(B/D), which is given by
P B D
P B D
P D
b / g
b g
b g
= = - - =
1
4
6
10
40
11
6
11
Example 5: A bag contains 6 red and 4 white balls. Another bag
contains 3 red and 5
white balls. A Iair die is tossed Ior the selection oI bag. II the die shows
1 or 2, the Iirst
bag is selected otherwise the second bag is selected. A ball is drawn
Irom the selected
bag and is Iound to be red. What is the probability that the Iirst bag was
selected?
$olution: Let A be the event that Iirst bag is selected, B be the event that
second bag is
selected and D be the event oI drawing a red ball.
Then, we can write
( 1
3
P A = , ( 2
3
P B = , ( 6
/
10
P D A = , ( 3
/
8
P D B =
Further, ) 1 6 2 3 9
3 10 3 8 20
P D = - + - = .
P A D = = - - =
P A D
P D
b / g
b g
b g
1
3
6
10
20
9
4
9
Example 57: In a certain recruitment test there are multiple-choice
questions. There
are 4 possible answers to each questio n out oI which only one is correct.
An intelligent
student knows 90 oI the answers while a weak student knows only
20 oI the answers.
(i) An intelligent student gets the correct answer, what is the probability
that he was
guessing?
(ii) A weak student gets the correct answer, what is the probability that
he was guessing?
$olution: Let A be the event that an intelligent student knows the
answer, B be the
event that the weak student knows the answer and C be the event that the
student gets
a correct answer.
(i) We have to Iind PdA /Ci. We can write
( (
(
( (
( ( ( (
/
/
/ /
P A C P A P C A
P A C
P C P A P C A P A P C A
= =
+

.... (1)
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342
It is given that P(A) 0.90, ( 1
/ 0.25
4
P C A = = and P(C / A =1.0
From the above, we can also write P(A = 0.10
Substituting these values, we get
) 0.10 0.25 0.025
/ 0.027
0.10 0.25 0.90 1.0 0.925
P A C
= - = =
- + -
(ii) We have to Iind PdB /Ci. Replacing A by B , in equation (1), we can
get this
probability.
It is given that P(B) 0.20, P(C / B = 0.25 and P(C / B =1.0
From the above, we can also write P(B = 0.80
Thus, we get ( 0.80 0.25 0.20
/ 0.50
0.80 0.25 0.20 1.0 0.40
P B C

= = =
+
Example 58: An electronic manuIacturer has two lines A and B
assembling identical
electronic units. 5 oI the units assembled on line A and 10oI those
assembled on line
B are deIective. All deIective units must be reworked at a signiIicant
increase in cost.
During the last eight-hour shiIt, line A produced 200 units while the line
B produced 300
units. One unit is selected at random Irom the 500 units produced and is
Iound to be
deIective. What is the probability that it was assembled (i) on line A, (ii)
on line B?
Answer the above questions iI the selected unit was Iound to be non-
deIective.
$olution: Let A be the event that the unit is assembled on line A, B be
the event that it
is assembled on line B and D be the event that it is deIective.
Thus, we can write
( 2
5
P A = , ( 3
5
P B = , ( 5
/
100
P D A = and ( 10
/
100
P D B =
Further, we have
PbA Dg = - = 2
5
5
100
1
50
and PbB Dg = - = 3
5
10
100
3
50
The required probabilities are computed Iorm the Iollowing table:
) 1 50 1
/
50 4 4
P A D = - = , ) 3 50 3
/
50 4 4
P B D = - =
) 19 50 19
/
50 46 46
P A D = - = , ) 27 50 27
/
50 46 46
P B D = - =
A B %ot,l
D
D
%ot,l
1
50
3
50
4
50
19
50
27
50
46
50
20
50
30
50
1
Probability
343
Exercise with Hints:
1. An insurance company insured 2,000 scooter drivers, 4,000 car
drivers and 6,000
truck drivers. The probability oI an accident is 0.01, 0.03 and 0.15 in the
respective
category. One oI the insured driver meets an accident. What is the
probability that
he is a scooter driver?
int: Apply Bayes' Rule.
2. When a machine is set correctly, it produces 25 deIectives,
otherwise it produces
60 deIectives. From the past knowledge and experience, the
manuIacturer knows
that the chance that the machine is set correctly or wrongly is 50 : 50.
The machine
was set beIore the commencement oI production and 1 piece was taken
out and
Iound to be deIective. What is the probability oI the machine set up
being correct?
II the selected piece was Iound to be non-deIective, what is the
probability oI the
machine set up being wrong?
3. Each oI the three identical jewellery boxes has 2 drawers. In each
drawer oI the
Iirst box there is a gold watch. In each drawer oI the second box there is
a silver
watch. In one drawer oI the third box there is a gold watch while in the
other
drawer there is a silver watch. II we select a box at random, open one oI
the
drawers and Iind it to contain a silver watch, what is the probability that
the other
drawer has a gold watch?
int: ( ( ( 1 2 3
1
3
P B = P B = P B = , ( 1 P S / B = 0, ( 2 P S / B =1, ( 3
1
/
2
P S B = .
4. In a Iactory producing bolts, Machines A, B and C manuIacture 25,
35 and
40 oI total output. OI their output, 5, 4 and 2 are deIective
respectively. A
bolt is drawn at random Irom the product and is Iound to be deIective.
What is the
probability that it was manuIactured by machine A?
5. Consider a population oI consumers consisting oI two types. The
upper class oI
consumers comprise 35 oI the population and each member has a
probability 0.8
oI purchasing brand A oI a product. Each member oI the rest oI the
population has
a probability 0.3 oI purchasing brand A oI the product. A consumer,
chosen at
random, is Iound to be buyer oI brand A. What is the probability that the
buyer
belongs to the middle and lower class oI consumers?
6. At an electric plant, it is known Irom the past experience that the
probability is 0.86
that new worker who has attended the company's training programme
will meet
his production quota and that the corresponding probability is 0.35 Ior a
new worker
who has not attended the company's training programme. II 80 oI the
new workers
attend the training programe, what is the probability that new worker
will meet his
production quota?
int: Apply P(D = P(A.P(D/ A + P(B.P(D/ B
7. A talcum powder manuIacturing company had launched a new type oI
advertisement. The company estimated that a person who comes across
the
advertisement will buy their product with a probability oI 0.7 and those
who does
not see the advertisement will buy the product with a probability oI 0.3.
II in an
area oI 1,000 people, 70 had come across the advertisement, what is
the probability
that a person who buys the product (a) has not come across the
advertisement (b)
has come across the advertisement?
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344
8. There are two boxes, oI identical appearance, each containing 4
sparkplugs. It is
known that box I contains only one deIective sparkplug, while all the
Iour sparkplugs
oI box II are non-deIective. A sparkplug is drawn at random Irom a box,
selected
at random, is Iound to be non-deIective. What is the probability that it
came Irom
box I?
9. A man has 5 one rupee coins and one oI them is known to have two
heads. He
takes out a coin at random and tosses it 5 times; it always Ialls head
upward. What
is the probability that it is a coin with two heads?
1 Give Statistical or Empirical DeIinition oI Probablity?
2. Explain Permutation with restrictions.
answers in it.
better.

10.8 LET US SUM UP
Probability distributions are a Iundamental concept in statistics. They are
used both on a
theoretical level and a practical level. Formally, a probability is a bundle
oI Iour things: a
universe which is a set oI all possible results, a number which is an
extension oI a
Boolean truth value, a constraint which matches the logical law oI the
excluded middle
along with the Iew operations an arithmetical operations correspond to
the standard
logical operation oI Boolean logic.
At last we can say that a probability is a measure oI the likelihood oI an
event. It can be
elucidate as a decimal or a percentage. Every probability must be
between 0 and 1
(100) inclusive P0 indicate an impossible event, P1 or 100
indicates a certainty
1. (a) The number oI permutations oI n objects taking n at a time are n!
(b) The number oI permutations oI n objects taking r at a time, are ) =

!
!
n
r
n
P
n r
(c) The number oI permutations oI n objects in a circular order are (n
1)!
(d) The number oI permutations oI n objects out oI which n1 are alike,
n2 are
alike, ...... nk are alike, are
n!
n1 !n2 ! ... nk !
Probability
345
(e) The number oI combinations oI n objects taking r at a time are
)
!
! !
n
r
n
C
r n r
=

2. (a) The probability oI occurrence oI at least one oI the two events A
and B is
given by : PbAU Bg = PbAg + PbBg PbA Bg = 1 PdA Bi .
(b) The probability oI occurrence oI exactly one oI the events A or B is
given by:
PdA Bi + Pd A Bi or PbAU Bg PbA Bg
3. (a) The probability oI simultaneous occurrence oI the two events A
and B is
given by: PbA Bg = PbAg. PbB / Ag or = PbBg. PbA / Bg
(b) II A and B are independent PbA Bg = PbAg. PbBg .
4. Bayes' Theorem :
) ) )
) )
1
. /
/ , ( 1,2, ...... )
. /
k k
k n
i i
i
P A P D A
P A D k n
P A P D A
=
= =

Here A1, A2, ...... An are n mutually exclusive and exhaustive events.
Apply the concept oI probability in predicting the sensex in diIIerent
stock exchanges
like ational Stock Exchange, Delhi Stock Exchange and Bombay Stock
Exchange.
10.10 KEYWORDS
Probability
Event
Outcome
Occurrence
Combination
Inverse probability
1. Fill in the blank
(a) The theory oI probability is a study oI ....................... or
.......................
experiments.
(b) ....................... is a arrangement oI a given number oI objects in a
deIinite
order.
(c) Counting techniques are oIten helpIul in ....................... oI total no. oI
outcomes.
(d) Modern approach was introduced by ....................... mathematical.
(e) Bayes' Theorem is also called .......................
2. Distinguish between
(a) Favourable outcomes and Exhaustive outcomes
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346
(b) Permutation and Combination
(c) Prior possibilities or Inverse possibilities
3. Write True or False against each of the statement:
(a) It is not possible to predetermine the outcome association with a
particular
experimentation.
(b) The total no. oI permutations oI n distinct objects is n!
(c) Each element oI the set is called sample point.
(d) A compound event is simultaneous occurrence oI only two events.
(e) The assignment oI probabilities on basis oI statistical and classical
events is
objective.
1. DeIine the term 'probability' by (a) The Classical Approach, (b) The
Statistical
Approach. What are the main limitations oI these approaches?
2. Discuss the axiomatic approach to probability. In what way it is an
improvement
over classical and statistical approaches?
3. Distinguish between objective probability and subjective probability.
Give one
example oI each concept.
4. State and prove theorem oI addition oI probabilities Ior two events
when
(a) they are not independent, (b) they are independent.
5. Explain the meaning oI conditional probability. State and prove the
multiplication
rule oI probability oI two events when (a) they are not independent, (b)
they are
independent.
6. Explain the concept oI independence and mutually exclusiveness oI
two events A
and B. II A and B are independent events, then prove that A and B are
also
independent.
For two events A and B it is given that PbAg = 0.4, PbBg = p, PbAU Bg
= 0.6
(i) Find the value oI p so that A and B are independent.
(ii) Find the value oI p so that A and B are mutually exclusive.
7. Explain the meaning oI a statistical experiment and corresponding
sample space.
Write down the sample space oI an experiment oI simultaneous toss oI
two coins
and a die.
8. State and prove Bayes' theorem on inverse probability.
9. What is the probability oI getting exactly two heads in three throws oI
an unbiased
coin?
10. What is the probability oI getting a sum oI 2 or 8 or 12 in single
throw oI two
unbiased dice?
11. Two cards are drawn at random Irom a pack oI 52 cards. What is the
probability
that the Iirst is a king and second is a queen?
12. What is the probability oI successive drawing oI an ace, a king, a
queen and a jack
Irom a pack oI 52 well shuIIled cards? The drawn cards are not replaced.
13. 5 unbiased coins with Iaces marked as 2 and 3 are tossed. Find the
probability oI
getting a sum oI 12.
Probability
347
14. II 15 chocolates are distributed at random among 5 children, what is
the probability
that a particular child receives 8 chocolates?
15. A and B stand in a ring with 10 other persons. II arrangement oI 12
persons is at
random, Iind the chance that there are exactly three persons between A
and B.
16. Two diIIerent digits are chosen at random Irom the set 1, 2, 3, 4, 5,
6, 7, 8. Find the
probability that sum oI two digits exceeds 13.
17. From each oI the Iour married couples one oI the partner is selected
at random.
What is the probability that they are oI the same sex?
18. A bag contains 5 red and 4 green balls. Two draws oI three balls
each are done
with replacement oI balls in the Iirst draw. Find the probability that all
the three
balls are red in the Iirst draw and green in the second draw.
19. Two die are thrown two times. What is the probability oI getting a
sum 10 in the
Iirst and 11 in the second throw?
20. 4 cards are drawn successively one aIter the other without
replacement. What is
the probability oI getting cards oI the same denominations?
21. A bag contains 4 white and 2 black balls. Two balls are drawn one
aIter another
without replacement. What is the probability that Iirst ball is white and
second is
black or Iirst is black and second is white?
22. A bag contains 4 white and 3 red balls. Another bag contains 3 white
and 5 red
balls. One ball is drawn at random Irom each bag. What is the
probability that (a)
both balls are white, (b) both are red, (c) one oI them is white and the
other is red?
23. What is the probability oI a player getting all the Iour aces, when
playing cards are
uniIormly distributed among the Iour players?
24. A bag contains 10 white and 6 red balls. Two balls are drawn one
aIter another
with replacement. Find the probability that both balls are red.
25. Three persons A, B and C successively draw one card Irom a pack oI
52 cards
with replacement oI the card drawn earlier. The Iirst to obtain a card oI
spade
wins. What are their respective chances oI winning?
26. A bag contains 6 red and 4 green balls. A ball is drawn at random
and replaced and
a second ball is drawn at random. Find the probability that the two balls
drawn are
oI diIIerent colours.
27. The letters oI the word GAESHPURI are arranged at random. Find
the probability
that in the word, so Iormed;
(a) The letter G always occupies the Iirst place.
(b) The letter P and I respectively occupy Iirst and last places.
(c) The vowels are always together.
(d) The letters E, H, P are never together.
(e) The vowels always occupy even places (i.e., 2nd, 4th, etc.)
28. 5-letter words are Iormed Irom the letters oI the word ORDIATES.
What is the
probability that the word so Iormed consists oI 2 vowels and 3
consonants?
29. Maximum number oI diIIerent committees are Iormed out oI 100
teachers, including
principal, oI a college such that each committee consists oI the same
number oI
members. What is the probability that principal is a member oI any
committee?
30. Letters oI the word ITERMEDIATE are arranged at random to
Iorm diIIerent
words. What is the probability that :
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348
(a) First letter oI the word is R?
(b) First letter is M and last letter is E?
(c) All the vowels come together?
(d) The vowels are never together?
int: (d) The event will occur iI the letters are arranged as
VCVCVCVCVCVCV
where V and C denote vowels and consonants respectively. 6 places Ior
vowels
can be chosen in 7C6.
31. Five persons entered the liIt cabin on the ground Iloor oI an 8-Iloor
building. Suppose
that each oI them independently and with equal probability can leave the
Iloor
beginning with Iirst. Find out the probability oI all the persons leaving at
diIIerent
Iloors.
int: There are 7 Iloors along with ground Iloor.
32. A team oI Iirst eleven players is to be selected at random Irom a
group oI 15
players. What is the probability that (a) a particular player is included,
(b) a particular
player is excluded?
33. Out oI 18 players oI a cricket club there are 2 wicket keepers, 5
bowlers and rest
batsmen. What is the probability oI selection oI a team oI 11 players
including one
wicket keeper and at least 3 bowlers?
34. Four persons are selected at random Irom a group consisting oI 3
men, 2 women
and 4 children. Find the chance that exactly 2 oI them are children.
35. A committee oI 6 is chosen Irom 10 men and 7 women so as to
contain at least 3
men and 2 women. Find the probability that 2 particular women don't
serve on the
same committee.
36. II n persons are seated around a round table, Iind the probability that
in no two
ways a man has the same neighbours.
37. 6 teachers, oI whom 2 are Irom science, 2 Irom arts and 2 Irom
commerce, are
seated in a row. What is the probability that the teachers oI the same
discipline are
sitting together?
38 (a) II P(A) 0.5, P(B) 0.4 and Pd A U Bi = 0.7 , Iind P(A/B) and
PbAUBg ,
where A is compliment oI A. State whether A and B are independent.
(b) II ( 1
3
P A = , ( 1
2
P B = , ( 1
/
6
P A B = , Iind P(B/A) and P dB / Ai .
(c) II A, B and C are three mutually exclusive events, Iind P(B) iI
( ( ( 1 1
3 2
P C = P A = P B .
39. Let A be the event that a business executive selected at random has
stomach ulcer
and B be the event that he has a heart disease. Interpret the Iollowing
events :
(i) Ac A, (ii) Ac A, (iii) Ac B, (iv) A Bc , (v) A B c
U b g ,
where c stands Ior compliment.
40. Let A, B and C be three events. Write down the Iollowing events in
usual set
notations :
(i) A and B occur together, (ii) Both A and B occur but not C, (iii) all the
three
events occur, (iv) at least one event occur and (v) at least two events
occur.
Probability
349
41. The records oI 400 examinees are given below :
II an examinee is selected at random Irom this group, Iind
(i) the probability that he is a commerce graduate,
(ii) the probability that he is a science graduate, given that his score is
above 60
and
(iii) the probability that his score is below 50, given that he is B.A.
42. It is given that ) 5 ) 1 ) 1
, and ,
6 3 2
P A + B = P AB = P B = where PdBi stands Ior
the probability that event B doesn't happen. Determine P(A) and P(B).
Hence,
show that the events A and B are independent.
43. A can solve 75 oI the problems in accountancy while B can solve
70 oI the
problems. Find the probability that a problem selected at random Irom
an
accountancy book;
(a) will be solved by both A and B,
(b) will be solved by A or B,
(c) will be solved by one oI them.
44. (a) One card is drawn Irom each oI two ordinary sets oI 52 cards.
Find the
probability that at least one oI them will be the ace oI hearts.
(b) Two cards are drawn simultaneously Irom a set oI 52 cards. Find the
probability that at least one oI them will be the ace oI hearts.
45. An article manuIactured by a company consists oI two parts X and
Y. In the
process oI manuIacture oI part X, 9 out oI 104 parts may be deIective.
Similarly, 5
out oI 100 are likely to be deIective in the manuIacture oI part Y.
Compute the
probability that the assembled product will not be deIective.
46. A salesman has 80 chance oI making a sale to each customer. The
behaviour oI
each customer is independent. II two customers A and enter, what is the
probability
that the salesman will make a sale to A or B?
47. A problem in economics is given to 3 students whose chances oI
solving it are
2
3
,
3
4
and
4
5
respectively. What is the probability that the problem will be solved?
48. A man and a woman appear in an interview Ior two vacancies in the
same post.
The probability oI man's selection is
1
4
and that oI woman's selection is
1
3
. What is
the probability that
(a) both oI them will be selected?
(b) only one oI them will be selected?
(c) none oI them will be selected?
(d) at least one oI them will be selected?
Score
Educ,tion,l Qu,lific,tion
B A B Sc B Com
%ot,l
Below
Between ,nd
Above
%ot,l
90 30 60
. . . . . .
50 180
50 60 20 70 70 160
60 10 30 20 60
120 130 150 400
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350
49. What is the chance that a non-leap year selected at random will
contain 53 Sundays?
50. In a group oI equal number oI men and women 15 oI men and
30 oI women
are unemployed. What is the probability that a person selected at random
is
employed?
51. An anti-aircraIt gun can take a maximum oI Iour shots at enemy
plane moving
away Irom it. The probabilities oI hitting the plane at Iirst, second, third
and Iourth
shot are 0.4, 0.3, 0.2 and 0.1 respectively. What is the probability that
the gun hits
the plane?
52. A piece oI equipment will Iunction only when all the three
components A, B, C are
working. The probability oI A Iailing during one year is 0.15 and that oI
B Iailing is
0.05 and oI C Iailing is 0.10. What is the probability that the equipment
will Iail
beIore the end oI the year?
53. A worker attends three machines each oI which operates
independently oI the
other two. The probabilities oI events that machines will not require
operator's
intervention during a shiIt are p1 0.4, p2 0.3 and p3 0.2. Find the
probability
that at least one machine will require worker's intervention during a
shiIt.
54. The probability that a contractor will get a plumbing contract is 2/3
and the probability
that he will not get a electric contract is 5/9. II the probability oI getting
at least one
oI the contract is 4/5, what is the probability that he will get both?
55. An M.B.A. applies Ior job in two Iirms X and Y. The probability oI
his being
selected in Iirm X is 0.7 and being rejected in the Iirm Y is 0.5. The
probability oI
at least one oI his application being rejected is 0.6. What is the
probability that he
will be selected in one oI the Iirms?
56. A researcher has to consult a recently published book. The
probability oI its being
available is 0.5 Ior library A and 0.7 Ior library B. Assuming the two
events to be
statistically independent, Iind the probability oI book being available in
library A
and not available in library B.
57. An investment consultant predicts that the odds against the price oI
certain stock
will go up next week are 2:1 and odds in Iavour oI price remaining same
are 1:3.
What is the probability that price oI the stock will go down during the
week?
58. In a random sample oI 1,000 residents oI a city 700 read newspaper
A and 400
read newspaper B. II the habit oI reading newspaper A and B is
independent,
what is the probability that a person selected at random would be
reading
(a) both the papers, (b) exactly one oI the papers, (c) at least one oI the
papers? Also Iind the absolute number oI persons in each oI the cases
(a), (b) and
(c).
59. The odds that a book will be reviewed Iavourably by three
independent experts are
5 to 2, 4 to 3 and 3 to 4 respectively. What is the probability that oI the
three
reviews a majority will be Iavourable?
60. In a certain city two newspapers, A and B, are published. It is known
that 25 oI
the city population reads A and 20 reads B while 8 reads both A and
B. It is
also known that 30 oI those who read A but not B look into
advertisements and
40 oI those who read B but not A look into advertisements while 50
oI those
who read both A and B look into advertisements. What is percentage oI
population
who reads an advertisement?
61. The probability that a new entrant to a college will be a student oI
economics is
1/3, that he will be a student oI political science is 7/10 and that he will
not be a
student oI economics and political science is 1/5. II one oI the new
entrants is
selected at random, what is the probability that (a) he will be a student oI
economics
and political science, (b) he will be a student oI economics iI he is a
student oI
Probability
351
political science? Comment upon the independence oI two events : a
student oI
economics and a student oI political science.
62. 20 oI all students at a university are graduates and 80 are
undergraduates.
The probability that a graduate student is married is 0.5 and the
probability that an
undergraduate student is married is 0.1. One student is selected at
random.
(a) What is probability that he is married?
(b) What is the probability that he is a graduate iI he is Iound to be
married?
63. In a city three daily news papers X, Y and Z are published. 40 oI
the people oI
the city read X, 50 read Y, 30 read Z, 20 read both X and Y, 15
read X and
Z, 10 read Y and Z and 24 read all the 3 papers. Calculate the
percentage oI
people who do not read any oI the 3 newspapers.
64. A bag contains 4 red and 3 blue balls. Two drawings oI 2 balls are
made. Find the
probability oI drawing Iirst 2 red balls and the second 2 blue balls
(i) iI the balls are returned to the bag aIter the Iirst draw,
(ii) iI the balls are not returned aIter the Iirst draw.
65. A die is loaded in such a way that each odd number is twice as likely
to occur as
each even number. Find (i) the probability that the number rolled is a
perIect square
and (ii) the probability that the number rolled is a perIect square
provided it is
greater than 3.
66. There are 100 students in a college class oI which 36 boys are
studying statistics
and 13 girls are not studying statistics. II there are 55 girls in all, Iind the
probability
that a boy picked at random is not studying statistics.
67. II a pair oI dice is thrown, Iind the probability that
(i) the sum is neither 7 nor 11
(ii) the sum is neither 8 nor 10
(iii) the sum is greater than 12.
68. Three horses A, B and C are in race. A is twice as likely to win as B,
and B is
twice as likely to win as C. What are the respective probabilities oI
winning?
69. A sample oI 3 items is selected at random Irom a box containing 12
items oI which
3 are deIective. Find the possible number oI deIective combinations oI
the said 3
selected items along with their respective probabilities.
70. In an examination 30 oI students have Iailed in mathematics, 20
oI the students
have Iailed in chemistry and 10 have Iailed in both mathematics and
chemistry.
A student is selected at random.
(i) What is the probability that the student has Iailed either in
mathematics or in
chemistry?
(ii) What is the probability that the student has Iailed in mathematics iI is
known
that he has Iailed in chemistry?
71. There are two bags. The Iirst contains 2 red and 1 white balls
whereas the second
bag contains 1 red and 2 white balls. One ball is taken out at random
Irom the Iirst
bag and is being put in the second. Then, a ball is chosen at random Irom
the
second bag. What is the probability that this ball is red?
72. From the sale Iorce oI 150 people, one will be chosen to attend a
special meeting.
II 52 are single and 72 are college graduates, and 3/4 oI 52 that are
single are
college graduates, what is the probability that a sales person, selected at
random,
will be neither single nor a college graduate?
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352
73. Data on readership oI a certain magazine indicate that the proportion
oI male
readers over 30 years old is 0.20. The proportion oI male readers under
30 is 0.40.
II the proportion oI readers under 30 is 0.70, what is the proportion oI
subscribers
that are male? Also Iind the probability that a randomly selected male
subscriber is
under 30.
74. Two union leaders and 10 directors oI a company sit randomly to
decide upon the
wage hike as demanded by the union. Find the probability that there will
be exactly
three directors between the two union leaders.
75. Suppose a company hires both MBAs and non-MBAs Ior the same
kind oI
managerial task. AIter a period oI employment some oI each category
are promoted
and some are not. Table below gives the proportion oI company's
managers among
the said classes :
Calculate P(A/B) andP(B/A), and Iind out whether A and B are
independent events?
76. Each oI A, B and C throws with two dice Ior a prize. The highest
throw wins, but
iI equal highest throws occur the player with these throw continue. II A
throws
10 Iind his chance oI winning.
77. The probability oI a man hitting a target is 1/4. How many times
must he Iire so
that probability oI hitting the target at least once is greater than 2/3?
78. Find the probability that an assessee Iiles his tax return and cheats on
it, given that
70 oI all assessee Iile returns and 25 oI those who Iile, cheat.
79. The probability oI an aircraIt engine Iailure is 0.10. With how many
engines should
the aircraIt be equipped to be 0.999 sure against an engine Iailure?
Assume that
only one engine is needed Ior successIul operation oI the aircraIt.
80. A market research Iirm is interested in surveying certain attitude in
small community.
There are 125 house holds broken down according to income, ownership
oI a
telephone and ownership oI a T.V.
. 1,00,000 . 1,00,000
Telephone Telephone
o Telephone o Telephone
subscriber subscriber
Own T.V. set 59 10 40
o T.V. set 2 4
Households with Households with
,nnu,l income of ,nnu,l income
Rs or less ,bove Rs
5
4 1
(a) II a person is selected at random, what is the probability that he is a
T.V.
owner?
(b) II the person selected at random is Iound to be having income greater
than
100,000 and a telephone subscriber, what is the probability that he is a
T.V.
owner?
(c) What is the conditional probability oI drawing a household that owns
a T.V.,
given that he is a telephone subscriber?
Promotional
Status
Academic QualiIication
MBA
(A)
on -MBA
(A)
Total
Promoted (B)
0.42 0.18
ot Promoted(B) 0.28 0.12
Total 0.70 0.30
060
040
100
.
.
.
Probability
353
81. An investment Iirm purchases three stocks Ior one week trading
purposes. It
assesses the probability that the stock will increase in value over the
week as 0.8,
0.7 and 0.6 respectively. What is the chance that (a) all the three stocks
will increase,
and (b) at least two stocks will increase? (Assume that the movements oI
these
stocks is independent.)
82. A company has two plants to manuIacture scooters. Plant I
manuIactures 70 oI
the scooters and plant II manuIactures 30. At plant I 80 oI the
scooters are
rated standard quality and at plant II 90 oI the scooters are rated
standard quality.
A scooter is picked up at random and is Iound to be standard quality.
What is the
chance that it has been produced by plant I?
83. A person has 4 coins each oI a diIIerent denomination. How many
diIIerent sums
oI money can be Iormed?
84. Two sets oI candidate avoid touching Ior the position oI Board oI
Directors oI a
company. The probabilities oI winning are 0.7 and 0.3 Ior the two. II the
Iirst set
wins, they will introduce a new product with the probability 0.4.
Similarly, the
probability that the second set will introduce a new product is 0.8. II the
new
product has been introduced, what is the chance that the Iirst set oI
candidates has
won?
85. By examining the chest X-ray, the probability that T.B. is detected
when a person
is actually suIIering is 0.99. The probability that the doctor diagnoses
incorrectly,
that a person has T.B., on the basis oI X-ray is 0.001. In a certain city, 1
in 1000
persons suIIers Irom T.B. A person selected at random is diagnosed to
have T.B.
What is the chance that he actually has T.B.?
86. The compressors used in reIrigerators are manuIactured by XYZ
company at
three Iactories located at Pune, asik and agpur. It is known that the
Pune
Iactory produces twice as many compressors as asik one, which
produces the
same number as the agpur one (during the same period). Experience
also shows
that 0.2 oI the compressors produced at Pune and asik and 0.4 oI
those
produced at agpur are deIective.
A quality control engineer while maintaining a reIrigerator Iinds a
deIective
compressor. What is the probability that asik Iactory is not to be
blamed?
87. A company estimates that the probability oI a person buying its
product aIter seeing
the advertisement is 0.7. II 60 oI the persons have come across the
advertisement,
What is the probability that the person, who buys the product, has not
come across
the advertisement?
88. In an automobile Iactory, certain parts are to be Iixed to the chassis
in a section
beIore it moves into another section. On a given day, one oI the three
persons A, B
or C carries out this task. A has 45, B has 35 and C has 20 chance
oI
doing it. The probabilities that A, B or C will take more than the allotted
time are
1
16
,
1
10
and
1
20
respectively. II it is Iound that one oI them has taken more time,
what is the probability that A has taken more time?
89. The probabilities oI X, Y and Z becoming managers are
4
9
,
2
9
and
1
3
respectively.
The probabilities that the Bonus Scheme will be introduced iI X, Y or Z
become
manager are
3
10
,
1
2
and
4
5
respectively.
(a) What is the probability that the Bonus Scheme will be introduced?
(b) What is the probability that X was appointed as manager given that
the Bonus
Scheme has been introduced?
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354
90. There are 3 bags. The Iirst bag contains 5 red and 3 black balls, the
second contains
4 red and 5 black balls and the third contains 3 red and 4 black balls. A
bag is
selected at random and the two balls drawn, at random, are Iound to be
red. Revise
the probabilities oI selection oI each bag in the light oI this observation.
91. On an average, 20 oI the persons going to a handicraIt emporium
are Ioreigners
and the remaining 80 are local persons. 75 oI Ioreigners and 50 oI
local
persons are Iound to make purchases. II a bundle oI purchased items is
sent to the
cash counter, what is the probability that the purchaser is a Ioreigner?
92. The chance that doctor A will diagnose disease B correctly is 60.
The chance
that a patient will die by his treatment aIter correct diagnosis is 40 and
the chance
oI death by wrong diagnosis is 70. A patient oI doctor A, who had
disease B,
died. What is the chance that his disease was correctly diagnosed?
93. A company has Iour production sections S1, S2, S3 and S4 which
contribute 30,
20, 28 and 22, respectively, to the total output. It was observed
that these
sections produced 1, 2, 3 and 4 deIective units respectively. II a
unit is
selected at random and Iound to be deIective, what is the probability that
it has
come Irom either S1 or S4?
94. A Iactory produces certain type oI output by three machines. The
respective daily
production Iigures are : machine A 3,000 units, machine B 2,500
units, machine
C 4,500 units. Past experience shows that 1 oI the output produced
by machine
A is deIective. The corresponding Iractions oI deIectives Ior the other
two machines
are 1.2 and 2 respectively. An item is selected at random Irom a day's
production
and is Iound to be deIective. What is the probability that it came Irom
the output oI
(i) machine A, (ii) machine B, (iii) machine C?
95. It is known that 20 oI the males and 5 oI the Iemales are
unemployed in a
certain town consisting oI an equal number oI males and Iemales. A
person selected
at random is Iound to be unemployed. What is the probability that he/she
is a (i)
male, (ii) Iemale?
96. In a typing-pool, three typists share the total work in the ratio 30,
35 and 35
oI the total work. The Iirst, second and the third typist spoil the work to
the extent
oI 3, 4 and 5 respectively. A completed work is selected at random
and
Iound to be spoiled. What is the probability that the work was done by
the third
typist?
97. An organisation dealing with consumer products, wants to introduce
a new product
in the market. Based on their past experience, it has a chance oI 65 oI
being
successIul and 35 oI not being successIul. In order to help them to
make a
decision on the new product, i.e., whether to introduce the new product
or not, it
decides to get additional inIormation on consumers' attitude towards the
product.
For this purpose, the organisation decides to conduct a survey. In the
past, when
the product oI this type were successIul, the surveys yielded Iavourable
indications
85 oI the times, whereas unsuccessIul products received Iavourable
indications
30 oI the time. Determine the probability oI the product being a
success given
the survey inIormation.
98. In a class oI 75 students, 15 were considered to be very intelligent,
45 as medium
and the rest below average. The probability that a very intelligent
student Iails in a
viva-voce examination is 0.005; the medium student Iailing has a
probability 0.05;
and the corresponding probability Ior a below average student is 0.15. II
a student
is known to have passed the viva-voce examination, what is the
probability that he
is below average?
Probability
355
99. Comment on the Iollowing statements :
(a) Since accident statistics show that the probability that a person will
be involved
in a road accident is 0.02, the probability that he will be involved in 2
accidents
in that year is 0.0004.
(b) For three mutually exclusive events A, B and C oI a sample space S,
where
( 1
,
3
P A = ( 3
5
P B = and ( 1
5
P C = .
(c) A and B are two events in a sample space S where PaAf 5
6
, PaBf 2
3
and
PbA Bg =2
5
.
(d) Four persons are asked the same question by an interviewer. II each
has,
independently, probability oI 1/6 oI answering correctly, the probability
that at
least one answers correctly is 1 2
4
6 3
- = .
(e) The probability that A and B, working independently, will solve a
problem is
2
3
and probability that A will solve the problem 1
3
.
(I) For a biased dice the probabilities Ior diIIerent Iaces to turn up are as
given in
the Iollowing table:
(g) II the probability oI A to Iail in an examination is 0.15 and that Ior B
is 0.27,
then the probability that either A or B Iails in examination is 0.42.
(h) II the probability that Congress wins Irom a constituency is 0.40 and
that
B.J.P. wins Irom the same constituency is 0.42, than the probability that
either
Congress or B.J.P. wins Irom that constituency is 0.82.
(i) The probability oI occurrence oI event A is 0.6 and the probability oI
occurrence oI at least one oI the Iour events A, B, C and D is 0.5.
100. Four alternative answers are given to each question. Point put the
correct
answer :
(a) II A and B are any two events oI a sample space S, then PbAU Bg
+PbA Bg
equals
(i) P(A + P(B
(ii) 1 Pd A Bi
(iii) 1 Pd A U Bi
(iv) none oI the above.
(b) II A and B are independent and mutually exclusive events, then
(i) P(A = P(A/ B
(ii) P(B = P(B/ A
umber on
the dice 1 2 3 4 5 6
Probability 0.15 0.30 0.17 0.25 0.08 0.07
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356
(iii) either P(A) or P(B) or both must be zero.
(c) II A and B are independent events, then PbA Bg equals
(i) P(A + P(B
(ii) PaAf.PaB/Af
(iii) PaBf.PaA/Bf
(iv) PaAf.PaBf
(d) II A and B are independent events, then PbAU Bg equals
(i) PaAf.PaBf PaBf
(ii) PaAf.PdBi PaBf
(iii) PdAi.PdBi PaAf
(e) II A and B are two events such that PbAU Bg =5
6
, PbA Bg =1
3
, ( 1
3
P A = ,
the events are
(i) dependent
(ii) independent
(iii) mutually exclusive
101. Which oI the Iollowing statements are TRUE or FALSE :
(i) The probability oI an impossible event is always zero.
(ii) The number oI permutations is always greater than the number oI
combinations.
(iii) II two events are independent, then they will also be mutually
exclusive.
(iv) II P(A) and P(B) are non-zero and A and B are independent, then
they
cannot be mutually exclusive.
(v) II P(A) and P(B) are non-zero and A and B are mutually exclusive,
then they
may be independent.
(vi) The probability that the rooI oI a room will Iall on the Iloor can be
determined
with the help oI Classical deIinition.
(vii) Personal judgement or experience cannot be used in the assignment
oI
probabilities.
(viii) Revision oI the past probabilities oI various events is possible on
the basis oI
the outcome oI the experiment.
(ix) The probability oI occurrence oI an event cannot be a negative
number.
(x) The probability oI occurrence oI an event that is sure to occur can be
greater
than unity.
102. Objective Type Questions :
(a) The probability oI getting a number greater than 4 Irom the throw oI
an
unbiased dice is
Probability
357
(i)
1
2
(ii)
1
3
(iii)
1
4
(iv) none oI these.
(b) The probability oI getting exactly one tail in the toss oI two unbiased
coins is
(i)
1
2
(ii)
2
3
(iii)
1
4
(iv) none oI these.
(c) II odds in Iavour oI an event A are 3 : 5, then the probability oI non-
occurrence
oI A is
(i)
3
5
(ii)
3
8
(iii)
5
8
(iv) none oI these.
(d) Four dice and six coins are tossed simultaneously. The number oI
elements in
the sample space are
(i) 46 - 62 (ii) 26 - 62 (iii) 64 - 26 (iv) none oI these.
(e) Two cards are drawn successively without replacement Irom a well-
shuIIled
pack oI 52 cards. The probability that one oI them is king and the other
is
queen is
(i)
8
13-51 (ii)
4
13-51 (iii)
1
13-17 (iv) none oI these.
(I) Two unbiased dice are rolled. The chance oI obtaining an even sum is
(i)
1
4
(ii)
1
2
(iii)
1
3
(iv) none oI these.
(g) Two unbiased dice are rolled. The chance oI obtaining a six only on
the
second die is
(i)
5
6
(ii)
1
6
(iii)
1
4
(iv) none oI these.
(h) II PaAf 4
5
, then odds against A are
(i) 1 : 4 (ii) 5 : 4 (iii) 4 : 5 (iv) none oI these.
(i) The probability oI occurrence oI an event A is 0.60 and that oI B is
0.25. II A
and B are mutually exclusive events, then the probability oI occurrence
oI
neither oI them is
(i) 0.35 (ii) 0.75 (iii) 0.15 (iv) none oI these.
(j) The probability oI getting at least one head in 3 throws oI an unbiased
coin is
(i)
1
8
(ii)
7
8
(iii)
3
8
(iv) none oI these.
DISCUSSION
1. (a) Statistical, Random (b) Permutation (c) enumeration
(d) Russian (e) Inverse Probability
2. (a) True (b) True (c) True (d) False (e) True
W. Feller, An introduction to prob,bility theory ,nd its ,pplic,tions,
Volume 1, John
Willy & Sons.
Ior Management
358
I Csiszar, I divergence geometry of prob,bility distributions ,nd
minimi:,tion
problems, The Annals oI probability, Vol 3, o 1, pp. 146-158.
Sheldon M. Ross, A first course in prob,bility, Prentice Hall.
Morris H. Degroot, Mark J, Schervish, "Prob,bility ,nd St,tistics,"
Addison-Wesley,
2001
William Mendenhall, Robert, J. Beaver, Barbara, M. Beaver,
Introduction to Prob,bility
,nd St,tistics.
AIter studying the probability in the previous lesson the next step is the
probability
distributions. Probability distributions are Iundamental concepts oI
statistics. It is used
both in theoretical aspects as well as practical aspects.
11.1 INTRODUCTION
Usual manager is Iorced to make decisions when there is uncertainty as
to what will
happen aIter the decisions are made. In this situation the mathematical
theory oI probability
Iurnishes a tool that can be oI great help to the decision maker. A
probability Iunction is
a rule that assigns probabilities to each element oI a set oI events that
may occur.
Probability distribution can either discrete or continuous. A discrete
probability distribution
is sometimes called a probability mass Iunction and a continuous one is
called a probability
density Iunction.
LESSON
11
THEORETICAL PROBABILITY DISTRIBUTIONS
CONTENTS
11.1 Introduction
11.2 Probability Distribution
11.3 Binomial Distribution
11.4 Hypergeometric Distribution
11.5 Pascal Distribution
11.6 Geometrical Distribution
11.7 UniIorm Distribution (Discrete Random Variable)
11.8 Poisson Distribution
11.9 Exponential Distribution
11.10 UniIorm Distribution (Continuous Variable)
11.11 ormal Distribution
11.12 Let us Sum Up
11.14 Keywords
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360
11.2 PROBABILITY DISTRIBUTION
The study oI a population can be done either by constructing an
observed (or empirical)
Irequency distribution, oIten based on a sample Irom it, or by using a
theoretical distribution.
We have already studied the construction oI an observed Irequency
distribution and its
various summary measures. ow we shall learn a more scientiIic way to
study a
population through the use oI theoretical probability distribution oI a
random variable. It
may be mentioned that a theoretical probability distribution gives us a
law according to
which diIIerent values oI the random variable are distributed with
speciIied probabilities.
It is possible to Iormulate such laws either on the basis oI given
conditions (a prior
considerations) or on the basis oI the results (a posteriori inIerences) oI
an experiment.
II a random variable satisIies the conditions oI a theoretical probability
distribution, then
this distribution can be Iitted to the observed data.
The knowledge oI the theoretical probability distribution is oI great use
in
the understanding and analysis oI a large number oI business and
economic
situations. For example, with the use oI probability distribution, it is
possible to test a
hypothesis about a population, to take decision in the Iace oI uncertainty,
to make Iorecast,
etc.
Theoretical probability distributions can be divided into two broad
categories, viz. discrete
and continuous probability distributions, depending upon whether the
random variable is
discrete or continuous. Although, there are a large number oI
distributions in each category,
we shall discuss only some oI them having important business and
economic applications.
11.3 BINOMIAL DISTRIBUTION
Binomial distribution is a theoretical probability distribution which was
given by James
Bernoulli. This distribution is applicable to situations with the Iollowing
characteristics :
1. An experiment consists oI a Iinite number oI repeated trials.
2. Each trial has only two possible, mutually exclusive, outcomes which
are termed as
a 'success' or a 'Iailure'.
3. The probability oI a success, denoted by p, is known and remains
constant Irom
trial to trial. The probability oI a Iailure, denoted by q, is equal to 1 - p.
4. DiIIerent trials are independent, i.e., outcome oI any trial or sequence
oI trials has
no eIIect on the outcome oI the subsequent trials.
The sequence oI trials under the above assumptions is also termed as
Bernoulli
%ri,ls.
Probability Function or Probability Mass Function
Let n be the total number oI repeated trials, p be the probability oI a
success in a trial and
q be the probability oI its Iailure so that q 1 - p.
Let r be a random variable which denotes the number oI successes in n
trials. The
possible values oI r are 0, 1, 2, ...... n. We are interested in Iinding the
probability oI r
successes out oI n trials, i.e., P(r).
To Iind this probability, we assume that the Iirst r trials are successes
and remaining n -
r trials are Iailures. Since diIIerent trials are assumed to be independent,
the probability
oI this sequence is
p p p q q q
r times n r times
. . .... . . ....
14243 14243
b g
i.e. prqn-r.
Since out oI n trials any r trials can be success, the number oI sequences
showing any r
trials as success and remaining (n - r) trials as Iailure is nCr , where the
probability oI r
successes in each trial is prqn-r. Hence, the required probability is P(r)
nCrprqn r, where
r 0, 1, 2, ...... n.
Theoretical Probability
Distributions
361
Writing this distribution in a tabular Iorm, we have
It should be noted here that the probabilities obtained Ior various values
oI r are the
terms in the binomial expansion oI (q p)n and thus, the distribution is
termed as Binomial
Distribution. ( ) n r nr
P r = Cr p q - is termed as the probability Iunction or probability mass
Iunction (p.m.I.) oI the distribution.
Summary Measures of Binomial Distribution
(a) Mean: The mean oI a binomial variate r, denoted by , is equal to
E(r), i.e.,
0 1
( ) ( ) .
n n
n r nr
r
r r
E r rP r r C p q
= =
= = = (note that the term Ior r 0 is 0)
(
(
( ( 1 1
. ! . 1 !
. .
! ! 1! !
n n
r n r r n r
r r
r n n n
p q p q
r n r r n r
- -
= =
-
= =
- - -
)
) ) )1 1
1
1 !
.
1 ! !
n
r n r n
r
n
np p q np q p
r n r

=

= = +
= np "q + p = 1
(b) Jariance: The variance oI r, denoted by s 2 , is given by
) . J 2 2 2 2 2 2 2 o = E r E r | = E r np = E r npr + n p |
= Er2 ) 2npEr) + n2 p2 = Er2 ) 2n2 p2 + n2 p2
= Er2 ) n2 p2 .... (1)
Thus, to Iind o 2 , we Iirst determine E(r2).
ow, 2 ) 2 )
1
. 1
n
n r nr n r nr
r r
r
E r r C p q r r r C p q
=
= = + |
)
2 1
1 .
n n
n r n r n r n r
r r
r r
r r C p q r C p q
= =
= + )
) 2
1 !
.
! !
n
r n r
r
r r n
p q np
r n r

=

= +

) ) 2
!
.
2 ! !
n
r n r
r
n
p q np
r n r

=
= +
) )
) ) 2
1 . 2 !
.
2 ! !
n
r n r
r
n n n
p q np
r n r

=

= +

) )
) )
2 2
2
2 !
1 .
2 ! !
n
r nr
r
n
n n p p q np
r n r

=

= +

) ) ) 1 2 2 1 2 n n n p q p np n n p np = + + = +
Substituting this value in equation (1), we get
o 2 = nn 1) p2 + np n2 p2 = np1 p) = npq
Or the standard deviation = npq
#emarks: o 2 = npq = me,n-q , which shows that o 2 me,n , since 0
q 1.
r nTotal
P r C p q C p q C p q C p q n n n n n n n
n
n
1 2
1

1
1
2
2 2
KK
( KK
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362
(c) The values oI 3 , 4 , 1 and 2
Proceeding as above, we can obtain
) ) 3
3 = E r np = npq q p
) ) 4 2 2 2
4 = E r np = 3n p q + npq 1 6pq
Also
) ) 2 2 2 2 2 2
3
1 3 3 3 3
2
n p q q p q p
n p q npq

= = =
The above result shows that the distribution is symmetrical when
p q
1
2
, negatively skewed iI q p, and positively skewed iI q ~ p
2 2 2 ) )
4
2 2 2 2 2
2
3 16 1 6
3
n p q npq pq pq
n p q npq

+
= = = +
The above result shows that the distribution is leptokurtic iI 6pq 1,
platykurtic
iI 6pq ~ 1 and mesokurtic iI 6pq 1.
(d) Mode: Mode is that value oI the random variable Ior which
probability is maximum.
II r is mode oI a binomial distribution, then we have
P(r 1) P(r) P(r 1)
Consider the inequality P(r) > P(r 1)
or 1 1
1
n r nr n r nr
r r C p q C p + q
+ >
or ) ) )
1 1 ! !
! ! 1! 1!
r n r r n r n n
p q p q
r n r r n r
> +
+
or ) )
1 1
. . or
1
q p qr q np pr
n r r
> +>
+
Solving the above inequality Ior r, we get
r > n +1) p 1 .... (1)
Similarly, on solving the inequality P(r 1) P(r) Ior r, we can get
r n +1) p .... (2)
Combining inequalities (1) and (2), we get
n +1) p 1 r n +1) p
Case I: When (n 1)p is not an integer
When (n 1)p is not an integer, then (n 1) p 1 is also not an integer.
ThereIore, mode
will be an integer between (n 1)p - 1 and (n 1)p or mode will be an
integral part oI
(n 1)p.
Case II: hen (n 1)p is an integer
When (n 1)p is an integer, the distribution will be bimodal and the two
modal values
would be (n 1) p 1 and (n 1)p.
Distributions
363
Example 1: An unbiased die is tossed three times. Find the probability
oI obtaining (a)
no six, (b) one six, (c) at least one six, (d) two sixes and (e) three sixes.
$olution: The three tosses oI a die can be taken as three repeated trials
which are
independent. Let the occurrence oI six be termed as a success.
ThereIore, r will denote
the number oI six obtained. Further, n 3 and
1
6
p = .
(a) Probability oI obtaining no six, i.e.,
(
0 3
3 0 3
0
1 5 125
0 1.
6 6 216
P r = = C p q = =
(b) (
2
3 1 2
1
1 5 25
1 3.
6 6 72
P r C p q = = = =
(c) Probability oI getting at least one six 1 - P(r 0)
125 91
1
216 216
= - =
(d) (
2
3 2 1
2
1 5 5
2 3.
6 6 72
P r C p q = = = =
(e) (
3
3 3 0
3
1 1
3 3.
6 216
P r C p q = = = =
Example 2: Assuming that it is true that 2 in 10 industrial accidents are
due to Iatigue,
Iind the probability that:
(a) Exactly 2 oI 8 industrial accidents will be due to Iatigue.
(b) At least 2 oI the 8 industrial accidents will be due to Iatigue.
$olution: Eight industrial accidents can be regarded as Bernoulli trials
each with probability
oI success 2 1
10 5
p= = . The random variable r denotes the number oI accidents due to
Iatigue.
(a) (
2 6
8
2
1 4
2 0.294
5 5
P r C = = =
(b) We have to Iind P(r > 2). We can write
P(r > 2) 1 - P(0) - P(1), thus, we Iirst Iind P(0) and P(1).
We have (
0 8
8
0
1 4
0 0.168
5 5
P C= =
and (
1 7
8
1
1 4
1 0.336
5 5
P C= =
\ P(r 2) 1- 0.168 - 0.336 0.496
Example 3: The proportion oI male and Iemale students in a class is
Iound to be 1 : 2.
What is the probability that out oI 4 students selected at random with
replacement, 2 or
more will be Iemales?
$olution: Let the selection oI a Iemale student be termed as a success.
Since the selection
oI a student is made with replacement, the selection oI 4 students can be
taken as 4
repeated trials each with probability oI success
2
3
p = .
Thus, P(r > 2) P(r 2) P(r 3) P(r 4)
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364
2 2 3 4
4 4 4
2 3 4
2 1 2 1 2 8
3 3 3 3 3 9
= C + C + C =

ote that P(r 2) can alternatively be Iound as 1 P(0) P(1)
Example 4: The probability oI a bomb hitting a target is 1/5. Two
bombs are enough to
destroy a bridge. II six bombs are aimed at the bridge, Iind the
probability that the bridge
is destroyed.
$olution: Here n 6 and
1
5
p =
The bridge will be destroyed iI at least two bomb hit it. Thus, we have to
Iind
P(r 2). This is given by
P(r > 2) 1 P(0) P(1)
6 5
6 6
0 1
4 1 4 1077
1
5 5 5 3125
C C = + + + = ' ' ' ' ' '
Example 5: An insurance salesman sells policies to 5 men all oI
identical age and good
health. According to the actuarial tables, the probability that a man oI
this particular age
will be alive 30 years hence is 2/3. Find the probability that 30 years
hence (i) at least 1
man will be alive, (ii) at least 3 men will be alive.
$olution: Let the event that a man will be alive 30 years hence be
termed as a success.
ThereIore, n 5 and
2
3
p = .
(i) P(r 1) 1 P(r 0) = FH G
K J
FH G
K J
1 =
2
3
1
3
242
243
5
0
0 5
C
(ii) P(r 3) P(r 3) P(r 4) P(r 5)
3 2 4 5
5 5 5
3 4 5
2 1 2 1 2 64
3 3 3 3 3 81
C C C = + + =

Example : Ten percent oI items produced on a machine are usually
Iound to be
deIective. What is the probability that in a random sample oI 12 items (i)
none, (ii) one,
(iii) two, (iv) at the most two, (v) at least two items are Iound to be
deIective?
$olution: Let the event that an item is Iound to be deIective be termed as
a success.
Thus, we are given n 12 and p 0.1.
(i) ( ( ( 12 0 12
0 P r = 0 = C 0.1 0.9 = 0.2824
(ii) ( ( ( 12 1 11
1 P r =1 = C 0.1 0.9 = 0.3766
(iii) ( ( ( 12 2 10
2 P r = 2 = C 0.1 0.9 = 0.2301
(iv) Pr 2) P(r 0) P(r 1) P(r 2)
0.2824 0.3766 0.2301 0.8891
(v) P(r 2) 1 P(0) P(1) 1 0.2824 0.3766 0.3410
Example 7: In a large group oI students 80 have a recommended
statistics book.
Three students are selected at random. Find the probability distribution
oI the number oI
students having the book. Also compute the mean and variance oI the
distribution.
$olution: Let the event that 'a student selected at random has the book'
be termed as a
success. Since the group oI students is large, 3 trials, i.e., the selection oI
3 students, can
be regarded as independent with probability oI a success p 0.8. Thus,
the conditions oI
the given experiment satisIies the conditions oI binomial distribution.
Distributions
365
The probability mass Iunction ( 3 (0.8 (0.23 r r
r P r C - = ,
where r 0, 1, 2 and 3
The mean is np 3 - 0.8 2.4 and Variance is npq 2.4 - 0.2 0.48
Example 8:
(a) The mean and variance oI a discrete random variable X are 6 and 2
respectively.
Assuming X to be a binomial variate, Iind P(5 X 7).
(b) In a binomial distribution consisting oI 5 independent trials, the
probability oI 1 and
2 successes are 0.4096 and 0.2048 respectively. Calculate the mean,
variance and
mode oI the distribution.
$olution:
(a) It is given that np 6 and npq 2
\
2 1
6 3
npq
q
np
= = = so that
1 2
1
3 3
p= - = and
3
6 9
2
n= =
ow P(5 X 7) P(X 5) P(X 6) P(X 7)
5 4 6 3 7 2
9 9 9
5 6 7
2 1 2 1 2 1
3 3 3 3 3 3
C C C = + +

5 5
9 9 9
9 5 6 7 9
2 2
2 4 438
3 3
= C + C - + C - | = -
(b) Let p be the probability oI a success. It is given that
( ( 5 4 5 2 3
1 2 C p 1- p = 0.4096 and C p 1- p = 0.2048
Using these conditions, we can write
(
(
( 4
2 3
5 1 0.4096 1
2 or 4
10 1 0.2048
p p p
p p p
- -
= = =
-
. This gives
1
5
p =
Thus, mean is
1 4
5 1 and 1 0.8
5 5
np = - = npq = - =
Since (n 1)p, i.e.,
1
6
5
- is not an integer, mode is its integral part, i.e., 1.
Example 9: 5 unbiased coins are tossed simultaneously and the
occurrence oI a head is
termed as a success. Write down various probabilities Ior the occurrence
oI 0, 1, 2, 3, 4,
5 successes. Find mean, variance and mode oI the distribution.
$olution: Here n 5 and
1
2
p = q = .
The probability mass Iunction is (
5
5 1
2 r P r C = , r 0, 1, 2, 3, 4, 5.
The probabilities oI various values oI r are tabulated below :
r 0 1 2 3 4 5 %ot,l
Parf 1
32
5
32
10
32
10
32
5
32
1
32
1
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366
Mean
1
5 2.5
2
np= - = and variance
1
2.5 1.25
2
- =
Since (n 1)p
1
6 3
2
- = is an integer, the distribution is bimodal and the two modes are
2 and 3.
Fitting of Binomial Distribution
The Iitting oI a distribution to given data implies the determination oI
expected
(or theoretical) Irequencies Ior diIIerent values oI the random variable
on the basis oI
this data.
The purpose oI Iitting a distribution is to examine whether the observed
Irequency
distribution can be regarded as a sample Irom a population with a known
probability
distribution.
To Iit a binomial distribution to the given data, we Iind its mean. Given
the value oI n, we
can compute the value oI p and, using n and p, the probabilities oI
various values oI the
random variable can be computed. These probabilities are multiplied by
total Irequency
to give the required expected Irequencies. In certain cases, the value oI p
may be
determined by the given conditions oI the experiment.
Example 1: The Iollowing data give the number oI seeds germinating
(X) out oI 10 on
damp Iilter Ior 80 sets oI seed. Fit a binomial distribution to the data.
$olution: Here the random variable X denotes the number oI seeds
germinating out oI a
set oI 10 seeds. The total number oI trials n 10.
The mean oI the given data
0 6 1 20 2 28 3 12 4 8 5 6 174
2.175
80 80
X
= - + - + - + - + - + - = =
Since mean oI a binomial distribution is np, \ np 2.175. Thus, we get .
2.175
0.22 (approx.)
10
p= = . Further, q 1 - 0.22 0.78.
Using these values, we can compute ( ( ( 10 0.22 0.78 10 X X
X P X C - = and then expected
Irequency | P(X)| Ior X 0, 1, 2, ...... 10. The calculated
probabilities and the
respective expected Irequencies are shown in the Iollowing table:
Features of Binomial Distribution
1. It is a discrete probability distribution.
2. It depends upon two parameters n and p. It may be pointed out that ,
distribution
is known if the v,lues of its p,r,meters ,re known.
3. The total number oI possible values oI the random variable are n 1.
The successive
binomial coeIIicients are nC0, nC1, nC2 , .... nCn . Further, since nCr
nCn r ,
these coeIIicients are symmetric.
X : 0 1 2 3 4 5 6 7 8 9 10
f : 6 20 28 12 8 6 0 0 0 0 0
) ) ) )
0 0.0834 6.67 6 6 0.0088 0.71 1
1 0.2351 18.81 19 7 0.0014 0.11 0
2 0.2984 23.87 24 8 0.0001 0.01 0
3 0.2244 17.96 18 9 0.0000 0.00 0
4 0.1108 8.86 9 10 0.0
5 0.0375 3.00 3
Approxim,ted Approxim,ted
X P X N P X X P X N P X
Frequency Frequency
- -
000 0.00 0
%ot,l 1.0000 80
Distributions
367
The values oI these coeIIicients, Ior various values oI n, can be obtained
directly
by using Pascal's triangle.
PASCAL'S TRIANGLE
We can note that it is very easy to write this triangle. In the Iirst row,
both the coeIIicients
will be unity because 1 1
C0 = C1 . To write the second row, we write 1 in the beginning
and the end and the value oI the middle coeIIicients is obtained by
adding the coeIIicients
oI the Iirst row. Other rows oI the Pascal's triangle can be written in a
similar way.
4. (a) The shape and location oI binomial distribution changes as the
value oI p
changes Ior a given value oI n. It can be shown that Ior a given value oI
n, iI
p is increased gradually in the interval (0, 0.5), the distribution changes
Irom
a positively skewed to a symmetrical shape. When p 0.5, the
distribution is
perIectly symmetrical. Further, Ior larger values oI p the distribution
tends to
become more and more negatively skewed.
(b) For a given value oI p, which is neither too small nor too large, the
distribution
becomes more and more symmetrical as n becomes larger and larger.
Uses of Binomial Distribution
Binomial distribution is oIten used in various decision-making situations
in business.
Acceptance sampling plan, a technique oI quality control, is based on
this distribution.
With the use oI sampling plan, it is possible to accept or reject a lot oI
items either at the
stage oI its manuIacture or at the stage oI its purchase.
11.4 HYPERGEOMETRIC DISTRIBUTION
The binomial distribution is not applicable when the probability oI a
success p does not
remain constant Irom trial to trial. In such a situation the probabilities oI
the various
values oI r are obtained by the use oI Hypergeometric distribution.
Let there be a Iinite population oI size , where each item can be
classiIied as either a
success or a Iailure. Let there be k successes in the population. II a
random sample oI
size n is taken Irom this population, then the probability oI r successes is
given by
( (k (N k
r nr
N
n
C C
P r
C
-
- = . Here r is a discrete random variable which can take values
0, 1, 2, ...... n. Also n k.
It can be shown that the mean oI r is np and its variance is
.
1
N n
npq
N
+
' ' , where p k
N
and q 1 p.
Example 11: A retailer has 10 identical television sets oI a company out
which 4 are
deIective. II 3 televisions are selected at random, construct the
probability distribution oI
the number oI deIective television sets.
$olution: Let the random variable r denote the number oI deIective
televisions. In terms
oI notations, we can write 10, k 4 and n 3.
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368
Thus, we can write )
4 6
3
10
3
r r , 0,1,2,3 C C
P r r
C
-
= =
The distribution oI r is hypergeometric. This distribution can also be
written in a tabular
Iorm as given below :
Binomial Approximation to Hypergeometric Distribution
In sampling problems, where sample size n (total number oI trials) is
less than 5 oI
population size , i.e., n 0.05, the use oI binomial distribution will
also
give satisIactory results. The reason Ior this is that the smaller the
sample size
relative to population size, the greater will be the validity oI the
requirements oI independent
trials and the constancy oI p.
Example 12: There are 200 identical radios out oI which 80 are
deIective. II 5 radios
are selected at random, construct the probability distribution oI the
number oI deIective
radios by using (i) hypergeometric distribution and (ii) binomial
distribution.
$olution:
(i) It is given that 200, k 80 and n 5.
Let r be a hypergeometric random variable which denotes the number oI
deIective
radios, then
)
80 120
5
200
5
r r , 0,1,2,3,4,5 C C
P r r
C
-
= =
The probabilities Ior various values oI r are given in the Iollowing table :
(ii) To use binomial distribution, we Iind p 80/200 0.4.
Parf 5Cr a0.4fr a0.6f5 r,r 0,1, 2, 3,4,5
The probabilities Ior various values oI r are given in the Iollowing table :
We note that these probabilities are in close conIormity with the
hypergeometric
probabilities.
1 Write the characterstics oI Binomial Distribution.
2. What is the use oI Hypergeometric Distribution?
answers in it.
r 0 1 2 3 4 5 %ot,l
Parf 0.0752 0.2592 0.3500 0.2313 0.0748 0.0095 1
r 0 1 2 3 4 5 %ot,l
Parf 0.0778 0.2592 0.3456 0.2304 0.0768 0.0102 1
r 0 1 2 3 %ot,l
Parf 5
30
15
30
9
30
1
30
1
Contd....
Distributions
369
better.

11.5 PASCAL DISTRIBUTION
In binomial distribution, we derived the probability mass Iunction oI the
number oI
successes in n (Iixed) Bernoulli trials. We can also derive the probability
mass Iunction
oI the number oI Bernoulli trials needed to get r (Iixed) successes. This
distribution is
known as Pascal distribution. Here r and p become parameters while n
becomes a
random variable.
We may note that r successes can be obtained in r or more trials i.e.
possible values oI
the random variable are r, (r 1), (r 2), ...... etc. Further, iI n trials are
required to get
r successes, the nth trial must be a success. Thus, we can write the
probability mass
Iunction oI Pascal distribution as Iollows :
( (
(
1
1
Prob,bility of r successes Prob,bility of , success
P n
out of n tri,ls in nth tri,l
-
= -
1 1 1
1 1 n r n r n r n r
r r - C p - q - p - C p q -
- - = = , where n r, (r 1), (r 2), ... etc.
It can be shown that the mean and variance oI Pascal distribution are 2
and
r rq
p p
respectively.
This distribution is also known as Neg,tive Binomi,l Distribution
because various
values oI P(n) are given by the terms oI the binomial expansion oI pr(1 -
q)- r.
11.6 GEOMETRICAL DISTRIBUTION
When r 1, the Pascal distribution can be written as
) 1 1 1
0 P n = n C pqn = pqn , where n = 1,2,3,.....
Here n is a random variable which denotes the number oI trials required
to get a success.
This distribution is known as geometrical distribution. The mean and
variance oI the
distribution are 1
p
and
q
p2 respectively.
11.7 UNIFORM DISTRIBUTION (DISCRETE RANDOM
VARIABLE)
A discrete random variable is said to Iollow a uniIorm distribution iI it
takes various
discrete values with equal probabilities.
II a random variable X takes values X1, X2, ...... Xn each with
probability
1
n
, the distribution
oI X is said to be uniIorm.
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370
Exercise with Hints
1. The probability that a secretary will not put the correct postage on a
letter is 0.20.
What is the probability that this secretary will not put the correct
postage:
(i) On 3 oI 9 letters? (ii) On at least 3 oI 9 letters? (iii) On at the most 3
oI 9 letters?
int: Use binomial distribution.
2. (a) The mean oI a binomial distribution is 4 and its standard deviation
is 3 . What
are the values oI n, p and q?
(b) The mean and variance oI a binomial distribution are 3 and 2
respectively.
Find the probability that the variate takes values (i) less than or equal to
2 (ii)
greater than or equal to 7.
int: Mean np and Variance npq.
3. (a) The probability oI a man hitting a target is
1
4
. (i) II he Iires 7 times, what is
the probability oI his hitting the target at least twice? (ii) How many
times
must he Iire so that the probability oI his hitting the target at least once is
greater than
2
3
?
(b) How many dice must be thrown so that there is better than even
chance oI
obtaining at least one six?
int: (a) (ii) Probability oI hitting the target at least once in n trials is
3
1
4
n - .
Find n such that this value is greater than
2
3
. (b) Find n so that
5 1
1
6 2
n - > .
4. A machine produces an average oI 20 deIective bolts. A batch is
accepted iI a
sample oI 5 bolts taken Irom the batch contains no deIective and rejected
iI the
sample contains 3 or more deIectives. In other cases, a second sample is
taken.
What is the probability that the second sample is required?
int: A second sample is required iI the Iirst sample is neither rejected
nor accepted.
5. A multiple choice test consists oI 8 questions with 3 answers to each
question (oI
which only one is correct). A student answers each question by throwing
a balanced
die and checking the Iirst answer iI he gets 1 or 2, the second answer iI
he gets 3
or 4 and the third answer iI he gets 5 or 6. To get a distinction, the
student must
secure at least 75 correct answers. II there is no negative marking,
what is the
probability that the student secures a distinction?
int: He should attempt at least 6 questions.
6. What is the most probable number oI times an ace will appear iI a die
is tossed (i)
50 times, (ii) 53 times?
int: Find mode.
7. Out oI 320 Iamilies with 5 children each, what percentage would be
expected to
have (i) 2 boys and 3 girls, (ii) at least one boy, (iii) at the most one girl?
Assume
equal probability Ior boys and girls.
int: Multiply probability by 100 to obtain percentage.
8. Fit a binomial distribution to the Iollowing data :
X
f
:
:
1 2 3 4
28 62 46 1 4
Distributions
371
9. A question paper contains 6 questions oI equal value divided into two
sections oI
three questions each. II each question poses the same amount oI
diIIiculty to Mr.
X, an examinee, and he has only 50 chance oI solving it correctly, Iind
the answer
to the Iollowing :
(i) II Mr. X is required to answer only three questions Irom any one oI
the two
sections, Iind the probability that he will solve all the three questions
correctly.
(ii) II Mr. X is given the option to answer the three questions by
selecting one
question out oI the two standing at serial number one in the two sections,
one
question out oI the two standing at serial number two in the two sections
and
one question out oI the two standing at serial number three in the two
sections,
Iind the probability that he will solve all three questions correctly.
int: (i) A section can be selected in 2C1ways and the probability oI
attempting all the
three questions correctly is 3C3
1
2
FH
K
3
. (ii) The probability oI attempting correctly,
one question out oI two is 2C1
1
2
FH
K
2
10. A binomial random variable satisIies the relation 9P(X 4) P(X
2) Ior n 6.
Find the value oI the parameter p.
int: ( 6 2 4
P X = 2 = C2 p q etc.
11. Three Iair coins are tossed 3,000 times. Find the Irequency
distributions oI the
number oI heads and tails and tabulate the results. Also calculate mean
and standard
deviation oI each distribution.
int: See example 9.
12. Take 100 sets oI 10 tosses oI an unbiased coin. In how many cases
do you expect
to get (i) 6 heads and 4 tails and (ii) at least 9 heads?
int: Use binomial distribution with n 10 and p 0.5.
13. In a binomial distribution consisting oI 5 independent trials, the
probabilities oI 1 and
2 successes are 0.4096 and 0.2048 respectively. Find the probability oI
success.
int: Use the condition P(1) 2P(2).
14. For a binomial distribution, the mean and variance are respectively 4
and 3. Calculate
the probability oI getting a nonzero value oI this distribution.
int: Find P(r 0).
15. (a) There are 300, seemingly identical, tyres with a dealer. The
probability oI a
tyre being deIective is 0.3. II 2 tyres are selected at random, Iind the
probability
that there is non deIective tyre.
(b) II instead oI 300 tyres the dealer had only 10 tyres out oI which 3 are
deIective,
Iind the probability that no tyre is deIective in a random sample oI 2
tyres.
(c) Write down the probability distribution oI the number oI deIectives
in each
case.
int: Use (a) binomial (b) hypergeometric distributions.
16. Write down the mean and variance oI a binomial distribution with
parameters n and
p. II the mean and variance are 4 and 8/3 respectively, Iind the values oI
n and p.
State whether it is symmetric Ior these values?
int: Binomial distribution is symmetric when p 0.5.
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372
17. Evaluate k iI I(x) k, when x 1, 2, 3, 4, 5, 6 and 0 elsewhere, is
a probability
mass Iunction. Find its mean and standard deviation.
int: f x ) =1 .
18. II a die is thrown 6 times, calculate the probability that :
(i) a score oI 3 or less occurs on exactly 2 throws;
(ii) a score oI more than 2 occurs on exactly 3 throws;
(iii) a score oI 5 or less occurs at least once;
(iv) a score oI 2 or less occurs on at least 5 throws.
int: Use binomial distribution with n 6 and a diIIerent value oI p in
each case.
19. II we take 1,280 sets each oI 10 tosses oI a Iair coins, in how many
sets should we
expect to get 7 heads and 3 tails?
int: See example 9.
20. II a production unit is made up Irom 20 identical components and
each component
has a probability oI 0.25 oI being deIective, what is the average number
oI deIective
components in a unit? Further, what is the probability that in a unit (i)
less than 3
components are deIective? (ii) exactly 3 components are deIective?
int: Take n 20 and p 0.25.
21. It is known Irom the past experience that 80 oI the students in a
school do their
home work. Find the probability that during a random check oI 10
students
(i) all have done their home work,
(ii) at the most 2 have not done their home work,
(iii) at least one has not done the home work.
int: Take n 10 and p 0.8.
22. There are 24 battery cells in a box containing 6 deIective cells that
are randomly
mixed. A customer buys 3 cells. What is the probability that he gets one
deIective
cell?
int: Use hypergeometric distribution.
23. There are 400 tyres in the stock oI a wholesaler among which 40
tyres, having
slight deIects, are randomly mixed. A retailer purchases 6 tyres Irom this
stock.
What is the probability that he gets at least 4 non deIective tyres?
int: n is less than 5 oI .
11.8 POISSON DISTRIBUTION
This distribution was derived by a noted mathematician, Simon D.
Poisson, in 1837. He
derived this distribution as a limiting case oI binomial distribution, when
the number oI
trials n tends to become very large and the probability oI success in a
trial p tends to
become very small such that their product np remains a constant. This
distribution is
used as a model to describe the probability distribution oI a random
variable deIined over
a unit oI time, length or space. For example, the number oI telephone
calls received per
hour at a telephone exchange, the number oI accidents in a city per
week, the number oI
deIects per meter oI cloth, the number oI insurance claims per year, the
number
breakdowns oI machines at a Iactory per day, the number oI arrivals oI
customers at a
shop per hour, the number oI typing errors per page etc.
Distributions
373
Poisson Process
Let us assume that on an average 3 telephone calls are received per 10
minutes at a
telephone exchange desk and we want to Iind the probability oI
receiving a telephone
call in the next 10 minutes. In an eIIort to apply binomial distribution,
we can divide the
interval oI 10 minutes into 10 intervals oI 1 minute each so that the
probability oI receiving
a telephone call (i.e., a success) in each minute (i.e., trial) becomes 3/10
( note that p
m/n, where m denotes mean). Thus, there are 10 trials which are
independent, each with
probability oI success 3/10. However, the main diIIiculty with this
Iormulation is that,
strictly speaking, these trials are not Bernoulli trials. One essential
requirement oI such
trials, that each trial must result into one oI the two possible outcomes, is
violated here.
In the above example, a trial, i.e. an interval oI one minute, may result
into 0, 1, 2, ......
successes depending upon whether the exchange desk receives none,
one, two, ......
telephone calls respectively.
One possible way out is to divide the time interval oI 10 minutes into a
large number oI
small intervals so that the probability oI receiving two or more telephone
calls in an
interval becomes almost zero. This is illustrated by the Iollowing table
which shows that
the probabilities oI receiving two calls decreases sharply as the number
oI intervals are
increased, keeping the average number oI calls, 3 calls in 10 minutes in
our example, as
constant.
Using symbols, we may note that as n increases then p automatically
declines in such a
way that the mean m ( np) is always equal to a constant. Such a process
is termed as
a Poisson Process. The chieI characteristics oI Poisson process can be
summarised as
given below :
1. The number oI occurrences in an interval is independent oI the
number oI
occurrences in another interval.
2. The expected number oI occurrences in an interval is constant.
3. It is possible to identiIy a small interval so that the occurrence oI more
than one
event, in any interval oI this size, becomes extremely unlikely.
Probability Mass Function
The probability mass Iunction (p.m.I.) oI Poisson distribution can be
derived as a limit oI
p.m.I. oI binomial distribution when nsuch that m ( np) remains
constant. Thus,
we can write
) 1
r nr
n
r
m m
P r lim C
n n n
= + + ' ' ' ' )
!
1
! !
r nr n m m
lim
n r n r n n
= + + ' ' ' '
) ) ) 1
. 1 2 .... 1. . 1
!
r n r
n r
m m
lim n n n n r
r n n

+ + ' ' |

1 2 1)
1 1 .... 1 1
.
!
1
n
r
n r
n r m
m n n n n n
lim
r m
n

+ + + + ' '' ' ' '' '
+ ' ' |
n Paone c,ll is receivedf Patwo c,lls ,re receivedf
10 0.3 0.09
100 0.03 0.0009
1, 000 0.003 0.000009
10, 000 0.0003 0.00000009
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374
1
!
r n
n
m m
lim
r n
= + ' '
, since each oI the remaining terms will tend to unity as
n
.
!
r m m e
r
-
= , since n
lim

1
n m
n
- = n
lim

1
n m
m
m m
e
n
-

- =
.
Thus, the probability mass Iunction oI Poisson distribution is
) .
, where 0,1,2, ......
!
e m mr
P r r
r

= = .
Here e is a constant with value 2.71828... . ote that Poisson
distribution is a discrete
probability distribution with single parameter m.
Total probability
2 3
0
.
1 ....
! 1! 2! 3!
m r
m
r
e m m m m
e
r

=
+
= = + + + +
' '

m. m 1 = e- e = .
Summary Measures of Poisson Distribution
(a) Mean: The mean oI a Poisson variate r is deIined as
)
0
.
.
!
m r
r
e m
E r r
r

=
= (
3 4
2
1
....
1 ! 2! 3!
r
m m
r
m m m
e e m m
r
`
- -
=
F
= = + + + + -

2 3
1 ....
2! 3!
m mm m m
me- m me- e m F
= + + + + = =

(b) Jariance: The variance oI a Poisson variate is deIined as
Var(r) E(r - m)2 E(r2) - m2
ow 2 ) 2 ) ) )
0 0
1
r r
E r r P r r r r P r

= =
= = + | ) ) )
0 0
1
r r
r r P r rP r

= =
| +
) ) 2 2
.
1
! 2!
m r r
m
r r
e m m
r r m e m
r r

= =
= | + = +
4 5
2 3 ....
2! 3!
m m m
m e m m +
= + + + + +
' '
2 3
2 1 .... 2
2! 3!
m m m
m m e m m m +
= + + + + + = +
' '
Thus, Var(r) m m2 - m2 m.
Also standard deviation o = m .
(c) The values oI 3 , 4 , 1 and 2
It can be shown that 3 m and 4 m 3m2.
Distributions
375
\
2 2
3
1 3 3
2
m 1
m m

= = =
Since m is a positive quantity, thereIore, 1 -is always positive and
hence the Poisson
distribution is always positively skewed. We note that 1 - 0 as m ,
thereIore
the distribution tends to become more and more symmetrical Ior large
values oI m.
Further,
2
4
2 2 2
2
3 1
3 3 as
m m
m
m m

= = + = + . This result shows that the
distribution becomes normal Ior large values oI m.
(d) Mode: As in binomial distribution, a Poisson variate r will be mode
iI
Pr 1) Pr ) > Pr +1)
The inequality Pr 1) Pr ) can be written as
)
. 1 .
1
1 ! !
e m mr e m mr m
r m
r r r

.... (1)
Similarly, the inequality Pr ) > Pr +1) can be shown to imply that
r m - 1 .... (2)
Combining (1) and (2), we can write m - 1 r m.
Case I: When m is not an integer
The integral part oI m will be mode.
Case II: When m is an integer
The distribution is bimodal with values m and m - 1.
Example 13: The average number oI customer arrivals per minute at a
super bazaar is
2. Find the probability that during one particular minute (i) exactly 3
customers
will arrive, (ii) at the most two customers will arrive, (iii) at least one
customer will
arrive.
$olution: It is given that m 2. Let the number oI arrivals per minute be
denoted by the
random variable r. The required probability is given by
(i) )
2 .23 0.13534 8
3 0.18045
3! 6
e
P r
- = = = =
(ii) )
2 2
2
0
.2 4
2 1 2 0.13534 5 0.6767.
! 2
r
r
e
P r e
r

=
= = + + = - = |
(iii) ) )
2 .20
1 1 0 1 1 0.13534 0.86464.
0!
e
P r P r

> = = = = =
Example 14: An executive makes, on an average, 5 telephone calls per
hour at a cost
which may be taken as Rs 2 per call. Determine the probability that in
any hour the
telephone calls' cost (i) exceeds Rs 6, (ii) remains less than Rs 10.
$olution: The number oI telephone calls per hour is a random variable
with mean 5.
The required probability is given by
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376
(i) ) )
3 5
0
.5
3 1 3 1
!
r
r
e
P r P r
r

=
> = =
5 25 125 236
1 1 5 1 0.00678 0.7349.
2 6 6
e

=

+
+
+

=

-
=

|
(ii) )
4 5
5
0
.5 25 125 625
4 15
! 2 6 24
r
r
e
P r e
r

=
= = + + + + | 1569
0.00678 0.44324.
24
= - =
Example 15: A company makes electric toys. The probability that an
electric toy is
deIective is 0.01. What is the probability that a shipment oI 300 toys will
contain exactly
5 deIectives?
$olution: Since n is large and p is small, Poisson distribution is
applicable. The random
variable is the number oI deIective toys with mean m np 300 0.01
3.
The required probability is given by
)
3.35 0.04979 243
5 0.10082.
5! 120
e
P r
- = = = =
Example 1: In a town, on an average 10 accidents occur in a span oI 50
days. Assuming
that the number oI accidents per day Iollow Poisson distribution, Iind the
probability that
there will be three or more accidents in a day.
$olution: The random variable denotes the number accidents per day.
Thus, we have .
10
0.2
50
m= = .The required probability is given by
) ) )2
0.2 0.2
3 1 2 1 1 0.2 1 0.8187 1.22 0.00119.
2!
P r P r e

> = = + + = - =
|
Example 17: A car hire Iirm has two cars which it hire out every day.
The number oI
demands Ior a car on each day is distributed as a Poisson variate with
mean 1.5. Calculate
the proportion oI days on which neither car is used and the proportion oI
days on which
some demand is reIused. | e-1.5 0.2231|
$olution: When both car are not used, r 0
\ P(r = 0 = e-1.5 = 0.2231. Hence the proportion oI days on which
neither car is used
is 22.31.
Further, some demand is reIused when more than 2 cars are demanded,
i.e., r ~ 2
\ ( ( ( 2 1.5
0
1.5
2 1 2 1
!
r
r
e
P r P r
r
-
=
> = - = - ( 2 1.5
1 0.2231 1 1.5 0.1913.
2!
F
= - + + =

Hence the proportion oI days is 19.13.
Example 18: A Iirm produces articles oI which 0.1 percent are usually
deIective. It
packs them in cases each containing 500 articles. II a wholesaler
purchases 100 such
cases, how many cases are expected to be Iree oI deIective items and
how many are
expected to contain one deIective item?
$olution: The Poisson variate is number oI deIective items with mean
1
500 0.5.
1000
m= - =
Distributions
377
Probability that a case is Iree oI deIective items
Pr = 0) = e0.5 = 0.6065.Hence the number oI cases having
no deIective items 0.6065 100 60.65
Similarly, Pr =1) = e0.5 -0.5 = 0.6065-0.5 = 0.3033.Hence the
number oI cases
having one deIective item are 30.33.
Example 19: A manager accepts the work submitted by his typist only
when there is no
mistake in the work. The typist has to type on an average 20 letters per
day oI about 200
words each. Find the chance oI her making a mistake (i) iI less than 1
oI the letters
submitted by her are rejected; (ii) iI on 90 oI days all the work
submitted by her is
accepted. |As the probability oI making a mistake is small, you may use
Poisson
distribution. Take e 2.72|.
$olution: Let p be the probability oI making a mistake in typing a word.
(i) Let the random variable r denote the number oI mistakes per letter.
Since 20 letters
are typed, r will Iollow Poisson distribution with mean 20p.
Since less than 1 oI the letters are rejected, it implies that the
probability oI
making at least one mistake is less than 0.01, i.e.,
P(r 1) 0.01 or 1 - P(r 0) 0.01
1 - e-20p 0.01 or e-20p 0.99
Taking log oI both sides
20p.log 2.72 log 0.99
b20- 0.4346gp > 1.9956
No.ofmist,kesperp,ge : 0 1 2 3
Frequency : 211 90 19 5
8.692p - 0.0044 or
0.0044
0.00051.
8.692
p> =
(ii) In this case r is a Poisson variate which denotes the number oI
mistakes per day.
Since the typist has to type 20 200 4000 words per day, the mean
number oI
mistakes 4000p.
It is given that there is no mistake on 90 oI the days, i.e.,
P(r 0) 0.90 or e-4000p 0.90
Taking log oI both sides, we have
- 4000p log 2.72 log 0.90 or 4000-0.4346p = 1.9542 = 0.0458
\
0.0458
0.000026.
4000 0.4346
p= =
-
Example 2: A manuIacturer oI pins knows that on an average 5 oI
his product is
deIective. He sells pins in boxes oI 100 and guarantees that not more
than 4 pins will be
deIective. What is the probability that the box will meet the guaranteed
quality?
$olution: The number oI deIective pins in a box is a Poisson variate
with mean equal to
5. A box will meet the guaranteed quality iI r 4. Thus, the required
probability is given
by
) 4
5 5
0
5 25 125 625
4 15
! 2 6 24
r
r
P r e e
r

=
= = + + + + | 1569
0.00678 0.44324.
24
= - =
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378
Poisson Approximation to Binomial
When n, the number oI trials become large, the computation oI
probabilities by using the
binomial probability mass Iunction becomes a cumbersome task.
Usually, when n 20
and p 0.05, Poisson distribution can be used as an approximation to
binomial with
parameter m np.
Example 21: Find the probability oI 4 successes in 30 trials by using (i)
binomial distribution
and (ii) Poisson distribution. The probability oI success in each trial is
given to be 0.02.
$olution:
(i) Here n 30 and p 0.02
\ ( 30 ( 4 ( 26
4 P r = 4 = C 0.02 0.98 = 27405 0.00000016 0.59 = 0.00259.
(ii) Here m np 30 0.02 0.6
\ ) )0.6 0.6 4 0.5488 0.1296
4 0.00296.
4! 24
e
P r
= = = - =
Fitting of a Poisson Distribution
To Iit a Poisson distribution to a given Irequency distribution, we Iirst
compute its mean
m. Then the probabilities oI various values oI the random variable r are
computed by
using the probability mass Iunction ) .
.
!
e m mr
P r
r

= These probabilities are then multiplied
by , the total Irequency, to get expected Irequencies.
Example 22: The Iollowing mistakes per page were observed in a book :
Fit a Poisson distribution to Iind the theoretical Irequencies.
$olution: The mean oI the given Irequency distribution is
0 211 1 90 2 19 3 5 143
0.44
211 90 19 5 325
m
= - + - + - + - = =
+ + +
Calculation oI theoretical (or expected) Irequencies
We can write ( ( 0.44 0.44
.
!
r e
P r
r
-
= Substituting r 0, 1, 2 and 3, we get the probabilities
Ior various values oI r, as shown in the Iollowing table:
Features of Poisson Distribution
(i) It is discrete probability distribution.
(ii) It has only one parameter m.
) )
0 0.6440 209.30 210
1 0.2834 92.10 92
2 0.0623 20.25 20
3 0.0091 2.96 3
325
Expected Frequencies Approxim,ted
r Pr N Pr
to the ne,rest integer
%ot,l
-
o. oI mistakes per page: 0 1 2 3
Frequency 211 90 19 5
Distributions
379
(iii) The range oI the random variable is 0 r `.
(iv) The Poisson distribution is a positively skewed distribution. The
skewness decreases
as m increases.
Uses of Poisson Distribution
(i) This distribution is applicable to situations where the number oI trials
is large and
the probability oI a success in a trial is very small.
(ii) It serves as a reasonably good approximation to binomial distribution
when n 20
and p 0.05.
Exercise with Hints
1. II 2 oI the electric bulbs manuIactured by a company are deIective,
Iind the
probability that in a sample oI 200 bulbs (i) less than 2 bulbs are
deIective, (ii) more
than 3 bulbs are deIective. (Given e- 4 0.0183).
int:
2
200 4.
100
m= - =
2. II r is a Poisson variate such that P(r) P(r 1), what are the mean
and standard
deviation oI r?
int: Find m by using the given condition.
3. The number oI arrivals oI telephone calls at a switch board Iollows a
Poisson
process at an average rate oI 8 calls per 10 minutes. The operator leaves
Ior a 5
minutes tea break. Find the probability that (a) at the most two calls go
unanswered
and (b) 3 calls go unanswered, while the operator is away.
int: m 4.
4. What probability model is appropriate to describe a situation where
100 misprints
are distributed randomly throughout the 100 pages oI a book? For this
model, what
is the probability that a page observed at random will contain (i) no
misprint, (ii) at
the most two misprints, (iii) at least three misprints?
int: The average number oI misprint per page is unity.
5. II the probability oI getting a deIective transistor in a consignment is
0.01, Iind the
mean and standard deviation oI the number oI deIective transistors in a
large
consignment oI 900 transistors. What is the probability that there is at
the most one
deIective transistor in the consignment?
int: The average number oI transistors in a consignment is 900 0.01.
6. In a certain Iactory turning out blades, there is a small chance 1/500
Ior any one
blade to be deIective. The blades are supplied in packets oI 10. Use
Poisson
distribution to compute the approximate number oI packets containing
no deIective,
one deIective, two deIective, three deIective blades respectively in a
consignment
oI 10,000 packets.
int: The random variable is the number oI deIective blades in a packet
oI 10 blades.
7. A manuIacturer knows that 0.3 oI items produced in his Iactory are
deIective.
II the items are supplied in boxes, each containing 250 items, what is the
probability
that a box contains (i) no deIective, (ii) at the most two deIective items?
int:
0.3
250 0.75.
100
m= - =
8. A random variable r Iollows Poisson distribution, where P(r 2) P(r
3). Find (i)
P(r 0), (ii) P(1 r 3).
int: P(1 r 3) P(r 1) P(r 2) P(r 3).
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380
9. II X is a Poisson variate such that P(X 2) 9P(X 4) 90P(X 6),
Iind the
mean and variance oI X.
int: mean Variance.
10. Lots oI 400 wall-clocks are purchased by a retailer. The retailer
inspects sample oI
20 clocks Irom each lot and returns the lot to the supplier iI there are
more than
two deIectives in the sample. Suppose a lot containing 30 deIective
clocks is received
by the retailer, what is the probability that it will be returned to the
supplier?
int: n 20 and p 30/400.
11. An industrial area has power breakdown once in 15 days, on the
average. Assuming
that the number oI breakdowns Iollow a Poisson process, what is the
probability oI
(i) no power breakdown in the next six days, (ii) more than one power
breakdown
in the next six days?
int: The random variable is the number oI power breakdowns in six
days.
12. AIter correcting the prooIs oI Iirst 50 pages or so oI a book, it is
Iound that on the
average there are 3 errors per 5 pages. Use Poisson probabilities and
estimate the
number oI pages with 0, 1, 2, 3, errors in the whole book oI 1,000 pages.
|Given
that e- 0.6 0.5488|.
int: Take random variable as the number oI errors per page.
13. Between 2 and 4 p.m., the number oI phone calls coming into the
switch board oI
a company is 300. Find the probability that during one particular minute
there will
be (i) no phone call at all, (ii) exactly 3 calls, (iii) at least 7 calls. |Given
e- 2
0.13534 and e-0.5 0.60650|.
int: Random variable is the number oI calls per minute.
14. It is known that 0.5 oI ball pen reIills produced by a Iactory are
deIective. These
reIills are dispatched in packagings oI equal numbers. Using Poisson
distribution
determine the number oI reIills in a packing to be sure that at least 95
oI them
contain no deIective reIills.
int: Let n be the number oI reIills in a package, then m 0.005n.
15. Records show that the probability is 0.00002 that a car will have a
Ilat tyre while
driving over a certain bridge. Find the probability that out oI 20,000 cars
driven
over the bridge, not more than one will have a Ilat tyre.
int: The random variable is number oI cars driven over the bridge
having Ilat tyre.
16. A radioactive source emits on the average 2.5 particles per second.
Calculate the
probability that two or more particles will be emitted in an interval oI 4
seconds.
int: m 2.5 - 4.
17. The number oI accidents in a year attributed to taxi drivers in a city
Iollows Poisson
distribution with mean 3. Out oI 1,000 taxi drivers, Iind approximately
the number
oI drivers with (i) no accident in a year, (ii) more than 3 accidents in a
year.
|Given e-1 0.3679, e- 2 0.1353, e- 3 0.0498|.
int: umber oI drivers probability 1000.
18. A big industrial plant has to be shut down Ior repairs on an average
oI 3 times in a
month. When more than 5 shut downs occur Ior repairs in a month, the
production
schedule cannot be attained. Find the probability that production
schedule cannot
be attained in a given month, assuming that the number oI shut downs
are a Poisson
variate.
int: Find P(r 5).
Distributions
381
19. A manager receives an average oI 12 telephone calls per 8-hour day.
Assuming
that the number oI telephone calls received by him Iollow a Poisson
variate, what
is the probability that he will not be interrupted by a call during a
meeting lasting
2 hours?
int: Take m 3.
20. Assuming that the probability oI a Iatal accident in a Iactory during a
year is
1/1200, calculate the probability that in a Iactory employing 300
workers, there will
be at least two Iatal accidents in a year. |Given e- 0.25 0.7788|.
int: The average number oI accidents per year in the Iactory 0.25.
21. II 2 oI electric bulbs manuIactured by a certain company are
deIective, Iind the
probability that in a sample oI 200 bulbs (i) less than 2 bulbs are
deIective (ii) more
than 3 bulbs are deIective. |Given e-4 0.0183|.
int: m 4.
22. II Ior a Poisson variate X, P(X 1) P(X 2), Iind P(X 1 or 2).
Also Iind its
mean and standard deviation.
int: Find m Irom the given condition.
23. II 5 oI the Iamilies in Calcutta do not use gas as a Iuel, what will
be the probability
oI selecting 10 Iamilies in a random sample oI 100 Iamilies who do not
use gas as
a Iuel? You may assume Poisson distribution. |Given e-5 0.0067|.
int: m 5, Iind P(r 10).
24. The probability that a Poisson variate X takes a positive value is 1 -
e-1.5. Find the
variance and also the probability that X lies between 1.5 and 1.5.
int: 1- e-1.5 P(r ~ 0). Find P(-1.5 X 1.5) P(X 0) P(X 1).
25. 250 passengers have made reservations Ior a Ilight Irom Delhi to
Mumbai. II the
probability that a passenger, who has reservation, will not turn up is
0.016, Iind the
probability that at the most 3 passengers will not turn up.
int: The number oI passengers who do not turn up is a Poisson variate.
11.9 EXPONENTIAL DISTRIBUTION
The random variable in case oI Poisson distribution is oI the type ; the
number oI arrivals
oI customers per unit oI time or the number oI deIects per unit length oI
cloth, etc.
Alternatively, it is possible to deIine a random variable, in the context oI
Poisson Process,
as the length oI time between the arrivals oI two consecutive customers
or the length oI
cloth between two consecutive deIects, etc. The probability distribution
oI such a random
variable is termed as Exponenti,l Distribution.
Since the length oI time or distance is a continuous random variable,
thereIore exponential
distribution is a continuous probability distribution.
Probability Density Function
Let t be a random variable which denotes the length oI time or distance
between the
occurrence oI two consecutive events or the occurrence oI the Iirst event
and m be the
average number oI times the event occurs per unit oI time or length.
Further, let A be the
event that the time oI occurrence between two consecutive events or the
occurrence oI
the Iirst event is less than or equal to t and I(t) and F(t) denote the
probability density
Iunction and the distribution (or cumulative density) Iunction oI t
respectively.
We can write P(A + P(A =1 or F (t + P(A = 1. ote that, by
deIinition,F t) PA)
Further, PdAi is the probability that the length oI time between the
occurrence oI two
consecutive events or the occurrence oI Iirst event is greater than t. This
is also equal to
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382
the probability that no event occurs in the time interval t. Since the mean
number oI
occurrence oI events in time t is mt, we have , by Poisson distribution,
) ) )0
0
0!
mt
mt e mt
P A P r e

= = = = .
Thus, we get F(t) e-mt 1
or P(0 to t) F(t) 1 emt. .... (1)
To get the probability density Iunction, we diIIerentiate equation (1)
with respect to t.
Thus, I(t) F'(t) memt when t ~ 0
0 otherwise.
It can be veriIied that the total probability is equal to unity
Total Probability 0 0
0
. . 0 1 1.
mt
mt mt e
m e dt m e
m
= = = = + =

Mean oI t
The mean oI t is deIined as its expected value, given by
) 0
1
E t t.m.e mtdt
m
= = , where m denotes the average number oI
occurrence oI events per unit oI time or distance.
Example 23: A telephone operator attends on an average 150 telephone
calls per hour.
Assuming that the distribution oI time between consecutive calls Iollows
an exponential
distribution, Iind the probability that (i) the time between two
consecutive calls is less
than 2 minutes, (ii) the next call will be received only aIter 3 minutes.
$olution: Here m the average number oI calls per minute
150
2.5.
60
= =
(i) ) ) 2 2.5
0
P t 2 = 2.5e tdt = F 2
We know that F(t) 1 - e-mt, \ F(2) 1 - e-2.5 2 0.9933
(ii) P(t ~ 3) 1 P(t 3) 1 - F(3)
1 |1 e2.5 3| 0.0006
Example 24: The average number oI accidents in an industry during a
year is estimated
to be 5. II the distribution oI time between two consecutive accidents is
known to be
exponential, Iind the probability that there will be no accidents during
the next two months.
$olution: Here m denotes the average number oI accidents per month
5
12
.
\ P(t ~ 2) 1 F(2)
5
2 0.833 e 12 e 0.4347.
- = =
Example 25: The distribution oI liIe, in hours, oI a bulb is known to be
exponential with
mean liIe oI 600 hours. What is the probability that (i) it will not last
more than 500 hours,
(ii) it will last more than 700 hours?
$olution: Since the random variable denote hours, thereIore
1
600
m =
(i) P(t 500) F(500)
1
500 0.833 1 e 600 1 e 0.5653.
= - = =
(ii) P(t ~ 700) 1 - F(700)
700
e 600 e 1.1667 0.3114.
= = =
Distributions
383
11.10 UNIFORM DISTRIBUTION (CONTINUOUS
VARIABLE)
A continuous random variable X is said to be
uniIormly distributed in a close interval
(, -) with probability density Iunction p(X)
iI ) 1
p X

=
Ior , X -and 0
Otherwise The uniIorm distribution is
alternatively known as rectangular distribution.
The diagram oI the probability density Iunction is shown in the Iigure
19.1.
ote that the total area under the curve is unity, i.e. ,
1 1
dX X 1

= =

Further, E X X dX
X b g=

=

=
+ z 1 1
2 2
2

.
E X 2 X 2 dX
3 3
2 2 1
3
1
3 d i = b g d i

=

z = + +

.
\ ) ) ) ) 2 2
2 2 1
3 4 12
J,r X

+
= + + =
Example 2: The buses on a certain route run aIter every 20 minutes. II
a person
arrives at the bus stop at random, what is the probability that
(a) he has to wait between 5 to 15 minutes,
(b) he gets a bus within 10 minutes,
(c) he has to wait at least 15 minutes.
$olution: Let the random variable X denote the waiting time, which
Iollows a uniIorm
distribution with p.d.I.
( 1
20
f X = Ior 0 X 20
(a) ) ) 15
5
1 1 1
5 15 15 5
20 20 2
P X = dX = =
(b) ) 1 1
0 10 10
20 2
P X = - =
(c) ) 20 15 1
15 20 .
20 4
P X
= =
11.11 NORMAL DISTRIBUTION
The normal probability distribution occupies a place oI central
importance in odern
St,tistic,l %heory. This distribution was Iirst observed as the norm,l l,w
of errors by
the statisticians oI the eighteenth century. They Iound that each
observation X involves
an error term which is aIIected by a large number oI small but
independent chance
Iactors. This implies that an observed value oI X is the sum oI its true
value and the net
eIIect oI a large number oI independent errors which may be positive or
negative each
with equal probability. The observed distribution oI such a random
variable was Iound to
be in close conIormity with a continuous curve, which was termed as the
norm,l curve
of errors or simply the norm,l curve.
Figure 11.1
p(X)
X
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384
Since Gauss used this curve to describe the theory oI accidental errors oI
measurements
involved in the calculation oI orbits oI heavenly bodies, it is also called
as Gaussian
curve.
The Conditions of Normality
In order that the distribution oI a random variable X is normal, the
Iactors aIIecting its
observations must satisIy the Iollowing conditions :
(i) A large number of chance factors: The Iactors, aIIecting the
observations oI a
random variable, should be numerous and equally probable so that the
occurrence
or non-occurrence oI any one oI them is not predictable.
(ii) Condition of homogeneity: The Iactors must be similar over the
relevant population
although, their incidence may vary Irom observation to observation.
(iii) Condition of independence: The Iactors, aIIecting observations,
must act
independently oI each other.
(iv) Condition of symmetry: Various Iactors operate in such a way that
the deviations
oI observations above and below mean are balanced with regard to their
magnitude
as well as their number.
Random variables observed in many phenomena related to economics,
business and
other social as well as physical sciences are oIten Iound to be distributed
normally. For
example, observations relating to the liIe oI an electrical component,
weight oI packages,
height oI persons, income oI the inhabitants oI certain area, diameter oI
wire, etc., are
aIIected by a large number oI Iactors and hence, tend to Iollow a pattern
that is very
similar to the normal curve. In addition to this, when the number oI
observations become
large, a number oI probability distributions like Binomial, Poisson, etc.,
can also be
approximated by this distribution.
Probability Density Function
II X is a continuous random variable, distributed normally with mean m
and standard
deviation o , then its p.d.I. is given by
)
2 1
2 1
.
2
X
p X e

o
o x
+
= ' ' where ` X `.
Here 5and s are absolute constants with values 3.14159.... and
2.71828.... respectively.
It may be noted here that this distribution is completely known iI the
values oI mean m
and standard deviation s are known. Thus, the distribution has two
parameters, viz.
mean and standard deviation.
Shape of Normal Probability Curve
For given values oI the parameters, m and s, the shape oI the curve
corresponding to
normal probability density Iunction p(X) is as shown in Figure. 11.2
Figure 11.2
Distributions
385
It should be noted here that although we seldom encounter variables that
have a range
Irom - ` to `, as shown by the normal curve, nevertheless the curves
generated by the
relative Irequency histograms oI various variables closely resembles the
shape oI normal
curve.
Properties of Normal Probability Curve
A normal probability curve or normal curve has the Iollowing properties
:
1. It is a bell shaped symmetrical curve about the ordinate at X . The
ordinate is
maximum at X .
2. It is unimodal curve and its tails extend inIinitely in both directions,
i.e., the curve is
asymptotic to X axis in both directions.
3. All the three measures oI central tendency coincide, i.e.,
mean median mode
4. The total area under the curve gives the total probability oI the
random variable
taking values between - to . Mathematically, it can be shown that
) )
2 1
2 1
1.
2
X
P X pXdX e dX

o
o x
+
' '

= = =
5. Since median m, the ordinate at X divides the area under the
normal curve
into two equal parts, i.e.,
pX)dX pX)dX 0.5

= =
6. The value oI p(X) is always non-negative Ior all values oI X, i.e., the
whole curve
lies above X axis.
7. The points oI inIlexion (the point at which curvature changes) oI the
curve are
at X o .
8. The quartiles are equidistant Irom median, i.e., Md - Q1 Q3 - Md ,
by virtue oI
symmetry. Also Q1 - 0.6745 o , Q3 0.6745 o , quartile
deviation
0.6745 o and mean deviation 0.8o , approximately.
9. Since the distribution is symmetrical, all odd ordered central moments
are zero.
10. The successive even ordered central moments are related according
to the Iollowing
recurrence Iormula
2n (2n - 1) o 2 2n - 2 Ior 1, 2, 3, ......
11. The value oI moment coeIIicient oI skewness 1 is zero.
12. The coeIIicient oI kurtosis
4
4
2 2 4
2
3
3.
o
o
= = =
ote that the above expression makes use oI property 10.
13. Additive or reproductive property
II X1, X2, ...... Xn are n independent normal variates with means 1
2 n KK and
variances o o o 1
2
2
2 2 KK n , respectively, then their linear combinationa1X1 a2X2
...... anXn is also a normal variate with mean
1
n
i i
i
,
=
and variance 2 2
1
n
i i
i
,o
=
.
In particular, iI a1 a2 ...... an 1, we have i X is a normal variate
with mean
i
and variance 2
i o . Thus the sum oI independent normal variates is also
a normal variate.
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386
14. Area property: The area under the normal curve is distributed by its
standard
deviation in the Iollowing manner :
Figure 11.3
(i) The area between the ordinates at 2 8and 2 8is 0.6826. This
implies
that Ior a normal distribution about 68 oI the observations will lie
between
2 8and 2 8.
(ii) The area between the ordinates at 2 28and 2 28is 0.9544. This
implies
between
2 28and 2 28.
(iii) The area between the ordinates at 2 38and 2 38is 0.9974.
This implies
between
2 38and 2 38. This result shows that, practically, the range oI the
distribution is 68although, theoretically, the range is Irom ` to `.
Probability of Normal Variate in an Interval
Let X be a normal variate distributed with mean m and standard
deviation s, also written
in abbreviated Iorm as X ~ (2, 8) The probability oI X lying in the
interval (X1, X2) is given by
)
2
2
1
1
2
1 2
1
2
X
X
X
P X X X e dX

o
o x
+
= ' '
In terms oI Iigure, this probability is equal to
the area under the normal curve between
the ordinates at X X1 and X X2
respectively.
Aote: It may be recalled that the probability that a continuous random
variable takes a
particular value is deIined to be zero even though the event is not
impossible.
It is obvious Irom the above that, to Iind P(X1 X X2), we have to
evaluate an integral
which might be cumbersome and time consuming task. Fortunately, an
alternative
procedure is available Ior perIorming this task. To devise this procedure,
we deIine a
new variable .
X
:

o
=
We note that ) ) 1
0
X
E : E E X

o o
= + = = ' ' |
and ) ) ) 2 2
1 1
1.
X
J,r : J,r J,r X J,r X

o o o
= + = = = ' '
Further, Irom the reproductive property, it Iollows that the distribution
oI z is also normal.
Figure 11.4
Distributions
387
Thus, we conclude that iI X is a normal variate with mean m and
standard deviation
s, then
X
:

o
= is a normal variate with mean zero and standard deviation unity.
Since the parameters oI the distribution oI z are Iixed, it is a known
distribution and is
termed as st,nd,rd norm,l distribution (s.n.d.). Further, z is termed as a
st,nd,rd
norm,l v,ri,te (s.n.v.).
It is obvious Irom the above that the distribution oI any normal variate X
can always be
transIormed into the distribution oI standard normal variate z. This Iact
can be utilised to
evaluate the integral given above.
We can write ) 1 2
1 2
X X X
P X X X P

o o o
+ + + = ' ' ' ' ' '|
) 1 2 = P : : : ,where 1
1
X
:

o

= and
2
2
X
:

o

=
In terms oI Iigure, this probability is equal to
the area under the standard normal curve
between the ordinates at z z1 and z z2.
Since the distribution oI z is Iixed, the probabilities oI z lying in various
intervals are
tabulated. These tables can be used to write down the desired
probability.
Example 27: Using the table oI areas under the standard normal curve,
Iind the Iollowing
probabilities :
(i) P(0 z 1.3) (ii) P(1 z 0) (iii) P(1 z 12)
(iv) P( z 1.54) (v) P(,z, ~ 2) (vi) P(,z, 2)
$olution: The required probability, in each question, is indicated by the
shaded are oI the
corresponding Iigure.
(i) From the table, we can write P(0 z 1.3) 0.4032.
(ii) We can write P(1 z 0) P(0 z 1), because the distribution is
symmetrical.
From the table, we can write P(1 z 0) P(0 z 1) 0.3413.
(iii) We can write P(1 z 2) P(1 z 0) P(0 z 2)
P(0 z 1) P(0 z 2) 0.3413 0.4772
0.8185.
Figure 11.5
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388
(iv) We can write
P(z 1.54) 0.5000 P(0 z 1.54) 0.5000 0.4382 0.0618.
(v) P(,z, ~ 2) P(z ~ 2) P(z 2) 2P(z ~ 2) 2|0.5000 - P(0 z
2)|
1 2P(0 z 2) 1 2 0.4772 0.0456.
(vi) P(,z, 2) P(- 2 z 0) P(0 z 2) 2P(0 z 2) 2
0.4772 0.9544.
Example 28: Determine the value or values oI z in each oI the Iollowing
situations:
(a) Area between 0 and z is 0.4495.
(b) Area between ` to z is 0.1401.
(c) Area between ` to z is 0.6103.
(d) Area between 1.65 and z is 0.0173.
(e) Area between 0.5 and z is 0.5376.
$olution:
(a) On locating the value oI z corresponding to an entry oI area 0.4495 in
the table oI
areas under the normal curve, we have z 1.64. We note that the same
situation
may correspond to a negative value oI z. Thus, z can be 1.64 or - 1.64.
(b) Since the area between ` to z 0.5, z will be negative. Further, the
area between
z and 0 0.5000 0.1401 0.3599. On locating the value oI z
corresponding to this
entry in the table, we get z 1.08.
(c) Since the area between ` to z ~ 0.5000, z will be positive. Further,
the area
between 0 to z 0.6103 - 0.5000 0.1103. On locating the value oI z
corresponding
to this entry in the table, we get z 0.28.
(d) Since the area between 1.65 and z the area between 1.65 and 0
(which,
Irom table, is 0.4505), z is negative. Further z can be to the right or to
the leIt oI the
value 1.65. Thus, when z lies to the right oI 1.65, its value,
corresponds to an
area (0.4505 0.0173) 0.4332, is given by z 1.5 (Irom table).
Further, when
z lies to the leIt oI - 1.65, its value, corresponds to an area (0.4505
0.0173)
0.4678, is given by z 1.85 (Irom table).
(e) Since the area between 0.5 to z ~ area between 0.5 to 0 ( which,
Irom table, is
0.1915), z is positive. The value oI z, located corresponding to an area
(0.5376
0.1915) 0.3461, is given by 1.02.
Example 29: II X is a random variate which is distributed normally with
mean 60 and
standard deviation 5, Iind the probabilities oI the Iollowing events :
(i) 60 X 70, (ii) 50 X 65, (iii) X ~ 45, (iv) X 50.
$olution: It is given that m 60 and s 5
(i) Given X1 60 and X2 70, we can write
1 2
1 2
60 60 70 60
0 and 2.
5 5
X X
: :
22
88
- - - -
= = = = = =
\ P(60 X 70) P(0 z 2) 0.4772 (Irom table).
Distributions
389
(ii) Here X1 50 and X2 65, thereIore, we can write
1 2
50 60 65 60
2 and 1.
5 5
: :
= = = =
Hence P(50 X 65) P(2 z 1) P(0 z 2) P(0 z 1)
0.4772 0.3413 0.8185
(iii) ) ) 45 60
45 3
5
P X P : P :
> = > + = > ' '
= P 3 : 0) + P0 : ) = P0 : 3) + P0 : )
0.4987 0.5000 0.9987
(iv) ) ) 50 60
50 2
5
P X P : P :
= + = ' '
= 0.5000 P 2 : 0) = 0.5000 P 0 : 2)
0.5000 0.4772 0.0228
Example 3: The average monthly sales oI 5,000 Iirms are normally
distributed with
mean Rs 36,000 and standard deviation Rs 10,000. Find :
(i) The number oI Iirms with sales oI over Rs 40,000.
(ii) The percentage oI Iirms with sales between Rs 38,500 and Rs
41,000.
(iii) The number oI Iirms with sales between Rs 30,000 and Rs 40,000.
$olution: Let X be the normal variate which represents the monthly
sales oI a Iirm.
Thus X ~ (36,000, 10,000).
(i) ( ( 40000 36000
40000 0.4
10000
P X P : P :
- > = > = >
= 0.5000 P 0 : 0.4) = 0.5000 0.1554 = 0.3446.
Thus, the number oI Iirms having sales over Rs 40,000
0.3446 5000 1723
Ior Management
390
(ii) ) 38500 36000 41000 36000
38500 41000
10000 10000
P X P :
= + ' '
= P0.25 : 0.5) = P0 : 0.5) P0 : 0.25)
= 0.1915 0.0987 = 0.0987.
Thus, the required percentage oI Iirms 0.0987 100 9.87.
(iii) ) 30000 36000 40000 36000
30000 40000
10000 10000
P X P :
= + ' '
= P 0.6 : 0.4) = P0 : 0.6) + P0 : 0.4)
= 0.2258 + 0.1554 = 0.3812.
Thus, the required number oI Iirms 0.3812 - 5000 1906
Example 31: In a large institution, 2.28 oI employees have income
below Rs 4,500
and 15.87 oI employees have income above Rs. 7,500 per month.
Assuming the
distribution oI income to be normal, Iind its mean and standard
deviation.
$olution: Let the mean and standard deviation oI the given distribution
be 2and 8
respectively.
It is given that ) 4500
P X 4500 0.0228 or P : 0.0228

o
= + = ' '
On locating the value oI z corresponding to an area 0.4772 (0.5000 -
0.0228), we can
write
4500
2 or 4500 2
o
o
= = .... (1)
Similarly, it is also given that
) 7500
P X 7500 0.1587 or P : 0.1587

o
> = > + = ' '
Locating the value oI z corresponding to an area 0.3413 (0.5000 -
0.1587), we can write
7500
1 or 7500
o
o
= = .... (2)
Solving (1) and (2) simultaneously, we get
2 Rs 6,500 and 8 Rs 1,000.
Example 32: Marks in an examination are approximately normally
distributed with
mean 75 and standard deviation 5. II the top 5 oI the students get grade
A and the
bottom 25 get grade F, what mark is the lowest A and what mark is the
highest F?
$olution: Let A be the lowest mark in grade A and F be the highest
mark in grade F.
From the given inIormation, we can write
P X A P :
A > = > FH G
K J
b g 0 05 =
75
5
. or 0.05
On locating the value oI z corresponding to an area 0.4500 (0.5000 -
0.0500), we can
write
A
A
= = 75
5
1.645 83.225
Further, it is given that
P X F P :
F = FH G
K J
b g 0 25 =
75
5
. or 0.25
Distributions
391
On locating the value oI z corresponding to an area 0.2500 (0.5000
0.2500),
we can write
F
F
= = 75
5
.675 71.625
Example 33: The mean inside diameter oI a sample oI 200 washers
produced by a
machine is 5.02 mm and the standard deviation is 0.05 mm. The purpose
Ior which these
washers are intended allows a maximum tolerance in the diameter oI
4.96 to 5.08 mm,
otherwise the washers are considered as deIective. Determine the
percentage oI deIective
washers produced by the machine on the assumption that diameters are
normally
distributed.
$olution: Let X denote the diameter oI the washer. Thus, X ~ (5.02,
0.05).
The probability that a washer is deIective 1 P(4.96 X 5.08)
4.96 5.02 5.08 5.02
1
0.05 0.05
P :
= + + ' ' ' ' |
=1 P1.2 : 1.2) =1 2P0 : 1.2) 1 2- 0.3849 0.2302
Thus, the percentage oI deIective washers 23.02.
Example 34: The average number oI units produced by a manuIacturing
concern per
day is 355 with a standard deviation oI 50. It makes a proIit oI Rs 1.50
per unit. Determine
the percentage oI days when its total proIit per day is (i) between Rs
457.50 and
Rs 645.00, (ii) greater than Rs 682.50 (assume the distribution to be
normal). The area
between z 0 to z 1 is 0.34134, the area between z 0 to z 1.5 is
0.43319 and the
area between z 0 to z 2 is 0.47725, where z is a standard normal
variate.
$olution: Let X denote the proIit per day. The mean oI X is 355-1.50
Rs 532.50 and
its S.D. is 50-1.50 Rs 75. Thus, X ~ (532.50, 75).
(i) The probability oI proIit per day lying between Rs 457.50 and Rs
645.00
) 457.50 532.50 645.00 532.50
457.50 645.00
75 75
P X P :
= + ' '
= P1 : 1.5) = P0 : 1) + P0 : 1.5) 0.34134 0.43319
0.77453
Thus, the percentage oI days 77.453
(ii) ) ) 682.50 532.50
682.50 2
75
P X P : P :
> = > + = > ' '
= 0.5000 P 0 : 2) = 0.5000 0.47725 = 0.02275
Thus, the percentage oI days 2.275
Example 35: The distribution oI 1,000 examinees according to marks
percentage is
given below :
Assuming the marks percentage to Iollow a normal distribution,
calculate the mean and
standard deviation oI marks. II not more than 300 examinees are to Iail,
what should be
the passing marks?
$olution: Let X denote the percentage oI marks and its mean and S.D.
be 2and 8
respectively. From the given table, we can write
,rks less th,n 40 40 - 75 75 or more %ot,l
No. of ex,minees 430 420 150 1000
Ior Management
392
P(X 40) 0.43 and P(X > 75) 0.15, which can also be written as
40 75
P : 0.43 and P : 0.15

o o
+ = > + = ' ' ' '
The above equations respectively imply that
40
0.175 or 40 0.175
o
o
= = .... (1)
and
75
1.04 or 75 1.04
o
o
= = .... (2)
Solving the above equations simultaneously, we get 2 45.04 and 8
28.81.
Let X1 be the percentage oI marks required to pass the examination.
Then we have ( 1
1
45.04
0.3 or 0.3
28.81
X
P X X P :
- < = < =
\ 1
1
45.04
0.525 29.91 or 30 (approx.)
28.81
X
X

= =
Example 3: In a certain book, the Irequency distribution oI the number
oI words per
page may be taken as approximately normal with mean 800 and standard
deviation 50. II
three pages are chosen at random, what is the probability that none oI
them has between
830 and 845 words each?
$olution: Let X be a normal variate which denotes the number oI words
per page.
It is given that X ~ (800, 50).
The probability that a page, select at random, does not have number oI
words between
830 and 845, is given by
( 830 800 845 800
1 830 845 1
50 50
P X P :
- - - < < = - < <
=1- P(0.6 < : < 0.9 =1- P(0 < : < 0.9 + P(0 < : < 0.6
1- 0.3159 0.2257 0.9098 0.91
Thus, the probability that none oI the three pages, selected at random,
have number oI
words lying between 830 and 845 (0.91)3 0.7536.
Example 37: At a petrol station, the mean quantity oI petrol sold to a
vehicle is 20 litres
per day with a standard deviation oI 10 litres. II on a particular day, 100
vehicles took 25
or more litres oI petrol, estimate the total number oI vehicles who took
petrol Irom the
station on that day. Assume that the quantity oI petrol taken Irom the
station by a vehicle
is a normal variate.
$olution: Let X denote the quantity oI petrol taken by a vehicle. It is
given that
X ~ (20, 10).
\ ) ) 25 20
25 0.5
10
P X P : P :
> = > + = > ' '
= 0.5000 Pb0 : 0.5g = 0.5000 0.1915 = 0.3085
Let be the total number oI vehicles taking petrol on that day.
\ 0.3085- 100 or 100/0.3085 324 (approx.)
Distributions
393
Normal Approximation to Binomial Distribution
ormal distribution can be used as an approximation to binomial
distribution when n is
large and neither p nor q is very small. II X denotes the number oI
successes with probability p oI a success in each oI the n trials, then X
will be distributed
approximately normally with mean np and standard deviation npq .
Further, ~ (0,1.
X np
: N
npq
-
=
It may be noted here that as X varies Irom 0 to n, the standard normal
variate z would
vary Irom - ` to ` because
when X 0,
lim
n
np
npq
+
' '
np
q
+
= ' '
and when X n ,
lim
n
n np
npq
-
=

lim
n
nq
npq

lim
n
nq
p

= `
Correction for Continuity
Since the number oI successes is a discrete variable, to use normal
approximation, we
have make corrections Ior continuity. For example,
P(X1 X X2) is to be corrected as 1 2
1 1
2 2
P X X X + + ' '
, while using normal
approximation to binomial since the gap between successive values oI a
binomial variate
is unity. Similarly, P(X1 X X2) is to be corrected as 1 2
1 1
2 2
P X X X + + ' '
,
since X1 X does not include X1 and X X2 does not include X2.
Aote: The normal approximation to binomial probability mass Iunction
is good when
n 50 and neither p nor q is less than 0.1.
Example 38: An unbiased die is tossed 600 times. Use normal
approximation to binomial
to Iind the probability obtaining
(i) more than 125 aces,
(ii) number oI aces between 80 and 110,
(iii) exactly 150 aces.
$olution: Let X denote the number oI successes, i.e., the number oI
aces.
\
1 15
600 100 and 600 9.1
6 66
= np = - = o = npq = - - =
(i) To make correction Ior continuity, we can write
P(X ~ 125) P(X ~ 125 0.5)
Thus, ) ) 125.5 100
125.5 2.80
9.1
P X P : P :
> = > + = > ' '
= 0.5000 P 0 : 2.80) = 0.5000 0.4974 = 0.0026.
Ior Management
394
(ii) In a similar way, the probability oI the number oI aces between 80
and 110 is given
by
) 79.5 100 110.5 100
79.5 110.5
9.1 9.1
P X P :
= + ' '
= P 2.25 : 1.15) = P0 : 2.25) + P0 : 1.15)
0.4878 0.3749 0.8627
(iii) P(X 120) P(119.5 X 120.5)
19.5 20.5
9.1 9.1
P : + ' '
P(2.14 z 2.25) P(0 z 2.25) - P(0 z 2.14)
0.4878 - 0.4838 0.0040
Normal/ Approximation to Poisson Distribution
ormal distribution can also be used to approximate a Poisson
distribution when its
parameter m 10. II X is a Poisson variate with mean m, then, Ior m
10, the distribution
oI X can be taken as approximately normal with mean m and standard
deviation m so
that
X m
:
m
-
= is a standard normal variate.
Example 39: A random variable X Iollows Poisson distribution with
parameter 25.
Use normal approximation to Poisson distribution to Iind the probability
that X is greater
than or equal to 30.
$olution: P(X 30) P(X 29.5) (aIter making correction Ior
continuity).
= > FH G
K J
P : = P : >
29 5 25
5
09
.
b . g
0.5000 - P(0 z 0.9) 0.5000 - 0.3159 0.1841
Fitting a Normal Curve
A normal curve is Iitted to the observed data with the Iollowing
objectives :
1. To provide a visual device to judge whether it is a good Iit or not.
2. Use to estimate the characteristics oI the population.
The Iitting oI a normal curve can be done by
(a) The Method oI Ordinates or
(b) The Method oI Areas.
(a) Method of Ordinates: In this method, the ordinate I(X) oI the normal
curve, Ior
various values oI the random variate X are obtained by using the table oI
ordinates Ior a
standard normal variate.
We can write ) )
2
2 1 1
2 2 1 1 1
2 2
X
:
f X e e :

o o
o x o x o
+
= ' ' = =
where ) 1 2
2 1
and z .
2
X :
: e
o
o x
= =
The expected Irequency corresponding to a particular value oI X is given
by
. ) )
N
y N o X o :
o
= = and thereIore, the expected Irequency oI a class y h, where
h is the class interval.
Distributions
395
Cl,ss Interv,ls : 10 - 20 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80
%ot,l
Frequency : 2 11 24 33 20 8 2 100
) ) -
*
( ) ( )
10-20 15 2.34 0.0258 0.2081 2
20-30 25 1.53 0.1238 0.9984 10
30-40 35 0.73 0.3056 2.4645 25
40-50 45 0.08 0.3977 3.2073 32
50-60 55 0.89 0.2685
e
Cl,ss id v,lues X : N
: y : f
Interv,ls X from t,ble
o o
o o
= =

2.1653 22
60-70 65 1.69 0.0957 0.7718 8
70-80 75 2.50 0.0175 0.1411 1
Example 4: Fit a normal curve to the Iollowing data :
$olution: First we compute mean and standard deviation oI the given
data.
Aote: II the class intervals are not continuous, they should Iirst be made
so.
\
10
45 10 44
100
= - =
and o= FH G
K J
10 = =
156
100
10
100
10 155 12 4
2
. .
Table for the fitting of Normal Curve
(b) Method of Areas: Under this method, the probabilities or the areas oI
the random
variable lying in various intervals are determined. These probabilities
are then multiplied
by to get the expected Irequencies. This procedure is explained below
Ior the data oI
the above example.
*Expected Irequency approximated to the nearest integer.
2 - 45
( ) ( ) 10
10-20 15 2 3 6 18
20-30 25 11 2 22 44
30-40 35 24 1 24 24
40-50 45 33 0 0 0
50-60 55 20 1 20 20
60-70 65 8 2 16 32
70-80 75 2 3 6 18
100
Cl,ss id v,lues Frequency X
d fd fd
Interv,ls X f
%ot,l
-
=
- -
- -
- -
-10 156
44
*
( ) 12.4 0
10-20 10 2.74 0.4969 0.0231 2
20-30 20 1.94 0.4738 0.1030 10
30-40 30 1.13 0.3708 0.2453 25
40-50 40 0.32 0.1255 0
e
Cl,ss Lower Limit X Are, from Are, under
: f
Interv,ls X to : the cl,ss
-
=
-
-
-
- .3099 31
50-60 50 0.48 0.1844 0.2171 22
60-70 60 1.29 0.4015 0.0806 8
70-80 70 2.10 0.4821 0.0160 2
80 2.90 0.4981
Ior Management
396
Exercise with Hints
1. In a metropolitan city, there are on the average 10 Iatal road accidents
in a month
(30 days). What is the probability that (i) there will be no Iatal accident
tomorrow,
(ii) next Iatal accident will occur within a week?
int: Take m 1/3 and apply exponential distribution.
2. A counter at a super bazaar can entertain on the average 20 customers
per hour.
What is the probability that the time taken to serve a particular customer
will be
(i) less than 5 minutes, (ii) greater than 8 minutes?
int: Use exponential distribution.
3. The marks obtained in a certain examination Iollow normal
distribution with mean
45 and standard deviation 10. II 1,000 students appeared at the
examination, calculate
the number oI students scoring (i) less than 40 marks, (ii) more than 60
marks and
(iii) between 40 and 50 marks.
4. The ages oI workers in a large plant, with a mean oI 50 years and
standard deviation
oI 5 years, are assumed to be normally distributed. II 20 oI the workers
are
below a certain age, Iind that age.
int: Given P(X X1) 0.20, Iind X1.
5. The mean and standard deviation oI certain measurements computed
Irom a large
sample are 10 and 3 respectively. Use normal distribution approximation
to answer
the Iollowing:
(i) About what percentage oI the measurements lie between 7 and 13
inclusive?
(ii) About what percentage oI the measurements are greater than 16?
int: Apply correction Ior continuity.
6. There are 600 business students in the post graduate department oI a
university
and the probability Ior any student to need a copy oI a particular text
book Irom the
university library on any day is 0.05. How many copies oI the book
should be kept
in the library so that the probability that none oI the students, needing a
copy, has to
come back disappointed is greater than 0.90? (Use normal
approximation to binomial.)
int: II X1 is the required number oI copies, P(X UX1) 0.90.
7. The grades on a short quiz in biology were 0, 1, 2, 3, ...... 10 points,
depending upon
the number oI correct answers out oI 10 questions. The mean grade was
6.7 with
standard deviation oI 1.2. Assuming the grades to be normally
(i) the percentage oI students scoring 6 points, (ii) the maximum grade
oI the
lowest 10 oI the class.
int: Apply normal approximation to binomial.
8. The Iollowing rules are Iollowed in a certain examination. "A
candidate is awarded
a Iirst division iI his aggregate marks are 60 or above, a second
division iI his
aggregate marks are 45 or above but less than 60 and a third division
iI the
aggregate marks are 30 or above but less than 45. A candidate is
declared
Iailed iI his aggregate marks are below 30 and awarded a distinction iI
his
aggregate marks are 80 or above."
At such an examination, it is Iound that 10 oI the candidates have
Iailed, 5
have obtained distinction. Calculate the percentage oI students who were
placed in
the second division. Assume that the distribution oI marks is normal.
The areas
under the standard normal curve Irom 0 to z are :
int: First Iind parameters oI the distribution on the basis oI the given
inIormation.
: : 1.28 1.64 0.41 0.47
Are, : 0.4000 0.4500 0.1591 0.1808
Distributions
397
9. For a certain normal distribution, the Iirst moment about 10 is 40 and
the Iourth
moment about 50 is 48. What is the mean and standard deviation oI the
distribution?
int: Use the condition -2 3, Ior a normal distribution.
10. In a test oI clerical ability, a recruiting agency Iound that the mean
and standard
deviation oI scores Ior a group oI Iresh candidates were 55 and 10
respectively.
For another experienced group, the mean and standard deviation oI
scores were
Iound to be 62 and 8 respectively. Assuming a cut-oII scores oI 70, (i)
what
percentage oI the experienced group is likely to be rejected, (ii) what
percentage
oI the Iresh group is likely to be selected, (iii) what will be the likely
percentage oI
Iresh candidates in the selected group? Assume that the scores are
normally
distributed.
11. 1,000 light bulbs with mean liIe oI 120 days are installed in a new
Iactory. Their
length oI liIe is normally distributed with standard deviation oI 20 days.
(i) How
many bulbs will expire in less than 90 days? (ii) II it is decided to
replace all the
bulbs together, what interval should be allowed between replacements iI
not more
than 10 percent bulbs should expire beIore replacement?
int: (ii) P(X UX1) 0.9.
12. The probability density Iunction oI a random variable is expressed as
) 2 2X 3)2 p X e
x
= + ' '
, ( - ` X `)
(i) IdentiIy the distribution.
(ii) Determine the mean and standard deviation oI the distribution.
(iii) Write down two important properties oI the distribution.
int: ormal distribution.
13. The weekly wages oI 2,000 workers in a Iactory are normally
distributed with a
mean oI Rs 200 and a variance oI 400. Estimate the lowest weekly
wages oI the
197 highest paid workers and the highest weekly wages oI the 197
lowest paid
workers.
14. Among 10,000 random digits, in how many cases do we expect that
the digit 3
appears at the most 950 times. (The area under the standard normal
curve Ior
z 1.667 is 0.4525 approximately.)
int: 2 10000- 0.10 and 82 1000- 0.9.
15. Marks obtained by certain number oI students are assumed to be
normally distributed
with mean 65 and variance 25. II three students are taken at random,
what is the
probability that exactly two oI them will have marks over 70?
int: Find the probability (p) that a student gets more than 70 marks.
Then Iind 3C2p2q.
16. The wage distribution oI workers in a Iactory is normal with mean
Rs 400 and
standard deviation Rs 50. II the wages oI 40 workers be less than Rs
350, what is
the total number oI workers in the Iactory? | given ) 1
0
o t dt = 0.34 , where t ~
(0,1).|
int: - Probability that wage is less than 350 40.
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398
17. The probability density Iunction oI a continuous random variable X
is given by
I(X) kX(2 - X), 0 X 2
0 elsewhere.
Calculate the value oI the constant k and E(X).
int: To Iind k, use the Iact that total probability is unity.
18. ) 25 2 5
f X e X , X
x
= is the probability density Iunction oI a normal
distribution with mean zero and variance 1/50. Is the statement true?
int: TransIorm X into standard normal variate z.
19. The income oI a group oI 10,000 persons was Iound to be normally
distributed with
mean Rs 1,750 p.m. and standard deviation Rs 50. Show that about 95
oI the
persons oI the group had income exceeding Rs 1,668 and only 5 had
income
exceeding Rs 1,832.
20. A complex television component has 1,000 joints by a machine
which is known to
produce on an average one deIective in Iorty. The components are
examined and
the Iaulty soldering corrected by hand. II the components requiring more
than 35
corrections are discarded, what proportion oI the components will be
thrown away?
int: Use Poisson approximation to normal distribution.
21. The average number oI units produced by a manuIacturing concern
per day is 355
with a standard deviation oI 50. It makes a proIit oI Rs 150 per unit.
Determine the
percentage oI days when its total proIit per day is (i) between
Rs 457.50 and Rs 645.00, (ii) greater than Rs 628.50.
int: Find the probabilities oI producing 457.50/150 to 645/150 units
etc.
22. A tyre manuIacturing company wants 90 oI its tyres to have a wear
liIe oI at
least 40,000 kms. II the standard deviation oI the wear lives is known to
be
3,000 kms, Iind the lowest acceptable average wear liIe that must be
achieved by
the company. Assume that the wear liIe oI tyres is normally distributed.
int: 0
40000
0.90.
3000
P :
> + = ' '
23. The average mileage beIore the scooter oI a certain company needs a
major overhaul
is 60,000 kms with a S.D. oI 10,000 kms. The manuIacturer wishes to
warranty
these scooters, oIIering to make necessary overhaul Iree oI charge iI the
buyer oI
a new scooter has a breakdown beIore covering certain number oI kms.
Assuming
that the mileage, beIore an overhaul is required, is distributed normally,
Ior how
many kms should the manuIacturer warranty so that not more than 3
oI the new
scooters come Ior Iree overhaul?
int: 0
60000
0.03.
10000
X
P :
- < =
24. AIter an aeroplane has discharged its passengers, it takes crew A an
average oI
15 minutes (8 4 min.) to complete its task oI handling baggage and
loading Iood
and other supplies. Crew B Iuels the plane and does maintenance checks,
taking
an average oI 16 minutes (8 2 min.) to complete its task. Assume that
the two
crews work independently and their times, to complete the tasks, are
normally
distributed. What is the probability that both crews will complete their
tasks soon
enough Ior the plane to be ready Ior take oII with in 20 minutes?
int: P(A).P(B) P(AB).
Distributions
399
25. An automobile company buys nuts oI a speciIied mean diameters m.
A nut is
classiIied as deIective iI its diameter diIIers Irom 2by more than 0.2
mm. The
company requires that not more than 1 oI the nuts may be deIective.
What
should be the maximum variability that the manuIacturer can allow in
the production
oI nuts so as to satisIy the automobile company?
int: Find S.D.
1 What are the characteristics oI Poisson Distribution?
2. What are the objectives Ior Iitting a normal curve?
answers in it.
better.

11.12 LET US SUM UP
Apply the theoretical probability distribution to check the eIIiciency oI
industrial water
treatment.
11.14 KEYWORDS
Binomial Distribution
Random Variable
Poisson Distribution
) )
. . ./ . . . . .
(i) Binomial 0,1,2,.... and
(ii) Hyper -
0,1,2,.... , and
geometric
.
(iii) Poisson 0,1,2,....
!
(iv)
n r nr
r
k N k
r nr
N
r
m r
Distribution p m f p d f R,nge of R J P,r,meters
C p q n n p
C C
n nN k
C
e m
m
r

2
2
1
2
1
2
Exponential . 0
1
(v) ormal and
2
1
(vi) S.ormal 0 and 1
2
mt
X
:
m e t m
e X
e :

o o
o x
x

+ ' '

Ior Management
400
ormal Distribution
Exponential Distribution
Functions
(a) Poisson distribution is used where no. oI trials are ......................
(b) Poisson distribution is a ...................... distribution.
(c) ormal distribution was Iirst identiIied as ......................
(d) ormal probability curve is ...................... shaped.
(a) Binomial distribution assumption has Bernoulli Trials.
(b) Standard deviation is equal to npq
(c) Poisson distribution is not used as a model.
(d) The curve used to describe the accidental errors is Gaussion curve.
3. Write short notes on:
(a) Fitting oI Binomial Distribution
(b) Pascal Distribution
(c) Poisson Distribution
(d) Geometrical Distribution
(e) ormal Distribution
1. What do you understand by a theoretical probability distribution?
How it is useIul in
business decision-making?
2. DeIine a binomial distribution. State the conditions under which
binomial probability
model is appropriate.
3. What are the parameters oI a binomial distribution? Obtain
expressions Ior mean
and variance oI the binomial variate in terms oI these parameters.
4. What is a 'Poisson Process'? Obtain probability mass Iunction oI
Poisson variate
as a limiting Iorm oI the probability mass Iunction oI binomial variate.
5. Obtain mean and standard deviation oI a Poisson random variate.
Discuss some
business and economic situations where Poisson probability model is
appropriate.
6. How will you use Poisson distribution as an approximation to
binomial? Explain
with the help oI an example.
7. Under what conditions will a random variable Iollow a normal
distribution? State
some important Ieatures oI a normal probability curve.
8. What is a standard normal distribution? Discuss the importance oI
normal distribution
in statistical theory.
9. State clearly the assumptions under which a binomial distribution
tends to Poisson
and to normal distribution.
Distributions
401
10. Assume that the probability that a bomb dropped Irom an aeroplane
will strike a
target is 1/5. II six bombs are dropped, Iind the probability that (i)
exactly two will
strike the target, (ii) at least two will strike the target.
11. An unbiased coin is tossed 5 times. Find the probability oI getting (i)
two heads, (ii)
at least two heads.
12. An experiment succeeds twice as many times as it Iails. Find the
probability that in
6 trials there will be (i) no successes, (ii) at least 5 successes, (iii) at the
most
5 successes.
13. In an army battalion 60 oI the soldiers are known to be married
and
remaining unmarried. II p(r) denotes the probability oI getting r married
soldiers
Irom 5 soldiers, calculate p(0), p(1), p(2), p(3), p(4) and p(5). II there are
500 rows
each consisting oI 5 soldiers, approximately how many rows are
expected to contain
(i) all married soldiers, (ii) all unmarried soldiers?
14. A company has appointed 10 new secretaries out oI which 7 are
trained. II a
particular executive is to get three secretaries, selected at random, what
is the
chance that at least one oI them will be untrained?
15. The overall pass rate in a university examination is 70. Four
candidates take up
such examination. What is the probability that (i) at least one oI them
will pass (ii)
at the most 3 will pass (iii) all oI them will pass, the examination?
16. 20 oI bolts produced by a machine are deIective. Deduce the
oI the number oI deIectives in a sample oI 5 bolts.
17. 25 employees oI a Iirm are Iemales. II 8 employees are chosen at
random, Iind
the probability that (i) 5 oI them are males (ii) more than 4 are males (iii)
less than
3 are Iemales.
18. A supposed coIIee connoisseur claims that he can distinguish
between a cup oI
instant coIIee and a cup oI percolator coIIee 75 oI the times. It is
agreed that his
claim will be accepted iI he correctly identiIies at least 5 oI the 6 cups.
Find, (i) his
chance oI having the claim accepted iI he is in Iact only guessing and,
(ii) his chance oI having the claim rejected when he does not have the
ability he
claims.
19. It is known that 10 oI the accounts oI a Iirm contain errors. An
auditor selects 5
accounts oI the Iirm at random and Iinds that 3 oI them contain errors.
What is the
probability oI this result? What do you conclude on the basis oI this
result?
20. The incidence oI an occupational disease in an industry is such that
the workers
have a 20 chance oI suIIering Irom it. What is the probability that out
oI 6
workmen, 4 or more will contract the disease?
21. A local politician claims that the assessed value oI houses, Ior house
tax purposes
by the Municipal Corporation oI Delhi, is not correct in 90 oI the
cases. Assuming
this claim to be true, what is the probability that out oI a sample oI 4
houses selected
at random (i) at least one will be Iound to be correctly assessed (ii) at
least one will
be Iound to be wrongly assessed?
22. There are 64 beds in a garden and 3 seeds oI a particular type are
sown in each
bed. The probability oI a Ilower being white is 0.25. Find the number oI
beds with
3, 2, 1 and 0 white Ilowers.
23. Suppose that halI the population oI a town are consumers oI rice.
100 investigators
are appointed to Iind out its truth. Each investigator interviews 10
individuals. How
many investigators do you expect to report that three or less oI the
people interviewed
are consumers oI rice?
24. II the probability oI a success in a trial is 0.2, Iind (a) mean, (b)
variance, (c)
moment coeIIicient oI skewness and kurtosis oI the number oI successes
in 100
trials.
Ior Management
402
25. There are 5 machines in a Iactory which may require adjustment
Irom time to time
during a day oI their use. Two oI these machines are oI type I, each
having a
probability oI 1/5 oI needing adjustment during a day and 3 are oI type
II, having
corresponding probability oI 1/10.
Assuming that no machine needs adjustment twice on the same day, Iind
the
probability that on a particular day
(i) Just 2 machines oI type II and none oI type I need adjustment.
(ii) II just 2 machines need an adjustment, they are oI the same type.
26. Fit a binomial distribution to the Iollowing data :
27. Five coins were tossed 100 times and the outcomes are recorded as
given below.
Compute the expected Irequencies.
28. The administrator oI a large airport is interested in the number oI
aircraIt departure
delays that are attributable to inadequate control Iacilities. A random
sample oI 10
aircraIt take oII is to be thoroughly investigated. II the true proportion oI
such
delays in all departures is 0.40, what is the probability that 4 oI the
sample departures
are delayed because oI control inadequacies? Also Iind mean, variance
and mode
oI the random variable.
29. A company makes T.Vs., oI which 15 are deIective. 15 T.Vs. are
shipped to a
dealer. II each T.V. assembled is considered an independent trial, what is
the
probability that the shipment oI 15 T.Vs. contain (i) no deIective (ii) at
the most one
deIective T.V.?
30. II 2 bulbs manuIactured by a company are deIective and the
random variable
denotes the number oI deIective bulbs, Iind mean, variance, measures oI
moment
coeIIicient oI skewness and kurtosis in a total oI 50 bulbs.
31. 4096 Iamilies having just 4 children were chosen at random.
Assuming the probability
oI a male birth equal to 1/2, compute the expected number oI Iamilies
having 0, 1,
2, 3 and 4 male children.
32. II the number oI telephone calls an operator receives Irom 9.00 A.M.
to 9.30 A.M.
Iollows a Poisson distribution with mean, m 2, what is the probability
that the
operator will not receive a phone call in the same interval tomorrow?
33. (a) Write down the probability mass Iunction oI a Poisson
distribution with
parameter 3. What are the values oI mean and variance oI the
corresponding
random variable?
(b) II X is a Poisson variate with parameter 2, Iind P(3 X 5).
(c) The standard deviation oI a Poisson variate is 2, Iind P(1 X 2).
34. Suppose that a telephone switch board handles 240 calls on the
average during a
rush hour and that the board can make at the most 10 connections per
minute.
Using Poisson distribution, estimate the probability that the board will
be over taxed
during a given minute.
35. An automatic machine makes paper clips Irom coils oI a wire. On
the average, 1 in
400 paper clips is deIective. II the paper clips are packed in boxes oI
100, what is
the probability that any given box oI clips will contain (i) no deIective
(ii) one or
more deIectives, (iii) less than two deIectives?
x : 0 1 2 3 4
f : 28 62 46 10 4
No.ofhe,ds : 0 1 2 3 4 5
Observed frequency : 2 10 24 38 18 8
Distributions
403
36. Certain mass produced articles, oI which 0.5 are deIective, are
packed in cartons
each containing 100 articles. What proportions oI the cartons are
expected to be
Iree Irom deIective articles and what proportion contain, 2 or more
deIective
articles?
37. A certain Iirm uses large Ileet oI delivery vehicles. Their records
over a long
period oI time (during which their Ileet size utilisation may be assumed
to have
remained constant) show that the average number oI vehicles serviced
per day is
3. Estimate the probability that on a given day
(i) no vehicle will be serviceable.
(ii) at the most 3 vehicles will be serviceable.
(iii) more than 2 vehicles will be unserviceable.
38. Suppose that a local electrical appliances shop has Iound Irom
experience that the
demand Ior tube lights is distributed as Poisson variate with a mean oI 4
tube lights
per week. II the shop keeps 6 tube lights during a particular week, what
is the
probability that the demand will exceed the supply during that week?
39. In a Poisson distribution, the probability oI zero success is 15. Find
its mean and
standard deviation.
40. Four unbiased coins are tossed 1,600 times. Using Poisson
distribution, Iind the
approximate probability oI getting 4 heads r times.
41. The number oI road accidents on a highway during a month Iollows
a Poisson
distribution with mean 6. Find the probability that in a certain month the
number oI
accidents will be (i) not more than 3, (ii) between 2 and 4.
42. A random variable X Iollows Poisson law such that P(X k) P(X
k 1).
Find its mean and variance.
43. The probability that a man aged 45 years will die with in a year is
0.012. What is
the probability that oI 10 such men at least 9 will reach their 46th
birthday?
(Given e- 0.12 0.88692).
44. During a period, persons arrive at a railway booking counter at the
rate oI 30 per
hour. What is the probability that two or less persons will arrive in a
period oI 5
minutes?
45. An insurance company insures 4,000 people against loss oI both eyes
in a car
accident. Based upon previous data, the rate were computed on the
assumption
that on the average 10 persons in 1,00,000 will have car accidents each
year with
this type oI injury. What is the probability that more than 3 oI the
insured will collect
on their policy in a given year?
46. A manuIacturer, who produces medicine bottles, Iinds that 0.1 oI
the bottles are
deIective. The bottles are packed in boxes containing 500 bottles. A drug
manuIacturer buys 100 boxes Irom the producer oI the bottles. Use
Poisson
distribution to Iind the number oI boxes containing (i) no deIective
bottles (ii) at
least two deIective bottles.
47. A Iactory turning out lenses, supplies them in packets oI 1,000. The
packet is
considered by the purchaser to be unacceptable iI it contains 50 or more
deIective
lenses. II a purchaser selects 30 lenses at random Irom a packet and
adopts the
criterion oI rejecting the packet iI it contains 3 or more deIectives, what
is the
probability that the packet (i) will be accepted, (ii) will not be accepted?
48. 800 employees oI a company are covered under the medical group
insurance scheme.
Under the terms oI coverage, 40 employees are identiIied as belonging
to 'High
Risk' category. II 50 employees are selected at random, what is the
probability that
Ior Management
404
(i) none oI them is in the high risk category, (ii) at the most two are in
the high risk
category? (You may use Poisson approximation to Binomial).
49. In Delhi with 100 municipal wards, each having approximately the
same population,
the distribution oI meningitis cases in 1987 were recorded as Iollows:
Fit a Poisson distribution to the above data.
50. The Iollowing table gives the number oI days in 50 day-period
during which
automobile accidents occurred in a certain part oI the city. Fit a Poisson
distribution
to the data.
51. A sample oI woollen balls has a mean weight oI 3.2 oz. and standard
deviation oI
1 oz. Assuming that the weight oI woollen balls is distributed normally,
(i) How many balls are expected to weigh between 2.7 and 3.7 oz., (ii)
what is the
probability that weight oI a ball is less than 1.5 oz. and (iii) what is the
probability
that the weight oI the ball will exceed 4.7 oz.?
52. The weekly wages oI 2,000 workers are normally distributed. Its
mean and standard
deviation are Rs 140 and Rs 10 respectively. Estimate the number oI
workers with
weekly wages
(i) Between Rs 120 and Rs 130.
(ii) More than Rs 170.
(iii) Less than Rs 165.
53. Find the probability that the value oI an item drawn at random Irom
a normal
distribution with mean 20 and standard deviation 10 will be between (i)
10 and 15,
(ii) 5 and 10 and (iii) 15 and 25.
54. In a manuIacturing organisation the distribution oI wages was
perIectly normal
and the number oI workers employed in the organisation were 5,000.
The mean
wages oI the workers were calculated as Rs 800 p.m. and the standard
deviation was worked out to be Rs 200. Estimate
(i) the number oI workers getting wages between Rs 700 and Rs 900.
(ii) the percentage oI workers getting wages above Rs 1,000.
(iii) the percentage oI workers getting wages below Rs 600.
55. Suppose that the waist measurements W oI 800 girls are normally
distributed with
mean 66 cms and standard deviation 5 cms. Find the number oI girls
with waists;
(i) between 65 and 70 cms. (ii) greater than or equal to 72 cms.
56. (a) A normal distribution has 77.0 as its mean. Find its standard
deviation iI 20
oI the area under the curve lies to the right oI 90.0.
(b) A random variable has a normal distribution with 10 as its standard
deviation.
Find its mean iI the probability that the random variable takes on a value
less
than 80.5 is 0.3264.
57. In a particular examination an examinee can get marks ranging Irom
0 to 100. Last
year, 1,00,000 students took this examination. The marks obtained by
them Iollowed
a normal distribution. What is the probability that the marks obtained by
a student
selected at random would be exactly 63?
No. of C,ses : 0 1 2 3 4
No. of W,rds : 63 28 6 2 1
No. of,ccidents : 0 1 2 3 4
No. of d,ys : 19 18 8 4 1
Distributions
405
58. A collection oI human skulls is divided into three classes according
to the value oI
a 'length breadth index' x. Skulls with x 75 are classiIied as 'long',
those with
75 x 80 as 'medium' and those with x ~ 80 as 'short'. The percentage
oI skulls
in the three classes in this collection are respectively 58, 38 and 4. Find,
approximately,
the mean and standard deviation oI x on the assumption that it is
normally distributed.
59. A wholesale distributor oI a Iertiliser product Iinds that the annual
demand Ior one
type oI Iertiliser is normally distributed with a mean oI 120 tonnes and
standard
deviation oI 16 tonnes. II he orders only once a year, what quantity
should be
ordered to ensure that there is only a 5 chance oI running short?
60. A multiple choice quiz has 200 questions, each with 4 possible
answers oI which
only one is correct. What is the probability (using normal approximation
to binomial
distribution) that sheer guess work yields Irom 25 to 30 correct answers
Ior 80
questions (out oI 200 questions) about which the student has no
knowledge?
61. In a normal distribution 31 oI the items are under 45 and 8 are
over 64. Find
the mean and standard deviation oI the distribution.
62. The mean liIe oI the bulbs manuIactured by a company is estimated
to be 2,025
hours. By using normal approximation to Poisson distribution, estimate
the
percentage oI bulbs that are expected to last Ior (i) less than 2,100 hours,
(ii)
between 1,900 and 2,000 hours and (iii) more than 2,000 hours.
63. Find mean and standard deviation iI a score oI 51 is 2 standard
deviation above
mean and a score oI 42 is 1 standard deviation below mean. Assume that
the
scores are normally distributed.
64. (a) A manuIacturer requires washers with speciIication oI its inner
diameter as
3.30 0.04 mm. II the inner diameters oI the washers supplied by some
suppliers are distributed normally with mean 2 3.31 mm. and 8 0.02
mm.,
what percentage oI the washers, supplied in the a lot, are expected to
meet
the required speciIication?
(b) A cylinder making machine has o 0.5 mm. At what value oI m
should the
machine be set to ensure that 2.5 oI the cylinders have diameters oI
25.48 mm. or more?
65. The mean liIe oI a pair oI shoes manuIactured by a company is
estimated to be
2.59 years with a standard deviation oI 3 months. What should be Iixed
as guarantee
period so that the company has not to replace more than 5 oI the pairs?
66. In a large group oI men, it is Iound that 5 are under 60 inches and
40 are
between 60 and 65 inches in height. Assuming the distribution to be
exactly normal,
Iind the mean and standard deviation oI the height. The values oI z Ior
area equal
to 0.45 and 0.05 between 0 to z are 1.645 and 0.125 respectively.
67. Packets oI a certain washing powder are Iilled with an automatic
machine with an
average weight oI 5 kg. and a standard deviation oI 50 gm. II the
weights oI
packets are normally distributed, Iind the percentage oI packets having
weight
above 5.10 kg.
68. For a normal distribution with mean 3 and variance 16, Iind the
value oI y such that
the probability oI the variate lying in the interval (3, y) is 0.4772.
69. The mean income oI people working in an industrial city is
approximated by a
normal distribution with a mean oI Rs 24,000 and a standard deviation
oI
Rs 3,000. What percentage oI the people in this city have income
exceeding
Rs 28,500? In a random sample oI 50 employed persons oI this city,
about how
many can be expected to have income less than Rs 19,500?
Ior Management
406
70. The burning time oI an experimental rocket is a random variable
which has normal
distribution with 4.36 seconds and s 0.04 seconds. What are the
probabilities
that this kind oI rocket will burn Ior
(i) less than 4.5 seconds, (ii) more than 4.40 seconds, (iii) between 4.30
to 4.42
seconds.
71. A company manuIactures batteries and guarantees them Ior a liIe oI
24 months.
(i) II the average liIe has been Iound in tests to be 33 months with a
standard
deviation oI 4 months, how many batteries will have to be replaced
under
guarantee iI the liIe oI the batteries Iollows a normal distribution?
(ii) II annual sales are 10,000 batteries at a proIit oI Rs 50 each and each
replacement costs the company Rs 100, Iind the net proIit.
(iii) Would it be worth its while to extend the guarantee to 27 months iI
the sales
were to be increased by this extra oIIer to 12,000 batteries?
72. The distribution oI total time a light bulb will last Irom the moment
it is Iirst put into
service is known to be exponential with mean time between Iailure oI
the bulbs
equal to 1,000 hours. What is the probability that the bulb will last Ior
more than
1,000 hours?
73. An editor oI a publishing company calculates that it requires 11
months on an
average to complete the publication process Irom the manuscript to
Iinished book
with a standard deviation oI 2.4 months. He believes that the distribution
oI
publication time is well described by a normal distribution. Determine,
out oI 190
books that he will handle this year, how many will complete the process
in less than
a year?
74. The I.Q.'s oI army volunteers in a given year are normally
distributed with
mean 110 and standard deviation 10. The army wants to give
advanced training
to 20 oI those recruits with the highest scores. What is the lowest I.Q.
score
acceptable Ior the advanced training?
75. II 60 oI the voters in a constituency Iavour a particular candidate,
Iind the probability
that in a sample oI 300 voters, more than 170 voters would Iavour the
candidate.
Use normal approximation to the binomial.
76. From the past experience, a committee Ior admission to certain
course consisting
oI 200 seats, has estimated that 5 oI those granted admission do not
turn up.
II 208 letters oI intimation oI admission are issued, what is the
probability that seat
is available Ior all those who turn up? Use normal approximation to the
binomial.
77. The number oI customer arrivals at a bank is a Poisson process with
average oI 6
customers per 10 minutes. (a) What is the probability that the next
customer will
arrive within 3 minutes? (b) What is the probability that the time until
the next
customer arrives will be Irom 2 to 3 minutes? (c) What is the probability
that the
next customer will arrive aIter more than 4 minutes?
78. Comment on the Iollowing statements :
(i) The mean oI a normal distribution is 10 and the third order central
moment
is 1.5.
(ii) The mean oI a Poisson variate is 4 and standard deviation is 3 .
(iii) The mean oI a binomial variate is 10 and standard deviation is 4.
(iv) The probability that a discrete random variable X takes a value X
a is equal
to P(X a), where P(X) is probability mass Iunction oI the random
variable.
(v) The probability that a continuous random variable X takes a value X
a is
equal to I(X a), where I(X) is probability density Iunction oI the
random
variable.
Distributions
407
(vi) The second raw moment oI a Poisson distribution is 2. The
probability
P(X 0) e-1.
(vii) The variance oI a binomial distribution cannot exceed
n
4
.
(viii) II Ior a Poisson variate X, P(X 1) P(X 2), then E(X) 2.
(ix) II Ior a Poisson variate X, P(X 0) P(X 1), then P(X ~ 0) e-1.
(x) -1 0 and -2 3 Ior a normal distribution.
79. State whether the Iollowing statements are True/False :
(i) Mean oI a binomial variate is always greater than its variance.
(ii) Mean oI a Poisson variate may or may not be equal to its variance.
(iii) Time required Ior the arrival oI two telephone calls at a desk is a
Poisson
variate.
(iv) A normal distribution is always symmetrical.
(v) A binomial distribution with p q is always symmetrical.
(vi) The probability Iunction oI a continuous random variable is called a
probability
mass Iunction.
(vii) The parameters oI a distribution completely determine the
distribution.
(viii) Any normal variate with given mean and standard deviation can be
transIormed
into a standard normal variate.
(ix) The number oI suicide cases in a given year is a binomial variate.
(x) Since the probability that a continuous random variable takes a
particular
value is zero, the event is said to be impossible.
80. Fill in the blanks :
(i) II three balls are drawn, successively with replacement, Irom a bag
containing
4 red and 3 black balls, the number oI red balls is a ...... random variable.
(ii) A standard normal variate has mean equal to ...... and standard
deviation
equal to ...... .
(iii) When 1 - p ~ p, the binomial distribution is ...... skewed.
(iv) The ...... oI a binomial variate with mean 4 and standard deviation
3 are
16 and
1
4
.
(v) A normal variate obtained by subtracting its mean and dividing by its
standard
deviation is known as ...... variate.
(vi) II the expected value oI a Poisson variate is 9, its ...... is 3.
(vii) The number oI deIects per unit oI length oI a wire is a ...... variate.
(viii) The time oI occurrence oI an event is an ...... variate.
(ix) The number oI trials needed to get a given number oI successes is a
......
variate.
(x) ormal distribution is also known as the normal law oI ...... .
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408
DISCUSSION
1. (a) large (b) discrete (c) law oI errors (d) Bell
2. (a) True (b) True (c) False (d) True
Peyton Z. Pebbles, Jr., Prob,bility R,ndom J,ri,bles ,nd R,ndom
Sign,l Principles.
Harold Crames, R,ndom v,ri,bles ,nd prob,bility distributions,
Cambridge Univ.
Press.
M.A. Kon, Prob,bility Distributions in Qu,rtum St,tistic,l ech,nics.
Springes
Verlag (Jan. 1966)
Charles F. Manski, Prob,bility Identific,tion of Prob,bility
Distribution, Springes
Verlag (May 2003)
P.C. Counsul, Femix Farieye Legrargian, Prob,bility Distributions,
Birkhauses,
Jan. 2006.
LESSON
12
PROBABILITY DISTRIBUTION OF A RANDOM
VARIABLE
CONTENTS
12.1 Introduction
12.2 Probability Distribution oI a Random Variable
12.2.1 Discrete and Continuous Probability Distributions
12.2.2 Cumulative Probability Function or Distribution Function
12.3 Mean and Variance oI a Random Variable
12.4 Theorems on Expectation
12.5 Joint Probability Distribution
12.5.1 Marginal Probability Distribution
12.5.2 Conditional Probability Distribution
12.5.3 Expectation oI the Sum or Product oI two Random Variables
12.5.4 Expectation oI a Function oI Random Variables
12.6 Decision Analysis under Certainty
12.7 Decision-making under Uncertainty
12.8 Decision-making under Risk
12.9 Expected Value with PerIect InIormation (EVPI)
12.10 Use oI Subjective Probabilities in Decision-making
12.11 Use oI Posterior Probabilities in Decision-making
12.12 Let us Sum Up
12.14 Keywords
In the previous two lessons we had talked about the probability theory
and various
distributions. But the most important aspect is to have a Ilavour oI
random variable so
that it may be attributed to a Iunction deIined on a state space.
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410
12.1 INTRODUCTION
A random variable X is a real valued Iunction oI the elements oI sample
space S, i.e.,
diIIerent values oI the random variable are obtained by associating a real
number with
each element oI the sample space. A random variable is also known as a
stoch,stic or
ch,nce v,ri,ble.
Mathematically, we can write X F(e), where e S and X is a real
number. We can note
here that the domain oI this Iunction is the set S and the range is a set or
subset oI real
numbers.
Example 1: Three coins are tossed simultaneously. Write down the
sample space oI the
random experiment. What are the possible values oI the random variable
X, iI it denotes
the number oI heads obtained?
$olution: The sample space oI the experiment can be written as
S (H,H,H), (H,H,T), (H,T,H), (T,H,H), (H,T,T), (T,H,T), (T,T,H),
(T,T,T)}
We note that the Iirst element oI the sample space denotes 3 heads,
thereIore, the
corresponding value oI the random variable will be 3. Similarly, the
value oI the random
variable corresponding to each oI the second, third and Iourth element
will be 2 and it will be 1 Ior each oI the IiIth, sixth and seventh element
and 0 Ior the last
element. Thus, the random variable X, deIined above can take Iour
possible values, i.e.,
0, 1, 2 and 3.
It may be pointed out here that it is possible to deIine another random
variable on the
above sample space.
12.2 PROBABILITY DISTRIBUTION OF A RANDOM
VARIABLE
Given any random variable, corresponding to a sample space, it is
possible to associate
probabilities to each oI its possible values. For example, in the toss oI 3
coins, assuming
that they are unbiased, the probabilities oI various values oI the random
variable X,
deIined in example 1 above, can be written as :
) 1
0 ,
8
P X= = ) 3
1 ,
8
P X= = ) 3
2
8
P X= = and ) 1
3
8
P X= = .
The set oI all possible values oI the random variable X alongwith their
respective
probabilities is termed as Probability Distribution oI X. The probability
distribution oI X,
deIined in example 1 above, can be written in a tabular Iorm as given
below:
ote that the total probability is equal to unity.
In general, the set oI n possible values oI a random variable X, i.e.,
X1, X2, ...... Xn} along with their respective probabilities p(X1),
p(X2), ...... p(Xn), where
)
1
1
n
i
i
p X
=
= , is called a probability distribution oI X. The expression p(X) is
called the
probability Iunction oI X.
12.2.1 Discrete and Continuous Probability Distributions
Like any other variable, a random variable X can be discrete or
continuous. II X can
take only Iinite or countably inIinite set oI values, it is termed as a
discrete random
variable. On the other hand, iI X can take an uncountable set oI inIinite
values, it is called
a continuous random variable.
X : 0 1 2 3 %ot,l
paXf : 1
8
3
8
3
8
1
8
1
Probability Distribution
oI a Random Variable
411
The random variable deIined in example 1 is a discrete random variable.
However, iI X
denotes the measurement oI heights oI persons or the time interval oI
arrival oI a speciIied
number oI calls at a telephone desk, etc., it would be termed as a
continuous random
variable.
The distribution oI a discrete random variable is called the Discrete
Probability Distribution and the corresponding probability Iunction p(X)
is called a
Probability Mass Function. In order that any discrete Iunction p(X) may
serve as probability
Iunction oI a discrete random variable X, the Iollowing conditions must
be satisIied :
(i) p(Xi) > 0 Vi 1, 2, ...... n and
(ii) )
1
1
n
i
i
p X
=
=
In a similar way, the distribution oI a continuous random variable is
called a Continuous
Prob,bility Distribution and the corresponding probability Iunction
p(X) is termed as the Prob,bility Density Function. The conditions Ior
any Iunction oI
a continuous variable to serve as a probability density Iunction are :
(i) p(X) > 0 Vreal values oI X, and
(ii) pX)dX 1

=
#emarks:
1. When X is a continuous random variable, there are an inIinite number
oI points in
the sample space and thus, the probability that X takes a particular value
is always
deIined to be zero even though the event is not regarded as impossible.
Hence, we
always talk oI the probability oI a continuous random variable lying in
an interval.
2. The concept oI a probability distribution is not new. In Iact it is
another way oI
representing a Irequency distribution. Using statistical deIinition, we can
treat the
relative Irequencies oI various values oI the random variable as the
probabilities.
Example 2: Two unbiased die are thrown. Let the random variable X
denote the sum oI
points obtained. Construct the probability distribution oI X.
$olution: The possible values oI the random variable are :
2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12
The probabilities oI various values oI X are shown in the Iollowing table
:
Probability Distribution of X
Example 3: Three marbles are drawn at random Irom a bag containing 4
red and 2
white marbles. II the random variable X denotes the number oI red
marbles drawn,
construct the probability distribution oI X.
$olution: The given random variable can take 3 possible values, i.e., 1, 2
and 3. Thus,
we can compute the probabilities oI various values oI the random
variable as given
below :
P(X 1, i.e., 1R and 2 W marbles are drawn)
4 2
1 2
6
3
4
20
C C
C
= - =
X 2 3 4 5 6 7 8 9 10 11 12 %ot,l
paXf 1
36
2
36
3
36
4
36
5
36
6
36
5
36
4
36
3
36
2
36
1
36
1
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P(X 2, i.e., 2R and 1W marbles are drawn)
4 2
2 1
6
3
12
20
C C
C
= - =
P(X 3, i.e., 3R marbles are drawn)
4
3
6
3
4
20
C
C
= =
Aote: In the event oI white balls being greater than 2, the possible values
oI the random
variable would have been 0, 1, 2 and 3.
12.2.2 Cumulative Probability Function or Distribution Function
This concept is similar to the concept oI cumulative Irequency. The
distribution Iunction
is denoted by F(x).
For a discrete random variable X, the distribution Iunction or the
cumulative probability
Iunction is given by F(x) P(X x).
II X is a random variable that can take values, say 0, 1, 2, ......, then
F(1) P(X 0) P(X 1), F(2) P(X 0) P(X 1) P(X 2), etc.
Similarly, iI X is a continuous random variable, the distribution Iunction
or cumulative
probability density Iunction is given by
) ) ( )
x
F x P X x p X dX

= =
12.3 MEAN AND VARIANCE OF A RANDOM VARIABLE
The mean and variance oI a random variable can be computed in a
manner similar to the
computation oI mean and variance oI the variable oI a Irequency
distribution.
Mean: II X is a discrete random variable which can take values X1, X2,
..... Xn, with
respective probabilities as p(X1), p(X2), ...... p(Xn), then its mean, also
known as the
,them,tic,l Expect,tion or Expected J,lue oI X, is given by :
E(X) X1p(X1) X2p(X2) ...... Xnp(Xn)
1
( )
n
i i
i
X p X
=
= .
The mean oI a random variable or its probability distribution is oIten
denoted by , i.e.,
E(X) .
#emarks: The mean oI a Irequency distribution can be written as
1 2
1 2 . . ...... . n
n
f f f
X X X
N N N
+ + + , which is identical to the expression Ior expected value.
Jariance: The concept oI variance oI a random variable or its
probability distribution is
also similar to the concept oI the variance oI a Irequency distribution.
The variance oI a Irequency distribution is given by
) ) 2 2 2 1
. i
i i i
f
f X X X X
N N
o = = Mean oI dXi Xi2 values.
The expression Ior variance oI a probability distribution with mean m
can be written in a
similar way, as given below :
) ) ) 2 2 2
1
n
i i
i
o E X X p X
=
= = , where X is a discrete random variable.
413
#emarks: II X is a continuous random variable with probability density
Iunction p(X),
then
EX) X.p(X)dX

=
) ) o 2 E X 2 X 2 .p(X)dX

= =
Moments
The rth moment oI a discrete random variable about its mean is deIined
as:
) )
1
( )
n
r r
r i i
i
E X X p X
=
= =
Similarly, the rth moment about any arbitrary value A, can be written as
) )
1
( )
n
r r
r i i
i
E X A X A p X
=
' = =
The expressions Ior the central and the raw moments, when X is a
continuous random
variable, can be written as
) ). ( ) r r
r E X X p X dX

= =
and ) ). ( ) r r
r E X A X A p X dX

' = = respectively.
12.4 THEOREMS ON EXPECTATION
%heorem 1: Expected value oI a constant is the constant itselI, i.e., E(b)
b, where b is
a constant.
Proof: The given situation can be regarded as a probability distribution
in which the
random variable takes a value b with probability 1 and takes some other
real value, say
a, with probability 0.
Thus, we can write E(b) b 1 a 0 b
%heorem 2: E(aX) aE(X), where X is a random variable and a is
constant.
Proof: For a discrete random variablze X with probability Iunction p(X),
we have :
E(aX) aX1.p(X1) aX2.p(X2) ...... aXn.p(Xn)
) )
1
.
n
i i
i
, X p X ,E X
=
= =
Combining the results oI theorems 1 and 2, we can write
E(aX b) aE(X) b
#emarks : Using the above result, we can write an alternative
expression Ior the variance
oI X, as given below :
82 E(X - 2)2 E(X2 - 22X 22)
E(X2) - 22E(X) 22 E(X2) - 222 22
E(X2) - 22 E(X2) - |E(X)|2
Mean oI Squares - Square oI the Mean
We note that the above expression is identical to the expression Ior the
variance oI a
Irequency distribution.
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Theorems on Variance
%heorem 1: The variance oI a constant is zero.
Proof: Let b be the given constant. We can write the expression Ior the
variance oI b as:
Var(b) E|b - E(b)|2 E|b - b|2 0.
%heorem 2: Var(X b) Var(X).
Proof: We can write Var(X b) E|X b - E(X b)|2 E|X b -
E(X) - b|2
E|X - E(X)|2 Var(X)
Similarly, it can be shown that Var(X - b) Var(X)
#emarks: The above theorem shows that variance is independent oI
change oI origin.
%heorem 3: Var(aX) a2Var(X)
Proof: We can write Var(aX) E|aX - E(aX)|2 E|aX - aE(X)|2
a2E|X - E(X)|2 a2Var(X).
Combining the results oI theorems 2 and 3, we can write
Var(aX b) a2Var(X).
This result shows that the variance is independent oI change origin but
not oI change oI
scale.
#emarks:
1. On the basis oI the theorems on expectation and variance, we can say
that iI X is
a random variable, then its linear combination, aX b, is also a random
variable
with mean aE(X) b and Variance equal to a2Var(X).
2. The above theorems can also be proved Ior a continuous random
variable.
Example 4: Compute mean and variance oI the probability distributions
obtained in
examples 1, 2 and 3.
$olution:
(a) The probability distribution oI X in example 1 was obtained as
From the above distribution, we can write
) 1 3 3 1
0 1 2 3 1.5
8 8 8 8
E X = - + - + - + - =
To Iind variance oI X, we write
Var(X) E(X2) - |E(X)|2, where EX2 )=X2 p(X) .
ow, 2 ) 1 3 3 1
0 1 4 9 3
8 8 8 8
E X = - + - + - + - =
Thus, Var(X) 3 - (1.5)2 0.75
(b) The probability distribution oI X in example 2 was obtained as
X 0 1 2 3
paXf 1
8
3
8
3
8
1
8
X 2 3 4 5 6 7 8 9 10 11 12 %ot,l
paXf 1
36
2
36
3
36
4
36
5
36
6
36
5
36
4
36
3
36
2
36
1
36
1
415
1 2 3 4 5 6
( ) 2 3 4 5 6 7
36 36 36 36 36 36
E X = - + - + - + - + - + -
5 4 3 2 1 252
8 9 10 11 12 7
36 36 36 36 36 36
+ - + - + - + - + - = =
Further, 2 1 2 3 4 5 6
( ) 4 9 16 25 36 49
36 36 36 36 36 36
E X = - + - + - + - + - + -
5 4 3 2 1 1974
64 81 100 121 144 54.8
36 36 36 36 36 36
+ - + - + - + - + - = =
Thus, Var(X) 54.8 - 49 5.8
(c) The probability distribution oI X in example 3 was obtained as
4 12 4
( ) 1 2 3 2
20 20 20
E X = - + - + - =
and 2 4 12 4
( ) 1 4 9 4.4
20 20 20
E X = - + - + - =
\ Var(X) 4.4 - 4 0.4
Expected Monetary Jalue (EMJ)
When a random variable is expressed in monetary units, its expected
value is oIten
termed as expected monetary value and symbolised by EMV.
Example 5: II it rains, an umbrella salesman earns Rs 100 per day. II it
is Iair, he loses
Rs 15 per day. What is his expectation iI the probability oI rain is 0.3?
$olution: Here the random variable X takes only two values, X1 100
with probability
0.3 and X2 15 with probability 0.7.
Thus, the expectation oI the umbrella salesman
100 - 0.3 15 - 0.7 19.5
The above result implies that his average earning in the long run would
be
Rs 19.5 per day.
Example : A person plays a game oI throwing an unbiased die under
the condition that
he could get as many rupees as the number oI points obtained on the die.
Find the
expectation and variance oI his winning. How much should he pay to
play in order that
it is a Iair game?
$olution: The probability distribution oI the number oI rupees won by
the person is given
below :
Thus, E(X = 1- + - + - + - + - + - = Rs
1
6
2
1
6
3
1
6
4
1
6
5
1
6
6
1
6
7
2
and 2 1 1 1 1 1 1 91
( ) 1 4 9 16 25 36
6 6 6 6 6 6 6
E X = - + - + - + - + - + - =
2
2 91 7 35
2.82
6 2 12
o = + = = ' '
. ote that the unit oI s2 will be (Rs)2.
X Rs
p X
(
(
1 2 3 4 5 6
1
6
1
6
1
6
1
6
1
6
1
6
X 1 2 3
p(X)
4
20
12
20
4
20
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416
Since E(X) is positive, the player would win Rs 3.5 per game in the long
run. Such a
game is said to be Iavourable to the player. In order that the game is Iair,
the expectation
oI the player should be zero. Thus, he should pay Rs 3.5 beIore the start
oI the game so
that the possible values oI the random variable become 1 - 3.5 - 2.5, 2
- 3.5 - 1.5,
3 - 3.5 - 0.5, 4 - 3.5 0.5, etc. and their expected value is zero.
Example 7: Two persons A and B throw, alternatively, a six Iaced die
Ior a prize oI
Rs 55 which is to be won by the person who Iirst throws 6. II A has the
Iirst throw, what
are their respective expectations?
$olution: Let A be the event that A gets a 6 and B be the event that B
gets a 6. Thus,
1
( )
6
P A = and 1
( )
6
P B = .
II A starts the game, the probability oI his winning is given by :
( wins) ( ) ( ). P A = P A + P A P(B).P(A) + P(A).P(B).P(A).P(B).P(A) +
....
1 5 5 1 5 5 5 5 1
......
6 6 6 6 6 6 6 6 6
= + - - + - - - - +
2 4 1 5 5 1 1 1 36 6
1 ......
6 6 6 6 25 6 11 11 1
36
+
+ + = + + + = - = - = ' ' ' ' | ' '
Similarly, P(B wins) = P(A).P(B) + P(A).P(B).P(A).P(B) + ....
5 1 5 5 5 1
.. .. . .
6 6 6 6 6 6
= - + - - - +
2 4 5 1 5 5 5 1 36 5
1 ......
6 6 6 6 6 6 11 11
+ + = - + + + = - - = ' ' ' ' |
Expectation of A and B for the prize of #s 55
Since the probability that A wins is
6
11
, thereIore, the random variable takes a value 55
with probability
6
11
and value 0 with probability
5
11
.Hence, E(A = 55 - + - =
6
11

5
11
Rs 3
Similarly, the expectation oI B is given by
6 5
( ) 55 0 .30
11 11
E B = - + - = Rs
Example 8: An unbiased die is thrown until a Iour is obtained. Find the
expected value
and variance oI the number oI throws.
$olution: Let X denote the number oI throws required to get a Iour.
Thus, X will take
values 1, 2, 3, 4, ...... with respective probabilities.
2 1 5 1 5 1
, , ,
6 6 6 6 6
- + - ' '
3 5 1
......
6 6
+ - ' '
etc.
2 3 1 51 5 1 5 1
( ) 1. 2. . 3. . 4. . ......
6 66 6 6 6 6
E X = + + + + + ' ' ' '
2 3 1 5 5 5
1 2. 3. 4. ......
6 6 6 6
F = + + + +
Let S
2 3 5 5 5
1 2. 3. 4. ......
6 6 6
= + + + +
417
Multiplying both sides by 5
6
, we get
5
6 S
2 3 4 5 5 5 5
2. 3. 4. ......
6 6 6 6
+ + + +
2 3 5 5 5 5
1 (2 1) (3 2) (4 3) ......
6 6 6 6
S S = + + + + + + ' ' ' '
2 3 1 5 5 5 1
1 ...... 6
6 6 6 6 5 1
6
S = + + + + = = -
.... (1)
Thus, S 36 and hence E(X)
1
6
36 6.
Further, to Iind variance, we Iirst Iind E(X2)
2 3
2 1 2 5 1 2 5 1 2 5 1
( ) 1. 2 . . 3 . . 4 . . ......
6 66 6 6 6 6
E X = + + +
2 3
2 2 2 1 5 5 5
1 2 . 3 . 4 . ......
6 6 6 6
F = + + + +
Let
2 3
2 5 2 5 2 5
1 2 . 3 . 4 . ......
6 6 6
S = + + + +
Multiply both sides by
5
6
and subtract Irom S, to get
( ( (
2 3
1 2 5 2 2 5 2 2 5
1 2 1 3 2 4 3 ......
6 6 6 6
S = + - + - + - +
2 3 5 5 5
1 3 5 7 ......
6 6 6
= + + + +
Further, multiply both sides by
5
6
and subtract
( ( (
2 3 1 5 5 5 5
1 3 1 5 3 7 5 ......
6 36 6 6 6
S S - = + - + - + - +
2 1 5 5 5 5
1 2 1 ...... 1 6 11
36 6 6 6 3
S
= + + + + = + =
.... (2)
\ S 36 - 11 and E(X2)
1
6
- 36 - 11 66
Hence, Variance E(X2) - |E(X)|2 66 - 36 30
eneralisation: Let p be the probability oI getting 4, then Irom equation
(1) we can
write 2
1 1 1
or
1
pS S
q p p
= = =
- ThereIore, 2
1 1
E(X ) p
p p

= =
Similarly, equation (2) can be written as
2 2
1
q
p S
p
= + 2 3
1 2
or
q
S
p p
= + 3
p 2q
p
+
=
ThereIore, ( 2
3 2
2 2
.
p q p q
E X p
p p
+ +
= = and Var(X) 2 2 2
p 2q 1 q
p p p
+
- =
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418
12.5 1OINT PROBABILITY DISTRIBUTION
When two or more random variables X and Y are studied simultaneously
on a sample
space, we get a joint probability distribution. Consider the experiment oI
throwing two
unbiased dice. II X denotes the number on the Iirst and Y denotes
the number on the second die, then X and Y are random variables having
a joint probability
distribution. When the number oI random variables is two, it is called a
bi-v,ri,te
prob,bility distribution and iI the number oI random variables become
more than two,
the distribution is termed as a multiv,ri,te prob,bility distribution.
Let the random variable X take values X1, X2, ...... Xm and Y take
values
Y1, Y2, ...... Yn. Further, let pij be the joint probability that X takes the
value Xi and Y
takes the value Yj, i.e., P|X Xi and Y Yj| pij (i 1 to m and j 1
to n). This bivariate
probability distribution can be written in a tabular Iorm as Iollows :
12.5.1 Marginal Probability Distribution
In the above table, the probabilities given in each row are added and
shown in the last
column. Similarly, the sum oI probabilities oI each column are shown in
the last row oI
the table. These probabilities are termed as marginal probabilities. The
last column oI the
table gives the m,rgin,l prob,bilities Ior various values oI random
variable X. The set
oI all possible values oI the random variable X along with their
respective marginal
probabilities is termed as the marginal probability distribution oI X.
Similarly, the marginal
probabilities oI the random variable Y are given in the last row oI the
above table.
#emarks: II X and Y are independent random variables, then by
multiplication theorem
oI probability we have
P(X Xi and Y Yi) P(X Xi).P(Y Yi) V i and j
Using notations, we can write pif = Pi .Pf'
The above relation is similar to the relation between the relative
Irequencies oI independent
attributes.
12.5.2 Conditional Probability Distribution
Each column oI the above table gives the probabilities Ior various values
oI the random
variable X Ior a given value oI Y, represented by it. For example,
column 1 oI the table
represents that P(X1,Y1) p11, P(X2,Y1) p21, ...... P(Xm,Y1) pm1,
where P(Xi,Y1)
pi1 denote the probability oI the event that X Xi (i 1 to m) and Y
Y1. From the
conditional probability theorem, we can write
) 1
1
1
/
i if
i
f
Joint prob,bility of X ,nd Y p
P X X Y Y
,rgin,l prob,bility of Y P
= = = =
'
(Ior i 1, 2, ...... m).
1 2
1 11 12 1 1
2 21 22 2 2
1 2
1 2
... ...
... ...
... ...
. . . ... ... . .
. . . ... ... . .
... ...
... ... 1
n
n
n
m m m mn m
n
,rgin,l
Y Y Y Prob,bilities
of X
X p p p P
X p p p P
X p p p P
,rgin,l
Prob,bilities P P P
of Y
' ' '
419
X 1 2 3 %ot,l
Pi
1
3
1
3
1
3
1
This gives us a conditional probability distribution oI X given that Y
Y1. This distribution
can be written in a tabular Iorm as shown below :
The conditional distribution oI X given some other value oI Y can be
constructed in a
similar way. Further, we can construct the conditional distributions oI Y
Ior various given
values oI X.
#emarks: It can be shown that iI the conditional distribution oI a
random variable is
same as its marginal distribution, the two random variables are
independent. Thus, iI Ior
the conditional distribution oI X given Y1 we have 1
1
i
i
p
P
P
=
' Ior Vi, then X and Y are
independent. It should be noted here that iI one conditional distribution
satisIies the condition
oI independence oI the random variables, then all the conditional
distributions would also
satisIy this condition.
Example 9: Let two unbiased dice be tossed. Let a random variable X
take the value 1
iI Iirst die shows 1 or 2, value 2 iI Iirst die shows 3 or 4 and value 3 iI
Iirst die shows 5
or 6. Further, Let Y be a random variable which denotes the number
obtained on the
second die. Construct a joint probability distribution oI X and Y. Also
determine their
marginal probability distributions and Iind E(X) and E(Y) respectively.
Determine the
conditional distribution oI X given Y 5 and oI Y given X 2. Find the
expected values
oI these conditional distributions. Determine whether X and Y are
independent?
$olution: For the given random experiment, the random variable X takes
values 1, 2 and
3 and the random variable Y takes values 1, 2, 3, 4, 5 and 6. Their joint
probability
distribution is shown in the Iollowing table :
From the above table, we can write the marginal distribution oI X as
given below :
Thus, the expected value oI X is
1 1 1
( ) 1. 2. 3. 2
3 3 3
E X = + + =
Similarly, the probability distribution oI Y is
and
1 1 1 1 1 1 21
( ) 1. 2. 3. 4. 5. 6. 3.5
6 6 6 6 6 6 6
E Y = + + + + + = =
XBY 1 2 3 4 5 6 ,rgin,l
Dist. of X
1 1
18
1
18
1
18
1
18
1
18
1
18
1
3
2 1
18
1
18
1
18
1
18
1
18
1
18
1
3
3 1
18
1
18
1
18
1
18
1
18
1
18
1
3
,rgin,l
Dist. of Y
1
6
1
6
1
6
1
6
1
6
1
6
1
X G Y
1 2 3 4 5 6
1 1 1 1 1 1
1
6 6 6 6 6 6 f
Y %ot,l
P'
1 2
11 21 1
1 1 1
... ...
... ... 1
m
m
X X X X %ot,l Prob,bility
p p p
Prob,bility
P' P' P'
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420
The conditional distribution oI X when Y 5 is
\ ( 1
( / 5) 1 2 3 2
3
E X Y= = + + =
The conditional distribution oI Y when X 2 is
\ ( 1
( / 2) 1 2 3 4 5 6 3.5
6
E Y X = = + + + + + =
Since the conditional distribution oI X is same as its marginal
distribution (or equivalently
the conditional distribution oI Y is same as its marginal distribution), X
and Y are independent
random variables.
Example 1: Two unbiased coins are tossed. Let X be a random variable
which denotes
the total number oI heads obtained on a toss and Y be a random variable
which takes a
value 1 iI head occurs on Iirst coin and takes a value 0 iI tail occurs on
it. Construct the
joint probability distribution oI X and Y. Find the conditional
distribution oI X when Y 0.
Are X and Y independent random variables?
$olution: There are 4 elements in the sample space oI the random
experiment. The
possible values that X can take are 0, 1 and 2 and the possible values oI
Y are 0 and 1.
The joint probability distribution oI X and Y can be written in a tabular
Iorm as Iollows :
The conditional distribution oI X when Y 0, is given by
Also, the marginal distribution oI X, is given by
Since the conditional and the marginal distributions are diIIerent, X and
Y are not
independent random variables.
0 1
1 1
0 0
4 4
1 1 2
1
4 4 4
1 1
2 0
4 4
2 2
1
4 4
X Y %ot,l
%ot,l
G
0 1 2
1 1 1
1
4 2 4 i
X %ot,l
P
1 2 3
1 6 1 1 6 1 1 6 1
/ 5 1
18 1 3 18 1 3 18 1 3 i
X %ot,l
P Y= - = - = - =
1 2 3 4 5 6
1 1 1 1 1 1
/ 2 1
6 6 6 6 6 6 f
Y %ot,l
P' X =
0 1 2
1 1
( / 0) 0 1
2 2
X %ot,l
P X Y =
421
12.5.3 Expectation of the Sum or Product of two Random Variables
%heorem 1: II X and Y are two random variables, then E(X Y) E(X)
E(Y).
Proof: Let the random variable X takes values X1, X2, ...... Xm and the
random variable
Y takes values Y1, Y2, ...... Yn such that P(X Xi and Y Yj) pij (i
1 to m,
j 1 to n).
By deIinition oI expectation, we can write
)
1 1 1 1 1 1
( )
m n m n m n
i f if i if f if
i f i f i f
E X Y X Y p X p Y p
= = = = = =
+ = + = +
1 1 1 1
m n n m
i if f if
i f i f
X p Y p
= = = =
= +
1 1
m n
i i f f
i f
X P Y P
= =
= + '
1 1
Here and
n m
if i if f
J i
p P p P
= =
= = ' +
' '
= E(X ) + E(Y )
The above result can be generalised. II there are k random variables X1,
X2, ...... Xk,
then E(X1 X2 ...... Xk) E(X1) E(X2) ...... E(Xk).
#emarks: The above result holds irrespective oI whether X1, X2, ......
Xk are independent
or not.
%heorem 2: II X and Y are two independent random variables, then
E(X.Y) E(X).E(Y)
Proof: Let the random variable X takes values X1, X2, ...... Xm and the
random variable
Y takes values Y1, Y2, ...... Yn such that P(X Xi and Y Yj) pij (i
1 to
m, j 1 to n).
By deIinition
1 1
( )
m n
i f if
i f
E XY XY p
= =
=
Since X and Y are independent, we have . if i f p = P P'
\E XY X Y P P X P Y P i f i f
f
n
i
m
i i
i
m
f f
f
n
( ) = . ' = '
=1 =1 =1 =1
-
E(X).E(Y).
The above result can be generalised. II there are k independent random
variables X1, X2,
...... Xk, then
E(X1. X2. ...... Xk) E(X1).E(X2). ...... E(Xk)
12.5.4 Expectation of a Function of Random Variables
Let o X,Y ) be a Iunction oI two random variables X and Y. Then we
can write
) )
1 1
, ,
m n
i f if
i f
E o X Y o X Y p
= =
| =
I. Expression for Covariance
As a particular case, assume that , ) ) ) i f i X f Y o X Y = X Y ,
where
( ) and ( ) X Y E X = E Y =
Thus, ) ) ) )
1 1
m n
X Y i X f Y if
i f
E X Y X Y p
= =
| =
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422
The above expression, which is the mean oI the product oI deviations oI
values Irom
their respective means, is known as the Covariance oI X and Y denoted
as Cov(X, Y) or
XY o . Thus, we can write
, ) ) ) X Y Cov X Y = E X Y |
An alternative expression oI Cov(X, Y)
Cov(X,Y) = E ,X E(X)=,Y E(Y)=|
= E X.,Y E(Y)= E(X).,Y E(Y)=|
= E .X.Y X.E(Y)J= E(X.Y) E(X).E(Y)
ote that E|Y - E(Y)}| 0, the sum oI deviations oI values Irom their
arithmetic mean.
#emarks: II X and Y are independent random variables, the right hand
side oI the
above equation will be zero. Thus, covariance between independent
variables is always
equal to zero.
II. Mean and Jariance of a Linear Combination
Let Z =o X,Y ) = ,X + bY be a linear combination oI the two random
variables X and
Y, then using the theorem oI addition oI expectation, we can write
( ) ( ) ( ) ( ) Z X Y = E Z = E ,X + bY = ,E X + bE Y = , + b
Further, the variance oI Z is given by
. J . J ) )2 2 2 2 ( ) Z X Y X Y o = E Z E Z = E ,X + bY
, b = E , X + b Y |
) ) ) ) 2 2 2 2 2 X Y X Y = , E X + b E Y + ,bE X Y
2 2 2 2 2 X Y XY = , o + b o + ,bo
#emarks:
1. The above results indicate that any Iunction oI random variables is
also a random
variable.
2. II X and Y are independent, then s XY 0 , 2 2 2 2 2
Z X Y o = , o + b o
3. II Z aX - bY, then we can write 2 2 2 2 2 2 Z X Y XY o = , o + b
o ,bo . However,
2 2 2 2 2
Z X Y o = , o + b o , iI X and Y are independent.
4. The above results can be generalised. II X1, X2, ...... Xk are k
independent random
variables with means 1 2 , , ...... k and variances 2 2 2
1 2 , , ...... k o o o respectively,
then
) 1 2 1 2 .... .... k k E X I X I I X = I I I
and ) 2 2 2
1 2 1 2 .... .... k k J,r X I X I I X =o +o + +o
Aotes:
1. The general result on expectation oI the sum or diIIerence will hold
even iI the
random variables are not independent.
2. The above result can also be proved Ior continuous random variables.
423
Example 11: A random variable X has the Iollowing probability
distribution :
(i) Find the value oI p.
(ii) Calculate E(X 2) and E(2X2 3X 5).
$olution: Since the total probability under a probability distribution is
equal to unity, the
value oI p should be such that
1 1 1
1
6 4 6
+ p + + p + = .
This condition gives
5
24
p =
Further,
1 5 1 5 1
( ) 2. 1. 0. 1. 2. 0
6 24 4 24 6
E X =- - + + + = ,
2 1 5 1 5 1 7
( ) 4. 1. 0. 1. 4.
6 24 4 24 6 4
E X = + + + + = ,
E(X + 2) = E(X ) + 2 = 0 + 2 = 2
and 2 2 7
(2 3 5) 2 ( ) 3 ( ) 5 2. 0 5 8.5
4
E X + X + = E X + E X + = + + =
Example 12: A dealer oI ceiling Ians has estimated the Iollowing
oI the price oI a ceiling Ian in the next summer season :
II the demand (x) oI his ceiling Ians Iollows a linear relation x 6000 -
4P, Iind expected
demand oI Ians and expected total revenue oI the dealer.
$olution: Since P is a random variable, thereIore, x 6000 - 4P, is also
a random variable.
Further, Total Revenue TR P.x 6000P - 4P2 is also a random
variable.
From the given probability distribution, we have
E(P) 800 - 0.15 825 - 0.25 850 - 0.30 875 - 0.20 900 - 0.10
Rs 846.25 and
E(P2) (800)2 - 0.15 (825)2 - 0.25 (850)2 - 0.30 (875)2 - 0.20

(900)2 - 0.10 717031.25
Thus, E(X) 6000 - 4E(P) 6000 - 4 - 846.25 2615 Ians.
And E(TR) 6000E(P) - 4E(P2)
6000 - 846.25 - 4 - 717031.25 Rs 22,09,375.00
Example 13: A person applies Ior equity shares oI Rs 10 each to be
issued at a premium
oI Rs 6 per share; Rs 8 per share being payable along with the
application and the
balance at the time oI allotment. The issuing company may issue 50 or
100 shares to
those who apply Ior 200 shares, the probability oI issuing 50 shares
being 0.4 and that oI
issuing 100 shares is 0.6. In either case, the probability oI an application
being selected
Ior allotment oI any shares is 0.2 The allotment usually takes three
months and the
market price per share is expected to be Rs 25 at the time oI allotment.
Find the expected
rate oI return oI the person per month.
$olution: Let A be the event that the application oI the person is
considered Ior allotment,
B1 be the event that he is allotted 50 shares and B2 be the event that he
is allotted 100
shares. Further, let R1 denote the rate oI return (per month) when 50
shares are allotted,
R2 be the rate oI return when 100 shares are allotted and R R1 R2 be
the combined
rate oI return.
Price (P) : 800 825 850 875 900
Prob,bility (p) : 0.15 0. 25 0. 30 0. 20 0.10
X : 2 1 0 1 2
Prob,bility : 1
6
p 1
4
p 1
6
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424
We are given that P(A) 0.2, P(B1/A) 0.4 and P(B2/A) 0.6.
(a) When 5 shares are allotted
The return on investment in 3 months (25 - 16)50 450
\ Monthly rate oI return
450
150
3
= =
The probability that he is allotted 50 shares
= P A B = P A P B A = - = 1 1 b g b g. b / g 0.2 0.4 0.08
Thus, the random variable R1 takes a value 150 with probability 0.08
and it takes a
value 0 with probability 1 - 0.08 0.92
\ E(R1) 150 0.08 0 12.00
(b) When 1 shares are allotted
The return on investment in 3 months (25 - 16).100 900
\ Monthly rate oI return
900
300
3
= =
The probability that he is allotted 100 shares
= P A B = P A P B A = - = 2 2 b g b g. b / g 0.2 0.6 0.12
Thus, the random variable R2 takes a value 300 with probability 0.12
and it takes a
value 0 with probability 1 - 0.12 0.88
\ E(R2) 300 - 0.12 0 36
Hence, E(R) E(R1 R2) E(R1) E(R2) 12 36 48
Example 14: What is the mathematical expectation oI the sum oI points
on n unbiased
dice?
$olution: Let Xi denote the number obtained on the i th die. ThereIore,
the sum oI points
on n dice is S X1 X2 ...... Xn and
E(S) E(X1) E(X2) ...... E(Xn).
Further, the number on the i th die, i.e., Xi Iollows the Iollowing
distribution :
\ ( ( 1 7
1 2 3 4 5 6
6 2 i E X = + + + + + = (i 1, 2, .... n)
Thus, ( 7 7 7 7
.... ( times)
2 2 2 2
n
E S = + + + n =
Example 15: II X and Y are two independent random variables with
means 50 and 120
and variances 10 and 12 respectively, Iind the mean and variance oI Z
4X 3Y.
$olution: E(Z) E(4X 3Y) 4E(X) 3E(Y) 4 - 50 3 - 120 560
Since X and Y are independent, we can write
Var(Z) Var(4X 3Y) 16Var(X) 9Var(Y) 16 - 10 9 - 12 268
Example 1: It costs Rs 600 to test a machine. II a deIective machine is
installed, it
costs Rs 12,000 to repair the damage resulting to the machine. Is it more
proIitable to
install the machine without testing iI it is known that 3 oI all the
machines produced are
deIective? Show by calculations.
$olution: Here X is a random variable which takes a value 12,000 with
probability 0.03
and a value 0 with probability 0.97.
\ E(X) 12000 - 0.03 0 - 0.97 Rs 360.
Since E(X) is less than Rs 600, the cost oI testing the machine, hence, it
is more proIitable
to install the machine without testing.
Xi : 1 2 3 4 5 6
p(Xi) : 1
6
1
6
1
6
1
6
1
6
1
6
425
Exercise with Hints
1. A man draws two balls at random Irom a bag containing three white
and Iive black
balls. II he is to receive Rs 14 Ior every white ball that he draws and
Rs 7 Ior every black ball, what should be his expectation oI earning in
the game?
int: Random variable takes 3 values 14, 21 and 28.
2. ABC company estimates the net proIit on a new product, that it is
launching, to be
Rs 30,00,000 iI it is successIul, Rs 10,00,000 iI it is moderately
successIul and a
loss oI Rs 10,00,000 iI it is unsuccessIul. The Iirm assigns the Iollowing
probabilities
to the diIIerent possibilities : SuccessIul 0.15, moderately successIul
0.25 and
unsuccessIul 0.60. Find the expected value and variance oI the net
proIits.
int: See example 5.
3. There are 4 diIIerent choices available to a customer who wants to
buy a transistor
set. The Iirst type costs Rs 800, the second type Rs 680, the third type Rs
880 and
the Iourth type Rs 760. The probabilities that the customer will buy these
types are
1 1 1 1
, , and
3 6 4 4
respectively. The retailer oI these sets gets a commission 20,
12, 25 and 15 on the respective sets. What is the expected
commission oI
the retailer?
int: Take commission as random variable.
4. Three cards are drawn at random successively, with replacement,
Irom a well
shuIIled pack oI cards. Getting a card oI diamond is termed as a success.
Tabulate
the probability distribution oI the number successes (X). Find the mean
and variance
oI X.
int: The random variable takes values 0, 1, 2 and 3.
5. A discrete random variable can take all possible integral values Irom 1
to k each
with probability
1
k
. Find the mean and variance oI the distribution.
int: ( 2 1 ( 2 2 2 1 ( 1(2 1
1 2 ....
6
k k k
E X k
k k
F + +
= + + + =

.
6. An insurance company charges, Irom a man aged 50, an annual
premium oI Rs 15
on a policy oI Rs 1,000. II the death rate is 6 per thousand per year Ior
this age
group, what is the expected gain Ior the insurance company?
int: Random variable takes values 15 and - 985.
7. On buying a ticket, a player is allowed to toss three Iair coins. He is
paid number oI
rupees equal to the number oI heads appearing. What is the maximum
amount the
player should be willing to pay Ior the ticket.
int: The maximum amount is equal to expected value.
8. The Iollowing is the probability distribution oI the monthly demand oI
calculators :
Calculate the expected demand Ior calculators. II the cost c oI producing
x calculators
is given by the relation c 4x2 - 15x 200, Iind expected cost.
Dem,nd (x) : 15 16 17 18 19 20
Prob,bility p(x) : 0.10 0.15 0.35 0.25 0.08 0.07
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426
9. Firm A wishes to bid Ior the supply oI 800 chairs to an educational
institution at the
rate oI Rs 500 per chair. The Iirm, which has two competitors B and C,
has estimated
that the probability that Iirm B will bid less than Rs 500 per chair is 0.4
and that the
Iirm C will bid less than Rs 500 per chair is 0.6. II the lowest bidder gets
business
and the Iirms bid independently, what is the expected value oI the
contract to
Iirm A?
int: The random variable takes value 0 with probability 0.4 - 0.6 and it
takes value
500 - 800 with probability 1 - 0.4 - 0.6.
10. A game is played by throwing a six Iaced die Ior which the
incomplete probability
distribution oI the number obtained is given below :
The conditions oI the game are : II the die shows an even number, the
player gets
rupees equal to the number obtained; iI the die shows 3 or 5, he loses
rupees equal
to the number obtained, while iI 1 is obtained the player neither gains or
loses.
Complete the probability distribution iI the game is given to be Iair.
int: E(X) 0 Ior a Iair game.
11. There are three bags which contain 4 red and 3 black, 6 red and 4
black and 8 red
and 2 black balls respectively. One ball is drawn Irom each urn. What is
the expected
number oI red balls obtained?
int: Find the expected number oI red balls Irom each urn and add.
12. A survey conducted over last 25 years indicated that in 10 years the
winter was
mild, in 8 years it was cold and in the remaining 7 years it was very
cold. A
company sells 1,000 woollen coats in mild cold year, 1,300 in a cold
year and 2,000
in a very cold year.
You are required to Iind the yearly expected proIit oI the company iI a
woollen
coat costs Rs 173 and is sold to stores Ior Rs 248.
int: The random variable can take 3 possible values.
13. You have been oIIered the chance to play a dice game in which you
will
receive Rs 20 each time the point total oI a toss oI two dice is 6. II it
costs you
Rs 2.50 per toss to participate, should you play or not? Will it make any
diIIerence
in your decision iI it costs Rs 3.00 per toss instead oI Rs 2.50?
int: Compare the cost oI participation with the expected value oI the
receipt.
14. The probability that a house oI a certain type will be on Iire in a year
is 0.005.
An insurance company oIIers to sell the owner oI such a house Rs
1,00,000 one
year term insurance policy Ior a premium oI Rs 600. What is the
expected
gain oI the company?
int: See exercise 6.
15. Three persons A, B and C in that order draw a ball, without
replacement, Irom a
bag containing 2 red and 3 white balls till someone is able to draw a red
ball. One
who draws a red ball wins Rs 400. Determine their expectations.
int: A wins iI he gets a red ball on the Iirst draw or all the three get
white ball in their
respective Iirst draws, etc.
16. A coin is tossed until a head appears. What is the expected number
and standard
deviation oI tosses?
int: The random variable takes values 1, 2, 3, .... with respective
probabilities p,
(1 - p)p, (1 - p)2p, etc., where p is the probability oI getting a head.
X : 1 2 3 4 5 6
p(X) : 0.09 0.30 m n 0.28 0.09
427
17. A box contains 8 tickets. 3 oI the tickets carry a prize oI Rs 5 each
and the remaining
5 a prize oI Rs 2 each.
(i) II one ticket is drawn at random, what is the expected value oI the
prize?
(ii) II two tickets are drawn at random, what is the expected value oI the
prize?
int: (i) The random variable can take values 5 or 2, (ii) It can take
values 4, 7 or 10.
18. 4 unbiased coins are tossed 256 times. Find the Irequency
distribution oI heads and
tabulate the result. Calculate the mean and standard deviation oI the
number oI
heads.
int: the random variable takes values 0, 1, 2, 3 and 4.
19. Throwing two unbiased coins simultaneously, Mr X bets with Mrs X
that he will
receive Rs 4 Irom her iI he gets 2 heads and he will give Rs 4 to her
otherwise. Find Mr X's expectation.
int: The random variable takes values 4 and 4.
20. A man runs an ice cream parlor in a holiday resort. II the summer is
mild, he can
sell 2,500 cups oI ice cream; iI it is hot, he can sell 4,000 cups; iI it is
very hot, he
can sell 5,000 cups. It is known that Ior any year the probability oI the
summer to
be mild is
1
7
and to be hot is
4
7
. A cup oI ice cream costs Rs 2 and sold
Ior Rs 3.50. What is his expected proIit?
int: See example 5.
21. Comment on the validity oI the Iollowing statement :
For a random variable X, 2 ) ) E X > E X .
int: 82 E(X2) - |E(X)|2.
1 What is Stochastic variable?
2. How bi-variate probability is diIIerent Irom multi variable probability
distribution?
answers in it.
(c) This Check Your Progress will help you to understand the lesson
better. Try to write answers Ior them, but do not submit your answers
to the university Ior assessment. These are Ior your practice only.

Ior Management
428
12.6 DECISION ANALYSIS UNDER CERTAINTY
Decision-making is needed whenever an individual or an organisation
(private or public)
is Iaced with a situation oI selecting an optimal (or best in view oI
certain objectives)
course oI action Irom among several available alternatives. For example,
an individual
may have to decide whether to build a house or to purchase a Ilat or live
in a rented
accommodation; whether to join a service or to start own business;
which company's
car should be purchased, etc. Similarly, a business Iirm may have to
decide the type oI
technique to be used in production, what is the most appropriate method
oI advertising its
product, etc.
The decision analysis provides certain criteria Ior the selection oI a
course oI action
such that the objective oI the decision-maker is satisIied. The course oI
action selected
on the basis oI such criteria is termed as the optim,l course of ,ction.
Every decision problem has Iour basic Ieatures, mentioned below:
1. Alternative Courses of Action or Acts: Every decision-maker is Iaced
with a set
oI several alternative courses oI action A1, A2, ...... Am and he has to
select one oI
them in view oI the objectives to be IulIilled.
2. $tates of Aature: The consequences oI selection oI a course oI action
are dependent
upon certain Iactors that are beyond the control oI the decision-maker.
These
Iactors are known as states oI nature or events. It is assumed that the
decisionmaker
is aware oI the whole list oI events S1, S2, ...... Sn and exactly one oI
them
is bound to occur. In other words, the events S1, S2, ...... Sn are assumed
to be
mutually exclusive and collective exhaustive.
3. Consequences: The results or outcomes oI selection oI a particular
course oI
action are termed as its consequences. The consequence, measured in
quantitative
or value terms, is called payoII oI a course oI action. It is assumed that
the payoIIs
oI various courses oI action are known to the decision-maker.
4. Decision Criterion: Given the payoIIs oI various combinations oI
courses oI action
and the states oI nature, the decision-maker has to select an optimal
course oI
action. The criterion Ior such a selection, however, depends upon the
attitude oI
the decision-maker.
II Xij denotes the payoII corresponding to a combination oI a course oI
action and
a state oI nature, i.e., (Ai, Sj), i 1 to m and j 1 to n, the above
elements oI a
decision problem can be presented in a matrix Iorm, popularly known as
the PayoII
Matrix.
Payoff Matrix
Given the payoII matrix Ior a decision problem, the process oI decision-
making depends
upon the situation under which the decision is being made. These
situations can be
classiIied into three broad categories : (a) Decision-making under
certainty, (b) Decision
-making under uncertainty and (c) Decision-making under risk.
... ...
... ...
... ...
... ...
... ...
Events
Actions S S S S
A X X X X
A X X X X
A X X X X
A X X X X
f n
f n
f n
i i i if in
m m m mf mn
B
1 2
1 11 12 1 1
2 21 22 2 2
1 2
1 2
M M M M M
M M M M M
429
Decision-making under Certainty
The conditions oI certainty are very rare particularly when signiIicant
decisions are
involved. Under conditions oI certainty, the decision-maker knows
which particular state
oI nature will occur or equivalently, he is aware oI the consequences oI
each course oI
action with certainty. Under such a situation, the decision-maker should
Iocus on the
corresponding column in the payoII table and choose a course oI action
with optimal
payoII.
12.7 DECISION-MAKING UNDER UNCERTAINTY
A situation oI uncertainty arises when there can be more than one
possible consequences
oI selecting any course oI action. In terms oI the payoII matrix, iI the
decision-maker
selects A1, his payoII can be X11, X12, X13, etc., depending upon
which state oI nature
S1, S2, S3, etc., is going to occur. A decision problem, where a decision-
maker is aware
oI various possible states oI nature but has insuIIicient inIormation to
assign any
probabilities oI occurrence to them, is termed as decision-making under
uncertainty.
There are a variety oI criteria that have been proposed Ior the selection
oI an optimal
course oI action under the environment oI uncertainty. Each oI these
criteria make an
assumption about the attitude oI the decision-maker.
1. Maximin Criterion: This criterion, also known as the criterion oI
pessimism, is
used when the decision-maker is pessimistic about Iuture. Maximin
implies the
maximisation oI minimum payoII. The pessimistic decision-maker
locates the
minimum payoII Ior each possible course oI action. The maximum oI
these minimum
payoIIs is identiIied and the corresponding course oI action is selected.
This is
explained in the Iollowing example :
Example 17: Let there be a situation in which a decision-maker has
three possible
alternatives A1, A2 and A3, where the outcome oI each oI them can be
aIIected by the
occurrence oI any one oI the Iour possible events S1, S2, S3 and S4. The
monetary
payoIIs oI each combination oI Ai and Sj are given in the Iollowing
table :
Payoff Matrix
$olution: Since 17 is maximum out oI the minimum payoIIs, the
optimal action is A2.
2. Maximax Criterion: This criterion, also known as the criterion oI
optimism, is
used when the decision-maker is optimistic about Iuture. Maximax
implies the
maximisation oI maximum payoII. The optimistic decision-maker
locates the
maximum payoII Ior each possible course oI action. The maximum oI
these payoIIs
is identiIied and the corresponding course oI action is selected. The
optimal course
oI action in the above example, based on this criterion, is A3.
3. #egret Criterion: This criterion Iocuses upon the regret that the
decision-maker
might have Irom selecting a particular course oI action. Regret is deIined
as the
diIIerence between the best payoII we could have realised, had we
known which
state oI nature was going to occur and the realised payoII. This
diIIerence, which
measures the magnitude oI the loss incurred by not selecting the best
alternative, is
also known as opportunity loss or the opportunity cost.
1 2 3 4
1
2
3
. .
27 12 14 26 12 27
45 17 35 20 17 45
52 36 29 15 15 52
Events
S S S S in P,yoff ,x P,yoff
Actions
A
A
A

G
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430
From the payoII matrix (given in 12.6), the payoIIs corresponding to
the actions
A1, A2, ...... An under the state oI nature Sj are X1i, X2j, ...... Xnj
respectively. OI
these assume that X2j is maximum. Then the regret in selecting Ai, to be
denoted
by Rij is given by X2j - Xij, i 1 to m. We note that the regret in
selecting A2 is zero.
The regrets Ior various actions under diIIerent states oI nature can also
be computed
in a similar way.
The regret criterion is based upon the minimax principle, i.e., the
decision-maker
tries to minimise the maximum regret. Thus, the decision-maker selects
the
maximum regret Ior each oI the actions and out oI these the action which
corresponds to the minimum regret is regarded as optimal.
The regret matrix oI example 17 can be written as given below:
Regret Matrix
From the maximum regret column, we Iind that the regret corresponding
to the
course oI action is A3 is minimum. Hence, A3 is optimal.
4. urwicz Criterion: The maximax and the maximin criteria, discussed
above,
assumes that the decision-maker is either optimistic or pessimistic. A
more realistic
approach would, however, be to take into account the degree or index of
optimism
or pessimism oI the decision-maker in the process oI decision-making. II
,, a
constant lying between 0 and 1, denotes the degree oI optimism, then the
degree oI
pessimism will be 1 - ,. Then a weighted average oI the maximum and
minimum
payoIIs oI an action, with , and 1 - , as respective weights, is computed.
The
action with highest average is regarded as optimal.
We note that , nearer to unity indicates that the decision-maker is
optimistic while
a value nearer to zero indicates that he is pessimistic. II , 0.5, the
decisionmaker
is said to be neutralist.
We apply this criterion to the payoII matrix oI example 17. Assume that
the index
oI optimism , 0.7.
Since the average Ior A3 is maximum, it is optimal.
5. Laplace Criterion: In the absence oI any knowledge about the
probabilities oI
occurrence oI various states oI nature, one possible way out is to assume
that all oI
them are equally likely to occur. Thus, iI there are n states oI nature,
each can be
assigned a probability oI occurrence 1/n. Using these probabilities, we
compute
the expected payoII Ior each course oI action and the action with
maximum expected
value is regarded as optimal.
Events
Actions S S S S ,x. Regret
A
A
A
B
1 2 3 4
1
2
3
25 24 21 0 25
7 19 0 6 19
0 0 6 11 11
1
2
3
. .
27 12 27 0.7 12 0.3 22.5
45 17 45 0.7 17 0.3 36.6
52 15 52 0.7 15 0.3 40.9
Action ,x P,yoff in P,yoff Weighted Aver,ge
A
A
A
- + - =
- + - =
- + - =
431
12.8 DECISION-MAKING UNDER RISK
In case oI decision-making under uncertainty the probabilities oI
occurrence oI various
states oI nature are not known. When these probabilities are known or
can be estimated,
the choice oI an optimal action, based on these probabilities, is termed as
decisionmaking
under risk.
The choice oI an optimal action is based on The Bayesian Decision
Criterion according
to which an action with maximum Expected Monetary Value (EMV) or
minimum
Expected Opportunity Loss (EOL) or Regret is regarded as optimal.
Example 18: The payoIIs (in Rs) oI three Acts A1, A2 and A3 and the
possible states
oI nature S1, S2 and S3 are given below :
The probabilities oI the states oI nature are 0.3, 0.4 and 0.3 respectively.
Determine the
optimal act using the Bayesian Criterion.
$olution:
Computation of Expected Monetary Value
From the above table, we Iind that the act A1 is optimal.
The problem can alternatively be attempted by Iinding minimum EOL,
as shown below:
Computation of Expected Opportunity Loss
This indicates that the optimal act is again A1.
12.9 EXPECTED VALUE WITH PERFECT INFORMATION
(EVPI)
The expected value with perIect inIormation is the amount oI proIit
Ioregone due to
uncertain conditions aIIecting the selection oI a course oI action.
Given the perIect inIormation, a decision-maker is supposed to know
which particular
state oI nature will be in eIIect. Thus, the procedure Ior the selection oI
an optimal
course oI action, Ior the decision problem given in example 18, will be
as Iollows :
II the decision-maker is certain that the state oI nature S1 will be in
eIIect, he would
select the course oI action A3, having maximum payoII equal to Rs 200.
1 2 3
1
2
3
20 50 200
200 100 50
400 600 300
Acts
A A A
St,tes of N,ture
S
S
S

G

1 2 3
1
2
3
( ) 0.3 0.4 0.3
20 200 400 20 0.3 200 0.4 400 0.3 194
50 100 600 50 0.3 100 0.4 600 0.3 125
200 50 300 200 0.3 50 0.4 300 0.3 130
S S S
P S EJ
A
A
A
- + - + - =
- - + - =
- - + - =
1 2 3
1
2
3
( ) 0.3 0.4 0.3
220 0 200 220 0.3 0 0.4 200 0.3 126
250 300 0 250 0.3 300 0.4 0 0.3 195
0 250 300 0 0.3 250 0.4 300 0.3 190
S S S
P S EOL
A
A
A
- + - + - =
- + - + - =
- + - + - =
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432
Similarly, iI the decision-maker is certain that the state oI nature S2 will
be in eIIect, his
course oI action would be A1 and iI he is certain that the state oI nature
S3 will be in
eIIect, his course oI action would be A2. The maximum payoIIs
associated with the
actions are Rs 200 and Rs 600 respectively.
The weighted average oI these payoIIs with weights equal to the
probabilities oI respective
states oI nature is termed as Expected P,yoff under Cert,inty (EPC).
Thus, EPC = 200 - 0.3 + 200 - 0.4 + 600 - 0.3 = 320
The diIIerence between EPC and EJ oI optimal action is the amount
oI proIit Ioregone
due to uncertainty and is equal to EJPI.
Thus, EJPI EPC - EJ oI optimal action 320 - 194 126
It is interesting to note that EJPI is also equal to EOL oI the optimal
action.
Cost of Uncertainty
This concept is similar to the concept oI EVPI. Cost oI uncertainty is the
diIIerence
between the EOL oI optimal action and the EOL under perIect
inIormation.
Given the perIect inIormation, the decision-maker would select an action
with minimum
opportunity loss under each state oI nature. Since minimum opportunity
loss under each
state oI nature is zero, thereIore,
EOL under certainty = 0 - 0.3 + 0 - 0.4 + 0 - 0.3 = 0 .
Thus, the cost oI uncertainty EOL oI optimal action EVPI
Example 19: A group oI students raise money each year by selling
souvenirs outside
the stadium oI a cricket match between teams A and B. They can buy
any oI three
diIIerent types oI souvenirs Irom a supplier. Their sales are mostly
dependent on which
team wins the match. A conditional payoII (in Rs.) table is as under :
(i) Construct the opportunity loss table.
(ii) Which type oI souvenir should the students buy iI the probability oI
team A's winning
is 0.6?
(iii) Compute the cost oI uncertainty.
$olution:
(i) %he Opportunity Loss %able
(ii) EOL oI buying type I Souvenir = 0 - 0.6 + 850 - 0.4 = 340
EOL oI buying type II Souvenir = 400 - 0.6 + 400 - 0.4 = 400.
EOL oI buying type III Souvenir = 900 - 0.6 + 0 - 0.4 = 540.
Since the EOL oI buying Type I Souvenir is minimum, the optimal
decision is to buy
Type I Souvenir.
(iii) Cost oI uncertainty EOL oI optimal action Rs. 340
1200 800 300
250 700 1100
%ype of Souvenir I II III
%e,m A wins
%e,m B wins

0 400 900
850 400 0
Actions %ype of Souvenir bought
Events I II III
%e,m A wins
%e,m B wins

G
433
Example 2: The Iollowing is the inIormation concerning a product X :
(i) Per unit proIit is Rs 3.
(ii) Salvage loss per unit is Rs 2.
(iii) Demand recorded over 300 days is as under :
Find : (i) EMV oI optimal order.
(ii) Expected proIit presuming certainty oI demand.
$olution:
(i) The given data can be rewritten in terms oI relative Irequencies, as
shown below:
From the above probability distribution, it is obvious that the optimum
order would
lie between and including 5 to 9.
Let A denote the number oI units ordered and D denote the number oI
units
demanded per day.
II D > A, proIit per day 3A, and iI D A, proIit per day 3D 2(A
D)
5D 2A.
Thus, the proIit matrix can be written as
From the above table, we note that the maximum EMV 19.00, which
corresponds
to the order oI 7 or 8 units. Since the order oI the 8th unit adds nothing
to the EMV,
i.e., marginal EMV is zero, thereIore, order oI 8 units per day is optimal.
(ii) Expected proIit under certainty
= b5- 0.10+ 6- 0.20+ 7 - 0.30+8- 0.25+ 9 - 0.15g - 3 = Rs 21.45
Alternative Method: The work oI computations oI EMV's, in the above
example, can
be reduced considerably by the use oI the concept oI expected marginal
proIit. Let p be
the marginal proIit and l be the marginal loss oI ordering an additional
unit oI the
product. Then, the expected marginal proIit oI ordering the Ath unit, is
givenby
=x .PD > A) .PD A) =x .PD > A) . 1 PD > A)|
= x + ).P D > A) .... (1)
&nits dem,nded : 5 6 7 8 9
No. of d,ys : 30 60 90 75 45
Units demanded
No of days
: 5 6 7 8
. : .1 .2 .3 .25 .15
5 6 7 8 9
0.10 0.20 0.30 0.25 0.15
( )
5 15 15 15 15 15 15.00
6 13 18 18 18 18 17.50
7 11 16 21 21 21 19.00
8 9 14 19 24 24 19.00
9 7 12 17 22 27 17.75
&nits Dem,nded
Prob,bility
EJ
Action units ordered

G
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434
The computations oI EMV, Ior alternative possible values oI A, are
shown in the Iollowing
table :
In our example, x 3 and 2
Thus, the expression Ior the expected marginal proIit oI the Ath unit
= 3 + 2)PD > A) 2 = 5PD > A) 2.
Table for Computations
* This column represents the 'more than type' cumulative probabilities.
Since the expected marginal proIit (EMP) oI the 8th unit is zero,
thereIore, optimal order
is 8 units.
Marginal Analysis
Marginal analysis is used when the number oI states oI nature is
considerably large.
Using this analysis, it is possible to locate the optimal course oI action
without the
computation oI EMV's oI various actions.
An order oI A units is said to be optimal iI the expected marginal proIit
oI the Ath unit is
non-negative and the expected marginal proIit oI the (A 1)th unit is
negative. Using
equation (1), we can write
x + )PD > A) > 0 and .... (2)
x + )PD > A +1) 0 .... (3)
From equation (2), we get
PD A)

x
> >
+
or 1 PD A)

x
>
+
or P D A) 1

x

+ or PD A 1)
x
x

+
.... (4)
|P(D A - 1) P(D A), since A is an integer|
Further, equation (3) gives
PD A 1)

x
> +
+
or 1 PD A 1)

x
+
+
or P D A 1) 1

x
+ >
+ or PD A)
x
x
>
+ .... (5)
Combining (4) and (5), we get
PD A 1) PD A)
x
x

+ .
( ) )* 5 ) 2
5 1.00 5 1.00 2 3.00 5 3.00 15.00
6 0.90 5 0.90 2 2.50 15.00 2.50 17.50
7 0.70 5 0.70 2 1.50 17.50 1.50 19.00
8 0.40 5 0.40 2 0.00 19.00 0.00 19.00
9 0.15 5 0.15
%ot,l profit or
Action A P D A EP P D A
EJ
> = >
- = - =
- = + =
- = + =
- = + =
- 2 = 1.25 19.00 1.25 =17.75
435
Writing the probability distribution, given in example 20, in the Iorm oI
less than type
cumulative probabilities which is also known as the distribution Iunction
F(D), we get
We are given 5= 3 and = 2 , \ 3
0.6
5
5
5
= =
+
Since the next cumulative probability, i.e., 0.85, corresponds to 8 units,
hence, the optimal
order is 8 units.
12.10 USE OF SUB1ECTIVE PROBABILITIES IN
DECISION-MAKING
When the objective probabilities oI the occurrence oI various states oI
nature are not
known, the same can be assigned on the basis oI the expectations or the
degree oI belieI
oI the decision-maker. Such probabilities are known as subjective or
personal probabilities.
It may be pointed out that diIIerent individuals may assign diIIerent
probability values to
given states oI nature.
This indicates that a decision problem under uncertainty can always be
converted into a
decision problem under risk by the use oI subjective probabilities. Such
an approach is
also termed as Subfectivists Appro,ch.
Example 21: The conditional payoII (in Rs) Ior each action-event
combination are as
under:
(i) Which is the best action in accordance with the Maximin Criterion?
(ii) Which is the best action in accordance with the EMV Criterion,
assuming that all
the events are equally likely?
$olution:
(i) The minimum payoIIs Ior various actions are :
Action 1 5
Action 2 2
Action 3 2
Action 4 3
Since the payoII Ior action 3 is maximum, thereIore, A3 is optimal on
the basis oI
maximin criterion.
(ii) Since there are 5 equally likely events, the probability oI each oI
them would be
1
5
.
Thus, the EMV oI action 1, i.e., 1
4 0 5 3 6 8
1.6
5 5
EJ
+ - + +
= = =
Similarly, 2
20
4.0
5
EJ = = , 3
19
3.8
5
EJ = = and 4
17
3.4
5
EJ = =
Thus, action 2 is optimal.
&nits dem,nded(D) : 5 6 7 8 9
F(D) : 0.1 0.3 0.6 0.85 1.00
1 2 3 4
4 2 7 8
0 6 3 5
5 9 2 3
3 1 4 5
6 6 3 2
Action
Event
A
B
C
D
E

G

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436
12.11 USE OF POSTERIOR PROBABILITIES IN
DECISION-MAKING
The probability values oI various states oI nature, discussed so Iar, were
prior probabilities.
Such probabilities are either computed Irom the past data or assigned
subjectively. It is
possible to revise these probabilities in the light oI current inIormation
available by using
the Bayes' Theorem. The revised probabilities are known as posterior
probabilities.
Example 22: A manuIacturer oI detergent soap must determine whether
or not to
expand his productive capacity. His proIit per month, however, depend
upon the potential
demand Ior his product which may turn out to be high or low. His payoII
matrix is given
below:
On the basis oI past experience, he has estimated the probability that
demand Ior his
product being high in Iuture is only 0.4
BeIore taking a decision, he also conducts a market survey. From the
past experience he
knows that when the demand has been high, such a survey had predicted
it correctly
only 60 oI the times and when the demand has been low, the survey
predicted it
correctly only 80 oI the times.
II the current survey predicts that the demand oI his product is going to
be high in Iuture,
determine whether the manuIacturer should increase his production
capacity or not?
What would have been his decision in the absence oI survey?
$olution: Let H be the event that the demand will be high. ThereIore,
P(H) = 0.4 and P(H) = 0.6
ote that H and H are the only two states oI nature.
Let D be the event that the survey predicts high demand. ThereIore,
P(D/ H) = 0.60 and P(D/H) = 0.80
We have to Iind P(H/D) and P(H /D). For this, we make the Iollowing
table:
0.24 2 0.12 1
( / ) and ( / )
0.36 3 0.36 3
P H D = = P H D = =
The EMV oI the act dont exp,nd = 5 - + - =
2
3
5
1
3
Rs 5
and the EMV oI the act exp,nd = 75 - + - =
2
3
21
1
3
Rs 57
Since the EMV oI the act 'expand' ~ the EMV oI the act 'don't expand',
the manuIacturer
should expand his production capacity.
It can be shown that, in the absence oI survey the EMV oI the act 'don't
expand' is Rs
5,000 and the EMV oI the act expand is Rs 4,260. Hence, the optimal act
is 'don't
expand'.
Do not Expand Expand
High Demand
Low Demand
Rs 5 Rs 75
Rs 5 Rs 21
0.4 0.6
0.12 0.36
0.24
0.6 0.8
0.16 0.64
0.48
0.40 0.60 1.00
H H %ot,l
D
D
%ot,l
-
=
-
=
437
Decision %ree Approach
The decision tree diagrams are oIten used to understand and solve a
decision problem.
Using such diagrams, it is possible to describe the sequence oI actions
and chance
events. A decision node is represented by a square and various action
branches stem
Irom it. Similarly, a chance node is represented by a circle and various
event branches
stem Irom it. Various steps in the construction oI a decision tree can be
summarised as
Iollows :
(i) Show the appropriate action-event sequence beginning Irom leIt to
right oI the
page.
(ii) Write the probabilities oI various events along their respective
branches stemming
Irom each chance node.
(iii) Write the payoIIs at the end oI each oI the right-most branch.
(iv) Moving backward, Irom right to leIt, compute EMV oI each chance
node, wherever
encountered. Enter this EMV in the chance node. When a decision node
is
encountered, choose the action branch having the highest EMV. Enter
this EMV in
the decision node and cutoII the other action branches.
Following this approach, we can describe the decision problem oI the
above example as
given below:
Case I: When the survey predicts that the demand is going to be high
Thus, the optimal act to expand capacity.
Case II: In the absence oI survey
Thus, the optimal act is not to expand capacity.
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438
Exercise with Hints
1. The probability oI the demand Ior lorries Ior hire on any day in a
given district is as
Iollows :
Lorries have a Iixed cost oI Rs 90 each day to keep and the daily hire
charge (net
oI variable costs oI running) is 200. II the lorry-hire company owns 4
lorries, what
is its daily expectations? II the lorry-hire company is about to go into
business and
currently has no lorries, how many lorries should it buy?
int: Take x 110 and 90.
2. A management is Iaced with the problem oI choosing one oI the
products Ior
manuIacturing. The potential demand Ior each product may turn out to
be good,
moderate or poor. The probabilities Ior each oI the states oI nature were
estimated
as Iollows :
The proIit or loss (in Rs) under the three states is estimated as
Prepare the expected value table and advise the management about the
choice oI
product.
int: Compute expected proIit Ior each commodity.
3. A pig breeder can either produce 20 or 30 pigs. The total production
oI his
competitors can be either 5,000 or 10,000 pigs. II they produce 5,000
pigs, his proIit
per pig is Rs 60; iI they produce 10,000 pigs, his proIit per pig is Rs 45
only.
Construct a payoII table and also state what should the pig breeder
decide?
int: This is a decision problem under uncertainty where the courses oI
actions are to
produce 20 or 30 pigs while the states oI nature are the production oI
5,000 or
10,000 pigs by his competitors.
4. Mr X quite oIten Ilies Irom town A to town B. He can use the airport
bus which
costs Rs 13 but iI he takes it, there is a 0.08 chance that he will miss the
Ilight. A
hotel limousine costs Rs. 27 with a 0.96 chance oI being on time Ior the
Ilight. For
Rs 50 he can use a taxi which will make 99 oI 100 Ilights. II Mr X
catches the Ilight
on time, he will conclude a business transaction which will produce a
proIit oI Rs
1,000; otherwise he will lose it. Which mode oI transportation should Mr
X use?
Answer on the basis oI EMV criterion.
int: EMV oI using airport bus (1000 13) - 0.92 13 - 0.08, etc.
5. A distributor oI a certain product incurs holding cost oI Rs 100 per
unit per week
and a shortage cost oI Rs 300 per unit. The data on the sales oI the
product are
given below :
Find his optimal stock.
int: Take 5 300 and 100.
No.of lorries dem,nded : 0 1 2 3 4
Prob,bility : 0.1 0.2 0.3 0.2 0.2
X
Y
Z
30 000 20 000 10 000
60 000 30 000 20 000
40 000 10 000 15 000
, , ,
, , ,
, , ,
Weekly S,les : 0 1 2 3 4 5 6 7 8
No. of Weeks : 0 0 5 10 15 15 5 0 0
0.70 0.20 0.10
0.50 0.30 0.20
0.40 0.50 0.10
N,ture of Dem,nd
Good oder,te Poor
Product
X
Y
Z

G
439
1 Distinguish between Hurwicz Criterion is diIIerent Irom Laplace
Criterion.
2. What is the use oI subjective and posterior probabilities in decision-
making?
answers in it.

12.12 LET US SUM UP
In this chapter you would be able to understand probability distribution
oI a random
variable and also mean and variance. In this various theorems on
expectation to Iind out
expected value. And taking decisions on the basis oI various
probabilistic distribution.
1. Mean oI a discrete random variable is
1
( ) . ( )
n
i i
i
E X X p X
=
=
2. Var(X) E|X - E(X)|2 E(X2) - |E(X)|2
3. E(b) b, where b is a constant
4. E(aX b) aE(X) b
5. Var(aX b) a2Var(X)
6. E(X Y) E(X) E(Y)
7. E(X.Y) E(X).E(Y), iI X and Y are independent.
8. Bayesian Decision Criterion : An action with maximum EMV or
minimum
EOL is said to be optimal.
Use the probability distribution in a laboratory Ior experiments.
12.14 KEYWORDS
Variable
Decision Analysis
Variance
Theorems
Marginal Analysis
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440
(a) Random variable expressed in monetary units, its expected value is
......................
(b) Simultaneously studying two or more random variables is called
......................
probability distribution.
(c) II X and Y are two random variables, then ...................... (X)
(Y)
(d) A situation oI uncertainty arises when there can be more than one
...................... consequence oI any course oI action.
(e) ...................... is the amount oI proIit Ioregone due to uncertainty.
(a) Cost oI uncertainty is the diIIerence between EOL oI optimal and
perIect
inIormation.
(b) In the toss oI B coins assuming that they are unbiased the probability
is 1/8.
(c) Marginal Analysis is used when no. oI states oI nature is small.
(d) Subjective and personal probabilities are same.
(e) Decision tree is used to solve decision problem.
3. Write short notes on:
(a) Pay-oII Matrix
(b) Theorems on Expectation
(c) Decision Analysis
(d) Joint Probability Distribution
(e) Action and Event
4. Distinguish Between:
(a) Action and Event
(b) Discrete and Continuous Probability Distribution
(c) Bivariate and Multivariate Probability Distribution
(d) Joint and Marginal Probability
(e) EMV and EOL
1. Explain the concept oI random variable and its probability distribution
by using a
simple example.
2. What is mathematical expectation oI a random variable? II Y aX
b, where X is
a random variable, show that E(Y) aE(X) b.
3. II X and Y are two independent random variables, show that
(a) E(X Y) E(X) E(Y) (b) E(X.Y) E(X).E(Y)
4. A bag contains 3 rupee coins, 6 IiIty paise coins and 4 twenty-Iive
paise coins. A
man draws a coin at random. What is the expectation oI his draw?
5. A box contains Iive tickets; two oI which carry a prize oI Rs 8 each
and the other
three oI Rs 3 each. II two tickets are drawn at random, Iind the expected
value oI
the prize.
441
6. Obtain the probability distribution oI the number oI aces in
simultaneous throws oI
two unbiased dice.
7. You are told that the time to service a car at a service station is
uncertain with
Iollowing probability density Iunction:
I(x) 3x - 2x2 1 Ior 0 x 2
0 otherwise.
Examine whether this is a valid probability density Iunction?
8. Find mean and variance oI the Iollowing probability distribution :
9. An urn contains 4 white and 3 black balls. 3 balls are drawn at
random. Write down
the probability distribution oI the number oI white balls. Find mean and
variance oI
the distribution.
10. A consignment is oIIered to two Iirms A and B Ior Rs 50,000. The
Iollowing table
shows the probability at which the Iirm will be able to sell it at diIIerent
prices :
Which oI the two Iirms will be more inclined towards the oIIer?
11. II the probability that the value oI a certain stock will remain same is
0.46, the
probabilities that its value will increase by Re. 0.50 or Re. 1.00 per share
are
respectively 0.17 and 0.23 and the probability that its value will decrease
by Re.
0.25 per share is 0.14, what is the expected gain per share?
12. In a college Iete a stall is run where on buying a ticket a person is
allowed one
throw oI two dice. II this gives a double six, 10 times the ticket money is
reIunded
and in other cases nothing is reIunded. Will it be proIitable to run such a
stall? What
is the expectation oI the player? State clearly the assumptions iI any, Ior
your
answer.
13. The proprietor oI a Iood stall has introduced a new item oI Iood. The
cost oI
making it is Rs 4 per piece and because oI its novelty, it would be sold
Ior
Rs 8 per piece. It is, however, perishable and pieces remaining unsold at
the end oI
the day are a dead loss. He expects the daily demand to be variable and
has drawn
up the Iollowing probability distribution expressing his estimates:
Compute his expected proIit or loss iI he prepares 53 pieces on a
particular day.
14. The probability that there is at least one error in an accounts
statement prepared by
A is 0.2 and Ior B and C are 0.25 and 0.4 respectively. A, B and C
prepare 10, 16
and 20 statements respectively. Find the expected number oI correct
statements in
all.
15. Three coins whose Iaces are marked as 1 and 2 are tossed. What is
the expectation
oI the total value oI numbers on their Iaces?
16. A person has the choice oI running hot snack stall or an ice cream
and cold drink
shop at a certain holiday resort during the coming summer season. II the
weather
during the season is cool and rainy, he can expect to make a proIit oI Rs
15,000 and
iI it is warm, he can expect to make a proIit oI Rs 3,000 only, by running
a hot
snack stall. On the other hand, iI his choice is to run an ice cream and
cold drink
SellingPrice in Rs
Prob of A
Prob of B
(
.
. . . .
4 45 55 7
.3 .4 .2 .1
1 2 4 3
No. of pieces dem,nded : 50 51 52 53 54 55
Prob,bility : 0.05 0.07 0.20 0.35 0.25 0.08
X : 20 10 30
p(X) : 3
10
1
5
1
2
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442
shop, he can expect to make a proIit oI Rs 18,000 iI the weather is warm
and only
Rs 3,000 iI the weather is cool and rainy. The meteorological authorities
predict
that there is 40 chance oI the weather being warm during the coming
season.
You are to advise him as to the choice between the two types oI stalls.
Base your
argument on the expectation oI the result oI the two courses oI action
and show
the result in a tabular Iorm.
17. Show that the expectation oI the number oI Iailures preceding the
Iirst success in
an inIinite series oI independent trials is q/p, where p is the probability
oI success in
a single trial and q 1 - p.
18. II X is a random variable with expected value 50 and standard
deviation 4, Iind the
values oI a and b such that the expected value oI Y aX b is zero and
standard
deviation is 6.
19. A discrete random variable X has the Iollowing probability
distribution:
Find (a) the value oI k, (b) P(X > 3), (c) the value oI m such that
5
( )
6
P X m =
and (d) write the distribution Iunction oI X.
20. A company introduces a new product in the market and expects to
make a proIit oI
Rs 2.5 lacs during Iirst year iI the demand is 'good', Rs 1.5 lacs iI the
demand is
'moderate' and a loss oI Rs 1 lac iI the demand is 'poor'. Market research
studies
indicate that the probabilities Ior the demand to be good and moderate
are 0.2 and
0.5 respectively. Find the company's expected proIit and standard
deviation.
21. II it rains, a taxi driver can earn Rs 100 per day. II it is Iair, he can
lose Rs 10 per
day. What is his expectation iI the probability oI rain is 0.4?
22. A player tosses 3 Iair coins. He wins Rs 10 iI three heads appear, Rs
6 iI two
heads appear, Rs 2 iI one head appears and loses Rs 25 iI no head
appears. Find
the expected gain oI the player.
23. A player tosses 3 Iair coins. He wins Rs 12 iI three tails occur, Rs 7
iI two tails
occur and Rs 2 iI only one tail occur. How much should he win or lose
in case oI
occurrence oI no tail iI the game is given to be Iair?
24. A Iirm plans to bid Rs 300 per tonne Ior a contract to supply 1,000
tonnes oI a
metal. It has two competitors A and B and it assumes that the probability
that A
will bid less than Rs 300 per tonne is 0.3 and that B will bid less than
Rs 300 per tonne is 0.7. II the lowest bidder gets all the business and the
Iirms bid
independently, what is the expected value oI the contract to the Iirm?
25. A certain production process produces items that are 10 percent
deIective. Each
item is inspected beIore being supplied to customers but the inspector
incorrectly
classiIies an item 10 percent oI the times. Only items classiIied as good
are supplied.
II 820 items in all have been supplied, how many oI these are expected
to be
deIective?
int: Let A be the event that an item is supplied. P(A) 0.10 - 0.10
0.90 - 0.90
0.82. Let B be the event that a deIective item is supplied. P(B) 0.10
- 0.10
0.01. ThereIore P(B/A) 0.01/0.82.
26. You are given the Iollowing payoIIs oI three acts A1, A2 and A3 and
the states oI
nature S1, S2 and S3 :
X
p X k k k k k k
:
( ) :
0 1 2 3 4 5
2 3 5 4 3
Acts
St,tes of N,ture
S1
S2
S3
A1 A2 A3
25 10 125
400 440 400
650 740 750
443
The probabilities oI the three states oI nature are 0.1, 0.7 and 0.2
respectively.
Compute and tabulate the EMV and determine the optimal act.
27. Given is the Iollowing payoII (in Rs) matrix :
What should be the decision iI we use (i) EMV criterion, (ii) The
minimax criterion
and (iii) the maximin criterion?
28. The proprietor oI a Iood stall has invented a new Iood delicacy
which he calls
WHIM. He has calculated that the cost oI manuIacture is Re 1 per piece
and
because oI its novelty, it can be sold Ior Rs 3 per piece, It is, however,
perishable
and the goods unsold at the end oI the day are a dead loss. He expects
the demand
to be variable and has drawn up the Iollowing probability distribution oI
his estimate:
(i) Find an expression Ior his net proIit or loss iI he manuIacture m
pieces and
only n are demanded. Consider separately the two cases n m and n ~
m.
(ii) Assume that he manuIactures 12 pieces. Using the results in (i)
above, Iind
his net proIit or loss Ior each level oI demand.
(iii) Using the probability distribution, calculate his expected net proIit
or loss iI he
manuIactures 12 pieces.
(iv) Calculate the expected proIit or loss Ior each oI the levels oI
manuIacture
(10 m 15).
(v) How many pieces should be manuIactured so that his expected proIit
is
maximum?
29. A physician purchases a particular vaccine on Monday oI each week.
The vaccine
must be used in the current week, otherwise it becomes worthless. The
vaccine
costs Rs 2 per dose and the physician charges Rs 4 per dose. In the past
50 weeks,
the physician has administered the vaccine in the Iollowing quantities :
Determine the number oI doses the physician should buy every week.
30. The marketing staII oI a certain industrial organisation has submitted
the Iollowing
payoII table, giving proIits in million rupees, concerning a proposal
depending upon
the rate oI technological advance in the next three years :
The probabilities are 0.2, 0.5 and 0.3 Ior Much, Little and one
technological
advance respectively. What decision should be taken?
No. of pieces dem,nded : 10 11 12 13 14 15
Prob,bility : 0.07 0.10 0.23 0.38 0.12 0.10
Doses per week : 20 25 40 60
No. of weeks : 5 15 25 5
%echnologic,l
,dv,nce
Accept
Propos,l
Refect
Propos,l
uch 2 3
Little 5 2
None 1 4
State of Nature Probability Decision
Do not
Expand
Expand
units
Expand
units
High Demand
Medium Demand
Low Demand
2 4
4
4
2
25 35 5
25 35 25
25 15 1
.
.
.
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444
31. A newspaper distributor assigns probabilities to the demand Ior a
magazine as
Iollows:
A copy oI magazine sells Ior Rs 7 and costs Rs 6. What can be the
maximum
possible expected monetary value (EMV) iI the distributor can return the
unsold
copies Ior Rs 5 each? Also Iind EVPI.
32. A management is Iaced with the problem oI choosing one oI the
three products Ior
manuIacturing. The potential demand Ior each product may turn out to
be good,
Iair or poor. The probabilities Ior each type oI demand were estimated as
Iollows:
The estimated proIit or loss (in Rs) under the three states oI demand in
respect oI
each product may be taken as :
Prepare the expected value table and advise the management about the
choice oI
the product.
33. The payoIIs oI three acts A, B and C and the states oI nature P, Q
and R are given
as :
The probabilities oI the states oI nature are 0.5, 0.1 and 0.4 respectively.
Tabulate
the Expected Monetary Values Ior the above data and state which can be
chosen
as the best act? Calculate expected value oI perIect inIormation also.
34. A manuIacturing company is Iaced with the problem oI choosing
Irom Iour products
to manuIacture. The potential demand Ior each product may turn out to
be good,
satisIactory or poor. The probabilities estimated oI each type oI demand
are given
below :
The estimated proIit (in Rs) under diIIerent states oI demand in respect
oI each
product may be taken as :
Prepare the expected value table and advise the company about the
choice oI
product to manuIacture.
A 35, 000 15, 000 5,000
B 50,000 20,000 3, 000
C 60,000 30,000 20, 000
Payoffs in Rs
States of Nature
P
"
R
A B C
(

35 12 1
25 35 2
55 65 7
Prob,bilities of type of dem,nd
Product
A
B
C
D
Good S,tisf,ctory Poor
0.60 0.20 0.20
0.75 0.15 0.10
0.60 0.25 0.15
0.50 0.20 0.30
A 40, 000 10,000 1,100
B 40, 000 20, 000 7, 000
C 50, 000 15, 000 8, 000
D 40, 000 18,000 15,000
0.75 0.15 0.10
0.60 0.30 0.10
0.50 0.30 0.20
Dem,nd
Good F,ir Poor
Product
A
B
C

G
Copies Dem,nded : 1 2 3 4
Prob,bility : 0.4 0.3 0.2 0.1
445
Dem,nd : 0 1 2 3 4 5 6
Prob,bility : 0.14 0.27 0.27 0.18 0.09 0.04 0.01
No. of c,ses sold : 15 16 17 18
No. of d,ys : 12 24 48 36
35. A shopkeeper at a local stadium must determine whether to sell ice
cream or
coIIee at today's game. The shopkeeper believes that the proIit will
depend upon
the weather. The payoII table is as Iollows :
Based upon his past experience at this time oI the year, the shopkeeper
estimates
the probability oI warm weather as 0.60. Prior to making his decision,
the shopkeeper
decides to hear Iorecast oI the local weatherman. In the past, when it has
been
cool, the weatherman has Iorecast cool weather 80 times. When it has
been
warm, the weatherman has Iorecast warm weather 70 times. II today's
Iorecast
is Ior cool weather, using Bayesian decision theory and EMV criterion,
determine
whether the shopkeeper should sell ice cream or coIIee?
36. A producer oI boats has estimated the Iollowing distribution oI
demand Ior a particular
kind oI boat :
Each boat costs him Rs 7,000 and he sells them Ior Rs 10,000 each. Any
boats that
are leIt unsold at the end oI the season must be disposed oII Ior Rs 6,000
each.
How many boats should be kept in stock to maximise his expected
proIit?
37. A retailer purchases berries every morning at Rs 5 a case and sells
Ior Rs 8
a case. Any case remaining unsold at the end oI the day can be disposed
oI the
next day at a salvage value oI Rs 2 per case (thereaIter they have no
value). Past sales have ranged Irom 15 to 18 cases per day. The
Iollowing is the
record oI sales Ior the past 120 days :
Find how many cases the retailer should purchase per day to maximise
his proIit?
38. State whether the Iollowing statements are True or False :
(i) A random variable takes a value corresponding to every element oI
the sample
space.
(ii) The probability oI a given value oI the discrete random variable is
obtained by
its probability density Iunction.
(iii) Distribution Iunction is another name oI cumulative probability
Iunction.
(iv) Any Iunction oI a random variable is also a random variable.
(v) The expected value oI the sum oI two or more random variables is
equal to
the sum oI their expected values only iI the are independent.
(vi) In the process oI decision-making, the decision-maker can also
assign
probabilities to various states oI nature based upon his degree oI belieI.
39. Fill in blanks :
(i) The probability that a ........ random variable takes a particular value
is always
zero.
(ii) The mean oI a random variable is also termed as its ........ value.
(iii) Any Iunction oI random variable is also a ........ .
Event Action
Cool We,ther
W,rm We,ther
Sell Coffee Sell Ice cre,m
Rs Rs
Rs Rs
40 20
55 80
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446
(iv) II the conditional distribution oI X given Y is same as the marginal
distribution
oI X, then X and Y are ........ random variables.
(v) The selection oI a particular decision criterion depends upon the
........ oI the
decision-maker.
(vi) An action with maximum EMV or minimum EOL is regarded as
....... .
DISCUSSION
1. (a) Expected Monetary Value (EMV) (b) Joint (c) (X Y)
(d) Possible (e) Expected Value with PerIect InIormation (EVPI)
2. (a) True (b) True (c) False (d) True (e) True
Lerry Gonick and Woollcott Smith, %he C,rtoon Guide to St,tistics,
Harpercollins,
ew York 1994.
Bernard W. Lindgren, St,tistic,l %heory, Macmillan, third edition 1976.
Siegrried GraI, Harold Luschgy, Found,tions of qu,nti:,tions for
prob,bility
distributions, Springes Motorola Univ. Pr (April 1993)
Edger H. Callaway, David A. Hill, Jerome V. Scholle, Prob,bility
Distribution, Motorola
Univ. April 1993
Gejza Wimmes, Gabriel Altmann, %hes,urus of &niverse Discrete
Prob,bility
Distribution, Stany, Jan. 1999
Unit-V
In this lesson we are going to talk about the inventory control and how
to minimised the
total cost oI inventory. The inventory control system oIIers
comprehensive report
capabilities to keep you on top oI inventory status. It can Iacilitate in
bringing about the
creating oI new or improved purchasing policies, save policies, pricing
modelling and
even enhanced customer service.
13.1 INTRODUCTION
The inventory means a physical stocks oI good which is kept in hand Ior
smooth and
eIIicient running oI Iuture aIIairs oI an organisation at the minimum
costs oI Iunds blocked
in inventories. In a manuIacturing organisation, inventory control plays a
signiIicant role
because the total investment in inventories oI various kinds is quite
substantious. In this
chapter we are going to discuss the meaning oI inventory, need to
control inventory,
advantage oI material control, essential Iactor, oI material control, the
ABC analysis
techniques, process oI inventory control.
LESSON
13
INVENTORY MODEL
CONTENTS
13.1 Introduction
13.2 eed oI Inventory Control
13.3 Advantages oI Material Controls
13.4 Essential Factors oI Material Control
13.5 ABC Analysis Technique
13.6 Process oI Inventory Control
13.7 Minimum Stock Level
13.8 Maximum Stock Level
13.9 Ordering Level or Re-order Level
13.10 Average Stock level
13.11 Danger Level
13.12 Let us Sum Up
13.14 Keywords
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Ior Management
Inventory can be deIined as the stock oI goods, commodities or other
resources that are
stored at any given period Ior Iuture production. In real, inventory
control is a process
itselI, with the help oI which, the demand oI items, scheduling, purchase
receiving,
inspection, storage and despatch are arranged in such a manner that at
minimum cost
and in minimum time, the goods can be despatched to production
department. Inventory
control makes use oI available capital in a most eIIective way and
ensures adequate
supply oI goods Ior production.
13.2 NEED OF INVENTORY CONTROL
The main objectives oI Inventory Control are as Iollows:
1. For Effective Cost Accounting $ystem: Cost accounting system is
useIul only
when there is a tight control over cost and inventory cost is a major part
oI total
production cost.
2. %o Check Waste and Wastage: Inventory control not just only
ensures uninterrupted
material supply to production department but also ensures the control
Irom purchasing
to supply oI Iinished goods to customers. So in this way it checks waste
and wastage
whether it is about time, money or material.
3. %o Check Embezzlement and %heft: Inventory control is to maintain
necessary
records Ior protecting theIt and embezzlement.
4. For the $uccess of Business: Customer`s satisIaction is very much
important Ior
the success oI business and customer`s satisIaction is directly related to
the goods
supplied to them. II the goods supplied to customers are low in cost with
good
quality at right time, it ensures the success oI business. Inventory
Control helps in
achieving this goal.
5. For the Life of the Business: In absence oI Inventory Control there
are many
risks oI losses.
6. %o Check Aational Wastage: Inventory control checks the wastage oI
nation`s
resources such as raw minerals, ores, etc.
13.3 ADVANTAGES OF MATERIAL CONTROLS
They are as Iollows:
1. It helps to minimise loss by obsolescence, deterioration damage etc.
2. It helps to protect against theIts, wastages, etc.
3. It helps managers in decision making.
4. To minimise capital investment in inventory.
5. To minimise cost oI material purchasing.
6. To increase the storing capacity.
7. To maintain reasonable stocks oI materials.
8. To Iacilitates regular and timely supply to customers.
9. To ensures smooth production operations.
10. To check national wastage.
13.4 ESSENTIAL FACTORS OF MATERIAL CONTROL
For the success oI material control Iollowing Iactors should be kept in
mind.
1. Proper Co-ordination: There should be a proper co-ordination
between all the
departments who uses materials, such as purchase department, store
department
inspection department, accounts department, production department and
sales
department, so that there is neither a scarcity oI material nor excess oI
material.
451
2. Centralisation of Purchasing: The important requirement oI a
successIul inventory Inventory Model
control system is the appointment oI intelligent and experienced
personnel in
purchase department, these personnel should be expert in their Iield and
negotiating
the deals.
3. Proper $cheduling: All the requisitions made by production
department should be
scheduled, so material could be issued them by time and production
should not be
stopped.
4. Proper Classification: ClassiIication and identiIication oI inventories
by allotting
proper code number to each item and group should be done, to Iacilitate
prompt
recordings, locating and dealing.
5. Use of $tandard Forms: Standards Iorms should be used so that any
inIormation
can be send to all department within no time.
6. Internal Check $ystem: Audit should be done by an independent
party to check
eIIectiveness oI inventory control system.
7. Proper $toring $ystem: Adequate and well organised warehouse
Iacilities with
well-equipped proper handling Iacilities must be there. Such Iacilities
will reduce
the wastage due to leakage, wear and tear, sustained dust and
mishandling oI
materials. Store location should be in between the purchase department
and
production department, so that cost oI internal transportation can be
minimised.
8. Proper $tore Accounting: An eIIicient inventory control necessitates
maintenance
oI proper inventory records. Any typical inIormation regarding any
particular item
oI inventory may be taken Irom such records.
9. Proper Issuing $ystem: There should be a well organised issuing
system oI material
so that production process do not suIIer.
10. Perpetual Inventory $ystem: Daily stock position should be taken in
this system.
11. Fixing of Jarious $tock Levels: Minimum stock level, maximum
stock level, reorder
point, saIety level etc, should be pre-determined to ensure the continuity
oI smooth
production.
12. Determination of Economic Order Quantity: Economic order
quantity should
be determined to minimised the cost oI inventory.
13. #egular #eporting $ystem: The inIormation regarding the stock
position, materials
quantity etc, should be available to management regularly.
13.5 ABC ANALYSIS TECHNIQUE
Where there are a large number oI items in the inventory, it becomes
essential to have
an eIIicient control over all items oI stores. However comparatively,
great care should
be given to items oI higher value. The movements oI certain
manuIacturing concerns
may consist oI a small number oI items representing a major portion oI
inventory value
and a large number oI items may represent a minor portion oI inventory
value. In such
cases, a selective approach Ior inventory control should be Iollowed.
The most modern technique Ior controlling the inventory is a value item
analysis popularly
known as ABC analysis which attempts to relate, how the inventory
value is concentrated
among the individual item. This analysis is based on Pareto`s law.
Pareto`s law states
that a Iewer items oI higher usage having high investment value should
be paid more
attention than a bulk oI items having low usage value and having a low
investment in
capital. Under this analysis, all items oI stores are divided into three
main categories
A, B and C. Category A includes the most important items which
represent about 60 to
70 per cent oI the value oI stores but constitute only 10 to 15 percent
items. These items
are recognised Ior special attention category B includes lesser important
items representing
an investment value oI 20 to 25 percent and constitute a similar
percentage oI items oI
stores. Category C consists oI the least important items oI stores and
constituted 60 to
70 percent oI stores items representing only a capital investment
between 10 to 15
percent. Close attention is paid to items Ialling in category A and the
best items oI
category C. This classiIication oI items into A, B and C categories is
based upon value,
usage, rate and criticality oI items and these variables are given due
weightage in
categorising the items the term ABC implies Always Better Control.
452
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Steps in ABC Analysis
Though no deIinite procedure can be laid down Ior classiIying the
inventories into A, B
and C categories as this will depend upon a number oI Iactors such as
nature and
varieties oI items speciIic requirements oI the business place oI items in
the production
etc. These Iactors vary Irom business to business to business and items
to item. However,
Iollowing procedure can be Iollowed:
(i) First, the quality oI each material expected to be used in a given
period should be
estimated.
(ii) Secondly, the money value oI the items oI materials, so chosen
should be calculated
by multiplying the quantity oI each item with the price.
(iii) Thirdly, the items should be rearranged in the descending order oI
their value
irrespective oI their quantities.
(iv) Fourthly, a running total oI all the values and items will then be
taken and then the
Iigure so obtained should be converted into percentage oI the gross total.
(v) FiIthly and lastly, it will be Iound that a small number oI a Iirst Iew
items may
amount to a large percentage oI the total value oI the items. the
management, then,
will have to take a decision as to percentage oI the total value or the total
number
oI items which have to be covered by A, B and C categories.
Advantages of ABC Analysis
These are as Iollows:
1. Increase in Profitability: ABC analysis ensures a close control over
the items oI
A, B and C categories and due to control over A category items, the
capital
investment over inventory reduces.
2. Other Uses: The technique oI ABC analysis is based on the principle
oI
management by exception and can be used in areas like, distribution,
sales, etc.
13.6 PROCESS OF INVENTORY CONTROL
For the convenience to understand the topic, the inventory control
system may be divided
into three parts:
(i) Process oI Purchasing oI Materials.
(ii) Inventory Storing Procedure.
(iii) Process oI Issue oI Materials.
Process of Purchasing of Materials
Its steps are as Iollows:
1. Establishment of Purchase Department: A diIIerent department
should be
established Ior purchase oI materials. This department not only ensure
the availability
oI raw material but also, machines, stationary etc. are purchased by this
department.
Purchase oI materials should be centralised. All purchase should be
under a single
department. Control centralised purchase is generally possible only in
these industries,
which are located at a single place only and nature oI production is oI
same type.
But iI an industry has diIIerent production centre at diIIerent places, then
it becomes
compulsory to Iollow decentralised purchase system. Thus it is
compulsory to have
a complete knowledge about he nature oI production, capacity oI locality
etc.
2. Preparation of Purchasing Budge: First oI all the production target
oI the company
should be determined, on the basis oI which the budget Ior purchasing oI
material
is prepared.
Following points should be kept in mind while preparing purchase
budget:
(i) System to receive the materials.
(ii) The quantity and quality oI the material according to the production
requirements.
453
(iii) Source oI supply. Inventory Model
(iv) Present balance oI materials and predictions to receive the materials
ordered.
(v) Available cash Ior debtors.
(vi) On which date the indent is made by concerned department.
(vii) The conditions regarding the value oI the material and rebate or
discount on
it.
3. Preparation of Purchase #equisition $lip: The initiations oI
purchase begins
with the Iormal request Irom the various sections or departments to the
purchase
department to order goods. The request is made in a prescribed Iorm to
the purchase
department by the departments needing the goods, authorising the
purchase
department Ior procuring the goods as per the speciIications given in the
slip by the
date mentioned on it.
Specimen of a PRS
o. Pr ............................. Date: .............................
Cost Centre .............................
Katech Corporation Ltd
Purchase Requisition Slip
Pealse purchase Ior ............................. department
Item o. Code o. Description Quantity Required Remark
Required by ........................ Checked by ........................ Approved by
........................
For use oI department issuing For use oI Purchased department
this requisition
Item o. Quantity Consumption Quantity Purchase Supplier Delivery
in stock per day/month required order no. Date
Store keeper ........................
The requisitions are generally prepared in triplicate the original copy is
sent to the
purchase department, the second copy is retained by the store or the
department
initiating the purchase requisition and third are is sent to the costing
department.
4. Obtaining the %ender: AIter the decision Ior purchase tenders are
invited Irom
the prospective suppliers on studying the terms oI supply and the
quantity and
quality oI the goods. Vendor is selected out oI the tenderers Ior the
comparative
study oI tenderers. Following type oI table may be used:
Type of Specimen of Tenderer Table
Katech Corporation Ltd.
Schedule of Quotations
Material ........................ Date ........................ S.o ........................
ame oI Quantity Rate/Unit Terms Time oI Mode oI Remarks
the party oIIered delivery delivery
Store keeper ........................ Date ........................
454
Ior Management
5. $ending Purchase Order: AIter comparing the diIIerence tenderers,
the best
vendor is decided and the order oI required material quotation is placed
to him.
Purchase order is prepared in prescribed Iorm by the purchase
department and
sent to the vendor authorising him to supply a speciIied quantity and
quality oI the
materials at the stipulated terms at the time and place mentioned therein.
Generally
purchase order has the Iollowing inIormation:
(i) ame oI the purchaser, serial no. and date oI order.
(ii) ame oI vendor and address.
(iii) Full details oI materials quantity etc.
(iv) Value, rebate and terms oI payment etc.
(v) Time and place oI delivery.
(vi) Directions regarding packing and despatching.
(vii) Signature oI purchaser.
(viii) Method oI Iollow-up.
Specimen of a Purchase Order
Cable ........................ S. o. ........................
To, Telephone ........................
M/s ........................ Date ........................
........................ Reg. o. ........................
........................ Our ReI. ........................
Please supply the Iollowing items in accordance with the terms and
conditions
mentioned herein ........................
Item Description Quantity Price Unit Amount Remarks
o.
Terms and conditions:
Delivery at ........................ Sales Tax ........................
Discount ........................ Freight ........................
Excise Duty ........................ Terms oI Payment .................
For Katech Corporation Ltd.
(Signature)
Acknowledgement
Kindly acknowledge the receipt oI this order:
Received on ........................
Date oI Delivery ........................
Challan ........................ Date ........................
Invoice o. ........................ Date ........................
455
Specimen of Goods Received Note Inventory Model
Goods Received Note
From
M/s (Supplier) ........................ o. VR ........................
........................ Date ........................
........................
6. #eceiving and Inspection of Materials: When goods arrive they are
taken delivery
oI and parcels or packet unpacked and the contents oI the packages are
checked
by the receiving clerk with the order placed by the purchasing
department to the
vendor. AIter proper checking goods should be delivered to the
laboratory or
inspection department. Goods received note is prepared here.
7. #eturning the Materials: On checking iI any discrepancy is Iound as
regards to
quality and quantity. It should immediately be reIerred to the purchasing
department
so that the discrepancy may be adjusted or steps may be taken to return
the deIective
or damaged goods in exchange oI proper quality material on credit note.
8. Payment of Purchased Material: AIter required inspection etc. Iinal
report is
sent to purchase oIIicer, who sent it to payment oIIicer aIter placing
required
entries in the report. AIter checking the ledger, payment oIIicer
authorise accounts
clerk Ior payment.
Process of Issue of Materials
To control the issue oI materials Iollowing procedure is Iollowed:
1. Issue of Materials: When a Ioreman oI any production department
needs materials
Irom store, he prepares three copies oI goods requisition slip. II the
material is
costly and important then Iactory manager also sign these copies. One
copy oI
requisition slip is kept by Ioreman itselI and other two copies are given
to stores.
According to the requisition slip the store-keeper issues the materials to
Ioreman.
Foreman signs the two copy oI store`s requisition slips to veriIy that he
has received
the materials. then storekeeper makes the required entries in the bin card.
AIter
signing both the copies oI requisition slip storekeeper sent one copy to
accountant
oI store. AIter recording the issue oI materials, store accountant sent this
copy to
costing department.
Sigma Corporation Ltd.
Material Requisition Slip
To .......................... o ..........................
.......................... Date ..........................
Deliver Iollowing material to .......................... Fore order o.
..........................
and Job o. ..........................
Goods Quantity o. oI
Packets etc.
Order
o.
Delivery
ote o.
Demanded
by
department
Remarks Inspection
Description
Code Qty.
rejected
Reason
Carrier Received by Store A
ledger
A/c &
reI.
Inspector`s signature
456
Ior Management
Materials Requisition Slip
Job o. ....................... Material Requisition Slip o. .......................
Department ....................... Date .......................
Please send the Iollowing materials.
Foreman .................... Bin o. ....................
Store Ledger Folio .................... Returned ....................
Storekeeper .................... Cost Clerk ....................
* Both these entries are to be done by cost clerk.
4. Inter Departmental %ransfer of Materials: (For details see
Inventory Storing
Procedure`)
ABC Co. Ltd.
Materials Transfer Slips
Issuing Department .................... Serial o. ....................
Receiving Department .................... Date ....................
Please receive the Iollowing materials.
.................... .................... ....................
Foreman TransIer Foreman TransIeree Cost Clerk
* To be Iilled by Cost Clerk.
5. %o Prepare Material Abstract: (For details see Inventory Storing
System).
Material Abstract
Week ending on ....................
Quantity Unit Description Code o. OIIice use only
Rate
Amount
Issued by
....
Remarks
Authorised
by ....
Store
Ledger
o.....
Issued
by
...
Received
by ....
Cost oIIice ReI.
o...
Price by ...
Quantity Code or Symbol Description oI Materials Rate* Amount*
Quantity Code or
Symbol
Description
oI Materials
Rate* Amount Reason Ior
TransIer
Materials Requisition
Slips
Job umbers
Slip o. Amount 1 2 3 4 5 6
Total
457
6. Periodical Checking of Materials: To control the issue oI materials
this is very Inventory Model
much necessary that bin cards, store control records and store ledgers are
checked
regularly and iI any discrepancy is Iound, proper corrective actions
should be taken.
7. Physical $tock Checking of Materials: Physical stock checking in
stores should
be done to prevent materials loss, material damage and theIt. This
checking can be
done weekly, monthly etc. Physical stock checking means the
veriIication oI actual
quantity in stores. This checking should be done surprisingly or at
random basis. II
any discrepancy is Iound and corrective actions should be taken to
reduce or eliminate
them the possible reasons may be wear and tear oI materials, absorption
oI moisture,
evaporation, waste, breakage, theIt or wrong recordings. This is assumed
to be the
best method oI inventory control.
Inventory Storing Procedure
Inventory storing procedure is an important part oI inventory control
management or
materials management. Following procedure is Iollowed in inventory
storing:
1. #eceipt of Material in $tore: The storekeeper receives the material
alongwith
the goods received note Irom the receiving section. The material are then
classiIied
according to the nature oI the material. The material should be arranged
in bins
especially meant Ior the materials. A bin card is attached with each bin
or rack
displaying the identiIication mark or code, minimum, maximum and
ordering levels
oI materials and receipts, issues and balance oI materials in hand, so that
the exact
position may be known at any time whenever desired.
Specimen of Bin Card
ABC Co. Ltd.
BIN CARD
Description ......................... Maximum Level .........................
Material code ......................... Minimum Level .........................
Location code ......................... Danger Level .........................
Bin o. ......................... Ordering Level .........................
Store Ledger Folio o. ......................... Re-order Quantity
.........................
2. Issue of Material from $tore: The store undertakes the responsibility
oI issuing
the material to the using departments. In order to prevent malpractices,
the materials
must be issued only against the properly authorised requisition slips.
These requisition
must be properly checked and scrutinised to avoid overissue oI
materials. All
requisition received must be posted immediately or daily on the bin
cards and on
the stock control cards. Generally three copies oI requisition slips are
prepared
Iirst two copies are given to the stores and third copy kept with the
demanding
department. Store incharge keeps one copy oI requisition slip Ior himselI
and other
copy he sent to accounts department.
Receipts Issues Balance Audit
Date G.R..
o.
Qty. Date Rege. Qty. Qty. Date Initial
458
Ior Management
3. #eturn of Material to $tore: II a department uses less material to its
demand then
it return the material to stores. Goods return slips are sent along with the
materials.
The same speciIications and details oI materials are given in goods
return slips as
they were mentioned in requisition slips. Three copies oI goods return
slips are
prepared. First two copies are sent to stores department and third copy is
kept by
the goods returning department itselI. Store keeper sent one copy to
accounts
department. The colour oI both requisition slip and return slips are kept
diIIerent to
identiIy them easily.
4. %ransfer of Material: The transIer oI materials Irom one department
to another
department is generally not appreciated, because it creates problems in
material
control process. But sometime when there is emergency, the transIer oI
material
Irom one department to other department is allowed. The department
transIerring
the materials makes Iour copies oI material transIer slips. First copy is
sent to the
needy department along with material. Second and third copies are sent
to stores
department and accounts department Ior their inIormation.
5. Material Abstract: In big industries where the large quality oI
materials are received,
issued and transIerred daily, 'material abstract is prepared weekly or
Iortnightly
to control the inventory. A physical veriIication oI quantity in stores and
other
departments is done by material abstract.
It any discrepancy is Iound in physical veriIication oI quantity in store or
other
department. It is brought into the notice oI top management this type oI
check
plays a very important role in inventory control. Thus material abstract
is a summary
oI materials received, issued and transIerred, Ior a given time period.
1 What are the main objectives oI having Inventory Control?
2. Discuss ABC analysis techniques.
(b) Please go through the lesson suxb-head thoroughly you will get your
answers in it.

13.7 MINIMUM STOCK LEVEL
The minimum stock level represents the lowest quantitative balance oI
materials in hand
which must be maintained in hand at all times so that the assembly time
may not be
stopped on accounts oI non-availability oI materials.
The minimum stock level may be calculated by the use oI the Iollowing
Iormula:
Minimum Stock Level Re-ordered level (Average rate oI
consumption Lead time)
459
Factors Affecting Minimum Stock Level Inventory Model
1. Lead %ime: This is the time lag required to obtain the delivery oI
Iresh supplies. II
this time is more than the minimum inventory level will be high.
2. Inland or Importable Inventory: II the material is to be import then
the lead time
will be more implying minimum inventory level is to be kept high.
3. Availability of Inventory: II the material is not easily available then
the minimum
stock level to be kept high.
4. Possibility of Interruption in Production: II the production process is
smooth
then it is easy to determine the minimum stock level, but, iI production
is not smooth
due to some reasons such as strike, power, etc. Then it is not easy to Iind
out exact
level oI minimum stock.
5. Aature of the Material: Materials that are regularly stored must
maintain a minimum
level. II on customer`s order a special item oI material is to be
purchased, no
minimum level is required to be Iixed Ior that.
6. %he Maximum %ime #equired from the Date of Order to the Date of
Actual
Delivery: It is known as the Lead Time. The longer the lead time the
lower is the
minimum level, provided the reorder point remains constant.
7. #ate of Consumption of the Material: The minimum rate, the
maximum rate and
the normal rate oI consumption are to be taken into consideration.
13.8 MAXIMUM STOCK LEVEL
Maximum stock level represents the maximum quantity oI inventory
which can be kept
in store at any time. This quantity is Iixed keeping in view oI
disadvantages oI overstocking.
Computation of Maximum $tock Level: The Iollowing Iormula is used:
Maximum Level Re- order level Re-order quantity Minimum
consumption
Minimum Re-order period
Or
Re-order level Re-order Quantity (Average rate oI usage Lead
Time)
Factors Affecting the Maximum Stock Level
1. Rate oI consumption oI the material.
2. The lead time.
3. The maximum requirement oI the material at any point oI time.
4. Aature of the Material: The materials which deteriorate quickly are
stored as
minimum as possible.
5. Storage space available Ior the material.
6. Price Economy: Seasonal materials are cheap during the harvesting
reasons. So
maximum purchase is made during that season and as a result the
maximum level
is high.
7. Cost oI storage and insurance.
8. Cost oI the material and the Iinance available. When the material is
costly the
maximum level is likely to be relatively low. II the price is likely to go
up maximum
level should be high.
460
Ior Management
9. Inventory %urnover: In case oI slow moving materials the maximum
level is low
and in case oI quick moving material it is high.
10. Aature of $upply: II the supply is uncertain the maximum level
should be as high
as possible.
11. Economic Order Quantity (EOQ): Maximum level largely depends
in economic
order quantity, because unless otherwise contra indicated the economic
order
quantity decides the quantity ordered and hence decides the maximum
level.
13.9 ORDERING LEVEL OR RE-ORDER LEVEL
This is the Iixed point between the maximum stock level and minimum
stock levels at
which time the order Ior next supply oI materials Irom vendor is to be
done.
This is mainly depends upon two Iactors:
1. Rate oI Maximum usage.
2. Maximum Re-order period or Maximum Delivery Time.
Computation oI Ordering Level or Re-order Level. The Iormula is as
Iollows:
Ordering level or Re-order level
Maximum usage per day Maximum Re-order period or Maximum
Delivery Time
Or
Maximum Level (ormal usage oI Average rate oI consumption
Average
Re-order period or Average Delivery Time)
Assumptions of Re-order point
1. The time oI delivery remains Iixed.
2. Load time remains Iixed.
3. The average rate oI consumption oI materials does not changes.
13.10 AVERAGE STOCK LEVEL
Average stock level is the average quantity oI stock Ior a given time oI
period.
Computation oI Average Stock Level. The Iormula is as Iollows:
Average stock level
2
1
|Minimum Level Maximum level|
or Average stock level Minimum level
2
1
|Re-order Quantity|
or Average stock level
2
2(Minimum level) + Re- order quantity
13.11 DANGER LEVEL
In addition to the minimum, the maximum and recording levels there is
another level
called Danger Level. This level is below the minimum level and when
the actual stock
reaches this level immediate measure is to be taken to replenish stock.
When the normal
lead time is not available, the purchase quantity cannot be accurately
determined. So, it
is Iixed in such a way that the actual stock does not Iall below danger
level by the actual
lead time. This means, that the minimum level contains a cushion to
cover contingencies.
461
Some concerns Iix danger level below the re-ordering level but above
the minimum Inventory Model
level. II action Ior purchase is taken as soon as the stock reaches the re-
ordering level,
the danger level bears no importance except that, when the stock reaches
the danger
level (but not yet the minimum level) a reIerence may be made to the
purchase department
to ensure that delivery is received beIore the actual stock reaches the
minimum level.
When the danger level is Iixed below the minimum, it being reaches by
the actual stock,
the deIect in the system is identiIied and corrective measure becomes
necessary. When
the danger level is Iixed above the minimum, it being reached by the
actual stock, preventive
measure is to be taken so that the stock may not go below the minimum
level.
It is the point or level oI stock which the material stock should never be
allowed to
reduce. It is generally a level below the minimum level. As soon as the
stock oI material
reaches this point, urgent action is needed Ior replenishment oI stock.
Determination oI Danger Level. This done as Iollows:
Danger Level Two days oI normal consumption
#e-order Quantity: The quantity which is ordered at re-order point is
called re-order
quantity. This is determined on the basis oI minimum stock level and
maximum stock
level. This is normally used in notation oI economic order quantity.
1 DiIIerentiate:
(a) Minimum stock level and Maximum stock level
(b) Average Stock level and Danger Stock level
2. What is Re-order level? Write assumptions Ior ascertaining Re-order
point.
answers in it.

Numerical Solved Examples
Example 1: Calculate (i) Re-order Level; (ii) Minimum Level; and (iii)
Maximum Level
Ior each Component A and Irom the Iollowing inIormation:
ormal Usage 50 Units per week each
Minimum Usage 25 Units per week each
Maximum Usage 75 Units per week each
Re-order Quantity A: 300 Units; B : 500 Units
Re-order Period A : 4 to 6 weeks; B : 2 to 4 weeks
462
Ior Management
$olution:
(i) Re-order Level Maximum Usage Maximum Re-order Period
For Component A 75 6 450 Units
For Component B 75 4 300 Units
(ii) Minimum Level Re-order Level (ormal Usage Average Re-
order Period)
For Component A 450 (50 5) 200 Units
For Component B 300 (50 3) 150 Units
Aote: Average Re-order Period Ior Component A
2
4 + 6
5
Average Re-order Period Ior Component B
2
2 + 4
3
(iii) Maximum Level (Re-order Level Re-order Quantity
(Minimum Usage
Minimum Re-order Period)
For Component A (450 300) (25 4)
650 Units
For Component B (300 500) (25 2)
750 Units
Example 2: From the Iollowing particulars, calculate: (a) Re-order
Level (b) Minimum
Level, (c) Maximum Level, (d) Average Level:
ormal Usage 100 units per day
Minimum Usage 60 units per day
Maximum Usage 130 units per day
Economic Order Qunatity 5,000 units
Re-order Period 25 to 30 days
$olution:
(a) Re-order Level Maximum Usage Maximum Re-order Period
130 30 3,900 units
(b) Minimum Level Re-order Level (ormal Usage Average Re-
order Period)
3,900 (100 27.5) 1.150 units
Aote: Average Re-order Period
2
25 + 30
27.5 days
(c) Maximum Level (Re-order Level Re-order Quantity Or EOQ)
(Minimum Usage Minimum Re-order Period)
(3,900 5,000) 60 25)
7,400 Units
(d) Average Level
2
Minimum Level +Maximum Level
27.5

2
1,150 + 7,400
4, 275 Units
463
Example 3: A manuIacturer buys costing equipment Irom out side
suppliers Rs. 30 per Inventory Model
unit. Total annual needs are 800 units. The Iollowing data is available:
Annual Return on Investment 10
Rent, Insurance etc. per unit per year Re. 1
Cost oI Placing an order Rs. 100
Determine Economic Order Quantity.
$olution:
EOQ
H
p
C
2-R-C
Where, EOQ Economic Order Qunatity
R Annual Requirement oI Inventory
Cp Cost oI placing an order
CH Annual holding Or Carrying cost per unit per year.
Given : R 800 units, Cp Rs. 100, CH Rs. 4
EOQ 40,000
4
2 800 100 - - =
200 Equipments
10 oI Rs. 30 Re 1 Rs. 3 Re. 1 Rs. 4.
Example 4: Fair Deal Limited uses Rs. 1,00,000 materials per year. The
administration
cost per purchase in Rs. 100 and the carrying cost is 20 oI the average
inventory. The
company has a purchase policy on the basis oI economic order quantity
but has been
oIIered a discount oI 0.5 in the case oI purchase Iive times per year.
Advise the
company whether it should accept new oIIer or not?
$olution: Given: R(in Rs.) 1,00,000, Cp Rs. 100, P Re. 1.00,
CH 1.00 20 Re. 0.20
E.O.Q. (in Rs.)
H
p
C
2-R-C

0.20
2-1,00,000-100
10,00,00,000
Rs. 10,000
Total Inventory Cost in case oI each order is placed oI Rs. 10,000:
(i) Cost oI Materials Rs. 1,00,000
(ii) Ordering Cost 100
10,000
1,00,000
C
q
R
P
0
- = - Rs. 1,000
(iii) Carrying Cost 0.2
2
10,000
C
2
q
H
0 - = - Rs. 1,000
Total Cost Rs, 1,02,000
464
Ior Management
Total Cost in case oI each order is placed or Rs. 19,900 i.e., Rs. 20,000
0.5 discount:
(i) Cost oI Materials (19,900 5) Rs. 99,500.00
(ii) Ordering Cost
'
+
'

- p
0
C
q
R
100
19,900
99,500 - 500.00
(iii) Carrying Cost
'
+
'
- H
0 C
2
q

2
19,900
0.199 1,980.05
Total Inventory Cost 1,01,980.05
|Aote: Here P Re. 1, 0.5 or Re. 1 Re. 1 Re. 0.95, CH 0.95
20 Re. 0.199|
On the basis oI above analysis the oIIer should be accepted as it will
save
Rs. 1,02,000 1,01,980.05 Rs. 19.95.
Example 5: A pharmaceutical Iactory consumes annually 6,000 kgms.
oI a chemical
costing Rs. 5 per kgm. Placing each order costs Rs. 25 and the carrying
cost is 6 per
year per kgm. oI average inventory. Find the Economic Order Quantity
and the total
inventory cost.
The Iactory works Ior days in a year. II the procurement time is 15 days
and saIety
stock 200 kgms., Iind the re-order point and maximum and average
inventories levels.
II the supplier oIIers a discount oI 5 on the cost price Ior a single order
oI annual
requirement, should the Iactory accept it?
$olution: Given: R 6,000 kgms.; P Rs. 5 per kgm. Cp Rs. 25; CH
6 per kgm.
per year oI average inventory; o. oI working days in a year 300;
Procurement time
15 days; SaIety Stock 200 kgms.
E.O.Q.
H
p
C
2-R -C

.30
3,00,000
.30
2 60,000 25 - - =
10,00,000 1,000 kgms.
CH 6 oI Average inventory i.e.,
100
5- 6
Re. 30
T.I.C
'
+
'
+ -
'
+
'

- + - H
0
H
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'
- + - .30
2
1,000
25
1,000
6,000
(6,000 5)
30,000 150 140 Rs. 30,000
465
Inventory Model
Re-order Point Procurement time SaIety Stock
o. oI Working days
R +
'
+
'

-

6,000 15
200
300 1
+
300 200 500 kgms.
Maximum Stock Level (Re-order Point Re-order Quantity or EOQ)
(Minimum Usage Minimum Re-order Period)
(500 1,000) (20 15)
1,500 300 1,200 kgms.
or Maximum Stock Level q0 SaIety Stock
1,000 200 1,200 kgms.
Minimum Stock Level Re-order Level (ormal usage Average
Re-order period)
500 (20* 15)
500 300 200 kgms.
* ormal Usage o. oI Working days
R

300
6,000
20 kgms.
Average Stock Level
'
+
'
+
2
Minimum Stock Level Maximum Stock Level

2
1,400
2
200 1,200 + =
700 kgms.
Or Average Stock Level
2
q0 SaIety Stock

2
1,000
200 700 kgms.
TIC iI a single order oI 6,000 kgms is placed:
Given: P Rs. 5 5 oI Rs. 5 i.e., 5 .25 Rs. 4.75
CH 6 oI Average Inventory i.e., 4.75
100
6
Re. 285;
Cp Rs. 25; R 6,000 kgms; q0 6,000 kgms.
TIC
'
+
'
+ -
'
+
'

- + - H
0
p
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'
- + - .25
2
6,000
25
6,000
6,000
(6,000 4.75)
28,500 25 855 Rs. 29,380.
The company should accept the oIIer oI 5 discount in purchase price
by placing a
single order oI 6,000 kgms. because the total inventory cost in this case
is less by Rs.
30,300 Rs. 29,380 Rs. 920 as compared to total inventory cost
without discount
oIIer.
466
Ior Management
Example : A trading company expects to sell 15,000 mixers during the
coming year.
The cost per mixer is Rs. 200. The cost oI storing a mixer Ior 1 year is
Rs. 5 and the
ordering cost is Rs. 540 per order. Find the Economic Order Quantity.
Would it be
proIitable to the company to accept a discount oIIer oI 30 on a single
order per year.
The storing cost continuing to be Rs. 5 per mixer per year.
$olution:
E.O.Q
H
P
C
2-R -C
Given R 15,000 units, CP 540, CH Rs.
E.O.Q
5
2-15,000-540
32,40,000 1,800 units
Total Inventory Cost iI q0 1,800 units:
T.I.C
'
+
'
+ -
'
+
'

- + - H
0
P
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'
- + - 5
2
1,800
540
1,800
15,000
(15,000 200)
30,00,000 4,500 4,500
Rs. 30,09,000
T.I.C. iI a single order is placed at 30 discount in price:
T.I.C
'
+
'
+ -
'
+
'

- + - H
0
P
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'-
+

-
5
2
15,000
540
15,000
15,000
(15,000 140)
21,00,000 540 37,500
Rs. 21,38,040
The company should accept the oIIer oI 30 discount as it will save Rs.
30,09,000
21,38,040 Rs. 8,70,960.
Example 7: A manuIacturer requires 1,000 units oI a raw material, per
month. The
ordering cost is Rs. 15 per order. The carrying cost in addition to Rs. 2
per unit, is
estimated to be 15 oI average inventory per unit per year. The
purchase price oI the
raw material is Rs. 10 per unit. Find the Economic Lot Size and the total
cost.
The manuIacturer is oIIered as 5 discount in purchase price Ior order
Ior 2,000 units
or more but less than 5,000 units. A Iurther 2 discount is available Ior
order oI 5,000 or
more units. Which oI the three ways oI purchase he should adopt?
$olution:
Given: R 1,000 units per month or 12,000 units per annum;
Cp Rs. 15 per order;
467
P (i) Rs. 10 per unit in case oI order Ior less than 2,000 units.
Inventory Model
(ii) Rs. 10 5 oI Rs. 10 i.e., Rs. 9.50 in case oI order Ior 2,000 or
more
units but less than 5,000 units.
(iii) Rs. 10 7 oI Rs. 10 i.e., Rs. 9.30 in case oI order Ior 5,000 or
more
units.
CH (i) Rs. 2 15 oI Rs. 2 oI Average inventory i.e., Rs. 2 1.50
Rs. 3.50
per unit per annum in case oI order Ior less than 2,000 units.
(ii) Rs. 2 15 oI Rs. 9.50 Rs. 2 1.425 Rs. 3.425 per unit per
annum in case oI order Ior 2,000 units or more but less than 5,000 units.
(iii) Rs. 2 15 oI Rs. 9.70 Rs. 2 1.395 Rs. 3.395 per unit per
annum in case oI order Ior 5,000 or more units.
Alternative I: In case oI order Ior less than 2,000 units:
E.O.Q. (q0)
H
P
C
2-R -C

3.50
3,60,000
3.50
2 12,000 15 - - =
1,02,857 320.7 or 321 units
T.I.C.
'
+
'
+ -
'
+
'

- + - H
0
P
0
C
2
q
C
q
R
(R P)

'
+
'
1 - +
'
+
'
- + - .50
2
321
15
321
12,000
(12,000 10)
1,20,000 561 562
Rs. 1,21,123 (nearest to Rupee)
Alternative II: In case oI order Ior 2,000 or more units but less than
5,000 units:
E.O.Q. (q0)
H
P
C
2-R -C
3,425
3,60,000
3,425
2 12,000 15 - - =
1,05,109.45 324 units
As the Economic Lot size (324 units) is less than minimum ordering
quantity (2,000
units), the company should order at least 2,000 units to get 5 discount
in purchase price
Thus, T.I.C. iI q0 2000 units:
T.I.C.
'
+
'
+ -
'
+
'

- + - H
0
P
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'
- + - 3.425
2
2,000
15
2,000
12,000
(12,000 9.50)
1,14,000 90 3,425 Rs. 1,17,515.
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Ior Management
Alternative III: In case oI orders oI 5,000 or more units:
Economic Lot size (q0)
H
P
C
2-R-C

3.395
3,60,000
3.395
2 12,000 15 - - =
1,06,038.29 325.6
Or 326 units
As the Economic Lot Size (326 units) is less than the minimum ordering
quantity 5,000
units, the company should order at least 5,000 units to get 7 discount
in purchase price.
Thus T.I.C. iI q0 5,000 units:
T.I.C.
'
+
'
+ -
'
+
'

- + - H
0
P
0
C
2
q
C
q
R
(R P)

'
+
'
+ -
'
+
'
- + - 3.395
2
5,000
15
5,000
12,000
(12,000 9.30)
1,11,600 36 8,487.50 1,20,123.50
On the basis oI above analysis we Iind that the T.I.C. is minimum (Rs.
1,17,515) in
second alternative. Hence the company should adopt this alternative.
13.12 LET US SUM UP
In this chapter the more emphasis is given on the role oI inventory
control. The certain
technique such as ABC Analysis have been illustrated with the help oI
specimen Iormat
and illustration.
1. SuccessIul well-organised business relies heavily on the inventory
control to make
certain they have adequate inventory levels to satisIy their customers. As
we know
that inventory control oIIers comprehensive reporting capabilities to
keep you on
top oI inventory status. Take any manuIacturing company like Pepsi or
Coca-Cola
which can help to bring about the creation oI new or improved
purchasing policies,
sales policies, pricing methods and even enhanced customer service.
2. Take a case oI a automobile industry where the inventory control had
played a vital
role like quickly locate parts, product lines, purchase orders, account
payable vendor
and general ledger account.
13.14 KEYWORDS
Lead %ime : Time between ordering & receiving the good.
Inventory Control $ystem : Is a technique to maintain inventory at a
desired level.
Maximum Level : Level oI inventory beyond which inventory is not
allowed.
Minimum Level : Level oI inventory beyond which inventory is
allowed.
469
Opportunity Cost : The next best alternative cost. Inventory Model
#eorder Level : The stock level which is suIIicient Ior the lead time
consumption.
(a) Inventory can be deIined as the state oI goods.
(b) ABC analysis ensure the close control over the items oI A, B and C
categories.
(c) Head line represent the maximum quantity oI inventory.
(d) Material control help to minimise loose by obsolescence.
2. Write short notes on following:
(a) Re-order level
(b) Minimum stock level
(c) Maximum stock level
(d) Danger level
(e) Average stock level
(I) EOQ
(a) Modem technique be controlling the inventory in a value item
analysis known
on ABC.
(b) When the material is costly the maximum level is likely to be
relatively low?
(c) Danger level is Iixed above the minimum.
(d) There should be well organised issuing system oI material.
1. What do you understand by inventory control?
2. Discuss the objectives oI inventory control.
3. Discuss the various Iactors which determine the level oI inventory
control.
4. What is an ABC analysis? What are the steps in ABC analysis?
5. Explain the process oI inventory control with example.
6. In manuIacturing a commodity two components X and Y are used as
Iollows:
ormal usage 100 units per week each
Minimum usage 50 units per week each
Maximum usage 150 units per week each
Ordering Quantities X : 600 units; Y : 1,000 units
Delivery Period X : 4 to 6 weeks
Y : 2 to 4 weeks
7. From the Iollowing inIormation determine the Re-order point,
Minimum Stock Level
and Maximum Stock Level:
(a) Minimum consumption 500 units per day
(b) Maximum consumption 875 units per day
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(c) ormal consumption 625 units per day
(d) Re-order Quantity 8,800 units
(e) Minimum period Ior receiving goods 7 days
(I) Maximum period Ior receiving goods 15 days
(g) ormal period Ior receiving goods 10 days
8. A manuIacturer`s requirement Ior raw materials is 12,800 kgms. per
annum. The
purchase price oI it is Rs. 50 per kgm. Ordering cost is Rs. 100 per order
and
carrying cost is 8 oI average inventory. The manuIacturer can procure
its annual
requirement oI raw material higher in one single lot or by ordering oI
400, 800, 1600
or 3,200 kgms. quantity. Find which oI these order quantities is the
Economic Order
Quantity using tabular method.
9. The annual requirement oI a product in a Iirm is 1,000 units. The
purchase price
per unit is Rs. 50; ordering cost is Rs. 150 per order and the carrying
cost per unit
oI average oI inventory is 15. The Iirm can procure its annual
requirement either
in one single lot or in various alternative losts oI 100, 200, 250 or 500
units. Determine
the Economic Order Quantity by Graphical method and with the help oI
the three
curves, show at EOQ level ordering and carrying costs are equal and
total cost is
minimum.
10. Calculate Economic Order Quantity Irom the Iollowing inIormation
by using Tabular
method, Graphical method and mathematical method:
Annual usage 10,000 units
Buying cost per order Rs. 10
Cost per unit Rs. 50
Cost oI carrying inventory 10 oI Average Inventory
11. A company requires annually 12,000 lbs. oI a chemical which costs
Rs. 250 per lb.
Placing each order costs the company Rs. 22.50, and the carrying cost is
15 oI
the cost oI average inventory per annum.
(i) Find Economic Order Quantity and total expenses on the chemical.
(ii) II in addition, the company decides to maintain a stock oI 300 lbs.
Iind the
maximum as well as average inventory.
12. Calculate the Economic Order Quantity Irom the Iollowing
inIormation. Also state
what will be the number oI orders during the whole year:
Requirement oI material per annum 1,250 units
Cost oI material per unit Rs. 200
Cost oI placing per order Rs. 100
Holding cost per unit per annum 8 oI average inventory.
13. A manuIacturer`s requirement Ior a raw material is 2,000 units per
year. The
ordering costs are Rs. 10 per order while carrying costs are 16 paise per
year per
unit oI a average inventory. The purchase price oI raw material is Re. 1
per unit.
(a) Find the Economic Order quantity and the total inventory cost.
(b) II a discount oI 5 is available Ior orders oI 1,000 units, should the
manuIacturer accepts this oIIer?
(The carrying cost per unit per annum remains unchanged.)
14. A business unit expect to sell 60,500 units oI a commodity during
the coming year.
The ordering cost per order is Rs. 840 and the cost per unit oI the
commodity is Rs.
471
200. The carrying cost per unit per annum is 0.5 oI the average
inventory. Find Inventory Model
out Economic Order Quantity. Would it be proIitable to the business unit
to accepts
a discount oIIer oI 1 on a single order per year. In this case the storing
cost per
unit per year will increase to 0.75 oI the average inventory.
15. A manuIacturer requires 2,500 units oI a raw material per month.
The ordering
cost is Rs. 20 per order. The carrying cost in addition to Rs. 3 per unit, is
estimated
to be 10 oI average inventory per unit per year. The purchase price oI
the raw
material is Rs. 4 per unit. Find the Economic Lot Size and the Total
Inventory Cost.
The manuIacturer is oIIered a discount in purchase price Ior order oI
1,000 units or
more but less than 2,000 units. A Iurther discount is available Ior orders
oI 2,000 or
more units. Which oI the three ways oI purchase he should adopt?
DISCUSSION
3. (a) True (b) True (c) False (d) True
M.P. Gupta & J.K. Sharma, Oper,tion Rese,rch for ,n,gement,
ational Publishing
House.
MustaIi C.K., Oper,tion Rese,rch ethods & Pr,ctice, Wiley Eastern
Ltd.
Peterson & E.A. Silver, Decision System for Inventory ,n,gement
Production
Pl,nning, Wiley ew York.
Stan M.K.D.W. Miller, Inventory Control %heory & Pr,ctices, Prentice
Hall oI India.
Tana H.A., Oper,tion Rese,rch Introduction, Macmillan Publishing
Company.
472
Ior Management
In this lesson we are going to discuss about the various strategies oI
players. This is done
through games theory. A game reIers to the situation in which two three
players are
competing.
14.1 INTRODUCTION
Game theory applies to those competitive situations which are
technically known as
'competitive games or in general known an games. As the game is a
competition involving
two or more decisions makers each oI whom is keen to win. The basic
aim oI this
chapter is to study about how the optimal strategies are Iormulated in the
conIlict. Thus
we can say that game theory is not related with Iinding an optimum or
winning strategy
Ior a particular conIlict situation. AIterwards we can say that the theory
oI game is
simply the logic oI rational decisions. AIter reading this unit, you should
be able to know
how to take decision under the cut-throat competition and know that
outcome oI our
business enterprise depends on what the competitor will do.
In today`s business world, decisions about many practical problems are
made in a
competitive situation, where two or more opponents are involved under
the conditions oI
LESSON
14
GAME THEORY
CONTENTS
14.1 Introduction
14.2 Two-person Zero-sum Game
14.3 Pure Strategies: Game with Saddle Point
14.4 Mixed Strategies: Games without Saddle Point
14.5 Dominance Property
14.6 Solving Problem on the Computer with TORA
14.7 Solving LP Model Games Graphically using Computer
14.8 Let us Sum Up
14.10 Keywords
473
competition and conIlict situations. The outcome does not depend on the
decision alone Game Theory
but also the interaction between the decision-maker and the competitor.
The objective, in theory, oI games is to determine the rules oI rational
behaviour in game
situations, in which the outcomes are dependent on the actions oI the
interdependent
players. A game reIers to a situation in which two or more players are
competing. A
player may be an individual, a group or an organization. Game Theory
has Iormulated
mathematical models that can be useIul in decision-making in
competitive situations. To
get a better insight oI the concept, we consider an example oI a simple
game.
Let us assume that there are only two car manuIacturers, company A and
company B.
The two companies have market shares Ior their product. Company A is
planning to
increase their market share Ior the next Iinancial year. The vice-
president oI company
A has come up with two strategies. One strategy is to modiIy the outer
shape oI the car
and to advertise on TV. Company B, knowing that iI these strategies are
adopted by
company A, it may lead to decrease in its market share, develops similar
strategies to
modiIy the shape oI their car and to advertise on TV. Table 14.1 below,
gives the pay oII
iI both the companies adopt these strategies.
Table 14.1: The Pay Off if Both Companies Modify Shape &
Advertise on TV
The pay oII given is with respect to company A and represents company
A. Company
B`s pay oII is the opposite oI each element. For example, it means that
Ior modiIication
strategy, Company A wins 4 and company B loses 4.
In a game, each player has a set oI strategies available. A strategy oI a
player is the list
oI all possible actions (course oI action) that are taken Ior every pay-oII
(outcome). The
players also know the outcome in advance. The players in the game
strive Ior optimal
strategies. An optimal strategy is the one, which provides the best
situation (maximum
pay-oII) to the players.
Payoff Matrix: Company A has strategies A1, A2,., Am, and
Company B has strategies
B1,B2,..,Bn. The number oI pay-oIIs or outcomes is m n. The pay-
oII amn represents
company A`s gains Irom Company B, iI company A selects strategy m
and company B
selects strategy n. At the same time, it is a loss Ior company B (amn).
The pay-oII
matrix is given (Table 14.2) with respect to company A.
The game is zero-sum because the gain oI one player is equal to the loss
oI other and
vice-versa.
Table 14.2: Pay-off Matrix
Company B Strategies
B1 B2 B3 ... Bn
A1
A2
A3
.
.
a11
a21
a31
.
.
a12
a22
a32
.
.
a13
a23
a33
.
.
...
...
...
...
...
a1n
a2n
a3n
.
.
Company A
Strategies
Am am1 am2 am3 ... amn
Company B
ModiIy shape Advertise
ModiIy shape 4 6
Company A Advertise 8 5
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Ior Management 14.2 TWO-PERSON ZERO-SUM GAME
In a game with two players, iI the gain oI one player is equal to the loss
oI another player,
then the game is a two person zero-sum game.
A game in a competitive situation possesses the Iollowing properties:
i. The number oI players is Iinite.
ii. Each player has Iinite list oI courses oI action or strategy.
iii. A game is played when each player chooses a course oI action
(strategy) out oI
the available strategies. o player is aware oI his opponent`s choice
until he decides
his own.
iv. The outcome oI the play depends on every combination oI courses oI
action. Each
outcome determines the gain or loss oI each player.
14.3 PURE STRATEGIES: GAME WITH SADDLE POINT
The aim oI the game is to determine how the players must select their
respective
strategies such that the pay-oII is optimized. This decision-making is
reIerred to as the
minimax-maximin principle to obtain the best possible selection oI a
strategy Ior the
players.
In a pay-oII matrix, the minimum value in each row represents the
minimum gain Ior
player A. Player A will select the strategy that gives him the maximum
gain among the
row minimum values. The selection oI strategy by player A is based on
maximin principle.
Similarly, the same pay-oII is a loss Ior player B. The maximum value in
each column
represents the maximum loss Ior Player B. Player B will select the
strategy that gives
him the minimum loss among the column maximum values. The
selection oI strategy by
player B is based on minimax principle. II the maximin value is equal to
minimax value,
the game has a saddle point (i.e., equilibrium point). Thus the strategy
selected by player
A and player B are optimal.
Example 1: Consider the example to solve the game whose pay-oII
matrix is given in
Table 14.3 as Iollows:
Table 14.3: Game Problem
The game is worked out using minimax procedure. Find the smallest
value in each row
and select the largest value oI these values. ext, Iind the largest value
in each column
and select the smallest oI these numbers. The procedure is shown in
Table 14.4.
Table 14.4: Minimax Procedure
Player B
1 2
1 1 3
Player A 2 1 6
Player B
1 2 Row Min
1 1 3
Player A
2 1 6 1
Col Max 6
1
1
475
II Maximum value in row is equal to the minimum value in column, then
saddle point Game Theory
exists.
Max Min Min Max
1 1
ThereIore, there is a saddle point.
The strategies are,
Player A plays Strategy A1, (A A1).
Player B plays Strategy B1, (B B1).
Value oI game 1.
Example 2: Solve the game with the pay-oII matrix Ior player A as
given in
Table 14.5.
$olution: Find the smallest element in rows and largest elements in
columns as shown in
Table 14.6.
Table 14.6: Minimax Procedure
Select the largest element in row and smallest element in column. Check
Ior the minimax
criterion,
Max Min Min Max
1 1
ThereIore, there is a saddle point and it is a pure strategy.
Optimum Strategy:
Player A A2 Strategy
Player B B1 Strategy
The value oI the game is 1.
Example 3: Check whether the Iollowing game is given in Table 14.7,
determinable and
Iair.
Player B
B1 B2 B3
A1 4 0 4
Player A A2 1 4 2
A3 1 5 3
Player B
B1 B2 B3 Row min
Player A A1 4 0 4 4
A2 1 4 2 1
A3 1 5 3 3
Column Max 1 5 4
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Ior Management
Player B
1 2
1 7 0
Player A
2 0 8
$olution: The game is solved using maximin criteria as shown in Table
14.8.
Table 14.8: Maximin Procedure
Player B
1 2 Row Min
1 7 0 0
Player A
2 0 8 0
Column Max 7 8
Max Min Min Max
i.e., 0 7
The game is strictly neither determinable nor Iair.
Example 4: IdentiIy the optimal strategies Ior player A and player B Ior
the game,
given below in Table 14.9. Also Iind iI the game is strictly determinable
and Iair.
Player B
1 2 Row Min
1 4 0 0
Player A
2 1 3 3
Col Max 4 0
Max Min Min Max
0 0
The game is strictly determinable and Iair. The saddle point exists and
the game has a
pure strategy. The optimal strategies are given in Table 14.10 (a, b).
Table 14.10: Optimal Strategies
1 2 1 2
p1
p2
q1
q2
(a) SA and (b) SB
1 0 0 1
Example 5 . Solve the game with the pay oII matrix given in Table
14.11 and determine
the best strategies Ior the companies A and B and Iind the value oI the
game Ior them.
477
Table 14.11: Game Problem Game Theory
Company B
2 4 2
Company A 1 5 4
2 6 2
$olution: The matrix is solved using maximin criteria, as shown in
Table 14.12 below.
Company B
1 2 3 Row Min
1 2 4 2 2
Company A 2 1 5 4 5
3 2 6 2 2
Column Max 2 6 2
Max Min Min Max
2 2
ThereIore, there is a saddle point.
Optimum strategy Ior company A is A1 and
Optimum strategy Ior company B is B1 or B3.
1 Discuss two-person zero-sum game.
2. What is minimax-minimin principle?
answers in it.

14.4 MIXED STRATEGIES: GAMES WITHOUT SADDLE
POINT
For any given pay oII matrix without saddle point the optimum mixed
strategies are
shown in Table 14.13.
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Ior Management
Table 14.13: Mixed Strategies
Player B
B1 B2
A1 a11 a12
Player A
A2 a21 a22
Let p1 and p2 be the probability Ior Player A.
Let q1 and q2 be the probability Ior Player B.
Let the optimal strategy be SA Ior player A and SB Ior player B.
Then the optimal strategies are given in Tables 14.14 a & b.
Table 14.14 (a), (b): Optimum Strategies
A1 A2 B1 B2
(a) SA and (b) SB
p1 p2 q1 q2
p1 and p2 are determined by using the Iormulae,
p1 ) )
22 21
11 22 12 21
a a
a + a a + a and p2 1 p1
q1 ) )
22 12
11 22 12 21
a a
a + a a + a and q2 1- q1
and the value oI the game w.r.t. player A is given by,
a11 a22 a12a21
Value oI the game, v
(a11a22) (a12a21)
Example : Solve the pay-oII given Table 14.15 matrix and determine
the optimal
strategies and the value oI game.
Player B
1 2
1 5 2
Player A
2 3 4
$olution: Let the optimal strategies oI SA and SB be as shown in Tables
14.16 (a, b).
Table 14.16(a) and (b): Optimal Strategies
A1 A2 B1 B2
(a) SA and (b) SB
p1 p2 q1 q2
The given pay-oII matrix is shown below in Table 14.17.
479
Table 14.17: Pay-off Matrix or Maximin Procedure Game Theory
Player B
1 2 Row Min
1 5 2 2
Player A
2 3 4 3
Column Max 5 4
Max Min Min Max
3 4
ThereIore, there is no saddle point and hence it has a mixed strategy.
Applying the probability Iormula,
p1 ) )
22 21
11 22 12 21
a a
a + a a + a
) )
4 3
5 4 2 3

+ +
1
9 5
4
1
p2 1 p1 1 / /
q1 ) )
22 12
11 22 12 21
a a
a + a a + a
5 4) 2 3)
4 2
+ +

5
2

4
2

2
1
q2 1 q1 1
2
1

2
1
Value oI the game, v ) )
11 22 12 21
11 22 12 21
a a a a
a + a a + a

) )
) )
5 4 2 3
5 4 2 3
- -
+ +
The optimum mixed strategies are shown in Table 14.18 (a, b) below.
Table 14.18(a) and (b): Optimum Mixed Strategies
A1 A2 B1 B2
(a) SA and (b) SB
/ /
Value oI the game 3.5
480
Ior Management 14.5 DOMINANCE PROPERTY
In case oI pay-oII matrices larger than 2 2 size, the dominance
property can be used
to reduce the size oI the pay-oII matrix by eliminating the strategies that
would never be
selected. Such a property is called a dominance property.
Example 7: Solve the game given below in Table 14.19 aIter reducing it
to 2 2 game:
Player B
1 2 3
1 1 7 2
Player A 2 6 2 7
3 5 1 6
$olution: Reduce the matrix by using the dominance property. In the
given matrix Ior
player A, all the elements in Row 3 are less than the adjacent elements
oI Row 2.
Strategy 3 will not be selected by player A, because it gives less proIit
Ior player A. Row
3 is dominated by Row 2. Hence delete Row 3, as shown in Table 14.20.
Table 14.20: Reduced the Matrix by Using Dominance Property
Player B
1 2 3
1 1 7 2
2 6 2 7
For Player B, Column 3 is dominated by column 1 (Here the dominance
is opposite
because Player B selects the minimum loss). Hence delete Column 3.
We get the reduced
2 2 matrix as shown below in Table 14.21.
Table 14.21: Reduced 2 2 Matrix
Player B
1 2
1 1 7
Player A
2 6 2
ow, solve the 2 2 matrix, using the maximin criteria as shown below
in Table 14.22.
Player B
1 2 Row Min
1 1 7 1
Player A
2 6 2 2
Column Max 6 7
Max Min Min Max
2 6
Player A
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ThereIore, there is no saddle point and the game has a mixed strategy.
Game Theory
Applying the probability Iormula,
p1 1 2) 7 6)
2 6
+ +
=
3 13
4

=
1
= 4
5
= 2
q1 5
2
= 1
5
= 3
q1 1 2) 7 6)
2 7
+ +
=
3 13
5

=
1
= 5
2
= 1
q2 1 q1 2
1
= 1
2
= 1
) )
1 2) 7 6)
1 2 7 6
+ +
= - -
3 13
2 42

=
1
= 4 4
The optimum strategies are shown in Table 14.23 (a, b)
Table14.23 (a, b): Optimum Strategies
A1 A2 A3 B1 B2 B3
(a) SA and (b) SB
2/5
3/5 0 0
Value oI the game, v 4
Example 8: Is the Iollowing two-person zero-sum game stable? Solve
the game given
below in Table 14.24.
Table 14.24: Two-person Zero-sum Game Problem
Player B
1 2 3 4
1 5 10 9 0
Player A 2 6 7 8 1
3 8 7 15 1
4 3 4 1 4
$olution: Solve the given matrix using the maximin criteria as shown in
Table 14.25.
Player B
1 2 3 4 Row Min
1 5 10 9 0 10
Player A 2 6 7 8 1 1
3 8 7 15 1 1
4 3 4 1 4 1
Column Max 8 7 15 4
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Max Min Min Max
3 1
ThereIore, there is no saddle point and hence it has a mixed strategy.
The pay-oII matrix is reduced to 22 size using dominance property.
Compare the rows
to Iind the row which dominates other row. Here Ior Player A, Row 1 is
dominated by
Row 3 (or row 1 gives the minimum proIit Ior Player A), hence delete
Row 1. The
matrix is reduced as shown in Table 14.26.
Table 14.26: Use Dominance Property to Reduce Matrix (Deleted
Row 1)
Player B
1 2 3 4
2 6 7 8 1
Player A 3 8 7 15 1
4 3 4 -1 4
When comparing column wise, column 2 is dominated by column 4. For
Player B, the
minimum proIit column is column 2, hence delete column 2. The matrix
is Iurther reduced
Table 14.27: Matrix Further Reduced to 33 (2 Deleted Column)
Player B
1 3 4
2 6 8 1
Player A 3 8 15 1
4 3 1 4
ow, Row 2 is dominated by Row 3, hence delete Row 2, as shown in
Table 14.28.
Table 14.28: Reduced Matrix (Row 2 Deleted)
Player B
1 3 4
Player A 3 8 15 1
4 3 1 4
ow, as when comparing rows and columns, no column or row
dominates the other.
Since there is a tie while comparing the rows or columns, take the
average oI any two
rows and compare. We have the Iollowing three combinations oI
matrices as shown in
Table 14.29(a) (b) and (c).
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Table 14.29 (a, b, c): Matrix Combinations Game Theory
(a) B (b) B (c) B
2
R1 +R3
R3 R1 2
R3 +R4
R2 2
R1 +R4
11.5 1 8 8 15 4.5
A A A
1 4 3 1.5 1 3.5
When comparing column 1 and the average oI column 3 and column 4,
column 1 is
dominated by the average oI column 3 and 4. Hence delete column 1.
Finally, we get the
2 2 matrix as shown in Table 14.30.
Table 14.30: 22 Matrix After Deleting Column 1
Player B
3 4
Player A 3 15 1
4 1 4
The strategy Ior the arrived matrix is a mixed strategy; using probability
Iormula, we Iind
p1, p2 and q1, q2.
p1
)
) ))
4 1
15 4 1 1

=
+ +
1
= 5
p2 1

5

= 14
q1 1
= 4 1
1
= 3
q2 1
1
3
1
= 16
) ))
15 4) 1 . 1))
15 4 1 . 1
+ +
= - -
1
= 6 + 1
1
= 61
The optimum mixed strategies are given below in Table 14.31 (a, b)

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Table 14.31(a) and (b): Optimum Mixed Strategies
A1 A2 A3 A4 B1 B2 B3 B4
(a) SA and (b) SB
0 0 5/19
14/19 0 0 3/19
16/19
14.6 SOLVING PROBLEM ON THE COMPUTER WITH
TORA
Pure strategy problem
Example 9: is solved using computer with TORA. From Main menu oI
TORA package
select Zero-sum Games option. Click Go to Input Screen Enter the
input values oI
the problem as shown in the Figure 14.1.
Figure 14.1: Solving Pure Strategy Problem Using TORA (Input
Screen)
ow, go to Solve menu and click. Another screen appears with Solved
Problem Select
solve problem and click LP-based. Then select the output Iormat screen
and click Go to
Output Screen. The Iollowing output screen is displayed, as shown in
Figure 14.2.
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Game Theory
Figure 14.2: Solving Pure Strategy Problem Using TORA (Output
Screen)
The results oI the problem can be read directly Irom the output screen.
Value oI the Game to Player A 1.00
Player A optimal strategies:
Strategies: A1 A2 A3
Probability: 0 1 0
Player B optimal strategies:
Strategies: B1 B2 B3
Probability: 1 0 0
The output also includes the linear programming Iormulation Ior Player
A.
Mixed Strategy Problem
Table 14.32
Player B
1 2
Player A 1 5 2
2 3 4
The output screen Ior the problem is shown in Figure 14.3
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Figure 14.3: Solving Mixed Strategy Problems Using TORA (Output
Screen)
Here the players play both the strategies in what turns out to be a mixed
strategy game.
A1 A2 B1 B2
Player A : 0.25 0.75 Player B : 0.5 0.5
Value oI the game, v 3.50.
Example 1: Solve the Iollowing 2 3 game given below in Table
14.33 graphically,
using computer.
Player B
B1 B2 B3
A1 1 3 10
A2 9 5 2
$olution: The game does not possess any saddle point and hence the
solution has mixed
strategies.
A`s expected payoIIs against B`s pure moves are given by
Table 14.34: Mixed Strategies Compared
B`s pure strategy A`s expected payoIIs
B1 p1 9 (1 p1) 8p1 9
B2 3p1 5 (1 p1) 2p1 5
B3 10p1 2 (1 p1) 8p1 2
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The expected payoII equations are plotted as Iunctions oI p Game
Theory 1 which show the payoIIs oI
each column represented as points on two vertical axis. Strategy B1 is
plotted by joining
value 1 on axis 2 with the value 9 on axis 1. Similarly, other equations
are drawn. The
output using TORA is given in the Figure 14.4 below:
Figure 14.4: Graphical Solution of Game Using TORA (Output
Screen)
Player A always wants to maximize his minimum expected payoII.
Consider the highest
point oI intersection I on lower envelope oI A`s expected payoII
equation. The lines B2
and B3 passing through I, are the strategies that B needs to play.
ThereIore the given
matrix is reduced to 22 matrix as shown in Table 14.35.
Table 14.35: Reduced 22 Matrix
B2 B3
A1 3 10
A2
5 2
Solving the 2x2 matrix, the optimal strategies are obtained using the
usual method
Table 14.36: Optimal Strategies
A1 A2 B1 B2 B3
(a) SA and (b) SB
0.30 0.70 0 0.80 0.20
The value oI the game, v 4.40.
14.7 SOLVING LP MODEL GAMES GRAPHICALLY
USING COMPUTER
Example 11: Solve the Iollowing game shown in Table 14.37, by linear
programming.
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Player B
B1 B2 B3
A1 4 1 4
Player A A2 3 4 2
The linear programming Iormulation is given by,
For player A,
Maximize, z v
Subject to the constraints,
v 4x1 3x2 0 ......................(i)
v x1 - 4x2 0 ......................(ii)
v 4x1 x2 0 ......................(iii)
x1 x2 1 ......................(iv)
where, x1, x2 ~ 0
v is unrestricted.
For Player B,
Minimize, z v
v 4y1 y2 4y3 ~ 0 ......................(v)
v 3y1 4y2 y3 ~ 0 ......................(vi)
y1 y2 y3 1 ......................(vii)
where, y1, y2, y3 ~ 0
v is unrestricted.
The problem can be solved by using linear programming. This can also
be solved by
using two-person zero-sum game. The output result is given in Figure
14.5 below:
Figure 14.5: Two-person Zero-sum Game, Output Result Using
TORA
489
The optimal strategies are, Game Theory
A1 A2
Player A : 0.11 0.89
B1 B2 B3
Player B : 0.22 0 0.78
Value oI the game, v 2.22
Take a type oI business problem oI your choice in which game theory
will be
helpIul.
answers in it.

14.8 LET US SUM UP
At the outset, a comprehensive overview oI games theory has been
applicable to those
competitive situation which are technically known as 'competitive
games. II we
elaborately go into the depth oI the word 'competitions it is a
watchword oI contemporary
liIe and competitive situation exists iI two or more individually are
making decisions in a
circumstances that involves conIlicting interests and in which the result
is controlled by
the decision oI all parties concerned. The initial discussion study with
the zero person
game and moves to saddle point Iurther principle oI dominance
applicable to reduce
the size oI matrix and their is a 2n oI M2 games which can be solved
with the help
oI graphical method. In short, the game theory Iacilitates us to learn how
to approves
and comprehend a conIlict circumstance and to enhance the decision
procedure.
Apply the game theory approach oI two television vendor line LG &
Samsung Ior their
advertising strategy.
14.10 KEYWORDS
%wo Person ame : A game that only has two players.
Zero $um ame : A game in which one player wins and other player
loses.
Dominance : A process by which the size oI the game will be reduced.
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$trategy : The strategy oI a player is the list oI all possible actions that
he takes Ior every pay-oII. The strategy is classiIied into
pure strategy and mixed strategy.
Pure $trategy : Pure strategy is always selecting a particular course oI
action
with the probability oI 1. For example, in case oI two
strategies, probability oI selecting the strategies Ior players
A is p1 0 and p2 1.
Mixed $trategy : Mixed strategy is to choose at least two courses oI
action.
The probability oI selecting an individual strategy will be less
than 1, but the sum oI the strategies will be 1. For example,
iI player A plays a mixed strategy, then the probability oI
selection oI mixed strategy is p1 0.45 and p2 0.55. But
the sum oI the strategies is 0.45 0.55 1.
$addle Point : Saddle point is a situation where both the players are
Iacing
pure strategies. When there is no saddle point, it indicates
the players will play both the strategies.
Minimax Criterion : Minimax criterion is selecting the strategies that
minimize
the loss Ior each player. In other words, the player always
anticipates worst possible outcome and chooses the strategy
to get maximum Ior proIit and minimum Ior loss.
Jalue of the ame : The Value oI the game is the expected gain oI
player A iI
both players use their best strategies. The best strategy is
arrived at using minimax criterion.
(a) Graphical method can only be used in games with no saddle point.
(b) Concept oI dominance is very useIul Ior expanding the size oI the
matrix.
(c) Saddle point in a pay oII matrix is one which is smallest value in its
row and
the largest value in its column.
(d) In two-person zero-sum game there will be more than two choices.
2. Briefly comment on the following:
(a) Dominance occurs in the pay-oII matrix.
(b) Best strategic are mixed strategies iI there is no involvement oI
saddle point.
(c) Graphical method is Ieasible Ior Small values.
(d) When the game have no saddle point & also cannot be reduced by
dominance.
(e) In game theory we determine the best strategies Ior each player.
(I) A saddle point is an element oI the matrix.
(a) Game theory applies to those situation which are
technically
known as 'competitive game.
(b) Strategy could be or one.
(c) A game involving n-players is called a game.
(d) Every course oI action is a strategy.
(e) In game theory all players act .
491
4. Write short Notes on following: Game Theory
(a) The value oI a game
(b) The sum & non-zero-sum games.
(c) Maximum & Minimum strategy
(d) Concept oI dominance.
(e) Pure strategy
(I) Mixed strategy
(g) Pay-oII matrix
(h) Saddle point
(i) Optimum strategies.
1. What are the properties oI Two-person Zero-sum game?
2. DeIine Pure strategy and Mixed strategy.
3. What is meant by the saddle point?
4. What is meant by a Fair Game?
5. Explain how games can be solved using the dominance property.
Exercise Problems
1. Using maximin criteria, identiIy whether the players play pure
strategy or mixed
strategies
(a) Player B
1 2
1 7 3
2 5 2
(b) Player B
1 2
1 7 2
2 1 5
2. Solve the game and determine whether it is strictly determinable.
(a) Player B
B1 B2 B3
A1 3 1 2
Player A A2 2 5 7
A3 2 3 5
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(b) Player B
B1 B2 B3
A1 6 10 8
Player A A2 4 10 14
A3 4 6 10
3. Determine the optimum strategies oI players.
4. Solve the game.
Company B Company B
(a) B1 B2 B3 (b) B1 B2 B3
A1 15 25 35 A1 7 5 2
Company A A2 5 10 45 Company A A2 1 3 2
A3 65 55 35 A3 4 3 7
5. Consider the payoII matrix oI player A and solve.
Player B
1 2 3 4 5 6
1 6 3 7 4 6 8
Player A
2 7 11 8 4 7 9
6. Solve the Iollowing sequence game using dominance property.
Company A
I II III IV
A 14 4 8 18
Company B B 8 3 2 12
C 8 7 6 16
D 6 5 12 10
B B
1 2 3 4 1 2 3 4
1 10 30 20 40 1 1 2 2 1
A 2 5 5 10 15 A 2 3 2 0 1
3 20 20 30 10 3 4 2 3 2
4 5 10 20 15 4 0 1 3 2
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7. Use dominance property to solve the Iollowing game. Game Theory
B1 B2 B3 B4 B5
A1 4 4 2 4 6
A2
8 6 8 4 0
A3
10 2 4 0 12
8. Solve the Iollowing two-person zero-sum game to Iind the value oI
the game.
Company B
1 2 3 4
1 2 2 4 1
Company A 2 6 1 12 3
3 -3 2 0 6
4 2 3 7 7
9. Solve the game whose payoII matrix is given Ior a 2 2 matrix.
(a) 5 2 (b) 2 5
1 7 2 2
10. Solve the game graphically.
B
B1 B2 B3 B4
A1 4 -2 3 1
A
A2
1 2 0 1
11. Use dominance property to reduce the matrix and solve it graphically
Player B
A B C D
1 18 4 6 4
Player A 2 6 2 13 7
3 11 5 17 3
4 7 6 12 2
12. Formulate a linear programming model Ior the Iollowing game.
Player B
1 2 3 4 5
1 6 15 30 21 6
Player A 2 3 3 6 6 4
3 12 12 24 36 3
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DISCUSSION
1. (a) True (b) False (c) True (d) False
3. (a) competitive (b) pure, mixed (c) n-person (d) pure
(e) intelligently.
Davis. M, G,me %heory. A Nontechnic,l Introduction, ew York; Basic
Books, Inc.
Lucas, 'An Overview of the ,them,tic,l %heory of G,me`
Management Science
Vol. 8, o. 8, Part-II.
Luce R.D. & RaiIIa. H, G,me & Decisions, ew York, John Wiley &
Sam.
Rapport, A., %wo Person G,me %heory, Anne Arbric, Michiger: The
University oI
ichigan Press, 1966.
Shubik. M, %he &ses & ethods of G,me %heory, ew York; American
Elsevier.
Van eumain, J. & Morgen Stan. O, %heory of G,mes & Economic
Beh,viour.
LESSON
15
SIMULATION
CONTENTS
15.1 Introduction
15.2 Advantages and Disadvantages oI Simulation
15.3 Monte Carlo Simulation
15.4 Simulation oI Demand Forecasting Problem
15.5 Simulation oI Queuing Problems
15.6 Simulation oI Inventory Problems
15.7 Let us Sum Up
15.9 Keywords
This is the last lesson oI the QT which will discuss about the
Mathematical analysis and
mathematical technique simulation technique is considered as a valuable
tool because
wide area oI applications.
15.1 INTRODUCTION
In the previous chapters, we Iormulated and analyzed various models on
real-liIe problems.
All the models were used with mathematical techniques to have
analytical solutions. In
certain cases, it might not be possible to Iormulate the entire problem or
solve it through
mathematical models. In such cases, simulation proves to be the most
suitable method,
which oIIers a near-optimal solution. Simulation is a reIlection oI a real
system,
representing the characteristics and behaviour within a given set oI
conditions.
In simulation, the problem must be deIined Iirst. Secondly, the variables
oI the model are
introduced with logical relationship among them. Then a suitable model
is constructed.
AIter developing a desired model, each alternative is evaluated by
generating a series oI
values oI the random variable, and the behaviour oI the system is
observed. Lastly, the
results are examined and the best alternative is selected the whole
process has been
summarized and shown with the help oI a Ilow chart in the Figure 90.
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Simulation technique is considered as a valuable tool because oI its wide
area oI application.
It can be used to solve and analyze large and complex real world
problems. Simulation
provides solutions to various problems in Iunctional areas like
production, marketing,
Iinance, human resource, etc., and is useIul in policy decisions through
corporate planning
models. Simulation experiments generate large amounts oI data and
inIormation using a
small sample data, which considerably reduces the amount oI cost and
time involved in
the exercise.
For example, iI a study has to be carried out to determine the arrival rate
oI customers at
a ticket booking counter, the data can be generated within a short span oI
time can be
used with the help oI a computer.
Figure 15.1: Simulation Process
15.2 ADVANTAGES AND DISADVANTAGES OF
SIMULATION
Advantages
l Simulation is best suited to analyze complex and large practical
problems when it is
not possible to solve them through a mathematical method.
l Simulation is Ilexible, hence changes in the system variables can be
made to select
the best solution among the various alternatives.
l In simulation, the experiments are carried out with the model without
disturbing the
system.
l Policy decisions can be made much Iaster by knowing the options well
in advance
and by reducing the risk oI experimenting in the real system.
Disadvantages
l Simulation does not generate optimal solutions.
l It may take a long time to develop a good simulation model.
l In certain cases simulation models can be very expensive.
l The decision-maker must provide all inIormation (depending on the
model) about
the constraints and conditions Ior examination, as simulation does not
give the
answers by itselI.
Problem DeIinition
Introduction oI Variables
Construction oI Simulation Model
Testing oI variables with values
Simulate
Examination oI results
Selection oI best alternative
ot Acceptable ot Acceptable
Acceptable
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Simulation 15.3 MONTE CARLO SIMULATION
In simulation, we have deterministic models and probabilistic models.
Deterministic
simulation models have the alternatives clearly known in advance and
the choice is
made by considering the various well-deIined alternatives. Probabilistic
simulation model
is stochastic in nature and all decisions are made under uncertainty. One
oI the probabilistic
simulation models is the Monte Carlo method. In this method, the
decision variables are
represented by a probabilistic distribution and random samples are
drawn Irom probability
distribution using random numbers. The simulation experiment is
conducted until the
required number oI simulations are generated. Finally, the best course oI
action is selected
Ior implementation. The signiIicance oI Monte Carlo Simulation is that
decision variables
may not explicitly Iollow any standard probability distribution such as
ormal, Poisson,
Exponential, etc. The distribution can be obtained by direct observation
or Irom past
records.
Procedure Ior Monte Carlo Simulation:
$tep 1: Establish a probability distribution Ior the variables to be
analyzed.
$tep 2: Find the cumulative probability distribution Ior each variable.
$tep 3: Set Random umber intervals Ior variables and generate random
numbers.
$tep 4: Simulate the experiment by selecting random numbers Irom
random numbers
tables until the required number oI simulations are generated.
$tep 5: Examine the results and validate the model.
15.4 SIMULATION OF DEMAND FORECASTING
PROBLEM
Example 1: An ice-cream parlor's record oI previous month`s sale oI a
particular variety
oI ice cream as Iollows (see Table 15.1).
Table 15.1: Simulation of Demand Problem
Simulate the demand Ior Iirst 10 days oI the month
$olution: Find the probability distribution oI demand by expressing the
Irequencies in
terms oI proportion. Divide each value by 30. The demand per day has
the Iollowing
distribution as shown in Table 15.2.
Table 15.2: Probability Distribution of Demand
Find the cumulative probability and assign a set oI random number
intervals to various
demand levels. The probability Iigures are in two digits, hence we use
two digit random
numbers taken Irom a random number table. The random numbers are
selected Irom
the table Irom any row or column, but in a consecutive manner and
random intervals are
set using the cumulative probability distribution as shown in Table 15.3.
Demand (No. of Ice-creams) No. of days
4 5
5 10
6 6
7 8
8 1
Demand Probability
4 0.17
5 0.33
6 0.20
7 0.27
8 0.03
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Table 15.3: Cumulative Probability Distribution
To simulate the demand Ior ten days, select ten random numbers Irom
random number
tables. The random numbers selected are,
17, 46, 85, 09, 50, 58, 04, 77, 69 and 74
The Iirst random number selected, 7 lies between the random number
interval 17-49
corresponding to a demand oI 5 ice-creams per day. Hence, the demand
Ior day one
is 5. Similarly, the demand Ior the remaining days is simulated as shown
in Table 15.4.
Table 15.4: Demand Simulation
Example 2: A dealer sells a particular model oI washing machine Ior
which the probability
distribution oI daily demand is as given in Table 15.5.
Table 15.5: Probability Distribution of Daily Demand
Find the average demand oI washing machines per day.
$olution: Assign sets oI two digit random numbers to demand levels as
shown in
Table 15.6.
Table 15.6: Random Numbers Assigned to Demand
Ten random numbers that have been selected Irom random number
tables are 68, 47, 92,
76, 86, 46, 16, 28, 35, 54. To Iind the demand Ior ten days see the Table
15.7 below.
Table 15.7: Ten Random Numbers Selected
Day 1 2 3 4 5 6 7 8 9 10
Random umber 17 46 85 09 50 58 04 77 69 74
Demand 5 5 7 4 6 6 4 7 6 7
Demand/day - 0 1 2 3 4 5
Demand - 0.05 0.25 0.20 0.25 0.10 0.15
Demand Probability Cumulative Probability Random Number
Intervals
0 0.05 0.05 00-04
1 0.25 0.30 05-29
2 0.20 0.50 30-49
3 0.25 0.75 50-74
4 0.10 0.85 75-84
5 0.15 1.00 85-99
Trial No Random Number Demand / day
1 68 3
2 47 2
3 92 5
4 76 4
5 86 5
6 46 2
7 16 1
8 28 1
9 35 2
10 54 3
Total Demand 28
Demand Probability Cumulative Probability Random Number
Interval
4 0.17 0.17 00-16
5 0.33 0.50 17-49
6 0.20 0.70 50-69
7 0.27 0.97 70-96
8 0.03 1.00 97-99
499
Average demand 28/10 2.8 washing machines per day. Simulation
The expected demand /day can be computed as,
Expected demand per day
=
n
i
i i
P X

.......................(1)
where, pi probability and xi demand
(0.05 0) (0.25 1) (0.20 2) (0.25 3) (0.1 4) (0.15
5)
2.55 washing machines.
The average demand oI 2.8 washing machines using ten-day simulation
diIIers signiIicantly
when compared to the expected daily demand. II the simulation is
repeated number oI
times, the answer would get closer to the expected daily demand.
Example 3: A Iarmer has 10 acres oI agricultural land and is cultivating
tomatoes on
the entire land. Due to Iluctuation in water availability, the yield per acre
diIIers. The
probability distribution yields are given below:
a. The Iarmer is interested to know the yield Ior the next 12 months iI
the same water
availability exists. Simulate the average yield using the Iollowing
random numbers
50, 28, 68, 36, 90, 62, 27, 50, 18, 36, 61 and 21, given in Table 15.8.
Table 15.8: Simulation Problem
b. Due to Iluctuating market price, the price per kg oI tomatoes varies
Irom Rs. 5.00
to Rs. 10.00 per kg. The probability oI price variations is given in the
Table 216
below. Simulate the price Ior next 12 months to determine the revenue
per acre.
Also Iind the average revenue per acre. Use the Iollowing random
numbers 53, 74,
05, 71, 06, 49, 11, 13, 62, 69, 85 and 69.
$olution:
Table 15.10: Table for Random Number Interval for Yield
Yield of tomatoes per acre (kg) Probability
200 0.15
220 0.25
240 0.35
260 0.13
280 0.12
Price per kg (Rs) Probability
5.50 0.05
6.50 0.15
7.50 0.30
8.00 0.25
10.00 0.15
Yield of tomatoes
per acre
Probability Cumulative Probability Random Number
Interval
200
220
240
260
280
0.15
0.25
0.35
0.13
0.12
0.15
0.40
0.75
0.88
1.00
00 14
15 39
40 74
75 87
88 99
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Table 15.11: Table for Random Number Interval for Price
Table 15.12: Simulation for 12 months period
Average revenue per acre 21330 / 12
Rs. 1777.50
Example 4: J.M Bakers has to supply only 200 pizzas every day to their
outlet situated
in city bazaar. The production oI pizzas varies due to the availability oI
raw materials and
labor Ior which the probability distribution oI production by observation
made is as Iollows:
Simulate and Iind the average number oI pizzas produced more than the
requirement
and the average number oI shortage oI pizzas supplied to the outlet.
$olution: Assign two digit random numbers to the demand levels as
shown in
Table 15.14
Table 15.14: Random Numbers Assigned to the Demand Levels
Price Per Kg Probability Cumulative Probability Random Number
Interval
5.00
6.50
7.50
8.00
10.00
0.05
0.15
0.30
0.25
0.25
0.05
0.20
0.50
0.75
1.00
00 04
05 19
20 49
50 74
75 99
Month
(1)
Yield
(2)
Price
(3) Revenue / Acre (4) 2 3 (Rs)
1
2
3
4
5
6
7
8
9
10
11
12
240
220
240
220
250
240
220
240
220
220
240
220
8.00
8.00
6.50
8.00
6.50
7.50
6.50
6.50
8.00
8.00
10.00
8.00
1960
1760
1560
1760
1820
1800
1430
1560
1760
1760
2400
1760
Production per day 196 197 198 199 200 201 202 203 204
Probability 0.06 0.09 0.10 0.16 0.20 0.21 0.08 0.07 0.03
Demand Probability Cumulative Probability No of Pizzas shortage
196 0.06 0.06 00-05
197 0.09 0.15 06-14
198 0.10 0.25 15-24
199 0.16 0.41 25-40
200 0.20 0.61 41-60
201 0.21 0.82 61-81
202 0.08 0.90 82-89
203 0.07 0.97 90-96
204 0.03 1.00 97-99
501
Selecting 15 random numbers Irom random numbers table and simulate
the production Simulation
per day as shown in Table 15.15 below.
Table 15.15: Simulation of Production Per Day
The average number oI pizzas produced more than requirement
12/15
0.8 per day
The average number oI shortage oI pizzas supplied
4/15
0.26 per day
1. Discuss the role oI simulation in demand Iorecasting.
2. What is Monte Carlo simulation?
answers in it.

15.5 SIMULATION OF QUEUING PROBLEMS
Example 5: Mr. Srinivasan, owner oI Citizens restaurant is thinking oI
introducing
separate coIIee shop Iacility in his restaurant. The manager plans Ior one
service counter
Ior the coIIee shop customers. A market study has projected the inter-
arrival times at
the restaurant as given in the Table 15.16. The counter can service the
customers at the
Iollowing rate:
Trial Number Random Number Production Per
day
No of Pizzas over
produced
No of pizzas
shortage
1 26 199 - 1
2 45 200 - -
3 74 201 1 -
4 77 201 1 -
5 74 201 1 -
6 51 200 - -
7 92 203 3 -
8 43 200 - -
9 37 199 - 1
10 29 199 - 1
11 65 201 1 -
12 39 199 - 1
13 45 200 - -
14 95 203 3 -
15 93 203 3 -
Total 12 4
502
Ior Management
Table 15.16: Simulation of Queuing Problem
Mr. Srinivasan will implement the plan iI the average waiting time oI a
customers in the
system is less than 5 minutes.
BeIore implementing the plan, Mr. Srinivasan would like to know the
Iollowing:
i. Mean waiting time oI customers, beIore service.
ii. Average service time.
iii. Average idle time oI service.
iv. The time spent by the customer in the system.
Simulate the operation oI the Iacility Ior customer arriving sample oI 20
cars when the
restaurant starts at 7.00 pm every day and Iind whether Mr. Srinivasan
will go Ior the
plan.
$olution: Allot the random numbers to various inter-arrival service
times as shown in
Table 15.17.
Table 15.17: Random Numbers Allocated to Various Inter-Arrival
Service Times
i. Mean waiting time oI customer beIore service 20/20 1 minute
ii. Average service idle time 17/20 0.85 minutes
iii. Time spent by the customer in the system 3.6 1 4.6 minutes.
Example : Dr. Strong, a dentist schedules all his patients Ior 30 minute
appointments.
Some oI the patients take more or less than 30 minutes depending on the
type oI dental
work to be done. The Iollowing Table 15.18 shows the summary oI the
various categories
oI work, their probabilities and the time actually needed to complete the
work.
Sl. Waiting Time
No.
Random
Number
(Arrival)
Inter
Arrival
Time
(Min)
Arrival
Time at
Service
Starts at
Random
Number
(service)
Service
Time
(Min)
Service
Ends at
Customer Service
(Min)
1 87 6 7.06 7.06 36 4 7.10 - 6
2 37 3 7.09 7.10 16 3 7.13 1 -
3 92 6 7.15 7.15 81 5 7.20 - 2
4 52 4 7.19 7.20 08 2 7.22 1 -
5 41 4 7.23 7.23 51 4 7.27 - 1
6 05 2 7.25 7.27 34 3 7.30 2 -
7 56 4 7.29 7.30 88 6 7.36 1 -
8 70 5 7.34 7.36 88 6 7.42 2 -
9 70 5 7.39 7.42 15 3 7.45 3 -
10 07 2 7.41 7.45 53 4 7.49 4 -
11 86 6 7.47 7.49 01 2 7.51 2 -
12 74 5 7.52 7.52 54 4 7.56 - 1
13 31 3 7.55 7.56 03 2 7.58 1 -
14 71 5 8.00 8.00 54 4 8.04 1 2
15 57 4 8.04 8.04 56 4 8.08 - -
16 85 6 8.10 8.10 05 2 8.12 - 2
17 39 3 8.13 8.13 01 2 8.15 - 1
18 41 4 8.17 8.17 45 4 8.21 - 2
19 18 3 8.20 8.21 11 3 8.24 1 -
20 38 3 8.23 8.24 76 5 8.29 1 -
Total 83 72 20 17
Inter-arrival times Service times
Time between two
consecutive arrivals (minutes) Probability Service time
(minutes) Probability
2 0.15 2 0.10
3 0.25 3 0.25
4 0.20 4 0.30
5 0.25 5 0.2
6 0.15 6 0.15
503
Table 15.18: Simulation Problem Simulation
Simulate the dentist`s clinic Ior Iour hours and determine the average
waiting time Ior
the patients as well as the idleness oI the doctor. Assume that all the
patients show up at
the clinic exactly at their scheduled arrival time, starting at 8.00 am. Use
the Iollowing
random numbers Ior handling the above problem:
40,82,11,34,25,66,17,79.
$olution: Assign the random number intervals to the various categories
oI work as
shown in Table 15.19.
Table 15.19: Random Number Intervals Assigned to the Various
Categories
Assuming the dentist clinic starts at 8.00 am, the arrival pattern and the
service category
are shown in Table 15.20.
Table 15.20: Arrival Pattern of the Patients
Table 15.21: The arrival, departure patterns and patients` waiting
time are tabulated.
Category of work Probability Cumulative probability Random
Number Interval
Filling 0.40 0.40 00-39
Crown 0.15 0.55 40-54
Cleaning 0.15 0.70 55-69
Extraction 0.10 0.80 70-79
Check-up 0.20 1.00 80-99
Patient Number Scheduled Arrival Random Number Service
category Service Time
1 8.00 40 Crown 60
2 8.30 82 Check-up 15
3 9.00 11 Filling 45
4 9.30 34 Filling 45
5 10.00 25 Filling 45
6 10.30 66 Cleaning 15
7 11.00 17 Filling 45
8 11.30 79 Extraction 45
Time Event (Patient Number) Patient Number (Time to go) Waiting
(Patient Number)
8.00 1 arrives 1 (60) -
8.30 2 arrives 1 (30) 2
9.00 1 departure, 3 arrives 2 (15) 3
9.15 2 depart 3 (45) -
9.30 4 arrive 3 (30) 4
10.00 3 depart, 5 arrive 4 (45) 5
10.30 6 arrive 4 (15) 5,6
10.45 4 depart 5 (45) 6
11.00 7 arrive 5 (30) 6,7
11.30 5 depart, 8 arrive 6 (15) 7,8
11.45 6 depart 7 (45) 8
12.00 End 7 (30) 8
Category Time required (minutes) Probability of category
Filling 45 0.40
Crown 60 0.15
Cleaning 15 0.15
Extraction 45 0.10
Check-up 15 0.20
504
Ior Management
The dentist was not idle during the simulation period. The waiting times
Ior the patients
are as given in Table 15.22 below.
Table 15.22: Patient's Waiting Time
The average waiting time oI patients 285/8
35.625 minutes.
15.6 SIMULATION OF INVENTORY PROBLEMS
A dealer oI electrical appliances has a certain product Ior which the
oI demand per day and the probability distribution oI the lead-time,
developed by past
records are as shown in Table 15.23 and 10.24 respectively
Table 15.23: Probability distribution of lead demand
Table 15.24: Probability distribution of lead time
The various costs involved are,
Ordering Cost Rs. 50 per order
Holding Cost Rs.1 per unit per day
Shortage Cost Rs. 20 per unit per day
The dealer is interested in having an inventory policy with two
parameters, the reorder
point and the order quantity, i.e., at what level oI existing inventory
should an order be
placed and the number oI units to be ordered. Evaluate a simulation plan
Ior 35 days,
which calls Ior a reorder quantity oI 35 units and a re-order level oI 20
units, with a
beginning inventory balance oI 45 units.
$olution: Assigning oI random number intervals Ior the demand
distribution and leadtime
distribution is shown in Tables 15.25 and 15.26 respectively.
Table 15.25: Random Numbers Assigned for Demand Per Day
Demand (Units) 2 3 4 5 6 7 8 9 10
Probability 0.05 0.07 0.09 0.15 0.20 0.21 0.10 0.07 0.06
Lead Time (Days) 1 2 3 4
Probability 0.20 0.30 0.35 0.15
Patient Arrival Time Service Starts Waiting time (minutes)
1 8.00 8.00 0
2 8.30 9.00 30
3 9.00 9.15 15
4 9.30 10.00 30
5 10.00 10.45 45
6 10.30 11.30 60
7 11.00 11.45 45
8 11.30 12.30 60
Total 285
Demand per day Probability Cumulative probability Random
Number Interval
2 0.05 0.05 00-04
3 0.07 0.12 05-11
4 0.09 0.21 12-20
5 0.15 0.36 21-35
6 0.20 0.56 36-55
7 0.21 0.77 56-76
8 0.10 0.87 77-86
9 0.07 0.94 87-93
10 0.06 1.00 94-99
505
Table 15.26: Random Numbers Assigned for Lead-time Simulation
Table 15.27: Simulation Work-sheet for Inventory Problem (Case -
1)
Reorder Quantity 35 units, Reorder Level 20 units, Beginning
Inventory 45 units
Lead Time (Days) Probability Cumulative probability Random
Number Interval
1 0.20 0.20 00-19
2 0.30 0.50 20-49
3 0.35 0.85 50-84
4 0.15 1.00 85-99
Day
Random
Number
(Demand)
Demand
Random
Number
(Lead
Time)
Lead
Time
(Days)
Inventory
at end of
day
Qty.
Received
Ordering
Cost
Holding
Cost
Shortage
Cost
0 - - - - 45 - - - -
1 58 7 - - 38 - - 38 -
2 45 6 - - 32 - - 32 -
3 43 6 - - 26 - - 26 -
4 36 6 73 3 20 - 50 20 -
5 46 6 - - 14 - - 14 -
6 46 6 - - 8 - - 8 -
7 70 7 - - 1 35 - 36 -
8 32 5 - - 31 - - 31 -
9 12 4 - - 27 - - 27 -
10 40 6 - - 21 - - 21 -
11 51 6 21 2 15 - 50 15 -
12 59 7 - - 8 - - 8 -
13 54 6 - - 37 35 - 37 -
14 16 4 - - 33 - - 33 -
15 68 7 - - 26 - - 26 -
16 45 6 45 2 20 - 50 20 -
17 96 10 - - 10 - - 10 -
18 33 5 - - 40 35 - 40 -
19 83 8 - - 32 - - 32 -
20 77 8 - - 24 - - 24 -
21 05 3 - - 21 - - 21 -
22 15 4 76 3 17 - 50 17 -
23 40 6 - - 11 - - 11 -
24 43 6 - - 5 - - 5 -
25 34 5 - - 35 35 - 35 -
26 44 6 - - 29 - - 29 -
27 89 9 96 4 20 - 50 20 -
28 20 4 - - 16 - - 16 -
29 69 7 - - 9 - - 9 -
30 31 5 - - 4 - - 4 -
31 97 10 - - 29 35 - 29 -
32 05 3 - - 26 - - 26 -
33 59 7 94 4 19 - 50 19 -
34 02 2 - - 17 - - 17 -
35 35 5 - - 12 - - 12 -
Total 300 768 -
506
Ior Management
Table 15.28: Simulation Work-sheet for Inventory Problem (Case -
II)
Reorder Quantity 30 units, Reorder Level 20 units, Beginning
Inventory 45 units
The simulation oI 35 days with an inventory policy oI reordering
quantity oI 35 units at
the time oI inventory level at the end oI day is 20 units, as worked out in
Table 10.27. The
table explains the demand inventory level, quantity received, ordering
cost, holding cost
and shortage cost Ior each day.
Day
Random
Number
(Demand)
Demand
Random
Number
(Lead
Time)
Lead
Time
(Days)
Inventory
at end of
day
Qty.
Received
Ordering
Cost
Holding
Cost
Shortage
Cost
0 - - - - 45 - - - -
1 58 7 - - 38 - - 38 -
2 45 6 - - 32 - - 32 -
3 43 6 - - 26 - - 26 -
4 36 6 73 3 20 - 50 20 -
5 46 6 - - 14 - - 14 -
6 46 6 - - 8 - - 8 -
7 70 7 - - 31 30 - 31 -
8 32 5 - - 29 - - 29 -
9 12 4 - - 25 - - 25 -
10 40 6 - - 19 - 50 19 -
11 51 6 21 2 13 - - 13 -
12 59 7 - - 38 - - 38 -
13 54 6 - - 32 30 - 32 -
14 16 4 - - 21 - - 21 -
15 68 7 - - 21 - - 21 -
16 45 6 45 2 15 - 50 15 -
17 96 10 - - 5 - - 5 -
18 33 5 - - 30 - - 30 -
19 83 8 - - 22 - - 22 -
20 77 8 - - 14 - 50 14 -
21 05 3 - - 11 - - 11 -
22 15 4 76 3 7 - - 7 -
23 40 6 - - 31 30 - 31 -
24 43 6 - - 14 - - 14 -
25 34 5 - - 20 - 50 20 -
26 44 6 - - 14 - - 14 -
27 89 9 96 4 5 - - 5 -
28 20 4 - - 1 - - 1 -
29 69 7 - - 24 30 - 24 -
30 31 5 - - 19 - 50 19 -
31 97 10 - - 9 - - 9 -
32 05 3 - - 6 - - 6 -
33 59 7 94 4 0 - - - 20
34 02 2 - - 28 30 - 28 -
35 35 5 - - 23 - - 23 -
Total 300 683 20
507
Completing a 35 day period, the costs are Simulation
Total ordering cost (6 50) Rs 300.00
Total holding cost Rs. 768.00
Since the demand Ior each day is satisIied, there is no shortage cost.
ThereIore, Total cost 300 768
Rs. 1068.00
For a diIIerent set oI parameters, with a re-order quantity oI 30 units and
the same reorder
level oI 20 units, iI the 35-day simulation is perIormed, we get the total
oI various
costs as shown in Table 10.28.
Total ordering cost 6 50 Rs. 300.00
Total holding cost Rs. 683.0
Total shortage cost Rs. 20.00
ThereIore,
Total cost 300 683 20
Rs. 1003.00
II we analyze the combination oI both the parameters, Case II has lesser
total cost than
Case I. But at the same time, it does not satisIy the demand on 33rd day,
that might cause
customer dissatisIaction which may lead to some cost.
In this type oI problems, the approach with various combinations oI two
parameter
values is simulated a large number oI times to Iind the total cost oI each
experiment,
compare the total cost and select the optimum alternative, i.e., that one
which incurs the
lowest cost.
1. Explain how computer make ideal aides in simulating complex tasks.
2. What are the two types oI computer programming languages that are
available
to Iacilitate the simulation process?
3. Why in the computer necessary in conducting a real world simulation.
4. Do you think the application oI simulation will enhance strongly in
the coming
10 years.
5. Draw a Ilow diagram Ior the simulation oI electric-maintenance by
the power
corporation oI India Ltd.
answers in it.

508
Ior Management 15.7 LET US SUM UP
By going through this lesson it is very true and clear that simulation is a
reIlection oI a
real system representing the characteristics and behaviour within a given
set oI conditions.
The most important point in simulation is that simulation technique is
considered as a
valuable tool because oI its wide area oI application. The most important
approach to
solving simulation is the Monte Carlo Simulation which can be solved
with the help oI
probabilistic and deterministic model. The deterministic simulation
mode, have the
alternatives clearly known in advance where as the probabilistic model
is stochastic in
nature and all decisions are made under uncertainty.
1. Apply the Monte Carlo Simulation technique weather in Iorecasting.
2. In the corporate the top Bosses use to take major decisions apply the
Simulation
techniques in designing and perIorming organisations take an industry
like Reliance,
Tata, InIosys to support your answer.
15.9 KEYWORDS
$imulation : A management science analysis that brings into play a
construction and mathematical model that represents a realworld
situation.
#andom number : A number whose digits are selected completely at
random.
Flow chart : A graphical means oI representing the logic oI a simulation
model.
1. Write True or False against each statement
(a) Simulations models are built Ior management problems and require
management input.
(b) All simulation models are very expensive.
(c) Simulation is best suited to analyse complex & large practical
problem
(d) Simulation-generate optimal solution.
(e) Simulation model can not be very expensive.
2. Fill in the blank
(a) Simulation is one oI the most widely used analysis book.
(b) Simulation allow, Ior the oI real world complications.
(c) System in similar to business gaming.
(d) Monte Carlo method used number.
(e) Simulation experiments generate large amount oI and
inIormation.
3. Briefly comment on the following
(a) The problem tackled by simulation may range Irom very simple to
extremely
complex.
(b) Simulations allows us to study the interactive eIIect oI individual
components
or variables in order to determine which one is important.
509
(c) Simulation is the valuable technique Ior analysing various
maintenance policies Simulation
beIore actually implementing them,
(d) Simulations technique in considered as a valuable tool because oI its
wide
area oI application.
(e) Simulation is nothing more or less them the technique oI perIorming
sampling
experiment on the model oI the system.
1. What is simulation? Give a Iew areas oI its application.
2. With the help oI a Ilow chart, brieIly explain the simulation process.
3. What are the advantages and limitations oI simulation?
4. What is Monte Carlo simulation?
5. Explain the procedure oI simulation using random numbers.
6. Explain how simulation is useIul in solving queuing and inventory
problems.
Exercise Problem
1. A sweet stall observed that the demand Ior item Mysorpa per week in
one kilogram
pack is as Iollows:
Generate the demand Ior the next 10 weeks, and also Iind the average
demand.
2. At a service station, cars arrive Ior water-wash daily. The probability
oI number oI
cars that arrive are given in the table below. Simulate the number oI cars
that will
arrive Ior the next 10 days. Use the Iollowing random numbers: 87, 01,
74, 11, 46,
82, 59, 94, 25 and 34.
3. A private bank has installed an ATM in the city bazaar area. It was
Iound that the
time between an arrival and completion oI transaction varies Irom one
minute to
seven minutes. The arrival and service distribution times are given
below. Simulate
the ATM operations Ior the next 30 arrivals.
Use Monte-Carlo simulation technique and determine:
a. Waiting time oI the customers.
b. Idle time oI the ATM.
Demand / week
(per kilo pack)
5 10 15 20 25 30
Frequency 4 22 16 42 10 6
Cars arrival per day 5 6 7 8 9 10
Probability 0.2 0.15 0.3 0.25 0.05 0.05
Probability
Time (minutes)
Arrival Service
1-2 0.10 0.05
2-3 0.15 0.15
3-4 0.30 0.30
4-5 0.25 0.20
5-6 0.10 0.15
6-7 0.10 0.15
510
Ior Management
4. The materials manager oI a Iirm wishes to determine the expected
mean demand
Ior a particular item in stock during the re-order lead time. This
inIormation is
needed to determine how Iar in advance to re-order, beIore the stock
level is
reduced to zero. However, both the lead time, and the demand per day
Ior the item
are random variables, described by the probability distribution.
Manually simulate the problem Ior 30 re-orders, to estimate the demand
during
lead time.
5. A company has the capacity to produce around 300 bikes per day.
Daily production
varies Irom 295 to 304 depending upon getting the clearance Irom the
Iinal inspection
department. The probability distribution oI bikes passed through Iinal
inspection
per day is given below:
The Iinished bikes are transported in a long trailer lorry suIIicient to
accommodate
300 mopeds. Simulate the process Ior 10 days and Iind:
a. The average number oI bikes waiting in the Iactory yard.
b. The average empty space in the lorry.
6. In a single pump petrol station, it was observed that the inter-arrival
times and
service times are as given in the table. Using the random numbers given,
simulate
the queue behaviour Ior a period oI 30 minutes and estimate the
probability oI the
pump being idle and the mean time spent by a customer waiting to Iill
petrol.
Use the Iollowing random numbers: 93, 14, 72, 10, 21, 81, 87, 90, 38,
10, 29, 17, 11,
68, 10, 51, 40, 30, 52 & 71.
Production per day Probability
295 0.03
296 0.04
297 0.10
298 0.20
299 0.25
300 0.15
301 0.09
302 0.07
303 0.05
304 0.02
Inter-arrival time Service time
Minutes Probability Minutes Probability
1 0.10 2 0.10
3 0.17 4 0.23
5 0.35 6 0.35
7 0.23 8 0.22
9 0.15 10 0.10
Lead time (days) Probability Demand / day (units) Probability
1 0.45 1 0.15
2 0.30 2 0.25
3 0.25 3 0.40
4 4 0.20
511
Simulation
Service
No. of TV sets requiring service
Frequency of request
1 15
2 15
3 20
4 25
5 25
Servicing done
No. of TV sets serviced
Frequency of service
1 10
2 30
3 20
4 15
5 25
Type of bowling Probability of hitting a boundary
Over pitched 0.1
Short-Pitched 0.3
Outside oII stump 0.2
Outside leg stump 0.15
Bouncer 0.20
Attempted Yorker 0.05
7. A one-man TV service station receives TV sets Ior repair. TV sets are
repaired on
a Iirst come, Iirst served` basis. The observations oI the study made
over a 100
day period are given below.
Simulate a 10 day period oI arrival and service pattern.
8. ABC company stocks certain products. The Iollowing data is
available:
a. o. oI Units:0 1 2 3
Probability: 0.1 0.2 0.4 0.3
b. The variation oI lead time has the Iollowing distribution
Lead time (weeks): 1 2 3
Probabilities: 0.30 0.40 0.30
The company wants to know (a) how much to order? and (b) when to
order ?
Assume that the inventory in hand at the start oI the experiment is 20
units and 15
units are ordered closed as soon as inventory level Ialls to 10 units. o
back orders
are allowed. Simulate the situation Ior 25 weeks.
9. A box contains 100 balls oI which 20 percent are white, 30 percent
are black and
the remaining are red. Simulate the process Ior drawing balls at random
Irom the
box, identiIy and note the colour and then replace. Use the Iollowing 10
random
numbers to simulate: 52, 60, 02, 3379, 79, 30, 36, 58 and 43.
10. Rahul, the captain oI the cricket team, has the Iollowing observations
on the number
oI runs scored against type oI ball. The bowling probability oI a bowler
Ior the type
oI balls bowled are given below.
512
Ior Management
The number oI runs scored oII each type oI ball is shown in the table
given below:
Simulate the game Ior 3 overs (6 balls per over) and calculate the batting
average
oI Rahul.
DISCUSSION
1. (a) True (b) False (c) True (d) False (e) False
2. (a) Quantitative (b) Inclusion (c) Simulation (d) Random (e) Data
ErnshoII, J.R. & Sisson, R.L. Computer Simul,tions odels, ew York
Macmillan
Company.
Gordon G., System Simul,tion, Englewood cliIIs .J. Prentice Hall.
Chung, K.H. 'Computer Simul,tion of Queuing System` Production &
Inventory
Management Vol. 10.
Shannon, R. I. Systems Simul,tion. %he ,ct & Science. Englewood
CliIIs, .J. Prentice
Hall.
Type of bowling Probability of hitting a boundary
Over pitched 1
Short-Pitched 4
Outside oII stump 3
Out side leg stump 2
Bouncer 2
Attempted Yorker 0

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LESSON 4

LINEAR PROGRAMMING: GRAPHICAL METHOD

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