DEC 2007 1. What Are the limitations of OR?

Limitations of Operations Research Operations Research has number of applications; similarly it also has certain limitations. These limitations are mostly related to the model building and money and time factors problems involved in its application. Some of them are as given below: i) Distance between O.R. specialist and anager Operations Researchers !ob needs a mathematician or statistician" who might not be aware of the business problems. Similarly" a manager is unable to understand the comple# nature of Operations Research. Thus there is a big gap between the two personnel. ii) agnitude of $alculations The aim of the O.R. is to find out optimal solution ta%ing into consideration all the factors. &n this modern world these factors are enormous and e#pressing them in 'uantitative model and establishing relationships among these re'uire voluminous calculations" which can be handled only by machines. iii) oney and Time $osts The basic data are sub!ected to fre'uent changes" incorporating these changes into the operations research models is very e#pensive. (owever" a fairly good solution at present may be more desirable than a perfect operations research solution available in future or after some time. iv) )on*'uantifiable +actors ,hen all the factors related to a problem can be 'uantifiable only then operations research provides solution otherwise not. The non*'uantifiable factors are not incorporated in O.R. models. &mportantly O.R. models do not ta%e into account emotional factors or 'ualitative factors. v) &mplementation Once the decision has been ta%en it should be implemented. The implementation of decisions is a delicate tas%. This tas% must ta%e into account the comple#ities of human relations and behavior and in some times only the psychological factors -. .#plain the characteristic of the industrial situations in which linear programming method can be successfully applied. /. .#plain duality theory of linear programming 0. (ow do you select best replacement alternative Introd ction! The replacement problems are concerned with the situations that arise when some items such as men"machines and usable things etc need replacement due to their decreased efficiency" failure or brea%down. Such decreased efficiency or complete brea%down may either be gradual or all of a sudden. &f a firm wants to survive the competition it has to decide on whether to replace the out dated e'uipment or to retain it" by ta%ing the cost of maintenance and operation into account. There are two basic reasons for considering the replacement of an e'uipment. They are

1i) 2hysical impairment or malfunctioning of various parts. 1ii) Obsolescence of the e'uipment. The physical impairment refers only to changes in the physical condition of the e'uipment itself. This will lead to decline in the value of service rendered by the e'uipment" increased operating cost of the e'uipments" increased maintenance cost of the e'uipment or the combination of these costs. Obsolescence is caused due to improvement in the e#isting Tools and machinery mainly when the technology becomes advanced therefore" it becomes uneconomical to continue production with the same e'uipment under any of the above situations. (ence the e'uipments are to be periodically replaced. Some times" the capacity of e#isting facilities may be in ade'uate to meet the current demand. 3nder such cases" the following two alternatives will be considered. 4. Replacement of the e#isting e'uipment with a new one -. 5rgument the e#isting one with an additional e'uipments. ".#.2 $%pe of &aintenance aintenance activity can be classified into two types i) 2reventive aintenance ii) 6rea%down aintenance 2reventive maintenance 12)) is the periodical inspection and service which are aimed to detect potential failures and perform minor ad!ustments a re'uires which will prevent ma!or operating problem in future. 6rea%down maintenance is the repair which is generally done after the e'uipment brea%s down. &t is offer an emergency which will have an associated penalty in terms of increasing the cost of maintenance and downtime cost of e'uipment" 2reventive maintenance will reduce such costs up*to a certain e#tent . 6eyond that the cost of preventive maintenance will be more when compared to the cost of the brea%down maintenance. Total cost 7 2reventive maintenance cost 8 6rea%down maintenance cost. This total cost will go on decreasing up*to 2 with an increase in the level of maintenance up*to a point" beyond which the total cost will start increasing from 2. The level of maintenance corresponding to the minimum total cost at 2 is the Optional level of maintenance this concept is illustrated in the follows diagram

The points M and N denote optimal level of maintenance and optimal cost respectively ".#.# $%pes of replacement pro'lem The replacement problem can be classified into two categories. i) Replacement of assets that deteriorate with time 1replacement due to gradual failure" due to wear and tear of the components of the machines) This can be further classified into the following types. a) Determination of economic type of an asset. b) Replacement of an e#isting asset with a new asset. ii) simple probabilistic model for assets which will fail completely 1replacement due to sudden failure). ".#.(. Determination of Economic Life of an asset 5ny asset will have the following cost components i) $apital recovery cost 1average first cost)" $omputed form the first cost 12urchase price) of the asset. ii) 5verage operating and maintenance cost. iii) Total cost which is the sum of capital recovery cost 1average first cost) and average operating and maintenance cost. A t%pical shape of each of the a'o)e cost *ith respect to life of the asset is sho*n 'elo*

+rom figure" when the life of the machine increases" it is clear that the capital recovery cost 1average first cost) goes on decreasing and the average operating and maintenance cost goes on increasing. +rom the beginning the total cost goes on decreasing upto a particular life of the asset and then it starts increasing. The point 2 were the total cost in the minimum is called the .conomic life of the asset. To solve problems under replacement" we consider the basics of interest formula. 2resent worth factor denoted by 129+" i"n). &f an amount 2 is invested now with amount earning interest at the rate i per year" then the future sum 1+) accumulated after n years can be obtained. 2 * 2rincipal sum at year :ero + * +uture sum of 2 at the end of the nth year i * 5nnual interest rate n * )umber of interest periods. Then the formula for future sum + 7 2 1 4 8 i ) n 2 7 +914 8i)n 7 +# 1present worth factor) &f 5 is the annual e'uivalent amount which occurs at the end of every year from year one through n years is given by 5 7 2 # i 14 8i)n 14 8i)n * 4 7 2 1 5 9 2" i" n ) 7 2 # e'ual payment series capital recovery factor ;. .#plain wor% brea%down structure <. 6rief any one of the inventory model=

>. Discuss on the $2 92.RT $omputations ?. .#plain @oal programming A. 4B. @@@@ 44.