Decision Science

2 Marks
a. Define transition probability in Markov Chain
The state transition probability matrix of a Markov chain gives the probabilities of
transitioning from one state to another in a single time unit.
b. Mention condition for balanced transportation problem.

In a transportation problem with m sources (e.g., factories or suppliers) and n destinations

(e.g., warehouses or consumers), the total supply from all sources must equal the total
demand at all destinations. Mathematically, this condition is expressed as:

∑i=1msi=∑j=1ndj

where:

 si is the supply at source �i,

 dj is the demand at destination �j,
 m is the total number of sources, and
 n is the total number of destinations.

c. Define independent events in probability.

Independent events are events which are not affected by the occurrence of other events. For
example, if we roll a die twice, the outcome of the first roll and second roll have no effect on
each other – they are independent.
d. Write condition for saddle point in game theory.

e. Define EVPI (Expected value of perfect Information).

The expected value of perfect information (EVPI) can be found by adding up the maximum
value and subtracting this from the expected value.
The formula that may be used is
EVPI = EPPI - EMV,

f. Write format of LPP (Linear Programming Problem)

g. Define critical pathin network diagram.

h. List elements of queuing system.

i. Arrival Refers to the customers who arrive and are first in line
Queue or Service Refers to the limits of the system as per the number of customers
Capacity in line
Number of Servers Refers to the total number of employees serving the customers in
line
Size of the Client Refers to the total number of customers in line
Population
Queuing Discipline Refers to how requests are delivered to the servers (includes first-
in, first-out)
Departure Process Refers to customers leaving after receiving service

a) Define Probability.
Probability is a measure of the likelihood or chance that a particular event will occur. It is
expressed as a number between 0 and 1, where 0 indicates impossibility (an event will not
occur), and 1 indicates certainty (an event will occur). The probability of an event is often
calculated based on the ratio of the number of favorable outcomes to the total number of
possible outcomes.
b) List techniques of initial solution for Transportation problem.
 NorthWest Corner Method.
 Least Cost Cell Method.
 Vogel's Approximation Method.

c) Enlist various methods of decision making under uncertainity.

 Laplace criterion
 Maximin criterion
 Maximax criterion
 Hurwicz criterion
 Minimax regret criterion
d) What is 2x2 zero sum game?
The 2-person 0-sum game is a basic model in game theory. There are two players, each with
an associated set of strategies. While one player aims to maximize her payoff, the other
player attempts to take an action to minimize this payoff. In fact, the gain of a player is the
loss of another.
e) Enumerate any two quantitative techniques for optimal decision in business.
1. Linear Programming: A mathematical technique for optimizing a linear objective
function subject to linear equality and inequality constraints.
2. Decision Trees: A graphical representation of decision problems that helps in
evaluating and choosing among different courses of action under uncertainty

f) List the drawbacks of graphical solution in LPP.

1. Limited to Two Variables
 2. Accuracy Issues
3. Non-Linearity
4. Infeasibility and Unbounded Solutions

g) Define total float in Network diagram.

It is the amount of time a scheduled activity can be delayed without delaying the overall
project completion date
Total float = Late finish - Early finish.
h) Define (M/M/1, Infinite, FIFO) in Queuing theory.
 M/M/1: Stands for a queuing system with a Markovian arrival process, Markovian
service process, and a single server.
 Infinite: Indicates an infinite queue capacity, allowing an unlimited number of
customers to wait in the queue.
 FIFO (First In, First Out): Describes the queue discipline, meaning that the
customer who arrives first is the one served first.

5 Marks

a) Discuss different decision environment in Decision Theory.

1. Certainty:
 In a certain decision environment, the decision-maker has complete
knowledge of all possible outcomes and their associated probabilities.
 The optimal decision can be easily determined because the consequences of
each alternative are known with certainty.
 Decision-making under certainty involves selecting the alternative with the
best outcome.
2. Risk:
 In a risky decision environment, the decision-maker has partial knowledge of
the probabilities associated with different outcomes.
 Probabilities are assigned to various states of nature, allowing for the
calculation of expected values and decision-making based on maximizing
expected utility.
 Decision-making under risk involves evaluating the trade-offs between
potential outcomes and their probabilities.
3. Uncertainty:
 In an uncertain decision environment, the decision-maker lacks sufficient
information about the probabilities of outcomes or even the possible states of
nature.
 Decision-making under uncertainty requires subjective judgment, intuition,
and may involve the use of decision criteria such as maximax, maximin,
minimax regret, or expected monetary value.
b) Describe role of linear programming problem (LPP) in managerial decision making
1. Resource Allocation:
 LPP helps in allocating limited resources such as labor, materials, and
machinery efficiently to maximize profits or minimize costs.
2. Objective Function Optimization:
 LPP involves formulating an objective function that needs to be either
maximized (e.g., profit) or minimized (e.g., cost). The decision variables are
adjusted to optimize this objective function.
3. Constraint Management:
 LPP incorporates constraints that represent limitations on resources. These
constraints ensure that the solution adheres to real-world limitations and
feasibility.
4. Sensitivity Analysis:
 LPP allows managers to conduct sensitivity analysis to understand how
changes in parameters, such as resource availability or product demand, affect
the optimal solution.
5. Multi-Objective Decision Making:
 LPP can be extended to handle multiple conflicting objectives, enabling
managers to consider trade-offs and find a compromise solution.
6. Efficient Decision Support Tool:
 LPP provides a quantitative and systematic decision support tool for managers
to make informed decisions based on mathematical modeling and optimization
techniques.

a) Discuss the use of CPM & PERT in Project Management.

Critical Path Method (CPM):

 Objective: CPM is used to determine the critical path in a project, which is the
longest sequence of dependent activities that determines the project's overall duration.
 Benefits: Helps in project scheduling, resource allocation, and identifying activities
that, if delayed, would extend the project completion time.

Program Evaluation and Review Technique (PERT):

 Objective: PERT is used to analyze the uncertainty and variability in project

completion time by considering three time estimates (optimistic, pessimistic, and most
likely).
 Benefits: Provides a probabilistic approach to project scheduling, allowing managers
to account for uncertainties and risks.

b) Explain the role of quantitative techniques in decision making.

1. Data Analysis:
 Quantitative techniques help in analyzing large datasets, identifying patterns,
trends, and relationships, leading to more informed decision-making.
2. Modeling and Optimization:
  Techniques like linear programming, simulation, and optimization models
assist in finding the best solution among various alternatives, considering
constraints and objectives.
3. Risk Analysis:
 Quantitative methods, such as decision trees and Monte Carlo simulation, help
in assessing and managing risks by quantifying uncertainties and potential
outcomes.
4. Resource Allocation:
 Linear programming and other quantitative methods aid in allocating
resources efficiently to achieve organizational goals while considering
constraints and limitations.
5. Forecasting:
 Time series analysis, regression analysis, and other quantitative forecasting
methods help in predicting future trends and making decisions based on
anticipated outcomes.

c) Describe the steps in Solving Assignment Problem.

1. Formulate the Cost Matrix:
 Create a matrix representing the costs or profits associated with assigning each
task to each resource.
2. Identify the Smallest Element in Each Row:
 Find the smallest element in each row of the cost matrix.
3. Subtract the Smallest Element from Each Row:
 Subtract the smallest element found in each row from all the elements in that
row.
4. Identify the Smallest Element in Each Column:
 Find the smallest element in each column of the modified matrix.
5. Subtract the Smallest Element from Each Column:
 Subtract the smallest element found in each column from all the elements in
that column.
6. Draw Minimum Number of Lines to Cover All Zeros:
 Draw the minimum number of horizontal and vertical lines needed to cover all
the zeros in the matrix.
7. Identify Uncovered Zeros:
 Identify any zeros in the matrix that are not covered by the lines.
8. Find the Smallest Uncovered Element:
 Find the smallest uncovered element in the matrix.
9. Adjust the Matrix and Repeat:
 Subtract the smallest uncovered element from every uncovered element, add it
to the intersection of lines, and repeat the process until all assignments are
made.
10. Interpret the Results:
 Interpret the assignments made to each task and resource based on the modified
matrix.