Junaid Zamir

SP10-MM-0040

Operations Research topic

Operations Research Applications

Operation research application

Interactive Optimization Improves Service and
Performance for Yellow Freight System

Yellow Freight System has evolved from a regional motor carrier to one of the
largest less-than-truckload motor carriers, handling over 15 million
shipments annually over a network of 630 terminals. As the company grew,
terminal managers in the field lacked the information that would allow them
to coordinate their activities around the network. We developed a large-scale
interactive optimization system called SYSNET to optimize the routing of
shipments and design of the network. SYSNET has allowed Yellow to evaluate
and implement basic operating strategies that run counter to decades of
standard practice. In addition to substantial cost savings, SYSNET has
improved Yellow's overall planning responsiveness in a changing business
environment. But the far more important statistic to Yellow's 300,000 regular
shipping customers has been the significant improvement in both transit
times and service reliability.

Source: http://interfaces.journal.informs.org/cgi/content/abstract/22/1/147

More Efficient Planning and Delivery at UPS

The Problem
The world's largest package delivery company, UPS relies on the efficient
design and operation of its hub-and-spoke air network – seven hubs and
nearly 100 additional airports in the U.S. – to move over a million domestic
Next Day Air packages every night. Bringing greater efficiency to such an
enormous system was a challenge. Known methods for solving large-scale
network design problems were inadequate for planning the UPS air network.
The primary obstacles were the complexity and immense size of the air
operation, which involves over 17,000 origin-destination flows and more than
160 aircraft of nine different types. Solving these problems required
operations research expertise in large-scale optimization, integer
programming, and routing.

The O.R. Solution

UPS Air Group worked with an MIT specialist in transportation. The joint
research and development effort resulted in an optimization-based planning
system for designing the UPS aircraft network. To ensure overnight delivery,
the approach simultaneously determined minimal-cost aircraft routes, fleet
assignments, and allocation of packages to routes. The project team built
integer programming formulations that were equivalent to conventional
network design formulations, but yielded greatly improved linear
programming-based bounds. This enabled realistic instances of the original
planning problem to be solved typically in less than six hours, with many
instances solving in less than one hour – substantial time savings.

The Value
UPS planners now use solutions and insights generated by the system to
create improved plans. UPS management credits the system with identifying
operational changes that have saved over $87 million to date, and is
anticipating additional savings of $189 million over the next ten years. Other
benefits include reduced planning time, reduced peak and non-peak costs,
reduced aircraft fleet requirements, and improved planning.

Source : http://www.scienceofbetter.org/can_do/success_stories/mepdu.htm

Increasing Advertising Revenues and

Productivity at NBC
The Problem
The National Broadcasting Company, a subsidiary of General Electric, is
primarily in the business of delivering audiences to advertisers. Every year,
NBC sells 60% to 80% of its air-time inventory in a brief period lasting 2 to 3
weeks in late May. Traditionally, each sales plan was written by hand. The
network sought to automate this system to better handle the tremendous
amount of work required in this brief span. Automating this time-consuming
process and better pricing the advertising inventory would require operations
research expertise in optimization and revenue management.

The O.R. Solution

GE's corporate research and development center developed optimization-
based sales systems to improve NBC's revenues and productivity, as well as
its advertising sales processes. These systems removed bottlenecks caused
by manual development of sales plans, helping NBC to respond quickly to
client requests with sales plans that met their requirements. The systems
also enabled NBC to make the most profitable use of its limited inventory of
valuable advertising slots by estimating demands for airtime by show and
week, and to schedule commercials.

The Value
Between 1996 and 2000, the systems increased revenues by over $200
million, improved sales-force productivity, reduced rework by over 80%, and
improved customer satisfaction. As a result, they've become an integral and
essential part of NBC's sales process.
Source : http://www.scienceofbetter.org/can_do/success_stories/iarpn.htm