,.

r
EUROPEAN
JOURNAL
OF OPERATIONAL
RESEARCH
ELSEVIER European Journal of Operational Research 97 (1997) 220-244

Operations Research applications:

Opportunities and accomplishments
H a n a n L u s s *, M o s h e B. R o s e n w e i n
AT& T Laboratories, Holmdel, NJ 07733-0651, USA

Abstract

About fifty years have passed since the birth of Operations Research (OR) during World War II. As a relatively young,
evolving discipline, the fierce debates in our journals and conferences regarding the future of OR are of no surprise and even
healthy. Although OR has penetrated into a wide range of application areas, it is still often viewed as an esoteric academic
discipline - certainly not a 'household name'. In this paper, we attempt to demonstrate the impressive impact OR has had
since World War II, and to highlight the unprecedented opportunities for OR in future years. First, we discuss opportunities
for OR in a sample of diverse application areas, including telecommunications, air transportation, energy, health care, and
others. Next, we review significant contributions of OR to numerous, high-impact projects, using the Edelman Award
Competition as a data source. Finally, we present OR activities in several corporations that won the ORSA Prize (as of 1995,
the INFORMS Prize), in recognition of their effective use of OR through all levels of management decision making.

Keywords: OR applications; Large scale applications

1. Perspective support the military effort. These groups had signifi-

Operations Research (OR) may be defined as the
scientific approach to decision making. Its mission is
to support solving real-world problems, in a wide
variety of application areas, using mathematical and
computer modeling. Our objective is to demonstrate
that OR has indeed had significant impact on our
society, and future opportunities are unbounded.
We begin by briefly reviewing the evolution of
OR since its birth in World War II. During the war,
OR groups were established in Britain and the US to
* Corresponding author.
cant successes in supporting critically important ac-
tivities including deployment of radar systems, anti-
submarine warfare and bombing strategies. The ' O R
professionals' were established scientists in other
areas such as physics, statistics and psychology.
These scientists worked on solving real problems
using primarily ingenious ideas, quantitative and sci-
entific reasoning, and common sense. Supportive OR
methodologies were essentially nonexistent, and re-
suits of the studies had to be immediately communi-
cated and implemented. An overview of the history
of OR in that period is presented in a series of three
papers by McCloskey (1987a,b,c).
After the war, the OR problem-solving approach
was enthusiastically welcomed to help solve com-
plex problems facing societies that needed to build a

0377-2217/97/$17.00 Copyright © 1997 Elsevier Science B.V. All rights reserved

PI1 S0377-221 7 ( 9 6 ) 0 0 1 9 4 - 4
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
new world. Major companies, including oil, automo-
bile, telecommunications, steel, airlines, and others,
established central OR groups to help solve their
strategic business problems. Expectations from OR
were extremely high. As a result, the OR profession
grew at a fast pace, drawing upon ideas from other
disciplines such as engineering, physics, biology,
and statistics. In the 60's, OR went mathematical and
many important methodologies were developed. Un-
fortunately, over the years it often appeared that the
mathematics of OR became the goal rather than the
means to support solving real-life problems. As a
result, many central OR groups lost their influence in
the 70's and 80's, and much of the OR work emi-
grated to line organizations within the companies. It
appears that corrective steps have been taken in the
late 80's and 90's. Many academicians have spent
significant effort trying to understand better the real
world, and academic programs have started to em-
phasize more than merely mathematical techniques.
All major OR conferences are now devoting numer-
ous sessions to applied work.
Over the years, much has been said and published
as to whether OR is dead or alive, in crisis or doing
well. We will not enter this debate. Let us only refer
to Corbett and Van Wassenhove (1993) who classi-
fied OR professionals into three groups: theoreti-
cians, who focus primarily on developing new
methodologies that enrich the knowledge in OR;
management consultants, who focus on using exist-
ing, standard methods to solve practical problems;
and the 'in-between' people, called (for lack of a
better term) operations engineers, who adapt and
enhance methodologies in novel ways in order to
solve practical problems. The OR pioneers in World
War II were essentially operations engineers. How-
ever, during the 60's and 70's, academic programs
produced primarily theoreticians who lacked under-
standing of (or motivation to learn about) real world
problems. On the other hand, companies often relied
on management consultants to solve their OR prob-
lems. Many of these consultants simply ignored
available methodologies, sometimes justifiably and
sometimes for lack of expertise that would facilitate
effective use of these valuable methodologies. Thus,
OR drifted to two extremes and was lacking a com-
parable growth in the number of operations engi-
neers. The profession needs to nurture and grow the
22l
number of operations engineers in order to bridge the
gap between the academic and consulting camps and
maintain OR as a viable and useful field.
This is perhaps the place to comment on severe
public relations/educational problems that our pro-
fession faces. From time to time, OR receives some
headlines (and credit) in the national newspapers.
For example, many major newspapers, e.g., The
New York Times (1984), reported on Karmarkar's
algorithm for solving large-scale linear programs,
emphasizing the new opportunities for businesses
and government agencies to tackle problems that had
been out-of-reach. As another example, the popular
US television program, 20/20, of ABC News (1989)
featured Professor Richard C. Larson of MIT who
described real-world applications of queueing theory,
e.g., management of queues at Disney World. How-
ever, the OR profession has failed to become a
'household name' - and this is critically important.
We, as ambassadors of the OR profession, should
have a suite of interesting OR applications, with
visible impact on society, that can be easily pre-
sented and explained to friends and acquaintances.
Many of us who are approached by high school (and
even college) students may recall the blank faces
when we first mention that we are involved in OR
(Operations Research, not operating rooms). It be-
comes even more frustrating when after ten minutes
of desperate attempts to explain what OR people do,
the communications gap is still obvious. How come
these students have no problem (or at least believe
they have none) in understanding what biomedical
engineers, rocket scientists, lawyers, and others are
doing, whereas OR sounds so mystical and esoteric?
Popularization of OR, through appropriate education
at high school level and other imaginative actions, is
vitally important to the long-term success, and per-
haps even existence, of the profession. And after all,
it might be more fun (and not more difficult) to learn
about the Traveling Salesman Problem or the Diet
Problem than, say, about topics in trigonometry. The
students of today are the managers and decision
makers of tomorrow. Unless we succeed in educating
them about what OR can do and has done for them,
they will be, at best, suspicious buyers of our profes-
sional services.
In Section 2, we address opportunities for OR in a
sample of application areas. We highlight issues in
222 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
diverse areas such as telecommunications, air trans-
portation, manufacturing, and health care. The op-
portunities for OR are unprecedented. The world is
becoming increasingly complex as globalization and
competitiveness are major issues facing countries
and companies. Many companies are embarking on
major reengineering efforts, attempting to change
drastically the way they are running their businesses.
The computer, information, and communications
revolutions have tremendously affected OR. Enor-
mous amounts of data are now readily accessible for
decision making, analysis, and model validation. In-
expensive computing power is readily available to
solve complex problems in almost real-time at deci-
sion makers' desks. PCs and workstations make it
easy to create user friendly interfaces with interac-
tive graphics. Thus, much of the barriers of earlier
decades for successful implementation of good OR
work have disappeared. The explosive use of spread-
sheets brought modeling capabilities to decision
makers' desks, as some of these software packages
already include some basic modeling tools such as
linear and nonlinear programming solvers. We be-
lieve that decision makers will therefore also learn to
appreciate the potential benefit in using good model-
ing, well beyond simply applying spreadsheets and
canned packages, to solve complex business prob-
lems.
For more general discussions on trends and oppor-
tunities for the OR discipline, the reader is referred
to papers by Geoffrion (1992) and by Little (1991)
and to an article in OR~MS Today (1990). The
latter article presents interviews with prominent
members of the Operations Research Society of
America (ORSA) and of The Institute of Manage-
ment Science (TIMS). (These two societies merged
in 1995 to form INFORMS - the Institute for Opera-
tions Research and the Management Sciences.) Also,
note a report sponsored by the British Operational
Research Society and prepared by a Commission on
the Future Practice of Operational Research (1986)
which focuses on the future practice of OR, and a
report prepared by a US committee on the next
decade in OR - CONDOR (1988) - which empha-
sizes past achievements of OR methodologies and
their promises for the future.
In Section 3, we examine a sample of OR accom-
plishments over the years. A major source of data is
the Edelman Award Competition, established in 1972
by TIMS. Each year, competitors from around the
world present successful OR applications with signif-
icant, verifiable impact on the sponsoring organiza-
tions. The application areas represented in these
annual competitions are indeed diverse, covering
traditional topics such as telecommunications, trans-
portation, and manufacturing, as well as non-tradi-
tional topics such as combating AIDS. A second
source of data is the ORSA Prize (as of 1995,
INFORMS Prize) established in 1991. It is awarded
to companies that demonstrate effective use of OR
through all levels of management decision making.
The Association of the European Operational Re-
search Societies (EURO) established, in 1995, the
EURO annual award for the best applied paper. The
1995 finalists presented their work at the EURO XIV
conference held in Jerusalem; see EURO XIV Pro-
gram and Abstracts (1995, session WEE23). We
expect that this EURO competition will gain momen-
tum in the coming years and provide another excel-
lent source of documented OR applications.
The presentation in Section 3 displays an impres-
sive array of OR success stories. However, we should
emphasize that a successful implementation of OR
work requires significant effort beyond the 'OR part',
including computer implementation, socialization
with potential users, appropriate technology transfer,
and more. An effective OR professional must team
with others from different disciplines and often lead
the team through a long and tedious path. Thus, in
addition to being skilled in OR methodology and to
approaching problem-solving from an 'OR frame-
of-mind', an OR professional must gain significant
subject-matter expertise and exhibit excellent inter-
personal skills in order to gain proper understanding
of a problem and credibility with the organization
that sponsors the work.
We conclude this introduction by emphasizing
that the OR discipline contributes to organizations
through various means. Of course, the most tangible
contributions are in the form of implementable mod-
els, algorithms, and software tools. Nevertheless, OR
also contributes in a major way through educating
and influencing decision makers at all levels to
'think the OR way'. Often, the learning process that
decision makers (and the OR professionals) undergo
throughout different phases of a project is more
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
beneficial to an organization than a software tool that
becomes available at a final stage of the project.
2. Opportunities for Operations Research
In this section, we present a sample of application
areas that provide significant opportunities for OR.
We use the term application area quite loosely. Often
it simply refers to an industry, e.g., telecommunica-
tions. However, we also refer to manufacturing or
logistics as application areas although these span
over many industries.
We first discuss telecommunications and air
transportation, industries responsible for the move-
ment of information, people, and cargo around the
world. These industries led the way towards the
ongoing globalization phenomena. Within seconds,
any news item is transmitted through communica-
tions channels to television stations in all countries,
and, within a day, a person can travel around the
world. It has indeed become a 'small, small world'.
The next application areas, water resources and
energy, represent major resources to society, vitally
important to the economic future of developed and
developing countries. Management of these re-
sources includes large capital investment decisions
for long-term capacity expansions, as well as tactical
decisions regarding the effective use of the available
resources. We added forestry to this group of appli-
cation areas, as prudent forest management is ex-
tremely important to the preservation of our environ-
ment.
Next, we present logistics, manufacturing, and
marketing. At the end of World War II, much of the
world's manufacturing capacity was destroyed, and a
rebuilding period ensued. Modem, efficient manufac-
turing facilities have been built in many countries.
Today, the competition among industrial countries
and companies is intense. For example, formation of
economic partnerships such as the European Com-
mon Market and the North American Free Trade
Agreement are responses by different regions to
better manage global competition. Effective logistics,
manufacturing, and marketing operations are essen-
tial for the long-term success of all major companies.
Accompanying the tremendous industrial and
technological development after World War II, peo-
223
pie in many countries expect comparable quality and
growth in the service sector. We chose to present
two service application areas, namely, health ser-
vices and government services. Much of these ser-
vices are funded through taxes. As people always
strive for improved services and reduced taxation,
the opportunities for OR seem unbounded.
We end the presentation where OR started, the
military. Although the cold war is over, this is not
yet a very safe world to live in. For the foreseeable
future, countries will feel the need to have strong
military forces to protect their political and economic
interests. Thus, military OR will continue to support
countries around the world.
The selection of these areas is somewhat arbi-
trary, and many other areas could have been se-
lected, e.g., financial services, trucking and railroads,
entertainment, and legal systems. Nevertheless, we
believe that the selected areas span a wide range of
interests and demonstrate the tremendous opportuni-
ties for OR in diverse areas.
2.1. Telecommunications
For decades, telecommunications has been a fer-
tile ground for OR. Indeed, as a capital intensive
industry (according to Standard and Poor's, 1992,
the total value of telecommunications plants in the
US alone in 1990 exceeded 200 billion dollars), the
complex design and management of telecommunica-
tions networks invites the use of OR. For example,
in the early 80's, A T & T changed the traditional
hierarchical routing in its long distance network in
the US to dynamic nonhierarchical routing by taking
advantage of the capabilities of the signaling net-
work and electronic switches. OR models were used
to design the time-dependent routing tables for all
switch-pairs in the network in order to minimize the
network cost; see Ash et al. (1981). Capacity expan-
sion models that support the planning of network
evolution over time are an integral part of network
planning. These models balance the significant setup
costs associated with frequent new installations
against early investment in capacity that will be used
only in future years; see Luss (1982). Performance
analysis of communications networks frequently rely
on queueing methodology to analyze congestion,
losses, delays, and related measures in complex net-
224 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
works. A variety of queueing network simulations
and analytic tools are routinely used to improve
management of telecommunications networks.
Telecommunications is one of the world's fastest
growing industries. Many countries realize that their
long-term economic development depends on build-
ing modern telecommunications networks. Network
architectures are becoming increasingly complex, as
these networks will be expected to carry diverse
traffic, including voice, data, video, and multimedia.
Technologies that support high speed digital trans-
port, e.g., the synchronous optical network (SONET),
already exists. A new generation of switching tech-
nology that will support bandwidth-on-demand and
the concept of an information super-highway are also
already available, e.g., asynchronous transfer mode
(ATM). The use of wireless communications is
rapidly spreading and will eventually lead to univer-
sal personal communications services (PCS), where a
unique phone number will be identified with an
individual regardless of location. These advances
will lead to significantly complex network architec-
tures with challenging opportunities for OR. For
instance, the large amount of traffic carried by each
fiber optic link in the network highlights the impor-
tance of network reliability, as companies cannot
afford to lose their communications medium due to a
failure, such as a cable cut, even for a few minutes.
The SONET technology addresses network diversity
and reliability through the design of networks with
ring topology. OR methods, quite different from the
traditional network design tools, are therefore needed
to design effective ring networks; see Cosares et al.
(1995). For more details on OR opportunities in
telecommunications, the reader is referred to Swain
(1992), Fowler and Wright (1994), and Gavish
(1995).
The effective use of information and communica-
tions has become a major factor in the success of
many industries. For example, airlines depend on
real-time reservation systems, airport controllers de-
pend on accurate information concerning airplane
locations, telemarketing groups rely on effective use
of call centers, retail chains order items based on
information collected at the point of sale, and auto
assembly factories can instantaneously view invento-
ries of subassemblies. OR methods have the opportu-
nity to use the available communications media and
the resulting information to provide added value to
the corresponding industries and help solve their
strategically important problems.
2.2. Air transportation
Airlines were among the first industries that ap-
plied OR to solve their strategic business problems.
As early as 1961, OR practitioners from most air-
lines joined forces and formed AGIFORS (Airline
Group of the International Federation of Operational
Research Societies). AGIFORS sponsors annual con-
ferences as well as special interest study groups.
In recent years, due to the fierce competition in
the airline industry, many airlines have relied on
their OR groups to help solve their complex business
problems and gain a competitive edge in the market.
The opportunities for OR in this industry are abun-
dant. We describe below a sample of airline prob-
lems that may significantly benefit from OR.
Efficient use of the airplane fleet is absolutely
essential for any airline. Given a schedule of flights,
an airline must assign different aircraft types to each
scheduled flight. The hub-and-spoke networks used
by major airlines provide a huge number of possible
assignments. Numerous considerations need to be
addressed in this process, including seat capacity
needed on each flight, maintenance constraints, and
others. Solving such fleet assignment problems effec-
tively requires ingenious modeling and state-of-the-
art linear integer programming solution methods. For
an interesting discussion, see Nemhauser (1994).
A second very important resource in the airline
industry is its workforce. The task of scheduling
air-crews (e.g., pilots and air-attendants) is extremely
challenging. Pilots are certified to fly only certain
types of aircraft. Furthermore, a crew schedule must
satisfy a variety of constraints, such as flying hours
within a week, return to a home airport, etc. Again,
sophisticated optimization approaches have proven
invaluable to help address crew scheduling problems.
A third issue that has drawn significant attention
in the last decade is yield management. Capacity of,
say, economy class, on each flight is sold to different
markets (e.g., business customers and tourists) at
different prices. Based on numerous parameters, yield
management models determine at each moment the
availability of different fare classes for each flight in
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
order to maximize an airline's expected profit. Due
to the success of yield management models in the
airline industry, similar approaches have been
adapted to other businesses, such as hotels and car
rentals.
Airlines also face long-term strategic issues where
decisions today will affect their profitability for many
years. Examples include where should new hubs be
located and which types of aircraft should be pur-
chased. These decisions are made at the highest
management levels in the airlines, and OR groups
can benefit from high visibility in airlines. Not sur-
prisingly, several airlines were among the ORSA
Prize recipients, in recognition of the effective use of
OR in these companies. These include American
Airlines, United Airlines, and Federal Express. Note
that many of the problems facing passenger airlines,
like the former two, are also important for airlines
that transport packages, like Federal Express. For
more details on OR work in airlines, the reader is
referred to a special issue of Interfaces, edited by
Cook (1989).
2.3. Water resources
Water is one of the most important resources in
the world. In addition to being required for our
survival, water is used in agriculture, manufacturing,
and electricity generation. Water is, by nature, a
renewable resource. However, in different parts of
the world, during different seasons of the year, the
supply of and demand for water do not always
coincide. Water resource managers must be able to
anticipate, plan for, and remedy flooding and drought
conditions. The association of OR and water re-
source management dates back to Little (1955) who
designed schedules to guide reservoir storage water
usage that was needed to operate a hydroelectric
plant. Since Little's work, numerous successful OR
applications in this area have been publicized, for
example, the work by Goeller et al. (1985) that
addressed strategic planning of water resources in
the Netherlands.
OR is well-suited to support strategic decisions
regarding 'core' water resource management issues.
Governments need to allocate limited funds to long-
term and costly projects, intended to increase water
supply to different regions. Such projects may in-
225
clude construction of dams, expansion of water
canals, and improvement of flood control systems.
As many of these projects are interrelated and their
execution is spread over many years, a good master
plan must be developed. OR approaches can support
the development of such a plan that would be eco-
nomically prudent and satisfy numerous physical,
environmental, and political constraints. OR method-
ologies can also be used to plan a complex project,
for example, to transport water from supply points
(e.g., reservoirs) to demand locations. Such a project
involves designing a water network consisting of a
configuration of rivers, canals, and pipes and deter-
mining locations and sizes of pumping plants.
OR applications in the water resource area are
often related to energy concerns. For example, OR
can be used to schedule the release of water from
reservoirs in a hydroelectric network that supports
multiple power plants. Water distribution must con-
sider the supply of and demand for water at each
location, subject to constraints on reservoir storage
capacities, constraints on flow capacities of each
interconnecting river, canal, or pipe, and legal regu-
lations, such as environmental protection.
We conclude by noting several worthy references.
Loucks et al. (1984) survey 42 water resource man-
agement applications worldwide including the High
Aswan Dam in Egypt, the St. John River in Canada,
and the Mu River in Burma. Yakowitz (1982) re-
views applications of dynamic programming in water
resource management (with over 130 references). A
thorough, more recent review of OR and water re-
source management is given by Golden and Wasil
(1994).
2.4. Energy
Maintaining low-cost, reliable, and environmen-
tally sound sources of energy is a worldwide con-
cern. As recently as 1991, the major industrial coun-
tries, led by the US, formed an alliance that engaged
Iraq in war, in part, to protect the flow of oil from
the Persian Gulf. The disruptions of supply and the
escalations in cost that occurred during the 70's due
to political instability in the Middle East remain
fresh in policymakers' minds. In addition to political
considerations that can affect energy policy, environ-
mental consciousness has been raised to unprece-
226 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997)220-244
dented levels worldwide. The potential dangers of
nuclear power, for instance, have unfortunately been
realized by the Chernobyl accident in the Ukraine.
We limit the discussion below to OR's role within
two industries: petroleum and electric power genera-
tion.
OR, particularly optimization models, have been
broadly applied to the petroleum industry for over 40
years. Optimization problems arise, for example, in
determining gasoline blending and production sched-
ules for a refinery. A typical refinery may have 20
different petroleum components that must be blended
into, say, four grades of gasoline that differ in qual-
ity. Each grade of gasoline may require different
amounts of between 3-10 different components. As
early as 1955, Symonds (1955) of Esso Standard Oil
Company published a book on linear programming
solutions to refinery problems. OR approaches can
provide integrated solutions to complex logistics is-
sues faced by the oil companies. The corresponding
logistics systems include shipping crude oil from oil
fields to refineries, processing at the refineries, dis-
tribution to wholesalers, and marketing. Optimizing
the system as a whole, rather than its components,
will enhance profitability. OR can also address many
other issues such as capital investment in new facili-
ties, and allocation of exploration and drilling re-
sources among different oil fields. Moreover, OR
can help address issues that are important on a
national level. For example, projects like the Alaska
pipeline design face challenging political, environ-
mental, technical and economic problems, providing
ample opportunities for OR approaches. Bodington
and Baker (1990) provide an excellent review of OR
in the petroleum industry and point out that OR
models are being used by nearly all of the major
petroleum companies.
Electric power generation is another important
industry in the energy sector in which OR is highly
prevalent. For instance, Bessiere (1979) described
work used to construct and plan the electric power
network in France over a period of about 20 years.
Multiple categories of equipment or technologies,
e.g., nuclear power plants, gas turbines, and hydro-
electric plants, are available to generate electricity.
The technologies have different construction costs,
operating costs, and operating characteristics. OR
may be used to develop strategic plans regarding
electric power supply in a large region (or country)
over, say, the next two decades. Such plans involve
decisions regarding the optimal mix of different plant
types, locations where each plant should be built,
and capacity expansion decisions over the planning
horizon for each plant. Technological and economic
considerations are typically compounded by political
and environmental issues. OR may also be used to
support tactical decision making. For example, OR
may be used to schedule the release of power from,
say, a hydroelectric plant to satisfy demands during
peak periods of the year. Reservoirs reach their peak
levels in the early spring as snow melts and rainfall
is plentiful. In contrast, peak demand for energy
occurs during the summer months. As another exam-
ple, the daily demand for energy surges during the
day and drops off significantly at night. An efficient
operating policy must be determined to produce and
'store' energy during off-peak times in order to
supply electricity during peak hours.
2.5. Forestry
OR methods and models have been used to solve
a diverse set of problems in the forest products
industry and in forest management. Recent world
attention has been focused on preserving the envi-
ronment and has increased the importance of effec-
tively managing forest resources. OR can and has
played a role in this effort.
Some of the problems unique to forestry are
prevention of forest fires and land use planing. OR
can be used to predict location and evolution of
forest fires and to deploy efficiently fire fighting
resources (workforce and equipment), thus improv-
ing the chances of controlling damage. Forest fires
are sometimes ignited under controlled conditions
(so-called prescribed fires) in order to achieve such
objectives as reducing the accumulation of hazardous
fuels that may contribute to more intense wildfires,
or to control disease and insects. OR can be used to
evaluate potential benefits of igniting a prescribed
fire.
OR can also be used by national forestry adminis-
tration agencies to develop strategic plans regarding
land use of forest areas. For example, the US Forest
Service is required (by the 1976 National Forest
Management Act) to prepare a comprehensive land
 H. Luss, M.B. Rosenwein / European Journal of'Operational Research 97 (1997) 220-244
management plan for over 150 national forests every
ten years. Such planning considers grazing areas,
timber production, wildlife preservation, and recre-
ational activities. OR models can support develop-
ment of appropriate plans while considering a variety
of political, environmental, and economic issues.
Like many other industries, the forestry industry
faces significant challenges in designing optimal lo-
gistics and manufacturing systems. (OR opportuni-
ties in these areas are described under separate head-
ings below.) Forest products include numerous types,
shapes, and sizes of logs. Major customers for these
logs include the construction and paper industries.
The logistics chain in forestry includes cutting of
trees into logs and distributing logs to customers at
many locations. OR methodologies can provide sig-
nificant support to such problems. For example,
Lembersky and Chi (1986) developed a decision
support system that aids in cutting tree stems. In
general, cutting decisions should not merely mini-
mize waste of raw materials. Rather, they should
also consider the implication of cutting decisions on
inventory and distribution costs.
Golden and Wasil (1994) provide a worthy review
of OR and forestry, and, earlier, Harrison and de
Kluyver (1984) edited a special issue of Interfaces
devoted to successful OR applications in forestry.
2.6. Logistics
Logistics is the set of end-to-end, interrelated
activities responsible for the flow of materials from
points of supply to consumers. Logistics is important
in virtually all industries, for in today's global econ-
omy, firms move resources and material among nu-
merous locations all over the globe. For example,
AT & T (now, Lucent Technologies) purchases raw
materials from the Far East to manufacture consumer
telephones in Mexico for distribution in the US.
Honda designs cars in Japan that are assembled in
the US for distribution worldwide. Trends in the
marketplace towards shortened product life cycles, a
focus on the consumer, and customer-option prod-
ucts have also resulted in increased interest in effi-
cient logistics management. An automotive company
may design excellent cars, but lose its market share
due to high costs and poor service that result from
inadequate logistics systems.
227
Numerous OR opportunities exist in logistics. On
the strategic level, a firm must choose where to
locate its manufacturing plants and warehouses. A
firm may choose to design a hierarchy of ware-
houses. For example, a regional European warehouse
may serve as a supplier for local warehouses
throughout the continent. The local warehouses may
serve as suppliers for field technicians. A firm must
also determine the shipment patterns in a distribution
network, i.e., which suppliers will supply which
customers and by which transportation mode. On a
tactical level, a firm must set inventory targets for
both raw materials and finished goods so that it
maintains minimum levels of inventory needed to
satisfy customer service requirements. The location
of inventory within a logistics network is also an
important issue. The topology of the logistics net-
work affects inventory location decisions. Consider a
key supplier that is located in the Far East and a key
manufacturing plant that is located in the US. The
plant may elect to hold large stocks of raw materials
in order to save on sea transport costs and in order to
protect itself from variability associated with the
(lengthy) transportation interval. Alternatively, it may
elect to rely on emergency air shipments while main-
taining only minimal raw materials inventory. On an
operational level, OR may be applied to determine,
for example, the daily routing and dispatching of a
fleet of vehicles to satisfy customer demand.
Billington (1994) provides a nice survey of OR
opportunities in logistics at Hewlett Packard. In addi-
tion to its prevalence in business applications, logis-
tics planning and management is essential in the
military, as described below. Andersen Consulting
(1994) has surveyed almost 1000 software logistics
tools, many of which are OR-based.
2.7. Manufacturing
In the 70's, Japanese manufacturing demonstrated
to the world 'excellence in manufacturing'; see, for
example, the Toyota success story documented in
Monden (1983). Over the years, the Japanese spent
enormous efforts on improving manufacturing. First,
they focused on product design and process reengi-
neering; only then they invested in information sys-
tems and automation. Their efforts paid off as their
products gained significant market shares in diverse
228 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
industries, including automobiles and consumer elec-
tronics, at the expense of American and European
companies. To reverse the trend, the Western compa-
nies have invested heavily in the 80's and 90's in
reengineering their manufacturing processes. Con-
cepts like just-in-time and total quality control were
thoroughly studied and adapted. Effective manufac-
turing facilities must be capable of producing diverse
products in a short lead time. It must also be flexible
to handle short-notice changes in the required prod-
uct mix, while maintaining minimal amounts of
work-in-process inventory.
OR methods can support all aspects of manufac-
turing, including long and short term production
planning, shop floor operations, and others. Large
optimization models, e.g. linear and nonlinear pro-
grams, can be used to drive production plans. For
example, Tata Iron and Steel, a major steel manufac-
turer in India, has used linear programming models
that impacted the company's bottom line in a very
significant way; see Sinha et al. (1995). Resource
allocation models may support the allocation of lim-
ited resources. For instance, in high-tech manufactur-
ing, thousands of integrated circuits are allocated
among numerous circuit board types. Due to rapid
changes in technologies and the large number of
components involved, shortages are often incurred.
Optimization-based resource allocation models that
consider production targets and substitution options
among the components could significantly enhance
production capability and flexibility. Such models,
and others, can be integrated into Material Require-
ment Planning (MRP) systems, widely used in manu-
facturing. Queueing simulations and scheduling algo-
rithms can significantly enhance shop floor opera-
tions. Analysis of bottlenecks that may depend on
the product mix, dispatching rules, and subassembly
routing decisions may help increase overall through-
puts, while producing finished goods on time. For
more details on OR opportunities in manufacturing,
the reader is referred to Collins and Baker (1989).
We conclude by mentioning a reengineering effort
undertaken by A T & T in the late 80's to modernize
one of its primary manufacturing facilities, an effort
in which the authors were involved. This facility (in
Denver, Colorado), manufactures custom-made,
complex communications systems, namely, private
branch exchanges (PBXs). Each such systems con-
sists of a large number of different circuit boards
assembled at multiple assembly lines. The reengi-
neering effort spanned several years and was com-
prised of a team of engineers and managers from the
factory and R & D personnel from Bell Laboratories.
Much of the effort was spent on the assembly of a
large number of different circuit boards needed for
the custom-made products. The project is described
in a special issue of the AT& T Technical Journal,
edited by Krupka et al. (1990), devoted to manufac-
turing excellence. The project provided ample oppor-
tunities for OR. A major OR contribution was the
development of a sequencing algorithm for the final
assembly shop. This shop drives the manufacturing
of all the feeder shops as they provide the subassem-
blies, e.g., the circuit boards, to the final assembly
shop. Thus, it was imperative that the final assembly
sequence smooth the demands imposed on the differ-
ent feeder shops as much as possible. Other OR
efforts included helping design tight inventory con-
trois in the feeder shops, and improving store room
operations.
2.8. Marketing
Each year, large corporations are spending huge
sums of money on marketing their products and
services. Marketing is concerned with diverse issues
such as understanding consumer behavior, designing
effective promotional campaigns, pricing and distri-
bution decisions, etc.
Consider, for example, the introduction of a new
product into the market. A firm must estimate the
impact of the new product on the market share of
existing products - its own and its competitors. The
timing for introducing the new product, the distribu-
tion channels, accompanying promotional campaign,
and the quantities of the new product to be offered
need also to be determined. As another example,
consider the monthly allocation of the promotional
activities of a firm. Given budget, personnel and
other constraints, a firm must decide how much
promotional effort of each type, e.g., advertising,
discounts, and direct marketing, should be spent in
each sales territory for each product. Furthermore,
the activities should be planned for multiple months,
as the efforts spent in a given month may impact
consumers in other months.
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
The examples above illustrate the fertile ground
for quantitative analysis and OR models in market-
ing. Indeed, large corporations have used OR ap-
proaches to address marketing problems since the
late 1950's. Montgomery and Urban (1970)provide
an excellent collection of papers that describe early
OR applications in marketing. ORSA recognized the
importance of this application area and established,
in 1982, the Marketing Science journal.
Advances in information technology have had a
tremendous impact on marketing. For example, di-
rect marketing, based on catalog sales, has boomed
in the past decade. Consumers often find it easier to
order goods via a toll-free number than to trek to a
store or a mall. Likewise, with the proliferation of
credit cards and credit checking, a telemarketing
agent can efficiently negotiate a sale with a cus-
tomer. The introduction of Universal Product Codes
(UPC) and the ability to scan bar codes optically at
cash registers allow retail stores and supermarkets to
update their data bases in real time. The availability
of vast amount of accurate data, collected in real
time and stored in modern data bases, provides
excellent opportunities to apply OR models effec-
tively to marketing. For more details, see Little
(1991).
Well-publicized yield management models (dis-
cussed under the Air Transportation heading) are an
excellent example of effective use of real-time data
by airlines in developing pricing and reservation
strategies for different consumer markets. The newly
established EURO award for the best applied paper
was given in 1995 to Levin et al. (1995) for develop-
ing a marketing decision support system for Franklin
Mint, a large mail order company for collectible
items. The goal of the system is to target the right
audiences for each promotion from among a very
large data base.
2.9. Health care
The area of health care has garnered a great deal
of recent attention in many countries. The main
objectives are to increase access to health care ser-
vices and, at the same time, control spiraling medical
costs.
OR can be used to provide less expensive and
more accessible health care by improving the effi-
229
ciency of existing resources, for instance, improving
hospital management. Resource allocation models
can be applied to allocate expensive diagnostic and
surgical equipment among a network of hospitals.
Prudent allocation of this equipment will provide
patients with access to the best available treatments,
while controlling capital and operating expenses. A
variety of scheduling problems, that are large-scale
and combinatorial in nature, may also be solved
effectively with the aid of computers and OR. For
example, hospitals must determine an appropriate
bed capacity and allocate these beds to different
populations, e.g., cardiac care, pediatrics, etc. Fur-
thermore, scheduling patients to beds in order to
maintain high utilization, while providing timely ser-
vices, is a challenging problem. Workforce manage-
ment (e.g., scheduling nursing shifts) is another im-
portant problem faced by hospitals. Emergency rooms
operate, typically, at high utilization and under stress.
OR models can help streamline operations, quantify
bottlenecks, and suggest improved allocation of lim-
ited resources.
OR can play an important role in a variety of
other health related issues. For example, advances in
the medical profession are highly dependent on ef-
fective research programs. OR approaches can help
coordinate worldwide research programs that seek
better treatments to, say, cancer or AIDS. Further-
more, efficient manufacturing and logistics methods
may help pharmaceutical companies reduce the cost
of delivering medicines.
In addition to being used to help manage health
care delivery, OR methods have begun to be used in
detection and treatment of diseases. That is, OR
methods are beginning to be integrated into the core
of the medical and health care profession. World-
wide attention has been focused on schemes to con-
trol the AIDS epidemic. Kaplan and O'Keefe (1993)
demonstrated the successful use of OR methods to
support the implementation of a needle distribution
program for intravenous drug users. By combining
OR with Artificial Intelligence methodologies, physi-
cians can diagnose and treat patients with serious
diseases. For example, given a patient's medical
history and various laboratory test results, an appro-
priate model can assist a physician in determining
the nature of a patient's illness and a treatment
program that is most likely to lead to a speedy
230 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
recovery. These methods can also help physicians to
treat patients in emergency cases, where a correct,
quick diagnosis will often save patients' lives.
Pierskalla and Brailer (1994) provide an excellent
review of health care applications that have been
reported on in the OR literature.
2.10. Government services
We limit the discussion below to a local (muni-
cipal or regional) government body, responsible for
operating a wealth of critical services such as police,
fire, education, health, sanitation, and bridges and
highways. Government agencies are typically
squeezed by taxpayers who desire high-quality and
accessible services while simultaneously desiring
lower tax rates. Not surprisingly, OR - with its
emphasis on achieving efficient operations - has a
long association with government service agencies.
The first Lanchester Prize (awarded annually by
ORSA (now INFORMS) for the best English-written
book or paper) was awarded to Edie (1954) for his
traffic management work on behalf of the Port Au-
thority of New York. He analyzed delays at toll
booths on the George Washington Bridge, connect-
ing New York and New Jersey. More recently, the
Office of Management and Budget of the City of
New York (with an annual budget exceeding $30
billion) was awarded the ORSA Prize for its
widespread and sustained use of OR models and
methods, see O R / M S Today (1994a). Obviously,
the opportunities for OR are abundant; a few exam-
ples are described below.
OR methodology can support city planners, con-
cerned with strategic development. Planning a city's
infrastructure, e.g., construction or expansion of
highways, bridges, school buildings, and justice fa-
cilities, has an enormous impact on the long-term
well-being of the residents. Quantitative models could
greatly support decision makers, faced with complex
political, environmental, and economic issues.
Location of emergency service stations that dis-
patch police, fire, or medical vehicles is tied to
achieving a specified service performance, e.g., a
response time to an emergency call that should not
exceed a certain threshold. OR can help design
cost-effective emergency systems that provide equi-
table service to all neighborhoods. Kolesar and
Walker (1974) captured the Lanchester Prize for
their work in locating fire stations in the City of New
York.
Other applications for OR include workforce (e.g.,
police patrols) deployment, and design of routes and
schedules for mass transit, school buses, sanitation
trucks, and street sweepers. As government agencies
always seek quality-of-life improvements for its con-
stituents, ample OR opportunities are found in study-
ing numerous policy issues. Examples include ways
of encouraging the use of mass transit, effects of
eliminating (or introducing) toll booths, effects of
reserving a highway lane to multi-passenger cars
only, and many others.
Excellent surveys of OR in the government sector
may be found in Larson (1988), Maltz (1994), and
Swersey (1994).
2.11. Military
As already discussed in the first section, OR was
born in World War II, in support of the allied
military forces. OR activities supported critically
important efforts, including deployment of radar sys-
tems on the coast of Britain, anti-submarine warfare,
and bombing strategies. After the war, OR expanded
into numerous civilian applications in the private and
public sectors. Nevertheless, over the years, OR has
gained significant influence in the military forces of
many countries, affecting major strategic decisions.
A military is a huge enterprise. Hence, like any
large corporation, it faces large-scale and complex
problems in, for example, resource allocation, inven-
tory, logistics and personnel management. Thus, the
same opportunities found in private and public cor-
porations are found in abundance in the military. In
fact, many OR methodologies were invented in the
military and then exported to other application areas.
For example, the Project Evaluation and Review
Technique (PERT) was invented during the develop-
ment of the Polaris submarine, and thereafter used in
the planning of virtually thousands of complex pro-
jects in diverse industries.
We will focus below on a few OR opportunities
that are unique to the military. Military OR is con-
cerned with preparation for and the fighting of wars.
Due to the complexities of modern wars, effective
OR support to decision making is essential, for the
consequences of bad decisions can be loss of life.
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
Planning of multiple war scenarios is extremely
complex. Over the years, hundreds of large war
simulations have been developed. These simulations
facilitate the evaluation of various strategies, the
effect of new weapons, etc. Furthermore, the concept
of simulation has been expanded to war games,
where models of warfare train humans to make
decisions in real time; see Washburn (1994). Simula-
tion tools were extensively used in the Persian Gulf
war in 1991. Senior military staff used simulation
results to analyze, for example, the air defense net-
works in Saudi Arabia and Iraq, as well as to evalu-
ate various air and ground war strategies. For more
details, see Appleget (1995) and Case et al. (1995).
We now describe additional OR opportunities that
arose in the Persian Gulf war. The transport of
personnel, weapons, and other cargo to the Persian
Gulf was characterized as the largest airlift in his-
tory, delivering over 350 000 people and hundreds of
thousands of cargo tons from the US alone during a
very short time interval. Successful accomplishment
of this operation required the use of sophisticated
optimization tools that coordinated the scheduling of
needed resources such as airplanes, airfields, and
aircrews.
In the war zone area, over 100000 sorties were
flown during 40 days. To gain perspective, this load
is equivalent to the flight volume of a major airline.
However, whereas a daily schedule followed by an
airline is relatively stable, the sorties schedule during
the war changed significantly from day to day. OR
methods played an important role in the effective
planning of the daily sorties during the war. On the
ground, a difficult logistics problem is to supply
equipment, fuel, water, medical supplies, etc. to the
right places at the right time. OR models were used
to guarantee the appropriate supplies to the ground
forces. For more details, see Schuppe (1991), Krae-
mer and Hillard (1991), and Staats (1991).
Many OR opportunities in the military are classi-
fied for obvious reasons. These include planning and
testing of complex weapon systems, intelligence and
counter-intelligence methods, and others.
3. Samples of success stories
In the previous section, we presented examples of
diverse application areas that provide ample opportu-
231
nities for OR. In this section, we review a sample of
success stories.
The OR profession has sought to encourage the
dissemination of OR practice success stories among
its membership. Although 'narrow' technical and
methodological contributions are typically easy to
publish, much less attention is focused on document-
ing other components of OR practice. Assad et al.
(1992) give several reasons for the paucity of de-
tailed reports on OR applications. Unlike academics,
practitioners, i.e., those that implement OR, are often
not rewarded for publishing articles. Also, some
firms may believe that releasing information on busi-
ness success stories benefits their competitors and is,
thus, counterproductive. Thus, certain breakthroughs
in OR practice remain proprietary for many years.
3.1. Edelman competition
The most effective mechanism for encouraging
reports of successful OR practice has been the Franz
Edelman Award. The Edelman award competition
was launched in 1972 by the College on the Practice
of Management Science (CPMS) - a special interest
group under TIMS. CPMS's mission is devoted to
focusing attention of the worldwide management
community on the value of OR. Originally known as
the Annual International Management Science Award
Competition, the award was renamed in 1985 as the
Franz Edelman Award for Management Science
Achievement in memory of the late Franz Edelman
who established and led the OR group at the RCA
corporation for many years. As described in its
eligibility requirements, the competition seeks to rec-
ognize and reward outstanding achievements of OR
in practice. An entry must report upon a completed,
practical application and should describe results that
had significant, verifiable, and preferably quantita-
tive impact on the performance of a client organiza-
tion.
The Edelman competition has steadily grown in
prestige and visibility. In 1996, $15000 were dis-
tributed among the finalists, including an award of
$10000 to the winning entry. Based on detailed
abstracts that include a summary of a project's im-
pact and interviews with the client organizations, a
panel of judges selects approximately six finalists.
Each finalist presents its work at a day-long session
232 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
during the spring semi-annual meeting of
ORSA/TIMS (now INFORMS). The finalist papers
are published in a special issue of Interfaces. The
final presentations are also videotaped, and these
videotapes may be obtained from TIMS. The top
prize is hotly contested, and, according to Edelman
folklore, selection of a winner is typically made in
the early hours of the morning following the day-long
competition.
Below, we present summaries of the Edelman
winning entries from 1985 through 1996. We also
provide some information on all finalists, dating
back to 1975. Although the winners (and finalists)
span a large range of industries and application
areas, they have some common features, e.g., a
model (or models) served a key role in supporting
management's ultimate decision direction. As pointed
out by Gass (1983), the role of a model as a catalyst
for change and improvement in an organization dis-
tinguishes OR practice from a productivity improve-
ment or cost cutting exercise.
The summaries below are based on papers pub-
lished in special issues of Interfaces devoted to the
competition. The finalist papers were published in
the following issues of Interfaces.
Year Interfaces Issue
of competition
1975-1977 Part 2 of No. 1, V.6-8,
1975-1977
1978 Part 2 of No. 2, V.9, 1979
1979 No. 5, V.9, 1979
1980-1983 No. 6, V.10-13, 1980-1983
1984-1996 No. 1, V.15-27, 1985-1997
For each winner, we list the title of the entry
(based on the title of the corresponding Interfaces
article), the full set of authors, the client organiza-
tion, and the application area, e.g., telecommunica-
tions, health care, etc.
Edelman competition award winners
1996: "Guns or butter: Decision support for deter-
mining the size and shape of the South African
National Defense Force (SANDF)" - S. Botha, I.
Gryffenberg, R. Hofmeyr, J. Lausberg, R. Nicolay,
W. Smith, S. Uys, W. van der Merwe, and G. Wessels
(South African National Defense Force - Military)
In early 1994, the chief of SANDF commissioned
a team to help determine the appropriate size and
shape of SANDF, in the absence of a major external
threat and given a limited budget. As part of the
project, the OPTIMUM decision support system was
developed. OPTIMUM is comprised of multiple
modules, including a risk model that explores vari-
ous defense contingencies, a growth model for dif-
ferent force elements, a zero-based budgeting cost
model, and a mixed integer programming and model
that ties the various pieces together and determines
optimal resource allocations under various sets of
assumptions. The system enabled a thorough analysis
of over 50 force structure options. Previously, the
creation and analysis of a single option required
about 20 person-years. The analysis highlighted ma-
jor strategic choices, and led to a consensus view
among the different branches of SANDF on a vision
for an affordable and sustainable force structure. The
project resulted in savings of more than 22%, which
translates to an annual savings of about 1.1 billion
dollars.
1995: "IMPRESS: An automated production plan-
ning and delivery quotation system at Harris Corpo-
ration" - R.C. Leachman, R.F. Benson, C. Liu, and
D.J. Raar (Harris Corporation / Semiconductor Sec-
t o r - Manufacturing)
In order to provide improved on-time service to
customers and in order to manage over 30 manufac-
turing facilities worldwide, Harris implemented IM-
PReSS (Integrated Manufacturing Production Re-
quirements Scheduling System) in late 1992. IM-
PReSS is a large-scale, linear programming-based
decision support tool that plans production of over
10000 products for Harris. IMPRESS provides each
factory with a weekly, capacity feasible, manufactur-
ing plan and also provides quotations of delivery
dates in response to customer requests for product
deliveries. IMPRESS considers several complexities
that are particularly important in semiconductor
manufacturing. These include product routing that
involves many processes that may be revisited peri-
odically over several weeks, and possible substitu-
tions among multiple components. Implementation
of IMPRESS resulted in significantly improved on-
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
time performance (the percentage of line items deliv-
ered on-time rose from 50% in 1991 to almost 95%
in 1993), and the elimination of lost sales (estimated
at $100 million in 1990). Improvement in on-time
performance was achieved without increasing inven-
tory as a percentage of sales. IMPRESS had a vital
role in restoring the Semiconductor Sector of Harris
to profitability.
1994: "Strategic and operational management with
optimization at Tara Steel" - G.P. Sinha, B.S.
Chandrasekaran, N. Mitter, G. Dutta, S.B. Singh,
A.R. Choudhury, and P.N. Roy (Tam Steel - Manu-
facturing)
The Tata Iron and Steel Company, one of the
largest companies in India, developed a production
planning model to determine its most profitable iron
and steel product mix, over time, subject to scarce,
available power resources. Large quantities of power
are needed to operate each production process in
metal manufacturing, e.g., blast furnaces which con-
vert raw materials into molten iron. Each product
may require a different processing time for each
production process, and the amount of power allo-
cated to each process determines a process's avail-
able capacity. The model influenced Tata manage-
ment in making various strategic decisions such as
justifying purchases of more expensive power in
order to maintain finishing mills at a high utilization
level. Based on the model's recommendations, man-
agement ceased the manufacture of certain, unprof-
itable products. The model was implemented in late
1986 and was responsible for $73 million in savings
in the first year. It continues to be used at Tata Steel
and has been adapted by two other Indian metal
manufacturers.
1993: " A T & Ts Call Processing Simulator (CAPS)
operational design for inbound call centers" - A.J.
Brigandi, D.R. Dargon, M.J. Sheehan, and T.
Spencer III (AT& T - Telecommunications)
In 1993, over 350000 businesses in the US had
call centers to receive and handle their 800 (i.e.,
inbound) calls. '800-line' service is used to conduct
such business functions as order taking and field
support. A call center refers to a set of agents who
reside at a location and handle 800 calls. The man-
agement of a call center involves deciding the num-
ber and types of lines to lease, policies for call
233
routing, and the number and types of agents. A T & T
developed a simulator for their business customers to
support these businesses in designing and operating
call centers. The simulator was used in more than
2000 studies for A T & T customers. Although the
benefits of the simulator do not directly benefit
A T & T , A T & T significantly leveraged the simulator
as an effective marketing tool for its customers. By
employing the simulator, A T & T was able to in-
crease, protect, and regain more than $1 billion in an
$8 billion 800-network market. In addition, the simu-
lator was a catalyst for achieving more than $750
million in annual profit for A T & T ' s business cus-
tomers.
1992: "Let the needles do the talking, t Evaluating
the New Haven needle exchange" - E.H. Kaplan
and E.O'Keefe (City of New Haven, Connecticut -
Health care)
In November, 1990, the city of New Haven,
Connecticut implemented a needle exchange pro-
gram to combat the spread of the AIDS virus. AIDS
may be transmitted among injecting drug users
through sharing of needles. A needle exchange pro-
gram may reduce needle sharing and, thus, limit the
spread of AIDS. Nevertheless, needle exchange pro-
grams are politically controversial. Kaplan and
O'Keefe modeled the HIV virus transmission pro-
cess and calibrated the model with actual data from
New Haven. They showed that a needle exchange
program can reduce the HIV incidence rate among
injecting drug users by one third. Based on this
study, New Haven decided to continue the program,
and several other Connecticut cities were in the
process of establishing their own needle exchange
programs.
1991: "Yield management at American Airlines" -
B.C. Smith, J.F. Leimkuhler, and R.M. Darrow
(American Airlines - Air transportation)
For an airline, the area of yield management
refers to the airline's dynamic control and manage-
ment of its seat inventory as it seeks to maximize
profitability. It involves deciding how many reserva-
tions to sell for a particular flight, i.e., an overbook-
ing policy, and the number of seats to allocate for
each fare class. These issues are dynamic - a daily
examination of these decisions may result in policy
changes for flights that are scheduled over a one-year
234 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
time horizon. At American Airlines, yield manage-
ment involves 250 million daily decisions. Yield
management is further complicated by the airline's
hub-and-spoke network. That is, a particular flight
segment into a hub may be carrying passengers that
are destined to 30 different destinations. Thus, effec-
tive yield management must evaluate the revenue
implications from selling a seat (on the in-bound hub
segment) that ultimately serves different markets.
Using a variety of management science models,
American developed a yield management system. It
estimated an increase in revenues of $1.4 billion over
1989-1991 and projected an annual contribution of
$500 million in the future.
1990: "Diagnosis related groups: Understanding
hospital performance" - R.B. Fetter (US Depart-
ment of Health and Human Services - Health care)
Diagnosis related groups (DRGs) classify acute-
care patients into groups that should receive similar
hospital services. DRGs were developed to enable
hospitals to control costs while providing quality
service. Hospital performance may be measured and
evaluated by classifying acute-care patients and mak-
ing available a bundle of goods and services for
diagnosis and treatment purposes for each group. In
conceiving and implementing DRGs (a two-decade
effort), Fetter applied economic models, e.g., trading
off cost and quality, to hospital management. For
each DRG, a rate is set for a given illness, consid-
ered to be fair payment to the hospital. The US
Federal government adopted DRGs as the mecha-
nism for reimbursing hospitals for Medicare patients.
By implementing DRGs, a $50 billion savings in
Medicare payouts, from 1983-1990, were realized.
Private insurers, state Medicaid programs, and more
than 20 countries are developing or have adopted
DRG-based systems.
1989: " A choice-modeling market information sys-
tem that enabled ABB Electric to expand its market
share" - D.H. Gensch, N. Aversa, and S.P. Moore
(ABB Electric - Marketing)
ABB Electric was formed in 1970 to design and
manufacture power transformers for the North Amer-
ican market. Over two decades, ABB became the
dominant firm in the industry, garnering a dollar
market share of 40%. In order to survive in its
beginning, ABB realized that they must lure cus-
tomers from its competitors. The firm used multiat-
tribute choice modeling for determining customer
preferences and for segmenting the market. ABB
was able to identify customers who were most likely
to switch suppliers and, thus, tailored marketing
strategy appropriately. Moreover, ABB selected new
products that were likely to be preferred by cus-
tomers and for which ABB could become the low-
cost producer. During the period of ABB's explosive
growth, six US transformer manufacturers left the
industry completely and two others closed major
manufacturing facilities. No new firms entered the
market.
1988: " A break from tradition for the San Fran-
cisco police: Patrol officer scheduling using an opti-
mization-based decision support system" - P.E.
Taylor and S.J. Huxley (San Francisco Police De-
partment - Government services)
The San Francisco Police Department imple-
mented an optimization-based, decision support sys-
tem for deploying patrol officers. The system fore-
casts hourly needs and schedules officers to maxi-
mize police coverage. Captains may evaluate policy
options and schedule changes. The tool, which em-
beds a specialized heuristic to solve a complex com-
binatorial scheduling problem, enabled 25% more
patrol units to be available in times of need, equiva-
lent to adding 200 officers or a savings of $11
million per year. Furthermore, response times im-
proved by 20%. The tool was instrumental in facili-
tating negotiations between the Department and the
Police Officer Association regarding work rules and
staffing. The system is PC-based, and interest in the
system spawned development of a companion sys-
tem to design patrol beats.
1987: "Sales force sizing and deployment using a
decision calculus model at Syntex Laboratories" -
L.M. Lodish, E. Curtis, M. Ness, and M.K. Simpson
(Syntex Laboratories - Marketing)
In order to improve its position in the pharmaceu-
tical marketplace, Syntex Laboratories undertook de-
velopment of a variety of models to support sales
force sizing and deployment. Using a modified Del-
phi method, response functions (i.e., sales levels as a
function of sales force size) were estimated by a
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
team of managers and salespeople. The models were
better predictors of sales than existing forecasts and
were a catalyst to Syntex increasing its sales force
and changing its deployment. The company wit-
nessed an eight percent annual increase in sales -
$25 million - over a three year period (1982-1985)
as the model was deployed. The models also sup-
ported Syntex's product planning such as introduc-
tion of new products and withdrawal of existing
products.
1986: "The successful deployment of Management
Science throughout Citgo Petroleum Corporation"
- D. Klingman, N. Phillips, D. Steiger, and W.
Young (Citgo Petroleum - Energy)
Citgo Petroleum Corporation was acquired by
Southland Corporation in 1983. Citgo had lost money
for several years prior to the takeover and, in fact,
sustained a $50 million pretax toss in 1984. In 1985,
bolstered in large part by the application of manage-
ment science methods and tools throughout its orga-
nization, Citgo achieved a pretax profit of $70 mil-
lion. Among the contributions of the management
science team were a linear programming model to
plan refining operations. Among the performance
improvements were a reduction in crude inventories
as a result of improved schedule deliveries from
crude suppliers, and a better ability to adjust produc-
tion runs and alter petroleum product mix in re-
sponse to changing market conditions. A second
optimization tool (that embeds a minimum cost net-
work flow model) was developed to support such
decisions as where to sell products, where to buy or
trade products, pricing, and transportation mode se-
lection. In conjunction with the management science
team's efforts, Citgo's management took ambitious
steps to integrate information systems and reorganize
its management structure.
1985: "Weyerhaeuser decision simulator improves
timber profits" - M.R. Lembersky and U.H. Chi
(Weyerhaeuser- Forestry)
Weyerh~euser is one of the largest forest product
companies in the world. Efficient usage of raw mate-
rials (i.e., trees) is critical to the company's success.
Weyerhaeuser developed a dynamic programming-
based model to optimize the use of raw materials.
Although a system based on the model was imple-
235
mented in 1976, Weyerhaeuser kept its contents
proprietary until 1982 due to the perceived competi-
tive edge that the technology offered. The system
supports decisions such as how to crosscut a particu-
lar tree into logs and to which markets to allocate the
resulting logs in order to maximize profit. Different
decisions on crosscutting and market allocation lead
to different revenue flows for the firm. Through
1985, Weyerhaeuser realized $100 million in in-
creased profits by using the system. The system was
also of note since it represented (at the time) a
significant breakthrough in the use of visual graphics
and animation in management science practice.
In addition to providing detailed summaries of
recent winners, we also present in Table 1 informa-
tion on all Edelman finalists, dating back to 1975.
(Prior to 1975, finalists did not publish their reports
in Interfaces.) The finalists are clustered by industry
classes, e.g., energy, government, health care,
telecommunications, etc. For each finalist, we pro-
vide the client, year of competition, and topic. (An
asterisk adjacent to a client denotes a winning paper.)
The interested reader is referred to the relevant is-
sues of Interfaces (1975-1997) for more informa-
tion. A somewhat different table of presentation is
given in Assad, et al. (1992) for the years 1980-1989.
Note that our choice of industry headings is some-
what arbitrary. For instance, the energy industry
could have been split into petroleum, electric power,
and other industries. As another example, air trans-
portation, sea transportation, trucking, and railroads
could have been combined into a single transporta-
tion industry group. In general, we classified finalists
under an appropriate industry based on the client,
e.g., all A T & T finalists are classified under telecom-
munications. However, when the client was a gov-
ernment entity and the topic matched well with one
of the other industries, we classified the correspond-
ing finalist based on the topic, e.g., a Federal Avia-
tion Administration (FAA) finalist was classified
under air transportation.
As displayed in Table 1, OR has been success-
fully deployed in a wide variety of industries. In-
deed, as discussed in Section 2, these industries (or
application areas) are faced with extremely complex
strategic and tactical problems that can benefit
tremendously from effective use of OR. Of the 142
236 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244

finalists over the past 22 years, energy (20), govern-
ment (16), health care (12), telecommunications (12),
financial services (12), and air transportation (10) are
the most highly represented industry groups. These
six industry groups account for almost 58% of the
finalists (these numbers are, of course, affected by
our groupings). The other finalists span over I1
industry groups, demonstrating the breadth of suc-
cessful OR applications. These groups include met-
als/chemicals, military, computers and electronics,
automotive, food, housing/land use, sea transporta-
tion, trucking, miscellaneous consumer products, pa-
per/forestry, and railroads. The relatively low num-
ber (nine) of military finalists may be explained by
the sensitive information that may be contained in
military OR projects.

Table 1
Summary of f'malists in the Edelman Award Competition for Management Science Achievement
Industry/client Year Topic
Energy:
National Energy Board of Canada 1975 Trans-Canada pipeline project evaluation
Syncrnde Canada* 1977 Mining equipment selection
Arizona Public Service 1979 Water supply system for a nuclear power plant
Exxon 1979 Gasoline blending
Getty Oil 1980 Risk analysis of oil and gas explorations
Exxon 1982 Selection of energy improvement projects
Potomac Electric Power Company 1982 Capital expansion policy
Standard Oil Company (Amoco) 1982 Merchandising automotive products
Air Products and Chemicals * 1983 Deliveries of industrial gases
Pacific Gas and Electric 1985 Water releases for hydroelectric plants
Centro de Pesquisas de Energia Electrica 1985 Allocation of hydro and thermal resources
Santos Ltd. 1986 Natural gas production planning
Mobil 1986 Marketing and distribution operations for petroleum products
Citgo Petroleum * 1986 Oil refining and marketing operations
Texaco 1988 Gasoline blending
Electric Power Research Institute 1988 Fuel inventory control
Hidroelectrica Espanola 1989 Reservoir management for hydroelectric power
Southern Company 1990 Allocation of hydro and thermal resources
Gas Research Institute 1992 R & D project appraisal methodology
Chinese State Planning Commission 1994 Coal and electricity procurement and distribution

Government:
City of Cleveland 1975 Solid waste management operations
US Veterans Administration 1976 Eligibility and benefits of pension program
Sudan 1977 Transportation infrastructure design for the Sudan
State of Arizona Department of Transportation * 1982 Maintenance policies for highways
Netherlands Rijkswaterstaat * 1984 National water management policy
Department of Sanitation NYC 1985 Street cleaning operations
US Postal Service 1987 Automating postal operations
San Francisco Police * 1988 Patrol officers deployment
Cabinet of Egypt 1989 Institutionalization of decision support systems
Montreal Urban Community Transit Authority 1989 Mass transit scheduling
US Postal Services 1991 Automating postal operations
New York City 1992 Arrest-to-arraignment system's operations
New Haven Fire Department 1992 Deployment of fire department resources
North Carolina Department of Public Instruction 1993 School bus routing and scheduling
Hanshin Expressway Public Corporation 1994 Automated highway traffic control system
Federal Highway Administration/California 1996 Maintenance planning for a network of bridges
Department of Transportation
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244 237

A breakdown of Edelman winners by industry
group reveals five winners from the health care
industry, three winners from energy, government,
and computer and electronics, and two winners from
telecommunications. The remaining seven winners
were spread over the other industry groups. (In 1984,
two winners were selected.) The winners in the
health care industry focused on pharmaceutical mar-
keting and distribution (2), blood distribution, hospi-
tal management, and disease control. As our health is
indeed dear to our hearts, we should well appreciate
these major OR success stories.
The topics addressed within each industry group
vary significantly. For example, the telecommunica-
tions industry includes topics that focus on network
design, call centers, credit screening, and others; the
air transportation industry includes topics on crew
and fleet scheduling, reservation office operations,

Table 1 continued
Health Care:
multiple hospitals 1975 Menu planning for institutional feeding programs
Cahill May Roberts * 1978 Pharmaceutical product distribution
Becton Dickinson 1979 Production planning of medical supplies
Greater New York Blood Program * 1979 Blood distribution system
American Edwards Laboratory 1981 Production planning of heart valves
Massachusetts Department of Public Health 1981 Forecasting the need for dialysis
Pfizer 1984 Inventory control of pharmaceutical products
City of Austin, TX 1984 Deployment of emergency medical service vehicles
Syntex Laboratories * 1987 Sales force deployment
US Department of Health and Human Services * 1990 Diagnosis related groups (DRGs) for hospitals
City of New Haven* 1992 Needle exchange program to combat AIDS
British National Health Service 1996 Allocation of funds among hospitals

Telecommunications:
AT&T * 1976 Directory assistance charges
AT&T 1977 Design of telephone directories
AT&T 1979 Bond calling and refunding strategies
AT&T 1981 Scoring rules in credit screening
AT&T 1982 Marketing residence long distance services
AT& T 1989 Site location for telemarketing centers
GTE 1991 Customer access network design
Bellcore 1992 Management of R & D project utilization
Bellcore 1993 Purchasing under business volume discounts
AT&T * 1993 Design of network of inbound call centers
Bellcore 1994 Ring network design
Nynex 1995 Interoffice facilities network planning

Financial services:
Liberty National Bank & Trust 1975 Asset/liability management
Cleveland Trust 1976 Commercial bank check processing operations
Farm Credit Banks 1977 Bank borrowing strategies
Wells Fargo Bank 1978 Financial investment portfolios
New England Merchants Leasing 1982 Lease portfolio planning
MPT Associates 1983 Equity investment strategies
Prudential Securities 1991 Mortgage valuation
GE Capital 1991 Delinquent consumer credit management
Yasuda Fire and Marine Insurance 1993 Asset/liability management
Key Corp Bank 1995 Customer service in branch offices
Al-Manakh Stock Market 1996 Debt settlement
AT & T Capital 1996 Credit and collection decisions
238 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244

yield management, and others. Thus, OR had major
impact on a variety of strategically important issues
that are encountered within an industry.
Although the majority of finalists were culled
from projects performed in the private sector, the
public sector has supported about one third of the
total number of finalists (mostly, but not exclusively,
in government services, energy, and the military).
OR has been prevalent at both large, international
organizations and smaller more medium-size firms.
For example, among the air transportation finalists
are the US giants, United Airlines and American
Airlines, as well as smaller carriers such as the
Australian company, Quantas Airways, and the
now-defunct US carrier, National Airlines.
Although most of the finalists were associated
with US-based enterprises, excellent contributions
were made from all over the world. In the 1994,
1995, and 1996 competitions, three of the six (or
seven) finalists in each year were from countries

Table 1 continued
Air transportation:
FAA 1976 Training program for air traffic controllers
United Airlines 1977 Airline's salesforce deployment
National Airlines 1978 Aircraft fueling management
Quastas Airways 1978 Backup crew scheduling
United Airlines 1985 Workforce scheduling at reservation stations
American Airlines 1990 Crew scheduling
American Airlines 1990 Arrival slot allocation
American Airlines * 1991 Yield management
Delta Airlines 1993 Assignment of aircraft to flight legs
NASA 1993 Risk analysis of space shuttle tiles

Metals / chemicals:
Bethlehem Steel 1975 Production scheduling of a large machine shop
Swift Chemical 1975 Phosphate rock production for fertilizers
Agrico Chemical 1979 Logistics system for chemical fertilizers
Monsanto 1984 Production system for chemical products
LTV Steel 1987 Caster scheduling
Bethlehem Steel 1988 Ingot molding and sizing
Reynolds Metal 1990 Centralized trucks dispatching
Merit Brass 1992 Production planning of brass products
Tata Iron and Steel * 1994 Production planning of steel products

Military:
US Navy 1978 Helicopter fleet mix planning
US Army 1980 Army workforce planning
US Air Force 1984 Aircraft utilization in airlift operations
US Army 1987 Army workforce planning
US Air Force 1988 Jet engine repair facility layout
Military Airlift Command 1991 Lifting of cargo and personnel to the Persian Gulf
US Army 1994 Army workforce planning
Israeli Air Force 1995 Aircraft squadron operations
South African National Defense Force* 1996 Army size and shape planning

Computer & electronics:

Xerox * 1975 Customer service operations
Xerox 1977 New product introduction
Xerox 1980 Forecasting system for computer printers
ABB Electric * 1989 Electrical equipment marketing
IBM 1989 Manufacturing system for semiconductor products
IBM 1989 Spare parts distribution network management
DEC 1994 Global logistics supply chain planning
Harris * 1995 Production planning for semiconductor products
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244 239

other than the US; in 1994: India (Tata Iron and the United Kingdom (Sainsburg); and in 1996:
Steel), China (Chinese State Planning Commission), Kuwait (Al-Manakh Stock Market), South Africa
and Japan (Hanshin Expressway Public Corporation); (South African National Defense force), and the
in 1995: Brazil (Sadia), Israel (Israeli Air Force), and United Kingdom (British National Health Service).

Table 1 continued
Automotive:
Hertz 1977 Fleet utilization for a car rental agency
Kelly-Springfield Tire * 1980 Production planning for tire manufacturing
General Motors 1983 Shop floor scheduling
General Motors 1986 Production, distribution, and marketing planning
General Motors 1986 Automotive parts shipping from suppliers to plants
National Car Rental 1996 Rental revenue management

Food:
Booth Fisheries 1976 Frozen seafood production and distribution
Burger King 1981 Fast food restaurant operations
Standard Brands 198 ! Finished goods inventory of nut products
Sadia 1995 Poultry production planning
Sainsbury 1995 Food and grocery retail operations

Housing / land use:

State of Kansas 1975 Reclamation of land that was strip mined for coal
DuPage County 1978 Land use planning
Homart 1986 Divestiture of shopping malls and office buildings
Marriott 1988 New hotel chain design
istanbul Chamber of Commerce 1988 Turkish housing availability planning

Sea tran.sportation:
Canadian Department of Transport 1978 Coast Guard fleet planning
lngalls Shipbuilding 1980 Shipbuilding project management
St. Lawrence Seaway Authority 1981 Canal capacity planning
Columbu s-America Discovery Group 1991 Search plan to locate a wreck at sea

Trucking:
ANR Freight System* 1981 Line haul productivity for a motor carrier
North American Van Lines 1987 Real-time truck dispatching system
Yellow Freight System 1991 Network design and vehicle routing
Vilpac 1992 Shop floor control at a truck manufacturer

Miscellaneous consumer products:

Armour-Dial, Procter & Gamble, and others 1983 Forecasting sales of new packaged goods
Blue Bell * 1984 Apparel inventory control
L.L. Bean 1990 Deployment of telemarketing resources
Procter & Gamble 1996 Supply chain planning

Paper/Jorestry:
Canadian Forest-Products 1976 Plywood production and distribution
Weyerhaeuser * 1985 Log cutting operations
Kodak 1990 Photographic color paper cutting

Railroads:
Chessie System 1980 Railroad freight car fleet planning
Southern Railway 1983 Train dispatching
Canadian National Railway 1985 Rail line capacity planning
240 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
In the past, projects from such countries as Australia,
Brazil, Canada, Egypt, Ireland, the Netherlands, and
Sudan have also been represented.
3.2. ORSA Prize (now, INFORMS Prize)
In addition to the Edelman competition that seeks
to recognize individual achievements in OR practice,
the ORSA Prize, established in 1991, recognizes
organizations for on-going exemplary use of OR.
This prize is the highest honor that ORSA bestows
upon an organization. The prize committee seeks to
reward organizations that have shown a sustained
commitment to OR through infusion of OR models
and methods into operational and strategic decision-
making throughout an organization.
A listing of past winners and a summary of the
impact of OR in the respective winners' organiza-
tions appears below. In three of the first five years in
which the award has been given, two winning orga-
nizations were selected.
ORSA Prize winners
1995: Bellcore (Telecommunications)
Bellcore is a leading provider of telecommunica-
tions software and consulting services. The company
was formed after the divestiture of A T & T in 1984.
Its charter was to provide research and development
support to the Regional Bell Operating Companies
(RBOCs). In addition, the company provides consult-
ing services to other industry clients. Bellcore em-
ploys over 200 OR professionals. They have helped
to introduce the OR culture into all levels of man-
agement and have successfully applied OR methods
into diverse application areas; a few examples are
given below. Bellcore has been involved in develop-
ing sophisticated network design tools for such new
technologies as SONET and ATM. These tools have
been used by the RBOCs and are being marketed to
other telecommunication firms. Some of the technol-
ogy and algorithms underlying the tools are pre-
sented in a recent book by Wu (1992). OR methods
were instrumental in developing a decision suppport
system for procurement decisions. The system was
successfully deployed by the RBOCs and led to
significant savings. As an example of OR's impact
on internal business matters, Bellcore developed
methodology for selecting a mix of projects that
benefit their client base in an equitable way while
effectively utilizing internal resources. Bellcore was
a finalist in the Edelman competition for three con-
secutive years (1992-1994). For more information,
see OR~MS Today (1995).
1994: AT& T (Telecommunications)
A T & T employs hundreds of people with OR
expertise throughout the corporation, including sev-
eral centralized OR groups. Hence, OR is firmly
embedded in the decision making culture across
various application areas. The most significant im-
pact of OR has been in the design and operation of
telecommunications networks. Numerous optimiza-
tion-based network design and network expansion
software tools, as well as queueing models and
simulation tools have been developed to aid decision
makers and engineers to plan the ever-evolving
A T & T network. As new technologies emerge and
network architectures become increasingly complex,
the use of OR models and methods is essential to
A T & T ' s efficient operation of its networks. As a
manufacturer of telecommunications equipment,
A T & T has used OR for a range of applications
including circuit board design, production schedul-
ing, inventory management, and distribution network
planning. Finally, OR has been applied in diverse
business applications including work force schedul-
ing, telemarketing centers site selection, and credit
management. A special issue of the AT& T Techni-
cal Journal devoted to optimization, edited by Luss
(1989), presents applications of OR to telecommuni-
cations network design, product design and manufac-
turing, and speech and language processing.
Klincewicz (1994) describes a variety of network
optimization applications in telecommunications and
logistics in AT&T. As new A T & T businesses
emerge, e.g., acquisition of McCaw, new OR appli-
cations will be developed. For more information, see
O R / M S Today (1994b).
1994: US WEST (Telecommunications)
US WEST, one of the seven Regional Bell Oper-
ating Companies that were created in the US after
the divestiture of A T & T in 1984, provides telephone
services to more than 25 million residential and
business customers in 14 western and midwestern
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
states. Since its formation, the OR group at US
WEST has provided internal consulting services in-
cluding model development and analysis, software
simulation, and optimization-based tools to various
levels throughout the corporation. OR approaches
have helped to shape key strategies that have im-
proved business, engineering, and operations deci-
sions throughout the company. Upper management
acknowledges that OR's biggest impact has been felt
in the company's reengineering initiatives (e.g., a
major initiative that was launched in 1993), increas-
ing US WEST's competitiveness in designing
telecommunications networks, and developing tactics
for moving into strategic business areas. An example
of an OR project at US WEST is the expansion of
interoffice fiber-optic networks in major metropoli-
tan areas in the US WEST region; see Cox et al.
(1993). This work further enabled the OR group to
become involved in the design of fiber-optical ring
networks for major metropolitan areas, a 'hot' area
in telecommunications network design in the 90's.
For more information, see OR/MS Today (1994b).
1993: Office of Management and Budget of the City
of New York (Government services)
New York City's Office of Management and Bud-
get (OMB) is responsible for managing the budget of
New York City - approximately $32 billion in 1993.
OMB reviews the allocation of scarce funds to gov-
ernment service agencies and approves all expenses
of the City. Among OMB's units is an Operations
Unit that supports OMB decision making with vari-
ous OR models and methodologies. OR has become
an integral part of the budget planning process and is
central to the evaluation of public services for New
York City. OR's biggest impact has been in person-
nel staffing, e.g., firefighters, emergency personnel,
and child welfare caseworkers. In addition, OR activ-
ities at OMB include forecast modeling to predict the
demand for different services such as demand for
Medicaid and demand for foster care, economic anal-
ysis of city services such as cost per mile of rebuild-
ing streets and highways and cost per foster child
care, and inventory modeling to manage the City's
reserves of general supplies. For more information,
see OR / MS Today (1994a).
241
1993: United Airlines (Air transportation)
United Airlines is one of the largest US airlines
and employs a sizable OR group. The carrier serves
150 cities on five continents with over 500 aircraft
and 2000 flights daily. Many of the contributions of
OR at United are similar to those described below at
American Airlines which won the ORSA Prize in
1991. At United, OR models have become an inte-
gral part of systems and business planning, employed
to improve 'core' airline operations. The list of OR
applications at United includes long-term strategic
issues such as resource planning (e.g., fleet expan-
sion, and introduction of new hubs), and operational
issues that affect the daily running of the airline such
as yield management, aircraft maintenance opera-
tions, crew scheduling (for a roster of 8000 pilots
and 17 000 flight attendants), and others. The use of
OR has been acknowledged by United to having
supported the airline's improved productivity and
enhancing the airline's competitive edge. In fact, it
would be quite impossible to run a large airline like
United without the use of OR. For more information,
see OR / MS Today (1994a).
1992: San Miguel (Food)
San Miguel is one of the largest private compa-
nies in The Philippines, employing about 40000
people and generating about 4% of the Phillipines'
gross national product. Although the company is best
known for its beer, San Miguel also manufactures a
wide assortment of food and beverage items such as
meat, fish, and soft drinks. In 1991, San Miguel's net
sales were $2 billion. In addition to a corporate OR
group, people with OR backgrounds are spread
throughout the corporation as plant managers, pro-
duction schedulers, and other upper management
positions. This has helped to apply OR approaches at
virtually all levels of the organization. OR models
and methods have supported San Miguel on various
business decisions including capacity planning, pro-
duction scheduling, product mix design, site loca-
tion, distribution, risk management, portfolio man-
agement, and marketing. OR played a role in a major
growth initiative, including the establishment of 22
manufacturing plants that was embarked upon in
1987. For more information, see Homer (1992).
242 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
1991: American Airlines (Air transportation)
From 1982 through 1991, the number of OR
professionals grew at American from 12 to 325. By
1988, the OR department spun off as a separate
division, American Airlines Decision Technologies
(AADT). (In 1993, AADT was reorganized as part
of American Airlines' SABRE Decision Technolo-
gies). At American Airlines, OR input has played
key roles supporting senior management in important
strategic decisions such as hub locations, aircraft
purchasing, and expansion of airport operations. In
addition, a long list of OR-based tools were devel-
oped to support many complex, daily operations of
the airline. These include decision support tools for
flight scheduling (e.g., assignment of aircraft types
to passenger legs and choice of nonstop flights),
crew scheduling for a workforce of 8000 pilots and
16000 flight attendants, yield management for over-
booking and dynamic seat allocation decisions, allo-
cating arrival slots at airports for aircraft in situations
when flights are delayed or canceled, and others. An
Interfaces issue, edited by Cook (1989), presents
several applications of OR in American Airlines.
Due to the tremendous success of OR at American
Airlines, the scope of AADT's charter was expanded
to include extemal consulting to other airlines and
other related industries such as railroad and car
rental companies. For more information, see Homer
(1991).
1991: Federal Express (Air transportation)
At Federal Express, the OR department reports
directly to the CEO and has been involved in the
company's long range decision making process
throughout its lifetime. OR techniques were actually
involved in the founding of the company. Federal
Express's founder, Frederick W. Smith, described
the notion of a hub-and-spoke network for air trans-
port in his OR senior thesis. At the time (early 70's),
the air transportation industry practiced point-to-point
pickup and delivery for both freight and passenger
transport. Upon founding the company, Smith's ideas
evolved into Federal Express's decision to locate a
single hub in Memphis, Tennessee. Since its incep-
tion, additional hubs were located in other cities,
based, in part, on analysis performed by the OR
group. Design and operation of hub-and-spoke net-
works have become standard practice in air trans-
portation today. OR has also been involved in a
variety of other strategic areas at Federal Express.
The costs and benefits of employing wide-body air-
crafts were evaluated by the OR group several years
before the corporation introduced them into service.
OR has also been involved in Federal Express's
development of an air-ground international network,
i.e., the coordination of truck and air schedules. The
coordination of multiple transport modes is becom-
ing a hot topic in freight transportation as customers
seek 'one-stop', global distribution alternatives. In
addition to its work on several long-term strategic
initiatives, the OR department contributes intemal
consulting support on a variety of tactical transporta-
tion and logistics studies. For more information, see
Homer (199 t).
We observe that the ORSA Prize has been cap-
tured three times by air transportation companies,
three times by telecommunications companies, once
by a government agency, and once by a food manu-
facturer. It is perhaps not surprising that air trans-
portation and telecommunications firms have, to date,
dominated the competition. The prize is given for
long-term penetration and impact of OR within a
company. In both air transportation and telecommu-
nications, " c o r e " business problems such as air-crew
scheduling and routing of telecommunications traffic
are intrinsically OR problems. Indeed, the air trans-
portation and telecommunications industries were
among the first to use OR methodologies to solve
their strategic business problems. In the future, we
expect to see the ORSA (INFORMS) Prize captured
by companies and organizations in a wide range of
industries like those represented in the Edelman
competition. Even in the short five year history of
the award, some diversity of industry groups has
been evidenced, as both a government agency (OMB)
and a non-US based company (San Miguel - The
Philippines) have captured the prize.
4. Final remarks
In this paper, we provided our views regarding
opportunities for OR applications and past accom-
plishments. As a relative young discipline, born about
50 years ago during World War II, OR has come a
 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
long way. In Section 2, we presented opportunities
for OR in a sample of application areas: telecommu-
nications, air transportation, water resources, energy,
forestry, logistics, manufacturing, marketing, health
care, government services, and military. As this sec-
tion demonstrated, opportunities for OR profession-
als in both the private and public sectors are un-
bounded. The continuing explosion in computer
power, accessibility of virtually unlimited informa-
tion sources, and capability of instantaneous informa-
tion networking through modern communications
networks will further enhance the future use of OR.
For example, numerous interrelated large-scale mod-
els will be routinely used to provide real-time control
of global, complex communications, transportation,
and logistics systems. In Section 3, we presented a
sample of past accomplishments. We chose to high-
light these accomplishments through the finalists in
the Edelman competition and through the companies
that won the ORSA (INFORMS) Prize. We de-
scribed a sample of the corresponding work in order
to provide a perspective on the depth and breadth of
OR accomplishments. The paper also provides a
table that documents all of the finalists in the Edel-
man competition since 1975.
The future of OR as a thriving discipline is quite
promising. We hope that this paper, and indeed all
the success stories published in this issue, convey
this message. The complexities of the problems fac-
ing governments and companies are truly enormous,
and thus the OR discipline will find ample opportu-
nities to help solve these problems. However, the OR
community needs to educate the public and promote
OR as a 'household name', and the academic OR
programs need to produce more professionals who
excel at bridging the gap between the academic and
management consulting camps. And, like many other
disciplines, OR needs to adapt more rapidly to tech-
nological and business changes, cooperate more ef-
fectively with related disciplines, and listen and re-
spond to feedback from practitioners and customers.
References
ABC News (1989), 20/20 TelevisionProgram (segment: "Hurry
up and wait"), AmericanBroadcastingCompanies,January 6.
243
Andersen Consulting(1994), Logistics Software, Council of Lo-
gistics Management,Oak Brook, IL.
Appleget, J.A. (1995), "The combat simulationof Desert Storm
with applications for contingency operations", Naval Re-
search Logistics 42, 691-713.
Ash, G.R., Cardwell, R.H., and Murray, R.P. (1981), "Design and
optimization of networks with dynamic routing", Bell System
Technical Journal 60, 1821- 1845.
Assad, A.A., Wasil, E.A., and Lilien, G.L. (1992), Excellence in
Management Science Practice, Prentice-Hall, Englewood
Cliffs, NJ.
Bessiere, F. (1979), "The 'Investment '85' Model of Electricit6
de France", Management Science 17, B192-B211.
Billington, C. (1994), "Strategic supply chain management",
O R / M S Today, April, 20-27.
Bodington, C.E., and Baker, T.E. (1990), "A history of mathe-
matical programming in the petroleum mdustry", Interfaces
20/4, I 17-127.
Case, F.T., Hines, C.W., and Satchwell, S.N. (1995), "Analysis
of air operations during DESERT SHIELD and DESERT
STORM", Naval Research Logistics 42, 715-736.
Collins, D.E., and Baker, T.E. (1989), "'Using OR to add value in
manufacturing", O R / M S Today, December, 22-26.
Commission on the Future Practice of Operational Research
(1986), Report of the 1986 Journal of the Operational Re-
search Society 37, 831-886.
CONDOR (1988), "Operations Research: The next decade",
Operations Research 36, 619-637.
Cook, T.M. (ed.)(1989), Special Section on Airline Operations
Research, Interfaces 19/4, 1-74.
Corbett, C.J., and Van Wassenhove, L.N. (1993), "'The natural
drift: What happened to Operations Research", Operations
Research 41,625-640.
Cosares, S., Deutsch, D.N., Saniee, I., and Wasem, O.J. (1995),
"SONET Toolkit: A decision support system for designing
robust and cost-effective fiber-optic networks", Interfaces
25/1, 20-40.
Cox, L.A., Kuehner, W.E., Parrish, S.H., and Qiu, Y. (1993),
"Optimal expansion of fiber-optic telecommunicationsnet-
works in metropolitanareas", Interfaces 23/1, 35-48.
Edie, L.C. (1954), "Traffic delays at toll booths", Operations
Research 2, 107-138.
EURO XIV (1995), Program and Abstracts, 14th European Con-
ference of Operations Research, Jerusalem, Israel, July 3-6,
1995.
Fowler, T.B., and Wright, K.J. (1994), "Telecommunicationsfor
the 21st century", OR~MS Today, June, 20-27.
Gass, S.I. (1983), "Decision-aiding models: Validation, assess-
ment, and related issues for policy analysis", Operations
Research 31,603-631.
Gavish, B. (1995), "'Telecommunications - A revolution in
progress", Operations Research 43, 29-32.
Geoffrion, A.M. (1992), "Forces, trends, and opportunities in
MS/OR", Operations Research 40, 423-445.
Goeller, B.F., and the PAWN Team (1985), "Planning the
Netherlands' water resources", Interfaces 15/1, 3-33.
Golden, B.L., and Wasil, E.A. (1994), "Managing fish, forests,
wildlife and water: Applicationsof ManagementScience and
244 H. Luss, M.B. Rosenwein / European Journal of Operational Research 97 (1997) 220-244
Operations Research to natural resource decision problems",
in: S. Pollock, M.H. Rothkopf and A. Barnett (eds.), Opera-
tions Research and the Public Sector, North-Holland, Amster-
dam, 289-363.
Harrison, T.P., and de Kluyver (eds.), C.A. (1984), " M S / O R and
the forest products industry", Interfaces 14/5, 1-112.
Homer, P. (1991), "Eyes on the prize", O R / M S Today, August,
34-38.
Homer, P. (1992), "OR pays for San Miguel Corp.", O R / M S
Today, December, 68.
Interfaces (1975-1997), Special Issues devoted to the Franz
Edelman Award for Management Science Achievement, Part 2
of No. 1 (V. 6-8), Part 2 of No. 2 (V. 9), No. 5 (V. 9), No. 6
(V. 10-13), No. 1 (V. 15-27).
Kaplan, E.H., and O'Keefe, E. (1993), "Let the needles do the
talking! Evaluating the New Haven needle exchange", Inter-
~aces 23/1, 7-26.
Klincewicz, J.G. (1994), "Transit and transport", O R / M S To-
day, June, 30-39.
Kolesar, P., and Walker, W. (1974), "An algorithm for the
dynamic relocation of fire companies", Operations Research
22, 249-274.
Kraemer, R.D., and Hillard, M.R. (1991), "Mission (not) impos-
sible", O R / M S Today, April, 44-45.
Krupka, D.C., Foo, G., and Svitak, J.J. (eds.). (1990), Special
Issue on Striving for Manufacturing Excellence, AT&T Tech-
nical Journal 69/4.
Larson, R.C. (1988), "Operations Research in the service indus-
tries", in: B.R. Guiles and J.B. Quinn (eds.), Managing
Innovation: Cases from Service Industries, National Academy
Press, Washington, DC.
Lembersky, M.R., and Chi, U.H. (1986), "Weyerhaeuser decision
simulator improves timber profits", Interfaces 16/1, 6-15.
Levin, N., Zahavi, J., and Olitsky, M. (1995), "AMOS - Proba-
bility-driven, customer-oriented decision support system for
target marketing of solo mailings", European Journal of
Operational Research 87, 708-721.
Little, J.D.C. (1955), "The use of storage water in a hydroelectric
system", Operations Research 3, 187-197.
Little, J.D.C. (1991), "Operations Research in industry: New
opportunities in a changing world", Operations Research 39,
531-542.
Loucks, D.P., Stedinger, J.R., and Shamir, U. (1984), "Research
in water resources and environmental systems modeling: Some
historical perspectives, current issues, and future directions",
Natural Resources Forum 8,219-240.
Luss, H. (1982), "Operations Research and capacity expansion
problems: A survey", Operations Research 30, 907-947.
Luss, H. (ed.). (1989), Special Issue on Optimization, AT&T
Technical Journal 68/3.
Maltz, M.D. (1994), "Operations Research in studying crime and
justice: Its history and accomplishments", in: S.M. Pollock,
M.H. Rothkopf and A. Barnett (eds.), Operations Research
and the Public Sector, North-Holland, Amsterdam, 201-262.
McCloskey, J.F. (1987a), "The beginnings of Operations Re-
search: 1934-1941", Operations Research 35, 143-152.
McCloskey, J.F. (1987b), "' British Operational Research in World
War II", Operations Research 35, 453-470.
McCloskey, J.F. (1987c), "US Operations Research in World
War !I", Operations Research 35, 910-925.
Monden, Y. (1983), Toyota Production System, Industrial Engi-
neering and Management Press, Atlanta, GA.
Montgomery, D.B., and Urban, G.L. (1970), Applications of
Management Science in Marketing, Prentice-Hall, Englewood
Cliffs, NJ.
Nemhauser, G.L. (1994), "The age of optimization: Solving
large-scale real-world problems", Operations Research 42,
5-13.
O R / M S Today (1990), "OR/MS: Looking back on the 80s:
Looking forward to the 90s", February, 26-29.
OR / MS Today (1994a), "ORSA ' Prizes' work of United, NYC' ',
February, 66-67.
O R / M S Today, (1994b), "ORSA Prize Committee calls on AT
& T, U S WEST", December, 57-58.
O R / M S Today, (1995), "'OR/MS pays off for BeUcore once
more", December, 51-53.
Pierskalla, W.P., and Brailer, D.J. (1994), "Applications of Oper-
ations Research in health care delivery", in: S.M. Pollock,
M.H. Rothkopf and A. Barnett (eds), Operations Research
and the Public Sector, North-Holland, Amsterdam, 469-505.
Schuppe, T.F. (1991), "OR goes to war", O R / M S Today, April,
44-45.
Sinha, G.P., Mitter, N., Singh, S.B., Dutta, G., Roy, P.N., Chan-
drasekaran, B.S., and Choudhury, A.R. (1995), "Strategic and
operational management with optimization in Tata Steel",
Interfaces 25/1, 6-19.
Staats, R. (1991), "Desert Storm", O R / M S Today, December,
42-56.
Standard and Poor's (1992), Industry Surveys: Telecommunica-
tions, January 23.
Swain, J.J. (1992), "Telecommunications", O R / M S Today,
February, 18-24.
Swersey, A.J. (1994), "The deployment of police, fire, and
emergency medical units", in: S.M. Pollock, M.H. Rothkopf
and A. Barnett (eds.), Operations Research and the Public
Sector, North-Holland, Amsterdam, 151-200.
Symonds, G.H. (1955), "Linear programming - The solution of
refinery problems", Esso Standard Oil Company, New York.
The New York Times (1984), "Breakthrough in problem solving",
November 19.
Washburn, A. (1994), "Military Operations Research", in: S.M.
Pollock, M.H. Rothkopf and A. Barnett (eds.), Operations
Research and the Public Sector, North-Holland, Amsterdam,
67-106.
Wu, T.-H. (1992), Fiber Network Service Survivability, Artech
House, Boston, MA.
Yakowitz, S. (1992), "Dynamic programming applications in
water resources", Water Resources Research 18, 673-696.