OPERATIONS RESEARCH

EM – 505

L
Lecture – 1:
1 Introduction
I d i
D M
Dr Muhammad
h d Fahad
F h d
Associate Professor/Director Product Development Centre
Dept of Industrial & Manufacturing
NED University of Engineering & Technology
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1-2

Course Outline
… Deterministic modeling:
g
† Linear programming; The simplex method; Multiple objective
linear optimization; Duality and sensitivity analysis; Post
optimality
ti lit analysis
l i from
f th
the viewpoint
i i t off technology
t h l
management; Transportation, transshipment, and assignment
problems; Problem formulation; Goal programming; Network
analysis; Dynamic programming; Integer programming and
nonlinear programming.
… Probabilistic modeling:
† Markov chains; Queuing theory and applications; Inventory
theory; Forecasting; Design analysis and simulation; Pareto
optimality
i li and d tradeoff
d ff curves.
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1-3

Books
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1-4

Evaluation

… Examination = 60 Marks

… Sessional = 40 Marks
† Two Test

† Tentatively 8th and 15th Class

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1-5

Introduction
Operations
… The activities carried out in an organization

Research
h
… Application of scientific methods for finding answers (solving
problems)
bl )

Operations Research
… Scientific methods applied for (making decision related to) the
activities carried out in an organization
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1-6

Introduction
Operations Research
… A scientific method of providing executive departments with a
quantitative basis for decisions regarding the operations under
their control.
… The scientific approach to execute decision making, which
consists of:
† The art of mathematical modeling of complex situations
† The science of the development of solution techniques used to solve
these models
† The ability to effectively communicate the results to the decision
maker
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1-7

Steps
p
7

What are the objectives?

Is the proposed problem

too narrow?

Is it too broad?
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1-8

Steps
p
8

What data should be

collected?
ll t d?

How will data be

collected?
ll d?

How do different
components of the system
interact with each other?
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1-9

Steps
p
9

What kind of model

should be used?

Is the model accurate?

Is the model too complex?

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1-10

Steps
p
10

Do outputs
p match
current observations for
current inputs?

Are outputs reasonable?

Could the model be

erroneous?
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1-11

Steps
p
11

What if there are

conflicting
fli ti objectives?
bj ti ?

Inherently the most difficult

step.

This is where software tools

will help us!
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1-12

Steps
p
12

Must communicate
M
results in layman’s
terms.

System must be user

friendly!
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1-13

Steps
p
13

Users must be trained on

the new system.

System
y must be observed
over time to ensure it
works properly.
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1-14

Model
Model
… Model is an idealized representation of a real world system

† Physical representation of a real world system

„ Model aircrafts, structures etc
† Mathematical representation of a real world system
„ S= VxT
… In OR, we are mainly interested in Mathematical Models and it
mainly comprises of
† Decision Variables
† Objective Function
† Co s a s
Constraints
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1-15

Model
Model
… A static model is one in which the decision variables do not
change with respect to the time period.
… A dynamic model is a model in which the decision variables

change with respect to the time period.

… If the decision variables are linearly related to each other
other, the
model is termed as linear, otherwise, it is termed as non-linear
… If the decision variables are known with certainty,
y, the model is
termed as deterministic, otherwise, it is termed as stochastic.
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1-16

Example
p
16

An auctioneer has developed a simple mathematical model for

deciding the starting bid he will require when auctioning a used
automobile Essentially,
automobile. Essentially he sets the starting bid at seventy percent of
what he predicts the final winning bid will (or should) be. He
predicts
di theh winning
i i bid by
b starting
i with
i h the
h car's
' original
i i l selling
lli
price and making two deductions, one based on the car's age and
the other based on the car's
' mileage.
The age deduction is $800 per year and the mileage deduction is
$.025 per mile.
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Example
p
17

… Model
M d l
The expected winning bid can be expressed as:
P - 800(A) - .025(M)
02 (M)
The entire model is:
B = .7(expected winning bid) or
B = .7(P - 800(A) - .025(M)) or
B = .7(P)- 560(A) - .0175(M)
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Example
p
18

Suppose a four
four-year
year old car with 60,000 miles on the
odometer is up for auction. If its original price was
$12,500,
, , what starting
g bid should the auctioneer
require?

… Answer:
B = .7(12,500) - 560(4) - .0175(60,000) = $5460.
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Example
p
19

The model is based on what assumptions?

… Assumptions

Only factors influencing the value of a used car are the

original price, age, and mileage

Age and mileage devalue a car in a linear manner and

without limit
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Example
p
Model Buildingg Exercise
… A potter is making cups and plates. It takes him 6 minutes to
make a cup and 3 minutes to make a plate. Each cup uses 3/4
lb off clay
lb. l andd eachh plate
l uses 1 lb.
lb off clay.
l H He has
h 20 hours
h
available for making the cups and plates and has 250 lbs. of
clay on hand. He makes a profit of $2 on each cup and $1.50
on each plate. How many cups and how many plates should he
make in order to maximize his profit?
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Example
p
Model Building g Exercise
… A plant makes aluminum and copper wire. Each pound of
aluminum wire requires 5 kWh of electricity and 1/4 hr of labor.
E h pound
Each d off copper wirei requires
i 2 kWh off electricity
l i i and d½
hr of labor. Production of copper wire is restricted by the fact
that raw materials are available to produce at most 60
lbs./day. Electricity is limited to 500 kWh/day and labor to 40
labour hr/day. If the profit from aluminum wire is $.25/lb. and
the profit from copper is $.40/lb.,
$ 40/lb how much of each should be
produced to maximize profit?