Operations Research & Management

Operations Research
and Management - 2
21MECH42H-O

Dr. Noha Mostafa

Mechanical Engineering department
The British University in Egypt
Operations Research & Management

Operations Research

Dr. Noha Mostafa

Mechanical Engineering department
The British University in Egypt
Operations Research & Management
3

1
Terminology
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Operations Research

▰ The British/Europeans use the term “Operational

Research”, the Americans use the term “Operations
Research”. But both use the abbreviation “OR”.

▰ Operational Research is a systematic and

analytical approach for decision making and
problem solving.
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Operations Research

▰ OR applies advanced analytical methods to help

make better desicions.

▰ It combines the three broad disciplines of

Mathematics, Computer Science, and Business
Applications.

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2
History of OR
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 OR originated in England during the World War II.

 During the WWII, about 1000 Men and Women were
engaged to work for the British Army to analyze and
improve the working of the UK’s Early Warning Radar
System.
 After WWII, Military Operational Research in U.K.
became Operational Analysis (OA) within the U.K.
Ministry of Defense.
 Later, as IT advances, OR spread to commercial use.

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The first computer – Alan Turing

Video: The imitation game Dr. Noha Mostafa

https://www.youtube.com/watch?v=nuPZUUED5uk Mechanical Engineering Department
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3
OR Steps
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“ Operations Research is the

application of analytical methods
designed to help the decision
makers choose between various
courses of action available to
accomplish specified objectives

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▰Operations

The activities carried out in an organization.

▰Research

The process of observation and testing characterized by the scientific method. Situation, problem
statement, model construction, validation, experimentation, candidate solutions.

▰Model

An abstract representation of reality. Mathematical or set of rules in computer program.

▰Operations Research Techniques

A collection of general mathematical models, analytical procedures, and algorithms.

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Steps of OR

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Example

Internal nursing staff not happy with their schedules; hospital using Dr. Noha Mostafa
too many external nurses. Mechanical Engineering Department
Operations Research & Management

1. Observation

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2. Problem Definition

Formulate the
Problem
Situation Problem
Statement

Data

 Describe system  Define variables

 Define boundaries  Define constraints
 State assumptions  Identify data requirements
 Select performance measures

Maximize individual nurse preferences subject to demand requirements, or

Minimize nurse dissatisfaction costs. Dr. Noha Mostafa
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2. Problem Definition

Long-term planning
– Full & part-timers
– Shifts
– Days off

Weekly scheduling
– Vacations, leave
– Overtime
– Part-timers, casuals
– Task assignments

Real-time control
– Emergencies
– Daily adjustments
– Sick leave
– Overtime

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3. Model construction

Situation Problem
Problem must be translated from verbal, Formulate the statement
qualitative terms to logical, quantitative Problem
terms. Data

A logical model is a series of rules, usually Construct

a Model
embodied in a computer program.

A mathematical model is a collection of functional relationships Model

by which allowable actions are delimited and evaluated.

Define relationships between individual nurse assignments and preference

violations; define tradeoffs between the use of internal and external nursing
resources. Dr. Noha Mostafa
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4. Solution
 Many tools are available in OR to
solve the models.
Model
 Some lead to “optimal” solutions
Find a
solution  Others only evaluate candidates 
trial and error to find “best” course
Solution Tools of action.

Collect input data -- nurse profiles and demand requirements; apply algorithm; post-
process results to get monthly schedules.
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5. Implementation

 A solution to a problem usually implies changes for some

individuals in the organization.

 Often there is resistance to change, making the

implementation difficult.

 A user-friendly system is needed.

Implement nurse scheduling system in one unit at a time. Integrate with existing HR
and T&A systems. Provide training sessions during the workday.
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4
OR Applications
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▶Video: A New View of Analytics and Operations Research

▶https://www.youtube.com/watch?v=sFWrmpXPVJw

▶https://www.weforum.org/agenda/2019/08/this-us-city-put-an-algorithm-in-charge-of-its-school-bus-routes-and-saved-5-million/
Dr. Noha Mostafa
▶https://www.facebook.com/watch/?v=410034326354900 Mechanical Engineering Department
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Transportation and travel

 OR techniques are used by airlines and rail companies to offer varying fares and make higher
revenues by filling more seats at different prices - an OR technique known as Yield Management.
 All airlines depend on the effective use of OR techniques to make them operate at a profit.
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Retailing

 In supermarkets, data from store loyalty card schemes is analyzed by OR groups to advise on
merchandising policies and profitability improvement.
 OR methods are also used to decide when and where new store developments should be made.
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Health

 Hospital managers use OR to make decisions such as

determining the optimal utilization of operating rooms
and personnel, assessing the risks posed by patients
with various medical conditions, and deciding
necessary levels of perishable medicine in stock.

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Financial services

 OR practitioners address issues such as portfolio and

risk management, planning and analysis of customer
service.
 They are widely employed in Credit Risk
Management—a vital area for lenders needing to
ensure that they find the optimum balance of risk and
revenue.

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4
OR Models
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Deterministic models (Certain)
▶Linear Programming
▶Network Optimization
▶Integer Programming
▶Nonlinear Programming
▶Dynamic Programming
▶Inventory Models
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Stochastic models (Uncertain)
▶Markov Chains
▶Queuing Theory (waiting lines)
▶Decision Analysis
▶Game Theory
▶Inventory Models
▶Simulation
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Mathematical programming

Basically an optimization problem:

x = (xj) are the decision variables;
f(·) is the objective function;
“g(·) ≤ b”, “xj ≥ 0” are the constraints.
▰LP: both f(·) and g(·) are linear in x;
▰Non-LP: either f(·) or g(·) is nonlinear;
▰Integer Programming (IP): to add in the LP the constraint “xj are integers”;
▰Mixed Integer Programming (MIP): only some xj are required to be integers;
▰Dynamic Programming (DP): multi-stage decision problem. Dr. Noha Mostafa
Mechanical Engineering Department
Operations Research & Management
Deterministic models (Certain)
▶Linear Programming
▶Network Optimization
▶Integer Programming
▶Nonlinear Programming
▶Dynamic Programming
▶Inventory Models
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Stochastic models (Uncertain)
▶Markov Chains
▶Queuing Theory (waiting lines)
▶Decision Analysis
▶Game Theory
▶Inventory Models
▶Simulation
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5
Linear Programming
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 LP is a mathematical technique to help in planning and

decision making.

 It is an analytical technique, in which linear algebraic

relations represent a firm’s decisions, given a business

objective and resource constraints.

 A Linear Programming model seeks to maximize or minimize

a linear function, subject to a set of linear constraints.

 Guarantees the optimal solution to the problem. Dr. Noha Mostafa

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LP importance

 Many real world problems can be approximated by linear models.

 There are well-known successful applications.

Manufacturing Transportation Finance Healthcare

 The output generated from linear programming packages provides useful “what if”
analysis. Dr. Noha Mostafa
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LP assumptions

 The objective functions and constraints must be expressed as linear equations or

inequalities.
 The parameter values are known with certainty (deterministic, non-probabilistic).
 Terms in the objective function and constraints are additive.
 Decision variables are continuous (can be fractional).

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LP components

Model components

Decision variables Mathematical symbols representing levels of activity of a firm.

Objective function A linear relationship in terms of D.Vs (Maximize or Minimize)

Constraints Requirements or restrictions stated in linear relationships of the D.Vs

Parameters Numerical coefficients and constants used in Obj. Fn. or constr.

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6
LP Examples
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Example 1

Product-mix problem Dr. Noha Mostafa

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Example

How many bowls and mugs should be produced to maximize profits given
labor and materials constraints?

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Example

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Example

 Maximization or Minimization?
 Resources?
 Decision variables?
 Objective function?

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Example

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Feasibility

 A feasible solution does not violate any of the constraints.

 An infeasible solution violates one or more constraints.
 What about the optimal solution?

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Example

Check the feasibility of the following solution:

 x1 = 5, x2 = 10
 x1 = 10, x2 = 20
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Example

 x1 = 5, x2 = 10
 Z = 40(5) + 50(10) = $700 Feasible
solution
 1(5) + 2(10) = 25 ≤ 40
 4(5) + 3(10) = 50 ≤ 120 Dr. Noha Mostafa
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Example

 x1 = 10, x2 = 20
 Z = 40(10) + 50(20) = $1400 Infeasible
solution
 1(10) + 2(20) = 50 > 40
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Example 2

 Toy Paradise manufactures two

toy doll models:
Woody and Buzz lightyear

 Resources are limited to:

1000 pounds of special plastic.
40 hours of production time per week.
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Example

 Marketing requirement
 Total production cannot exceed 700 dozens.
 Number of dozens of Woody cannot exceed number of
dozens of Buzz by more than 350.

 Technology requirement
 Woody requires 2 pounds of plastic and 3 minutes of
labor per dozen.
 Buzz requires 1 pound of plastic and 4 minutes of labor
per dozen. Dr. Noha Mostafa
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Example

 The current production plan

 Producing as much as possible of the more profitable
product, Woody ($8 profit per dozen).
 Use resources left over to produce Buzz ($5 profit
per dozen).
 Currently the company produces 450 dozens of Woody,
100 dozens of Buzz
 Profit = 8(450) + 5(100) = $4100 per week

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Example

Management is seeking a production

schedule that will increase the
company’s profit.

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Class activity

 Toy Paradise manufactures two toy doll models: Woody and Buzz lightyear
 Resources are limited to 1000 pounds of special plastic and 40 hours of production time per
week.
 Total production cannot exceed 700 dozens.
 Number of dozens of Woody cannot exceed number of dozens of Buzz by more than 350.
 Woody requires 2 pounds of plastic and 3 minutes of labor per dozen.
 Buzz requires 1 pound of plastic and 4 minutes of labor per dozen.
 The current production plan is to producing as much as possible of the more profitable
product, Woody ($8 profit per dozen) and use resources left over to produce Buzz ($5
profit per dozen).

Use LP to model this problem Dr. Noha Mostafa

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Model

Decisions variables:
X1 = Weekly production level of Woody (in dozens)
X2 = Weekly production level of Buzz lightyear (in dozens).
Objective Function:
Weekly profit, to be maximized
Max Z = 8X1 + 5X2 (Weekly profit)
subject to
2X1 + 1X2 ≤ 1000 (Plastic)
3X1 + 4X2 ≤ 2400 (Production Time)
X1 + X2 ≤ 700 (Total production)
X1 - X2 ≤ 350 (Mix)
Xi ≥ 0, i = 1,2 (Non-negativity)
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7
Graphical Solution
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Graphical representation

▰Feasible region:
The set of all points that satisfy all the constraints of the model

▰By using a graphical presentation we can represent all the

constraints, the objective function, and the feasible region.

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X2

The non-negativity constraints

X1
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Graphical Solution

X2

1000 The Plastic constraint

2X1+X2 ≤ 1000
700

500

X1
500 700 Dr. Noha Mostafa
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Graphical Solution

X2

1000 The Plastic constraint

2X1+X2 ≤ 1000
700

500

Production
Time
X1
3X1+4X2 ≤ 2400
500 700 Dr. Noha Mostafa
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Graphical Solution

X2

1000 The Plastic constraint

2X1+X2 ≤ 1000
700 Total production constraint:
X1+X2 ≤ 700
500

Production
Time
X1
3X1+4X2 ≤ 2400
500 700 Dr. Noha Mostafa
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Graphical Solution

X2
1000 The Plastic constraint
2X1+X2 ≤ 1000
700 Total production constraint:
X1+X2 ≤ 700
500

Production mix
constraint:
Production
X1-X2 ≤ 350
Time
X1
3X1+4X2 ≤ 2400
500 700 Dr. Noha Mostafa
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Graphical Solution

X2
1000 The Plastic constraint
2X1+X2 ≤ 1000
700 Total production constraint:
X1+X2 ≤ 700 (redundant)
500
Infeasible
Production mix
Feasible constraint:
Production
X1-X2 ≤ 350
Time
X1
3X1+4X2 ≤ 2400
500 700 Dr. Noha Mostafa
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Graphical Solution

X2
1000

700

500
Infeasible

Feasible
X1
Interior point Extreme point Dr. Noha Mostafa
Boundary point Mechanical Engineering Department
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Corner- Point method

X2
1000

700
5

500
4 Infeasible

Feasible
3
X1
1
2 Dr. Noha Mostafa
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Corner- Point method

1 x1 = 0, x2 = 0; z = 8(0) + 5(0) = 0

2 x1 = 350, x2 = 0; z = 8(350) + 5(0) = 2800

3 x1 = 450, x2 = 100; z = 8(450) + 5(100) = 4100

4 x1 = 320, x2 = 360; z = 8(320) + 5(360) = 4360

5 x1 = 0, x2 = 600; z = 8(0) + 5(600) = 3000

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Iso-Profit line method

X2 Start at some arbitrary profit, say profit = $400...

1000 Then increase the profit, if possible...
...and continue until it becomes infeasible

700 Max Z = 8X1 + 5X2

Profit =$4360
Z = 400
500 8X1 + 5X2 = 400
(0,80), (50,0)
X1 = 320, x2 = 360
Z = 2000
8X1 + 5X2 = 2000
(0,400), (250,0)

Dr. Noha Mostafa

500 X1 Mechanical Engineering Department
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Solution

Woody = 320 dozen

Buzz lightyear = 360 dozen
Profit = $4360
 This solution utilizes all the plastic and all the production hours.
 Total production is only 680 (not 700).
 Woody production exceeds Buzz production by only 40
dozens.
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Special Cases

▰Multiple optimal solutions (Multi-Optima)

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Special Cases

▰Infeasible solution

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Special Cases

▰Unbounded solution

Dr. Noha Mostafa

Mechanical Engineering Department
THANKS!
Any questions?
You can find me at
Noha.Mostafa@bue.edu.eg