IE210

Int. to Systems and Mathematical

Modeling for Ind. Eng.

Department of Industrial Engineering

 Industrial Engineering (IE)
• The Industrial Revolution (19th century) : Large factories with
mass production created a need for managing them effectively
and efficiently.

• The field of Operations Research (OR) (Decision Science,

Management Science) started with the publication of The
Principles of Scientific Management in 1911 by Frederick W.
Taylor, the father of IE.

• His approach: measurement of industrial productivity, time /work

studies in factories, to determine the best method for performing
tasks in the least amount of time.

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What is Operations Research (OR)?

• Operations research (management science) is a scientific

approach to decision making that seeks to best design and
operate a system, usually under conditions requiring the
allocation of scarce resources.
– Term coined during World War II, when leaders asked scientists and
engineers to analyze several military problems.
• A system is an organization of interdependent components
that work together to accomplish a goal.

What is a system?

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 During World War II…
Military leaders wanted
engineers to analyze:
• The deployment of radar
• The management of convoy,
bombing, submarine, and mining
operations

• All these researchers brought

new perspectives to OR.

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 Societies
• The International Federation of Operational Research Societies (IFORS)
• Institute for Operations Research and the Management Sciences
(INFORMS)
• The OR Society (ORS)
• The Association of European Operational Research Societies (EURO)
• Canadian Operations Research Society (CORS)
• Australian Society for Operations Research (ASOR)
• Military Operations Research Society (MORS)
• Operations Research Society of New Zealand (ORSNZ)
• Operations Research Society of the Philippines (ORSP)
• Operational Research Society of India (ORSI)
• Operations Research Society of South Africa (ORSSA)
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• Institute for Operations Research (IFOR)
 Journals
• INFORMS Journals
• European Journal of Operational Research (EJOR)
• Journal of The Operational Research Society (JORS)
• INFOR Journal

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 OR in Turkey
1956: Genelkurmay Başkanlığı Harekat Araştırması Şubesi

Prof. Dr. Halim Doğrusöz (1922-) – CASE OR Group (1958)

– TÜBİTAK Harekat Araştırması Ünitesi, 1965.

– ODTÜ Fen Edebiyat Fakültesi Matematik Bölümü, Harekat
Araştırması Lisansüstü Programı, 1965.
– With Barış Kendirli: Harekat Araştırması → Erekizlem →
Yöneylem Araştırması, 1966.
– ODTÜ Endüstri Mühendisliği Bölümü, 1969.
– ODTÜ Yöneylem Araştırması ve İstatistik Bölümü, 1974.
– Yöneylem Araştırması Derneği (YAD), 1975.
– Yöneylem Araştırması ve Endüstri Mühendisliği Kongresi:
(YAEM)
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 Where do we face with
Optimization?
• In playing chess, to win the game, best strategy must
be considered.
• When there is so much things to do, time management
is important.
• Customers want the goods with highest quality and
lowest price,etc.

→ Everywhere!

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Examples

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 Modelling Optimization Process
• OR is interdisciplinary team approach
• OR is a system approach
• OR is the art of giving answers to problems where otherwise worse answers are
given.

• These methodological modeling principles are also captured in the following

list of questions and answers:

Why? What are we looking for? Identify the need for the model.

Find? What do we want to know? List the data we are seeking.

Given? What do we know? Identify the available relevant data.

Assume? What can we assume? Identify the circumstances that apply.

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How? How should we look at this model? Identify the governing physical principles.
 Modelling Optimization Process

Predict? What will our model predict? Identify the equations that will be used, the
calculations that will be made, and the answers that will result.

Valid? Are the predictions valid? Identify tests that can be made to validate the model,
i.e., is it consistent with its principles and assumptions?

Verified? Are the predictions good? Identify tests that can be made to verify the model,
i.e., is it useful in terms of the initial reason it was done

Improve? Can we improve the model? Identify parameter values that are not
adequately known, variables that should have been included, and/or
assumptions/restrictions that could be lifted.

Use? How will we exercise the model? What will we do with the model?

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Modelling Optimization Process

A first-order view of mathematical modeling that shows how the questions asked in a
principled approach to building a model relate to the development of that model
 The 7-Step Problem Solving Process
1. Observe the System and Formulate the Problem
The operations researcher first defines the organization’s problem. Defining the
problem includes specifying the organization’s objectives and the parts of the
organization that must be studied before the problem can be solved.

2. Collect Data
Collect data to estimate the values of parameters. The operations researcher collects
data to estimate the value of parameters that affect the organization’s problem.
These estimates are used to develop and evaluate a mathematical model of the
organization’s problem.

3. Formulate a Model of the Problem

In this step, the operations researcher develops a mathematical model of the
problem. We will describe many mathematical techniques that can be used to model
systems.
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 The 7-Step Problem Solving Process

4. Verify and Use the Model for Solution

The operations researcher now tries to determine if the mathematical model
developed in step 3 is an accurate representation of reality.

5. Select a Suitable Solution

Given a model and a set of alternative solutions, determine which solution best
meets the organizations objectives. (There may be more than one!)

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 The 7-Step Problem Solving Process

6. Present the Results and Conclusion(s) to the decision makers

The operations researcher presents the model and recommendation from step 5 to
the decision-making individual or group.
In some situations, one might present several alternatives and let the organization
choose the one that best meets its needs.

7. Implement and Evaluate Recommendations

If the organization has accepted the study, then the analyst aids in implementing the
recommendations.
The system must be constantly monitored to ensure that the recommendations
enable the organization to meet its objectives.

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 Models: Abstractions of real world

• Iconic Models
• Simulation Models
• Mathematical Models

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 Terminology
maximize c1x1+c2x2+…+cnxn
Objective Function
Constraints
subject to
Decision Variables a11x1+a12x2+…+a1nxn  b1
a21x1+a22x2+…+a2nxn  b2
Parameters
equality or ≥ constraint
….
set constraints am1x1+am2x2+…+amnxn  bm
sign restrictions x1, x2 , …, xn  Z+
Optimal solution Note: Can also have
Feasible solution equality or ≥ constraint
Heuristics in non-standard form.

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 Mathematical Models

• Operations Research requires the use of mathematical models.

• A mathematical model is an algebraical representation of an

actual problem that may be used to make decisions or clarify
the situation.

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 Descriptive vs. Prescriptive Models

• Prescriptive models “prescribe” behavior for an organization

that will enable it to best meet its goals.
– Components of this model include:
• objective function(s)
• decision variables
• constraints

• An optimization model seeks to find values of the decision

variables that optimize (maximize or minimize) an objective
function among the set of all values for the decision variables
that satisfy the given constraints.

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 A Mathematical Modeling Example
➢ Daisy Co. produces the drug Wozac by heating a chemical
mixture of components A, B and C in a pressurized container.
➢ Each batch produced yields a different amount of Wozac:
process yield (kg).
➢ If Daisy is interested in determining the factors that influence
the process yield, they should form a descriptive model, to
describe the behavior of the actual yield as a function of various
factors.

➢ Daisy thinks that the following factors affect yield:

– Container volume in liters (V)
– Container pressure in milliliters (P)
– Container temperature in degrees centigrade (T)
– Chemical composition of the processed mixture (A, B, C in %)
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 Daisy Example
➢ After analysis, Daisy finds that:
Yield = 300 + 0.8V +0.01P + 0.06T + 0.001TP - 0.01T2 – 0.001P2 + 11.7A + 9.4B +
16.4C + 19AB + 11.4AC – 9.6BC

➢ Now, Daisy can describe the yield of the production process when
volume, pressure, temperature, and chemical composition are
known. Suppose that Daisy now wants to maximize the yield.

Objective function : The function we wish to maximize or minimize.

To maximize the yield, Daisy needs to find the values of V, P, T, A,

B, and C that maximizes the objective function (yield).
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 Decision Variables and Constraints

➢ Variables whose values are under our control and influence

system performance are called decision variables.
– In the Daisy example, V, P, T, A, B, and C are decision variables.

➢ In most situations, only certain values of the decision

variables are possible.
– For example, certain volume, pressure, and temperature conditions
might be unsafe → not allowed.

➢ Also, A, B, and C are percentages, so they must be

nonnegative numbers that sum up to one.

→ These restrictions on the decision variable values are called

constraints. 22
 Constraints of Daisy
➢ Volume must be between 1 and 5 liters V≤5
V≥1
➢ Pressure must be between 200 and 400 P ≤ 400
milliliters
P ≥ 200
T ≤ 200
➢ Temperature must be between 100 and
T ≥ 100
200 degrees centigrade
A≥0

➢ Mixture must be made up entirely of A, B, B≥0

and C C≥0
A + B + C = 1.0
➢ For the drug to perform properly, only A ≤ 0.5
half the mixture at most can be product A. 23
 The Optimization Model for Daisy
Let z represent the value of the objection function (the yield).
Then, the optimization model may be written as:

Maximize z = 300 + 0.8V +0.01P + 0.06T + 0.001TP - 0.01T2

– 0.001P2 + 11.7A + 9.4B + 16.4C + 19AB + 11.4AC – 9.6BC

Subject to V≤5 T ≤ 200 A≥0

(s.t.)
V≥1 T ≥ 100 B≥0
P ≤ 400 A + B + C = 1.0 C≥0
P ≥ 200 A ≤ 0.5

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 The Optimization Model for Daisy

➢ A set of values of the decision variables that satisfies all the

model’s constraints is said to be a feasible solution, and the set of
feasible solutions is called the feasible region (area).
– For example, V = 2, P = 300, T = 150, A = 0.4, B = 0.3 and C = 0.3 is a
feasible solution, and is in the feasible region.

➢ An optimal solution of an optimization model is a feasible

solution that optimizes (in this case maximizes) the objective
function.
– Using an optimization software (we will use OPL and Excel), we can find
that the optimal solution is:
V = 5, P = 200, T = 100, A = 0.294, B = 0, C = 0.706, and z = 209.38.

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 The Optimization Model for Daisy

Daisy problem formulation in LINGO

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 The Optimization Model for Daisy

Part of solution for the Daisy example using LINGO

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 Classifications of Models
Single vs. Multiple Objective Functions
• In many situations, an organization may have multiple (more
than one) objectives.
• For example, in assigning students to two high schools in the
same district, the assignment of students may involve two
objectives:
• equalize the number of students at the two high schools
• minimize the average distance students travel to school

Deterministic vs. Stochastic Models

• A deterministic model : values of parameters of the model are
known with certainty.
• If this is not the case, then we have a stochastic model.
 Classifications of Models
Static vs. Dynamic Models
• A static model : the decision variables involve a decision for a single period.
• A dynamic model : the decision variables involve sequences of decisions over
multiple periods.

Linear, Nonlinear and Integer Models (LP, NLP, IP)

• A linear programming model : the objective function and the constraints of
the model are all linear functions.
• The Daisy example is a nonlinear programming model (involves multiplication
of variables in the objective function). In general, nonlinear models are much
harder to solve than linear models.
• If one or more of the decision variables must be integer, then we say that the
model is an integer programming model. Integer models are also much
harder to solve than linear models.
 What is a Linear Programming Problem (LP)?

➢ Linear Programming (LP) is a tool for solving optimization

problems.

What is a Linear Programming

❑ Linear Programming provides methods for allocation limited resources
among competing activities in an optimal way
▪ Linear All mathematical functions are linear
▪ Programming Involves the planning of activities

❑ Any problem whose model fits the format for the linear programming
model is a linear programming problem.
 Definitions
• A function f(x1, x2, …, xn) of x1, x2, …, xn is a linear function if and only
if for some set of constants, c1, c2, …, cn,

f(x1, x2, …, xn) = c1x1 + c2x2 + … + cnxn.

Ex. f(x1, x2) = 2x1 + x2

• For any linear function f(x1, x2, …, xn) and any number b, the
inequalities

f(x1, x2, …, xn) ≤ b and

f(x1, x2, …, xn) ≥ b
are linear inequalities.
 Definitions
• A linear programming problem (LP) is an optimization
problem for which we do the following:

– Attempt to maximize (or minimize) a linear function (called the

objective function) of the decision variables.

– The values of the decision variables must satisfy a set of constraints.

Each constraint must be a linear equation or inequality.

– A sign restriction is associated with each variable. For any variable

xi, the sign restriction specifies either that xi must be nonnegative (xi ≥
0) or that xi may be unrestricted in sign.
 Four Assumptions of an LP

✓ Proportionality Assumption: Each variable brings a profit

(cost) proportional to its value.

✓ Additivity Assumption: Total profit(cost) can be found by

adding the ones from each decision variable.

✓ Divisibility assumption: Each decision variable can take

fractional values.

✓ Certainty assumption: Each parameter (objective

function coefficients, right-hand side, and technological
coefficients) is known with certainty.
Example: Giapetto’s Woodcarving
• Giapetto’s, Inc., manufactures wooden soldiers and
trains.
– Each soldier built:
• Sells for $27 and uses $10 worth of raw materials.
• Increases Giapetto’s variable labor/overhead costs by $14.
• Requires 2 hours of finishing labor.
• Requires 1 hour of carpentry labor.
– Each train built:
• Sells for $21 and used $9 worth of raw materials.
• Increases Giapetto’s variable labor/overhead costs by $10.
• Requires 1 hour of finishing labor.
• Requires 1 hour of carpentry labor.
 Giapetto - continued
• Each week Giapetto can obtain:
– All needed raw material.
– At most 100 finishing hours.
– At most 80 carpentry hours.
• Demand for trains is unlimited.
• At most 40 soldiers can be sold each week.
• Giapetto wants to maximize weekly profit :
(revenues – costs)
• Formulate a mathematical model of Giapetto’s
situation that can be used maximize weekly profit.
 Giapetto: Formulation
• The Giapetto model will be an LP.

– Decision variables completely describe the decisions to be

made.
• x1 = number of soldiers produced each week
• x2 = number of trains produced each week

– The decision maker wants to maximize (usually revenue or

profit) or minimize (usually costs) some function of the
decision variables. This function to maximized or
minimized is called the objective function.
 Giapetto - Formulation
• Giapetto’s weekly profit can be expressed in terms of the
decision variables x1 and x2:

Weekly profit =
weekly revenue – weekly raw material costs – weekly
variable costs
Weekly revenue = 27x1 + 21x2
Weekly raw material costs = 10x1 + 9x2
Weekly variable costs = 14x1 + 10x2

Weekly profit = 3x1 + 2x2

 Giapetto - Formulation

• Thus, Giapetto’s objective is to chose x1 and x2 to maximize

weekly profit. The variable z denotes the objective function
value of any LP.

• Giapetto’s objective function is

Maximize z = 3x1 + 2x2

• Maximize = Max , Minimize = Min

• The coefficient of an objective function variable is called an

objective function coefficient.
 Giapetto- Formulation
• As x1 and x2 increase, Giapetto’s objective function grows
larger.

• For Giapetto, the values of x1 and x2 are limited by the

following three restrictions (constraints):
– Each week, no more than 100 hours of finishing time may be used.
– Each week, no more than 80 hours of carpentry time may be used.
– Because of limited demand, at most 40 soldiers should be produced.
 Giapetto- Formulation
– Each soldier built – x1 :
• Requires 2 hours of finishing labor.
• Requires 1 hour of carpentry labor.
– Each train built – x2:
• Requires 1 hour of finishing labor.
• Requires 1 hour of carpentry labor.

• Constraints:
– Each week, no more than 100 hours of finishing time may be used:
2 x1 + x2 ≤ 100
– Each week, no more than 80 hours of carpentry time may be used:
x1 + x2 ≤ 80
– Because of limited demand, at most 40 soldiers should be produced:
x1 ≤ 40
 Giapetto- Formulation
• The coefficients of the decision variables in the constraints
are called the technological coefficients (or constraint
coefficients). The number on the right-hand side of each
constraint is called the constraint’s right-hand side (or rhs).

• To complete the formulation of a linear programming

problem, the following question must be answered for each
decision variable.
– Can the decision variable only take nonnegative values,
or is it allowed to take both positive and negative values?
• If only nonnegative values, the sign restriction xi ≥ 0 is
added.
• If both positive and negative values, the decision
variable xi is unrestricted in sign (urs).
 Giapetto- Formulation
• For the Giapetto model, combining the sign restrictions x1≥0 and
x2≥0 with the objective function and constraints gives the
following LP:
 Definitions
• The feasible region of an LP is the set of all feasible
solutions; solutions that satisfy all the LP’s constraints
and sign restrictions.

• For a maximization problem, an optimal solution to an

LP is a point in the feasible region with the largest
objective function value.

• Similarly, for a minimization problem, an optimal solution

is a point in the feasible region with the smallest
objective function value.
 Feasible Region and Optimal Solution

x1 = 40 and x2 = 20 are in the feasible

region since they satisfy all the
Giapetto constraints.
On the other hand, x1 = 15, x2 = 70 is
not in the feasible region because this
point does not satisfy the carpentry
constraint [15 + 70 is > 80].
Giapetto Constraints
2 x1 + x2 ≤ 100 (finishing constraint)
x1 + x2 ≤ 80 (carpentry constraint)
x1 ≤ 40 (demand constraint)
x1 ≥ 0 (sign restriction)
x2 ≥ 0 (sign restriction)
Feasible Region and Optimal Solution
Most LPs have only one optimal solution. However, some
LPs have no optimal solution, and some LPs have an
infinite number of optimal solutions. The optimal solution
to the Giapetto LP is
x1 = 20 and x2 = 60.
This solution yields an objective function value of:

z = 3x1 + 2x2 = 3(20) + 2(60) =

$180

When we say x1 = 20 and x2 = 60 is the optimal solution, we are

saying that no point in the feasible region has an objective
function value (profit) exceeding 180.
 Binding and Nonbinding Constraints

• A constraint is binding (active) at the optimal solution if the left-hand

and right-hand side of the constraint are equal when the optimal
values of the decision variables are substituted into the constraint.
Otherwise, the constraint is called nonbinding (inactive).

• In the Giapetto LP, the finishing and carpentry constraints are

binding: (Optimal solution: x1 = 20, x2 = 60, z = 180)
2 x1 + x2 ≤ 100 (finishing constraint)
2*20 + 60 = 100

x1 + x2 ≤ 80 (carpentry constraint)
20 + 60 = 80

• The demand constraint for wooden soldiers is nonbinding:

x1 ≤ 40 (demand constraint)
20 < 40.