Operations Research

Publisher: Andi, 2010

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 INTRODUCTION
 Operational research (or better known as operations research or
quantitative analysis) is an activity that analyzes and models
mathematics for decision making.
 Many managerial problems in an organization / company are
always in the process of making decisions (decision making).
 The main objective of operational research is to find optimal
solutions,
 However, in managerial practice a satisfactory solution is more
important.
 Decisions in business are still more determined by the behavior of
the decision maker (whether he is an optimist or pessimist,
courageous or afraid of risk, or other characteristics).

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 Implementation OR
1. OR on toll roads, pay attention to how many payment counters
and operators should be prepared, as well as how many payment
lanes that must be opened?
2. OR at a shopping place, how many cashiers are needed, and how
are the layouts of goods and shelves, parking areas, and so on?
3. OR in the hospital, how do you manage the work schedule for
all employees, including medics, doctors, medicine supplies, and
so on? How do you plan your medicine and other supplies for
the next 6 months?
4. OR at the factory, how to manage production schedules, raw
material inventory, employee work schedules, distribution
problems, employee OT schedules, and so on?

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 Implementasi OR
5. OR in the Navy, how to arrange the placement of patrol boats
and their crews for each work area and other problems?
6. OR in a university, how to manage class schedules in each
department, arrange the needs of lecturers and staff for the
next 5 years in each department or faculty, and so on?
7. OR at the Road Transport Traffic Service (DLLAJ) of a large
city, how do you manage the existing city transportation
schedules and routes so that they are optimal? How to
centrally regulate traffic lights (traffic light system)?
8. OR in many sectors of human life, military, schools,
universities, roads, hospitals, markets, and so on?

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 DECISION ANALYSIS
 The problem of decisions is always faced by humans. For example:
in the morning or at dawn, he already has to make a decision to get
up immediately or continue sleeping. When going to campus, he also
has to decide what to ride, with whom, sooner or later, and so on.
 There are many decisions that are taken as they are without thinking,
for example: blinking eyes, tapping a mosquito on the hand, drinking
a drink, and so on.
 There are also decisions that must be considered carefully and
carefully, for example choosing a school, college, workplace, wife,
and so on.
 In the company, managerial decisions must be taken by considering
the various obstacles that exist, resolved systematically, and
evaluated the results to become a continuous improvement process.

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Two Dimensional Matrixes (Contains 3 Decision Criteria and 2
Alternatives) With Results (gain)

DECISION CRITERIA
ALTERNATIVE
K1 K2 K3

A1 H11 H12 H13

A2 H12 H22 H23

The result for alternative 1 (A1) with criterion 1 (K1) is H11

The result for alternative 2 (A2) with criterion 1 (K1) is H21
The result for alternative 1 (A1) with criterion 2 (K2) is H12
... and so on

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 Example:
 The decision to buy a new factory location. There are 2 alternative
locations (Sidoarjo or Mojokerto) with 3 criteria (price, area, and distance
from Surabaya). Value / yield / gain per cell, for example, as follows
DECISION CRITERIA
Alternative Rp (Million) M2 KM

SIDOARJO 560 2.500 30

MOJOKERTO 490 3.000 50
 Price (cheaper preferable = preferably cheaper).
 Broad (bigger / wider is preferred = preferably bigger).
 Distance (preferably closer = preferably closer).
The benchmarks for each criterion could be:
 BIB (bigger is better ),
 SIB (smaller is better), or
 NIB (nominal is better).

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Multi Criteria Decision Making (MCDM)
1. Domination
(When one alternative dominates the other alternatives for all the decision
criteria set).
Criteria Decision
ALTERNATIF Rp(Million) M2 (KM)

SIDOARJO 560 2.500 30

MOJOKERTO 490 3.000 50

DOMINATION CRITERIA ANALYSIS:

Sidoarjo: Only superior in distance, but inferior in price and area.
Mojokerto: Excellent in price and area, but lost in distance.
Conclusion: There is no domination, no decision which one to choose (there is no
superior / dominant alternative for the three expected criteria)

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2. Lexicographic criteria:
First, which criteria must be determined first, second, and so on. If the value is
the same in the first criterion, then it is followed by the next criteria. If the
score is worse for the nth criterion, the decision is taken from an alternative
that meets the previous criteria (n-1). The decision is made when the
alternatives meet the priority criteria.
DECISION CRITERIA
ALTERNATIVE Rp(Million) M2 (KM)

SIDOARJO 560 2.500 30

MOJOKERTO 490 3.000 50
For example:
First = area = Mojokerto is better than Sidoarjo
Second = Distance = Sidoarjo is better than Mojokerto
Third = Price = No need to consider
Conclusion: Mojokerto was selected, as a sufficient consideration of broad
criteria
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3. Approach criteria (Aspiration Rate):
Define the criteria that must be met, then select alternatives that meet all
aspiration levels (targets).
For example, the expected level of aspiration is:
Price ≤ 600 million; Area ≥ 2,500 M2; Distance ≤ 40 KM

Decision Criteria
ALTERNATIF Rp (Million) M2 (KM)

SIDOARJO 560 2.500 30

MOJOKERTO 490 3.000 50
 SOLUTION

Price Area Distance

SIDOARJO √ √ √
MOJOKERTO
 Conclusion: The selected Sidoarjo √(because √
it meets the- three desired
criteria)
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 2.2 Analytical Hierarchy Process (AHP)
 AHP is often defined as weighting (prioritization) of a
series of problems faced, both on criteria and
alternatives.
 AHP can be used to solve complex problems.

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 Steps in AHP
1. The design of the decision structure of the problem at hand.
2. Pairwise comparisons.
3. Priority synthesis (weight).
4. Consistency test
STEP IN Priority Synthesis:
1. Count the number of each column from the paired value matrix.
2. Create a new matrix with elements in the form of a quotient between
the old value and the number of columns (do it per column).
3. Add the new elements on each line.
4. The results of this new column are divided by the total of the columns
to get the expected priority (weight).

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 Example
The issue of the decision to buy a 2,000cc class sedan

Criteria (there are 4) Alternatives (there are 3)

Biaya Operasional Toyota
Model Masda
Kecepatan Honda
Kenyamanan

What is expected is a car with low operating costs, a good model, fast
speed, and excellent comfort.
What is the structure of the problem and the best decision?

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 STRUKTUR KEPUTUSAN

Buying car
Sedan 2000 cc

Operational
Model Speed Safety
Cost

Toyota Honda Masda

AHP can assist in determining the priority of the criteria, the priority
of each alternative on certain criteria, and finally in the form of a
priority synthesis of each alternative based on all predetermined
criteria.
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 Conduct Pairwise Analysis
Is the first step to determine priority (weight). The score (value) is
used from 1 (to show that both aspects / factors / items are equally
important) to 9 (one of which is absolutely more important / main
than the other) and the score / value is the opposite.
1 2 3 4 5 6 7 8 9
Just as A little - - - - - - - - - - - - - - - Almost Absolut
Important bit more Absolute More es are
importa Important more
nt importa
nt
Misalnya:
A to B the score is 5, then B to A the score is 1/5.
B to G the score is 7, then G to B the score is 1/7.
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Example of Assessment Matrix for the Case Above
THEN PRIORITY SYNTHESA (WEIGHTING)
Criteria  BOP MDL CPT NYM
BOP 1 1/4 1/3 1/5 Criteria BOP MDL CPT NYM
MDL 4 1 3 2 BOP 1 1/4 1/3 1/5
CPT 3 1/3 1 1/2 MDL 4 1 3 2
NYM 5 1/2 2 1 CPT 3 1/3 1 1/2
NYM 5 1/2 2 1
∑ Nilai Kolom 13 25/12 19/3 37/10
New Matrix

Priority /
Criteria BOP MDL CPT NYM ∑ Line
Weight

DECISION
BOP 1/13 3/25 1/19 2/37 0,304 0,076
MDL 4/13 12/25 9/19 20/37 1,802 0,450
CPT 3/13 4/25 3/19 5/37 0,684 0,171
NYM 5/13 6/25 6/19 10/37 1,211 0,303
∑ Column 1 1 1 1 4 1
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 Please look for the new matrix

Cost  TYT HND MZD

TOYOTA 1 4 1/3 Speed TYT HND MZD
HONDA 1/4 1 1/2 TOYOTA 1 1/5 2
MAZDA 3 2 1 HONDA 5 1 1/3
MAZDA 1/2 3 1
Model TYT HND MZD
TOYOTA 1 1/3 2 Convenience TYT HND MZD
HONDA 3 1 4 TOYOTA 1 1/4 1/2
MAZDA 1/2 1/4 1 HONDA 4 1 4
MAZDA 2 1/4 1

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THEN THE DECISION RECOMMENDATIONS of
each Priority / Weights ARE

BOP MDL CPT NYM

ALTER
Weight
NATIVE 0,076 0,450 0,171 0,303
TOYOTA 0,330 0,239 0,267 0,133 0,219
HONDA 0,158 0,623 0,369 0,655 0,554
MAZDA 0,512 0,137 0,364 0,211 0,227

Recommended decisions:
Choose Honda whose weight (priority) is the highest for
the four criteria, namely 55.4%,
then Mazda the second 22.7%, and Toyota the third
21.9%.

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 DECISION ANALYSIS

2.3 Decision Analysis In Uncertainty

2.4 BORDA function

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 Elements of Decision Analysis
 Decision statement
 Goals for decisions
 Alternative
 Consequences of choice

Steps in management decision making:

 Formulate / define the decision problem
 Gather relevant information
 Look for alternatives to action
 Feasible alternative analysis
 Choose the best alternative
 Carry out decisions & Evaluate the results 20

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 The Role of Management Science
Factors in Decision Making
 The technology used by a company is increasingly sophisticated
 The reduced supply of Energy & other critical materials, so it needs
to be managed efficiently
 Management issues are very complex, covering many factors (ex:
production & quality control, working capital management, capital
allocation, consumer information processing, etc.)
 Management problems are not only complex, they are even very
important
 The problems faced by managers are often completely new, have
nothing to do with previous experiences
 Emphasis on planning & achieving long-term goals requires decision21
making with forecast data
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 Decision Analysis in Uncertainty

 Making decisions in uncertainty indicates a decision

atmosphere in which the probability of potential
outcomes is unknown (unpredictable).

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 Criteria Used
1. Maximax (the best of the good)
2. Maximin (the best of the ugly)
3. Minimax Regret (best of greatest regret value - known as "caution"
decisions).
4. Hurwicz criteria (by giving certain weight to optimistic and pessimistic
values).
5. Laplace or Equal Likelihood criteria (giving equal weight to optimistic
and pessimistic scores, the special conditions of Hurwicz).
6. Expected value (calculated as the expected value (expectation) of all
economic conditions encountered).

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 Contoh
 It is known that there are 4 project or investment
alternatives (call it A, B, C, and D). For example, it is
also known that there are 3 possible economic
conditions, namely bad, moderate, and bright. For
example, the income (gain) from the four projects /
investments in the three economic conditions is as
stated in the following matrix (in million rupiah):
Economic conditions
Alternative
Investation Ugly Moderate Bright
A 60 120 350
B -80 220 630
C 150 200 260 24
D -230 470 880
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 Langkah Mengerjakan
ECONOMIC CONDITIONS
Maxi Maxi Minimax Hurwicz Lap
Alternative
Investation ugly Modeerate Bright
max Min Regret α =0,6 lace
A 60 120 350 350 60 530 234 205
B -80 220 630 630 -80 250 246 275
C 150 200 260 260 150 620 216 205
D -230 470 880 880 -230 380 436 325
 The Minimax Regret calculation is done by finding the max value in
each economic condition then subtracting the number itself. You can fill
in the Minimax Regret column by finding the max value for still \] - each
row,Hurwicz
 The then selecting
criterion the smallestbased
is calculated value.
on the "α" weight given to the Maximax
value plus the weight (1 - "α") of the Maximin value.
 = ((Alpha x Maximax) + ((1 - Alpha) x Maximin))). Then select the LARGEST
VALUE
 The Laplace / Equal Likelihood criterion is the multiplication of the weight of
alpha with the maximax and minimin values. = alpha x (maximax +
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Minimin). For example: "α" = 0.5. Then select the LARGEST VALUE

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 Langkah Mengerjakan
Economic condition Maxi
Maxi Minimax Hurwicz Lap
Alternative Min
max Regret α =0,6 lace
Investation Ugly Moderate Bright
A 60 120 350 350 60 530 234 205
B -80 220 630 630 -80 250 246 275
C 150 200 260 260 150 620 216 205
D -230 470 880 880 -230 380 436 325
 The expectation criterion, must be estimated in advance the probability of each
economic condition, for example: Bad = 0.2; Medium = 0.5; Bright = 0.3. then
multiplied by each economic condition. Then select the LARGEST VALUE
 Then the expected value is: Ekspektation
0,2 x 60 + 0,5 x 120 + 0,3 x 350 = 177
0,2 x -80 + 0,5 x 220 + 0,3 x 630 =
283
0,2 x 150 + 0,5 x 200 + 0,3 x 260 = 208
 THEN the decision to take is investment D, because the alternative is
0,2 x -230 + 0,5 x 470 + 0,3 x 880 = 453
often CHOOSED
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 Study Case AKDK
 Don't Work For Money, Make Money Work For You. Many people have their
lives spent working to earn money. One day, when we are unable to work
anymore, what will we do?
 Here we present some alternatives to doingInvestment
business on-line virtual
Condition
Alternative Stabl Decreas
Investation Better e ed
Speedline 305 300 155
Speedgold 252 250 100
Sengkuni Jaya 255 230 210
Prima Sentosa 225 225 225
Kaskus 86 85 80
Forex 400 200 60
Danareksa 239 235 223
 From the table data, if it is known Alpha (α) = 0.5; with the probability of the
expected value: improved 0.4; stable 0.1; and decreased 0.5. Then determine
what types of investment are feasible and not feasible to try based on the
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possibility of the conditions: Improving; Stable; and Decreasing

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 2.4 Fungsi BORDA
 The BORDA function is a weighting method (similar to the previous
AHP) using preference data or importance ranking of the attributes
(variables) to be weighted. The steps in working on the Borda function
are as follows:
 Come up with all possible preferences of the attribute to be weighted.
 Reorder in the form of a matrix in pairs the results of the recapitulation
of all preferences obtained
 Create Paired Matrix
 then synthesize the priority by counting the number of rows and dividing
the total:

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 Contoh
 Calculate the weight of importance or priority of 3 automatic motorcycle brands,
such as "M", "V", and "S". How to use the BORDA function can be done as
follows:
 From the example of the automatic motorbike, 6 possible arrangements of
preferences of the respondents can be raised (from 3 x 2 x 1 or 3 factorial), and
make a list of the results of the distribution of the number of each respondent who
chose the preferred preference arrangement. For example, from 20 respondents the
following results were obtained. Possibility Number of Respondents
1) M> V> S (prefers M over V over S) = 6
2) M> S> V (prefers M over S over V) = 4
3) V> M> S (prefer V over M over S) = 3
4) V> S> M (prefers V over S over M) = 4
5) S> M> V (prefers S over M over V) = 1
6) S> V> M (prefers S to V over M) = 2
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2. Reorder in the form of a matrix in pairs, the recapitulation results of all the preferences
obtained, then perform a priority synthesis by counting the number of rows and
dividing the total:
• The number that prefers M over V = 6 + 4 +1 = 11
• The number that prefers M over S = 6 + 4 + 3 = 13
• The number that prefers V over M = 3 + 4 + 2 = 9
• The number that prefers V over S = 6 + 3 + 4 = 13
• The quantity that prefers S to M = 4 + 1 + 2 = 7
• The quantity that prefers S to V = 4 + 1 + 2 = 7
3. Create Paired Matrix

  M V S Number of rows Weight %

M  - 11 13 24 40,0
V 9 -  13 22 36,7
The final result of the BORDA function shows that the weight of those who like "M"
S 7 7 -  14 23,3
is 40%, followed by those who like "V" 36.7% and the last one who likes "S" is
Total Number of Rows 60 100,0
23.3%

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 BORDA Function Study Case
 Sustainable economic development accompanied by employment is one of the
goals of national economic development. In line with that, development at the
regional level also makes sustainable goals a key factor in achieving local
development performance targets. To achieve this goal, even though a region
has special and different characteristics, this region cannot be separated from
economic linkages with other regions.
 Thus, the transmission of economic development in other regions can affect
economic development in related regions. In measuring the level of economic
development in a region, economic growth indicators are calculated from the
value of the Gross Regional Domestic Product (GRDP), especially the main
economic sectors in the region. The following are some of the indicators:
1. Financial and capital aspects (A),
2. The majority of the raw materials used (B).
3. Labor used (C)
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4. Production results (D).

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 Results of Questionnaire Distribution from 100
Respondents
No Preferensi ∑ No Preferensi ∑
1 A>B>C>D 4 13 C>D>A>B 1
2 A>B>D>C 3 14 C>D>B>A 2
3 A>C>D>B 2 15 C>A>B>D 9
4 A>C>B>D 2 16 C>A>D>B 6
5 A>D>B>C 1 17 C>B>D>A 7
6 A>D>C>B 5 18 C>B>A>D 6
Information: 7 B>C>D>A 5 19 D>A>B>C 5
•Financial and capital aspects (A) 8 B>C>A>D 4 20 D>A>C>B 4
B>D>A>C 7 21 D>B>C>A 8
•The majority of raw materials used9 (B)
•Labor used (C) 10 B>D>C>A 3 22 D>B>A>C 5
•Yield (D) 11 B>A>C>D 3 23 D>C>A>B 3
Question: 12 B>A>D>C 1 24 D>C>B>A 4
By using the BORDA function, determine the weight and sequence of
the indicators from each indicator of the Gross Regional Domestic 32
Product (GRDP) Sustainable economic growth.
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 Thank You

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