COURSE CODE: COSC 309

COURSE TITLE: OPERATIONAL

RESEARCH
 Course Description
• This course is designed to equip you with basic techniques of solving
certain problems arising in the direction of management of systems of
scarce resources.
• At the end of this course, you will be able to
– Discuss Operational Research
– Solve decision making problems using the Naive, Maximum
Likelihood and Expected Value approaches
– Solve linear programming problems that resolve directly into the
standard form
– Solve certain deterministic and non-deterministic inventory
problems
• draw project network diagram, and determine project duration
and critical path(s).
 Course Contents

 Module 1 - Operational Research Defined and Decision Analysis

 Unit 1.1 – Operational Research Defined
 Unit 1.2 – Introduction of Decision Analysis
 Unit 1.3 – Some Decision Making Approaches

 Module 2 - Linear Programming

 Unit 2.1: General Introduction to Linear Programming
 Unit 2.2: Graphical, Algebraic and Simplex Methods of
Solution
 Contents cont’d

• Module 3 - Inventory Models

– Unit 3.1 – Deterministic Models (Economic Order Quantity &
Production Lot Size)
– Unit 3.2 – Stochastic Models (safety stock and reorder level)
– Unit 3.3 – Marginal analysis (The Newsboy Problem)
• Module 4 - Project Management
– Unit 4.1 – Critical Path Method
– Unit 4.2 – Program Evaluation & Review Technique
 Books
• Adebayo, A. O. (2015). Introductory Operational Research:
Notes and Worked Examples on Basic Concepts of Certain
Topics. Lagos, Ng: Mic ‘N’ Dell Ventures
• Hillier, F S & Lieberman, G J (1995 or Later). Introduction to
Operations Research. Singapore: McGraw-Hill
 Meet the Facilitators
• Prof. Adewale O Adebayo
• Had childhood in Lagos, Nigeria.
• Degrees gained
– PGD, MSc (Unilag) and PhD Computer Science (BU)
– MBA General Management (Unilag)
– BSc Mathematical Statistics (Ife)
• Professional Membership
– Nigeria Computer Society
– Computer Professionals (Registration Council of Nigeria).
• Computing Working Experience (twenty-six years)
– Fifteen in Accounting, Management Consulting and ICT firms
– Eleven as Lecturer
 Meet the Facilitator
Name: Dr. Seun Ebiesuwa
• Degrees Earned
- Ph.D Computer Science (Babcock)
- M.Sc Computer Science (Babcock)
- B.Sc Computer Engineering (LASU)
• Professional Membership
- Nigeria Computer Society
- Computer Professionals
Registration Council of Nigeria (CPN)
 Module 1 - Operational Research (OR) Defined and Decision Analysis

• This module introduces you to Operational Research and Decision

Analysis
• At the end of this module, you will be able to
– define an operation and OR,
– discuss some characteristics of OR, phases of typical OR study
and some challenges of OR,
– state the stages of decision making,
– classify decision making conditions,
– express decision making problems as pay-off matrix, and
– solve decision making problems using the Naive, Maximum
Likelihood and Expected Value approaches.
Unit 1.1 - Operational Research Defined
• At the end of this unit, you will be able to
– Define Operations Research (OR)
– Discuss Phases of typical OR study
– Discuss Challenges of OR
– Appreciate the need for more wisdom
 An Advice
• A dull axe requires great strength; be wise and sharpen the
blade (Ecclesiastes 10:10).
– Master certain models and complimentary algorithms that
might become useful
Operational Research (OR) Defined
• Operation is a set of coordinated activities required to achieve a
specific objective.
 
• Research is a careful study (clear objective + scientific method)
of something in order to find out or discover new facts about it.
– Seest thou a man diligent in his business? … Prov. 22:29.
– … the honor of kings is to search out a matter. Prov. 25:2.
• OR is the representation of real-world systems by
mathematical models together with the use of quantitative
methods (algorithms) for solving such models, with a view to
optimising (Beasley, 2013).
 Phases of OR study
• Problem definition and Objective identification
• Information gathering
• Formulation of model (formal representation and description of
the real system)
• Testing of model (by subjecting model to rigorous analysis in
order to validate or modify it)
• Solving the model (sensitivity analysis)
• Use of model to solve practical problems (algorithm; allocation
of resources) (Adewoye & Okwa 2005; Beasley, 2013).
 Problem
Formulation

Model
Algorithm
Numerical
Solution
Allocation of Resources

Implementation
Figure 1 – The OR Process (Beasley, 2013, slightly modified )
 Model?
• A model is never exact, but good enough for employment.
– If you wait for the perfect condition, you will never get
anything done (Ecclesiastes 11:4).
• God built the first model, man, of Himself, and He had good
reasons for doing so.
– And God said, let us make man in our image, after our
likeness: … (Genesis 1: 26, 27).
 Examples
• Problem & Objective(s), Information Gathering, Model,
Algorithm, and Solution
– Decision Analysis
– Linear Programming
– Inventory
– Project Management
Decision Analysis -Problem and Objective(s)
• Problem
– Data Showers Limited invented a captivating computer that
might turn out in three different ways depending on external
factors (factors beyond company’s control). What decision should
be made to maximize gains?
• Objective
– Determination of the decision(s) that will maximize gains
Decision Analysis - Information Gathering
• What are the decision options available?
• What are the different external environment scenarios?
• What are the payoffs by the decision options under different
scenarios?
 Decision Analysis - Information Gathered
• Decision options are to manufacture the computer alone, to
manufacture the computer as a joint venture with another company,
or to sell its rights to the invention at =N=70 million, and the payoff
matrix for manufacturing is given:
Decision Analysis - Model
 Decision Analysis - Algorithm
• Some decision making approaches, without experimentation
– Naïve decision criteria – Maximin and Maximax payoff
– Maximum likelihood criteria, and
– Expected Value (EV) (Bayes’ decision rule)
• Naïve decision making
– Maximin (pessimistic) indicates that the decision which
maximizes the minimum pay-off should be selected. This
provides the best guarantee.
– Maximax (optimistic) indicates that the decision which
maximizes the maximum pay-off should be selected.
Decision Analysis - Solution
 Linear Programming - Problem and Objective(s)
• Problem
– A tailor has 16m2 of cotton, 11m2 of silk and 15m2 of wool
available. What garments should the tailor make to maximize
gains in Naira terms?
• Objective
– Determination of the number of gowns and/or suits that will
maximize gains
Linear Programming - Information Gathering
• What garments could be made?
• What quantities of material would each piece of garment
consume?
• At what price would each of the different garments be sold?
(Linear Programming)
Linear Programming - Gathered Facts & Model
• Assumed Gathered Facts
– a suit requires 2m2 of cotton, 1m2 of silk and 1m2 of wool, and a
gown requires 1m2 of cotton, 2m2 of silk and 3m2 of wool
– A suit sells for N3, 000, and a gown for N5, 000
• Model
– Let x, y & z be the number of suits, gowns and total money
generated, respectively:
The objective is to maximize z = 3000x + 5000y ...(i)
Subject to: 2x + y ≤ 16 ……………………………. (ii)
x + 2y ≤ 11 …………………………… (iii)
x + 3y ≤ 15 …………………………… (iv)
x ≥ 0, y ≥ 0 non-negativity
 Linear Programming - Algorithm
• Four Different Methods
– Graphical (decision variables limited to two)
– Algebraic/Quadratic
– Simplex (used to solve larger problems that occur in practical
management situations)
– Interior-Point Approach (used to solve much larger problems
that occur in practical management situations – runs faster
than simplex in such cases)
• Graphical Method
– Draw the graph of the constraints
– Select the corner points of the feasible area
– Set these points into the objective function, and select the
one that produces the best solution
– Deduce the recommended solution
 Linear Programming - Solution
Chart of X Vs Y of Constraints
18

16

14

12

10
Y Axis

A(0,5)
4 B(3,4
)
2 C(7,2)

0
D(8,0)
0 2 4 6 8 10 12 14 16

X Axis

Figure 3: Graph of the Constraints

 Linear Programming - Solution cont’d
• The corner points of the feasible solution area are (0, 5), (3, 4),
(7, 2) and (8, 0)
• z(A) = 3000(0) + 5000(5)= 25, 000
• z(B) = 3000(3) + 5000(4)= 29, 000
• z(C) = 3000(7) + 5000(2)= 31, 000
• z(D) = 3000(8) + 5000(0)= 24, 000
• Hence, the maximum amount of money the tailor can get is
N31, 000, and this will happen when he makes 7 suits and 2
gowns.
 Inventory - Problem and Objective(s)
• Problem
– A company purchases a particular component directly from the
supplier. The company wants to know what quantity to be
ordering to minimize inventory cost.
• Objective
– Determination of the order quantity that will minimize
inventory cost (Economic Order Quantity)
 Inventory - Information Gathering
• What quantity does the company require per month, and is it
regular?
• What is the ordering cost per order?
• What is the annual inventory holding cost per unit?
• What is the component unit price?
• Are the costs approximately constant?
 Inventory - Model
• Q = √ 2DS/H is the optimal order size model, demand and costs
assumed constant.
Q = Order size
D = Annual Demand
S = Ordering cost per order
H = Carrying cost per unit/annum
• Q is the quantity of order that will minimize total inventory costs
(Inventory).
 Inventory - Algorithm
• Input values of D, S and H
• Determine Q (Inventory)
 Inventory - Solution
• Given D = 12, 000 per annum, S = N2, 500, and H = N50
• Q = √ 2DS/H = √ 2 x 12, 000 x 2500/50
= 1, 095 units
•  EOQ for this component is 1, 095 units
 Project Management - Problem and Objective(s)
• Problem
– You are about to bake a loaf of bread. You want to know the
shortest time it could be completed.
• Objective
– Determination of the earliest project time.
Project Management - Information Gathering
• What activities must be done?
• What are the activities’ durations?
• What activity or activities must be performed before each activity
can start?
(Project Management)
 Project Management - Model
Activity Preceded by Elapsed time (minutes)

A - Weigh ingredients - 1

B - Mix ingredients A 3

C - Dough rise time B 60

D - Prepare tins - 1

E - Pre-heat oven - 10

F - Knock back dough and place in tins C&D 2

G - 2nd dough rising time F 15

H - Cooking time E&G 40

(Tutor2u, 2015)
 Project Management - Algorithm
• Draw the Network Diagram
• Carry out a Forward Pass
• The earliest project time is given by the earliest time for the
final event
 Project Management - Solution
C
B F
A G
1 D
E H
 Problem
Formulation

Model
Algorithm
Numerical
Solution
Allocation of Resources

Implementation

Figure 1 – The OR Process (Beasley, 2013, slightly modified )

 Some Limitations of OR
• Difficulty in balancing the requirements of reality and those of
simplicity
• The derived solution may be sub-optimal due to narrow
problem boundaries
• The need for experience and judgment in implementing the
results of an OR study.
• There may be a conflict between the conclusion reached by the
OR analyst and the opinions of line managers as to the best
course of action.
• The situation the static OR model represents is constantly
changing (Adewoye & Okwa, 2005).
 References
• Adewoye, S.O. & Okwa, L.I. (2005). Introduction to Operational
Research. Yaba, Lagos, Ng: Authors
• Beasley, J.E. (2013). Basic OR Concepts. Retrieved from
http://people.brunel.ac.uk/~mastjjb/jeb/or/basicor.html
• Tutor2u. (2015). Critical Path Analysis CPA (Network Analysis).
Retrieved from www.tutor2u.net/business/production/crical-path-
analysis.htm