Introduction to operation

research

Ha Thi Xuan Chi, PhD

1
General information
Textbook: Introduction to Operations Research.
FREDERICK S. HILLIER and GERALD J.
LIEBERMAN, 9th edition.
Reference book: Introduction to Mathematical
Programming-  Wayne L. Winston,  Munirpallam
Venkataramanan , 4th Edition
Grading:
 Midterm examination 30%
 Homework/ quiz/project: 30%
 Final examination: 40%

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Learning objectives
Introduction to OR
 What is OR?
 History of OR
 Applications in OR
 How does OR impact the world?
Modeling and the problem solving process
Deterministic vs. stochastic models

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Introduction to OR
What is Operational Research?
 A scientific approach to the solution of problems in the
management of complex systems that enables decision
makers to make better decisions.
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.

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 Introduction to OR

History of OR
 World War II : British military
leaders asked scientists and
engineers to analyze several
military problems

 Deployment of radar
 Management of convoy
 Bombing
 Antisubmarine

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History of OR
The result was called Military Operations
Research, later Operations Research
Let see the video for more information:

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 History of OR
OR Over the Years

1950's 1970's 1990's

Mathematical Improved
NP-
developments use of O.R.
completeness.
queuing theory,
systems.
More realistic
mathematical
expectations.
programming
.

1947 1960's 1980's

Simplex More
excitement Easy access
method
more to data
development and
grand plans
managers to use
models..
Introduction to OR
Today:
 The use of mathematical models in providing guidelines to
managers for making effective decisions within the state of the
current information, or in seeking further information if current
knowledge is insufficient to reach a proper decision
Let see the video

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Introduction to OR

Applications of OR

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Introduction to OR
Applications of OR
Scheduling:
Manufacturing machines,
workers,

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Introduction to OR
Applications of OR

Football

Racing: fuel, risk, forecast

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Introduction to OR
Applications of OR

Warehouse management

Distribution
Transportation
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Introduction to OR
Applications of OR

Check-in

Queuing

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Introduction to OR
Applications of OR

Scheduling 14
Introduction to OR
How does OR impact the world?
Let see the video

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Introduction to OR
 Applications of OR
 Firms want to maximize value to shareholders
 People want to make the best choices
 We want the highest quality at the lowest price
 When playing games, we want the best strategy
 When we have too much to do, we want to optimize the use of
our time
 etc.

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Problem Solving Process (video)
Model : Situation
Formulate the
Problem
Problem
 valid Implement a Solution Statement

 tractable
Data
Solution: Construct
a Model

 useful Implement
the Solution

Model

Procedure
Find
a Solution
Establish
a Procedure

Test the Model

and the Solution Solution Tools
Problem Solving Process
The Situation
Example:
 Internal nursing staff not happy with
their schedules; hospital using too
many external nurses.
Problem Solving Process
Problem Formulation
 Define variables
 Define constraints
 Identify data requirements
 Describe system
 Define boundaries
 State assumptions
 Select performance measures
 Problem Solving Process
Constructing a Model
Example: Problem
 Maximize individual nurse Formulate the statement
preferences subject to Problem
demand requirements, or
minimize nurse Construct
dissatisfaction costs. a Model
Model
Problem Solving Process
Solving the
Mathematical Model Model
Example:
 Collect input data -- nurse Find a
profiles and demand solution
requirements; apply
algorithm; post-process
results to get monthly
schedules.
Solution Tools
Problem Solving Process
Implementation
Example:
 Implement nurse
scheduling system in one
unit at a time. Integrate
with existing HR and T&A
systems. Provide training
sessions during the
workday.
 Problem Solving Process

https://www.researchgate.net/publication/
283805990_Why_No_Difference_A_Controlled_Flipped_Classroom_Study
_for_an_Introductory_Differential_Equations_Course/figures?lo=1 23
Deterministic vs. stochastic models
 Deterministic Models Stochastic Models
 Linear Programming • Discrete-Time Markov Chains
 Network Optimization • Continuous-Time Markov Chains
 Integer Programming • Queuing
 Nonlinear Programming • Decision Analysis

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Deterministic vs. Stochastic Models
Deterministic models
 assume all data are known with certainty
Stochastic models
 explicitly represent uncertain data via random variables or
stochastic processes
Deterministic models involve optimization
Stochastic models characterize / estimate
system performance.
Steps on OR

Start
Yes
Problem statement Analysis results
No
Model Building Yes
No
Implement results
Data analysis Model
verification
and evaluation End
Coding
The MSR Marketing Problem

Minimize 500 x1 + 200 x2 + 250 x3 + 125 x4

subject to 50 x1 + 25 x2 + 20 x3 + 15 x4  1,500
0  x1  20
0  x2  15
0  x3  10
0  x4  15

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Some Success Stories
 Optimal crew scheduling saves American Airlines $20 million/yr.
 Improved shipment routing saves Yellow Freight over $17.3 million/yr.
 Improved truck dispatching at Reynolds Metals improves on-time delivery
and reduces freight cost by $7 million/yr.
 GTE local capacity expansion saves $30 million/yr.

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Other Success Stories (cont.)
Optimizing global supply chains saves Digital
Equipment over $300 million.
Restructuring North America Operations, Proctor
and Gamble reduces plants by 20%, saving $200
million/yr.
Optimal traffic control of Hanshin Expressway in
Osaka saves 17 million driver hours/yr.
Better scheduling of hydro and thermal
generating units saves southern company $140
million.
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Success Stories (cont.)
Improved production planning at Sadia
(Brazil) saves $50 million over three years.
Production Optimization at Harris
Corporation improves on-time deliveries
from 75% to 90%.
Tata Steel (India) optimizes response to
power shortage contributing $73 million.
Optimizing police patrol officer scheduling
saves police department $11 million/yr.
Gasoline blending at Texaco results in
saving of over $30 million/yr. 44
Summary
Answered the question: What is
Operations Research & Management
Science? and provided some historical
perspective.
Introduced the terminology of linear
programming
Two Examples:
1. MSR Marketing
2. Gemstone Tool Company
 Small (2-dimensional) Linear Program, non-obvious
solution 45