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Information Systems

Dr Heng-Soon GAN

Department of Mathematics and Statistics

The University of Melbourne

This presentation has been made in accordance with the provisions of Part VB of the copyright

act for the teaching purposes of the University.

Copyright 2005 by Heng-Soon Gan

Optimisation = Efficiency + Savings

Kelloggs

The largest cereal producer in the world.

LP-based operational planning (production, inventory, distribution)

system saved $4.5 million in 1995.

Procter and Gamble

A large worldwide consumer goods company.

Utilised integer programming and network optimization worked in

concert with Geographical Information System (GIS) to re-engineering

product sourcing and distribution system for North America.

Saved over $200 million in cost per year.

Hewlett-Packard

Robust supply chain design based on advanced inventory optimization

techniques.

Realized savings of over $130 million in 2004

Source: Interfaces

Mathematics in Operation

Mathematical Solution Method (Algorithm)

Real Practical Problem

Mathematical (Optimization) Problem

x

2

Computer Algorithm

Human Decision-Maker

Decision Support Software System

Decision Support

Decision Support Tool

Interface

Information Systems

A Team Effort

Interface

Information Systems

Users

Comp Sci Ops Res

Decision Support Tool

Info Sys Biz Analyst

Staff Rostering

Allocating Staff to Work Shifts

A significant role for the Team

The Staff Rostering Problem

What is the optimal staff allocation?

Consider a Childcare Centre:

The childcare centre is operating 5 days/week.

There are 10 staff members.

Each staff member is paid at an agreed daily rate,

according to the skills they possess.

One shift per day

Skills can be categorised into 5 types.

(Singing,Dancing)

(Arts)

(Sports)

(Reading,Writing)

(Moral Studies,Hygiene)

other information

CONSTRAINTS:

Skill Demand

The daily skill demand is met.

Equitability (breaks,salaries)

Each staff member must at least work 2 days/week and

can at most work 4 days/week.

Workplace Regulation

On any day, there must be at least 4 staff members

working.

OBJECTIVE:

Minimise Total Employment Cost/Week

Problem Solving Stages

Mathematical Solution Method (Algorithm)

Real Practical Problem

Mathematical (Optimization) Problem

Computer Algorithm

Human Decision-Maker

Decision Support Software System

Staff Rostering at

Childcare Centre

Mathematical

Programming

CPLEX

Xpress

MP

LINGO

Excel with VBA

Childcare Centre

Manager

The Mathematical Problem

Modelled as an Integer LP

Decision variables are integers, i.e. variables can

only take 0,1,2, not 0.2, 1.1, 2.4 etc.

A binary variable: a decision variable that can only

take 0 or 1 as a solution.

Integer LP (just for show)

{ } D k E i x

D k x

E i x

D k S j d x a t s

x c Minimise

ik

i

ik

k

ik

jk

i

ik ij

i k

ik i

e e e

e >

e s s

e e >

=

=

=

= =

, , 1 , 0

, 4

, 4 2

, , . .

10

1

5

1

10

1

10

1

7

1

=

otherwise , 0

day on works staff if , 1 k i

x

ik

=

otherwise , 0

skill possesses staff if , 1 j i

a

ij

i c

i

staff for daily wage =

k j d

jk

day on skill for ts requiremen =

Skill Demand

Equitability

Workplace Regulation

Xpress

MP

Large-scale optimisation software developed

by Dash (http://www.dashoptimization.com)

Xpress-IVE (Interactive Visual Environment)

Decision Support Software

System

Excel Interface

Database Management:

Staff Profile (Name, Category)

Annual leave

Shift preferences

Reserve staff

Roster

etc.

Information system installed to disseminate

information (shift preference, roster etc.) effectively

throughout the organisation

Other Issues and Challenges

Breaks

scheduled breaks

annual leave

festive breaks (under-staffing issues)

Fatigue

limit to number of working hours per day/week/fortnight

(Union Requirements)

Equitable roster

equitable weekend/night shifts

Motivation

skill utilisation (avoid monotonous job routine)

Training

training and development (scheduled)

Other Industry Requiring Staff

Rostering

Airline (air crew and ground staff)

Health (nurses and doctors)

Manufacturing (operators)

Transport (truck drivers)

Entertainment and gaming

Education (teachers, lecturers)

MORe is currently involved in several (long-term) staff

rostering projects for Australia-based companies in

at least one of the industries mentioned above.

Force Optimisation

A collaborative project between

Melbourne Operations Research (MORe)

&

Defence Science and

Technology Organisation (DSTO),

Department of Defence,

Australian Government

Project Background

DSTO LOD working with Melbourne Operations Research

(MORe), The University of Melbourne

Project aim: support the Army (Force Design Group) with their

capability options development and analysis, seeking

What types of forces should be maintained?

What force strength is required?

to ensure forces are effective in achieving defence objectives

Project started in mid-2004 and successfully completed its

modelling, interface design and testing phases in the

beginning of year 2005

The model will be presented at the Australian Society for

Operations Research 2005 Conference (26-28

th

September)

General Aim of Project

Forces wishlist

$ $ $ $

Choose forces

(STRATEGIC) s budget

Objectives

Deploy forces

(TACTICAL)

e e e e e e e max effectiveness

Force

configuration

The Mathematical Model

An integer LP-based prototype decision

support tool has been developed.

The support tool, ForceOp, has an Excel

interface, written with VBA and optimised

using Xpress

MP

.

Future directions

database management

integrated military systems Military Information

System

The ForceOp Tool

Before this tool,

force design was carried out manually

a lengthy and laborious process, based on intuitive-

reasoning (no quantitative basis).

difficult to assess effectiveness or compare quality of

solutions

With this tool,

solutions can be obtained fast.

quality of solutions can be quantified.

many sets of objectives can be tested within a short period

of time.

many different force configurations can be tested against a

given set of objectives.

Facility Location Decisions

LP as a What-If Tool

The Facility Location Problem

LP-based techniques can be used to locate

manufacturing facilities,

distribution centres,

warehouse/storage facilities etc.

taking into consideration factors such as

facility/distribution capacities,

customer demand,

budget constraints,

quality of service to customers etc.

using Operations Research techniques such as

linear programming,

integer linear programming, and

stochastic programming.

With OR techniques, solutions for the facility location problem

can be obtained fast, and hence, we are able to perform a

large range of what-if scenarios.

36km

W-4

Problem Statement

A

F

D

C

W-1

W-2

W-3

W-5

W-6

Customer

Warehouse

(W)

Assume:

Transportation cost:

$20/km/unit

Warehouses have the same

O/H cost

Warehouse has very large

capacity

Problem modelled as an

integer linear program, and

solved using Xpress

MP

.

10 000 units

180 000

10 000

180 000

220 000

10 000

B E

36km

The Mathematical Model

{ }

eger int is y

, x

d j , D y

n i , x C y

. t . s

y W x f Minimise

ij

i

j

n

i

ij

i i

d

j

ij

n

i

d

j

ij ij

n

i

i i

1 0

1

1

1

1

1 1 1

e

= >

= s

+

=

=

= = =

j

ij

y

i

i

x

Scenario 1

Scenario 1:

Warehouse O/H

cost is very small

as compared to

transportation cost

Warehouse O/H:

$6 000 000

Transportation cost:

$20/km/unit

proximity dominates

operate the

warehouse closest

to each customer

W-4

A

F

D

C

W-1

W-2

W-3

W-5

W-6

10 000 units

180 000

10 000

180 000

220 000

10 000

B E

Scenario 2

Scenario 2: Warehouse

O/H cost is very large

as compared to

transportation cost

Warehouse O/H:

$1 800 000 000

Transportation cost:

$20/km/unit

too expensive to

operate a warehouse

hence, the most

centralised warehouse

selected (based on

demand & distance)

W-4

A

F

D

C

W-1

W-2

W-3

W-5

W-6

10 000 units

180 000

10 000

180 000

220 000

10 000

B E

Scenario 3

Scenario 3: Both

warehouse O/H and

transportation costs

are competing

Warehouse O/H:

$60 000 000

Transportation cost:

$20/km/unit

solution is not

obvious; too many

possibilities

W-4

A

F

D

C

W-1

W-2

W-3

W-5

W-6

10 000 units

180 000

10 000

180 000

220 000

10 000

B E

Scenario 4

Scenario 4: Both

warehouse O/H and

transportation costs

are competing AND

warehouse capacity

limited

Warehouse O/H:

$60 000 000

Transportation cost:

$20/km/unit

Warehouse

capacity: 150 000

units

W-4

A

F

D

C

W-1

W-2

W-3

W-5

W-6

10 000 units

180 000

10 000

180 000

220 000

10 000

B E

10 000

70 000

10 000

30 000

110 000

150 000

150 000

70 000

10 000

Facility Location

Possible variants

closure decisions

acquisition decisions

Possible extensions

limitations to the number of distribution centres

warehouse-customer distance constraint

complex cost functions

uncertain demand

Other OR Applications

Other areas where OR techniques have been proven

to be useful include

Inventory control

Warehouse design, storage and retrieval, order picking

Vehicle routing

Delivery transport mode selection

Capacity and manpower planning

Production scheduling

and other resource usage and allocation decisions.

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