Introduction to Operations

Research (OR)

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 ISE 303
OPERATIONS RESEARCH I

PLOs CLOs Chapter Assessment / Marks

Mid Q Assign HW CW Final Total

2.2 Formulate and solve problems using Linear 5 5 5 10 20

Formulate the problem objectives and integer programming Programming
constraints relative to production and
mechanical problems
2.3 Develop heuristic methods to solve Heuristics 5 5 5 10 20
Find the different solution alternatives for problems Methods
the production and design problems
2.4 Develop dynamic programming models Dynamic 5 5 5 10 20
Analyse the solution alternatives and choose the optimum for certain set of decision problems and Programming
one solve them
2.11 Develop solution procedure for nonlinear Non-Linear 5 5 5 10 20
Design the production systems, projects, product, programming models Programming
component, process or operation to meet desired needs
within realistic constraints such as economical,
environmental, social, political, ethical, health and safety
considerations.

2.13 Built nonlinear programming models for problems Non-Linear 5 5 5 10 20

Interpret Industrial Engineering problems in-depth and find Programming
innovative solutions based on a feasibility study of the
economic and applicability

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Quality & Accreditation Terminologies

• Program Leaning Outcomes : PLOs

• Course Leaning Outcomes : CLOs
• Course Specification : CS
• Course Report : CR
• Teaching Strategy : TS
• Assessment Methods : AM
• Rubric Sheets : RS
• Aptitude Exam : APE
• Benchmark : BM

Correlation between all of them?!

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What is Operations Research??

• Operations research (often referred to as management science) is simply

a scientific approach to decision making that seeks to best design and
operate a system, usually under conditions requiring the allocation of
scarce (limited) resources
• By a system, we mean an organization of interdependent components
that work together to accomplish the goal of the system
• Whether it is a factory, firm, or any domestic situations, the resources of
Men, Money and Machines have to be coordinated to achieve the given
objectives in a most efficient manner
• For example, Ford Motor Company is a system whose goal consists of
maximizing the profit that can be earned by producing quality vehicles

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What is Operations Research??

• Operations Research is the application of the scientific methods to the

study of the operations of large, complex organizations or activities…
• Operations Research is the application of the scientific methods to the
analysis and solution of managerial decision problems
• Operations Research is the application of scientific methods, techniques
and tools, by interdisciplinary team to problems involving the operations of
organized systems (men-machine) so as to provide those in control of the
operations with optimum solutions to the problems

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The Nature of OR

• Operations research involves “research on operations”

• Operations research is applied to problems that concern how to conduct
and coordinate the operations (i.e., the activities) within an organization
• Nature of the organization is essentially immaterial, and, in fact, OR has
been applied extensively in such diverse areas as manufacturing,
transportation, construction, telecommunications, financial planning,
health care, the military, and public services
• Research part of the name means that operations research uses an
approach that resembles the way research is conducted in established
scientific fields
• Scientific method is used to investigate the problem of concern

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Operations Research – Definition Summary

• Application of SCIENTIFIC METHOD

• Analysis of MANAGERIAL PROBLEMS
• Study of LARGE & COMPLEX SYSTEMS
• Finding OPTIMAL SOLUTION…
• ----------------------------------------------------
• Use of MATHEMATICAL MODELS
• Use of COMPUTERS & SPECIAL SOFTWARE

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The Origins of Operations Research

• Origin of Operations Research was during the Second World war

• At that time military management in United Kingdom called upon a team
of scientist to study the strategic issues related to Air and land defense of
the country
• They had very little resources and they had given the tactics of best
utilization of resources…
• Because the team was engaged in research on military operations; hence
name of the technique was coined as Operations Research
• Following the end of the war, the ideas advanced in military operations
were adapted to improve efficiency and productivity in the civilian sector
• Today, OR is a dominant decision making tool
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Other Names for Operation Research???

• A rose by any other name…

– Management Science
– Systems Engineering
– Industrial Engineering
– Operations Management
– Applied Mathematics

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Model Types

• Linear Program (LP)

• Integer Linear Program (IP or ILP)
• Non-Linear Program (NLP)
• Dynamic Program (DP)
• Goal Program (GP)
• Queuing Models
• Simulations
• Network models
• Game theory

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Operations Research - Phases

Recognize Problem
Real World
Problem
Problem Definition

Model Construction

Feedback Solution Management Science

Techniques

Interpretation, Validation and

Sensitivity Analysis of the Model

Implementation
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Phase – I: Recognition and Definition of the Problem

• Involves defining the scope of the problem under investigation

– Designing and implementing new operations
– Evaluating ongoing Operations and Procedures
– Determining and recommending corrective actions
• Should be carried out by the entire OR team
• Aim is to identify three principal elements of the decision problem
1) description of the decision alternatives
2) determination of the objective of the study, and
3) specification of the limitations under which the modeled system operates

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Phase – II: Formulation & Construction of the
Mathematical Model

• Entails an attempt to translate the problem definition into mathematical

relationships
• Decide the most suitable model to represent the system
• Model should specify the quantitative expressions for the objectives and
constraints in terms of decision variables…
• Validation of the model

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Classes of OR Models

Operations Research

Deterministic

Linear Integer Non-Linear

Programming Programming Programming
(LP) (IP) (NLP)

Stochastic

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Elements of Mathematical Model

• Decision Variable – Represents an alternative available to the decision-

Maker
• Objective Function – A (usually real-valued) function measuring the
“goodness” of alternatives – minimization or maximisation
• Constraint – An restriction on the set of alternatives that may be
considered

Maximize or minimize Objective Function

subject to
Constraints
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Phase – III: Model Solution

• Use of well-defined optimization algorithms

• Feasible – An alternative (value) is feasible if it satisfies all constraints
• Optimal – An alternative (value) is optimal if it yields the most favorable
value of the objective function over all feasible solutions considered
• Infeasible – does not satisfy the constraints

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Phase – IV: Interpretation, Validation and Sensitivity
Analysis of the Model

• Checks whether or not the proposed model does what it purports to do –

that is, does it adequately predict the behavior of the system under study?
• Does the solution make sense?
• Are the results intuitively acceptable?
• A common method for validating a model is to compare its output with
historical output data
• Model is valid if, under similar input conditions, it reasonably duplicates
past performance
• Sensitivity Analysis – deals with obtaining additional information about the
behavior of the optimum solution when the model undergoes some
parameter changes

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Phase – V: Implementation

• Implementation is the actual use of the model once it has been developed
or the solution to the problem the model was developed to solve
• Translation of the results into understandable operating instructions to be
issued to the people who will administer the recommended system

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The OR Problem Solving Scheme

Formulation Monitoring
Realization

Modelling Implementation

Analysis Solution

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The OR Problem Solving Scheme

Formulation Monitoring
Realization

Modelling Implementation

Analysis Solution

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Successful OR Applications

Company Problem Techniques Used Annual Savings

Designing buffers into production
Hewlett Packard Queuing models $280 million
line
Taco Bell Employee scheduling IP, Forecasting, Simulation $13 million
Redesign production &
Proctor & Gamble Transportation models $200 million
distribution system
Delta Airlines Assigning planes to routes Integer Programming $100 million
AT&T Call center design Queuing models, Simulation $750 million
Yellow Freight Network models, Forecasting,
Design trucking network $17.3 million
Systems, Inc. Simulation
SF Police Dept. Patrol Scheduling Linear Programming $11 million
Bethlehem Steel Design an Ingot Mold Stripper Integer Programming $8 million
North American Van
Assigning loads to drivers Network modeling $2.5 million
Lines
Refinery operations & Linear Programming,
Citgo Petroleum $70 million
distribution Forecasting
Scheduling reservation
United Airlines LP, Queuing, Forecasting $6 million
personnel

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EXAMPLE 1

Imagine that you have a 5-week business commitment between Fayetteville

(FYV) and Denver (DEN). You fly out of Fayetteville on Mondays and return
on Wednesdays. A regular round-trip ticket costs S400, but a 20% discount is
granted if the dates of the ticket span a weekend. A one-way ticket in either
direction costs 75% of the regular price. How should you buy the tickets for
the 5-week period?
We can look at the situation as a decision-making problem whose solution
requires answering three questions:
1. What are the decision alternatives?
2. Under what restrictions is the decision made?
3. What is an appropriate objective criterion for evaluating the alternatives?

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EXAMPLE 1

Three alternatives are considered:

1. Buy five regular FYV-DEN-FYV for departure on Monday and return on
Wednesday of the same week
2. Buy one FYV-DEN, four DEN-FYV-DEN that span weekends, and one
DEN-FYV
3. Buy one FYV-DEN-FYV to cover Monday of the first week and
Wednesday of the last week and four DEN-FYV-DEN to cover the
remaining legs. All tickets in this alternative span at least one weekend.
The restriction on these options is that you should be able to leave FYV on
Monday and return on Wednesday of the same week

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EXAMPLE 1

An obvious objective criterion for evaluating the proposed alternative is the

price of the tickets. The alternative that yields the smallest cost is the best.
Specifically, we have
1. Alternative 1 cost − 5  400 = $2,000
2. Alternative 2 cost − 0.75  400 + 4  (0.8  400) + .75  400 = $1,880
3. Alternative 3 cost − 5  (0.8  400) = $1600
Thus, you should choose alternative 3.

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EXAMPLE 2

Wilson company produces three products: desk, chairs, and molded steel. It is
trying to decide on the number of desks (D), chair (C), and pound of model
steels (M)

Assumption :
1. If the nets $50 profit on each desk produced, $30 on each chair produced,
and $ 6 per pound of modeled steel produced. What the total profit?
Total profit for production run can be modeled by the expression
50 D + 30 C + 6 M

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EXAMPLE 2

2. If 7 pounds of raw steel are needed to manufacture a desk, 3 pounds to

manufacture a chair, and 1.5 pounds to produce a pound of model steel.
What the amount of raw steel used during the production?

The amount of raw steel used during the production run is modeled by the
expression:
7D + 3C + 1.5 M

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EXAMPLE 2

3. Wilson has only 2,000 pounds of raw steel available. And at least 100
desk must be produced to satisfy contract commitment

The function constraint can be modeled as :

7 D + 3C + 1.5 M ≤ 2000 (raw steel)
D ≥ 100 (contract)

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EXAMPLE 2: Final Problem Formulation

The Mathematical model for this problem is formulated as :

MAXIMIZE 50 D + 30 C + 6 M

SUBJECT TO
7D + 3C + 1.5M ≤ 2000 (Raw steel)
D ≥ 100 (contract)

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Impact of OR

• OR can play a significant role in bringing a balance among different inter

disciplinary people to managerial problem
• OR is regularly applied in areas such as:
– supply chain management
– marketing and revenue management systems
– manufacturing plants
– financial engineering
– telecommunication networks
– healthcare management
– transportation networks
– energy and the environment
– service systems
– web commerce
– military defense
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