Operation Research
Chapter 1
Introduction to Operations Research
1
Introduction:
Operations Research (OR) is scientific
approach to analyzing problems and
making decisions. OR professionals aim to
provide rational bases for decision making
by seeking to understand and structure
complex situations and to use
understanding to predict system behavior
and improves system performance.
2
Introduction
Operations Research is an Art and Science
It had its early roots in World War II and is
flourishing in business and industry with the
aid of computer
Primary applications areas of Operations
Research include forecasting, production
scheduling, inventory control, capital
budgeting, and transportation.
3
What is Operations Research?
Operations
The activities carried out in an organization.
Research
Research is a systematic, scientific, controlled
and empirical.
Systematic → (step and step)
Scientific → (has a logical step to follow)
Control research covers a limited scope:
a. Time
b. Geographical
c. Respondents
d. Content
Empirical →evidence based information
4
Definition of Operations Research
1. Operation research applies scientific
methods to deal with the problems of
system where men, material and other
resources are involved and other system
under study may be industry, defense,
etc…
2. Operation research is the application of the
theories of probability, statistics, Queuing,
Games, linear programming etc, to the
problems of war, Government and industry.
5
3. Operations Research is a
quantitative approach to decision
making based on the scientific
method of problem solving
4. Operation research is the
application methods, techniques
and tools to the operation of a
system with optimum solution to
the problem
6
What is Operations Research?
Operations Research is the scientific approach
to execute decision making, which consists of:
◦ The art of mathematical modeling of
complex situations
◦ The science of the development of
solution techniques used to solve these
models
◦ The ability to effectively communicate
the results to the decision maker
7
What Do We do
1. OR professionals aim to provide rational bases for decision making
by seeking to understand and structure complex situations and to
use this understanding to predict system behavior and improve
system performance.
2. Much of this work is done using analytical and numerical
techniques to develop and manipulate mathematical and computer
models of organizational systems composed of people, machines,
and procedures.
8
Terminology
The British/Europeans refer to “Operational Research",
the Americans to “Operations Research" - but both are
often shortened to just "OR".
Another term used for this field is “Management
Science" ("MS"). In U.S. OR and MS are combined
together to form "OR/MS" or "ORMS".
Yet other terms sometimes used are “Industrial
Engineering" ("IE") and “Decision Science" ("DS").
9
Operations Research Models
Deterministic Models Stochastic Models
• Linear Programming • Discrete-Time Markov Chains
• Network Optimization• Continuous-Time Markov Chains
• Integer Programming • Queuing Theory (waiting lines)
• Nonlinear Programming • Decision Analysis
• Inventory Models Game Theory
Inventory models
Simulation
10
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.
11
History of OR
OR is a relatively new discipline.
70 years ago it would have been
possible to study mathematics,
physics or engineering at university
it would not have been possible to
study OR.
It was really only in the late 1930's
that operationas research began in
a systematic way. 12
1890 1900 1910 1920
Frederick Taylor •Henry Gannt •F. W. Harris •William Shewart
Scientific [Project Scheduling] [Inventory Theory] [Control Charts]
Management •Andrey A. Markov •E. K. Erlang •H.Dodge – H.Roming
[Industrial [Markov Processes] [Queuing Theory] [Quality Theory]
Engineering] •Assignment
[Networks]
1960 1950 1940 1930
•John D.C. Litle •H.Kuhn - A.Tucker •World War 2 Jon Von Neuman –
[Queuing Theory] [Non-Linear Prog.] •George Dantzig Oscar Morgenstern
•Simscript - GPSS •Ralph Gomory [Linear [Game Theory]
[Simulation] [Integer Prog.] Programming]
•PERT/CPM •First Computer
•Richard Bellman
[Dynamic Prog.]
ORSA and TIMS
1970 1980 1990 2006
•Microcomputer •H. Karmarkar •Spreadsheet •You are here
[Linear Prog.] Packages
•Personal computer •INFORMS
•OR/MS Softwares
13
Phases of operations research
◦ Identify and define the problem.
◦ Construct a model
◦ Verify the Model and Use the Model for Prediction
◦ Determine the set of alternative solutions.
◦ Select a Suitable Alternative
◦ Present the Results and Conclusions of the Study
◦ Implement and Evaluate Recommendation
14
Quantitative Analysis and Decision Making
Potential Reasons for a Quantitative Analysis
Approach to Decision Making
◦ The problem is complex.
◦ The problem is very important.
◦ The problem is new.
◦ The problem is repetitive.
15
Problem Solving Process
Formulate the
Problem
Situation Problem
Implement a Solution Statement
Goal: solve a problem
• Model must be valid
Data
• Model must be Construct
a Model
tractable
Implement
• Solution must be the Solution
useful Model
Solution
Find
a Solution
Establish
a Procedure
Test the Model
and the Solution Solution Tools
16
The Situation
• May involve current operations or
proposed expansions due to
expected market shifts
• May become apparent through
Situation
consumer complaints or through
employee suggestions
• May be a conscious effort to improve
efficiency or response to an
unexpected crisis.
Data
Example: Internal nursing staff not happy with their schedules;
hospital using too many external nurses.
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Problem Formulation
Formulate the
Problem
Situation Problem
Statement
Data
• Describe system Define variables
• Define boundaries Define constraints
• State assumptions Data requirements
• Select performance measures
Example: Maximize individual nurse preferences subject to
demand requirements.
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Data Preparation
Data preparation is not a trivial step, due to
the time required and the possibility of data
collection errors.
A model with 50 decision variables and 25
constraints could have over 1300 data
elements!
Often, a fairly large data base is needed.
Information systems specialists might be
needed.
19
Constructing a Model
Situation Problem
Problem must be translated Formulate the
statement
from verbal, qualitative terms to Problem
logical, quantitative terms Data
A logical model is a series of Construct
a Model
rules, usually embodied in a
computer program
• A mathematical model is a collection of functional Model
relationships by which allowable actions are delimited and
evaluated.
Example: Define relationships between individual nurse
assignments and preference violations; define
tradeoffs between the use of internal and external
nursing resources. 20
MODELS IN OPERATIONS RESEARCH
modeling revise to fitting modeling the data
Data
or it means imposing structure to data.
a model is the seam or structure imposed data.
Data modeling is the proceeds of choosing a
reasonable model and using the data to modify
and improve the model. This is developing and
model that will a good fit to a set of data and that
would give estimate of the mean value of the
dependent variable(y) and good predictions of
future values of y for a given value at independent
value.
21
What are models?
An approximation of real
world including its essential
elements, which is constructed
by establishing relationships
among various variables of the
system, is called a model.
22
Characteristics of a Good Model
Large number of parameter should be
avoided in model for better understanding of
the problem
A good model should be flexible to
accommodate any necessary information
during the stages of model building.
A model must take less time.
23
Procedure for data modeling
This is involves steps below:
Purpose a model
Fit model
Asses of goodness of fit model
Check whether the model is good fit if it’s
not.
24
Advantages of Models
Generally, experimenting with models
(compared to experimenting with the real
situation):
◦ requires less time
◦ is less expensive
◦ involves less risk
25
Review exercise
Differentiate Operations Research and
model.
What are Operations Research models?
Discuss the various steps used in solving
Operations Research problems.
What do you mean research?
Explain the objective of Operations Research
26
Chapter 2
Linear Programming Models: Graphical
and Computer Methods
Introduction
Many management decisions involve trying to make the
most effective use of limited resources
Machinery, labor, money, time, warehouse space, raw
materials
Linear programming (LP ) is a widely used mathematical
modeling technique designed to help managers in planning
and decision making relative to resource allocation
Belongs to the broader field of mathematical programming
In this sense, programming refers to modeling and solving
a problem mathematically
Requirements of a Linear
Programming Problem
LP has been applied in many areas over the past 50
years
All LP problems have 4 properties in common
1. All problems seek to maximize or minimize some
quantity (the objective function)
2. The presence of restrictions or constraints that limit the
degree to which we can pursue our objective
3. There must be alternative courses of action to choose
from
4. The objective and constraints in problems must be
expressed in terms of linear equations or inequalities
LP Properties and Assumptions
Basic Assumptions of LP
We assume conditions of certainty exist and
numbers in the objective and constraints are known
with certainty and do not change during the period
being studied
We assume proportionality exists in the objective
and constraints
We assume additivity in that the total of all
activities equals the sum of the individual activities
We assume divisibility in that solutions need not be
whole numbers
All answers or variables are nonnegative
Formulating LP Problems
Formulating a linear program involves developing a
mathematical model to represent the managerial
problem
The steps in formulating a linear program are
1. Completely understand the managerial problem
being faced
2. Identify the objective and constraints
3. Define the decision variables
4. Use the decision variables to write
mathematical expressions for the objective
function and the constraints
Linear Programming Problems: A
Geometric Approach
Linear Programming Problems (LPP)
consists of linear objective function to
maximized or minimized subject to
certain constraints in the form of a linear
equalities or inequities
The methods of corners
1. Graph the feasible set
2. Find the coordinates of all corner points
(vertices) of the feasible set
3. Evaluate the objective function to each
corner point
4. Find the vertex of function maximized or
minimized
Maximization problem
Example (1)
Ace Novelty Company wishes to produce two types of
souvenirs, type A and type B. Each type A souvenirs will
result in a profit of $1 . Each type B souvenir will result in a
profit of $1.20. To manufacture of type A souvenir requires 2
minutes on machine I and 1 minute on machine II and of type
B souvenir requires 1minute on machine I and 3 minutes on
machine II . There are 3 hours available on machine I and 5
hours available on machine II. How many souvenirs of each
type should Ace make to maximize profit?
Construct objective and subject function but do not solving
Example (2)
Ali holds two part-time jobs, Job I and Job II. he never
wants to work more than a total of 12 hours a week. he
has determined that for every hour he works at Job I, he
needs 2 hours of preparation time, and for every hour he
works at Job II, he needs one hour of preparation time,
and he cannot spend more than 16 hours for preparation.
If he makes $40 an hour at Job I, and $30 an hour at Job
II, how many hours should he work per week at each job
to maximize his income? Construct objective and subject
function but do not solving
Example (3)
A factory manufactures two types of gadgets, regular and
premium. Each gadget requires the use of two operations,
assembly and finishing, and there are at most 12 hours
available for each operation. A regular gadget requires 1
hour of assembly and 2 hours of finishing, while a premium
gadget needs 2 hours of assembly and 1 hour of finishing.
Due to other restrictions, the company can make at most 7
gadgets a day. If a profit of $20 is realized for each regular
gadget and $30 for a premium gadget, how many of each
should be manufactured to maximize profit? Construct
objective and subject function but do not solving
Example (4)
Solve the following maximization problem by
using by corner method
Solution set of linear inequalities is bounded if it can be
enclosed by a circle otherwise it’s unbounded
Exercise
1) A farmer has 100 acres of land on which she plans to grow wheat and corn. Each acre of wheat
requires 4 hours of labor and $20 of capital, and each acre of corn requires 16 hours of labor and
$40 of capital. The farmer has at most 800 hours of labor and $2400 of capital available. If the
profit from an acre of wheat is $80 and from an acre of corn is $100, how many acres of each crop
should she plant to maximize her profit?
2) A department store sells two types of televisions: Regular and Big Screen. The
store can sell up to 90 sets a month. A Regular television requires 6 cubic feet of
storage space, and a Big Screen television requires 18 cubic feet of space, and a
maximum of 1080 cubic feet of storage space is available. The Regular and Big
Screen televisions take up, respectively, 2 and 3 sales hours of labor, and a
maximum of 198 hours of labor is available. If the profit made from each of
these types is $60 and $80, respectively, how many of each type of television
should be sold to maximize profit, and what is the maximum profit?
3) A company manufactures two types of printers, the Inkjet and the Laser. The
Inkjet generates a profit of $100 per printer and the Laser a profit of $150. On
the assembly line the Inkjet requires 7 hours, while the Laser takes 11 hours.
Both printers require one hour for testing. The Inkjet requires one hour and the
Laser needs 3 hours for finishing. On a particular production run the company
has available 1,540 work hours on the assembly line, 200 work hours in the
testing department, and 360 work hours for finishing. How many sets of each
type should the company pro duce to maximize profit, and what is that
maximum profit?
4. A factory manufactures chairs and tables, each requiring the use of
three operations: Cutting, Assembly, and Finishing. The first
operation can be used at most 40 hours; the second at most 42 hours;
and the third at most 25 hours. A chair requires 1 hour of cutting, 2
hours of assembly, and 1 hour of finishing; a table needs 2 hours of
cutting, 1 hour of assembly, and 1 hour of finishing. If the profit is
$20 per unit for a chair and $30 for a table, how many units of each
should be manufactured to maximize revenue?
5. The Silly Nut Company makes two mixtures of nuts: Mixture A
and Mixture B. A pound of Mixture A contains 12 oz of peanuts, 3 oz
of almonds and 1 oz of cashews and sells for $4. A pound of Mixture
B contains 12 oz of peanuts, 2 oz of almonds and 2 oz of cashews and
sells for $5. The company has 1080 lb. of peanuts, 240 lb. of
almonds, 160 lb. of cashews. How many pounds of each of mixtures
A and B should the company make to maximize profit?
Minimization Applications
Minimization linear programming problems are solved in
much the same way as the maximization problems.
For the standard minimization linear programming
problem, the constraints are of the form ax + by = c, as
opposed to the form ax + by = c for the standard
maximization problem. As a result, the feasible solution
extends indefinitely to the upper right of the first
quadrant, and is unbounded. But that is not a concern,
since in order to minimize the objective function, the line
associated with the objective function is moved towards
the origin, and the critical point that minimizes the
function is closest to the origin.
Example 5
Professor Symons wishes to employ two students,
John and Mary, to grade the homework papers for
his classes. John can mark 20 papers per hour and
charges $5 per hour, and Mary can mark 30
papers per hour and charges $8 per hour. Each
student must be employed at least one hour a
week to justify their employment. If Mr. Symons
has at least 110 homework papers to be marked
each week, how many hours per week should he
employ each student to minimize his cost?
Example 6
Professor Hamer is on a low cholesterol
diet. During lunch at the college
cafeteria, he always chooses between two
meals, Pasta or Tofu. The table below
lists the amount of protein, carbo-
hydrates, and vitamins each meal
provides along with the amount of
cholesterol he is trying to minimize. Mr.
Hamer needs at least 200 grams of
protein, 960 grams of carbohydrates,
and 40 grams of vitamins for lunch each
month. Over this time period, how many
days should he have the Pasta meal, and
how many days the Tofu meal so that he
gets the adequate amount of protein,
carbohydrates, and vitamins and at the
same time minimizes his cholesterol
intake?
Exercise
1. A diet is to contain at least 2400 units of vitamins, 1800 units of
minerals, and 1200 calories. Two foods, Food A and Food B are to be
purchased. Each unit of Foo d A provides 50 units of vitamins, 30
units of minerals, and 10 calories. Each unit of Food B provides 20
units of vitamins, 20 units of minerals, and 40 calories. If Food A
costs $2 per unit and Food B cost $1 per unit, how many units of
each food should be purchased to keep costs at a minimum?
2. A computer store sells two types of computers, desktops and
laptops. The supplier demands that at least 150 computers be sold a
month. In order to keep profits up, the number of desktops sold
must be at least twice of laptops. The store pays its sales staff a $75
commission for each desk top, and a $50 commission for each lap
top. How many of each type of computers must be sold to minimize
commission to its sales people? What is the minimum commission?
3. An oil company has two refineries. Each day, Refinery A produces
200 barrels of high-grade oil, 300 barrels of medium-grade oil, and
200 barrels of low-grade oil and costs $12,000 to operate. Each day,
Refinery B produces 100 barrels of high-grade oil, 100 barrels of
medium-grade oil, and 200 barrels of low-grade oil and costs $10,000
to operate. The company must produce at least 800 barrels of high-
grade oil, 900 barrels of medium-grade oil, and 1,000 barrels of low-
grade oil. How many days should each refinery be operated to meet the
goals at a minimum cost?
4. A print shop at a community college in Cupertino, California,
employs two different contractors to maintain its copying machines.
The print shop needs to have 12 IBM, 18 Xerox, and 20 Canon copying
machines serviced. Contractor A can repair 2 IBM, 1 Xerox, and 2
Canon machines at a cost of $800 per month, while Contractor B can
repair 1 IBM, 3 Xerox, and 2 Canon machines at a cost of $1000 per
month. How many months should each of the two contractors be
employed to minimize the cost?
Initial simplex table
1)
Convert the inequalities into equations.
This is done by adding one slack variable
for each inequality.
2) Rewrite the objective function
In the form
3) Construct the initial simplex tableau. Write
the objective function as the bottom row
THE SIMPLEX METHOD
1) Set up the problem. That is, write the objective function and the
constraints.
2) Convert the inequalities into equations. This is done by adding
one slack variable for each inequality.
3) Construct the initial simplex tableau. Write the objective
function as the bottom row.
4) The most negative entry in the bottom row identifies a column.
5) Calculate the quotients.
6) Perform pivoting to make all other entries in this column zero.
7) When there are no more negative entries in the bottom row, we
are finished; otherwise, we start again from step 4.
8) Read off your answers. Get the variables using the columns with
1 and 0s. All other variables are zero. The maximum value you
are looking for appears in the bottom right hand corner.
Example 1
A factory manufactures chairs, tables and bookcases each
requiring the use of three operations: Cutting, Assembly, and
Finishing. The first operation can be used at most 600 hours;
the second at most 500 hours; and the third at most 300 hours.
A chair requires 1 hour of cutting, 1 hour of assembly, and 1
hour of finishing; a table needs 1 hour of cutting, 2 hours of
assembly, and 1 hour of finishing; and a bookcase requires 3
hours of cutting, 1 hour of assembly, and 1 hour of finishing.
If the profit is $20 per unit for a chair, $30 for a table, and
$25 for a bookcase, how many units of each should be
manufactured to maximize profit?
Dual Problem
1) Set up the problem.
2) Write a matrix whose rows represent each
constraint with the objective function as its
bottom row
3) Write the transpose of this matrix by
interchanging the rows and columns.
4) Now write the dual problem associated with
the transpose. .
Example 2
A diet is to contain at least 8 units of vitamins, 9 units of
minerals, and 10 calories. Three foods, Food A, Foo d B, and
Foo d C are to be purchased. Each unit of Food A provides 1
unit of vitamins, 1 unit of minerals, and 2 calories. Each unit
of Food B provides 2 units of vitamins, 1 unit of minerals, and
1 calorie. Each unit of Food C provides 2 units of vitamins, 1
unit of minerals, and 2 calories. If Foo d A costs $3 per unit,
Foo d B costs $2 per unit and Food C costs $3 per unit, how
many units of each food should be purchased to keep costs at a
minimum?
