Department of Mechanical and Industrial Engineering
IE 442: Operations Research
Lecturer In Charge: Dr. Mussa I. Mgwatu
Introduction to Operations Research
In this section:
• What is Operational Research (OR)?
• How is it used to solve real-life, everyday
problems?
What is Operations Research?
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.
• Operations Research is a quantitative approach to
decision making based on the scientific method of
problem solving.
3
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
4
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.
5
What are the other names of operation research?
• Operations research is commonly referred to as OR.
• In the United Kingdom/Europeans, where the first formally recognized
group of practitioners was formed, 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"), operational analysis and systems analysis.
6
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.
• During the WWII, the British military management called upon a group of
scientist together to apply a scientific approach in the study of military
operations to win the battle.
• The main objective of the military management was to allocate their
resources in an effective manner to various military activities.
• This was the origin of Operation research (OR).
• After the success in the military operations, an effort was made to apply the
OR approaches to other areas on the business and industry.
7
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
8
Phases of OR
• Solving of OR problem involves many steps. These
steps can be classified in major three phases as follows:
1. Pre-modeling phase
a. Identification and quantification of problem
2. Modelling phase
a. Formulation of the problem
b. Data collection
c. Identification of possible alternate solutions
3. Implementation phase
a. Solution interpretation and model validation
b. Implementation, monitoring and control
9
Decision making and OR
• OR is also termed as Operations Management.
• It means to manage the various operations by taking
optimum decision.
• It is required to choose the best option from available
options for performing any kind of operations.
• So, to make decision or decision making is inherent
characteristics of OR.
• Decision making depends on three parameters
1. Objectives
2. Constraints
3. Alternatives.
10
Scope of OR
• Industry • Agriculture
Resource allocation Crop selection criteria
Product mix decision
Area selection criteria
Blending of raw materials
Inventory control
• Management
Finance and accounting
Loading problems
Assignment problems Investment decision
Replacement problems analysis
Simulation of real situation Advertising media selection
• Planning Break-even analysis
Production planning Sales force allocation
Scheduling • Defence
Sequencing Weapon allocations
Material control Intelligence activities
• Public utilities Administration activities
Transportation problem
Training
Queuing problems
11
Limitations of OR
• Lack of qualitative factors: since it is mathematical model, it ignores
qualitative or emotional factors. These are important aspect when
analysing any problem thus requiring systems thinking.
• Limited factor consideration: although OR tries to involve a number of
factors into consideration while finding the optimal solution, in present
day problem involve numerous factors. So, if all considered in
quantities and relationships are established, then huge calculations
are required.
• Specific categories of problem: OR can solve the problems in certain
specific categories which are standard format. It is difficult to solve
other non-standard format problems.
• Resistance of employees and management: since changes are
suggested as a part of solution of OR, employees and management
of the organisations are not in favour of changes due to old thinking.
12
Limitations of OR cont’d
• System definition: Operational research is essentially analytical in
approach. The task is decomposed into more elemental components,
the behaviour of these is to be described and from the latter the
behaviour of the whole is predicted.
• The issue which most seems to confound the application of the
analytical methods adopted by hard science is that of defining the
system within which the problem to be examined resides.
• Limitation of capability: The second major problem facing operational
research, which is shared with natural sciences generally, is that it is
itself a closed system of syntax. It deals in the relations between
signs rather than in objects of experience. In consequence though its
arguments may be valid, the conclusions it draws have no necessary
truth value. It may be that its conclusions are true, but they do not
derive that truth from the mathematical operations. They derive it only
from the truth of the objects to which the signs have been attributed.
13
Limitations of OR cont’d
• Lack of transparency when communicating the nature of
operational research models and the significance of the
results derived from them. Not every problem owner is
mathematically literate, able to follow the ritual and
appreciate its limitations. So, there is a danger that s/he
may anticipate that the model will solve more problems
than those specified.
• Non-Linear System Behaviour; this concerns the
difficulties of representing non-linear system behaviour.
The world of experience appears to lurch from state to
state. The smooth linear progressions of mathematical
models, though relatively easy and reassuring to portray,
may be counter-intuitive to the manager.
14
Problem Solving and Decision Making
• 7 Steps of Problem Solving
(First 5 steps are the process of decision making)
1. Identify and define the problem.
2. Determine the set of alternative solutions.
3. Determine the criteria for evaluating the alternatives.
4. Evaluate the alternatives.
5. Choose an alternative.
---------------------------------------------------------------
6. Implement the chosen alternative.
7. Evaluate the results.
15
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.
16
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
17
The Situation
• May involve current operations
or proposed expansions due to
expected market shifts
Situation
• May become apparent through
consumer complaints or through
employee suggestions
Data • May be a conscious effort to
improve efficiency or response to
an unexpected crisis.
Example: Internal nursing staff not happy with their schedules;
hospital using too many external nurses.
18
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.
19
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.
20
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
Model
• A mathematical model is a collection of
functional 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.
21
Model Development
• Models are representations of real objects or
situations.
• Three forms of models are iconic, analog, and
mathematical.
Iconic models are physical replicas (scalar
representations) of real objects.
Analog models are physical in form, but do not
physically resemble the object being modeled.
Mathematical models represent real world problems
through a system of mathematical formulas and
expressions based on key assumptions, estimates, or
statistical analyses. 22
Advantages of Models
• Generally, experimenting with models
(compared to experimenting with the real
situation):
requires less time
is less expensive
involves less risk
23
Mathematical Models
• Cost/benefit considerations must be made in selecting
an appropriate mathematical model.
• Frequently a less complicated (and perhaps less
precise) model is more appropriate than a more
complex and accurate one due to cost and ease of
solution considerations.
24
Mathematical Models
• Relate decision variables (controllable inputs) with fixed
or variable parameters (uncontrollable inputs).
• Frequently seek to maximize or minimize some objective
function subject to constraints.
• Are said to be stochastic if any of the uncontrollable
inputs (parameters) is subject to variation (random),
otherwise are said to be deterministic.
• Generally, stochastic models are more difficult to
analyze.
• The values of the decision variables that provide the
mathematically-best output are referred to as the optimal
solution for the model.
25
Transforming Model Inputs into Output
Uncontrollable Inputs
(Environmental Factors)
Controllable
Mathematical Output
Inputs
Model (Projected Results)
(Decision Variables)
26
Example: Project Scheduling
Consider a construction company building a 250-unit
apartment complex. The project consists of hundreds of
activities involving excavating, framing, wiring,
plastering, painting, landscaping, and more. Some of the
activities must be done sequentially and others can be
done simultaneously. Also, some of the activities can be
completed faster than normal by purchasing additional
resources (workers, equipment, etc.).
What is the best schedule for the activities and for which
activities should additional resources be purchased?
27
Example: Project Scheduling
• Question:
Suggest assumptions that could be made to simplify
the model.
• Answer:
Make the model deterministic by assuming normal and
expedited activity times are known with certainty and
are constant. The same assumption might be made about
the other stochastic, uncontrollable inputs.
28
Example: Project Scheduling
• Question:
How could management science be used to solve
this problem?
• Answer:
Management science can provide a structured,
quantitative approach for determining the minimum
project completion time based on the activities' normal
times and then based on the activities' expedited
(reduced) times.
29
Example: Project Scheduling
• Question:
What would be the uncontrollable
inputs?
• Answer:
Normal and expedited activity completion times
Activity expediting costs
Funds available for expediting
Precedence relationships of the activities
30
Example: Project Scheduling
• Question:
What would be the decision variables of the
mathematical model? The objective function? The
constraints?
• Answer:
Decision variables: which activities to expedite and by how
much, and when to start each activity
Objective function: minimize project completion time
Constraints: do not violate any activity precedence
relationships and do not expedite in excess of the funds
available.
31
Example: Project Scheduling
• Question:
Is the model deterministic or stochastic?
• Answer:
Stochastic. Activity completion times, both
normal and expedited, are uncertain and subject
to variation. Activity expediting costs are
uncertain. The number of activities and their
precedence relationships might change before the
project is completed due to a project design
change.
32
Solving the Mathematical Model
• Many tools are available
Model as discussed before
Find a
• Some lead to “optimal”
solution solutions (deterministic
Models)
• Others only evaluate
candidates trial and
Solution Tools error to find “best”
course of action
Example: Read nurse profiles and demand requirements, apply
algorithm, post-processes results to get monthly
schedules.
33
Model Solution
• Involves identifying the values of the decision
variables that provide the “best” output for
the model.
• One approach is trial-and-error.
might not provide the best solution
inefficient (numerous calculations required)
• Special solution procedures have been
developed for specific mathematical models.
some small models/problems can be solved by hand
calculations
most practical applications require using a computer
34
Computer Software
• A variety of software packages are available
for solving mathematical models, some are:
Spreadsheet packages such as Microsoft Excel
The Management Scientist (MS)
Quantitative system for business (QSB)
LINDO, LINGO
Quantitative models (QM)
Decision Science (DS)
35
Model Testing and Validation
• Often, the goodness/accuracy of a model cannot
be assessed until solutions are generated.
• Small test problems having known, or at least
expected, solutions can be used for model testing
and validation.
• If the model generates expected solutions:
use the model on the full-scale problem.
• If inaccuracies or potential shortcomings inherent
in the model are identified, take corrective action
such as:
collection of more-accurate input data
modification of the model
36
Implementation
• A solution to a problem usually
Situation implies changes for some
individuals in the organization
• Often there is resistance to
change, making the
implementation difficult
Impleme nt
the Proce dure
• User-friendly system needed
• Those affected should go through
training
Procedure
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.
37
Implementation and Follow-Up
• Successful implementation of model results is of
critical importance.
• Secure as much user involvement as possible
throughout the modeling process.
• Continue to monitor the contribution of the model.
• It might be necessary to refine or expand the
model.
38
Report Generation
• A managerial report, based on the results of the
model, should be prepared.
• The report should be easily understood by the
decision maker.
• The report should include:
the recommended decision
other pertinent information about the results (for
example, how sensitive the model solution is to the
assumptions and data used in the model)
39
Components of OR-Based
Decision Support System
• Data base (nurse profiles, external resources,
rules)
• Graphical User Interface (GUI); web enabled
using java or VBA
• Algorithms, pre- and post- processor
• What-if analysis
• Report generators
40
Examples of OR Applications
• Rescheduling aircraft in response to groundings
and delays
• Planning production for printed circuit board
assembly
• Scheduling equipment operators in mail
processing & distribution centers
• Developing routes for propane delivery
• Adjusting nurse schedules in light of daily
fluctuations in demand
41