introduction of operation research
DESCRIPTION
Operation ResearchTRANSCRIPT
OPERATION RESEARCHMKT-505
S@hani
OPERATION RESEARCH:ART OR SCIENCE?
Operations Research – problem solving steps
Real-WorldProblem
Recognition and Definition
of the Problem
Formulation and Construction of
the Mathematical
Model
Solutionof the Model
InterpretationValidation and
Sensitivity Analysis
of the Model
Implementation
WHAT IS OR … Operations The activities carried out in an organization
(stakeholder relation, strategy, marketing, HR). 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. CAN IT BE QUALITATIVE?
Primary applications areas of Operations Research include forecasting, production scheduling, inventory control, capital budgeting, and transportation
I say: Operations Research is
Application of SCIENTIFIC METHOD
Analysis of MANAGERIAL PROBLEMS
Study of LARGE & COMPLEX SYSTEMS
Finding OPTIMAL SOLUTION
Use of MATHEMATICAL MODELS Use of COMPUTERS & SPECIAL SW
TERMİNOLOGY
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").
NAME AND TOOLS
operational research
operations analysis quantitative
analysis quantitative
methods systems analysis decision analysis decision science
Lingo (LINDO) MPL for Windows XPRESS (FICO) CPLEX (IBM ILOG) AIMMS AMPL Gurobi NEOS MS Excel (FRONTLINE
SOLVERS) SIMPROCESS SIMUL 8 Matlab
Alternative Names Software for OR
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
Deterministic vs. Stochastic Models
Deterministic models assume all data are known with certainty
(HR payroll _ current); NO randomness Stochastic models
explicitly represent uncertain data via
random variables or stochastic processes. Space ship project, insurance
Deterministic models involve optimization
Stochastic models characterize / estimate system
performance.
ORIGIN & HISTORY
During WW II, Britain engaged more than 1000 worker in OR and 200 OR scientists.
‘Circus’ team by Patric Blakeckt in Royal Aircraft Establishment (RAE) helped to reduce the number of Anti-Aircraft Artillery to shot down enemy aircraft (avg. 20,000 to 4,000).
1890Frederick TaylorScientific Management[Industrial Engineering]
1900•Henry Gannt[Project Scheduling]•Andrey A. Markov[Markov Processes]•Assignment[Networks]
1910•F. W. Harris[Inventory Theory]•E. K. Erlang[Queuing Theory]
1920•William Shewart[Control Charts]•H.Dodge – H.Roming[Quality Theory]
1930Jon Von Neuman – Oscar Morgenstern[Game Theory]
1940•World War 2•George Dantzig[Linear Programming]•First Computer
1950•H.Kuhn - A.Tucker[Non-Linear Prog.]•Ralph Gomory[Integer Prog.]•PERT/CPM•Richard Bellman[Dynamic Prog.]ORSA and TIMS
1960•John D.C. Litle[Queuing Theory]•Simscript - GPSS[Simulation]
1970•Microcomputer
1980•H. Karmarkar[Linear Prog.]•Personal computer•OR/MS Softwares
1990•Spreadsheet Packages•INFORMS
2006-14•You are here
DEFINITION(S)…
OR is the art of winning the war without actually fighting them. -Aurther Clark
OR is a scientific approach of problem solving for executive management. -H.M. Wagner
WHY OR IS FOR? Simulation: Gives the ability to try out
approaches and test ideas for improvement- space science
Optimization: Narrows down choices to the very best when there are virtually innumerable feasible options and comparing them is difficult- transportation, flight schedule.
Probability and Statistics: Helps in measuring risk, mine data to find valuable connections and insights, test conclusions, and make reliable forecasts- GDP growth.
CHARACTERISTICS OF OR Use of interdisciplinary teams: analyze problem
from different angle (social, economic …)
Application of scientific methods: CPM (critical Path Measurement), PERT (Project Evaluation & Review Technique)
Improvement in quality of decision making process: bus/train schedule
Quantitative precision: aerospace, space ship. System Orientation: grocery shop to mega
shop New form of Problem identification: oil price-
demand & supply?
AREAS OR DEALS WITH…
Project Management Floor Planning: Factory
Equipment layout Network Optimization:
Telecomm Industry SCM: flow of raw
materials & product based on uncertainty
Automation
Scheduling: Pricing Routing: Bus/Train to
minimize no. of trip to serve max. passengers
Turning the color from Black to
White increased its camouflage by 20% & 30%
frigates would be attacked.
PHASES OF OR Judgment Phase:
Determination of Operation: assembling of engine associated with many (sub) assembling. Any conceivable operation will be associated with problem.
Determination of value/objective: manufacturing, tactical, engineering (type of situation). Objective- social, economic, aesthetic. Magnitude of risk and time limit etc.
Determination of Effectiveness: link between objective & analysis required for corrective action.
CONT. Formulation of problem relative to
objective: Remedial- plane crash, health hazard Optimization: train schedule, product line efficiency Transference: use of venom in Cancer medication Prediction: forecasting (El-nino)
CONT.
Research Phase: Observation & Data Collection: trend analysis Formulation of hypothesis: 0 or 1, true/false.
Good hypothesis depends on sound knowledge and accumulated data.
Info. and verification of hypothesis: analyze & interpret info
Prediction & generalized result: run the model, obtain a complete description.
Action Phase: GET THE WORK TO ROLL ON!!!
NECESSITY OF OR Complexity: oil production Customer demand: call center Raw material: Equipment capacity & probability of failure: BAT Risk/uncertainty: space craft. Knowledge Explosion: Sony simultaneously in
cell phone, TV, play station business Diverse Footprint: Walmart has its brunches in
11137 location
SCOPE OF OR Industry: Management looks ‘ultimately’
for PROFIT! OR team fosters alternatives.
Defence: varieties of activities to be inter linked i.e. operation, training, intelligence
Planning: both economic & social (education to administration)
Public Utilities: how premium for car to be decided? On what basis new sale girls would be appointed? Cost optimization?
OPTIMIZE YOUR COST…
You need to travel DHK-CTG a 5-week business plan. Each round trip ticket costs $400. You fly out Tuesday and get back Thursday. 20% discount for round trip if tickets are
purchased in weekends 25% discount (one way either)
What are the alternatives to optimize your cost?• Case #1: 5*DHK-CTG-DHK: 5*$400= $2000 Case#2: 1*DHK-CTG PLUS 4* CTG-DHK-CTG @
weekend PLUS CTG-DHK: 0.75*$400+4*(0.8*$400)+0.75*$400= 1880
Case#3 : 1* DHK-CTG-DHK (to cover 1st week and last week) PLUS 4* CTG-DHK-CTG (@
weekend)= 5*(0.8*400)= $1600