Table of Contents

Introduction to Operations Research

1 Introduction 2 Overview of the Operations Research Modeling Approach 3 Introduction to Linear Programming 4 Solving Linear Programming Problems: The Simplex Method 5 The Theory of the Simplex Method 6 Duality Theory and Sensitivity Analysis 7 Other Algorithms for Linear Programming 8 The Transportation and Assignment Problems 9 Network Optimization Models 10 Dynamic Programming

References
Gass, S. I. and Harris, C. M. (eds.): Encyclopedia of Operations Research and Management Science, 2nd edition, Kluwer Academic Publishers, Boston, 2001. Wein, L. M. (ed.):50th Anniversary Issue, Operations Research (a special issue featuring personalized accounts of some of the key early theoretical and practical developments in the field), 50(1), Jan.-Feb. 2002. Fortuin, L., P. van Beek, and L. van Wassenhove (eds.): OR at wORk: Practical Experiences of Operational Research, Taylor & Francis, Bristol, PA, 1996. Morris, W. T.: On the Art of Modeling, Management Science, 13: B707-717, 1967. LINGO Users Guide, LINDO Systems, Inc., Chicago, IL, 2003. MPL Modeling System (release 5.0) manual, Maximal Software, Inc., Arlington, VA, 2004. Maros, I.: Computational Techniques of the Simplex Method, Kluwer Academic Publishers, Boston, MA, 2003. Geoffrion, A. M.: Elements of Large-scale Mathematical Programming, Management Science, 16: 652-691, 1970. Howard, R. A.: Dynamic Programming, Management Science, 12: 317-345, 1966. Barnhart, C., E. D. Johnson, G. L. NemhauserM. W. P. Savelsbergh, and P. H. Vance: Branch and Price Column Generation for Solving Huge Integer Programs, Operations Research, 46: 316-329, 1998.

Assignments and Questions

Email to pengyi@uestc.edu.cn Email title: subject should begin with ORSpring2012-

Assessment

Homework 25%

Project 35%

Exam 40%

Discussion
What is operations research (OR) Bnet.com video: O.R. applies advanced analytic techniques to real business problems.

Agenda
Chapter 1
OR cases Definition of OR The nature of OR The origin of OR The impact of OR OR software

Chapter 2 The OR modeling approach

OR and P&G
The Successful Story of Procter & Gamble
As the worlds largest consumer products companies, P&G operates in more than 80 countries, has 138,000 employees, and with US$78.9 billion in annual sales (2010). Secrete weapon?

OR and P&G
Secrete weaponOR inside 900 terabytes of data Measure and optimize every aspect of business, from selecting manufacturing site locations to choosing the right brand names Integrates OR principles into the decision-making structure of the firm. Tackling issues such as global manufacturing site location and sourcing, inventory management, supply chain design, and consumer behavior analysis. [2004 INFORMS Prize winner]

OR and P&G: inventory management

Inventory management is crucial to overall efficiencyHow much products should each factory produce? How much inventory should they have? The first successful use of OR at P&G is inventory management. In 1992, P&G had too many manufacturing plants scattered around the country, and needed to eliminate redundant capacity, optimize inventory holding policies and supply chain.

OR and P&G: inventory management

The analytic team spent a little less than a year devising tools that generated various consolidation scenarios. The teams recommendations ultimately allowed P&G to shut down multiple plants and have since generated more than $1 billion in cost savings.

OR and P&G: New product branding

When P&G designed a new teeth-whitening product, they turned to their analytics team to decide a brand name. The analytic team used decision analysis techniques, through defining the question, evaluating options, understanding the uncertainties, and analyzing the best decision, to determine the brand name.

64 factories 2 billion cases

54,000 vehicles

2,400,000 retail outlets

Coca-cola Enterprises (CCE) Case: vehicle routes optimization for efficient product delivery

Coca-cola Enterprises (CCE) Case

Coca-Cola Enterprises (CCE) is the worlds largest bottler and distributor. In 2005, CCE distributed 42 billion bottles and cans to 46 states in the United States and all 10 provinces in Canada. Objectives:
Provide world-class customer service; Optimize its labor and assets; Reduce natural resource consumption Increase productivity of its employees

Coca-cola Enterprises (CCE) Cases

Business benefits
Delivery cost per case improved 15% over the prior year $45 million in annual delivery cost savings Inaccurate or late delivery rate dropped from 4.5% in 2004 to 3.7% in 2005 User satisfaction increased because service improved Reduced pollution because drivers drove fewer miles

Scheduling employees in a call center

Discussion Suppose you are a call center supervisor, how do you schedule employees? What issues do you need to consider?

Scheduling employees in a call center

Issues need to consider
Provide sufficient number of employees to handle expected call volumes while minimize the operation cost. Schedule different number of agents at different shifts. Determine your call centers peak calling time. Determine salary levels of different shifts. Determine what capabilities you need for your call center employee (e.g., bilingual? flexible time schedule?)

Nestle kids cereal advertising case

Suppose you are a marketing manager for Nestle. The task is to design a series of advertising activities for Nestles new breakfast cereal products. Budget $4,000,000
Discussion
What are the objectives How to measure success What kinds of approaches

Nestle kids cereal advertising case

Objectivemaximize the revenue Objective for advertisingmaximize the number of audiences, especially children and their parents.

Approaches
TV Newspaper Magazine Supermarket Web

Nestle kids cereal advertising case

Suppose you select three approaches
TVevery Sat morning at childrens program Magazinechoose family and food magazines Newspaperadvertising on Sun newspaper