Académique Documents
Professionnel Documents
Culture Documents
CHAPTER 1: Introduction
Body of Knowledge
Problem Solving and Decision Making
Quantitative Analysis and Decision Making
Quantitative Analysis
Models of Cost, Revenue, and Profit
Quantitative Methods in Practice
Some Videos
Simulation: giving the ability to try out approaches and test ideas for
improvement
4
Body of Knowledge
German troops
As the industrial boom following the war was running its course, the
problems caused by the increasing complexity and specialization in
organizations were again coming to the forefront.
The other factor that played a key role in the rapid growth of OR during
the early 1950s was the Research on Improving OR Methods.
1. A prime example is the simplex method for solving linear
programming problems, developed by George Dantzig in 1947.
2. Many of the standard tools of OR, such as linear programming,
dynamic programming, queuing theory, and inventory theory, were
relatively well developed before the end of the 1950s..
While a graduate student at UC Berkeley, Dantzig showed up late to
class one day. Professor Jerzy Neyman had written two examples of
famously unsolved statistics problems on the blackboard. When
Dantzig arrived, he assumed that the two problems were a homework
assignment and wrote them down. According to Dantzig, the problems
"seemed to be a little harder than usual", but a few days later he
handed in completed solutions for both, still believing that they were an
assignment that was overdue. Six weeks later, Dantzig received a visit
from an excited professor Neyman, who had prepared one of Dantzig's
solutions for publication in a mathematical journal!
1914-2005
Problem Solving
Decision-Making Process
Structuring the Problem
Define
the
Problem
Identify
the
Alternatives
Determine
the
Criteria
Choose
an
Alternative
10
Qualitative Analysis
based largely on the managers judgment and
experience
includes the managers intuitive feel for the problem
is more of an art than a science
11
Quantitative Analysis
analyst will concentrate on the quantitative facts or
data associated with the problem
analyst will develop mathematical expressions that
describe the objectives, constraints, and other
relationships that exist in the problem
analyst will use one or more quantitative methods to
make a recommendation
12
13
14
Model Development
15
Model Development
16
Mathematical Models
17
18
Mathematical Models
19
Mathematical Models
Uncontrollable Inputs
(Environmental Factors)
Controllable
Inputs
(Decision
Variables)
Mathematical
Model
Output
(Projected
Results)
20
Mathematical Models
21
Model Solution
22
Projected
Profit
0
20
40
60
80
100
120
Total Hours
of Production
0
10
20
30
40
50
60
Feasible
Solution
Yes
Yes
Yes
Yes
Yes
No
No
23
Model Solution
24
Report Generation
26
27
Mathematical Model
The total monthly profit =
(profit per unit of product 1)
x (monthly production of product 1)
+ (profit per unit of product 2)
x (monthly production of product 2)
= p1x1 + p2x2
We want to maximize total monthly profit:
Max p1x1 + p2x2
28
30
Subject to
Max
p1x1 + p2x2
s.t.
Objective Function
Constraints
31
Question
Suppose b = 2000, a1 = 2, a2 = 3, m = 60, u = 720,
p1 = 100, p2 = 200.
Rewrite the model with these specific values for the
uncontrollable inputs.
32
Answer
Substituting, the model is:
Max 100x1 + 200x2
s.t.
2x1 + 3x2
x1
x2
x2
< 2000
>
60
< 720
>
0
33
Question
The optimal solution to the current model is x1 =
60 and x2 = 626 2/3. If the product were engines,
explain why this is not a true optimal solution for the
"real-life" problem.
Answer
One cannot produce and sell 2/3 of an engine.
Thus the problem is further restricted by the fact that
both x1 and x2 must be integers. (They could remain
fractions if it is assumed these fractions are work in
progress to be completed the next month.)
34
60 units Prod. 1
626.67 units Prod. 2
Controllable Inputs
Profit = $131,333.33
Steel Used = 2000
Output
Mathematical Model
35
Linear Programming
Integer Linear
Programming
Nonlinear Programming
PERT/CPM
Inventory Models
Waiting Line Models
Simulation
Decision Analysis
Goal Programming
Analytic Hierarchy Process
Forecasting
Markov-Process Models
Distribution/Network Models
36
37
38
Goal programming is a technique for solving multicriteria decision problems, usually within the
framework of linear programming.
Analytic hierarchy process is a multi-criteria decisionmaking technique that permits the inclusion of
subjective factors in arriving at a recommended
decision.
Markov-process models are useful in studying the
evolution of certain systems over repeated trials (such
as describing the probability that a machine,
functioning in one period, will function or break down
in another period).
40
Linear programming
Integer programming
Network models (such as transportation and
transshipment models)
Simulation
41
Assignment 1
1. Read Chapters 1 and 2 in the textbook.
2. Search for one industrial application of OR
3. Prepare a brief description of the problem
42
End of Chapter 1
43