A Crash Course in Operations Research

Archis Ghate Feb 7, 2008 HSERV/EPI 539

What is Operations Research (OR)?

OR is a discipline that applies advanced mathematical techniques to help institutions (private, public, non-profit) and individuals make better decisions.
OR

OR focuses on finding ways to allocate scarce resources to activities often in an uncertain environment in order to optimize one or more objectives. Institute for Operations Research and the Management Sciences (INFORMS) - http://www.informs.org

has recently been called the science of better. http://www.scienceofbetter.org

Some Examples of Typical Decision Problems

How many cars to produce? What intensity of radiation to use in cancer treatment? How many outpatients to schedule every day? Whether to undertake a new project? Whether to invest in a particular stock? Which retirement plan to choose? How many medical service centers to open in a county? How many warehouses to open? What and how much to stock in these warehouses? How many nurses to employ? Which doctors to have on call? How to schedule flights? How to route road traffic / air traffic? Whether to use twofinger screening or ten-finger screening? How to schedule multiple projects? Which classes to take? Which PhD advisor to choose? When to replenish inventory?

Origins and Applications of OR

Initial research in OR is typically attributed to World War II. Since the early 1940, OR has grown to be a vast field of study with applications to healthcare, emergency/disaster management, telecommunications, finance, business modeling, medicine, logistics/transportation, inventory management, manufacturing, sports, engineering design, economics, natural sciences, e-commerce, forest management, supply chain management, . This lecture is a 60 minute crash-course on a 50-year old field !!

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The OR Approach to Modeling

1. 2.

Not different from other quantitative fields of study Define the problem and gather data. Formulate a mathematical model to represent the problem Develop a computer-based procedure for deriving solutions to the model Test/refine the model Implement.

3.
4. 5.

(Hillier and Lieberman, 2005)

1. Defining the Problem and Gathering Data

Unlike textbook problems, practical decision problems are often vague. Important to identify the key decision makers and understand their viewpoint/gain insights into the problem.

What

Data gathering is key.

are the different decision alternatives? What is the objective of interest? Are there multiple objectives? Do these objectives conflict with one another? What are the constraints? What are the sources of uncertainty?

2. Mathematical Model

After a problem description is available from the decision makers, we need to build a mathematical model of the problem
A
variables to represent attributes in the problem. parameters/constants that represent problem data. simplifying assumptions to make the solution/analysis

mathematical model is an idealized representation that uses

tractable.

It

Since

is important to build a mathematical model that can be solved and yet represents the actual problem to a reasonable accuracy.

it is typically hard to assign appropriate values to the parameters, we often perform sensitivity analysis
How

does our decision change if we change the parameter values.

3. Computer-based procedure for deriving solutions. In some cases, standardized software may be available to solve your model.
Applied

In

some cases, you may have to design new algorithms and write your own programs
Methodological

you)

research (most relevant for

research

A Short List of OR Journals

Operations

Research, Management Science, Manufacturing and Service Operations Management, Mathematical Programming, Interfaces, INFORMS Journal on Computing, Mathematics of Operations Research, Healthcare Management Science

A Partial List of OR Topics

Linear

Programming, Non-linear Programming, Integer Programming, Dynamic Programming, Decision Analysis, Markov chains, Markov Decision Problems, Queueing Theory, Game Theory, Simulation, Network Optimization, Stochastic Programming

A Diet Problem
1.

Problem description and data

To

decide the quantity of different food itmes to consume every day so as to meet the Minimum Daily Requirement (MDR) of several nutrients at minimum cost. What type of data do we need?

What are the different food items under consideration? Nutrient information and cost of food?

Diet Problem contd..

Simple toy example - two food items and three nutrients

Wheat Rye MDR

Carbs/unit Proteins/unit

Vitamins/unit
Cost/unit

5 7 4 2 2 1 0.6 0.35

8 15 3

Diet Problem contd..

2.

Mathematical model. What variables do we need? Let XW and XR be the quantities of wheat and rye we consume respectively.

minimize 0.6 X W 0.35 X R subject to 5 X W 7 X R 8 4 X W 2 X R 15 2 XW X R 3 XW 0 X R 0

cost carb MDR protein MDR vitamin MDR

Diet Problem contd..

Computer solution using EXCEL

XW 0 XR 0 TOTAL COST 0 MDR DAILY INTAKE 8 0 15 0 3 0

per unit WHEAT RYE CARB 5 7 PROTEIN 4 2 VITAMIN 2 1 COST 0.6 0.35

Transportation Problem (adapted from Hillier and Lierberman, 2005)

A non-profit organization manages three warehouses and four healthcare centers. The organization has estimated the requirements for a specific vaccine at each healthcare center in units of boxes of vials. The organization also knows the number of boxes of vials available at each warehouse. They want to decide how many boxes of vials to ship from the warehouses to the healthcare centers so as to meet the demand for the vaccine at minimum total shipping costs. Decision variables - Xij be the number of boxes shipped from warehouse i to healthcare center j.

HC1 HC2

HC3

HC4

AVAILABILITY

W1
W2 W3
REQUIREMENT

46 4 35 2 99 5 80

513
416 682

654
690 388

867
791 685

75
125 100

65

70

85

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A Shortest Path Problem (taken from Denardo, 1982)

You bike from home (A) to work (G) everyday along a network of bike routes shown in the picture with nodes and links. The travel time along these links is shown next to the links. Which route should you take to minimize total travel time?

Distributing Medical Teams to Counties (adapted from Hillier and Lieberman, 2005)
A

non-profit institution provides health related services to three counties. These services include medical care, health education and training. The institution has five medical teams and wants to decide how many (if any) medical teams to assign to each of these counties so as to maximize additional person-years of life. Decision variables - xj be the number of medical teams assigned to county j.

Distributing Medical Teams contd..

thousands of additional person-years of life county Medical Teams 1 2 3 0 0 0 0 1 45 20 50 2 70 45 70 3 90 75 80 4 105 110 100 5 120 150 130

Distributing Medical Teams to Counties contd..

Can be solved the same way as the shortest path problem working backward choosing the option with the highest reward.

A Non-linear Problem

We can also tackle non-linear objective functions/constraints.

Maximize 126X- 9X 2 182Y 13Y 2 X4 2Y 12 3X 2Y 18 X 0, Y 0
X 2.667 1 0 3 Y 5 0 2 2 2.667 10 18 OBJ 857 4 12 18

A Crop Farming Problem (taken from Hillier and Lieberman, 2005)

A

farmer wants to decide which crop to grow in order to maximize his expected income. He is considering four crops and feels that the weather this year is going to be either dry, moderate or damp. The farmer has estimated the probabilities for these events and the corresponding net income.

Crop Farming problem contd..

CROP1 CROP2 CROP3 CROP4 PROB. WEATHER DRY MODERATE DAMP 20 35 40 22.5 30 45 30 25 25 20 20 20 0.3 0.5 0.2 EXP. INCOME 31.5 30.75 26.5 20

What Did We Learn?

Saw

a few toy examples from Operations Research, which takes a systematic mathematical approach to decision making. There is a lot more out there and is covered in classes such as INDE 410, 411, 412, 513, 599 etc.

References
Hillier,

F. and Lieberman, G., Introduction to Operations Research, McGraw Hill, 8th edition, 2005. Denardo, E., Dynamic Programming: Models and Applications, PrenticeHall, 1982.