456/556 Introduction to

Operations Research

Chapter 1: Introduction
Chapter 2: Overview of the Operations
Research Modeling Approach
Origins of Operations
Research
 Operations Research (OR) or Management
Science can be defined as the use of
quantitative methods to assist analysts and
decision makers in designing, analyzing, and
improving the performance or operations of
systems.
 OR is a branch of mathematics that grew out
of the need during WWII to allocate scarce
resources to various military operations in an
effective manner.
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Origins of Operations
Research (cont.)
 Examples include:
 The development and use of radar for detecting
and tracking aircraft.
 Allocation of scarce resources (raw materials,
parts, time, people) to problems such as:
 Producing high octane fuel,
 Developing systems for detection of submarines and
aircraft,
 Strategic and tactical planning in order to achieve
military and industrial goals.

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Origins of Operations
Research (cont.)
 After WWII, an industrial boom led to
increasing complexity and specialization in
organizations.
 Typical problems that needed to be solved:
 How to get various components of a company
working at cross purposes to work together.
 How to allocate limited resources in the most
effective way.

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Origins of Operations
Research (cont.)
 People who had worked on OR problems for the
military realized that these new problems were
basically the same as those faced by the military in a
different context.
 Two factors that have played a key role in the growth
of OR are:
 The development of powerful techniques for solving OR
problems such as the simplex method developed by George
Dantzig in 1947.
 The digital computer - large scale OR problems are solvable
and anyone with a personal computer can solve OR
problems with software such as Excel.

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The Nature of Operations
Research
 Operations research is applied to problems that deal with how to
conduct and coordinate the operations (or activities) within an
organization.
 Some of the areas where OR has been applied:
 Manufacturing
 Transportation
 Construction
 Telecommunications
 Financial Planning
 Health care
 Military
 Public services
 See Table 1.1 in our textbook for some actual problems solved by OR
techniques!
 Some specific examples follow!

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Reengineering IBM’s Global
Supply Chain
 In 1994, IBM began to reengineer its global supply chain.
 It wanted to achieve quick responsiveness to customers with minimal
inventory.
 To support this effort, an extended-enterprise supply-chain analysis
tool, the Asset Management Tool (AMT) was developed.
 AMT integrates graphical process modeling, analytical performance
optimization, simulation, activity-based costing, and enterprise
database connectivity into a system that allows quantitative analysis of
extended supply chains.
 IBM has used AMT to study such issues as inventory budgets, turnover
objectives, customer-service targets, and new-product introductions.
 It has been implemented at a number of IBM business units and their
channel partners.
 AMT benefits include over $750 million in material costs and price-
protection expenses saved in 1998.
 INTERFACES 30: 1 January–February 2000 (pp. 7–25)

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Nuclear Weapons Dismantlement,
Evaluation, and Maintenance
 The end of the Cold War changed the missions of facilities in the US nuclear
weapons complex.
 They ceased production of new weapons and focused on dismantling old
weapons and maintaining the safety, security, and reliability of those remaining.
 The Pantex Plant, operated for the US Department of Energy (DOE) by the
Mason and Hanger Corporation, is the sole assembly and disassembly facility for
dismantlement, evaluation, and maintenance activities for the US nuclear
stockpile.
 A decision support tool, the Pantex Process Model (PPM), was developed to help
Pantex plan capacity and deploy resources to meet its new requirements.
 Using the PPM, Pantex has provided critical input to help the US form and
defend positions during arms-control-treaty negotiations.
 It has changed the way Pantex and the DOE evaluate resource requirements in
planning future workloads.
 It has also led to an innovative cooperative agreement among Pantex, the
Transportation Safeguards Division of DOE, and the Department of Defense
(DOD) that resulted in Pantex exceeding weapon dismantlement goals.
 INTERFACES 30: 1 January–February 2000 (pp. 57–82)

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Optimized Crew Scheduling at
Air New Zealand
 The aircrew-scheduling problem consists of two important
subproblems:
 The tours-of-duty planning problem to generate minimum-cost tours of
duty (sequences of duty periods and rest periods) to cover all scheduled
flights
 The rostering problem to assign tours of duty to individual crew members.
 Between 1986 and 1999, Air New Zealand staff and consultants in
collaboration with the University of Auckland have developed eight
application-specific optimization-based computer systems to solve all
aspects of the tours-of-duty planning and rostering processes for Air
New Zealand’s national and international operations.
 These systems have saved NZ$15,655,000 per year while providing
crew rosters that better respect crew members’ preferences.
 INTERFACES 31: 1 January–February 2001 (pp. 30–56)

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Characterization of Operations
Research
 The scientific method is used to investigate
problems to be solved.
 OR is concerned with practical management
of an organization.
 OR must provide positive, understandable
conclusions to decision makers when they are
needed!
 OR takes a broad viewpoint
 OR attempts to resolve conflicts of interest among
components of an organization in a way that is
best for the organization as a whole.

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Characterization of Operations
Research (cont.)
 The goal of OR is to find a best (optimal) solution.
 Usually, the problems in OR need to be solved with a
team of people with a collective expertise in:
 Mathematics
 Statistics and probability theory
 Economics
 Business administration
 Computer science
 Physical sciences
 Behavioral sciences
 Special techniques of OR

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Overview of the OR Modeling
Approach
 An OR study usually consists of the following
(overlapping) phases:
 1. Define the problem of interest and gather relevant
data.
 2. Formulate a mathematical model to represent the
problem.
 3. Develop a computer-based procedure for deriving
solutions to the problem from the model.
 4. Test the model and refine it as needed.
 5. Prepare for the ongoing application of the model
as prescribed by management.
 6. Implement.

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Modeling Process in General

Real World Problem Mathematical Model

Compare Model
Solve Mathematical
Solution
Model
to Real World

Refine Model
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Homework
 Read Chapters 1 and 2 in our textbook.
 Read INTERFACES journal articles on three
specific applications of OR discussed above.
 Read the article “History in the
Making: INFORMS celebrates 50 years of
problems, solutions, anecdotes
and achievement” (http://www.lionhrtpub.co
m/orms/orms-10-02/frhistory.html)
 Problem # 1.3-2 (apply to three applications
of OR discussed above).

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References
 Operations Research: A Practical
Introduction by Michael W. Carter and Camille
C. Price, CRC Press, 2001.
 Introduction to Operations Research (8th ed)
by Frederick S. Hiller and Gerald J.
Lieberman, McGraw Hill, 2005.
 Interfaces Journal, Jan. - Feb. Issues,
Volumes 30 and 31
(http://interfaces.pubs.informs.org/)
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