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What is OR?
OR can be defined neither in terms of a single field of application, nor application of a method, nor of a technique, because it aims to analyse problems using the most appropriate method. Over time OR methods have been used by many others: in particular linear programming and decision analysis; and more generally, the use of models using modern software. Although it is difficult to define modern OR, the above early examples capture its nature: OR is about analysis of problems. What is crucial in practice is identifying what are the most serious problems in the organisation where you are working and assessing whether you can help. OR is not about searching for a problem to match a list of techniques. It is about relating analytic methods to the processes of decision-making. OR analysis typically means developing an abstract model of some kind. Models serve two important functions. First, they make assumptions explicit. Second, models require us to select what is important. This is well described as translating data into information. For example, in June 2012 the Daily Telegraph analysed all dubious refereeing decisions in the football premier league and thus identified which teams should have been in the first four league positions if mistakes had not been made: first Manchester United, then Manchester City, Tottenham Hotspur and lastly Arsenal. The objective of OR is to enable others to make better decisions. Defining improvement is frequently problematic as changes often mean that some gain and others lose. This raises the unresolved theoretical problem of interpersonal comparisons in welfare economics and practical problems of implementation. An analyst will often have to negotiate acceptable changes. Churchman, a leading systems theorist, eloquently expounded the dilemma all analysts face: How can you be sure that the change will lead to improvement if you have not understood the whole system? But how can you understand the whole system? The practical answer is that problem definition is crucial in setting boundaries of the problem to be analysed. This is indeed a focus of much of modern soft OR with emphases on problem structuring methods, cognitive mapping, and decision analysis.
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Reading
The closest thing to a set book is: Hillier FS, Lieberman GJ (2001) Introduction to Operations Research. (eighth edition) London: McGraw Hill (and later editions!).
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For this lecture, I recommend that you read Chapter 1 (Introduction) and Chapter 2 (Overview of the Operations Research Modelling Approach) in this book. You may also find it helpful to read the introductory Chapters by two distinguished Professors of OR if you can find these books (others are available in the library): Chapter 1 (Help) and Chapter 2 (Science) (pages 1 34) from Mitchell GH (1993) The Practice of Operational Research. London: Wiley. Or Chapter 1 (Introduction) and Chapter 2 (Decisions and the Scientific Method) (pages 1 49) from Rivett P (1994) The Craft of Decision Modelling. London: Wiley.
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Suppose you have a certain sum of money to invest, e.g. 100,000. You can invest in - or disinvest from - any of up to 10 funds or companies at 6 monthly intervals over the next 5 years. For example: 2012, 20th October : invest (i) 40k on HSBC shares; (ii) 5k on an ISA with Santander; (iii) 30k buying gold; and (iv) 25k buying Icelandic Krona. 2013, 20th April: sell half of the HSBC shares; and then from the money raised and other dividends, interest received, etc., invest half equally into (v) a Zurich MENA fund; and (vi) a Paulson fund. Etc., etc. How do you choose the best combination of amounts of money to invest, etc., in the individual funds and their timings, in order to make the maximum profit by the end of the fifth year?
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Example 2:
Project Management.
A house is to be built for you, and you have firm estimates of the times to complete many activities, such as: get planning permission; prepare the building site; dig the foundations; build the walls for the ground floor; prepare the walls and grounds to receive services (electric cabling, water pipes, sewerage, gas, etc); build the upper walls; build the roof; lay the garden paths; paint the inside walls; build the roof; order the windows; install the ground floor windows; install the upper floor windows; plaster the internal walls; first-paint the internal walls; etc. Some tasks must be carried out sequentially: e.g. you must plaster walls before you can paint them. Others are more independent and can be carried out (by different people) simultaneously, such as insulating the loft and hanging the internal doors on the ground floor. What is the best sequence in which to carry out these activities? What if the time estimates are not firm (i.e. fixed), but are subject to variation because of factors like the weather? Distribution Problem
Example 3:
Suppose you run a distribution company and today you have 30 items to deliver, one to each of 30 different places (houses, etc.) in Greater London. Call the depot D, and the 30 destinations (or places) P1, P2, ... P30. Suppose you know the road distances from every single place to every other, such as from P6 to P21. You wish to devise a good schedule such as from D to P4 to P25 to P16 to P8 to . . . . . . to P7 and back again to D that will attempt to minimise the overall distance to be travelled. Or should it be to minimise the total time taken? Or minimise the total cost? Example 4: Minimising the Cost of a Diet
You wish to define a low cost diet that meets daily requirements of vitamins, iron, calories, etc., and for each item of food (e.g. bowl of steamed rice) you have a good estimate of how much vitamin C and cholesterol (or fat of different kinds) it contains, the cost of the raw materials (per 100 grams of rice), etc., etc. Perhaps there are 200 items or quantities of food you can think of. Which combination will meet all the daily nutritional requirements at the least overall cost of the diet? Later you would need alternatives or your diet would be very boring . . . . . . For example the cheapest diet may contain no crabs, but you love crabs - so want to include a crab dish.
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The first three of these examples would be solved using the techniques covered in this part of the course on Friday mornings, OR202.1, and the skills you'd need to tackle example 4 will be developed in OR202.2. You'll meet standard techniques for tackling dozens of problems like the ones above and I'll show you sensible and logical approaches to apply if you're faced with a problem but cannot find a text book containing a suitable approach. i.e. Heuristic methods invented and adapted by yourself in order to guarantee you a really satisfactory solution. This should give you a flavour of the potential practicality of OR202. If this is not enough . . . . OR can be used in Scheduling of aircrews and planes for airlines; of operating theatres and surgeons in a hospital; of players for Manchester Uniteds 5 matches within 20 days . . . . . Facility Planning computer simulations of airports for the rapid and safe processing of passengers and luggage; the layout within a new library; . . . . . Yield Management setting the prices of theatre tickets, airline seats, overseas students fees at university, etc., to reflect changing demand, to maximise profits, or to reduce the chance of empty seats, etc. . . . . Defence and Peace Keeping finding ways to deploy troops, vehicles and equipment rapidly and effectively . . . . .
References Used in Compiling This Document 1. Anderson DR, Sweeney DJ, Williams TA (1994). An introduction to management science: quantitative approaches to decision making. West Publishing. 2. Beasley JE (editor) (1996). Management science methods. University of London External Programme. 3. Churchman CW, Ackoff RL, Arnoff EL (1957). Introduction to operations research. John Wiley. 4. Dennis TL, Dennis LB (1991). Management Science. West Publishing. 5. Mitchell G (1993). The practice of operational research. John Wiley. 6. Phillips DT, Ravindran A, Solberg JJ (1976). Operations research - principles and practice. John Wiley. 7. Pryor, AJ (2001). Operational research / management science: what it is, its origins, and how it has evolved to meet managements needs. Draft research paper. 8. Rivett P (1994). The craft of decision modelling. John Wiley. 9. Robins P (1985). The methodology of operational research, in Kidd J (editor). Managing with operational research. Philip Allan / St Martin's Press.
These notes are copyright to Dr Alan Pryor Page 6 of 9
10. Waring D (1996). A brief introduction to operational research, in Beasley JE (editor). Management science methods. University of London External Programme.
-------------------------------------------------------------------------------------------------------------------The class exercises for this lecture now follow, and should be tackled in preparation for the classes in week 2, commencing Monday 10th October. A purist might say that an operational researcher who is faced by a quantitative problematic situation is able to do either or both of two things: (i) be aware that the problematic situation has arisen and attempt to identify the precise problem; and (ii) attempt to solve the problem, particularly if it is of a quantitative nature, and even if no standard technique can be 'lifted off the shelf' to solve it. In the two examples that follow, you are to try to find a suitable methodology or approach that seems sensible and likely to give you a good solution to the stated problem. This sort of approach is often called a heuristic approach; or simply common sense! Qu 1 Victoria and David are mature students with a great deal of work experience, and are entering their second year at LSE. They have just signed a lease to rent a rather grotty flat - because it's cheap. The flat has six rooms and they've decided that, as a priority, they will make these rooms more habitable. David, who has Spanish roots, claims to be good at painting and proposes that he will paint the walls and ceilings of the various rooms. Victoria says "there's no point in painting a room until the surfaces of the walls and ceilings have been thoroughly cleaned of grease and dirt, and any holes in them, etc., are made good, e.g. with Polyfilla". The table below shows the exact number of hours Victoria and David reckon they'll take for each of the rooms. Being typical overconfident students, they are convinced that each of the times are going to be totally accurate - neither a minute more nor a minute less, although the times quoted allow time for quick snacks, etc. Room Victoria's 'Preparatory' Times Kitchen 12 Bathroom 8 Lounge 13 Bedroom 9 Games Room 6 Study 5 David's Painting Times 6 9 18 11 5 6
They will start at 6 p.m. on Friday evening, so that if Victoria starts each new room (after the first) as soon as she's finished the previous one she'll finish at 11 p.m. on Sunday evening. Whatever the sequence (i.e. order) in which she prepares the six rooms, it is sensible for David to paint the six rooms in the same order. David will be able to start painting any particular room the instant that Victoria has finished preparing it, and not before although, of course, this will only be possible if he's not still painting his previous room. It is clear that David will start later than Victoria. For example if the first room Victoria prepares is the bathroom, David will start painting it at 2 a.m. on Saturday morning. Similarly he will finish his final room some time after Victoria has finished that same final room.
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What is the best sequence in which to prepare and paint these six rooms, and when will David finish his final room so that they can have a big celebration (e.g. David likes reading Enid Blyton stories, especially the pictures, whereas Victoria prefers to throw knives at pictures of the SpiceGirls)? Try a number of different sequences in order to get a feel for the problem, such as (i) the order given above; and (ii) an alphabetical order. In each case identify the corresponding schedule showing when Victoria and David will start and end each room. These two sequences are, of course, perfectly arbitrary, so the need is to begin to develop a more systematic and (hopefully) productive methodology which could then be used in further applications of a similar nature. Thus, bearing in mind that they want to finish the whole 'project' as early as possible, and recognising that there will be one or more 'bottlenecks' as far as David is concerned (when he is doing nothing because he's waiting for Victoria to finish the room he's due to start painting next), can you suggest which room Victoria should start with and, conversely, which room David should do last? Can you then extend these ideas? How good is your best schedule? I.e. What is the earliest time at which you reckon David can finish the project? As a check, you may manage to get him finishing at 10 a.m. on Monday, but not before (unless you make an error!). The objective here was to get David finished as early as possible. Can you think of an alternative objective? It is also clear that the wording of this problem shows that a number of assumptions have been made (or rules have been defined). How realistic do you think these rules are? Qu 2 Alan is another second year student at LSE and, to help finance himself, he occasionally works as a courier for a private company that delivers small parcels or documents to various destinations in Greater London and the Home Counties. Today Alan has been asked to deliver items to seven separate destinations which, for convenience, we'll call D1, D2, D3, D4, D5, D6 and D7. Starting from his home at O, Alan wishes to visit each of these seven places once (and once only), and only then return home. For example, he might choose his 'tour' to be: O to D3 to D5 to D2 to D7 to D1 to D4 to D6 to O. The company insists that he makes all the trips by taxi, and the table below shows his estimates in exact s of the costs of going from each of these eight places to all others. Note that these costs are not necessarily symmetrical. For example, the cost of going from D1 to D2 is 24, and differs from the cost of going from D2 to D1, perhaps because of one-way systems, expected road congestion, and so on. Whatever his total taxi fare may be for the eight links of his tour, the company will pay him a lump sum of 170 for the 'project', so that clearly he will wish to find the best sequence in which to visit these places in order to minimise his total taxi fare. Can you think of any logical ways in which to approach this problem using pen and paper or otherwise? i.e. Can you propose a heuristic methodology? (Or more than one?) How many different tours are possible? Try one or two different tours and calculate the profit in each case. How good is your best solution, given that it can be shown that the best possible profit is 68? N.B. It is most unlikely that you will identify the particular tour which will result in this best profit. How sensible do you think are the assumptions or rules defined in the third sentence of this problem? The data values for the expected individual trip costs in s are as follows:
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Finally, we will return to these two topics again later and examine them more thoroughly. The methodology which you should be using in order to try to solve these two problems is: try to think of a good way of approaching the problem, and then apply the approach systematically. I.e. There is not a standard method that you can lift down from the shelf, and so you have to adapt a heuristic approach.
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