OPERATIONS RESEARCH

OR
MANAGEMENT SCIENCE

Operations Research (OR)

is the study of
mathematical models for
complex organizational
systems.

COMPLEXITY IN AN ORGANIZATION
Aviation

Industry:

Revenue management- cost &fuel efficiency, market share

Flight Scheduling -(fleet Planning, Schedule development,
Capacity Planning, routing)
Operations (Manpower planning, Maintenance planning, Crew
scheduling)
Irregular operations

Retail Industry:
Distribution System-(number of warehouses, trucks, routes)
Retail site selection
Optimal mix of merchandise to maximize sales
Production optimization-What organization, machines,
processes, and work flows will maximize quality, minimize
costs, and maximize output

EMERGENCE OF OPERATIONS
RESEARCH

Increased complexity and specialization

Limited available resources
OR is applied the problem that concern
how to conduct and co-ordinate the
operations within an organization

EMERGENCE OF OPERATIONS
RESEARCH

Activities of Operations Research were

initiated in England during the World War II.
Urgent need to allocate scare resources the
various activities within each operations
(activities) in an effective manner

Scientist were asked to research on

(military) operations

APPLICATION OF OR

Extensively applied in such diverse area as:

Manufacturing
Transportation
Construction
Financial

planning
Labor scheduling
Selection of advertising media
Routing of delivery vehicle
Hospital staffing

PROBLEMS DISCUSSED IN OR

Optimization Problem: Seeks to maximize or

minimize a numerical function
Minimize cost of the food purchased subjected to
the constraints that purchased foods provide at least
a certain total amount of each nutrient.

Programming Problem: Deals with determining

optimal allocation of limited resources to meet given
objective.
or they deal with situations where
number of resources such as men, material, machines
and land, are available (with certain restrictions on
amount and quality) and are to be combined to yield
one or more product.

Out of all permissible resources, it is desired

to find the one or ones which maximize or
minimize some numerical quantity, such as
profit or cost.
Ex. We may be interested in finding the
cheapest way of transporting a product from a
number of origin to number of destinations.
Linear programming deals with that class of
programming problems for which all relations
among the variables are linear.

EXAMPLE

Let us consider a shop with three types of machines, A, B,

and C, Which can turn out four products, 1, 2, 3, 4. Any
one of the products has to undergo some operation on
each of the three types of machines (lathes, drill and
milling machines). We assume that the production is
continuous, and that each product must first go on
machine type A, then B, and finally C. Furthermore, we
shall assume that the time requires for adjusting the setup
of each machine to a different operation, when
production shifts from one product to another is
negligible. Table shows:

The hours required on each machine type per unit of each product

The total available machine hours per week

The profit realized on the sale of one unit of any one products.

DATA FOR EXAMPLE:

Machine
Type

Products
1

Total time
available per
week

1.5

2.4

2000

3.5

8000

1.5

3.5

5000

Unit
profit

5.24

7.30

8.34

4.18

It is assumed that profit is directly proportional to the

number of units sold. We wish to determine the weekly
output for each product in order to maximize profits.

OBSERVATIONS:

Maximum profit will not be achieved by

restricting production to a single item.
Available machine time is limited so we can
not increase input arbitrarily of any product.
Production must be allocated among the
product 1, 2, 3, 4 so that profit will be
maximized without exceeding the maximum
number of machine hours available.

LINEAR PROGRAMMING:
Given a set of m linear inequalities or
equations in r variables, we wish to find non
negative values of these variables which will
satisfy the constraints and maximize or
minimize some linear function of variables.

ai1 x1 ai 2 x2 ......... air xr {, , }bi ,

x j 0,

j 1,....., r ,

i 1,......., m,

( 2)

which minmize or maximize a linear function

z c1 x1 ......... cr xr .
(3)
The aij , bi , c j are assumed to be known constant.

(1)

LINEARITY:

Additivity
Multiplicativity

Assumptions of the
programming model

linear

The parameter values are known with

certainty.
The objective function and constraints
exhibit constant returns to scale
(proportionality
/Multiplicativity
assumption).
There are no interactions between the
decision
variables
(the
Additivity

APPROACH USED MANAGEMENT SCIENCE

Define Problem
Identify Alternative
Determine Criteria
Evaluate criteria
Choose an alternative

MODEL
Models are representation of reality.
Ex. Equations, An outline, A diagram, A map
Symbolic Model
Mathematical Model

Deterministic

versus Probabilistic Models

Models are based on some assumption:

Technical Assumption
Operational Assumption

FORMULATION OF LP MODEL

Define the decision variable

Determine the objective function
Identify the constraints
Determine appropriate value of parameters
Determine the upper limit, lower limit or
equality called for
Build a model

THE SERVER PROBLEM

General Description- A firm that assembles computers and

computer equipment is about to start production of two new
Web server models. Each type of model will require assembly
time, inspection time and storage space. The amount of each of
these resources that can be devoted to the production of the
server is limited. The manager of the firm would like to
determine the quantity of each model to produce in order to
maximize the profit generated by sales of these servers.

Additional Information- In order to develop a suitable model of

the problem, the manager has met with design and
manufacturing personnel. As a result of those meeting, the
manager has obtained the following information:
Type 1

Type 2

Profit per unit

$60

$50

Assembly time per unit

4 hours

10 hours

Inspection time per unit

2 hours

1 hours

Storage space per unit

3 cubic feet

3 cubic feet

The manager also has acquired information on the availability of

company resources. These amount are:
Resources

Amount available

Assembly time

100 hours

Inspection time
Storage space

22 hours
39 cubic feet

The manager also met with the firms marketing manager and
learned that demand for the server was such that whatever
combination of these two models of servers is produced, all of the
output can be sold.

OTHER PROBLEM:
Let us consider the problem (Multiple solution):

3 x1 5 x2 15
5 x1 2 x2 10
x1 , x2 0
max z 2.5 x1 x2

EXCEPTIONAL CASES:
Let us study the following problem (unbounded
solution):

x1 5 x2 1

0.5 x1 x2 2
x1 , x2 0
max z 2 x1 2 x2

Let us study the following problem (Infeasible

solution):

x1 x2 1
2 x1 2 x2 4
x1 , x2 0
max z 3 x1 2 x2

TOY MANUFACTURER

A toy manufacturer makes three version of a toy

robot. The first version requires 10 minutes each for
fabrication and packaging and 2 pounds of plastic,
the second version requires 12 minutes for
fabrication and packaging and 3 pounds of plastic
and the third version requires 15 minutes of
fabrication and packaging and 4 pounds of plastic.
There are 8 hours of fabrication and packaging time
available and 200 pounds of plastic available for the
next production cycle. The unit profits are $1 for each
version 1, $5 for each version 2, and $6 for each
version3. A minimum of 10 units of each version of
robot must be made to fill previous orders.
Formulate an LP model that will determine the
optimal production quantities for profit maximization.