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Operations Research

Yongxi Cheng

School of Management at XJTU


Course mission
 Help you cope with the challenge of making complex
decisions, by doing quantitative analysis that provides
insight into organization’s problem.

 Help you conduct modeling & analysis

 Implementation on a computer
Outline
 Introduction

 Linear programming

 Transportation problem and assignment problem

 Network optimization models

 Game theory

 Queueing theory
References
 F.S. Hillier, G.J. Lieberman. Introduction to Operations
Research. McGraw-Hill Series in Industrial Engineering
and Management Science. 2001.

 F.S. Hillier et al., Data, Model and Decision. China


Financial & Economic Publishing House, 2005.
The origins of OR
 World’s remarkable growth in the size and complexity
of organizations since industrial revolutions.

 Tremendous increase in the division of labor and


segmentation of management responsibilities in
organizations.
 It becomes more and more difficult to allocate the
available resources to the various activities in a way
that is most effective for the organizations as a whole.
The roots of OR
 During WWII, there was an imperative need to allocate scare
resources to various military operations.

 The U.K. and U.S. scientists were asked to do research on


military operations, which were the first OR teams.

 Their research mainly focused on how to manage convoy and


antisubmarine operations, which result in winning the Battle of
the North Atlantic as well as the Island Campaign in the Pacific.

 First called military operations research, later Operations


Research.
After the war…
 Tendency of applying OR outside military stimulated
solving the problems caused by the increasing
complexity in organization, business, industry, and
government.

 Basically these problems met in military contrasting to


other fields were the same except for different context.

 Many of the scientists in the OR groups turned their


activities to applying their approach to civilian
problems.
After the war…(cont)
 Some returned to universities to develop a sound
foundation for the hastily developed techniques, others
concentrated on developing new techniques.
 First civilian organizations interested were large profit
making corporations. For example, petroleum
companies were the first to use linear programming on
a large scale for production planning.
 Applications in the service industries did not start until
the mid 1960s.
Two reasons for the boom
 Substantial progress in improving the techniques to OR.
- In 1947, George Dantzig developed the Simplex method for
solving linear programming problems.

 The development of electronic digital computers.


- Millions of times faster than human beings, which
undoubtedly benefit to OR.
- Many excellent software packages for doing OR, such as
LINGO.
The nature of OR
 OR involved “research on operations”.

 OR applied to the problems that concerned how to


conduct and coordinate the operations within an
organization.

 It has applied extensively in such diverse areas as


manufacturing, transportation, construction,
telecommunication, financial planning, military and
public services.
Other characters of OR

 It attempts to resolve the conflicts of interest among


the components of the organization in a way that is
best for the organization as a whole.

 It attempts to find a best solution, or say, search for


optimality for the problems under consideration.
OR and MS
 Today, Operations Research and Management Science
mean: “the use of mathematical models in providing
guidelines to managers for making effective decisions
within the state of the current information.”

 Other related subjects, such as decision science,


systems engineering, operations management, etc.
Optimization is Everywhere

 The more you know about something, the more


you see where optimization can be applied.
 Some personal decision making
– Finding the fastest route home (or to class)
– Optimal allocation of time for homework
– Optimal budgeting
– Selecting a major
Applications of OR
Allocation and distribution

 Optimal allocation of limited resources such as men,


machines, time and money.

 Location and size of warehouse, distribution center, etc.

 Distribution policy.
Applications of OR
Marketing

 Product selection.

 Selection of advertising media.

 Demand forecasts and stock levels.


OR and computers
It is generally accepted that without computers, OR and
optimization would not be what they are today.
• The first large scale computer became a practical reality in 1946 at the
University of Pennsylvania.

• This was just one year before the development of SIMPLEX.


• The SIMPLEX method for linear programming consists only of a few steps
and these steps require only the most basic mathematical operations which a
computer is well suited to handle.
• However, these steps must be repeated over and over before one finally
obtains an answer.
• The first successful computer solution of a LP problem was in January 1952 on
the National Bureau of Standards SEAC computer.
Components of OR models
OR models used for decision making are generally comprised of three main
parts:

 Objectives
Criteria by which alternatives are evaluated
 Decision Variables
Aspects of the problem over which you have control
 Constraints
Expressions describing relationships between the variables and
limitations of the system
A Meta-Model for OR Analysis

Modeling
State Model
Problem

Assessment Analysis

Make Draw
Decisions Inference Conclusion