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Introduction to Operations Research

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Lê Xuân Thanh
Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 What is Operations Research? Definition

Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 What is Operations Research? Definition

Terminologies

Standard terms
Operations Research (in American English)
Operational Research (in Bristish-European English)
both are abbreviated by OR

Symnonyms
Management Science (MS)
Industrial Engineering (IE)
Decision Science (DS)
 What is Operations Research? Definition

Brief history

1840: England’s universal Penny Post

Originated from research of R. Hill1
on transportation cost and sorting cost of mail

1938: First use of the term “Operational Research”

British Air Ministry established Bawdsey Research Station in
1936 for carrying out pre-war radar experiments
Integrating radar data with ground-based-observer data for
fighter interception was the start of OR
To improve operational achievements, a research program into
operational aspects of radar system was initiated
The term ”operational research” was coined as a suitable
description of this new branch of applied science

1
Sir Rowlland Hill (03.12.1795-27.08.1879): an English teacher, inventor,
and social reformer
 What is Operations Research? Definition

Brief history

From 1940: OR began in a systematic fashion

1941: Operational Research Section in Coastal Command
Study the strategic and tactical problems involved in military
operations
Find the most effective utilization of limited military resources
by the use of quantitative techniques
1951: first book on “Methods of Operations Research” by
Morse and Kimball
1952: Operations Research Society of America
1953: Operations Research unit in Indian Statistical Institute
(Calcutta) for National Planning and Survey
1959: International Federation of Operations Research
Societies
1975: Association of European Operational Research Societies
1998: German Operations Research Society
 What is Operations Research? Definition

Definition

According to Operational Research Society of Great Britain2 :

“Operational Research is the attack of modern science on complex
problems arising in the direction and management of large systems
of men, machines, materials and money in industry, business,
government, and defense. Its distinctive approach is to develop a
scientific model of the system, incorporating measurements of
factors such as change and risk, with which to predict and compare
the outcomes of alternative decisions, strategies or controls. The
purpose is to help management determine its policy and actions
scientifically.”
According to INFORMS3 :
“Operations Research is a discipline that deals with the application
of advanced analytical methods to help make better decisions.”

2
Operational Research Quarterly, l3(3):282, l962
3
Institute for Operations Research and the Management Sciences
 What is Operations Research? Principles

Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Process of OR

Step 1: Observe problem environment

From conferences, site visit, research, observations, . . .
To have sufficient information for formulating problem
Step 2: Define and analyze problem
Determine objectives, constraints, type of solution, . . .
To understand the need and nature of solutions
Step 3: Construct a model
Describe problem in math models, formula, equations, . . .
Work under stated environmental constraints
Step 4: Collect and select input data
Sufficient inputs to operate and test model
Step 5: Derive and analyze solutions
Achieve current organization goals?
Update model if needed
Step 6: Implement and monitor solutions
 What is Operations Research? Principles

Objective of the course

Upon completion of this course the student shall be able to

identify an OR problem in a real-world context
formulate some simple OR problems in an appropriate
modeling framework
describe and apply manually a set of basic algorithms
choose and apply an appropriate algorithm to solve basic OR
problems
 What is Operations Research? Tools and applications

Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 What is Operations Research? Tools and applications

OR tools

Optimization
Linear Programming
Integer Programming
Combinatorial Optimization
Global Optimization
Unconstrained / Constrained Optimization
Dynamic Programming
Simulation
Probability and Statistic
Game theory
Decision theory
...
 What is Operations Research? Tools and applications

Applications of OR

Accounting
Assigning audit teams effectively
Credit policy analysis
Cash flow planning
Developing standard costs
Establishing costs for byproducts
Planning of delinquent account strategy
Construction
Project scheduling, monitoring and control
Determination of proper work force
Deployment of work force
Allocation of resources to projects
 What is Operations Research? Tools and applications

Applications of OR (continued)

Facilities Planning
Factory location and size decision
Estimation of number of facilities required
Hospital planning
International logistic system design
Transportation loading and unloading
Warehouse location decision
Finance
Building cash management model
Allocating capital among various alternatives
Building financial planning models
Investment analysis
Portfolio analysis
Dividend policy making
 What is Operations Research? Tools and applications

Applications of OR (continued)

Manufacturing
Inventory control
Marketing balance projection
Production scheduling
Production smoothing
Marketing
Advertising budget allocation
Product introduction timing
Selection of Product mix
Deciding most effective packaging alternative
Organizational Behavior / Human Resources
Personnel planning
Recruitment of employees
Skill balancing
Training program scheduling
Designing organizational structure
...
 Optimization in OR Decision vs. Optimization

Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 Optimization in OR Decision vs. Optimization

Decision problems

Decision problem (feasibility problem):

make a decision satisfying some constraints

Examples:
Find a path from a node to another node in a graph?
(e.g., find a route from Paris to Toulouse by train?)
Find a path of at most k steps from a node to another node in
a graph?
(e.g., can we flight from Hanoi to Toulouse with one transit?)
Partition problem: ∑n
1
Given n natural numbers a1 , . . . , an and let b = 2 i=1 ai .
Find a subset I ⊂ {1, . . . , n} such that
∑ ∑
ai = aj = b
i∈I j̸∈I

...
 Optimization in OR Decision vs. Optimization

Optimization problems

Optimization problem:
make the best decision with respect to some criterion
while satisfying some constraints

Examples:
Find the shortest / cheapest / fastest way from A to B
Find a daily schedule for a metro network using least number
of trams
Construct a school timetable with least number of idle times of
all teachers
Make a production plan maximizing profit
Select a set of foods at minimum cost to satisfy a set of daily
nutritional requirement
...
 Optimization in OR Optimization concepts

Contents

1. What is Operations Research?

Definition
Principles
Tools and applications

2. Optimization in OR
Decision vs. Optimization
Optimization concepts
 Optimization in OR Optimization concepts

General form of Optimization problems

maximize f(x)
subject to gi (x) ≤ 0 (i = 1, . . . , m)
n
x∈X⊂R

with f, gi : Rn → R

x = (x1 , . . . , xn ) is composed of decision variables

f(x) is objective function
X is domain of decision variables
gi (x) ≤ 0 and x ∈ X are constraints
 Optimization in OR Optimization concepts

Solutions of Optimization problems

max f(x) s.t.

gi (x) ≤ 0 (i = 1, . . . , m) (1)
x ∈ X ⊂ Rn (2)

Feasible solution: any x satisfying (1) & (2)

Feasible set: set of all feasible solutions
Optimal solution: best solution in feasible set
Local optimum: best solution in comparison to feasible
solutions near by
Optimal objective value: value of objective function at
optimal solution
 Thanks

Thank you for your attention!