1. 1 1 Operations Research The OR Process 2005.9.13

2. 2 Topics What is OR? Modeling and the problem solving process Deterministic vs. stochastic models OR techniques Using the Excel add-ins to find solutions Solving real problems Lecture 1 – Operations Research

3. 3 Systems Approach Include broad implications of decisions for the organization at each stage in analysis. Both quantitative and qualitative factors are considered. Optimal Solution A solution to the model that optimizes (maximizes or minimizes) some measure of merit over all feasible solutions. Team A group of individuals bringing various skills and viewpoints to a problem. Operations Research Techniques A collection of general mathematical models, analytical procedures, and algorithms.

4. 4 It is a Process It assists Decision Makers It has a set of Tools It is applicable in many Situations What is OR?

5. 5 1.OR professionals aim to provide rational bases for decision making by seeking to understand and structure complex situations and to use this understanding to predict system behavior and improve system performance. 2.Much of this work is done using analytical and numerical techniques to develop and manipulate mathematical and computer models of organizational systems composed of people, machines, and procedures. Definition of OR?

6. 6 Manufacturing Planning Design Scheduling Dealing with Defects Dealing with Variability Dealing with Inventory … The Process: Recognize the Problem

7. 7 Service Industries Logistics Transportation Environment Health Care Situations with complexity Situations with uncertainty Other applications

8. 8 Goal: solve a problem Model must be valid Model must be tractable Solution must be useful Problem Solving Process

9. 9 Define the problem Delimit the system Select measures Determine variables Identify constraints Formulate the Problem

10. 10 May involve current operations or proposed expansions due to expected market shifts May become apparent through consumer complaints or through employee suggestions May be a conscious effort to improve efficiency or response to an unexpected crisis. Example:Internal nursing staff not happy with their schedules; hospital using too many external nurses. The Situation

11. 11 Define variables Define constraints Data requirements Example:Maximize individual nurse preferences subject to demand requirements. Describe system Define boundaries State assumptions Select performance measures Problem Formulation

12. 12 Personnel Planning and Scheduling: Example of Bounding a Problem

13. 13 Construct a Model Math. Programming Model Stochastic Model Statistical Model Simulation Model

14. 14 Problem must be translated from verbal, qualitative terms to logical, quantitative terms A logical model is a series of rules, usually embodied in a computer program Example:Define relationships between individual nurse assignments and preference violations; define tradeoffs between the use of internal and external nursing resources. Construct a Model Model Formulate the Problem statement A mathematical model is a collection of functional relationships by which allowable actions are delimited and evaluated. Constructing a Model

15. 15 Many tools are available as discussed in this course Some lead to “optimal” solutions Others only evaluate candidates  trial and error to find “best” course of action Example:Read nurse profiles and demand requirements, apply algorithm, post-processes results to get monthly schedules. Model Solution Find a solution Tools Solving the Mathematical Model

16. 16 Linear Programming Nonlinear Programming Regression Direct Search Stochastic Optimization Trial and Error Find a Solution

17. 17 Production software Easy to use Easy to maintain Acceptable to the user Establish a Procedure

18. 18 The model must be valid The model must be tractable The solution must be useful The Goal is to Solve the Problem

19. 19 Change for the organization Change is difficult Establish controls to recognize change in the situation Implement the Solution

20. 20 A solution to a problem usually implies changes for some individuals in the organization Often there is resistance to change, making the implementation difficult User-friendly system needed Those affected should go through training Example:Implement nurse scheduling system in one unit at a time. Integrate with existing HR and T&A systems. Provide training sessions during the workday. Implementation

21. 21 Data base (nurse profiles, external resources, rules) Graphical User Interface (GUI); web enabled using java or VBA Algorithms, pre- and post- processor What-if analysis Report generators Components of OR-Based Decision Support System

22. 22 Real World Situation Problems Models Methods Problems, Models and Methods

23. 23 Operations Research Models Deterministic ModelsStochastic Models Linear Programming Discrete-Time Markov Chains Network Optimization Continuous-Time Markov Chains Integer Programming Queueing Nonlinear Programming Decision Analysis

24. 24 Deterministic models – 60% of course Stochastic (or probabilistic) models – 40% of course Deterministic models assume all data are known with certainty Stochastic models explicitly represent uncertain data via random variables or stochastic processes. Deterministic models involve optimization Stochastic models characterize / estimate system performance. Deterministic vs. Stochastic Models

25. 25 Rescheduling aircraft in response to groundings and delays Planning production for printed circuit board assembly Scheduling equipment operators in mail processing & distribution centers Developing routes for propane delivery Adjusting nurse schedules in light of daily fluctuations in demand Examples of OR Applications

26. 26 Steps in OR Study

27. 27 How decision-making problems are characterized OR terminology What a model is and how to assess its value How to go from a conceptual problem to a quantitative solution How to find solutions with the Excel add-ins What you Should Know about Operations Research

28. 1 28 Operations Research/Management Science Institute for Operations Research and the Management Sciences OR/MS Professionals aim to provide rational bases for decision making by seeking to understand and structure complex situations and to use this understanding to predict system behavior and improve system performance. Much of this work is done using analytical and numerical techniques to develop and manipulate mathematical and computer models of organizational systems composed of people, machines, and procedures.

29. 29 Operations The activities carried out in an organization. Research The process of observation and testing characterized by the scientific method. Situation, problem statement, model construction, validation, experimentation, candidate solutions. Model An abstract representation of reality. Mathematical, physical, narrative, set of rules in computer program. What is Operations Research?

30. 30 PhilosophyWhy are we here? TheologyWhat is going to become of us? ScienceWhat is it, how and why does it work? MathematicHow do we prove it? EngineeringHow do we make it? OR/MSHow do we get it to work efficiently (optimally)? PsychologyHow do we feel about it? SociologyHow does it affect us and how do we affect it? PoliticsHow can we agree on getting it to work? BusinessHow do we convert it to an opportunity and make money out of it? LawHow do we create doubt about why it happened so we can win and make big money? PsychiatryWhat is the bright side of looking at it? MedicineHow do we get it going again?