Operations Research

Introduction

Module I

Model
Definition: A simplified rep. of reality Types of Models
physical model (e.g., wind tunnel model) graphic model (e.g., a map or flow chart) symbolic model
sheet music equations (mathematical model)

Trade-off: Plausibility vs. Tractability

OR Maithreye S H

Operations Research

Operations Research (OR) is the field of how to form mathematical models of complex management decision problems and how to analyze the models to gain insight about possible solutions.

OR

Maithreye S H

Introduction to Operations Research

The first formal activities of Operations Research
(OR) were initiated in England during World War II, when a team of British scientists set out to make scientifically based decisions regarding the best utilization of war materiel. After the war, the ideas advanced in military operations were adapted to improve efficiency and productivity in the civilian sector. The basic terminologies of operations research includes mathematical modeling, feasible solutions, optimization, and iterative computations. S H OR Maithreye

Applications
grouped by function

Planning, Strategic Decision-Making Production Distribution, Logistics, Transportation Supply Chain Management Marketing Engineering

Financial Engineering
OR Maithreye S H

Operations Research

The model-based OR approach to problem solving works best on problems important enough to warrant the time and resources for a careful study.

OR

Maithreye S H

OR Process
Assessment

Real world problem

Abstraction

Real world solution

Interpretation

Model

Analysis

Model solution

OR

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Math Modeling is Only One Part of Problem Solving

Define an Opportunity or Problem Formulate a Mathematical Model Acquire Input Information and Data Validate (Calibrate) Model and Data Solve and Analyze Solutions Sensitivity Implement Solution Monitor and Follow-Up
OR Maithreye S H

OR models
The three fundamental concerns of forming operations research models are decisions open to decision makers,(Alternatives) the constraints limiting decision choices,(constraints) and the objectives making some decisions preferred to others (objective criterion).
OR Maithreye S H

Mathematical Programs
Optimzation models (also called mathematical programs) represent choices as decision variables and seek values that maximize or minimize objective functions of the decisions variables subject to constraints on variable values expressing the limits on possible decision choices.
OR Maithreye S H

Feasible - Optimal
A feasible solution is a choice of values for the decision variables that satisfies all constraints. Optimal solutions are feasible solutions that achieve objective functions value(s) as good as those of any other feasible solutions.
OR Maithreye S H

Sensitivity Analysis

Sensitivity Analysis is an exploration of results from mathematical models to evaluate how they depend on the values chosen for parameters.

OR

Maithreye S H

Tractability-Validity
Tractability in modeling means the degree to which the model admits convenient analysis. The validity of a model is the degree to which inferences drawn from the model hold for the underlying real world problem. Tradeoff between validity of models and their tractability to analysis.
OR Maithreye S H

Deterministic - Stochastic
A mathematical model is termed deterministic if all parameter values are assumed to be known with certainty. A mathematical model is termed probabilistic or stochastic if it involves quantities known only in probability.

OR

Maithreye S H

The principal phases for implementing OR in practice include: 1. Definition of the problem 2. Construction of the model 3. Solution of the model 4. Validation of the model 5. Implementation of the solution.
OR Maithreye S H

Degeneracy
When an LP has more than one unique way to reach an optimal objective function value, we say that the problem is degenerate LP solvers can detect degeneracy but only report one solution It would be nice to see all possible solutions Different solvers can land on different solutions of a degenerate problem, depending on solution strategy
OR Maithreye S H