OR Process

1. Make observation of the system

and gather required information
and relevant data.
2. Define the problem of interest
(Define Problem)
3. Formulate a mathematical model
of problem. (detail next slide)
4. Develop a procedure to for
deriving solutions to the problem
from the model.
5. Test the model and refine it as
needed (Feedback and testing)
6. Implement 1
Models and Managers
 Models are used in as many ways as there
are people who build them. They can be used
to sell an idea or a design, to order optimal
quantities of nylon hosiery, or to better
organize a giant multinational organization.
 In spite of these differences, a few
generalities apply to all decision support
models. All such models provide a framework
for logical and consistent analysis.

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Modeling Problem in OR
 Many different types of problems are called OR
problems , and there may be many different
approaches to solution for a particular problem. Yet
certain tasks are common to all OR enquiries.
Three critical stages OR Model construction are:
1. Defining the Problem. Identifying the problem:
its objectives, its constraints, and its decision
variables.
2. Formulating the model of the problem (Building
a Mathematical Model).
3. Solving a Mathematical Model.

3
1- Defining the Problem
 OR is Applied When –
 Designing and implementing new
operations.
 Evaluating ongoing Operations and
Procedures.
 Determining and recommending corrective
actions.

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How to Start and How to Proceed
 Identify the problem.
 Observe the problem from various points
of view.
 Keep things simple.
 Identify constraints.
 Work with management, get feedback .

5
 2- Building a Mathematical
Model

 Identify Decision Variables

Which factors are controllable?
 Quantify the Objective and Constraints
 Formulate the function to be optimized (profit, cost).

 Formulate the requirements and/or restrictions.

 Construct a Model Shell

 Help focus on the exact data required.

 Gather Data --
 Consider time / cost issues.

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Mathematical modeling formulation: The general OR
model can be organized in the following general
format:-

Maximize or minimize Objective Function

subject to
Constraints

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3- Solving a Mathematical Model
 Choose an Appropriate Solution Technique
 An optimization algorithm.

 A heuristic algorithm.

 Generate Model Solutions

 Test / Validate Model Results
 Is the solution reasonable?

 Are radical changes needed?

 Does it fit present and future plans?

 Unacceptable results? Return to modeling.

 Perform “What--If” Analyses

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EXAMPLES
 Example 1:
Wilson company produces three
products: desk, chairs, and molded
steel. It is trying to decide on the
number of desks (D), chair (C), and
pound of model steels (M)

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Assumption :
1- If the nets $ 50 profit on each desk
produced, $30 on each chair produced,
and $ 6 per pound of modeled steel
produced. What the total profit?

The answer :
Total profit for production run can be
modeled by the expression
50 D + 30 C + 6 M
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2- if 7 pounds of raw steel are needed to
manufacture a desk, 3 pounds to
manufacture a chair, and 1.15 pounds to
produce a pound of model steel. What the
amount of raw steel used during the
production?
The answer:
The amount of raw steel used during the
production run is modeled by the
expression:
7D + 3C + 1.5 M 11
3- Wilson has only 2000 pounds of raw steel
available.
And at least 100 desk must be produced to
satisfy contract commitment.
The answer:
The function constraint can be modeled as :
7 D + 3C + 1.5 M <= 2000 (raw steel)
D >= 100 (contract)

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The Mathematical model for this
problem is formulated as :

MAXIMIZE 50 D + 30 C + 6 M
SUBJECT TO
7D + 3C + 1.5M <= 2000 (Raw steel)
D >= 100 (contract)

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 Application Example
An OR study done for the San Francisco Police Department resulted in the
development of a computerized system for optimally scheduling and
deploying police patrol officers. The new system provided annual savings
of $11 million, an annual $3 million increase in traffic citation revenues,
and a 20 percent improvement in response times. In assessing the
appropriate objectives for this study, three fundamental objectives were
identified:
1. Maintain a high level of citizen safety.
2. Maintain a high level of officer morale.
3. Minimize the cost of operations.
 To satisfy the first objective, the police department and city government
jointly established a desired level of protection. The mathematical model
then imposed the requirement that this level of protection be achieved.
Similarly, the model imposed the requirement of balancing the workload
equitably among officers in order to work toward the second objective.
Finally, the third objective was incorporated by adopting the long-term
goal of minimizing the number of officers needed to meet the first two
objectives. 14
Things to Do
 PROBLEM SET 1.1A

15
Modeling with Linear
Programming (CH 2)

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Linear Programming
 Linear programming is a model that consists of
linear relationships representing a firm’s
decision(s), given an objective and resource
constraints.
Steps in applying the linear programming technique.
 First, the problem must be identified as being solvable by
linear programming.
 Second, the unstructured problem must be formulated as a
mathematical model.
 Third, the model must be solved by using established
mathematical techniques.
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Components of Linear Programming
 The LP model, as in any OR model, has
three basic components.
1. Decision variables that we seek to determine.
2. Objective (goal) that we need to optimize
(maximize or minimize).
3. Constraints that the solution must satisfy.

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 Model Formulation
 Decision variables are mathematical symbols that
represent levels of activity.
 The objective function is a linear mathematical
relationship that describes the objective of the firm in
terms of the decision variables. The objective function
always consists of either maximizing or minimizing
some value (e.g., maximize the profit or minimize the
cost of producing radios).
 A model constraint is a linear relationship that
represents a restriction on decision Making.
 Parameters are numerical values that are included in
the objective functions and constraints.
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Model Formulation (cont)
 Non-negativity constraints restrict the decision
variables to zero or positive values.
 A feasible solution does not violate any of the
constraints.

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Mathematical formulation of
Linear Programming model:
Step 1
- Study the given situation
- Find the key decision to be made
- Identify the decision variables of the problem
Step 2
- Formulate the objective function to be optimized
Step 3
- Formulate the constraints of the problem
Step 4
- Add non-negativity restrictions or constraints
The objective function , the set of constraints and the non-
negativity
restrictions together form an LP model.

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TWO-VARIABLE LP MODEL
EXAMPLE:

“ THE GALAXY INDUSTRY PRODUCTION”

 Galaxy manufactures two toy models:
 Space Ray.

 Zapper.

 Resources are limited to

 1200 pounds of special plastic.

 40 hours of production time per week.

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 Marketing requirement
 Total production cannot exceed 800 dozens.

 Number of dozens of Space Rays cannot exceed

number of dozens of Zappers by more than 450.
 Technological input
 Space Rays requires 2 pounds of plastic and
3 minutes of labor per dozen.
 Zappers requires 1 pound of plastic and
4 minutes of labor per dozen.

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 Current production plan calls for:
 Producing as much as possible of the more
profitable product, Space Ray ($8 profit per
dozen).
 Use resources left over to produce Zappers ($5
profit
per dozen).
 The current production plan consists of:
Space Rays = 550 dozens

Zapper = 100 dozens

Profit = 4900 dollars per week

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SOLUTION
 Decisions variables:
 X1 = Production level of Space Rays (in dozens
per week).

 X2 = Production level of Zappers (in dozens per

week).

 Objective Function:

 Weekly profit, to be maximized

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The Linear Programming Model

Max 8X1 + 5X2 (Weekly profit)

subject to
2X1 + 1X2 < = 1200 (Plastic)
3X1 + 4X2 < = 2400 (Production Time)
X1 + X2 < = 800 (Total production)
X1 - X2 < = 450 (Mix)
Xj> = 0, j = 1,2 (Nonnegativity)

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Feasible Solutions for Linear
Programs

 The set of all points that satisfy all the constraints of

the model is called

FEASIBLE
REGION
Using a graphical presentation we can represent all
the constraints,
The objective function, and the three types of
feasible points.

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 The plastic constraint:
2X1+X2<=1200

2X1+X2=1200
3X1+4X2=2400 X1= 480
X2= 240

Production Production mix

Time constraint:
3X1+4X2<=2400 X1-X2<=450

2X1+X2=1200
X1-X2=450 X1= 550
X2= 100 28
By Compensation on :
Max 8X1 + 5X2
(X1, X2) Objective fn
(0,0) 0
(450,0) 3600
(480,240) 5040
(550,100) 4900
(0,600) 3000

The maximum profit (5040) will be by producing:

Space Rays = 480 dozens, Zappers = 240 dozens

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Type of feasible points
 Interior point: satisfies all constraint but
non with equality.
 Boundary points: satisfies all
constraints, at least one with equality
 Extreme point: satisfies all constraints,
two with equality.

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 X2

1200
The plastic constraint:
2X1+X2<=1200
The Plastic constraint

Total production constraint:

X1+X2<=800

Infeasible
600
Production
Time
Production mix
3X1+4X2
constraint:
<=2400 (200, (550,10 X1-X2<=450
200) (300,0)
0)
** *
X1
600 800

Extreme
Interior
Boundary point
point
point 31
 Summery of graphical solution
procedure

1- graph constraint to find the feasible point

2- set objective function equal to an arbitrary value so
that line passes through the feasible region.
3- move the objective function line parallel to itself until
it touches the last point of the feasible region .
4- solve for X1 and X2 by solving the two equation that
intersect to determine this point
5- substitute these value into objective function to
determine its optimal solution.

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Example 2.1-1
(The Reddy Mikks Company)

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