Operation Research

Chapter 1

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Chapter Objectives
1.understanding the Origins of Operations Research
2.Defining the Nature of Operations Research
3.Exploring the Decision-Making Process and Management Science
4.Explaining the Reasons for the Need for Operations Research Methods
5.Utilizing Models in Operations Research
6.Understanding the Steps of Quantitative Analysis of Problems and Their Use in
Solving Managerial Issues

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 Historical Review
• The use of operations research began during World War II when teams of specialists
in fields such as mathematics, engineering, behavioral sciences, and others studied
problems and proposed solutions using operations research techniques.

• The application of operations research expanded beyond military contexts into non-
military domains.
• The emergence and advancement of computers played a significant role in applying
operations research to solve large-scale problems in management and industry.

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Operation Research Definitions:
• Operations Research (OR) is a set of quantitative methods widely used to
assist in the decision-making process. It is a scientific approach to decision-
making that relies on quantitative analysis methods to solve problems with
the goal of reaching the optimal solution within the constraints of available
resources.
• Operations Research is the process of decision-making based on the
scientific method, relying on quantitative analysis methods to solve
problems with the aim of achieving the optimal solution within the limits of
available capabilities and resources.
• Operations Research is the science of mathematically representing decision-
making problems and finding solutions to these models."

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OR & Decision-Making
Steps of Decision-Making.

Determining the
Selecting a.3 problem
Measure for Identifying .2 Problem.1
Comparing Alternatives Definition
Alternatives Analyzing the
Problem
Evaluating the .4
Choosing one of .5 Alternatives
the Alternatives

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OR & Decision-Making

Evaluating Alternatives

Quantitative Analysis Qualitative Analysis

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 The reasons for the need for Operations Research
are:
• Facing a complex problem that involves multiple factors.
• The need for a quantitative interpretation of the decision.
• The need to minimize risks when embarking on a new project.
• Dealing with a problem that frequently repeats itself with changing inputs.
• Achieving a competitive advantage for your company

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The use of mathematical models in Operations Research
(OR)
• Mathematical models serve as a mathematical description of a specific
situation, subject, or problem
• In Operations Research, mathematical models are constructed by formulating
the problem in the form of equations.
• Mathematical models in Operations Research have several benefits:
1-Holistic Problem Solving
2-Clarity in Problem Understanding
3-Establishing Cause-Effect Relationships

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Steps of Quantitative Analysis:

1. Problem Identification: The first and most crucial step in conducting

quantitative analysis is to express the problem in a clear and precise
formulation.
2. Formulating the Mathematical Model: This stage involves the
formulation of the problem, known as "Problem Formulation," by
translating linguistic expressions into mathematical relationships. The
mathematical model includes:
• Parameters: Inputs that the organization cannot control, such as the
selling price of a product or its production cost.
• Decision Variables: Inputs that the organization can control, such as the
number of units produced, or the quantity of goods shipped. These are the
variables whose values need to be determined when solving the model.

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 Steps of Quantitative Analysis:

3. Data Collection: In this step, data is collected regarding the uncontrollable inputs, whether
from internal sources such as the organization's records or external sources like customer
interviews.

4. Solving the Model: In this stage, the values of the controllable decision variables are
determined to achieve the best possible value for the objective function without violating the
imposed constraints.

5. Report Writing: This step involves explaining the problem's solution and the methodology
used in its execution.

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How many units to produce from each product to reach the maximum profit?
Given:
Ingredient (sugar): at least 500 kg each month, product 1 requires 12g and product 2 9g of sugar
Ingredient (raspberry): available 100 kg each month, product 1 requires 5g of raspberry
Ingredient (cherry): available 120 kg each month, product 2 requires 7g of cherry
material of stainless-steel: at most 300 pounds each month, each product require 3 pounds
Profit: product 1 $2 and product 2 $3
• Given:
• Ingredient (sugar): at least 500 kg each month, product 1 requires 12g and product 2 9g of sugar
• Ingredient (raspberry): available 100 kg each month, product 1 requires 5g of raspberry
• Ingredient (cherry): available 120 kg each month, product 2 requires 7g of cherry
• material of stainless-steel: at most 300 pounds each month, each product require 3 pounds
• Profit: product 1 $2 and product 2 $3
X1 X2 Total
• X1 = number of units produced from Pepsi max raspberry
At least
• X2 = number of units produced from Pepsi max cherry sugar 12 9
500

Objective function raspberry 5 100

• Maximize Z = 2x1 + 3x2
subject to: 12x1 + 9x2 ≥ 500 cherry 7 120
5x1 ≤ 100 Functional constraints
Stainless At most
3 3
7x2 ≤ 120 steel 300

3x1 + 3x2 ≤ 300 profit 2 3 XXX

Non-negativity constraint
x 1, x 2 ≥ 0
 Model Formulation Steps
• Step 1 : Clearly define the decision variables

• Step 2 : Construct table of important data

• Step 3 : Formulate the Model:

3.1 Objective function
3.2 Constraints
3.3 Non-negativity constraints
• Example 1:
• Iron Works, Inc. (IWI) manufactures two products made from steel and just received this month's
allocation of 200 pounds of steel. It takes 2 pounds of steel to make a unit of product 1 and it takes 3
pounds of steel to make a unit of product 2. The manufacturer has a contract calling for at least 60 units
of product 1 this month. The firm's facilities are such that at most 720 units of product 2 may be produced
monthly. Each unit of product 1 gives a profit of $100 and each unit of product 2 gives a profit of $200.
Answer: Step2: Construct table of important data
Step1: decision variables:
X1 = number of units produced from product 1 X1 X2 Total
X2 = number of units produced from product 2
Step3: Formulate the Model: Steel 2 3 200
Objective function:
Max. Z = 100 X1 + 200 X2 At least
Contract P.L
Constraints: 60

2x1 + 3x2 ≤ 200 Production At

most P.L
x1 ≥ 60 limit 720
x2 ≤ 720
Profit $100 $200 XXX
Non-negativity constraint:
x1 , x2 ≥ 0
• Example 2:
The World Light Company produces two light fixtures (products 1 and 2) that require both metal frame parts and
electrical components. Management wants to determine how many units of each product to produce so as to
maximize profit. For each unit of product 1, one unit of frame parts and two units of electrical components are
required. For each unit of product 2, three units of frame parts and two units of electrical components are required.
The company has 200 units of frame parts and 300 units of electrical components. Each unit of product 1 gives a
profit of $1, and each unit of product 2, up to 60 units gives a profit of $2, any excess over 60 units of product 2
brings no profit.
Answer: Step2: Construct table of important data
Step1: decision variables:
X1 = number of units produced from product 1 (light fixture) X1 X2 Total
X2 = number of units produced from product 2 (light fixture)
Step3: Formulate the Model: Metal
frame
1 3 200
Objective function:
Max. Z = 1X1 + 2X2 Electrical
components 2 2 300
Constraints:
x1 + 3x2 ≤ 200
profit $1 $2 XXX
2x1 + 2x2 ≤ 300
x2 ≤ 60 Production At most
limit 1
Non-negativity constraint: 60
x1 , x2 ≥ 0
• Example 3:
• A company that produces leather bags aims to maximize its profit from
manufacturing a specific type of leather bag. The profit from one bag is $12.
It takes four hours of work to produce one bag. The company has 40 hours of
work available per week. What is the maximum number of bags that can be
produced in a week to achieve the company's goal (maximum profit)?

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 𝑦 = 12𝑥

• The number of bags that can be produced in a week:

• A variable controlled by the company (represented as x)
• Profit per bag, time required to produce one bag, and the number of
weekly working hours:
• These represent inputs not controlled by the company.
• The objective function (y):
• The weekly profit from producing this type of bags = Profit per bag ×
Number of bags produced weekly
• Y=12x

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The goal is to maximize profit: Maximize 𝑦.
The imposed constraints on the production process are as follows:

1.The weekly working hours for bag production should not exceed 40 hours. (The
weekly working hours for bag production = Time required to produce one bag ×
Number of bags produced weekly).

2.Additionally, the implicit constraint is that the number of bags produced weekly
must be a non-negative quantity (the non-negativity constraint).

4𝑥 ≤ 40
𝑥≥0

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• And thus, the complete model for this problem is:
• Maximize 𝑀 𝑎𝑥𝑖𝑚 𝑖𝑧𝑒 𝑦 = 12𝑥
• Subject to:
• (1) 4𝑥 ≤ 40
• (2) 𝑥 ≥ 0
• The solution to the problem is to find the number of bags that can be produced weekly
(x) to achieve the maximum possible value for the objective function y without
violating the constraint of weekly working hours (Inequality 1). The optimal solution
is found to be x = 10, which means that the optimal solution is to produce 10 bags per
week to achieve the maximum profit of 120 dollars.

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 Example 4:
• A company that produces leather bags aims to maximize its profit from
manufacturing two types of leather bags: large bags and small bags. For the first
type (large bags), the profit from one bag is 12 dollars, and it takes four hours of
work to produce one bag. For the second type (small bags), the profit from one
bag is 5 dollars, and it takes two hours of work to produce one bag. The company
has 40 hours of work available per week. What is the maximum number of bags of
each type that can be produced in a week to achieve the company's goal
(maximum profit)?

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 Model Formulation
• The number of large bags that can be produced in a week: A variable controlled by
the company (represented as 𝑥₁).
• The number of small bags that can be produced in a week: A variable controlled
by the company (represented as 𝑥₂).
• Profit per large bag, profit per small bag, time required to produce one bag, and
the number of weekly working hours: These represent inputs not controlled by the
company.

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• The objective function (y):
The weekly profit from producing all bags =
Profit per large bag × Number of large bags produced weekly + Profit per small bag × Number
of small bags produced weekly
𝑦 = 12𝑥₁ + 5𝑥₂
The goal is to maximize profit: Maximize 𝑦.

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• The constraints imposed on the production process are that the number of
weekly working hours for bag production should not exceed 40 hours.
This can be expressed as:
• (The weekly working hours for bag production) = (Time required to
produce one large bag × Number of large bags produced weekly) +
(Time required to produce one small bag × Number of small bags
produced weekly)

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• In addition to the constraints mentioned earlier, there is also the implicit non-negativity
constraint, which ensures that the number of bags produced weekly must be a non-
negative quantity. This can be expressed as:

• 𝑥₁ ≥ 0 (Non-negativity constraint for large bags)

• 𝑥₂ ≥ 0 (Non-negativity constraint for small bags)
• These constraints ensure that both the number of large bags ( 𝑥₁) and the number of
small bags (𝑥₂) produced weekly cannot be negative.

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• Then the complete model for this problem is:

𝑴 𝒂𝒙 𝒚 = 𝟏𝟐𝒙
₁ + 𝟓𝒙
₂
Subject to:
(1) 𝟒𝒙₁ + 𝟐𝒙₂ ≤ 𝟒𝟎
(2) 𝒙₁ ≥ 𝟎
(3) 𝒙₂ ≥ 𝟎
• This model aims to maximize the total profit (y) from producing both large
and small bags while considering the constraints related to the available
working hours and non-negativity of the production quantities.

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• The solution to the problem involves finding the values of both 𝑥₁ and 𝑥₂ that
maximize the objective function 𝑦 without violating the constraint of weekly working
hours (Inequality 1). We will explore solving such models in future lectures.

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