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Operations Research 201 3 UNIT -1

INTRODUCTION, LINEAR PROGRAMMING - 1: Introduction: o The origin, nature and impact of OR; Overview of the Operations Research Modeling Approach o Defining the problem and gathering data; o Formulating a mathematical model; o Deriving solutions from the model; o Testing the model; o Preparing to apply the model; o Implementation Introduction to Linear Programming: Prototype example; The linear programming (LP) model.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3

Overview of the Operations Research Modeling Approach


1. Defining the Problem and Gathering Data 2. Formulating a Mathematical Model 3. Deriving Solutions from the Model 4. Testing the Model 5. Preparing to Apply the Model 6. Implementation

1. Defining the Problem and Gathering Data


Problems are usually vague & imprecise So, the first step is forming a well defined problem statement OR teams usually are in an advisory capacity -- Ascertain appropriate objectives Objectives: Serve decision maker and Entire organization Long-run profit maximization may seem best, but consider Immediate results, Satisfactory profits, Market share, Diversification, Worker morale, Company prestige

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Five parties affect a business (1 country) Owners, Employees, Customers, Suppliers, Governments Data gathering o Time consuming o Requires Management Information Systems Examples: San Francisco Police: Schedule and deploy officers An OR study done for the San Francisco Police Department1 resulted in the development of a computerized system for optimally scheduling and deploying police patrol officers. 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. Health Dept. New Haven: Needle Exchange HIV testing Merrill Lynch: Overhaul of charge for services Citgo Petroleum, o Refinery, supply, distribution, and marketing o Spreadsheet screens created to aid in data entry

2. Formulating a Mathematical Model


Construct a mathematical model that represents the essence of the problem.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Models are idealized representations. Define decision variables. -- you pick Define the objective function. Objectives-- made best Define the constraints (relations among decision variables). Constraints-- boundary components. Parameters: known values (constant?) Sensitivity Analysis: what if parameters Usually, there is more than one way to formulate a problem. o Some degree of simplifications and approximations are inevitable. o Different formulations may require different solution techniques. Example: An OR study done for Monsanto Corp. was concerned with optimizing production operations in Monsantos chemical plants to minimize the cost of meeting the target for the amount of a certain chemical product (maleic anhydride) to be produced in a given month. The decisions to be made are the dial setting for each of the catalytic reactors used to produce this product, where the setting determines both the amount produced and the cost of operating the reactor. The form of the resulting mathematical model is as follows:

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3

3. Deriving Solutions from the Model


Need an algorithm (systematic solution procedures). Solve to optimality or pseudo-optimal. o Exact algorithm vs. heuristics algorithms. o Conduct post optimality (what-if) analysis. What would happen to the optimal solution if different assumptions are made? Often not a major part of the study The Solution may be Satisfactory or Optimal Hueristic Procedure (suboptimal) Metahueristics: guidelines for designing hueristics This step is an iterative process.

4. Testing the Model


Developing a large mathematical model is in many ways like developing a large computer program (test and correct) Testing and improving a model to increase its validity is called Model Validation Dimensional consistent in terms of units in a helpful check Retrospective tests and Documentation becomes important Make sure there are no serious flaws.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Make changes if necessary. Repeat the above procedures until satisfied.

5. Preparing to Apply the Model


Need to install a system to apply the model (if it is used regularly). Include the model, solution procedure, and operating procedures for implementation. Even include personnel changes. This system is usually computer-based. A considerable number of computer programs often need to be used and integrated. Databases and management information systems may provide up-to-date input for the model. Usually take several months. Examples all had a significant computer effort o IBM (parts network), Yellow Freight (routing), Continental Airline (crew), Texaco (blending)

6. Implementation
The step yields the real benefits. Need support from both top management and operating management. Its better to keep management well informed and encourage managements active guidance throughout the course of the study. Require good communication skills.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Continue to obtain feedback on how well the system is working and whether the assumptions of the model continue to be satisfied. Need to revise or re-build models when significant deviations occur.

Introduction to Linear Programming


Now we deal with the problems of allocating limited resources among competing activities in the best possible (optimal) way. This requires all functions to be linear functions.

Prototype Example:
The WYNDOR GLASS CO. produces high-quality glass products, including windows and glass doors. It has three plants. Plant 1: Aluminum frames and hardware are made, Plant 2: Wood frames are made, Plant 3: Glass Products are made and assembly of the product is done. Because of declining earnings, top management has decided to revamp the companys product line. Unprofitable products are being discontinued, Releasing production capacity to launch two new products having large sales potential: o Product 1: An 8-foot glass door with aluminum framing o Product 2: A 4 x 6 foot double-hung wood-framed window Product 1 requires some of the production capacity in Plants 1 and 3, but none in Plant 2. Product 2 needs only Plants 2 and 3. However, because both products would be competing for the same production capacity in Plant 3, it is not clear which mix of the two products would be most profitable.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Therefore, an OR team has been formed to study this question. The OR team began by having discussions with upper management to identify managements objectives for the study. These discussions led to developing the following definition of the problem: Definition of the problem: Determine what the production rates should be for the two products in order to maximize their total profit, subject to the restrictions imposed by the limited production capacities available in the three plants. (Each product will be produced in batches of 20, so the production rate is defined as the number of batches produced per week.) Any combination of production rates that satisfies these restrictions is permitted, including producing none of one product and as much as possible of the other. The OR team also identified the data that needed to be gathered: 1. Number of hours of production time available per week in each plant for these new products. 2. Number of hours of production time used in each plant for each batch produced of each new product. 3. Profit per batch produced of each new product. After interview and gathering data yield the following information: Plants 1 2 3 Profit per batch (in thousands) Production time per batch (in hours) Product 1 Product 2 1 0 0 2 3 2 3 5 Production Time available per week (in hours) 4 12 18

Formulation as a Linear Programming Problem To formulate the mathematical (linear programming) model for this problem, let x1 - number of batches of product 1 produced per week x2 - number of batches of product 2 produced per week Z - total profit per week (in thousands of dollars) from producing these two products Thus, x1 and x2 are the decision variables for the model.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Z = 3x1+ 5x2. The objective is to choose the values of x1 and x2 so as to Maximize Z = 3x1+ 5x2.

Graphical Solution This very small problem has only two decision variables and therefore only two dimensions, so a graphical procedure can be used to solve it. This procedure involves constructing a two-dimensional graph with x1 and x2 as the axes. Non-negativity restrictions x1 0 and x2 0 require (x1, x2) to lie on the positive side of the axes (including actually on either axis), i.e., in the first quadrant. The first step is to identify the values of (x1, x2) that are permitted by the restrictions. The resulting region of permissible values of (x1, x2), called the feasible region.

A (0, 6)

B (2, 6)

C (4, 3)

Mr. Kotreshi SN, GMIT, Davangere D (4, 0)

Operations Research 201 3

Then, we need to pick out the point in this feasible region that maximizes the value of Z = 3x1 + 5x2. For points A, B, C, D calculating the value of Z Point Value of Z A(0, 6) 30 B(2, 6) 36 Optimal point (2, 6) C(4,3) 27 D(4,0) 12 The optimal solution is x1=2, x2=6, with Z=36. This solution indicates that the Wyndor Glass Co. should produce products 1 and 2 at the rate of 2 batches per week and 6 batches per week, respectively, with a resulting total profit of $36,000 per week. No other mix of the two products would be so profitable according to the model.

Linear Programming Model


The key terms are resources and activities. o m denotes the number of resources; n denotes the number of activities. Once again, the most common type of application of linear programming involves allocating resources to activities. Back to our Wyndor example Prototype Example Production capacities of plants Resources 3 plants Production of products Activities 2 products Production rate of product j, xj Profit Z General Problem m resources n activities Level of activity j, xj Overall measure of performance Z

Standard form of the LP Model

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


Certain symbols are commonly used to denote the various components of a linear programming model. These symbols are listed below, along with their interpretation for the general problem of allocating resources to activities. Z = value of overall measure of performance. xj = level of activity j (for j = 1, 2, . . . , n). cj = increase in Z that would result from each unit increase in level of activity j. bi = amount of resource i that is available for allocation to activities (for i =1, 2, .. , m). aij = amount of resource i consumed by each unit of activity j. The model poses the problem in terms of making decisions about the levels of the activities, so x1, x2, . . . , xn are called the decision variables. The values of cj, bi, and aij (for i = 1, 2, . . . , m and j = 1, 2, . . . , n) are the input constants for the model. The cj, bi, and aij are also referred to as the parameters of the model. We can now formulate the mathematical model for this general problem of allocating resources to activities. In particular, this model is to select the values for x1, x2, . . . , xn so as to Maximize Z = c1x1 + c2x2 +. + cnxn, Subject to the restrictions a11x1 + a12x2 +..+ a1nxn b1 a21x1 + a22x2 +..+ a2nxn b2 . . am1x1 + am2x2 +..+ amnxn bm and x1, x2, x3 .. xn 0 Other forms of LP Model
Non-negativity constraints Constraint s Functional constraints Objective function

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3


1. Minimizing rather than maximizing the objective function: Manimize Z = c1x1 + c2x2 +. + cnxn, 2. Some functional constraints with a greater-than-or-equal-to inequality: ai1x1 + ai2x2 +..+ ainxn bi 3. Some functional constraints in equation form: ai1x1 + ai2x2 +..+ ainxn = bi xj unrestricted in sign for some values of j. Terminology for Solutions of the Model 1. Solutionany specification of values for the decision variables (x 1, x2, x3 .. xn) is called a solution, regardless of whether it is a desirable or even an allowable choice. 2. Feasible Solution- a solution for which all the constraints are satisfied. Example: Points (2, 3) and (4, 1) in the prototype example 3. Infeasible Solution- is a solution for which at least one constraint is violated. Example: Points (-2, 3) and (4, 4) in the prototype example 4. Feasible Region - is the collection of all feasible solutions; shaded area of graph. Note that it is possible to have no feasible solution. 5. Optimal solution - is a feasible solution that has the most favorable value of the objective function. The most favorable value is the largest value if the objective function is to be maximized, whereas it is the smallest value if the objective function is to be minimized. Most problems will have just one optimal solution. However, it is possible to have more than one. (The same optimal value of the objective function) for some values of i. 4. Deleting the nonnegativity constraints for some decision variables: for some values of i.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3

6. No optimal solutions - This occurs only if (1) it has no feasible solutions or (2) the constraints do not prevent improving the value of the objective function (Z) indefinitely in the favorable direction (positive or negative). The latter case is referred to as having an unbounded Z.

7. Corner-Point Feasible (CPF) solution - is a solution that lies at a corner of the feasible region. Relationship between optimal solution and CPF solution Consider any linear programming problem with feasible solutions and a bounded feasible region. The problem must possess CPF solutions and at least one optimal solution. The best CPF solution must be an optimal solution. If a problem has exactly one optimal solution, it must be a CPF solution. If the problem has multiple optimal solutions, at least two must be CPF solutions.

Mr. Kotreshi SN, GMIT, Davangere

Operations Research 201 3

Mr. Kotreshi SN, GMIT, Davangere

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