Operations Research and Logistics

Course
Operations Research and Logistics

Course code ORL-30806

Period 6

Contact Person Karin Pauls

Lecturers/
Examiners René Haijema
Eligius Hendrix
Karin Pauls
Jack van der Vorst

Language of English
instruction

Assumed Decision Science 1 (ORL-20306)

prerequisite
knowledge

Secretariat Leeuwenborch building

Room 6013
tel: 0317-485645
office.orl@wur.nl

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Profile of the course
This course broadens en deepens the knowledge and skills acquired in Decision Science 1
(ORL-20306). The global aim is to learn to deal with new (difficult) models and
algorithms.
The focus of the course is on supporting logistical decision processes in an industrial
environment by means of quantitative models and techniques. Long-term as well as
short-term management/control of good-flows and required production factors are
studied. The topics are on the strategic control level, the tactical control level and on the
operational control level.
For every topic, several models will be discussed to solve problems that can occur within
these topics, along with algorithms to find solutions to the problems. Additional attention
will be paid to non-linear aspects in mathematical programming, especially relevant for
(technical) design problems and/or the estimation of parameters in mathematical and
economical models.

Learning outcomes
After the course the students are expected to be able to:
- classify typical decision problems in logistics;
- deduce a quantitative model for presented decision problems in logistics;
- judge which algorithm is appropriate to solve the formulated problem;
- apply (newly) provided algorithms to calculate a solution to a provided decision
problem;
- evaluate the effectiveness and efficiency of algorithms;
- select from OR journals an appropriate article on a pre-specified topic, as
preparation for thesis research activities;
- argue on the tenor of the selected OR article in a presentation.

Learning materials and resources

- Ghiani G, Laporte G, Musmanno R. 2004. Introduction to Logistics Systems
Planning and Control.
- Claassen, G.D.H., Hendriks, Th.H.B., Hendrix E.M.T. (eds.), 2007. Decision
Science, Theory and applications. Chapters 7, 11 and 12.
- Additional literature will be distributed on EduWeb.

Educational activities
The course Operations Research and Logistics consists of tutorials, computer practicals
and student presentations during 7 weeks in period 6. Part of the course is an
assignment.

The assignment consists of three parts:

1. select and present an article on an OR application;
2. be discussant at the presentation of another group;
3. attend the presentations of the other students (compulsory).
Details about the assignment are handed out in the first lecture.

Activities concerning tutorials and practicals:

- acquire knowledge and insight by active participation in the tutorials and practicals;
- make exercises and acquire skills by active participation in the tutorials and
practicals;
- study the literature;

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Activities concerning the assignment:
- search in scientific OR-journals to select an article;
- study scientific articles;
- present a scientific article to fellow students;
- be a discussant to the presentation of fellow students.

Preparation: it is strongly advised to study the scheduled literature before

attending the tutorial/instruction sessions.

Assessment strategy

written exam 
assignment 

practicals 
Learning outcomes \ where assesed?

1  classify typical decision problems in logistics x 

deduce a quantitative model for presented decision problems in
2  logistics x  x 
judge which algorithm is appropriate to solve the formulated
3  problem x  x 
apply (newly) provided algorithms to calculate a solution to a
4  provided decision problem x  x 
5  evaluate the effectiveness and efficiency of algorithms x  x  x 
select from OR journals an appropriate article on a pre-specified
6  topic, as preparation for thesis research activities x 
7  argue on the tenor of the selected OR article in a presentation x 
Contribution to final mark (%) 0/1*  10  90 
 sufficient level is condition to obtain the mark

Assignment: the selection of the articles has to be delivered in week 2, the approval
follows in week 3. Presenting, attending and discussing is scheduled in week 7, with
immediate assessment. The three parts of the assignment must be passed in order to
get a mark for the exam. The assessment of the assignment will remain valid for 6
academic years.

Practicals: for participating in all practicals the student gets 10 points. Missing one or
more practicals leads to a subtraction of 2 points per practical. The points for the
practicals are only valid for the current academic year.

The written exam: the exam consists of open end questions. The use of a calculator is
allowed. The use of the book, the reader and written notes is also allowed. The exam has
to be passed with a score ≥ 50 points from 90. The exam is at the end of period 61.
There will be two opportunities for a re-exam1.

Important: the contents of this course may be updated yearly, that means that the
contents of the exam may also change yearly.

Topics in Operations Research and Logistics

A brief description of every topic of the course is given, with the literature we use and
the number of lectures.

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Introduction: In the first lecture the meaning of logistics is explained. Most people
know that logistics has to do with the flow of goods from suppliers through shops to the
final customers. But what more is logistics and why is it so important? Furthermore the
topics in this course are clarified.
Literature: Ghiani, Chapter 1.

Nonlinear Optimisation: In the course Decision Science 1 the topic Linear

Programming was introduced. In a LP model there is an objective function which has to
be maximised or minimised, subject to a number of constraints. The objective function
and the constraints have to be linear. LP is very useful, but often in real life the objective
function and/or the constraints are nonlinear. In solving the model nonlinearities have
some serious consequences.
Literature: Claassen et al., Chapter 12.

Location/allocation in practice (game): By means of a real-life case of facility

location at TNT Express in the Benelux, the students will get a flavour of how logistics
infrastructure optimisation in practice compares to the theory on this topic. It turns out
that on the one side, the theoretical lessons are not implemented to the full extent in
practice, but on the other side, there exist many additional practical complications that
make it more challenging to apply standard optimisation techniques.
Literature: Lecture notes.

Location/allocation problems: In general (one of) the aim(s) of logistics is to

minimize costs, subject to capacity restrictions and the required customer service level.
Therefore it is important to decide on the best locations for plant, distribution centres,
warehouses, retail outlets, etc., to minimise the cost of facility operations and transport.
Literature: Ghiani, Chapter 3.

Networks: Network formulation is a useful way of modelling many types of problems.

Also supply chains can be modelled as a network. Ghiani et al. use network formulation
in the book we study.
Literature: Claassen et al., Chapter 7.

Inventory Management: In Inventory Management one decides for each stocking

point in the supply chain when to reorder and how much to order so that the expected
annual relevant cost is minimized while meeting a given service level. We discuss models
for different types of product demand.
Literature: Ghiani, Chapter 4. Claassen et al., Chapter 11.

Computational Logistics:
In quite some logistical problems, uncertainty plays a dominant role, making it hard to
find an optimal planning of activities. In a simple case one may think of the planning of
replenishments of stock points that face uncertain demands: determining good values of
the safety stocks and the replenishment levels can be a challenge. We use stochastic
dynamic programming and work with computational procedures such as (dynamic)
Monte Carlo simulation.
Literature: Lecture notes.

Revenue Management:
A challenging problem is the pricing of freight capacity: by adjusting the price over time
one controls the demand and thus optimizes the revenues and utilization of the available
capacity. This idea originates from the airline industry (apply different fare classes for
the same seat), but finds its way in many applications ranging from the selling of hotel
rooms to the home-delivery of groceries. In solving dynamic pricing we use stochastic
dynamic programming.
Literature: Lecture notes.

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Long-Haul Freight Transportation: Freight transportation is important in every supply
chain. It is essential to move raw materials from sources to plants, semi-finished
products between factories and final goods to customers and retail outlets. In long haul-
freight transportation, goods are moved over relatively long distances, between
terminals or other facilities. Commodities may be transported by truck, rail, ship or any
combination of modes.
Literature: Ghiani, Chapter 6.

Routing: In routing (or short-haul freight transportation), goods are transported,

usually by truck, between pick-up and delivery points in a relatively small area (a city or
a county) using a fleet of trucks. As a rule, vehicles are based at a single depot, and
vehicle tours are performed in a single work shift and may include several pick-up and
delivery points. In Operations Research these problems are well-studied and called
Vehicle Routing Problems (VRP) and as a special case the Traveling Salesman Problem
(TSP).
Literature: Ghiani, Chapter 7.

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 Operations Research and Logistics (ORL-30806) Course Schedule 2013
Monday Tuesday Wednesday Thursday Friday
13:30 – 15:15 C67 13:30 – 15:15 C67 13:30 – 17:15 PC3031 13:30 – 15:15 C67 13:30 – 15:15 C62
Week 35 13:30 – 16:15 Nonlinear Optimisation Practical Ascension Day
(May 6-10) Intro + Thesis info K. Pauls Nonlinear Optimisation
K. Pauls / J. vd Vorst K. Pauls XX XX
Week 36 Inventory Management TNT Loc/Alloc Practical Inventory Management Inventory Management
(May 13–17) K. Pauls F. Cruijssen TNT Loc/Alloc game K. Pauls K. Pauls
F. Cruijssen
Week 37 Whit Monday Inventory Management Practical Networks Networks
(May 20-24) K. Pauls Computational Logistics K. Pauls K. Pauls
XX and Inv. Management
R. Haijema / K. Pauls
Week 38 Computational Logistics Computational Logistics Practical Routing Routing
(May 27-31) R. Haijema R. Haijema Computational Logistics R. Haijema R. Haijema
R. Haijema
Week 39 Revenue Management Revenue Management Practical Location/Allocation Logistics Case
(June 3-7) R. Haijema R. Haijema Computational Logistics E. Hendrix F. Cruijssen
R. Haijema
Week 40 Location/Allocation Location/Allocation Practical PC3032 Long-Haul Freight Long-Haul Freight
(June 10-14) E. Hendrix E. Hendrix Revenue Management Transportation Transportation
R. Haijema E. Hendrix E. Hendrix
Week 41 Guest Lecture Student Presentations 13:30 – 17:15 C62 Innovations in Logistics
(June 17-21) FloraHolland K. Pauls Student Presentations J. van der Vorst
E. Wenink K. Pauls
Week 43 Exam: Thursday, July 4 14:00 – 17:00
Week 49 Re-exam: Monday, August 12 18:30 – 21:30
Re-exam: February 2014

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