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Lecture 1 – Operations Research. Topics What is OR? Modeling and the problem solving process Deterministic vs. stochastic models OR techniques Using the Excel add-ins to find solutions Solving real problems. What is Operations Research?. Operations

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Lecture 1 – Operations Research

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lecture 1 operations research
Lecture 1 – Operations Research


  • What is OR?
  • Modeling and the problem solving process
  • Deterministic vs. stochastic models
  • OR techniques
  • Using the Excel add-ins to find solutions
  • Solving real problems
what is operations research
What is Operations Research?


The activities carried out in an organization.


The process of observation and testing characterized

by the scientific method. Situation, problem statement, model construction, validation, experimentation, candidate solutions.


An abstract representation of reality. Mathematical, physical, narrative, set of rules in computer program.


Systems Approach

Include broad implications of decisions for the organization at each stage in analysis. Both quantitative and qualitative factors are considered.

Optimal Solution

A solution to the model that optimizes (maximizes or minimizes) some measure of merit over all feasible solutions.


A group of individuals bringing various skills and viewpoints to a problem.

Operations Research Techniques

A collection of general mathematical models, analytical procedures, and algorithms.

definition of or
Definition of OR
  • OR professionals aim to provide a rational basis for decision making by seeking to understand and structure complex situations and to use this understanding to predict system behavior and improve system performance.
  • Much of this work is done using analytical and numerical techniques to develop and manipulate mathematical and computer models of organizational systems composed of people, machines, and procedures.
problem solving process

Formulate the







a Model



a Solution



Problem Solving Process

Implement a Solution

Goal: solve a problem

  • Model must be valid
  • Model must be tractable
  • Solution must be useful


the Solution



a Procedure

Test the Model

and the Solution

the situation
The Situation
  • May involve current operations or proposed developments due to expected market shifts
  • May become apparent through consumer complaints or through employee suggestions
  • May be a conscious effort to improve efficiency or respond to an unexpected crisis

Example: Internal nursing staff not happy with their schedules; hospital using too many external nurses.

problem formulation
Define variables

Define constraints

Identify data requirements

Problem Formulation
  • Describe system
  • Define boundaries
  • State assumptions
  • Select performance measures

Example: Maximize individual nurse preferences subject to demand requirements, or minimize nurse dissatisfaction costs.

constructing a model



Formulate the



a Model


Constructing a Model
  • Problem must be translated from verbal, qualitative terms to logical, quantitative terms
  • A logical model is a series of rules, usually embodied in a computer program
  • A mathematical model is a collection of functional relationships by which allowable actions are delimited and evaluated.

Example: Define relationships between individual nurse assignments and preference violations; define tradeoffs between the use of internal and external nursing resources.

solving the mathematical model


Find a




Solving the Mathematical Model
  • Many tools are available as discussed in this course
  • Some lead to “optimal” solutions
  • Others only evaluate candidates  trial and error to find “best” course of action

Example: Collect input data -- nurse profiles and demand requirements; apply algorithm; post-process results to get monthly schedules.

  • A solution to a problem usually implies changes for some individuals in the organization
  • Often there is resistance to change, making the implementation difficult
  • A user-friendly system is needed
  • Those affected should go through training

Example: Implement nurse scheduling system in one unit at a time. Integrate with existing HR and T&A systems. Provide training sessions during the workday.

components of or based decision support system
Components of OR-Based Decision Support System
  • Database (nurse profiles, external resources, rules)
  • Graphical User Interface (GUI); web enabled using java or VBA
  • Algorithms, pre- and post- processors
  • “What-if” analysis capability
  • Report generators
problems models and methods
Problems, Models and Methods

Real World





operations research models
Operations Research Models

Deterministic Models Stochastic Models

• Linear Programming • Discrete-Time Markov Chains

• Network Optimization • Continuous-Time Markov Chains

• Integer Programming • Queuing

• Nonlinear Programming • Decision Analysis

deterministic vs stochastic models
Deterministic vs. Stochastic Models

Deterministic models – 60% of course

Stochastic (or probabilistic) models – 40% of course

Deterministic models

assume all data are known with certainty

Stochastic models

explicitly represent uncertain data via

random variables or stochastic processes

Deterministic models involve optimization

Stochastic models characterize / estimate

system performance.

examples of or applications
Examples of OR Applications
  • Rescheduling aircraft in response to groundings and delays
  • Planning production for printed circuit board assembly
  • Scheduling equipment operators in mail processing & distribution centers
  • Developing routes for propane delivery
  • Adjusting nurse schedules in light of daily fluctuations in demand
activate excel add ins
Activate Excel Add-ins

Tools Menu:



Individual Add-ins

what you should know about operations research
What You Should Know About Operations Research
  • Components of the decision-making process
  • OR terminology
  • What a model is and how to assess its value
  • How to go from a conceptual problem to a quantitative solution
  • How to load or locate the Excel add-ins