Practical Applications of Practical Applications of

Operations Operations ResearchResearch

What is Operations What is Operations Research?Research?• the discipline which apply

advanced analytical methods to help make better decisions.

• How?–A better understanding of the problems–More complete data–Consideration of all available options–Careful predictions of outcomes and

estimates of risk–The latest decision tools and

techniques

Scope of Operations Scope of Operations ResearchResearchFinance & AccountingMarketingPurchasing, ProcurementProduction ManagementPersonnel ManagementGovernmentGeneral Management

7 Signs that management 7 Signs that management could benefit from OR could benefit from OR

face complex decisionsisn't sure what the main problem isuncertain about potential outcomesis having problems with processesis troubled by riskis not making the most of its dataneeds to be at stiff competition

Samsung - 1995Samsung - 1995Objective: To Cut Manufacturing

Cycle Time and InventoryRequired Production Scheduling

techniquesSolution

◦SLIM (short cycle time and low inventory in manufacturing).

Result - additional $1 billion in sales revenue

CricketCricket

• Duckworth/Lewis method• Requires a single page table of

percentages and a pocket calculator, • Uses mathematical models of the

relationship between average runs scored and over's left and also the relationship to the number of wickets that have been lost when a stoppage occurs.

FootballFootball

Actim IndexHow the ranking is done?Uses six key factors for calculationsImplemented in 2003-04 seasonThierry Henry – first player

identified by Actim

Satellite navigation systems in vehicles allow the driver to enter destination details into a small on-board computer that calculates the optimum route.

In just a few seconds, the route is downloaded and clear verbal turn by turn instructions are provided throughout the journey and a route map is also displayed.

Satellite NavigationSatellite Navigation

The more sophisticated systems constantly monitor the journey and provide the driver with delays and instantly recalculate the new optimum route.

They use optimization algorithms and heuristic techniques to calculate routes along known highways.

Satellite Navigation Satellite Navigation Contd…..Contd…..

How the low cost carriers manage to offer such surprisingly low fares?

Seats on any flight are perishable - once the plane has taken off, there is no possibility of selling any empty seats

AirlinesAirlines

some passengers want the lowest price and to get it are prepared to book well in advance,

others want the flexibility to book at the last minute, and perhaps to switch flights, and are prepared to pay more - for the convenience.

Airlines – Contd…Airlines – Contd…

Ideally, on any flight, the airline would first like to see how many people are willing to pay the highest price, sell as many tickets as possible to them, then sell as many as possible at the next highest price, and so on, filling up any remaining seats at the cheapest price.

Airlines – Contd….Airlines – Contd….

How bookings come in over time - is monitored on a continuous basis, compared with the typical profile for the flight, and the number of seats held back is adjusted according to whether bookings are heavier or lighter than the typical profile.

Sophisticated analysis is provided by the OR.

Airlines – Contd….Airlines – Contd….

Car Car ManufacturingManufacturing

In the 1980s when Rover Cars (now MG Rover) were developing the Metro at their Longbridge plant, they used OR in the manufacturing process by inventing visual interactive modelling.

Cars move along a production line and various processes - welding, painting, trim etc Designing such a plant is a complex business –

A lot of different processes and pieces of plant have to be married together, ideally in such a way that every operation takes the same time to perform.

If that's not the case then a bottleneck will occur

Should we install three robots instead of two?

Car Manufacturing – Car Manufacturing – Contd….Contd….

Once in a while, a piece of plant will break down or there will be a shortage of some component. Such problems can quickly shut down the entire line, unless adequate buffers are provided

where should we provide buffers, and how big should they be?

Car Manufacturing – Car Manufacturing – Contd….Contd….

Visual Interactive ModelVisual Interactive ModelThe OR team built the first ever

visual interactive model which simulated the working of the plant, including breakdowns and component shortages, and displayed the results on a computer screen in the form of an animated diagram of the plant.

Visual Part- see where bottlenecks were occurring, and how quickly the effects of a breakdown spread to other parts of the plant.

Interactive Part- the model enabled the designers to ask what if? Questions like what if we installed three robots instead of two? What if we provided a buffer here?

By asking such questions and re-running the model, they could see which design gave the best results.

Visual Interactive Model - Visual Interactive Model - 22

Railway – Canadian PacificRailway – Canadian PacificCanadian Pacific providing rail and inter-modal freight

transportation services in Canada and the Eastern and Midwestern U.S.

“Used tonnage-based dispatching," in which trains are only run when enough traffic has accumulated.

Although this approach attempts to minimize the total number of trains needed by maximizing their size, in practice it disrupts the efficient utilization of crews, locomotives, and equipment.

Although this approach attempts to minimize the total number of trains needed by maximizing their size, in practice it disrupts the efficient utilization of crews, locomotives, and equipment.

Solution Solution Working with Multi-Modal Applied Systems, the railway

developed an operating plan that was tightly matched to traffic patterns.

The model optimized the routing and classification plan for each rail car movement and determined which trains to run.

It tailored the contingency plans for high and low-volume days.

Shortest-path-based algorithms reduced operating cost and transit time, and improving service reliability for shippers.

The change in railway operating philosophy and practice reduced cost by more than $285 million.

Worcester BoschWorcester Bosch

Worcester Bosch manufacturer of high efficiency heating and hot water systems for the home.

Worcester Bosch holding around 4,000 lines of stock, ranging from complete boiler assemblies to the most miniscule of system parts.

95% of its parts were ex-stock, but, the customers demanded higher levels of stock supply, typically of the order 98%.

To reduce the dissatisfied customers they set a target of 100% stock availability.

Achieving such may not seem realistic.

SolutionSolution A solution came to hand from INFORM UK - add*ONE, a system

with O.R. inside.

It could maintain optimum inventory levels by applying advanced mathematical techniques for demand forecasting, purchase order call off and in freight cost minimisation.

The add*ONE system enhanced the efficiency & 100% stock availability became a reality.

It not only created forecasts, but also had the ability to state how accurate the forecasts were.

The system was equipped with an inventory optimiser - recalculating every single stock forecast every night.

It replaced three operative personnel to one.

Worcester Bosch now ranks as Number One in customer satisfaction.