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INTRODUCTION

1.1 OPERATIONS RESEARCH - AN OVERVIEW

Management science, or operations research, is a specialized discipline for business decision-making. The term Operations Research (OR) describes the discipline that is focused on the application of information technology for informed decision-making. In other words, OR represents the study of optimal resource allocation. The goal of OR is to provide rational bases for decision making by seeking to understand and structure complex situations, and to utilize this understanding to predict system behavior and improve system performance. Much of the actual work is conducted by using analytical and numerical techniques to develop and manipulate mathematical models of organizational systems that are composed of people, machines, and procedures. OR involves solving problems that have complex structural, operational and investment dimensions, involving the allocation and scheduling of resources. A typical approach might include: Defining the problem, including identifying the absolute requirements and the objectives to be achieved, identifying what information is required and/or available, and what form the answer should take; Breaking the problem down into logical elements that can be analyzed or solved; Solving the problem using the most appropriate analytical technique; and Offering insights into the problem, such as determining the sensitivity of the outcomes to inputs and determining the value of additional information.

1.2 GAME THEORY IN OPERATION RESEARCH

Game theory is a method of studying strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."[1] An alternative term suggested "as a more descriptive name for the discipline" is interactive decision theory.[2] Game theory is mainly used in economics, political science, and psychology, as well as logic and biology. The subject first addressed zero-sum games, such that one person's gains exactly equal net losses of the other participant(s). Today, however, game theory
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applies to a wide range of class relations, and has developed into an umbrella for the logical side of science, to include both human and non-humans, like computers. Classic uses include a sense of balance in numerous games, where each person has found or developed a tactic that cannot successfully better his results, given the other approach. Modern game theory began with the idea regarding the existence of mixed-strategy equilibrium in two-person zero-sum games and its proof by John von Neumann. Von Neumann's original proof used Brooders fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathematical economics. His paper was followed by his 1944 book Theory of Games and Economic Behavior, with Oskar Morgenstern, which considered cooperative games of several players. The second edition of this book provided an axiomatic theory of expected utility, which allowed mathematical statisticians and economists to treat decision-making under uncertainty. Operations Research techniques have traditionally been applied to problems that involve an organization or agent that optimizes a system centrally. In the last decades, though, it has became increasingly important to incorporate competition to the set of tools available to us to model reality accurately. This arose from the recognition that many of the problems that we routinely solve do not involve just one agent but instead involve many agents that have their own conflicting objectives. The most important tool used to address decision-making in the presence of competition in loosely integrated systems is Game Theory and the associated equilibrium concepts. Some directions of research central to our community where this trend has been significant include transportation networks,telecommunication networks and the Internet, supply chain management, and revenue management, to name a few. Although part of this research makes use of the same methodology and models as those used by economists, a differentiating factor of the Operations Research and Computer Science communities was a focus on computation, which led to the name Algorithmic Game Theory (see, e.g., the
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book `Algorithmic Game Theory' by Nisan, Roughgarden, Tardos and Vazirani. Cambridge University Press, 2007). Transportation engineers have been looking at equilibrium concepts since Wardrop pos-tulated in the 1950s that drivers select paths that are shortest under the prevailing trac conditions. At around the same time, Vickrey proposed to use a pricing mechanism to make commuters internalize the congestion they generate, making self-interested decisions optimal for the system. In the late 1970s, the US Department of Energy developed the PIES energy model that illustrated the practicality of equilibrium models in determining market prices. Some years later, several researchers started to analyze the impact of competition in telecom-munication networks. This was accelerated by the recognition that the Internet ceased to be a research network controlled by a few cooperating universities, and became a platform where various for-prot companies compete to make money. This competition is best exemplied by the net neutrality debate currently ongoing in many parts of the world whereby governmentsare deciding what policies (or lack thereof) they will use to regulate the way Internet operates. Another area that experienced a need to incorporate competition is supply chain management. Although early models dealt with the internal operations of a company in isolation, it has been recognized that the reactions of competitors were an important ingredient of the decision. This led to capacity, inventory and facility location problems that incorporate competition explicitly. Once competition is added to the model, it is not as straight forward to have a system operate optimally because agents are not willing to optimize the welfare of the system, they all focus in their own utility functions. For this reason, a related research trend has been the design of mechanisms and contracts that maximize welfare under competition. Auctions are a very important type of mechanism that has been used extensively. Examples include the allocation of spectrum rights where auctions allowed governments to make heftyrevenues compared to previous mechanisms used for
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the same purpose, placing ads in search engines such as Google, Bing or Yahoo, and deciding who prepares school meals in Chile. Finally, revenue management was introduced in the 1980s after the deregulation of the airline industry in the US. It consists of a set of procedures designed so airlines can make capacity decisions and allocate fares to sell all the seats in an airplane at the `right price.' The first to try this was American Airlines defending itself from People's Express who was charging fares that were so low that American Airlines could not e ectively compete withit. The idea was so successful that it is now believed that an airline cannot survive without using a methodology of this kind. Although early implementations just computed forecasts of demand at different price levels, it was eventually recognized that it was important for an airline to model the reactions of both competing airlines and those of consumers. These ideas led to modeling consumers as strategic agents that can learn the strategies that sellers design to extract higher revenues. Although many of these tools were originally designed for airlines, currently many other industries that need to price goods or services use them. In this talk, I will present an overview of the use of Game Theory in Operations Research, focusing on some of the examples described above. The main takeaway is that when there is competition, optimizing a system can be a complex task because the system's manager needs to consider the incentives of agents. To illustrate, it can sometimes happen that an increase in capacity may back fire and degrade the performance for the system's users. A situation like this cannot possibly arise with centralized optimization because a relaxation always leads to better solutions.

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2 .OPERATIONAL RESEARCH IN INFORMATION AND TECHNOLOGY

The operations research modeling has been a very difficult task. But by the arrival of information technology and the usage of computers in modeling the job has become much easier. The practice of OR involves a major activity in problem formalization and model construction and validation; other activities include a computational part, analysis of solutions, arriving at conclusions, and implementation of the decision. The increased computing power has stimulated large-scale use of mathematical programming models for planning and on line control. Databases and computer networks make reliable up-todate data available for more effective decision making. TORA and SIMNET II are examples of software packages in OR. Some problems are one-off; others require an on-going solution. Where an on-going solution is required, we are able to deliver a framework for solving the problem in the future and, if necessary, a computerized solution integrated into an organizations existing information infrastructure Some of the possible solution techniques include:

2.1 SIMULATION
A computer simulation, a computer model, or a computational model is a computer program, or network of computers, that attempts to simulate an abstract model of a particular system. Computer simulations have become a useful part of mathematical modeling of many natural systems in physics (computational physics), astrophysics chemistry and biology, human systems in economics, psychology, and social science and in the process of engineering new technology, to gain insight into the operation of those. Computer simulations are used in a wide variety of practical contexts, analysis of air pollutant dispersion using atmospheric dispersion modeling Design of complex systems such as aircraft and also logistics systems.
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design of Noise barriers to effect roadway noise mitigation flight simulators to train pilot forecasting of prices on financial markets (for example Adaptive Modeler) behavior of structures (such as buildings and industrial parts) under stress and other conditions design of industrial processes, such as chemical processing plants strategic Management and Organizational Studies reservoir simulation for the petroleum engineering to model the subsurface reservoir

2.2 NETWORK FLOW PROGRAMMING

The term network flow program describes a type of model that is a special case of the more general linear program. The class of network flow programs includes such problems as the transportation problem, the assignment problem, the shortest path problem, the maximum flow problem, the pure minimum cost flow problem, and the generalized minimum cost flow problem. It is an important class because emany aspects of actual situations are readily recognized as networks and the representation of the model is much more compact than the general linear program. When a situation can be entirely modeled as a network, very efficient algorithms exist for the solution of the optimization problem, many times more efficient than linear programming in the utilization of computer time and space resources. Network models are constructed by the Math Programming add-in and may be solved by either by the Excel Solver, Jensen LP/IP Solver or the Jensen Network Solver.

2.3 DATA MINING

Generally, data mining (sometimes called data or knowledge discovery) is the process of analyzing data from different perspectives and summarizing it into useful information information that can be used to increase revenue, cuts costs, or both. Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among
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dozens of fields in large relational databases. Data mining is primarily used today by companies with a strong consumer focus - retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among internal factors such as price, product positioning, or staff skills, and external factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to drill down into summary information to view detail transactional data Data mining consists of five major elements: Extract, transform, and load transaction data onto the data warehouse system. Store and manage the data in a multidimensional database system. Provide data access to business analysts and information technology professionals. Analyze the data by application software. Present the data in a useful format, such as a graph or table.

2.4 PATTERN RECOGNITION

A complete pattern recognition system consists of a sensor that gathers the observations to be classified or described, a feature extraction mechanism that computes numeric or symbolic information from the observations, and a classification or description scheme that does the actual job of classifying or describing observations, relying on the extracted features. The classification or description scheme is usually based on the availability of a set of patterns that have already been classified or described. This set of patterns is termed the training set, and the resulting learning strategy is characterized as supervised learning. Learning can also be unsupervised, in the sense that the system is not given an a priori labeling of patterns, instead it itself establishes the classes based on the statistical regularities of the patterns. The classification or description scheme usually uses one of the following approaches: statistical (or decision theoretic) or syntactic (or structural). Statistical pattern recognition is based on statistical characterizations of patterns, assuming that the patterns are generated by a probabilistic system. Syntactical (or structural) pattern recognition is based on the structural interrelationships of features. A wide range of algorithms can be applied for pattern recognition, from simple naive Bayes classifiers and neural networks to
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the powerful KNN decision rules.

2.5 STOCHASTIC SIMULATION

Stochastic simulation algorithms and methods were initially developed to analyze chemical reactions involving large numbers of species with complex reaction kinetics. Stochastic networks. These are networks of entities, with particles residing in and moving between these entities according to stochastic processes. A key example is a queuing network, where the entities are service facilities and the particles customers. In the design of computer, communication, and manufacturing systems, the most important criterion presently is quality of service, in relation to the costs of the system. The quality of service is expressed in terms of performance and reliability of the systems in relation to their applications. Stochastic networks provide the mathematical models for the description and analysis of these systems. Technological developments have in recent years led to new forms of the processing, storage and transmission of information, and have changed considerably the way companies are organized. In its turn, this has given rise to a plethora of new and challenging problems in the analysis and control of stochastic networks.

2.6 NETWORK ROUTING

Network routing, a critical element of network management, consists of the decision rules to connect the pairs of origins and destinations in order to communicate at a given rate on a given topology with fixed link capacities. In the hierarchy of decision problems that dominate network management, routing stands between network design (where topology, facility location and capacity assignment are considered under long-term strategic objectives) and flow control (where traffic is dynamically organized under short-term operational objectives at each switch and router along the routes specified by the routing module). These decision levels are strongly interconnected, giving rise to integrated optimization models at each interface, such as capacity and flow assignment or routing under quality of service constraints

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2.7 STOCHASTIC OPTIMIZATION

Stochastic optimization algorithms have been growing rapidly in popularity over the last decade or two, with a number of methods now becoming industry standard approaches for solving challenging optimization problems. In short, while classical deterministic optimization methods (linear and nonlinear programming) are effective for a range of problems, stochastic methods are able to handle many of the problems for which deterministic methods are inappropriate. Stochastic optimization refers to the minimization (or maximization) of a function in the presence of randomness in the optimization process. The randomness may be present as either noise in measurements or Monte Carlo randomness in the search procedure, or both

2.8 QUEUING THEORY

Queuing Theory tries to answer questions like e.g. the mean waiting time in the queue, the mean system response time (waiting time in the queue plus service times), mean utilization of the service facility, distribution of the number of customers in the queue, distribution of the number of customers in the system and so forth. These questions are mainly investigated in a stochastic scenario, where e.g. the inter-arrival times of the customers or the service times are assumed to be random.

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3. REFERENCES
1. http://www.orbitsystems.co.nz/net/operations-research.aspx 2. http://en.wikipedia.org/wiki/Computer_simulation 3.http://en.wikipedia.org/wiki/Stochastic_simulation 4.http://www.anderson.ucla.edu/faculty/jason.frand/teacher/technologies/palace/dataminin g.htm 5.http://www.me.utexas.edu/~jensen/ORMM/models/unit/network/index.html 6. http://www.lionhrtpub.com/orms/orms-6-02/network.html 7. http://en.wikipedia.org/wiki/Pattern_recognition

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