IE 425

Industrial Systems Optimization

Fall 2014
Hector A. Vergara
School of Mechanical, Industrial and Manufacturing Engineering
Oregon State University

Today

Course Syllabus
Introduction to Operations Research

Definition

Operations Research (OR)

is the discipline of using advanced analytical
methods to make better decisions
Video:

http://www.youtube.com/watch?v=3390-IYcLiQ

IE 425 and Operations Research

IE 425 Industrial Systems Optimization is a

first introductory course in the field of
Operations Research (OR)

Industrial Systems is an application area

Optimization is a sub-area of OR and refers to a

set of methodologies
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Instructors Information

Instructor: Dr. Hector A. Vergara

Office:
422 Rogers Hall
Phone:
(541) 737-0955
Email:
hector.vergara@oregonstate.edu
Office Hours
Tu/Th 2:00 4:00 PM
By appointment
Please do not email technical questions about an
assignment

Lengthy or potentially difficult questions should be handled

face to face with instructor

Teaching Assistant

Mohammad Ghane-Ezabadi

Email: ghaneezm@onid.orst.edu
Office Hours: M/W 11:30 AM 1:00 PM
Office: Batcheller 345

Responsibility

Grade homework assignments

Answer questions about homework problems

Course Information

Course Web Page:

http://classes.engr.oregonstate.edu/mime/fall2014/ie425-001

Syllabus

Contact info. and office hours

Text information
Class policy information grading, exams, homework, small project
Course schedule

Announcements

Blackboard Site for IE 425

Slides for lectures (more on this later)

Homework assignments
Materials
Announcements

Course Information (cont.)

Class Schedule: M,W 8:00-9:50PM, Covell Hall 221

(4 credit hours)

Enforced Prereq: Mth 306 or Mth 341, Stat 314

Text: Hillier, F.S. and G.J. Lieberman (2014). Introduction to

Operations Research, 10th edition, McGraw-Hill Inc.

Course Evaluation

Grading Weights:
Midterm Exam

25%

Approx. 8 total

Small Project

30%

Tuesday, December 9
2:00-3:50 PM

Weekly Homework

Monday, October 27

Final Exam

30%

10%

Project Deliverables

Class Participation

5%

Course Evaluation (cont.)

The final course grades will be assigned using the following

scale:

A
AB+
B
BC+
C
CD
F

92% or more
[89% - 92%)
[86% - 89%)
[82% - 86%)
[79% - 82%)
[76% - 79%)
[72% - 76%)
[69% - 72%)
[59% - 69%)
less than 59%

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Exams & Homework

Exams

Closed book and closed notes exams

No laptop computers allowed

One double sized formula sheet (8.5x11) with hand-written notes
allowed

Based on homework, lecture material & reading assignments

Homework

Homework assignments are due at the beginning of the lecture

session

A subset of problems will be graded

No late assignments will be allowed!

Each HW is worth 10 pts.

Group study is encouraged but splitting up assignments is not

Solutions will be posted to Blackboard
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Small Project & Class Participation

Small Project

Students in groups will work on a small real world problem

Multiple deliverables

Problem Proposal
Final Report
Peer Evaluation

Project will be introduced after the midterm

Class Participation

Notify instructor when absent from class as soon as possible

Before or after the fact

Justifiable reason

Each unexcused absence will result in a deduction of 0.25 points

from the Class Participation grade

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Classroom Rules

Arrive to class on time

Be attentive during class
Refrain from rude or distracting behavior
No cell phone use during class

In general, use common sense and be

considerate of others!

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Tentative Course Schedule

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Course Topics

Introduction to Operations Research

Mathematical Programming Formulations
Using the Computer to Solve Mathematical Models
Graphical Solution Method for Solving Linear Programs
Simplex Method for Solving Linear Programs
Sensitivity Analysis and Linear Programming under
Uncertainty
Special Network Optimization Algorithms
Metaheuristics

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Lecture Format

The first part of class will be devoted to questions

Lecture

Ask questions

5 min. break after approx. 50 minutes

End of class

Will try to leave time for questions

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Lecture Format (cont.)

Material will be delivered on slides

Changes and all added material are your responsibility

Material will be added to the slides during class

Most examples will be completed using the board or the doc cam
There will be periodic in-class problem solving sessions
Minor changes to the slides may be made just before class

They will not be available on Blackboard

It is my intent that we will have short quizzes every class

Purpose of these quizzes are two-fold

Break up the monotony of the lecture

Helps me to reinforce material

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Introduction to Operations
Research
Chapters 1 and 2
Hillier and Lieberman

Example Problem

You are an IE at a warehouse in charge of developing a system for the delivery of

goods to various retailers. There are 50 retailers that you must deliver to each week.
Each retailer will expect a delivery once per week on the same day of the week. The
amount of goods delivered to a retailer each week can and will vary. You have a
choice of different truck sizes that have different costs (fixed and operating).

What decisions need to be made?

What information do you as an analyst need to know?

Lead time to each retailer; Truck capacities; Location of retailers; Cost of truck;
Transportation costs; Amount of variation of required quantities; Demand
information; Forecasting information; Driver roles

What rules need to be followed?

How many trucks/types; which retailers to deliver to on a given day; truck route;
Inventory location; Truck loading and scheduling; Time to deliver; Plan safety stock

Deliver to each retailer once a week; Must use available trucks and drivers; Truck
capacity cannot be exceeded; Each retailer must receive goods on desired day;

What outcomes are you trying to achieve?

Minimize cost of delivery; Satisfy customer expectations

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Example Problem (cont.)

Data(Sets/Parameters)
Decisions
Rules
Quantifiable Goal(s)

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Decision Making

We all make decisions, all of the time!

As individuals, day to day decisions

Corporate or business decisions
Operational decisions
Public policy decisions

Easy vs. Difficult

Feasibility vs. Optimality
OR helps us to think systematically and quantitatively
about these decisions
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Definition

Operations Research (OR)

is the discipline of using advanced analytical
methods to make better decisions
Operations Research: The Science of Better
https://www.informs.org/Sites/GettingStarted-With-Analytics

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History of Operations Research

Initially studied in WWII by the Allies

How could they best leverage their scarce resources?

British govt brought scientists from various disciplines together
to do research on problems of military operations
a)
b)
c)

Radar coordination of antiaircraft batteries in the Battle of Britain

Flying maintenance and inspection
Efficient search patterns for U-Boats

(a)

(b)

(c)

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Current Commercial Applications

Production Production line design, supply chain modeling,

inventory allocation and storage, facility design and location
Engineering and development Resource allocation, scheduling
Healthcare Scheduling of operating rooms, radiation therapy
planning
Telecommunications Queuing theory, network design
Transportation industry Routing, logistics planning, network
design
Finance Quantitative modeling, risk management
Airline industry Scheduling planes and crews, planning the size
of the fleet
Revenue management Pricing plane tickets, hotel rooms, rental
car charges, sporting/entertainment event tickets

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Why is Industry Interested in OR?

Organization

Application

Savings / year

Continental Airlines

Reassigning crews to flights when $40 million

schedule disruptions occur

Waste Management

Develop a route-management
system for trash collection and
disposal

$100 million

Procter & Gamble

Redesign the production and

distribution system

$200 million

Samsung Electronics

Reduce manufacturing times and

inventory levels

$200 million
more revenue

Time Inc.

Management of distribution
channels for magazines

$3.5 million
more profit

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OR in Practice

Identify that there is a problem that can be

addressed using OR
Identify objectives of OR application
Develop appropriate OR model addressing the key
issues (formulation and solution)
Collect data on the key variables
Validate the model
Document the model
Implement the model

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OR Methodologies/Tools

Classified based on knowledge/lack of knowledge

about the data used to formulate the models

Deterministic models

Assume certainty about the data

i.e., uses best estimates of data (constant values)

Stochastic models

Use probability distributions and statistical analysis to explicitly

incorporate uncertainty

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OR Methodologies/Tools (cont.)

Two major modeling approaches

Prescriptive models

Recommend a solution

Descriptive models

Model an existing systems performance and make

inferences about the system

e.g., Optimization models (focus of the course)

e.g., Simulation models, probability models

What-if? Capabilitieswhat if data changes?

Does decision need to change?
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Optimization

Optimization problems have:

A collection of decisions that need to be made

Rules that govern the decisions that can be made
A quantifiable goal(s) that is used as a way of
comparing the decisions that we make

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Optimization (cont.)

Terminology

Decisions variables

Rules constraints

Number of fixtures type A to produce in a month

Machine B must be scheduled for a major maintenance
service every 350 hours

Quantifiable goal(s) objective function(s)

Maximize the profit obtained in a month

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Optimization (cont.)

Systematically determining the values of the

variables that
satisfy all the constraints feasibility
give the best value for our objective optimality
without explicitly considering all possible combinations
of variable values

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Mathematical Programming

Mathematical programming is an optimization

approach

A mathematical program refers to a mathematical

description of a decision problem
Programming is a synonym for Planning
There are different solution methods for different
types of math programs

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Mathematical Programming (cont.)

The description of a decision problem is expressed

using functions of decision variables and their
relationships (often to fixed values)

Objective function Describes a measure

$s, Cost, Time,

Maximize, Minimize, Min (Max), Max (Min),

Constraint functions Express limits, rules,

Limited Resources
Quantity Required
Completeness
etc.

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Mathematical Programming (cont.)

Types of mathematical programs

Linear programming

Including special cases such as network models

Non-linear programming
Integer programming

Including combinatorial optimization

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Linear Programming (LP)

The mathematical program has

Linear objective function

Linear constraint functions
Continuous decision variables

Maximize

Z 3x1 5 x2

subject to

x1

Objective Function

4
2 x2 12

3 x1 2 x2 18
x1 0, x2 0

Decision Variables
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Nonlinear Programming (NLP)

Similar problem statement as a linear program

except:

The objective function and/or one or more

constraints are nonlinear functions
e.g., x1c1 x2c2 xncn

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Integer Programming (IP)

Similar problem statement as a linear program

except:

Decision variables must take on discrete or integer

values

e.g.,

x1 = Number of units of product 1 to produce

Also referred to as discrete optimization

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Integer Programming (IP) (cont.)

Combinatorial Optimization

An optimization problem with a finite number of

feasible solutions

e.g.,

x1 = 1 if product 1 is produced; 0 otherwise

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Simple Scheduling Example

Example Data

One machine
25 tasks available at the beginning of the day
Each task requires a known fixed amount of machine
time (processing time)
No idle time

Determine a schedule that minimizes the

average time a task remains in the system

Schedule = sequence (in this example)

What type of mathematical program is needed?
Decision variable is the order. DISCRETE
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Simple Scheduling Example (cont.)

Problem requires an IP

The solution space is discrete and finite

Combinatorial optimization

The sequence and processing time of each task

determines each tasks start time

How many schedules are there?

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Simple Scheduling Example (cont.)

There are many sequences

There are 25! different schedules
The first task has 25 choices, the
second has 24 choices.
25! = 15,511,210,043,330,985,984,000,000
Now thats Big!

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Computational Issues

For many OR problems the ability to compute

optimal solutions can only be done for small
problems

What do you do with large problems?

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Heuristics

A heuristic is a method to generate a good

solution fast for a difficult to solve problem
Important to ask:

How important is getting the optimal solution?

Traveling Salesman Problem

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Quiz (Intro to OR)

Layout vs Queue in System?

Which can be addressed using an

optimization model
Descriptive, deterministic
Unceratinty in queueing model, more
stochastic

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Quiz (Intro to OR)

Optimization problem has

Rules, quantifiable goals, decisions

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Quiz (Intro to OR)

Solutions that satisfy all the rules of an

optimization problem are called feasible
solutions

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Next Topic

Mathematical Programming Formulations

Text reading See syllabus

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