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QTDM (Quantitative Techniques For Decision Making) :: An Introduction

Operations research uses quantitative and analytical techniques to help make better organizational decisions. It has applications in areas like production scheduling, inventory control, and transportation. Models can be deterministic, dealing with known quantities, or stochastic, accounting for uncertainty. Some examples of successful operations research projects include optimizing crew scheduling at Air New Zealand and reducing cycle times at Samsung. The Duckworth-Lewis method is a mathematical approach for adjusting targets in interrupted cricket matches.

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Tushar Pal
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801 views16 pages

QTDM (Quantitative Techniques For Decision Making) :: An Introduction

Operations research uses quantitative and analytical techniques to help make better organizational decisions. It has applications in areas like production scheduling, inventory control, and transportation. Models can be deterministic, dealing with known quantities, or stochastic, accounting for uncertainty. Some examples of successful operations research projects include optimizing crew scheduling at Air New Zealand and reducing cycle times at Samsung. The Duckworth-Lewis method is a mathematical approach for adjusting targets in interrupted cricket matches.

Uploaded by

Tushar Pal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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QTDM

(Quantitative Techniques
for Decision Making):
An Introduction

1
Introduction
Operations Research is an Art and Science

It had its early roots in World War II and is


flourishing in business and industry with the aid
of computer.

Primary application areas of Operations


Research include forecasting, production
scheduling, inventory control, capital budgeting
and transportation. 2
What is Operations Research?
Operations
The activities carried out in an organization.

Research
The process of observation and testing
characterized by the scientific method. Situation,
problem statement, model construction, validation,
experimentation, solutions.

Operations Research is a quantitative approach to


decision making based on the scientific method of
problem solving. 3
What is Operations Research?
Operations Research is the scientific
approach to execute decision making, which
consists of:
The art of mathematical modeling of
complex situations
The science of the development of solution
techniques used to solve these models
The ability to effectively communicate the
results to the decision maker
4
What Do We do
1. Provide rational bases for decision making by
seeking to understand and structure complex
situations and to use this understanding to
predict system behavior and improve system
performance.

2. 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.

5
Terminology
The British/Europeans refer to Operational Research", the
Americans to Operations Research" - but both are often
shortened to just "OR".

Another term used for this field is Management Science"


("MS"). In U.S. OR and MS are combined together to form
"OR/MS" or "ORMS".

Yet other terms sometimes used are Industrial Engineering"


("IE") and Decision Science" ("DS").

6
Operations Research Models

Deterministic Models Stochastic Models


Linear Programming Discrete-Time Markov Chains
Network Optimization Continuous-Time Markov Chains
Integer Programming Queuing Theory (waiting lines)
Nonlinear Programming Decision Analysis
Inventory Models Game Theory
Inventory models
Simulation

7
Deterministic vs. Stochastic Models
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.

8
Success Stories of OR

9
Application Areas

Strategic planning
Supply chain management
Pricing and revenue management
Logistics and site location
Optimization
Marketing research
10
Applications Areas (cont.)
Scheduling
Portfolio management
Inventory analysis
Forecasting
Sales analysis
Auctioning
Risk analysis
11
A Short List of Successful Stories (1)
Air New Zealand
Air New Zealand Masters the Art of Crew Scheduling
AT&T Network
Delivering Rapid Restoration Capacity for the AT&T Network
Bank Hapoalim
Bank Hapoalim Offers Investment Decision Support for Individual Customers
British Telecommunications
Dynamic Workforce Scheduling for British Telecommunications
Canadian Pacific Railway
Perfecting the Scheduled Railroad at Canadian Pacific Railway
Continental Airlines
Faster Crew Recovery at Continental Airlines
FAA
Collaborative Decision Making Improves the FAA Ground-Delay Program

12
A Short List of Successful Stories (2)
Ford Motor Company
Optimizing Prototype Vehicle Testing at Ford Motor Company
General Motors
Creating a New Business Model for OnStar at General Motors
IBM Microelectronics
Matching Assets to Supply Chain Demand at IBM Microelectronics
IBM Personal Systems Group
Extending Enterprise Supply Chain Management at IBM Personal Systems
Group
Jan de Wit Company
Optimizing Production Planning and Trade at Jan de Wit Company
Jeppesen Sanderson
Improving Performance and Flexibility at Jeppesen Sanderson

13
A Short List of Successful Stories (3)
Mars
Online Procurement Auctions Benefit Mars and Its Suppliers
Menlo Worldwide Forwarding
Turning Network Routing into Advantage for Menlo Forwarding
Merrill Lynch
Seizing Marketplace Initiative with Merrill Lynch Integrated Choice
NBC
Increasing Advertising Revenues and Productivity at NBC
PSA Peugeot Citroen
Speeding Car Body Production at PSA Peugeot Citroen
Rhenania
Rhenania Optimizes Its Mail-Order Business with Dynamic Multilevel
Modeling
Samsung
Samsung Cuts Manufacturing Cycle Time and Inventory to Compete

14
A Short List of Successful Stories (4)
Spicer
Spicer Improves Its Lead-Time and Scheduling Performance
Syngenta
Managing the Seed-Corn Supply Chain at Syngenta
Towers Perrin
Towers Perrin Improves Investment Decision Making
U.S. Army
Reinventing U.S. Army Recruiting
U.S. Department of Energy
Handling Nuclear Weapons for the U.S. Department of Energy
UPS
More Efficient Planning and Delivery at UPS
Visteon
Decision Support Wins Visteon More Production for Less

15
The DuckworthLewis (D/L)
Method
It is a mathematical formulation designed to calculate the
target score for the team batting second in a limited overs
cricket match interrupted by weather or other
circumstances.
It is generally accepted to be the most accurate method of
setting a target score.
The D/L method was devised by two English
statisticians, Frank Duckworth and Tony Lewis.
After their retirements Professor Steven Stern became
the custodian of the method.
In November 2014, it was renamed the Duckworth 16

LewisStern method (or D/L/S method).

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