Operations Research Applications Research Articles

Dealing with uncertainty in complex projects: revisiting Klein and Meckling

Purpose – The purpose of this paper is to review the content and contributions of the article by Klein and Meckling entitled “Application of operations research to development decisions” which was published in the journal Operations Research in May‐June 1958. The paper explores the major concepts and contributions in the article and suggests that these are relevant to today's complex and uncertain development projects.Design/methodology/approach – The paper outlines the context in which the research on which the article is based took place and presents the main ideas in the article which relate to decision making in the procurement and development of complex systems.Findings – The paper demonstrates the utility of the concepts in the original article, shows how they have been used in academic research on project management and innovation and that they are still relevant for both practical project management and project‐based research.Practical implications – The primary implication is to demonstrate the v...

Book Reviews

In Book Reviews, we review an extensive and diverse range of books. They cover theory and applications in operations research, statistics, management science, econometrics, mathematics, computers, and information systems. In addition, we include books in other fields that emphasize technical applications. The editor will be pleased to receive an email from those willing to review a book, with an indication of specific areas of interest. If you are aware of a specific book that you would like to review, or that you think should be reviewed, please contact the editor. The following books are reviewed in this issue of Interfaces, 42(4), July–August 2012: Optimal Strategies in Sports Economics and Management, Sergiy Butenko, Jaime Gil-Lafuente, and Panos M. Pardalos, eds.; Foundations of Location Analysis, H. A. Eiselt and Vladimir Marianov, eds; Metaheuristics: From Design to Implementation, El-Ghazali Talbi; Data Mining: Concepts, Methods and Applications in Management and Engineering Design, Yong Yin, Ikou Kaku, Jiafu Tang, and Jian-Ming Zhu.

Political engineering: optimizing a U.S. Presidential candidate’s platform

We explore the application of operations research to the problem of defining/refining the political strategy for a candidate in a U.S. Presidential election. We use Hierarchical Bayesian techniques to model criteria used by a stratified random sample of registered voters to evaluate a candidate/platform. We then use the estimated utility parameters as inputs to a model that finds the positions a candidate can take on the salient issues of the election that will optimize expected Electoral College votes conditional on the positions respondents perceive to have been taken by the opposing party’s nominee. This approach is unique in that it (i) considers the value that individual voters associate with various positions the candidates can take on various issues, (ii) considers the chronicity of the electorate’s perceptions of a candidate’s positions on the salient issues, and (iii) yields a solution that will optimize expected Electoral College votes. We demonstrate this model on data collected immediately prior to the 2004 U.S. Presidential election (the most recent U.S. Presidential election not involving any potential candidate for the upcoming 2012 U.S. Presidential election), and we show how these data and the model can also be used to assess the perceived clarity of a candidate’s positions, the sensitivity of a candidate’s support to her/his perceived positions, and the viability of a third party candidate.

OPTIMIZATION OF SUPPLY CHAIN WITH UNCERTAINTIES

The purpose of this study is to clarify the approach by which companies are solving the problems of optimization of Supply Chain with uncertainties through application of operations research and numerical methods. The problem of Supply Chain maximization is considered on a global scale and the model with uncertainties is developed. An algorithm for optimization is presented for this model.

Book Reviews

In Book Reviews, we review an extensive and diverse range of books. They cover theory and applications in operations research, statistics, management science, econometrics, mathematics, computers, and information systems. In addition, we include books in other fields that emphasize technical applications. The editor will be pleased to receive an e-mail from those willing to review a book, with an indication of specific areas of interest. If you are aware of a specific book that you would like to review, or that you think should be reviewed, please contact the editor. The following books are reviewed in this issue of Interfaces, 42(3), May–June 2012: Introduction to Discrete Event Simulation and Agent-based Modeling: Voting Systems, Health Care, Military, and Manufacturing, Theodore T. Allen; Benchmarking with DEA, SFA, and R, Peter Bogetoft and Lars Otto; Linear Programming and Generalizations: A Problem-based Introduction with Spreadsheets, Eric V. Denardo; The Linear Ordering Problem: Exact and Heuristic Methods in Combinatorial Optimization, Rafael Martí and Gerhard Reinelt.

Stochastic programs without duality gaps

This paper studies dynamic stochastic optimization problems parameterized by a random variable. Such problems arise in many applications in operations research and mathematical finance. We give sufficient conditions for the existence of solutions and the absence of a duality gap. Our proof uses extended dynamic programming equations, whose validity is established under new relaxed conditions that generalize certain no-arbitrage conditions from mathematical finance.

On the interval Shapley value

The Shapley value is one of the most common solution concepts in Operations Research applications of cooperative game theory. It was defined and axiomatically characterized in different game-theoretic models. In this article, we focus on the Shapley value for cooperative games where the set of players is finite and the coalition values are compact intervals of real numbers. Our main contribution is to characterize the interval Shapley value by using the properties of efficiency, symmetry and strong monotonicity. We also give a characterization by using the interval dividends.

Book Reviews

In Book Reviews, we review an extensive and diverse range of books. They cover theory and applications in operations research, statistics, management science, econometrics, mathematics, computers, and information systems. In addition, we include books in other fields that emphasize technical applications. The editor will be pleased to receive an e-mail from those willing to review a book, with an indication of specific areas of interest. If you are aware of a specific book that you would like to review, or that you think should be reviewed, please contact the editor. The following books are reviewed in this issue of Interfaces, 42(2), March-April 2012: Red Plenty: Industry! Progress! Abundance! – Inside the Fifties' Soviet Dream, Francis Spufford; Sports Data Mining, Robert P. Schumaker, Osama K. Solieman, and Hsinchun Chen; Foundations of Optimization, Osman Güler; Stochastic Processes with Applications to Reliability Theory, Toshio Nakagawa; Data Mining and Knowledge Discovery via Logic-Based Methods, Evangelos Triantaphyllou; Random-Like Multiple Objective Decision Making, Jiuping Xu and Liming Yao.

Special issue of the Czech Society for Operations Research

This special issue contains selected papers of the 28th International ConferenceMathematical Methods in Economics (MME) that took place in the city of Ceske Budejovice in September 2010. It is a traditional annual meeting of professionals from universities and business who are interested in the theory and applications of operations research and econometrics organized by the Czech Society for Operations Research (CSOR) together with the Czech Econometric Society in various places within the Czech Republic. The number of participants is rapidly increasing in the last years. Usually between 100 and 200 professionals are presenting their research results every year. Although the conference is the annual meeting of the CSOR there are always participants from all around the world especially from surrounding countries as Slovakia, Poland, Austria, Germany, Slovenia, etc. Accepted papers presented at the conference are published in the Book of Proceedings that is indexed in CPCI (Conference Proceedings Citation Index) since 2003. Main organizer of theConferenceMME is theCSOR. It is a quite small professional society with approx. 50 regular members but its activities are numerous. Except the mentioned international conference Mathematical Methods in Economics the main international activity was organization of the 22nd European Conference on Operational Research EURO XXII in 2007. This conference was organized by the CSOR in cooperation with the University of Economics, Prague. EURO XXII was a very successful event, by attending of more than two thousands of participants from all over the world it was one of the largest EURO conferences at all. The conferencesMME cover both theoretical and application aspects of mathematical modeling of economic processes. The scope of the conference involves operations

The multi-armed bandit, with constraints

The colorfully-named and much-studied multi-armed bandit is the following Markov decision problem: At epochs 1, 2, ... , a decision maker observes the current state of each of several Markov chains with rewards (bandits) and plays one of them. The Markov chains that are not played remain in their current states. The Markov chain that is played evolves for one transition according to its transition probabilities, earning an immediate reward (possibly negative) that can depend upon its current state and on the state to which transition occurs. Henceforth, to distinguish the states of the individual Markov chains from those of the Markov decision problem, the latter are called multi-states. Each multi-state prescribes a state for each of the Markov chains. This version of the multi-armed bandit problem was originally solved by John Gittins. It has a large range of operations research applications including applications to resource allocation, scheduling, project management, and search. A key result for the multi-armed bandit is that attention can be restricted to a simple class of decision procedures. A label is assigned to each state of each bandit such that no two states have the same label, even if they are in different bandits. A priority rule is a policy that, given each multistate, plays the Markov chain whose current state has the lowest label. The literature includes several different proofs of the optimality of a priority rule. Nearly all of these proofs rest on a family of optimal stopping times, one for each state of each bandit. A different approach is taken here. Pair-wise comparison, rather than optimal stopping, is used to demonstrate the optimality of a priority rule. This is accomplished for models having linear and exponential utility functions. Elementary row operations are used to identify an optimal priority rule and to compute its expected utility for a given starting state. Our analysis covers the cases of linear and exponential utilities. In the case of a linear utility function, the model is generalized to include constraints that link the bandits. With C constraints, an optimal policy is shown to take the form of an initial randomization over C + 1 priority rules, and column generation is proposed as a solution method. The proposed computational methods are based on several matrix algorithms. First, an algorithm, called the Triangularizer, transforms the one-step rewards and transition probability matrixes for individual bandits by applying elementary row operations. The transformed matrixes, called finalized, are triangle: all their elements on diagonals and below diagonals are equal to zero. For a given index policy, running the transformed bandits is equivalent to running the original bandits. Second, the transition probabilities and one-step rewards of the transformed bandits are used to compute the performance characteristics of index policies in polynomial times. These computations are used by the column generation algorithm for multi-armed bandits with constraints.

Using the Viable Systems Model to examine multi-agency arrangements for combatting transnational organised crime

Traditionally, most operational research applications in the area of law enforcement and criminal justice have used quantitative techniques to forecast patterns and levels of offending and to optimise various police, judicial and prison processes. This paper seeks to examine the role that more qualitative modelling approaches might contribute in this important application area. Specifically, the paper examines the role that cybernetic theory and viable systems modelling can contribute in helping government bodies and law enforcement agencies to think through how, organisationally, they can best respond to the increasingly complex problem of transnational organised crime. Focussing on new multi-agency collaborative arrangements, the paper argues that there is a need for more informed debate that can account for the complexity of the challenge and point towards more holistic and integrated solutions. Against this background, the paper argues that the viable systems modelling approach has much to offer because it is theoretically grounded in the management of complexity; because its flexibility allows it to accommodate the trend for law enforcement agencies to work more closely with partner agencies, and to do so at multiple organisational levels; and because its user-friendly annotated diagramming conventions allow stakeholders to focus discussion and work towards outcomes that make sense in particular settings.

Mind the gap: A study of Tube tour

The problem considered in this paper can be expressed as a question: Is it possible to visit all Tube lines in a day? This is a new type of combinatorial optimization problem which generalizes classic problems like TSP, set cover. It has similarities with classic combinatorial optimization problems and ties with operations research applications. We call the graphs corresponding to the city railway systems subway graphs. Examples and properties of such graphs are described in the paper. We show that our problem is NP-hard. Algorithms solving the problem are proposed and their performance is studied both analytically and experimentally on transportation networks of several big cities of the world.

Book Reviews

In Book Reviews, we review an extensive and diverse range of books. They cover theory and applications in operations research, statistics, management science, econometrics, mathematics, computers, and information systems. In addition, we include books in other fields that emphasize technical applications. The editor will be pleased to receive an e-mail from those willing to review a book, with an indication of specific areas of interest. If you are aware of a specific book that you would like to review, or that you think should be reviewed, please contact the editor. The following books are reviewed in this issue of Interfaces, 42(1), January–February 2012: Profiles in Operations Research: Pioneers and Innovators, Arjang A. Assad and Saul I. Gass, eds.; Operations Rules: Delivering Customer Value through Flexible Operations, David Simchi-Levi; Service Parts Management: Demand Forecasting and Inventory Control, Nezih Altay and Lewis A. Litteral, eds.; Linear Programming Sensitivity Analysis and Related Topics, Marie-France Derhy; Artificial Ants: From Collective Intelligence to Real-life Optimization and Beyond, Nicolas Monmarche, Frederic Guinand, and Patrick Siarry, eds.

MISO Unlocks Billions in Savings Through the Application of Operations Research for Energy and Ancillary Services Markets

Over the past few years, the Midwest Independent Transmission System Operator, Inc. (MISO) has transformed the electric utility industry in 13 Midwestern US states through the development and implementation of energy and ancillary services markets. MISO uses mixed-integer programming to determine when each power plant should be on or off. Operations research methods set energy output levels and establish the prices at which energy trades. These new markets increased the efficiency of the existing electric infrastructure (power plants and transmission lines) in the Midwest, improved the reliability of the grid, and reduced the need for future infrastructure investments. These advances enabled the MISO region to realize between $2.1 billion and $3.0 billion in cumulative savings from 2007 through 2010. We expect additional savings of $6.1 billion to $8.1 billion through 2020.

Contributors

Contributors

General forms of the quadratic assignment problem

In this paper, a general model has been formulated for facility location. The proposed model allows for locating several facilities in a single location, and as such, it is therefore a generalisation of the well-known quadratic assignment problem (QAP) and other variants. The general model has a wide range of applications in facility location, operations research and business. A branch-and-bound algorithm is developed for the generalised quadratic semi-assignment problem (GQSAP), which is a special form of the general model. The branch-and-bound algorithm is based on a modified version of the well-known Gilmore bound. Computational results are presented to corroborate the theoretical model developed here.

Revised simplex method and its application for solving fuzzy linear programming problems

Linear programming models play an important role in management, economic, data envelopment analysis, operations research and many industrial applications. In many practical situations there is a kind of ambiguity in the parameters of these models which can be expressed by means of fuzzy numbers. In the literature of fuzzy mathematical programming there are many types of the fuzzy linear programming problems. But in this paper, we deal with a kind of linear programming which includes the triangular fuzzy numbers in its parameters. For finding the solution of these problems, we propose a revised simplex algorithm for an extended linear programming problem which is equivalent to the original fuzzy linear programming problem. An illustrative example is presented to clarify the proposed approach. A fuzzy DEA model has been also considered as a practical application to illustrate the effectiveness of the proposed approach. (Received 20 December 2009; Revised 29 September 2010; Accepted 11 November 2010)

Exact and Heuristic Solutions to Minimize Total Waiting Time in the Blood Products Distribution Problem

This paper presents a novel application of operations research to support decision making in blood distribution management. The rapid and dynamic increasing demand, criticality of the product, storage, handling, and distribution requirements, and the different geographical locations of hospitals and medical centers have made blood distribution a complex and important problem. In this study, a real blood distribution problem containing 24 hospitals was tackled by the authors, and an exact approach was presented. The objective of the problem is to distribute blood and its products among hospitals and medical centers such that the total waiting time of those requiring the product is minimized. Following the exact solution, a hybrid heuristic algorithm is proposed. Computational experiments showed the optimal solutions could be obtained for medium size instances, while for larger instances the proposed hybrid heuristic is very competitive.

A hybrid PSO-SA algorithm for the travelling tournament problem

Sports scheduling has become an important area of applied operations research in recent years, since satisfying fans and teams’ requests and revenues of a sports league and TV networks may be affected by quality of the league schedule. While this type of scheduling problem can be solved by mathematical methods and exact solutions are accessible, it computationally leads to hard problems. The travelling tournament problem (TTP) is defined as minimising total travelling distance for all teams in a league. In this study, a new mathematical model for the TTP with the no-repeater constraint is presented. In addition, a very fast hybrid metaheuristic algorithm is proposed, which combines particle swarm optimisation (PSO) and simulated annealing (SA). Our computational experiments on standard instances show that the hybrid approach results in comparable to or even better than current best known solutions, specifically in computational time.

Book Reviews

In Book Reviews, we review an extensive and diverse range of books. They cover theory and applications in operations research, statistics, management science, econometrics, mathematics, computers, and information systems. In addition, we include books in other fields that emphasize technical applications. The editor will be pleased to receive an e-mail from those willing to review a book, with an indication of specific areas of interest. If you are aware of a specific book that you would like to review, or that you think should be reviewed, please contact the editor.