making a real difference

A GUIDE TO OPERATIONAL RESEARCH
MAKING A
REAL DIFFERENCE
IT’S ALL AROUND US AND CAN BE FOUND IN JUST
ABOUT EVERYTHING WE DO
WHAT IS IT?
OPERATIONAL RESEARCH: THE SCIENCE OF BETTER
“
OPERATIONAL RESEARCH
IS VITAL TO OUR BUSINESS.
IT’S CRITICAL IN HELPING
US UNDERSTAND HOW WE
CAN IMPROVE AND HOW WE
CAN BE MORE SUCCESSFUL
IN WHAT ARE VERY
COMPETITIVE MARKETS.
CHRIS DALE
SITE MANAGER
CROWN PAINTS
“
CONTENTS
O.R. INTRODUCTION
O.R. IN TRANSPORT
O.R. IN MANUFACTURING
O.R. IN SPORT
O.R. IN GOVERNMENT
O.R. IN SUPPLY CHAINS
O.R. EDUCATION FOR A CAREER
2
OPERATIONAL RESEARCH (O.R.)
THE SECRET OF BETTER DECISION MAKING
IN A COMPLEX WORLD
In a nutshell, O.R. is the discipline of applying
appropriate, often advanced, analytical methods
to help make better decisions.
By using techniques such as problem structuring methods (sometimes known
as ‘soft O.R.’) and mathematical modelling to analyse complex situations,
O.R. gives executives the power to make more effective decisions and build
more productive organisations.
O.R. is all around us and can be found in just about everything we do.
It forms the building blocks for our every day world – from buying a flight to
queueing for our weekly groceries. It helps save lives, improves sporting events,
drives business and government. Without O.R. the modern world we take for
granted wouldn’t exist.
This is not maths in theory but maths in the real world making a real difference.
THIS GUIDE WILL SHOW YOU HOW O.R. HELPS
This booklet describes some examples of O.R. being used to help solve
real-world problems.
GETTING THE NUMBERS RIGHT
CAN MAKE PASSENGERS MORE
SATISFIED WITH THE SERVICE AND
MILLIONS OF POUNDS WORTH OF
DIFFERENCE TO THE BUSINESS
[Full story page 4]
3
O.R. IN TRANSPORT
NEVER BEFORE HAVE SO MANY PEOPLE OR PRODUCTS NEEDED TO BE
MOVED AROUND THE WORLD. AS PASSENGERS AND CONSUMERS WE
EXPECT EVERYTHING TO RUN SMOOTHLY WHETHER WE ARE FLYING
ON HOLIDAY OR TRAVELLING TO SCHOOL, UNIVERSITY OR WORK.
At British Airways, getting the numbers right can make passengers more
satisfied with the service as well as making millions of pounds worth of
difference to the business.
As with all airlines, British Airways’ staff have to be ‘rostered’ to take into
account things like number of hours they work per shift, minimum rest periods
between flights, breaks at home but they also need to make sure crews spend as
much time as possible working in the air.
Research gets involved in a whole
“ Operational
range of decisions here at BA.
Starting with the whole booking process where
O.R. is involved in helping to set the ticket prices
and calculate the seat availability through to the
flights logistics on the day. O.R. has a massive part
to play in a whole range of day to day decisions.
You get the opportunity to be involved in a whole
different range of aspects of an airline… a whole
different range of problems.
One day you could be looking at something that is
very short term, very tactical and the next day or
the next week you could be looking at something
strategic for twenty years time.
Neil Cottrell
Head of Fleet Planning
British Airways
4
“
TICKET PRICING
There’s one challenge that every airline faces: Seats on any flight are perishable –
once the plane has taken off, there is no possibility of selling any empty seats.
This being so, it pays an airline to fill a seat, even at a very low fare, rather than
have it take off empty. But obviously it isn’t viable to sell every seat at a low price,
so a ‘model’ has to be found for selling seats at different prices.
The real skill comes in working out how many tickets to sell at each fare. 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. Unfortunately they can’t do it that way because the kind of people
who are willing to pay the higher fares often want to book at the last minute.
So the airline usually sells the cheaper tickets first and holds back some places
at the higher prices. The problem is knowing how many seats to hold back.
This is where the airline uses O.R. By observing the day to day variations in the
number of high priced tickets sold, the number of seats that need to be reserved
to give high fare passengers the best chance of being able to get on the flight can
be estimated. In addition the profile of bookings – 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.
To do all this accurately and in such a way as to produce the best achievable
results is difficult, and calls for some sophisticated ‘Yield Management’ analysis,
which the O.R. model provides.
5
O.R. IN MANUFACTURING
Operational Research is often at the heart of what
makes a business run efficiently. In a manufacturing
plant, everything must be planned and timed precisely
to avoid bottlenecks.
At Crown Paints there are literally hundreds of different colours made and
well over a hundred varieties of paint. So knowing what colours can be made
where and when and how many of each variety will be needed is crucial to
the success of the business.
people built a model of the plant that allows
“ O.R.
us to understand better the complexities of the
manufacturing process by breaking down a
complex problem, to make it very visual.
O.R. is vital to our business. It’s critical in helping
us understand how we can improve and how we
can be more successful in what are very
competitive markets.
“
Chris DALE
Site Manager
Crown Paints
6
SIMULATION MODEL
The simulation model in some ways looks like a computer game. It allows
managers to visualise exactly where any problems might occur. It’s like a map
of the plant which shows all the tanks, the mixers and all the different routings
and filling areas.
The model starts running and as soon as it hits the start time the process begins
in the premix and the manufacturing areas. The batch that was made earlier can
be seen running through into the plant and going into the filling line. It’s possible
to see the batches run through a step by step process until they reach the filling
line and the filled cans are shown moving through into the warehouse.
In a paint manufacturing plant there are a huge number of variables – hundreds
of colours, varieties and can sizes – and the simulation model allows managers
to structure the problem, visualise it and understand what is really happening.
This piece of software allows the company to schedule production more
efficiently and helps them to run the plant and use the people more effectively.
7
O.R. IN SPORT
The world of sport isn’t an obvious place where
Operational Research might be used. Yet, many of our much
loved activities rely on O.R. – in fact, without O.R. some of
the games we know and love wouldn’t be recognisable.
For example, in limited-overs cricket, when weather interrupts play,
an O.R. model – the Duckworth Lewis method – is used to calculate the
fairest run target for the team batting second. O.R. is also behind football’s
Actim Index stats that help calculate the best player in each position.
O.R. had a big part to play in the design of the magnificent Emirates Stadium
in North London – home of Arsenal F.C. Operational Research was used to
help make the running of the site on match days safe and efficient.
imagine a match day situation…
“ Just
when you arrive at the station O.R. starts to
feature immediately. You get off the train,
people marshal you toward the stadium. That
part of the process has already got O.R. taken
into account, trying to find the safest way for you
to move. Then when you reach the stadium, the
number of turnstiles, for example, will have been
determined by an O.R. technique – so O.R.’s really
important to everything about this stadium.
The design of this stadium is obviously
magnificent. It’s a sixty thousand capacity
stadium and without a simulation model of people
moving in and out you’d never know whether
during a match situation if there was a fire, for
example, if those people could be evacuated
safely within the eight minute guide line.
“
Danielle Czauderna
Principal Consultant
STEER DAVIES GLEAVE
8
FORMULA 1
In the exciting world of Formula 1 racing, split second decisions are often
the difference between success and failure. Often these decisions rely on
mathematical models, developed by skilled O.R. experts.
think the first thing we’ll see with the direct
“ Iapplication
of O.R. with the race strategy is the
fuel load. Estimating competitor’s fuel load and
when they’e going to stop and when we are going to
hit traffic during a race and when it’s good to go in
for a pit stop and tyre degradation… these are all
estimations we need to do as the race develops.
I strongly believe that O.R. has a greater role to
play in F1 for the future…
“
Israel Vieira
F1 Team Race Strategy
Mathematical Modeller
9
O.R. IN GOVERNMENT
Central government is the biggest business in Britain and,
to help government, O.R. gets involved in just about
everything that affects our day to day lives.
The Prime Minister has his own team of advisors that works in 10 Downing Street
but they rely on information that comes to him from every one of the government
departments. One of the roles in providing an O.R. service at the centre of
government is to ‘quality assure’ the analysis and evidence that gets sent to the
PM so he knows that what he’s looking at is accurate, timely and effective.
Whatever the issue – whether working out the most efficient way of treating
us when we’re ill, policing our streets and improving transport networks or
even what is taught in the classroom, an operational researcher helps monitor
government performance and finds the most effective ways of putting policy
into practice.
passionate about maths and you want
“ Iftoyou’re
make a difference, the Government O.R.
Service gives you the perfect opportunity to
solve problems… to solve puzzles… and actually
improve the quality of life right the way across
the public agenda. If your analysis can make
a differenceand make the right decision and
improve the effectiveness then the country’s
going to be a better place overall.
Tony O’Connor CBE
Chair
Government O.R. Service
10
“
Helping to run the National Health Service is a major task for the analysts in
the Government O.R. Service. In a hospital, for example, using O.R. techniques
can literally be the difference between life and death.
One of the really big things that hospitals have to think about is how long patients
stay – so, therefore, how many beds and how many wards and doctors you have
to have look after them.
really important for us to get as far as we can
“ It’s
the right capacity for the patients who are going
to come through the doors so that we can give the
treatment that they need when they need it.
Patients, when they are referred by their GP,
go either into A and E or Out Patients and enter a
series of queues. One of the things that we really
have to do – and something we’ve been working
very hard on – is getting those queues as short as
we can. And making sure we don’t have any bottle
necks in our system. Therefore, we need queueing
theory and other O.R. techniques to help us make
sure we get that right.
“
Dr Trudi Kemp
Interim Director of Strategic Development
St George’s Hospital
11
O.R. IN SUPPLY CHAINS
We all expect the things we want and need to be readily
available. That means shelves to be always stocked and
deliveries to arrive on time.
This is what is known as the ‘supply chain’ of a business and O.R. techniques lie at
the very heart of getting this process to function efficiently. At WaverleyTBS, one of
the UK’s leading distribution companies, O.R. is key to the forecasting process.
take a mathematical forecast of sales going
“ We
forward and then we use that forecast to order
stock from suppliers. That stock then comes into
these warehouses where we manage, store and
deliver stock from here to end customers.
Once the forecast has been created we then have
teams of people who order stock against that
forecast with the suppliers and they manage
that stock into the warehouses. We then use O.R.
mathematical models to work out manning levels,
to control our costs in the operation and, more
importantly, manage the space as our warehouses
only have a finite capacity.
12
Bob Wigglesworth
Director
Waverly TBS
“
O.R AND THE SUPPLY CHAIN
Sales in large grocery retailers in the UK follow a weekly cycle – more is sold
on Fridays and Saturdays than on other days of the week. So, on Thursdays and
Fridays their distribution centres supplying stores have to work very hard.
In fact, they often have to employ temporary staff and sub-contract trucks to
cope with the peaks.
Truck-loads of products received from suppliers have to be broken down into
store orders and delivered to the stores. O.R. people analyse sales patterns
and develop replenishment policies. One major retailer detected irregularity in
suppliers’ production schedules which led to either too much or too little product
being available for delivery to the warehouse. This situation, caused by the
‘bullwhip effect’, resulted in poor customer satisfaction due to the unavailability
of products.
O.R. was used in the construction of a simulation model of the replenishment
system. The model helped the retailer to alter the replenishment rules to
incorporate a feedback system to their suppliers. The model also showed that
the distribution workload could be spread more evenly over the whole week for
certain products by smoothing the sales cycle.
The simulation led to the implementation of a small change to the replenishment
algorithms, resulting in considerable smoothing of daily variability. The company
trialled the new replenishment model for three months in a single store, it proved
so successful that the implementation rolled out across the entire UK business.
As a result, the savings achieved by not having to employ temporary staff in the
distribution centres and subcontract transport ran into millions of pounds per
year. Crucially, service levels improved as distribution centres could keep up
with demand, while stock was directed where needed rather than too much
being held in stores.
13
O.R. EDUCATION FOR A CAREER
If you are interested in a career in operational research
take a look at the interesting University Degree courses
that are the best route into the profession.
A list of universities offering degrees in O.R. can be found at
www.LearnAboutOR.co.uk
are many different academic paths into
“ There
operational research although most people tend
to have undergraduate degrees with mathematics,
statistics, O.R., computer science or management
content. Specialist Master’s degrees in O.R. and
related subjects are also available.
Students will also learn a number of O.R. techniques
such as computer simulation, optimisation, queueing
theory, inventory control, and problem structuring
methods to name but a few. You’ll also get a good
balance between the theoretical work and an
appreciation of the application of these techniques,
and this will be through case studies and projects
which might involve working with a company on a real
world problem.
“
14
Paul Harper
Professor of Operational Research
Cardiff University
“
IF YOU’RE PASSIONATE ABOUT
MATHS AND YOU WANT TO MAKE
A DIFFERENCE, THE GOVERNMENT
O.R. SERVICE GIVES YOU THE
PERFECT OPPORTUNITY TO SOLVE
PROBLEMS... to solve puzzles...
AND ACTUALLY IMPROVE THE
QUALITY OF LIFE RIGHT THE
WAY ACROSS THE PUBLIC
AGENDA. WITH THE HELP OF
YOUR O.R. ANALYSIS, THE
COUNTRY’S GOING TO BE A
BETTER PLACE OVERALL.
TONY O’CONNOR, CBE
CHAIR
GOVERNMENT O.R. SERVICE
“
15
THE SECRET
OF BETTER
DECISION MAKING
IN A COMPLEX WORLD
IN A NUTSHELL, OPERATIONAL RESEARCH (O.R.) IS THE
DISCIPLINE OF APPLYING APPROPRIATE, OFTEN ADVANCED,
ANALYTICAL METHODS TO HELP MAKE BETTER DECISIONS.
By using techniques such as problem structuring methods (sometimes
known as ‘soft O.R.’) and mathematical modelling to analyse complex
situations, O.R. gives executives the power to make more effective
decisions and build more productive organisations.
O.R. is all around us and can be found in just about everything we do.
It forms the building blocks for our every day world – from buying a
flight to queueing for our weekly groceries. It helps save lives, improves
sporting events, drives business and government. Without O.R. the
modern world we take for granted wouldn’t exist.
This is not maths in theory but maths in the real world – making a
real difference.
IF YOU’D LIKE TO LEARN MORE ABOUT O.R.,
VISIT WWW.LEARNABOUTOR.CO.UK
You’ll find: E
xamples of O.R. helping to solve real-world problems
O.R. problems for you to solve
Details of Universities offering degrees in O.R.
Careers in O.R.
A video of O.R. in action
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TEL: +44 (0)121 233 9300 www.theorsociety.com