Business Applications of Operations Research

162 Pages·2013·3.882 MB·English

by  Bodhibrata Nag

THE BUSINESS Business Applications of N Quantitative Approaches
A
EXPERT PRESS Operations Research G to Decision Making Collection
DIGITAL LIBRARIES
Donald N. Stengel, Editor
Bodhibrata Nag
EBOOKS FOR
Operations Research is a bouquet of mathematical tech-
BUSINESS STUDENTS
niques that have evolved over the last six decades to im-
Curriculum-oriented, born- prove the process of business decision making. Operations
digital books for advanced Research offers tools to optimize and find the best solu- Business
business students, written tions to myriad decisions that managers have to take in
by academic thought their day to day operations or while carrying out strategic
leaders who translate real- planning. Today, with the advent of operations research
Applications
world business experience software, these tools can be applied by managers even
into course readings and without any knowledge of the mathematical techniques
reference materials for that underlie the solution procedures.
students expecting to tackle The book starts with a brief introduction to various tools of Operations
B
management and leadership of operations research, such as linear programming and in- U
challenges during their teger programming together with simple examples in each SI
N
professional careers. of the areas. The introductory chapter also covers opera- E
S Research
tions research software, along with examples. Other tools S
POLICIES BUILT of operations research such as multi-objective program- A
BY LIBRARIANS P
ming, queuing theory, and network theory are discussed in P
L
• Unlimited simultaneous subsequent chapters along with their appropriate applica- I
C
usage tions in business decision making. A
T
• Unrestricted downloading The book will give you real awareness of the power and IO
and printing potential of operations research in addressing decision N
S
• Perpetual access for a making in areas of operations, supply chain, and financial O
one-time fee and marketing management. You’ll be encouraged to use F O
• No platform or the accompanying software models to solve these prob- P
E
maintenance fees lems, using detailed do-it-yourself instructions, and as you R
A
• Free MARC records progress, you’ll gain familiarity with and an intuitive un- T
• No license to execute derstanding of the various tools of operations research and IO
N
The Digital Libraries are a their applications to various business situations. S
R
comprehensive, cost-effective E
Bodhibrata Nag is an associate professor of Operations S
way to deliver practical Management at Indian Institute of Management Calcut- EA Bodhibrata Nag
treatments of important ta. His research interests are applications of operations R
C
business issues to every research in areas of logistics, transportation, energy, and H
student and faculty member. public sector management. He has authored a book, Opti-
mal Design of Timetables for Large Railways, and co-authored
the Special Indian Edition of Hillier & Lieberman’s classic
textbook, Introduction to Operations Research. In addition he
For further information, a has co-authored three chapters for the forthcoming book
Case studies of realistic applications of optimum decision making
free trial, or to order, contact: 
being published by Springer.
[email protected]
Quantitative Approaches
www.businessexpertpress.com/librarians
to Decision Making Collection
Donald N. Stengel, Editor
ISBN: 978-1-60649-526-1
www.businessexpertpress.com www.businessexpertpress.com
Business Applications
of Operations Research

Business Applications
of Operations Research
Bodhibrata Nag
Business Applications of Operations Research
Copyright © Business Expert Press, LLC, 2014.
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted in any form or by any
means—electronic, mechanical, photocopy, recording, or any other
except for brief quotations, not to exceed 400 words, without the prior
permission of the publisher.
First published in 2014 by
Business Expert Press, LLC
222 East 46th Street, New York, NY 10017
www.businessexpertpress.com
ISBN-13: 978-1-60649-526-1 (paperback)
ISBN-13: 978-1-60649-527-8 (e-book)
Business Expert Press Quantitative Approaches to Decision Making
Collection
Collection ISSN: 2163-9515 (print)
Collection ISSN: 2163-9582 (electronic)
Cover and interior design by Exeter Premedia Services Private Ltd.,
Chennai, India
First edition: 2014
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
Abstract
Operations Research is a bouquet of mathematical techniques that have
evolved over the last six decades to improve the process of business deci-
sion making. Operations Research offers tools to optimize and find the
best solutions to myriad decisions that managers have to take in their day
to day operations or while carrying out strategic planning. Today, with
the advent of operations research software, these tools can be applied by
managers even without any knowledge of the mathematical techniques
that underlie the solution procedures.
The book starts with a brief introduction to various tools of oper-
ations research, such as linear programming and integer programming
together with simple examples formulated and solved using the opera-
tions research software LINGO.
The book intends to make the readers aware of the power and poten-
tial of operations research in addressing decision making in areas of
operations, supply chain, and financial and marketing management. The
approach of this book is to demonstrate the solution to specific problems
in these areas using operations research techniques and LINGO software.
The reader is encouraged to use the accompanying software models to solve
these problems, using detailed do-it-yourself instructions and the limited
version of LINGO software available at the “Downloads-Try Lingo” tab
of the website www.lindo.com. The intended outcome for readers of this
book will be gaining familiarity with and an intuitive understanding of
the various tools of operations research and their applications to various
business situations. It is expected that this will give the readers the ability
and confidence to devise models for their own business needs.
Keywords
operations research, linear programming, integer programming, heuris-
tics, queues, supply chain models, marketing models, operations models,
financial models

Contents
Section 1 Introduction to Operations Research ��������������������������1
Chapter 1 Introduction to Operations Research and Guide
to LINGO Software ........................................................3
Section 2 Applications in Operations Management ������������������31
Chapter 2 Product Mix ..................................................................33
Chapter 3 Facility Location ............................................................35
Chapter 4 Cable Layout .................................................................45
Chapter 5 Planning Check-in Counters .........................................53
Chapter 6 Scheduling of a Production Line ....................................55
Chapter 7 Shift Staff Planning........................................................61
Chapter 8 Production Planning......................................................67
Chapter 9 Blending of Dog Diet ....................................................71
Chapter 10 Paper Roll Trimming .....................................................73
Section 3 Applications in Supply Chain Management ��������������77
Chapter 11 Multicommodity Transport Planning ............................79
Chapter 12 Single Delivery Truck Routing .......................................87
Chapter 13 Multiple Delivery Trucks Routing .................................93
Chapter 14 Supplier Selection with Multiple Criteria .......................97
Section 4 Applications in Marketing Management �����������������103
Chapter 15 Revenue Management .................................................105
Section 5 Applications in Financial Management �������������������109
Chapter 16 Portfolio Management .................................................111
viii Contents
Chapter 17 Capital Budgeting �������������������������������������������������������115
Chapter 18 Bank Asset Liability Management ��������������������������������117
Chapter 19 Index Fund Construction ��������������������������������������������123
Section 6 Applications in Transport Management ������������������127
Chapter 20 Airline Network Design �����������������������������������������������129
Chapter 21 Performance Measurement Using Data
Envelopment Analysis �������������������������������������������������137
Notes143
References 147
Index 149
SECTION 1
Introduction to
Operations Research