CHAPTER 1: INTRODUCTION

1-1

CHAPTER 1: INTRODUCTION

1.3-1Þ

Answers will vary.

1.3-2.

Answers will vary.

1.3-3.

By using operations research (OR), FedEx managed to survive crises that could drive it out of business. The new planning system provided more flexibility in choosing the destinations that it serves, the routes and the schedules. Improved schedules yielded into faster and more reliable service. OR applied to this complex system with a lot of interdependencies resulted in an efficient use of the assets. With the new system, FedEx maintained a high load factor while being able to service in a reliable, flexible and profitable manner. The model also enabled the company to foresee future risks and to take measures against undesirable outcomes. The systematic approach has been effective in convincing investors and employees about the benefits of the changes. Consequently, "today FedEx is one of the nation's largest integrated, multi-conveyance freight carriers" [p. 32].(Introduction to Operations Research 10e Fred Hillier ) (Solution Manual, For Complete File, Download link at the end of this File) 1 / 4

2-1

CHAPTER 2: OVERVIEW OF THE OPERATIONS RESEARCH

MODELING APPROACH

2.1-1.

(a) The rise of electronic brokerage firms in the late 90s was a threat against full-service financial service firms like Merrill Lynch. Electronic trading offered very low costs, which were hard to compete with for full-service firms. With banks, discount brokers and electronic trading firms involved, the competition was fierce. Merrill Lynch needed an urgent response to these changes in order to survive.(b) "The group's mission is to aid strategic decision making in complex business situations through quantitative modeling and analysis" [p.8].(c) The data obtained for each client consisted of "data for six categories of revenue, four categories of account type, nine asset allocation categories, along with data on number of trades, mutual fund exchanges and redemptions, sales of zero coupon bonds, and purchases of new issues" [p. 10].(d) As a result of this study, two main pricing options, viz., an asset-based pricing option and a direct online pricing option were offered to the clients. The first targeted the clients who want advice from a financial advisor. The clients who would choose this option would be charged at a fixed rate of the value of their assets and would not pay for each trade. The latter pricing option was for the clients who want to invest online and who do not want advice. These self-directed investors would be charged for every trade.(e) "The benefits were significant and fell into four areas: seizing the marketplace initiative, finding the pricing sweet spot, improving financial performance, and adopting the approach in other strategic initiatives" [p.15].

2.1-2.

(a) This study arose from GM's efforts to survive the competition of the late 80s. Various factors, including the rise of foreign imports, the increase in customer expectations and the pricing constraints, forced GM to close plants and to incur large financial losses.While trying to copy Japanese production methods directly, GM was suffering from "missing production targets, working unscheduled overtime, experiencing high scrap costs, and executing throughput-improvement initiatives with disappointing results" [p.7]. The real problems were not understood and the company was continuously losing money while the managers kept disagreeing about solutions.(b) The goal of this study was "to improve the throughput performance of existing and new manufacturing systems through coordinated efforts in three areas: modeling and algorithms, data collection, and throughput-improvement processes" [p. 7].(c) The data collection was automated by using programmable logic controllers (PLCs).The software kept track of the production events including "machine faults and blocking and starving events" [p. 13] and recorded their duration. The summary of this data was then transferred to a centralized database, which converted this to workstation- performance characteristics and used in validating the models, determining the bottleneck processes and enhancing throughput.(d) The improved production throughput resulted in more than $2.1 billion in documented savings and increased revenue. 2 / 4

2-2

2.1-3.

(a) The San Francisco Poice Department has a total police force of 1900, with 850 officers on patrol. The total budget of SFPD in 1986 was $176 million with patrol coverage cost of $79 million. This brings out the importance of the problem .Like most police departments, SFPD was also operated with manually designed schedules. It was impossible to know if the manual schedules were optimal in serving residents' needs. It was difficult to evaluate alternative policies for scheduling and deploying officers. There was also the problem of poor response time and low productivity, pressure of increasing demands for service with decreasing budgets. The scheduling system was facing the problem of providing the highest possible correlation between the number of officers needed and the number actually on duty during each hour. All these problems led the Task Force to search for a new system and thus undertake this study.(b) After reviewing the manual system, the Task Force decided to search for a new

system. The criteria it specified included the following six directives:

-- the system must use the CAD (computer aided dispatching ) system, which provides a large and rich data base on resident calls for service. The CAD system was used to dispatch patrol officers to call for service and to maintain operating statistics such as call types, waiting times, travel time and total time consumed in servicing calls. The directive was to use this data on calls for service and consumed times to establish work load by day of week and hour of day.-- it must generate optimal and realistic integer schedules that meet management policy guidelines using a computer.-- it must allow easy adjustment of optimal schedules to accommodate human considerations without sacrificing productivity.-- it must create schedules in less than 30 minutes and make changes in less than 60 seconds.-- it must be able to perfonn both tactical scheduling and strategic policy testing in one integrated system --the user interface must be flexible and easy, allowing the users (captains) to decide the sequence of functions to be executed instead of forcing them to follow a restrictive sequence.

2.1-4.

(a) Taking all the statistics of AIDS cases into account it was inferred that just one-third of all cases nation-wide involved some aspect of Injection Drug Use(IDU). But in contrast to this national picture, over 60% of 500 cases reported in New Haven , Connecticut was traced to drug use. Though it was realized previously, by 1987 it was clear that the dominant mode of HIV transmission in New Haven was the practice of needle sharing for drug injection.This was the background of the study and in 1987 a street outreach program was implemented which included a survey of drug addicts with partial intent to detennine why lDUs continued to share needles given the threat of HIV infection and AIDS. h was claimed by the survey respondents that IDUs shared needles since they were scared and feared arrest for possessing a syringe without prescription which was forbidden by law in Connecticut. Respondents also pointed out difficulties involved in entering drug treatment program . The officials recognized that logical intervention was needle exchange whereby IDUs exchanged their used needles for clean ones. This would remove 3 / 4

2-3 infectious drug injection equipment from circulation and also ease access to clean needles. Further, contacts made as a result of needle exchange m ight lead some active lDUs to consider counseling or enter drug treatment. After a lot of lobbying finally the bill for the first legal needle exchange program became effective on July 1, 1990.(b) The design for the needle exchange program was achieved over the summer of 1980.The relevant committee decided that IDUs would be treated with respect and so no identification information was asked of program clients. The program began operating on November 13, 1990.The needle exchange operate on an outreach basis. A van donated by Yale university visits neighborhoods with high concentration of IDUs. Outreach staff members try to educate the clients over there by different means like distributing literature documenting risks of HIV infection, dispensing condoms , clean packets, etc.The primary goal of needle exchange is to reduce incidence of new HIV infection among IDUs. While studies showed consistent self-reported reductions in risky behavior among lDUs participating in needle exchange programs the studies were not convincing.So the mechanics of needle exchange require that the behavior of needles must change.What was required was to reduce the time needles spend circulating in the population. As needles circulate for shorter period of time, needles share fewer people which lower the number of infected needles in the pool of circulating needles which in effect lowers chances of an IDU becoming infected being injected with a previously infected needle.To use this theory required invention of new data collection system which is as follows.A syringe tracking and testing is a system developed to interview the needles returned to the program. All clients participating in the needle exchange are given unique code names and every needle distributed receives a code. Every time a client exchanges needles, an outreach worker records the date and location of exchange. He also records the code name of the client receiving the needles alongside the codes of the needles.The client then places the returned needles in a canister to which the worker puts a label with the date and location of exchange and code name of client.All returned needles are brought to a laboratory at Yale University where a technician collates the information on the canister labels with the tracking numbers on the returned needles . For non-program or street needles returned to needle exchange, the location, date, and client code are recorded. A sample of the returned needles are tested for HIV.

• / 4