Course title: Applied Methods of

Operations Research in Agriculture

• Course code: AGEC 531

• Credit hrs: 3
By

Mebratu Alemu (PhD)

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 Chapter 1: Introduction to
Operations Research
• Development of operation research
• 1.1. Definitions and scope of operations research
• 1.2. Overview of the operations research
modeling approach
• 1.3. Applications of operations research

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 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 applications areas of Operations
Research include forecasting, production
scheduling, inventory control, capital budgeting,
and transportation.

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 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,
candidate solutions.
 
Operations Research is a quantitative approach to
decision making based on the scientific method of problem
solving. 4
 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
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 What Do We do
1. OR professionals aim to 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 models of organizational systems
composed of people, machines, and procedures.

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 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").

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 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
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 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.

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 History of OR

• OR is a relatively new discipline.

• 100 years ago it would have been possible to
study mathematics, physics or engineering at
university it would not have been possible to
study OR.
• It was really only in the late 1930's that
operationas research began in a systematic
way. 10
1890 1900 1910 1920
Frederick Taylor •Henry Gannt •F. W. Harris •William Shewart
Scientific [Project Scheduling] [Inventory Theory] [Control Charts]
Management •Andrey A. Markov •E. K. Erlang •H.Dodge – H.Roming
[Industrial [Markov Processes] [Queuing Theory] [Quality Theory]
Engineering] •Assignment
[Networks]

1960 1950 1940 1930

•John D.C. Litle •H.Kuhn - A.Tucker •World War 2 Jon Von Neuman –
[Queuing Theory] [Non-Linear Prog.] •George Dantzig Oscar Morgenstern
•Simscript - GPSS •Ralph Gomory [Linear [Game Theory]
[Simulation] [Integer Prog.] Programming]
•PERT/CPM •First Computer
•Richard Bellman
[Dynamic Prog.]
ORSA and TIMS

1970 1980 1990 2017

•Microcomputer •H. Karmarkar •Spreadsheet •You are here
[Linear Prog.] Packages
•Personal computer •INFORMS
•OR/MS Softwares

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 Introduction..contd..
• In the area of agriculture and irrigation also
OR can be useful for project management,
construction of major dams at minimum cost,
optimum allocation of supply and collection
points for fertilizer/seeds and agriculture
outputs and optimum mix of fertilizers for
better yield.

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 OR in Agriculture
• Understanding and managing systems based on
agriculture or forestry resources is complex for several
reasons:
• 1. we must consider the sustainability of the underlying
natural system

• 2. we should take into account the underlying

complexity of the growth and harvesting system

• 3. we must consider the r/nship b/n production,

processes, and general env’tal, economic and social
issues. 13
 OR in Agriculture…..
• Common Problems
– Scarcity
– Env’tal effects and prodn.
– Need for efficient production process
Decision Makers have used the basic Lp model to:
1. Determining the optimum cropping pattern
2. Analyze interdependence of parts of the farm
3. Investigate the optimal sizes of different types of fixed
equipment and machines to add to farm products
4. To assess and stimulate the economic input of policy
changes on farmer’s incomes and production patterns
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Problem Solving and Decision Making
• Problem solving is defined as the process of identifying a
difference b/n the actual & the desired state of affairs &
then taking action to solve the difference.
• 7 Steps of Problem Solving
(First 5 steps are the process of decision making)
– 1. Identify and define the problem.
– 2. Determine the set of alternative solutions.
– 3. Determine the criteria for evaluating the alternatives.
– 4. Evaluate the alternatives.
– 5. Choose an alternative.
– 6. Implement the chosen alternative.
– 7. Evaluate the results. 15
 Quantitative Analysis and Decision Making
• Potential Reasons for a Quantitative Analysis Approach to Decision Making
– The problem is complex.
– The problem is very important.
– The problem is new.
– The problem is repetitive.

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 Problem Solving Process
Formulate the
Problem
Situation Problem
Implement a Solution Statement
Goal: solve a problem
• Model must be valid Data
• Model must be Construct
a Model
tractable
Implement
• Solution must be the Solution

useful Model

Solution
Find
a Solution
Establish
a Procedure

Test the Model

and the Solution Solution Tools
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 The Situation
• May involve current operations
or proposed expansions due to
expected market shifts
Situation
• May become apparent through
consumer complaints or through
employee suggestions
Data • May be a conscious effort to
improve efficiency or response to
an unexpected crisis.

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 Problem Formulation
Formulate the
Problem
Situation Problem
Statement

Data

• Describe system • Define variables

• Define boundaries • Define constraints
• State assumptions • Data requirements
• Select performance measures

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 Data Preparation
• Data preparation is not a trivial step, due to the
time required and the possibility of data
collection errors.
• A model with 50 decision variables and 25
constraints could have over 1250 data
elements!
• Often, a fairly large data base is needed.
• Information systems specialists might be
needed.
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 Constructing a Model
Situation Problem
• Problem must be translated Formulate the
statement

from verbal, qualitative terms Problem

to logical, quantitative terms Data

• A logical model is a series of Construct

a Model
rules, usually embodied in a
computer program
Model
• A mathematical model is a collection of
functional r/nships by w/c allowable actions
are delimited and evaluated.

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 Model Development
• Models are representations of real objects or
situations.
• Three forms of models are iconic, analog, and
mathematical.
– Iconic models are physical replicas (scalar
representations) of real objects.
– Analog models are physical in form, but do not
physically resemble the object being modeled.
– Mathematical models represent real world problems
through a system of mathematical formulas and
expressions based on key assumptions, estimates, or
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statistical analyses.
 Advantages of Models
• Generally, experimenting with models
(compared to experimenting with the real
situation):
– requires less time
– is less expensive
– involves less risk

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 Mathematical Models
• Cost/benefit considerations must be made in
selecting an appropriate mathematical model.
• Frequently a less complicated (and perhaps
less precise) model is more appropriate than a
more complex and accurate one due to cost
and ease of solution considerations.

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 Mathematical Models
• Relate decision variables (controllable inputs) with fixed
or variable parameters (uncontrollable inputs).
• Frequently seek to maximize or minimize some objective
function subject to constraints.
• Are said to be stochastic if any of the uncontrollable
inputs (parameters) is subject to variation (random),
otherwise are said to be deterministic.
• Generally, stochastic models are more difficult to
analyze.
• The values of the decision variables that provide the
mathematically-best output are referred to as the optimal
solution for the model. 25
 Transforming Model Inputs into
Output
Uncontrollable Inputs
(Environmental Factors)

Controllable
Mathematical Output
Inputs
Model (Projected Results)
(Decision Variables)

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 Example: Project Scheduling
Consider a construction company building a 250-
unit apartment complex. The project consists of
hundreds of activities involving excavating, framing,
wiring, plastering, painting, landscaping, and more.
Some of the activities must be done sequentially and
others can be done simultaneously. Also, some of the
activities can be completed faster than normal by
purchasing additional resources (workers, equipment,
etc.).
What is the best schedule for the activities and for
which activities should additional resources be
purchased? 27
 Example: Project Scheduling
• Question:
Suggest assumptions that could be made to simplify
the model.
• Answer:
Make the model deterministic by assuming normal and
expedited activity times are known with certainty and
are constant. The same assumption might be made
about the other stochastic, uncontrollable inputs.

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 Example: Project Scheduling
• Question:
How could management science be used to
solve this problem?
• Answer:
Management science can provide a
structured, quantitative approach for
determining the minimum project
completion time based on the activities'
normal times and then based on the
activities' expedited (reduced) times. 29
Example: Project Scheduling
• Question:
What would be the uncontrollable
inputs?
• Answer:
– Normal and expedited activity completion
times
– Activity expediting costs
– Funds available for expediting
– Precedence relationships of the activities
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 Example: Project Scheduling
• Question:
What would be the decision variables of the
mathematical model? The objective function?
The constraints?
• Answer:
– Decision variables: which activities to expedite and
by how much, and when to start each activity
– Objective function: minimize project completion time
– Constraints: do not violate any activity precedence
relationships and do not expedite in excess of the
funds available. 31
 Example: Project Scheduling
• Question:
Is the model deterministic or stochastic?
• Answer:
Stochastic. Activity completion times, both normal and
expedited, are uncertain and subject to variation. Activity
expediting costs are uncertain. The number of activities
and their precedence relationships might change before
the project is completed due to a project design change.

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 Solving the Mathematical Model
• Many tools are available as
Model discussed before
Find a
• Some lead to “optimal”
solution solutions (deterministic
Models)
• Others only evaluate
candidates  trial and
Solution Tools error to find “best” course
of action

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 Model Solution
• Involves identifying the values of the decision variables that
provide the “best” output for the model.
• One approach is trial-and-error.
– might not provide the best solution
– inefficient (numerous calculations required)
• Special solution procedures have been developed for specific
mathematical models.
– some small models/problems can be solved by hand
calculations
– most practical applications require using a computer

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 Implementation
• A solution to a problem usually
Situation
implies changes for some
individuals in the organization
• Often there is resistance to
change, making the
Implement implementation difficult
the Procedure
• User-friendly system needed
• Those affected should go
Procedure
through training

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 Implementation and Follow-Up
• Successful implementation of model results is of
critical importance.
• Secure as much user involvement as possible
throughout the modeling process.
• Continue to monitor the contribution of the model.
• It might be necessary to refine or expand the
model.

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 Report Generation
• A managerial report, based on the results of the
model, should be prepared.
• The report should be easily understood by the
decision maker.
• The report should include:
– the recommended decision
– other pertinent information about the results (for
example, how sensitive the model solution is to the
assumptions and data used in the model)

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 Examples of OR Applications
• Planning production for agricultural produce
• Scheduling equipment operators in supply &
distribution centers
• Developing routes for agr. transportation
• Adjusting SS requirments in light of daily
fluctuations in demand

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 1
Problem formulation

Steps in OR 2
Study Model building

3
Data collection

4
Data analysis

5
Coding

Model No
6 Fine-tune
verification and model
validation

Yes

7
Experimental design

8
Analysis of results 39
Success Stories of OR

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 Application Areas

• Strategic planning
• Supply chain management
• Pricing and revenue management
• Logistics and site location
• Optimization
• Marketing research
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 Applications Areas (cont.)
• Scheduling
• Portfolio management
• Inventory analysis
• Forecasting
• Sales analysis
• Auctioning
• Risk analysis
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 What you Should Know about
Operations Research
• How decision-making problems are
characterized
• OR terminology
• What a model is and how to assess its value
• How to go from a conceptual problem to a
quantitative solution

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Chapter 2:Linear Programming and non-linear
programming problem

1. Basic Concepts in Linear Programming

• Formulations of LPP
• Assumptions of linear programming
Methods of Solving LP (The Graphic Method and the
Simplex Method)
2.Tie Breaking in simplex method
3.The artificial variable (The Big M) technique
4. Minimization

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 Chapter 3: Duality theory and sensitivity analysis

1.1. The essence of Duality theory

1.2. Economic interpretation of Duality
1.3. Primal-Dual relationship
1.4. The role of duality theory in sensitivity analysis
1.5. Sensitivity analysis

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 Chapter 4: Integer Programming

4.1. Need for Integer Programming

4.2. Gomory’s Fractional Method
4.3. Branch- and- Bound Method

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Chapter 5: Special types of linear programming

5.1. Transportation problem

5.1.1. Formulation/construction of the model
5.1.2. Methods of solving Transportation problems
5.1.3. Special Cases in Transportation problem
5.2. Assignment problem
5.2.1. Formulation/construction of the model
5.2.2. Methods of solving assignment problems
5.2.3. Special cases in assignment problems

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 Chapter 6: Network Analysis with CPM and PERT

6.1. Basic concepts on net work

6.2. The critical path method (CPM)
6.3. Program evaluation and review technique (PERT)

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