Operations Research and Management Science

The terms Operations Research and Management Science tend to be used synonymously.
Operations research (or operational research, as it's called in Europe) refers to scientific methods
(statistical and mathematical modeling, experiments, simulation, and optimization) applied to the
solution of complex business problems. Operations research is about deriving optimal solutions to
maximize sales or profits and/or to minimize costs, losses, or risks.
The basic tools of operations research are probability theory, Monte Carlo methods, stochastic
processes, queuing models, transportation models, network models, game theory, linear and nonlinear
programming, dynamic programming, Markov decision processes, input-output analysis, choice
modeling, econometric modeling, and other mathematical techniques and algorithms. The ultimate
goal is to create a mathematical model that simulates real-world processes and systems so that
optimal solutions can be found. Computer science technologies and software development capabilities
are often critical components in successful operations research projects.

Distribution system optimization. What is the optimal number of warehouses, trucks and
routes to minimize out-of-stocks, or minimize distribution costs or maximize delivery speeds?
Where should the warehouses be located? What are the most efficient delivery routes? What
size should the trucks be? How should the products be packaged and palletized for most
efficient shipping?

Retail site selection optimization. Which markets offer the greatest potential for new retail
outlets? What store density maximizes sales revenue or profits? Whats the interaction
between advertising investments and number of retail units? What sections of a metropolitan
area offer the greatest potential for new retail units? What specific retail locations will yield the
greatest return on investment? What deployment of retail units minimizes supply chain and
distribution costs?

Store design optimization. What type of store design will maximize consumer visits, time
spent in store, or sales? What elements of store design are most important to consumers, and
what arrangements of these elements are optimal? How should store design vary to maximize
appeal to a particular demographic target or for a given location? What product mix
corresponds to and supports the optimal store design?

Store merchandise optimization. What is the optimal mix of merchandise in a given store
to maximize sales or profits? How should this optimal mix vary across different types of
geographic areas and demographic groups? How should this product mix vary throughout the
business cycle? What are the optimal marketing elements to support the optimal merchandise
mix?

Retail category optimization. There are many categories of products within a retail store.
Retailers often strive to maximize sales within each category. What is the optimal mix of
brands, sizes, and facings to increase category sales? Will optimization of one category
negatively affect other categories? How can product categories be optimized without hurting
overall store sales?

Supply chain optimization. Whats the optimal way to manage the flow of raw materials,
components, and supplies from various vendors to the manufacturer, under conditions of
varying and uncertain demand?

Manufacturing/Production optimization. What organization, machines, processes, and

work flows will maximize quality, minimize costs, and maximize output? Optimizing
manufacturing processes must be closely integrated with optimization of the related supply
chain and distribution system.

Network optimization. How should airports be designed to handle luggage and passenger
flow? How should traffic lights be organized and timed to maximize traffic flow? What is the
optimal design of an electrical grid or a communications network?

Transportation optimization. What route structure minimizes the number of trucks,

railcars, or school buses needed to achieve a certain service threshold or minimizes waiting
times? Which common carriers provide the most efficient distribution services for a particular
business? How should these transportation solutions vary as conditions change (weather, time
of day, traffic density, etc.)?

Scheduling optimization. What type of schedule or scheduling system will yield the greatest
revenue, minimize costs, reduce delivery times, or meet other objectives? How should
scheduling change as conditions and the business environment change?

Strategy optimization. What markets, technologies, systems and processes, products and
services, and positioning and messages will achieve the greatest long-term success for a given
brand, business unit, or corporation? That is, what is the optimal business model for a given
company in a given industry?

Trading and markets optimization. Some problems can be addressed via artificial markets
(e.g., cap and trade) wherein interested parties bid against each other and trade with each
other. What is the optimal way to build such a market, and how can the results be evaluated
and understood?

Analytical Consulting Services

Decision Analysts strengths in statistics and mathematics, simulation, modeling, and optimization
provide the analytical foundation to address complex business and strategy problems.
If your company is facing tough, complex decisions and wants to improve its strategy and
performance, Operations Research and Management Science offer powerful analytical tools to help you
make the very best decisions.