Friday, 13 September 2013

The Impact of Operations Research on People, Business and Society

Last week the international conference on Operations Research OR2013 took place in Rotterdam. The conference was the result of the close corporation of the GermanOR society (GOR), the Erasmus University Rotterdam and the Dutch OR society.  The conference started with a keynote from Alexander Rinnooy Kan, an expert in our field and several times ranked as the most influential Dutch Person, on “How to educate Operations Research practitioners”.  Key point in his lecture was that although Operations Research practitioners have been successful in applying their knowledge, continued education is of great importance. The obvious reason is keeping pace with new developments in research; on the other hand trends like Big Data give rise to new problems and applications, here research and practice can go hand in hand. The OR2013 conference programme had a special plenary session, led by the Chair of the Amsterdam Business School Marc Salomon, in which special attention was given to the impact of Operations Research on people, business and society.  Over 50 C-suite business representatives attended the plenary as a special guest.

Wim Fabries of Dutch Railways
The session started with Wim Fabries, Director of Transport and board member of the passenger division of Dutch Railways. Fabries illustrated that providing reliable rail transportation is complex, requiring many interrelated decisions concerning the time table, rolling stock and crew. To support these decisions Dutch Railways has a special department, the department of Process Quality and Innovation, which uses Operations Research to support these decisions. The Operations Research practitioners of Dutch Railways had their finest hour when a new and robust time table had to be constructed which facilitated the growing passenger and freight transport on the already highly utilized railway network. The new schedule was successfully launched in December 2006, providing a daily schedule for about 5,500 daily trains. This “tour de force” was rewarded with the Franz Edelman award in 2008. Fabries indicated that Operations Research continues to be of high importance. For example in effectively managing disruptions or in constructing a reliable winter schedule so people can continue to use the trains with minimal impact on their travel plans.

Pieter Bootsma of AirFrance KLM
Pieter Bootsma, Executive Vice-President Marketing, Revenue Management and Network at Air France KLM, explained that without the use of Operations Research successfully running an airline would be impossible. In nearly every process within the company Operations Research is involved.  Whether it is in strategic planning, crew management, flight operations, planning of ground services or maintenance scheduling, without Operations Research managing these processes would be nearly impossible. Given the narrow margins in the airline industry, slight improvements in efficiency can make the difference between profit and loss. In his talk, Pieter Bootsma highlighted the use of OR in Revenue management.  The essence of revenue management is to use price or availability of seats to influence customer demand. By analysing booking behaviour of passengers, Air France KLM is able to estimate the willingness to pay a certain price of each passenger category. For example business people are willing to pay more for a seat than leisure passengers and they tend to book there flights closer to the actual departure date. With this knowledge Air France KLM can use the availability of seats and set the right price to maximize revenue. As a consequence availability and/or price of a passenger seat will vary over time. Revenue management has led to a paradigm shift in the airline business as it focusses on maximizing revenue, not the number of seats occupied. By many it has been coined the single most important technical development in transportation management, showing that Operations Research can be a disruptive technology.

Luke Disney of North Star Alliance
The impact of Operations Research on humanitarian assistance was illustrated by North Star Alliance Executive Director, Luke Disney. The North Star Alliance started as a practical industry response to an urgent health problem, the spread of HIV/AIDS among truck drivers in sub-Saharan Africa, negatively impacting the distribution of relief food to hungry communities. By establishing a network of drop-in health clinics, called Roadside Wellness Centres, at truck stops, ports, rail junctions and border crossings North Start Alliance can offer mobile populations like truck drivers with essential healthcare and information.  The access to healthcare allows truck drivers to get treatment when necessary while at work, securing the distribution of relief food and road transportation in Africa. Luke Disney highlighted the impact of Operations Research with Polaris; a model that is used to optimise the placement of new and repositioning of existing RWCs, including the optimisation of staffing and inventory levels. Key in building the network of RWCs is to improve the continuity of care along the trade lanes within Africa. Continuity of care ensures that truck drivers can have access to healthcare everywhere they go. Also it ensures that medical help is in the neighbourhood when assistance is required suddenly, for example when a truck driver gets Malaria or when he loses his pills while being treated for Tuberculosis or HIV. Since financial resources are limited, the Polaris model helps the North Star Alliance to gradually build a network, having the biggest increase in continuity of care for each dollar invested.

Operations Research has proved to be the best answer to handle complexity many times in the past. It came into existence during the 2nd world war, where mathematicians revolutionized the way wars are waged and won by applying mathematics to almost any challenge in warfare. Today Operations Research has found its way in many applications that impacts business, people and society. The above stories point this out very clear. You could say it is the least known most influential scientific practice of our time.

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