After Sept. 11, U.S. water utilities had a major problem to solve: Because the physical layout of the nation’s drinking water system leaves it vulnerable to contamination by terrorists, water utilities had to determine how and where to detect tampering.

“Water utilities were interested in putting sensor technology throughout the water system in order to detect contaminants,” explains Regan Murray, a research scientist with the U.S. Environmental Protection Agency, who partnered with the American Water Works Association in 2003 to research potential solutions. “Most water systems have thousands of miles of pipes, so to select a handful of locations for sensors is not an easy or obvious task.”

The obvious solution, according to Murray, was to tap in-house experts, who could select the best locations based on their own knowledge. Researchers wondered, however, if there might be a better, more reliable way. So, they turned to operations research, a scientific process whereby problems are translated into mathematical models that computers can process in order to determine the most effective and efficient solutions.

“What we found was that in every case we studied—we looked at nine different water utilities—the operations research method did about 80 percent better than the water experts,” Murray says. “The reason is not that the water experts weren’t good—they were very good—but that with these types of situations, there are so many variables involved that it’s hard for one person to wrap his or her mind around the whole problem.”

Based on its research, the EPA created software to help water utilities optimize their distribution systems. The utilities supply data about variables within their systems, and the software uses algorithms to advise them on sensor design, placement and system implementation.

For its efforts, the Institute for Operations Research and the Management Sciences selected the EPA as one of six finalists for this year’s Franz Edelman Award for Achievement in Operations Research and the Management Sciences, which recognizes outstanding problem solving by systems engineers. Among this year’s finalists were the Federal Aviation Administration (FAA), which designed a tool to help manage airspace congestion; Xerox, which developed a scheduling framework to help commercial printers be more productive; and this year’s winner, Netherlands Railways, which created a new timetable for trains on the Dutch passenger railway network.

O.R. and You

Although large corporations and government bodies are leading the way with operations research, companies of all types and sizes can benefit from it, according to Cynthia Barnhart, president of INFORMS and co-director of the Center for Transportation & Logistics, MIT’s operations research center.

“The wonderful thing about operations research is that its applications can be pervasive into any decision you have,” she says.

Indeed, O.R. can help you solve almost any problem. It can save time, money and, in the case of the EPA, lives. To find out how O.R. can help your business, consider these answers to commonly asked questions:

• What is O.R.? Simply put, O.R. is problem solving. “It’s the use of analytics to gain insight about your business and to help make decisions that can have economic benefit,” Barnhart says.
• How does O.R. work? If the objective of O.R. is better decision-making, then the means is better information. Therefore, O.R. works by collecting data related to a problem and feeding it into a computer that can analyze and interpret it. More than spreadsheets, O.R. tools enable businesses to forecast individual problems and optimize solutions. They do that with simulations, allowing companies to virtually test theories and situations; optimization, helping companies narrow their choices when there are infinite possibilities; and statistics, enabling companies to collect data and measure risk by isolating probable outcomes.
• What’s the business benefit of O.R.? O.R. gives businesses more complete data so they can consider all available options. As a result, it helps businesses save time and make money by helping them predict outcomes, reduce risks and maximize productivity, according to Barnhart. “When you’re trying to solve complex problems, even though lots of experience and intuition serves you really well, it’s not enough,” she says. “Analytical tools provide insights about what-if scenarios; you can construct a lot of different scenarios and see the results of how your strategy ought to change.”
• How can my business use O.R.? Businesses can use O.R. to enhance virtually any process. Airlines use it to schedule planes and crews, theme parks to design waiting line formations and manufacturers to develop new products, source materials, manage inventory and organize employees. The potential is infinite, Barnhart suggests.
  
• Where do I start? While there are out-of-the-box business analysis programs available, such as SAP or Oracle’s ERP suite, the most effective O.R. tools are custom-built. To get the ball rolling on custom research, Barnhart recommends partnering with an O.R. expert who can help you ask questions and develop tools for answering them. You can find O.R. consultants via INFORMS, which has more than 11,000 members, or at universities, which often have O.R. programs. Meanwhile, if you need an O.R. expert on staff, look for systems engineers who specialize in O.R., or for MBA’s who are trained in business analysis.
  

To learn more about operations research and how it can help your business, visit www.scienceofbetter.org.

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