Scaling down OR is an opportunity

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Scaling down OR is an opportunity

On October 31, 2012, Posted by , In business,operations research,software, With 3 Comments

A lot of researchers and practitioners make good use of Operational Research (OR) in order to optimise, solve problems and real life issues, and help make better decisions. However, I have been concerned about the scale of the projects that are being publicised; maybe it is that only the big guys problems or the massive OR deployments are the ones that get to be known. Or maybe, as OR-ers we are losing the big opportunity to use our knowledge for the good of the small and medium businesses (SMBs).


Taking this into account, from Matter of BIZ I have started to develop small software apps that bring ‘old models’ to the mobile phones of SMBs owners and managers. Take for instance, our first two apps:

 

  • Simple Z-Score Calculator; an implementation of Altman’s Z-score index to help estimate business default.

Android app on Google Play

  • Simple EOQ Calculator; it calculates the optimal order size either when demand is certain (EOQ model) or uncertain (Newsvendor model).

Android app on Google Play

 

As you see, last century models; ‘oldies but goldies’, models that are taught at introductory OR and management courses alike, but that, as far as I know, SMBs do not use even when they could obtain better efficiencies. So, what do you think? Is scaling down OR a real opportunity? Is this the best way to promote OR within small businesses?

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  • Paul Rubin

    I +hope+ that people will look harder at “scaling down” OR, but I think we may run into two hurdles. The first is money. Apps like those you are producing may help with simple, “standard” problems, but in many cases the real benefit of OR stems from having an analyst study, model and produce recommendations for a specific situation. If the analyst is willing to do this pro bono, great; but if the analyst wants to make a living doing this, SMB customers may not be sufficiently lucrative. The second hurdle is availability of data. I suspect that many SMBs are at best haphazard collecting data, and at worst don’t collect or store it at all (other than whatever is required by their accountants). If that’s the case, a “data” intervention is required before any problem solving can take place.

  • kproductivity

    Good points, Paul. I think people that would use the apps are not in the same bucket that would employ OR analyst. Howeeeveer, this brings us to the second point: if the problem is data availability, they should be needing expert help anyway. Having already thought of that I’m trying to find second-best solutions (i.e. EOQ is fairly unsensitive to data errors or, on other terms, it does work in wide ranges). But just because of that approach, I am going to need to be more careful, since there is no OR-er to double check when the app says Y or Z.

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