Each year, the Franz Edelman competition recognizes outstanding examples of Operations Research (O.R.)-based projects that have transformed companies, entire industries and people's lives. O.R. uses advanced analytical methods to make better decisions and is a disciplined way to improve almost any business situation in nearly any type of organization in the public or private sector. Past Franz Edelman winners have included General Motors, which used O.R. to save more than $2 billion through improved productivity at 30 assembly plants in 10 countries, and a team from the city of New Haven and Yale who won for preventing AIDS through an innovative needle exchange program.
"O.R. is more important today than at any time since it first came to prominence during World War II," said Mark Doherty, Executive Director, INFORMS. "For the last 35 years we've recognized the best work in the discipline and many of our award winners have proved transformative. For example, pricing policies known as revenue or yield management pioneered by Franz Edelman Award-winner American Airlines have become the norm. Each of these finalists lives up to that standard."
Ranging widely in industry and geographic origin, the 2006 Franz Edelman finalists are: Animal Health Institute and Cox Associates; The US Commercial Aviation Partnership, comprising Airports Council International - North America, Air Transport Association, Department of Homeland Security, Department of Transportation, The Boeing Company, and the Transportation Security Administration; Omya Hustadmarmor and Møre Research/ Molde University College; Travelocity and Sabre Holdings; and Warner Robins Air Logistics Center and the University of Tennessee. Descriptions follow:
Animal Health Institute and Cox Associates: Quantitative risk analysis for animal antibiotics.
For decades, scientists, consumers and politicians have struggled with the possible human health effects of using antibiotics on animals. Proponents held that healthier animals make for a safer food supply and healthier people; opponents countered that scarce antibiotics shouldn't be wasted on animals, especially if doing so runs the risk of increasing antibiotic-resistant strains of disease. The dearth of evidence led politicians in Europe to apply the Precautionary Principle by banning antibiotics used for growth promotion in food animals; American politicians debated the same move.
Applying O.R. techniques and models, the Animal Health Institute (AHI), along with its member companies and outside O.R. firm Cox Associates, created new ways to inform this debate. They created new methods that succeeded in applying available science and data to quantify the potential human health impacts of specific animal antibiotic uses, despite uncertainties and data gaps. The quantitative bounding methods and results showed that the quantitative risks to human health from specific important animal antibiotics are minimal and that the greater risk could arise from not treating animals. Armed with these methods and results, regulators and scientists in the US were able to agree that the quantitative human health risks from continued use of specific animal antibiotics to prevent animal illnesses appear to be relatively minor. To date, none of these animal antibiotics has been banned. As predicted, continued prudent use has been accompanied by steady reductions in human health risks from food borne illnesses. By showing how to quantify previously unquantifiable human health risks, AHI and Cox Associates have helped to create a powerful role for using quantitative science and data in the worldwide debate on appropriate risk management of animal antibiotics.
The US Commercial Aviation Partnership: Industry-government coalition ensures a balance between security and aviation-system performance.
Since 9/11, there has been an outpouring of support for measures aimed to increase the security of the air transport system. However, in an era of limited resources and with airlines standing on the brink of bankruptcy, it is vital government decision-makers have the right information to help them implement measures that strike the right balance between truly enhanced security and the continued vitality of the air transport system.
To meet this goal, a consortium comprising government, airlines and industry formed the US Commercial Aviation Partnership (USCAP). USCAP used Operations Research to create a unique model and analytical process that combines system dynamics with econometrics to provide a 30-year evaluation of the impacts of proposed security measures on each key stakeholder. Members of USCAP include Airports Council International - North America, Air Transport Association, Department of Homeland Security, Department of Transportation, The Boeing Company, and the Transportation Security Administration.
Omya Hustadmarmor and Møre Research / Molde University
College: Optimizing the supply chain of calcium carbonate slurry to the European paper-making industry.
Planning shipments throughout Europe can be like a massive Sudoku game. From a single processing plant, Norwegian company Omya Hustadmarmor supplies calcium carbonate slurry to the paper manufacturers throughout Europe. For shipping planners, an important rule is that using bigger boats to ship goods lowers the cost per unit. But the little boats provide more flexibility to get the goods to customers when things happen at sea, ships are delayed or disabled, weather gets in the way, and customer orders are changed. Planning the optimal shipments and making sure they get to their locations on time often requires intricate maneuvers that are difficult to do by hand, even more difficult without the use of smaller ships.
Møre Research / Molde University College and Omya Hustadmarmor conducted a project that led to the development of a Decision Support System built on concepts of O.R. The system, implemented by Optimal Logistics, provides planners with the information they need to make stronger and faster decisions. The resulting system saves several million dollars a year by optimizing distribution, reducing costs and lowering overall oil consumption by more than 10 percent. This enabled Omya Hustadmarmor to limit price increases and aided a planned expansion into additional markets.
Travelocity & Sabre Holdings: Supporting Travelocity's transition to travel retailer and an economic turnaround.
In 2002, a changing business and competitive landscape forced online travel agency Travelocity to shift its current business model due to losses in both revenue and market share. In order to thrive in a new business environment and regain share, Travelocity needed to become an active retailer by negotiating marketing agreements with suppliers (airlines, hotels, etc.), managing web content and expanding into more profitable lines of business.
Using O.R., Travelocity Revenue Management and Sabre Research Group collaborated to improve Travelocity's performance through modeling of customer behavior, product pricing and analyzing supplier agreements. The result: since 2002, Travelocity has more than doubled its annual revenues and the O.R.-based models have contributed millions of dollars per year to Travelocity earnings.
Warner Robins Air Logistics Center and the University of Tennessee: Streamlined project management: the critical chain way.
In 2005, the Warner Robins Air Logistics Center (WR-ALC) in Georgia used operations research to arrive at a completely different method for managing the repair and overhaul activity on its C-5 transport aircraft. Working with Realization Technologies and faculty from the University of Tennessee, WR-ALC used an O.R. technique called Critical Chain to reduce the number of C-5 aircraft in the depot undergoing repair and overhaul from 12 to 7 in just eight months (March 2005-October 2005). As a direct consequence, the time required to repair and overhaul the C-5 aircraft has reduced by 33 percent.
The 5 additional aircraft now in operation have generated immediate additional revenue of at least $49.8 Million per year. The replacement value for these aircraft is estimated at $2.37 Billion. The additional workload the Center is accommodating in the dock spaces freed up will bring in additional revenue of $119 Million through 2008, with this number projected to increase to $248 Million by 2009.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.