Webinar by Prof José Fernando Oliveira, Head of the Department of Industrial Engineering and Management, University of Porto

Title

Tackling uncertainty in combinatorial optimization problems: using metaheuristics to efficiently co-generate scenarios and solutions.

Abstract

Uncertainty is receiving increasing attention, in the past years, from the Operational Research community. Methods that acknowledge uncertainty and incompleteness of information are an important research trend. Scenarios arise as key components in many of these methods, as instruments to deal with uncertainty. However, the scenario generation process is often unrealistically simplified.

We propose that metaheuristics, namely based on genetic algorithms, can generate relevant and complex scenarios, without requiring a priori probability distributions. This is of particular interest in practical applications where there are many uncertain parameters, and it is significantly difficult to define their characteristics accurately.

To address two-stage decision problems with uncertainty, we propose a method based on a co-evolutionary metaheuristic, where solutions and scenarios are generated and evolve in parallel. The goal of the evolution of the solution population is to obtain values for the first-stage decisions that perform well when compared with the scenario population. The goal of the evolution of the scenario population is to diversify the impact of its elements on the value of solutions. This methodology is able to support decision-makers with different risk profiles.

To illustrate the method, we apply it to the integrated problem of fleet management and pricing for car rental companies under demand and competitor pricing uncertainty. When planning a selling season, a car rental company must decide on the number and type of vehicles in the fleet to meet demand. The demand for the rental products is uncertain and highly price-sensitive, and thus capacity and pricing decisions are interconnected. Moreover, since the products are rentals, capacity “returns”. This creates a link between capacity with fleet deployment and other tools that allow the company to meet demand, such as upgrades, transferring vehicles between locations or temporarily leasing additional vehicles.

(This talk is based on a joint work with Beatriz Brito Oliveira, Maria Antónia Carravilla and Alysson M. Costa)

Short Bio

José Fernando Oliveira is Full Professor and Head of the Department of Industrial Engineering and Management at the Faculty of Engineering of the University of Porto. He also teaches at Porto Business School. He is a senior researcher in the Industrial Engineering and Management Center of the research institute INESC TEC.

His main area of scientific activity is Operations Research and Management Science. Within Operations Research the main research area is related to the efficient use of raw materials and other resources (cutting and packing problems), while from the techniques viewpoint his research is centered in the use and development of Metaheuristic approaches and their hybridization with Mathematical Programming based methods. He has also worked on Vehicle Routing, Lotsizing and Scheduling problems in industrial contexts.

He has been giving special attention in the last years to several problems arising in the transportation sector, particularly freight transportation and shared mobility. In freight transportation, new frameworks to assess and enforce cargo stability, weight distribution and other relevant goals in road transportation, have been developed, implemented and tested. In the research line related to shared mobility the integration of pricing and capacity planning decisions has been approached, under a revenue management framework. Support of decision making in Higher Education institutions management, which includes workload models, sustainability, institutional benchmarking and assessment and evaluation of institutions and teaching staff, is also one of his interests.

From his many past academic and service positions, stand out the Vice-Presidency of the Pedagogical Council of FEUP and the Vice-Presidency of the European Association of Operational Research Societies. He is currently a member of the General Council of the University of Porto, President of the Portuguese Operational Research Society and co-editor-in-chief of the European Journal of Operational Research.