Wednesday, July 22, 2009

Idahostatesmen: Going beyond Vietnam, remembering McNamara for research

The has a good article on McNamara's influence on the field of Operations Research. Also in the article there is a good review of the history of Operations Research and how it has come to be a integral tool for industrial economic decision making. A great plug for Operations Research is how the author Lotterman, an economist teacher and writer, describes its broad appeal to many industries and not just its military roots.

An interesting note on this article is it asks the reader to look beyond the military influences of McNamara. The comments to the story paint another picture of McNamara that is more grim. Using Operations Research for decision analysis has many consequences, intended or otherwise. When one applies mathematics to decision making one needs to understand what the outcome implies to the whole system. Often times the optimal decision may lead to true objective optimality for some economic benefit but yet can lead to a totally different ethical result.

A case in point. I remember one academic discussion about one of the airline industry's revenue management models. The Operations Research team found that it was more economically optimal to "bump" passengers. Yet from a marketing and customer service standpoint how long could such a policy last? The management teams decided to put a cap on the number of passenger bumps that were allowed on the models imposing an economical constraint.

Michael Trick describes a great example of this in his blog on the perils of statistical significance. Sometimes one needs to holistically understand the problem set before inferences and key insights can be understood. Perhaps the greatest achievement McNamara taught us was not his grasp of mathematical knowledge but what do we do with the optimal solution set.

1 comment:

boing3887 said...

Hi, the link to the Idaho Statesman article appears to lead to a dead end. Any way you could find the article's new address? I tried searching on the Statesman' website but got no hits