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History

Stochastic modelling is an active research field with much interaction between theory and practice. Up to now there was no platform for European researchers working within this broad field. This explains the idea for a European Working Group on Stochastic modelling. In June 2004 this was first proposed to EURO, the Association of European Operational Reseach Societies. The first meeting was held at the VU University Amsterdam, The Netherlands (19th April 2006 - 21st April 2006). With 41 participants, it was a succes. The second meeting took place on June 23-25, 2008 at Koc University in Istanbul. The third meeting was held at the University of Athens on June 7 to June 9, 2010. The fourth meeting will take place at ECP in Paris, on May 30 to June 1 2012.

Purpose

The main aim of this Working Group is to provide a platform for researchers working on the theory and/or applications of stochastical models and to stimulate exchange and cooperation between its members. The Working Group has two ways to fulfill its role as European platform for research in stochastic modelling: workshops and a mailing list. It is the objective to organize biennual workshops, the first was organized in April 2006 in Amsterdam. Next to that there is a news web page for submitting information in the area of stochastic modelling. New items are distributed regularly among the members.

Fields of Interest

The dictionary has the following entries:
    bullet modelling: to make a model;
    bullet model: a schematic describtion of a system that accounts for its properties and may be used for further study of its characteristics.
This Working Group is concerned with all aspects, both theoretical and practical, of mathematical modelling using stochastic models. The areas of interest include but are not restricted to: performance analysis of telecommunication systems, the modelling of logistics and service systems, the theory of queueing and inventory models, revenue management, and so forth. The use of stochastic models is the binding factor.

Some of the settings where stochastic modelling plays an important role are:

    bullet telecommunication
      bullet admission control
      bullet flow control
      bullet scheduling
    bullet logistics
      bullet location
      bullet production and scheduling
      bullet inventory
      bullet transportation (distribution)
    bullet provision of services
      bullet call centres
      bullet health care
      bullet queueing theory
    bullet financial sector
      bullet revenue management
      bullet risk management

Telecommunication

All kinds of data packets are sent over a communication network from a source to a destination. Routers make sure that the data finds the right direction to go through the network. However, routers have a limited buffer, therefore, packet delay or loss can occur. Network operators should provide some Quality of Service with the use of an appropriate netwerk (e.g., capacity) but more importantly they should have traffic control and allocate the resources in a fair way (or according to some protocol). The main traffic control mechanisms are admission control, flow control and scheduling. Stochastic modelling plays an important role in order to evaluate the performance of telecommunication networks.

Logistics

Logistics activities deal with the efficient management of the flow of goods through a network connecting supply and demand points. A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. There are four major decision areas in supply chain management:
  • location: The geographic placement of production facilities, stocking points, and resourcing points is the natural first step in creating a supply chain. Besides, the size and number have to be determined.
  • production: The manufacturing decisions concearn production scheduling as well as workload balancing (capacity); what products to produce and which plants to produce them in, the order in which the products go along the machines.
  • inventory: Inventories are kept at every stage of the supply chain to buffer against any uncertainty that might exist. Deployment strategies (push versus pull) and control policies (the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels) are developed. Other aspects concerning inventory have to deal with material handling at warehouses.
  • transportation (distribution): Shipment sizes (consolidated bulk shipments versus lot-for-lot), routing and scheduling of equipment are the key for an effective management of the firm's transport strategy.

Provision of services

The objective of most of the problems is to minimize costs while some kind of Quality of Service has to be provided (also for telecommunication and logistics problems). It is impossible to mention all areas where we find these stochastic problems. Call centres are a good example; for instance call routing in a multi-skill environment, load balancing among the agents, etc. However, the provisioning of services can also be found in the non-profit sector, like for instance, in health care.

Financial sector

Another area of interest is the financial sector, like revenue management, value at risk, corporate risk management, etc.

These problemsettings are however only a small set of the possible problems which face stochastic modelling.