ABSTRACT
This lecture reflects on many years of experience at IFOR (Institute of Operations Research ETH Zurich) working on the cutting edge of academia and practice. The lecture will begin with some thoughts about the notion of Systems Complexity by focusing on what we will call “Organized Complexity”. In this context, the notion of “design” will be reviewed with an explicit emphasis on emergent system properties, such as “Flexibility” and “Adaptability”, “Robustness” and “Stability”, “Equilibria” and “Self -Organization”. To illustrate the concepts some challenging in-house real world examples carried out with our industrial partners will be presented:
• The Value of Flexibility in Power Production (in collaboration with AXPO Switzerland) [1]
• Market Design for Emission Trading and the Emergence of Windfall Profits [2]
• Constructing Robust Timetables for Railways (in collaboration with SBB Switzerland) [3]
• Power at Risk in Electricity Grid Management: Reliability and Vulnerability of Networks (in collaboration with RWE, Germany) [4 ]
The key message of this lecture will be that the focus should be placed on the design of emergent (qualitative) system properties rather than on optimality properties in organized complex systems subsequently yielding to nontrivial innovations in modeling. In particular, the colloquial notions of Flexibility, Adaptability, Robustness, Equilibrium and Windfall Profits have to be rigorously defined in order to make them tangible for OR in spite of the inherent, computational complexity. These mathematical innovations will be discussed along with the presentation of some of the examples described above. The lecture will conclude with a discussion on further research challenges when dealing with complexity in OR.
The lecture is based on the following publications, which can be downloaded from http://www.ifor.math.ethz.ch/publications
[1] Doege J., Fehr M., Hinz J., Luethi H.-J., Wilhelm M. (2008): "Risk Management in Power Markets: The Hedging Value of Production Flexibility." (to appear in EJOR). Awarded with the EURO Excellence in Practice Price.
[2] Carmona R., Fehr M., Hinz J., Porchet A. (2008): "Market Design For Emission Trading Schemes." (to appear in SIAM Review)
[3] Wüst R., Laube F., Roos S., Caimi G. (2008): "Sustainable Global Service Intention as objective for Controlling Railway Network Operations in Real Time." Proceedings of the 8th World Congress of Railway Research (WCRR), Seoul, Korea
[4] Guarisco M., Friedrich C., Laumanns M., Zdrallek M. (2008): "A Grid Operation Model: Resource Demand For An Adequate Quality Of Supply." Proceedings of the 16th Power Systems Computation Conference (PSCC 2008), Glasgow, Scotland, 14-18 July, 2008
