Internet and OR - a new era?

Internet and OR - a new era? Kjetil K. Haugen Applied Economics The Foundation for Scientific and Industrial Research at the Norwegian Institute of Technology Industrial Management N-7034 Trondheim, Norway E-mail: [email protected] Mon 20.05.1996 Abstract This paper discusses recent trends in internet development and possible important consequences for the OR-community. The discussion refers some experiments with a new branch of internet applications which may prove to have a tremendous impact on the OR-related software industry.

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Introduction

The development of internet related software (and hardware) has shown a tremendous growth the latter years. The introduction of low cost internet connection possibilities has opened up a new and interesting market for almost any modern business. A few examples may be interesting in order to understand to which extent the IT-industry has ”understood” the potential in this market. • The old giant IBM are launching an internet PC [5] • Netscape Communications Corporation (the leading WWW-browser producer) reports a first quarter net income of $4.7 million (1996) as opposed to the same period in 95; $2.4 million - a growth of almost 100% [4] • Bill Gates (Founder of Microsoft Corporation) Well, the biggest thing that’s been happening is the Internet. The Internet has become a real phenomena. And we’re now at critical mass in terms of people publishing electronic information of all types. [3] 1

• Another one from Bill The Internet phenomenon is really unbelievable. It’s the most fantastic thing to happen in the world of computing since the original PC. [2] This paper addresses possible interesting consequences for the OR-community with special emphasis on OR-software and some thoughts on how the internet may be utilized in a not so distant future.

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The ”OR-industry”

Up to this point in time, the traditional way of making profit in the ”ORindustry” has been to manufacture, market and sell optimization and matrix generation software. Such software has mainly been sold to academia and big industrial corporations. The prizing strategy - at least historically - seems to reflect the fact that the industry assumes a small market yielding high prices - this in contradiction to other branches of software production, who have experienced decreasing prices and increasing volumes. Typical examples of products in this line are MPSX/OSL, SCICONIC, GAMS and X-PRESS-MP. Coexisting as a ”shadow market”, is the public domain market which supplies corresponding software solutions. This software - MINOS and XMP are well known examples - may not necessarily be of poor quality but will typically lack the background organization needed to successfully market and sell these products. As a consequence of this tradition, standard commercial software for solving Mathematical Programming problems are expensive and not widespread. The topic this paper addresses, is whether the internet may change this trend towards a situation with cheaper access to this type of software for anybody - small firms as well as private individuals.

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Internet trends Some facts

The Internet is a huge network connecting a large number of computers worldwide. The experts disagree on the number of users, but the number of ”hosts”1 Figure 1 shows the number of hosts as a function of time [8]. A typical way of estimating the number of users, has been to multiply the number of hosts with 7.5. This would lead to around 70 mill. users in early 1996. Maybe more significant than the absolute size is the growth rate. Figure 2 shows the same data with a logarithmic scale on the y-axis [7]. 1 A user is an individual able of accessing the internet while a host is a computer with an ip-address. That is, a host may be directly reached by ftp, telnet, ping etc.

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Figure 1: Internet hosts as a function of time Figure 2 shows an almost perfect historic exponential growth pattern (linear in a log-scale). The extrapolation shows that the number of hosts would reach 100 mill. before year 2000. Hence, according to the simple estimator above, more than 700 mill. users – surely an interesting number from a firms point of view.

3.2

Trends

A reasonable effect of growth in Internet availability, is increased competition in software manufacturing markets. Increased competition should (according to standard economic theory) lead to decreased prices which surely has been the case. However, the increased competition and the actual nature of the Internet, has lead to additional changes. The ”public-domain-strategy” - try before you buy and even the ”freeware-strategy - try without buy - seems to have been adopted by major software firms. A typical example is Microsoft’s Internet Explorer2 which is available for downloading free of charge. This radical change in price and marketing strategy has rapidly been adopted by other major agents in software manufacturing. 2

Internet explorer is Microsoft’s World Wide Web Browser

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Figure 2: Internet hosts as a function of time with log-scal y-axis and future extrapolation

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What about the ”OR-industry”?

As earlier mentioned, it is harder to observe similar trends in the ”OR-industry”. The industry is probably less aggressive, more conservative and maybe also less vulnerable to this type of competition. The products in the ”OR-industry” are – at least traditionally – looked upon as less user-friendly and hence harder to market in similar fashions. Discussing these matters, it may be interesting to divide the product types into two categories: • Downloadable software • Servers offering on-line computing facilities The first category – downloadable software – has a long history in OR, at least for public-domain and freeware products. That is, the the professional agents, IBM and EDS/SCICON for instance, has to a very small extent adopted the modern marketing/pricing strategies. The second category is more interesting as it focuses on the major problem in this industry – the cost of solving Mathematical Programming problems. To 4

a large extent, the major use of internet resources today are related to software downloading, General information searching and retrieval, Electronic Mail, and Usenet News distribution. The topic which discussed here, distributed computational resources by internet, have not reached any interesting level yet. However, distributed computational resources may be an interesting future use for internet resources. The possibility of using up-to date software without a lengthy and costly installation process, no compiling and linking and no ”make-file” editing seems appealing. Technically, it is simple to distribute computational resources. Any person with a PC, a modem and a telephone line and some optimization software can – at least manually – receive optimization problem input, solve the problem and send it back to the receiver. Practically, such a process may be facilitated by use of Electronic Mail (and probably MPS-files as the interchanging media). Obviously, such a mechanism may not extend the availability of MP-solvers as the MPS-format is somewhat hard to use for ”rookies”. However, with the available browser technology, it is possible to imagine almost any user-interface for transmitting optimization problems – also with extensive automatization. So far, the OR-community has shown few examples on these thoughts. Some interesting exceptions do however exist, and these will be examined closer in the next paragraph.

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Internet experiments

5.1

The NEOS server

As discussed above, some interesting experiments in this fashion are available. The non-commercial (e.g. free) site which delivers high class optimization solution on-line is the NEOS server. This server situated at • http://http://www.mcs.anl.gov/home/otc/Server/neos.html delivers both a WWW-interface and an Electronic Mail input/output facility. The WWW-interface is somewhat primitive so I will just explain the E-mail interface. This structure is more or less working as described above. • Submit an E-mail message containing the MPS-file • Wait for a few minutes and the result returns in the form of an E-mail message. To test it, a very simple LP (minimization) gathered from a standard OR textbook [6] is submitted. The problem used is example 2.9-1;

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M in s.t.

−3x1 + x2 + x3 x1 − 2x2 + x3 −4x1 + x2 + 2x3 2x1 − x3 x1 , x2 , x3

≤ 11 ≥ 3 = −1 ≥ 0

(1)

with optimal solution x∗1 = 4, x∗2 = 1, x∗3 = 9 The message body is very simple. First a line describing the solver (LP) and then the actual MPS-file between the codes BEGIN.MPS and END.MPS with an additional keyword END-NEOS-INPUT at the end of the message. The actual E-mail dialogue is as follows:3 TYPE LP BEGIN.MPS NAME RAVI ROWS L NR1 G NR2 E NR3 N PROFIT COLUMNS X1 NR1 X1 NR3 X2 NR1 X2 PROFIT X3 NR1 X3 NR3 RHS RHS00001 NR1 RHS00001 NR3 ENDATA END.MPS END-NEOS-INPUT

1.000000 2.000000 -2.000000 1.000000 1.000000 -1.000000

NR2 PROFIT NR2

-4.000000 -3.000000 1.000000

NR2 PROFIT

2.000000 1.000000

11.000000 -1.000000

NR2

3.000000

The server returns the solution as follows: Return-Path: From: NEOS Date: Tue, 21 May 1996 08:08:15 -0500 To: [email protected] Subject: NEOS Job #7569 ************************************************************* The Network-Enabled Optimization System (NEOS) Version 1.0 (last modified Fri May 17 19:08) 3

The e-mail address is [email protected]

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Job# Problem Type Start time End time Host

: : : : :

7569 LP Tue May 21 08:07:54 CDT 1996 Tue May 21 08:08:14 CDT 1996 happy.mcs.anl.gov

Announcements: Be sure to try the new NEOS Submission tool! This application runs on UNIX workstations and uses socket communication to give a fast interactive session with the server. For more information, see: http://www.mcs.anl.gov/home/otc/Server/subtool.html. You can download the tool directly from Argonne: ftp.mcs.anl.gov in pub/neos/submission_tool. Login as "anonymous." Disclaimer: This information is provided without any express or implied warranty. In particular, there is no warranty of any kind concerning the fitness of this information for any particular purpose. ************************************************************* Determining solver: I will use the PCx solver (default). Finished calling PCx solver: no errors. Output: Before Preprocessing: LP form has 3 Rows, 5 Columns After Preprocessing: LP form has 3 Rows, 5 Columns (0 passes) Cholesky factor will have 3 nonzeros Need 2.700000e+01 operations for the factorization Iter 0 1 2 3 4 5 6

Primal -9.0343e+00 -1.0518e+00 -1.9642e+00 -1.9996e+00 -2.0000e+00 -2.0000e+00 -2.0000e+00

Dual -2.1667e+00 -2.3047e+00 -2.0150e+00 -2.0002e+00 -2.0000e+00 -2.0000e+00 -2.0000e+00

(P. Infeas (1.352e+00 (1.352e-02 (1.352e-04 (1.385e-06 (1.385e-08 (1.385e-10 (1.386e-12

D. Infeas) 3.406e-02) 3.406e-04) 3.406e-06) 3.415e-08) 3.415e-10) 3.415e-12) 3.417e-14)

log(mu) -0.10 -0.56 -1.98 -3.98 -5.98 -7.98 -9.98

--OPTIMAL Solution for: RAVI In original problem, have 3 variables, 3 constraints After 6 iterations, the solution of the problem is OPTIMAL.

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digits 0 0 1 3 5 7 9

Primal Objective = -2.00000000e+00 Dual Objective = -2.00000000e+00 Relative Complementarity = Relative Infeasibilities:

5.29e-10 Primal = 3.995e-12,

Dual

= 0.000e+00.

Number of Orderings (for factorization) = 1. Read Time = 0.010000 seconds Preprocess time = 0.000000 seconds Solution time = 0.010000 seconds Solution for RAVI Variables: # Label Value Reduced Cost 0 X1 4.0000000e+00 1.8851587e-11 1 X2 1.0000000e+00 2.0101032e-11 2 X3 9.0000000e+00 6.8143269e-12

Lower Bound Upper Bound 0.0000000e+00 Infinity 0.0000000e+00 Infinity 0.0000000e+00 Infinity

. . . .

This server uses some pretty advanced solvers. It is for instance possible to solve stochastic LP’s by using MSLiP [1]. It is also possible to use network based algorithms and other specialized MP solvers. Unluckily, the present interface lacks some flexibility. However, if such a flexibility is established, it is easy to see that such a tool may induce serious competition to the professional firms4 . Actually, from an OR-specialist’s point of view, it may already serve needs which today are based on expensive commercial software.

5.2

The Interactive LP server

This server is a result of a project done by some students in a class held by Prof. Goldberg, IEOR Dept., U.C. Berkeley. The optimization software is surely inadequate, but the interface may show a path into the future. Here, the concept is not based on MPS-file communication but rather on direct data manipulation via WWW. Figure 3 shows the main interface with the example problem given as input. Here, the user directly enters and manipulates the problem by forms5 . After 4 The folks at NEOS are experimenting with an X-windows based direct interface which at least from the screen-shots seems interesting 5 form is the name for input/output structures in the HTML language.

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Figure 3: The Interactive LP server’s interface submission (push a button), the solution comes up in the browser as showed in figure 4 The server is situated at • http://ford.ieor.berkeley.edu/ ilan/project.html

5.3

Commercial servers

The next interesting question to ask is whether we can observe any response from the big commercial firms. Actually, we can. IBM offers the possibility to solve MP-problems (freely6 ) by ftp. We will not test this ability just note that it seems that at least IBM has learnt the ”Bill Gates marketing lesson”. The IBM URL is 6 There is a 1 Mb limit on a compressed file – that is probably a 10 Mb limit on the actual MPS-file

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Figure 4: The Interactive LP server’s solution • http://www.research.ibm.com/osl/ftpinfo.html

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Conclusions - trends

Firstly, the observation of IBM’s attempt to broaden their marketing activities in the direction set by other parts of the industry may prove to be a necessary step for all agents in this industry. Second, the two experimental servers we have examined are neither by themselves nor combined, a satisfying way of distributing computational resources for the OR-community on the Internet. It is technically possible (today) to include more advanced matrix-generating possibilities on-line. This could be a combination of communication with various matrix generating languages such as OMNI, MGG, GAMS, AMPL etc. but also the construction of WWW-adapted specialized ways of communicating MP-models. 10

The NEOS server is obviously a very nice start. Especially if they are able to increase the flexibility of communication. If that is a realistic scenario, it will surely be very hard to make money in the ”OR-industry” in the future. Finally, it could be tempting to predict a world with huge computing resources freely available to everyone with nice and slick interfaces. Surely, this will not be the case, but I think that the ”OR-industry” may benefit from the ”Bill Gates way of doing things”. Hopefully, the demand for MP-solvers are as big as ORpeople like to think. In that case there may be room for a future ”OR-industry”, but probably not as we know it today.

References [1] H. I. Gassmann. Mslip: A computer code for the multistage stochastic linear programming problem. Mathematical Programming, pages 407–423, 1990. [2] Bill Gates. Internet world 1996. Speech, April 1996. [3] Bill Gates. Keynote address: Bill gates. Microsoft TechEd 96 Los Angeles Convention Center, Los Angeles , CA Monday, April 15, 1996, April 1996. [4] http://home.netscape.com/. Netscape reports revenue of $55 million for first quarter 1996. Published on the internet, May 1996. [5] http://www.msn.com/news/18697.html. Ibm to show its first internet pc. Published on the internet, May 1996. [6] A. Ravindran, D. T. Phillips, and J. J. Solberg. Operations research: Principles and Practice. John Wiley and Sons, New York, 1987. [7] A. M. Rutkowski. Internet hosts – overall trend. Published on the internet at http://www.genmagic.com/internet/trends/sld004.htm, May 1996. [8] A. M. Rutkowski. Internet hosts 1989-1996. Published on the internet at http://www.genmagic.com/internet/trends/sld003.htm, May 1996.

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