1. Dynamic Programming
Operations Research

2. Dynamic programming
• Series of inter-related decisions
• How to find the combination of most optimal
decisions over time?
• Production Scheduling, Inventory Control,
Warehousing, given changes in demand –
How much to produce, store and sell over a
period of time
2

3. Sometimes its easier to work
backwards from the end!
• You are going for an arranged marriage and
you have 10 proposals, whom you will meet
one after the other.
• Once you have rejected a proposal, you
cannot get the same girl again!
• The current profile may be best or they may
be better profiles yet to come . . .
• How to decide?

4. A problem along similar lines
• Lets say you have 10 tries to receive a random amount between 0 and 100. At
each try, you can either accept what you get and quit, or pass to next try.
• At each try, when would you accept or reject the value that comes up?
• Working backwards,
– On the last attempt (assuming you passed 9 times), you will have to take whatever value
comes – expected value = 50.
– On the second last attempt, you can either accept whatever comes or pass to last attempt
where you expect to get 50. So, in second last attempt, if you get more than 50 you should
accept, else pass.
– On the third last attempt, you can either accept or move to second last attempt, where you
expect to get 75 or again pass to last attempt where you expect to get 50. On an average you
would expect to get 62.5 over the last two attempts. Therefore, if you get more than 62.5 in
third last attempt, you should accept, else pass.
– On the 4th last attempt, you can either accept or move to 3rd last attempt where you expect to
get 87.5 or pass to 2nd last attempt where you expect to get 75 or pass to last attempt where
you expect to get 50. On an average you would expect to get 708 over last 3 attempts.
Therefore, if you get more than 708 in 4th last attempt, you should accept, else pass.
– And so on . . .

5. Finding Shortest Path
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

6. Working Backwards

7. Stage 3 H I SP Go to
E 1+3 4+4 4 H
F 6+3 3+4 7 I
G 3+3 3+4 6 H
Stage E F G SP Go to
4
B 7+4 4+7 6+6 11 E or F
C 3+4 2+7 4+6 7 E
D 4+4 1+7 5+6 8 E or F
Stage B C D SP Go to
5
A 2+11 4+7 2+8 10 D
ADEHJ =2+4+1+3=10
ADFIJ = 2+1+3+4=10

8. Bellman’s Principle of Optimality
• “An optimal policy has the property that
whatever the initial state and initial decision
are, the remaining decisions must constitute
an optimal policy with regard to the state
resulting from the first decision.”