OPERATIONS RESEARCH

Origin:-
The ambiguous (unclear) term operations research (O.R.) was
coined during World War II, when the British military management
called upon a group of scientists together to apply a scientific
approach in the study of military operations to win the battle. The
main objective was to allocate limited resources in an effective
manner to various military operations and to the activities within
each operation. The effectiveness of operations research in
military, increases interest in it to other government departments
and industry.

Due to the availability of faster and flexible computing facilities

and the number of qualified O.R. professionals, it is now widely
used in military, business, industry, transportation, public health,
crime investigation, etc.

Introduction to Operation Research:-

Operation research as one of the quantitative aid to decision
making offers the decision maker a method of evaluating every
possible alternative action by using various techniques to know
the potential outcomes. To effectively address the problems and
provide the leadership in the advancing global age, Decision
makers cannot afford to make decisions by simply applying
personal experience, guesswork, or intuition because the
consequences (penalty) of wrong decisions are serious and costly.
Decision making in today’s social and business environment has
become a complex task. High cost of technology, material, labor,
competitive pressure and so many different economic and social
as well as political factors and viewpoints greatly increase the
difficulty of managerial decision-making.

DEFINITIONS OF OPERATION RESEARCH:-

Operation research is concerned with scientifically deciding how
to best design and operate man – machine system usually
requiring the allocation of scare resources.
O.R. is a scientific approach to problems solving for executive
management.

OR Model:-
An OR model is image of an actual project or solution. It shows
the relationships and the interrelationship of action and reaction
in terms of cause and effect.

Application of Operation Research:-

Finance and Accounting
Marketing
Purchasing Procurement and Exploration
Production Management
Personal Management
Techniques and General Management
Government

APPLICATIONS OF OPERATIONS
RESEARCH TECHNIQUES IN
INDUSTRY
Operations research plays an increasingly important role in both
the public and private sectors. Operations research addresses a
wide variety of issues in transportation, inventory planning,
production planning, crew planning, communication network
design and operation, computer operations, financial assets and
risk management, revenue management, market clearing and
many other topics that aim to improve business productivity.

In the public domain it deals with such topics as energy policy,

defense, health care, water resource planning, forestry
management, design and operation of urban emergency systems
and criminal justice.

Nature of O.R. Characteristics

• Inter-disciplinary team approach
• Systems approach
• Helpful in improving the quality of solution
• Scientific method
• Goal oriented optimum solution
• Use of models
• Require willing executives
• Reduces complexity

Application in Decision Making

1. Recognize the Problem

⋅ Decision making begins with a situation in which a problem
is recognized.
 ⋅ The problem may be actual or abstract, it may involve
current operations or proposed expansions or contractions
due to expected market shifts, it may become apparent
through consumer complaints or through employee
suggestions, it may be a conscious effort to improve
efficiency or a response to an unexpected crisis.

2. Formulate the Problem

• At the formulation stage, statements of objectives, constraints
on solutions, appropriate assumptions, descriptions of
processes, data requirements, alternatives for action and
metrics for measuring progress are introduced.
• Because of the ambiguity of the perceived situation, the
process of formulating the problem is extremely important.

3. Construct a Model
• A mathematical model is a collection of functional
relationships by which allowable actions are delimited and
evaluated. Although the analyst would hope to study the broad
implications of the problem using a systems Approach, a
model cannot include every aspect of a situation.
• A model is always an abstraction that is, by necessity,
simpler than the Reality.

• Elements that are irrelevant or unimportant to the problem are

to be ignored, hopefully leaving sufficient detail so that the
solution obtained with the Model has value with regard to the
original problem.
• Models must be both tractable -- capable of being solved,
and valid Representation of the true situation.

4. Find a Solution
• The next step in the process is to solve the model to obtain
a solution to the problem. It is generally true that the most
powerful solution methods can be applied to the simplest, or
most abstract, model.
• Some methods can prescribe optimal solutions while other only
evaluate candidates, thus requiring a trial and error approach to
finding an acceptable course of action.
• Of course, the solution provided by the computer is only a
proposal. An analysis does not promise a solution but only
guidance to the Decision maker.
• Choosing a solution to implement is the Responsibility of the
decision maker and not the Analyst. The decision maker may
modify the solution to incorporate practical or intangible
considerations not reflected in the model.

5. Establish the Procedure

• Once a solution is accepted a procedure must be designed
to retain control of the implementation effort.
• Problems are usually ongoing rather than unique. Solutions are
implemented as procedures to be used repeatedly in an
almost automatic fashion under perhaps changing conditions.
• Control may be achieved with a set of operating rules, a job
description, laws or regulations promulgated by a
government body, or computer programs that accept current
data and prescribe actions.
• It is important to establish controls that recognize a changing
situation and signal the need to modify or update the solution.

6. Implement the Solution

• A solution to a problem usually implies changes for some
individuals in the organization. Because resistance to change is
common, the implementation of solutions is perhaps the
most difficult part of a problem solving exercise.
• Some say it is the most important part. Although not strictly the
responsibility of the analyst, the solution process itself can be
designed to smooth the way for implementation.
• The persons who are likely to be affected by the changes
brought about by a solution should take part, or at least be
consulted, during the various stages involving problem
formulation, solution testing, and the establishment of the
procedure.

The OR Process
• Combining the steps we obtain the complete OR process.
• In practice, the process may not be well defined and the steps
may not be executed in a strict order. Rather there are many
loops in the process, with experimentation and observation at
each step suggesting modifications to decisions made earlier.
• The process rarely terminates with all the loose ends tied up.
Work continues after a solution is proposed and implemented.
For Example:

Linear Programming:-
{Linear and programming} The word linear refers to linear
relationship among variables in model. Thus a given change in
one variable will always cause a resulting proportional change in
resulting variable.
Example: (If we double the investment on a project than we will
surely get double the rate of return.)
The word programming refers to modeling and solving a problem
mathematically that involves the economic allocation of limited
resources by choosing a particular course of action or strategy
among various alternative strategies to achieve the desired
objective.
General structure of LP model:-
General structure of LP model consist three elements

⋅ Decision activities

⋅ Objective function
⋅ Constraints
Advantages of linear programming:-
The linear programming technique helps to make the best
possible use of available productive resources (such as time,
labor, machines etc.)
In a production process, bottle necks may occur. For example, in
a factory some machines may be in great demand while others
may lie idle for some time. A significant advantage of linear
programming is highlighting of such bottle necks.
Limitations of Linear Programming:-
Linear programming is applicable only to problems where the
constraints and objective function are linear. When constraints or
objective functions are not linear, this technique cannot be used
Factors such as uncertainty, weather conditions etc. are not taken
into consideration.
Linear programming requires that all the mathematical functions
in the model be linear functions.
Mathematical programming is used to find the optimal (best)
solution to a problem that requires a decision or set of decisions
about how best to use a set of limited resources to achieve a
state goal of objectives.
Application of Linear Programming Problem:-
Linear Programming Problem (L.P.P) is widely used in
Portfolio selection
Financial mix strategy
Profit planning
Manpower planning
Media selection problem
Job Allocation
Traveling salesman problem
Make or buy problem

Problems Addressed with Operations Research

• Critical path analysis or project planning: identifying those
processes in a complex project which affect the overall
duration of the project
• Floor planning: designing the layout of equipment in a
factory or components on a computer chip to reduce
manufacturing time (therefore reducing cost)
• Network optimization: for instance, setup of
telecommunications networks to maintain quality of service
during outages
• Allocation problems
• Routing, such as determining the routes of buses so that as
few buses are needed as possible
• Supply chain management: managing the flow of raw
materials and products based on uncertain demand for the
finished products
• Efficient messaging and customer response tactics
• Automation: Automating or integrating robotic systems in
human-driven operations processes
• Globalization: Globalizing operations processes in order to
take advantage of cheaper materials, labor, land or other
productivity inputs
• transportation: managing freight transportation and delivery
systems (Examples: LTL Shipping, intermodal freight
transport)
• Scheduling:
 o personnel staffing
o manufacturing steps
o project tasks
o Network data traffic: these are known as queuing
models or queuing systems.
o sports events and their television coverage
• Blending of raw materials in oil refineries
• Determining optimal prices, in many retail and B2B settings,
within the disciplines of pricing science

Operations research is also used extensively in government

where evidence-based policy is used.

“TIME STARVED EXECUTIVES ARE MAKING BOLDER

DECISIONS WITH LESS RISK
AND BETTER OUTCOMES.
THEIR SECRET
OPERATION RESEARCH”