OPERATIONS RESEARCH

AN OVERVIEW

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After reading the present module, learner will be able to

General Objectives:
• Understand the concept of Operations Research
• Know Phases and Process of Operations Research

Specific Objectives:
• Define basic terms related with OR
• Define Operation Research
• Describe the phases of O.R
• Draw the flow chart of O.R. approach
• List out the various techniques of O.R
• Give application fields of various techniques
• List out the components of mathematical model
• State advantages and limitations of O.R
• Identify the various application fields of O.R

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 Table of Contents

• Origin of OR
• Introduction
• Phases and Process of OR
• Techniques of OR
• Advantages and Disadvantages Of OR
• Applications of OR

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 ORIGIN of OR
• Operations Research (OR) term was coined during world war II,
when the British Military Management called upon a group of
scientists to apply a scientific approach to the study of military
operations to win the battle.

• Operations Research originated in Great Britain during World War II.

The main objective was to allocate the scarce resources in an
effective manner to the various military operations and to the
activities within each operation.

• The effectiveness of operations research in military spread in it to

other government department and industry.

• Due to the availability of faster and flexible computing facilities and

the no. of qualified O.R. professionals, it is now widely used in
military, business, industry, transportation, public health etc.

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 INTRODUCTION
• It is concerned with co-ordinating and controlling the
operations or activities within the organization

• O.R. can be regarded as the mathematical and

quantitative techniques to substantiate the decisions
being taken

• O.R. takes tool from subjects like statistics, mathematics,

engineering, economics, psychology etc. and uses them
to know the consequences of possible alternative actions

• Operations research (OR) is a discipline explicitly

devoted to aiding decision makers

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 Operations: activities carried out in an organization related to attaining its
goals and objectives

Research: process of observation and testing characterized by the scientific

method. Steps of the process include observing the situation and formulating
a problem statement, constructing a mathematical model, hypothesizing that
the model represents the important aspects of the situation, and validating
the model through experimentation

Organization: society in which the problem arises or for which the solution
is important. The organization may be a corporation, branch of government,
department within a firm, group of employees, or perhaps even an individual

Decision Maker: An individual or group in the organization capable of

proposing and implementing necessary actions

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 DEFINITIONS
• OR is a scientific method of providing executive
departments with a quantitative basis for decisions
regarding the operations under their control
– Morse & Kimball

• Operations research is a scientific approach to problem

solving for executive management
– H.M. Wagner

• Operations research is an aid for the executive in making

this decisions by providing him with the needed
quantitative information based on the scientific method of
analysis
– C. Kittel

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 Nature of O.R.

• 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

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 PHASES OF
OPERATIONS RESEARCH

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 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

• It is impossible to circumscribe the breadth of circumstances

that might be appropriate for this discussion

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 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

• The analyst is usually not the decision maker and may

not be part of the organization, so care must be taken to
get agreement on the exact character of the problem to
be solved from those who perceive it.
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 3. Construct a Model
» A mathematical model is a collection of functional
relationships by which allowable actions are
delimited and evaluated

• A model is always an abstraction that is, by necessity, simpler than

the reality

• The statements of the abstractions introduced in the construction of

the model are called the assumptions

• The appropriateness of the assumptions can be determined only by

subsequent testing of the model’s validity

• Models must be
– tractable -- capable of being solved, and
– valid -- representative of the true situation

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 4. Find a Solution(1)
• The next step in the process is to solve the model to obtain a
solution to the problem

• Some methods can prescribe optimal solutions while others

only evaluate candidates, thus requiring a trial and error
approach to finding an acceptable course of action

• It may be necessary to develop new techniques specifically

tailored to the problem at hand

• A model that is impossible to solve may have been formulated

incorrectly or burdened with too much detail. Such a case
signals the return to the previous step for simplification or
perhaps the postponement of the study if no acceptable,
tractable model can be found
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 4. Find a Solution(2)
• 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

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 5. Establish the Procedure(1)
• 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
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 5. Establish the Procedure(2)
• Once a procedure is established (and implemented), the
analyst and perhaps the decision maker are ready to tackle
new problems, leaving the procedure to handle the required
tasks

But what if the situation changes?

• An unfortunate result of many analysis is a remnant
procedure designed to solve a problem that no longer exists
or which places restrictions on an organization that are
limiting and no longer appropriate

• Therefore, it is important to establish controls that recognize a

changing situation and signal the need to modify or update
the solution

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 6. Implement the Solution

• Implementation of solutions is perhaps the most difficult

part of a problem solving exercise.

• Solution process itself can be designed to smooth the

way for implementation.

• Persons who are likely to be affected by the changes

should take part, or at least be consulted, during the
various stages involving problem formulation, solution
testing, and the establishment of the procedure.

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 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. Parameters and
conditions change over time requiring a constant
review of the solution and a continuing repetition of
portions of the process.

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 O.R. APPROACH

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 TECHNIQUES OF OR(1)
• Linear programming- It has been used to solve problems involving
assignment of jobs to machines, blending, product mix, advertising
media selection, least cost diet, distribution, transportation and
many others.

• Dynamic programming- It has been applied to capital budgeting,

selection of advertising media, cargo loading and optimal routing
problems.

• Waiting line or queuing theory- It has been useful to solve

problems of traffic congestion, repair and maintenance of broken-
down machines, number of service facilities, scheduling and control
of air-traffic, hospital operations, counter in banks and railway
booking agencies.

• Inventory control / planning- These models have been used to

determine economic order quantities, safety stocks, reorder levels,
minimum and maximum stock level.

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Contd…
• Decision theory- It has been helpful in controlling hurricuanes,
water pollution, medicine, space exploration, research and
development projects.

• Network analysis (PERT& CPM)- These techniques have been

used in planning, scheduling and controlling construction of dams,
brides, roads and highways and development & production of
aircrafts, ships, computers etc.

• Simulation- It has been helpful in a wide variety of probabilistic

marketing situations.

• Theory of replacement- It has been extensively employed to

determine the optimum replacement interval for three types of
replacement problems:
i) Items that deteriorate with time.
ii) Items that do not deteriorate with time but fail suddenly.
iii) Staff replacement and recruitment.

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 What is a Mathematical Model?
• Most-important step in a scientific or quantitative analysis of a
problem is to formulate a model that adequately captures the
essence of a problem.
• Result of such a formulation, or an abstraction, is called a
mathematical optimization model.

• Generally speaking, a mathematical optimization model has

the following typical components:
– a set of decision variables
– an objective function, expressed in terms of the decision
variables, that is to be minimized or maximized
– a set of constraints that limit the possible values of the
decision variables

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 ADVANTAGES
• Provides a tool for scientific analysis.
• Provides solution for various business problems.
• Enables proper deployment of resources.
• Helps in minimizing waiting and servicing costs.
• Enables the management to decide when to buy
and how much to buy?
• Assists in choosing an optimum strategy.
• Renders great help in optimum resource allocation.
• Facilitates the process of decision making.
• Management can know the reactions of the
integrated business systems.
• Helps a lot in the preparation of future managers.
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 LIMITATIONS
• The inherent limitations concerning mathematical
expressions
• High costs are involved in the use of O.R. techniques
• O.R. does not take into consideration the intangible
factors
• O.R. is only a tool of analysis and not the complete
decision-making process
• Other limitations
• Bias
• Inadequate objective functions
• Internal resistance
• Competence
• Reliability of the prepared solution

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 List out the applications of
Operations Research

List the uses of Operations

Research in Management
Education

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