Chandigarh School

Of Business

Management Department

Master of Business
Administration Introduction to
MBA-2 Semester Operations
Research
Operations Research
Applications
MBA 952-18 Ms. Shweta Wadhwa
Assistant Professor
 Topics
Introduction to Operational Research
History of Operational Research
Operational Research in India
Definition of Operational Research
Features of Operational Research
Scope of Operational Research
Methodology/Approaches of Operational Research
Tools/Techniques of Operational Research
Operational Research and Management Decision-
Making
Limitations of Operational Research
 Introduction to Operational
Research
Operational Research is a systematic and analytical approach to
decision making and problem solving.
O.R. as termed in USA, Canada, Africa, Australia and Operational
Research as termed in Europe, is an Branch of applied mathematics
that uses techniques and statistics to arrive at Optimal solutions to
solve complex problems.
It is typically concerned with determining the maximum profit,
sale, output, crops yield and efficiency
And minimum losses, risks, cost, and time of some objective function. It
have also become an important part of INDUSTRIAL ENGINEERING
PROFESSION.
Some of the PRIMARY TOOLS used by operation researchers are-
STATISTICS
GAME THEORY
PROBABILITY THEORY, etc.
History of Operations Research
There is no clear history that marks the Birth if O.R., it is
generally accepted that the field originated in England during the
World War II. Some say that Charles Babbage (1791-1871) is the
Father of O.R because his research into the cost of transportation
and sorting of mail led to England’s University Penny Post in 1840.
Modern Operations Research originated at the Bowdsey
Research Station in U.K. in 1937 to analyse and improve the
working of the UK’s Early Warning Rador System.
During the Second World War about 1000 Men and Women
were engaged to work for British Army.
After World War II, Military Operational Research in U.K.
became Operational Analysis (OA) within the U.K. Ministry of
Defence with expanded techniques and graving awareness.
 Operational Research in India
The Operational Research Society of India was founded in 1957 to provide a forum for the
Operational Research Scientists as well as an avenue to widen their horizon by exchange of
knowledge and application of techniques from outside the country. The Society is affiliated to
the International Federation of Operational Research Societies (IFORS).
The Headquarters of the Society is located in Kolkata at 39, Mahanirvan Road, Kolkata
700029, India. At present the Society has 12 Operating Chapters located in Agra, Ahmedabad,
Ajmer, Bangalore, Chennai, Delhi, Durgapur, Jamshedpur, Kolkata, Madurai, Mumbai and 
Tirupati.
The Objectives of the Society comprise advancement of, conducting of research in, study
of, promotion and propagation of knowledge in Operational Research and Allied Techniques
through exchange of information, as well as establishment, improvement and maintenance of
professional and academic standards of work known as Operational Research.
Contribution to the Society towards attainment of these objectives is eligible for
exemption of income tax under Section 80(G)(5)(vi) of the Income Tax Act 1961.
The Society Publishes a quarterly journal OPSEARCH, which brings out high quality and
state of the art papers in Operational Research.
In order to provide opportunity to professionals and students to equip themselves with
the knowledge and usage of the science of Operational Research, the Society is conducting an
examination on Graduate Diploma in Operational Research since 1973.
 Definition of Operations Research

It is an Act of winning wars without actually

fighting.
-Aurther Clark
It is a Scientific Approach to problem solving for
executive management.
-H.M. Wagner
It is Art of giving bad answers to problem which
otherwise have worse answers.
-T.L. Saaty
 Features of Operations Research
Decision-Making
Scientific Approach
Inter-Disciplinary Team Approach
System Approach
Use of Computers
Objectives
Human Factors
 DECISION MAKING
Every industrial organisation faces multifacet
problems to identify best possible solution to
their problems.
OR aims to help the executives to obtain
optimal solution with the use of OR techniques.
It also helps the decision maker to improve
his creative and judicious capabilities, analyse
and understand the problem situation leading to
better control, better co-ordination, better
systems and finally better decisions.
 SCIENTIFIC APPROACH
OR applies scientific methods, techniques and
tools for the purpose of analysis and solution of
the complex problems.
In this approach there is no place for
guesswork and the person bias of the decision
maker.
 INTER-DISCIPLINARY
TEAM APPROACH
Basically the industrial problems are of complex
nature and therefore require a team effort to
handle it.
This team comprises of scientist,
mathematician and technocrats. Who jointly use
the OR tools to obtain a optimal solution of the
problem. They tries to analyse the cause and
effect relationship between various parameters of
the problem and evaluates the outcome of various
alternative strategies.
 SYSTEM APPROACH
The main aim of the system approach is to trace
out all significant and indirect effects for each
proposal on all sub-system on a system and to
evaluate each action in terms of effects for the
system as a whole.
The inter-relationship and interaction of each
sub-system can be handled with the help of
mathematical/analytical models of OR to obtain
acceptable solution.
 USE OF COMPUTERS
The models of OR need lot of computation and
therefore, the use of computers becomes
necessary.
With the use of computers it is possible to
handle complex problems requiring large
amount of calculations.
The objective of the operations research
models is to attempt and to locate Best or
Optimal Solution.
 OBJECTIVE
Operational Research always try to find the best and
optimal solution to the problem.
For this purpose objectives of the organisation
are defined and analysed. These objectives are then
used as the basis to compare the alternative courses of
action.
 HUMAN FACTORS
In deriving, Quantitative Solutions we do not consider
human factors, which doubtlessly play a great role in
the problems.
So, study of O.R. is incomplete without study of
human factors.
Scope of Operations Research
The scope of OR is not only confined to any specific
agency like defense services but today it is widely used
in all industrial organizations.
It can be used to find the best solution to any
problem be it simple or complex. It is useful in every
field of human activities. Thus, it attempts to resolve
the conflicts of interest among the components of
organization in a way that is best for the organization
as a whole.
The main fields where OR is extensively used are
given in next slide.
 FIELDS
National Planning and Budgeting
Defence Services
Industrial Establishment and Private Sector Units
R & D and Engineering
 NATIONAL PLANNING AND
BUDGETING
OR is used for the Preparation of-

Five Year Plans

Annual Budgets
Forecasting of Income and Expenditure
Scheduling of Major Projects of National Importance
Estimation of GNP
GDP
Population
Employment and Generation of Agriculture Yields, etc.
 DEFENCE SERVICES
Basically formulation of OR started from USA Army, so it has wide
application in the areas such as:
Development of New Technology
Optimization of Cost and Time
Tender Evaluation
Setting and Layouts of Defence Projects
Assessment of “Threat Analysis”
Strategy of Battle
Effective Maintenance and Replacement of Equipment
Inventory Control,
Transportation
Supply Depots, etc.
 INDUSTRIAL ESTABLISHMENTS
AND PRIVATE SECTOR UNITS
OR can be effectively used in-
Plant Location and Setting Finance Planning
Product and Process Planning
Facility Planning and Construction
Production Planning and Control
Purchasing
Maintenance Management
Personnel Management, etc.
 R&D AND ENGINEERING
Research and development being the heart of
technological growth, OR has wide scope and can
be applied in-
Technology Forecasting and Evaluation,
Technology and Project Management,
Preparation of Tender and Negotiation,
Value Engineering,
Work/Method Study and so on.
 METHODOLOGIES/APPROACHES
OF OPERATIONAL RESEARCH
1. ORIENTATION F
2. PROBLEM DEFINITION E
3. DATA COLLECTION E
4. MODEL FORMULATION D

5. SOLUTION B

6. ANALYSES AND INFORMATION A

7. IMPLEMENTATION AND C
MONITORING K
 TECHNIQUES/TOOLS OF
OPERATIONAL RESEARCH
Linear Programming
Queuing Theory
Sequencing
Transportation Problems
Integer Problems
Assignment Problems
Decision Theory and Games Theory
Replacement Problems
Symbolic Logic
 LINEAR PROGRAMMING
This technique is used to find a solution
for optimising a given objective. Objective
may be maximizing profits or minimising
costs.
Objective function and Boundary conditions
are linear in nature. LPP techniques solve
Product-Mix and Distribution problems of
enterprise.
Its also used to allocate Scarce Resources in
optimum manner in problems of scheduling,
product mix, etc.
QUEUING THEORY
This theory deals with the situations in which queue is
formed, e.g. customers waiting for services, machines
waiting for repairmen, and aircrafts waiting for landing
strips, etc.
If the Queue will be long the cost will be high due to
long waiting hour.
This technique is used to analyse the feasibility of
adding facilities and to access the amount and cost of
waiting time.
This calculations can then be used to determine the
desirable number of service facilities.
 SEQUENCING
Models have been developed to find a sequence for
Processing Jobs so that the total elapsed time for all
the jobs will be minimum.
The models also help to resolve the conflict
between the objectives of maximizing machines
utilization and complying with predetermined
delivering rates.
 TRANSPORTATION PROBLEMS
Transportation problems deals with
transportation of a product
 From a number of sources
 With limited supplies
 To number of destinations
 With specified demands
 At the total transportation cost.
The main objective of transportation is to
Schedule Shipment from sources to destinations
in such a way so as to Minimize the Total
Transportation Cost.
 INTEGER PROGRAMMING
Integer means complete or whole number. By using
the Integer Programming Algorithm a series of
continuous linear programming problem are solved
in such a way that the solution containing un-
acceptable non-integer value are ruled out and the
best higher programming solution is obtained.
 ASSIGNMENT PROBLEMS
It is a special type of linear programming
problem. It deals in allocating the various
resources or items to various activities in a one
to one basis in such a way that the time or cost
involved in minimised and the sale or profit is
maximized.
E.g. Manager may like to know which job
should be assigned to which person so that all
jobs can be completed in the shortest possible
time.
 DECISION THEORY AND GAME
THEORY
Decision Theory is primarily considered with decision
making under the conditions of:
 Risk
 Uncertainity

Game Theory is concerned with:

Decision Making under Conflict

Hence, both Decision Theory and Game Theory assist

the Decision-Maker in Analysing Problems with
numerous alternative course of action and
consequences.
 REPLACEMENT PROBLEMS
This Theory is concerned with situations that arise when some items such
as machines, men, etc. require replacement due to their decreasing
efficiency, failure or break-down.
Sooner or later all the equipments are required to be replaced because of:
 Obsolescence
 Discovery of New Technology
 Better Design of Equipment

In Replacement Decisions we consider:

 Cost of Equipment to be Installed
 Cost of Equipment Replaced, etc.
Hence, this theory helps to solve all Replacement
Problems.
 SYMBOLIC LOGIC
Symbols are more meaningful and accurate.
Everything is Symbolic in this world.
Words, classes of things, functional systems
and rules are substituted with symbols.
The whole problem is converted into
algebraic equations and propositions. Business
Problems are not commonly converted into
symbols but calculations are done on computers,
that is why symbols have extensive applications.
 OPERATIONAL RESEARCH AND
MANAGEMENT DECISION-MAKING

Operation Research increases the creative capabilities of a decision

maker.
It increases the effectiveness of mgt. decisions. Management is
most of the time making decisions. It is thus a decision science which
helps mgt. to take better decisions.
Nowadays, business problems have become so complex that it is
almost impossible for a human being to comprehend all important
factors, OR Techniques can be helpful in such situations.
It also helps in ascertaining best locations for factories and
warehouses, project scheduling as well as most economic means of
transportation.
OR study approach in business decisions leads to better control,
better co-ordination, better system and at the end better decision.
 Limitations of Operations Research

Magnitude of Computation
Non-Quantifiable Factors
Distance between User and Analyst
Time and Money Costs
Implementation
 MAGNITUDE OF COMPUTATION
Operations research models try to find out
optimal solution taking into account all the
factors. But, these factors are enormous
and,
expressing them in quantity,
and,
establishing relationships among these,
Require voluminous calculations which can be
handled only by computers.
NON-QUANTIFIABLE FACTORS
OR provides solution only when all elements
related to a problem can be quantified. All relevant
variables do not lend themselves to quantification.
Factors which cannot be quantified, find no place
in OR study. Models in OR do not take into account
qualititative factors or emotional factors which
may be quite important.
 DISTANCE BETWEEN USER
AND ANALYST
OR being specialist’s job requires a mathematician
or statistician, who might not be aware of the
business problems.
Similarly, a manager fails to understand the
complex working of OR. Thus there is a gap
between the two. Management itself may offer a
lot of resistance due to conventional thinking.
 TIME AND MONEY COST
When basic data are subjected to frequent
changes, incorporating them into the OR
models is a costly proposition.
Moreover, a fairly good solution at present
may be,
More desirable than a perfect OR solution
available after sometime. The computational
time increases depending upon the size of the
problem and accuracy of results desired.
IMPLEMENTATION
Implementation of any decision is a delicate task. It
must take into account the complexities of human
relations and behaviour. Sometimes, resistance is
offered due to psychological factors which may not
have any bearing on the problem as well as its
solution.
THANK YOU