OPERATIONS RESEARCH

also called  operational research,   application of scientific methods

to the management and administration of organized military,
governmental, commercial, and industrial processes.

Basic aspects

Operations research attempts to provide those who manage organized

systems with an objective and quantitative basis for decision; it is
normally carried out by teams of scientists and engineers drawn from a
variety of disciplines. Thus, operations research is not a science itself
but rather the application of science to the solution of managerial and
administrative problems, and it focuses on the performance of
organized systems taken as a whole rather than on their parts taken
separately. Usually concerned with systems in which human behaviour
plays an important part, operations research differs in this respect from
systems engineering, which, using a similar approach, tends to
concentrate on systems in which human behaviour is not important.
Operations research was originally concerned with improving the
operations of existing systems rather than developing new ones; the
converse was true of systems engineering. This difference, however, has
been disappearing as both fields have matured.

The subject matter of operations research consists of decisions that

control the operations of systems. Hence, it is concerned with how
managerial decisions are and should be made, how to acquire and
process data and information required to make decisions effectively,
how to monitor decisions once they are implemented, and how to
organize the decision-making and decision-implementation process.
Extensive use is made of older disciplines such as logic, mathematics,
and statistics, as well as more recent scientific developments such as
communications theory, decision theory, cybernetics, organization
theory, the behavioral sciences, and general systems theory.

In the 19th century the Industrial Revolution involved mechanization or

replacement of human by machine as a source of physical work. Study
and improvement of such work formed the basis of the field of
industrial engineering. Many contemporary issues are concerned with
automation or mechanization of mental work. The primary technologies
involved are mechanization of symbol generation (observation by
machines such as radar and sonar), mechanization of symbol
transmission (communication by telephone, radio, and television), and
mechanization of logical manipulation of symbols (data processing and
decision making by computer). Operations research applies the
scientific method to the study of mental work and provides the
knowledge and understanding required to make effective use of
personnel and machines to carry it out.

History

In a sense, every effort to apply science to management of organized

systems, and to their understanding, was a predecessor of operations
research. It began as a separate discipline, however, in 1937 in Britain
as a result of the initiative of A.P. Rowe, superintendent of the Bawdsey
Research Station, who led British scientists to teach military leaders
how to use the then newly developed radar to locate enemy aircraft. By
1939 the Royal Air Force formally commenced efforts to extend the
range of radar equipment so as to increase the time between the first
warning provided by radar and the attack by enemy aircraft. At first
they analyzed physical equipment and communication networks, but
later they examined behaviour of the operating personnel and relevant
executives. Results of the studies revealed ways of improving the
operators' techniques and also revealed unappreciated limitations in the
network.

Similar developments took place in the British Army and the Royal Navy,
and in both cases radar again was the instigator. In the army, use of
operations research had grown out of the initial inability to use radar
effectively in controlling the fire of antiaircraft weapons. Since the
traditional way of testing equipment did not seem to apply to radar
gunsights, scientists found it necessary to test in the field under
operating conditions, and the distinguished British physicist and future
Nobel Laureate P.M.S. Blackett organized a team to solve the
antiaircraft problem. Blackett's Antiaircraft Command Research Group
included two physiologists, two mathematical physicists, an
astrophysicist, an army officer, a former surveyor, and subsequently a
third physiologist, a general physicist, and two mathematicians.

By 1942 formal operations research groups had been established in all

three of Britain's military services.

Development of operations research paralleling that in Britain took

place in Australia, Canada, France, and, most significantly for future
developments, in the United States, which was the beneficiary of a
number of contacts with British researchers. Sir Robert Watson-Watt,
who with A.P. Rowe launched the first two operational studies of radar
in 1937 and who claims to have given the discipline its name, visited the
United States in 1942 and urged that operations research be introduced
into the War and Navy departments. Reports of the British work had
already been sent from London by American observers, and James B.
Conant, then chairman of the National Defense Research Committee,
had become aware of operations research during a visit to England in
the latter half of 1940. Another stimulant was Blackett's memorandum,
“Scientists at the Operational Level,” of December 1941, which was
widely circulated in the U.S. service departments.

The first organized operations research activity in the United States

began in 1942 in the Naval Ordnance Laboratory. This group, which
dealt with mine warfare problems, was later transferred to the Navy
Department, from which it designed the aircraft mining blockade of the
Inland Sea of Japan.

As in Britain, radar stimulated developments in the U.S. Air Force. In

October 1942, all Air Force commands were urged to include operations
research groups in their staffs. By the end of World War II there were 26
such groups in the Air Force. In 1943 Gen. George Marshall suggested to
all theatre commanders that they form teams to study amphibious and
ground operations.

At the end of World War II a number of British operations research

workers moved to government and industry. Nationalization of several
British industries was an important factor. One of the first industrial
groups was established at the National Coal Board. Electricity and
transport, both nationalized industries, began to use operations
research shortly thereafter. Parts of the private sector began to follow
suit, particularly in those industries with cooperative research
associations; for example, in the British Iron and Steel Research
Association.

The early development of industrial operations research was cautious,

and for some years most industrial groups were quite small. In the late
1950s, largely stimulated by developments in the United States, the
development of industrial operations research in Britain was greatly
accelerated.

Although in the United States military research increased at the end of

the war, and groups were expanded, it was not until the early 1950s
that American industry began to take operations research seriously. The
advent of the computer brought an awareness of a host of broad system
problems and the potentiality for solving them, and within the decade
about half the large corporations in the United States began to use
operations research. Elsewhere the technique also spread through
industry.

Societies were organized, beginning with the Operational Research Club

of Britain, formed in 1948, which in 1954 became the Operational
Research Society. The Operations Research Society in America was
formed in 1952. Many other national societies appeared; the first
international conference on operations research was held at Oxford
University in 1957. In 1959 an International Federation of Operational
Research Societies was formed.

The first appearance of operations research as an academic discipline

came in 1948 when a course in nonmilitary techniques was introduced
at the Massachusetts Institute of Technology in Cambridge. In 1952 a
curriculum leading to a master's and doctoral degree was established at
the Case Institute of Technology (now Case Western Reserve University)
in Cleveland. Since then many major academic institutions in the United
States have introduced programs. In the United Kingdom courses were
initiated at the University of Birmingham in the early 1950s. The first
chair in operations research was created at the newly formed University
of Lancaster in 1964. Similar developments have taken place in most
countries in which a national operations research society exists.

The first scholarly journal, the Operational Research Quarterly,

published in the United Kingdom, was initiated in 1950; in 1978 its name
was changed to the Journal of the Operational Research Society. It was
followed in 1952 by the Journal of the Operations Research Society of
America, which was renamed Operations Research in 1955. The
International Federation of Operational Research Societies initiated the
International Abstracts in Operations Research in 1961.

Despite its rapid growth, operations research is still a relatively young

scientific activity. Its techniques and methods, and the areas to which
they are applied, can be expected to continue to expand rapidly. Most
of its history lies in the future.

Essential character
Three essential characteristics of operations research are a systems
orientation, the use of interdisciplinary teams, and the application of
scientific method to the conditions under which the research is
conducted
Systems orientation

The systems approach to problems recognizes that the behaviour of any

part of a system has some effect on the behaviour of the system as a
whole. Even if the individual components are performing well, however,
the system as a whole is not necessarily performing equally well. For
example, assembling the best of each type of automobile part,
regardless of make, does not necessarily result in a good automobile or
even one that will run, because the parts may not fit together. It is the
interaction between parts, and not the actions of any single part, that
determines how well a system performs.

Thus, operations research attempts to evaluate the effect of changes in

any part of a system on the performance of the system as a whole and
to search for causes of a problem that arises in one part of a system in
other parts or in the interrelationships between parts. In industry, a
production problem may be approached by a change in marketing
policy. For example, if a factory fabricates a few profitable products in
large quantities and many less profitable items in small quantities, long
efficient production runs of high-volume, high-profit items may have to
be interrupted for short runs of low-volume, low-profit items. An
operations researcher might propose reducing the sales of the less
profitable items and increasing those of the profitable items by placing
salesmen on an incentive system that especially compensates them for
selling particular items.

The Interdisciplinary team

Scientific and technological disciplines have proliferated rapidly in the
last 100 years. The proliferation, resulting from the enormous increase
in scientific knowledge, has provided science with a filing system that
permits a systematic classification of knowledge. This classification
system is helpful in solving many problems by identifying the proper
discipline to appeal to for a solution. Difficulties arise when more
complex problems, such as those arising in large organized systems, are
encountered. It is then necessary to find a means of bringing together
diverse disciplinary points of view. Furthermore, since methods differ
among disciplines, the use of interdisciplinary teams makes available a
much larger arsenal of research techniques and tools than would
otherwise be available. Hence, operations research may be
characterized by rather unusual combinations of disciplines on research
teams and by the use of varied research procedures.

Methodology
Until the 20th century, laboratory experiments were the principal and
almost the only method of conducting scientific research. But large
systems such as are studied in operations research cannot be brought
into laboratories. Furthermore, even if systems could be brought into
the laboratory, what would be learned would not necessarily apply to
their behaviour in their natural environment, as shown by early
experience with radar. Experiments on systems and subsystems
conducted in their natural environment (“operational experiments”) are
possible as a result of the experimental methods developed by the
British statistician R.A. Fisher in 1923–24. For practical or even ethical
reasons, however, it is seldom possible to experiment on large
organized systems as a whole in their natural environments. This results
in an apparent dilemma: to gain understanding of complex systems
experimentation seems to be necessary, but it cannot usually be carried
out. This difficulty is solved by the use of models, representations of
the system under study. Provided the model is good, experiments
(called “simulations”) can be conducted on it, or other methods can be
used to obtain useful results.
Phases of operations research  Problem formulation
To formulate an operations research problem, a suitable measure of
performance must be devised, various possible courses of action defined
(that is, controlled variables and the constraints upon them), and
relevant uncontrolled variables identified. To devise a measure of
performance, objectives are identified and defined, and then
quantified. If objectives cannot be quantified or expressed in rigorous
(usually mathematical) terms, most operations research techniques
cannot be applied. For example, a business manager may have the
acquisitive objective of introducing a new product and making it
profitable within one year. The identified objective is profit in one
year, which is defined as receipts less costs, and would probably be
quantified in terms of sales. In the real world, conditions may change
with time. Thus, though a given objective is identified at the beginning
of the period, change and reformulation are frequently necessary.

Detailed knowledge of how the system under study actually operates

and of its environment is essential. Such knowledge is normally acquired
through an analysis of the system, a four-step process that involves
determining whose needs or desires the organization tries to satisfy;
how these are communicated to the organization; how information on
needs and desires penetrates the organization; and what action is
taken, how it is controlled, and what the time and resource
requirements of these actions are. This information can usually be
represented graphically in a flowchart, which enables researchers to
identify the variables that affect system performance.

Once the objectives, the decision makers, their courses of action, and
the uncontrolled variables have been identified and defined, a measure
of performance can be developed and selection can be made of a
quantitative function of this measure to be used as a criterion for the
best solution.

The type of decision criterion that is appropriate to a problem depends

on the state of knowledge regarding possible outcomes. Certainty
describes a situation in which each course of action is believed to result
in one particular outcome. Risk is a situation in which, for each course
of action, alternative outcomes are possible, the probabilities of which
are known or can be estimated. Uncertainty describes a situation in
which, for each course of action, probabilities cannot be assigned to the
possible outcomes.

In risk situations, which are the most common in practice, the objective
normally is to maximize expected (long-run average) net gain or gross
gain for specified costs, or to minimize costs for specified benefits. A
business, for example, seeks to maximize expected profits or minimize
expected costs. Other objectives, not necessarily related, may be
sought; for example, an economic planner may wish to maintain full
employment without inflation; or different groups within an
organization may have to compromise their differing objectives, as
when an army and a navy, for example, must cooperate in matters of
defense.

In approaching uncertain situations one may attempt either to maximize

the minimum gain or minimize the maximum loss that results from a
choice; this is the “minimax” approach. Alternatively, one may weigh
the possible outcomes to reflect one's optimism or pessimism and then
apply the minimax principle. A third approach, “minimax regret,”
attempts to minimize the maximum deviation from the outcome that
would have been selected if a state of certainty had existed before the
choice had been made.

Each identified variable should be defined in terms of the conditions

under which, and research operations by which, questions concerning its
value ought to be answered; this includes identifying the scale used in
measuring the variable.

 Model construction

A model is a simplified representation of the real world and, as such,

includes only those variables relevant to the problem at hand. A model
of freely falling bodies, for example, does not refer to the colour,
texture, or shape of the body involved. Furthermore, a model may not
include all relevant variables because a small percentage of these may
account for most of the phenomenon to be explained. Many of the
simplifications used produce some error in predictions derived from the
model, but these can often be kept small compared to the magnitude of
the improvement in operations that can be extracted from them. Most
operations research models are symbolic models because symbols
represent properties of the system. The earliest models were physical
representations such as model ships, airplanes, tow tanks, and wind
tunnels. Physical models are usually fairly easy to construct, but only
for relatively simple objects or systems, and are usually difficult to
change.

The next step beyond the physical model is the graph, easier to
construct and manipulate but more abstract. Since graphic
representation of more than three variables is difficult, symbolic
models came into use. There is no limit to the number of variables that
can be included in a symbolic model, and such models are easier to
construct and manipulate than physical models.

Symbolic models are completely abstract. When the symbols in a model

are defined, the model is given content or meaning. This has important
consequences. Symbolic models of systems of very different content
often reveal similar structure. Hence, most systems and problems
arising in them can be fruitfully classified in terms of relatively few
structures. Furthermore, since methods of extracting solutions from
models depend only on their structure, some methods can be used to
solve a wide variety of problems from a contextual point of view.
Finally, a system that has the same structure as another, however
different the two may be in content, can be used as a model of the
other. Such a model is called an analogue. By use of such models much
of what is known about the first system can be applied to the second.

Despite the obvious advantages of symbolic models there are many

cases in which physical models are still useful, as in testing physical
structures and mechanisms; the same is true for graphic models.
Physical and graphic models are frequently used in the preliminary
phases of constructing symbolic models of systems.

Operations research models represent the causal relationship between

the controlled and uncontrolled variables and system performance; they
must therefore be explanatory, not merely descriptive. Only
explanatory models can provide the requisite means to manipulate the
system to produce desired changes in performance.

Operations research analysis is directed toward establishing cause-and-

effect relations. Though experiments with actual operations of all or
part of a system are often useful, these are not the only way to analyze
cause and effect. There are four patterns of model construction, only
two of which involve experimentation: inspection, use of analogues,
operational analysis, and operational experiments. They are considered
here in order of increasing complexity.
In some cases the system and its problem are relatively simple and can
be grasped either by inspection or from discussion with persons familiar
with it. In general, only low-level and repetitive operating problems,
those in which human behaviour plays a minor role, can be so treated.

When the researcher finds it difficult to represent the structure of a

system symbolically, it is sometimes possible to establish a similarity, if
not an identity, with another system whose structure is better known
and easier to manipulate. It may then be possible to use either the
analogous system itself or a symbolic model of it as a model of the
problem system. For example, an equation derived from the kinetic
theory of gases has been used as a model of the movement of trains
between two classification yards. Hydraulic analogues of economies
and electronic analogues of automotive traffic have been constructed
with which experimentation could be carried out to determine the
effects of manipulation of controllable variables. Thus, analogues may
be constructed as well as found in existing systems.

In some cases analysis of actual operations of a system may reveal its

causal structure. Data on operations are analyzed to yield an
explanatory hypothesis, which is tested by analysis of operating data.
Such testing may lead to revision of the hypothesis. The cycle is
continued until a satisfactory explanatory model is developed.

For example, an analysis of the cars stopping at urban automotive

service stations located at intersections of two streets revealed that
almost all came from four of the 16 possible routes through the
intersection (four ways of entering times four ways of leaving).
Examination of the percentage of cars in each route that stopped for
service suggested that this percentage was related to the amount of
time lost by stopping. Data were then collected on time lost by cars in
each route. This revealed a close inverse relationship between the
percentage stopping and time lost. But the relationship was not linear;
that is, the increases in one were not proportional to increases in the
other. It was then found that perceived lost time exceeded actual lost
time, and the relationship between the percentage of cars stopping and
perceived lost time was close and linear. The hypothesis was
systematically tested and verified and a model constructed that related
the number of cars stopping at service stations to the amount of traffic
in each route through its intersection and to characteristics of the
station that affect the time required to get service.

In situations where it is not possible to isolate the effects of individual

variables by analysis of operating data, it may be necessary to resort to
operational experiments to determine which variables are relevant and
how they affect system performance.
Such is the case, for example, in attempts to quantify the effects of
advertising (amount, timing, and media used) upon sales of a consumer
product. Advertising by the producer is only one of many controlled and
uncontrolled variables affecting sales. Hence, in many cases its effect
can only be isolated and measured by controlled experiments in the
field.

The same is true in determining how the size, shape, weight, and price
of a food product affect its sales. In this case laboratory experiments on
samples of consumers can be used in preliminary stages, but field
experiments are eventually necessary. Experiments do not yield
explanatory theories, however. They can only be used to test
explanatory hypotheses formulated before designing the experiment
and to suggest additional hypotheses to be tested.

It is sometimes necessary to modify an otherwise acceptable model

because it is not possible or practical to find the numerical values of the
variables that appear in it. For example, a model to be used in guiding
the selection of research projects may contain such variables as “the
probability of success of the project,” “expected cost of the project,”
and its “expected yield.” But none of these may be calculable with any
reliability.

Models not only assist in solving problems but also are useful in
formulating them; that is, models can be used as guides to explore the
structure of a problem and to reveal possible courses of action that
might otherwise be missed. In many cases the course of action revealed
by such application of a model is so obviously superior to previously
considered possibilities that justification of its choice is hardly required.

In some cases the model of a problem may be either too complicated or

too large to solve. It is frequently possible to divide the model into
individually solvable parts and to take the output of one model as an
input to another. Since the models are likely to be interdependent,
several repetitions of this process may be necessary.

Deriving solutions from models

Procedures for deriving solutions from models are either deductive or

inductive. With deduction one moves directly from the model to a
solution in either symbolic or numerical form. Such procedures are
supplied by mathematics; for example, the calculus. An explicit
analytical procedure for finding the solution is called an algorithm.

Even if a model cannot be solved, and many are too complex for
solution, it can be used to compare alternative solutions. It is
sometimes possible to conduct a sequence of comparisons, each
suggested by the previous one and each likely to contain a better
alternative than was contained in any previous comparison. Such a
solution-seeking procedure is called heuristic.

Inductive procedures involve trying and comparing different values of

the controlled variables. Such procedures are said to be iterative
(repetitive) if they proceed through successively improved solutions
until either an optimal solution is reached or further calculation cannot
be justified. A rational basis for terminating such a process—known as
“stopping rules”—involves the determination of the point at which the
expected improvement of the solution on the next trial is less than the
cost of the trial.

Such well-known algorithms as linear, nonlinear, and dynamic

programming are iterative procedures based on mathematical theory.
Simulation and experimental optimization are iterative procedures
based primarily on statistics.