Operations research

From Wikipedia, the free encyclopedia

This article may require cleanup to meet Wikipedia's quality standards. Please improve this article if
you can. The talk page may contain suggestions. (February 2010)

Operations research (also referred to as decision science, or management science) is an

interdisciplinary mathematical science that focuses on the effective use of technology by organizations. In
contrast, many other science & engineering disciplines focus on technology giving secondary considerations to
its use.

Employing techniques from other mathematical sciences — such as mathematical modeling, statistical

analysis, and mathematical optimization — operations research arrives at optimal or near-optimal solutions to
complex decision-making problems. Because of its emphasis on human-technology interaction and because of
its focus on practical applications, operations research has overlap with other disciplines, notably industrial
engineering and management science, and draws on psychology and organization science. Operations
Research is often concerned with determining themaximum (of profit, performance, or yield) or minimum (of
loss, risk, or cost) of some real-world objective. Originating in military efforts before World War II, its techniques
have grown to concern problems in a variety of industries. [1]

Contents
 [hide]

1 Overview

2 History

o 2.1 Historical origins

o 2.2 Second World War

o 2.3 After World War II

3 Problems addressed with operational

research

4 Management science

o 4.1 Techniques

o 4.2 Applications of management

science

5 Societies and journals

6 See also

7 Notes

8 References
 9 Further reading

10 External links

[edit]Overview

Operational research encompasses a wide range of problem-solving techniques and methods applied in the
pursuit of improved decision-making and efficiency. [2] Some of the tools used by operational researchers
are statistics, optimization, probability theory, queuing theory, game theory, graph theory, decision
analysis, mathematical modeling and simulation. Because of the computational nature of these fields, OR also
has strong ties to computer science and analytics. Operational researchers faced with a new problem must
determine which of these techniques are most appropriate given the nature of the system, the goals for
improvement, and constraints on time and computing power.

Work in operational research and management science may be characterized as one of three categories: [3]

 Fundamental or foundational work takes place in three mathematical

disciplines: probability, optimization, and dynamical systems theory.

 Modeling work is concerned with the construction of models, analyzing them mathematically,
implementing them on computers, solving them using software tools, and assessing their effectiveness
with data. This level is mainly instrumental, and driven mainly by statistics and econometrics.

 Application work in operational research, like other engineering and economics' disciplines, attempts to

use models to make a practical impact on real-world problems.

The major subdisciplines in modern operational research, as identified by the journal Operations Research,
[4]
 are:

 Computing and information technologies

 Decision analysis

 Environment, energy, and natural resources

 Financial engineering

 Manufacturing, service sciences, and supply chain management

 Marketing Engineering [5]

 Policy modeling and public sector work

 Revenue management

 Simulation

 Stochastic models

 Transportation
 Characteristics of Operations Research
By an eHow Contributor
Operations research, an interdisciplinary division of mathematics and science, uses statistics,
algorithms and mathematical modeling techniques to solve complex problems for the best possible
solutions. This science is basically concerned with optimizing maxima and minima of the objective
functions involved. Examples of maxima could be profit, performance and yield. Minima could be
loss and risk. The management of various companies has benefited immensely from operations
research. 

Operations research is also known as OR. It has basic characteristics such as systems orientation,
using interdisciplinary groups, applying scientific methodology, providing quantitative answers,
revelation of newer problems and the consideration of human factors in relation to the state under
which research is being conducted.

1. Systems Orientation
o This approach recognizes the fact that the behavior of any part of the system has an
effect on the system as a whole. This stresses the idea that the interaction between parts of the
system is what determines the functioning of the system. No single part of the system can have a
bearing effect on the whole.
OR attempts appraise the effect the changes of any single part would have on the performance of
the system as a whole. It then searches for the causes of the problem that has arisen either in one
part of the system or in the interrelational parts.

Interdisciplinary groups
o The team performing the operational research is drawn from different disciplines. The
disciplines could include mathematics, psychology, statistics, physics, economics and engineering.
The knowledge of all the people involved aids the research and preparation of the scientific model.

Application of Scientific Methodology

o OR extensively uses scientific means and methods to solve problems. Most OR
studies cannot be conducted in laboratories, and the findings cannot be applied to natural
environments. Therefore, scientific and mathematical models are used for studies. Simulation of
these models is carried out, and the findings are then studied with respect to the real environment.

New Problems Revealed

o Finding a solution to a problem in OR uncovers additional problems. To obtain
maximum benefits from the study, ongoing and continuous research is necessary. New problems
must be pursued immediately to be resolved. A company looking to reduce costs in manufacturing
might discover in the process that it needs to buy one more component to manufacture the end
product. Such a scenario would result in unexpected costs and budget overruns. Ensuring flexibility
for such contingencies is a key characteristic of OR.

Provides Quantitative Answers

o The solutions found by using operations research are always quantitative. OR
considers two or more options and emphasizes the best one. The company must decide which
option is the best alternative for it.

Human Factors
o In other forms of quantitative research, human factors are not considered, but in OR,
human factors are a prime consideration. People involved in the process may become sick, which
would affect the company's output.

phases
1. Defining the problem and gathering data

A through study of the business system is carried out to enable the development of a

well-defines statement of the problem. The development includes determining the
appropriate objectives, constraints, interrelationships, possible alternative courses of
action, and so on.

2. Formulating a Mathematical Model
After the decision maker's problem is defined, the next phase is to reformulate this
problem in a form that is convenient for analysis. The usual way adopted in OR
approach is to construct a mathematical model that represents the essence of the
problem. Mathematical models are defined as idealized representations in terms
of mathematical symbols and expressions.
3.Implementation of the Model
The last phase of an OR study is to implement this system as prescribed. It is vital for
the OR team to participate in launching this phase. This ensures that model solutions
are correctly translated to an operating procedures. In addition it helps to rectify any
flaws in the solutions that are then uncovered.

Limitations of Operations Research

by ADMIN  on JULY 10, 2007
Operations research has been used to solve only a fairly limited
number of managerial problems. Its limitations should not be
overlooked.

In the first place, there is the sheer magnitude of the

mathematical and computing aspects. The number of variables
and interrelationships in many managerial problems, plus the
complexities of human relationships and reactions, calls for a
higher order of mathematics than nuclear physics does. The late
mathematical genius John von Neumann found, in his
development of the theory of games, that his mathematical
abilities soon reached their limit in a relatively simple strategic
problem. Managers are, however, a long way from fully using the
mathematics now available.

In the second place, although probabilities and approximations

are being substituted for unknown quantities and although
scientific method can assign values to factors that could never be
measured before, a major portion of important managerial
decisions still involves qualitative factors. Until these can be
measured, operations research will have limited usefulness in
these areas, and decisions will continue to be based on non-
quantitative judgments.

Related to the fact that many management decisions involve un-

measurable factors is the lack of information needed to make
operations research useful in practice. In conceptualizing a
problem area and constructing a mathematical model to represent
it, people discover variables about which they need information
that is not now available. To improve this situation, persons
interested in the practical applications of operations research
should place far more emphasis on developing this required
information.

Still another limitation is the gap between practicing managers

and trained operation researchers. Managers in general lack a
knowledge and appreciation of mathematics, just as
mathematicians lack an understanding of managerial problems.
This gap is being dealt with, to an increasing extent, by the
business schools and, more often, by business firms that team up
managers with operations research. But it is still the major
reasons why firms are slow to use operations research.

A final drawback of operations research at least in its application

to complex problems is that analyses and programming are
expensive and many problems are not important enough to justify
this cost. However, in practice this has not really been a major
limitation.

Limitations OF OPERATION RESEARCH: 

 Dependence on an Electronic Computer: O.R. techniques

try to find out an optimal solution taking into account all the
factors. In the modern society, these factors are enormous
and expressing them in quantity and establishing
relationships among these require voluminous calculations
that can only be handled by computers. 
 Non-Quantifiable Factors: O.R. techniques provide a
solution only when all the elements related to a problem can
be quantified. All relevant variables do not lend themselves
to quantification. Factors that cannot be quantified find no
place in O.R. models.
 Distance between Manager and Operations
Researcher: O.R. being specialist's job requires a
mathematician or a statistician, who might not be aware of
the business problems. Similarly, a manager fails to
understand the complex working of O.R. Thus, there is a gap
between the two.
 Money and Time Costs: When the basic data are subjected
to frequent changes, incorporating them into the O.R. models
is a costly affair. Moreover, a fairly good solution at present
may be more desirable than a perfect O.R. solution available
after sometime.
 Implementation: Implementation of decisions is a delicate
task. It must take into account the complexities of human
relations and behaviour.