INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

Mechanical and Industrial Engineering Department

Course Title: Operations Research Subject Code: MIN-311

(L-T-P: 3-1-0; Credits: 4)

Rahul S. MULIK

[email protected]; [email protected]
Suggested Books
Introduction

The main origin of Operations Research was during the Second World-War. During
World-War II, the Military Commands of U.K. and U.S.A. engaged several inter-
disciplinary teams of scientists to undertake scientific research into strategic and
tactical military operations. Their mission was to formulate specific proposals and
plans for aiding the Military Commands to arrive at the decisions on optimal
utilization of scarce military resources and efforts, and also to implement the
decisions effectively.

“An art of winning the war without actually fighting it”

The first mathematical technique in this field (called the Simplex Method of
linear programming) was developed in 1947 by American mathematician, George B.
Dantzig.

While making use of the techniques of OR, a mathematical model of the

problem is formulated. This model is actually a simplified representation of the
problems in which only the most important features are considered for reasons of
simplicity. Then, an optimal or most favorable solution is found.
1. OR is a scientific method of providing executive departments with a quantitative
basis for decisions regarding the operations under their control.
-Morse and Kimbal (1946)
2. OR is a scientific method or providing executive with an analytical and
objective basis for decisions.
-P.M.S. Blackett (1948)
3. The term 'OR' has hitherto-fore been used 10 connate various attempts to study
operations of war by scientific methods. From a more general point of view, OR
can be considered to be an attempt to study those operations of modern society
which involved organizations of men or of men and machines.
-P.M. Morse (1948)
4. OR is the application of scientific methods, techniques and tools to problems
involving the operations of systems so as to provide these in control of the
operations with optimum solutions to the problem.
-Churchman, Acoff, Anroff (1957)
5. OR is an experimental and applied science devoted to observing. understanding
and predicting the behavior of purposeful man-machine systems and OR workers
are actively engaged in applying this knowledge to practical
Problem in business. government. and society.
-OR Society of America
APPLICATIONS IN MANAGEMENT

1. Finance, Budgeting and Investments

• Cash-flow analysis, long range capital requirements, dividend policies,
investment portfolios.
• Credit policies, credit risks and delinquent account procedures.
• Claim and complaint procedures.
2. Purchasing, Procurement and Exploration
• Rules for buying, supplies and stable or varying prices.
• Determination of quantities and timing of purchases.
• Bidding policies.
• Strategies for exploration and exploitation of raw material sources.
• Replacement policies.
3. Production Management
(i) Physical Distribution
(a) Location and size of warehouses, distribution centers and retail outlets.
(b) Distribution policy. .
( ii) Facilities Planning
(a) Numbers and location of factories, warehouses, hospitals etc.
(b) Loading and unloading facilities for railroads and trucks determining
the transport schedule.
(iii) Manufacturing
(a) Production scheduling and sequencing.
(b) Stabilization of production and employment training, layoffs and
optimum product mix.
( iv) Maintenance and Project Scheduling
(a) Maintenance policies and preventive maintenance.
(b) Maintenance crew sizes.
(c) Project scheduling and allocation of resources.
4. Marketing
(i) Product selection, timing, competitive actions.
(ii) Number of salesman, frequency of calling on accounts per cent of time
spent on prospects.
(iii) Advertising media with respect to cost and time.
5. Personnel Management
(i) Selection of suitable personnel on minimum salary.
(ii) Mixes of age and skills.
(iii) Recruitment policies and assignment of jobs.
6. Research and Development
(i) Determination of the areas of concentration of research and development.
(ii) Project selection.
(iii) Determination of time cost trade-off and control of development projects.
(iv) Reliability and alternative design.
Classification by Structure

(i) Iconic models. Iconic models represent the system as it is scaling it up or down
(i.e., by enlarging or reducing the size). In other words, it is an image. For example,
a toy airplane is an iconic model of a real one.
Other common examples of it are : photographs, drawings, maps etc. A
model of an atom is scaled up so as to make it visible to the naked eye. In a globe,
the diameter of the earth is scaled down, but the globe has approximately the same
shape as the earth, and the relative sizes of continents, seas, etc., are approximately
correct.
The iconic model is usually the simplest to conceive and the most specific and
concrete. Its function is generally descriptive rather than explanatory. Accordingly,
it cannot be easily used to determine or predict what effects many important
changes on the actual system.
(ii) Analogue models. The models, in which one set of properties is used to
represent another set of properties, are called analogue models. After the problem is
solved, the solution is re-interpreted in terms of the original system.
For example, graphs are very simple analogues because distance is used to represent
the properties such as : time, number, per cent, age, weight, and many other
properties.
Contour-lines on a map represent the rise and fall of the heights. In general,
analogues are less specific, less concrete but easier to manipulate than are iconic
models.
(iii) Symbolic (Mathematical) models.
The symbolic or mathematical model is one which employs a set of mathematical
symbols (i.e., letters, numbers, etc.) to represent the decision variables of the
system. These variables are related together by means of a mathematical equation or
a set of equations to describe the behaviour (or properties) of the system.
The solution of the problem is then obtained by applying well-developed
mathematical techniques to the model. The symbolic model is usually the easiest to
manipulate experimentally and it is most general and abstract. Its function is more
often explanatory rather than descriptive
Classification by Purpose
(i) Descriptive models. A descriptive model simply describe some aspects of a
situation based on observations, survey, questionnaire results or other available
data. The result of an opinion poll represents a descriptive model.
(ii) Predictive models. Such models can answer 'what if type of questions, i.e. they
can make predictions regarding certain events. For example, based on the
survey results and television networks such models attempt to explain and
predict the election results before all the votes are actually counted.
(iii) Prescriptive models. Finally, when a predictive model has been repeatedly
successful, it can be used to prescribe a source of action. For example, linear
programming is a prescriptive (or normative) model because it prescribes what
the managers ought to do.
Classification by Nature of Environment

(i) Deterministic models. Such models assume conditions of complete certainty

and perfect knowledge. For example, linear programming, transportation and
assignment models are deterministic type of models.
(ii) Probabilistic (or Stochastic) models. These types of models usually handle
such situations in which the consequences or payoff of managerial actions
cannot be predicted with certainty. However, it is possible to forecast a
pattern of events, based on which managerial decisions can be made. For
example, insurance companies are willing to insure against risk of fire,
accidents, sickness and so on, because the pattern of events have been
compiled in the form of probability distributions.
Classification by Behavior

(i) Static models. These models do not consider the impact of changes that takes
place during the planning horizon, i.e. they are independent of time. Also, in a
static model only one decision is needed for the duration of a given time period.

(ii) Dynamic models. In these models, time is considered as one of the important
variables and admit the impact of changes generated by time. Also in dynamic
models, not only one but a series of interdependent decisions is required during the
planning horizon.
Classification by Method of Solution

(i) Analytical models. These models have a specific mathematical structure and
thus can be solved by known analytical or mathematical techniques. For
example, a general linear programming model as well as the specially
structured transportation and assignment models are analytical models.
(ii) Simulation models. They also have a mathematical structure but they cannot
be solved by purely using the 'tools' and 'techniques' of mathematics. A
simulation model is essentially computer assisted experimentation on a
mathematical structure of a real time structure in order to study the system
under a variety of assumptions.
Classification by Use of Digital Computers

(i) Analogue and Mathematical models combined.

Sometimes analogue models are also expressed in tem1s of mathematical symbols.
Such models may belong to both the types in classification by structure.
For example, simulation model is of analogue type but mathematical formulae are also used
in it. Managers very frequently use this model to 'simulate' their decisions by summarizing
the activities of industry in a scale-down period.
(ii) Function models.
Such models are grouped on the basis of the function being performed. For
example, a function may serve to acquaint to scientist with such things as-tables, carrying
data, a blue-print of layouts, a program representing a sequence of operations (like in
computer programming).
(iii) Quantitative models. Such models are used to measure the observations.
For example, degree of temperature, yardstick, a unit of measurement of length
value, etc. Other examples of quantitative models are (i) transformation models
which are useful in converting a measurement of one scale to another (e.g.,
Centigrade vs Fahrenheit conversion scale)

(iv) Heuristic models. These models are mainly used to explore alternative
strategies (courses of action) that were overlooked previously, whereas
mathematical models are used to represent systems possessing wel(-defined
strategies. Heuristic models do not claim to find the best solution to the problem.
PRINCIPLES OF MODELLING

1. Do not build up a complicated model when simple one will suffice

2. Beware of molding the problem to fit the technique
3. The deduction phase of modelling must be conducted Rigorously
4. Models should be validated prior to implementation
5. A model should never be taken too literally
GENERAL METHODS FOR SOLVING 'OR' MODLES

Analytic Method. If the OR model is solved by using all the tools of classical
mathematics such as : differential calculus and finite differences available for this
task, then such type of solutions are called analytic solutions. Solutions of various
inventory models are obtained by adopting the so called analytic procedure.
Iterative Method. If classical methods fail because of complexity of the
constraints or of the number of variables, then we are usually forced to adopt an
iterative method. Such a procedure starts with a trial solution and a set of rules for
improving it.
The Monte-Carlo Method. The basis of so called Monte-Carlo technique is
random sampling of variable's values from a distribution of that variable. Monte-
Carlo refers to the use of sampling methods to estimate the value of non-
stochastic variables.
MAIN PHASES OF OR STUDY

Phase I : Formulating the problem

Phase II : Constructing a mathematical model
Phase III : Deriving the solutions from the model
Phase IV : Testing the model and its solution (updating the model).
Phase V : Controlling the solution
Phase VI: Implementing the solution