Operations Research Chapter 1 2023 GC

CHAPTER ONE
OPERATIONS RESEARCH – AN OVERVIEW
1.1 The origin and Development of operations research
The term Operations Research, was first coined in 1940 by McClosky and Trefthen in a
small town, Bowdsey, of the United Kingdom. This new science came into existence in military
context. Its concept was derived from the fact that “Unity is strength”. Why unity is strength?
Because, when there is calamity to the nation, citizens of all shades join their opinions together
to do their might to solve the problem. How this came to be proved? It was proved during World
War II.
Two blocks took part in the Second World War, namely, Axes power and Allied power.
Axes forces include Nazi German, Italy and Japan, in one block. Contrarily, the allied forces
included America, Great Britain and Russia. During World War II, there was a natural calamity
to Great Britain from Nazi German Forces. Superior weapons and strategy of Germans became a
real threat to Allied Forces. Consequently, Allied Forces were threatened on land, sea and air
using superior weapons such as submarines, U-boats and air crafts. Being challenged by this
serious situation, the Government of Great Britain appealed to the people and requested talents
from all walks of life to join together and find a solution to the problem in order to overcome the
threatening situation. Based on an appeal made by Government of Great Britain, military
management called on scientists from various disciplines and organized them into teams to assist
in solving strategic and tactical problems, i.e., to discuss, evolve and suggest ways and means to
improve the execution of various military projects. Accordingly, scientists reported to the
military management and they were grouped into various teams and each team is given strategic
problem to come up with the possible solution. These combined efforts produced fantastic
results. By their joint efforts, experience and deliberations, they suggested certain approaches
that showed remarkable progress. Based on suggestions provided by teams of scientists, Allied
forces defeated Axes forces.
This signaled to the birth of Operations Research as a separate discipline. This new
approach to systematic and scientific study of operations of the systems was called the
Operations Research or Operational Research (abbreviated as O.R.)

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 Operations Research Chapter 1 2023 GC
Following the end of World War II, the success of military teams attracted the attention
of industrial managers who were seeking solutions to their complex executive-type problems.
During the year 1950, O.R. achieved recognition as a subject worthy of academic study in the
Universities. Since then, the subject has been gaining more and more importance for the students
of Economics, Management, Public Administration, Behavioral Sciences, Social Work,
Mathematics, Commerce and Engineering. With a view to increasing the impact of O.R. and
establishing rapport between all its serious students and users, the Operations Research society of
America was formed in 1950. Other countries followed suit, and in 1957 the International
Federation of O.R. Societies was established.
O.R. is, therefore, a systematic method consisting of stating the problem in clear terms,
collecting facts and data, analyzing them, and reaching certain conclusions in the form of
solutions to the problem. The ultimate aim of it is to find out an optimum solution which is
most appropriate under the given circumstances.
1.2 DEFINITIONS:
Dictionary meaning of research is “a careful investigation or inquiry especially through
search for new facts”. It also means “systematized effort to gain new knowledge”. Thus,
Operations Research could be thought of as a “systematized efforts to solve a given problem
through careful investigation”.
As far as the definition of O.R. is concerned, there is no single universally accepted
definition. It is so because it has been defined by many authors in different ways. However, the
following definition is proposed for this study to be used in common.
Operations Research is a systematic analysis of a problem through scientific
methods, carried out by appropriate specialists, working together as a team, constituted at
the instance of management for the purpose of finding an optimum and the most
appropriate solution, to meet the given objective under a given set of constraints.
According to the definition given by operational research society, UK, Operations
Research is the application of the methods of science to complex problems in the direction and
management of large systems of men, machines, materials and money in industry, business,
government and defense. The distinctive approach is to develop a scientific model of the system
incorporating measurements of factors such as chance and risk, with which to predict and

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 Operations Research Chapter 1 2023 GC
compare the outcomes of alternative decisions, strategies or controls. The purpose is to help
management in determining its policy and actions scientifically.
According to the definition given by operational research society, America, operations
research is concerned with scientifically deciding how to best design and operate man-machine
system usually requiring allocation of scarce resources.
According to Daellenbach and George 1978, “Operations Research is the systematic
application of quantitative methods, techniques and tools to the analysis of problems involving
the operation of systems.”
According to S L Cook 1977, Operations Research has been described as a method, an
approach, a set of techniques, a team activity, a combination of many disciplines, an extension of
particular disciplines (mathematics, engineering, economics, etc.) a new discipline, a vocation,
even a religion. It is perhaps some of all these things.
There are many more definitions as various authors have defined the term differently. As
it has been written by many authors, discussing all the definitions exhaustively is very
impossible. The student, therefore, can consult more definitions from such books as J.K. Sharma,
1997, S.D Sharma and others.
Meaning of O.R. is evident from the concept given in the definitions here above.
However, some more aspects of O.R. are given here under to get better insight into it.
1. O.R is the application of scientific methods, techniques and tools to the problem to
find out an answer.
2. O.R. is a management tool, in the hands of a manager, to take a decision.
3. O.R. is a scientific approach to the decision-making process.
4. O.R. is an “Applied Research” which aims at finding a solution for immediate
problem facing a society, industry or a business enterprise. It is not fundamental
research.
5. O.R. is decision-oriented research, which provides quantitative basis to managers of
the organization for taking decisions.
6. O.R. is applied decision theory. It uses scientific, mathematical and logical means to
take decisions.

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 Operations Research Chapter 1 2023 GC
N.B. - O.R. is a team effort. Team efforts are as old as mankind. What is then new in
O.R. approach? O.R. is a systematic approach using only scientific methods to find a
solution. This distinguishes O.R. from team efforts-past or present.
Question: Define the meaning of Operations Research and discuss the origin and
development of it.
1.3 NATURE AND CHARACTERISTIC OF OPERATIONS RESEARCH:
Some significant features of O.R. are given here under as follows:
i) Decision-making. Primarily O.R. is addressed to managerial decision-making or
problem-solving. A major premise of O.R. is decision-making.
ii) Scientific approach. O.R. employs scientific methods for the purpose of solving
problems. It is a formalized process of reasoning.
iii) Objective. O.R. attempts to locate the best or optimal solution to the problem under
consideration. For this purpose, it is necessary that a measure of effectiveness is
defined based on the goals of organization. This measure is then used as the basis to
compare the alternative courses of action.
iv) Inter-disciplinary team approach. O.R. is inter-disciplinary in nature and requires a
team approach to arriving at a solution of the problem. Managerial problems have
economic, physical, psychological, biological, sociological and engineering aspects.
This requires a blend of people with expertise in the areas of mathematics, statistics,
engineering, economics, management, computer science and so on.
v) Digital computer. Use of a digital computer has become an integral part of the O.R.
approach to decision-making. The computer may be required due to the complexity of
the model, volume of data required and the computations to be made.
vi) Methodological Approach. O.R. is the application of scientific methods, techniques
and tools to problems involving the operations of systems so as to provide optimum
solutions to the problems. The scientific method consists of observing and finding the
problem; formulating and testing the hypothesis; and analyzing the results of the test.
The data so obtained is then used to decide whether the hypothesis should be accepted
or not. If the hypothesis is accepted, the results should be implemented. Otherwise, an
alternative hypothesis has to be accepted.

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 Operations Research Chapter 1 2023 GC
vii) Wholistic Approach. While arriving at a decision, an operations research team
examines the relative importance of all conflicting and multiple objectives and the
validity of claims of various departments of the organization from the perspective of
the whole organization.
It is not so easy to exhaustively list down the features of O.R. as the matter of fact that it
constitutes very broad area. However, the following features can also be mentioned in
addition to those already listed here above.
 Existence of a problem.
 Intention to solve the problem.
 Application of system concept and system analysis to problem.
 Scientific approach to solving the existing problem.
 Formation of a group consisting of different specialists.
 Multi-disciplinary team with common aim.
 Team is constituted by management.
 O.R. assists the management to take decision.
 O.R. role is that of recommendatory nature.
 Existence of a number of solutions to the problem.
 Solution must be optimum.
 Solution must be most appropriate.
 Solution must meet the objectives within the constraints.
 Solution must be given in quantifiable terms.
 Solution must be practical, application specific and result-oriented.
1.4 APPLICATIONS OF OPERATIONS RESEARCH
Operation Research is mainly concerned with the techniques of applying scientific
knowledge, besides the development of science. It provides an understanding which gives the
expert/manager new insights and capabilities to determine better solutions in his decision-
making problems, with great speed, competence and confidence. In recent years, O.R. has
successfully entered many different areas of research in Defense, Government, Service
Organizations and Industry. Some applications of O.R. in the functional areas of management are
briefly presented here under.

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Finance, Budgeting, and Investment
i) Cash flow analysis, long range capital requirements, dividend policies, investment portfolios.
ii) Credit policies, credit risks and adequate account procedures.
iii) Claim and complaint procedure.
Marketing
i) Product selection, timing, comparative actions.
ii) Advertising media with respect to cost and time.
iii) Number of salesmen, frequency of calling of account, etc.
iv) Effectiveness of market research.
Physical Distribution
i) Location and size of warehouses, distribution centers, retail outlets, etc.
ii) Distribution policy.
Purchasing, Procurement and Exploration
i) Rules of buying.
ii) Determine the quality and timing of purchase.
iii) Bidding policies and vendor analysis.
iv) Equipment replacement policies.
Personnel
i) Forecasting the manpower requirement, recruitment policies and job assignments.
ii) Selection of suitable personnel with due consideration for age and skills, etc.
iii) Determination of optimum number of persons for each service center.
Production
i) Scheduling and sequencing the production run by proper allocation of machines.
ii) Calculating the optimum product mix.
iii) Selection, location and design of sites for the production plant.
Research and Development
i) Reliability and evaluation of alternative designs.
ii) Control of developed projects.
iii) Co-ordination of multiple research projects.
iv) Determination of time and cost requirements.

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 Operations Research Chapter 1 2023 GC
Besides the above mentioned applications of O.R. in the context of modern management,
its use has now extended to a wide range of problems, such as the problems of communication
and information, socio-economic fields and national planning.

1.5 OPPORTUNITIES AND SHORTCOMINGS OF OPEERATIOS RESEARCH

The use of O.R. to improve decision-making has become almost universal today. However,
this remarkable achievement of O.R. is not totally free from shortcomings. Certain shortcomings
result from lack of awareness on the part of managers about their roles, while others result due to
avoidance of the behavioral and organizational issues which are a part of every successful
application.
Opportunities of O.R.
1. Using O.R. approach, the decision-maker can determine a solution to his routine or repetitive
problem. For obtaining solution of such type of problems, it is necessary to build a model so
that future solution can be obtained using the model thus freeing managers to concentrate on
more pressing matters.
2. O.R. requires business managers to be quite explicit about their objective, their assumptions
and the way of visualizing the constraints.
3. While using O.R. approach, a manager has to consider very carefully all those variables
which influence his decisions and the way these variables in a problem interact with each
other. He then selects a decision which is best for the organization as whole.
4. O.R. approach allows a decision-maker to solve a complex problem involving multiple
variables much more quickly than if he had to compute them using traditional methods.
Some times it may not be possible to solve such complex problems without using O.R.
methods.
5. Using O.R. approach, a decision-maker can examine a situation from various angles by
simulating the model which he has constructed for the real problem. He can change various
conditions under which decisions are being made, and examine the effect of these changes
through appropriate experiments on the model, to determine the best or optimal solution for
the problem under consideration. All these experiments can be carried out without causing
any series damage to the existing system or incurring excessive cost.

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Shortcomings of O.R.
1) There are certain problems which a decision-maker may have to solve only once.
Constructing a complex O.R. model for solving such problems is often too expensive when
compared with the cost of other less sophisticated approaches available to solve them.
2) Sometimes O.R. specialists become too much enamored with the model they have built and
forget the fact that their model does not represent the “real world problem” in which
decisions have to be made.
3) Sometimes the basic data are subject to frequent changes. In such cases, modification of O.R.
models is a costly affair.
4) Many O.R. models are so complex that they cannot be solved without the use of computer.
Also, the solutions obtained from these models are difficult to explain to managers and hence
fail to gain their support and confidence.
5) Magnitude of computation involved, lack of consideration for non-quantifiable factors and
psychological issues involved in implementation are some of the other shortcomings of O.R.

1.1. Models and modeling in operations research

The approximation or abstraction, maintaining only the essential elements of the system,
which may be constructed with various forms by establishing relationships among
specified variables and parameters of the system, is called a model.

Models attempt to describe the essence of a solution or activity by abstracting from

reality so the decision maker can study the relationship among relevant variables in
isolation. Hence, models do not, and cannot represent every aspect of reality because of
the innumerable and changing characteristics of the real life problems to be represented.
Instead, they are limited approximation of reality.

A model is constructed to analyze and understand the given system for the purpose of
improving its performance. The reliability of the solution obtained from a model
depends on the validity of the model in representing the system under study.

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 Operations Research Chapter 1 2023 GC
The key to model building lies in abstracting only the relevant variables that affect the
criteria of the measures of performance of the given system and expressing the
relationship in a situation form. A model should be as simple as possible so as to give the
desired result.

There are many ways to classify models. Classification schemes can also provide a useful
frame of reference for modelers. There are five classification schemes for models.

1. Classification based on structure

a) Physical models

The models provide a physical appearance of the real object under study either reduced in
size or scaled up. Physical models are useful only in design problems because they
are easy to observe, build and describe.

i. Iconic models: - retain some of the physical properties and characteristics of

the system they represent. An iconic model is either in an idealized form or is
a scaled version of the system. Such models represent the system as it is by
scaling it up or down (i.e. enlarging or reducing the size).
Examples: blueprints of a home, maps, globes, photographs, drawings, a
model airplane in a wind tunnel, trains etc.

The chief merit of an iconic model is that it is concrete and specific. It resembles visually
the thing it represents and therefore, there are likely to be fewer problems in translating
any “findings” from the model into the real-life situation. However, the disadvantage of
such models is that they often do not lead themselves to manipulation for experimental
purpose.

ii. Analogue models: - represent a system by a set of properties different from

those of the original system and does not resemble it physically. After the
problem is solved, the solution is reinterpreted in terms of the original
system.

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 Operations Research Chapter 1 2023 GC
Examples: organizational chart, maps in different colures may represent
water, desert and other geographical feature. These models are less specific
and concrete but are easier to manipulate and are more general than iconic
models.
b) Symbolic models

Use symbols (letters, numbers) and functions to represent variables and their
relationships to describe the properties of the system. These models are also used to
represent relationships which can be represented in a physical form.

i. Verbal models: - describe a situation in written or spoken language. Example the

perimeter (P) of a rectangle is equal to the sum total of two times the length (L) and
two times the width of the rectangle.

ii. Mathematical models: - involve the use of mathematical symbols, letters, numbers
and mathematical operations (+, –, ÷, ×) to represent relationships among
variables of the system to describe its properties or behaviors.
Example: P = 2L + 2W

. Max . Z=4500 x 1+ 2000 x 2

¿ ject ¿ :
x 1+ x 2<60
x 1+2 x 2< 45
x 1<15
x 1 , x 2> 0
x 1∧x 2 are decision variables
2. Classification based on function or purpose
a) Descriptive models: - simply describe some aspects of a situation, based on
observation, survey, questionnaire results or other available data of a situation and
do not predictive or recommend anything.

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 Operations Research Chapter 1 2023 GC
Example: - organizational chart, plant layout diagram, block diagram
representing an algorithm or method for solving a problem etc.

b) Predictive models: - these models indicate “if these occurs then what will follow”.
They relate dependent and independent variables and permit trying out “what if
questions’. Used to predict the outcomes due to a given set of alternatives for the
problem.
c) Normative (optimization) models: - provide the best or optimal solution to
problems subject to certain limitations on the use of resources. Are also called
prescriptive models because they provide what the decision maker out to do.
3. Classification based on time reference
a. Static models: - static models represent a system at some specified time and do
not account for changes over time.
b. Dynamic models; - time is considered as one of the variables and allows the
impact of changes due to change in time. Thus the sequence of interrelated
decisions over a period of time is made to select the optimal course of action to
optimize the given objective.

4. Classification based on degree of certainty

a) Deterministic models

If all the parameters, constants and functional relationships are assumed to be known with
certainty when the decision is made, the model is said to be deterministic. Thus, in such
case, the outcome associated with a particular course of action is known. That is for a
specific set of input values, there is a uniquely determined output which represents the
solution of the model under considerations of certainty. The results of the models assume
single value.

b) Probabilistic (stochastic) models

Models in which at least one parameter or decision variable is a random variable are
called probabilistic (or stochastic) models. Since at least one decision variable is random,

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 Operations Research Chapter 1 2023 GC
therefore, an independent variable which is the function of dependent variable(s) will also
be random. This means consequence or payoff due to certain changes in the independent
variable cannot be predicted with certainty. However, it is possible to predict a pattern of
values of both the variables by their probability distribution.

Example: insurance against risk of fire, accidents, sickness, where the pattern of events
is studied in the form of probability distribution.

5. Classification based on method of solution or quantification:

a. Heuristic models: These models employ some set of rules which, though
perhaps not optimal, do facilitate solution of problems when applied in a
consistent manner.
b. Analytical models: it has specific analytical structure and thus can be solved
by known analytical or mathematical techniques. Any optimization model
(which requires maximization or minimization of an objective function) is an
analytical model.
c. Simulation model: it has a mathematical structure but is not solved by
applying mathematical techniques to get a solution. Instead it is computer
assisted experimentation on a mathematical structure of a real life problem. It
is more flexible than a mathematical model and helps to represent complex
systems which otherwise can’t be represented by mathematically.

Review Questions
1. Model building is the essence of the operations research approach? Discuss.
2. What is meant by a mathematical model of a real situation? Discuss the importance of
models in the solution of O.R. problems.
3. What is the purpose of a mathematical model? How does a model achieve this purpose?
Consider in your answer the concept that a model is an abstraction of reality.
4. Explain how and why operations research methods have been valuable in aiding
executive decisions?

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