OPERATIONS RESEARCH
An Introduction
INTRODUCTION
Operations Research (O.R.), or operational
research is a discipline that deals with the
application of advanced analytical methods to
help make better decisions.
The terms management science and analytics
are sometimes used as synonyms for operations
research.
What is Management Science?
Management science (MS), is an interdisciplinary
branch of applied mathematics, engineering and sciences
that uses various scientific research-based principles,
strategies, and analytical methods including
mathematical modeling, statistics and algorithms to
improve an organization's ability to take rational and
meaningful management decisions.
The discipline is typically concerned with maximizing
profit, assembly line performance, crop yield,
bandwidth, etc or minimizing expenses, loss, risk, etc.
Theory
Some of the fields that are included in Management
Science are:
Data mining
Optimization
Decision analysis
Probability and statistics
Engineering
Project management
Forecasting
Simulation
Game theory
Social network
Industrial engineering Transportation forecasting
Logistics models
Mathematical modeling Supply chain management
History
As a formal discipline, operations research
originated in the efforts of military planners during
World War II.
In the decades after the war, the techniques began to
be applied more widely to problems in business,
industry and society.
Today, operations research is used by virtually every
business and government throughout the world and
remains an active area of academic research.
OPERATION RESEARCH
Operations research overlaps with other disciplines,
notably industrial engineering and operations
management.
Operations research (OR) seeks the determination
of the best (optimum) course of action of a decision
problem under the restriction of limited resources.
It is often concerned with determining a maximum
(such as profit, performance, or yield) or minimum
(such as loss, risk, or cost.)
OPERATIONS RESEARCH
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.
OPERATIONS RESEARCH
Operations research encompasses a wide range of
problem-solving techniques and methods applied in
the pursuit of improved decision-making and
efficiency, such as simulation, mathematical
optimization, queuing theory, Markov decision
processes, economic methods, data analysis, statistics,
neural networks, expert systems, and decision analysis.
OPERATIONS RESEARCH
Nearly all of these techniques involve the construction
of mathematical models that attempt to describe the system.
Because of the computational and statistical nature of
most of these fields, O.R. also has strong ties to computer
science.
Operations 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.
OPERATIONS RESEARCH
As a problem solving technique, OR must be viewed
as both a science and art.
The science aspect lies in providing
mathematical techniques and algorithms.
It is an art because success in all phases that
precede and succeed the solution of a
mathematical model depends largely on the
creativity and personal abilities of the decision
making analysts (it includes gathering of data,
model construction, validation of the model and
implementation of the obtained solution)
OPERATIONS RESEARCH
The major sub-disciplines in modern operations
research are:
Computing and information technologies
Environment, energy, and natural resources
Financial Engineering
Manufacturing, service science, and supply chain management
Marketing Science
Policy modeling and public sector work
Revenue management
Simulation
Stochastic models
Transportation.
Elements of Decision Model
Three basic components of the decision
making process : decision alternatives, problem
constraints, and objective criterion.
Alternatives should be feasible
Optimum solution is the best solution out of
all solutions.
Sub-optimal solution is the best solution if
considering part of the alternatives.
Types of OR Models
Mathematical Models (considers the system
from a less detailed level of
representation)
Simulation Models (it views the system
from a basic elemental level)
Effect of Data Availability on
Modeling
If the data are not accurate, the obtained
solution, though the optimum in a
mathematical sense, may be of inferior quality
from the standpoint of the real system.
Data may be deterministic, probabilistic or
stochastic.
Computations in OR
In Simulation models, computations are typically
voluminous and mostly time consuming.
Computations in OR mathematical models, on the
other hand, are typically iterative in nature (solution
converges iteratively to the optimum).
Not all OR mathematical models posses solution
algorithms (methods) that always converge to the
optimum. Instead heuristic can be applied which are
based on rules of thumb.
Phases of OR Study
The major phases through which the OR team
would proceed to effect an OR study include
1. Definition of the problem
2. Construction of the model
3. Solution of the model
4. Validation of the model
5. Implementation of the final results.
Applications
Applications of management science are abundant in
industry such as airlines, manufacturing companies,
service organizations, military branches, and in
government. The range of problems and issues to
which management science has contributed insights
and solutions is vast. It includes:
scheduling airlines, both planes and crew,
deciding the appropriate place to place new facilities
such as a warehouse or factory,
Applications
managing the flow of water from reservoirs,
identifying possible future development paths for
parts of the telecommunications industry,
establishing the information needs and appropriate
systems to supply them within the health service, and
identifying and understanding the strategies adopted
by companies for their information systems.
End of lecture 1
