INTRODUCTION

TO
OPERATIONS RESEARCH

Grishma Sharma
KJSCE
 TOPICS
• Introduction to Operational Research
• History of Operational Research
• Operational Research in India
• Definition of Operational Research
• Features of Operational Research
• Scope of Operational Research
• Methodology/Approaches of Operational Research
• Tools/Techniques of Operational Research
• Operational Research and Management Decision-Making
• Limitations of Operational Research
 DEFINITION OF
OPERATIONAL RESEARCH
Operations research/management science

– Winston: “a scientific approach to decision making,

which seeks to determine how best to design and
operate a system, usually under conditions requiring
the allocation of scarce resources.”

– Kimball & Morse: “a scientific method of providing

executive departments with a quantitative basis for
decisions regarding the operations under their
control.”
 INTRODUCTION TO
OPERATIONAL RESEARCH
Operational Research is a systematic and analytical approach
to decision making and problem solving.

It is typically concerned with determining the maximum

profit, sale, output, crops yield and efficiency and minimum
losses, risks, cost, and time of some objective function. It have
also become an important part of INDUSTRIAL ENGINEERING
PROFESSION.
Some of the PRIMARY TOOLS used by operation
researchers are-
• STATISTICS
• GAME THEORY
• PROBABILITY THEORY, etc.
 What is Operations Research?
Operations
The activities carried out in an organization.

Research
The process of observation and testing characterized
by the scientific method. Situation, problem
statement, model construction, validation,
experimentation, candidate solutions.

Model
An abstract representation of reality. Mathematical,
physical, narrative, set of rules in computer program.
Systems Approach
Include broad implications of decisions for the organization
at each stage in analysis. Both quantitative and qualitative
factors are considered.

Optimal Solution
A solution to the model that optimizes (maximizes or
minimizes) some measure of merit over all feasible
solutions.

Team
A group of individuals bringing various skills and viewpoints
to a problem.

Operations Research Techniques

A collection of general mathematical models, analytical
procedures, and algorithms.
 FEATURES OF
OPERATIONAL RESEARCH
• Decision-Making
• Scientific Approach
• Inter-Disciplinary Team Approach
• System Approach
• Use of Computers
• Objectives
• Human Factors
 DECISION MAKING
• Every industrial organization faces multifacet
problems to identify best possible solution to
their problems.
• OR aims to help the executives to obtain
optimal solution with the use of OR techniques.
• It also helps the decision maker to improve his
creative and judicious capabilities, analyze and
understand the problem situation leading to
better control, better co-ordination, better
systems and finally better decisions.
 SCIENTIFIC APPROACH
• OR applies scientific methods, techniques and tools
for the purpose of analysis and solution of the
complex problems.
• In this approach there is no place for guesswork
and the person bias of the decision maker.
 INTER-DISCIPLINARY
TEAM APPROACH
• Basically the industrial problems are of complex
nature and therefore require a team effort to
handle it.

• This team comprises of scientist, mathematician

and technocrats. Who jointly use the OR tools to
obtain a optimal solution of the problem. They tries
to analyze the cause and effect relationship
between various parameters of the problem and
evaluates the outcome of various alternative
strategies.
 SYSTEM APPROACH
The main aim of the system approach is to trace out
all significant and indirect effects for each proposal
on all sub-system on a system and to evaluate each
action in terms of effects for the system as a whole.

The inter-relationship and interaction of each sub-

system can be handled with the help of
mathematical/analytical models of OR to obtain
acceptable solution.
 USE OF COMPUTERS
• The models of OR need lot of computation
and therefore, the use of computers becomes
necessary.
• With the use of computers it is possible to
handle complex problems requiring large
amount of calculations.
• The objective of the operations research
models is to attempt and to locate Best or
Optimal Solution.
 OBJECTIVE
• Operational Research always try to find the
best and optimal solution to the problem.
• For this purpose objectives of the
organization are defined and analyzed. These
objectives are then used as the basis to
compare the alternative courses of action.
 HUMAN FACTORS
In deriving, Quantitative Solutions we do not
consider human factors, which doubtlessly
play a great role in the problems.
So, study of O.R. is incomplete without study
of human factors.
 SCOPE OF
OPERATIONAL RESEARCH
• The scope of OR is not only confined to any specific agency
like defence services but today it is widely used in all
industrial organizations.

• It can be used to find the best solution to any problem be it

simple or complex. It is useful in every field of human
activities. Thus, it attempts to resolve the conflicts of interest
among the components of organization in a way that is best
for the organization as a whole.

• The main fields where OR is extensively used are given in

next slide.
 FIELDS
National Planning and Budgeting
Defence Services
Industrial Establishment and Private Sector
Units
R & D and Engineering
 NATIONAL PLANNING AND
BUDGETING
OR is used for the Preparation of-

 Five Year Plans

 Annual Budgets
 Forecasting of Income and Expenditure
 Scheduling of Major Projects of National Importance
 Estimation of GNP
 GDP
 Population
 Employment and Generation of Agriculture Yields,
etc.
 DEFENCE SERVICES
Basically formulation of OR started from USA Army, so it has wide
application in the areas such as:

 Development of New Technology

 Optimization of Cost and Time
 Tender Evaluation
 Setting and Layouts of Defence Projects
 Assessment of “Threat Analysis”
 Strategy of Battle
 Effective Maintenance and Replacement of Equipment
 Inventory Control,
 Transportation
 Supply Depots, etc.
 INDUSTRIAL ESTABLISHMENTS AND PRIVATE
SECTOR UNITS

OR can be effectively used in-

Plant Location and Setting Finance Planning

Product and Process Planning
Facility Planning and Construction
Production Planning and Control
Purchasing
Maintenance Management
Personnel Management, etc.
 R&D AND ENGINEERING
Research and development being the heart of
technological growth, OR has wide scope and can
be applied in-

Technology Forecasting and Evaluation,

Technology and Project Management,
Preparation of Tender and Negotiation,
Value Engineering,
Work/Method Study and so on.
 METHODOLOGIES/APPROACHES OF
OPERATIONAL RESEARCH
1. ORIENTATION F

2. PROBLEM DEFINITION E

3. DATA COLLECTION E

4. MODEL FORMULATION D

5. SOLUTION B

6. ANALYSES AND INFORMATION A

C
7. IMPLEMENTATION AND
MONITORING K
 TECHNIQUES/TOOLS OF
OPERATIONAL RESEARCH
Linear Programming
Queuing Theory
Sequencing
Transportation Problems
Integer Problems
Assignment Problems
Decision Theory and Games Theory
Replacement Problems
Symbolic Logic
 LINEAR PROGRAMMING
• This technique is used to find a solution for optimizing a given
objective. Objective may be maximizing profits or minimizing
costs.

• Objective function and Boundary conditions are linear in

nature. LPP techniques solve Product-Mix and Distribution
problems of enterprise.

• Its also used to allocate Scarce Resources in optimum manner

in problems of scheduling, product mix, etc.
 QUEUING THEORY
• This theory deals with the situations in which queue is formed,
e.g. customers waiting for services, machines waiting for
repairmen, and aircrafts waiting for landing strips, etc.
• If the Queue will be long the cost will be high due to long
waiting hour.
• This technique is used to analyze the feasibility of adding
facilities and to access the amount and cost of waiting time.
• This calculations can then be used to determine the desirable
number of service facilities.
 SEQUENCING
• Models have been developed to find a sequence for
Processing Jobs so that the total elapsed time for all
the jobs will be minimum.

• The models also help to resolve the conflict

between the objectives of maximizing machines
utilization and complying with predetermined
delivering rates.
 TRANSPORTATION PROBLEMS
Transportation problems deals with transportation of a
product
• From a number of sources
• With limited supplies
• To number of destinations
• With specified demands
• At the total transportation cost.
The main objective of transportation is to Schedule
Shipment from sources to destinations in such a way so as to
Minimize the Total Transportation Cost.
 INTEGER PROGRAMMING
Integer means complete or whole number. By using
the Integer Programming Algorithm a series of
continuous linear programming problem are solved in
such a way that the solution containing un-acceptable
non-integer value are ruled out and the best higher
programming solution is obtained.
 ASSIGNMENT PROBLEMS
• It is a special type of linear programming problem.
It deals in allocating the various resources or items
to various activities in a one to one basis in such a
way that the time or cost involved in minimized and
the sale or profit is maximized.
• E.g. Manager may like to know which job should be
assigned to which person so that all jobs can be
completed in the shortest possible time.
 DECISION THEORY AND
GAME THEORY
Decision Theory is primarily considered with decision making
under the conditions of:
• Risk
• Uncertainty

Game Theory is concerned with:

• Decision Making under Conflict

Hence, both Decision Theory and Game Theory assist the

Decision-Maker in Analyzing Problems with numerous
alternative course of action and consequences.
 SYMBOLIC LOGIC
• Symbols are more meaningful and accurate.
Everything is Symbolic in this world.
• Words, classes of things, functional systems and
rules are substituted with symbols.
• The whole problem is converted into algebraic
equations and propositions. Business Problems
are not commonly converted into symbols but
calculations are done on computers, that is why
symbols have extensive applications.
 OPERATIONAL RESEARCH AND
MANAGEMENT
DECISION-MAKING
• Operation Research increases the creative capabilities of a
decision maker.
• It increases the effectiveness of mgt. decisions.
Management is most of the time making decisions. It is
thus a decision science which helps mgt. to take better
decisions.
• Nowadays, business problems have become so complex
that it is almost impossible for a human being to
comprehend all important factors, OR Techniques can be
helpful in such situations.
• It also helps in ascertaining best locations for factories and
warehouses, project scheduling as well as most economic
means of transportation.
• OR study approach in business decisions leads to better
control, better co-ordination, better system and at the end
better decision.
 LIMITATIONS OF
OPERATIONAL RESEARCH

Magnitude of Computation
Non-Quantifiable Factors
Distance between User and Analyst
Time and Money Costs
Implementation
 MAGNITUDE OF COMPUTATION
Operations research models try to find out optimal
solution taking into account all the factors. But, these
factors are enormous and, expressing them in
quantity, and,
establishing relationships among these, Require
voluminous calculations which can be handled only
by computers.
 NON-QUANTIFIABLE FACTORS
• OR provides solution only when all elements
related to a problem can be quantified. All
relevant variables do not lend themselves to
quantification. Factors which cannot be
quantified, find no place in OR study.
• Models in OR do not take into account
qualititative factors or emotional factors which
may be quite important.
 DISTANCE BETWEEN USER AND
ANALYST
• OR being specialist’s job requires a mathematician
or statistician, who might not be aware of the
business problems.
• Similarly, a manager fails to understand the
complex working of OR. Thus there is a gap
between the two. Management itself may offer a
lot of resistance due to conventional thinking.
 TIME AND MONEY COST
• When basic data are subjected to frequent
changes, incorporating them into the OR models
is a costly proposition.
• Moreover, a fairly good solution at present may
be, More desirable than a perfect OR solution
available after sometime. The computational time
increases depending upon the size of the problem
and accuracy of results desired.
 IMPLEMENTATION
Implementation of any decision is a delicate task.
It must take into account the complexities of
human relations and behavior. Sometimes,
resistance is offered due to psychological factors
which may not have any bearing on the problem
as well as its solution.
 Successful OR Applications
Company Year Problem Techniques Used Annual Savings
Designing buffers into production
Hewlett Packard 1998 Queuing models $280 million
line
Taco Bell 1998 Employee scheduling IP, Forecasting, Simulation $13 million
Redesign production & distributon
Proctor & Gamble 1997 Transportation models $200 million
system
Delta Airlines 1994 Assigning planes to routes Integer Programming $100 million
Queuing models,
AT&T 1993 Call center design $750 million
Simulation
Yellow Freight Systems, Network models,
1992 Design trucking network $17.3 million
Inc. Forecasting, Simulation
San Francisco Police
1989 Patrol Scheduling Linear Programming $11 million
Dept.
Bethlehem Steel 1989 Design an Ingot Mold Stripper Integer Programming $8 million
North American Van
1988 Assigning loads to drivers Network modeling $2.5 million
Lines
Linear Programming,
Citgo Petroleum 1987 Refinery operations & distribution $70 million
Forecasting
United Airlines 1986 Scheduling reservation personnel LP, Queuing, Forecasting $6 million
Dairyman's Creamery 1985 Optimal production levels Linear Programming $48,000
Phillips Petroleum 1983 Equipment replacement Network modeling $90,000
THANK YOU 