OPERATIONS RESEARCH

Introduction
• Modern technological advance growth of
scientific techniques
• Operations Research (O.R.) recent addition to
scientific tools
• O.R. new outlook to many conventional
management problems
• Seeks the determination of best (optimum)
course of action of a decision problem under
the limiting factor of limited resources
 Development of O.R.
• Developed in military context during world war II,
pioneered by the British scientists – Research on
military operations
• US military management was motivated
– Development of new flight pattern
– Planning sea mining
– Effective utilization of electronic equipment
• Similar operations in Canada and France
• Till 50’s: use of O.R. confined to military
purposes
 O.R. in Industry
• After World War II: success attracted
industrial managers to solve complex
managerial problems
• 1950: O.R. began to develop in industrial field
in US
• 1953: Operations Research Society of America
was formed
• 1957: International Federation of Operational
Research Society
 What is OR ?
Operational Research can be considered as
being the application of scientific method by
inter-disciplinary teams to problems involving
the control of organized (manmachine)
systems so as to provide solutions which best
serve the purposes of the organization as a
whole.
 Nature of O.R.: Characteristics
• Inter-disciplinary team approach
• Systems approach
• Helpful in improving the quality of solution
• Scientific method
• Goal oriented optimum solution
• Use of models
• Require willing executives
• Reduces complexity
 Methodology of O.R.
• Formulating the problem
• Constructing the model
• Deriving the solution
– Analytical method
– Numerical method
– Simulation method
• Testing the validity
• Controlling the solution
• Implementing the result
 Problems in O.R.
• Allocation
• Replacement
• Sequencing
• Routing
• Inventory
• Queuing
• Competitive
• Search
 O.R. techniques
• Linear programming
• Waiting line or queuing theory
• Inventory control / planning
• Game theory
• Decision theory
• Network analysis
– Program Evaluation and Review Technique
(PERT)
– Critical Path Method (CPM) etc.
• Simulation
• Integrated production models
 Other O.R. techniques
• Non-linear programming
• Dynamic programming
• Heuristic programming
• Integer programming
• Algorithmic programming
• Quadratic programming
• Parametric programming
• Probabilistic programming
• Search theory
• Theory of replacement
 Significance of O.R.
• Provides a tool for scientific analysis
• Provides solution for various business problems
• Enables proper deployment of resources
• Helps in minimizing waiting and servicing costs
• Enables the management to decide when to buy and how
much to buy?
• Assists in choosing an optimum strategy
• Renders great help in optimum resource allocation
• Facilitates the process of decision making
• Management can know the reactions of the integrated
business systems
• Helps a lot in the preparation of future managers
 Limitations of O.R.
• The inherent limitations concerning mathematical
expressions
• High costs are involved in the use of O.R. techniques
• O.R. does not take into consideration the intangible factors
• O.R. is only a tool of analysis and not the complete decision-
making process
• Other limitations
– Bias
– Inadequate objective functions
– Internal resistance
– Competence
– Reliability of the prepared solution
Different Phases of Operation Research

Operation Research study is conducted in below steps.

1. Formulate Problem

2. Develop OR model

3. Select Best OR model

4. Validate OR Model

5. Sensitivity Analysis

6. Decision making and implement OR model

 1. To formulate the Problem

●Objectives are defined

●Range of Controllable variables are identified
●Identify the uncontrollable variables that may cause
damage
●Understand Restrictions
●Understand nature or condition of variables

This phase is considered is importance for the reason, any wrong analysis done at
this stage would replicate wrong decisions and results
2.Develop an appropriate Operation Research models

● As the name indicate, it is about selecting right Operation

Research model to be applied to find solution to a
problem
● Operation Research model selection generally is based
on below factors
- Varaibles
- Parameters
- Restrictions
- Objective of research
3. Select best OR Model

● Here it is process of selecting right selection of solution after evaluation of

all alternate solutions
● All pro’s and concerns are analysed of each solution available, then
finally a best solution method is selected

4. Validate the Operation Research Model

● Here it is tested for errors before proceeding to testing at organizational

level
● Once it is passed with reliability of its performance, on research it is put to
next stage
● Otherwise, it is subjected to changes and looked into matter of
reconsideration of alternate method again, that means discarding the
method and select the next best operation research method for testing
5. Sensitivity Analysis

● In this stage, operation research method is used as per satisfaction levels of

Business needs
● The method is put to changes, when there is an change in variables of
organisational research in real terms, otherwise the results might show incorrect
data of performance.
● This action of reconsideration of changes in variable is known as Sensitivity
Analysis

6. Decision Making and implementation of specific solution

● Finally, in this stage the model is put to use in real terms and implemented
to work
● The implementation of Operation Research needs a cooperation of OR
Specialist with Business operations , managing teams etc
● A positive cooperation will always results in good yields
Advantages Of Operation Research

1. Provide a Better Strategies -

●The core idea of Operation Research is to provide a better means of

economics in Business Operations
●This is done by better decision making, choosing right strategies etc
●All this can be studied under operation research for any field of business

2.Managers have better Decision making systems with use of Operation

Research

3.Improves Yields of business and least costs

4.Operation Research can be applied to any field of operations, like -

transportation, Warehouse, Production management, Assignment of jobs
etc
 5.Fundamentally, it is purely scientific model, any OR Model is put to
implement after various considerations and subjected to testing. The results
obtained from it realistic in terms rather than simple predictions

6.Operation Research clearly defines controllable and uncontrollable

variables while in its operations and are applied to any situations

7.Other notable advantages are -

●Rise in production or productivity
●Understand Anomalies in business operations
●Better control of Business Operations
●Helps Managers to take better decisions
●Helps to improve organisational products and services
Disadvantages of Operation Research(OR)

. Operations research (OR) is an interdisciplinary of mathematical

science
●Need a personnel to have skills of statistics, and mathematics
●Most of managers are not well proficient in such activities
●They depend of OR specialist

2.There are instances of Coordination issues between OR Specialist and

Business Operation Teams or Managers

3.OR makes extensive use of computers

4.The most popular OR techniques like simulation, linear programming, data

mining, game theory and decision tree analysis are suffering from inbuilt
flaws
5.Operations research itself is very costly
● An Organisation needs to invest a lot of money and effort into OR in
order to make it effective
● It is suitable to large companies
● May not be a viable option for small or midsize companies, as it is a
costly affair

6.Need of OR Specialist(professional) to manage OR related tasks

7.Analysis is only based on Quantifiable factors and expressed in terms of

numbers and expressions only. It does not consider Human behavioural
issues.

8.Sometimes, the results of OR show disconnection to real world business

conditions

9.More importantly, time consuming process