Chapter 1

 The term “Operations research” was coined as a result of

military operations during World War II. During the war there was

a critical need to manage scarce resources.

specialists in mathematics, Economics, statistics and probability

theory, engineering, behavioral, and physical science deal with

strategic and tactical problems of various military operations.

The objective – effective utilization of most limited military

resources
•Balancing conflicting objectives (goals or interests) by analyzing
inter-relationships among the system components involved in the
problem.

1.3. Operation Research: Some definitions

 OR,MS,ORMS, IE, DS, and problem solving techniques

 OR is the application 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.
Operations
Research Society, UK

 OR is concerned with scientifically defining how to best design

 Con….
OR is the application of a scientific approach to solve

management problems in order to help managers

make better decisions.

OR is a systematic application of quantitative methods,

techniques and tools to the analysis of problems

involving the operation of systems.

Determination of the optimum course of action of a

decision problem under the restriction of limited

resources.
1.4. Features of Operations Research Approach
The important features or characteristics of OR
approach to any decision and control problems can
be summarized as:
1.Inter-disciplinary approach
2.Methodological Approach
3.Holistic Approach or Systems Orientation
4.Objectivistic Approach
5.Decision Making
6.Use of Computers
7.Human factors
 1.5. Models and Modeling in Operations Research
An OR model is an abstract representation of an existing
problem or situation.
They are INCOMPLETE.

Purpose: of improving its performance.

The reliability of the solution is depended on model

validation.
For a model to be effective, it must be representative
of those aspects of reality that are being investigated
and have a major impact on the decision situation.
 It can be in the form of a graph or chart, but mostly, an OR model
consists of a set of mathematical relationship. In OR terminology,
these are called objective function and constraints.
 ii) Classification based on function or
purpose
A. Descriptive models: describe some aspects of a situation,
based on observation, survey, questionnaire results.
Example: Organizational chart, plant layout diagram, etc.
B. Predictive Models: indicate “If this occurs, then that
follow”. They relate dependent and independent variables
and permit trying out, “what if” questions. They do not have
an objective function.
E.g. S = a + bA +cI
C. Normative (Optimization) models: prescriptive models:
These models provide the “best” or “Optimal” solution to
problems subject to certain limitations on the use of
resources. These models provide recommended courses of
action. E.g. Mathematical programming.
iii) Classification Based on Time Reference
a) Static Models: represent a system at some
specified time and do not account for changes over
time.
For example, an inventory model can be developed
and solved to determine an economic order
quantity for the next period assuming that the
demand in planning period would remain the same
as that for today.

b) Dynamic models: time is considered as one of the

variables and allows the impact of changes due to
change in time. Dynamic programming is an
example of a dynamic model
iv). 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. The
results of the models assume single value. E.g;
Linear programming models.
b) Probabilistic (Stochastic) models: Models in
which at least one parameter or decision variable is
a random variable are called probabilistic.
Insurance against risk of fire, accidents, sickness, etc
are examples where the pattern of events is studied
in the form of a probability distribution.
 v) Classification Based on Method of solution or Quantification
a) Heuristic Model: sets of rules which, though
perhaps not optimal, do facilitate solutions of
problems when applied in a consistent manner.
b) Analytical Models: have a specific mathematical
structure solved by analytical or mathematical
techniques.
c) Simulation Models: have a mathematical
structure but are not solved by applying
mathematical techniques to get a solution.
Simulation models are more flexible than
mathematical ones and therefore, can be used to
represent a complex system which otherwise can not
be represented mathematically. These models do not
provide general solution like those of mathematical
Models.
Methodology of Operations Research
It is essential steps to follow that are helpful for
decision- maker to make better decisions.
 Problem Solving Process
Formulate the
Problem
Situation Problem
Implement a Solution Statement
Goal: solve a problem
• Model must be
valid Data
Construct
• Model must be a Model
tractable Implement
the Solution
• Solution must be
useful Model

Procedure
Find
a Solution
Establish
a Procedure

Test the Model

and the Solution Solution Tools
 • May involve current
operations or proposed
developments due to
Situation expected market shifts
• May become apparent
through consumer
complaints or through
employee suggestions
Data
• May be a conscious effort
to improve efficiency or
respond to an unexpected
crisis
Example: Internal nursing staff not
happy with their schedules; hospital using
too many external nurses.
2. Problem Formulation
Formulate the
Problem
Situation Problem
Statement

Data

• Describe system Define variables

• Define boundaries Define constraints
• State assumptions Identify data
• Select performance requirements
measures
Example: Maximize individual
nurse preferences subject to
demand requirements, or minimize
nurse dissatisfaction costs.
 2.1. Constructing a Model
Situation Problem
Problem must be translated Formulate the
statement

from verbal, qualitative terms Problem

to logical, quantitative terms Data

A logical model is a series of Construct

a Model
rules, usually embodied in a
computer program
Model
• A mathematical model is a collection of
functional relationships by which allowable
actions are delimited and evaluated.

Example: Define relationships between

individual nurse assignments and preference
violations; define tradeoffs between the use of
internal and external nursing resources.
 3. Solving the Mathematical Model
Many tools are
Model
available as discussed
Find a in this course
solution Some lead to “optimal”
solutions
Others only evaluate
Solution Tools candidates  trial and
error to find “best”
course of action
Example: Collect input data -- nurse
profiles and demand requirements; apply
algorithm; post-process results to get
monthly schedules.
 Validating (Testing) the solution
After solving the mathematical model, it is
important to review the solution carefully to
see that values make sense and that the
resulting decisions can be implemented. Some
of the reasons for validating the solution are:
 The mathematical model may not have enumerated
all the limitations of the problem under
consideration.
 Certain aspect of the problem may have been
overlooked, omitted or simplified,
 The data may have been incorrectly estimated or
recorded, perhaps when entered in to the
computer.
 Implementation
A solution to a problem usually
Situation implies changes for some
individuals in the organization
Often there is resistance to
change, making the
Implement
implementation difficult
the Procedure A user-friendly system is needed
Those affected should go
Procedure through training

Example: Implement nurse scheduling

system in one unit at a time. Provide
training sessions during the workday.
Modifying the Model
For a mathematical model to be useful, the

degree to which it actually represents the

system or problem being modeled must be
established.

Establishing control over the solution

The dynamic environment and changes within

the environment can have significant

implications regarding the continuing validity
of models and their solutions.
 1.6. Operations Research Techniques
five categories, Management Science Techniques
1. Linear Mathematical Programming
Linear programming models
Graphic Analysis
Simplex Method
Post optimality
Transportation and assignment
Integer linear programming
Goal Linear Programming
Non-linear programming
2. Probabilistic Techniques
Probability , Decision Analysis, Game Theory,
Markov Analysis, Queuing, Simulation
Cont---
3. Inventory Techniques
Certain Demand
Uncertain Demand
4. Net work Techniques
Net work flow
CPM/PERT
5. Other linear and non-linear Techniques
Dynamic programming
Break-even Analysis
Feature of OR solutions
1. Technically appropriate
2. Reliable
3. Economically viable
4. Behaviorally appropriate
Difficulties in problem solving:
Arise due to lack of appropriate methodology and
psychological perceptions
1. Failure to recognize the existence of a
problem
2. Failure to define the correct problem
3. Failure to use all available information
4. Failure to recognize or question assumptions
Limitations of Quantitative Techniques
Quantitative management cannot fully
explain or predict the behavior of people in
organizations( ignores intangibles).
Mathematical sophistication may come at

the expense of other managerial skills.

Quantitative models may require
unrealistic or unfounded assumptions,
limiting their general applicability.
CON…
 High costs involved in the use of quantitative techniques
 Quantitative techniques are only tools of analysis not the
complete decision making process
 Other limitations:
- Bias
- Inadequate objective functions
- Internal resistance
- Competence
- Reliability of the prepared solutions