UNITT Operation Research is a relatively new discipline. The contents and the boundaries of the OR are not yet fixed. Therefore, to give a formal definition of the term Operations Research is a difficult task. The OR starts when mathematical and quantitative techniques are used to substantiate the decision being taken. The main activity of a manager is the decision making. In our daily life we make the decisions even without noticing them. The decisions are taken simply by common sense, judgment and expertise without using any mathematical or any other model in simple situations. Operations Research tools are not from any one discipline. takes tools from different discipline such as Mathematics, Statistics, Economics, Psychology, Engineering etc, and Combines these tools to make a new set of knowledge for Decision Making DEFINITION of OR According to the Operational Research Society of Great Britain “Operational Rescarch is the attack of modern science on complex problems arising in the direction and management of large systems of Men, Machines, Materials and Money in Industry, Business, Government and Defense. Its distinctive approach is to develop a Scientific model of the system, Incorporating measurements of factors such as Change and Risk, with which to predict and compare the outcomes of alternative Decisions, Strategies or Controls. The purpose is to help management determine its policy and actions scientifically”. According Morse and Kimball, “OR is A scientific method of providing executive departments ‘with a quantitative basis for decisions regarding the operations under their control" According Miller and Starr, “O.R. is applied decision theory, which uses any scientific, ‘mathematical or logical means to attempt to cope with the problems that conffont the executive, ‘when be tries o achieve a thorough-going rationality in dealing with his decision problem”. Stages of Development of Operations Research: The stages of development of O.R. are also ‘known as phases and process of O.R Step [: Observe the problem environment Step II: Analyze and define the problem Step II: Develop a model Step IV: Sclect appropriate data input Step V: Provide a solution and test its reasonableness Step VI: Implement the solution Step I: Observe the problem Environment Process Activities Process Output Site visits, Conferences, ‘Sufficient information and support to proceed Observations, Research Step Il: Analyze and define the problem Process Activities Process Output Define: Use, Objectives, Limitations ‘Clear grasp of need for and nature of solution requestedStep Ill: Develop a mode Process Activities Process Output Define inter relationships, _ Formulate | Models that works under stated environmental equations, Use known O.R. Model, Search | constraints, altornate Model Step IV: Select appropriate data input Process Activities Process Output “Analy ‘options Use computer data banks test model = internal-external data, Facts Collect | Sufficient inputs to operate and Step V: Provide a solution and test its reasonableness Process Activities Process Output “Test the model, find limitations, Update the — | Solution(s) that support current model organizational goals Step Viz Implement the solution Process A ies Process Output Resolve behavioral Sues, Sell the idea, Give | improved working and Management support explanations, Management involvement for longer run operation of model Relationship between Manager/Decision Maker and O.R. Specialists ‘Steps in problem recognition, formulation and solution Tnvolvement OR. specialist manager [Recognize from organizational symptoms that a problem exists “Manager Decide what variables are involved; state the problem in quantitative relationships among the variables. Manager aad OR. Specialist Tnvestigale methods [br solving the problems as stated above; determine appropriate quantitative tools to be used OR Specialist ‘Attempt solutions to the problems; find various solutions; state assumptions underlying these solutions; test alternative solutions. OR. Specialist Determine which solution is most effective because of practical constraints within the organization; decide what the solution ‘means for the organization. Manager and OR. Specialist ‘Choose the solution to be used, Manager ‘Sell the decision to operating managers; get their understanding and cooperation, Manager and OR. SpecalistLouls and Pechaiuucs ‘The common frequently used tools!techniques are mathematical procedures, cost analysis, ‘electronic computation. However, operations rescarchers given special importance to the development and the use of techniques like Linear Programming © Game Theory © Decision Theory © Queuing Theory Inventory Models and Simulation In addition to the above techniques, some other common tools are © Non-Linear Programming Integer Programming Dynamic Programming Sequencing Theory Markov Process, "Network Scheduling (PERT/CPM), ‘Symbolic Model, Information theory, and Value theory. Linear Prosramming : This is constrained optimization technique, which optimize some ceriterion within some constraints, In Linear programming the objective function (profit, loss or return on investment) and constraints are linear, There are different methods available to solve linear programming Game Theory ; This is used for making decisions under conflicting situations where there are ‘one or more players/opponents. In this the motive of the players are dichotomized. The success ‘of one player tends to be at the cost of other players and hence they are in conflict. Decision Theory : It is concerned with making decisions under conditions of ‘complete certainty about the future outcomes and under conditions such that we ‘can make some probability about what will happen in future. Queuing Theory : This is used in situations where the queue is formed (for example customers waiting for service, aircrafts waiting for landing, jobs waiting for processing in the computer system, etc). The objective here is minimizing the cost of waiting without increasing the cost of servicing. Inventory Model ; It make a decisions that minimize total inventory cost. This model successfully reduces the total cost of purchasing, carrying, and out of stock inventory. ‘Simulation : It is a procedure that studies a problem by ereating a model of the process involved in the problem and then through a series of organized trials and error solutions attempt to ‘determine the best solution. Some times this is a difficulvtime consuming procedure. Simulation is used when actual experimentation is not feasible or solution of model is not possible. ‘Non-linear Programming : This is used when the objective funtion and the constraints are not lincar in nature. Linear relationships may be applied to approximate non-lincar constraints butlimited to some range, because approximation becomes poorer as the range is extended, Thus, the non-linear programming is used to determine the approximation in which a solution lies and then the solution is obtained using linear methods Dynamic Programming : It is a method of analyzing multistage decision processes. In this each ‘ckmentary decision depends on those preceding decisions and as well as external factors. Information Theory ; This analytical process is transferred from the electrical communication field to OR. field. The objective of this theory is to evaluate the effectiveness of flow of information with a given system. This is used mainly in communication networks but also has indirect influence in simulating the examination of business organizational structure with a view of enhancing flow of information. i . Accounting: ‘Assigning audit teams effectively Credit policy analysis, Cash flow planning Developing standard costs Establishing costs for byproducts Planning of delinquent account strategy Construction, Project scheduling, monitoring and control © Determination of proper work force Deployment of work force Allocation of resources to projects Facilities Planning : ‘Factory location and size decision + Estimation of number of facili Hospital planning ‘International logistic system design «Transportation loading and unloading * Warehouse location decision Hinauess Building cash management models * Allocating capital among various alternatives Building financial planning models Investment analysis + Portfolio analysis * Dividend policy making required © Inventory control * Marketing balance projection * Production scheduling * Production smoothing‘Marketing: ‘Advertising budget allocation Product introduction timing Selection of Product mix Deciding most effective packaging alternative ‘Oreanizational Uchavior/ Human Resources: Personnel planning © Recruitment of employees © Skill balancing. Training program scheduling Designing organizational structure more effectively Purchasing: © Optimal buying Optimal reordering © Materials transfer ‘Research and Development; ‘© R&D Proxects control * R&D Budget allocation © Planning of Product introduction Limitations of Oncratians R Distance between OUR specialist and Manager: Operations Rescarchers job nocds a mathematician of statistician, who might not be aware of the business problems. Similarly, a manager is unable to understand the complex nature of OR. Thus there isa big gap between the two personnel Magnitude of Calculations: The aim of the O.R. is to find out optimal solution taking into consideration all the factors. In this modem world these factors are enormous and expressing them in quantitative model and establishing relationships among these require voluminous cakulations, which can be handled only by machines ‘Maney and Time Costs : The basic data are subjected to frequent changes, incorporating these changes into the operations research models is very expensive. However, a fairly good solution at present may be more desirable than a perfect operations research solution available in future or after some time ‘Non-auantifiable Factors ; When all the factors related to a problem can be quantifiable only then OR provides solution otherwise not. The non-quantifiable factors are not incorporated in OR models. Importantly O.R. models do not take into account emotional factors or qualitative factors. Implementation : Once the decision has been taken it should be implemented. ‘The implementation of decisions is a delicate task. This task must take into account the complexities of human relations and behavior and in some times only the psychological factors. Linear Programming: ‘© tis special and versatile technique which can be applied to Advertising, Refinery Operations, Investment, Transportation analysis and Production. ribution,It is useful not only in industry and business but also in non-profit sectors such as Education, Government, Hospital, and Libraries ‘The linear programming method is applicable in problems characterizedby the presence of decision variables. ‘The objective function and the constraints can be expressed as linear functions of the decision variables. ‘The decision variables are in some sense, controllable inputs to the system being ‘modeled. ‘An objective function represents some prineipal objective criterion or goal that measures the effectiveness of the system stich as maximizing profits or productivity, or minimizing ‘cost or consumption ‘There is always some practical limitation on the availability of resources like Man, Material, Machine, or Time for the system. ‘These constraints are expressed as lincar equations involving the decision variables.