INTRODUCTION TO OPERATIONS RESEARCH

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.

INTRODUCTION TO OPERATIONS RESEARCH

Operations Research is an Art and

Science
It had its early roots in World War II and
is flourishing in business and industry
with the aid of computer
Primary applications areas of Operations
Research include forecasting, production
scheduling, inventory control, capital
budgeting, and transportation.

HISTORY OF OR
OR is a relatively new discipline.
70 years ago it would have been possible
to study mathematics, physics or
engineering at university it would not
have been possible to study OR.
It was really only in the late 1930's that
operationas research began in a
systematic way.

1890
Frederick Taylor
Scientific
Management
[Industrial
Engineering]

1900
Henry Gannt
[Project Scheduling]
Andrey A. Markov
[Markov Processes]
Assignment
[Networks]

1910
F. W. Harris
[Inventory Theory]
E. K. Erlang
[Queuing Theory]

1920
William Shewart
[Control Charts]
H.Dodge H.Roming
[Quality Theory]

1960
John D.C. Litle
[Queuing Theory]
Simscript - GPSS
[Simulation]

1950
H.Kuhn - A.Tucker
[Non-Linear Prog.]
Ralph Gomory
[Integer Prog.]
PERT/CPM
Richard Bellman
[Dynamic Prog.]
ORSA and TIMS

1940
World War 2
George Dantzig
[Linear
Programming]
First Computer

1930
Jon Von Neuman
Oscar Morgenstern
[Game Theory]

1970
Microcomputer

1980
H. Karmarkar
[Linear Prog.]
Personal computer
OR/MS Softwares

1990
Spreadsheet
Packages
INFORMS

2015
You are here

OBJECTIVE OF OPERATION RESEARCH

The objective of operation research is to

provide a scientific basis to the decision
maker for solving the problems involving the
interaction of various components of an
organization by employing a team of
scientists from various disciplines, all
working together for finding a solution which
is in the best interest of the organization as a
whole. The best solution thus obtained is
known as optimal decision.

DEFINITION OF OR

OR professionals aim to provide a rational

basis for decision making by seeking to
understand and structure complex situations
and to use this understanding to predict system
behavior and improve system performance.

Much of this work is done using analytical and

numerical
techniques
to
develop
and
manipulate mathematical and computer models
of organizational systems composed of people,
machines, and procedures.

CHARACTERISTIC FEATURES OF OR

Decision making
Primarily, OR is addressed to managerial decision making or problem
solving
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. The models of OR need lot of computation and therefore, the
use of computers becomes necessary

SCOPE OF OPERATION RESEARCH

In defense operation
In National Planning and Budgeting
Industrial Establishment and Private Sector Units
In planning for economic growth
In R & D and Engineering
Business Management and Competition
In Agriculture and Irrigation
In transportation and traffic control
Education and Training
In hospitals
Home Management and Budgeting

PHASES OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model
Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

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METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity

What are the

objectives?

Understand the System

Formulate a
Mathematical Model

Is the proposed
problem too narrow?
Is it too broad?

Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

11

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model
Verify the Model

What data should

be collected?
How will data be
collected?
How do different
components of the
system interact with
each other?

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

12

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model

What kind of model

should be used?
Is the model accurate?
Is the model too
complex?

Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

13

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model
Verify the Model

Do outputs match
current observations
for current inputs?
Are outputs
reasonable?
Could the model be
erroneous?

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

14

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model

What if there are

conflicting objectives?
Inherently the most
difficult step.
This is where software
tools will help us!

Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

15

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model

Must communicate
results in laymans
terms.
System must be
user friendly!

Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

16

METHODOLOGY OF OPERATIONS RESEARCH*

THE SEVEN STEPS TO A GOOD OR ANALYSIS

Identify the Problem

or Opportunity
Understand the System
Formulate a
Mathematical Model

Users must be trained

on the new system.
System must be
observed over time to
ensure it works properly.

Verify the Model

Select the Best Alternative

Present the Results of
the Analysis
Implement and Evaluate

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LIMITATIONS OF OPERATIONS
RESEARCH

Magnitude of Computation
Non-Quantifiable Factors
Distance between User and
Analyst
Time and Money Costs
Implementation

SUCCESSFUL OR APPLICATIONS
Company

Year

Problem
Designing buffers into production
line

Techniques Used

Annual Savings

Hewlett Packard

1998

Queuing models

$280 million

Taco Bell

1998

Employee scheduling

IP, Forecasting, Simulation

$13 million

Proctor & Gamble

1997

Redesign production & distributon

system

Transportation models

$200 million

Delta Airlines

1994

Assigning planes to routes

Integer Programming

$100 million

AT&T

1993

Call center design

Queuing models,
Simulation

$750 million

Yellow Freight Systems,

Inc.

1992

Design trucking network

Network models,
Forecasting, Simulation

$17.3 million

San Francisco Police

Dept.

1989

Patrol Scheduling

Linear Programming

$11 million

Bethlehem Steel

1989

Design an Ingot Mold Stripper

Integer Programming

$8 million

North American Van

Lines

1988

Assigning loads to drivers

Network modeling

$2.5 million

Citgo Petroleum

1987

Refinery operations & distribution

Linear Programming,
Forecasting

$70 million

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

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