Operations Research
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DEFINITION
Operations Research is the application of scientific methods and
techniques by interdisciplinary teams to problems involving the
operations of complex systems (man and machine) so as to provide those
in management with the optimum or near-optimum solutions to the
problem. It can also be defined as the application of the scientific
method to the analysis and solution of managerial decision-making
problems.
BRIEF HISTORY
Operations Research became established as a separate discipline
from Management in 1939 during World War II. The British government
organized teams of scientific and engineering personnel to assist field
commanders in solving perplexing strategic and tactical problems. Some
of the problems included: allocation of airplanes to a mission,
determination of the best pattern to be used in searching for submarines,
etc. (Even today, a substantial number of practitioners are involved in
military operations.)
After the war, some of the military personnel went back to private
practice. They realized that basically the same problems are encountered
in the business world and in the civil government.
FOCUS
The primary focus of most OR studies is the need to allocate
scarce/limited resources. OR is a decision-making tool and in the right
hands, its use could save an organization a lot of time and resources.
BENEFITS
Operations Research
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1. Provides a systematic and logical approach to decision-making.
2. Helps communication within an organization through consultation
with experts in various areas.
3. Permits a thorough analysis of a large number of alternative options.
4. Enables evaluation of situations involving uncertainty.
5. Allows decision makers to judge how much information to gather in a
given problem.
6. Increases the effectiveness of the decision.
7. Enables quick identification of the best available solution.
8. Allows quick and inexpensive examination of a large (sometimes
infinite) number of alternatives.
9. Enables experimentation with different alternatives using models,
thus eliminating the cost of making errors while experimenting with
reality.
LIMITATIONS
1.
2.
3.
4.
Time-consuming.
Probable lack of acceptance by decision makers.
Assessments of uncertainties are difficult to obtain.
Evaluates the decision in terms of a sometimes oversimplified model
of reality, possibly leading to erroneous recommendations.
5. Can be expensive to undertake, relative to the size of the problem.
6. Studies may be abandoned for various reasons, resulting in an
unproductive expense.
Operations Research
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The role of the operations research expert can be viewed as someone
who is called on to diagnose an opportunity or a problem, propose an
approach, and sometimes, implement the approach.
In such a capacity, the OR expert works with tools that enable him/her
 to analyze a situation (diagnosis)
 to predict the future development of the situation (prognosis), and
 to suggest the best approach (solution).
Characteristics of Management Science/ Operations Research
1.
2.
3.
4.
5.
6.
A primary interest in managerial decision making
The employment of the scientific approach
An interdisciplinary framework is attempted
Mathematical models are used
Computers are very frequently employed
Problems and decisions are viewed from a systems perspective
A decision is the conclusion of a process (decision making) by which
one chooses between one or more available alternative courses of action
for the purpose of attaining a goal(s).
Planning involves a series of decisions such as:
What should be done? When? How? Where? By whom?
A major premise here is that decision making, regardless of the
situation involved, can be considered as a generic process, consisting of
the following major steps:
1.
2.
3.
4.
Defining the problem
Searching for alternative courses of action
Evaluating the alternatives
Selecting one alternative (out of the choices)
Operations Research
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POTENTIAL APPLICATION AREAS OF OR
PRODUCTION
Planning and Scheduling
Make or Buy Decisions
Equipment Utilization
Waiting Line Problems
Plant Location and Layout
Assembly-Line Balancing
Materials & Supplies Purchasing
Raw Materials and In-Process Inventory Management
Allocation of Scarce Resources and Fixed Facilities
Maintenance and Replacement of Equipment and Facilities
MARKETING
Deployment of Sales Manpower
Salesmen’s Compensation Plan
Allocation of Advertising Funds
Product Mix
Pricing Schemes
Bidding Strategies
Product Positioning
Evaluation of Advertising Effectiveness
Market Forecasting (Statistical and Technological)
INVESTMENT and FINANCE
Facilities Planning
Replacement Policies
Capital Budgeting
Accounts Audit Sampling
Credit Analysis
Investment Portfolio Selection
Financial Strategies Formulation
Selection of Alternative Processes and Equipment
Research and Development Expenditure Allocation
ORGANIZATION
Benefit/Compensation Plans
Work Assignment Scheme
Communication Patterns
Org. of Problem Solving Groups
OTHERS
Design of Experiments
Urban Planning and Area Dev’t
Area Crop Planting
Power Plants & Hydraulics Apps