AER 2311: OPERATIONS RESEARCH
CHAPTER ONE
INTRODUCTION TO OPERATIONS RESEARCH
1.1 TERMINOLOGY
The British/Europeans refer to "operational research", the Americans to "operations research" - but both are
often shortened to just "OR" (which is the term we will use). Another term which is used for this field is
"management science" ("MS"). The Americans sometimes combine the terms OR and MS together and say
"OR/MS" or "ORMS". Yet other terms sometimes used are "industrial engineering" ("IE"), "decision
science" ("DS"), and “problem solving”. In recent years there has been a move towards a standardization
upon a single term for the field, namely the term "OR". “Operations Research (Management Science) is a
scientific approach to decision making that seeks to best design and operate a system, usually under
conditions requiring the allocation of scarce resources.”A system is an organization of interdependent components that
work together to accomplish the goal of the system.
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. But the decision we are concerned here with are
complex and heavily responsible. Examples are public transportation network planning in a city having its
own layout of factories, residential blocks or finding the appropriate product mix when there exists a large
number of products with different profit contributions and production requirements etc.
Operations Research tools are not from any one discipline. Operations Research 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. Today, OR became a professional discipline which
deals with the application of scientific methods for making decision, and especially to the allocation of scarce
resources. The main purpose of O.R. is to provide a rational basis for decisions making in the absence of
complete information, because the systems composed of human, machine, and procedures may do not have
complete information. Operations Research can also be treated as science in the sense it describing,
understanding and predicting the systems behavior, especially man-machine system. Thus O.R. specialists are
involved in three classical aspect of science, they are as follows:
a) Determining the systems behaviour
b) Analyzing the systems behaviour by developing appropriate models
c) Predict the future behaviour using these models
The business and industry benefitted from O.R. in the areas of inventory, reorder policies, optimum
location and size of warehouses, advertising policies, etc. As stated earlier defining O.R. is a difficult
task. The definitions stressed by various experts and Societies on the subject together enable us to
know what O.R. is, and what it does. They are as follows:
a)According to the Operational Research Society of Great Britain (OPERATIONAL RESEARCH
QUARTERLY, l3(3):282, l962), Operational Research is the attack of modern science oncomplex
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
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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.
b) Randy Robinson stresses that Operations Research is the application of scientific methods to
improve the effectiveness of operations, decisions and management. By means such as analyzing
data, creating mathematical models and proposing innovative approaches, Operations Research
professionals develop scientifically based information that gives insight and guides decision making.
They also develop related software, systems, services and products.
c) Morse and Kimball have stressed O.R. is a quantitative approach and described it as “ a scientific
method of providing executive departments with a quantitative basis for decisions regarding
theoperations under their control”.
d) Saaty considers O.R. as tool of improving quality of answers. He says, “O.R. is the art of giving
bad answers to problems which otherwise have worse answers”.
e) Miller and Starr state, “O.R. is applied decision theory, which uses any scientific, mathematical or
logical means to attempt to cope with the problems that confront the executive, when he tries to
achieve a thorough-going rationality in dealing with his decision problem”.
f)Pocock stresses that O.R. is an applied Science. He states “O.R. is scientific methodology
(analytical, mathematical, and quantitative) which by assessing the overall implication of various
alternative courses of action in a management system provides an improved basis formanagement
decisions”.
g) Wagner, H.M., defined OR as a scientific approach to solve problems for executive management.
1.2 History of Operations Research
Operation Research is a relatively new discipline. Whereas 90 years ago it would have been possible
tostudy mathematics, physics or engineering (for example) at a university it would not have been
possible to study Operation Research, indeed the term O.R. did not exist then. It was really only in
the late 1930's that operational research began in a systematic fashion, and it started in the UK. As
such it would be interesting to give a short history of O.R.
1936 - Early in 1936 the British Air Ministry established Bawdsey Research Station, on the east
coast, near Felix stowe, Suffolk, as the centre where all pre-war radar experiments for both the Air
Force and the Army would be carried out. Experimental radar equipment was brought up to a high
state of reliability and ranges of over 100 miles on aircraft were obtained. It was also in 1936 that
Royal Air Force (RAF) Fighter Command, charged specifically with the air defense of Britain, was
first created. It lacked however any effective fighter aircraft - no Hurricanes or Spitfires had come
into service - and no radar data was yet fed into its very elementary warning and control system. It
had become clear that radar would create a whole new series of problems in fighter direction and
control so in late 1936 some experiments started at Biggin Hill in Kent into the effective use of such
data. This early work, attempting to integrate radar data with ground based observer data for fighter
interception, was the start of OR.
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1937-The first of three major pre-war air-defense exercises was carried out in the summer of 1937.
Theexperimental radar station at Bawdsey Research Station was brought into operation and the
information derived from it was fed into the general air-defense warning and control system. From
the early warning point of view this exercise was encouraging, but the tracking information obtained
from radar, after filtering and transmission through the control and display network, was not very
satisfactory.
1938 - In July 1938 a second major air-defense exercise was carried out. Four additional radar
stations had been installed along the coast and it was hoped that Britain now had an aircraft location
and control systemgreatly improved both in coverage and effectiveness. Not so! The exercise
revealed, rather, that a newand serious problem had arisen. This was the need to coordinate and
correlate the additional, and often conflicting, information received from the additional radar
stations. With the outbreak of war apparently imminent, it was obvious that something new - drastic
if necessary - had to be attempted. Some new approach was needed. Accordingly, on the termination
of the exercise, the Superintendent of Bawdsey Research Station, A.P. Rowe, announced that
although the exercise had again demonstrated the technical feasibility of the radarsystem for
detecting aircraft, its operational achievements still fell far short of requirements. He therefore
proposed that a crash program of research into the operational - as opposed to the technical -aspects
of the system should begin immediately. The term "operational research" [RESEARCH into(military)
OPERATIONS] was coined as a suitable description of this new branch of applied science. The first
team was selected from amongst the scientists of the radar research group the same day.
1939 - In the summer of 1939 Britain held what was to be its last pre-war air defense exercise. It
involved some33,000 men, 1,300 aircraft, 110 antiaircraft guns, 700 searchlights, and 100 barrage
balloons. Thisexercise showed a great improvement in the operation of the air defense warning and
control system.The contribution made by the OR team was so apparent that the Air Officer
Commander-in-Chief RAFFighter Command (Air Chief Marshal Sir Hugh Dowding) requested that,
on the outbreak of war, theyshould be attached to his headquarters at Stanmore in north
London.Initially, they were designated the "Stanmore Research Section". In 1941 they were re
designated the "Operational Research Section" when the term was formalized and officially
accepted, and similarsections set up at other RAF commands.
1940 - On May 15th 1940, with German forces advancing rapidly in France, Stanmore Research
Section wasasked to analyses a French request for ten additional fighter squadrons (12 aircraft a
squadron - so 120 aircraft in all) when losses were running at some three squadrons every two days
(i.e. 36 aircraft every 2days). They prepared graphs for Winston Churchill (the British Prime Minister
of the time), based upona study of current daily losses and replacement rates, indicating how rapidly
such a move would depletefighter strength. No aircraft were sent and most of those currently in
France were recalled.This is held by some to be the most strategic contribution to the course of the
war made by OR (as the aircraft and pilots saved were consequently available for the successful air
defense of Britain, the Battle of Britain).
1941 onward-In 1941, an Operational Research Section (ORS) was established in Coastal Command
which was tocarry out some of the most well-known OR work in World War II.The responsibility of
Coastal Command was, to a large extent, the flying of long-range sorties bysingle aircraft with the
object of sighting and attacking surfaced U-boats (German submarines). Thetechnology of the time
meant that (unlike modern day submarines) surfacing was necessary to recharge batteries, vent the
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boat of fumes and recharge air tanks. Moreover U-boats were much faster on thesurface than
underwater as well as being less easily detected by sonar.Thus the Operation Research started just
before World War II in Britain with the establishment of teams of scientists to study the strategic
and tactical problems involved in military operations. The objective was to find the most effective
utilization of limited military resources by the use of quantitativetechniques. Following the end of
the war OR spread, although it spread in different ways in the UK andUSA.
In 1951 a committee on Operations Research formed by the National Research Council of USA,
and the first book on “Methods of Operations Research”, by Morse and Kimball, was published. In
1952 the Operations Research Society of America came into being. Success of Operations Research
in army attracted the attention of the industrial mangers whowere seeking solutions to their complex
business problems. Now days, almost every organization in all countries has staff applying
operations research, and the use of operations research in government hasspread from military to
wide variety of departments at all levels. The growth of operations research has not limited to the
U.S.A. and U.K., it has reached many countries of the world.India was one the few first countries
who started using operations research. In India, Regional Research Laboratory located at Hyderabad
was the first Operations Research unit established during 1949. At the same time another unit was
set up in Defense Science Laboratory to solve the Stores, Purchase and Planning Problems. In 1953,
Operations Research unit was established in Indian Statistical Institute, Calcutta, with the objective
of using Operations Research methods in National Planning and Survey. In 1955, Operations
Research Society of India was formed, which is one of the first members of International Federation
of Operations Research societies. Today Operations Research is a popularsubject in management
institutes and schools of mathematics.
1.3 THE METHODOLOGY OF OR
When OR is used to solve a problem of an organization, the following seven step procedure should
be followed:
Step 1. Formulate the Problem OR analyst first defines the organization's problem. Defining the
problem includesspecifying the organization's objectives and the parts of the organization (or
system) that must be studied before the problem can be solved.
Step 2. Observe the SystemNext, the analyst collects data to estimate the values of parameters that
affect theorganization's problem. These estimates are used to develop (in Step 3) andevaluate (in
Step 4) a mathematical model of the organization's problem.
Step 3. Formulate a Mathematical Model of the Problem The analyst, then, develops a
mathematical model (in other words an idealizedrepresentation) of the problem. In this class, we
describe many mathematicaltechniques that can be used to model systems.
Step 4. Verify the Model and Use the Model for Prediction The analyst now tries to determine if
the mathematical model developed in Step 3 isan accurate representation of reality. To determine
how well the model fits reality,one determines how valid the model is for the current situation.
Step 5. Select a Suitable Alternative Given a model and a set of alternatives, the analyst chooses
the alternative (if thereis one) that best meets the organization's objectives.Sometimes the set of
alternatives is subject to certain restrictions and constraints. Inmany situations, the best alternative
may be impossible or too costly to determine.
Step 6. Present the Results and Conclusions of the Study In this step, the analyst presents the
model and the recommendations from Step 5 to the decision making individual or group. In some
situations, one might present several alternatives and let the organization choose the decision
maker(s) choose the one that best meets her/his/their needs. After presenting the results of the OR
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study to the decision maker(s), the analyst may find that s/he does not (or they do not) approve of
the recommendations. This may result from incorrect definition of the problem on hand or from
failure to involve decision maker(s) from the start of the project. In this case, the analyst should
return to Step 1, 2, or 3.
Step 7. Implement and Evaluate Recommendation If the decision maker(s) has accepted the
study, the analyst aids in implementing therecommendations. The system must be constantly
monitored (and updateddynamically as the environment changes) to ensure that the
recommendations areenabling decision maker(s) to meet her/his/their objectives.
1.4 O.R. Tools and Techniques
Operations Research uses any suitable tools or techniques available. The common frequently
usedtools/techniques are mathematical procedures, cost analysis, electronic computation.
However,operations researchers given special importance to the development and the use of
techniques like linearprogramming, game theory, decision theory, queuing theory, inventory models
and simulation. Inaddition 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. There is
many other Operations Research tools/techniques also exists. The brief explanations of some of the
above techniques/tools areas follows:
Linear Programming: This is a constrained optimization technique, which optimize some criterion
within some constraints. InLinear programming the objective function (profit, loss or return on
investment) and constraints arelinear. 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
moreplayers/opponents. In this the motive of the players are dichotomized. The success of one
player tends tobe at the cost of other players and hence they are in conflict.
Decision Theory: Decision theory is concerned with making decisions under conditions of
complete certainty about thefuture outcomes and under conditions such that we can make some
probability about what will happenin 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 isminimizing the cost of waiting without increasing the cost of servicing.
Inventory Models: Inventory model make a decisions that minimize total inventory cost. This
model successfully reducesthe total cost of purchasing, carrying, and out of stock inventory.
Simulation: Simulation is a procedure that studies a problem by creating a model of the process
involved in theproblem and then through a series of organized trials and error solutions attempt to
determine the bestsolution. Sometimes this is a difficult/time consuming procedure. Simulation is
used when actualexperimentation is not feasible or solution of model is not possible.
Non-linear Programming: This is used when the objective function and the constraints are not
linear in nature. Linear relationshipsmay be applied to approximate non-linear constraints but
limited to some range, because approximationbecomes poorer as the range is extended. Thus, the
non-linear programming is used to determine theapproximation in which a solution lies and then the
solution is obtained using linear methods.
Dynamic Programming: Dynamic programming is a method of analyzing multistage decision
processes. In this each elementarydecision depends on those preceding decisions and as well as
external factors.
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Integer Programming: If one or more variables of the problem take integral values only then
dynamic programming method isused. For example number or motor in an organization, number of
passenger in an aircraft, number ofgenerators in a power generating plant, etc.
Markov Process: Markov process permits to predict changes over time information about the
behavior of a system isknown. This is used in decision making in situations where the various states
are defined. The probability from one state to another state is known and depends on the current
state and is independentof how we have arrived at that particular state.
Network Scheduling: This technique is used extensively to plan, schedule, and monitor large
projects (for example computersystem installation, R & D design, construction, maintenance, etc.).
The aim of this technique isminimize trouble spots (such as delays, interruption, production
bottlenecks, etc.) by identifying thecritical factors. The different activities and their relationships of
the entire project are representeddiagrammatically with the help of networks and arrows, which is
used for identifying critical activitiesand path. There are two main types of technique in network
scheduling, they are:Program Evaluation and Review Technique (PERT) – is used when activities
time is not knownaccurately/ only probabilistic estimate of time is available.Critical Path Method
(CPM) – is used when activities time is known accurately.
Information Theory: This analytical process is transferred from the electrical communication field
to O.R. field. Theobjective of this theory is to evaluate the effectiveness of flow of information with
a given system. Thisis used mainly in communication networks but also has indirect influence in
simulating the examinationof business organizational structure with a view of enhancing flow of
information.
1.5 Applications of Operations Research
Today, almost all fields of business and government utilizing the benefits of Operations Research.
There are voluminous of applications of Operations Research. Although it is not feasible to cover all
applications of O.R. in brief. The following are the abbreviated set of typical operations research
applications to show how widely these techniques are used today:
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 facilities required
Hospital planning
International logistic system design
Transportation loading and unloading
Warehouse location decision
Finance:
Building cash management models
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Allocating capital among various alternatives
Building financial planning models
Investment analysis
Portfolio analysis
Dividend policy making
Manufacturing:
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
Organizational Behavior / 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 Projects control
R & D Budget allocation
Planning of Product introduction
1.6 Limitations of Operations Research
Operations Research has number of applications; similarly it also has certain limitations.
Theselimitations are mostly related to the model building and money and time factors problems
involved in itsapplication. Some of them are as given below:
i) Distance between O.R. specialist and Manager Operations Researcher’s job needs a
mathematician or statistician, who might not be aware ofthe business problems. Similarly, a manager
is unable to understand the complex nature ofOperations Research. Thus there is a big gap between
the two personnel.
ii) Magnitude of Calculations The aim of the O.R. is to find out optimal solution taking into
consideration all the factors. Inthis modern world these factors are enormous and expressing them
in quantitative model andestablishing relationships among these require voluminous calculations,
which can behandled only by machines.
iii) Money and Time Costs The basic data are subjected to frequent changes, incorporating these
changes into theoperations research models is very expensive. However, a fairly good solution at
present maybe more desirable than a perfect operations research solution available in future or after
sometime.
iv) Non-quantifiable Factors When all the factors related to a problem can be quantifiable only
then operations researchprovides solution otherwise not. The non-quantifiable factors are not
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incorporated in O.R.models. Importantly O.R. models do not take into account emotional factors or
qualitativefactors.
v) Implementation Once the decision has been taken it should be implemented. The
implementation of decisionsis a delicate task. This task must take into account the complexities of
human relations andbehavior and in some times only the psychological factors.
1.7 Summary
Operations Research is relatively a new discipline, which originated in World War II, and became
very popular throughout the world. India is one of the few first countries in the world who started
usingoperations research. Operations Research is used successfully not only in military/army
operations but also in business, government and industry. Now a day’s operations research is almost
used in all the fields. Proposing a definition to the operations research is a difficult one, because its
boundary and content are not fixed. The tools for operations search is provided from the subject’s
viz. economics,engineering, mathematics, statistics, psychology, etc., which helps to choose possible
alternative courses of action. The operations research tool/techniques include linear programming,
non-linear programming, dynamic programming, integer programming, Markov process, queuing
theory, etc. Operations Research has a number of applications. Similarly it has a number of
limitations,which is basically related to the time, money, and the problem involves in the model
building. Day-by-day operations research gaining acceptance because it improve decision making
effectiveness of the managers. Almost all the areas of business use the operations research for
decision making.
1.8Self-Assessment Questions
Q1. Define Operations Research.
Q2. Describe the relationship between the manager and O.R. specialist.
Q3. Explain the various steps in the O.R. development process.
Q4. Discuss the applications of O.R.
Q5. Discuss the limitation of O.R.
Q6. Describe different techniques of O.R.
Q7. Discuss few areas of O.R. applications in your organization or organization you are familiar
with.
1.9 Further References
Hamdy A Taha, 1999. Introduction to Operations Research, PHI Limited, New Delhi.
Sharma, J.K., 1989. Mathematical Models in Operations Research, Tata McGraw Hill Publishing
Company Ltd., New Delhi.
Beer, Stafford, 1966. Decision and Control, John Wiley & Sons, Inc., New York.
Levin, Rubin, Stinson, Gardner, 1992. Quantitative Approaches to Management, Tata McGraw Hill
Publishing Company Ltd. New Delhi.
Wagner, Harvery M., 1975. Principles of Operations Research, PHI, Egnlewood Cliffs, N.J.
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