ORIGIN AND DEVELOPMENT OF OPERATIONS RESEARCH

The term Operations Research, was first coined in 1940 by McClosky and Trefthen in a small town, Bowdsey, of the United Kingdom. This new science came into existence in military context. During World War II, military management called on scientists from various disciplines and organized them into teams to assist in solving strategic and tactical problems, i.e., to discuss, evolve and suggest ways and means to improve the execution of various military projects. By their joint efforts, experience and deliberations, they suggested certain approaches that showed remarkable progress. This new approach to systematic and scientific study of the operations of the system was called the Operations Research or Operational Research (abbreviated as O.R.) In India, Operations Research came into existence in 1949 with the opening of an O.R. unit at the Regional Research Laboratory at Hyderabad. At the same time, another group was set up in the Defence Science Laboratory which devoted itself to the problems of stores, purchase and planning. In 1953, an O.R. unit was established in the Indian Statistical Institute, Calcutta, for the application of O.R. methods in national planning and survey. O.R. Society of India was formed in 1957. It became a member of the International Federation of O.R. Societies in 1959. In the industrial sector, in spite of the fact that opportunities of O.R. work at present are very much limited, organized industries in India are gradually becoming conscious of the role of Operations Research and a good number of them have well-trained O.R. teams. Most popular practical application of O.R. in India has been mainly that of Linear Programming.

FEATURES OF OPERATIONS RESEARCH

DECISION MAKING

Primarily, O.R. is addressed to managerial decision-making or problemsolving. A major premise of O.R. is that decision-making, irrespective of the situation involved, can be considered as a general systematic process. SCIENTIFIC APPROACH

O.R. employs scientific methods for the purpose of solving problems. It is a formalised process of reasoning. OBJECTIVE

O.R. attempts to locate the best or optimal solution to the problem under consideration. For this purpose it is necessary that a measure of effectiveness is defined which is based on the goals of the organization. This measure is then used as the basis to compare the alternative courses of action. INTER-DISCIPLINARY TEAM APPROACH

O.R. is inter-disciplinary in nature and requires a team approach to a solution of the problem. Managerial problems have economic, physical, psychological, biological and engineering aspects. This requires a blend of people with expertise in the areas of mathematics, statistics, engineering, economics, management, computer science, and so on. DIGITAL COMPUTER

Use of a digital computer has become an integral part of the O.R. approach to decision-making. The computer may be required due to the complexity of the model, volume of data required and the computations to be made.

MODELLING IN OPERATIONS RESEARCH

MODEL A model in O.R. is a simplified representation of an operation or a process in which only the basic aspects or the most important features of a typical problem under investigation are considered. OBJECTIVE OF A MODEL The objective of a model is to provide a means for analyzing the behaviour of the system for the purpose of improving its performance. CHARACTERISTICS OF A GOOD O.R. MODEL A good model should be capable of taking into account new formulations without having any significant change in its frame.

Assumptions made in the model should be as small as possible. It should be simple and coherent i.e. Number of variables is less. It should open to parametric type of treatment. It should not take much time in its construction for any problem

LIMITATIONS OF AN O.R. MODEL Models are only and attempt in understanding operations and should never be considered as absolute in any sense.

Validity of any model with regard to corresponding operation can only be verified by carrying the experiment and relevant data characteristics.

CLASSIFICATION OF MODELS

MODELS BY DEGREE OF ABSTRACTION LANGUAGE MODELS CASE STUDIES

MODELS BY FUNCTION DESCRIPTIVE MODELS PREDICTIVE MODELS NORMATIVE MODELS

MODELS BY STRUCTURE ICONIC MODELS ANALOGUE MODELS SYMBOLIC MODELS

MODELS BY NATURE OF THE ENVIRONMENT DETERMINISTIC MODELS PROBABILISTIC MODELS

MODELS BY THE EXTENT OF GENERALITY

SPECIFIC MODELS GENERAL MODELS MODELS BY DEGREE OF ABSTRACTION These models are based on the past data/information of the problems under consideration. MODELS BY FUNCTION
Descriptive models :

They describe some aspects of a

situation based on the available data. Predictive models : They make predictions regarding certain events. Normative models : They are used to prescribe a source of action. MODELS BY STRUCTURE
Iconic models

: They are representation of real systems

and have the appearance of the real thing. Analogue models : They are built from a set of properties to represent another set of properties. Symbolic models : They employ a set of mathematical symbols to represent the components of a real system. MODELS BY NATURE OF THE ENVIRONMENT
Deterministic models : In these decision variables are known

with certainty. Probabilistic models : They have one decision variable which is a random variable. MODELS BY EXTENT OF GENERALITY

 Specific models : They present a system at some specific

time. General models : They are used to explore alternative strategies which have been overlooked previously.

GENERAL SOLUTION METHODS FOR O.R. MODELS

ANALYTICAL / DEDUCTIVE METHODS In these methods classical optimization techniques such as Calculus, Finite Differences, etc. are used for solving an O.R. model. The kind of mathematics required depends upon the nature of the model. For example, the area indicated by the mathematical function may be evaluated through the use of Integral Calculus. NUMERICAL METHODS Numerical methods are concerned with the iterative or trial and error procedures, through the use of numerical computation at each step. These numerical methods are used when some analytical methods fail to derive the solution. The algorithm is started with a trial (initial) solution and continued with a set of rules for improving it towards optimality. The trial solution is then replaced by the improved one and the process is repeated until either no further improvement is possible or the cost of further computations cannot be justified. Thus the numerical methods are hit and trial methods that end at a certain step which no further improvement can be made. MONTE CARLO METHODS These involve the use of probability and sampling concepts. The various steps associated with a Monte Carlo method are as follows : (a) For appropriate model of the system, make sample observations and determine the probability for the variables of interest. (b) Convert the probability distribution to cumulative distribution. (c) Select the sequence of random numbers with the help of random tables.

(d) Determine the sequence of values of variables of interest with the sequence of random numbers obtained in the above step. (e) Fit an appropriate standard mathematical function to the values obtained in step (d).

METHODOLOGY OF OPERATIONS RESEARCH

The O.R. approach to problem solving consists of the following six steps : 1. FORMULATION OF THE PROBLEM It involves analysis of the physical system, setting-up of objectives, determination of restriction constraints against which decision should be adopted, alternative courses of action and measurement of effectiveness.
2.

CONSTRUCTION OF A MATHEMATICAL MODEL After formulation of the problem, the next step is to express all the relevant variables of the problem into a mathematical model.

3.

DERIVING THE SOLUTION FROM THE MODEL Once the mathematical model is formulated, the next step is to determine the values of decision variables that optimize the given objective function. This deals with the mathematical calculations for obtaining the solution to the model.

4.

VALIDITY OF A THE MODEL The model should be validated to measure its accuracy. That is, in order for a model to be useful, the degree to which it actually represents the system or problem being modeled must be established. A model is valid or accurate if (a) it contains all the objectives, constraints, and decision variables relevant to the problem, (b) the objectives, constraints, and decision variables included in the model are all relevant to, or actually part of the problem, and (c) the functional relationships are valid.

5.

ESTABLISHING CONTROL OVER THE SOLUTION After testing the model and its solution, the next step of the study is to establish control over the solution, by proper feedback of the information on variables which deviated significantly. As soon as one or more of the controlled variables change significantly, the solution goes out of control. In such a situation the model may accordingly be modified.

6.

IMPLEMENTATION OF THE FINAL RESULTS Finally, the tested results of the model are implemented to work. This would basically involve a careful explanation of the solution to be adopted and its relationship with the operating realities. This stage of O.R. investigation is executed primarily through the co-operation of both the O.R. experts and those who are responsible for managing and operating the system.

APPLICATIONS OF OPERATIONS RESEARCH

O.R. is mainly concerned with the techniques of applying scientific knowledge, besides the development of science. It provides an understanding which gives the expert/manager new insights and capabilities to determine better solutions in his decision-making problems, with great speed, competence and confidence. Now we describe the applications of O.R. in the functional areas of management : FINANCE, BUDGETING AND INVESTMENT Cash flow analysis, long rate requirements, dividend policies. Credit policies, credit cards and delinquent account procedures. Claim and complaint procedure. MARKETING Product selection, timing, competitive actions. Advertising media with respect to cost and time. Effectiveness of market research. PURCHASING, PROCUREMENT AND EXPLORATION Rules of buying. Determining the quantity and timing of purchase. Equipment replacement policies RESEARCH AND DEVELOPMENT Reliability and evaluation of alternative designs. Control of developed projects. Determination of time and cost requirements.

PRODUCTION Scheduling the production run by proper allocation of machines. Calculating the optimum product mix. Selection, location and design of the sites for the production plant.

OPPORTUNITIES OF OPERATIONS RESEARCH

Using O.R. approach, the decision maker can determine a solution to his routine or repetitive problem. For obtaining solution of such type of problems, it is necessary to build a model so that future solutions can be obtained using the model. O.R. requires business managers to be quite explicit about their objectives, their assumptions and visualizing the constraints. While using O.R. approach, the manager has to consider very carefully all those variables which influence his decisions and the way these variables in a problem interact with each other. He then selects a decision which is best for the organization as whole. O.R. approach allows a decision maker to solve a complex problem involving multiple variables much more quickly than if he had to compute them using traditional methods. Sometimes it may not be possible to solve these problems using O.R. methods. Using O.R. approach, a decision maker can examine a situation from various angles by simulating the model which he has constructed for the real problem. He can change various conditions under which decisions are being made, and examine the effect of these changes through appropriate experiments on the model, to determine the optimum or the best solution for the problem under consideration. All these experiments can be carried out without causing any serious damage to the existing system or incurring excessive cost.

SHORTCOMINGS OF OPERATIONS RESEARCH

There are certain problems of O.R. which a decision-maker may have to solve only once. Constructing a complex O.R. model for solving problems is often too expensive when compared with the cost of other less sophisticated approaches available to solve them. Sometimes O.R. specialists become too much enamoured with the model they have built and forget the fact that their model does not represent the real world problem in which decisions have to be made. Many O.R. models are so complex that they cannot be solved without the use of computer. Also, the solutions obtained form these models are difficult to explain to managers and hence fail to gain their support and confidence. Magnitude of computation involved, lack of consideration for nonquantifiable factors and psychological issues involved in implementation are some of the other short-comings of O.R.