Operations Research—An Overview “Ideas illuminate, while interest only befog 1:1. INTRODUCTION The activity “Operations Research” (abbreviated as O.R.) has become increasingly important in the face of fast moving technology and increasing complexities in business and industry. This chapter starts with the historical development of Operations Research and provides an overall view of the subject. It covers some general ideas on the subject, thus providing a perspective. 1:2. ORIGIN AND DEVELOPMENT OF O.R. No science has ever been born on a specific day. Operations research is no exception. Its roots are as old as science and society. Though the roots of O.R. extend to even early 1800's, It was in 1917, when A.K. Erlang, a Danish mathematician, published his work on the problem of congestion of telephone traffic. The difficulty was that during busy periods, telephone operators were unable to handle the calls the moment they were made, resulting in delayed calls. A few years after its appearance, his work was accepted by the British Post Office as the basis for calculating circuit facilities. During the 1930's, H.C. Levinson applied scientific analysis to the problems of merchandising. His work included scientific study of customers’ buying habits, response to advertising and relation of environment to the type of article sold, The term, Operational Research, was first coined in 1940 by McClosky and Trefthen in a small town, Bowdsey, of the United Kingdom. This new science came into existerice as a result of research ‘on military operations during World War II. During the war there were strategic and tactical problems which were greatly complicated, to expect adequate solutions from individuals or specialists. was unrealistic. Therefore, the military management called on scientists from various disciplines and organised them into teams to assist in solving strategic and tactical problems, ie., 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 OR.) Following the end of World War Il, the success of military teams attracted the attention of industrial managers of U.K. who were sceking solutions to their complex executive type problems. It was becoming apparent that these were basically the same problems but in a different context. Thus, keeping in view the critical economic situation which required drastic increase in production efficiency, O.R. activities were diverted from military to civil government and industries. In this way OR. began to creep into business and industry. By 1948 it had taken good hold in U.K. and was in the process of achieving the same in the United States. It was only in the early 1950's that theEe OPERATIONS RESEARCH industries in U.S.A. realized the importance of this new science in solving their management problems. Since then, industrial O.R. developed rapidly in U.S.A. as compared to U.K. The dramatic development and refinement of the various techniques of O.R. and the advent of digital computers are the two prime factors that have contributed to the growth and application of O.R. in the post-war period. In the 1950's O.R. achieved recognition as a subject for study in the universities. Since then the subject has gained more and more importance for the students of management, public administration, behavioural sciences, engineering, mathematics, economics and commerce. In recent years, Operations Research has had an increasingly great impact on the management of organizations. Both the number and the variety of its applications continue to grow rapidly, and no slowdown is in sight. The subject is also being used widely in other types of organizations, including business and industry. Many industries including aircraft and missile, automobile, communication, computer, electronics, mining, paper, petroleum and transportation have made widespread use of Operations Research in determining their tactical and strategical decisions more scientifically. In addition to the industries, the financial institutions, governmental agencies and hospitals are also rapidly increasing the use of Operations Research. 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 OLR. 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. Towards the applications of O.R. in India, Prof. Mahalonobis made the first important application. He formulated the Second Five-Year Plan with the help of O.R. techniques to forecast the trends of demand, availability of resources and for scheduling the complex schemes necessary for developing our country’s economy. 1:3. NATURE AND FEATURES OF O.R. Afier tracing the process of establishment and growth of Operations Research, we can consider it as a source to other new sciences. Literally, the word ‘operation’ may be defined as some action that we apply to some problems or hypotheses and the word ‘research’ is an organised process of seeking out facts about the same. O.R. has been variously described as the “science of use”, “quantitative common sense”, ‘scientific approach to decision-making problems”, etc. But only a few are commonly used and widely accepted, namely, (i) “O.R. is the art of giving bad answers to problems which otherwise have worse answers.” TL Saaty (ii) “OLR. is a scientific method of providing executive departments with a quantitative basis for decisions under their control.” — P.M. Morse and G.E. Kimball (iii) “O.R. is the application of scientific methods, techniques and tools to problems involving the operations of a system so as to provide those in control of the system with optimum solutions to the problem.” — Churchman, Ackoff and Arnoff _ (iv) “O.R. is applied decision theory. It uses 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 problems.” — D.W. Miller and M.K. Starr (0) “OR. is a scientific approach to problems solving for executive management.” — HM. WagnerOPERATIONS RESEARCH—AN OVERVIEW ce (vi) “OR, is A scientific knowledge through imerdisciplinary team effort for the purpose of determining the best utilization of limited resources” —HA. Taha Some significant features of O.R. are highlighted below : (a) Decision-Making. Primarily, O.R. is addressed to managerial decision-making or problem-solving. A major premise of O.R. is that decision-making, irrespective of the situation involved, can be considered as a general systematic process. It consists of the following steps : ( Define the problem and establish a criterion to be used. (A Select the alternative courses of action for consideration. (Gi Determine the model to be used and the values of the parameters involved. (iv) Solve the model to choose the best (optimal) alternative. (0) Scientific Approach. O.R. employs scientific methods for the purpose of solving problems. It is a formalised process of reasoning. (c) 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 organisation. This measure is then used as the basis to compare the alternative courses of action. (d) 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, sociological 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. (c) 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. 1:4. SCIENTIFIC METHOD IN O.R. The scientific method in Operations Research is its most important feature. It consists of the following three phases : Judgement Phase. This phase includes : (i) identification of the real-life problem, (ii) selection of an appropriate goal and the value of various variables related to the goals, (iii) appropriate scale of measurement, and (iv) formulation of an appropriate model of the problem, abstracting the essential information so that a solution at the decision-maker’s goal can be sought. Research Phase. This-phase is the largest and longest among the other two. However, the remaining two are also equally important as they provide the’ basis for a scientific method. This phase utilizes : ( observations and data collection for a better understanding of what the problem is, (ii) formulation of hypothesis and models, (iii) observation and experimentation to test the hypothesis on the basis of additional data, (iv) analysis of the available information and verification of the hypothesis using pre-established measures of effectiveness, (v) predictions of various results from the hypothesis, and (vi) generalization of the results and consideration of alternative methods. Action Phase. This phase consists of making recommendations for decision process by those who first posed the problem for consideration, or by anyone in a position to make a decision influencing the operation in which the problem occurred, i ft 1:5. MODELLING IN OPERATIONS RESEARCH A model in OR. 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.28 OPERATIONS RESEARCH Models, in general, cannot represent every aspect of reality because of innumerable and changing characteristics of the real life problems to be represented. Instead, they are limited approximations o the reality, ‘The objective of a model is to provide a means for analysing the behaviour of the system for the purpose of improving its performance ‘ There are several models in each area of business, or industrial activity. For instance, an account model is a typical budget in which business accounts are referred to with the intention of providing measurements such as rate of expenses, quantity sold, etc.; a mathematical equation may be considered to be a mathematical model in which a relationship between constants and variables is represented. A model which has the possibility of measuring observations may be called a quantitative model; a product, a device or any tangible thing used for experimentation may represent a physical model. Following are the main characteristics that a good model for Operations Research study should have : (i A good model should be capable of taking into account new formulations without having any significant change in its frame. (ii) Assumptions made in the model should be as small as possible. (iii) ‘Wt should be simple and coherent. Number of variables used should be less. (iv) It should be open to parametric type of treatment. (9) It should not take much time in its construction for any problem. Classification of Models Although the classification of models is a subjective problem, they may be distinguished as follows = Models by degree of abstraction. These models are based on the past datafinformation of the problems under consideration and can be categorised into (a) language models, and (b) case studies. ‘A book may be regarded as an example of a language model. Models by function. These models consist of (a) Descriptive models, (6) Predictive models, and (©) Normative models. (a) Descriptive models : A descriptive model simply describes some aspects of a situation based ‘on observation, survey, questionnaire results, or other available data, The result of an opinion poll represents a descriptive model, (b) Predictive models : Such models can answer ‘if and what’ type of questions, ie, they make predictions regarding certain events, For example, based on survey results, television networks attempt to explain and predict the election outcome before all the votes are actually counted. (©) Normative models : Finally, when a predictive model has been repeatedly successful it can be used to prescribe a source of action. Linear programming is a normative of prescriptive model, because it prescribes what the managers ought to do, Models by structure, These models are represented by (a) leonic models, (b) Analogue models, and (c) Symbolic models. Iconic or Physical models are pictorial representation of real systems and have the appearanc the real thing, Examples of such models are eity maps, houses blueprint’, globe ard se Bad iconic model is said to be ‘scaled-down’ or ‘scaled-up’ according as the dimensions of the model are smaller or greater than those of the real item, For instance, in biology, the structure of a cell may be illustrated by an enlarged (scaled-up) iconic model for teaching purposes. Iconic models are easy to observe, build and describe, but are difficult to ‘manipulate and not very useful for the purposes of prediction. Commonly, these models represent a static event. Analogue models are more abstract than the iconic ones for there is no ‘look-alike’ correspondence between these models and real life items, ‘They are built by utilizing one set ofOPERATIONS RESEARCH—AN OVERVIEW 29 properties to represent another set of properties. For instance, a network of pipes through which water is running could be used as a perallel for understanding the distribution of electric currents. Graphs and maps in various colours ‘are analogue models. in which different colours correspond to different characteristics, A flow process chart is an analogue model which represents the order of occurrence of various events to make a product. Mathematical or Symbolic models are most abstract in nature. They employ a set.of mathematical symbols to represent the components (and relationships between them) of the real system. These models are most general and precise. However, it is not always possible to depict a real system in mathematical formulation, sometimes it is easier to use mathematical symbols for describing the relationship of the components, and sometimes an analogue model may express the pattern of its relationship in a better way. Models by nature of the environment, These models can be classified into (a) Deterministic models, and (b) Probabilistic models. In deterministic models, all the parameters and functional relationships are assumed to be known with certainty when the decision is to be made. Linear Programming and Break-even models are the examples of deterministic models. On the other hand, models in which at least one parameter or decision variable is a random variable are called probabilistic or stochastic models. These models reflect, to some extent. the complexity of the real world and the uncertainty surrounding it. Models by the extent of generality. These models can be categorised into (a) Specific models, and (b) General models. When a model presents a system at some specific time, it is known as a specific model. In these models if the time factor is not considered, then they are termed as static models, and dynamic models otherwise. An inventory problem of determining economic order quantity for the next period. assuming that the demand in planning period would remain same as that of today, is an example of a static model. Dynamic Programming may be considered as an example of dynamic model. Simulation and Heuristic models fall under the category of general models. These models are mainly used to explore alternative strategies (courses of action) which have been overlooked previously. These models do not yield any optimum solution jo the problem, but give a solution to a problem depending on assumptions based on the past experience. 1:6. ADVANTAGES AND LIMITATIONS OF MODELS Models in OLR. are used as an aid for analysing complex problems. The main advantages of a'model are : (i) Through a model, the problem under consideration becomes controllable. (ii) It provides some logical and systematic approach to the problem. (iii) It indicates the limitations and scope of an activity. (iv) It helps in incorporating useful tools that eliminate duplication of methods applied to solve any specific problems. (v) It helps in finding avenues for new research and improvements in a system. (vi) It provides economic descriptions and explanations of the operations of the system they represent. However, besides the above advantages a model has the following limitations : (a) Models are only an attempt in updérstanding operations and should never be considered as absolute in any sense. % ' (b) Validity of any model with regard to corresponding operation can only be verified by carrying out the experiment and observing relevant data characteristics, (c) Construction of models require experts from various disciplines.30 OPERATIONS RESEARCH 1:7, GENERAL SOLUTION METHODS FOR O.R. MODELS There are, in general, three methods for deriving the solution to an O.R. model: the analytical methods, the numerical methods and the Monte-Carlo methods. The first one is deductive by nature, while the second one is inductive. Analytical or 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, in the inventory model, in order to calculate the economic order quantity (EOQ), the analytical method requires the first derivative of the mathematical expression TC = (D/Q) Cs + (Q/2)C. equated to zero, as the first step towards identifying the optimum value of EOQ, viz, V2DC\/Cs. This is because of the concept of maxima and minima for optimality. Here, TC = total annual cost, D = annual demand, Q = size of an order, Cs = set up cost per production run, and C, = holding cost for @ unit in inventory. 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 numerical method starts 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 after 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 distribution for the variables of interest. (6) 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 (4). The Monte Carlo method is essentially a simulation technique in which statistical distribution functions are created by generating a series of random numbers, 1:8. METHODOLOGY OF OPERATIONS RESEARCH The systematic methodology developed for an O.R, study deals with problems involving conflicting multiple objectives, policies and alternatives. O.R. in the final analysis is a scientific methodology which is applied to the study of the operations of large complex organisations or activities with a view to assessing the overall implications of various alternative courses of action, thus providing an improved basis for managerial decisions. The O.R. approach to problem solving consists of the following seven steps : 1. Formulate the problem. 2. Construct a mathematical model. 3. Acquire the input data. 4, Derive the solution from the model.OPERATIONS RESEARCH—AN OVERVIEW 31 5. Validate the model 6. Establish control over the solution, 7. Implement the final results 1. Formulating the Problem. The first step in OLR. is to develop a clear and concise statement of the problem, i.e., to identify the problem correctly. Once the problem is rightly identified we can say that fifty per cent of the problem is solved. After identification, formulation of the problem is to be carried out. For this it is necessary to study comprehensively the components of the problems, viz. (@) the decision-maker, (b) the objective, (c) the alternative courses of action, and (d) the environment. After identifying the components of the problem, the relationship that exists among the components of the problem should be analysed. Aiso, there must be complete agreement on the above points between persons initiating the O.R. study and the persons performing the study. 2. Constructing a Mathematical Model, The next step is to build a suitable mathematical model. Model construction consists of hypothesizing relationships between variables subject to, and not subject to control by decision-maker. ‘A mathematical model should include mainly the following three basic sets of elements = (a) Decision variables and Parameters, (b) Constraints or Restrictions, and (c) Objective function. A generalized mathematical model might take the form : E=f(x, y;) where f represents a system ‘of mathematical relationships between the measures of effectiveness of the objective sought (E) and the variables, both controllable (x,) and uncontrollable (y,). 3. Obtaining the Input Data. Once the mathematical model of the problem has been formulated. the next step is to obtain the data to be used in the model as input. Since the quality of data determines the quality of output, the importance of obtaining accurate and complete data cannot be over-emphasised. Obtaining correct and relevant data may, however, be a difficult exercise when relatively large problems are involved, A number of sources, such as: company reports and documents, interviews with the company personnel and so on may by used for collecting data. 4. Deriving the solution from the Model. Having collected the input data, 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. It may be noted that the solutions can be categorised as being (i) feasible or infeasible, (ii) optimum or non-optimum, and (iif) unique or multiple, (i A solution that satisfies all the constraints of the problem including the condition of non-negativity is known as a feasible solution, while the infeasible solution is one that does not satisfy the condition of non-negativity of variables. (i) An optimum solution to the problem is one of the feasible solutions which also optimises the objective function, The feasible solutions other than the optimum solution are ealled non-optimum solutions. (ii) If there exists only one optimum solution to be problem, itis said to be an unique optim solution. On the other hand, if two or more optimum solutions 10 the problem exist, then ‘mudtiple optimum solutions are said 10 exist. ! While algorithms exist for most ofthe standardised problems, there are also some numerical techniques, which yield solutions shat are not necessarily optimum. Heuristics and Simalation illustrate those methods, Heuristics are step by step logical rules that yield values of the variables which satisfy all the constraints, but not necessarily provide optimum solution. However, these values provide an acceptable value for the objective function. Similarly, the technique of Simulation is~wTwwaVaw we So OPERATIONS RESEARCH applied where a given system is sought to be replicated and experimented with. Solutions using simulation need not be optimal, because the technique is only descriptive in nature. In addition to the solution of the model, it is also sometimes essential to perform sensitivity analysis, ie., to determine the behaviour of the system, changes in the system's parameters and specifications. This is done because the input data (parameters) may not be accurate or stable, and the structural assumptions of the model may not be valid, S. Validation of the Model. Validating a model requires of determining as if the model can reliably predict the actual system's performance. It also involves testing the structural assumptions of the model to ascertain their validity. A common approach for testing the validity of a model is to compare its performance with past data available for the actual system. If during validation, the solution cannot be implemented, one needs to find if some of the original constraints were incorrect and need to be modified. In such a case, one must retum to the problem formulation step and carefully make the appropriate modifications to represent more realistic situation. A model must be applicable for a reasonable time period and should be updated from time to time, taking into consideration the past, present and future aspects of the problem. 6. 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 mode! may accordingly be modified. 7. 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. 1:9. OPERATIONS RESEARCH AND DECISION-MAKING Every industrial enterprise or business house works on a properly established management information system. Such a system usually assumes a three-tier position at the level of (i) strategic planning, (ii) managerial control, and operational control. These levels are identified with the top management, middle management and supervisory management respectively. Many prefer to call these three-tier activities as policy-making, decision-making and activity oriented. For a competent management, decision-making is a major task. Decision-making is not the headache of only the management, rather all of us make decisions. We daily decide about many minor and major issues. The essential characteristics of all decisions_are: (1) objective; (2) alternatives at the disposal; and (3) influencing factors. Once these characteristics are known, one can think of improving the characteristics so as 10 improve upon the decision itself. Let us consider a situation where a decision concems spending summer vacations at a hill resort ‘The problem may be to decide the mode of conveyance from amongst the three altematives: train. bus and a taxi {At the first level of decision-making, bus is chosen as the mode of conveyance just by intuition, ‘At the second level of decision-making, the three modes are ‘compared and it is decided qualitatively that the bus will be preferred since it is less time consuming compared to the train and cheaper as compared (0 taxi. At the third level of decision-making, the three altematives are compared = ict suggested that the bus will be chosen, as it will be taking only half the time taken by train and shal be 40% less costlier than the taxi,OPERATIONS RESEARCH—AN OVERVIEW second decisi best as it is scientific as well as quantitative, It is this scientific quantification used in O.R. that helps management to make better decisions. Operations Research may be regarded as’ a tool employed to increase the i effectiveness of managerial decisions as an objective supplement to the Subjective feelings of the decision-maker. For instance, in distribution or allocation areas, O.R. may suggest the best locations for agencies, warehouses as well as the most economical kind of transportation; in marketing areas, it may aid in solution is attempted. However, the study of compl only when a choice between two or more courses of OR. may be regarded as a tool that enables the decision-maker to be objective in choosing an altemative from among many that he can conceive of, Following are the salient advantages of an operations research study approach in decision-making: (® Better Decisions. O.R. models frequently yield actions that do improve on intuitive decision- making. A situation may be so complex that the human mind can never hope to assimilate all the significant factors without the aid of O.R. guided computer analysis. (i) Better Coordination. Sometimes, ‘operations research has been instrumental in bringing order out of chaos. For instance, an O.R.-oriented planning model becomes a vehicle for coordinating ‘marketing decisions within the limitations imposed on manufacturing capabilities. id) Better Control. The management of large organizations recognize that itis extremely costly ‘0 provide continuous executive supervision over routine decisions. An O.R. approach, thereby regained new freedom to the executive to devote his attention to more pressing matters. The moct frequently adopted application in this category deal with production scheduling and inventory replenishment. (iv) Better Systems. Often, an OR. study is initiated to analyse a particular decision-problem, such as whether fo open a new warehouse. Afterwards, the approach is further developed into a’system to be employed repeatedly. Thus, the cost of undertaking the first application may produce benefits, lex problems by O.R. techniques becomes useful f action is possible. 1:10, 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 expertimanager new insights and capabilities to determine better solutions in his decision-making problems, with great speed, competence and confidence. In recent years, O.R. has successfully entered many different areas of research in Defence, Government, Service Organisations. and Industry. We briefly describe some applications of OLR. in the functional areas of management : Finance, Budgeting and Investment (Cash flow analysis, long range capital requiréments, dividend policies, investment portfolios, (ii), Credit policies, credit risks and delinquent account procedures, (iii) Claim and complaint procedure, Marketing (i) Product selection, timing, competitive actions. “ (ii) Advertising media with respect to cost and time,34 OPERATIONS RESEARCH (iii) Number of salesmen, frequency of calling of account, etc. (iv) Effectiveness of market research. Physical Distribution (® Location and size of warehouses, distribution centres, retail outlets, etc. (ii) Distribution policy Purchasing, Procurement and Exploration (i) Rules of buying. (i) Determining the quantity and timing of purchase. (iii) Bidding policies and vendor analysis. (iv) Equipment replacement policies. Personnel (@ Forecasting the manpower requirement, recruitment policies and job assignments (i, Selection of suitable personnel with due consideration for age and skills, etc. (iii) Determination of optimum number of persons for each service centre. Production (@ Scheduling and sequencing the production run by proper allocation of machines. (@) Calculating the optimum product mix. (i) Selection, location and design of the sites for the production plant. Research and Development (® Reliability and evaluation of alternative designs. (ii) Control of developed projects. (iii) Co-ordination of multiple research projects. (iv) Determination of time and cost requirements. Besides the above mentioned applications of O.R. in the context of modern management, its use has now extended to a wide range of problems, such as the problems of communication and information, socio-economic fields and national planning. 1:11. OPPORTUNITIES AND SHORTCOMINGS OF OPERATIONS RESEARCH The use of O.R. to improve decision-making has become almost universal today. However, this remarkable achievement of O.R. is not totally free from shortcomings, Certain shortcomings result from lack of awareness on the part of managers about their roles, while others result due to avoidance Of the behavioural and organisational issues which are a part of every successful application, Opportunities of O.R. 1. 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 thus freeing managers to concentrate on more Pressing matters. 2 OR, requires business managers to be quite explicit about theif objectives, their assumptions and the way of visualising the constraints, 2 3. While using O.R. approach, a 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 thea selects a decision which is best for the organisation as whole, ]OPERATIONS RESEARCH—AN OVERVIEW 35 4. O.R. approach allows a decision-maker to“solve a complex problem involving multiple ‘ariciles much more quickly than if he had to compute them using traditional methods. Sometimes it may not be possible to solve such complex problems without using O.R. methods. 5. 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 cant 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 best or optimal 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. A Shortcomings of O.R. 1. There are certain problems which a decision-maker may have to solve only once. Constructing a complex OR. model for solving such problems is often too expensive when compared with the cost of other less sophisticated approaches available to solve them. 2. 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. ' 3. Sometimes the basic data are subject to frequent changes. In such cases, modification of O.R. models is a costly affair. 4. Many O.R. models are so complex that they cannot be solved-without the use of computer. Allso, the solutions obtained from these models are difficult to explain to managers and hence fail to gain their support and confidence. 2 5. Magnitude of computation involved, lack of consideration for noh-quantifiable factors and psychological issues involved in implementation are some of the other shortcomings of O.R. MULTIPLE CHOICE QUESTIONS Choose the correct alternative: 1. Operations Research came into existence (@) im the year 1940, (®) in the military context, (©) during World War I, (@) during World: War UL 2. Operations Research achieved recognition as a subject of academic study in the year (a) 1949, @® 1950, (1953, @ 1957. 3. Operations Research is - (a) applied decision theory, (6) a scientific approach to problems solving for, executive management, (0) the science of use, (4) allof the above ‘Operations Research approach is i (a) intaitive, (©) objective, (©) mubi-disciplinary, ; {@) all of the above. 5. A model im Operations Research is ‘ (a) an approximation, / (b) an idealization, (0) aneessence of reality, sik (@ all of the above, 6. A physical model is an example of ~~ (a) ironic model, a (b) analogue model, (0) verbal model, (@) symbolic’ mode,36 OPERATIONS RESEARCH 7. Decision variables in an O.R. model-are (a) controltable, (b) , uncontrollable, (©) parameters, (a) constants. 8, The scientific method"in Operations Research consists of (a) Judgement’Phase, (b) Research Phase, (©) Action Phase, (d)_all of the above 9. Operations Research techniques are not applicable in the following situation : (a) Resources available are unlimited, (b) Objective can be defined for maximization or minimization, (©) Sufficient input data is available for formulating the problem. (a) Scientifi> methods. techniques and tools may be applied. 10. An optimization model in OR (@) provides decision within its limited context, (©) mathematically provides the best decision, (©) helps in evaluating various altematives constantly, (@) all of the above. 11. Which of the following is not correct? {a) A model should'be simiple and coherent. (®) A model should not take much time in its construction for any problem. (©) A model representing the'typical budget of business accounts is called ‘account model’. (a) A model which has the probability of measuring observations is called “qualitative model’. 12. Which of the following is not correct? (a) Models are only. an attempt in understanding operations and should never be considered as absolute in any sense. (b) Iconic models are pictorial representation of real system. (C) Heuristic models are particular cases of iconic models. (d) Analogue models are most abstract than the iconic ones ANSWERS L@ 2. (b) 3. @) 40 sS@ = 6. (a) “1. @) 8d) 9% (@) 10. @ iL. (d) 12. (©) REVIEW QUESTIONS 1, What is Operations Research? [Madurai M.Com. 2003] 2, What is Operations Research? Account for the growing importance of O.R, in business decisions. 3, Give any three definitions of Operations Research and explain, 4, State the features of O.R. [Madras M.B.A. (Nov.) 2006) 5, Explain the nature of Operations Research and its limitations, (Madurai M.Com. 2003] 6. What are the essential characteris ‘of O.R.? Mention different phases in an O.R. study. Explain the role of computers in this field 7. Model building is the essence of Operations Research, Discuss. 8, Discuss various classification, sehemes of models (Madurai M.Com., 2002], 9. What are the advantages and disadvantages of Operations Research model? Why is it necessary to test models and how would you go to about testing a model? [Lucknow B.S. 2008] 10, “Operations Research is a bunch of mathematical techniques.” Comment,OPERATIONS RESEARCH—AN OVERVIEW 1. 12. 13. 14. 15. 16. 17. 18. 8 oR RE BR 8 37 How can Operations Research models be classified? What is the best classification in terms of learning and understanding the fundamentals of O.R.? [Delhi MBA (HCA) 2002, Madras MBA (Nov.) 2006] Explain briefly the general methods for solving O.R. models. Describe briefly the different phases of Operations Research. Explain briefly the general methods for solving O.R. models, Discuss scientific method in O.R. Describe in detail, the four areas for the applications of O.R. Techniques in Financial Management. “Quantifying the elements of a decision problem is the easy part, the hard part is solving the model’. Do you agree? Why or why not? [Madurai M.Com. (Nov.) 2003] “Operations Research is an aid for the executive in making his decisions based on scientific method analysis.” Discuss the above statement in brief. .. Explain how and why O.R. methods have been valuable in aiding executive decisions. ‘Comment on the following statements : (a) Operations Research advocates a system approach and is concemed with optimization. (b) Operations Research replaces management by personality. (a) Explain briefly the applications of O.R. ‘(Madurai M.Com. 2002, Madras MBA (Nov.) 2006] (®) Write a short note on the importance of O.R. in project management. [Madras MBA 1999] State three O.R. models which have wide commercial applications. Discuss the significance and scope of Operations Research in decision-making with special reference to Health Care Administration. [Delhi MBA. (HCA) 2002] Briefly describe the scope of Operations Research. (Madras MCA 2003, MBA (Apri) 2006) Discuss the usefulness of O.R. in decision-making process and the role of computers in this field. [Madras MCA 1999) ‘What are the limitations of O.R.? Suggest three advantages of O.R. approach in decision-making. (Madras MBA 2004) ‘What is Operations Research? Which of the techniques of O.R. clearly fall under the category of optimal decision-making? Which of the techniques are not directly concerned with optimal decision-making? What are they concerned with? [Delhi M.Com. 2000) Name some of the tools of Operations Research. Discuss with examples, how these tools can be useful in Health Care Administration. (Delhi MBA (HCA) PT 2008)