Basics of

Operation Research

Dr. J. A. M. Rexie
Operation Research

● Operations Research (OR) is a scientific approach to decision-making

that uses mathematical models, statistical analysis, and optimization
techniques to solve complex problems and improve outcomes.
● Optimization is the process of finding the best possible solution to a
problem from a set of feasible solutions — maximizing or minimizing a
specific objective (like profit, cost, time, etc.) while satisfying all given
constraints.
Operation Research - Definitions
● OR is a scientific method of providing executive departments with a quantitative
basis for decisions regarding the operations under their control. -Morse & Kimball
● OR, in the most general sense, can be characterised as the application of scientific
methods, tools and techniques to problems involving the operations of systems so
as to provide those in control of the operations with optimum solutions to the
problems. -Churchman, Ackoff, Arnoff
● Operations research is applied decision theory. It 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
problems. -Miller and Starr
● Operations research is a scientific approach to problem solving for executive
management. -H.M.Wagner
Operation Research - Definitions

● Operations research is the art of giving bad answers to problems, to which, otherwise,
worse answers are given. -Thomas L. Saaty (6) Operations research is the art of
winning wars without actually fighting them. -Auther Clark
● Operations research is an aid for the executive in making his decisions by providing
him with the needed quantitative information based on the scientific method of
analysis. -C.Kittel
● Operations research is the systematic, method-oriented study of the basic structure,
characteristics, functions and relationships of an organization to provide the executive
with a sound, scientific and quantitative basis for decision-making. -E.L. Arnoff & M.J.
Netzorg
● Operations research is the application of scientific methods to problems arising from
operations involving integrated systems of men, machines and materials. It normally
utilizes the knowledge and skill of an interdisciplinary research team to provide the
managers of such systems with optimum operating solutions. -Fabrycky & Torgersen
Operation Research - Definitions

● Operations research is an experimental and applied science devoted to observing,

understanding and predicting the behaviour of purposeful man-machine systems; and
operations research workers are actively engaged in applying this knowledge to
practical problems in business, government and society. -Operations Research
Society of America
● Operations research is the application of scientific method by interdisciplinary teams
to problems involving the control of organized (man-machine) systems so as to
provide solutions which best serve the purpose of the organization as a whole. -Ackoff
& Sasieni
● Operations research utilizes the planned approach (updated scientific method) and an
interdisciplinary team in order to represent complex functional relationships as
mathematical models for the purpose of providing a quantitative basis fo decision-
making and uncovering new problems for quantitative analysis. -Thierauf & Klekamp
Operation Research - Definitions

● The most comprehensive and modern definition of operations research can be

summarised as below:
● O.R. is the application of modern methods of mathematical science to complex
problems involving management of large systems of men, machines, materials
and money in industry, business, government and defence. The distinctive
approach is to develop a scientific model of the system incorporating
measurement of factors such as chance and risk to predict and compare the
outcomes of alternative decisions, strategies or controls. -J.O.R. Society, U.K.
Scientific Method - Operation Research

● 1.Judgement Phase
● 2.Research Phase
● 3.Action Phase
Characteristics of Operation Research

● (i) its system (or executive) orientation,

● (ii) the use of interdisciplinary teams,
● (iii) application of scientific method,
● (iv) uncovering of new problems,
● (v) improvement in the quality of decisions,
● (vi) use of computer,
● (vii) quantitative solutions, and
● (viii) human factors.
System (or executive) orientation
● Any action by one part of an organization affects other parts.
● An optimum operation for one part might not be optimal for the entire system.
● To make effective decisions, all interactions within the system must be
identified and their effects evaluated.
● Example – Inventory Policy:
○ At first glance, some problems (e.g., inventory policy) may seem simple.
○ The production department prefers long, uninterrupted runs to reduce
setup and cleanup costs.
○ This causes large inventories of raw material, in-process, and finished
goods in few product lines.
○ Leads to conflicts:
■ Finance wants minimum inventory.
■ Marketing wants diverse inventory.
■ Personnel wants continuous production, even during slack periods.h a
solution is called an optimal (optimum or global optimum) solution.
System (or executive) orientation

● Need for Thorough Analysis:

○ Given these complexities, problems must be carefully analyzed.
○ All organizational factors must be considered thoroughly.

● Role of Mathematical Models:

○ Once system factors are identified, a mathematical model can be
formulated.
○ This model aims to optimize profits for the system as a whole.

● Optimal Solution:
○ The solution derived from such a model is termed an optimal or global
optimum solution.
Use of Interdisciplinary Teams
● OR studies are typically carried out by teams of scientists from diverse
scientific and engineering disciplines.
● Common team members may include: Mathematicians, Statisticians,
Physicists, Psychologists, Economists and Engineers
● Teams with members from different fields generate more unique and
effective solutions.
● These teams have a higher probability of success compared to teams from
a single discipline.
● Multidisciplinary teams can tackle problems from multiple perspectives.
Application of Scientific Method
● A key feature of OR (Operations Research) is the use of the
scientific method to solve real-world problems.
● Unlike other scientific fields (e.g., chemistry, physics), OR
cannot always use controlled laboratory conditions.
● OR deals with real systems (like companies), where
experimentation may risk failure and is not always feasible.
● Challenges with Experimentation in OR
○ Experimentation on the entire system is often avoided due to
risk.
○ Sometimes sub-systems may be tested, but this is limited.
○ Model-based research is preferred instead of real-world trials.
Uncovering of New Problems

● Solving one OR problem may uncover additional related

problems.
● These new problems don’t need to be solved
simultaneously, but must eventually be addressed for full
benefits.
● OR should not be limited to one-shot problems.
● Continuous research is necessary to ensure long-term
effectiveness.
● OR results for one problem can still be used even if all
related issues aren't resolved yet.
Improvement in the Quality of Decisions

● OR might not give perfect solutions, but improves solutions

compared to unscientific methods.
● It helps in making better decisions, even if they are not ideal.
● Reflects OR's role in enhancing decision-making quality, not
guaranteeing perfection.
Use of Computers

● OR often deals with complex models and large data sets.

● Computers are essential for:
● Solving mathematical models
● Performing large-scale computations
● Managing and analyzing data efficiently
Quantitative Solutions

● OR provides quantitative decision support.

● Helps in comparing outcomes numerically,
● e.g.: “Cost to the company if decision A is taken is ₹ X, if
decision B is taken is ₹ Y.”
● Enables data-driven decision-making by management.
Human Factors

● Quantitative solutions in OR often do not consider

human factors.
● However, human factors play a crucial role in many real-
world problems.
● Therefore, an OR study is incomplete without
considering human behavior and psychology.
Scientific Method

● Judgement Phase
● Research Phase
● Action Phase
Judgement Phase
🛠 Determination of the Operation
🧩 Problem Formulation Relative to Objectives
● Defines the operation as a set of coordinated
actions. ● Define the nature and origin of the problem.
● Example: Assembling an engine using ● Analyze causes and structure the problem clearly.
various components and processes. ● Align problem-solving methods with operational
● Focus is on resource utilization to achieve objectives.
broader objectives.
Types of Problems:
🎯 Objectives and Values of the Operation
● Remedial Type - focuses on fixing or improving an
● Establish the frame of reference for analysis. existing system or operation.
● Identify the type and context of the situation. ● Optimization Type - Seeks the best possible solution
● Set goals, time constraints, accuracy levels, and under given constraints.
assess risks. ● Transference Type - Involves allocation of limited
● Clarify values associated with success criteria.
resources from one area to another to maximize
benefit.
● Prediction Type - Aims to forecast future outcomes
📏 Determining Effectiveness Measures based on current or historical data.

● Measures how well a model solves the defined problem.

● Use ratios, rates, or comparisons.
● Example: Traffic flow analysis or strategic military assessments.
● Ensures the model aligns with operational goals.
Research
2
Phase
1 Observation and Data Collection

2 Formulation of Hypotheses and Models

3 Analysis and Verification of Hypotheses

4 Prediction, Generalization & Alternatives

 Formulation of Relevant Hypotheses
Research Phase and Models
● Hypotheses are tentative explanations
or assumptions about the problem.
○ A hypothesis must:
○ Be based on sound subject
Observation and Data Collection
knowledge.
● Direct observation by trained experts at
○ Provide an answer to the problem.
the operation site may be difficult or
○ Be capable of verification through
unsafe.
empirical evidence.
● If feasible, simulate the problem using a
● Models treat the problem as a unified
model or operational experiments.
entity, not disconnected parts.Models
● When complete data isn’t available,
may be:
make educated assumptions to fill gaps.
○ Based on theoretical assumptions.
● The analyst must try to find missing
○ Derived from facts and data.
information to fully understand the
● Time factor is critical:
problem.
○ Urgent decisions may not need
elaborate models.
○ For rough estimates, over-modeling
is wasteful.
Hypotheses - Example
● A hypothesis is a tentative, testable statement or prediction about the
relationship between two or more variables. It serves as a starting point for
investigation in research, guiding what data to collect and how to interpret
it.

🧪 Example:
“Increasing the amount of daily exercise will improve cardiovascular
health in adults aged 30–50.”
● ________ = Independent variable
● ______________________ = Dependent variable
● _________________ = Defined group
Hypotheses - Example
● A hypothesis is a tentative, testable statement or prediction about the
relationship between two or more variables. It serves as a starting point for
investigation in research, guiding what data to collect and how to interpret
it.

🧪 Example:
“Increasing the amount of daily exercise will improve cardiovascular
health in adults aged 30–50.”
● Exercise = Independent variable
● Cardiovascular health = Dependent variable
● Adults aged 30–50 = Defined group
This hypothesis can be tested by tracking changes in health indicators like
blood pressure or cholesterol after increasing exercise levels.
Research Phase
Prediction, Generalization, and
Analysis of Available Information Alternative Methods
and Verification of Hypothesis ● Once verified, the model is used to
● Scientists learn to analyze and build a theory describing the
interpret data through training. problem completely.
● Both qualitative and quantitative ● Study how parameter changes
methods are used. affect results to generalize
● Example: In mechanics, to find outcomes.
work (W = F × S), the force and ● Use the theory to predict future
distance are used to form and test outcomes.
hypotheses. ● The analyst must also:
● Verification doesn’t require testing ○ Explore alternative solutions.
every case—sampling and ○ Recommend new approaches.
estimation can be sufficient. ○ Ensure that recommendations
are justified and impactful.
📌 Action Phase

● Making Recommendations for remedial action.

● Components of an Effective Recommendation:
a. Clear statement of assumptions made
b. Scope and limitations of the information presented
c. Alternative courses of action
d. Effects of each alternative
e. Preferred course of action
📌 Action Phase

● Making Recommendations for remedial action.

● Components of an Effective Recommendation:
a. Clear statement of assumptions made
b. Scope and limitations of the information presented
c. Alternative courses of action
d. Effects of each alternative
e. Preferred course of action
Necessity of Operations Research in
Industry A Strategic Approach to Complex Decision-Making

Complexity Organization Optimizati Innovation

on

Made with
Genspark
Introduction: What is Operations Research?

Origins: Evolved from military strategy decision-making

during World War II

Modern Application: Now applied to complex decision-

making across various industries

Scientific Approach: Uses mathematical modeling,

statistical analysis, and algorithms to improve decision-
making processes

Core Objective: Finding optimal or near-optimal solutions to

complex business problems
Why is Operations Research Needed in
Industry?

Increasing Complexity: Modern industries face ever-

growing interconnected systems and processes
Data-Driven Decisions: OR provides a structured,
quantitative foundation for more reliable decision-making
Resource Optimization: Essential for maximizing
efficiency while minimizing costs in competitive markets
Strategic Advantage: Enables organizations to make
smarter decisions faster than competitors
Key Reason 1: Complexity

Multiple Interacting Factors: Customer demand, raw

materials availability, equipment capacity, and
manufacturing constraints are deeply interconnected
System Interdependence: Changes in one variable can
trigger cascading effects throughout the entire production
system

Mathematical Modeling: OR simplifies complexity by

transforming real-world problems into mathematical
representations

Optimization Solutions: Helps identify the best possible

decisions in situations where human intuition alone is
insufficient
Key Reason 2: Scattered Responsibility &
Authority
Siloed Decision-Making: Decisions made at various
departments and management levels without coordination
Organizational Disconnect: Separated authority leads
to conflicting objectives and suboptimal outcomes
OR Solution: Quantitative methods to coordinate
decision processes across organizational boundaries
Integrated Framework: Creates unified decision-
making models that align departmental goals with
overall objectives
Key Reason 3: Uncertainty & Knowledge
Explosion
Volatile Markets: Industries face unprecedented uncertainty due
to rapid economic and market changes
Decision Reliability: OR provides models that ensure more timely
and dependable decisions in unpredictable environments
Information Overload: Businesses struggle to process the
exponential growth of available information
Knowledge Integration: OR teams collect and apply the
latest knowledge to support effective strategy development
Scope of OR
● Industry:
a. Industrial management faces a chain of problems — from raw material purchase to dispatch of
finished goods.
b. OR helps management gain an overall view to optimize profits through scientific decision-
making.
c. Evaluates alternative production methods and estimates potential returns.
d. Suggests structural improvements like new machinery and increased automation.
e. Successfully applied to areas such as: Production, Blending, Product mix, Inventory
control, Demand forecasting, Sales and purchasing, Transportation, Repair and
maintenance, Scheduling and sequencing, Planning and control of projects
● Defence: Coordinates operations using experts from various fields to achieve consistent goals.
● Planning: Crucial for maximizing growth and resource use, especially in addressing poverty and
hunger in Asia and Africa.
● Agriculture: Optimizes land and water allocation to tackle food shortages and population growth.
● Public Utilities: Applied in hospitals to reduce waiting time and in transport to control arrivals and
prevent congestion.
● Business and Society: Helps set premium rates in offices and is used across industries (petroleum,
paper, chemicals, small enterprises) to minimize cost and maximize benefits.
🧠 OR and Decision Making
🔍 Role in Management:
Decisions are fundamental to managerial functions.
OR transforms decision-making into a scientific and systematic process.
🏁 Characteristics of a Good Decision:
Clear objective

Defined alternatives

Awareness of influencing constraints (resources, time, environment)

OR and Decision Making
🎓 Levels of Decision-Making (Example: Choosing a Mode of Transport)

● Intuition-Based
○ Quick decision without comparison (e.g., take a rickshaw instantly)
● Qualitative Comparison
○ Weighing pros and cons (rickshaw vs. autorickshaw)
● Scientific Quantification
○ Apply OR techniques to compare cost, efficiency, and time (rickshaw vs. bus
via mathematical models)

📊 Why OR Matters:

● Adds quantitative analysis to the decision-making process

● Improves accuracy, consistency, and outcomes
● Equips managers to handle complex scenarios with data-driven confidence
Methodology

Provide some project details. Explain how

the project supports the organization's
overall objectives or how it meets client
and customer needs.