Operation Research

Overview
Introduction
 The subject OPERATIONS RESEARCH is a
branch of mathematics - specially applied
mathematics, used to provide a scientific
base for management to take timely and
effective decisions to their problems.
School of Thought
 You have studied various schools of
management in your management science.
Most important among them which uses
scientific basis for decision making is:
 The Decision theory or Decisional

Management School and

 The Mathematical or Quantitative

Measurement School.
HISTORY OF OPERATIONS
RESEARCH
 Operations Research is a ‘war baby’. It is
because, the first problem attempted to
solve in a systematic way was concerned
with how to set the time fuse bomb to be
dropped from an aircraft onto a submarine.
In fact the main origin of Operations
Research was during the Second World War.
DECISION MAKING AND SOME
ASPECTS OF DECISION
 what is decision?
 What it consists of?
 What are its characteristics?
Decision making
 The basic requirements of decision-making
are
 (i) A set of goals or objectives,
 (ii) Methods of evaluating alternatives in an

objective manner,
 (iii) A system of choice criteria and a

method of projecting the repercussions of

alternative choices of courses of action.
OBJECTIVE OF OPERATIONS
RESEARCH
 The environment in which the organization
is operating is very dynamic in nature and
the manager has to take decisions without
delay to stand competitive in the market.
Objecive
 “The objective of Operations Research is to
provide a scientific basis to the decision
maker for solving the problems involving
the interaction of various components of an
organization by employing a team of
scientists from various disciplines, all
working together for finding a solution
which is in the best interest of the
organizaton as a whole. The best solution
thus obtained is known as optimal
decision”.
DEFINITION OF OPERATIONS
RESEARCH
 some of the important definitions are
discussed below.
 (a) Operations Research is the art of

winning wars without actually fighting. -

Aurther Clarke.
 (b) Operations Research is the art of giving

bad answers to problems where otherwise

worse answers are given. - T.L. Satty.
Contd..
 (c) Operations Research is Research into
Operations. - J. Steinhardt.
 (d) Operations Research is defined as Scientific
method for providing executive departments a
quantitative basis for decisions regarding the
operations under their control. - P.M. Morse and
G.E. Kimball.
 (e) Operations Research is the application of
scientific methods, techniques and tools to
operation of a system with optimum solution to
the problem. - Churchman, Ackoff and Arnoff.
Contd..
 (f) Operations Research is the application of the
methods of science to complex problems arising in
the direction and management of large systems of
men, materials and money in industry, business,
Government and defense. The distinctive
approach is to develop a scientific model of the
system, incorporating measurements of factors
such as chance and risk, with which to predict and
compare the outcome of alternative decisions,
strategies or controls. The purpose is to help
management to determine its policy and actions
scientifically. - Operations Society of Great Britain.
Characteristics of Operation
Research
 It is a interdisciplinary team approach
 It increases the creative ability of the

decision maker
 It is a system approach
Scope of OR
 In Defense Operation
 In Industry
 In planning and growth
 In agriculture
 In traffic control
 In hospital
Model
 Model is a representation of a person or a
system which provides some information
about it.
Classification of Models
 Mathematical and Descriptive
 Static and Dynamic
Types of Model

 A) Classification by structure:
 Iconic
 Analogue
 Symbolic
Contd..
 By Utility
 Descriptive
 Predictive
 Prescriptive
Contd..
 By nature of environment
 Deterministic
 probabilistic
contdd.
 By method of getting solution
 Analytical
 simulation
Example of a linear programming problem

 Let’s say a FedEx delivery man has 6

packages to deliver in a day. The warehouse
is located at point A. The 6 delivery
destinations are given by U, V, W, X, Y, and
Z. The numbers on the lines indicate the
distance between the cities. To save on fuel
and time the delivery person wants to take
the shortest route.
Contd..
 So, the delivery person will calculate different routes
for going to all the 6 destinations and then come up
with the shortest route. This technique of choosing the
shortest route is called linear programming.

 In this case, the objective of the delivery person is to

deliver the parcel on time at all 6 destinations. The
process of choosing the best route is called Operation
Research. Operation research is an approach to
decision-making, which involves a set of methods to
operate a system. In the above example, our system
was the Delivery model.
Contd..
 Linear programming is used for obtaining the most
optimal solution for a problem with given constraints. In
linear programming, we formulate our real-life problem
into a mathematical model. It involves an objective
function, linear inequalities with subject to constraints.
 Is the linear representation of the 6 points above
representative of the real-world?
 Yes and No.
 It is an oversimplification as the real route would not be
a straight line. It would likely have multiple turns, U-
turns, signals and traffic jams. But with a simple
assumption, we have reduced the complexity of the
problem drastically and are creating a solution that
should work in most scenarios.
Formulating a problem – Let’s manufacture
some chocolates

 Example: Consider a chocolate manufacturing company

that produces only two types of chocolate – A and B. Both
the chocolates require Milk and Choco only.
 To manufacture each unit of A and B, the following
quantities are required:
 Each unit of A requires 1 unit of Milk and 3 units of Choco
 Each unit of B requires 1 unit of Milk and 2 units of Choco

 The company kitchen has a total of 5 units of Milk and 12

units of Choco. On each sale, the company makes a profit of:
 Rs 6 per unit A sold
 Rs 5 per unit B sold.
 Now, the company wishes to maximize its profit. How many
units of A and B should it produce respectively?
Contd,

Choco Profit per unit

Milk

A 1 3 Rs 6
B 1 2 Rs 5
Total 5 12
Contd..
 Let the total number of units produced by A
be = X
 Let the total number of units produced by B
be = Y
 Now, the total profit is represented by Z
 The total profit the company makes is given
by the total number of units of A and B
produced multiplied by its per-unit profit of Rs
6 and Rs 5 respectively.
 Profit: Max Z = 6X+5Y
 which means we have to maximize Z.
Contd..
 The company will try to produce as many units of A and B to maximize
the profit. But the resources Milk and Choco are available in a limited
amount.
 As per the above table, each unit of A and B requires 1 unit of Milk. The
total amount of Milk available is 5 units. To represent this
mathematically,
 X+Y ≤ 5
 Also, each unit of A and B requires 3 units & 2 units of Choco
respectively. The total amount of Choco available is 12 units. To
represent this mathematically,
 3X+2Y ≤ 12
 Also, the values for units of A can only be integers.
 So we have two more constraints, X ≥ 0 & Y ≥ 0
 For the company to make maximum profit, the above inequalities have
to be satisfied.
 This is called formulating a real-world problem into a
mathematical model.
Common terminologies used in Linear
Programming

 Let us define some terminologies used in Linear Programming using the

above example.
 Decision Variables: The decision variables are the variables that will
decide my output. They represent my ultimate solution. To solve any
problem, we first need to identify the decision variables. For the above
example, the total number of units for A and B denoted by X & Y
respectively are my decision variables.
 Objective Function: It is defined as the objective of making decisions.
In the above example, the company wishes to increase the total profit
represented by Z. So, profit is my objective function.
 Constraints: The constraints are the restrictions or limitations on the
decision variables. They usually limit the value of the decision
variables. In the above example, the limit on the availability of
resources Milk and Choco are my constraints.
 Non-negativity restriction: For all linear programs, the decision
variables should always take non-negative values. This means the
values for decision variables should be greater than or equal to 0.
The process to formulate a Linear
Programming problem

 Let us look at the steps of defining a Linear

Programming problem generically:
 Identify the decision variables
 Write the objective function
 Mention the constraints
 Explicitly state the non-negativity restriction