MODULE 1

INTRODUCTION TO
OPERATIONS RESEARCH
 TOPICS COVERED
 Origin of O.R.
 Definition & Meaning of O.R.
 Features /Nature of O.R.
 Methodology/Approaches of O.R.
 Application/Scope of O.R.
 Models in O.R.
 Techniques of O.R.
 Limitations of O.R.
 ORIGIN OF OPERATIONS RESEARCH
 Any problem that requires a positive decision to be made can be
classified as an Operations Research type problem.

 The name ‘Operations Research’ originated from a programme

under taken by Great Britain during the World War II.

 “Research in Military Operations”.

 It was during early part of the war that Great Britain brought
together a group of specialists from a number of areas to work on
the military defence of their country.
 Study involved to determine the best use of air power and the
newly invented radar.

 Because of the success of O.R in military operations – it quickly

spread to all phases of the industry and government.

 By 1951, O.R. had taken its place as a distinct science in the US.

 In India, O.R. society was founded and known in the year 1959 –
emerging as an inter-disciplinary areas of knowledge for
problem-solving. (Thus, it was implemented, studied, and then
applied)
 MEANING & DEFINITION OF O.R.

MEANING:

 O.R. is the application of scientific methods to problems arising

from operations involving integrated system of men, machines, and
material.

 It normally utilizes the knowledge and skill of an inter-

disciplinary research team to provide the managers of such systems
with optimum operations solutions.
DEFINITIONS:

 According to C.W. Churchman --- “O.R. is the application of

scientific methods, techniques, and tools to problems involving the
operation of a system so as to provide those in control of the
system with optimum solution to the problem”.

 According to O.R. Society of America --- “O.R. is concerned

with scientifically deciding how best to design and operate man-
machine systems usually under conditions requiring allocation of
scarce resources”.
 Thus, Industries in India are also becoming conscious of the role
of O.R. and a good number of them have well trained O.R. teams.
Examples: Indian Airlines, Railways, Defence Organizations,
TATA, TELCO., etc.

 Assignment models is used by Kirloskar – for allocation of

salesmen to different areas so as to maximize profits. DCM –
Linear programming – cotton blending; PERT/CPM –
construction projects.

 Thus, O.R. is termed as “An art of winning war without

actually fighting it”.
 FEATURES/ NATURE OF O.R.
1. System Orientation: O.R. studies the situation or problem as a whole.
The optimum result of one part of a system may not be the optimum for
some other part.

2. Inter-Disciplinary Team Approach: Performed by team of scientists

whose individual members have been drawn from different scientific and
engineering disciplines. (Mathematics, Statistics, Economics,
Management, Computer Science, so on.)

3. Scientific Approach: O.R. uses the scientific methods to solve

problems. (e.g. observations and measurements - problem under study) –
formalized process of reasoning.
4. Decision-Making: O.R. increases the effectiveness of a
managerial decision. i.e.
a. Diagnose the problem- maximize profits or minimize cost.
b. Select alternative course of action.
c. Determine the model to be used.
d. Evaluate alternatives.
e. Select best and optimum alternative. } thus, O.R. is called
“Decision Science”

5. Use of Computers: O.R. requires computers to solve complex

mathematical model or to perform a large no. of computations
involved. (e.g. digital computers).

6. Objectives: Attempts to provide the best and optimal solution to

a given problem.
7. Quantitative Solution: Quantitative solutions to managerial
problems.

8. Human Factors: Study of O.R. is incomplete without the study

of human factors.

9. Continuing Process: Needs to study changing environmental

conditions, update and modify the model on a regular basis.

10. Operations Economy: Conflicts, uncertainty, complex

situations – OR help to reduce costs, and improve profits.
 METHODOLOGY/APPROACHES OF O.R.

• Clear picture of relevant issues – study relevant

documents & literature of the problem – aim to
OR obtain a clear understanding of the problem &
IE
NT relationship to different operational aspects of the
ATI system.
ON

• To have a clear definition of a problem in terms of

scope & results desired.
PROB • The 3 components:
LEM
DEFI • 1. Statement of Objective 2. Factors Affecting
NITI 3. Constraints.
ON
 • Data is collected with the objective of
translating the problem defined in second
DATA
phase into a model for analyzing.
COLL • Two Sources: 1. Observation 2. Standards: i.e.
ECTI primary & secondary sources.
ON

MO • Model is a selective abstraction of reality

DEL which helps in the working of original
FO system.
RM
UAL • Defines characteristics of all operation. E.g.
TIO Physical Models, Analogic Models, etc.
N
 • This phase or process involves finding solution
to the model & then interpreting the solution.
• This stage helps in arriving at answers to the
SOLUTIO
N variables & the objective function.
RESULTS • E.g. Feasible, Infeasible, Optimal, Non-Optimal,
Unique, Multiple Solution, etc.

• This stage requires determining whether the

ANALY model can adequately & reliably predict the
SIS &
INTER
behaviour of the real system.
PRETA • Assumptions are made but no assurance of
TION
OF future performance.
RESUL
TS
 • Last process of implementing solution in the
organization.
IMPLE
MENT
ATION • Most difficult as it gives no assurance – decision
&
MONI may effect various segments of the organization
TORIN
G
which needs proper monitoring for changes &
take corrective measures.

• At every stage feedback is made in order to

FEED improve the solution which will be effective for
BACK the organization.
 APPLICATIONS / SCOPE OF O.R.

O.R. is equally applicable to big & small organizations.

O.R. is successfully applied in Industry.
Some of the areas of management/ business where O.R.
techniques are applied:

1. Finance,
Budgeting & E.g. Cash flow analysis,
capital requirements, etc.
Investment
 2. Purchasing,
Procurement
& Exploration

- E.g. Purchase of raw-materials, machinery,

prices, etc.
- Quantities, quality of purchase etc.
 3. Production
Management

1. Project Planning: Location, size of

warehouses, retail outlets, distribution centre's,
etc.

2. Manufacturing & Facility Planning:

Production & project scheduling, selection of
location of factories, warehouses, maintenance,
etc.
4. Marketing
Management
Product selection, timing,
competitions, advertising & sales
promotion strategies, market
research, etc.
5. Personnel
Management
Recruitment policies &
assignment of jobs, selection of
suitable personnel, etc.
 6. Research &
Development

Areas of concentration of R & D, reliability, control,

co-ordination of multiple research projects, time &
cost requirements etc.
- Others areas include: Travel, Hospitality,
Agriculture, LIC, and Industry.

CONCLUSION:
O.R. can be widely used in taking timely
management decisions & also used as a corrective
measure.
 MODELS USED IN O.R.
 The essence of O.R. lies in the construction and use of
MODELS.

 A model is a specified representation of something real.

 A model is constructed to analyse and understand the given

system for the purpose of improving its performance.
CLASSIFICATION OF MODELS USED IN O.R.

I. On the Basis of Functions:

It is further divided into 3 types:
(a) Descriptive Models:
These models simply describe some aspects of a situation based on
observation, survey, questionnaire results.
E.g. Plant layout diagrams, flow charts, organization charts, etc.

(b) Predictive Models:

“If something happens what will follow”. Here, one can predict
the outcomes due to a given set of alternatives for the problem.
 (c) Normative or Optimization Models:
• These models provide the “best” or “optimal” solution to
problem subject to certain limitations on the use of resources.

• E.g. formulating equations  objective function  restrictions or

constraints.

• Here, these models prescribe what decision-maker has to do.

(prescriptive models).
II. On the Basis of Structure:
They are of 2 types:
(a) Physical Models:
• Provide a physical representation of the real object under
study in a reduced size (scaled model).
• E.g. Scale models of proposed aircraft under construction.

• Physical models are classified as:

(i) Iconic Models: (depiction of an object as its image)
• An iconic model is a scaled version of the system it represents.
• E.g. Blue prints of buildings, houses, toy airplanes etc.
 (ii) Analog Models:
• It represents a system different from the original system & does
not resemble it physically.
• E.g. Maps, organization charts, graphs of time series,
thermometer which indicates temperature, etc.

(b) Symbolic Models:

• Represents actual problems using symbols (letters, numbers).
• To represent variables and their relationships to describe the
properties of the system.
Symbolic Models are further classified as:

(i) Verbal Models:

• Describe a situation in written or spoken words or sentences.
• E.g. Books, reports, etc.

(ii) Mathematical Models:

• Involves the use of mathematical operators (+, -, x, /)
• To represent relationships among various variables of the system
for describing the properties or behaviour of the system.
• E.g. EOQ in inventory management.
III. On the Basis of Time Reference:
They are of 2 types:

(a) Static Models:

• Represent a system at some specified time and do not account for
change over time.
• E.g. EOQ model.

(b) Dynamic Models:

• Which considers time as one of the variables & allows the
change to happen overtime.
• E.g. Dynamic Programming.
 IV. On the Basis of Degree of Certainty:
They are of 2 types:
(a) Deterministic Models:
• Under this model, all the parameters, functional relationships are
assumed to be known with certainty when the decision is
taken.
• E.g. Linear Programming.

(b) Probabilistic Models:

• Under this model, all the parameters or decision variable is a
random variable – i.e. cannot be predicted with certainty.
• E.g. models representing insurance against risk of fire,
accidents, sickness of employees, etc.
 V. On the Basis of Quantification:
They are of 2 types:
(a) Qualitative Models:
• These are models – mental or verbal description is used to
represent the system.

(b) Quantitative Models:

They are further divided into 3 models:
(i) Heuristic Models:
• Employ some set of rules – though not optimal but facilitate
problem solving when applied consistently.
• E.g. Traffic Signal.
 (ii) Analytical Models:
• Have a specific mathematical structure to solve the problem
using mathematical techniques.
• E.g. Linear Programming (product mix).

(iii) Simulation Models:

• Have a mathematical structure but does not solve the problem
by the use of mathematical techniques.
• E.g. Use of computer assisted experiments of a real-life
problem.
 TECHNIQUES / TOOLS OF O.R.
1. Linear Programming: (Linear -- straight line)
• Find out solution for optimizing a given objective.
• Maximize profits or minimize cost – within scarce resources
(restrictions).
• E.g. Product-mix.

2. Queuing Theory:
• Deals with different situations in which/ where queue is formed.
• E.g. Customers waiting for service, machines waiting for
repairmen etc.
• Therefore, reduce the cost.
 3. Inventory Control Models:
• When to buy? How much to buy? & How much to keep in store?
etc., -- production, purchase managers address them to.
• E.g. Optimal order size, re-order level, etc.

4. Network Analysis:
• Helps managers to determine total project time, probability of
when the project will be completed, etc.
• E.g. PERT, CPM --- helps to plan, monitor and control large
projects such as construction of buildings, making ships, etc.
 5. Replacement Problems:
• Concerned with situations when machines, men, electric bulbs
or any other equipment is replaced due to their decreasing
efficiency --- all this may be due to innovations.

6. Sequencing:
• To find a sequence for processing jobs so that the total time for
all the jobs will be minimum.
• E.g. Resolve conflict between maximizing machine utilization
& complying with predetermined delivery dates.
 7. Integer Programming:
• Integer means complete or whole number.
• E.g. No. of taxis in a flee, the no. of power plugs in a factory,
etc.
• Because of limitation of linear programming this technique
arises. (in linear programming it takes decimals & fractions).

8. Assignment Problem:
• A special type of LPP.
• E.g. Manager may like to know which job is assigned or should
be, to which person.
• One-to-one basis in such a way cost or time is minimized.
 9. Transportation Problem:
• Deals with transportation of goods from a number of sources,
with limited supplies, to a number of destinations with specified
demands, at the minimum total transportation cost.

10. Decision Theory & Games Theory:

• Decision-making under conditions of risk & uncertainty.
(Decision - Theory)
• However, Games theory is concerned with decision-making
under conflict.
• Both assist the decision-maker in analyzing the problems with
numerous alternative courses of action.
OTHER TECHNIQUES INCLUDE:

 Markov Analysis:
• Predicts changes over time when information about the
behaviour of a system is known.
• E.g. Predicting market shares, future conditions.

 Simulation:
• All real-life problems that cannot be stated in mathematical form
– can be tackled by simulation by developing a dynamic model.
  Dynamic Programming:
• When we are faced with the problem of multi-faced solution
which are inter-related & almost similar in nature --- this
technique is used.

 Goal Programming:
• Multiple objectives are considered.
• E.g. Maximize profits, minimize cost of production.

 Symbolic Logic:
• Symbols are more meaningful & accurate.
• Problems converted into algebraic equations & propositions.
 LIMITATIONS OF O.R.
• O.R. has certain limitations. However, these limitations are mostly
related to the problems of model building and the time & money
factors involved in its application rather than its practical utility.

• Some of the drawbacks are as follows:

1. Magnitude of Computers:
• Takes all factors into consideration for optimal solution, hence
complicated calculations involved – can be done only by
machines.

2. Non-Quantifiable Factors:
• Takes only quantifiable factors & not qualitative.
• Solutions are also quantified.
 3. Gap Between Manager & Operations Researcher:
• O.R. is a specialist’s job which requires the skill & knowledge of a
mathematician or statistician.
• Similarly, even a manager fails to understand the complex
working of O.R. Hence, there is gap between the two.

4. Money & Time Costs:

• Subject to frequent changes.
• Solutions are available after sometime.

5. Implementation:
• Most delicate task.
• Must take into account the complexities of human factors –
relations & behaviour.
 6. Selection of Techniques:
• Not very easy to choose a technique.
• Must match with the nature of problem, operating conditions,
assumptions, objectives, etc.

7. Not a Substitute of Management:

• O.R. provides only the tools & cannot be a substitute of
management.
• It only examines the results but final decision is taken by
management.