Module 1. Introduction to operations research

 

Lesson 1

ELEMENTARY CONCEPTS AND OBJECTIVES OF OPERATIONS RESEARCH

1.1 Introduction

Operations Research (OR) is relatively a new discipline. The first formal activities of OR were initiated in England during the Second World War, when a team of British scientists set out to make decisions regarding the best utilization of war material. OR begins when some mathematical  and quantitative technique is used to verify the decision being taken. OR provides a quantitative technique  or a scientific approach to the executives for making better decisions for operations under their control.

1.2 Historical Background of Operations Research

The term Operations Research was first coined in 1940 by McClosky and Trefthen in a small town Bowdsey of U.K. This new science came into existence in military context. As the name implies, ‘Operations Research’ was apparently invented by the team dealing with research on (military) operations. The work of the team of science was named as Operations Research in U.K. During the Second World War, military management called upon 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 is called the ‘Operations Research’ or ‘Operational Research’.

The encouraging results obtained by the British OR team quickly motivated the military management of the United States to start on similar activities. The successful applications of the U.S. teams included the invention of new flight patterns, planning sea mining and effective utilization of electronic equipment. This work of OR team was given various names in the United States: Operational Analysis, Operations Evaluation, Operations Research, Systems Analysis, Systems Evaluation, System Research and Management Science.

Following the end of the war, the success of military teams attracted the attention of industrial managers who were seeking solutions to their complex managerial type problems. The most common problem was to seek methods so as to minimize the total cost and maximize the total profit. The first mathematical technique in the field, called the Simplex Method of linear programming, was developed in 1947 by an American Mathematician George B. Dantzig. Since then, new techniques and applications have been developed through the efforts and cooperation of interested individuals in both academic institutions and industry.

In India, Operations Research came into existence in 1949 with the opening of an OR 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, OR unit was established in Indian Statistical Institute, Calcutta for the application of OR methods in national planning and survey. OR Society of India was formed in 1955. In India, Prof. P. C. Mahalanobis made the first important application of OR in formulating the Second Five Year Plan in order to forecast the trends of demand, availability of resources and for scheduling the complex schemes necessary for developing the economy of the country. In the industrial sector, in spite of the fact that opportunities of OR 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 OR teams. Most popular practical application of OR in India is linear programming.

1.3 Definitions of Operations Research

Literally the word ‘operation’ may be defined as some action that we apply to some problems or hypotheses and the word ‘Research’ means an organized process of seeking out facts about the same. In fact, it is difficult to precisely define OR mainly because of the fact that its boundaries are not clearly marked. OR has been variously described as ‘Science of Use’, ‘Quantitative Common Sense’, ‘Scientific approach to decision making problems’, etc. Some of the commonly used and widely accepted definitions of OR are given as under:

1.      “OR is a scientific method of providing executive departments with a quantitative basis for decisions under their control”. 

-          P.M. Morse and G.E. Kimball

2.      “OR 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 problems”.

-          Churchman, Ackoff and Arnoff

3.      “OR 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”.

-          D.W. Miller and M.K. Starr

4.      “OR is the attack of modern science on problems of likelihood that arise in the management and control of men and machines, materials and money in their natural environment, its special technique is to invent a strategy of control by measuring, comparing and predicting probable behavior through a scientific model of a situation”.

-          Beerr

5.      “OR is a scientific method of providing the executive with an analytical and objective basis for decisions”.

-          P.M.S. Blackett

6.      The term OR connotes various attempts to study operations of war by scientific methods. From a more general point of view OR can be considered to be an attempt to study these operations of modern society which involve organizations of men or of men and machines.

-          P.M. Morse

7.      OR is a management activity pursued in two complementary ways – one half by the free and bold exercise of commonsense untrammeled by any routine and other half by the application of a repertoire of well established pre-created methods and techniques.

-          Jagjit Singh

8.      OR is the attack of modern science on complex problems arising in the direction and management of large systems of men, machines, materials and money in industry, business and defence. 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 outcomes of alternative decisions, strategies or controls. The purpose is to help management to determine its policies and actions scientifically.

-          Operational Research Quarterly

9.      “OR is the art of giving bad answers to problems which otherwise have worse answers”.

-          T.L. Saaty

From all the above opinions, it may be concluded that whatever else OR may be, it is certainly concerned with optimization theory.

1.4 Scope of Operations Research

OR 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. OR  has been found to be used in the following five major areas of research:

1.      OR is useful to the Directing Authority in deciding optimum allocation of various limited resources such as men, machines, material, time, money, etc., for achieving the optimum goal.

2.      OR is useful to Production Specialist in

                                i.            Designing, selecting and locating sites.

                              ii.            Determining the number and size.

                            iii.            Scheduling and sequencing the production runs by proper allocation of machines; and

                            iv.            Calculating the optimum product mix.

3.      OR is useful to the Marketing Manager (executive) in determining:

                                i.            How to buy, how often to buy, when to buy and what to buy at the minimum possible cost.

                              ii.            Distribution points to sell the products and the choice of the customers.

                            iii.            Minimum per unit sale price.

                            iv.            The customer’s preference relating to the size, colour, packaging etc., for various products and the size of the stock to meet the future demand; and

                              v.            The choice of different media of advertising.

4.      OR is useful to the Personnel Administrator in finding out:

                                i.            Skilled persons at a minimum cost.

                              ii.            The number of persons to be maintained on full time basis in a variable work load like freight handling etc.; and

                            iii.            The optimum manner of sequencing personnel to a variety of jobs.

5.      OR is useful to the Financial Controller to

                                i.            Find out a profit plan for the company.

                              ii.            Determine the optimum replacement policies.

                            iii.            Find out the long-range capital requirements as well as the ways and means to generate these requirements.