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Original Title: Operation Research

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Operation research (OR) may be described as a scientific approach to decision making that involve the operations of organizational systems. OR seeks the determination of the best course of action of a decision problem under the restriction of limited resources. The beginning of OR has generally been attributed to the military services early in World War II. Because of the war effort, there was an urgent need to allocate scarce resources to the various military operations and to the activities within each operation in an effective manner. When the war ended, the success of OR in the war effort spurred interest in applying OR outside the military.

Nature of OR

OR is applied to problems that concern how to conduct and co-ordinate the operations or activities within an organization. It is extensively used in business, industry, military and civil government and so forth.

It attempts to resolve the conflicts of interest among the components of the organization in a way to that is best for the organization as a whole.

It attempts to find the best or optimum solution to the problem under consideration. For OR it is usually necessary to use a team approach. Such an OR team typically needs to include individuals who collectively are highly trained in mathematics, statistics, probability theory, economics and business administration.

Phases of OR

The usual phases of an OR study is the following: 1. Define the problem of interest and gather relevant data. 2. Formulate a mathematical model to represent the problem. 3. Develop a computer-based procedure for deriving solutions to the problem from the model. 4. Test the model and refine it as needed. 5. Prepare for the ongoing application of the model as prescribed by management. 6. Implement.

The definition of problem includes determining: (a) The appropriate objectives, (b) Constraints on what can be done, (c) Interrelationships between the area to be studied and other areas of the organization, (d) Possible alternative courses of action, (e) Time limits for making a decision, and so on. The process of problem definition is a crucial one because one cannot get a right answer from a wrong problem. So this phase should be executed with great care. Much data usually are needed both to gain an accurate understanding of the problem and to provide the needed input for the mathematical model being formulated in the next phase of study. 2. Formulating a mathematical model The next phase after define the problem is to reformulate this in a form that is convenient for analysis. The conventional OR approach for doing this is to construct a mathematical model that represents the essence of the problem.

The mathematical model of a business problem is the system of equations and related mathematical expressions that describe the essence of the problem.

Thus, if there are n related quantifiable decisions to be made, they are represented as decision variables (say, x1, x2, . . . , xn) whose respective values are to be determined. The appropriate measure of performance (e.g., profit) is then expressed as a mathematical function of these decision variables (for example, P = 3x1+ 2x2 + ..+ 5xn). This function is called the objective function. Any restrictions on the values that can be assigned to these decision variables are also expressed mathematically, typically by means of inequalities or equations (for example, x1+2x2<=10). Such mathematical expressions for the restrictions often are called constraints. The constants (namely, the coefficients and right-hand sides) in the constraints and the objective function are called the parameters of the model.

The mathematical model might then say that the problem is to choose the values of the decision variables so as to maximize the objective function, subject to the specified constraints.

One of the most important mathematical model is the linear programming model, where the mathematical functions appearing in both the objective function and the constraints are all linear functions.

3. Deriving solutions from the model After a mathematical model is formulated for the problem under consideration, the next phase in an OR study is to develop a procedure (usually a computer-based procedure) for deriving solutions to the problem from this model. A common theme in OR is the search for an optimal, or best, solution. 4. Testing the model The model must be thoroughly tested to try to identify and correct as many flaws as possible. Eventually, after a long succession of improved models, the OR team concludes that the current model now is giving reasonably valid results.

This process of testing and improving a model to increase its validity is commonly referred to as model validation.

The next step is to install a well documented system for applying the model as prescribed by management. This system will include the model, solution procedure, and operating procedures for implementation. Then, even as personnel changes, the system can be called on at regular intervals to provide a specific numerical solution. 6. Implementation After a system is developed for applying the model, the last phase of an OR study is to implement this system as prescribed by management. The implementation phase involves several steps:

First, the OR team gives operating management a careful explanation of the new system to be adopted and how it relates to operating realities.

Second, these two parties share the responsibility for developing the procedures required to put this system into operation.

Third, operating management then sees that a detailed indoctrination is given to the personnel involved, and the new course of action is initiated. If successful, the new system may be used for years to come. With this in mind, the OR team monitors the initial experience with the course of action taken and seeks to identify any modifications that should be made in the future.

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