1.

Meaning and Definition of Operation Research

It is the method of analysis by which management receives aid for their decisions. Though the name of
this method, Operation Research is relatively new, but the method used for this is not a new one.
Operation Research is concerned with the application of the principles and the methods of science to the
problems of strategy.

The operation research can be defined as:

Definitions:

(i) It is the application of scientific methods, techniques and tools to problems involving the operations of
a system so as to provide those in the control of the system with optimum solutions to the problems.

(ii) Operation Research is a tool for taking decisions which searches for the optimum results in parity with
the overall objectives and constraints of the organisation.

(iii) O.R. is a scientific method of providing executive department with a quantitative basis of decisions
regarding the operations under their control.

(iv) O.R. is a scientific approach to problem solving for management.

(v) O.R. is an aid for executive in making his decisions by providing him with the needed quantitative
information’s based on the scientific method of analysis.

(vi) 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 outcome of alternative
decisions, strategies or controls.

(vii) It is the application of the scientific methods by scientists and subject specialists to the study of the
given operation. Its purpose is to give administration, a basis for predicting quantitatively the most
effective results of an operation under given set of variable conditions and thereby to provide a sound
basis for “decision-making”.

In fact in Operation Research, research techniques and scientific methods are employed for the analysis
and also for studying the current or future problems. Thus, Operation Research offers alternative plans for
a problem to the management for decisions.

Although it is very clear that operation research never make decisions for the man agement, instead the
method presents management with a careful scientific and quantitative analysis of problem so that the
management will be in a better position to make sounder decisions.

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2. Historical Development of Operation Research

Operations research called by different names like management science, or decision science provides
managers with quantitative bases for decision making. The foundation of OR was laid during the Second
World War when group of scientists under the direction of professor P.M.S Blackett was attached to the
military staff in UK to help them find solutions to tactical problems by collecting and scientifically
analysing military data. These scientists made use available knowledge in various disciplines and where
means were not available went ahead and developed new method and techniques or modified existing
ones. The group of scientists consisting three physiologists, two mathematical physicists, one
astrophysicist, one army officer, one surveyor, one general physicist, and two mathematicians. The
group’s efforts acted as force multiplier for the allies. A large number of operational problems were
tackled and the group carried out “research in to military operations” and hence the term operational
research.

During the same period, similar research was also undertaken in US where it was called operations
research. At the end of the Second World War the requirement of the military decreased. The scientists
and academicians went back to their normal lives and it was only a matter of time before the techniques
successfully developed and used in military operations were adapted by industrial and management
science.
Business and military may seem strange bedfellows at first sight. However, a closer look at their basic
background reveals many similarities.
 Both are concerned with analysis of system
 Both involve allocation of resources (man, material, machines, money, minute, and market-
information)
 Both are concerned with strategies- the basic disposition of resources the manner of utilizing
these resources (tactics)
 Both are concerned with competition or conflict.

 Operations research is a science devoted to solving certain managerial type problems using
quantitative models.
 It is widely employed in business with the following application areas: forecasting, capital budgeting,
capacity planning, scheduling, inventory management, project management, waiting line, production
planning and etc
 It uses a logical approach to problem solving. The problems are focal points of analysis and
quantitative models are the vehicles by which solutions are obtained. Problems may pertain to a
current condition or it may relate to the future. Customers complaining the amount of time they have
to wait in line is example of current problem. A decision of where to locate warehouse is a problem
that pertains to future problem.

3 Elucidate the Models and Modelling in OR

A model is an abstraction of reality. It is a simplified and often idealized representation of reality. It is
incomplete. A good model only captures the important details of the reality with out including
innumerable minor details that obscure the reality rather than illuminating it. Models provide a manager
or an analyst with an alternative to work directly with the reality. It allows the person the using the model
greater freedom in terms of:
 Experimenting with different ideas
 Controlling certain aspects of the situation
 Investigating alternative solutions
 Reduces the cost of mistake

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 3.1 Types of models
Models based on level of abstraction
Models are classified in to three based on level of abstraction: iconic, analog and symbolic models.
- Iconic models
They are least abstract, physical model and look like the reality. Example toy
- Analog Models
They are physical models like iconic model. However they are more abstract than the iconic ones. They
substitute analogy for important aspects of reality. Examples include charts, clock, thermometer,
Barometer, blue prints, graphs and the like.
- Symbolic models
They are the most level models. They incorporate numbers and algebraic symbols and they are the least
appealing (do not look like the reality). Mathematical models are made up of constants and variables.
Constants are fixed and variables can take on different values. Variables are decision variables and are
under the control of the decision maker. There are also some uncontrollable variables. Example crop yield
obviously depends on different variables like rainfall, application of different treatments (fertilizers,
pesticides and the like). The treatment type and amount is under the control of the decision maker where
as the rainfall is uncontrollable for the decision maker. Models that are used for problem solving include
constants, decision variables, and uncontrollable variables.
Classification based on function or purpose
Descriptive models
 They simply describe some aspects of a situation based on observation, survey, questionnaire
results or other available data for a situation.
 They do not predict or recommend anything.
 Examples include organization chart, plant layout diagram
Predictive models
 These models indicate ‘if this occurs then that will follow’.
 They relate dependent variable and independent variables and permit what if questions.
 These models do not have an objective function.

Normative (optimization) models

 Provide the best or optimal solution to problems subject to certain limitations or resource
constraints.
 Provide recommended courses of action.
 They are also prescriptive models

Classification of model based on time reference

1. Static models
They represent a system as some specified time and do not account for changes over time
2. Dynamic models
Time is considered as of the variables and impacts change due to change in time.

Classification based on degree certainty

A. Deterministic models
 Constants and functional relationships are assumed to be known with certainty

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  The outcome associated with the particular course of action is known
 For specific sets of input values, there is a uniquely determined output which represents
the solution of model under conditions of certainty
B. Probabilistic (stochastic) models
 Models in which at least one parameter/decision variable is random
 Independent variable which is the function of dependent variable will also be random-
example insurance against risk of fire, accidents and sickness.

Classification of models based on method of solution

A. Heuristic
 Employ some sets of rules which facilitate solution of problems when applied in
consistent manner.
B. Analytical models
 Have specific mathematical structure and can be solved by known analytical or mathematical
techniques.
 Any optimization model is analytical model
C. Simulation model
 They do have mathematical structure but can not be solved by analytical or mathematical
techniques.
 It is computer assisted experimentation on mathematical structure of real life problem.
 They are more flexible than mathematical models.

Benefits and Risks of Using a Model

Benefits
 Enables analysts to strip away many unimportant details
 Force the analyst to quantify problems
 They provide structure for analysis
 They compress time
Risks
 One or more important detail may be left out
 Non quantifiable information may be ignored
 Inexperienced analyst may attempt to force a problem to fit the model
 They do not adequately portray reality