Operations Research

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 What is Operations Research?
Operations
The activities carried out in an organization.

Research
The process of observation and testing characterized
by the scientific method. Situation, problem
statement, model construction, validation,
experimentation, candidate solutions.

Model
An abstract representation of reality. Mathematical,
physical, narrative, set of rules in computer program.
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Optimal Solution
A solution to the model that optimizes (maximizes
or minimizes) some measure of merit over all
feasible solutions.

Operations Research Techniques

A collection of general mathematical models,
analytical procedures, and algorithms.

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 Operations Research
• O.R involves creative scientific research into the
fundamental properties of operations.

• O.R is also concerned with the practical management

of the organization. Therefore O.R. must provide
positive understandable conclusions to the decision
maker(s) when they are needed.

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 Operations Research
• O.R frequently attempts to find a best solution
(optimal solution) for the problem under
consideration.(a best not “the” best , multiple
solution tied as best).
• Management Science

Operations Research
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Problems, Models and Methods

Rea l Worl d
Real World
Si tu a ti o n
Situation

Prob l ems TP LP DS
Problems

Mo de l s
Models LP NFP TP

Me tho ds
Methods interior
simplex

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 Operations Research Models

Deterministic Models Stochastic Models

• Linear Programming • Discrete-Time Markov Chains
• Network Optimization • Continuous-Time Markov Chains
• Integer Programming • Queuing
• Nonlinear Programming • Decision Analysis or Game Theory

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 Deterministic vs. Stochastic Models

Deterministic models
assume all data are known with certainty.

Stochastic models
explicitly represent uncertain data via
random variables or stochastic processes.

Deterministic models involve optimization

Stochastic models
characterize / estimate system performance.

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 Application Details
• Accounting • Manufacturing
– Cash flow planning – Production scheduling
– Credit policy – Production-marketing balance
– Strategy planning

• Facilities Planning • Organization Behavior / HR

– Location & size – Employee recruiting
– Logistics systems – Skills balancing
– Transportation – Training programs scheduling
Planning – Manpower justification \
– Hospital planning planning
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 Application Details
• Construction • Marketing
– Project scheduling – Product mix analysis
– maintenance crew – Product introduction
scheduling timing
– Resources allocation – Advertising allocation

• Finance • Purchasing
– Investment analysis – Optimal buying
– Portfolio analysis – Optimal reordering
– Policy making material transfer

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 1
Problem formulation

Steps in OR 2
Study M odel building

3
Data collection

4
Data analysis

5
Coding

M odel No
6 Fine-tune
verification and model
validation

Yes

7
Experimental design

8
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Operations Research Over the Years

• World War II : British military leaders asked scientists and

engineers to analyze several military problems.
– Deployment of radar
– Management of convoy, bombing, antisubmarine, and
mining operations.
• The result was called Military Operations Research, later
Operations Research
• MIT was one of the birthplaces of OR
– Professor Morse at MIT was a pioneer in the US.
– Founded MIT OR Center and helped found ORSA

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 Operations Research Over the Years
• 1947
– Project Scoop (Scientific Computation of Optimum Programs)
with George Dantzig and others. Developed the simplex
method for linear programs.
• 1950's
– Lots of excitement, mathematical developments, queuing
theory, mathematical programming.
cf. A.I. in the 1960's
• 1960's
– More excitement, more development and grand plans.

– cf. A.I. in the 1980's.

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Operations Research Over the Years
• 1970's
– Disappointment, and a settling down. NP-completeness.
More realistic expectations.
• 1980's
– Widespread availability of personal computers.
Increasingly easy access to data. Widespread willingness of
managers to use models.
• 1990's
– Improved use of O.R. systems.
Further inroads of O.R. technology, e.g., optimization and
simulation add-ins to spreadsheets, modeling languages,
large scale optimization. More intermixing of A.I. and O.R.
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 What is Management Science
(Operations Research)?
• Today: Operations Research and Management Science mean

“Use of mathematical models in providing guidelines to

managers for making effective decisions within the state
of the current information, or in seeking further
information if current knowledge is insufficient to reach
a proper decision.”

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 What you should know about
Operations Research

• How decision-making problems are characterized

• OR terminology

• What a model is and how to assess its value

• How to go from a conceptual problem to a quantitative

solution

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