The principal phases for implementing OR in practice include;

1. Definition of the problem.

2. Construction of the model.

3. Solution of the model.

4. Validation of the model.

5. Implementation of the solution.

1.Problem definition involves defining the scope of the problem under investigation. This function
should be carried out by the entire OR team. The aim is to identify three principal elements of the
decision problem: (1) description of the decision alternatives, (2) determination of the objective of the
study, and (3) specification of the limitations under which the modeled system operates.

2.Model construction entails an attempt to translate the problem definition into mathematical
relationships. If the resulting model fits one of the standard mathematical models, such as linear
programming, we can usually reach a solution by using available algorithms. Alternatively, if the
mathematical relationships are too complex to allow the determination of an analytic solution, the OR
team may opt to simplify the model and use a heuristic approach, or they may consider the use of
simulation, if appropriate. In some cases, mathematical, simulation, and heuristic models may be
combined to solve the decision problem.

3. Model solution is by far the simplest of all OR phases because it entails the use

of well-defined optimization algorithms. An important aspect of the model solution

phase is sensitivity analysis. It deals with obtaining additional information about the

behavior of the optimum solution when the model undergoes some parameter changes.

Sensitivity analysis is particularly needed when the parameters of the model cannot

be    estimated accurately. In these cases, it is important to study the behavior of the

optimum solution in the neighborhood of the parameters estimates.

4.Model validity checks whether or not the proposed model does what it purports

to    do—that is, does it adequately predict the behavior of the system under study?

Initially, the OR team should be convinced that the model’s output does not include

“surprises.” In other words, does the solution make sense? Are the results intuitively

acceptable? On the formal side, a common method for validating a model is to compare its output with
historical output data. The model is valid if, under similar input

conditions, it reasonably duplicates past performance. Generally, however, there is

no guarantee that future performance will continue to duplicate past behavior. Also,

because the model is usually based on examination of past data, the proposed comparison should
usually be favorable. If the proposed model represents a new (non-existing)

system, no historical data would be available. In some situations, simulation may be

used as an independent tool for validating the output of the mathematical model.

5. Implementation of the solution of a validated model involves the translation of

the results into understandable operating instructions to be issued to the people who

will administer the recommended system. The burden of this task lies primarily with

the OR team.

DESCRIBE ATLEAST 3 AREA OF APPLICATION OF OR.

1. Allocation and Distribution in Projects:

(i) Optimal allocation of resources such as men materials machines, time and money to projects.

(ii) Determination and deployment of proper workforce.

(iii) Project scheduling, monitoring and control.

2. Marketing;

(i) Advertising budget allocation.

(ii) Product introduction timing.

(iii) Selection of advertising media.

(iv) Selection of product mix.

(v) Customer’s preference of size, colour and packaging of various products.

3.. Finance:

(i) Capital requirements, cash flow analysis.

(ii) Credit policies, credit risks etc.

(iii) Investment decision

(iv) Profit plan for the company.

DEFINE THE TERM MODEL AND DISCUSS THE DIFFERENT KIND OF MODELS BASED ON STRUCTURE.

A model is an abstraction or an idealised representation of a real life proble. The objective of a model is
to provide means for analysing the behavious of the system for further improvement. A map of multiple
activity char, a project network, the representation of the behavious of a queuing system, a model to
forecast the future, abased on the past and the present factors of a time series, etc. are all examples of
models.

A iconic model is a physical representation of a real project on a different scale. A toy automobile is a
iconic model of a real automobile. A globe is an iconic model of the earth, a photograph is also an iconic
model. In general, they enlarge or reduce the size of a real system. In other words, they are the images
of areal object.

1 Econometric models: These are models that use statistical methods to estimate
the parameters of a model. Econometric models can be used to estimate the
causal effect of one variable on another, such as the effect of interest rates on
inflation.
2 General Equilibrium Models: General equilibrium models are used to analyze the
interactions between different markets in an economy. These models take into
account the effects of changes in one market on other markets.

3 Real Business Cycle models (RBCs) : RBC models are a class of macroeconomic
models that emphasize the role of technology and productivity in shaping business
cycles.

4 Dynamic Stochastic General Equilibrium (DSGE) models: DSGE models are a

class of macroeconomic models that are used to study the behavior of an
economy over time. These models take into account the effects of shocks, such
as changes in interest rates, on the economy.
5

historical evolution of Operations research

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References
Laguna, M., Martí, R. (2013). Heuristics. In: Gass, S.I., Fu, M.C. (eds) Encyclopedia of Operations
Research and Management Science. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-
1153-7_1184