Operation Research

Chapter 1
Conceptual Framework for Operations
Research
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Chapter Outline
Learning Objectives
LO1 Identify the Concept of Operation Research.
LO2 Explain the Characteristics of Operation Research.
LO3 Determine the Scope of Operation Research.
LO4 Determine Applications of Operation Research.
LO5 Explain Advantages of Operation Research.
Concept of Operation Research

Operation Research can be defined as

▪ The systematic application quantitative methods, techniques,
and tools to the analysis of problems involving the operation of
systems.
▪ Also, it is simply a scientific approach to decision making that
seeks to best design and operate a system, usually under
conditions requiring the allocation of few resources
Characteristics of Operation Research

The most important of these characteristics are:

System Orientation of Operation Research
▪ One of the most important characteristics of Operations
Research study is its concerned with problem as a whole or its
system orientation.
▪ This means that an activity by any part of an organization has
some effect on the activity of every part. Therefore, to evaluate
any decision one must identify all possible interactions and
determine their impact on the organization.
Characteristics of Operation Research

The Use of Interdisciplinary Team

▪ Operations Research study is performed by a team of scientists
whose individuals' members have been drawn from different
scientific and engineering disciplines.
▪ For example, one may find a mathematician, statistician,
physicist, psychologist, economist, and engineers working
together on an Operations Research problem.
Characteristics of Operation Research

Application of Scientific Method

▪ Sometimes, we must use the scientific method for solving the
problem of Operations Research. It is not related to laboratories
experiment like physics or biology or chemistry, but it related by
to the real-life experiment.
Characteristics of Operation Research

Quantitative Solutions
▪ It provides the management with a quantitative basis for
decision making.
Human Factor
▪ Human factor is an important component of the Operations
Research study. Without human factor Operations Research
study is incomplete.
Scope of Operations Research
In Industry
▪ Operation Research has been successfully applied in industry in the
fields of production, blending product mix, inventory control, demand
forecast, sale and purchase, transportation, repair and maintenance,
scheduling, and sequencing, planning and control of projects etc.
In Defense
▪ Operation Research has a wide scope for application in defense
operations. All the defense operations are carried out by a different
agency, namely air force, army and navy. Operation Research helpful
for achieving the desired goals of different agencies.
Scope of Operations Research
In Planning
▪ Operation Research is helpful for planning of various activities of the
organization. Planning is the important function of management,
without effective planning, we cannot achieve the desired goals.
In Agriculture
▪ Operation Research needs to be equally developed in agriculture
sector on national or international basis. Every country is facing the
problem of optimum allocation of land to various crops in accordance
with the climatic conditions and optimum distributions of water from
various resources like canal for irrigation purposes. Thus, there is a
need of determining best policies under the prescribed restrictions.
Applications of Operational Research

▪ Today, almost all fields of business and government utilizing the

benefits of Operations Research. There are voluminous of
applications of Operations Research. Although it is not feasible
to cover all applications of O.R. in brief.
▪ The following are the abbreviated set of typical operations
research applications to show how widely these techniques are
used today:
Applications of Operational Research

Accounting
▪ Assigning audit teams effectively, Credit policy analysis, Cash
flow planning, developing standard costs, establishing costs for
byproducts, Planning of delinquent account strategy.
Construction
▪ Project scheduling, monitoring, and control, Determination of
proper work force, Deployment of work force, Allocation of
resources to projects
Applications of Operational Research

Facilities Planning
▪ Factory location and size decision, Estimation of number of
facilities required, Hospital planning International logistic system
design, Transportation loading and unloading, Warehouse
location decision.
Finance
▪ Building cash management models, allocating capital among
various alternatives, building financial planning models,
Investment analysis, Portfolio analysis, Dividend policy making.
Applications of Operational Research

Manufacturing
▪ Inventory control, Marketing balance projection, Production
scheduling, Production smoothing.
Marketing
▪ Advertising budget allocation, Product introduction timing,
Selection of Product mix, Deciding most effective packaging
alternative
Applications of Operational Research

Organizational Behavior / Human Resources

▪ Personnel planning, Recruitment of employees, Skill balancing,
Training program scheduling, Designing organizational structure
more effectively.
Purchasing
▪ Optimal buying, Optimal reordering, Materials transfer.
Research and Development
▪ R & D Projects control, R & D Budget allocation, Planning of
Product introduction.
Advantages of Operations Research

Following are certain advantages of Operations Research:

▪ Operations Research helps decision –maker to take better and
quicker decisions, it helps decision –maker to evaluate the risk
and results of all the alternative decisions. So, it improves the
quality of decisions and makes the decisions more effective.
▪ Operation Research helps, in preparing future managers as it
provides in-depth knowledge about a particular action.
Advantages of Operations Research

▪ Operations Research develop models, which provides logical and

systematic approach for understanding, Solving, and controlling
a problem.
▪ Operations research reduces the chances of failure as it provides
many alternatives for one problem, which helps the
management to choose the best decision. Even managers can
evaluate the risks associated with each solution and can decide
whether they want to go with the solution or not.
Advantages of Operations Research

▪ It helps users in optimum use of resources. For example, linear

programming techniques in Operations Research suggest most
effective methods and efficient ways of optimality.
▪ It helps in finding the limitations and scope of an activity.
▪ It helps suggest alternative solutions for the same optimum
profit if the management wants so.
Advantages of Operations Research

▪ Using this information, it can measure the performance of

employees and can compare it with the standard performance.
▪ It modifies mathematical solutions before these are applied.
Managers may accept or modify the mathematical solutions
obtained using Operations Research techniques.