This action might not be possible to undo. Are you sure you want to continue?
Operation research is a scientific approach to analyzing problems and making decisions. OR professionals aim to provide rational bases for decision making by seeking to understand and structure complex situations and to use this understanding to predict system behaviour and improve system performance. Much of this work is done using analytical and numerical techniques to develop and manipulate mathematical and computer models of organizational systems composed of people, machines, and procedures. Operations Research is often concerned with determining the maximum (of profit, performance, or yield) or minimum (of loss, risk, or cost) of some real-world objective. Originating in military efforts before World War II, its techniques have grown to concern problems in a variety of industries. The term Operations Research (OR) describes the discipline that is focused on the application of information technology for informed decision-making. In other words, OR represents the study of optimal resource allocation. The goal of OR is to provide rational bases for decision making by seeking to understand and structure complex situations, and to utilize this understanding to predict system behaviour and improve system performance. Much of the actual work is conducted by using analytical and numerical techniques to develop and manipulate mathematical models of organizational systems that are composed of people, machines, and procedures. This article introduces some of the methods and application that are affiliated with OR, and elaborates on some of the benefits that may be gained by incorporating OR into the actual business framework.
OR’s role in both, the public and the private sectors is increasing rapidly. In general, OR addresses a wide variety of issues in transportation, inventory planning, production planning, communication operations, computer operations, financial assets, risk management, revenue management, and many other fields where improving business productivity is paramount. In the public sector, OR studies may focus on energy policy, defense, health care, water resource planning, design and operation of urban emergency systems, or criminal justice. To reiterate, OR reflects an analytical method of problem solving and decision-making that is useful in the management of organizations. In OR, problems are decomposed into basic components and solved via mathematical analysis. Some of the analytical methods used in OR include mathematical logic, simulation, network analysis, queuing theory, and game theory. The actual OR process can in general be described via three steps.
conjoint analysis. as engineers or consumers alike can benefit from the improved and streamlined decision-making process. OR supports the key decision making process. OR improves the effectiveness and the efficiency of an institution. (2) The alternatives derived in the first step are analyzed. To illustrate. allows to solve urgent problems. hence some of the benefits offered by OR include: • Decrease Cost or Investment • Increase Revenue or Return on Investment • Increase Market Share • Manage and Reduce Risk • Improve Quality • Increase Throughput while Decreasing Delays • Achieve Improved Utilization form Limited Resources • Demonstrate Feasibility and Workability OR Functions and Methods OR may assist decision-makers in almost any management function. . and measures actual results.(1) A set of potential solutions to a problem is identified and developed (the set may be rather large). Despite the wealth of labels available in the filled of OR. exposed to an actual analysis in a real-world environment. discrete-simulation. (3)The alternatives derived in the second step are subjected to simulated implementation and. psychology and management sciences often play a rather important role. Generally speaking. most projects apply one of three broad groups of methods. can be utilized to design improved multistep operations (processes). supports the planning and forecasting steps. if feasible. which may be described as: • Simulation methods. or neural networking further foster this general impression. where the goal is to develop simulators that provide the decision-maker with the ability to conduct sensitivity studies to (1) search for improvements. and (2) to test and benchmark the improvement ideas that are being made. queuing and stochastic process modeling. It has to be pointed out that in the final step. linear and non-linear programming. When first encountered. and reduced to a smaller set of solutions (the solutions have to be feasible and workable). the methods commonly utilized in OR may seem obscure. setup policies. OR can be applied at the non-manager levels as well. Technical labels such as multi-criteria decision analysis.
and telecommunication. and finally distributing and delivering the items to the customers. many probabilistic methods provide the ability to assess risk and uncertainty factors. logistics. Within each of the three basic groups. in environments where thousands or millions of choices may actually be feasible. Nevertheless. The ultimate goal is to identify and locate the very best choice based on certain criteria’s. • Data-analysis methods. That is not quite accurate. as the name originated from military operations. business process re-engineering. where the goal is to aid the decision-maker in detecting actual patterns and inter-connections in the data set. in almost all managerial and decision-making functions. inventory control. and hence beneficial to the operation. .• Optimization methods. where the goal is to enable the decision maker to search among possible choices in an efficient and effective manner. Revenue and supply chain management reflect two growing applications that are distinguished by their use of several OR methods to cover several functions. or facility and general operational planning. through manufacturing actual products and goods. distribution. and where abstraction from purchasing and transporting raw materials and parts. The prime management goal here may be to reduce overall cost while processing customer orders more efficiently than before. the list of OR applications is prodigious. when. Hence. elimination of bottlenecks. routing. The myriad applications include scheduling. transportation. it is a true statement that OR’s successes in contemporary business pervade manufacturing and service operations. what. and to search among a vast number of combinations for the resource optimization and allocation strategy that seem most effective. OR in Manufacturing As OR has made (over the years) significant contributions in virtually all industries. The term operations in OR may suggests that the manufacturing application category represents the original home of OR. Revenue management entails first to accurately forecasting the demand. workflow improvements. and introduces some of the application where OR is being used. and secondly to adjust the price structure over time to more profitably allocate fixed capacity. Supply chain decisions describe the who. this article focuses in the next few paragraphs on the manufacturing industry. and at most organizational levels. The power of utilizing OR methods allows examining this rather complex and convoluted chain in a comprehensive manner. site selection. not business operations. This method is rather useful in numerous applications including forecasting and data mining based business environments. or where some of the comparing choices are rather complex.
any organization follows a systematic approach for the conduct of its business. Tasks such as scheduling and replenishment of inventories benefit immensely from OR. hence the chances of errors are minimum. Decision Making • OR is used for analyzing problems of decision making in a superior fashion. OR essentially emphasizes the use of computers in decision making. Maxima are usually the yield. The organization can decide on factors such as sequencing of jobs. Systems • With OR. Also the organization can take a call on whether or not to introduce new products or open new factories on the basis of a good OR plan. In OR. performance and profit and minima are the losses and risks. Business Operations • OR could be very effective in handling issues of inventory planning and scheduling. Basically. production planning. Control • With OR.Importance of operation research Operations research (OR) is a management function that draws extensively from the divisions of mathematics and science. organizations are greatly relieved from the burden of supervision of all the routine and mundane tasks. . statistics and numerous modeling techniques from mathematics to find the best possible solutions for complex problems. the maxima has to be optimized and the minima has to be reduced for all the objects involved. transportation. The problem areas are identified analytically and quantitatively. OR could be used in any situation where improvements in the productivity of the business are of paramount importance. financial and revenue management and risk management. production scheduling and replacements. There are many reasons to use OR. Coordination • Various departments in the organization can be coordinated well with suitable OR. It makes use of algorithms. This facilitates smooth functioning for the entire organization.
Operations research is also known as OR. Simulation of these models is carried out. physics. The management of various companies has benefited immensely from operations research. Therefore. an interdisciplinary division of mathematics and science. performance and yield. This stresses the idea that the interaction between parts of the system is what determines the functioning of the system. providing quantitative answers. Examples of maxima could be profit. It then searches for the causes of the problem that has arisen either in one part of the system or in the international parts. statistics. The knowledge of all the people involved aids the research and preparation of the scientific model. The disciplines could include mathematics. Systems Orientation • This approach recognizes the fact that the behavior of any part of the system has an effect on the system as a whole. Minima could be loss and risk. algorithms and mathematical modeling techniques to solve complex problems for the best possible solutions. This science is basically concerned with optimizing maxima and minima of the objective functions involved. and the findings cannot be applied to natural environments. scientific and mathematical models are used for studies. Most OR studies cannot be conducted in laboratories. No single part of the system can have a bearing effect on the whole . economics and engineering. using interdisciplinary groups. revelation of newer problems and the consideration of human factors in relation to the state under which research is being conducted. psychology. Interdisciplinary groups • The team performing the operational research is drawn from different disciplines. uses statistics. Application of Scientific Methodology • OR extensively uses scientific means and methods to solve problems. applying scientific methodology. It has basic characteristics such as systems orientation.Characteristics of Operations Research Operations research. and the findings are then studied with respect to the real environment. .OR attempts appraise the effect the changes of any single part would have on the performance of the system as a whole.
which would affect the company's output. but in OR. . To obtain maximum benefits from the study. Asset allocation. Ensuring flexibility for such contingencies is a key characteristic of OR. Typical Applications of Operations Research Capital budgeting. human factors are a prime consideration. human factors are not considered. Portfolio selection. ongoing and continuous research is necessary. Human Factors • In other forms of quantitative research. Supply Chain Planning. New problems must be pursued immediately to be resolved. Direct marketing campaigns. Such a scenario would result in unexpected costs and budget overruns. Fraud prevention. and Campaign optimization. Distribution . Anti-Money Laundering. Customer segmentation. Bench marking. The company must decide which option is the best alternative for it. Provides Quantitative Answers • The solutions found by using operations research are always quantitative. OR considers two or more options and emphasizes the best one. People involved in the process may become sick. A company looking to reduce costs in manufacturing might discover in the process that it needs to buy one more component to manufacture the end product. Routing.New Problems Revealed • Finding a solution to a problem in OR uncovers additional problems. Traffic flow optimization. Scheduling. Marketing channel optimization. Predicting customer response.
Industrial waste reduction Trends and Opportunities As operations researchers pursue their careers. O.R. Inventory planning. opportunity is truly everywhere. departments have revitalized themselves at engineering and business schools such as the University of Alberta. Following is a list of current trends influencing O. and the Federal Government. insurance carriers. Trends by application Opportunities by industry:- Academia: Among INFORMS members. Villanova University. .R. Georgia Tech. computer and data processing services firms.R. go to Issues & Strategies for Academics. positions teaching at universities remain a strong source of employment. computers. Opportunities by industry 2. Resource allocation. telecommunication companies. Of course.R. Retail planning. engineering and management services firms. a wide variety of industries and specializations remain open to them. and North western University. Agriculture and food are discovering operations research applications for planting. professionals.R. procurement. the Bureau of Labor Statistics reports that major employers of operations researchers include air carriers. The Bureau also writes that job opportunities in O. For more on O. Staff allocation. In the United States. Merchandise optimization. and competitiveness. opportunities and issues in academia. Product mix and blending. financial institutions. Indiana University. 1. these are only examples. effectiveness. and software. and distribution. should be good because of interest in improving productivity. Opportunities in the public sector 3. and because of the extensive availability of data. and opportunity areas for O.
Forestry uses O. a key aspect of any manufacturing operation. is driven by operations research technologies. Marketing: Marketing departments use operations research to determine the best ways to target their diversified customer bases.Airline industry: Although experiencing hard times. Health care: Health care continues to offer a variety of uses for operations research. emergency room scheduling. in harvesting and at timber mills. Manufacturing: Manufacturing organizations continue to use operations research to optimize factory operations. and fuel management offer assignments to operations researchers. Revenue management and pricing. professionals may also offer guidance in technology adoption. Timber is a strong application area. and. resource modelling. diagnosis. tied to manufacturing. is seeing a vital use of O. professionals. the airline industry is still a predominant area of employment. Warehouse optimization. both at airlines and at consultants contracting to airlines.R. crew scheduling.R. the design of medical informatics. maintenance planning. in some cases. and operations research technologies are heavily used by all the major oil companies. Energy: The oil industry was one of the first users of operations research techniques to help manage their refinery operations. One category of manufacturing.R. With the deregulation of the power industry. Emergency services like 9-1-1 and air ambulances rely on operations researchers to keep response times quick and determine fleet levels. O. semiconductor optimization. including quality assurance. Supply chain planning. parts inventory management. is a potential growth area. As the health care system and hospitals in particular seek to reduce costs and make better use of resources. Electrical and hydro-electric companies use operations research to determine how to efficiently produce power as well as trade power among their partners. operations researchers can model better systems as hospital staffers and as consultants. numerous opportunities for operations research are bound to arise. airline network planning. Operations researchers can offer guidance . A recent application of revenue management by a hospital for the purpose of contract negotiation with vendors may point to a new way of containing medical costs.
Mining and similar sectors working with natural resources may rely on the lessons of the forestry industry. Consultants to the military employ operations researchers. Pharmaceuticals: Pharmaceutical companies continue to use O.R. including the scheduling and pricing of containers. The healthy package delivery field is one that continues to rely heavily on the work of O. and policy science. plan purchasing and production. trucking.R. police and firefighter deployment. war gaming. Bureau . Real-time dispatching and delivery truck routing are important O. although experiencing difficult financial times. The U. operations research remains strong in the military. who can advise planners about where to spend and place resources within the system. where the services use O. professionals in the manufacture and development of products.R. O. clothing manufacturers and stores are exploring O.R. Telecommunications. Retailing: Although retailing companies don't currently use O. may again rely on operations researchers in various areas as the economy and the field stabilize. Opportunities in the public sector The public sector has offered opportunities in various areas. tactical planning.R.R. and war theater optimization. can help the fight against terror via routing and rerouting traffic in case of terrorist attack. and the improvement of systems like the electrical grid. for personnel force management. Military: Conceived during war. areas. transportation. as well. fire and ambulance station location.R. Transportation: Operations researchers perform logistics for air traffic control. offering a potential growth area.on what are the right offers to give to the right customers. logistics. and improve supply chain management. heavily. including school location. Homeland security: Homeland security and related interstate and federal systems may represent opportunities for operations researchers.S. and railroads. Another important area for operations researchers is international freight. and in the management of drug portfolios representing the assortment of different drugs maintained by companies. and when it is no longer profitable to target certain segments of the market. applications to forecast sales. do pricing. strategic planning.
give superior solutions in diverse database-plumbing applications – such as predicting purchasing behaviour.R. online auctions. . and that many operations research analysts in private industry work directly or indirectly on national defence. with work in portfolio selection. Financial engineering: Financial engineering and related work is seeing some instances of growth for operations researchers. the military remains the largest employer of operations researchers in the Federal Government. Public health: In public health.of Labour Statistics reports that in the United States.com bust. Environmental applications: Operations researchers offer aid in pollution control and the design of systems to prevent shipping accidents. and hedge fund strategies. E-commerce offers opportunities in business-tobusiness and consumer areas of online purchasing. bidders are looking to O. and organ donation. Municipalities and states: These levels of government rely more on operations researchers to deal with highway traffic delays and the development of intelligent traffic systems. Some credit card companies use operation researchers to work on credit scoring. models for decision support on how to bid intelligently. operations researchers have made important recommendations in drug treatment. E-commerce: Even after the dot. AIDS prevention. among other applications. Insurers rely heavily on operations researchers to do risk analysis and pricing. and supply procurement. portfolio models.'s data mining methods.R. detecting fraud.R. whose use is growing rapidly. vendor purchasing models. professionals in extracting the information they really want. O. Online grocers that make home delivery are another area of opportunity for operations researchers. In addition to sellers. Banks rely on risk management modeling. Trends by application Data mining: With the widespread emergence of very large databases. assessing credit risk. segmenting customers. many different organizations are finding vital help from O. and anticipating customer attrition.
both at the business-tobusiness and consumer level.R. telecommunications. bus crewing. Gas and Chemicals. such as power (electricity). being used for sales forces. express. Supply chain management: SCM continues to rely heavily on operations researchers. customer segmentation. Revenue management: The practice of retail management has extended from the airlines to hotels. call centers . as well as major manufacturers and mid-sized companies. etc. Strategic planning: This remains an area where operations researchers offer great potential. and hospital nurses. • Transport & Logistics Applications and Benefits of Operations Research in Transport and Logistics. with O. supply chain logistics. Some large companies rely extensively on operations researchers before introducing new product lines or services. Operations researchers in the field work for major software companies and consultants. car rental operations. Operations researchers have also been instrumental in turning around ailing companies. such as • . Some other uses of operation management are:Oil. Some large and mid-size companies use O. retail staffing. mail. etc. and even gas pipeline operations.-based forecasting systems to plan sales and growth.Marketing: Direct marketing models. • Manufacturing Applications and Benefits of Operations Research in Manufacturing.R. • Energy Applications and benefits of Operations Research in Energy. air traffic control. gas. refining & distribution. particularly those optimizing the supply chain. Scheduling: Scheduling continues to offer employment for operations researchers. production. Gas & Chemicals Applications and benefits of Operations Research in Oil. such as oil exploration. such as transportation. travel. chemicals. cruises. water. Customer Relations Management (CRM) – all rely on the service of operations researchers.
common sense) analyses are required to make the most economical decisions. With companies moving towards managing business with some form of company-wide information system. Discrete Event Simulation and Queueing Theory. decision based on intuition with minimal quantitative basis may be reasonably acceptable and practical in achieving the goal of the organization. Government and Other. if not the most important. experience. such as financial services. data plays important. intuition. organization leaders can make high quality decisions. for a large-scale system. for a system that is highly manual. Linear Programming. • Services & Government Applications and Benefits of Operations Research in Services. forestry. Numerous studies are conducted on development of more effective and efficient heuristic and exact algorithms that can solve large scale optimization problems. CONCLUSION Another name for managers is decision makers. electronics.e. However. both quantitative and qualitative (i. consultancy. OR is quantitative problem solving technique.base materials. such approach towards performance improvement may or may not be economically feasible for some organizations. hence. automotive. . healthcare. data driven decision science techniques presented her may or may not be the appropriate approach. however. Thus. pressure is on management to make economical decisions. medicine Challenges in Operations Research Due to vast quantities of data and calculation. solving optimization problems is challenging and time consuming. Operations managers are not expected to be experts in any decision science tools. With an organization that has data readily available using information system such as MRP and ERP should be able to use the required data with certain level of integrity. In some cases such as small-scale low complexity environment. To survive and lead the today’s highly competitive and demand driven market. durable and fast moving consumer goods. One of the essential managerial skills is ability to allocate and utilize resources appropriately in the efforts of achieving the optimal performance efficiently. Using Operations Research techniques including Linear Programming. he or she must have fundamental knowledge of such tools to acquire right resources and to make the most economically sounding decisions for the company as a whole. Discrete Event Simulation and Queueing Theory will be most suitable and appropriate decision tools. role in producing high quality and executable solutions. However.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.