OPERATIONS RESEARCH

Chapter one: Introduction

 Operations Research (OR) started just before World War II in Britain with the establishment of teams of scientists to study the strategic and tactical problems involved in military operations. The objective was to find the most effective utilization of limited military resources by the use of quantitative techniques.
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 Following the war, numerous peacetime applications emerged, leading to the use of OR and management science in many industries and occupations.

Operations research is the application of mathematical techniques and scientific principles to management problems to help managers make better decisions.

 The five function s of operation research are objectives, scientific approach, interdisciplinary team work, use of computers, and decision making. Making decisions or taking actions is central to all operations research applications.
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There are various techniques used in OR such as, Linear Programming, Probability Theory, Transportation Algorithm, Assignment problems, Queuing theory, etc. Operations research (OR) has application in forecasting, inventory management, production planning , capital budgeting, capacity planning, and other important areas of management decision making.
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 Problem solving can be either qualitative or quantitative. In qualitative problem solving intuition and subjective judgment are used. Quantitative analysis tend to be more objective and will include only information that can be quantified
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 Qualitative approach is used when the problem is fairly simple and familiar, the cost involved is not much and immediate decision are needed. Quantitative approach is used when problem is complex and not familiar, cost involved is substantial and enough time is available to analyze the problem.
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1.2. Model is an abstraction of a reality. Models are classified as 1. Physical(iconic) model: are the least abstract.
They are physical models that look like reality. such as model of an airplane, layout drawing of a factory, glob, etc. 2. Analogue models: Physical models which are more abstracts than iconic models such as, graph, flowcharts, Gantt charts, cause-effect diagram etc.
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3. Mathematical models( symbolic models): are the most abstract models which usually represent a problem in a form of mathematical equations or in a set of mathematical

relationships. These mathematical relationships are made up of symbols and numbers. variable within a model is a mathematical symbol that can take on different values. Variables are

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 parameter is a constant value that is mostly a coefficient of a variable in a mathematical equation / relationship. Constants are fixed values not subject to variation generally represented by numbers. While variables can take on different values.

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Example: Suppose a company produces three different items: item A, item B and item C. The profit obtained from each item A is Birr 20, from each item B is Birr 32 and from each item C is Birr 18. Write an equation ( a mathematical model) which can be used to compute profit.

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The total profit depends on the number of each item sold. Hence the number of items sold is represented by variables while the profit on each item is a constant that doesnt vary. Let x1 :number of units of item A sold x 2 : number of units of item B sold x3 : number of units of item C sold Profit = 20 x1 +32x2 +18x3
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 In this example x1, x 2, x 3 are called decision variables since managers can give decisions on values of this variables. However there can be other variables such as weather, government decisions that are not under the control of managers but can affect the profit. Such type of variables are called uncontrollable variables .

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1.3. The Management Science approach

Management science encompasses a logical, systematic approach to problem solving, which closely parallels what is known as the scientific method for attacking problems. This approach, follows an ordered series of steps: (1) definition of the problem, (2) model construction, (3) model solution(analysis) and (4) implementation of solution.

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PROBLEM DEFINITION

Feedback

MODEL CONSTRUCTION

ANALYSIS

IMPLEMENTATIO N AND FOLLOWUP

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