Operations research (OR) is an analytical method of problem-solving and decision-making that is useful in the management of organizations. In operations research, problems are broken down into basic components and then solved in defined steps by mathematical analysis.
Analytical methods used in OR include mathematical logic, simulation, network analysis, queuing theory, and game theory. The process can be broadly broken down into three steps.
- A set of potential solutions to a problem is developed. (This set may be large.)
- The alternatives derived in the first step are analyzed and reduced to a small set of solutions most likely to prove workable.
- The alternatives derived in the second step are subjected to simulated implementation and, if possible, tested out in real-world situations. In this final step, psychology and management science often play important roles.
Phases in Operation Research Study:
Since, the main objective of operation research is to provide better quantitative information’s for making decision. Now our aim is to learn how we can have better decisions.
(i) Judgment Phase:
- Determination of operation.
- Determination of objectives.
- Determination of effectiveness of measures.
- Determination of type of problem, its origin and causes.
(ii) Research Phase:
- Observation and data collection for better understanding of the problem.
- Formulation of relevant hypothesis and models.
- Analysis of available information and verification of hypothesis.
- Production and generation of results and consideration of alternatives.
(iii) Action Phase:
- Recommendations for remedial action to those who first posed the problem, this includes the assumptions made, scope and limitations, alternative courses of action and their effect.
- Putting the solution to work: implementation.
Without OR, in many cases, we follow these phases in full, but in other cases, we leave important steps out. Judgment and subjective decision-making are not good enough. Thus industries look to operation research for more objective way to make decisions. It is found that method used should consider the emotional and subjective factors also.
For example, the skill and creative labour are important factors in our business and if management wants to have a new location, the management has to consider the personal feeling of the employees for the location which he chooses.
Characteristics (Features) of Operation Research:
(i) Inter-Disciplinary Team Approach:
This requires an inter-disciplinary team including individuals with skills in mathematics, statistics, economics, engineering, material sciences, computer etc.
(ii) Wholistic Approach to the System:
While evaluating any decision, the important interactions and their impact on the whole organisation against the functions originally involved are reviewed.
(iii) Methodological Approach:
O.R. utilises the scientific method to solve the problem
(iv) Objective Approach:
O.R. attempts to find the best or optimal solution to the problem under consideration, taking into account the goals of the organisation.
Methodology of Operation Research:
1. Formulating the Problem:
The problem must be first clearly defined. It is common to start the O.R. study with tentative formulation of the problem, which is reformulated over and again during the study. The study must also consider economical aspects.
While formulating the O.R. study, analyists must analyse following major components:
(i) The environment:
Environment involves physical, social and economical factors which are likely to affect the problem under consideration. O.R. team or analysts must study the organisation contents including men, materials, machines, suppliers, consumers, competitors, the government and the public.
Operation analyst must study the decision-maker and his relationship to the problem at hand.
Considering the problem as whole, objectives should be defined.
The O.R. study determines as to which alternative course of action is most effective to achieve the desired objectives. Expected reactions of the competitors to the alternative must also be considered.
2. Deriving Solution:
Models are used to determine the solution either by simulation or by mathematical analysis. Mathematical analysis for deriving optimum solution includes analytical or numerical procedure, and uses various branches of mathematics.
3. Testing the Model and Solution:
A properly formulated and correctly manipulated model is useful in predicting the effect of changes in control variables on the overall system effectiveness. The validity of the solution is checked by comparing the results with those obtained without using the model.
4. Establishing Controls over the Solution:
The solution derived from a model remains effective so long as the uncontrolled variables retain their values and the relationship. The solution goes out of control, if the values of one or more variables vary or relationship between them undergoes a change. In such circumstances the models need to be modified to take the changes into account.
5. Implementing the Solution:
Solution so obtained should be translated into operating procedure to make it easily understandable and applied by the concerned persons. After applying the solution to the system, O.R. group must study the response of the system to the changes made.
Historically, the term Operations Research originated during Second World War when U.S.A. and Great Britain’s Armed Forces sought the assistance of Scientists to solve complex and very difficult strategical and tactical problems of warfare, like making mines harmless or increasing the efficiency of antisubmarine aerial warfare, etc.
Operations research employs mathematical logic to complex problems requiring managerial decisions.
Operations research aids, in solving diverse business problems and in planning and investigation of major operational decisions.
Operations Research (Operational Research, O.R., or Management science) includes a great deal of problem-solving techniques like Mathematical models, Statistics and algorithms to aid in decision-making. O.R. is employed to analyze complex real-world systems, generally with the objective of improving or optimizing performance.
In other words, Operations Research is an interdisciplinary branch of applied mathematics and formal science which makes use of methods like mathematical modeling, algorithms statistics and statistics to reach optimal or near optimal solutions to complex situations.
It is usually worried about optimizing the maxima (for instance, profit, assembly line performance, bandwidth, etc) or minima (for instance, loss, risk, cost, etc.) of some objective function. Operational Research aids the management to accomplish its objectives utilizing scientific methods.
Origin and History of Operations Research in Brief
While researching for operations research (O.R.) history, I discovered that history is not clear cut, different people have diverse views of the same event.
Based on the history of Operations Research, it is believed that Charles Babbage (1791-1871) is the father of Operational Research due to the fact that his research into the cost of transportation and sorting of mail resulted in England’s universal Penny Post in 1840.
The name operations research evolved in the year 1940. During World War 2, a team of scientist (Blackett’s Circus) in UK applied scientific techniques to research military operations to win the war and the techniques thus developed was named as operation research.
As a formal discipline, operations research originated from the efforts of army advisors at the time of World War II. In the years following the war, the methods started to be employed extensively to problems in business, industry and society. Ever since then, OR has developed into a subject frequently employed in industries including petrochemicals, logistics, airlines, finance, government, etc.
Thus, the Operational Research began during World War II in great Britain with the establishment of groups of scientists to analyze the strategic and tactical problems associated with military operations. The aim was to discover the most efficient usage of limited military resources by the application of quantitative techniques.
Figure – O.R. Origin
At the conclusion of war different things happened to O.R. in the Great Britain and in the United States. In the UK expenses on defense research were lowered; this resulted in the discharge of numerous Operational Research workers from the military at a time when business managers were facing the need to restore much of Britain’s production facilities which had been ruined in war. Professionals in the nationalized basic industries, specifically, needed assistance from the OR men leaving the military organization.
To the contrary, defense research in US was increased and O.R. was expanded at the conclusion of war. The majority of the experienced workers stayed in the service of the army. The ultimate involvement of science in industrial problems of the executive type in the US is a result of the advent of Second Industrial revolution.
World war II had sparked scientific advances in the study of communication, computation, & control which produced the technological grounds for automation. In early 1950s industry started to take in a few of the Operational Research workers who left the army. Thus O.R. started to spread and expand in the United States.
India was among the few nations which began utilizing O.R. In 1949, the first Operational Research unit was established at Hyderabad which was named Regional Research Laboratory located. At the same time an additional unit was launched in Defense Science Laboratory to fix the Stores, Purchase and Planning Problems.
In 1953 at Calcutta, an O.R. unit was established in Indian Statistical Institute. The objective was to use O.R. techniques in National Planning and Survey. In 1955, Operations Research Society of India was created, which is among the first members of International Federation of Operations Research societies. Today, the utilization of O.R. techniques have spread out from army to a wide range of departments at all levels.