In its recent years of organized development, O.R. has solved successfully many cases of research for military, the government and industry. The basic problem in most of the developing countries in Asia and Africa is to remove poverty and hunger as quickly as possible. So there is a great scope for economist, statisticians, administrators, politicians and technicians working in a team to solve this problem by an O.R. approach.
On the other hand, with the explosion of population and consequent shortage of food, every country is facing the problem of optimum allocation of land for various crops in accordance with climatic conditions and available facilities. The problem of optimal distribution of water from a resource like a canal for irrigation purposes is faced by developing country. Hence a good amount of scientific work can be done in this direction.
In the field of Industrial Engineering, there is a claim of problems, starting from the procurement of material to the despatch of finished products. Management is always interested in optimizing profits.
Hence in order to provide decision on scientific basis, O.R. study team considers various alternative methods and their effects on existing system. The O.R. approach is equally useful for the economists, administrators, planners, irrigation or agricultural experts and statisticians etc.
Operation research approach helps in operation management. Operation management can be defined as the management of systems for providing goods or services, and is concerned with the design and operation of systems for the manufacture, transport, supply or service. The operating systems convert the inputs to the satisfaction of customers need.
Thus the operation management is concerned with the optimum utilisation of resources i.e. effective utilisation of resources with minimum loss, under utilisation or waste. In other words, it is concerned with the satisfactory customer service and optimum resource utilisation. Inputs for an operating system may be material, machine and human resource.
O.R. study is complete only when we also consider human factors to the alternatives made available. Operation Research is done by a team of scientists or experts from different related disciplines.
For example, for solving a problem related to the inventory management, O.R. team must include an engineer who knows about stores and material management, a cost accountant a mathematician-cum-statistician. For large and complicated problems, the team must include a mathematician, a statistician, one or two engineers, an economist, computer programmer, psychologist etc.
Some of the problems which can be analysed by operations research are given hereunder:
(I) Finance, Budgeting and Investment:
- Cash flow analysis, long range capital requirement, investment portfolios, dividend policies,
- Claim procedure, and
- Credit policies.
- Product selection, competitive actions,
- Number of salesmen, frequencies of calling on, and
- Advertising strategies with respect to cost and time.
- Buying policies, varying prices,
- Determination of quantities and timing of purchases,
- Bidding policies,
- Replacement policies, and
- Exploitation of new material resources.
(IV) Production Management:
- Physical distribution: Location and size of warehouses, distribution centres and retail outlets, distribution policies.
- Facilities Planning: Number and location of factories, warehouses etc. Loading and unloading facilities.
- Manufacturing: Production scheduling and sequencing stabilisation of production, employment, layoffs, and optimum product mix.
- Maintenance policies, crew size.
- Project scheduling and allocation of resources.
(V) Personnel Management:
- Mixes of age and skills,
- Recruiting policies, and
- Job assignments.
(VI) Research and Development:
- Areas of concentration for R&D.
- Reliability and alternate decisions.
- Determination of time-cost trade off and control of development projects.