The term Operation Research (OR) related to military operations during the Second World War. Scientists used various techniques to deal with strategic and tactical problems during the war. After the war military OR group scientists tried to apply OR techniques to civilian problems relating to business, industry and research development. During the 1950s educational institutions introduced OR in their curricula. Today service organizations such as airlines, railways, hospitals, libraries and banks employ OR to improve their efficiency.
- According to H.M. Wagner
O.R. is a scientific approach to problem solving for executive management.
- According to Operations Research Society of America
O.R. is an experimental and applied science devoted to observing, understanding and predicting the behavior of purposeful man-machine systems and operations research workers are actively engaged in applying this knowledge to practical problems in business, government and society.
- According to E.L. Arnoff and M.J. Netzorg
O.R. is the systematic, method oriented study of the basic structure, characteristics, functions and relationships of an organization to provide the executive with a sound, scientific and quantitative basis for decision making.
- According to C.W. Churchman
Operation Research is the application of scientific methods, techniques and tools to problems involving the operation of a system so as to provide those in control of the system with optimum solution to the problem.
- According to C. Kittel
O.R. is an aid for the executive in making his decision by providing him with the needed quantitative information based on the scientific method of analysis.
It can be used for solving different types of problems, such as:
- Problems dealing with the waiting line, the arrival of units or persons requiring service.
- Problems dealing with the allocation of material or activities among limited facilities.
- Equipment replacement problems.
- Problems dealing with production processing i.e., production control and material shipment.
But it may be remembered that operation research never replaces a manager as decision maker. The ultimate and full responsibility for analysing all factors and making decision will be of the manager.
In the more wide sense, operation research does not deal with the everyday problems such as output by the one worker or machine capacity; instead it is concerned with the overall aspect of business operation such as something as the relationship between inventory, sales, production and scheduling. It may also deal with the overall flow of goods and services from plants to consumers.
The team doing operation research may have statisticians, psychologists, labour specialists, mathematicians and others depending upon the requirement for the problems.
Nature of Operation Research:
In its recent years of organised 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.
- 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
- Advertising strategies with respect to cost and time
- Buying policies, varying prices
- Determination of quantities and timing of purchases
- Bidding policies
- Replacement policies
- Exploitation of new material resources
4. 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.
5. Personnel Management:
- Mixes of age and skills
- Recruiting policies
- Job assignments
6. Research and Development:
- Areas of concentration for R&D.
- Reliability and alternate decisions.
- Determination of time-cost trade off and control of development projects.
Characteristics of Operations research
- Decision making
OR is a decision science which helps management to make better decisions.
- Use of Information Technology (IT)
O.R. often requires a computer to solve the complex mathematical model or to perform a large number of computations that ae involved. Use of digital computer has become an integral part of the operations research approach to decision making.
- Quantitative solution
Operations research provides the managers with a quantitative basis for decision making. OR attempts to provide a systematic and rational approach for quantitative solution to the various managerial problems.
- Human factors
In deriving quantitative solution we do not consider human factors, which doubtlessly plays a great role in the problems. So study of the OR is incomplete without a study of human factors.
- System orientation
O.R. study the situation or problem as a whole. This means that an activity by any part of an organization has some effect on the activity of every other part. The optimum result of one part of a system may not be the optimum for some other part. Therefore, to evaluate a decision, one must identify all possible interactions and determine their impact on the organization as a whole.
- Scientific approach
O.R. uses scientific methods to solve the problems. Most of the scientific studies such as chemistry, physics, biology etc. can be carried out in the laboratories, without much interference form the outside world. Bust same is not true in the systems under study by OR teams. So, OR is an formalized process of reasoning. Under OR the problem is to be analysed ad defined clearly. Observations are made under different conditions to study the behavior of the system. On the basis of these observations a hypothesis describing how the various factors involved are believed to interact and the best solution to the problem is formulated. To test the hypothesis experiment is designed and executed. Observations are made and measurement s are recorded. Finally results of the experiments are studied and the hypothesis is accepted or rejected. So, OR is the use of scientific method to solve the problem under study.
- Inter-disciplinary team approach
O.R. is performed by a team of scientists whose individual members have been drawn from different scientific and engineering disciplines. For example, one may find a mathematician, statistician, physicist, psychologist, economist and an engineer working together on an OR problem.
- Uncovering new problems
Solution of an OR problem may uncover a number of new problems. In order to derive the maximum benefit each one of them must be solved. OR is not effectively used if It is restricted to one shot problems only. In order to derive full benefits, continuity of research must be maintained.