INTRODUCTION TO
OPERATIONS RESEARCH
SCHOOL OF DATA SCIENCE AND FORECASTING
DEVI AHILYA VISHWAVIDYALAYA, INDORE
Outline of the lecture
• 1. History of Operations Research (OR)
• 2. Introduction of OR- (a) Definitions (b) Objective of OR
• 3. Developments in OR
• 4. Characteristics- (a) Optimization (b) Simulation (c) Prob. And Statistics
• 5. OR is both a science and an art
• 6. Models of OR-
• (a) Linear programming model
• (b) Allocation models- (i)Transportation model (b) Assignment (c) Sequencing model
etc.
• (c) Simulation model
• (d) Network model
• (e) Inventory model
• (f) Replacement model etc.
History:
The scientific management revolution of the early 1900s,
initiated by Frederic W. Taylor, provided the foundation for the
use of quantitative methods in management.
Operations Research is generally considered to have originated
during the World War II period, when teams were formed to deal
with strategic and tactical problems faced by the military. These
teams, involving the people with diverse backgrounds (e.g.,
mathematics, statistics, engineering, and behavioral science),
were joined together to solve a common problem by utilizing the
scientific method.
After the war, different techniques were developed and applied
to addressing problems in business, the government and society.
OPERATIONS RESEARCH: An Introduction
Operations Research: It is a decision making approach based on the scientific
method. It makes extensive use of quantitative analysis.
Operations Research is also known as:
• Management Science
• Quantitative Techniques
• Decision Science
Today, many use the terms Management Science, Operations Research,
Quantitative Techniques, and Decision Science interchangeably.
Developments in Operations Research during the post–
World War II period for non-military applications
Continued research resulted in numerous methodological
developments. Probably the most significant development
was the discovery by George Dantzig, in 1947, of the simplex
method for solving linear programming problems.
Besides linear programming, many other tools of operations
research such as statistical control, dynamic programming,
queuing theory and inventory theory were well developed
before the end of the 1950s.
Developments in digital computers prompted a virtual
explosion in computing power.
Characteristics
Optimization - The purpose of operations research is to
achieve the best performance under the given
circumstances.
Simulation- This involves building models or replications in
order to try out and test solutions before applying them.
Probability and statistics- This includes using mathematical
algorithms and data to uncover helpful insights and risks,
make reliable predictions and test possible solutions.
OR is both a Science and an Art
It is science by virtue of the mathematical techniques it
presents.
It is an art because the success of operations research
study depends largely on the creativity and experience
of the team.
Models of OR-
• (a) Linear programming model
• (b) Allocation models- (i)Transportation model (b) Assignment (c)
Sequencing model etc.
• (c) Simulation model
• (d) Network model
• (e) Inventory model
• (f) Replacement model etc.
Importance
Operations research provides a more powerful approach to
decision making than ordinary software and data
analytics tools.
Operations research can help companies to achieve more
complete datasets, consider all available alternatives, predict
all possible outcomes and estimate the risk.
Operations research can also be fit to specific business
processes or use cases to determine which techniques are
most appropriate to solve the problem.
Phases of Operations Research
Problem Formulation-
Objectives, Range of Controllable variables, Identification of the uncontrollable variables that may
cause damage, Understand Restrictions, Understand nature or condition of variables.
Development of the Model-
Translating the problem into mathematical relationships.
If resulting model fits into standard mathematical models such as linear
programming solution is attainable with available algorithms.
If resulting model is too complex to get analytical solution-simplify the model,
use heuristic or simulation approach.
Solution of the Model-
Use of well defined optimization algorithms, Sensitivity analysis.
Validation of the Model-
Check whether or not the proposed model does what is supposed to do.
Compare the behaviour of the system with known historical data.
Implementation of the Solution-
Translation of the results into operating system where results are important
and relevant.
Applications of OR
Business (real world) Problems: Production
Management, Inventory Management, Materials
Management, Marketing, Finance, Maintenance and
Project Scheduling, Enterprise Resource Planning (ERP),
Supply Chain Management (SCM).
Planning: Urban Planning, Agricultural Planning, Energy
Planning.
Optimal Utilization of Natural resources.
Network optimization and engineering.
Risk management.
Advantages
The advantages of operations research include enhancing
daily operations, fair comparison, building a high-level strategy, and
smoother inventory planning and management. It also helps design
company processes, tells how to allocate assets, and
solves management problems.
1. Effective Decisions: Identification and Assessment of Alternatives,
Better and Quicker decisions
2. Better Coordination
3. Facilitates Control
4. Improves Productivity
Limitations (Disadvantages)
Operations research is an interdisciplinary of mathematical sciences
● Need a personnel to have skills of statistics, and mathematics
● Most of managers are not well proficient in such activities
● They depend of OR specialist
Operations research itself is very costly
● An Organization needs to invest a lot of money and effort into OR in order to
make it effective
● It is suitable to large companies
● May not be a viable option for small or midsize companies, as it is a costly affair
Coordination issues between OR Specialist and Business Operation Teams
Analysis is only based on Quantifiable factors and expressed in terms of
numbers and expressions only. It does not consider Human behavioural
issues.
Time consuming process.
What is mathematical modelling?
Modelling is the constructing of mathematical objects whose behaviour correspond in some way to a
real world system. Objects could be a system of equations, an algebraic or stochastic process, an
algorithm or even just a set of numbers.
Real world system means a physical system, a social system, financial system, ecological system or any
system whose behaviour can be observed.
Why a model/motivation behind a model?
If we have a model, which reflects some behaviour of real world system then we can get improved
understanding of that model. With the model, we can predict the parameters involved in the model.
- Analyse the problem domain
- Simplify the reality
- Capture the requirements
- Visualize the system
- Specify the structure and behaviour
With the model we can create database from very remote area or where measurements are not
possible.
Principles of modelling
Choose your model well:
The choice of model deeply impacts the analysis of the problem and the design of
solution.
Every model may be expressed at different levels of precision:
The same model can be scaled up and down to different granularities/rough levels.
The best models are connected to reality:
Simplify the model, but don’t hide important details.
No single model is sufficient:
A set of models is required to solve any significant solution. But some time single
model is sufficient for similar system except local conditions.
Pre-modelling need recognition
• Similarity of the system
• Local conditions
• Geographical location
• Orography etc.
are the pre-modelling need. Based on these recognitions we can select a suitable model or a
set of model to study the proposed system.
Problem formulation: a question/any issue or difficulty
Research problem refers to some difficulty which researcher experiences in the context of
either a theoretical or practical situation and wants to obtain a solution for the same.
So, it is statement of the problem for
- an area of concern
- a condition to be improved
- a difficulty to be eliminated
- a troubling question that exists in literature, in theory or in practice that points to the need for
meaningful understanding and deliberate investigation.
Data collection
• Raw, facts and figures
• Research Data: that has been collected observed, generated or created to
validate original research findings.
There are two type of data:
Primary data:
The primary data are those, which are collected afresh and for the first time.
Primary data are original in nature and directly related to the issue or problem and
current data.
On other hand, secondary data are those, which have already been collected by
someone else and which have already ben passed through the statistical process.
Sources/Methods of Primary data:
Observation (Structured and unstructured)
Interview (Personal/ Telephonic)
Questionnaire (list of questions in a printed form)
• Schedule (Enumerator)
Other Methods: Warranty card, use of mechanical devices, Audits etc.
Sources/Methods for secondary data:
Internal sources of data
-Company records
- Employee records
- Sales records
- Financial records
- Other
External sources
-Published data- By Govt., by private agencies/ organisations
Model solution
1. Mathematical modelling through ODE
For example, population growth model
2. Non-linear growth and decay models:
(For example, Logistic law of population growth model)
3. Mathematical modelling through Algebra
(For example, Finding the radius of the Earth)
• Model validation:
Model results are tested for its validation based on measurements or
observations taken from a particular real world system. When results
are matches well with developed model then we say model is validated.
Sensitivity analysis:
In real world situation, input parameters may change over a period of
time due to dynamic nature of business environment, such changes
raise doubt in optimal solution, that is called sensitivity analysis.
Thank You!
Dr. Ashok Kumar
Mob: 8630896215
[email protected]
