Operation research and its application • Operations • The activities carried out in an organization. • Research • The process of observation and testing characterized by the scientific method. Situation, problem statement, model construction, validation, experimentation, candidate solutions.

1. OPERATION
RESEARCH AND
ITS
APPLICATION.
B y : A r u n & S h u b h l a g n a
P G D U P M
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2. INTRODUCTION
• Operations
• The activities carried out in an organization.
• Research
• The process of observation and testing
characterized by the scientific method. Situation,
problem statement, model construction,
validation, experimentation, candidate solutions.
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3. OPERATIONS RESEARCH
o Operations Research is a quantitative approach to decision
making based on the scientific method of problem solving.
o Operations Research is the scientific approach to execute
decision making, which consists of:
o The art of mathematical modeling of complex situations.
o The science of the development of solution techniques
used to solve these models.
o The ability to effectively communicate the results to the
decision maker.
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 The British/Europeans refer to “Operational
Research", the Americans to “Operations
Research" - but both are often shortened to just
"OR".
 Another term used for this field is “Management
Science" ("MS"). In U.S. OR and MS are combined
together to form "OR/MS" or "ORMS".
 Yet other terms sometimes used are “Industrial
Engineering" ("IE") and “Decision Science" ("DS").
TERMINOLOGY.
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5. HISTORY OF
Operational Research has
been existed as a science
since 1930’s when it began in
a systematic way.
Scientific approach to manag
ement principles was put
forward by Frederick
Taylor in the early 1900s.
OPERATION RESEARCH
In the decade after World War-II
the techniques began to be
applied more widely in problems
of business, industries and
societies.
The techniques of Operational
Research have been applied and
proven in many industries under
different names. For instance :-
- ‘Lean’ in manufacturing.
- ‘Supply Chain’ in logistics and
- ‘Yield Management’ in airlines
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6. NECESSITY OF
OPERATION
RESEARCH
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After The Industrial Revolution,
different sections like
manufacture, marketing,
financing occured in industrial
enterprises. Approaches of
problems between these
sections and finding better
solutions caused the evolution
of OR.
BASIC PROPERTIES
OF OPERATION
RESEARCH
USE THE SYSTEM APPROACH
IS AN INTERDISCIPLINARY
APPROACH
USE OF SCIENTIFIC METHODS

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7 STEPS TO A GOOD OPERATION RESEARCH ANALYSIS

8. 1) IDENTIFYTHEPROBLEMOROPPORTUNITY
WHAT ARE THE OBJECTIVES ?
IS THE PROPOSED PROBLEM TOO NARROW ?
IS IT TOO BROAD ?

9. 2) UNDERSTANDTHESYSTEM
WHAT DATA SHOULD BE COLLECTED ?
HOW WILL DATA BE COLLECTED ?
HOW DO DIFFERENT COMPONENTS OF THE SYSTEM
INTERACT WITH EACH OTHER ?

10. 3) FORMULATEA MATHEMATICALMODEL
WHAT KIND OF MODELS SHOULD BE USED ?
IS THE MODEL ACCURATE ?
IS THE MODEL TOO COMPLEX ?

11. 4) VERIFYTHE PROBLEM
DO OUTPUTS MATCH CURRENT
OBSERVATIONS FOR CURRENT INPUTS ?
ARE OUTPUTS REASONABLE ?
COULD THE MODEL BE ERRONEOUS ?

12. 5) SELECTTHE BESTALTERNATIVES
WHAT IF THERE ARE CONFLICTING
OBJECTIVES ?
INHERENTLY THE MOST DIFFICULT STEP.
THIS IS WHERE SOFTWARE TOOLS WILL HELP
US !!

13. 6) PRESENTTHERESULTSOFTHEANALYSIS
THE OUTPUTS OF THE MODEL DO FIT WITHIN
THE OUTPUT FROM THE SYSTEM ITSELF ?
ARE THE OUTPUTS OF THE MODEL
REASONABLE ?
THE MODEL MAY BE WRONG ?

14. 7) IMPLEMENTATIONANDEVALUATE
Users must be trained on the new system.
System must be observed over time to ensure it
works properly.

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APPLICATIONOFOPERATIONRESEARCH

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OR techniques are used by airlines and
rail companies to offer varying fares and
make higher revenues by filling more
seats at different prices - an OR
technique known as Yield Management. All
airlines depend on the effective use of
OR techniques to make them operate at a
profit.
TRANSPORTATION
AND TRAVEL
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17. In supermarkets, data from store
loyalty card schemes is analyzed
by OR groups to advise on
merchandising policies and
profitability improvement. OR
methods are also used to decide
when and where new store
developments should be made.
RETAILING
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18. Hospital managers use OR to make
decisions such as determining the
optimal utilization of operating
rooms and personnel, assessing the
risks posed by patients with
various medical conditions, and
deciding necessary levels of
perishable medicine in stock.
HEALTH
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19. OR practitioners address issues
such as portfolio and risk
management, planning and analysis
of customer service. They are
widely employed in Credit Risk
Management—a vital area for
lenders needing to ensure that
they find the optimum balance of
risk and revenue.
FINANCIAL SERVICES
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20. OR is a key contributor in
modernizing government services and
making them more efficient. Some
OR applications include modeling the
impact of performance related paying
for teachers, evaluating government
call-centers, projecting the size of
the prison population, and national
defense.
GOVERNMENT
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21. THANK YOU
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