OPERATIONS RESEARCH

Operations Research is relatively a new discipline, which originated in World War II, by Britain and
U.S.A., during the 1939-1945, for scientific methods to the planning of military operations and became
very popular throughout the world. India is one of the few first countries in the world who started using
operations research. Operations Research is used successfully not only in military/army operations but
also in business, government and industry. Now a days operations research is almost used in all the
fields.

Operational Research is the attack of modern science on complex problems arising in the direction and
management of large systems of men, machines, materials and money in industry, business, government
and defense. Its distinctive approach is to develop a scientific model of the system, incorporating
measurements of factors such as change and risk, with which to predict and compare the outcomes of
alternative decisions, strategies or controls. The purpose is to help management determine its policy and
actions scientifically.

Stages of Development of Operations Research

The stages of development of O.R. are also known as phases and process of O.R, which has six
important steps. These six steps are arranged in the following order:

Step I: Formulation of Problem

Step II: Construction of Mathematical Model
Step III: Deriving the solution from the model
Step IV: Testing the model and the solution derived from it
Step V: Controlling the solution
Step VI: Implement the solution

Step I: Formulation of problem

First of all one must formulate the problem in the form of an appropriate model. To do
so the following information will be required
Who has to take the decision?
What are the objectives?
What are the controlled variables?
What are the uncontrolled variables?
What are the restrictions?
Since wrong formulation cannot yield a right decision, one must be considerably careful
while executing this phase.

Step II: Construction of Mathematical Model

This phase is concerned with the reformulation of the problem in an appropriate form
which is convenient for analysis. The most suitable form for this purpose is to construct
a mathematical model representing the system under study. Model must include 3
important factors
a. Decision Variable
b. Constraints or Restrictions
c. Objective function.

Step III: Deriving the solutions from the model

After formulating the mathematical model for the problem under consideration, the next
phase is to derive a solution from this model. Here in OR we are always in search for an
optimal solution. Optimal solution is the one which maximizes or minimizes the
objective function.
 Step IV: Provide a solution and test its reasonableness
This step is to get a solution with the help of model and input data. This solution is not
implemented immediately, instead the solution is used to test the model and to find there
is any limitations. Suppose if the solution is not reasonable or the behaviour of the
model is not proper, the model is updated and modified at this stage. The output of this
stage is the solution(s) that supports the current organizational objectives.

Step V: Controlling the solution

The model requires immediate modification as soon as the controlled variables (one or
more) changes significantly, otherwise the model goes out of control. As the conditions
are constantly changing in the world and the solution may not remain valid for a long
time.

Step VI: Implement the solution

At this step the solution obtained from the previous step is implemented. The
implementation of the solution involves many behavioural issues. Therefore, before
implementation the implementation authority has to resolve the issues. A properly
implemented solution results in quality of work and gains the support from the
management.

Scopes & Applications of Operations Research

Today, almost all fields of business and government utilizing the benefits of Operations Research. There
are voluminous of applications of Operations Research. Although it is not feasible to cover all
applications of O.R. in brief.

DEFENCE:
In modern time war the military operations are carried out by airforce, army & navy therefore there is a
necessarity to formulate optimum strategies that may give maximum benefit operations research helps
military executives and managers to select the best strategies (course of action) to win the battle thus
operations research has got great scope in defence.

LIC:
Operations research techniques are also applicable to enable LIC officers to decide the premium rates of
various policies for the best interest of corporation.

AGRICULTURE:
With increase of population and consequent shortage of food, there is need to increase agriculture output
for a country. But there are many problems faced by the agriculture department of a country eg
a. Climatic Condition
b. Problem of optimal distribution of water from the resourses etc.
Thus there is a need of best policy under the given restrictions. Operations research is the technique to
determine best policy.

MANAGEMENT
The following are the abbreviated set of typical operations research applications in an organization just to
show how widely these techniques are used today:

1. Accounting:
Assigning audit teams effectively
Credit policy analysis
Cash flow planning
Developing standard costs
 Establishing costs for byproducts
Planning of delinquent account strategy

2. Construction:
Project scheduling, monitoring and control
Determination of proper work force
Deployment of work force
Allocation of resources to projects

3. Facilities Planning:
Factory location and size decision
Estimation of number of facilities required
Hospital planning
International logistic system design
Transportation loading and unloading
Warehouse location decision

4. Finance:
Building cash management models
Allocating capital among various alternatives
Building financial planning models
Investment analysis
Portfolio analysis
Dividend policy making

5. Manufacturing:
Inventory control
Marketing balance projection
Production scheduling
Production smoothing

6. Marketing:
Advertising budget allocation
Product introduction timing
Selection of Product mix
Deciding most effective packaging alternative

7. Organizational Behavior / Human Resources:

Personnel planning
Recruitment of employees
Skill balancing
Training program scheduling
Designing organizational structure more effectively

8. Purchasing:
Optimal buying
Optimal reordering
Materials transfer

9. Research and Development:

R & D Projects control
R & D Budget allocation
 Planning of Product introduction