Sohan Singh Rawat, Vipin Kr Chaudhary

RESEARCH COMMUNICATION

IMPORTANCE OF
OPERATIONS RESEARCH IN MANAGEMENT PRACTICES
1Sohan Singh Rawat, 2Vipin Kr. Chaudhary
1,2Assistant Professor, Department of Management, Doon Business School, Dehradun, Uttrakhand, INDIA.
E-mail : 1sohanrawat80@gmail.com, 2coolvipinchaudhary777@gmail.com

ABSTRACT
The term operation research has become increasingly important in the face of fast moving technology and increasing complexities in
business and industry. The intense competition in the market highlighted the need of operation research. Operation research approaches to
problem solving often embody an attempt to obtain mathematically optimal solutions to managerial problems. OR by nature is a problem
solving and decision making technique. OR is the most suitable technique in decision making. It identifies and defines the problem,
construct the model and choose right solution to the given problem. It measures the effectiveness of alternatives more objectively on the
basis of the goals of the organization .As it is objective in nature, the results of the study can be a good base to compare different
alternatives in the light of goals of organization. This helps in making better decisions. Present paper is an attempt to study the importance
of operation research in management practices to improve the effectiveness and efficiency of the organization.

Keywords : Operation Research, Optimum Solution, Alternatives, Decision Making, Efficiency.

1. INTRODUCTION
Any problem that requires a positive decision to be made
can be classified as an operations research (OR) type
problem. However, the approach used in decision making
has changed considerably over the year. Operations
Research is one of the popular managerial decision science
tools used by profit and nonprofit organizations. As the
global environment becomes fiercely competitive,
Operations Research has gained significance in applications
like world-class Manufacturing systems (WCM), Lean
production, Six-sigma quality management, Just-in-time
(JIT) inventory techniques [1].
In order to run an organization effectively as a whole the
problem that arises frequently is coordinating among the
conflicting goal of its various functional departments. To
understand this problem we have a simple example,
consider the organization is facing problems relating to
finished goods. There are different approaches by various
department to handle the problems, supply chain
management technique is used by marketing department to
resolve this kind of problem, inventory control system is
taken in process by logistic department, production
department relates this problems with production
management and finance department handle it with stock as
capital kept up in un productive manner and argues for the
reduction strongly. To find the optimum solution, the
decision maker must decide the best policy keeping in view
the relative importance of objectives and validity of
conflicting claims of various departments from the various
perspective of the whole organization [2]. OR seeks the
maximum for problem not only one which is in current use
42
but one which can give better solution to the problem. The
decision made may not be acceptable to each department but
should be optimistic for organization as a whole or for the
large proportion of the whole organization.
Operation Research as scientific discipline to inform about
the decision for the operation that is taken by the managers
for use. Operation Research is drawn from science, maths
and statistics accordingly as per the use for problem to find
solution. It is used extensively to schedule and assemble by
operational manager for their smooth production functions.
Companies used operation research as a device to minimize
risk and losses and to maximize their profits. Even
companies on the most optimum level at production are able
to zero down the level of cost of production. Also, the
device means to produce at the same cost or at lower cost or
produce more quantities at the same.
This paper highlights the significance of operation research,
different techniques and its importance in management
practices. This paper indicates the importance of OR in
finding the optimum solution of critical problems. It helps in
decision making process in public, private, government and
the society. Such a wide usages of operational research
models used by the government, industry and academicians
would not only contribute to the discipline but also would
contribute to enhance the quality of economic production.
2. THE ORIGINS OF OPERATION
RESEARCH
The roots of OR can be traced back many decades, when
Bookman International Journal of Accounts, Economics & Business Management, Vol. 1 No. 1 Sep. 2012
ISSN No. 2319-426X Bookman International Journals
early attempts were made to use a scientific approach in
management of organizations [3]. The term, operation
research was first coined in 1940 by Mc Closky and
Trefthen in small town Bowdsey, of the United Kingdom[4].
This new science came into existence in military context
during the World War II. Because of the war effort, there
was an urgent need to allocate scare resources to the various
military operations and to the activities within each
operation in an effective manner. The team of scientists
were the first OR teams. By developing effective methods
of using the new tool of radar, these teams were
instrumental in winning the Air battle of Britain. Through
their research on how to better manage convoy and
antisubmarine operations, they also played a major role in
winning the battle of the North Atlantic. The work of OR
team was given various names in United States: operation
Analysis, operation evaluation, operation research, system
analysis, system evaluation, system research, and
management science.
Following the end of World War II, the success of military
team attracted the attention of industrial managers of U.K.
Who were seeking solutions to their complex executive type
problems .it was becoming apparent that these were
basically the same problems but in a different context. In
this way OR began to creep into business and Industry. It
was only in the early 1950s that the industries in U.S.A
realized the importance of this new science in solving their
management problems. Science then, industrial O.R
developed rapidly in U.S.A
In India, Operation Research came into existence in 1949
when an Operation Research unit was established at
Regional Research Laboratory, Hyderabad. In India OR
society founded in 1959, also became a member of
international federation of OR societies in 1959[4]. The
journal OPSEARCH was published for the first time in
1963[2].Some of Indian organizations using OR techniques
are Indian Airlines, Railways, defense organization, Tata,
Telco, dcm, Stc etc.
In 1953, Prof. P.C. Mahalanobis[5] established an Operation
Research team in the Indian Statistical Institute, Calcutta to
solve problems related to national planning and survey. In
1958, project scheduling techniques: PERT (Program
Evaluation and Review Technique) and CPM (Critical Path
Method) were developed as efficient tools for scheduling
and monitoring lengthy, complex and expensive projects of
that time. The real development of Operation Research in
the national field was carried out by Prof. Mohalanobis in
India when he used it in national planning. Operation
Research is also being used in Railway, waiting or queuing
problems of passengers for tickets at booking windows or
trains queuing up in marshalling yard, waiting to be sorted
out are tackled by various Operation Research techniques.
43
3. NATURE OF OPERATION RESEARCH
As its clear from its name Operation Research i.e.
Research on Operation .Thus operation research is a
technique to solve problems that concern how to conduct
and coordinate the activities (operation) in the organization.
OR tools can help in different part of organization i.e.
manufacturing, transportation, construction, tele-
communication, financial planning, health care, and the
military etc.[3]
The Research part resembles the way research is conducted
in established scientific fields. Scientific methods are used
to investigate the problems of concern. The next step is to
construct a scientific model that attempts to abstract the
essential features of the situation that the conclusion obtains
from the model are also valid for the real problem. Thus
operation research involves creative scientific research into
the fundamental properties of operations.
The additional characteristics of OR is that it find the
optimum solution of the problem under consideration and
select the best possible course of action. For this purpose it
is necessary that a measure of effectiveness is defined which
is based on the goals of the organization.
4. METHODS IN OPERATION RESEARCH
Operation Research consists of different phases i.e.
judgment phase, research phase and action phase. In
judgment phase it selects the appropriate goal and various
variables regarding the problems and formulates the
problems in mathematics form. In Research Phase it helps
us to understand the problem and formulation of hypothesis
and models test the hypothesis, verification of hypothesis,
prediction of various results from the various hypothesis and
generalization of the results and consideration of alternative
methods. The Action Phase is for recommendation of
decision making for the problem and selection of best
outcomes from different phases.
5. TOOLS OF OPERATION RESEARCH
Linear Programming involves the planning of activities to
obtain an optimal result i.e. the result according to the
mathematical model among all feasible solutions. Linear
programming techniques solve product mix and distribution
problems of enterprises .linear programming problem used
to allocate scares resources in optimum manner in problem
of scheduling product mix etc.
A linear programming problem (LPP) consist of three
Components namely (1) Decision Variables (2) Objective
Function (3) and the Constraints (restrictions)
Decision Variable helps us to find optimization of
problem ( i.e. minimization/Maximization)
E.g. Maximize of Z = C1X1 + C2X2
Constraints part is of the following Forms
e.g. A11 X1 + A12 X2 < B1
A21 X1 +A22 X2 < B2
Sohan Singh Rawat, Vipin Kr Chaudhary
Non-Negative Variables
e.g. X1 0 X2 0 Simulation is a representation of real life problem through
6. QUEUING THEORY
This theory deals with the situation in which queue is
formed. There are different types of queue e.g. customer
waiting for services, machine waiting for repairmen and
aircraft waiting for landing etc[2]. The objective of a queuing
model is to find out the optimum services rate and the
number of servers so that the average cost of being in
queuing system and the cost of service are minimized. The
queuing models are basically relevant to service oriented
organizations and suggest ways and means to improve the
efficiency of the services. This model can be applied in the
field of transportation, daily life (restaurants, doctors clinic),
Industries (service of machines) and in the field of business.
7. TRANSPORTATION TECHNIQUE
Transportation technique is a special group of problems to
with linear programming and other quantitative techniques
have been extensively applied. These problems are typically
resource allocation problems with a minimization or
maximization goal, such as minimization of cost,
maximization of operating efficiency and so forth.
The physical distribution of product increases the cost.
Multi- plant companies with wide range of warehouse are
interested in minimizing the transportation cost. The main
objective is to minimize the level of distribution of supply
point to demand point that is made by organization for every
shipment. It is what warehouse should be within exact term
of it demand to make clear supply and reduce down the
overall cost of physical distribution. The transportation
method for solving the physical distribution or
transportation problem is an iterative, like the simple
method[12].
Start
Make the Initial
allocation
Make another
allocation
Stop the preceding
Is this allocation
more cost effective allocation is optimal
44
8. SIMULATION TECHNIQUE
model, which will react in the same manner as reality under
a given condition. Simulation is a numerical technique for
conducting experiments on a digital computer, which
involves certain types of mathematical and logical
relationship necessary to describe the behavior and structure
of a complex real word system over extended period of time
(T.H Taylor)
Simulation provides the alternative solution of the problem
and provides choices to the decision maker to select the best
solution for the problem. thus by applying this technique,
one can study the effects of environmental changes on the
operation of a system by making model of the system and
finding the effect of these changes on the systems behavior
.simulation is a quantitative technique developed for
studying alternative course of action by building a model of
that system and then conducting a series of repeated trial
and error experiments to predict the behavior of the system
over a period of time [9]. Simulation process for solving
problem -
Identifying/defining
the problem
Identifying the problem Applying
Formulating the
to test the model simulation
problem
technique
Again applying Find the solution
Validate simulation technique
for best selection
the result for new solution of decision
9. CPM/PERT
CPM & PERT are popular techniques for project
scheduling, these chart show a graphic representation of
timescale or work. But to show inter relationship amongst
various activities, this technique failed. To overcome such
limitations PERT and CPM were proposed in 1950s. PERT
was developed in 1950s by the U.S navy special projects
office in co-operation with Booz, Allen, and Hamiltan, a
management consulting firm. At about the same time in
1957 critical
No path method (CPM) was developed by J.E
Kelly of Remington raud and M.R walker of duPont[2].The
significance difference in CPM & PERT approaches is that
of time estimation for the different activities. CPM assumed
time estimates to be deterministic while PERT described it
as probabilistically.
These methods are applied to wide variety of problems in
industries and have found acceptance even in government
organizations. These include development of supersonic
planes, designing a prototype of a machine, cost controlling
Bookman International Journal of Accounts, Economics & Business Management, Vol. 1 No. 1 Sep. 2012
ISSN No. 2319-426X Bookman International Journals

and constructing of a building or highway. The project

scheduling by PERT/CPM consist of four main steps:
Planning
Scheduling
Allocation of Resources Decision Algorithms
Controlling

11.OPERATION RESEARCH IN DIFFERENT

10.DECISION MAKING SECTORS
Decision-making sometimes plays voluntarily and Finance, Budgeting and Investment
involuntarily, where one decide to take an action or to stand Marketing
in a situation and where the other does not know what it Physical Distribution
would be. Therefore, it implies that decision-making is
Purchasing
primarily a reasoning process. Reasoning is subjective by
Personnel
nature, which can be rational or irrational. All types of
human decision-making are basically logical processes. This Production
process has its roots in both the mindful as well as the Research and Development
unconscious mind and always involves three stages Supply and chain management
described below: Inventory planning
Product mix
Cognition Stage: It is the initial point of mind that Staff allocation and resource allocation
searched facts in the surroundings in decision making Capital Budgeting
process.

Assembly Stage: The assemblies of predictable facts 12.IMPACT OF OPERATION RESEARCH

obtained in the initial stage (cognition stage) are usable Impact of OR on agriculture: OR Technique like as linear
information to represent the second stage. programming, Dynamic programming and simulation
outlines some problems encountered with these. OR
Testing Stage: At this point the decision maker application for agriculture has mainly been developed by
evaluates the first stage in term of their relevancy to a university, colleges and state government. The agriculture is
given problem. Either a decision is made or not and any one of the Indian largest industries therefore OR could have
number of managerial action programs are the outcome made a significant contribution to decision making. The
of this intellectual process [12]. industry with large number of small individual business
does not permit any specialization in management function
The decision making task may be defined as input output
system as shown in fig. The following are few field were OR has its great impact
for decision making process:
Marketing
INPUT Decision Making OUTPUT Finance and investment O
Purchasing
Production
Research and Development
Managerial
Control System 13.FUTURE SCOPE OF OPERATION
RESEARCH
Every decision making task results in an output which is an OR is a team consisting of various skilled people from
evidence of the decision taken. On the input side a large different fields and works together. Therefore its scope and
number of variables may be listed. These variables can be application are very extensive [13].
classified in terms of the traditional factors. Underlying this
input-output system is feed back loop identified as OR and Industrial Management: Industry is a complex
managerial control systems. Its function is to optimize the composition consisting of different section and sub section
transformation of outputs into the desired output. In industry and department; it may consist of different section such as:
optimization means the minimization of costs and the Purchase department
maximization of profits subject to legal, social and Production department
ideological constraints [12]. The management decision Marketing department
making phases are shown in fig: Logistic department
Defined Quantitative
Conceptual Model
Problem Model
45
Sohan Singh Rawat, Vipin Kr Chaudhary
There is a chain of problems starting from purchase of raw
materials till the goods are distributed to the ultimate
customers.
Defense Operation: As we know army, navy and air force
are important group of defense. In each group training and
operations wings work together. Members of defense are
widely spread in various duties. In such department decision
making is a key issue, OR with its team of experts from
various fields can help defense department to take best
decision.
In LIC: In LIC OR can help to decide premium rate of
various policies.
Public System : The techniques of OR are widely applied
in various public services such as Railways, Postal
department, water supply , traffic
14.CONCLUSION
OR is basically a science of decision making. Decision
making becomes a problem when the availability of
alternatives is many. OR techniques are of great support to
make better and suitable decisions because all the methods
are scientific and systematic. LPP are widely used for
optimum allocation of resources. Queuing technique are
useful for analyzing situations in which waiting line forms.
Inventory model are widely used to control inventories.
Project model such as PERT (Program evaluation and
review technique) and CPM (Critical path method) are
useful for planning, controlling and scheduling.
Transportation model is useful for supply of goods from one
place to another. Simulation model is a representation
through real life problem, which will react in the same
manner as reality under a given condition.
46
15.REFERENCES
[1] Operations research - contemporary role in managerial
decision making: IJRRAS 3 (2) May 2010 Agarwal & al.PP-
200-208.
[2] Chawla KK, Gupta Vijay, Operation Research quantitative
Analysis for Management, 2008.
[3] Hiller F S, Gerald J. Lieberman, Introduction to Operation
Research, Eight editions, 2010.
[4] Kanti Swarup, P.K Gupta, Operation Research, Sultan chand
&sons, fifth edition 2010.
[5] Ghosh J.K., Mahalanobis and the art and science of statistics:
The early days, Indian Journal of History of Science, Vol.
29(1), 1994, pp.89-98.
[6] Buffa, E.S., Sarin, R.K., Modern Production/Operation
Management, John Wiley and Sons, Eighth Edition.
[7] Sharma, J.K., Quantitative Techniques: Theory and
Applications, Macmillan, Third Edition.
[8] Taha, H.A., Natarajan, A.M., Balasubramanie, P., Tamilarasi
A., Operation Research: An Introduction, Pearson Education,
Eighth Edition, 2008.
[9] Tulsian P.C, Pandey Vishal, Quantitaive echnique Theory and
Numerical, pearson pb, 2011.
[10] Chary, S. N., Production and Operation Management, Tata
McGraw-Hill Publishing Company Limited, Second edition
2000.
[11] Ghosh J.K., Mahalanobis and the art and science of statistics:
The early days, Indian Journal of History of Science, Vol.
29(1), 1994, pp.89-98.
[12] SIM, self instructional material for ptu students 2009.
[13] Satyadevi.C, Quantitative Techniques, S.Chand & Com.LTD.
2009.
[14] Kapoor, V.K., Operation Research, Sultan Chand and Sons,
Seventh Edition, 2001.
[15] Mahadevan, B., Operations Management: Theory and
Practice, Pearson Education, Third edition, 2008.