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ESSENTIALS OF
OPERATIONS RESEARCH
Chapter 1:
Introduction to Operations Research

The term Operations Research (OR) describes the discipline that is

focused on the application of information technology for informed
decision-making. In other words, OR represents the study of
optimal resource allocation. The goal of OR is to provide rational
bases for decision making by seeking to understand and structure
complex situations, and to utilize this understanding to predict
system behavior and improve system performance.

Prof.(Dr.) Dalgobind Mahto

1/12/2012
 CHAPTER 1

INTRODUCTION TO OPERATIONS RESEARCH

1.0 OVERVIEW OF OPERATION RESEARCH

Now a day Operations research has been applying by every large organization in developed nation
and developing country in every department at all level. Availability of faster and flexible
computing facilities and the number of qualified OR professionals have enhanced the acceptance
and popularity of the discipline. In the country like USA and the UK growth of OR has not been
limited, now it has reached to many countries including India.

Operational research encompasses a wide range of problem-solving techniques and methods

applied in the detection of improved decision-making and efficiency. Some of the tools used by
operational researchers are statistics, optimization, probability theory, queuing theory, game theory,
graph theory, decision analysis, mathematical modeling and simulation. Because of the
computational nature of these fields, OR also has strong ties to science.

Application work in operational research, like other engineering and economics' disciplines, attempts
to use models to make a practical impact on real-world problems.

1.1 DEFINITION OF OR

The term Operations Research (OR) describes the discipline that is focused on the application of
information technology for informed decision-making. In other words, OR represents the study of
optimal resource allocation. The goal of OR is to provide rational bases for decision making by
seeking to understand and structure complex situations, and to utilize this understanding to predict
system behavior and improve system performance. Much of the actual work is conducted by using
analytical and numerical techniques to develop and manipulate mathematical models of
organizational systems that are composed of people, machines, and procedures. Hence, it is

1
important to give few opinions about the definitions of OR. OR is a Mathematical or scientific
analysis of a process or operation, used in making decisions

According to Moarse and Kimbal (1946) “OR is a scientific method of providing executive
department with a quantitative basis for decision regarding the operations under their control.

Similarly, according to Dictionary of Military and Associated Terms US Department of Defense

2005 “The analytical study of military problems undertaken to provide responsible commanders and
staff agencies with a scientific basis for decision on action to improve military operations is called
OR”. It is also called operational research; operations analysis.

According to Britannica Concise Encyclopedia, “OR is the application of scientific methods to

management and administration of military, government, commercial, and industrial systems. It is
characterized by a systems orientation, or systems engineering, in which interdisciplinary research
teams adapt scientific methods to large-scale problems that must be modeled, since laboratory
testing is impossible.

In the same way, McGraw-Hill Science & Technology Encyclopedia defines OR as the application
of scientific methods and techniques to decision-making problems. A decision-making problem
occurs where there are two or more alternative courses of action, each of which leads to a different
and sometimes unknown end result. Operations research is also used to maximize the utility of
limited resources. The objective is to select the best alternative, that is, the one leading to the best
result.

In its essence, an operation research (OR), is the branch of applied mathematics that deals with
optimizing the use of available resources, given limitations and constraints. A collection of several
analytical techniques is generally referred to as operations research.

Other prominent definitions given by experts of OR are as follows

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  According to O.R. Society of America: O.R. is concerned with scientifically deciding how to
best design and operate man-machine systems usually under conditions requiring the
allocation of scarce resources. -
 O.R. is the art of winning wars without actually fighting. - Aurther Clarke
 O.R. is the art of giving bad answers to problems which otherwise have worse answers. -T.L.
Saaty
 O.R. is applied decision theory. It uses any scientific, mathematical or logical means to
attempt to cope with the problems that confront the executive, when he tries to achieve a
thorough-going rationality in dealing with his decision problems. -D.W. Miller and M.K.
Starr
 O.R. is a scientific approach to problems solving for executive management. -H.M. Wagner
 O.R. is the application of scientific methods, techniques and tools to problems involving the
operations of a system so as to provide those in control of the system with optimum solution
to the problem. -Churchman, Ackoff and Arnoff
 O.R. is scientific methodology-analytical, experimental, quantitative-which by assessing the
overall implication of various alternative courses of action in a management system, provides
an improved basis for management decisions. –Pocock

1.2 History: The Development of OR

The development of operations research as a science consists of the development of its methods,
concepts, and techniques. As a formal discipline, operational research has expanded into a field
widely used in industries ranging from petrochemicals to airlines, finance, logistics, and government,
moving to a focus on the development of mathematical models that can be used to analyze and
optimize complex systems.
The ambiguous term Operations Research (OR) was coined during World War II, when the British
Military Management called upon a group of scientists together to apply a scientific approach to the
study of military operations to win the battle. Due to the availability of faster and flexible computing
facilities and the no. of qualified O.R. professionals, it is now widely used in military, business,
industry, transportation, public health etc. Since its birth in the 1940 & apos;s, OR has been widely
recognized as an important approach to decision-making in the management of all aspects of an
organization. Operations Research as a new field started in the late 1930's and has grown and

3
expanded tremendously in the last 30 years. The British army was conducting exercises on the radar
system for detecting the aircrafts.
On 15th May 1940, with German forces advancing rapidly in France, Stanmore Research Section
was asked to analyze a French request for ten additional fighter squadrons. In 1941 Operational
Research Section (ORS) was established in Coastal Command which was to carry out some of the
most well-known OR work in World War II. Thus OR as a separate field of specialization was born!
The Operations research is usually the mathematical treatment, analysis of a process, problem, or
operation to determine its purpose and effectiveness and to gain maximum efficiency. The operation
technique is utilized by functional groups such as Industrial Engineering in effort to support
Operations Managers to make economically feasible decisions on a range of systematic challenges.
The main responsibilities of operations management are to manage and operate as efficiently and
effectively as possible with the given resources. Quantitative methods which comprises of
Simulation, Linear and nonlinear programming, Queuing Theory and Stochastic Modeling, are well-
accepted techniques by both research and practice communities.
Functional entities such as Industrial or Systems Engineering use methodologies to provide feasible
alternatives for operations mangers to decide on. An important component of decision-making
process is verifying and validating alternatives, which typically involve decision makers, engineers
or analysts.
In India, Operation Research came into existence in 1949 when an Operation Research unit was
established at Regional Research Laboratory, Hyderabad. Also Prof. R.S.Verma set up an Operation
Research team at Defense Science Laboratory to solve problems of store, purchase and planning.
During the 1950‟s there was substantial progress in the application of Operation Research
techniques for civilian activities along with a great interest in the professional development and
education in Operation Research. Many colleges and universities introduced Operation Research in
their curricula. They were generally schools of engineering, public administration, business
management, applied mathematics, economics, computer science etc.

In 1953, Prof. P.C. Mahalanobis 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

4
expensive projects of that time. The real progress of Operation Research in the national field was
approved 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.

1.2.1 EVOLUTION OF OPERATION RESEARCH AS AN ACADEMIC DISCIPLINE

Because of this historical legacy, operational research was accepted as a legitimate management tool
in defense research establishments and subsequently for efficient resource planning and allocation by
Government departments. Business supported the accelerated growth of this discipline by funding
real and potential applications. Over period of time, a symbiotic relationship between government,
business and academia ensured the growth and expansion of the discipline for their mutual benefit.
During the last 50 years, operational research has evolved as a multidisciplinary function involving
economics, mathematics, statistics, industrial engineering and management.

1.3 MANAGEMENT SCIENCE

In 1967 Stafford Beer characterized the field of management science as "the business use of
operations research. However, in modern times the term management science may also be used to
refer to the separate fields of organizational studies or corporate strategy. It uses various scientific
research-based principles, strategies, and analytical methods including mathematical modeling,
statistics and numerical algorithms to improve an organization's ability to enact rational and
meaningful management decisions by arriving at optimal or near optimal solutions to complex
decision problems. In short, management sciences help businesses to achieve their goals using the
scientific methods of operational research.
The terms Operations Research and Management Science tend to be used synonymously.
Operations research refers to scientific methods (statistical and mathematical modeling, experiments,
simulation, and optimization) applied to the solution of complex business problems. Operations
research is about deriving optimal solutions to maximize sales or profits and/or to minimize costs,
losses, or risks

5
The management scientist's mandate is to use rational, systematic, science-based techniques to
inform and improve decisions of all kinds. Management science is concerned with developing and
applying models and concepts that may prove useful in helping to illuminate management issues and
solve managerial problems, as well as designing and developing new and better models of
organizational excellence. The application of these models within the corporate sector became
known as Management science.

Table 1.1: Brief Time Line for History of OR

Year Development taken place for and by

1600’s Expected Values (Blaise Pascal); Newton’s Method for finding a minimum of a function
(Isaac Newton)
1700’s Bayes Rule (Thomas Bayes); Least Squares (Carl F. Gauss)
1826 Solution of linear equations (Carl F. Gauss)
1890 Scientific Management (Frederick W. Taylor- known as the father of Scientific
Management – always looking for the “one best way”)
1900 Gantt Charts (Henry Gantt, Frederick W. Taylor)
1902 Solution of inequality systems (J. Farkas)
1936 The term “operational research” first used by British military applications
1939 Optimality condition for constrained problems (W. Karush)
1941 Transportation Problem (F. L. Hitchcock)
1942 UK & US Navy and Air Force start OR groups
1944 Utility Theory (John von Neumann, Oskar Morgenstern)
1944 Exponential Smoothing (R. Brown)
1946 Methods of Operations of Operations Research OEG Report (Philip M. Morse & G. E.
Kimball) – classified until 1951
1947 Linear programming model (Simplex method) (George B. Dantzig)
1947 Theory of Games & Economic Behavior (von Neumann & Morgenstern)
1948 First course in OR at MIT
1949 Monte Carlo simulation (S. M. Ulam, J. von Neumann)
1950 Shortest-path problem

6
1950 First OR journal: Operations Research Quarterly (UK) – OR in US in 1952
1951 Nonlinear Programming (optimality condition for constrained problems) (H. Kuhn & A.
Tucker)
1960 Decision Trees
1.4 TECHNIQUES OF OR USED IN MANAGEMENT SCIENCE
Some of the fields that are considered within Management Science include:
 Decision analysis
 Engineering
 Forecasting
 Game theory
 Industrial engineering
 Mathematical modeling
 Optimization
 Probability and statistics
 Project management
 Simulation
 Social network
 Transportation forecasting models
 Supply chain management

APPLICATIONS OF MANAGEMENT SCIENCE

The application of OR as management science are as follows
 Scheduling of activities which includes manpower and resources
 Selection of right place for new facilities such as a warehouse, factory or fire station
 Identifying future development paths for parts
 Establishing the information system and needs analysis with appropriate utility mechanism,
and
 Developing strategies for enriching information systems

1.5 JOURNALS OF OR
There are twelve scholarly journals for operations research. They are:

7
  Decision Analysis
 Information Systems Research
 INFORMS Journal on Computing
 INFORMS Transactions on Education
 Interfaces
 Management Science
 Manufacturing & Service Operations Management
 Marketing Science
 Mathematics of Operations Research
 Operations Research
 Organization Science
 Transportation Science.
1.5.1 Other Journals of OR
The other journals are the following:
 INFOR Journal
 Journal of Defense Modeling and Simulation (JDMS)
 Journal of the Operational Research Society (JORS)
 Journal of Simulation (JOS)
 Mathematical Methods of Operations Research (MMOR)
 Military Operations Research (MOR)
 Opsearch
 OR Insight
 TOP: official journal of the Spanish Society of Statistics and Operations Research.

1.6 FEATURES / CHARACTERISTICS OF OR

The significant features of operations research include the followings:

(1). Decision-making. Every industrial organization faces multi facet problems to identify best
possible solution to their problems. OR aims to help the executives to obtain optimal solution
with the use of OR techniques. It also helps the decision maker to improve his creative and

8
 judicious capabilities, analyze and understand the problem situation leading to better control,
better co-ordination, better systems and finally better decisions.

(2).Scientific Approach. OR applies scientific methods, techniques and tools for the purpose of
analysis and solution of the complex problems. In this approach there is no place for guess work
and the person bias of the decision maker.

(3).Inter-disciplinary Team Approach. Basically the industrial problems are of complex nature
and therefore require a team effort to handle it. This team comprises of scientist/mathematician
and technocrats. Who jointly use the OR tools to obtain a optimal solution of the problem. The
tries to analyze the cause and effect relationship between various parameters of the problem and
evaluates the outcome of various alternative strategies.

(4).System Approach. The main aim of the system approach is to trace for each proposal all
significant and indirect effects on all sub-system on a system and to evaluate each action in terms
of effects for the system as a whole. The interrelationship and interaction of each sub-system can
be handled with the help of mathematical/analytical models of OR to obtain acceptable solution.

(5). Use of Computers. The models of OR need lot of computation and therefore, the use of
computers becomes necessary. With the use of computers it is possible to handle complex
problems requiring large amount of calculations. The objective of the operations research models
is to attempt and to locate best or optimal solution under the specified conditions. For the above
purpose, it is necessary that a measure of effectiveness has to be defined which must be based on
the goals of the organization. These measures can be used to compare the alternative courses of
action taken during the analysis.

1.7 THE METHODOLOGY / PHASES OF OPERATION RESEARCH STUDY

When OR is used to solve a problem of an organization, the following seven step procedure
should be followed:
Step 1. Formulate the Problem

9
 OR analyst first defines the organization's problem. Defining the problem includes specifying
the organization's objectives and the parts of the organization (or system) that must be
studied before the problem can be solved.

Step 2. Observe the System

Next, the analyst collects data to estimate the values of parameters that affect the
organization's problem. These estimates are used to develop (in Step 3) and evaluate (in Step
4) a mathematical model of the organization's problem.

Step 3. Formulate a Mathematical Model of the Problem

The analyst, then, develops a mathematical model (in other words an idealized
representation) of the problem. In this class, we describe many mathematical techniques that
can be used to model systems.

Step 4. Verify the Model and Use the Model for Prediction
The analyst now tries to determine if the mathematical model developed in Step 3 is an
accurate representation of reality. To determine how well the model fits reality, one
determines how valid the model is for the current situation.

Step 5. Select a Suitable Alternative

Given a model and a set of alternatives, the analyst chooses the alternative (if there is one)
that best meets the organization's objectives. Sometimes the set of alternatives is subject to
certain restrictions and constraints. In many situations, the best alternative may be impossible
or too costly to determine.

Step 6. Present the Results and Conclusions of the Study

In this step, the analyst presents the model and the recommendations from Step 5 to the
decision making individual or group. In some situations, one might present several
alternatives and let the organization choose the decision maker(s) choose the one that best
meets her/his/their needs.

10
 After presenting the results of the OR study to the decision maker(s), the analyst may find
that s/he does not (or they do not) approve of the recommendations. This may result from
incorrect definition of the problem on hand or from failure to involve decision maker(s) from
the start of the project. In this case, the analyst should return to Step 1, 2, or 3.

Step 7. Implement and Evaluate Recommendation

If the decision maker(s) has accepted the study, the analyst aids in implementing the
recommendations. The system must be constantly monitored (and updated dynamically as the
environment changes) to ensure that the recommendations are enabling decision maker(s) to
meet her/his/their objectives.

The summary of steps have been depicted in Fig1.1 below

Fig.1.1: Flow chart of Methodology of OR

1.8 MATHEMATICAL MODELS OF OR: (Basic facts about O.R as a concept)

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"OR is the representation of real-world systems by mathematical models together with the use of
quantitative methods (algorithms) for solving such models, with a view to optimizing."
We can also define a mathematical model as consisting of:
 Decision variables, which are the unknowns to be determined by the solution to the model.
 Constraints to represent the physical limitations of the system
 An objective function
 An optimal solution to the model is the identification of a set of variable values which are
feasible (satisfy all the constraints) and which lead to the optimal value of the objective
function.
 In general terms we can regard OR as being the application of scientific methods / thinking to
decision making.
 Underlying OR is the philosophy that: decisions have to be made; and using a quantitative
(explicit, articulated) approach will lead to better decisions than using non-quantitative
(implicit, unarticulated) approaches.
 Indeed it can be argued that although OR is imperfect it offers the best available approach to
making a particular decision in many instances (which is not to say that using OR will
produce the right decision).

1.9 SCOPE AND APPLCATION OF OPERATIONS RESEARCH

As presented in the earlier paragraphs, the scope of OR is not only confined to any specific agency
like defense services but today it is widely used in all industrial organizations. It can be used to find
the best solution to any problem be it simple or complex. It is useful in every field of human
activities, where optimization of resources is required in the best way. Thus, it attempts to resolve
the conflicts of interest among the components of organization in a way that is best for the
organization as a whole. The main fields where OR is extensively used are given below, however,
this list is not exhaustive but only illustrative.

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National Planning and Budgeting

OR is used for the preparation of Five Year Plans, annual budgets, forecasting of income and
expenditure, scheduling of major projects of national importance, estimation of GNP, GDP,
population, employment and generation of agriculture yields etc.

Defense Services

Basically formulation of OR started from USA army, so it has wide application in the areas such as:
development of new technology, optimization of cost and time, tender evaluation, setting and layouts
of defense projects, assessment of “Threat analysis”, strategy of battle, effective maintenance and
replacement of equipment, inventory control, transportation and supply depots etc.

Industrial Establishment and Private Sector Units

OR can be effectively used in plant location and setting finance planning, product and process
planning, facility planning and construction, production planning and control, purchasing,
maintenance management and personnel management etc. to name a few.

R & D and Engineering

Research and development being the heart of technological growth, OR has wide scope for and can
be applied in technology forecasting and evaluation, technology and project management,
preparation of tender and negotiation, value engineering, work/method study and so on.

Business Management and Competition

OR can help in taking business decisions under risk and uncertainty, capital investment and returns,
business strategy formation, optimum advertisement outlay, optimum sales force and their
distribution, market survey and analysis and market research techniques etc.

13
Agriculture and Irrigation

In the area of agriculture and irrigation also OR can be useful for project management, construction
of major dams at minimum cost, optimum allocation of supply and collection points for
fertilizer/seeds and agriculture outputs and optimum mix of fertilizers for better yield.

Education and Training

OR can be used for obtaining optimum number of schools with their locations, optimum mix of
students/teacher student ratio, optimum financial outlay and other relevant information in training of
graduates to meet out the national requirements.

Transportation

Transportation models of OR can be applied to real life problems to forecast public transport
requirements, optimum routing, forecasting of income and expenses, project management for
railways, railway network distribution, etc. In the same way it can be useful in the field of
communication.

Home Management and Budgeting

OR can be effectively used for control of expenses to maximize savings, time management, work
study methods for all related works.

1.10 APPLICATION OF VARIOUS OPERATION RESEARCH TECHNIQUES

Operation Research, in today’s context, is comprehensively used in industry, business,

government, military and agriculture operations. The significant techniques of OR which has
been successfully applied to decision making are the following:

 Linear Programming. Linear Programming (LP) is a mathematical technique. It is the

process of taking various linear inequalities relating to some situation, and finding the "best"
value obtainable under those conditions. In "real life", linear programming is part of a very

14
 important area of mathematics called "optimization techniques”. It takes all kinds of factors
into consideration to determine the best combination of a purchasing or manufacturing
process, to either maximize profit, minimize cost or some other goal. Therefore, LP is a very
important part of any business.
 Transportation Problem. The transportation problem is a special type of linear
programming problem, where the objective is to minimize the cost of distributing a product
from a number of sources to a number of destinations. Transportation helps shape an area’s
economic health and quality of life.
 Assignment Problem. In a few words, when the problem involves the allocation of n
different facilities to n different tasks, it is often termed as an assignment problem.
Assignment deals with the question how to assign n object to m other object in an injective
fashion in the best possible way. An assignment problem is specified by its two component:
the assignment which represent the underlying combinatorial structure and the objective
function to be optimized which model “the best possible way”
 Queuing Theory. The queuing problem is identified by the presence of a group of customers
who arrive randomly to receive some service. Queuing theory deals with problems which
involve queuing (or waiting). This theory helps in calculating the expected number of people
in the queue, expected waiting time in the queue, expected idle time for the server, etc.

 Game Theory. : Game theory is the formal study of decision-making where several players
must make choices that potentially affect the interests of the other players. It is used for
decision making under conflicting situations where there are one or more opponents (i.e.,
players). In the game theory, we consider two or more persons with different objectives, each
of whose actions influence the outcomes of the game. Game theory is a mathematical method
for analyzing calculated circumstances, such as in games, where a person’s success is based
upon the choices of others.

 Inventory Control Models. The literal meaning of inventory is “idle but usable resources.
Thus, this model is concerned with the acquisition, storage, handling of inventories so as to
ensure the availability of material whenever needed and minimize wastage and losses.

15
 Goal Programming. It is a powerful tool to tackle multiple and incompatible goals of an
enterprise. Goal programming models are very similar to linear programming models but
whereas linear programs have one objective goal programs can have several objectives.
 Simulation. It is a technique that involves setting up a model of real situation and then
performing experiments. Simulation is used where it is very risky, cumbersome, or time
consuming to conduct real experiment to know more about a situation.
 Nonlinear Programming. These methods may be used when either the objective function or
some of the constraints are not linear in nature. Non-Linearity may be introduced by factors
such as discount on price of purchase of large quantities.

 Integer Programming. These methods may be used when one or more of the variables can
take only integral values. The Integer Programming problem (IP) is that of deciding whether there
exists an integer solution to a given set of m rational inequalities on n variables. E.g. the number of
trucks in a fleet, the number of generators in a power house, etc.

 Dynamic Programming. Dynamic programming is a methodology useful for solving

problems that involve taking decisions over several stages in a sequence. One thing common
to all problems in this category is that current decisions influence both present & future
periods.
 Sequencing Theory. It is related to Waiting Line Theory. It is applicable when the facilities
are fixed, but the order of servicing may be controlled. The scheduling of service or
sequencing of jobs is done to minimize the relevant costs.
 Replacement Models. These models are concerned with the problem of replacement of
machines, individuals, capital assets, etc. due to their deteriorating efficiency, failure, or
breakdown.
 Network Scheduling-PERT and CPM. Network scheduling is a technique used for
planning, scheduling and monitoring large projects. Such large projects are very common in
the field of construction, maintenance, computer system installation, research and
development design, etc.
 Information Theory. It is an analytical process transferred from the electrical
communications field to operations research. It seeks to evaluate the effectiveness of
information flow within a given system and helps in improving the communication flow.

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1.11. ROLE OF COMPUTERS IN OPERATION RESEARCH

As has been presented earlier that OR tries to find optimal solutions with multiple variables. In most
of the cases a large number of iterations are required to reach optimal solution. Manually this task
becomes time consuming and single mistake at any point can generate erroneous results. With the
development of computers and P.C’s this has reduced manual efforts considerably and solutions can
be obtained in a short period of time and possibility of errors is also minimized considerably.
Storage of information/data is easy and faster with the use of computers because of its memory. The
computational time requirements are also less and no paper work is required. Transfer of data from
one place to another is also possible through net/computers. The reliability of solutions is also high.
For the large size problems, where simulation was to be used, it was not possible to carry it out
manually, which is now possible with the use of computers. To handle linear programming problem
with multiple variables use to be cumbersome and time taking; can be done at wink of moment
without any manual efforts.

Some of the widely used OR software’s have been given below:

SAS/OR software: SAS/OR software provides a powerful array of optimization, simulation and
project scheduling techniques to identify the actions that will produce the best results, while
operating within resource limitations and tight restrictions. It enables organizations to consider more
alternative actions and scenarios, and determine the best allocation of resources and the best plans
for accomplishing goals.

QSB+ software: QSB+ stands for Quantitative System for Business Plus. It is a software package
developed by Chang and Sullivan for problem solving algorithms for OR as well as modules of
statistics, non –linearity programming and financial analysis.

LINDO: It is a very popular OR software package and is used. LINDO is the abbreviated form of
Linear, Interactive, and Discrete Optimizer. It is an interactive linear, quadratic, and integer
programming system useful to a wide range of users. LINDO can be used

 to solve interactive linear, quadratic, general integer and zero-one integer programming
programs up to 500 rows and 1,000 columns

17
  To perform sensitivity analysis and parametric programming.

CPLEX: CPLEX is optimization software with such features as infeasible problem analysis,
automatic and dynamic algorithm parameter control, input/output options and post solution
information and analysis for objective function value, solution variable and slack values, sensitivity
ranges, basic variables and constraints, solution infeasibilities, iteration/node count, solution time,
and process data information.

CPLEX solves linear and convex quadratic programs by simplex or interior-point methods, and
linear and convex quadratic integer programs by a branch-and-bound procedure

GUROBI: Gurobi solves linear programs by simplex and interior-point methods, and linear mixed-
integer programs by a branch-and-bound procedure. Support for convex quadratic programs, both
continuous and mixed-integer, is planned for version 4.0 to be released in November 2010.

LIPSOL: LIPSOL is a Mat lab-based package for solving linear programs by interior-Point methods

1.12 WHERE DOES OR’S FUTURE LIE?

Today there are 28 countries in the European federation of OR Societies (EURO) and 45 in the
International Federation (IFORS). The application reality is a little more complex and a little less
dramatic. The model of OR as an activity conducted for executives by internal OR groups with a
good deal of choice as to which issue to tackle. A new model of highly specific investigations and
developments conducted by external specialist firms and management consultancies is alive and
flourishing.

This is not an unequivocally happy outcome. There was, and still is, great merit in the sort of
grounded, detailed investigation that is the hallmark of good traditional OR. The technically
efficient, goal oriented, socially aware OR consultants of tomorrow may get things done and satisfy
their clients but they may miss the potential implications or the valuable insight as they rush to the
next challenge.

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ADVANTAGES OF OPERATION RESEARCH

The significant advantages of OR are enumerated below

 OR will provide a tool for scientific analysis.

 It provides solution for various business problems.
 It enables proper deployment of resources.
 This helps in minimizing waiting and servicing costs.
 Management decides with the help of OR when to buy and how much to buy?
 Optimum strategy is chosen.
 Renders great aid in optimum resource allocation.
 Makes possible the process of decision making.
 Management can know the reactions of the integrated business systems.
 Prepares future managers.

1.13 LIMITATIONS OF OPERATIONS RESEARCH

OR has some limitations. However, the limitations are related to the problem of model building and
the time and money factors involved in application rather than its practical utility. Some of them are
as follows:
 Magnitude of Computation. The models of OR strive to find out optimal solutions taking
into account all the factors. These factors may be huge and state them in quantity and
establish relationships among the factors require ample calculations which can be effectively
solved by computers.
 Non-Quantifiable Factors. OR provides solution only when all elements related to a
problem can be quantified. All relevant variables do not lend themselves to quantification.
Factors which cannot be quantified find no place in OR study.
 Distance between User and Analyst. OR being specialist’s job requires a mathematician or
statistician, who might not be aware of the business problems. Similarly, a manager fails to
understand the complex working of OR. Thus there is a gap between the User and Analyst.

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  Time and Money Costs. OR models are a costly proposition as they require time and money
for scientific application. The computational time increases depending upon the size of the
problem and accuracy of results desired.
 Implementation. Implementation of any decision is a delicate task. It must take into account
the complexities of human relations and behavior. Sometimes, resistance is offered due to
psychological factors which may not have any bearing on the problem as well as its solution.
 Difficult to Balance the Requirement: It is often difficult to balance the requirement of
reality and those of simplicity.
 Poor and/or Inaccurate Data: The quality of data collection may be poor and/or inaccurate.
 Lack of Suitable Solution Techniques: In many cases, the solution of Operations Research
problem is restricted by the lack of suitable solution techniques. As example, the derived
solution may be sub-optimal i.e. the boundaries of the problem may be open.
 Conflict: An Operations Research model is static but the solution it imitates is dynamics.
Conflict between conclusion reached by the Operations Research analyst and the opinion of
time managers as to the best course of action.

1.14 CONCLUSION

The OR profession was for a time the centre of managerial attention. It had its golden era. It is now a
small professional grouping which has found its niche. Few people realize that OR lies behind many
every day events, providing the algorithms for airline reservation systems, checking the credit
worthiness of loan applicants, and calculating the replenishment quantities required by supermarkets.
Despite its important role in today’s society OR lacks self-importance, it includes many, diverse
interests and has demonstrated a certain capacity for survival.

QUESTION BANK 1.1

Q1: What is the origin and development of OR. How computer has helped in popularizing
operation research? What are the limitation of OR.
Q2: Define OR. What are the characteristics and limitation of OR technique.
Q3: Explain the main characteristics of operation research with suitable example.
Q4: Define operation research. Give features of OR. Briefly discuss technique and tools of OR.

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 Q5: What s the role of decision –making in OR? Define scientific decision making and explain
how it affects OR decisions. And also explain scope and limitation of OR.
Q6: What is the significance and scope of OR in modern management?
Q7: Define OR and discuss its application in brief.
Q8: Discuss the various phase in solving OR problem.
Q9: What is the role of OR in decision-making?
Q10: Define a scientific model. Discuss in detail three type of model with special emphasis on the
important logical properties and relationships the three type bear to each other and how to
modeled entities.
Q11: Explain the different type of model used in OR. Explain briefly the general method for
solving these OR models.
Q12: What are the essential characteristics of OR? Enumerate various types of models. Give a
brief account of method used in model formulations.
Q13 (a): Why is the study of operation research important to decision maker.
(b). Operation Research increase creative and judicious capabilities of a decision maker.
Comment
Q14: Quantities technique complement the expensive and judgment of an executive in decision
making. They do not replace it. Discuss
Q15: Comment of the following statement:
(A). OR is a bunch of mathematical technique:
(b). OR is no more than a quantitative analysis of the problem.
(c): OR advocates a system’s approach and is concerned with optimization. It provides a
quantitative analysis for decision making.
(d). OR has been defined semi –facetiously as the application of big minds to small
problems.
Q16: Explain, how and why OR method have valuable in aiding executive decision.

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