Operations Research

Maumita Roy

O.R. Society of America gave the following

definition of Operations Research:

Operations Research is the application of

scientific methods, techniques and tools
to operations of a system with optimum
solution to the problem.

Optimisation = Efficiency + Savings

Kelloggs
o The largest cereal producer in the world.
o LP-based operational planning (production, inventory,
distribution) system saved $4.5 million in 1995.
Procter and Gamble
o A large worldwide consumer goods company.
o Utilised integer programming and network optimization
worked in concert with Geographical Information System
(GIS) to re-engineering product sourcing and distribution
system for North America.
o Saved over $200 million in cost per year.
Hewlett-Packard
o Robust supply chain design based on advanced inventory
optimization techniques.
o Realized savings of over $130 million in 2004

Distinct Nature of OR

Simultaneously analyzes all variables

Seeks global, balanced solutions defined by:
o Multiple criteria
o Multiple, conflicting objectives
Helps mitigate risk and reduces uncertainty
by modeling different scenarios
Goes beyond single-issue management

Charles Babbage - The Father of

OR
DOB: 26 Dec 1791.
DOD: 18 Oct 1871.
His implementation of OR
into
the
cost
of
transportation
and
sorting of mails.

Patrick Blackett - Implementer

DOB: 18 Nov 1897.
DOD: 13 July 1974.
He advised the British
government on military
strategy.
OR gained importance
after
its
successful
application in World War
II.

Factors behind growing importance of

O.R. in theory and practice of
management:

Complex decision problems

Availability of quantitative models
Availability of high speed computers

Need for OR

Consistently delivers significant value to business processes.

Optimum utilization of limited equipments, facilities, money
and personnel.

Improvement in business performance and decision making.

Finding new opportunities to reduce cost or investment.

Assessment of likely outcomes of decision alternatives and

uncovering better alternatives.
Better basis for more accurate forecasting and planning.

Quantitative measures for managing and reducing risks.

Increasing speed and decreasing delays.

Examples of applications in which operations

research is currently used include:

Project planning

designing the layout of a factory for efficient flow of

materials

constructing a telecommunications network at low

cost while still guaranteeing QoS (quality of service)
or QoE (Quality of Experience)

road traffic management and 'one way' street

allocations i.e. allocation problems.

determining the routes of school buses

designing the layout of a computer chip

managing freight transportation and delivery systems

scheduling:

managing the flow of raw materials and products in a

supply chain

o
o
o
o
o

personnel staffing
manufacturing steps
project tasks
network data traffic: these are known as queuing models or
queuing systems.
sports events and their television coverage

blending of raw materials in oil refineries

Scope

Strategic planning
Pricing and revenue management
Logistics and site location
Optimization
Scheduling
Portfolio management
Inventory analysis
Forecasting
Sales analysis
Replacement and maintenance
Risk analysis

Limitations

Simplification for problem solution

Expensive for one time problems
Models are not absolute
Magnitude of computation
Distance between managers and
Operations Research

Thank you