Krunal Ved, MBA, 2nd Sem, TAPMI School of Business, MUJ

INDEX
1. Evolution 2. Role in Decision Making 3. Classification 4. Limitation 5. Modern Techniques

1. Evolution
Operation Research is a fairly new discipline. Whereas 70 years ago it could have been promising to study mathematics, physics or engineering (for example) at university it would not have been possible to study OR, indeed the term OR did not exist then. It was only really in the late 1930's that operational research began in a systematic fashion, and it started in the UK. Early in 1936 the British Air Ministry established Bawdsey Research Station, on the east coast, near Felixstowe, Suffolk, as the center where all pre-war radar experiments for both the Air Force and the Army would be carried out. Experimental radar equipment was brought up to a high state of reliability and ranges of over 100 miles on aircraft were obtained. It was also in 1936 that Royal Air Force (RAF) Fighter Command, charged specifically with the air defense of Britain, was first created. It lacked however any effective fighter aircraft - no Hurricanes or Spitfires had come into service - and no radar data was yet fed into its very elementary warning and control system. It had become clear that radar would create a whole new series of problems in fighter direction and control so in late 1936 some experiments started at Biggin Hill in Kent into the effective use of such data. This early work, attempting to integrate radar data with ground based observer data for fighter interception, was the start of OR. The first of three major pre-war air-defense exercises was carried out in the summer of 1937. The experimental radar station at Bawdsey Research Station was brought into operation and the information derived from it was fed into the general airdefense warning and control system. From the early warning point of view this exercise was encouraging, but the tracking information obtained from radar, after filtering and transmission through the control and display network, was not very satisfactory. On May 15th 1940, with German forces advancing rapidly in France, Stanmore Research Section was asked to analyze a French request for ten additional fighter squadrons (12 aircraft a squadron) when losses were running at some three squadrons every two days. They prepared graphs for Winston Churchill (the British Prime Minister of the time), based upon a study of current daily losses and replacement rates, indicating how rapidly such a move would deplete fighter strength. No aircraft were sent and most of those currently in France were recalled. This is held by some to be the most strategic contribution to the course of the war made by OR (as the aircraft and pilots saved were consequently available for the successful air defense of Britain, the Battle of Britain). In 1941 an 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

Although scientists had (plainly) been involved in the hardware side of warfare (designing better planes, bombs, tanks, etc) scientific analysis of the operational use of military resources had never taken place in a systematic fashion before the Second World War. Military personnel, often by no means stupid, were simply not trained to undertake such analysis. These early OR workers came from many different disciplines, one group consisted of a physicist, two physiologists, two mathematical physicists and a surveyor. What such people brought to their work were "scientifically trained" minds, used to querying assumptions, logic, exploring hypotheses, devising experiments, collecting data, analyzing numbers, etc. Many too were of high intellectual caliber (at least four wartime OR personnel were later to win Nobel prizes when they returned to their peacetime disciplines). By the end of the war OR was well established in the armed services both in the UK and in the USA.

2. Role in Decision Making

In recent years the statisticians, engineers, economist and students of management have placed increasing emphasis on decision-making under conditions of uncertainty. Much of life, of course, involves making choices under uncertainty, which is, choosing from some set of alternatives courses of action in situation where we are uncertain about the actual consequences that will occur for each course of action being considered. In todays fast-moving technological world, the need for sound, rational decision making by business, industry and government is vividly apparently. Considered, for example, the area of design and development of new improved products and equipment. Typically, development from invention to commercialization is expensive and filled with uncertainty regarding both commercial and technical success. In R&D, for example, decision makers might be faced with the problem of choosing whether to pursue parallel vs sequential strategy.

3. Classification

Operation Research Mathematical Linear Programming

Probabilistic

Inventory

Network

Others

LP Models, Simplex, Transportation, Assignment, Integer LP & Goal LP

Decision An, Game Th, Markov An, Queing Th & Simulation Forecasting

Certain & Uncertain

Network, Flow, Pert/CPM

Dynamic P, Non L. P & Break Even.

4. Limitations
Operations Research has number of applications; similarly it also has certain limitations. These limitations are mostly related to the model building and money and time factors problems involved in its application. Some of them are as given below: 4.1 Distance between O.R. specialist and Manager Operations: Researchers job needs a mathematician or statistician, who might not be aware of the business problems. Similarly, a manager is unable to understand the complex nature of Operations Research. Thus there is a big gap between the two personnel. 4.2 Magnitude of Calculations: The aim of the O.R. is to find out optimal solution taking into consideration all the factors. In this modern world these factors are enormous and expressing them in quantitative model and establishing relationships among these require voluminous calculations, which can be handled only by machines. 4.3 Money and Time Costs: The basic data are subjected to frequent changes, incorporating these changes into the operations research models is very expensive. However, a fairly good solution at present may be more desirable than a perfect operations research solution available in future or after some time.

4.4 Non-quantifiable Factors: When all the factors related to a problem can be quantifiable only then operations research provides solution otherwise not. The non-quantifiable factors are not incorporated in O.R. models. Importantly O.R. models do not take into account emotional factors or qualitative factors. 4.5 Implementation: Once the decision has been taken it should be implemented. The implementation of decisions is a delicate task. This task must take into account the complexities of human relations and behavior and in some times only the psychological factors.

5. Techniques
5.1 Mathematical Modeling The science and art of math modeling is a fundamental technique that all OR practitioners build upon. A "model" here refers to a set of mathematical equations that describes the relevant aspects of the problems to be solved. In operations research, the mathematical representation of the problem is called a "formulation." Since there are many types of problem sets for which solution techniques are well known, the skill lies in formulating the math model of the real-life problem at hand into one such set and then obtaining the solution. 5.2 Optimization Techniques The techniques around optimization form the core of operations research. "Optimization is the process of finding the best way of using your resources, at the same time not violating any of the constraints that are imposed" as defined by Dash Optimization, the developers of one computer-based solver. In OR most real-life problems that require optimization are cast either as linear programs or as integer programs. 5.3 Decision Analysis The techniques of decision analysis were first developed at Stanford University. Decision analysis is very useful when complex sequences of events are dependent on probabilities that far exceed the ability of human intuitions. The techniques in this branch of operations research involve using graphs (called "decision trees") and assigning probabilities to various outcomes. These techniques help in making decisions by estimating the most likely outcomes under various risk scenarios that are assumed.

5.4 Game Theory Game theory is the science of social interaction, applied to situations in which groups of people cooperate or compete against each other. All the participants are assumed to be intelligent and operating to maximize their own personal gains. The "prisoners' dilemma" is a very common example of a game theoretical problem, with different techniques leading to various outcomes. 5.5 Mathematical Simulation The techniques mentioned above are theoretical in nature. However, for very complex situations (such as in a manufacturing factory, or at an airport) these models often prove to be inadequate. In those cases, operations researchers will rely on mathematical simulation. These are computer programs that can be made to simulate discrete parts of a complex operation. Multiple replications (called "simulation runs") are then made, and the results provide insights into the complex operations. 5.6 Using Techniques Together A skilled operations research practitioner will know when to rely on which technique and will combine them depending on the real-world problem at hand. Whether the problem at hand is maximizing profits (or minimizing costs) for a business, or whether the decision at hand is to maximize social and economic good, given resource constraints, the OR practitioner will typically start with a math formulation, then attempt optimization and build in complexity in order to obtain solutions and insights.