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

• Kellogg’s
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-engineer 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
Charles Babbage

• 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
 •Moving goods to retailers
•Transportation mode
•Type of promotion
•Rate •Channel management
•Payment Terms •Assigning sales territory
•Quantity •Distribution decisions
•Quality •Terms of payment
•Mode of Transport •After sale service
Supplier Manufacturer Branch Wholesaler/ Consumer
Office/ Retailer
Warehouse
•Packaging •Promotion
•Plant Layout •Purchase Price
•Lot size •Customer Relationship
•Production Quantity •Value added services
•Inventory Control •Price
•Job Assignment •After sale service
 Company
•Quantity
Finance
•Time
•Terms
•Equipment Replacement
•Exploitation of new material sources
Production
•Product selection
•Advertising strategy
•No. of salesmen
•Assigning sales territory
•Size of stock for demand
fulfillment
Personal Management
•Determination of time
and cost requirement
•Reliability and evaluation
of alternate designs
Range of Business Decisions
•Cash Management
•Credit Risk
•Investment Portfolios
•Credit Policies
Procurement
•Manufacturing and facility planning
•Production Scheduling
•Allocation of resources
•Determination of optimal product mix
•Allocation of machines
•Sequencing of production run
•Maintenance policies Location &size of
•Project planning warehouse
Distribution centers
Marketing
Retail outlets
Distribution policy
•Assignment of jobs
•Selection of personnel
•Establishing equitable
bonus system
Research and Development
 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 the flow of raw materials and products in a supply chain

• managing freight transportation and delivery systems

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

• blending of raw materials in oil refineries

 Limitations
• Simplification for problem solution
• Expensive for one time problems
• Models are not absolute
• Magnitude of computation
• Distance between managers and Operations
Research