TULSIRAMJI GAIKWAD-PATIL College of Engineering and Technology

Wardha Road, Nagpur - 441108

Accredited withNAACA+Grade
Approved by AICTE, New Delhi, Govt. of Maharashtra
(An Autonomous Institution Affiliated to RTM Nagpur University, Nagpur)
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Master of Business Administration
First Semester
Subject:- Quantitative Techniques
Topic:-Operation Research
Module 5
Subject In-Charge:- Prof. Ankita Bawane
Operations Research (OR)

Operations research (OR) is an analytical method of problem-solving and decision-making that is useful
in the management of organizations. In operations research, problems are broken down into basic
components and then solved in defined steps by mathematical analysis.

The process of operations research can be broadly broken down into the following steps:

1. Identifying a problem that needs to be solved.

2. Constructing a model around the problem that resembles the real world and variables.

3. Using the model to derive solutions to the problem.

4. Testing each solution on the model and analyzing its success.

5. Implementing the solution to the actual problem.

Disciplines that are similar to, or overlap with, operations research include statistical analysis,
management science, game theory, optimization theory, artificial intelligence and network analysis. All
of these techniques have the goal of solving complex problems and improving quantitative decisions.

The concept of operations research arose during World War II by military planners. After the war, the
techniques used in their operations research were applied to addressing problems in business, the
government and society.

Characteristics of operations research

There are three primary characteristics of all operations research efforts:

1. Optimization- The purpose of operations research is to achieve the best performance under the given
circumstances. Optimization also involves comparing and narrowing down potential options.

2. Simulation- This involves building models or replications in order to try out and test solutions before
applying them.

3. Probability and statistics- This includes using mathematical algorithms and data to uncover helpful
insights and risks, make reliable predictions and test possible solutions.

Importance of operations research

The field of operations research provides a more powerful approach to decision making than ordinary
software and data analytics tools. Employing operations research professionals can help companies
achieve more complete datasets, consider all available options, predict all possible outcomes and
estimate risk. Additionally, operations research can be tailored to specific business processes or use
cases to determine which techniques are most appropriate to solve the problem.

Uses of operations research

Operations research can be applied to a variety of use cases, including:

 Scheduling and time management.

 Urban and agricultural planning.

 Enterprise resource planning (ERP) and supply chain management (SCM).

 Inventory management.

 Network optimization and engineering.

 Packet routing optimization.

 Risk management.

Applications

Applications are abundant such as in airlines, manufacturing companies, service organizations, military
branches, and government. The range of problems and issues to which it has contributed insights and
solutions is vast. It includes:[34]

 Scheduling (of airlines, trains, buses etc.)

 Assignment (assigning crew to flights, trains or buses; employees to projects; commitment and
dispatch of power generation facilities)
 Facility location (deciding most appropriate location for new facilities such as warehouse; factory or
fire station)
 Hydraulics & Piping Engineering (managing flow of water from reservoirs)
 Health Services (information and supply chain management)
 Game Theory (identifying, understanding; developing strategies adopted by companies)
 Urban Design
 Computer Network Engineering (packet routing; timing; analysis)
 Telecom & Data Communication Engineering (packet routing; timing; analysis)
Management is also concerned with so-called 'soft-operational analysis' which concerns methods
for strategic planning, strategic decision support, problem structuring methods. In dealing with these
sorts of challenges, mathematical modeling and simulation may not be appropriate or may not suffice.
Therefore, during the past 30 years[vague], a number of non-quantified modeling methods have been
developed. These include:[citation needed]

 stakeholder based approaches including metagame analysis and drama theory

 morphological analysis and various forms of influence diagrams
 cognitive mapping
 strategic choice
 robustness analysis

Examples of Operations Research:

1. Linear Programming

If you’ve taken math classes in school, you have probably encountered Linear Equations and you may

have learned how to solve those methods with pen and paper. Linear programming is an optimization

technique to solve systems of linear constraints with a linear objective function. It is the most known

method of Operations Research.

2. Waiting line theory or queuing theory.

The second topic in Operations Research is Queuing Theory. Maybe less obvious than the previous

example, but a waiting line can just as well be described perfectly in mathematical terms. Once this is

done, Queuing Theory allows a business to understand and improve queuing times for customers and at

the same time workforce management.

Another important application of Queuing theory is task scheduling by computer’s Operation Systems,

although that’s quite far from the other applications discussed in this article.

3. Inventory control systems

The next topic solved by Operations Research is Inventory Control. Inventory Control for a company is

complicated and depends on many decisions, for example, purchasing, warehousing, shipping, tracking
and more,Inventory Control Systems regroup different solutions that solve the totality of an

organization’s inventory tasks. The most-used algorithms for Inventory Management are Economic Order

Quantity (EOQ), Inventory Production Quantity (IPQ) and ABC Analysis. If you want to go further into

inventory management, you should definitely have a look into those.

4. Replacement problems

I hope that at this point the types of problems treated in Operations Research are already getting clearer

for you. Replacement problems are relatively comparable to the previous: optimizing the replacement of

materials that are known to fail after a certain time of usage. For expensive items like machinery, cars,

computers, etc there is a huge cost for a company when replacing them too late, but also when replacing
them too early. Therefore this is also a good question for optimization with Operations Research.

5. Network Analysis

Network Analysis is a topic that is relatively different from the previously listed items.In Network

Analysis, an application is represented as a graph to be optimized. In Graph theory in general, graphs

exist of nodes and edges. Each node is a point and each edge indicates whether there is a connection

between certain different nodes. A good example of this type of data is a social media network where

each person (profile) is represented as a node and each friendship relationship is represented as an edge.