CHAPTER I

INTRODUCTION TO
OPERATIONS RESEARCH

Introduction to Operations Research 1

An Overview of Operations Research
It is generally agreed that operations
research came into existence during the
Second World War (WW-II).

However, a particular model and technique

of operations research can be traced back
much earlier.

The term operations research was coined as a

result of research on military operations
during this war.
Introduction to Operations Research 2
 Con…
After the war ended, scientists who had been
active in the military operations research
groups made their efforts to apply the
operations research approach to civilian
problems, related to business, industry,
research and development, etc.

And today, operations research is a

dominant and very important quantitative
decision making tool.
Introduction to Operations Research 3
 Con…
As its name implies, operations research
involves a “research on operations”.

An operation is the process of converting

inputs into goods and services.

Thus, operations research is about

conducting a research on operations of an
organization and solving problems related to
these operations.

Introduction to Operations Research 4

 Con…
Operations research also known as
management science is the application of a
scientific approach to solving management
problems in order to help managers make
better decisions.

Management science can be used in a variety

of organizations to solve many different
types of problems (example: problems in
government, military operations, businesses,
industries, health sectors, etc).

Introduction to Operations Research 5

 Con…
The following are some of the operations
research techniques that will be discussing
in this course:
 Linear programming
 Distribution models
 Queuing Models
 Inventory Management Techniques
 Project scheduling (PERT/ CPM)
 Game theory
Introduction to Operations Research 6
 The Process of Operations Research
Real World Problem

Abstraction

Model Construction

Assessment Analysis

Model Solution

Interpretation

Real World Solution

Introduction to Operations Research 7

 Problem Solving and Decision Making

A problem is defined as the difference

between expected and/or desired
outcomes and actual outcomes.

Problem solving is, therefore, the process

of identifying a difference between the
actual and the desired state of affairs and
taking action to resolve the difference.

Introduction to Operations Research 8

 Steps in Problem Solving:
Identify and Define the Problem:
Problem is a necessary condition for a
decision.
In order to identify a problem in the system,
the system must be closely and continuously
observed.
The existence of a problem implies that the
objectives of the firm are not being met.
Problem definition should be in a clear and
concise manner.
Introduction to Operations Research 9
Determine set of Alternative Solutions:

The key to this step is to not limit yourself

to obvious alternatives or what are
worked in the past but to be open to new
and better alternatives.

Introduction to Operations Research 10

 Determine the Criterion:

If the criterion to select the best alternative

is only one, it is called a single-criterion
decision problem, otherwise called
multiple-criteria decision problem.
The criteria are probably not equally
important.

Introduction to Operations Research 11

 Evaluate the alternatives:

As you evaluate each alternative, you

should be looking at the likely positive
and negative cones for each.

It is unusual to find one alternative that

would completely resolve the problem.

Introduction to Operations Research 12

 Con…
Choose the Best Alternative:

Most of the time, it is subjectively you

select the best alternative.

Introduction to Operations Research 13

Implement the Selected Alternative:

Deciding on the best alternative is not the same as

doing something.

A decision only counts when it is implemented.

As Gerstner (CEO of IBM) said, “there are no

more prizes for predicting rain. There are only
prizes for building arks.”

Introduction to Operations Research 14

 Evaluate the Results:

Every decision is intended to fix a

problem.

The final test of any decision is whether or

not the problem was fixed.

Introduction to Operations Research 15

 Decision Making
Making appropriate decision is the most
important aspect in business.
Decision making is a primary function of
management.
Every one of us takes number of decisions every
day.
Decision Making is the process of selecting the
best, based on some criteria, among the
alternatives to solve a certain problem.

Introduction to Operations Research 16

 Con…
A decision is a choice between two or
more alternatives.

If you only have one alternative, you do

not have a decision.

It is associated with the first five steps of

the problem solving process.
Introduction to Operations Research 17
 Qualitative and Quantitative Decision Making

Decision making can be either qualitative or

quantitative.
In qualitative decision making, intuition, subjective
judgment, and past experience are used.
Decisions based on quantitative analysis tend to be
more objective than based on a purely qualitative
analysis.
Although operations research is not entirely
quantitative, its application falls under the heading
of quantitative analysis.
Introduction to Operations Research 18
The quantitative approach is usually used when:

The problem is simple.

The problem is familiar.

The costs involved are not so great.

Immediate decisions are needed, etc.

Introduction to Operations Research 19

 The qualitative approach is used when:

The problem is complex.

It is impossible to decide without
qualitative analysis.
The problem is new.
The costs involved are substantial
Enough time is available to analyze the
problem, etc.

Introduction to Operations Research 20