Operations Research

Maumita RoyOperations Research Operations Research is the application of scientific methods, techniques and tools to operations of a system with optimum solution to the problem.O.R. Society of America gave the following definition of Operations Research:

Optimisation = Efficiency + SavingsKelloggsThe largest cereal producer in the world.LP-based operational planning (production, inventory, distribution) system saved $4.5 million in 1995.Procter and GambleA large worldwide consumer goods company.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.Saved over $200 million in cost per year.Hewlett-PackardRobust supply chain design based on advanced inventory optimization techniques.Realized savings of over $130 million in 2004

Distinct Nature of ORSimultaneously analyzes all variablesSeeks global, balanced solutions defined by:Multiple criteriaMultiple, conflicting objectivesHelps mitigate risk and reduces uncertainty by modeling different scenariosGoes beyond single-issue managementCharles Babbage - The Father of ORDOB: 26 Dec 1791.DOD: 18 Oct 1871.His implementation of OR into the cost of transportation and sorting of mails.

5Patrick Blackett - ImplementerDOB: 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.

6Factors behind growing importance of O.R. in theory and practice of management:Complex decision problemsAvailability of quantitative modelsAvailability of high speed computersNeed for ORConsistently 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.

8Examples 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: 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

ScopeStrategic planningPricing and revenue managementLogistics and site locationOptimizationSchedulingPortfolio managementInventory analysisForecastingSales analysisReplacement and maintenanceRisk analysisLimitationsSimplification for problem solutionExpensive for one time problemsModels are not absoluteMagnitude of computationDistance between managers and Operations Research

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