introduction_to_or.ppt

7/28/2019 INTRODUCTION_TO_OR.ppt

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OPERATIONSRESEARCH


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Waste neither time nor money, butmake the best use of both.

Benjamin Franklin5/29/2013 2


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Module IIntroduction to Operations Research,

Evolution of the field , Scope, Merits and

LimitationsConcept of Optimization

Decision making through Operation

Research Nature and significance ofoperations research Models and Modeling

in OR General methods for

solving OR models Methodology of OR,Application and Scope of OR

Basic OR models.

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What is Operations Research (OR) ?OR is a secret weapon !!!

Lindsay Blakely, CBS MONEY WATCHOCTOBER 15, 2008.

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What is Operations Research ? (contd.)

Operations Research:

The Science of Better!!!

INFORMS Institute for Operations Researchand Management Sciences, USA.

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What is Operations Research ? (contd.)Operations Research is concerned with

scientifically deciding how to best design

and operate man-machine system usually

under conditions requiring the allocation

of scarce resources.

OR SOCIETY OF USA

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What is Operations Research ? (contd.)Operational Research is the applicationof the methods of science to complex

problems arising in the direction and

management of large systems of men,machine, materials and money in

industry, business, government and

defense.

OR SOCIETY OF UK

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So what is Operations Research ?Involves research on operations.

To conduct and coordinate the operations/

activities within an organization.

Nature of the organization is immaterial.Applied in- manufacturing, transportation,

construction, telecommunications,

financial planning, health care, themilitary, and public services etc.

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So what is Operations Research ? (contd.Operations Research (OR) is the use

ofadvanced analytical/quantitative

techniques to improve decision

making.

It is sometimes known as Operational

Research, Optimisation Techniques,Management Science orIndustrial

Engineering.5/29/2013 9


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History of ORCame into existence during World War II

Scientists with diverse educational background - todevelop a scientific approach to deal with strategic and

tactical problems of various military operations.

Initial objective - to allocate scarce resources in an

effective manner to various military operations and to

the activities within each operation.

Hence the name Operations Research.

During the 50s, Operations Research achievedrecognition as a subject for study in the universities.


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Why do managers need Operations Research ?high costs of technology, labor and

materialscompetitive pressures of the

modern world

rapid advancements in technology

and knowledge

new problems with little or noprecedents.

Have greatly increased the difficulty

of managerial decision making.5/29/2013 11


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Why do managers need Operations Research ?to effectively address these problems

guide their teams successfully

managers need a thorough

understanding of the applicability of

quantitative methods to decision making

Managers cannot rely merely on their

experience or intuition because the

consequences of wrong decisions canbe serious and costly.

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Why do managers need Operations Research ?Complex, global organizations are

constantly in need of better ways to

manage their processes, resources,

products, and people.OR is an indispensable decision

making tool that allows these

companies to do exactly that andfind a competitive advantage.

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Why do managers need Operations Research ? (contd.)The list of Fortune 500 companies getting

into the OR game is expanding

Mark Doherty, Executive Director of the

Hanover Institute for Operations Research

and Management Sciences.

P&G makes significant analyses on supply

chain structure with input from the ORteam, since improving the slightest of

margins in a company of P&Gs size can

generate huge dividends.5/29/2013 14


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Why do managers need Operations Research ? (contd.)At RIL, there is always a linear

programming that is under way, based onthe world crude prices and the product

demand pattern. The return on the rather

high investment made in infrastructure waspaying dividends, especially when the delta

between the price of sour and sweet crude

was significant - a direct corollary of rising

crude prices

Hindu Business Line5/29/2013 15


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Examples of OR in action Scope of ORInventory/EOQ/ROL

Ticketing/Route PlanningSupply chain

management/Sequencing

Marketing/ sales forecasting,market selection/ segmentationand targeting/ pricing/salesforce

sizing anddeployment/transportation.


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Examples of OR in action (contd.)Telecommunications/ Capacity

planningDefence and peace

keeping/deployment of troops.

Healthcare/SimulationScheduling / aircrews and fleets for

airlines / orders in a factory/ operatingtheatres in a hospital.

Yield management: setting the pricesof airline seats and hotel


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Optimization in Operations ResearchOptimization could mean eithermaximization

orminimization. In business/ industry one is interested in

maximizing profit/ productivity/ utilisationrate

One is also interested in minimizing cost/time taken to perform tasks

Linear programming arose as a mathematicalmodel developed during Second World Warto plan expenditures and returns in order toreduce costs to the army and increase lossesto the enemy.


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PROBLEM DEFINITION

MODEL CONSTRUCTION

SOLUTION

VALIDATION

IMPLEMENTATION

ORTEC

HNIQU

ES


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Nature and Significance of OR OR approach is particularly useful in

balancing conflicting objectives (goals

or interests) where there are many

alternative courses of action availableto the decision-makers.

The optimum decision must be one that

is best for the organization as a wholeit is often called the global optimum.


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Nature and Significance of OR

Operations Research is concerned withproviding the decision-maker withdecision aids (or rules) derived from:

A Total System Orientation

Scientific Methods of Investigation.

Models of reality, generally based onquantitative measurement andtechniques.

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