OPERATIONS RESEARCH

UNIT I Introduction- nature significance definitions-models-scope- advantageformulation-graphic-simplex LPP

Operations research
Introduction:The Science of Better: The discipline of applying advanced analytical methods to help make better decisions Operations problems that concern how to conduct and coordinate the operations within an organization Research use of the scientific method to address these problems Interdisciplinary brings together:
mathematics statistics industrial engineering management (management science) systems engineering...

Highly application oriented

OR INTRODUCTION
Britain, WWII (1938). Multidisciplinary team of scientists explore how to use radar information to deploy and use fighter planes.
United States. Mathematical models (Search Theory) used to develop optimal air search patterns for antisubmarine tactics

ORIGIN &DEVELOPMENT OF OR
1917-A.k.ERLANG-problem on congestion of telephone traffic 1930- H.C.Levinson scientific analysis of study of customers buying habits 1940-military operations-world war II execute various operations

Operations Research Over the Years 1947

Project Scoop (Scientific Computation of Optimum Programs) with George Dantzig and others. Developed the simplex method for linear programs.

1950's
Lots of excitement, mathematical developments, queuing theory, mathematical programming. A.I. in the 1960's

1960's
More excitement, more development and grand plans. A.I. in the 1980's.

Operations Research Over the 1970's Years

Disappointment, and a settling down. NPcompleteness. More realistic expectations.

1980's
Widespread availability of personal computers. Increasingly easy access to data. Widespread willingness of managers to use models.

1990's
Improved use of O.R. systems. Further inroads of O.R. technology, e.g., optimization and simulation add-ins to spreadsheets, modeling languages, large scale optimization. More intermixing of A.I. and O.R.

Or Evolution
Evolution of OR
OR moves into industrial domain (1950s), parallels computers growth as business planning/management tool. Focus on development of mathematical modeling techniques to improve or optimize real-world systems.

Voices from the past

Waste neither time nor money, but make the best use of both.
Benjamin Franklin

Obviously, the highest type of efficiency is that which can utilize existing material to the best advantage.
Jawaharlal Nehru

It is more probable that the average man could, with no injury to his health, increase his efficiency fifty percent.
Walter Scott

Operations research
What is Operations Research?
Before: application of mathematics and the scientific method to military operations Today: scientific approach to decision making. Seeks to determine best way to design and operate system, usually requiring allocation of scarce resources

What is Management Science (Operations Research)? Today: Operations Research and Management Science mean
the use of mathematical models in providing guidelines to managers for making effective decisions within the state of the current information, or in seeking further information if current knowledge is insufficient to reach a proper decision.

Decision science, systems analysis, operational research, systems dynamics, operational analysis, engineering systems, systems engineering, and more.

1.1 - An Introduction to OR
Operations Research (management science) is a scientific approach to decision making that seeks to best design and operate a system, usually under conditions requiring the allocation of scarce resources.

A system is an organization of interdependent components that work together to accomplish the goal of the system.

Definition of or
O.R- is a scientific method of providing executive departments with a quantitative basis for decisions under their controlp.m.morse & G.E kimball OR-is a scientific approach to problems solving for executive managementH.M.Wagner Is a scientific knowledge through interdisciplinary team effort for the purpose of determining the best utilization of limited resources-H.A.Taha

Features of or
Decision making-problem solving Scientific approach-scientifically solve the problem

Features of OR
1. Objective- to locate the best or optimal solution 2. Inter-disciplinary approach- team effort with all fields 3. Digital computer-need computer to solve problem with volume of data

Scientific method in OR
Three phases 1.Judgement phase Identification of real life problem Selection of Appropriate goal Appropriate scale of measurement Formulate the model

Scientific method in or
2. Research phase Observations and data collection for a better understanding of what the problem is Formulate the model To test the data Analysis and verify the measure the effectiveness Predictions of various result Generalizations of alternative methods

Scientific method in or
3.Action phaseMaking recommendations for decision process

Operations Research
(Understand and)

Model
(and verify)

(Strategize and)

Solve
(and make recommendations)

Operations Research model

Structuring the real-life situation into a mathematical model, abstracting the essential elements so that a solution relevant to the decision maker's objectives can be sought This involves looking at the problem in the context of the entire system Exploring the structure of such solutions and developing systematic procedures for obtaining them Developing a solution, including the mathematical theory, if necessary, that yields an optimal value of the system measure of desirability (or possibly comparing alternative courses of action by evaluating their measure of desirability)

Model in or
Simplified representation of an operations or a process -model 1.Account model 2.Mathematical model 3.Quantitative model 4.Physical model

Characteristics of or model
1. A good should be capable of taking into account new formulations without having any significant change in its frame 2. Assumptions made in the model should be simple 3. Number variable should be less 4. Should be open to parametric type of treatment 5. Should not take much time in its constructions for any problem

Operations Research Modeling Toolset

Queueing Theory
Simulation Inventory Theory Forecasting Game Theory Markov Chains Dynamic Programming PERT/ CPM

Markov Decision Processes Decision Analysis

Network Programming

Linear Programming
Stochastic Programming Nonlinear Programming Integer Programming

Advantages and disadvantages of a model

Advantages Provides a logical and systematic approach It indicates the scope as well as limitations It helps for improvement It permits experimentations Limitations Model idealized representation, only for particular situation

Model used in or
1.by degree of abstraction Mathematical- mathematical based on real life situation (lpp) Language model-concrete based on characteristic (dam ,hockey) 2. By function Descriptive model-the functional relationship and interactions various non mathematical operations (survey) Predictive model-predict the behavior of the model (forecast) Normative or prescriptive models- develop optimum rules (lpp)

Model used in or
3.By structure Iconic or physical model-properties of the real system are represented (sun, planets..) Analogue or schematic models-reinterpreted in terms of the original system (floe chart like organization chart) Symbolic or mathematical- mathematical symbols like numbers..

Model used in or
4.By nature of the environment Deterministic- variables defined and out come are certain (eoq) Probabilistic model- input and output variables are take from probability (forecasting)

Model used in or
5. Based on general General- number function used ( marketing, product mix) Specific models- specific ( sales response curve) 6. Based on time Static- one time decision models ( economic order quantity) Dynamic- models for situations depends on previous outcome (dynamic programming)

Composition of OR
Tools Techniques Methodology Choice depends on the complex nature of the problem

Possible applications
Resource Allocation
Product Mix Transportation Blending Portfolio of stocks

Risk Assessment
Investment decision Oil explorations Commodity markets and Auction

Possible applications
Industry applications
Call center design Facility layout Location of plant Design of workflow in Ports

Models for profit

Optimized sourcing Max utilization of capacity Revenue Management, Yield Where to sell, what, when Supply chain optimization

Possible applications
Decision support system
Traffic pattern planning Dynamic Management of Resource allocation Model for Economic Planning

Applications in Government
RPO / RTO Speed disposal of cases Manpower planning in Government department Process simplification Process Automation and many more !

Applications of Operations Research

Business
Manufacturing
Project management Scheduling Facility layout and location Many more

Economics & Finance

Auctions Portfolio selection Capital investment Many more Scheduling Queuing Biotechnology And more

Health

Service
Project management Transportation and logistics Marketing Queuing Many more

Military Army,navy,airforce-

Scope of OR in management
1.allocation and distribution Allocation of resources as men,machine,materials,time and money Distribution policy, allocation of warehouse 2.Production and facility planning Project scheduling, design of production plant, retail outlets

Scope of OR in management
3. Procurement What, how and when to purchase at the minimum procurement cost Transportation planning 4.Marketing Product selection,timing,selection of advertising media

Scope of OR in management
5.Finance Capital requirement, cash flow analysis Credit policy Profit plan 6.Personnel Selection,retirement,recuritment,wage 7. Research and development

Examples of O.R. Applications

China
Select and schedule projects for future energy needs

New Haven Health Department

Design an effective needle exchange program to combat HIV

Continental Airlines
Optimize the reassignment of crews to flights

IBM
Reengineer supply chain

Stages in OR application
1. Analysis of a situation 2. Distinction between the problem and consequence 3. Select an appropriate set of alternatives 4. Evaluation of alternatives 5. Decide the best course of action 6. Explore implementation 7. Validate and improve

The OR Problem Solving Schema

Formulation

Monitoring

Realization

Modelling

Implementation

Analysis

Solution

The OR Problem Solving Schema

In Practice

Formulation Realization

Monitoring

Modelling

Implementation

Analysis

Solution

Linear programming
1947- George Dantzig Deals with the optimization( maximization or minimization) of a function of variables known as objective function. Inequalities known as constraints All relationships involved in a particular problem

LPP assumptions
Decision variables-the activities that are sharing resources available The objective- clearly identified and measurable in quantitative Constraints( restrictions)- certain limitations

LPP assumptions
Certainty- known variables Divisibility- solutions values of the decision variables be non-negative Proportionality-objective fn and constraints are proportion Additive- objective and decision variables are equal

LPP assumptions
Key decisions should be identified Symbols xj (j= 1,2,3.. ) Feasible alternatives xj 0 for all j

LPP- Methods
Formulations Graphical methods Simplex methods

A Diet Problem
1. Problem description and data
To decide the quantity of different food itmes to consume every day so as to meet the Minimum Daily Requirement (MDR) of several nutrients at minimum cost. What type of data do we need?
What are the different food items under consideration? Nutrient information and cost of food?

Diet Problem contd..

Simple toy example - two food items and three nutrients

Wheat

Rye

MDR

Carbs/unit Proteins/unit Vitamins/unit

Cost/unit

5 7 4 2 2 1 0.6 0.35

8 15 3

minimize subjec t to

0.6 X W 0.35 X R 5 XW 7 X R 8 4 X W 2 X R 15 2 XW X R 3 XW 0 X R 0

Diet Problem contd..

Computer solution using EXCEL
XW 0 XR 0 TOTAL COST 0 MDR DAILY INTAKE 8 0 15 0 3 0

per unit WHEAT RYE CARB 5 7 PROTEIN 4 2 VITAMIN 2 1 COST 0.6 0.35