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What is Operations Research?

What is Operations Research?

What is Operations Research?

Question: Define Operations Research. How did it start?

Answer: Operations Research (OR) is a scientific method of providing executive with an analytical and objective basis for decisions.

Development of Operations Research (OR)

The main origin of OR was during World War II.

During WW II, the commanders of Allied forces (mainly UK and USA commands) engaged several inter-disciplinary teams of scientists to undertake scientific research into startegic and tactical military operations.

Their mission was to formulate specific plans to aid Military officers to arrive at a decision on optimal utilization of scarce military resources.

The OR teams were not actually engaged in wars but they were advisors and significantly instrumental in winning the war by applying scientific approaches.

After the world war, it motivated to continue this research and led to formation of 'Operations Research'

Thus OR is associated with,
"an art of winning the war without actually fighting it."

After the end of World War, OR techniques got the attention of Industrial managers who were seeking solutions to their decision making and resource utilization related complex problems. 

 The first mathematics technique in this field, called Simplex Method of Linear Programming was developed in 1947 by an American Mathematician, George B. Dantzig.

Dantzig - A genius Mathematician 
When Dantzig was a graduate student in Berkley, one day he arrived late in his class. Before his arrival, his professor, Jerzy Neyman, wrote two examples of famously unsolved statistics problems on the blackboard. Dantzig assumed that these two were part of homework assignment and solved them down. Later his professor told Dantzig that he had solved two of the most famous unsolved problems in statistics.

Question: What are the management applications of Operations Research (OR)?
Give applications of OR in Industry?

Answer: OR techniques are widely used in timely management decisions and often used as corrective measure. A few are outlined below:

Finance (Budgeting and Investments)
Cash-flow analysis, Dividend policies, Investment Portfolios etc.

Credit policies, Credit risks and delinquent account procedures

Claim and complaint procedure

Purchasing, Procurement and Exploration
Rules for buying, supplies, stable or varying prices

Bidding policies, replacement policies

Determination of quantities and timing of

Production Management
Location of warehouses, distribution centres, retail outlets

Facilities planning: Number and location of factories, warehouses etc. Loading and Unloading facilities for railroads, trucks, computing transport schedule etc.

Manufacturing: Production Schedule and Sequencing

Maintenance and Project Scheduling

Personnel Management
Selection of suitable personnel with minimum salary.

Recruitment policies, mixes of age and skills.

OR has replaced management by persoanlity.
Product selection, competitive actions etc.

Salesmen, frequency of calling, advertisements with respect to costs and time.

Research and Development
Determination of areas of concentration of R & D.

Project selection, computing time cost tradeoffs.

Reliability and Alternative designs.