Unit.1 . introduction to oprational research
- 1. Chapter One Introduction to Operational Research By;-Dagnaygebaw Goshme (MSc.)
- 2. Think over it Economics Management Mathematics Statistics Mathematics for economics Statistics for economics OR
- 3. At the end of the chapter students able to :- Define Operational Research Aware the dev’t of Operational Research Know Features of Operational Research State the Scope and Applications of Operational Research Clarify phases of Operational Research Introduce tools of Operational Research
- 4. 1.1.Definition of OR Operations:-The activities carried out in an organization. Research:- The process of observation and testing characterized by the scientific method. Situation, problem statement, model construction, validation, experimentation, candidate solutions. Operational Research is a systematic and analytical approach to decision making and problem solving. It is a Branch of applied mathematics that uses techniques and statistics to arrive at optimal solutions to solve complex problems.
- 5. Operations Research is the scientific approach to execute decision making, which consists of: The art of mathematical modeling of complex situations The science of the development of solution techniques used to solve these models The ability to effectively communicate the results to the decision maker It is typically concerned with determining ; maximum :-profit, sale, output, utility, quality, crops yield and efficiency Minimum:- losses, risks, cost, damages, and time of some objective function.
- 6. 1.2.Development of Operation Research Since the advent of the industrial revolution,the world has seen a remarkable growth in the size and complexity of organizations. An integral part of this revolutionary change has been a remarkable increase in ; division of labor segmentation of management responsibilities in these organizations. Increasing specialization has created new problems, problems that are still occurring in many organizations.
- 7. As complexity and specialization in an organization increase,so does the problems . It becomes more and more difficult to allocate the available resources to the various activities in a way that is most effective for the organization as a whole. These kinds of problems and the need to find a better way to solve them provided the environment for the emergence of operations research. It originated in England during the WW II by Charles Babbage (1791-1871) is the Father of OR for military purpose. Computer revolution and improving techniques are the key for rapid growth of OR.
- 8. 1.3. Features of Operational Research i. Decision-Making:- OR aims to help the executives to obtain optimal solution with the use of OR techniques. It also helps the decision maker:- To improve his creative and judicious capabilities To analyze and understand the problem situation leading to better control, For better co-ordination, For better systems and finally better decisions. ii. Scientific Approach:-OR applies scientific methods, techniques and tools for the purpose of analysis and solution of the complex problems. In this approach there is no place for guesswork and the person bias of the decision maker.
- 9. iii. Inter-DisciplinaryTeam Approach:- scientist, mathematician and technocrats jointly use the OR tools to obtain a optimal solution of the problem. They tries to analyze the cause and effect relationship between various parameters of the problem and evaluates the outcome of various alternative strategies. iv. System approach:- OR trace out all significant and indirect effects for each proposal on all sub-system on a system and to evaluate each action in terms of effects for the system as a whole.
- 10. The inter-relationship and interaction of each sub- system can be handled with the help of mathematical/analytical models of OR to obtain acceptable solution. vi. Objective :-OR always try to find the best and optimal solution to the problem. For this purpose objectives of the organization are defined and analyzed. These objectives are then used as the basis to compare the alternative courses of action. vii. Human factors :- it considers human factors viii. Use of computer:- we can use computer for complex problem solving .
- 11. 1.4.Scope and Applications of O R OR is not only confined to any specific agency like defense services but today it is widely used in all industrial organizations. It can be used to find the best solution to any problem be it simple or complex. It is useful in every field of human activities. The main fields where OR;- A. National Planning and Budgeting Plans(one year, five Years, ten years…) Annual Budgets Forecasting of Income and Expenditure Scheduling of Major Projects of National Importance Estimation of GNP & GDP Population Employment and Generation of Agriculture Yields, etc
- 12. B. Defense Services Development of NewTechnology Optimization of Cost andTime Tender Evaluation Setting and Layouts of Defence Projects Assessment of “Threat Analysis” Strategy of Battle Effective Maintenance and Replacement of Equipment Inventory Control, Transportation Supply Depots, etc. C. Industrial Establishments and Private Sector Units Plant Location and Setting Finance Planning Product and Process Planning Facility Planning and Construction Production Planning and Control Purchasing Maintenance Management Personnel Management, etc.
- 13. D.R&D and Engineering:- Research and development being the heart of technological growth, OR has wide scope and can be applied in- Technology Forecasting and Evaluation, Technology and Project Management, Value Engineering, Work/Method Study and so on. E.Agriculture science Inventory control Facility design (distribution decision) Product mix determination Portfolio analysis Allocation of scarce resources(land, labor, capital….. Agricultural Investment decisions Agricultural Project management.
- 14. 1.5. Overview of the OR modeling approach Seven phases of Operations Research Study :- Step 1: Formulate the problem :analyst first defines the organization’s problem. This includes specifying the organization’s that must be studied before the problem can be solved. Step 2: Observe the system: collects data to estimate the values of the parameters that affect the organization’s problem. Step 3: Formulate mathematical model of the problem: analyst develops an idealized representation i.e. a mathematical model of the problem.
- 15. Step 4: Verify the model and use it for prediction: determine if the mathematical model developed in Step 3 is an accurate representation of the reality. The verification typically includes observing the system to check if the parameters are correct. If the model does not represent the reality well enough then the OR analyst goes back either to Step 3 or Step 2. Step 5: Select a suitable alternative Given a model and a set of alternatives: the analyst now chooses the alternative that best meets the organization’s objectives. Sometimes there are many best alternatives
- 16. Step 6: Present the results and conclusions :analyst presents the model and recommendations from Step 5 to the organization’s decision-makers. At this point OR analyst may do not approve of the recommendations due to incorrect definition of the organization’s problems or parameters or the mathematical model.The analyst goes back to Step 1, Step 2, or Step 3, where the disagreement lies. Step 7: Implement and evaluate recommendation: Finally, when the organization has accepted the study, the OR analyst helps in implementing the recommendations. The system must be constantly monitored and updated dynamically as the environment changes.
- 17. 1.6. Significance of OR It provides a tool for scientific analysis and provides solution for various business problems. It enables proper deployment and optimum allocation of scarce resources. It helps in minimizing waiting and servicing costs. It enables the management to decide when to buy and how much to buy through the technique of inventory planning.
- 18. It helps in evaluating situations involving uncertainty It enables experimentation with models, thus eliminating the cost of making errors while experimenting with reality. It allows quick and inexpensive examination of large numbers of alternatives. In general OR facilitates and improves the decision making process.
- 19. Techniques/Tools of Operational Research Linear Programming Integer Problems Transportation Problems Assignment Problems Network analyses