Introduction to Operations Research
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BIRTH OF OPERATIONS RESEARCH (OR)
Operations Research originated during World War II (1939–1945)
Scientists and engineers in Britain first applied scientific methods to military problems
such as radar deployment, anti-submarine warfare, and optimal use of resources.
After the war, these techniques were successfully adopted in industry and business
for decision-making, planning, and optimization.
INTRODUCTION
Operations Research is an Art and Science
It had its early roots in World War II and is flourishing in business and
industry with the aid of computer
Primary applications areas of Operations Research include ( but not limited
to) forecasting, production scheduling, inventory control, capital budgeting,
and transportation.
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WHAT IS OPERATIONS RESEARCH?
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.
Operations Research is a “quantitative approach” to decision making
based on the scientific method of problem solving.
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WHAT IS OPERATIONS RESEARCH?
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
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TERMINOLOGY
The British/Europeans refer to “Operational Research", the Americans to
“Operations Research" - but both are often shortened to just "OR".
Another term used for this field is “Management Science" ("MS"). In U.S. OR and MS
are combined together to form "OR/MS" or "ORMS".
Yet other terms sometimes used are “Industrial Engineering" ("IE") and “Decision
Science" ("DS").
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HISTORY OF OPERATIONS RESEARCH
OR is a relatively new discipline.
95 years ago it would have been possible to study mathematics, physics or
engineering at university it would not have been possible to study OR.
It was really only in the late 1930's that operationas research began in a
systematic way.
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1890 1900 1910 1920
Frederick Taylor •Henry Gannt •F. W. Harris •William Shewart
Scientific [Project Scheduling] [Inventory Theory] [Control Charts]
Management •Andrey A. Markov •E. K. Erlang •[Link] – [Link]
[Industrial [Markov Processes] [Queuing Theory] [Quality Theory]
Engineering] •Assignment
[Networks]
1960 1950 1940 1930
•John D.C. Litle •[Link] - [Link] •World War 2 Jon Von Neuman –
[Queuing Theory] [Non-Linear Prog.] •George Dantzig Oscar Morgenstern
•Simscript - GPSS •Ralph Gomory [Linear [Game Theory]
[Simulation] [Integer Prog.] Programming]
•PERT/CPM •First Computer
•Richard Bellman
[Dynamic Prog.]
ORSA and TIMS
1970 1980 1990 2010-2020 2020 - 2025
•Microcomputer •H. Karmarkar •Spreadsheet •Open-source tools •Explainable OR
[Linear Prog.] Packages •Big data integration • quantum & hybrid
•Personal computer •INFORMS •AI & ML synergy optimization
•OR/MS Softwares •real-time systems
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METHODOLOGY
7 Steps of Problem Solving and decision making
(First 5 steps are the process of decision making)
1. Identify and define the problem.
2. Determine the set of alternative solutions.
3. Determine the criteria for evaluating the alternatives.
4. Evaluate the alternatives.
5. Choose an alternative.
---------------------------------------------------------------
1. Implement the chosen alternative.
2. Evaluate the results.
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Formulate the
PHASES OF OR STUDY Situation
Problem
Implement a Solution
Problem
Statement
Goal: solve a problem Data
Construct
a Model
Implement
Phases: the Solution
Model
1. Definition of the problem.
2. Construction of the model.
Solution
3. Solution of the model. Find
a Solution
4. Validation of the model.
Establish
5. Implementation of the solution. a Procedure
Test the Model
and the Solution Solution Tools
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THE SITUATION
• May involve current operations or proposed
Situation expansions due to expected market shifts
• May become apparent through consumer complaints
or through employee suggestions
Data
• May be a conscious effort to improve efficiency or
response to an unexpected crisis.
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PROBLEM FORMULATION Situation
Formulate the
Problem
Problem
Statement
Data
• Study the relevant system and develop a well-defined statement of the problem.
• Determine the appropriate objectives, variables, constraints, and their interrelationships.
Examples: maintaining stable price, profits, increasing the share in market, improving work
morale etc
• The OR team normally works in an advisory capacity.
• The team performs a detailed technical analysis of the problem and then presents
recommendations to the management. 12
CONSTRUCTING A MODEL
Situation Problem
statement
Formulate the
• Problem must be translated from verbal, qualitative Problem
terms to logical, quantitative terms Data
• A logical model is a series of rules, usually embodied Construct
in a computer program a Model
• A mathematical model is a collection of functional
relationships by which allowable actions are delimited
and evaluated. Model
1. Decision variables (x1, x2 ... xn) - 'n' refers to associated quantifiable decisions to be made.
2. Objective function - It is a measure of performance (profit) which is expressed as
mathematical function of decision variables. For instance P=3x1 +5x2 + ... + 4xn
3. Constraints - any limitations on values that can be allocated to decision variables in terms of
equations or inequalities. For instance x1 +2x2 ≥ 20
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CONSTRUCTING A MODEL CONTD…
Situation Problem
statement
Formulate the
• The end product of OR model is a mathematical form Problem
associating the objective function, Decision variables Data
with constraints.
Construct
a Model
• The mathematical function is to optimize (maximize/
minimize) the magnitude of the objective function, at
the same time fulfilling all the facility constraints. Model
Max P = p1(Xn) + p2(Yn)
St. (Subject to/such that)
x+ y ≤ 400
x≥ 0 , y≥ 0
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SOLVING THE MATHEMATICAL MODEL
Many tools are available
Model
Some lead to “optimal” solutions (deterministic Models)
Find a
solution
Others only evaluate candidates trial and error to
find “best” course of action
Solution Tools
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COMPUTER SOFTWARE
A variety of software packages are available for solving mathematical
models, some are:
Spreadsheet packages such as Microsoft Excel
The Management Scientist (MS)
Quantitative system for business (QSB)
Quantitative models (QM)
Decision Science (DS)
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APPLICATION AREAS
• Strategic planning • Scheduling
• Supply chain management • Portfolio management
• Pricing and revenue management • Inventory analysis
• Logistics and site location • Forecasting
• Marketing research • Sales analysis
• Auctioning
• Risk analysis
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LIMITATIONS OF OR
• High Degree of Calculation
All the models require high degree of computations. We seek the help of systems which require heavy investments.
Hence the application of this kind is used in large concerns only.
• Quantitative Nature
All kinds of problems require variables of quantitative nature. Some times, in reality it is not possible to quantify
certain things. Factors which cannot be quantified find no place in OR study.
• Distance between User and Analyst.
There is a big gap between the person who is going to make use of the solution and one who actually arrives at such a
solution.
• Time and Money Costs.
When basic data are subjected to frequent changes, incorporating them into the OR models is a costly proposition.
• Implementation
Implementation of any decision is a delicate task. It must take into account the complexities of human relations and
behaviour
TYPES OF OPERATIONS RESEARCH
Operations Research can be classified based on:
• Nature of data
• Time consideration
• Objectives
• Decision variables
• Method of solution
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DETERMINISTIC OPERATIONS RESEARCH
• All parameters are known and fixed
• No uncertainty in data
• Results are exact
Examples:
• Linear Programming
• Transportation Problem
PROBABILISTIC (STOCHASTIC) OPERATIONS RESEARCH
• Some parameters are uncertain
• Uses probability theory
• Results are expected values
Examples:
• Queuing Theory
• Inventory Models
STATIC OPERATIONS RESEARCH
• Decision made at a single point of time
• Time factor is ignored
Examples:
• Assignment Problem
• Replacement Models
DYNAMIC OPERATIONS RESEARCH
• Decisions are made over a period of time
• Time is an important variable
Examples:
• Dynamic Programming
• Multistage Decision Problems
SINGLE OBJECTIVE OPERATIONS RESEARCH
• Only one objective function
• Easy to analyze
Example:
• Minimization of cost
• Maximization of profit
MULTI OBJECTIVE OPERATIONS RESEARCH
• More than one objective
• Objectives may conflict
Examples:
• Cost vs Quality optimization
• Time vs Cost trade-off
CONTINUOUS OPERATIONS RESEARCH
• Decision variables can take fractional values
• Widely used in resource allocation
Example:
• Linear Programming
DISCRETE / INTEGER OPERATIONS RESEARCH
• Decision variables are integers
• Used where fractional values are not possible
Examples:
• Integer Programming
• Scheduling Problems
SIMULATION-BASED OPERATIONS RESEARCH
• Uses computer models to simulate real systems
• Useful for complex systems
Example:
• Monte Carlo Simulation
APPLICATIONS OF OPERATIONS RESEARCH
IN PRODUCTION MANAGEMENT
Production Planning
Optimal production quantity
Resource allocation
Cost minimization
Product Mix Decision
Selection of best product combination
Profit maximization under constraints
Scheduling
Job sequencing on machines
Minimizing idle time and makespan
Inventory Control
Optimal order quantity (EOQ)
Reduction of holding and shortage costs
Line Balancing
Balanced workload on production lines
Increased efficiency and throughput
Capacity Planning
Optimal use of plant capacity
Expansion or contraction decisions
Resource Allocation
Optimal use of men, machines, and materials
Cost Control
Minimization of production and operating costs
USE OF COMPUTERS IN OPERATIONS RESEARCH
Computers play a vital role in Operations Research (OR) by enabling the
analysis and solution of complex decision-making problems. Many OR
problems involve large amounts of data, numerous variables, and complicated
mathematical models, which are difficult or impossible to solve manually.
Computers make it possible to handle such complexity efficiently and
accurately
CORE ROLES OF COMPUTERS IN OR
Computational Speed and Capacity: Computers allow researchers to build larger,
more realistic models of organized systems, processing vast amounts of data to find
meaningful solutions via simulation techniques.
Optimization Algorithms: They are used to execute complex optimization
methodologies, including exact methods for smaller problems and metaheuristics (like
evolutionary algorithms or ant colony optimization) for massive, non-linear problems.
Interactive Man-Machine Systems: Modern OR utilizes "what-if" heuristic
approaches, allowing managers to interact with models in real-time, providing
feedback to adjust parameters and bridge the gap between theoretical science
and management practice.
Data Management & Analytics: Computers facilitate the collection and storage of
real-world data in Management Information Systems (MIS), ensuring that decision-
making is based on timely, accurate, and structured data.
KEY APPLICATION AREAS
Transportation and Logistics: Optimizing routes, scheduling, and supply chain
management through constrained optimization.
Manufacturing: Automating process control and production scheduling by translating
physical processes into mathematical equations.
Strategic Planning: Using computer simulations to replicate complex systems for
evaluating long-term business strategies and risk analysis.
Financial Modeling: Conducting multi-criteria performance evaluations and capital
budgeting under uncertainty.
EMERGING TRENDS (2026 CONTEXT)
Integration with AI/ML: Modern OR heavily incorporates Machine Learning and
Data Science to handle decision-making under high uncertainty.
Behavioral OR: Computers are now used to model and analyze behavioral
patterns in operations, adding a human-centric dimension to traditional mathematical
models.
Advanced Simulation: Enhanced software allows for "digital twins"—virtual replicas
of physical systems used for real-time monitoring and predictive maintenance.
