Applications of Operation Research:

O.R. is a problem solving and decision taking technique. It is considered a kit of

scientific and programmable rules which provides the management a “quantitative
basis” for decisions concerning the operation under its control.
Some areas of management where O.R techniques have been successfully
utilized are as follow:
1. Allocation and Distribution in Projects:
(i) Optimal allocation of resources such as men materials machines, time and money to
projects.
(ii) Determination and deployment of proper workforce.
(iii) Project scheduling, monitoring and control.
2. Production and Facilities Planning:
(i) Factory size and location decision.
(ii) Estimation of number of facilities required.
(iii) Preparation of forecasts for the various inventory items and computation of
economic order quantities and reorder levels.
(iv) Scheduling and sequencing of production runs by proper allocation of machines.
(v) Transportation loading and unloading,
(vi) Warehouse location decision.
(vii) Maintenance policy decisions.
3. Programmes Decisions:
(i) What, when and how to purchase to minimize procurement cost.
(ii) Bidding and replacement policies.
4. Marketing:
(i) Advertising budget allocation.
(ii) Product introduction timing.
(iii) Selection of advertising media.
(iv) Selection of product mix.
(v) Customer’s preference of size, colour and packaging of various products.
5. Organization Behaviour:
(i) Selection of personnel, determination of retirement age and skills.
(ii) Recruitment policies and assignment of jobs.
(iii) Recruitment of employees.
(iv) Scheduling of training programs.
6. Finance:
(i) Capital requirements, cash flow analysis.
(ii) Credit policies, credit risks etc.
(iii) Investment decision.
(iv) Profit plan for the company.
7. Research and Development:
(i) Product introduction planning.
(ii) Control of R&D projects.
(iii) Determination of areas for research and development.
(iv) Selection of projects and preparation of their budgets.
(v) Reliability and control of development projects thus it may be concluded that
operation research can be widely utilized in management decisions and can also be used
as corrective measure.
Methodology of Operation Research:
Quantitative basis for decision making is provided to managers by O.R. it enhances a
manager’s ability to make long range plans and to solve the routine problems of running
a enterprise/concern OR is a systematic and logical approach to provide a rational
footing for taking decisions. Operation research, like scientific research is based on
scientific methodology which involves following steps.
1. Formulating the Problem:
OR is a research into the operation of a man machine organisation and
must consider the economics of the operation in formulating a problem for
O.R. study analysis must be made of the following major components:
(i) The environment.
(ii) The objectives.
(iii) The decision maker.
(iv) The alternative courses of action and constraints out of the above four component,
environment is most comprehensive as it provides a setting for the remaining three. The
operation researcher shall attend conferences, pay visits, send observation and perform
research work thus succeeds in getting sufficient date to formulate the problems.
2. Constructing a Model to Represent the System under Study:
Once the project is approved by the management, the next step is to construct a model
for the system under study. The operation researcher can now construct the model to
show the relations and interrelations between a cause and effect or between an action
and a reaction.
Now the aim of operation researcher is to develop a model which enables him to forecast
the effect of factors crucial to the solution of given problem. The proposed model may be
tested and modified in order to work under stated environmental constraints. A model
may also be modified if the management is not satisfied by its performance.
3. Deriving Solution from the Model:
A solution may be extracted from a model either by conducting experiments on it i.e., by
simulation or by mathematical analysis. No model will work appropriately if the data is
not appropriate. Such information may be available from the results of experiments or
from hunches based on experience.
The data collection can clearly effect the models output significantly. Operation
researcher should not assume that once he has defined his objective and model, he has
achieved his aim of solving the problem. The required data collection consumes time to
prepare if date collection errors are to be minimized
4. Testing the Model and the Solution Derived from it:
As has been pointed out earlier a model is never a perfect representation of reality. But if
properly formulated and correctly manipulated, it may be useful in providing/predicting
the effect of changes in control variables on overall system effectiveness.
The usefulness or utility of a model is checked by finding out how well it predicts the
effect of these changes. Such an analyse is usually known as sensitivity analysis. The
utility or validity of the solution can be verified by comparing the results obtained
without applying the solution with the results obtained when it is used.
5. Establishing Controls over the Solution:
The next phase for the operation researcher is to explain his findings to the
management. It may be pointed out that he should specify those conditions under which
the solution can be utilized.
He should also point out weaknesses if any so that management will know what risks
they are taking while employing the model to generate results. Thus he should also
specify the limits with in which the results obtained from using the model are valid. He
should also define those conditions under which the model will not work.
6. Implementation of the Solution:
The last phase of the operation research methodology is implementation of solutions
obtained in the previous steps. In operation research though decision making is
scientific but its implementation involves so many behavioural issues. Therefore the
implementing authority has to resolve the behavioural issues. He has to sell the idea of
utility of O.R not only to the workers but also to superiors.
The distance between O.R scientist and management may create huddles thus the gap
between one who provides a solution and the other who wants to utilize it must be
eliminated. To achieve this both the management and O.R scientist should play positive
role A properly implemented solution obtained through application of O.R techniques
results in improved working conditions and gains the management support.
Tools of Operation Research:
In any area of human endeavour, whether it is a production system, business system or
service system where an objective is to be optimized, the problem falls into the domain
of operation research.
Some of the commonly used techniques of operation research are as
follows:
1. Linear programming.
2. Waiting line theory or queuing theory.
3. Inventory control models.
4. Replacement problems.
5. Network Analysis.
6. Sequencing.
7. Dynamic programming.
8. Assignment problems.
9. Decision theory.
10. Integer Programming.
11. Transportation Problems.
12. Simulation.
13. Goal Programming.
14. Markov Analysis.
15. Game Theory.
16. Heuristic Models.
17. Routing Models.
18. Symbolic logic.