Operations Research

CHAPTER - 1
Introduction to Operations Research
History of Operations Research
Operations Research is a relatively new discipline. Whereas 70 years
ago it would have been possible to study mathematics, physics or
engineering (for example) at university it would not have been possible to
study OR, indeed the term OR did not exist then. It was only really in the
late 1930's that operational research began in a systematic fashion, and it
started in the UK.
Early in 1936 the British Air Ministry established Bawdsey Research
Station, on the east coast, near Felixstowe, Suffolk, as the centre where all
pre-war radar experiments for both the Air Force and the Army would be
carried out. Experimental radar equipment was brought up to a high state
of reliability and ranges of over 100 miles on aircraft were obtained.
It was also in 1936 that Royal Air Force (RAF) Fighter Command,
charged specifically with the air defense of Britain, was first created. It
lacked however any effective fighter aircraft - no Hurricanes or Spitfires
had come into service - and no radar data was yet fed into its very
elementary warning and control system.
It had become clear that radar would create a whole new series of
problems in fighter direction and control so in late 1936 some experiments
started at Biggin Hill in Kent into the effective use of such data. This early
work, attempting to integrate radar data with ground based observer data
for fighter interception, was the start of OR.
The first of three major pre-war air-defense exercises was carried
out in the summer of 1937. The experimental radar station at Bawdsey
Research Station was brought into operation and the information derived
from it was fed into the general air-defense warning and control system.
From the early warning point of view this exercise was encouraging, but
the tracking information obtained from radar, after filtering and
transmission through the control and display network, was not very
satisfactory.
In July 1938 a second major air-defense exercise was carried out.
Four additional radar stations had been installed along the coast and it
was hoped that Britain now had an aircraft location and control system
greatly improved both in coverage and effectiveness. Not so! The exercise
revealed, rather, that a new and serious problem had arisen. This was the
need to coordinate and correlate the additional, and often conflicting,
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information received from the additional radar stations. With the out-break
of war apparently imminent, it was obvious that something new - drastic if
necessary - had to be attempted. Some new approach was needed.
Accordingly, on the termination of the exercise, the Superintendent
of Bawdsey Research Station, A.P. Rowe, announced that although the
exercise had again demonstrated the technical feasibility of the radar
system for detecting aircraft, its operational achievements still fell far
short of requirements. He therefore proposed that a crash program of
research into the operational - as opposed to the technical - aspects of the
system should begin immediately. The term "operational research"
[RESEARCH into (military) OPERATIONS] was coined as a suitable
description of this new branch of applied science. The first team was
selected from amongst the scientists of the radar research group the
same day.
In the summer of 1939 Britain held what was to be its last pre-war
air defense exercise. It involved some 33,000 men, 1,300 aircraft, 110
antiaircraft guns, 700 searchlights, and 100 barrage balloons. This
exercise showed a great improvement in the operation of the air defense
warning and control system. The contribution made by the OR teams was
so apparent that the Air Officer Commander-in-Chief RAF Fighter
Command (Air Chief Marshal Sir Hugh Dowding) requested that, on the
outbreak of war, they should be attached to his headquarters at
Stanmore.
On May 15th 1940, with German forces advancing rapidly in France,
Stanmore Research Section was asked to analyze a French request for ten
additional fighter squadrons (12 aircraft a squadron) when losses were
running at some three squadrons every two days. They prepared graphs
for Winston Churchill (the British Prime Minister of the time), based upon a
study of current daily losses and replacement rates, indicating how rapidly
such a move would deplete fighter strength. No aircraft were sent and
most of those currently in France were recalled.
This is held by some to be the most strategic contribution to the
course of the war made by OR (as the aircraft and pilots saved were
consequently available for the successful air defense of Britain, the Battle
of Britain).
In 1941, an Operational Research Section (ORS) was established in
Coastal Command which was to carry out some of the most well-known
OR work in World War II. Although scientists had (plainly) been involved in
the hardware side of warfare (designing better planes, bombs, tanks, etc)
scientific analysis of the operational use of military resources had never

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taken place in a systematic fashion before the Second World War. Military
personnel were simply not trained to undertake such analysis.
These early OR workers came from many different disciplines, one
group consisted of a physicist, two physiologists, two mathematical
physicists and a surveyor. What such people brought to their work were
"scientifically trained" minds, used to querying assumptions, logic,
exploring hypotheses, devising experiments, collecting data, analyzing
numbers, etc. Many too were of high intellectual caliber (at least four
wartime OR personnel were later to win Nobel prizes when they returned
to their peacetime disciplines).
By the end of the war OR was well established in the armed services
both in the UK and in the USA.
Operations Research started just before World War II in Britain with
the establishment of teams of scientists to study the strategic and tactical
problems involved in military operations. The objective was to find the
most effective utilization of limited military resources by the use of
quantitative techniques.
Following the end of the war OR spread, although it spread in
different ways in the UK and USA.
You should be clear that the growth of OR since it began (and
especially in the last 30 years) is, to a large extent, the result of the
increasing power and widespread availability of computers. Most (though
not all) OR involves carrying out a large number of numeric calculations.
Without computers this would simply not be possible.

Origin of Operations Research

The origin of Operations Research was during the Second World War.
At that time, the military management in England called upon a team of
scientists to study the strategic and tactical problems related to defense
of the country. Since they were having very limited military resources, it
was necessary to decide upon the most effective utilization of them.
Their mission was to formulate specific proposals and plans for
aiding the military commands to arrive at decisions on optimal utilization
of scare military resources and efforts, and also to implement the
decisions effectively. Hence OR can be associated with an art of winning
the war without actually fighting it.
Following the end of war, the success of military teams attracted the
attention of Industrial managers who were seeking solutions to their
complex executive-type problems. Hence OR is the art of giving bad
answers to problems to which otherwise worse answers are given.
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If the model is carefully formulated and tested, the resulting solution

should reach to be good approximation to the ideal course of action for
the real problem. Although, we may not get the best answers, but
definitely we are able to find the bad answers where worse exist. Thus
operations research techniques are always able to save us from worse
situations of practical life.
The British/Europeans refer to "operational research", the Americans
to "operations research" - but both are often shortened to just "OR" (which
is the term we will use).
Another term which is used for this field is "management science"
("MS"). The Americans sometimes combine the terms OR and MS together
and say "OR/MS" or "ORMS".
Yet other terms sometimes used are industrial engineering (IE),
decision science (DS), and problem solving. In recent years there has
been a move towards a standardization upon a single term for the field,
namely the term "OR".

Nature of Operations Research

Operations Research involves research on operations.
The OR is applied to problems that concern how to conduct and
coordinate the operation (activities) within an organization.
In particular, the process begins by carefully observing and
formulating the problem, including gathering all relevant data.
The next step is to construct a scientific model that attempts to
abstract the essence of the real problem.
Next, suitable experiments are conducted to test this hypothesis,
modify it as needed, and eventually verify some form of hypothesis.
Operations Research is also concerned with the practical
management of the organizations. Another characteristic of OR is its
broad viewpoint. Operations Research adopts an organizational point of
view. Thus, it attempts to resolve the conflicts of interest among the
components of the organization in a way that is best for the organization
as a whole.
An additional characteristic is that OR frequently attempts to find a
best solution for the problem under consideration.
Therefore, when a full fledged OR study of a new problem is
undertaken, it is usually necessary to use a team-approach.

Impact of Operations Research

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Today, the impact of OR can be felt in many areas. A large number

of management consulting firms are currently engaged in OR activities.
Apart from military and business applications, the OR activities include
transportation system, libraries, hospitals, city planning, financial
institutions etc. Besides this, OR is useful in the following various
important fields.
1. In Agriculture.
With the explosion of population and consequent storage of food,
every country is facing problem of
i.

Optimum allocation of land to various crops in accordance with

the climatic conditions.

ii.

Optimum distribution of water from various resources like canal

for irrigation purposes.

Thus there is a need of determining best policies under the

prescribed restrictions. Hence a good amount of work can be done in this
direction.

2. In Finance.
In these modern times of economic crisis, it has become very
necessary for every government to have a careful planning for the
economic development of the country. OR-techniques can be fruitfully
applied.
i.

To maximize the per capita income with minimum resources.

ii.

To find the profit plan for the company.

iii.

To determine the best replacement policies, etc.

3. In Industry.
If the industry manager decides his policies (not necessarily
optimum) only on the basis of his experience (without using OR
techniques) and a day comes when his retirement, then a heavy loss is
encountered before the industry. This heavy loss can immediately be
compensated by newly appointing a young specialist of OR techniques in
business management. Thus OR is useful to the Industry Director in
deciding optimum allocation of various limited resources such as men,
machines, material, money, time, etc., to arrive at the optimum decision.
4. In Marketing.
With the help of OR techniques a Marketing Administrator (Manager)
can decide.
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i.

Where to distribute the products for sale so that the total cost of
transportation etc., is minimum.

ii.

The minimum per unit sale price.

iii.

The size of the stock to meet the future demand.

iv.

How to select the best advertising media with respect to time,

cost, etc.,

v.

How, when and what to purchase at the minimum possible cost?

5. In Personnel Management
A personnel manager can use OR techniques:
i.

To find out the most suitable persons on minimum salary

ii.

To determine the best age of retirement for the employees.

iii.

To find out the number of persons to be appointed on full time

basis when the workload is seasonal (not continues).

6. In Production management
A production manager can use OR techniques.
i.

To find out the number and size of the items to be produced.

ii.

In scheduling and sequencing the productions run by proper

allocation of machines.

iii.

In calculating the optimum product mix.

iv.

To select, locate and design the sites for the production plants,
etc.,

7. In Insurance and Banking

OR approach is also applicable to enable the Insurance and Banking
sector.
i.

What should be the premium rates for various modes of policies

and loans?

ii.

How best the profits could be distributed in the cases of with

profit policies and investments, etc.,
Finally, we can say: wherever there is problem, there is OR. The
application of OR cover the whole extent of anything.

The Modeling Approach

Different Phases of Operations Research

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In analyzing and solving a typical problem in the subject Operations

Research, we involve certain stages known as phases of O.R. study. The
usual phases are the following:
1. Definition of the problem.
2. Constructing mathematical model.
3. Deriving a solution from the model.
4. Testing the model and its solution.
5. Establishing control over the solution.
6. Implementation.

Defining the Problem and Gathering Data (Formulating the

Problem)
Most practical problems encountered by OR teams are initially
described to them in a vague, imprecise way. Therefore, the first order of
business is to study the relevant system and develop a well defined
statement of the problem to be considered.
The team performs a detailed technical analysis of the problem and
then presents recommendations, takes into account a variety of intangible
factors, and makes the final decision based on its best judgment.
By its nature, OR is concerned with the welfare of the entire
organization rather than that only certain of its components. An OR study
seeks solution that are optimal for the overall organization rather than
suboptimal solutions that are best only for one component.
Therefore, OR teams typically spend a surprisingly large amount of
time gathering relevant data about the problem. Much data usually are
needed both to gain an accurate understanding of the problem and to
provide the needed input for the mathematical model being formulated in
the next phase of study.
Before proceeding to find the solution of the problem: first of all one
must be able to formulate the problem in the form of an appropriate
model. To do so, the following information will be required.
a. Who has to take the decision?
b. What are the objectives?
c. What are the ranges of the controlled variables?
d. What are the uncontrolled variables that may affect the possible
solutions?
e. What are the restrictions or constraints on the variables?
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Since wrong formulation cannot yield a right decision (solution), one

must be considerably careful while executing this phase.

Formulating a Mathematical Model

In developing the model, a good approach is to begin with a very
simple version and then move in evolutionary fashion toward more
elaborate models that more nearly reflect the complexity of the real
problem.
A crucial step in formulating an OR model is the construction of the
objective function. This requires developing a quantitative measure of
performance relative to each of the decision makers ultimate objectives
that were identified while the problem was being defined. If there are
multiple objectives, their respective measures commonly are then
transformed and combined into a composite measure, called the overall
measure of performance.
Therefore, this phase of investigations is concerned with the
reformulation of the problem in an appropriate form which is convenient
for analysis. The most suitable form for this purpose is to construct a
mathematical model representing the system under study. It requires the
identification of both static and dynamic structural elements. A
mathematical model should include the following three important basic
factors:
a. Decision variables and parameters.
b. Constraints and restrictions.
c. Objective function.

Deriving Solutions from the Model

After a mathematical model is formulated for the problem under
consideration, the next phase in an OR study is to develop a procedure
(usually a computer based procedure) for deriving solutions to the
problem from this model.
A common theme in OR is the search for an optimal or best solution.
Therefore, the goal of an OR study should be to conduct the study in an
optimal manner, regardless of whether this involves finding an optimal
solution for the model. Thus, in addition to pursuing the science of the
ultimate, the team should also consider the cost of the study and the
disadvantages of delaying its completion, and then attempt to maximize
the net benefits resulting from the study.

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In recognition of this concept, OR teams occasionally use only heuristic

procedures (intuitively designed procedures that do not guarantee an
optimal solution) to find good suboptimal solution. The most often the
case when the time or cost required finding an optimal solution for an
adequate model of the problem is very large. In recent years, great
progress has been made in developing efficient and effective
metaheuristics that provide both a general structure and strategy
guidelines for designing a specific heuristic procedure to fit a particular
kind of problem.
An optimal solution for the original model may be far from ideal for the
real problem. So, additional analysis is needed. Therefore, post optimal
analysis (analysis done after finding an optimal solution) is a very
important part of most OR studies. This analysis also is sometimes
referred to as what-if-analysis because it involves addressing some
questions about what would happen to the optimal solution if different
assumptions are made about future conditions. In part, post-optimality
analysis involves conducting sensitivity analysis to determine which
parameters of the model are critical (the sensitive parameters) in
determining the solution. A common definition of sensitive parameter is
the following.
For a mathematical model with specified values for all its
parameters, the models sensitive parameters are the parameters
whose values cannot be changed without changing the optimal
solution.
Therefore, this phase is devoted to the computation of those values of
decision variables that maximize (or minimize) the objective function.
Such solution is called an optimal solution which is always in the best
interest of the problem under construction. The general techniques for
deriving the solution of OR model are discussed in the following sections.

Testing the model and its solution

Developing a large mathematical model is analogous in some ways to
developing a large computer program. When the very first version of the
computer program is completed, it inevitably contains many bugs. The
program must be thoroughly tested to try to find an correct as many bugs
as possible. Eventually, after a long succession of improved programs, the
programmer (or programming team) concludes that the rent program now
is generally giving reasonable valid results. The process of testing and
improving a model to increase its validity is commonly referred to as
model validation.

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After completing the model, it is once again tested as a whole for errors if
any. A model may be said to be valid if it can provide a reliable prediction
of the systems performance. A good practitioner of Operation Research
realizes that his model be applicable for a longer time and thus he
updates the model time to time by taking into account the past, present
and future specifications of the problem.

Preparing to apply the model (controlling the solution)

This system, will include the model, solution procedure (including postoptimality analysis), and operating procedures for implementation. Then,
even as personnel changes, the system can be called on at regular
intervals to provide a specific numerical solution.
This system is usually is computer-based. In fact, a considerable number
of computer programs often need to be used and integrated. Databases
and Management Information may provide up-to-date input for the model
each time it is used, in which case interface programs are needed. After a
solution procedure (another program) is applied to the model, additional
computer programs may trigger the implementation of the results
automatically.
This phase establishes controls over the solution with any degree of
satisfaction. The model requires immediate modification as soon as the
controlled variables (one or more) change significantly, otherwise the
model goes out of control. As the conditions are constantly changing in
the world, the model and the solution may not remain valid for a long
time.

Implementation
After a system is developed for applying the model, the last phase of an
OR study is to implement this system as prescribed by the management.
This phase is a critical one because it is here, and only here, that the
benefits of the study are reaped.
The success of the implementation phase depends on a great deal upon
the support of both top management and operating management.
The implementation phase involves several steps. First, the OR team gives
operating management a careful explanation of the new system to be
adopted and how it relates to operating realities. Next, these two parties
share the responsibility for developing the procedures required to put this
system into operation. Operating management then sees that a detailed
indoctrination is given to the personnel involved.

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Finally, the tested results of the model are implemented to work. This
phase primarily executed with the cooperation of the Operation Research
Experts and those who are responsible for managing and operating the
system.

The Methodology of Operations Research

When OR is used to solve a problem of an organization, the following
seven step procedure should be followed:
Step 1.

Formulate the Problem

OR analyst first defines the organization's problem. Defining the problem

includes specifying the organization's objectives and the parts of the
organization (or system) that must be studied before the problem can be
solved.
Step 2.

Observe the System

Next, the analyst collects data to estimate the values of parameters that
affect the organization's problem. These estimates are used to develop (in
Step 3) and evaluate (in Step 4) a mathematical model of the
organization's problem.
Step 3.

Formulate a Mathematical Model of the Problem

The analyst, then, develops a mathematical model (in other words an

idealized representation) of the problem. In this class, we describe many
mathematical techniques that can be used to model systems.
Step 4.

Verify the Model and Use the Model for Prediction

The analyst now tries to determine if the mathematical model developed

in Step 3 is an accurate representation of reality. To determine how well
the model fits reality, one determines how valid the model is for the
current situation.
Step 5.

Select a Suitable Alternative

Given a model and a set of alternatives, the analyst chooses the

alternative (if there is one) that best meets the organization's objectives.
Sometimes the set of alternatives is subject to certain restrictions and
constraints. In many situations, the best alternative may be impossible or
too costly to determine.
Step 6.

Present the Results and Conclusions of the Study

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In this step, the analyst presents the model and the recommendations
from Step 5 to the decision making individual or group. In some situations,
one might present several alternatives and let the organization choose the
decision maker(s) choose the one that best meets her/his/their needs.
After presenting the results of the OR study to the decision maker(s), the
analyst may find that s/he does not (or they do not) approve of the
recommendations. This may result from incorrect definition of the problem
on hand or from failure to involve decision maker(s) from the start of the
project. In this case, the analyst should return to Step 1, 2, or 3.
Step 7.

Implement and Evaluate Recommendation

If the decision maker(s) has accepted the study, the analyst aids in
implementing the recommendations. The system must be constantly
monitored (and updated dynamically as the environment changes) to
ensure that the recommendations are enabling decision maker(s) to meet
her/his/their objectives.

Properties of good model

A good model must possess the following characteristics:
i.

A good model should be capable of taking into account new

formulations without having any significant change in the frame.

ii.

Assumptions made in the model should be clearly mentioned and

should be as small as possible.

iii.

The model should be simple and logical in its structure. There should
be less number of variables.

iv.

It should be open to parametric type treatment.

Advantages of a model
i.

The problem under consideration can be controlled through a model.

ii.

The model provides the limitations and scope of an activity.

iii.

It provides a logical and systematic approach to the problem.

iv.

These help in incorporating useful techniques and eliminate

duplication of methods applied to solve the problem.

v.

For a new research and development in a system, the models serve

a useful tool.

Advantages of O.R. studies

i.

Economic use of production factors

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Techniques like linear programming, inventory control, production

planning, product mix, transportation problem etc., are very
common to industries and these techniques clearly help manager to
employ his production factors by more efficiently selecting and
distributing these elements.
ii.

Better quality of decision

The computation process indicated by certain tables gives a clear
picture of what is happening within the basic restrictions and the
possibilities of compound behavior of the elements involved in the
problem. The effect of changes in certain elements is being taken
care by sensitivity analysis and post-optimality analysis.

iii.

Training the future executives

The O.R. techniques offer scope to improve the skill and knowledge
of the executives to arrive at optimum decision in business problems
in a more scientific way.

iv.

Changes in the solution

O.R. offers a solution in the most practical way but it is up to the
managers to accept or modify. The modifications can be easily done
by the changes in the model and its solution.

v.

Different optimum solutions

O.R. suggests alternative optimum solutions to the same problem so
that the management can choose the one which suits to them in the
most practical way.

Limitations of O.R. studies

The O.R. has advantages; we cannot but mention the following
limitations involved.
i.

Formulation of problem
The main idea in O.R. is to build a suitable model taking into account
all the factors in the problem in any industry. It is not always easy to
formulate a model for a given problem. Even if the problem is
formulated there is no guarantee that solution to the problem exists.
Considerable progress has already been made to solve all routine
problems and we can do fast by the use of standard programmes
with the electronic high speed computers.

ii.

Dependency on the solution

The solution obtained to the problem may be near optimal. For
example a non-linear relationship is changed into linear
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programming format which is agreeable for solution. This may give

only an approximate solution to the original problem.
iii.

Money, time and cost

The expenditure involved in solving the problems, changes in the
solution programmes and time taken to solve a problem may be an
involved one in dealing with O.R. applications

iv.

Organization aspect
Even though the O.R. models emphasize to take the entire
organization into account, it is difficult in certain cases to build a
model taking all factors into consideration. The problem may
become complicated with more objective functions and constraints
may be inconsistent or contradicting. Then a solution may not exist.

Basic OR Concepts
"OR is the representation of real-world systems by mathematical models
together with the use of quantitative methods (algorithms) for solving
such models, with a view to optimizing."
We can also define a mathematical model as consisting of:
Decision variables, which are the unknowns to be determined by the
solution to the model.
Constraints to represent the physical limitations of the system
An objective function
An optimal solution to the model is the identification of a set of
variable values which are feasible (satisfy all the constraints) and
which lead to the optimal value of the objective function.
In general terms we can regard OR as being the application of scientific
methods / thinking to decision making.
Underlying OR is the philosophy that:
Decisions have to be made; and
Using a quantitative (explicit, articulated) approach will lead to
better decisions than using non-quantitative (implicit, unarticulated)
approaches.
Indeed it can be argued that although OR is imperfect it offers the best
available approach to making a particular decision in many instances
(which is not to say that using OR will produce the right decision).

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"OR is the representation of real-world systems by mathematical

models together with the use of quantitative methods
(algorithms) for solving such models, with a view to optimizing."

Exercise:
1. Define the term operations research and write brief notes on
applications of operations research. (Garhwal 97,96; Meerut (IPM) 90, IGNOU 2001
(June), Dec. 06/Jan.07, Dec.08/Jan.09)

2. Write a short note on nature and meaning of OR.

(IPM (PGDBA) 82,81;

Meerut82) - 6M

3. Define: i) Feasible solution ii) Feasible region iii) Optimal solution.

(June-

July 2009) - 6M

4. Write the meaning of following terms with respect to a LPP.Give

examples for each:
a. Feasible solution
b. Infeasible solution.
c. Feasible region
d. Optimal Solution.
e. CPF solution
5.

(Dec 2009 /Jan 10) - 05M

Write 4 assumptions of linear programming.

(Dec 2009 /Jan 10) - 04M

6. State and explain the different stages involved in solving a problem in

OR.

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7. List and briefly explain the various types of models used in OR.
8. What are the various phases through which an OR team normally has
to proceed?

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