**INTRODUCTION TO OPERATION RESEARCH**

**Def: OPERATION RESEARCH:-**

Operation research is the application of scientific methods, techniques and tools to problems involving the operations of systems so as provide those in control of operations with optimum solutions to the problems.

**FEATURES OF OR:-**

**1)
****Decision making: **OR is used for obtaining
numerical solutions to problems. Based on these numerical solutions, the
manager can make decision making.

**2)
****Scientific nature: **OR is quantitative in
nature, not qualitative. Hence, it is not judgemental in nature. The problem is
clearly defined. Numerical data is collected. This data is analyzed using the
appropriate technique and the solution is obtained.

**3)
****Well defined goals and
objectives: **A computer program can be created for a particular OR technique to solve
problems involving large set of data.

**METHODOLOGY OF OPERATION RESEARCH:-**

The application of OR generally
involves following steps:

**1)
****Problem formulation: **The first step is to identify
the problem and then representing it precisely. This includes steps starting
from the problem discovery and ending in problem definition.

**2)
****Model construction: **After defining the
problem, a model needs to be developed to represent the problem. Models can be-

**(a)
****Physical model: **It is a physical
representation of the real situation. E.g. model of a proposed building.

**(b)
****Symbolic model: **Symbolic model use symbols,
letters, and numbers etc. to represent things associated with real life
situations. Symbolic model can be verbal or mathematical.

E.g. In words,
area of a rectangle is the product of its length and breadth

In Symbols, A=l.b

Where- A=area, l=length, b=breadth.

**3)
****Data collection: **After formulating the
model, we need collect the data related with value of
variables. This data will determine the final solution. Hence data collection
is extremely important. Inaccurate or insufficient data will result in poor
solution.

**4)
****Substitute data in the
model: **Then
we substitute the data in the model, apply the appropriate mathematical
technique and solve the model to get solution.

**5)
****Interpretation of
solution: **Interpretation of solution is
subjective in nature. How one manager interprets a solution can differ from how
another manager reads the same situation. Past experience, attitude, bias influence
of surrounding etc. are some of the factors which can affect interpretation.

**6)
****Decision making: **Based on the
interpretation of the solution, the final decision will be taken. The manager
may completely accept the solution, completely rejecte the solution or accept
it partly.

**OPERATION RESEARCH TECHNIQUES:-**

**A.
****STATISTICAL TECHNIQUES: **Statistical techniques are
applied in statistics for data collection, data organisation and data analysis.
Some of the examples are:

**1)
**Mean, median and mode.

**2)
**Mean deviation and standard deviation.

**3)
**Probability theory.

**4)
**Regression analysis and correlation analysis.

**5)
**Sampling.

**B.
****PROGRAMMING TECHNIQUES: **These are OR techniques.
These techniques involve problem formulation , building mathematical models,
substituting data in mathematical models, testing the model, using appropriate
OR technique to solve the problem, obtaining optimal solution. Some examples
are:

**1)
**Linear programming.

**2)
**Transportation problems.

**3)
**Assignment problems.

**4)
**Critical path method.

**5)
**Decision theory.

**6)
**Inventory management.

**APPLICATION AREAS FOR OPERATION
RESEARCH TECHNIQUES:-**

Or techniques are applied to a
variety of business problems. Some examples are:

**A. Production management: **

** 1) **To
calculate loss of time due to waiting time, queuing time etc.

** 2) **To decide
optimum allocation of jobs and optimum sequence in which job should be
sequenced.

**B. Personal management:**

**1) **To study labour turnover.

** 2) **To do human
resource planning.

** 3) **To decide
number of personnel required to be kept on standby in case of demand for higher
manpower.

**C. Inventory management: **

**1) **To study economic lot size to be
ordered.

**D. Marketing management: **

**1) **To decide optimal product mix for
maximum profit.

** 2) **Media
selection for advertising for maximum reach.

** 3) **Sales
forecasting.

**E. Transportation management:**

**1) **To determine transportation schedule
for minimum cost or minimum time.

**F. Project management:**

**1) **To identify critical and
non-critical activities of a project.

** 2) **To
determine minimum project completion time.

** 3) **To
determine optimal project cost.

**G. Financial management:**

**1) **To decide investment portfolio to maximize return on investment.

**LIMITATIONS
OF OPERATIONS RESEARCH TECHNIQUES:-**

Some of the
major limitations of OR techniques are:

**1) **In construction of mathematical models, something assumptions are
necessary to simplify model construction. But over simplification of a model or
too many assumptions can make the model un realistic.

**2) **OR techniques are quantitative in nature. Hence these techniques do
not consider qualitative or intangible factors such as customer perceptions,
employee motivation levels, quality of executives, advantage of experience etc.

**3) **All business situations cannot be responded with quantitative
techniques. Some business situations require gut feeling, initiative or
managerial judgment. OR techniques cannot be applied in such situations.

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