Introduction to Operations Research

Session Speaker
Prof. Meghna Verma

OPERATIONS RESEARCH

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Introduction to Operations Research : Definition & Characteristics of OR, Techniques in OR, Problem Formulation & Modeling, Linear Programming General formulation, Application Corner point theorem, graphical and Simplex method, Big-M method, Sensitivity analysis ,Duality Transportation Model Finding an initial basic feasible solution: NW corner method, VAM method, LCC method (balanced & unbalanced transportation problems), optimality test: U-V (MODI) method only Assignment problems, Travelling salesman problems, Case Study. Game Theory: Optimal solution of Two-Person Zero-sum Games. Mixed Strategies, Graphical Solutions of (2xn) and (mx2) games, Queueing Models:Queuing Models: Basic elements of Queuing Models. Single Channel Models- M/M/1:FCFS// type only Simulation: Basic Concepts. Use of Random Numbers. Monte Carlo Method, Application of Simulation, Markov Chain Decision Theory: Decision Process, decision making under certainty, decision making under uncertainty decision making under risk. (Expected value criterion,EOL),Decision trees

TEXT BOOK: AIMA Book Quantitative Techniques for Managers OPERATIONS RESEARCH - P.K.Gupta & D.S.Hira. S.Chand & Co. Limited

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Introduction to Operation Research Meaning and definition of Operation Research Phases and application of an operations research Methodology of Operation Research Operation Research Models In Practices Summary

INTRODUCTION
Operations Research involves Research on military operations. This indicates the approach as well as the area of applications of the field. Thus it is an approach to problems of how to coordinate and control the operations or activities within an organization.

World War II Prof. P.M.S.Blackett of Manchester Unive formed Blackett Circus 1950, OR was introduced as a subject in American Univ. ORSA was formed in 1950. In India OR unit was establised in Regional Research Laboratory in Hyderabad. In India OR society of India (ORSI) was founded in 1957. The journal OPSEARCH was published for the first time in 1963, Now OR techniques are used in almost all walks of our life and industry life. Prof. Mahalonobis made the first MADE or APPLICATION IN India in preparing the Draft of Second five year plan.

Meaning of Operation Research

Operation Research is the application of scientific methods, techniques and tools to problem involving the operation of the systems so as to provide those in control of the system with optimum solutions to the problems.-Churchman, Ackoff and Arnoff,1957

Operation Research is the art of giving bad answers to problems, to which ,otherwise ,worse answers are given.-Thomas L.Saaty OR is a scientific method of providing executive departments with a quantitative basis for decisions regarding the operations under their control.- Morse & Kimball

System (or Executive) Orientation of OR Interdisciplinary Approach Scientific Approach Uncovering of new problems Holistic Approach Improvement in the quality of Decision Use of computer Quantitative solutions Human Factors

Judgement Phase

*Determination of the operation *Determination of the objectives and values associated with the operation *Determination of effectiveness measure *Formulation of problem relative to the objective The Research Phase: *Observation and data collection for a better understanding of the problem *Formulation of hypothesis and model *Analysis of available information & verification of hypothesis *Prediction of various results from the hypothesis *Prediction & Generalization of the result and consideration of alternative methods.

The Action Phase

*It consist of making recommendations for implementing the decision by an individual who is in the position to implement the result

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Formulate the problem Develop math model to represent the system Solve and derive solution from model Test/validate model and solution Establish controls over the solution Put the solution to work

Real life problem or opportunity

System Choosing a particular aspect of reality which needs attention Define the problem

Develop The Mathematical Model Collect the relevant data Establish relationships among variables & parameters of the system Define objective(s) to be achieved & limitations on resources

Modify the model Implementation & Control *Interpret solution values *Put the result gained from the solution to work through organisational policies *Monitor changes and exercise control

Solve the model Apply suitable OR technique to ge solution in terms of decision variables

Testing the model & its solution Put values of decision variables in the model under consideration See whether solution is valid or not

Finance
*Capital requirement, cash flow analysis * Credit policy *Profit plan for the company *Determination of optimum replacement policy Dividend policies, auditing, investment & portfolio mgmt

Production Mgmt

Mktg Purchasing ,Procurement & Exploration Personnel Mgmt Techniques & General Mgmt Government R&D

*Facility Planning *Manufacturing *Maintenance & project scheduling

Allocation Models:

which a)there are a number of jobs to be performed and there are alternative ways of doing them and b)Resources & facilities are limited. Assignment model , Transportation model comes under such category.

are used to solve problems in

Inventory Models:deals

with idle resource such as men, machines, money and materials.These models are concerned with two decision: a)how much to order(produce/purchase) to replenish the inventory of an item and b) When to order so as to minimise the total cost.

Waiting line (or Queuing)

models:have been developed to establish a trade-off between cost of providing service and waiting time of customer in th queuing system. Competitive (game theory) models: These models are used when two or more Individualsor organisations with conflicting objectives try to make decisions. Network Model: These models are applied to the mgmt (planning, controlling and scheduling) of large-scale projects. PERT/CPM techniques help in identifying potential trouble spots in a project thru the identification of critical path. Sequencing Models: These are applicable in situations in which there is a problem in determining the sequence (order) in which a no. of tasks can be performed by a no.of service facilities in such a way that some measure of performance eg time,cost or distance is optimized. Decision Analysis Model: These models deal with the selection of an optimal course of action given the possible payoffs and their associated probabilities of occurrence. These models are broadly applied to the problems involving decisionmaking under risk and uncertainty.

Simulation Model :Simulation is a data generation technique and is

used when actual experimentation is not feasible and analytical methods of building models and solving them are not helpful. the optimal time to replace an equipment for one reason or the other.

Replacement model: These models are used when one must decide Markov-chain Model: these models are used for analysing a system
which changes over a period of time among various possible outcomes or states. To test brand loyalty and brand switching tendencies of customers ,where each system state is considered to a particular brand purchase, these models have been used.

Advanced OR models :
Non-linear programming Dynamic programming Integer Programming Goal Programming Heuristic Programming Quadratic Programming Parametric Programming Stochastic Programming Sensitivity analysis

Models

By degree of abstraction

By Function

By Time Horizon

By structure

By Nature Of the Envionment

By the Extent of Generality

MatheMatical Model

Language Model

Descriptive Model

Normative Or Predictive Prescriptive Model Model

Static Models

Dynamic Models

Iconic Or Physical Model

Analog Or Schematic Model

Symbolic Deterministic Or Probabilistic Model Maths Model Model

General Model

Specific Model

 Explained the meaning and definition of operation research along with its application in mgmt. Phases of an operations research project has been explained . Classification scheme of OR models has been explained. OR models in practices were discussed.