Overview of The Operations Research Modeling Approach

Learning Objectives Students will be able to: Describe the operations research (OR) approach. Understand the application of OR in a real situation. Describe the use of modeling in OR. Discuss possible problems in using operations research.

Operations Research\History The formal activities of Operations Research (OR) were initiated in England during World War II when a team of British scientists set out to make decisions regarding the best utilization of war material. Following the end of the war, the ideas advanced in military operations were adapted to improve efficiency and productivity in the civilian sector. Today, OR is a dominant and indispensable decision making tool.

What is OR? “[Application of] scientific methods to decision making in complex real world problems which are concerned with coordination and execution of the operations within an organization” Goal = find a best possible solution to improve performance of the organization

Other Definitions “a scientific approach to decision making, which seeks to determine how best to design and operate a system, usually under conditions requiring the allocation of scarce resources.”

Other Definitions “a scientific method of providing executive departments with a quantitative basis for decisions regarding the operations under their control”.

Other Definitions Operations Research Approach Meaningful Raw Data Information Raw Data

Operation Research Provides rational basis for decision making Solves the type of complex problems that turn up in the modern business environment. Builds mathematical and computer models of organizational systems composed of people, machines, and procedures. Uses analytical and numerical techniques to make predictions and decisions based on these models.

The usual phases of an OR study Define the problem of interest and gather relevant data. Formulate a mathematical model to represent the problem. Deriving solutions to the problem from the model. Test the model and refine it as needed. Prepare for the ongoing application of the model as prescribed by management. Implement.

1. Define the problem of interest and gather relevant data. Defining the problem includes: Developing a well-defined statement of the problem to be considered. Determining the appropriate objectives, constraints, interrelationships between the area to be studied and other areas of the organization, time limits for making a decision, and so on. Model data: Accurate input data that may come from a variety of sources such as company reports, company documents, interviews, on-site direct measurement, or statistical sampling.

Gathering Data Garbage In Garbage Out =

2. Formulate a mathematical model to represent the problem. Constructing a mathematical model that represents the essence of the problem. Mathematical models are expressed in terms of mathematical symbols and expressions, for example Breakeven Quantity determination Q=(F/(P-V)). What kind of model should be used? Is the model accurate? Is the model too complex?

3. Deriving solutions to the problem from the model. OR searches for the optimal, or best, solution. The best model solution is found by manipulating the model variables until a practical and implemental solution is obtained. Manipulation can be done by solving the equation(s), trying various approaches (trial and error), trying all possible variables (complete enumeration), and/or implementing an algorithm (repeating a series of steps).

4. Test the model Before using the model, it must be tested to try to identify and correct as many flows as possible. Do outputs match current observations for current inputs? Are outputs reasonable? Could the model be erroneous?

5. Preparing to apply the model In this step a well-documented system is installed for applying the model as prescribed by management. The system includes the model, solution procedure, and operating procedures for implementation. This system usually is computer-based.

6. Implement The success of the implementation phase depends upon the support of both top management and operating management to the OR team. Users must be trained on the new system. System must be observed over time to ensure it works properly.