Tag: characteristics of operational research

Introduction

The current problem in the decision-making process is solved using the operational research (OR) approach. In this circumstance, which is also known as a management system decision-making situation, all variables are quantified with the intention of the phrase “quantification of variables” refers to the conversion of the given data into units such as dollars, kilogrammes, litres, hours, days, and months.

When doing operation research (OR), the firm, organisation, or management as a whole is taken into account rather than a single person, department, auction, division, or branch. Often was created in the early stages of World War II. OR attempts to identify and address an issue in order to find the optimum solution by analysing the potential effects of several solutions.

Meaning

Operation research is a strategy that is used to handle a variety of economic, management, industrial, and military challenges with the best possible resource utilisation. This makes disagreements unnecessary. All parties are unquestioningly accepting Olt’s solution. Before choosing a solution, the management’s overall interests are taken into account.

Definition

Operations research, according to the American Encyclopedia of Management, is “the quantitative study of an organisation in motion carried out to uncover ways in which its functions might be enhanced.”

Activities research is a scientific approach for giving executive departments a quantitative foundation for choices relating to the operations under supervision, according to Morse and Kiball.

“Operations research is the application of specialised methodologies, tools and techniques to operations of system with optimal solution to the issues,” claim C.W. Churchman, R.L. Acroff, and E.L. Amoff.

According to definitions of operation research, the problem’s nature is defined numerically, and the relationships between its components are examined in order to make decisions based on the results of the study. When an ideal solution is needed, operation research is used.

In order to maximise profit, it was basically designed to identify methods to allocate limited resources—men, money, and material—to different production processes and to the activities inside each operation in an efficient manner.

Characteristics of Operational Research

The following is a discussion of the fundamental elements of operation research:

1. Quantitative presentation of the issue.
2. Recognition of the problem’s components
3. Determining the existing connections between the different aspects of the issue.
4. Models are valued in operation research. Model is the depiction of a problem’s events, processes, or systems.
5. The model is used to determine the solution.
6. The identification of obstacles to the suggested solution.
7. Evaluating the suggested remedy to ascertain its degree of success in accomplishing objectives.

Techniques from operation research are used to everyday, strategically oriented tasks. Routine issues are those that repeat themselves. Production issues, inventory issues, machine repairs, labour issues, and other issues like amenities are some of them.

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Role of Operational Research

Operation research was first created to simplify difficult decision-making. Growing firm size, competition, legislation, consumerism, etc. all add to the complexity of business decisions. How to optimise company operations for the best outcomes is the fundamental issue that the majority of managements face in a complicated circumstance.

Today’s quickly evolving internet environment presents company managers with the challenge of maximising profit with limited resources. In this case, operation research aids the company management in streamlining operations.

1. The full operation research approach may be used to plan production and address issues with labour, materials control, finances, distribution channels, marketing, and other issues.
2. The strategies allow for the optimal allocation of resources. A large size business unit has significant challenges with resource allocation since each division tends to operate independently and may need more resources.
3. Market opportunities at the national and worldwide level may be quickly decided upon with the use of operational research methodologies.
4. A manager may use approaches from operation research to measure various factors.
5. Different fields, including arithmetic, statistics, computers, economics, engineering, management, and others are covered by operation research methodologies. This kind of combination makes it easier to analyse the issue more thoroughly and choose an accurate solution.

In order to succeed, the best or optimal answer is required in every area of life. Due to the competitive climate, concrete and the finest answer are very crucial in the corporate world.

Operational Research Techniques

Finding the best answer requires the development of operation research techniques. The following describes a few of the methods.

WAITING LINE THEORY OR QUEUEING THEORY

This idea may be used to solve the problem of waiting lines. Thus, the waiting line hypothesis is the term given to it. People encounter waiting lines at bus stops, train stations, banks, parks, beaches, movie theatres, hospitals, grocery stores, and other locations daily in our fast-paced world. Customers leave these centres when services are delayed.

The queing models aid managers in making informed decisions. Here, the extra expense associated with cutting down on or doing away with waiting time is considered. Before making a choice, two variables are taken into account. The first and second factors are the cost of extra costs and the cost of idle capacity, respectively. When a facility is built at significant expense to minimise or eliminate waiting, idle capacity is revealed. A facility built on a tight budget makes users pay a hefty price for waiting.

A facility built at a high cost also has a high idle capacity cost. Types of costs must be at their lowest possible level. The following factors are taken into account while building a facility:

1. The frequency of consumer arrivals.
2. The likelihood of having to wait
3. Duty time.
4. The price of losing a client.
5. The quantity of amenities offered.
6. The First Come, First Served principle of service.
7. Emergency cases are given priority at the hospital.

The quewing hypothesis aids management in making decisions on the supply of the best facilities.

LINEAR PROGRAMMING

To maximise profit or reduce loss, linear programming is utilised. When a number of factors impact how well an organisation achieves its goals, this strategy is used. The challenge here is determining the ideal set of values for these variables.

The goals and each of the variables are interconnected in some way. Relationships are by their very nature linear. It implies that a little adjustment in any one of the variables might affect how goals are attained.

An organization’s limited resources may be used efficiently by using the linear programming method. Money, materials, machine hours, and other resources of this kind may be limited. The resource is discovered in the greatest amount possible at any given moment.

Any resource’s amount cannot be grown to its maximum right away, although it could be feasible in the long term. According to linear programming, the management must make a choice on how those few resources should be wisely distributed and used.

“Linear Programming is a strategy for describing how to utilise restricted resources or capabilities of a corporation to attain given target, such as least time when such resources have alternative uses,” claim Ferguson and Sargent.

Thus, under certain constraints, linear programming is the maximisation of profits or minimization of losses. In addition, linear programming provides management with a wealth of data to aid in decision-making on the resources it is in charge of.

Characteristics / Features of Linear Programming

There are certain traits or aspects of linear programming. These are briefly spoken about.

below.

1. Objective function: Linear programming may be used to help an organisation accomplish its goals. Therefore, it qualifies as an objective function.
2. Quantifiable: Resources are described by their numerical value. For instance, the number of labour hours used to describe human resources and the number of units used to measure production capacity are two examples. The goals of an organisation may also be stated numerically, as profit expressed in rupees.
3. Restrictions: The decision-making process is subject to a variety of limitations. There may be limitations on the supply of labour, raw materials, and other resources.
4. Consistency: All choices have a consistent result.
5. Positivity: Linear programming can identify an organization’s positive attributes. There is no chance of anything bad happening. The accomplishment of an organization’s goals is the result of favourable variables.
6. Optimal resource use: Limited resources are allocated and used effectively. There won’t be any waste.
7. Direct connection, often known as a linear relationship: The connection between two or more variables is linear. In other words, the product will be produced in the same proportion with a specific amount of new inputs.
8. Choosing the best path of action: Instead of just choosing one course of action, the decision-maker has a choice of realistic courses of action. The decision maker must choose the best course of action from among various options.

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Suitability of Linear Programming

The following fields have shown success using linear programming approaches.

1. Appropriate use of available limited resources: By appropriately allocating resources, it is possible to enhance overall production while making a profit. It entails choosing how to distribute scarce resources. The use of linear programming aids management in making wise choices.
2. Best combination selection: The finest combination may be chosen to get the best outcomes for the least amount of money. Combination may occur in the areas of labour force (skilled, unskilled, or semi-skilled), sales or manufacturing, etc.
3. Product distribution: A certain product may be sold everywhere in the globe. Long distance markets have significant transportation costs, which reduces profit. When compared to distant markets, local markets are more profitable. The issue with the product distribution may be resolved at this point.
4. Make or buy decisions: This is a dilemma that large organisations often face, namely whether to manufacture a product internally or to purchase it outside. Here, linear programming methods may be used to choose which goods should be manufactured, which ones should be bought, and so on.

Limitations of Linear Programming

Despite its drawbacks, linear programming is a very effective method for handling unusual issues. The restrictions are listed below.

1. The premise of linear programming is that two variables are directly related to one another. However, in reality, there is no such connection, particularly when it comes to commercial and industrial issues.
2. The effects of time and uncertainty are not taken into account by linear programming. Most commercial or industrial issues are not ongoing. The outcomes or effects of any solution, however, are not certain.
3. The only goal of linear programming is to increase production or profit. In actuality, the industrial or corporate challenge has several goals. It indicates that management takes into account factors such as labour force, manufacturing capacity, and others in addition to only profit growth. Multi-objective issues cannot be handled by the linear programming approach. So, in the modern, rapidly evolving internet environment, linear programming is not applicable.

Game Theory

Game Theory was created by Oskar Morgenstern and John Van Neumann. Game theory aims to predict logically how individuals will act in conflictual circumstances. The behaviour of others is influenced by an individual’s conduct. An entrepreneur in business seeks to gauge the responses of rivals by providing a special discount or gift for large purchases, promoting the current product with a fresh look, and other similar tactics.

The same businessperson also wants to know how customers will respond when a new product, advertisement, or similar change is made. Game theory aids management in creating new winning methods in this circumstance.

In competitive scenarios, success requires a logical plan of action. In addition, the overall result of each action depends on both the individual action and the acts of others. The other members are dealing with a similar issue.

A disagreement between two or more people is referred to as a “game.” A set of rules frames a game. The set of rules precisely outlined what each participant should do and should not do in a variety of situations. Each player has a number of options about how their other players will move. Finally, one player must triumph, while the other players must lose.

Finding the best winning strategy for a certain competitive circumstance is the basis of every game. Each player has to understand that his opponent, or fellow player, has comparable goals. The explanation is that winning is everyone’s only goal in the game.

Features / Characteristics of Game Theory

If a competitive scenario has some of the following elements or characteristics, it may be referred to as a game.

1. Reasonable behaviour is required of every participant.
2. The participants’ interests are in conflict. In this case, the conflict of interest is the outcome, or winning.
3. Each participant acts rationally.
4. There is a single victor.
5. In a competitive setting, every action is made to maximise profits and minimise losses.
6. A player’s strategy influences the tactics used by other players.
7. There are several ways for each player to win.
8. A game’s regulations provide restrictions on the tactics that each participant may use.
9. Before choosing his own line of action, no player is aware of the tactics of the other players.
10. The participants are unable to communicate directly with one another.
11. Each participant is aware of the level of competition.

The main goal of game theory is to provide a foundation for making decisions in light of the competitive environment and competitors’ behaviours. Elections, the military, conflict, marketing plans, and other situations may all benefit from the game theory.

The dynamic and ever-changing nature of competitive circumstances and interpersonal connections makes implementation more challenging. The cause is that one person’s action causes a chain of reactions in others. Additionally, other individuals are also altering their behaviour. Game theory, however, aids management in reasonably accurately forecasting future occurrences.

Stimulation Method

Simulation is a model, not a process. The simulation reflects reality. Instead of looking for the best answer, a problem must be defined in simulation. The management can make a wise judgement thanks to the situation’s description. “Simulation is the use of digital computers to aid in completing experiments on a model of a real system,” write Chase, Richard B., and Nicholas J. Aquilano.

When numerous factors influence outcomes and those same factors are unclear in and of themselves, this approach might be used. There is no distinct tool for simulation. However, if the issue is very difficult, it may be utilised in conjunction with a mathematical tool. With success, simulation models have been used to locate plants, choose locations for branches, plan space missions, and other tasks.

Advantages of Simulation

Below is a discussion of a few benefits of the simulation approach.

1. The cost of the simulation model is quite little.
2. Any issue may be addressed by a simulation model.
3. There is relatively little risk in using a simulation model. The method for framing a model is a trial-and-error one, which is why.
4. A full analysis of the issue is possible. It aids in the management’s creation of the ideal model.
5. A simulation model may be used to validate conclusions drawn from analysis. Even with the aforementioned benefits, there is no way to find the ideal model for each given issue. The drawback of the simulation model is this. A simulation model cannot be used to research or analyse issues other than the one that is defined.

Advantages of Operation Research

The following list includes a few of operation research’s benefits.

1. The management is capable of making wise choices.
2. Management leaders must pay particular attention to a number of elements that are influencing the judgments by analysing operation research models.
3. Operational research does not constitute judgement. However, it aids management in making decisions.
4. When making a choice, a methodical strategy is used rather than avoiding rules of thumb.
5. To make it easier to diagnose and find a workable solution, a difficult issue should be divided into multiple manageable components.
6. Before implementing any remedy, an experiment is conducted. The optimum solution is produced by this method.

Limitations of Operation Research

Additionally, operation research has several drawbacks. While making an important choice, a management or decision-maker should be fully aware of these limits.

1. Operation research is expensive since it takes time to get to a single conclusion or choice.
2. Operation research seeks to provide the optimum answer by taking into account all the relevant factors. In the commercial world today, this is not feasible. Finding the total number of factors influencing a situation is quite challenging.
3. Many cases when a problem is caused by human traits and interpersonal relationships cannot be addressed by operation study.
4. A gap exists between the decision-maker and an analyst of operation research. A decision-maker is not in a position to be knowledgeable about the methods of operation research. The operation research analyst could also be unaware of the nature of issues. This kind of gap degrades the decision’s quality.
5. The accuracy of statistical data is the foundation of operation research. The judgement made with the aid of operation study may be flawed if the statistical data is not accurate.

The optimal answer can be found using the operation research approach, notwithstanding the restrictions. Operation research techniques can also be used by individuals to solve problems pertaining to their personal affairs.

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