Operations Research

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Operations Research

• OR is a scientific approach to decision making
  that involves the operations of organizational
  systems.
• "Research on Operations"
• OR involves creative scientific research into the
  fundamental properties of operations. Operations
  research is also concerned with the practical
  management of the organization.
• 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.
• OR attempts to find the best or optimal solution
  to the problem under consideration.

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• Team Approach - OR team to undertake a
  full-fledged study.
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• OR team needs to include specialists in
  mathematics, statistics and probability theory,
  economics, business administration, electronic
  computing, engineering and the physical sciences,
  the behavioral sciences, and the special
  techniques of OR.
•  
• OR is concerned with optimal decision making in,
  and modeling of, deterministic and probabilistic
  systems that originate from real life.
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• Typical OR approach is
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• 1) Formulating the problem. - From vague
  description, determine objectives, goals, and
  constraints
• 2) Constructing a mathematical model to represent
  the system under study. - decision variables,
  objective function, (mathematical) constraints
• 3) Deriving a solution from the model. -
  optimizing or satisficing, post-optimality
  analysis
• 4) Testing the model and the solution derived
  from it. - validity
• 5) Establishing controls over the solution. -
  sensitivity analysis
• 6) Putting the solution to work implementation.

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OR methods

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• Mathematical Programming
• (LP, IP, NLP, Multi-Objective)
• Transportation Problem
• Game Theory
• Dynamic Programming
• PERT-CPM
• Queueing Theory
• Forecasting
• Inventory
• Decision Analysis
• Reliability
• Simulation

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Game Theory
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• A queueing problem arises whenever the demand for
  customer service cannot perfectly be matched by a
  set of well-defined service facilities.
• Purpose
• To help design a system that will minimize a
  stated measure of performance such as the sum of
  the costs of customer waiting and costs of idle
  facilities.

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• PLANNING
• What to store (or produce)
• Where are the best sources
• What are the best arrangements (shipping,
  storage, inspection . . .)
• CONTROL
• When to order (or produce)
• How much to order
• What type of IC system
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• To minimize total inventory costs (or maximize
  profits)

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SIMULATION

• The basic idea of simulation is to utilize some
  device to imitate a real-life system in order to
  study and understand its properties, behavior,
  and operating characteristics.
•  Simulation procedures are inductive in nature
  and they use the concept of random sampling.
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• Why SIMULATION?
• - Lack of Analytical Method
• - Easy to trace the past or future