Operations research (O.R.) is a scientific approach to decision-making that applies mathematical, statistical, and analytical methods to solve complex real-world problems across various sectors, including business and military. Originating during World War II, it has evolved to optimize processes in areas such as finance, marketing, and production management by balancing conflicting departmental objectives and maximizing overall organizational efficiency. Characterized by an interdisciplinary team approach, a systems perspective, and a reliance on modeling and quantitative analysis, operations research aims to improve decision quality and operational performance while navigating resource constraints.

1. OPERATIONS RESEARCH-
Introduction, Meaning and
Characteristics

2. Introduction to Operations Research
You will agree that human beings have the tendency of getting
maximum gains with minimum effort. The complexities in
every aspect of life are increasing by the day. As a result, we
would like to create/use scientific methods and techniques
that help us attain optimum solutions in decision making
problems. Operation Research (O.R.) is concerned with the
applications of such scientific methods and techniques.
Operations Research is used to solve the real world problems
that involve a lot of mathematics, statistics, computer
science, accounting, etc.
„Operation‟ implies some action applied in any area of
interest”. “Research‟ means some organised process of
getting and analysing information about the problem
environment.

3. Introduction to Operations Research (2)
Operations Research (or Management Science or
Decision Sciences) is a scientific manner of decision
making, mostly under the pressure of scarce
resources.
The objective of decision making is often the
maximization of profit, minimization of cost, better
efficiency, better operational or tactical or strategic
planning or scheduling, better pricing, better
productivity, better recovery, better throughput,
better location, better risk management, or better
customer service.

4. Background of OR
The term Operations Research came into existence and gained
prominence during the Second World War when military
planners were faced with logistical tasks requiring prompt
and effective solutions. Hence, became involved in applying a
scientific approach to a group of scientists with diverse
educational backgrounds including mathematics, statistics
and physics deal with strategic and tactical problems of
various military operations. This initial research on military
operations soon found applications in other decision making
problems in business and industry. Hence, the word
„military‟ was dropped and it was named as „Operations
Research‟. In India, Operations Research came into
existence in 1949 with the opening of an Operations
Research unit at the Regional Research Laboratory in
Hyderabad and also in the Defence Science Laboratory.

5. Meaning of OR
Operational research is the application of the methods of
science to complex problems arising in the direction and
management of large systems of men, machines, materials
and money in industry, business, government, and defence.
Operations research is concerned with scientifically deciding
how to best design and operate man-machine systems,
usually under conditions requiring the allocation of scarce
resources.
“Operations Research is a branch of science which is concerned
with the application of scientific methods and techniques to
decision making problems and with establishing the optimal
solutions.”
In Short, Operations Research is a discipline that deals with the
application of advanced analytical methods help to make
better decisions.

6. Scope of OR
Now-a-days, due to complexities of operations and huge sizes
of industries, important decisions regarding various
sections of the organisation, e.g., planning, procurement,
marketing, finance, etc. have to be taken division wise. For
example, the production department needs to minimise
the cost of production, but maximise output;
The finance department needs to optimise capital
investment;
The personnel department needs to appoint competent work
force at minimum cost.
Each department has to plan its own objectives which may be
in conflict with the objectives of other departments and
may not conform to the overall objectives of the
organisation.

7. For example, the sales department of an organisation
may want to keep sufficient stocks in the inventory,
whereas the finance department may want to have
minimum investment.
In that case, both departments would be in conflict with
each other.
The applications of O.R. techniques to such situations
help in overcoming this difficulty by evolving an
optimal strategy and serving efficiently the interest
of the organisation as a whole. Some of the problems
faced by various divisions of an industry, which can be
solved by the application of Operations Research
techniques are as follows:

8. Finance department of an organisation needs to
optimise capital investment, determine optimal
replacement strategies, apply cash flow analysis for
long range capital investments, formulate credit
policies, credit risks, breakeven analysis. All these can
be attained by applying Operations Research
techniques.
The marketing department of any organisation has to
face various problems like product selection,
formulation of competitive strategies, sales forecasting,
distribution strategies, selection of advertising media
with respect to cost and time, finding the optimal
number of salesmen, finding optimum time to launch a
product. All such problems can be overcome using

9. Personnel Management of an organisation needs to find
the best combination of workers in different categories
with respect to costs, skills, age and nature of jobs. It
also needs to forecast the work force requirement,
frame recruitment policies, assign jobs to machines or
workers, negotiate in a bargaining situation, etc. This
can be achieved very easily by the application of
operations research techniques.
Problems related to production management of an
organisation, i.e., determination of the optimal product
mix, selection of the location and design of the sites for
production plant, scheduling and sequencing the
production run by proper allocation of machines,
location and size of warehouse/new plant, etc. can very
easily be solved by applying Operations Research
techniques.

10. The breadth of applications of operations research in
business can be gauged from a reading of the annual
Franz Edelman competition winners’ accomplishments,
few of which are listed below:
2013: Dutch Delta Program Commissioner used mixed integer
nonlinear programming to derive an optimal investment
strategy for strengthening dikes for protection against high
water and keeping freshwater supplies up to standard,
resulting in savings of €8 billion in investment costs.
2012: TNT Express developed a portfolio of multicommodity
and vehicle routing models for package and vehicle routing
and scheduling, planning of pickup and delivery, and supply
chain optimization for its operations across 200 countries
using 2,600 facilities, 30,000 road vehicles, and 50 aircraft
resulting, in savings of €207 million over the period 2008–
2011 and reduction in CO2 emissions by 283 million
kilograms.

11. 2011: Midwest Independent Transmission System
Operator used mixed integer programming to
determine when each power plant should be on or off,
the power plant output levels and prices to minimize
the cost of generation, start-up and contingency
reserves for 1000 power plants with total capacity of
146,000 MW spread over 13 Midwestern states of U.S.
and Manitoba (Canada) owned by 750 companies
supplying 40 million users, resulting in savings of $2
billion over the period 2007–2010.
2010: Mexico’s central security depository, INDEVAL,
used linear programming to develop a secure and
automatic clearing and settlement engine to determine
the set of transactions that can be settled to maximize
the number of traded securities, thereby efficiently
processing transactions averaging $250 billion daily and
optimally using available cash and security balances.

12. 2009: Hewlett-Packard developed an efficient frontier analysis based Revenue
Coverage Optimization tool for analysis of its order history to manage
product variety, thereby enabling increased operational focus on most
critical products, making data-driven decisions and increasing its market
share, customer satisfaction, and profits by more than $500 million since
2005
2008: Netherlands Railways developed a constraint programming based
railway timetable for scheduling about 5,500 trains daily, while ensuring
maximum utilization of railway network, improving the robustness of the
timetable, and optimal utilization of rolling stock and crew thereby resulting
in additional annual profit of €40 million.
2005: Motorola used mixed integer programming to develop Internet-enabled
supplier negotiation software with flexible bidding formats, multistage
negotiation capabilities, multiple online negotiation formats (with reverse
e-auction, online competitive bidding facilities), and optimized selection of
vendors to support its global procurement function, automated
negotiations, and the management of a heterogeneous supply base of more
than thousand vendors with different product portfolios and delivery
capabilities, thereby resulting in savings of more than $600 million

13. CHARACTERISTICS OF OPERATIONS RESEARCH
Interdisciplinary team approach: Operations research
has the characteristics that it is done by a team of
scientists drawn from various disciplines such as
mathematics, statistics, economics, engineering,
and physics. It is essentially an interdisciplinary
team approach. Each member of the OR team is
benefited from the viewpoint of the other, so that
a workable solution obtained through such a
collaborative study has a greater chance of
acceptance by management.

14. Systems approach: Operations research emphasizes
on the overall approach to the system. This
characteristic of OR is often referred to as system
orientation. The orientation is based on the
observation that in the organized systems the
behaviour of any part ultimately has some effect on
every other part.
In O.R., an attempt is made to take account of all the
significant effects and to evaluate them as a whole.
OR thus considers the total system for getting the
optimum decisions.

15. Helpful in improving the quality of solution:
Operations research cannot give perfect answers or
solutions to the problems. It merely gives bad
answers to the problems which otherwise have
worst answers. Thus, OR simply helps in improving
the quality of the solution but does not result in
perfect solution
Scientific method: Operations research involves
scientific and systematic attack of complex
problems to arrive at the optimum solution. Thus it
comprehends both aspects, i.e., it includes both
scientific research on the phenomena of operating
systems and the associated engineering activities
aimed at applying the results of research.

16. Use of models: Operations research uses models
built by quantitative measurement of the variables
concerning a given problem and also derives a
solution from the model using one or more of the
diversified solution techniques. A solution may be
extracted from a model either by conducting
experiments on it or by mathematical analysis. The
purpose is to help the management to determine
its policy and actions scientifically.
Requires willing executives: Operations research
does require the willingness on the part of the
executive for experimentation to evaluate the costs
and the consequences of the alternative solutions
of the problem. It enables the decision maker to be

17. 8. Reduces complexity: Operations research tries to
reduce the complexity of business operations and does
help the executive in correcting a troublesome function
and to consider innovations which are too costly and
complicated to experiment with the actual practice. In
view of this above, OR must be viewed both as a
science and as an art. As science, OR provides
mathematical techniques and algorithms for solving
appropriate decision problems. OR is an art because
success in all the phases that precede and succeed the
solution of a problem largely depends on the creativity
and personal ability of the decision-making analysts.
Goal-oriented optimum solution: Operations research
tries to optimize a well defined function subject to
given constraints and as such is concerned with the
optimization theory.