3. • Data science is the transformation of data using mathematics and
statistics into valuable insights, decisions , and products.
• To an extent data science is synonymous with or related to terms like
Business Analytics, Operations Research, Business Intelligence, data
analysis and modelling and knowledge extraction.
• Its’ just a new spin on something that people have been doing for a
long time.
4. Business Analytics
• It is an data driven approach to decision making that allows companies to
make better decisions.
• It can be broken into three categories:
1. Descriptive – involves the study and consolidation of historical data for a
business and industry.
2. Predictive- is aimed at forecasting future outcomes based on patterns in
the past data.
3. Prescriptive – involves the use of optimization methods to provide new
and better ways to operate based on specific business objectives.
Many business decisions are made based on information obtained from two
or three of these categories.
5. Business Analytics
• It is an data driven approach to decision making that allows
companies to make better decisions.
• It can be broken into three categories:
1. Descriptive??
2. Predictive??
3. Prescriptive??
6. • Prescriptive analysis- Inventory management, Linear Programming,
Transportation and assignment models, Integer programming, goal
programming, non linear programming, Network models etc.
8. What is
Operations
Research?
• Operations
The activities carried out in an organization.
• Research
The process of observation and testing characterized
by the scientific method.
Situation, problem statement, model construction,
validation, experimentation, candidate solutions.
9. • Operational Research is a systematic and analytical approach to
decision making and problem solving.
• O.R. is an Branch of applied mathematics that uses techniques and
statistics to arrive at Optimal solutions to solve complex problems.
• It is typically concerned with determining the maximum profit, sale,
output, crops yield and efficiency And minimum losses, risks, cost,
and time of some objective function.
10. • Operations Research is the application of analytical methods designed
to help the decision makers choose between various courses of action
available to accomplish specified objectives
11. OR has been applied extensively in such diverse areas as
manufacturing, transportation, construction, telecommunications,
financial planning, health care, the military, and public services, to
name just a few.
Therefore, the breadth of application is unusually wide.
12. 12
Terminology
• The British/Europeans refer to “Operational Research", the
Americans to “Operations Research" - but both are often shortened
to just "OR".
• Another term used for this field is “Management Science" ("MS"). In
U.S. OR and MS are combined together to form "OR/MS" or
"ORMS".
• Yet other terms sometimes used are “Industrial Engineering" ("IE")
and “Decision Science" ("DS").
13. • In a nutshell, OR is application of analytical tools to make decisions.
• In today’s world OR is all around us
14.
15.
16. Operations Research in one word: Optimization.
• Let’s say we are making a decision. If we have to make the
best decision possible, what should we do?
• You evaluate every possible option by weighing each option’s
pros and cons.
• For example, in order for Uber to have a master routing plan,
it has to decide which driver should be sent where, when,
and how much they should charge the customers. And
those decisions must be made while optimally using available
resources
17. • Uber’s objective function is something that they are trying to
maximize by dispatching the drivers. Let’s say it’s the revenue.
There also will be a cost associated with every dispatch and the
routing plan should meet the constraints specific to Uber’s
policy.
18. • Operations Research in one sentence: Do things best under
constraints.
• In mathematical terms, the problem above can be written as:
• Maximize F(X1, X2, …, Xn)
• Such that it meets the constraints C1, C2, …, Cm.
19. • This type of formulation is called optimization or mathematical
programming.
• There is an objective function to be maximized (i.e. profit) or
minimized (i.e. cost, loss, risk of some undesirable event,
etc.) X’s are the decision variables. They are the things we
can adjust. For example, each X can be a driver. X_i=1 means
the driver i is selected and will be sent to the
customer. X_i=0 means he is not selected. C’s are
the constraints. For instance, each car has a distance from
potential customers. Drivers can drive only for so many hours a
day. Each road has a speed limit and each car has a
maximum number of passengers it can take.
20. • 3. Applications in real life
• Operations research is applied to a lot of real-world use cases.
• Assignment (assigning Uber drivers to customers)
• Scheduling (scheduling multiple TV shows together to achieve the maximum
views possible)
• Financial Engineering (asset allocation, risk management, derivatives pricing,
portfolio management, etc.)
• Pricing Science (airline ticket pricing)
• Routing (master planning the routes of buses so that as few buses are needed
as possible)
• Facility Location (deciding the most appropriate location for new facilities such
as warehouse, factory or fire station)
• Network Optimization (packet routing)
22. • Based on the history of Operations
Research, it is believed that Charles
Babbage (1791-1871) is the father of
Operational Research due to the fact
that his research into the cost of
transportation and sorting of mail
resulted in England’s universal Penny
Post in 1840.
• (Fact: Penny post- every post weighing
less than 1 pound was charged 1
Penny)
23. Father of the Computer
• In 1837, Charles Babbage proposed the first general mechanical
computer, the Analytical Engine.
• The Analytical Engine contained an ALU (Arithmetic Logic Unit), basic
flow control, punch cards (inspired by the Jacquard Loom), and
integrated memory.
• It is the first general-purpose computer concept. Unfortunately,
because of funding issues, this computer was also never built while
Charles Babbage was alive.
• In 1910, Henry Babbage, Charles Babbage's youngest son, was able
to complete a portion of this machine and was able to perform basic
calculations.
24. • The roots of OR can be traced back many decades, when early
attempts were made to use a scientific approach in the management
of organizations.
• However, the beginning of the activity called operations research has
generally been attributed to the military services early in World War
II.
25. 25
1890
Frederick Taylor
Scientific
Management
[Industrial
Engineering]
1900
•Henry Gannt
[Project Scheduling]
•Andrey A. Markov
[Markov Processes]
•Assignment
[Networks]
1910
•F. W. Harris
[Inventory Theory]
•E. K. Erlang
[Queuing Theory]
1920
•William Shewart
[Control Charts]
•H.Dodge – H.Roming
[Quality Theory]
1930
Jon Von Neuman –
Oscar Morgenstern
[Game Theory]
1940
•World War 2
•George Dantzig
[Linear
Programming]
•First Computer
1950
•H.Kuhn - A.Tucker
[Non-Linear Prog.]
•Ralph Gomory
[Integer Prog.]
•PERT/CPM
•Richard Bellman
[Dynamic Prog.
1960
•John D.C. Litle
[Queuing Theory]
•Simscript
[Simulation]
1970
•Microcomputer
1980
•H. Karmarkar
[Linear Prog.]
•Personal computer
•OR/MS Softwares
1990
•Spreadsheet
Packages
•INFORMS
2021-
•You are here
•Age of Big Data,
Machine Learning,
Artifical Intelliegence
1840
Charles
Babbage
research into
the cost of
transportation
and sorting of
mail
26. • The name operations research
evolved in the year 1940.
• During World War II, a team of
scientists (Blackett’s Circus) in UK
applied scientific techniques to
research military operations to
win the war and the techniques
thus developed was named as
OR.
• As a formal discipline, operations
research originated from the
efforts of army advisors at the
time of World War II.
27. • Because of the war effort, there was an urgent need to allocate scarce
resources to the various military operations and to the activities
within each operation in an effective manner.
• Therefore, the British and then the U.S. military management called
upon a large number of scientists to apply a scientific approach to
dealing with this and other strategic and tactical problems. In effect,
they were asked to do research on (military) operations. These teams
of scientists were the first OR teams.
• By developing effective methods of using the new tool of radar, these
teams were instrumental in winning the Air Battle of Britain.
28. • Patrick Blackett worked for several different organizations during the
war. Early in the war while working for the Royal Aircraft
Establishment (RAE) he set up a team known as the "Circus" which
helped to reduce the number of anti-aircraft artillery rounds needed
to shoot down an enemy aircraft from an average of over 20,000 at
the start of the Battle of Britain to 4,000 in 1941.
29. • Through their research on how to better manage convoy and
antisubmarine operations, they also played a major role in winning the
Battle of the North Atlantic.
• Similar efforts assisted the Island Campaign in the Pacific. When the war
ended, the success of OR in the war effort spurred interest in applying OR
outside the military as well.
• As the industrial boom following the war was running its course, the
problems caused by the increasing complexity and specialization in
organizations were again coming to the forefront.
• It was becoming apparent to a growing number of people, including
business consultants who had served on or with the OR teams during the
war, that these were basically the same problems that had been faced by
the military but in a different context. By the early 1950s, these individuals
had introduced the use of OR to a variety of organizations in business,
industry, and government. The rapid spread of OR soon followed.
30. Factors that played a key role Post World War II
• One was the substantial progress that was made early in improving
the techniques of OR. After the war, many of the scientists who had
participated on OR teams or who had heard about this work were
motivated to pursue research relevant to the field; important
advancements in the state of the art resulted.
• A prime example is the simplex method for solving linear
programming problems, developed by George Dantzig in 1947. Many
of the standard tools of OR, such as linear programming, dynamic
programming, queueing theory, and inventory theory, were relatively
well developed before the end of the 1950s.
31. • A second factor that gave great impetus to the growth of the field was the
onslaught of the computer revolution.
• A large amount of computation is usually required to deal most effectively
with the complex problems typically considered by OR. Doing this by hand
would often be out of the question.
• Therefore, the development of electronic digital computers, with their
ability to perform arithmetic calculations thousands or even millions of
times faster than a human being can, was a tremendous boon to OR.
• A further boost came in the 1980s with the development of increasingly
powerful personal computers accompanied by good software packages for
doing OR. This brought the use of OR within the easy reach of much larger
numbers of people.
• Today, literally millions of individuals have ready access to OR software.
Consequently, a whole range of computers from mainframes to laptops
now are being routinely used to solve OR problems.
32. Operations
Research
in India
• India was among the few nations which began utilizing
O.R. In 1949, the first Operational Research unit was
established at Hyderabad which was named Regional
Research Laboratory .
• At the same time an additional unit was launched in Defense
Science Laboratory to fix the Stores, Purchase and Planning
Problems.
• In 1953 at Calcutta, an O.R. unit was established in Indian
Statistical Institute. The objective was to use O.R. techniques
in National Planning and Survey.
• In 1957, Operations Research Society of India was created,
which is among the first members of International
Federation of Operations Research societies.
• Today, the utilization of O.R. techniques have spread out
from army to a wide range of departments at all levels.
• At present the Society has 12 Operating
• Chapters located in Agra, Ahmedabad, Ajmer,
• Bangalore, Chennai, Delhi, Durgapur,
• Jamshedpur, Kolkata, Madurai, Mumbai and Tirupati.
33. • The Operational Research Society of India was founded in 1957 to
provide a forum for the Operational Research Scientists as well as an
avenue to widen their horizon by exchange of knowledge and
application of techniques from outside the country. The Society is
affiliated to the International Federation of Operational Research
Societies (IFORS).
• https://www.ifors.org/india/
35. Nature and SCOPE OF OR
• Scope – what all the subject can do for you
• English- reading, writing, communication
• Maths-identify no, payments etc
Scope of OR??
• Industrial management, Decision Science- BBA
- (production, scheduling, product mix, Inventory etc.)
Defence Operations- (Operations, intelligence, administration, training and the
like)- Core from where it all started-Intelligence, training, allocation
- Used by developed nations in planning and infrastructure development and
developing nations to fight issues like hunger, poverty to improve infrastructure
- hospitals – scheduling, reducing waiting time
36. SCOPE for management- Across the
organisation
• Allocation and distribution ( Assignment, transportation)- Raw material,
product, demand forecasting, sequencing, Sales man for cost effective
route)
• Production and Facility planning(scheduling, sequencing)
• Procurement(low cost acquisition of material, bidding)
• Marketing(advertising budgets and effectiveness. Demand forecasts,
assignment of salesman)
• Finance(Capital requirement, cash flow , optimum replacement policies-
equipment, stock)
• Personnel( selection, training, retirement, replacement)
• Research and development(Checking reliability, feasibility etc)
37. Attributes of OR
• Interdisciplinary approach- the problem must be explored by an interdisciplinary team,
to take advantage of modelling and solving problems from different perspectives.
A group of individuals bringing various skills and viewpoints to a problem.
• Integrated Approach/ Systems Approach- takes into account all elements of a problem
that belong to organization, environment, and interaction between them.
• Include broad implications of decisions for the organization at each stage in analysis.
Both quantitative and qualitative factors are considered
• Scientific Approach/ Optimal Solution- A solution to the model that optimizes
(maximizes or minimizes) some measure of merit over all feasible solutions.
• Operations Research Techniques
• A collection of general mathematical models, analytical procedures, and algorithms
• Which follows a procedure- proven – experimental approach-certain path-
• Problem- alternatives- data analysis- best alternative
38. 38
Application Areas
• Strategic planning
• Supply chain management
• Pricing and revenue management
• Logistics and site location
• Optimization
• Marketing research
