L-1

KMBN 206

QUANTITATIVE
TECHNIQUES FOR
MANAGER
SYLLABUS:
 UNIT 1:
INTRODUCTION
TO
OPERATIONS RESEARCH
HISTORY OFOPERATIONAL
RESEARCH
There is no clear history that marks the
Birth if O.R., it is generally accepted that the
field originated in England during the World
War II.
Some say that Charles Babbage (1791-
1871) is the Father of O.R because his
research into the cost of transportation and
sorting of mail led to England’s University
Penny Post in 1840.
Modern Operations Research originated
at the Bowdsey Research Station in U.K. in
1937 to analyse and improve the working of
the UK’s Early Warning Rador System.
 In 1940
by
Mc Closky and Trefthen
In small town
Bowdsey of United kingdom

During the Second World War

During the Second World War about 1000 Men and Women
were engaged to work for British Army.
Britain was having very limited resources relating to air and
land defence of the country, therefore there was an urgent need
to allocate resources and various military operations in an
effective manner the military commands of UK and USA called
upon a team of scientists with diverse educational background to
apply a scientific approach to study technical problems.
This mission was to formulate specific proposals and plans for aiding the
military commands to arrive at the decisions an optimal utilization of scarce military
resources and efforts.
 This new approach to systematic and
scientific study of operation of the system was
called OR.

The OR teams were not actually engaged

military operations and in fighting the war so
OR is also defined as an art of winning the war
without actually fighting it.

After World War II, Military Operational

Research in U.K. became Operational Analysis
(OA) within the U.K. Ministry of Defence with
expanded techniques and graving awareness.
The first technique is the field called the simplex method
for solving the linear programming problems developed by
the American mathematician, George B. Dentzig in 1947
In 1949- unit of OR at the Regional Research
Laboratory at Hyderabad was formed
In 1950 - OR achieved recognition as a subject and
Operations Research Society ofAmerica
was formed
 In 1953 - unit of OR was established in the Indian
Statistical Institute, Calcutta for national
planning and survey.
In 1957- OR society of India was formed also
International Federation of OR societies
was established.
In 1959 - India became a member of International
Federation of OR. First conference of OR
society of India was held in Delhi.
In 1963 – A journal “Opsearch” of OR was started.
OPERATIONAL RESEARCH
IN INDIA
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).

The Headquarters of the Society is located

in Kolkata at 39, Mahanirvan Road, Kolkata 700029,
India. At present the Society has 12 Operating
Chapters located in Agra, Ahmedabad, Ajmer,
Bangalore, Chennai, Delhi, Durgapur,
Jamshedpur, Kolkata, Madurai, Mumbai
DEFINITION OF
OPERATIONAL RESEARCH
It is an Act of winning wars
without actually fighting.
-
Aurther Clark
It is a Scientific Approach to
problem solving for executive
management.
-
H.M. Wagner
It is Art of giving bad answers to
problem which otherwise have worse
answers.
-T.L.
Standard Definition of OR ?
OBJECTIVE
Operational Research always
try to find the best and optimal
solution to the problem.
For this purpose
objectives of the organisation are
defined and analysed.
These objectives are then
used as the basis to compare the
alternative courses of action.
Objectives
 Decision making and improve its

quality.
 Identify optimum solution.
 Integrating the systems.
 Improve the objectivity of
analysis.
 Minimize the cost and maximize

the profit.
 Improve the productivity.
 Success in competition and
market leadership
The intent of Operational
Research is
 to learn about management
and administration of socio-
cultural behavior and economic
factors that exist as bottleneck
to effective implementation and

 to develop more effective

approaches to the
programming.
 PHASES OF OR
Problems, Models and Method
• Real world Situation

• Problems
2

• Models
3

• Methods
4
Problem Solving Process
PRACTICAL SITUATION

Formulate
the
Situati Problem Problem
on
Stateme
nt
Dat
a
 Constructing a Model
1Problem must be translated
from verbal, qualitative terms
to logical, quantitative terms

2A logical model is a series of

rules, usually embodied in a
computer program

3A mathematical model is a
collection of functional
relationships by which
allowable actions are delimited
and evaluated
Solving the Mathematical Model
1. Many tools are
available as discussed
in this course
2. Some lead to
“optimal” solutions
3. Others only evaluate
candidates to trial
and error to find
“best” course of
action
Implementation
Situation
A solution to a
problem usually
implies changes
for some
individuals in Implement
the organization the Procedure

Procedure
Process…..
 Operations Research Models

Deterministic Models Stochastic Models (or)

Probabilistic Model
• Linear Programming • Discrete-Time
Markov Chains
• Network Optimization • Continuous-Time
Markov Chains
• Integer Programming • Queuing Theory
• Nonlinear Programming • Decision Analysis
SCOPE
Different fields
Scope and Applications
1.National plans and budget.
2. Health care services and National Health
Programs.
3. Government development and public sector
unit.
4. Industrial establishment and private sector
unit.
5. National defense services.
6. Research and development in engineering.
7. Public works department.
8. Business management.
9. Agriculture and irrigation projects.
10. Education and training.
11. Transport and communication.
Scope and Applications
Management Economic support
-Leadership -Public sources of finance
-Decision-making -Employers
-planning -Organized voluntary
-implementation agencies
-monitoring and evaluation -Local community efforts
-information Regulation -Foreign Aid
-Private households
Operations Research in daily life

1. Capacitated vehicle routing problem

2. Stochastic vehicle routing problem (SVRP)
3. Vehicle routing problem with pick-up and
delivery (VRPPD)
4. Group-shop scheduling problem (GSP)
5. Nursing time distribution scheduling
problem
6. Permutation flow shop problem (PFSP)
7. Frequency assignment problem
8. Redundancy allocation problem
9. Traveling salesman problem(TSP)
SCIENTIFIC APPROACH

OR applies scientific
methods, techniques and
tools for the purpose of
analysis and solution of the
complex problems.
In this approach
there is no place for
guesswork and the person
bias of the decision maker.
 INTER-DISCIPLINARY
TEAM APPROACH
Basically the industrial problems are of
complex nature and therefore require a
team effort to handle it.
This team comprises of scientist,
mathematician and technocrats. Who jointly
use the OR tools to obtain a optimal solution
of the problem.
They tries to analyse the cause and
effect relationship between various
parameters of the problem and evaluates the
outcome of various alternative strategies.
 SYSTEM APPROACH

The main aim of the system approach is to

trace out all significant and indirect effects for
each proposal on all sub-system on a system
and to evaluate each action in terms of effects
for the system as a whole.
The inter-relationship and
interaction of each sub-system can be handled
with the help of mathematical/analytical
models of OR to obtain acceptable solution.
 USE OF
COMPUTERS

The models of OR need lot of computation

and therefore, the use of computers becomes
necessary.
With the use of computers it is
possible to handle complex problems
requiring large amount of calculations.
The objective of the operations
research models is to attempt and to locate
Best or Optimal Solution.
TECHNIQUES/TOOLS OF
OPERATIONAL RESEARCH
Linear Programming
Queuing Theory
Sequencing
Transportation Problems
Integer Problems
Assignment Problems
Decision Theory and Games

Theory
Replacement Problems
Symbolic Logic
QUEUING THEORY
This theory deals with the situations in
which queue is formed, e.g. customers waiting
for services, machines waiting for repairmen,
and aircrafts waiting for landing strips, etc.
If the Queue will be long the cost
will be high due to long waiting hour.
This technique is used to analyse the
feasibility of adding facilities and to access the
amount and cost of waiting time.
This calculations can then be used
to determine the desirable number of service
facilities.
SEQUENCING

Models have been developed

to find a sequence for Processing
Jobs so that the total elapsed
time for all the jobs will be
minimum.
The models also help to
resolve the conflict between the
objectives of maximizing
machines utilization and
complying with predetermined
delivering rates.
TRANSPORTATION PROBLEMS

Transportation problems
deals with transportation of a
product
 From a number of sources
 With limited supplies
 To number of destinations
 With specified demands
 At the total transportation cost.
The main objective of
transportation is to Schedule
Shipment from sources to
destinations in such a way so as to
Minimize the Total Transportation
Cost.
INTEGER PROGRAMMING

Integer means complete or

whole number. By using the Integer
Programming Algorithm a series of
continuous linear programming
problem are solved in such a way
that the solution containing un-
acceptable non-integer value are
ruled out and the best higher
programming solution is obtained.
ASSIGNMENT PROBLEMS
It is a special type of linear
programming problem. It deals in
allocating the various resources or
items to various activities in a one to
one basis in such a way that the time
or cost involved in minimised and the
sale or profit is maximized.
E.g. Manager may like to
know which job should be assigned to
which person so that all jobs can be
completed in the shortest possible
time.
DECISION THEORY AND
GAME THEORY
Decision Theory is primarily
considered with decision making under the
conditions of:
 Risk
 Uncertainity

Game Theory is concerned with:

Decision Making under Conflict

Hence, both Decision Theory

and Game Theory assist the Decision-
Maker in Analysing Problems with
numerous alternative course of action and
consequences.
REPLACEMENT PROBLEMS
This Theory is concerned with situations
that arise when some items such as machines,
men, etc. require replacement due to their
decreasing efficiency, failure or break-down.
Sooner or later all the equipments are
required to be replaced because of:
Obsolescence
Discovery of New Technology
 Better Design of Equipment
In Replacement Decisions we consider:
 Cost of Equipment to be Installed
Cost of Equipment Replaced, etc.
Hence, this theory helps to solve all
Replacement Problems.
SYMBOLIC LOGIC
Symbols are more meaningful
and accurate. Everything is
Symbolic in this world.
Words, classes of things,
functional systems and rules are
substituted with symbols.
The whole problem is
converted into algebraic equations
and propositions. Business
Problems are not commonly
converted into symbols but
calculations are done on computers,
that is why symbols have extensive
applications.
 DECISION MAKING
Every industrial organisation faces multifacet
problems to identify best possible solution to
their problems.

OR aims to help the executives to

obtain optimal solution with the use of OR
techniques.

It also helps the decision maker to

improve his creative and judicious capabilities,
analyse and understand the problem situation
leading to better control, better co-ordination,
better systems and finally better decisions.
 OPERATIONAL RESEARCH AND
MANAGEMENT DECISION-MAKING
Operation Research increases the creative capabilities
of a decision maker.
It increases the effectiveness of mgt. decisions.
Management is most of the time making decisions. It is
thus a decision science which helps mgt. to take better
decisions.
Nowadays, business problems have become so
complex that it is almost impossible for a human being to
comprehend all important factors, OR Techniques can be
helpful in such situations.
It also helps in ascertaining best locations for
factories and warehouses, project scheduling as well as
most economic means of transportation.
OR study approach in business decisions leads
to better control,
better co-ordination,
better system
and at the end better decision.
LIMITATIONS OF
OPERATIONAL RESEARCH

Magnitude of Computation
Non-Quantifiable Factors
Distance between User and Analyst
Time and Money Costs
Implementation
MAGNITUDE OF
COMPUTATION
Operations research models
try to find out optimal solution
taking into account all the
factors. But, these factors are
enormous and, expressing
them in quantity, and,
establishing relationships among
these, Require voluminous
calculations which can be
handled only by computers.
NON-QUANTIFIABLE FACTORS
OR provides solution only
when all elements related to a
problem can be quantified. All
relevant variables do not lend
themselves to quantification.
Factors which cannot be
quantified, find no place in OR
study. Models in OR do not
take into account qualitative
factors or emotional factors
which may be quite important.
DISTANCE BETWEEN USER
AND ANALYST
OR being specialist’s job requires a
mathematician or statistician, who
might not be aware of the business
problems.
Similarly, a manager fails to
understand the complex working of
OR. Thus there is a gap between the
two. Management itself may offer a
lot of resistance due to conventional
thinking.
TIME AND MONEY COST

When basic data are subjected to

frequent changes, incorporating
them into the OR models is a costly
proposition.
Moreover, a fairly good
solution at present may be,
More desirable than a perfect OR
solution available after sometime.
The computational time increases
depending upon the size of the
problem and accuracy of results
desired.
IMPLEMENTATION

Implementation of any
decision is a delicate task. It
must take into account the
complexities of human relations
and behaviour. Sometimes,
resistance is offered due to
psychological factors which may
not have any bearing on the
problem as well as its solution.