OPERATION RESEARCH

• Research for operation….

• Scientific approach to problem solving for
executive management
example stock market, real estate and
bank deposits
•Operation research is concerned with
scientifically deciding how to best design and
operate man-machine systems usually
requiring the allocation of scarce resources
•Example – A furniture manufacturer produces wooden tables
and chairs. Unit profit for table is $6 and unit profit for chair is
$8.To simplify our discussion, the only two resources the
company uses to produce tables and chairs are wood (board
feet) and labor(hours). It takes 30bf and 5 hrs to make a table
and 20 bf and 10 hrs to make a chair. There are 300 bf of wood
available and 110 hours of labor available. The company
wishes the maximum profit??
 Quantitative Analysis?

1. The method when data is processed into information.

2. Helps in decision making process
3. For example companies using quantitative inventory
model.
 HOW TO DEVELOPE A
QUANTITATIVE ANALYSIS MODEL ?

• Mathematical model which represent a

profit
• Profit = Sx – (F+Vx)
• S = selling price
• V = variable cost
• F = fixed cost
• x = number of units sold
 History of Operation Research

• Pre world war 2nd

• In world war 2nd
 Linear Programming Problems - Formulation

• The term ‘Linear’ is used to describe the

proportionate relationship of two or more
variables in a model. The given change in one
variable will always cause a resulting
proportional change in another variable
 Linear Programming Problems - Formulation

The word , ‘Programming’ is used to specify a sort

of planning that involves the economic allocation
of limited resources by adopting a particular course
of action or strategy among various alternatives
strategies to achieve the desired objective.
•Linear programming is a method of allocating resources
in an optimal way
•Most widely used OR tool
•Resources = decision variables
•3x vs. 3x2(accept first power of variable with no cross
product)
•Objective Function = Criterion for selecting best values of
decision variables
OPTIMAL SOLUTION –

Either the most profitable or the least costly solution that

simultaneously satisfies all the constraints of a Linear Programming
(LP) problem. The most important general properties of an optimal
solution: the optimal solution lies on the boundary of the feasible
region.
 Applications of Operation Research

• Successful OR applications can be found in a broad array of

industries dealing with challenges such as planning, routing,
scheduling, forecasting, process analysis and decision
analysis.
• OR has been applied in many industry sectors
• Transport and Travel
• Retailing
 Example - A city hospital has the following minimal daily
requirements for nurses.

Period Clock time (24 hours day) Minimum number of nurses

required
1 6 a.m. – 10 a.m. 2
2 10 a.m. – 2 p.m. 7
3 2 p.m. – 6 p.m. 15
4 6 p.m. – 10 p.m. 8
5 10 p.m. – 2 a.m. 20
6 2 a.m. – 6 a.m. 6

Nurses report at the hospital at the beginning of each period and work for 8
consecutive hours. The hospital wants to determine the minimal number of
nurses to be employed so that there will be a sufficient number of nurses
available for each period. Formulate this as a linear programming problem
by setting up appropriate constraints and objective function.
i) Identify and define the decision variable of the problem
Let X1, X2, X3, X4, X5 and X6 be the number of nurses joining duty at
the beginning of periods 1, 2, 3, 4, 5 and 6 respectively.

ii) Define the objective function

Minimize Z = X1 + X2 + X3 + X4 + X5 + X6

iii) State the constraints to which the objective function should be

optimized. The above objective function is subjected to following
constraints.
X1 + X2 ≥ 7
X2 + X3 ≥ 15
X3 + X4 ≥ 8
X4 + X5 ≥ 20
X5 + X6 ≥ 6
X6 + X1 ≥ 2
X1, X2, X3, X4, X5, X6 ≥ 0