It is said that the term “operations research” came into existence during World War II, when the British army sought the help of a group of scientists to determine through research the military operations needed to win the war.
The army aimed at allocating scarce resources to their various military operations in the most effective manner. Word of the success met by the British army spread to other countries, and not only the military but also industries and businesses started applying this concept to maximize their return on investment.
Operations Research: A Definition
According to the Operations Research Society of America, operations research is scientifically deciding how best to operate man-machine systems usually associated with the allocation of scarce resources.
Faced with a problem, an operations researcher determines which techniques would be most appropriate given the kind of system, constraints on time, and calculating command. Therefore, the human element of operations research is very important.
Operations research today has many names, such as management science, operational research (usually used in the UK), and industrial engineering.
Tools Used for Operations Research
There are several techniques used for operations research. Some of the most common are:
- Queuing theory: This operations research technique aims at reducing the time and extent of a queue (human, product, or data) with minimum investment. The theory is effectively applied to many industries including customer service, transportation systems, PABXs, and telecommunications.
- Game theory: The game theory applies to conflicting situations where there are players with different objectives and the action of each player affects the game. Here, a decision is made to reach the best solution while minimizing losses.
- Probability theory: This theory deals with calculating and making decisions based on the maximum probability of a system with minimum input.
- Linear programming: Operations research applies linear programming in situations where there is a list of requirements. This theory helps to optimize certain demands from the list by drastically reducing the number of possible optimal solutions.
- Decision analysis: A set of quantitative methods used for making a decision based on uncertainty or multiple conflicting objectives is known as decision analysis.
- Inventory control: As the name suggests, inventory control helps warehouse managers to better handle stock with minimum waste or loss. It involves acquiring, stocking, moving, and reordering goods.
- Simulation: Often operations research is based on a simulation technique, which helps when it comes to avoiding risky situations. Experiments are conducted on model situations to analyze the outcome.
Today, operations research is being increasingly used by a number of businesses that want to optimize their systems while minimizing their use of resources and risk. For example, operations research may be used while designing a computer chip to reduce manufacturing time and cost.
Operations research is applied in supply chain management to handle the flow of raw materials and products. Even major IT companies like IBM, Accenture, and Hewlett-Packard have operations researchers and industry experts working day and night to optimize systems according to customer needs.