History of Operations Research

History

1. Chapter 1- Introduction to Operations Research 1

2. Data Science??

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: Descriptive – involves the study and consolidation of historical data for a business and industry. Predictive- is aimed at forecasting future outcomes based on patterns in the past data. 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: Descriptive?? Predictive?? Prescriptive??

6. Prescriptive analysis- Inventory management, Linear Programming, Transportation and assignment models, Integer programming, goal programming, non linear programming, Network models etc.

7. Content

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 “ O perational R esearch ", the Americans to “ O perations R esearch " - but both are often shortened to just "OR". Another term used for this field is “ M anagement S cience " ("MS"). In U.S. OR and MS are combined together to form "OR/MS" or "ORMS". Yet other terms sometimes used are “ I ndustrial E ngineering " ("IE") and “ D ecision S cience " ("DS").

13. In a nutshell, OR is application of analytical tools to make decisions. In today’s world OR is all around us

14. 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

15. 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.

16. 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.

17. 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.

18. 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)

19. History of OR

20. 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)

21. 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.

22. 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 .

23. 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 20 21- You are here Age of Big Data, Machine Learning, Artifical Intelliegence 18 4 Charles Babbage research into the cost of transportation and sorting of mail

24. 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.

25. 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.

26. 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.

27. 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.

28. 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.

29. 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.

30. 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.

31. 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/

32. THE NATURE OF OPERATIONS RESEARCH

33. 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

34. 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)

35. 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

36. 38 Application Areas Strategic planning Supply chain management Pricing and revenue management Logistics and site location Optimization Marketing research

37. 39 Applications Areas (cont.) Scheduling Portfolio management Inventory analysis Forecasting Sales analysis Auctioning Risk analysis