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Introduction

HISTORY AND BACKGROUND OF OR

In the books of management one often finds a specific period of the development of management thought called the period of Scientific Management. It was in 1885 that Fredrick W. Taylor, considered the “father of scientific management’ developed the scientific management theories. It is also called the Modern era when rapid development of concepts, theory and techniques of management took place. During World War II production bottlenecks forced the government of Great Britain to look upto scientists and engineers to help achieve maximum military production. These scientists and engineers created mathematical models to find solutions to the problems of increasing production of military equipment. This branch of study was called Operations Research (OR) since it was used in the research in war operations of armed forces. These problems of the armed forces seemed to be similar to those that occurred in production systems. Because of the success of OR in military operations, approach to war problems began to be used in industry as well.

WHY STUDY OPERATION RESEARCH?

OR basically helps in determining the best (optimum) solution (course of action) to problems where decision has to be taken under the restriction of limited resources. It is possibleto convert any real life problem into a mathematical model. The basic feature of OR is to formulate a real world problem as a mathematical model. Since in the production industry, most of the manufacturers want to lower their labour costs or production costs to achieve higher profits, OR can be very usefully employed to real life production problems.

OR should be seen as a problem-solving technique. Like Management, OR is also both Science and an Art. The Science part of OR is using mathematical technique for solving decision problems. The Art part of OR is the ability of the OR team to develop good rapport with these supplying information and those who have to implement the recommended solutions. It is important that both the Science and the Art part of the OR are understood properly as a system of problem-solving.

In India OR Society was formed in ‘1950’s’. The Journal of Operations Research has the mission to serve entire OR community including practitioners, researchers, educators and students. It celebrated its 50th Anniversary of Operations Research and published Anniversary issue in Jan-Feb 2001. Industry has become
quite aware of the potential of OR as a technique and many industrial and business houses have OR teams working to find solutions to their problems. Particularly, Railways, Indian Airlines, Defence Forces, Telco, DCM etcare using OR to their advantage. As a matter of fact, some techniques of OR like Programme Evaluation and Reviewing Techniques (PERT) and Critical Path Method (CPM) are frequently used by many organizations for effective planning and control of the construction projects.

OR helps in taking decisions which optimize (maximize) the interest of the organization, it is a decision making tool and should be seen as such. Many individuals and organizations see it as a management fad, which has limited use to them. At the same time, tendency of some organizations to force-fit OR to prove that they use managerial techniques whether their functioning needs demand OR or not must be curbed, However, this is also true that complex real life problems can be solved to the advantage of the organizations by using OR techniques.

DEFINITION OF OR

Many authors have given different interpretation to the meaning of ORas it is not possible to restrict the scope of OR in a few sentences. Students must understand that there need not be one single definition of OR which is acceptable to everyone. Two of the widely accepted definitions are provided below for understanding the concept of OR.

“Operation Research is concerned with scientifically deciding how best todesign and operate man-machine system usually under conditions requiring the allocation of scarce resources”.

– OR Society of America

The salient features of the above definition are :-

  1. It is a scientific decision-making technique.
  2. It deals with optimizing (maximizing) the results.
  3. It is concerned with man-machine systems.
  4. The resources are limited.

“Operations Research is a scientific approach to problem solving for executive management”.

-HM Wagner

The above definition lays emphasis on

  1. OR being a scientific technique.
  2. It is a problem-solving technique.
  3. It is for the use of executives who have to take decisions for the organizations.

A close observation of the essential aspects of the above two definitions will make it clear that both are in reality conveying the same meaning. Other definitions of OR also converge on these essential features. One need not remember the definitions word by word but understand the true meaning of the definition provided by different authors. The emphasis has to be on the application of technique so that organizations are benefitted. Hence, the real work of any managerial technique is the ability of the organizations to take advantage for meeting their objectives.

OPERATIONS MANAGEMENT, PRODUCTION MANAGEMENT, SYSTEMMANAGEMENT AND OPERATIONS RESEARCH

All the above subjects are inter-related and one must understand the fundamental concepts of these before one is ready to study the details.

Any production function brings together men, machines and materials. These are used to provide goods and services, which satisfy the needs, wants and desires of the people. For long the term ‘production’ has been associated with factory like situations where goods are produced in the physical sense. In fact, a factory is defined as ‘a premises where people are employed for making, altering, repairing, ornamenting, finishing, cleaning, working, breaking, demolishing or adopting any article for sale. For example, in factory the mass production of any household product or good may take place. The management of production of such goods is important but equally important is the management of the service part associated with it. Similarly, one can distinguish between the production of say McDonald’s burger which is a product or good and its delivery, which is a service. Ifwe generalize the concept of production as the process through which
goods and services are created, both manufacturing of goods and service organization can be included in production management. Thus non-manufacturing processes like health, transport, banks, education etc come under the scope of production management. It is because of this reason that term production or
operations management has been suggested by many authors to include the application of techniques of management of men, machines and materials.

So, general concept of ‘Operations’ and not production can include both manufacturing and service organizations. There is an operation function involved in all enterprises, big or small.