APPLICATION OF OPERATION RESEARCH

[Pick the date]

INTRODUCTIONToday, almost every large organization or corporation in developed nations as well as to some extent in developing countries has executive applying operations research, and in government the use of operations research has spread from military to widely varied departments at all levels. Availability of faster and flexible computing facilities and the number of qualified OR professionals has enhanced the acceptance and popularity of the discipline. The growth of OR has not been limited to the USA and the UK, now it has reached to many countries including India. ORIGINThe ambiguous term Operations Research (OR) was coined during world war II, when the British Military Management called upon a group of scientists together to apply a scientific approach to the study of military operations to win the battle. The main objective was to allocate the scarce resources in an effective manner to the various military operations and to the activities within each operation. DEFINING OPERATIONS RESEARCHOR is a scientific method of providing executive departments with a quantitative basis for decisions regarding the operations under their control. Morse & Kimball Operations research is a scientific approach to problem solving for executive management. H.M. Wagner Operations research is an aid for the executive in making this decisions by providing him with the needed quantitative information based on the scientific method of analysis. C. Kittel OPERATIONS

The activities carried out in an organization related to attaining its goals and objectives.

RESEARCH

The process of observation and testing characterized by the scientific method. The steps of the process include observing the situation and formulating a problem statement, constructing a mathematical model, hypothesizing that the model represents the important aspects of the situation and validating the model through experimentation.

Operations Research Techniques: Two of the five steps of OR process, model construction and solution, encompass the actual use of OR techniques. These techniques can be loosely classified into five categories. 1) Linear mathematical programming technique consist of first, identifying problem as being solvable by linear programming; second formulation of unturned problem and then finding the solution by using established mathematical techniques. It derives its name from the fact that the functional relationship in the mathematical model are linear and the solution techniques consists of a predetermined mathematical steps i.e. program. 2) Probabilistic techniques covers those problem in which all parameters are not known with certainty. The solution results are assumed to be known with uncertainty, with probability that other solution might exist. 3) Inventory techniques are specifically designed for the analysis of inventory problem frequently encountered by the business firms. This particular business function is singled out for attention, since it typically represents a significant area of cost for almost every business. This category is divided into probabilistic and deterministic techniques.

4) Network techniques consist of models that are represented by diagrams rather than strictly mathematical relationship i.e. pictorial representation of the system under consideration. These models can represent either probabilistic or deterministic systems. 5) Other techniques consist of all the remaining techniques, which do not come under the four heads mentioned above. For example, Dynamic programming employs a different modeling and solution logic than linear programming. In non-linear programming either the objective function or the constraints or both can be non-linear functions, which would require altogether different solution technique. USES OF OPERATIONS RESEARCH TECHQUINEIn its recent years of organized development, OR has entered successfully many different areas of research for industry in many countries of the world. The basic problem in most of the developing countries is to remove poverty and improve the standard of living of a common man as quickly as possible. So there is a great scope for economists, statisticians, administrators, politicians and the technicians working in a team to solve this problem by an OR approach.  The possible application sectors are as underSECTORAL PLANNING MACRO ECONOMICS PLANNING
OPERATION RESEARCH

MICRO ECONOMICS PLANNING

1) Macro Economic Planning: OR can be employed for Macro-Economic Planning of the country: a) Input / Output Analysis: by using LP models. This input/output analysis can be of any duration [i.e. of short term (up to say 10 years)-Five Year Plan; and of long term (10-30 years)]. b) Investment Planning: OR can be employed in the Investment Planning of the country where investment plans for the next five or ten years are prepared. Mixed Integer Programming and Linear Programming techniques can be used. c) Choice of Projects: OR can help the people in the planning in choosing the

optimal project. This sort of choice would need Integer Programming and Quadratic Assignment techniques. d) OR can also be used in Simulation Modeling of the Economy of the country. 2) Sectoral Planning: OR can also be employed in a particular sector of the Economy, e.g. in agriculture, in finance, in industry, in marketing, in production, in management etc. a) Scheduling all operations within a sector can be done by using OR e.g. production scheduling + Distribution planning + marketing + Personnel management + maintenance + ............... b) Schedule of some operations within a sector can be done by employing OR e.g. Inventory planning in agriculture or distribution of fertilizer etc. 3) Micro Economic Planning: This sort of activity involve for example: y y y y Planning the operations of a Company. Improving the layout of a workshop in a company. Finding size of a hospital in an area etc. There is a great potential for utilizing OR in this area of planning in our country.

 POTENTIAL AREAS OF APPLICATIONS As mentioned earlier OR can be applied in every field of life. Here are few of the many fields where OR has potential application. This list is by no means comprehensive or exhaustive but definitely will provide an idea of the power of OR as a separate discipline.

POTENTIAL AREA
PUBLIC SECTOR INDUSTRY AND COMMERCE TRANSPORT

Operations Research in the Public SectorFederal, Provincial and Local Governmenty Development of Country Structure Plans y Manpower Planning and Career Development in Govt. Departments y Organization of Long-Term planning groups at the National Level y Corporate Planning in Local Government y Allocation of Government Houses y Estimation of Future Requirement of School/College Building y Placing of Fire Brigade in a City y Measuring the Effectiveness of Police y Timetabling in Schools and Colleges for Efficient use of Space Healthy Management policies for 120-bed nursing units y Optimum size of general hospitals y Appointment systems for hospital outpatients y Stock control for regional and area health units y National and area planning of health services y Manpower planning for nurses, radiographers, etc. y Commissioning of a new general hospital y Simulation of pathology laboratories y Organizing an ambulance service y Care provided by community nurses Defensey Arms control and disarmament studies y Communications network development y Logistic support in operations y Field experimentation y War games and other models of battle y Equipment procurement y Reinforcement and redeployment problems Operations Research in Industry & CommerceFinance and Investmenty Developing the five-year plan for a food manufacturer y Development of the pipeline y Computer based financial planning y Portfolio selection y Structure for the assets of a bank y Evaluating investment in a new plant y Corporate planning in the chemical industry

Financing expansion of a small firm

Productiony Production scheduling in a steel works y Meeting peak demands for electricity y Minimization of costs of power station maintenance y Scheduling newsprint deliveries y Stock levels of steel plate y Meeting seasonal demands for products y Blending scrap metals y Stock policy for a paint manufacturer y Allowing for yarn breaks in spinning y Meeting customer requirements for carpets y Planning a quarry's output y Optimum layout for belt coal transport in a colliery Marketingy Launching a new product y Advertising effectiveness and cost y Planning sales territories y Measurement of consumer loyalty y Buyer-seller behavior y Advertising research and media scheduling y Most profitable retail brand mix y Developing customer service policies y Pricing policies for confectionery Personnely Personnel shift planning y Manpower planning y Manpower for an assembly line y Effects of flexible working hours Distributiony Distribution of Products. y Returnable bottles: how many? y Refinery crude tank capacity y Depot location of pharmaceutical products y Trucking policy for dairy products y Distribution of newspapers to newsagents OR in TransportRaily Rail freight management

y y y y

Required fleet size of locomotives and rolling stock Forecasting passenger traffic Planning reconstruction of main-line termini Introduction of freightliners

Roady Designing urban road networks y Forecasts of car ownership y Implementation of bus lanes y Re-routing bus services y Purchasing and maintenance of buses y Introduction of flat-fare buses y Bus services in rural areas y Preparation of crew rosters Airy Planning the introduction of Boeing 737/Airbus 300 y Allocation of aircraft and crew to routes y Location of Islamabad Airport y Karachi-Lahore - Islamabad - Peshawer: aircraft requirements Seay Potential traffic for new container services y Shipbuilding requirement in the 1990's y Optimum ship size for given routes y Construction and management of a container terminal EXAMPLESOPERATIONS: 1) Oil production from fields 2) Transportation of Crude y from fields to refineries y from fields to export ports (Jetties) y from import ports (Jetties) to refineries 3) Storage of Crude y on fields y at Ports y at refineries 4) Refinery Scheduling y Operation of CDU's

Operation of Blending Units

5) Storage of Distilled Blended Products y at refineries y at Jetties y at distribution points 6) Transportation of Products y from Jetties to refineries y from one refinery to another for another processing y from refinery to bulk distribution pts. y from bulk distribution points to final consumers. At all the stages from oil production from fields to its transportation to the final consumer OR has been employed in the developed countries of the world. APPLICATION OF OR IN FASHION INDUSTRYOR Functions and MethodsOR supports the key decision making process, allows to solve urgent problems, can be utilized to design improved multistep operations (processes), setup policies, supports the planning and forecasting steps, and measures actual results. The following three methods are used to solve the problems of fashion industry-

Simulation methods: Where the goal is to develop simulators that provide the decision-maker with the ability to conduct sensitivity studies to (1) search for improvements, and (2) to test and benchmark the improvement ideas that are being made. Optimization methods: where the goal is to enable the decision maker to search among possible choices in an efficient and effective manner, in environments where thousands or millions of choices may actually be feasible, or where some of the comparing choices are rather complex. The ultimate goal is to identify and locate the very best choice based on certain criteria. Data-analysis methods: where the goal is to aid the decision-maker in detecting actual patterns and interconnections in the data set. This method is rather useful in numerous applications including forecasting and data mining based business environments. Application of OR in Fibre and Fabric IndustryOR applications include scheduling, routing, workflow improvements, elimination of bottlenecks, inventory control, business process re-engineering, site selection, or facility and general operational planning. Revenue and supply chain management reflect two growing applications that are distinguished by their use of several OR

methods to cover several functions. Revenue management entails first to accurately forecasting the demand, and secondly to adjust the price structure over time to more profitably allocate fixed capacity. Supply chain decisions describe the who, what, when, and where abstractions from purchasing and transporting raw materials and parts, through manufacturing actual products and goods, and finally distributing and delivering the items to the customers. The power of utilizing OR methods allows examining this rather complex and convoluted chain in a comprehensive manner, and to search among a vast number of combinations for the resource optimization and allocation strategy that seem most effective, and hence beneficial to the operation.

Application of OR in Garment IndustryIn garment industry the organization may need to design a sampling plan in order to meet specific quality control objectives. In a garment manufacturing, operations that compete for the same resources must be scheduled in a way that deadlines are not violated. Application of OR is useful in various department of garment manufacturing organizations. In cutting department cut scheduling problem concerns finding a feasible cutting schedule having the minimum number of lays. The availability of multiple solutions allows greater flexibility and permits decision makers to apply additional criteria in selecting an appropriate cutting schedule. A hybrid flow shop (HFS) problem on the pre-sewing operations and master production scheduling (MPS) problem of apparel manufacture are solved by a proposed two-tier scheduling model. OR helps to plan a MPS for the factory so that the costs are minimized when the production orders are completed before and after the delivery dates required by the customers and it also helps to minimize the completion time of the presewing operations in the cutting department while the production quantities required by the sewing department at several predetermined times can be fulfilled by the cutting department. OR projects focus on the industrial deployment of computer-based methods for assembly line balancing, business process reengineering, capacity planning, pull scheduling, and setup reduction, primarily through the integration of the philosophies of the Theory of Constraints and Lean Manufacturing. The main benefits are : Defects and wastage Reduce defects and unnecessary physical wastage, including excess use of raw material (inputs), preventable defects, costs associated wither processing defective items, and unnecessary product characteristics which are not required by customers Cycle Times Reduce manufacturing lead times and production cycle times by reducing waiting times between processing stages, as well as process preparation times and product/model conversion times

Inventory levels Minimize inventory levels at all stages of production, particularly works-in-progress between production stages. Lower inventories also imply lower working capital requirements. Labor productivity Improve labor productivity, both by reducing the idle time of workers and ensuring that when workers are working, they are using their effort as productively as possible. Utilization of equipment and space Use equipment and manufacturing space more efficiently by eliminating bottlenecks and maximizing the rate of production though existing equipment, while minimizing machine downtime. Flexibility Have the ability to produce a more flexible range of products with minimumchangeover costs and changeover time. Output In regards to reduced cycle times, increased labor productivity and elimination of bottlenecks and machine downtime can be achieved, companies can generally increase the output from their existing facilities.

Application of OR in Retail IndustryIn the retail industry application of OR is as follows: ROI Maximization: The retailers try to know the number of units (retail stores) to build in a particular DMA (designated marketing area) to maximize return on total investments within that DMA. In such situation the optimization model would need to consider the variables like warehousing, distribution, and supply chain costs, overhead, operating costs (labor, utilities, taxes, etc.), advertising efficiencies, media advertising costs, positioning, marketing strategy, the breadth and depth of merchandise , real estate and construction costs, employee training and sharing efficiencies among the stores etc. A nonlinear integer programming optimization model with stochastic and dynamic components is used to solve such problems. Optimal Distribution System: Transportation models, inventory models, and advertising response models is used to get optimal distribution system.

Optimal Product Line: Choice modeling would be used to measure consumersproduct line preferences and elasticities, given different market conditions. Optimal Positioning and Advertising Messaging: Survey research would be employed to provide a first approximation of target-audience definition. The final optimization model would involve choice modeling experiments among the broadly-defined target audience to identify a set of optimal solutions, which would also precisely define corresponding optimal target audiences. Route or delivery system optimization Promotional optimization Package design optimization Product features optimization Pricing optimization Industry and category forecasting Inventory optimization Retail category optimization Store design optimization