Operations research is a quantitative approach that solves problems, using a number of mathematical techniques. It is helpful to use operations research when you’re trying to make decisions but the conditions are uncertain, and when differing objectives are in conflict with each other.
Advantages of Operations Research
These mathematical techniques used in operations research help managers do their jobs more effectively:
Maintaining Better Control
Managers use techniques of operations research to maintain better control over their subordinates. This is possible because operations research provides a basis in which to establish standards of performance and ways to measure productivity. Reporting deviations from standards enables managers to identify problem areas and to take corrective action.
Better Decision Making
The mathematical models of operations research allow people to analyze a greater number of alternatives and constraints than would usually be possible, if they were to use only an intuitive approach. Using operations research, it is easier to analyze multiple alternatives, which results in greater confidence in the optimal choice.
Better Coordination of Departments
Operations research analysis blends together the objectives of different departments. For example, operations research coordinates the aims of the marketing department with the schedules of the production department.
Increased Business Productivity
The mathematical formulas used in operations research can increase productivity, as they offer a greater number of optimal choices of inventory mix, plant machine utilization, factory size, manpower planning and implementing new technologies.
Operations Research Model
Operations research has evolved into a standard framework that’s used for identifying and solving problems. The steps are as follows:
- Defining the problem
- Collecting data
- Formulating constraints and objectives
- Validating the model and output analysis
- Implementation and monitoring
Example of Operations Research Analysis
A good example of how to use operations research analysis is to consider the plight of farmer Jones. He must decide how many acres of corn and wheat to plant this year. One acre of corn will yield 10 bushels, and will require four hours of labor per week, and it will sell at $3 per bushel. Wheat will sell at $4 a bushel, will need 10 hours of labor a week and will yield 25 bushels per acre.
Farmer Jones has seven acres of land and can only work 40 hours per week. The government states that he must produce at least 30 bushels of corn in the coming year.
How many acres of corn and wheat does Farmer Jones plant to maximize his revenue? The linear programming technique of operations research gives the optimal answer – he should plant three acres of corn and 2.8 acres of wheat.
Operations Research Limitation: Problem must be Quantifiable
Operations research only functions when all factors in a problem can be quantified. Other relevant inputs to a problem might not be expressible in numbers.
Difficulties in Implementation
Implementing optimal solutions that result from operations research does not take human reactions and behavior into consideration.
Management is constantly under pressure to make economical decisions that result in more efficient operations and greater profits. The techniques of operations research help managers allocate resources more effectively and enables them to better optimize the performance of their businesses.