Uses of operational research in business - Free Essay Example

Sample details Pages: 5 Words: 1520 Downloads: 7 Date added: 2017/06/26 Category Business Essay Type Argumentative essay Did you like this example? Brief 69251 Title: Uses of OR (operational research) in business I. Introduction The main characteristic of business has always been the combination of a series of actions that can lead to the creation of a profit for its owner. On the other hand, the volume and the complexity of the above actions have been differentiated because of the changes in the social and the science sectors. However, there is an element of the commercial activity that still remains the same and which seems to define the productivity and the development of the business. This element is the necessity for the presence of a person (or persons) who will have the exclusive task of measuring the uncertainty (regarding the business activities), of allocating the resources, of planning projects and organizing, generally, the administrative force of an enterprise (public or private) in a way that the latter can confront most of the unexpected situations that are related with the business activity. II. Operational Resear ch – Definition and Theories The task of defining the Operational Research to its full meaning and purpose is not an easy one. There have been some definitions, each one from a different point of view but all of them are giving somehow a completed description for the role of the OR in the business environment. According to Duckworth, W. E., Gear, A. E., Lockett (1977, 1) ‘operational research is the study of administrative systems pursued in the same scientific manner in which systems in physics, chemistry and biology are studied in the natural sciences’. The above definition, although a distinctive one we can say, does not refer to the functions of the OR and its specific role in the business environment. Cohen S. S. (1985, 1) states that ‘operational research is the science of planning and executing an operation to make the most economical use of the resources available’. The definition of Cohen seems to be much more completed as it refers to th e role and the aim of OR regarding the business development. On the other hand, Littlechild L.C. (1977) does not refer to a specific definition for the OR but proceed to the presentation of the ten stages that, according to his opinion, have to be followed when applying the OR in business. The stages are Littlechild L.C. (1977, 15-16): ‘1. describe problem in its context, 2. collect preliminary information, 3. define problem explicitly, 4. set study objectives, 5. formulate the OR problems, 6. construct model, 7. collect detailed data, 8. test model, 9. select solution from alternatives, 10. implement and monitor solution’. The above ‘stages’ or steps refer to the methodology that has to be followed during the application of OR in a business environment. These ‘steps’ seem to be a very detailed presentation of the whole functions of OR in a business, however we can notice the lack of the aim and the reasoning of existence of OR. The OR, due to its extended flexibility, can be used in any business environment, bearing in mind that, in its case, we have to adapt the techniques used in OR to the needs of the specific enterprise. III. Techniques and Applications of OR The application of OR have met difficulties especially due to the constant changes of the science and the technology. A theory that has been expressed in order to help to the solution of problems related with the application of technology to the everyday life is the ‘Queueing theory’ (Littlechild L.C. (1977, 160). The above theory, which is based to the existence of queues, is mainly concerned with problems such as: congestion in telephone systems, airports and harbours, machines out of action waiting for repair and so on. Cohen S. S. (1985, 15) refers to ‘Linear Programming’ a technique used ‘to find a combination of different types of activities which fully exploits the available resources – when the restrictions on the resources have a simple algebraic form’. This technique is called ‘Linear Programming’ (Cohen S. S., 1985, 15). Another method, the decision tree one is applied by ‘laying out the available information in a clear and convenient way, known as a decision tree, so that the manager can relatively easy trace out the implications of a particular policy, which corresponds to a particular branch of the tree’ (Kidd J B in Littlechild S. C., 1977, 207). Operational research can also have many other applications in its pure form or in an non – so distinctive role, (see also Duckworth, W. E., Gear, A. E., Lockett 1977, 180-184), like the business forecasting, the corporate planning, the discounted cash flow (DCF) methods, the cost-benefit analysis, the output budgeting and so on. Of course, the techniques of OR used inside each business are in any case adapted to the specific requirements and as a result they can present different formulations and results even when referring to the same industry. Under these circumstances, the problems that may occur during their application are been confronted in a ‘local’ level (Samaddar, S., Rabinowitz, G., Zhang, G. P., 2005). IV. Problems arising when applying the OR in a business environment The application of the OR inside a business has to be adapted to the needs and the requirements of the specific enterprise. First of all the management team that carries out the operational research in order to take decisions for the firm’s strategy, has to take into account the ‘particular national elements’ that characterize the country that this business operates (Pagell, M., Katz, J. P., Sheu, C., 2005, 4, ReVelle, C. S., Eiselt, H. A., 2005). At a next level, there should be paid a lot of attention regarding to the data gathered (i.e. examination of equivalence and accuracy) especially those which were collected through international markets surveys (see also Van Herk, H., Poortinga, Y. H., Verhallen, 2005). When referring to the operational research of a business in general, the knowledge gained or gathered is in any case valuable. Under these circumstances we have to bear in mind when managing, exploiting or transferring it that every measure of safety has be taken in order to avoid its unwilling modification or even its damage (Hall, R., Andriani, P., 2003, Nicolau, J. L., 2005, Guzman, G. A. C., Wilson, J., 2005). We should notice that, the data involved in the OR, cannot give a totally clear and specific image for the firm’s financial future (sometimes there is even uncertainty for the current situation), and it’s the management’s role to handle this problem by relevant measures assuming there are always factors that remain unknown but can have unexpected consequences under circumstances of pressure or of radical changes (see also Herroelen, W., Leus, R., 2004, Ozdemir, M. S., Saaty, T. L., 2004, Cao, Q. , Patterson, W., Bai, X., 2005, Prajogo, D. I., Sohal, A. S., 2004). V. Conclusion The operational research has a decisive role in a business operation, both to its daily activities and to its future strategy. However, in order to achieve its full potential (regarding the business development) it has to be adapted every time in the requirements of the specific enterprise and not to be limited to specific rules and conditions. We should also mention the very important role of the management team towards this direction. The operational research, like every other business activity, needs to be designed, formulated and executed applying a specific methodology – the one that should be evaluated as the most suitable – and under a thorough examination and controlling of the data and the resources involved. In this way it will help directly to the business development and it will not remain just another effort to enforce the productivity and – as a result – the profit. References Brignall, M., ‘Rise: Set course: Operational research’, The Guardian, 21/2/2004, 7 Cao, Q., Patterson, W., Bai, X., (2005), ‘Reexamination of processing time uncertainty’, European Journal of Operational Research, 164, 185-194 Cohen, S. S., Operational Research, 1st edition, 1985 Duckworth, W. E., Gear, A. E., Lockett, A.G., A guide to Operational Research, 3rd edition, 1977 Guzman, G. A. C., Wilson, J., (2005) ‘The ‘soft’ dimension of organizational knowledge transfer’, Journal of Knowledge Management, vol. 9, no 2, 59-74 Hall, R., Andriani, P., (2003), ‘Managing knowledge associated with innovation, Journal of Business Research, vol. 56, 145-152 Herroelen, W., Leus, R., (2004), ‘Project scheduling under uncertainty: Survey and research potentials, European Journal of Operational Research, 165, 289-306 Littlechild, S. C., Operational Research for Managers, 1st edition, 1977 Nicolau, J. L., (2005), ‘Valuing the business environment on a daily basis’, European Journal of Operational Research, 164, 217-224 Ozdemir, M. S., Saaty, T. L., (2004), ‘The unknown in decision making – What to do about it’, European Journal of Operational Research (article in press) Pagell, M., Katz, J. P., Sheu, C., (2005), ‘The importance of national culture in operations management research’, International journal of Operations and Production Management, vol. 25, no 4, 2005, 371-394 Prajogo, D. I., Sohal, A. S., (2004), ‘The relationship between organizational strategy, total quality management (TQM), and organization performance – the mediating role of TQM, European Journal of Operational Research, 168, p. 35-50 ReVelle, C. S., Eiselt, H. A., (2005), ‘Location analysis: A synthesis and survey’, European Journal of Operational Research, 165, 1-19 Samaddar, S., Rabinowitz, G., Zhang, G. P., (2005), ‘An experimental analysis of solution performance in a resource sharing and scheduling problem’, European Journal of Operational Research, 165, 139-156 Van Herk, H., Poortinga, Y. H., Verhallen, (2005), ‘Equivalence of survey data: relevance for international marketing’, European Journal of Marketing, vol. 39, no 3/4, p. 351-364 Don’t waste time! Our writers will create an original "Uses of operational research in business" essay for you Create order