Introduction to Operations Research
Business is no longer just a matter of buying and selling something or procuring raw materials, manufacturing a product and selling it for a tidy profit. The complexities of globalized market economies and extreme competition demand an optimized process for each aspect of business that would result in maximum value addition with least inefficiencies – often small process efficiency can ensure competitive advantage or render your business to historical archives.
This is where Operations Research (OR) plays a role.
Operations Research studies business processes mathematically, comes up with statistical projections to optimize each process and the use of available resources and then delivers the most cost-effective way of completing the business process – the process could have to do with finance, the running of a factory line, the optimal distribution of marketing spends or simply the distribution of finished goods.
Elements of Operations Research
Like several elements in modern business, OR also has a military application background – it has roots in the art of optimizing the use of the men and equipment to score major victories without incurring big losses.
Thus, apart from mathematics, OR may also use data sciences, organizational behavior, psychology and industrial engineering to come up with solutions. It also defines the goals and lays down the plan of action for getting there.
You can apply OR to any area of business or human endeavor including National budget & planning, defense, production or manufacturing, purchasing, procurement, logistics & supply chain management, budgeting & investments, revenue and marketing management, telecom networks, agriculture, energy and environment to name a few.
Also Read: MBA in Operations Management
Also Read: MBA in Logistics & Supply Chain Management
Also Read: MBA Specializations: A Complete Guide
Operations Research Methodology
Operations Research methodology comprises three phases.
The first phase one is the judgement phase in which all aspects of the objectives, the current state, problems and related matters are clearly defined to bring everyone involved on board.
The second is the research phase that involves data or information gathering, framing of hypothesis and validating them, model construction and predictions.
The third phase is the action phase in which the results of the previous phases are implemented. If needed, changes or repetitions are also incorporated.
Thus, the OR manager will initially try to build a mathematical representation of the problem and then set an intermediate goal to understand the dependence of variables and the output. The next stage is to frame strategies to resolve the issues.
Here is an interesting example of how operations research decides the best fastest route for package delivery vehicles: Why UPS Trucks Don’t Turn Left
Operations Research: Pros and Cons
Among the advantages of OR is the fact that it allows decisions to be taken free from pre-conceived opinion or biases as it is based on a mathematical model and data analysis.
Apart from ensuring optimum use of resources and promoting efficiency, it also provides advance warning of problems or opportunities ahead and comes up with suggestions and solutions well in time.
Among the limitations is the very fact that OR is based on a mathematical model that may not work well in situations calling for human intelligence or ingenuity at short notice.
Operations Research: Education Opportunities in India
The importance of OR can be gauged from the fact that it is a separate department at the Indian Institutes of Management (IIMs).
At IIM Bangalore, Production & Operations Management faculty not only provides graduate-level courses but also conducts research in Project Management, Logistics & Supply Chain Management, Production Planning & Control, E-Commerce, Enterprise Resource Planning, Services Management, Reverse Logistics and Design of Manufacturing Systems.
At IIM Calcutta, the Operations Management group is deeply involved in research and teaching activities. It is frequently called upon to plan, design and optimize operations in a wide range of manufacturing and services, both in the private and public sectors. Everything from systems design and technology choices to day-to-day scheduling and performance measurement to day-to-day scheduling and performance audit to technology choices and systems design comes under its ambit.
IIM Ahmedabad’s Production & Quantitative Methods (P&QM) area offers Operations management, Operations research and Statistics as core or elective courses for MBA and all other programs.
Operations Research: Careers
Payscale has pegged the average salary for an MBA in Operations Research at $ 802,000.
Operations management was at one time, considered mostly a line job in a factory where the OR Manager was mostly concerned with optimizing all elements of production.
However, it has since then branched into several other areas offering excellent growth prospects and rewards for out of the box thinking and innovation. Globalization has made business across domains and sectors part of a vast supply chain stretching across continents.
Thus, an MBA with OR qualifications could go into
- Operations management consulting
- Strategic planning
- Manufacturing strategy
- Inventory Planning and Control
- Business process re-engineering
- Operations strategy
- Internal auditing
- Supply chain management and Distribution
- Logistics planning
- MBA in Human Resource Management
- MBA in Hotel Management
- MBA in Logistics and Supply Chain Management
- MBA in Marketing
- MBA in Production and Operations Management
- MBA in Finance