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Summary Operations Research
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Summary of Operations Research for MA1 Business Engineering at the VUB.
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Operations ResearchChapter 1: Introduction
Definitions of Operations Research:
- “a scientific approach to the solution of problems in the management of complex
systems”
- “Operations Research (O.R.), or operational research in the U.K, is a discipline that deals
with the application of advanced analytical methods to help make better decisions. The
terms management science and analytics are sometimes used as synonyms for
operations research.”
- “Operations Research & Analytics are proven scientific mathematical processes that
enable organizations to turn complex challenges into substantial opportunities by
transforming data into information, and information into insights that save lives, save
money and solve problems”.
Examples:
The Procter & Gamble Company substantially integrates operations research principles into
the decision-making structure of the firm, tackling issues such as global manufacturing site
location and sourcing, inventory management, supply chain design, and consumer behavior
analysis.
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,“Rather than operate with well-defined problems, managers ‘manage mess’ of interconnected
dynamic problems.”
We have to avoid messes because:
• When it is a puzzle, both the formulation and solution can be agreed upon without any
place for discussion. For Problems, the formulation can be agreed upon, but the
solution is still arguable, as the problem can be tackled in multiple ways. This is still
acceptable. A mess on the other hand, has both arguable formulation and solution,
which doesn’t lead anywhere.
How? By using a model:
A model represents or describes perceptions of a real situation, simplified, using a formal,
theoretically-based language of concepts and their relationships (that enables manipulation of
these entities), in order to facilitate management, control, understanding or some other
manipulation of that situation
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,Operations Research/Analytics Cycle:
The Nature of Operations Research:
• Process
o Carefully observe and formulate the problem
o Gather data
o Construct a mathematical model
o Test whether the model represents the actual situation
o Modify the model as appropriate and validate again
• Broad viewpoint
o Considers what is best for organization as a whole
o Attempts to identify best possible course of action
• Team approach
o Consists of individuals with diverse backgrounds and skills
o Necessary for considering ramifications of problem throughout organization
The Rise of Analytics Together with Operations Research:
• Analytics (Business Analytics)
o Introduced in 2006 by Thomas H. Davenport
o Similar in concept to operations research
o Transforms data into insight to make better decisions
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, • Big Data
o Refers to the massive amounts of data available today
Three types of Analytics:
• Descriptive analytics
o Identify interesting patterns to describe what is currently happening
• Predictive analytics
o Using data to predict what will happen in the future
• Prescriptive analytics
o Using data to prescribe what should be done in the future
è O.R. focuses on predictive and prescriptive analytics.
• Famous analytics applications:
o 2012 U.S. presidential campaign
§ The Obama team used data to target voters and donors
o Moneyball
§ The Oakland Athletics baseball team used analytics to identify athletes
to draft
Organizations:
• International Federation of Operational Research Societies (IFORS)
o Consists of a few dozen member countries. Each country has a national OR
society: Europe = EURO; Belgium = ORBEL
• Institute for Operations Research and the Management Sciences (INFORMS)
o International society headquartered in U.S. Publishes leading journals in
Analytics, Interfaces, Management Science, ...
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