Chapter One

1. Introduction to Operations Research

1.1. OR – Quantitative approach to decision making
Decision-making in today’s social and business environment has become a complex task. The uncertainty of the
future and the nature of competition and social interaction greatly increase the difficulty of managerial decision-
making. Knowledge and technology are changing rapidly, the new problems with little or no precedents these
problems and provide leadership in the advancing global age, decision-makers cannot afford to make decisions
by simply applying their personal experiences, guesswork or intuition, because the consequences of the wrong
markets, producing the wrong products, providing inappropriate services, etc., will have major, often disastrous
consequences for organizations.
Operations Research as one of the quantitative aid to decision-making, offers the decision maker a method of
evaluating every possible alternative (act or course of action) by using various techniques to know the potential
outcomes. This is not to say, however, that management decision-making is simply about the application of
operations research techniques.
In general, while solving a real-life problem, the decision-maker must examine in both from quantitative as well
as qualitative perspective. Information about the problem from both these perspectives needs to be brought
together and assessed in the context of the problem. Based on some mixes of the two sources of information, a
decision should be taken by the decision-maker.
The evaluation of each alternative is extremely difficult or time consuming for two reasons: First, the amount and
complexity of information that must be processed; second the number of alternative solutions could be so large
that a decision maker simply cannot evaluate all of them to select an appropriate one. For these reasons when
there is lack of qualitative information, decision makers increasingly turn to quantitative methods and use
computers to arrive at their optimal solution to problems involving large number of alternatives. The study of
these methods and how decision makers use them in the decision process is the essence of operations research
approach.
1.2. History of Operations Research
It is generally agreed that operations Research came is to existence as a discipline during World War II when
there was a critical need to manage scarce resources. The term “Operations research” was coined as a result of
research on military operations during this war. Since the war involved strategic and tactical problems which
were greatly complicated, to expect adequate solutions from individual or specialists in a single discipline was
unrealistic. Therefore, group of individuals who collectively were considered specialists in mathematics,
Economics, statistics and probability theory, engineering, behavioral, and physical science were formed as
special unit within the armed forces to deal with strategic and tactical problems of various military operations.
The objective was the most effective utilization of most limited military resources by the use of quantitative
techniques.
After the war ended, scientists who had been active in the military OR groups made efforts to apply the
operations research approach to civilian problems, related to business, industry, research and development, and
even won Nobel prizes when they returned to their peacetime disciplines.
There are three important factors behind the rapid development in the use of operations research approach.
 (i) The economic and industrial boom after World War II resulted in continuous mechanization,
automation, decentralization of operations and division of management factors. This industrialization
also resulted in complex managerial problems, and therefore application of operations research to
managerial decision-making become popular.
(ii) Many operation researchers continued their research after war. Consequently, some important
advancement were made in various operations research techniques: linear programming and its
solution by a method known as simplex method, statistical quality control, dynamic programming,
queuing theory and inventory theory were well developed during this time.
(iii) Analytic power was made available by high-speed computers. The use of computers made it possible
to apply many OR techniques for practical decision analysis.
1.3. Nature and Significance Operations Research
The Operations research approach is particularly useful in balancing conflicting objectives (goals or interests),
where there are many alternative courses of action available to the decision-makers. In a theoretical sense, the
optimum decision must be one that is best for the organization as a whole. It is often called global optimum. A
decision that is best for one or more sections of the organization is usually called suboptimum decision. The OR
approach attempts to find global optimum by analyzing inter-relationships among the system components
involved in the problem. In other words, operations research attempts to resolve the conflicts of interest among
various sections of the organization and seeks the optimal solution which may not be acceptable to one
department but is in the interest of the organization as a whole.
1.4. Operation Research: Some definitions
The British/Europeans refer to "operational research", the Americans to "Operations research" - but both are
often shortened to just "OR" (which is the term we will use). Another term which is used for this field is
"management science" ("MS"). The Americans sometimes combine the terms OR and MS together and say
"OR/MS" or "ORMS". Yet other terms sometimes used are "industrial engineering" ("IE"), "Decision Science"
("DS”) and “problem solving”. In recent years there has been a move towards a standardization upon a single
term for the field, namely the term "OR".
Because of the wide scope of application of operations research, giving a precise definition is difficult. However,
a few definitions of OR are given below.
 Operations research is the application of the methods of science to complex problems in the direction and
management of large systems of men, machines, materials and money in industry, business, government and
defense. The distinctive approach is to develop a scientific model of the system incorporating measurements
of factors such as chance and risk with which to predict and compare the outcomes of alternative decisions,
strategies, or controls. The purpose is to help management in analyze its policy and actions scientifically.
Operations Research Society, UK
 Operations research is concerned with scientifically defining how to best design and operate man-machine
systems usually requiring the allocation of scarce resources.
Operations Research Society, America
Apart from being lengthy, the definition given by ORSUK, has been criticized, because it emphasizes complex
problems and large systems leaving the impression that it is a highly technical approach suitable only to large
organizations. The definition of ORSA contains an important reference to the allocation of scarce resources. The
key words used in the above definitions are scientific approach, scarce resources, system and model. The UK
definition contains no reference to optimization, while the American definition has no reference to the word,
best.
A few other definitions, which are commonly used and widely acceptable, are:
 Operations research is a systematic application of quantitative methods, techniques and tools to the analysis
of problems involving the operation of systems.
 Operations research is essentially a collection of mathematical techniques and tools which in conjunction
with systems approach, is applied to solve practical decision problems of an economic or engineering nature.
 Operations Research, in the most general sense, can be characterized as the application of scientific methods,
techniques and tools, to problems involving operations of a system so as to provide those in control of the
operations with optimum solutions to the problems.
 Operation research seeks the determination of the optimum course of action of a decision problem under the
restriction of limited resources. It is quite often associated almost exclusively with the use of mathematical
techniques to model and analyze decision problems.
 Operations research is the application of a scientific approach to solving management problems in order to
help managers make better decisions. As implied by this and other definitions, operations research
encompasses a number of mathematically oriented techniques that have either been developed within the
field of management science or been adapted from other disciplines, such as natural sciences, mathematics,
statistics, and engineering.
1.5. Features of Operations Research Approach
From the previous discussions and various definitions of OR, important features or characteristics can be drawn.
These features of OR approach to any decision and control problems can be summarized as:
1.5.1. Inter-disciplinary approach
Interdisciplinary teamwork is essential because while attempting to solve a complex management problem, one
person may not have complete knowledge of all its aspects such as economic, social, political, psychological,
engineering, etc. This means we should not expect a desirable solution to managerial problems from a single
individual or discipline. Therefore, a team of individuals specializing in mathematics, statistics, computer
science, psychology, etc, can be organized so that each aspect of the problem could be analyzed by a particular
specialist in that field. But we shouldn’t forget that certain problem situations may be analyzed even by one
individual.
1.5.2. Methodological Approach: Operation research is the application of scientific methods, techniques and
tools to problems involving the operations of systems so as to provide those in control of operations with
optimum solutions to the problems.

Note: A system is defined as an arrangement of components designed to achieve a particular objective(s)

according to plan. The components may be either physical or conceptual or both but they share a unique
relationship with each other and with the overall objective of the system.
1.5.3. Wholistic Approach or Systems Orientation: While arriving at a decision, an operation research team
examines the relative importance of all conflicting and multiple objectives and the validity of claims of various
departments of the organization from the perspective of the whole organization.
1.5.4. Objectivistic Approach: The OR approach seeks to obtain an optimal solution to the problem under
analysis. For this, a measure of desirability (or effectiveness) is defined, based on objective(s) of the
organization. A measure of desirability so defined is then used to compare alternative courses of action with
respect to their outcomes.
1.5.5. Decision Making – OR increases the effectiveness of management decisions. It is the decision science
which helps management to make better decisions. So the major premise of OR is decision making, irrespective
of the situation involved.
1.5.6. Use of Computers: OR often requires a computer to solve the complex mathematical model or to perform
a large number of computations that are involved.
1.5.7. Human factors: In deriving quantitative solution, we do not consider human factors which doubtlessly
play a great role in the problems. So study of the OR is incomplete without a study of human factors.
Operations research, though young, is a recognized and established discipline in the field of business
administration. The application of management science techniques is widespread, and they have been frequently
credited with increasing efficiency and productivity of business firms.
1.6. Models and Modeling in Operations Research
Both simple and complex systems can easily be studied by concentrating on some portion or key features instead
of concentrating on every detail of it. This approximation or abstraction, maintaining only the essential elements
of the system, which may be constructed in various forms by establishing relationships among specified variables
and parameters of the system, is called a model. In general, models attempt to describe the essence of a situation
or activity by abstracting from reality so that the decision- maker can study the relationship among relevant
variables in isolation.
Models do not, and cannot, represent every aspect of reality because of the innumerable and changing
characteristics of the real-life problems to be represented. Instead, they are limited approximation of reality. For
example, to study the flow of materials through a factory, a scaled diagram on paper showing the factory floor,
position of equipment, tools, and workers can be constructed. It would not be necessary to give such details as
the color of machines, the height of the workers, or the temperature of the building. For a model to be effective,
it must be representative of those aspects of reality that are being investigated and have a major impact on the
decision situation.
A model is constructed to analyze and understand the given system for the purpose of improving its performance.
The reliability of the solution obtained from a model depends on the validity of the model in representing the
system under study. A model, allows the opportunity to examine the behavioral changes of a system without
disturbing the on-going operations.
Note: The key to model building lies in abstracting only the relevant variables that affect the criteria of the
measures of performance of the given system and expressing the relationship in a suitable form. But
oversimplification of problem can lead to a poor decision. Model enrichment is accomplished through the
process of changing constants in to variables, adding variables, relaxing linear and other assumptions, and
including randomness.
1.6.1. Classification of OR Model
As we discussed earlier, OR model is an abstract representation of an existing problem situation. It can be in the
form of a graph or chart, but most frequently an OR model consist of a set of mathematical relationships. These
mathematical relationships are made up of numbers and symbols.
There are many ways to classify models:
i) Classification based on structure
a) Physical Models: These models provide a physical appearance of the real object under study either reduced in
size or scaled up. Physical models are useful only in design problems because they are easy to observe, build,
and describe. Since these models cannot manipulated and are not very useful for prediction, problems such as
portfolio analysis selection, media selection, production scheduling, etc cannot be analyzed by physical models.
b) Symbolic models: These models use symbols (letters, numbers) and functions to represent variables and their
relationships to describe the properties of the system.
ii) Classification based on function or purpose
Models based on the purpose of their utility include:
a) Descriptive models: Descriptive models simply describe some aspects of a situation, based on observation,
survey, questionnaire results or other available data of a situation and do not recommend anything. Example:
Organizational chart, plant layout diagram, etc.
b) Predictive Models: These models indicate “If this occurs, then that follow”. They relate dependent and
independent variables and permit trying out, “what if” questions. In other words, these models are used to predict
outcomes due to a given set of alternatives for the problem. These models do not have an objective function as a
part of the model to evaluate decision alternatives.
For example, S = a + bA +cI is a model that describes how the sales (S) of a product change in advertising
expenditures (A) and disposal personal income (I). Here, a, b, and c are parameters whose values must be
estimated.
c) Normative (Optimization) models: These models provide the “best” or “Optimal” solution to problems
subject to certain limitations on the use of resources. These models provide recommended courses of action. For
example, in mathematical programming, models are formulated for optimizing the given
objective function, subject to restrictions on resources in the context of the problem under consideration and non-
negativity of variables. These models are also called prescriptive models, because they prescribe what the
decision maker ought to do.
iii) Classification Based on Time Reference
a) Static Models: Static models represent a system at some specified time and do not account for changes
over time. For example, an inventory model can be developed and solved to determine an economic order
quantity for the next period assuming that the demand in planning period would remain the same as that
for today.
b) Dynamic models: In dynamic models, time is considered as one of the variables and allows the impact of
changes due to change in time. Thus, sequences of interrelated decisions over a period of time are made to select
the optimal course of action to optimize the given objective. Dynamic programming is an example of a dynamic
model.
iv) Classification based on Degree of certainty
a) Deterministic Models: If all the parameters, constants and functional relationships are assumed to be known
with certainty when the decision is made, the model is said to be deterministic. Thus, in such a case, the
outcome associated with a particular course of action is known. That is, for a specific set of input values,
there is a uniquely, determined output which represents the solution of the model under consideration of
certainty. The results of the models assume single value. Linear programming models are examples of
deterministic models.
b) Probabilistic (Stochastic) models: Models in which at least one parameter or decision variable is a random
variable are called probabilistic (or stochastic). Since at least one decision variable is random, a dependent
variable which is the function of independent variable(s) will also be random. This means consequences or
pay off due to certain changes in the independent variable cannot be produced with certainty. However, it is
possible to predict a pattern of values of both the variables by their probability distribution. Insurance against
risk of fire, accidents, sickness, etc are examples where the pattern of events is studied in the form of a
probability distribution.
v) Classification Based on Method of solution or Quantification
a) Heuristic Model: These models employ some sets of rules which, though perhaps not optimal, do facilitate
solutions of problems when applied in a consistent manner.
b) Analytical Models: These models have a specific mathematical structure and thus can be solved by known
analytical or mathematical techniques. Any optimization model (which requires maximization or minimization of
an objective function) is an analytical model.
c) Simulation Models: These models have a mathematical structure but are not solved by applying mathematical
techniques to get a solution. Instead, a simulation model is essentially a computer-assisted experimentation on a
mathematical structure of a real-life problem in order to describe and evaluate its behavior under certain
assumptions over a period of time.
Simulation models are more flexible than mathematical ones and therefore, can be used to represent a complex
system which otherwise can not be represented mathematically. These models do not provide general solution
like those of mathematical Models.
1.6.2. Advantage of Models
Models in general are used as an aid for analyzing complex problems. However, a model can also serve other
purposes as:
i) A model provides economy in representation of the realities of the system. That is, models help decision
makers to visualize a system so that he/she can understand the system’s structure or operation in a better
any. For example, it easier to represent a factory lay out on paper than to construct it. It is cheaper to try
out modifications of such systems by rearrangement on paper.
ii) The problem can be viewed in its entirety, with all the components being considered simultaneously.
iii) Models serve as aids to transmit ideas and visualization among people in the organization. For example,
process chart can help the management to communicate about better work methods to workers.
iv) A model allows us to analyze and experiment in a complex situation to a degree that would be impossible
in the actual system and its environment. For example, the experimental firing of satellite may be costly
and require years of preparation.
 v) Models simplify he investigation considerably and provide a powerful and flexible for predicting the
future state of the process or system.
1.6.3. Methodology of Operations Research
For effective use of OR techniques, it is essential to follow some steps that are helpful for decision-makers to
make better solution. The flow diagram representing the methodology of OR is shown as:

Abstraction System Model Building

Choosing a Logic
- Establish relationships among variables
Real World particular aspect and parameters of the system.
problem of reality which - Define objectives to be achieved and
needs attention limitations on resources

Solve the Model

Apply suitable OR technique to get solution in
terms of decision variables.

Modify the Model Testing the Model and its solution

- Put values of decision variables in the

model under consideration
Not acceptable - See whether solution in valid or not

Implementation and Control

V
- Interpret solution values
- Put the knowledge (result) gained
form the solution to work through Acceptable
organizational policies
- Monitor changes and exercise control.

Step 1. Observation and defining a problem

The first step in OR process is the identification of a problem that exists is a system (organization). The system
must be continuously and closely observed so that problems can be identified as soon as they occur or
anticipated. Problems are not always the results of crisis; but instead frequently involve an anticipatory or
planning situation. Once it has been determined that a problem exists, the problem must be clearly and concisely
defined. Because improperly

defining a problem can easily result in no solution or an inappropriate solution. Since the existence of a problem
implies that the objectives of the firm are not being met in some way, the goals (objectives of the organization)
must also be clearly defined.
Step 2. Formulating a model
Model formulation involves an analysis of the system under study, determining objective of the decision-maker,
and alternative course of action, etc, so as to understand and describe, in precise terms, the problem that an
organization faces.
The major steps which have to be taken in to consideration for formulating the model are:
  Problem Components. The first component of the problem to be defined is the decision maker who is not
satisfied with the existing state of affairs. The interaction with the decision maker will help the OR
specialist in knowing his/her objectives. That is, either he/she has already obtained some solution of the
problem and wants to retain it, or he wants to improve it to a higher degree. If the decision maker has
conflicting multiple objectives, he/she may be advised to rank the objectives in the order of preference;
overlapping objectives may be eliminated.
 Decision environment
It is desirable to know about the resources such as managers, employees equipments, etc which are required to
carry out the policies of the organization considering the social and ecological environment in which the
organization functions. Knowledge of such factors will help in modifying the initial set of decision-maker’s
objectives.
 Alternative courses of Action
The problem arises only when there are several courses of action available for a solution. An exhaustive list of
course of action can be prepared in process of going through the above steps of formulating the problem. Courses
of action which are not feasible with respect to objectives and resources may be ruled out.
 Measure of effectiveness
A certain measure of effectiveness or performance is required in order to evaluate the merit of the several courses
of action. The performance or effectiveness can be measured in different units such as birr (net profits),
percentage (share of market desired), time dimension (service or waiting time).
 Collecting Data and Constructing a Mathematical Model
After the problem is clearly defined and understood, the next step is to collect required data and then formulate a
mathematical model. Model construction consists of hypothesizing relationships between variables subject to and
not subject to control by decision-maker. Certain basic components required in every decision problem model
are:
o Controllable (decision) Variables - These are the issues or factors in the problem whose values are to be
determined (in the form of numerical values) by solving the model. The possible values assigned to these
variables are called decision alternatives (strategies or courses of actions). Example, in LPP the number
of units produced is a decision variable.
o Uncontrollable variable. These are the factors whose numerical value depends up on the external
environment prevailing around the organization. The values of these variables are not under the control of
the decision-maker and are also termed as state of nature.
 Objective function.
It is a representation of (i) the criterion that expresses the decision-maker’s manner of evaluating the
desirability of alternative values of decision variables, and (ii) how that criterion is to be optimized
(minimized or maximized. A stated objective helps to focus attention on what the problem actually is.
 Constraints or Limitations
These are the restrictions on the values of the decision variables. These restrictions can arise due to limited
resources such as space, money, manpower, material, etc. The constraints may be in the form of equations or
inequalities.
 Functional relationships
In a decision problem, the decision variables in the objective function and in the constraints are connected by a
specific functional relationship. A general decision problem model might take the form:
Optimize (Max or Min) Z = f(x)
Subject to the constraints:
gi(x) (≤, = ≥ ) bi; i = 1,2,…..m and x ≥ 0
Where, x = a vector of decision variables (x1, x2, x3, xn)
f(x) = Criterion or objective function to be optimized
gi(x) = the ith constraint
bi = fixed amount of the ith resource
A model is referred to as a linear model if all functional relationships among decision variables X 1, X2, Xn in f(x)
and g(x) are of a linear form. But if one or more of the relationships are non – linear, the model is said to be a
non-linear model.
 Parameters- These are constants in the functional relationships. Parameters can be deterministic or
probabilistic in nature.
Step [Link] the Mathematical Model
This involves obtaining the numerical values of decision variables. Obtaining these values depends on the
specific form or type, of mathematical models. Solving the model requires the use of various mathematical tools
and numerical procedures. In genera, there are two categories of methods used for solving an OR model.
 Optimization model. These models yield the best value for the decision variables both for unconstrained
and constrained problems. In constrained problems, these values simultaneously satisfy all of the
constraints and provide an optimal or acceptable value for the objective function or measure of
effectiveness. The solution so obtained is called the optimal solution to the Problem.
 Heuristic Model. These methods yield values of the variables that satisfy all the constraints, but not
necessarily provide optimal solution. However, these values provide an acceptable value of the objective
function.
Heuristic Methods are sometimes described as “rules of thumb” which work. These methods are used when
obtaining optimal solution is either very time consuming or the model is complex.
Difficulties in problem solving
Sometimes difficulties in problem solving arise due to lack of an appropriate methodology for it and
psychological perceptions on the part of the problem solver. The major difficulties in problem solving:
(i) Failure to recognize the existence of a problem (iii) Failure to use all available
information
- Some people tend to personalize problems - The problem-solver fails to seek out
- Problems arise in context which people have information
had no experience.
ii)Failure to define the correct problem iv) Failure to recognize or question
- One situation may contain many intertwined assumptions.
problems. - it is assumed that there is a
- Obvious problems are often symptoms of much solution to every problem
deeper problems. - Rigid thinking blocks ones view
 - The inability to identify accurately what is going point.
on can lead to inaccurate problem identification.
- Attitudes and beliefs can blind the problem
solver to the real causes on undesirable
situations.
Step 4. Validating (Testing) the solution
After solving the mathematical model, it is important to review the solution carefully to see that values make
sense and that the resulting decisions can be implemented. Some of the reasons for validating the solution
are:
(i) The mathematical model may not have enumerated all the limitations of the problem under
consideration.
(ii) Certain aspect of the problem may have been overlooked, omitted or simplified,
(iii) The data may have been incorrect estimated or recorded, perhaps when entered in to the computer.
Step 5. Implementing the solution
The decision-maker has not only to identify good decision alternatives but also to select alternatives that are
capable of being implemented. It is important to ensure that any solution implemented is continually reviewed
and updated in the light of a changing environment.
Step 6. Modifying the Model
For a mathematical model to be useful, the degree to which it actually represents the system or problem being
modeled must be established. If during validation, the solution cannot be implemented, one needs to (a) identify
constraint that were omitted during the original problem
formulation or (b) find if some of the original constraints were incorrect and need to be modified. In all such
cases, one must return to the model formulation step and carefully make the appropriate modifications to
represent more accurately the given problem. A model must be applicable for a reasonable time period and
should be updated from time to time, taking in to consideration the past, present, and future aspects of the
problem.
Step 7. Establishing control over the solution
The dynamic environment and changes within the environment can have significant implications regarding the
continuing validity of models and their solutions. Thus, a control procedure has to be established for detecting
significant changes in decision variables of the problem so that suitable adjustments can be made in the solution
without having to build a model every time a significant change occurs.
1.7. Features of OR solution
A solution that works but is quite expensive compared to the potential savings from its application should not be
considered successful. Also a solution that is well within the budget but which does not accomplish the objective
is not successful either. The following are features of good solution:
 Technically appropriate. The solution should work technically; meet the constraints and operate in the
problem environment.
 Reliable. The solution must be useful for a reasonable period of time under the conditions for which it
was designed.
  Economically viable. The economic value should be more that what it costs to develop and should be
seen as wise investment in hiring OR talents.
 Behaviorally appropriate. The solution should be behaviorally appropriate and must remain valid for
reasonable period of time within the organization.

1.8. Basic Operations Research Models

There is no unique set of problems which can be solved by using OR models or techniques. Some OR models or
techniques include:

Allocation Models

Allocation models are used to allocate resources to activate in such a way that some measure of effectiveness
(objective function) is optimized. Mathematical programming is the broad term of OR techniques used to solve
allocation problems.
If the measure of effectiveness such as profit, cost, etc., is represented as a linear function of several variables
and if limitations of resources (constraints) can be expressed as a system of
linear inequalities or equalities, the allocation problem is classified as linear programming problems.
But, if the objective unction of any or all constraints can not be expressed as a system of linear equalities or
inequalities, the allocation problem is classified as a non-linear programming problem.

When the solution values or decision variables for the problem are restricted to being integer values, the problem
is classified as an integer programming. The problem having multiple, conflicting and incommensurable
objective function (goals) subject to linear constraints is called goal programming. If decision variables in the
linear programming problem depend on chance, such a problem is called is called a stochastic programming
problem.

If resources such as workers, machines or salesmen can be assigned to perform a certain number of activities
such as jobs or territories on one- to one basis so as to minimize total time, cost or distance involved in
performing a given activity, such problems are classified as assignment problems. Conversely, if the resources
can be used for more than one activity, the allocation problem is classified as a transportation problem.

Inventory Model
Inventory Models deal with the problem of determination of how much to order at a point in time and when to
place an order. The main objective is to minimize the sum of three conflicting inventory costs: the Cost of
holding or carrying extra inventory, the cost of shortage or delay in delivery of items when it is needed, a cost of
ordering or set-up.

Competitive (Game Theory) Model

These models are used to characterize the behavior of two or more opponents (called players) who compete for
the achievement of conflicting goals.
Network Models
These models are applied to the management (planning, controlling and scheduling) of large-scale projects.
PERT/CPM Techniques help in identifying potential trouble spots in a project through the identification of the
critical path. These techniques improve project coordination and enable the efficient use of resources. Network
methods are also used to determine time-cost trade off, resource allocation and updating of activity time.
Decision analysis Model
These models deal with the selection of an optimal course faction given the possible pay offs and their associated
probabilities of occurrence. These models are broadly applied to problems involving decision making under risk
and uncertainty.
Linear Mathematical Programming Techniques refer to a predetermined set mathematical solution steps used to
solve a problem, while probabilistic techniques are techniques with model parameters that are not known with
certainty. Inventory models are specifically designed for the analysis of inventory problems frequently
encountered by business firms. On the other hand, network techniques consist of models that are represented as
diagrams rather than strictly mathematical relationship. As such, these models offer a pictorial representation of a
system.
Other linear and non-linear Techniques deal with calculus-based models.

Note: This classification is loose as many of the techniques cross over between classifications. Example, Net
work, inventory models can be either deterministic or probabilistic.
1.9. Operations Research Techniques
OR techniques can be loosely classified in to five categories

Management Science Techniques

Linear Mathematical Programming

Probabilistic Techniques Inventory Techniques Net work Techniques Other linear and non-linear Techniques

Linear programming models Probability Certain Demand Net work flow Dynamic Programming
Graphic Analysis Decision Analysis Uncertain Demand CPM/PERT Break-even Analysis
Simplex Method Game Theory Non-linear programming
Post optimality Markov Analysis
Transportation and assignmentQueuing
Integer linear programming Simulation
Goal Linear Programming Forecasting

Source: Taylor, 1990, Introduction to Management Science, 3rd edition, Brown Publisher