Operations research, sometimes simply referred to as OR, is the use of advanced and highly analytical procedures to enhance the decision-making process. Operations research employs techniques such as mathematical modeling to help managers understand, examine and investigate difficult and complex situations. These methods provide executives with the ability to make more effective decisions and build a more beneficial and constructive system. By using an operations research model and approach, executives know their decisions are based on complete data, up-to-date decision techniques and tools, and accurate predictions of results, with an estimation of risks and the consideration of all available options.
Operations research is unique in that it uses the most advanced and highly developed models created by trained professionals. These technologies provide analytical capabilities that cannot be obtained by using popular software, and provide tailor-made solutions for each company. An operations research professional's analytical technologies help to achieve the following:
• Optimization -- narrow the options to the best alternatives, especially when there are many feasible choices
• Simulation -- offer the ability to try out different approaches and test various ideas for improvement
• Statistics and probabilities –- help to mine information and weigh risks in order to uncover important insights and connections, make reliable forecasts and test conclusions
All this is possible because operations research involves the study of mathematical science that focuses on the effective use of technology by organizations or individuals, as opposed to other scientific methods that only emphasize technology and not any external applications. By using approaches associated with other mathematical sciences, such as statistical analysis, mathematical optimization and mathematical modeling, operations research can attain near-optimal solutions to difficult and complicated decision-making problems. Since operations research stresses the interaction with human technology, and focuses on practical uses, there is quite a bit of overlap with other fields such as organizational science, psychology, management science and industrial engineering. Operations research is concerned with analyzing and providing advice vis-à-vis the maximum (yield, profit) and the minimum (cost, risk, loss) of actual industrial objectives.
Operations research includes a wide range of techniques for solving problems and different methods used in the search for a better decision-making process. Tools used by operational researchers include probability theory, game theory, statistics, decision analysis, simulation optimization, queuing theory, graph theory and mathematical modeling. Since it is calculation- and computation-oriented, operations research has a strong connection to the study of analytics and computer science. When operations researchers are confronted with a new situation, they must first determine which technique to employ to yield the best solution.
Three basic categories characterize operations research. One is the foundational or fundamental work that occurs within three branches of mathematics, namely dynamic systems theory, probability theory and mathematical optimization. The second is modeling work, which concerns itself with building and creating models, analyzing them mathematically, programming them on a computer, solving them using specially designed software and appraising their effectiveness. This last element is applied mainly using econometrics and statistics.
Military planners during World War II were the first to use operations research. After the war, those techniques were applied to other problems affecting industry, society and business. The problems are the same, just in different circumstances, and military solutions often worked in other areas.
Today, operations research has spread to industries such as airlines, finance, petrochemicals, logistics and governmental agencies. All these sectors are creating mathematical models that will assist them in analyzing and optimizing highly sophisticated and complex systems. Operations research has become a very progressive area of academic study and industrial research.