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What is Operations Research?

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Operations Research (OR) applies scientific method to the management of organized systems in business, industry, government and other enterprises. OR is regularly applied in areas such as:

  • supply chain management
  • marketing and revenue management systems
  • manufacturing plants
  • financial engineering
  • telecommunication networks
  • healthcare management
  • transportation networks
  • energy and the environment
  • service systems
  • web commerce
  • military defense

Typically, applications of OR in these and other areas deal with decisions involved in planning the efficient allocation of scarce resources - such as material, skilled workers, machines, money and time - to achieve stated goals and objectives under conditions of uncertainty and over a span of time. Efficient allocation of resources may entail establishing policies, designing processes, or relocating assets. OR analysts solve such management decision problems with an array of mathematical methodologies.

To do this, OR professionals first represent the system in mathematical form. Rather than using trial and error on the system itself, they build an algebraic or computational model of the system and then manipulate or solve the model, using computers, to come up with the best decisions. Often motivated by new decision problems, OR researchers work to improve and expand the applicable methodologies.

As OR professionals strive to construct models that accurately represent and forecast relationships, they may use statistical analysis. The system may be characterized by uncertainty and risk and so require use of probability analysis. Finding an efficient allocation of resources may employ optimization techniques that can deal with huge numbers of interrelated variables and constraints. For many complex systems, the implications of a particular resource allocation strategy may only be understood by building a computer simulation of the system and testing an array of strategies against it. Evaluating allocation strategies often requires an understanding of accounting and managerial finance.

Operations Research is known by different names in different organizations: Analytics, Systems Analysis and Management Science among them. Related fields include Operations Management, Industrial Engineering, and Systems Engineering (OR tends to have a broader and more mathematical scope than these fields). Information lies at the core of what OR analysts do: they collect, synthesize, and work with information, and use information systems as a source of data and a means of implementing solutions. For this reason, Cornell’s School of OR&IE has changed the “I” in their name, from “Industrial” to “Information,” to become the School of Operations Research and Information Engineering.