History of Operational Research

Nature of Operations Research

Looking to the basic features of the definitions concerning OR, we can state that, 'Operational Research can be considered as the application of the scientific method by interdisciplinary teams to problems involving the control of the organized system to provide solutions, which best serve the purposes of the organization as a whole.

History of Operations Research

The subject of Operational Research (OR) was developed in military context during World War II, pioneered by British scientists. At that time, the military management in England appointed a study group of scientists to deal with the strategic and tactical problems related to air and land defense of the country. The main reason for conducting the study was that they were having very limited military resources. It was, therefore, necessary to decide upon the most effective way of utilizing these resources. as the name implies, Operation Research was apparently invented because the team was dealing with research on military operations. The scientists studied the various problems and on the basis of a quantitative study of operations suggested certain approaches which showed remarkable success. The encouraging result obtained by the British operations research teams consisting of personnel drawn from various field like Mathematics, Physics, Biology, Psychology and other physical science, quickly motivated the United States military management to start similar activities. Successful innovations of US teams included the development of new flight patterns, planning sea mining and effective utilization of electronic equipment. Similar OR teams also started functioning in Canada and France. These OR teams were usually assigned to the executive in charge of operations and as such their work came to be known as "Operational Research" in the UK and by a variety of names in the United States an "Operational Analysis, Operations Evaluation, Operations Research, Systems Analysis, System Evaluation and System Research. The name 'Operational research' or 'Operations Research or simply OR is most widely used now days all over the world for the systematic and scientific study of the operations of the system. Till the fifties, the use of OR was mainly confined to military purposes.

After the end of the second world war, the success of military teams attracted the attention of industrial managers who were seeking solutions to their complex managerial problems. At the end of the war, expenditures on defense research were reduced in the UK and this led to the release of many operations research workers from the military at a time when industrial managers were confronted with the need to reconstruct most of Britain's manufacturing industries and plants that had been damaged in the war. Executives in such industries sought assistance from the said operations workers. But in the USA most of the war experienced operations research workers remained in military service as the defense research was increased and consequently operations research was expanded at the end of the war. It was only in the early 1950s, the industry in the USA began to absorb the operation is research worker under the pressure for increased demands for greater productivity originated because of the outbreak of the Korean conflict and because of technological development in the industry. Thus, OR began to develop in the industrial field in the United States since the year 1950. The Operations research society of America was formed in 1953 and in 1957 the international federation of operational research societies was established. various journals relating to OR began to appear in different countries in the year that followed the mid-fifties. 

Nature of business

Business is a wide term. it includes all occupation in which people are busy in earning income either by production or purchase and sale or exchange goods and services to satisfy the needs of other people with the main object of earning a profit.

• Definition by other authors:-

•  According to Lewis H. Honey "Business is a human activity directed toward producing or acquiring wealth through buying and selling goods".

•  According to Peterson and Plowman "Business is an activity in which different person exchange something of value, whether goods or services for mutual gain or profit".

•  According to James Stephenson" Business is sum total of those processes which are engaged in the removal of hindrances of person, place and time in the exchange commodities".

                 In modern times business is no longer dealing only with goods or services. It can not be defined in terms of profit only. It has become an integral p[art of society. In modern times business includes the following activities:-

• Creating a customer for itself.
• Converting economic resources into goods and services keeping in mind the preferences of customers.
• Innovating new products or services. Innovation may lead to technological upgradation of production processes.
• Marketing these innovative products and services so that these can reach the customer.

• Nature of business:-

• An economy activity:- Business is considered as an economic activity as it is undertaken with the objective or aim of earning money and livelihood and not for psychological satisfaction.
• Production or procurement of goods and services:- Every business enterprise either produces or procures goods or services from producers. Goods may consist of consumer or industrial goods and services may include transportation, banking, insurance, etc.
• Sales of exchange of goods and services for the satisfaction of human needs:- Business involves sale or exchange of goods or services. The production of goods or services for self-consumption is not business. A farmer cultivating crop for himself and his family consumption only is not doing business. But the farmer who is cultivating crop for sale is involved in business activity. similarly buying goods to gift to someone else is not a business but buying goods for resale in business. so there must be sale exchange of goods and services in business.

• Dealing in goods or services on a regular basis:- another important feature of business is that it must sale or exchange goods or services on a regular basis. buying or selling goods and services once or twice is not business. once a single transaction of sale does not constitute a business. For example:- If a person sells his house to buy a new house, he is not doing business. But if a person buys and sells houses on a regular basis to earn a commission, then it will be considered as a business. Regularity of occurrence of a business transaction is a must. 
• Profit earning:- The main purpose of business is earning profit. If the profit motive is missing in a transaction, than it can not be considered as a business transaction. For example:- Goods given in a charity are not a business activity. No businessman can servive without earning sufficient profit.
• Uncertainty of Return / Risk:- Another important feature of business is the presence of risk factor in the transaction. There is always a possibility of losses. It is not a certain that a businessman will always earn adequate profit, as market condition may change, customer's taste may change, there may be strike in businessman's own factory, etc. All these can lead to loss. So in a business transaction, there is always an element of risk involved.