Basic Concepts and Examples

THE METHODOLOGY OF OR
When OR is used to solve a problem of an organization, the following seven step procedure should be followed:
Step 1. Formulate the Problem
OR analyst first defines the organization s problem. Defining the problem includes specifying the organization s objectives and the parts of the organization (or system) that must be studied before the problem can be solved.
Step 2. Observe the System
Next, the analyst collects data to estimate the values of parameters that affect the organization
s problem. These estimates are used to develop (in Step 3) and evaluate (in Step 4) a mathematical model of the organization s problem.
Step 3. Formulate a Mathematical Model of the Problem
The analyst, then, develops a mathematical model (in other words an idealized representation) of the problem. In this class, we describe many mathematical techniques that can be used to model systems.
Step 4. Verify the Model and Use the Model for Prediction The analyst
now tries to determine if the mathematical model developed in Step 3 is an accurate representation of reality. To determine how well the model fits reality, one determines how valid the model is for the current situation.
Step 5. Select a Suitable Alternative Given a model and a set of alternatives, the analyst chooses the alternative (if there is one) that best meets the organization s objectives.Sometimes the set of alternatives is subject to certain restrictions and constraints. In many situations, the best alternative may be impossible or too costly to determine.
Step 6. Present the Results and Conclusions of the Study