APPLICATIONS OF OR IN

DEVELOPING ECONOMIES:
SOME INDIAN EXPERIENCES

PREPARED BY:
GROUP 10
WHAT IS OPERATIONAL RESEARCH?
Operational Research (OR) is the application of advanced analytical
techniques to improve decision making.
It is also known as operations research, management science or
industrial engineering.

People with skills in OR hold jobs in decision support, business

analytics, marketing analysis and logistics planning as well as jobs
with OR in the title.
ADVANTAGES OF OPERATIONS RESEARCH
OR APPROACH TO PROBLEMS
OR considers social, economic, political and cultural factors to tackle
the problems of development in any specific developing economy.

OR can provide framework for both analyzing the problems and

synthesizing elements for integrative solution to the problems.

OR acts as a proactive approach and a method which helps in

tackling uncertainties at the policy making and strategic levels.
PAST STUDIES ON OR
The growth of OR in the developing countries of Africa, Asia And
Latin America was seen very low in their implementation.
Whereas, China started using OR techniques during late 1950s for
Agriculture, Transport And Manufacturing Industries.
The previous studies lacked the full essence of operational research,
as the techniques developed were not standardized and were simply
based on economic, mathematical and computer models only.
The recent OR techniques also include simulation and queuing, linear
programming, networks and other programming techniques.
PILLARS OF DEVELOPMENT THROUGH OR

PILLAR I PILLAR II

DEVELOPMENT
BANKING CULTURAL
AND DEVELOPMENT
LONG RANGE AND
PLANNING WATER MANAGEMENT
IN BANKS

ENERGY
MICRO OPERATIONAL
DEVELOPMENT PROBLEMS
AND OF IMPROVEMENTS OF
BACKWARD AREA SYSTEMS AND
DEVELOPMENT OPERATIONS

PILLAR III PILLAR IV

 PILLAR I
CREDIT ALLOCATION & REGIONAL ECONOMIC DEVELOPMENT

Nationalization of banks acted as a catalyst for development

Models with six different objective functions were developed

Integrative framework for credit allocation for regional development

After developing the model, the lp framework was developed with various
equations, constraints and mathematical formula.

With the help the lp framework was developed in order to use the model better
Branch Location

Problem:
Number and location
Creating potential demand
Constraints:
No relevant existing model, data available
Relation between environmental and banking variables is unknown and
uncertain
Innovative ideas: Multi staged Dynamic programming Model
Damoh (M.P.): Command area
Reactions to Model: Initial resistance, later acceptance.

Marketing of product is important.

Model benefits:
Relevant
Replicable
Long range Corporate Planning

Performance Budgeting System-1975

Steps:
Corporate Monitoring Team
Discussions with operational executives
Scenario building
Training and monitoring
Partially successful
Strategies:
Involve line executives
Organisational customisation
Awareness
 Pillar II
Pulse Production

DSTs research for improving pulse production

Forecasting demand
Capturing constraints
Strategies used:
Intercropping
Increasing irrigation facility
Strategies tested and accepted
Implementation yet to be seen
Cropping Pattern
Depends on:
Crop selection
Utilisation of irrigation water
Initially- Linear programming used
Later- Comprehensive Simulation
World Bank accepted the model
Lagged in implementation
 Pillar III
Small HP Diesel Engine

Oil crisis-1973
Demand recession
Capacity utilisation
Models Used:
Trend impact Analysis
System Dynamic Model
Locational Model
Accepted, implementation yet to be seen
Limitation:
Bureaucratic lethargy
Organisational deficiency
Rural Energy
Study on energy requirements of rural areas.
Traditionally, conventional preferred over non-conventional
Illustrative Study
Provided important inputs in other studies
Development strategy for a backward district
Focus on- whether growth models in developed countries are applicable in
developing economies.
Growth center model Vs Phase wise development model
Solution- Phase wise development

PILLAR IV
System Improvement of an export house
Focus on- Improvement of systems of Mumbai based export house.
Solution- Information flow matrix, decision sequence diagrams, modified
procedures and formats.
Impact- Improved performance of the unit and day to day operations.
Information system design
Focus on- To suggest a computerized administrative management system for
NISTDS.
Solution- Design and simplification of existing manual systems and
procedures. Flow charts for simplified process were designed.
Impact- Increased efficiency of current systems.

Reasons for successful implementation

Willingness of top management to introduce changes.
Simple nature of solutions.
Structured nature of problem.
Benefits far outweighing costs.
Systems for establishing new small scale industries units
A study by National Entrepreneurship Development Board
Focus on- Reduce project sanction time for Small Scale Industrial Units
Solution- Single Window Clearance SystemSIGMA Model
Impact- Reduction in sanction time from 18 to 7 months in states where it is employed.
Constraints- Resistance to change by state governments.

Case studies in Nut Shell

Problem areas of importance to decision makers are focused upon.
Incorporated uncertainty in the models.
Formulated by multidisciplinary teams.
All the cases were handled by internalized teams.
Ground reality was adequately captured.
Conclusion
Factors determining the degree of innovative OR techniques were inclined
more towards a. Behavioral b. Socio-cultural than Technical aspects.
Solution can be formulated for both structured and non-structured problems.

Success rate of OR applications depends on

Team being multidisciplinary and from within the country.
Incremental general awareness of decision makers through
sustained Public Relations.
Interaction level among stakeholders involved in OR
implementation.
THANK YOU