About Operational Research An introduction for the third sector 1 1

Why use an OR approach? OR : “The application of appropriate analytical methods to help make better decisions” Is a unique combination of: tools skills and experience Can help management determine policies & actions scientifically “what if we do this?” Better than using gut feelings “let’s do this - it seems like a good idea!” reduces risk to operations 2

Common problems where OR is used Facilities (eg hospitals, shops, warehouses, call centres) How many? Where? How big? How should they be staffed? Logistics What is expected future demand? What supplies should be kept and where? How can deliveries/calls be scheduled most efficiently? Service operations How best to deal with queues?

Further examples of OR for charities Financial management Modelling and forecasting funding requirements and business cases Financial options appraisal Design of performance measures and set-up of monitoring systems Design of systems for managing grants or loan schemes 4

Characteristics of difficult decisions - where OR can help Typical in government and 3rd sector Complex Messy Multiple stakeholders Multiple objectives Uncertainty – changing environment Complex – everything interconnects Messy – things are hard to define, aims are unclear, circumstances change… Multiple stakeholders – with different agendas Multiple objectives – which conflict with each other Uncertainty – about the environment, about other people’s decisions, about stakeholders’ values

OR Tools ‘Soft’ tools: Decision support tools: Mathematical models: Framework for involving different stakeholders Help identify goals, objectives and issues Decision support tools: Identify and explore issues and options ‘What-if’ analysis in the face of uncertainty Mathematical models: Keep track of multiple factors and how they interact Quantify – consistently and accurately Powerful algorithms to calculate optimum solutions

A simulation model: how to staff surgery?

A forecasting model: monthly sales next year?

A logistics model: how many depots and where?

A ‘what-if’model: to assess different ways of operating

A Flu pandemic model – basic model For each business activity (e.g. IB claims processing) and time period (e.g. weeks) Assumptions about ‘crisis scenario’ impact (for flu pandemic – from DoH) Absenteeism Demand for work (assumptions from policy group) Contingency measures (from businesses) Staff available Staff Required Performance Staff loss/work to clear Clearance Times

Flu pandemic model: Jobcentre Plus processing High contingency appears to show sufficient staff available - But significant risks to delivery of key benefits Peak staff required Schools closed Base staff Least staff available

OR Society Founded 1948 Charitable status 2700 members in academia, government, private sector Special interest groups include: Agriculture Criminal justice Financial services Health and social services The community Developing countries