The Operations Research Systems Approach and the Manager

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THE OPERATIONS RESEARCH SYSTEMS APPROACH AND THE MANAGER

J.G. DEBANNE

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JCPT70-03-02 The Operations Research Systems Approach and the Manager J. G. DEBANNE D(ean, f,'acultlj of Ma,,Yiag(,IneT.et Sciell(-CS. University of Ottat(7a ABSTRACT The trend toward increasing complexity is a funda- cu- mental characteristic of society. Increasingly, the exe of tive must take into account an ever-widening scope considerations when planning and making decisions. Opera- tions research and the systems approach provide the means to effectively cope with this increasing complexity. To he effective, however, the O-R function needs under- standing from management and staff, but above all it needs access to the sources of information within the organization - hence the importance of information systems. The most commonly used O-R technique is the simulation on computers of real-life situations, processes, organ- izations and, in general, man-machine systems. Provided that the model is representative, the simulation may be very useful to study the effect of certain decisions and factors in complex situations. It is, however, not sufficient to know how a system works - we must know how it should ideally work. This is recognized as the normative side of O-R and it requires special skills and training which go beyond a scientific background. Mathematical programming and optimization J. G. DEBANNE has a B.Se. in mechanical industrial engineering, and M.Sc. degrees in petroleum engr neering and mathematics. He started work in le)50 as petroleum engr neer in the oil fields of Western Can- ada and in 1953 became chief petro_ leum engineet- of Denton Spencer Company, consulting engineers, Cal- gary. . He joined the Engineering Depart- ment of Texaco Canada Limited (iD Calgary) in 1954, where he introduced scientific computing in the oil and gas producing indus- try; he also formed the first applied science computing group an(I installed the first computer in Western Can- ,Ada. Transferred in 1957 to Texaco's Houston, Texas staff, he designed, implemented, introduced and administered a company-wide computerized pi,ofitability analysis and ex- penditure control program, including annual decision score profiles to help rate division managers. In the applied science field, he designed and nnpletuented the Reservoir Model language, which is a problem-oriented computel- package for petroleum anci reservoir engineers. He also acte(i ts consultant on O-R proj(e(ets for Texaco subsidia- ries. Mr. Debann6 joined the National Energy Board, Otta- wa, in 1964 as director of the O-R Branch, which cOm- prises four divisions: econometric research, mathematical programming, industrial models and computer systems. He organized the activities of this branch along project lines, within the framework of a niaster plan known as the Energy-Oriented Model of the Canadian Economy. has recently headed a task folece on the Continental Oel Supply and Distribution System to assess the impact Of the Aretic oil discoveries. He joined the University of Ottawa on June 18, 1969, as Dean of the Faculty of Management Sciences. PAPER PRESENTED: at the 21st Annual Technical Meeting of The Petroleum Society of CIM, Calgary, May, 1970. Technology, July-September, 1970, Montreal technique;, which are the main instruments of normative studies, are desirable not only in view of their implementa- tion but also because of their information value. Even if they cannot be implemented, optimal solutions provide the decision-maker with far more information content than ordinary !iolutions - hence, they help the decision-making pro(-e.,is. The systems approach recognizes that "each system is an integrated whole" even though composed of diverse, specialized structures and subfunctions. The methods seek to optimize the over-all system according to the weighted objective,; and to achieve maximum compatibility of its parts. The development of O-R and systems skills is a real challenge to the educators. The problem lies in providing experience to the students. To this effect, the Inter- disciplinary Institute has been devised to provide the students of the Faculty of Management Sciences at the University of Ottawa with a 'laboratory' where practical and relei,ant experience can be acquired in the management scitences. INTRODUCTION AS AN INTRODUCTION to this paper on Operations Re- seay-(-h, it mav be appropriate to recall a storv that hal)l)ene,d to me in the mid-fifties, shortly afeer the oil company I was working for installed the first com- I)uter iri Western Canada. As I was responsible for this decision and also in charge of applied science pro- gr.tnimi)-ig"', I was eager to introduce the use of com- PLitei's illl various domains, notably in that of decision- making. The company was at the time frequently en- gaged ni evaluating prospective oil exploration leases in order to determine the amount of cash bonuses to t)i(i at ublic auctions of mineral rights. I developed, th(-refore, a computer procedure to estimate the arnonnt to bid, given the reservoir engineer's estimate of recoverable oil and gas reserves and the projection of oil and gas I)rodu tion, an estimate of risk from th(e geologist and geophysicist, and so forth . . . , in- elli(ling the ieate of return expected by management. Some tilme was devoted to acquaint the company's evilliation engineer with this procedure. At the ap- I)roleriaile time, I suggested that he use the computer to estimate the bids foi, the on-coming public sale of mineral rights, due seventy-two hours hence. He polit,ely declined by saying: "I am sorry Joe, I am in a etirry and cannot afford to do it the 'fast' way". 'This was a case in which the analysis of the prob- leyn an([ its solution was adequate for the early fif- tie,,;, I)Llt the nifot-mation system was inadequate. On th(e basis of his brief experience with the 'Sophistlr ctted and fast method', this evaluation engineer had serious reservations about the reliability of the information system available to him at the time. With- in seventy-two hOLirs he had to obtain information from v;trious other stibject-matter experts, including 169 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021 Downloaded from http://onepetro.org/jcpt/article-pdf/doi/10.2118/70-03-02/2166094/petsoc-70-03-02.pdf by guest on 02 October 2021