Behavioral Operations Research
Encyclopedia
Behavioral operations research
(BOR) examines the behavior of actual human agents in complex decision problems. BOR is the operations management
analog of experimental economics
and behavioral finance
, and is part of the field known as management science.
In the vast majority of operations, people are a critical component to the functioning of
the system and influence both the way operating systems work and how they perform.
Yet most formal analytical models in operations assume that the humans who participate
in operating systems are fully rational or at least can be induced to behave rationally.
Many other disciplines, including economics, finance, and marketing, have successfully
incorporated departures from this rationality assumption into their models and theories.
Most formal analytical models in operations management (OM) assume that the
agents who participate in operating systems or processes—as decision-makers, problem
solvers, implementers, workers or customers— are either fully rational or can be induced
to behave rationality. More specifically, they can distinguish signal from noise; they
react to relevant information and discard irrelevant information; their preferences are
consistent; their decision-making process incorporates all relevant alternatives and
variables and is unhampered by cognitive biases or emotions. While advances in the
understanding of human behavior and cognition have begun to influence the fields ofeconomics, finance, accounting, law, marketing and, more recently, strategy, a
“behavioral perspective” has largely been absent in the field of operations.
Some problems studied in behavioral operations research:
Operations research
Operations research is an interdisciplinary mathematical science that focuses on the effective use of technology by organizations...
(BOR) examines the behavior of actual human agents in complex decision problems. BOR is the operations management
Operations management
Operations management is an area of management concerned with overseeing, designing, and redesigning business operations in the production of goods and/or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as little resources as needed, and...
analog of experimental economics
Experimental economics
Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in...
and behavioral finance
Behavioral finance
Behavioral economics and its related area of study, behavioral finance, use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market...
, and is part of the field known as management science.
In the vast majority of operations, people are a critical component to the functioning of
the system and influence both the way operating systems work and how they perform.
Yet most formal analytical models in operations assume that the humans who participate
in operating systems are fully rational or at least can be induced to behave rationally.
Many other disciplines, including economics, finance, and marketing, have successfully
incorporated departures from this rationality assumption into their models and theories.
Most formal analytical models in operations management (OM) assume that the
agents who participate in operating systems or processes—as decision-makers, problem
solvers, implementers, workers or customers— are either fully rational or can be induced
to behave rationality. More specifically, they can distinguish signal from noise; they
react to relevant information and discard irrelevant information; their preferences are
consistent; their decision-making process incorporates all relevant alternatives and
variables and is unhampered by cognitive biases or emotions. While advances in the
understanding of human behavior and cognition have begun to influence the fields ofeconomics, finance, accounting, law, marketing and, more recently, strategy, a
“behavioral perspective” has largely been absent in the field of operations.
Some problems studied in behavioral operations research:
- NewsvendorNewsvendorThe newsvendor model is a mathematical model in operations management and applied economics used to determine optimal inventory levels. It is characterized by fixed prices and uncertain demand for a perishable product. If the inventory level is q, each unit of demand above q is lost...
problem - Assignment problemAssignment problemThe assignment problem is one of the fundamental combinatorial optimization problems in the branch of optimization or operations research in mathematics...
- Secretary problemSecretary problemThe secretary problem is one of many names for a famous problem of theoptimal stopping theory.The problem has been studied extensively in the fields ofapplied probability, statistics, and decision theory...
- Beer Distribution GameBeer Distribution GameThe Beer Distribution Game is a simulation game created by a group of professors at MIT Sloan School of Management in early 1960s to demonstrate a number of key principles of supply chain management. The game is played by teams of at least four players, often in heated competition, and takes from...
- SchedulingSchedule (workplace)A schedule, often called a rota, is a list of employees who are working on any given day, week, or month in a workplace. A schedule is necessary for the day-to-day operation of any retail store or manufacturing facility. The process of creating a schedule is called scheduling...
- Optimal maintenanceOptimal maintenanceOptimal maintenance is the discipline within operations research concerned with maintaining a system in a manner that maximizes profit or minimizes cost. Cost functions depending on the reliability and maintainability characteristics of the system of interest determine the parameters to minimize...
- Queueing theoryQueueing theoryQueueing theory is the mathematical study of waiting lines, or queues. The theory enables mathematical analysis of several related processes, including arriving at the queue, waiting in the queue , and being served at the front of the queue...