Behavioral operations research

Behavioral operations research (BOR) examines and takes into consideration human behavior and emotions when facing complex decision problems. BOR is part of Operational Research. BOR relates to the behavioural aspects of the use of operations research in problem solving and decision support. Specifically, it focuses on understanding behaviour in, with and beyond models. The general purpose is to make better use and improve the use of operations research theories and practice, so that the benefits received from the potential improvements to operations research approaches in practice, that arise from recent findings in behavioural sciences, are realised . BOR approaches have heavily influenced supply chain management research, amongst others.

Overview

Operations research (or operational research) involves a wide range of problem–solving skills aiming to help individuals or organizations to make more rational decisions as well as improving their efficiency. However, operations research often assumes that agents involved in the process or operating system, such as employees, consumers and suppliers, make fully rational decisions. Their decisions are not affected by their emotions as well as their surroundings and that they are able to react and distinguish between different types of information. In reality, this is not always true; human behavior has an important role in decision making and worker motivation, and therefore should be considered in the study of operations. This has led to the rise of behavioral operations research, which is defined as the study of impacts that human behavior has on operations, design and business interactions in different organizations. Behavioral operations research aims to understand the decision making of managers and tries to make improvements to the supply chain using the insight obtained. Behavioral operations research includes knowledge from a number of fields, such as economics, behavioral science, psychology and other social sciences. Traditional operations research and behavioral operations research have a common intellectual goal, aiming to make differences in operations outcomes, such as flexibility, efficiency and productivity.

Theoretical influence

Humans have limitations in their ability to collect and react to relevant information. When a decision or conclusion has to be made through complex information, human decision-makers often fail to comply with normative decision theories. Moreover, a person's lifestyle, social interaction and collective behaviors has clear influence on people's decisions.

The breakdown of Cognitive Psychology Study which refers to the study of human mental processes and their role in thinking,feeling and behaving.

Cognitive psychology

This is a relatively new branch of psychology which focuses on humans' ability to make decisions, solve problems, learning, attention, memory and forgetting, these are only a few of the practical applications of this science, to some extent it is also related to motivation and emotion. Cognitive psychology is interested in what is happening within the mind when new information is received, how people respond to this information, and how this response affects their behavior and emotions. Cognitive psychology is considered to be one of the dominant theoretical force in behavioral science.

Social psychology

The Asch experiment shows that participants tend to adhere to the group norms.

People often react and behave differently when they are put into different social situations. The aim of social psychology is to understand the nature and causes of individual behaviors. It questions or provides an insight of how human behavior relies on the physical environment. Social psychology theories explain why there are competition between individuals, why it is often the case that individuals or organisations seek to protect and maintain their status, and why it has been observed that individuals and organisations are willing to sacrifice efficiency to achieve their goal of staying at a higher hierarchical position. In addition to status, social psychology also includes people's behavior towards goal setting, feedback and controls, interdependence, and reciprocity.

Organizational behavior

The use of psychology in behavioral operations research links to the idea of judging the relationship between people's mental health and wellbeing and their behavior at work. Psychology experts often set up indicators to evaluate how an employee's surroundings, such as working environment and noise, can affect their productivity at work. Organizational behavior is the study of ways people react or behave when they are organized in groups. The purpose of this study is to improve business productivity, trying to create a more efficient business organization. Organizational behavior theories are applied towards human resource trying to maximize the output from individual group members. The study of organization behavior can be broken down into different sections, including Personality, Job Satisfaction and Reward Management, Leadership, Authority, Power and Politics.

Main streams of research

There are four main streams of research that can be considered a part of behavior operations research. These give us an idea of the weakness of the current operations research model and the effectiveness of behavioral operations research in predicting human decisions and reactions when facing different situations.

Socio-technical view of technology management

Physical technologies can be defined as a socio-technology system, which consists of humans, human activity, spaces, artifacts, tools, and communications media. This theory suggests that social interaction at the workplace is determined by the technology and techniques used at work. Therefore, a change in technology used at work can lead to unexpected consequences. This may include differences in motivation.

Human factor engineering

Human factor engineering can be applied to improve workplaces, working systems and products aiming to reduce human errors during operations as well as improving human efficiency, productivity and operational performance. It often involves improvements of large machineries to reduce accidents during work. It is believed that behavior operations research can be related to human factor engineering as systematic errors, which happens very often technology and different machineries, can affect people's decision making and their interaction with the operating system.

Visualisation of Bullwhip effect

The bullwhip effect

The bullwhip effect happens along the supply chain of an organisation. This is when agents along the supply chain fail to pass on relevant and accurate information to their superior, leading to a large variation in the demand of goods and services from the customers and the supply from the organisation. Human behavior is a very important aspect to be considered, as decision making and emotions in the market will make a big difference to the final result of the bullwhip effect. This is because managers who can calmly make decisions while others competitors panic and deliver inaccurate messages often perform better within the industry. When the market is in poor condition, 'fear' can be an important factor affecting managers' decisions. Therefore, human behavior is closely related to people's decisions.

System dynamics models in operations contexts

System dynamics models in operations contexts focuses on the importance of how components in a system interact with each other as well as providing an overview of the processes that takes place within the system. Behavioral operations research often benefits from the development of comprehensive systems models as they are able to analyse and provide an insight of the operational system. This allows the study of behavioral operations to understand how people in these settings or work conditions think about the context in which they operate. In an operations system, it often involves levers for managers to manipulate the components involved in the system. The uses of these levers are determined by human behaviors and these behaviors include feelings of stress and fear.

Related problems

Newsvendor problem

The newsvendor model (or newsboy or single-period or perishable) is a mathematical model used in operations management and applied economics to determine optimal level products or services to keep in stock when the demand is unknown. This model is also known as the newsvendor problem by analogy with the situation faced by a newspaper vendor who must make on time stocking decision of how many copies of newspaper to keep in stock when facing uncertain demand. If the newspaper vendor stocks too much, these newspaper may end up worthless by the end of the day as they are no longer up-to-date. However, if the newspaper vendor stocks too little, he misses the opportunity to make more profit and suffers loss of goodwill.

Heuristic performance regarding the secretary problem – Expected success probabilities for three heuristics

Assignment problem

The assignment problem is a complex optimization problem. The problem involves number of agents and a number of tasks. The purpose is to assign each agent with a task. All agents are expected or aimed to be allocated in a way that will maximize productivity and efficiency and minimize the total cost of the assignment.

Secretary problem

The secretary problem can also be called the optimal stopping theory. It focuses heavily on applied probability, statistics and decision theory. The idea behind the secretary problem is that to make the best decisions when there is a pool of different options, other options are unknown, details of other options will only be given if the currently existing option is given up. The problem comes down to the idea of optimal strategy, maximizing the probability of selecting the best option.