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    Introduction To OR

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    Manjunatha Aradya
    Decision making has traditionally relied on intuition but today's complex environment requires more systematic methods. Operations research (OR) developed during WWII to optimize military operations and was later applied to industry. OR uses scientific techniques to help managers make optimal decisions. It involves formulating problems mathematically, collecting data, developing and testing models, and implementing solutions. Common OR techniques include linear programming, queuing theory, and simulation. OR helps allocate resources efficiently and improve areas like production, marketing, and finance. However, it also has limitations like cost and not considering intangible factors.

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    Introduction To OR

    Uploaded by

    Manjunatha Aradya
    8 views14 pages
    Decision making has traditionally relied on intuition but today's complex environment requires more systematic methods. Operations research (OR) developed during WWII to optimize military operations and was later applied to industry. OR uses scientific techniques to help managers make optimal decisions. It involves formulating problems mathematically, collecting data, developing and testing models, and implementing solutions. Common OR techniques include linear programming, queuing theory, and simulation. OR helps allocate resources efficiently and improve areas like production, marketing, and finance. However, it also has limitations like cost and not considering intangible factors.

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    1. Introduction to OR

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    Decision making has traditionally relied on intuition but today's complex environment requires more systematic methods. Operations research (OR) developed during WWII to optimize military operations and was later applied to industry. OR uses scientific techniques to help managers make optimal decisions. It involves formulating problems mathematically, collecting data, developing and testing models, and implementing solutions. Common OR techniques include linear programming, queuing theory, and simulation. OR helps allocate resources efficiently and improve areas like production, marketing, and finance. However, it also has limitations like cost and not considering intangible factors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    8 views14 pages

    Introduction To OR

    Uploaded by

    Manjunatha Aradya
    Decision making has traditionally relied on intuition but today's complex environment requires more systematic methods. Operations research (OR) developed during WWII to optimize military operations and was later applied to industry. OR uses scientific techniques to help managers make optimal decisions. It involves formulating problems mathematically, collecting data, developing and testing models, and implementing solutions. Common OR techniques include linear programming, queuing theory, and simulation. OR helps allocate resources efficiently and improve areas like production, marketing, and finance. However, it also has limitations like cost and not considering intangible factors.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 14

    Decision Making and

    Quantitative Techniques
    Introduction

    Decision making is an essential management process


    and plays a vital role in business
    Traditionally decisions were taken more on a “gut-
    feel”.
    Today, the business environment has become
    complex and is fast changing.
    There is a need to supplement the process of
    decision making with systematic and scientific
    methods.
    Development of Operations Research

    • Developed in military context by research


    pioneered by the British scientists on military
    operations during World War II
    • US military management was motivated
    • Development of new flight pattern
    • Optimising convoy size to minimise submarine
    attacks
    • Effective utilization of electronic equipment
    • Till 50’s: use of O.R. confined to military
     purposes
    O.R. in Industry

     After World War II: success attracted industrial managers


    to solve complex managerial problems

     1950: O.R. began to develop in industrial field in US

     1953: Operations Research Society of America was formed

     1957: International Federation of Operational Research


    Society
    What is O.R.?

    Operational Research is the application of


    scientific methods, techniques and tools to
    problems involving the operations of systems to
    provide those in control of operations with
    optimum solutions to the problems.
    Nature and Characteristics of OR

    1. Decision making

    2. Scientific approach

    3. Objective

    4. Inter-disciplinary team approach

    5. Digital computing
    Phases of O.R. study

     Judgment phase
     Determination of the problem
     Establishment of the objectives and values
     Determination of suitable measures of effectiveness
     Research phase
     Observation and data collection
     Formulation of hypothesis and models
     Observation and experimentation to test the hypothesis
     Prediction of various results, generalization,
    consideration of alternative method
     Action phase
     Implementation of the tested results of the model
    Methodology of O.R.

    The OR approach to problem solving


    involves the following steps
    Formulate the problem
    Determine the assumptions and develop a
    mathematical framework
    Acquire the input data
    Solve the model and interpret the results
    Validate the model
    Implement the solution
    Problems in O.R.

    Allocation
    Replacement
    Sequencing
    Inventory
    Queuing
    O.R. techniques

     Linear programming
     Waiting line or queuing theory
     Inventory control / planning
     Game theory
     Decision theory
     Network analysis
     Program Evaluation and Review Technique (PERT)

     Critical Path Method (CPM) etc.


     Simulation
     Integrated production models
    Types of models

    Iconic models – represents the physical properties of


    the system – blue print of a home, globes
    Analogue models – do not represent physical
    properties but only characteristics – different colours in
    maps, graphs of stock market
    Mathematical models – use mathematical symbols
    and operators – cost-volume profit analysis, velocity-
    time graphs
    Static models – represent a system at a specified time
    Dynamic models – change with different time frames
    Deterministic models – all relationships are known
    Probabilistic models – where certain variables are
    random variables – fire insurance, no. of accidents
    Applications of OR

     Finance and accounting


     Dividend policies
     Capital budgeting
     Break-even analysis
     Marketing management
     Selection of product mix
     Advertisement and media planning
     Purchasing, procurement
     Transportation planning
     Replacement policies
     Optimal buying
     Production management
     Facilities planning
     Maintenance
     Project scheduling
    Significance of O.R.

     Provides a tool for scientific analysis


     Provides solution for various business problems
     Enables proper deployment of resources
     Helps in minimizing waiting and servicing costs
     Enables the management to decide when to buy and how
    much to buy?
     Assists in choosing an optimum strategy
     Renders great help in optimum resource allocation
     Facilitates the process of decision making
     Management can know the reactions of the integrated
    business systems
     Helps a lot in the preparation of future managers
    Limitations of O.R.

    The inherent limitations concerning mathematical


    expressions
    High costs are involved in the use of O.R. techniques
    O.R. does not take into consideration the intangible
    factors
    O.R. is only a tool of analysis and not the complete
    decision-making process
    Other limitations
     Bias
     Inadequate objective functions
     Internal resistance
     Competence
     Reliability of the prepared solution

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