Quantitative Techniques for Management

10MBA21

Module 1
Introduction to Operations Research

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•Introduction to OR
•Definitions
OR is the application of scientific methods, tools and techniques to
problems involving the operations of systems so as to provide those in
control of the operations with optimum solutions to the problems.
-Churchman,Ackoff,Arnoff

OR is the systematic, method oriented study of the basic structure,

characteristic, functions and relationships of an organization to provide
the executive with a sound, scientific and quantitative basis for decision
making. -Arnoff & Netzorg

OR is a technique of giving bad answers to problems which otherwise

would have worse answers. -Thomas L. Saaty

OR is the art of winning wars without actually fighting them. - Clark

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• Characteristics of OR

 System (or Executive) Orientation of OR

 The Use of Interdisciplinary Teams

 Application of Scientific Methods

 Improvement in the Quality of Decisions

 Use of Computer

 Quantitative Solutions
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 • Scope of OR

OR is used in almost all walks of life where decisions are to be made

 In Agriculture
 In Finance
 In Industry
 In Marketing
 In Personnel management
 In Production management
 In Life Insurance
 In Research & Development
 In Banking
 In Defence
 In Public Utilities like hospitals, public transport etc.
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• Phases/Methodology/Approach of OR
OR like all scientific research is based on scientific methodology and
involves following phases:
 Problem Formulation
What are the objectives, controlled variables, uncontrolled variables, constraints
 Constructing a model to represent the system under study
A mathematical model should include a decision variable and
parameter,constraints,objective function.

 Deriving a solution for the model

 Testing the model and the solution derived(Validation)

 Controlling the solution

 Implementing the solution

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• Limitations of OR

 Magnitude of computation

 Absence of quantification

 Distance between manager and OR experts

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• Techniques of OR /Models of OR
 Distribution/allocation Models(LPP,Transportation,Assignment)

 Waiting line/queuing models

 Production/inventory model

 Competitive strategy model/games theory

 Network analysis

 Job sequencing models

 Replacement models

 Markovian models

 Simulation models
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