How can or be applied for making
managerial decisions
PERSONNEL MANAGEMENT I
XAVIER INSTITUTE OF SOCIAL SERVICE
RANCHI
GROUP MEMBERS
NAME ROLL NO.
• BETTY MATHEW 01• SHRADHA GARG 02• VISHAL VATS 03• PREMLATA TUTI 04• DAKSH AGRAWAL 05• ASHUTOSH SHARMA 06• NEHA MARWAH 07• MANSI SHARMA 08• RAVI ROSHAN DUNGDUNG 09• JUDE ANUPAM SINGH 10
INTRODUCTION TO O.R.
• Operations Research (OR) is one of the popular managerial decision science tools used by profit and non-profit organizations.
• Operations Research has gained significance in applications like world-class Manufacturing systems (WCM), Lean production, Six-sigma quality management, Benchmarking, Just-in-time (JIT) inventory techniques.
• Growth of global markets and the resulting increase in competition have highlighted the need for Operation Research.
• This presentation is an attempt to highlight the significance of Operation Research, different techniques used and its application in business and industry in decision making.
BRIEF HISTORY AND GROWTH
• Operations Research as a new field started in the late 1930’s (pre-World War II era).
The British army was conducting exercises on
the radar system for detecting the aircrafts. In
July 1938, the Superintendent of Bawdsey
Research Station, announced that although the
exercise had demonstrated the technical
feasibility of the radar system, its operational
achievements were not up to the mark.
He proposed that a crash program of research into the operational, as
opposed to the technical aspects of the system should begin. The term
"Operational Research" was coined as a suitable description of this
new branch of applied science.
On 15th May 1940, with German forces
advancing rapidly in France, Stanmore
Research Section was asked to analyze a
French request for ten additional fighter
squadrons. They prepared graphs for
Winston Churchill, based upon a study of
current daily losses and replacement rates,
indicating how rapidly such a move would
deplete fighter strength.
No aircrafts were sent and most of those currently inFrance were recalled. This is held by some to be the moststrategic contribution to the course of the war made by OperationsResearch (as the aircraft and pilots saved were consequently availablefor the successful air defence of Britain, the Battle of Britain).
Patrick Blackett, working for the Royal
Aircraft Establishment (RAE) set up a team
known as the "Circus" which helped to reduce
the number of anti-aircraft artillery rounds
needed to shoot down an enemy aircraft from
an average of over 20,000 at the start of the
Battle of Britain to 4,000 in 1941.
In 1941 Operational Research Section (ORS) was established in Coastal
Command which was to carry out some of the most well-known OR work in World War-II. Thus OR as a separate field of
specialization was born!
Operational research doubled the on-target bomb rate of B-29s
bombing Japan from the Marianas Islands by increasing the training
ratio from 4 to 10 percent of flying hours;
Revealed that wolf-packs of three United
States submarines were the most effective
number to enable all members of the pack
to engage targets discovered on their
individual patrol stations; Revealed that glossy enamel paint
was more effective camouflage for
night fighters than traditional dull
camouflage paint finish, and the
smooth paint finish increased
airspeed by reducing skin friction.
In India, Operation Research came into existence in 1949 when anOperation Research unit was established at Regional ResearchLaboratory, Hyderabad.
Prof. R.S.Verma set up an Operation Research team atDefence Science Laboratory to solve problems of store, purchase andplanning.
In 1953, Prof. P.C. Mahalanobis established an Operation Research team
in the Indian Statistical Institute, Calcutta to solve problems related to
national planning and survey.
Operation Research is now being used in Railway, waiting or queueing
problems of passengers for tickets at booking windows or trains
queueing up in marshalling yard, waiting to be sorted out.
EVOLUTION OF OPERATION RESEARCH AS AN ACADEMIC
DISCIPLINE
• During the last 50 years, operational research has evolved as a multidisciplinary function involving economics, mathematics, statistics, industrial engineering and management.
• Operational research as a discipline can be classified into three distinct set of categories. They correspond to tools, models and methodology.
TOOLS
ABCANALYSIS
80:20RULE
BREAKEVEN
ANALYSIS
TOOLS
MODELS
MODELS
Blending models Optimized Distribution
System
PortfolioOptimization
OfAssets
METHODOLOGY
METHODOLOGY
ProjectManagement
Systems
MultiCriteria
Optimization
Simulation Methodology
Game TheorySimulation
Methodology Game Theory
SIGNIFICANCE OF OR
• OR approach is particularly useful in balancing conflicting objectives (goals or interests) where there are many alternative courses of action available to the decision-makers.
• The optimum decision must be one that is best for the organization as a whole it is often called the global optimum.
SIGNIFICANCE OF OR
• Operation Research is concerned with providing the decision-maker with decision aids (or rules) derived from:
• A Total System Orientation
• Scientific Methods of Investigation.
• Models of reality, generally based on quantitative measurement and techniques.
O.R. APPROACH• O.R. represents an integrated framework to help make
decisions, to achieve this, the so-called O.R. approach is
• Orientation• Problem Definition• Data Collection• Model Formulation• Simulation• Model Validation And Output Analysis, and• Implementation and Monitoring
ORIENTATION
PROBLEM
DATACOLLECTION
MODELFORMULATION
SOLUTION
OUTPUT
ANALYSIS
IMPLEMENTATIONMONITORING
VALIDATION
TECHNIQUES USED IN O.R.
• Decision Analysis: Decision analysis refers to a set of quantitative methods for analyzing decisions that use expected utility as the criterion for identifying the preferred alternative.A general decision making process can be divided into the following steps:
DEFINETHE
PROBLEM
DETERMINETHE
REQUIREMENTS
ESTABLISH GOALS IDENTIFY
ALTERNATIVES
DEFINECRITERIA
SELECTDECISION
MAKING TOOLEVALUATEVALIDATE
DEFINEPROBLEM
DETERMINEREQUIREMENTS
ESTABLISHGOALS
IDENTIFYALTERNATIVE
DEFINE CRITERIA
SELECT DECISIONMAKING
TOOL
EVALUATEALTERNATIVES
AGAINST
VALIDATESOLUTIONAGAINSTPROBLEM
STATEMENT
SOLUTION
TECHNIQUES USED IN O.R.
• Linear programming arose as a mathematical model developed during Second World War to plan expenditures and returns in order to reduce costs to the army and increase losses to the enemy.
• In OR Optimization means to find out the maximum profit and minimum loss in any deal which we can be done in Quantitative Techniques, in this we can narrowing our choices to the very best when there are virtually immeasurable feasible options. This is a constrained optimization technique, which optimize some criterion within some constraints.
TECHNIQUES USED IN O.R.
SIMULATION In this technique of OR we can make themodel of a real situation and then performthe various experiments on this roughsculpt. Generally it is used in uncertaincondition, through this model to know moreabout different situations which we use inthis artificial model.
TECHNIQUES USED IN O.R.
QUEUING THEORY
• Queuing System is used in situations where the queue is formed (for example customers waiting for service, aircrafts waiting for landing, jobs waiting for processing in the computer system, etc). The objective here is minimizing the
cost of waiting without increasing the cost of servicing. • Vehicles requiring service wait for their turn in a garage.
• A simple example is the telephone exchange.
TECHNIQUES USED IN O.R.
TRANSPORTATION TECHNIQUE• A special class of linear programming problem is
Transportation Problem, where the objective is to minimize the cost of distributing a product from a number of sources (e.g. factories) to a number of destinations (e.g. warehouses)
• The transportation model can be extended to areas other than the direct transportation of a commodity, including among others, inventory control, employment scheduling, and personnel assignment
Typical Applications of Operations Research
• Capital budgeting. • Asset allocation. • Portfolio selection. • Fraud prevention, Anti-Money Laundering. • Benchmarking. • Marketing channel optimization, Customer
segmentation. • Direct marketing campaigns, Predicting
customer response, and Campaign optimization.
Typical Applications of Operations Research
• Supply Chain Planning. • Distribution, Routing, Scheduling, Traffic
flow optimization. • Resource allocation, Staff allocation. • Inventory planning. • Retail planning, Merchandize optimization. • Product mix and blending, Industrial waste
reduction.
CONCLUSION
• Another name for managers is decision makers.
• To survive and lead the today’s highly competitive and demand driven market, pressure is on management to make economical decisions.
• One of the essential managerial skills is ability to allocate and utilize resources appropriately in the efforts of achieving the optimal performance efficiently.
CONCLUSION
• In some cases such as small-scale low complexity environment, decision based on intuition with minimal quantitative basis may be reasonably acceptable and practical in achieving the goal of the organization. However, for a large-scale system, both quantitative and qualitative (i.e. intuition, experience, common sense) analyses are required to make the most economical decisions.
• Using Operations Research techniques including Linear Programming, Discrete Event Simulation and Queuing Theory, organization leaders can make high quality decisions.
• Operations managers are not expected to be experts in any decision science tools; however, he or she must have fundamental knowledge of such tools to acquire right resources and to make the most economically sounding decisions for the company as a whole.
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