Operational Research Assignment

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Operational Research : This Assignment contents 26 important questions and answers of all the chapters of operational research which will be useful for MBA and BBA students.

Transcript of Operational Research Assignment


Department of Management(MBA Semester II)

Q1.Discuss the role and scope of quantitative methods for scientific decision-making in a business environment?Ans.Quantitative methods are always important in making important business decisions. Therefore, there are various quantitative subjects which have been introduced. For example, Total Quality Management and Quantitative methods and Techniques are two subjects which have a lot of quantitative methods to solve various problems and facilitate decision making process. For example Regression analysis can help the company to overview the previous trends in the sales of the company and decide the budgeted sales for the new year.



Analogue Degree Of

Mathematical Abstraction

FeaturesInterdisciplinary approach: Interdisciplinary is essential because while attempting to solve a complex management problem one person may not have the complete knowledge of all its aspects such as economical, social, political.Methodological approach: Operations Research is the application of scientific methods, techniques and tools to problems involving the operations of systems so as to provide those in control of operations research with optimum solutions to the problem.Holistic Approach: While arriving at a decision, an operations research team examines the relative importance of all conflicting and multiple objectives and the validity of claims of various departments of the organization from the perspective of whole organization .Objectivistic approach: An Operations Research approach seeks to obtain an optimal solution to the under analysis for these, measure of desirability is defined, based on the objective of the Organization

Application and scope of Operations researchSome of the industrial/government/business problems which can be analysed by OR Approach have arranged by functional areas as followsFinance and Accounting Dividend Policies Investment and portfolio management Auditing Balance sheet Cash flow Analysis Claim and complaint procedure and Public accounting Break even analysis, capital Budgeting, cost allocation and control, financial planning Establishing cost for By products and developing standard cost

Marketing Selection of Productmix Marketing and Export Planning Advertising, Media Planning, selection and effective Packing Alternatives Sales effort allocation and assignment Best time to launch a new product Predicting customer Loyalty

Purchasing, Procurement and Exploration Optimal Buying and reordering with or without price quantity discount Transportation Planning Replacement polices Bidding Policies Vendor AnalysisProduction management Facilities Planning Location and Size of warehouse or new plant Distribution centres and retail outlets

Manufacturing Aggregate Production Plaiing Assembly Line Blending Purchasing and Inventory control Maintenance and project schedulingPersonnel Management Selection of suitable personnel. Recruitment of employees. Assignment of jobs. Skills balancing. Research and Development Project selection. Control of R&D projects.Government Economic Planning Natural resources Social Planning Energy

Q2. Discuss advantages and limitation of Operations Research?Ans.Advantages Better Control:The management of large organizations recognize that it is a difficult and costly affair to provide continuous executive supervision to every routine work. An O.R. approach may provide the executive with an analytical and quantitative basis to identify the problem area. The most frequently adopted applications in this category deal with production scheduling and inventory replenishment. Better Systems:Often, an O.R. approach is initiated to analyze a particular problem of decision making such as best location for factories, whether to open a new warehouse, etc. It also helps in selecting economical means of transportation, jobs sequencing, production scheduling, replacement of old machinery, etc. Better Decisions:O.R. models help in improved decision making and reduce the risk of making erroneous decisions. O.R. approach gives the executive an improved insight into how he makes his decisions. Better Co-ordination:An operations-research-oriented planning model helps in co-ordinating different divisions of a company.

Limitations Dependence on an Electronic Computer:O.R. techniques try to find out an optimal solution taking into account all the factors. In the modern society, these factors are enormous and expressing them in quantity and establishing relationships among these require voluminous calculations that can only be handled by computers. Non-Quantifiable Factors:O.R. techniques provide a solution only when all the elements related to a problem can be quantified. All relevant variables do not lend themselves to quantification. Factors that cannot be quantified find no place in O.R. models. Distance between Manager and Operations Researcher:O.R. being specialist's job requires a mathematician or a statistician, who might not be aware of the business problems. Similarly, a manager fails to understand the complex working of O.R. Thus, there is a gap between the two. Money and Time Costs:When the basic data are subjected to frequent changes, incorporating them into the O.R. models is a costly affair. Moreover, a fairly good solution at present may be more desirable than a perfect O.R. solution available after sometime. Implementation:Implementation of decisions is a delicate task. It must take into account the complexities of human relations and behaviour.Opportunities It compels the decision maker to quit explicit about his objectives assumption and his prospective to constraints It makes the decision maker consider very carefully just what variables influence decisions Quickly points out gaps in the data required to support workable solutions to a problem Its model can be solved by a computer

3. It is said that operations research increases the creative capabilities of a decision maker. Do you agree with this view? Defend your point of view with examples.Ans. The main responsibilities of operations management are to manage and operate as efficiently and effectively as possible with the given resources. With today's global market, and large-scale systems, achieving the optimum performance is a challenge. Many decision science tools are available for all levels of decision makers. Quantitative methods such as Operations Research (OR), which comprises of simulation, linear and nonlinear programming, queueing theory and stochastic modeling, are well-accepted techniques by both research and practice communities. Large profit organization such as Ford Motors (Chelst, Sidelko, Przebienda, Lockledge, & Mihailidis, 2001), Merrill Lynch (Atschuler et al., 2000), AT&T (Ambs et al., 2000) andJournal of Applied Business and EconomicsSamsung (Leachman, Kang, & Lin, 2002) reported millions dollars of savings with OR. OR has a strong presence in nonprofit organizations as well. US Army Recruiting Office (Knowles, Parlier, Hoscheit, & Ayer, 2002) and Warner Robins Air Logistics Center (Srinivasan 2006) won the worlds most prestigious award, 2006 Franz Eldelman Award for outstanding achievements of OR.

Functional entities such as Industrial or Systems Engineering uses both methodologies to provide feasible alternatives for operations mangers to decide on. An important component of decision-making process is verifying and validating alternatives, which typically involve decision makers and engineers or analysts. Thus, high-level understanding of the tools or methodologies used for recommendations is essential in making the effective decision for achieving the organizations common goal of maximizing profit. In the following sections a brief background on Operations Research is discussed along with selected OR techniques including Linear Programming, Discrete Event Simulation and Queueing Theory, and a typical problem solving procedures for OR. Also, Success cases of OR from both practical and research perspectives are discussed. The paper is concluded with a brief summary of the materials discussed. The primary motivation and purpose of this literature is to disseminate knowledge; hence, neither academic nor research disclosures are conversed.


During World War II, a set of diversified scientists from England and the United States developed scientific methods of planning military logistics such as most economical method of disseminating resources to various war sites. The scientists developed a famous quantitative method for such operations and named it Operations Research (OR) or often referred as managerial or decision science (Hillier, 2005; Turner, Mize, Case, & Nazemetz, 1993). With its proven successes, OR spread to private sectors promptly. With rapid improvements in computer technology, to this date, OR is one of the most powerful decision making tools in the Operations Management and Industrial Engineering disciplines. Murty defines Operations Research as a discipline that deals with techniques for system optimization (1993). ORs primary objective is to find optimal or near optimal solution to complex business to engineering problems.

Operations Research techniques are used to answer the common managerial questions such as: How many and much resources are required to meet the key performance target? Which alternatives require minimum cost and generate maximum profit? What is the optimal resource schedule to minimize overhead cost? What is the maximum and minimal resource utilization level? Where are primary and secondary constraints or bottlenecks? What range of queue and process time is allowed to achieve goal? What is the current capacity and required capacity to meet the goal? What are the anticipated risks for ac