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OR Unit 1

This unit is one of the basic important requirement for studing operation researce in any management field
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0% found this document useful (0 votes)
81 views4 pages

OR Unit 1

This unit is one of the basic important requirement for studing operation researce in any management field
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. Discuss the importance of operations research techniques in business and industry.

Operations research quantifies the relevant factors of an issue and uses mathematical techniques to arrive
at an optimal decision. Operations research is important because it is a helpful tool used to solve complex
problems under uncertainty. In business, very few things are certain, and managers must often make
decisions based on their instincts instead of being able to use reliable data. Operations research
techniques fill this void with methods that quantify issues and give business managers a better basis for
making decisions.

2. What is Operations research?


O.R. is the application of modern methods of mathematical science to complex problems involving
management of large systems of men, machines, materials, and money in industry, business, government
and defence. The distinctive approach is to develop a scientific model of the system incorporating
measurement of factors such as chance and risk, to predict and compare the outcome of alternative
decisions, strategies or controls.

3. Explain the principle phase for implementing operations research in practice.


The procedure for making decisions with the OR study generally involves the following phases:
(i) Judgment Phase:
i. Determination of operation.
ii. Determination of objectives.
ADVERTISEMENTS:
iii. Determination of effectiveness of measures.
iv. Determination of type of problem, its origin and causes.
(ii) Research Phase:
i. Observation and data collection for better understanding of the problem.
ii. Formulation of relevant hypothesis and models.
iii. Analysis of available information and verification of hypothesis.
iv. Production and generation of results and consideration of alternatives.
(iii) Action Phase:
i. Recommendations for remedial action to those who first posed the problem, this includes the assumptions
made, scope and limitations, alternative courses of action and their effect.
ii. Putting the solution to work: implementation.

4. explain briefly about the development of OR.


In the decades after the two world wars, the tools of operations research were more widely applied to
problems in business, industry and society. Since that time, operational research has expanded into a field
widely used in industries ranging from petrochemicals to airlines, finance, logistics, and government,
moving to a focus on the development of mathematical models that can be used to analyse and optimize
complex systems, and has become an area of active academic and industrial research.

5. Explain the applications of Markov Analysis.


Markov analysis is a method of analyzing the current behaviour of some variable in an effort to predict the
future behaviour of the same variable.
Markov analysis has come to be used as a marketing research tool for examining and forecasting the
frequency with which customers will remain loyal to one brand or switch to others. It is generally assumed
that customers do not shift from one brand to another at random, but instead will choose to buy brands in the
future that reflect their choices in the past.
Other applications:
A model for assessing the behaviour of stock prices,
A model for scheduling hospital admissions,
A model for analyzing internal manpower supply etc.

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6. Describe the use of various operation research models in the field of business.
Linear programming is a mathematical technique of assigning a fixed amount of resources to satisfy a
number of demands in such a way that some objectives are optimized and other defined conditions are also
satisfied.
The transportation problem is special type of linear programming problem where the objective is to
minimize the cost of distributing a product from a number of sources to a number of destinations.
Succinctly, when the problem involves the allocation of n different facilities to n different tasks, it is often
termed as assignment problem.
The queuing problem is identified by a group of customers who arrived randomly to receive some service.
Game theory is used for decision making under conflicting situations where there are one or more opponent.
In this theory we consider two or more person s with different objectives each of whose actions influence the
outcome of the game.

7. Explain how OR is useful in balancing organisations conflicting objectives.

8. Define Model. Explain briefly different types of OR models based on different classification.
The model is a collection of logical and mathematical relationships that represents aspects of the situation
under study.
Models can be classified on the basis of following factors:
1. By degree of Abstraction:
i. Mathematical models.
ii. Language models.
2. By Function:
i. Descriptive models.
ii. Predictive models.
iii. Normative models for repetitive problems.
3. By Structure:
i. Physical models.
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ii. Analogue (graphical) models.
iii. Symbolic or mathematical models.
4. By Nature of Environment:
i. Deterministic models.
ii. Probabilistic models.
5. By the Time Horizon:
i. Static models.
ii. Dynamic models.

9. Write a short note on OR highlighting its techniques.


Important techniques of Operation Research are being described hereunder:
(i) Inventory Control Models:
Operation Research study involves balancing inventory costs against one or more of the following
costs:
i. Shortage costs.
ii. Ordering costs.
iii. Storage costs.
iv. Interest costs.
(ii) Waiting Line Models:
These models are used for minimising the waiting time and idle time together with the costs associated
therewith.
Waiting line models are of two types:
(a) Queuing theory, which is applicable for determining the number of service facilities and/or the timing of
arrivals for servicing.
(b) Sequencing theory which is applicable for determining the sequence of the servicing.
(iii) Replacement Models:
These models are used for determining the time of replacement or maintenance of item, which may
either:
(i) Become obsolete, or
(ii) Become inefficient for use, and
(iii) Become beyond economical to repair or maintain.
(iv) Allocation Models:
These models are used to solve the problems arising when:
(a) There are number of activities which are to be performed and there are number of alternative ways of
doing them,
(b) The resources or facilities are limited, which do not allow each activity to be performed in best possible
way. Thus these models help to combine activities and available resources so as to optimise and get a
solution to obtain an overall effectiveness.
(v) Competitive Strategies:
Such type of strategies are adopted where, efficiency of decision of one agency is dependent on the decision
of another agency. Examples of such strategies are game of cards or chess, fixing of prices in a competitive
market where these strategies are termed as “theory”.
(vi) Linear Programming Technique:
These techniques are used for solving operation problems having many variables subject to certain
restrictions. In such problems, objectives are—profit, costs, quantities manufactured etc. whereas restrictions
may be e.g. policies of government, capacity of the plant, demand of the product, availability of raw
materials, water or power and storage capacity etc.

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10. Write a short note on Methodologies in OR.
Operation Research, is a scientific approach for decision-making, and therefore must follow following
steps:
1. Formulating the Problem:
The problem must be first clearly defined. It is common to start the O.R. study with tentative formulation of
the problem, which is reformulated over and again during the study. The study must also consider
economical aspects.
While formulating the O.R. study, analyists must analyse following major components:
(i) The environment:
Environment involves physical, social and economical factors which are likely to affect the problem under
consideration. O.R. team or analysts must study the organisation contents including men, materials,
machines, suppliers, consumers, competitors, the government and the public.
(ii) Decision-makers:
Operation analyst must study the decision-maker and his relationship to the problem at hand.
(iii) Objectives:
Considering the problem as whole, objectives should be defined.
(iv) Alternatives:
The O.R. study determines as to which alternative course of action is most effective to achieve the desired
objectives. Expected reactions of the competitors to the alternative must also be considered.
2. Deriving Solution:
Models are used to determine the solution either by simulation or by mathematical analysis. Mathematical
analysis for deriving optimum solution includes analytical or numerical procedure, and uses various
branches of mathematics.
3. Testing the Model and Solution:
A properly formulated and correctly manipulated model is useful in predicting the effect of changes in
control variables on the overall system effectiveness. The validity of the solution is checked by comparing
the results with those obtained without using the model.
4. Establishing Controls over the Solution:
The solution derived from a model remains effective so long as the uncontrolled variables retain their values
and the relationship. The solution goes out of control, if the values of one or more variables vary or
relationship between them undergoes a change. In such circumstances the models need to be modified to
take the changes into account.
5. Implementing the Solution:
Solution so obtained should be translated into operating procedure to make it easily understandable and
applied by the concerned persons. After applying the solution to the system, O.R. group must study the
response of the system to the changes made.

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