Decision making & operational research, Study notes of Operational Research

Download Decision making & operational research and more Study notes Operational Research in PDF only on Docsity! Operation research for business decision making Meaning of decision-making It is regarded as a cognitive process resulting in the selection or a course of action among several alternative possibilities. Managerial decision making: it is a process by which the management when faced with a problem choose a specific course of action from a set of possible options. Steps in decision making 1. Defining the problem in a clear manner. 2. Collecting persistent facts 3. Analysing the facts thoroughly 4. Driving and implementing the solution. Classification of decision making 1. On the basis of certainty A. Decision under certainity: where all the facts are for fully and for sure. B. Decision under uncertainty: Where the event that would actually occur Is not known but probabilities assigned to various possible occurrence. 2. On the basis of time A.Static decision:In this will take decision only one period of time and we know when and where is used B. Dynamic decision: Sequence of interrelated decision And decision are applied for the different time period. 3. On the basis of opponent A. Opponent is nature. B. Opponent is rational. Elements of decision making 1. Decision maker(I.e any individual,group,organizations or society) 2. A set of possible actions to solve decision making. 3. A set of possible state occurrence. 4. A set of consequences. 5. The relationship between consequences & the value of the decision maker. Operation research OR is a method of mathematically based analysis for providing a quantities basis for mgt. Decision. For eg. We want to increase sale in a particular market. It’s a only quantative decision .in general we have to Change manager it’s a qualitative decision through this we analyse the quantitative decision. It means if we want to increase sale we have to change current sales manager we move from qualitative Decision to quantitative decision its nothing but operations research . Nature and characteristics of OR Major premise of OR 1.determine problem 2.select alternative Scientific approach 1.OR uses scientific methods of problem Objective OR defines the measurement of effectiveness which is 3.determine the model 4.Evaluate the alternatives 5.select the best alternative There is no place of whims and guess work based on the goal of the organization Inter disciplinary team approach OR requires blend if people with expertise in the area of maths ,engineering,computer science,management Digital computer The computer may be required due to competitors. In today’s Era we can’t do task manually so we need digital computer store and process data. Methodology or step in OR 1. Formulate the problem: Define a clear and concise statement of problem 2. Determine the assumption: Analyst can’t deal with all problem and one should select a few problems Are likely result in greatest benefit. 3. Acquired input data: after the problem is defined categories into the following Problem 1.standard problem: also known as programmed problem. These are we structure problem characterized by to use, repetitive decision maker techniques to solve . 2. Specific problem: Unique and recurrent in nature and therefore ill structured. 4. Solution of model formulated and interpret result: A solution of model implies determination of a specific set of decision variable that would field a desired level of output.Desired level of output is determined by the principal of choice and represent level of which optimises the solution. Category 1  Feasible solution: a solution which satisfies all the constraints of the problem  Infeasible solution : a solution which does not satisfy all the constraints Category 2  Optimal solution  Non optimal solution Category3  Unique solution  Multiple solution 5. Validate the model: It's designed within regulatory guidance as the set of processes & activities intended to verify that model are performing as expected in time with their design objectives & business users. 6. Implement the solution: It's the process of incorporating the solution in the organization. Computer based information system Quantitative analysis or has become integral part of the modern computer based information system.