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CH 1 - Introduction

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25 views

CH 1 - Introduction

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Kiap R14
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Introduction to Deci-

sion Making Process


BENG 2213B
OBJECTIVE
With the growth of technology, the World has seen a remarkable
changes in
the size and complexity of organizations.
An integral part of this had been the division of labor and segmentation
of
management responsibilities in these organizations.
The results have been remarkable but with this, increasing specializa-
tion has
created a new problem to meet out organizational challenges.
The allocation of limited resources to various activities has gained sig-
nificant
importance in the competitive market.
LEARNING OUTCOMES
Identify and develop operational research models from the verbal de-
scription of the real world problems.
Solve business problems and apply it's applications by using mathe-
matical
analysis.
Develop the ideas of developing and analyzing mathematical models
for
decision problems, and their systematic solution.
Understand the mathematical models that are needed to solve opti-
mization problems.
INTRODUCTION
Operations Research is a very important area of study, which tracks its
roots to business applications. It combines the three broad disciplines of
Mathematics,
Computer Science, and Business Applications.
This course will formally develop the ideas of developing, analyzing, and
validating mathematical models for decision problems, and their sys-
tematic
solution. The course will involve programming and mathematical analy-
sis
erations
(i.e., the activities) within an organization .
The nature of the organization is essentially immaterial, and, in fact, OR
has been applied extensively in such diverse areas as manufacturing,
transportation,
construction, telecommunications, financial planning, health care, the mili-
tary,
and public services, to name just a few. Therefore, the breadth of applica-
tion is
unusually wide.
The research part of the name means that operations research uses an ap-
proach
that resembles the way research is conducted in established scientific
fields. To
WHAT IS OPERATIONS RESEARCH
Operations Research ( OR) is the application of scientific methods in solving
problems facing management and to help to taking decisions.
A rose by any other name…
– Management Science
– Systems Engineering
– Industrial Engineering
– Operations Management
– Applied Mathematics
Operations research (also known as management science) is a collection of
techniques based on mathematics and other scientific approaches that finds
solutions to your

problems .
AIMS OF OR
Maxima of ;
Profit
Assembly line performance
Crop yield
Bandwidth

Minima of;
Loss
Risks

OR is a dominant decision making tool, that seeks the


optimum state in all conditions and thus provides
optimum solution to organizational problems
IMPACT OF OR
Operations Research (OR) applies scientific method to the management of orga-
nized systems in business, industry, government, engineering and other enter-
prises.
OR can play a significant role in bringing a balance among different inter disci-
plinary
people to managerial problem.
OR is regularly applied in areas such as:
– supply chain management
– marketing and revenue management systems
– manufacturing plants
– financial engineering
– telecommunication networks
– healthcare management
– transportation networks
– energy and the environment
– service systems
– web commerce
PHASES OF AN OR STUDY

As a decision-making tool, OR is both a science and an art.


The principal phases for implementing OR in practice in-
cludes:
– Definition of the problem.
– Construction of the model.
– Solution of the model.
– Validation of the model.
– Implementation of the solution.
DEFINING THE PROBLEM AND GATHERING DATA

In formulating a problem for O.R. study analysis must be made of the fol-
lowing major components:
(i) The environment
(ii) The objectives
(iii) The decision maker
(iv) The alternative courses of action and constraints.
Out of the above four components environment is most comprehensive
as it
provides a setting for the remaining three.
The operation researcher shall attend conferences, pay visits,
send observation and perform research work thus succeeds in getting
sufficient data to formulate the problems.
FORMULATING
The operation OFconstruct
researcher can now THE MODELthe model to show the re-
lations
and interrelations between a cause and effect or between an action
and a
reaction. The following steps are used in linear programming models
– Specify solution objectives
– Specify decision variables and stipulate constraints on the solu-
tion
– Identify or construct an appropriate model for solution devel-
opment
– Determine and obtain required data
– Develop solutions using analytical model
TO OBTAIN SOLUTION FROM MODEL
A solution may be extracted form a model either by conducting ex-
periments on it i.e. by simulation or by mathematical analysis.
It and even use standard algorithms ”Optimizing” is the science of
the
ultimate; satisficing is the art of the feasible”
OR team uses Heuristic procedures and post optimality analysis
(“what-if analysis”).
TESTING OF THE MODEL AND THE SOLUTION
Before the application of the model solution, the validity of model
and
reliability of the solution should be tested.

Validity of the model can be decided by comparing its outputs with


the results of past.

Retrospective test: If past behavior is repeated when provided


similar inputs (a stable solution is being obtained), the model will be
valid.
PREPARING TO APPLY THE MODEL

Well documented installation


Computer based systems
Interactive decision support systems
IMPLEMENTATION

Implementation of the solution obtained from a validated model is a


reliable solution to the the real-life problems.

Implementation of the solution is the duty of operation research


team.

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