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Application of Operation Research

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Introduction

Operation Research "Operations Research is essentially a collection of mathematical techniques and tools which in conjuction with a systems approach are applied to value practical decision problems of an economic or engineering nature." Operation research is applied decision theory. It uses Scientific, Mathematical or logical means to attempt to cope with the problems that confront the executives. Application of Operation Research Operation Research is a technique which has a wide area of specification. Some of them are as follows:- Finance & Accounting - Dividend policies, Investment and Portfolio management, Auditing, Balance Sheet and Cash flow analysis - Break even analysis, Capital budgeting, cost allocation, financial planning. - Claim & complaint procedure & public accounting - Establishing costs for by products and developing standard costs. Marketing - Selection of product mix, marketing and export planning - Best time to launch a new product - Sales effort allocation and assignment - Predicting customer loyalty - Advertising, Media planning, Selection and effective planning packaging alternatives. Purchasing Procurement & Exploration: - Optimal buying and reordering under price quantity discount - Bidding Policies - Transportation Planning - Vendor analysis - Replacement Policies Production Management - Location of & Size of warehouse or new plant, distribution centres and retail outlets. ...read more.

Middle

OR is one of the quantitative aids to Decision Making Process. In general while solving a problem, decision makers must examine it both from quantitative as well as qualitative perspective. Certain Qualitatives factors such as: Weather, State and Central policies, New Technology, Political situation need to be considered, but these factors are difficult to quantify. It is also very time consuming. Because of the amount of and complexity of information that must be processed. Secondly, the number of alternative solutions could be so large that a decision maker simply cannot evaluate all of things and select an appropriate one. So decision makers turn to quantitative methods and use computer to arrive at the optimal solution to problems involving a large number of alternatives. The study of this method and how decision makers use them in decision process, in the essence of operations research approach. Balanced Transportation Problem In Operation research problem we are given supply to meet the demand. When the total supply equals total demand the problem is called a balanced transportation problem, otherwise an unbalanced transportation problem. ...read more.

Conclusion

Thus, we have to evaluate each unoccupied cell (unused route) in the transportation table in terms of an opportunity of reducing total transportation cost. An unoccupied cell with the largest negative opportunity cost is selected to include in the new set of transportation routes known as Incoming Variable. The Outgoing Variable in the current solution is the occupied cell (basic variable) in the unique closed path (loop) whose allocation will become zero first as more units are allocated to the unoccupied cell with the largest negative opportunity cost. Such an exchange reduces total transportation cost. The process is continued until there is no negative opportunity cost. That is, the current solution cannot be improved further. This is Optimal Solution. Q. What is Degeneracy in T.P? How such problems are solved ? In Transportation problem, when the number of positive allocation ( value of decision variables) at any stage of the feasible solution is less then the required number ( row+ column -1) i.e. number of independent constraint equations, the solution is said to be degenerate, otherwise non-degenerate. An Assignment On Operations Research Submitted to: Mamta Bhrambhatt In Partial Fulfillment of Quantitative Anaysis Subject in MBA Programme Rashesh Patel (43) National Institue of Co-operative Management ...read more.

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