Introduction to Decision

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 specialization has

created a new problem to meet out organizational challenges.

• The allocation of limited resources to various activities has gained significant

importance in the competitive market.

• These types of problems need immediate attention which is made possible by

the application of OR techniques.

• Operations Research (OR) is a science which deals with problem, formulation,

solutions and finally appropriate decision making.
 LEARNING OUTCOMES
• Identify and develop operational research models from the verbal description
of the real world problems.

• Solve business problems and apply it's applications by using mathematical

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 optimization p

roblems.
 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 systematic

solution. The course will involve programming and mathematical analysis

Operations research involves “research on operations.” Thus, operations research

is applied to problems that concern how to conduct and coordinate the operations

(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 military,

and public services, to name just a few. Therefore, the breadth of application is

unusually wide.

The research part of the name means that operations research uses an approach

that resembles the way research is conducted in established scientific fields. To

a considerable extent, the scientific method is used to investigate the problem of

concern. (In fact, the term management science sometimes is used as a synonym for
operations research.)
 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 organized systems
in business, industry, government, engineering and other enterprises.
OR can play a significant role in bringing a balance among different inter disciplinary
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
– military defense
 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 includes:
– 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 following
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 OF THE MODEL

The operation researcher can now construct the model to show the relations
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 solution

– Identify or construct an appropriate model for solution development

– 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 experiments
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 res
ults of past.

Retrospective test: If past behavior is repeated when provided similar inp

uts (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.