SCOPE OF OPERATIONS RESEARCH IN BUSINESS

SCOPE OF OPERATIONS RESEARCH IN BUSINESS

OPERATIONS RESEARCH

Operations research is the application of scientific method to problem arising from operation involving integrated system of men, machine and material. It normally utilises the knowledge and skills of an inter-disciplinary research team to provide the management of such system with optimum operating solution.

ACCORDING TO HM WAGNER

“Operations Research is a scientific approach to problem solving for execution management.”

ACCORDING TO THOMAS L SATTY

“Operations research is the art of giving bad answers to problems to which, otherwise worst answers are given.”

Thus, Operations research is the application of modern methods of mathematical science to complex problems involving management of large system of man, machines and money in industry, business, government and defence.

SCOPE OF OPERATIONS RESEARCH IN MANAGEMENT

Wherever there is a problem of optimization, there is a scope of operations research. It is as follows:

1. Finance, budgeting and investments:
   • Cash flow analysis, long range capital requirements, investment portfolios, dividend policies etc.
   • Credit policies, credit risks and the delinquent account produces- claim and complaint procedures.
   • Break even analysis, capital budgeting, cost allocation and control and financial planning.
   • Establishing costs for by-products and developing standard costs.
2. Purchasing, procurement and exploration:
   • Determining the quantity and timing of purchases of raw materials, machinery etc.
   • Rules for buying and supplying under varying prices.
   • Bidding policies.
   • Equipment replacement policies.
   • Determination of quantities and timings of purchase.
   • Strategies for exploration and exploitation of new material sources.
   • Vendor analysis
   • Transportation planning
3. Production management:
   • Physical distribution:
     • Location and size of warehouse distribution centres, retail outlets etc.
     • Distribution policy.
   • Manufacturing and facility planning:
     • Production scheduling and sequencing.
     • Project scheduling and allocation of resources.
     • Number and location of factories, warehouses, hospitals, and their sizes.
     • Determining the optimum product mix.
   • Manufacturing:
     • Maintenance policies and preventive maintenance.
     • Maintenance of new sizes.
4. Marketing management:
   • Product selection, timing, competitive actions.
   • Advertising strategy and choice of different media of advertising.
   • Number of salesmen, frequency of calling of accounts etc.
   • Effectiveness of market research.
   • Size and the stock to meet the future demand.
5. Personnel management:
   • Recruitment policies and assignment of job.
   • Negotiation in bargaining situation.
   • Skills and wages balancing.
   • Wage/ salary administration.
   • Designing organisation structure more effectively.
6. Techniques and general management:
   • Decision support system and MIS (Management Information System) forecasting.
   • Making quality control more effective.
   • Project management and strategic planning.
7. Government:
   • Economic planning, natural resource, social planning, and energy.
   • Urban and rural housing problems.
   • Military, police, pollution control etc.
8. Research and development
   • Determination of areas of concentration of research and development.
   • Reliability and evaluation of alternative designs.
   • Control of developed projects.
   • Coordination of multiple research projects.
   • Determination of time and cost requirements

Also Study	Also Study	Also Study
Operations Research	Linear Programming	Assignment
Linear programming problems	Linear programming applications	Models of Operations research

OTHER APPLICATIONS OF OPERATIONS RESEARCH

Maintaining better control: Managers use techniques of operations research to maintain better control over their subordinate. This is possible because Operations Research provide a basis in which to establish standards of performance and ways to measure productivity. Reporting deviations from the standards enables managers to identify problem areas and to take corrective actions.

Better decision making: The mathematical models of Operations research allows people to analyse a greater number of alternatives and constraints that would usually be possible, if they were to use only and only intuitive approach. Using operations research, it is easier to analyse multiple alternatives which results in greater confidence in the optimal choice.

Better coordination of departments: Operations research blends together the objectives of different departments. For example: Operations research coordinates the aims of the marketing department with the schedules of the production department.

Increased business productivity: The mathematical formulae used in operations research can increase productivity as they offer a great number of optimal choices of inventory mix, plant machine utilization, factory size, manpower planning and implementing new technologies.

Preparation of future managers: These methods substitute a means for improving the skills and knowledge of young managers.

Modification of mathematical solution: Operations research presents a possible practical solution when one exists, but it is always a responsibility of the managers to accept or modify the solution before its use, The effect of these modifications may be evaluated from the computational steps and tables.

Alternative Solution: Operational research techniques will suggest all the alternative solutions available for the same profit so that the management may decide on the basis of the strategies.