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
