Operation Research In Management

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Scope of Or In Management

Operation Research In Management is a problem-solving and decision-making science.

It is a kit of scientific and programmable rules providing the management a ‘quantitative basis’ for decisions regarding the operations under its control.

Some of the areas of management where OR techniques have been successfully applied are:

  1. Allocation and Distribution
  2. Production and Facility Planning
  3. Procurement
  4. Marketing
  5. Finance
  6. Personnel
  7. Research and Development
Scope of management
Scope of Management

1. Allocation and Distribution

  • Optimal allocation of limited resources called as “Four M”(4 M) such as,
    men,
    machines,
    materials,
    money and time
  • Location and size of wareouses, distribution centers, retail depots, etc
  • Distribution policy.

2. Production and Facility Planning

  • Selection, location and design of production plants, distribution centers and retail outlets.
  • Project scheduling and allocation of resources
  • Preparation of forecasts for the various inventory items and computing economic order quantities and reorder levels.
  • Determination of the number and size of the items to be produced.
  • Maintenance policy and preventive maintenance
  • Scheduling and sequencing of production runs by proper allocation of machines.

3. Procurement

  • What, how and when to purchase at the minimum procurement cost.
  • Bidding and replacement policies.
  • Transportation planning and vendor analysis.

4. Marketing

  • Product selection, timing and competitive actions.
  • Selection of advertising media.
  • Demand forecasts and stock levels.
  • Customers preference for size, color and packaging of various products.
  • Best time to launch a new product

5. Finance

  • Capital requirements, cash-flow analysis.
  • Credit policies, credit risks, etc.
  • Profit plan for the company.
  • Determination of optimum replacement polices.
  • Financial planning, dividend policies, investment and portfolio management, auditing, etc.

6. Personnel

  • Selection of personnel, determination of retirement age and skills.
  • Recruitment policies and assignment of jobs.
  • Wage/salary administration.

7. Research and Development

  • Determination of areas for research and development.
  • Reliability and control of development projects.
  • Selection of projects and preparations of their budgets.

From all the above areas of applications, it can be concluded that OR can be widely used in taking timely management decisions and can be also used as a corrective measure.

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