Management Science
Module I : Operations Research: Concept - Meaning and Definition–
Development of OR– Characteristics of OR – Scope & Objectives of
OR – Phases of OR – Techniques of OR – OR and Modern Business
Management. (15 hours)
Module II : Linear Programming Problem: Meaning & Objective of
LP–Applications of LP– Formulation of Mathematical Model to a LPP
– Objective function – Constraints – Solution to LPP (Graphical
solution only) – Advantages & Disadvantages of LP. (15 hours)
Module III : Network Analysis: Meaning and Objectives–Network
Techniques–Managerial applications of Network Techniques – PERT
& CPM – Network diagram – activity – Event – Dummy Activity –
Construction of Network diagram – Numbering of events – Activity &
Event times – Float & Slack – Steps in the application of CPM –
Critical activity – Finding of critical path & Estimated Duration – Time
estimates in PERT – Steps involved in PERT calculations – Difference
between PERT & CPM (only simple problems are expected – Crashing
of activity timing not expected) (25 hours)
Module IV : Decision Theory: Decision making situations–Decision
making under certainty - Decision making under uncertainty : Payoff,
Regret (Opportunity loss), Maximax criterion – Minimax criterion,
Laplace criterion &Hurwics alpha criterion – Decision making under
risk : Expected Monetary Value (EMV) , Expected Opportunity Loss
(EOL) , Expected Value of perfect information (EVPI) – Decision
making under competition – Game Theory (Theory only) – Decision
Tree. (15 hours)
Module V : Transportation Model: Structure of Transportation
problem–solution for Transportation problem – North West Corner
Method (NWCM) – Least Cost Method (LCM) – Vogel’s
Approximation method (VOM) (Simple problems only). (10 hours)
Operations Research (OR)
Meaning: Operations Research is a scientific method of providing
executive departments with a quantitative basis for decisions
regarding the operations under their control.
Concept: It applies mathematical models, statistical analysis, and
optimization techniques to decision-making problems to achieve the
best possible outcome.
Definition
Morse & Kimball: OR is a scientific method of providing executive
departments with a quantitative basis for decisions regarding the
operations under their control.
Operations Research (OR)
Development of OR
Origin: Emerged during World War II (1939–1945) when military
management used scientific methods to solve complex defense and
logistics problems.
Post-war expansion: Applied to industries like manufacturing,
transportation, communication, healthcare, and business.
Modern growth: Linked to computers and advanced analytics,
making complex models solvable in real-time.
Characteristics of OR
Interdisciplinary approach – uses mathematics, statistics, economics,
engineering, psychology, etc.
Systems orientation – studies the problem as a whole, considering
interactions of subsystems.
Scientific method – applies experimentation, observation, and logic.
Quantitative solutions – relies on mathematical and statistical
techniques.
Use of models – represents real-world problems through models.
Decision-focused – provides optimum or near-optimum solutions for
decision-making.
Computational support– heavily dependent on computers and
software.
Scope of OR
❑ Production planning and scheduling
❑ Inventory control
❑ Transportation and distribution
❑ Project management
❑ Decision-making under uncertainty
❑ Allocation of resources (manpower, machines, money, material)
❑ Marketing, finance, and HR management
Objectives of OR
Improve efficiency and productivity
Optimize the use of limited resources
Provide scientific decision support
Minimize risk and uncertainty
Reduce cost and increase profitability
Enhance overall organizational effectiveness
Phases of OR
1. Formulation of the problem – define objectives, limitations, and
scope.
2. Construction of a model – develop mathematical/statistical
representation.
3. Deriving solutions – apply OR techniques to solve the model.
4. Testing the model – verify accuracy with real-world data.
5. Implementation – apply solution in practice.
6. Feedback and control – monitor results, adjust if needed.
Techniques of OR
Linear Programming (LP) – resource allocation, optimization.
Integer Programming – decision variables restricted to integers.
Dynamic Programming – multistage decision problems.
Queuing Theory – waiting line analysis, service efficiency.
Inventory Models – managing stock levels.
Game Theory – competitive strategies.
Simulation – experimenting with models to predict outcomes.
Network Analysis – PERT (Program Evaluation & Review Technique) and
CPM (Critical Path Method).
Decision Theory – decision-making under risk and uncertainty.
Markov Processes – stochastic processes, forecasting.
OR and Modern Business Management
Decision-making tool – helps managers take rational and data-driven
decisions.
Cost optimization– reduces production and operational costs.
Strategic planning – aids in long-term forecasting and policy
formulation.
Risk management – supports decisions under uncertainty.
Efficient resource utilization– manpower, money, materials,
machines managed effectively.
Improves competitiveness – supports innovation and customer
satisfaction.
Applications in modern areas:
Supply Chain Management
Logistics and distribution
Project Management (IT, construction, R&D)
Finance & Banking (portfolio management, credit risk analysis)
Healthcare (hospital scheduling, resource allocation)