i. It is the application of scientific methods, techniques and tools to problems involving the operations of a system so as to provide those in the control of the system with optimum solutions to the problems. ii. Operation Research is a tool for taking decisions which searches for the optimum results in parity with the overall objectives and constraints of the organization. iii. Operations research (OR) is an analytical method of problem-solving and decision-making that is useful in the management of organizations. In operations research, problems are broken down into basic components and then solved indefined steps by mathematical analysis.

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Meaning
i. It is the application of scientific methods, techniques and tools to problems involving the
operations of a system so as to provide those in the control of the system with optimum
solutions to the problems.
ii. Operation Research is a tool for taking decisions which searches for the optimum results
in parity with the overall objectives and constraints of the organization.
iii. Operations research (OR) is an analytical method of problem-solving and decision-
making that is useful in the management of organizations. In operations research,
problems are broken down into basic components and then solved indefined steps by
mathematical analysis.
Scope of Quantitative Techniques and OperationResearch
Production management–
quantitative techniques are useful to the production management in
(a) selecting the location site for a plant, scheduling and controlling its development and
designing of plant layout.
(b) Locating within the plant and controlling the movements of required production material and
finished goods inventories and
(c) scheduling and sequencing production by adequate preventive maintenance with optimum
product mix.
Personnelmanagement-
quantitative techniques are useful to personnel management to find out
(a) optimum manpower planning,
(b) the number of employees to be maintained on the permanent or full time roll,

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(c) the number of persons to be kept in a work pool intended for meeting the absenteeism,
(d) in studying personnel recruiting procedures, accidents rates, labor turnover
Marketing management -
Quantitative techniques equally help n marketing management to determine
(a) warehouse distribution point and where warehousing should be located, their size quantity to
be stocked and the choice of customers,
(b)The optimum allocation of sales budget to direct selling and promotional expenses,
(c)The choice of different media of advertising and bidding strategies and
(d) The customer preferences relating to size, color, packaging et for various products as well as
to outbid and outwit customers.
Financialmanagement –
Quantitative techniques are also very useful to the financial management in
(a) finding long range capital requirements as well as how to generate these requirements,
(b) Determining optimum replacement policies
(c) working out a profit plan for the firm
(d) developing capital investment plan,
(e) estimating credit and investment risk.
Operation researchin Management
Operations research (OR) is a management function that draws extensively from the divisions of
mathematics and science. It makes use of algorithms, statistics and numerous modeling
techniques from mathematics to find the best possible solutions for complex problems. In OR,

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the maxima has to be optimized and the minima has to be reduced for all the objects involved.
Maxima are usually the yield, performance and profit and minima are the losses and risks. There
are many reasons to use OR in Management.
Manage
ment
Business
Operation
s
Decisio
n
Making
Coordin
ation
Control

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Business Operations
OR could be very effective in handling issues of inventory planning and scheduling, production
planning, transportation, financial and revenue management and risk management. Basically, OR
could be used in any situation where improvements in the productivity of the business are of
paramount importance
Control
With OR, organizations are greatly relieved from the burden of supervision of all the routine and
mundane tasks. The problem areas are identified analytically and quantitatively. Tasks such as scheduling
and replenishment of inventories benefit immensely from OR.
Decision Making
OR is used for analyzing problems of decision making in a superior fashion. The organization can decide
on factors such as sequencing of jobs, production scheduling and replacements. Also the organization can
take a call on whether or not to introduce new products or open new factories on the basis of a good OR
plan.
Coordination
Various departments in the organization can be coordinated well with suitable OR. This facilitates smooth
functioning for the entire organization.
Operations Research Uses (Role)
Operations research plays an important role in almost all areas of business decisions. Some
problems where operational research (OR) approach can be used:
1. Finance, Budgeting and Investments

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 Credit policy analysis.
 Cash flow analysis.
 Dividend policies.
 Investment portfolios.
2. Marketing
 Product selection, timing, etc.
 Advertising media, budget allocation.
 Number of salesman required.
 Selection of product mix.
3. Purchasing, Procurement and Exploration
 Optimal buying and reordering.
 Replacement policies
4. Production Management
 Location and size of warehouses, factories, retail outlets, etc.
 Distribution policy.
 Loading and unloading facilities for trucks, etc.
 Production scheduling.
 Optimum product mix.
 Project scheduling and allocation of resources.
5. Personnel Management
 Selection of suitable personnel.
 Recruitment of employees.
 Assignment of jobs.
 Skills balancing.
6. Research and Development

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 Project selection.
 Control of R&D projects.
 Reliability and alternative design.
Advantages of Quantitative Techniques And Operation Research
Better Systems: Often, an O.R. approach is initiated to analyze a particular problem of
decision making such as best location for factories, whether to open a new warehouse, etc. It
also helps in selecting economical means of transportation, jobs sequencing, production
scheduling, replacement of old machinery, etc.
Better Control: The management of large organizations recognize that it is a difficult and
costly affair to provide continuous executive supervision to every routine work. An O.R.
approach may provide the executive with an analytical and quantitative basis to identify the
problem area. The most frequently adopted applications in this category deal with production
scheduling and inventory replenishment.
Better Decisions: O.R. models help in improved decision making and reduce the risk of
making erroneous decisions. O.R. approach gives the executive an improved insight into how
he makes his decisions.
Better Co-ordination: An operations-research-oriented planning model helps in co-ordinating
different divisions of a company.
Limitation of Quantitative Techniques And Operation Research
Dependence on an Electronic Computer: O.R. techniques try to find out an optimal
solution taking into account all the factors. In the modern society, these factors are enormous

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and expressing them in quantity and establishing relationships among these require voluminous
calculations that can only be handled by computers.
Non-Quantifiable Factors: O.R. techniques provide a solution only when all the elements
related to a problem can be quantified. All relevant variables do not lend themselves to
quantification. Factors that cannot be quantified find no place in O.R. models.
Distance between Manager and Operations Researcher: O.R. being specialist's job
requires a mathematician or a statistician, who might not be aware of the business problems.
Similarly, a manager fails to understand the complex working of O.R. Thus, there is a gap
between the two.
Money and Time Costs: When the basic data are subjected to frequent changes,
incorporating them into the O.R. models is a costly affair. Moreover, a fairly good solution at
present may be more desirable than a perfect O.R. solution available after sometime.
Implementation: Implementation of decisions is a delicate task. It must take into account the
complexities of human relations and behaviour.