Quantitative Methods II Operations Research (OR) Management Science (MS) Why? What? How?

Why OR/MS?

Typical MBA Placement

PROFICIENCY SOUGHT IN NEW MBAs (Graduate Management Admissions Council Survey, 2005)

Industry-specific skills sought (GMAC Survey, 2005)

What is OR/MS?

OR/MS “The discipline of applying advanced analytical methods to aid decision making” “Decision Making based on Scientific Methods”

Who uses OR/MS? Many different organisations use the principles and practices of OR/MS in a wide range of situations: Consultancy Companies Financial Institutions and Financial Services Utilities Services, typically the Health Service Railways, Airports, Airlines Basic industries such as Coal, Steel, Oil and Chemicals Engineering and manufacturing industries Government Military …

Professional Bodies Institute for Operations Research and Management Science (INFORMS), USA. ( Visit for more on MS and several examples of real world success stories using MS. The UK Operational Research Society (

How does OR/MS Help Problem Solving and Decision Making?

Problem Solving “The process of identifying a difference between the actual and the desired state of affairs and taking action to resolve the difference”

Seven Steps to Problem Solving 1.Identify and define the problem 2.Determine the set of alternative solutions 3.Determine the criteria to evaluate alternatives 4.Evaluate the alternatives 5.Choose an alternative 6.Implement the selected alternative 7.Evaluate the results to determine whether a satisfactory solution has been obtained

Decision Making The first five steps of Problem Solving constitute the Decision Making process: i.e.: 1.Identify and define the problem 2.Determine the alternatives 3.Determine the criteria 4.Evaluate the alternatives 5.Choose an alternative The choice of an alternative is the Decision

Classification of the Stages in the Decision Making Process Structuring the Problem Define the Problem Identify the Alternatives Determine the Criteria Analyzing the Problem Evaluate the Alternatives Choose an Alternative

Analyzing a Problem Qualitative Analysis Dependent on the decision maker, his/her experience, judgment, intuitive feel, relative simplicity of the problem etc. More of an art than a science The skills in qualitative approach are inherent in the manager and improve with experience Subjective

Analyzing a Problem Quantitative Analysis Relatively large/complex problem or when the manager lacks previous experience with similar situation or where the nature of the problem demands quantitative treatment The skills in quantitative approach are learnt only by studying the methods of Management Science Objective

Qualitative and Quantitative Analyses have their roles in Decision Making Analyzing the Problem Make the Decision Summary and Evaluation Quantitative Analysis Qualitative Analysis A manager who knows quantitative procedures is in a much better position to compare and evaluate the qualitative and quantitative recommendations and combine them to arrive at the best decision.

Summary of the instances requiring Quantitative Analysis The problem is large or complex; the manager cannot develop a good solution without quantitative analysis The problem is important; demands a thorough analysis The problem is new; no previous experience to rely on The problem is repetitive; quantitative methods save time and effort for the decision maker

Stages in Quantitative Analysis Analysis begins once the problem has been properly structured. The management scientist may associate with the manager at this stage Model Development follows; i.e. creating a mathematical representation of the problem Model Solution, using the techniques of Management Science (which is the subject matter of our course) Generation of Report for the use of the decision maker giving the recommendations and other pertinent aspects that aid the decision making process Model Development Model Solution Report Generation

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