Operations Research

Optimisation = Efficiency + Savings

A uniquely powerful approach to
decision making
 Mathematics in Operation
Real Practical Problem


Mathematical (Optimization) Problem
x2

Mathematical Solution Method (Algorithm)

Computer Algorithm

Decision Support Software System

Human Decision-Maker
 Decision Support
Interface

Decision Support Tool

Information Systems
 Users
A Team Effort

Interface

Ops Res Decision Support Tool Comp Sci

Information Systems

Biz Analyst Info Sys

 Problem
Real Practical Problem
Solving Stages

Mathematical (Optimization) Problem

Mathematical Solution Method (Algorithm)

Computer Algorithm

Decision Support Software System

Human Decision-Maker
 Operational research, also known
as operations research, is an
interdisciplinary mathematical science
 that focuses on the effective use of
technology by organizations.
 By using techniques such as
mathematical modeling to analyze
complex situations, operations
research gives executives the power to
make more effective decisions and
build more productive systems based
on:
 More complete data
Consideration of all available options
Careful predictions of outcomes and
estimates of risk
The latest decision tools and
techniques
 The role of managerial economist
u s ing
n t b y g
e m e lv i n
a n ag in so
e m qu e s
p s t h c h n i tu r e
t he l d t e d f u
m is lo p e g a n
o n o e v e a k i n
i a l ec h ly d n - m
a g e r d h ig e c is io
m an l l s a n f u l d
A
a l s ki c c e ss
a l y tic s of su
i s a n ss ue .
h l e x i in g
o m p p l a nn
c c e d
n
ad v a
 The role of managerial economist
He studies the economic patterns at macro-level and analysis it’s
significance to the specific firm he is working in.

He has to consistently examine the probabilities of transforming

an ever-changing economic environment into profitable
business avenues.

He assists the business planning process of a firm.

The role of managerial economist
He also carries cost-benefit analysis

In addition, a managerial economist has to

analyze changes in macro- economic indicators such as
national income, population, business cycles, and their
possible effect on the firm’s functioning.
 The role of managerial economist
He is also involved in advising the management on public
relations, foreign exchange, and trade. He guides the firm on the
likely impact of changes in monetary and fiscal policy on the
firm’s functioning.

He also makes an economic analysis of the firms in

competition. He has to collect economic data and examine all
crucial information about the environment in which the firm
operates.
 The role of managerial
economist
• The most significant function of a managerial
economist is to conduct a detailed research
on industrial market.
• In order to perform all these roles, a
managerial economist has to conduct an
elaborate statistical analysis.
• He must be vigilant and must have ability to
cope up with the pressures.
 The role of managerial economist
• He also provides management with economic
information such as tax rates, competitor’s price
and product, etc. They give their valuable advice to
government authorities as well.
• At times, a managerial economist has to prepare
speeches for top management
 Objectives of the firm
• Objectives are targets or goals that a business
sets itself
• The theory of the firm is based on the
assumption that all businesses will operate to
make a profit
• Businesses face upward sloping total cost and
revenue curves – as more is produced costs
increase and as more is sold revenue increases
 Additional Objectives
• There are additional objectives that a business
could pursue including:
– Growth
– Sales revenue maximisation
– Limit pricing to gain monopoly power
– Customer satisfaction
• The satisficing principal sets a minimum
acceptable level of achievement
 Managerial theories of the firm

• Managerial theories of the firm place

emphasis on various incentive mechanisms
in explaining the behaviour of managers
and the implications of this conduct for
their companies and the wider economy.
 Managerial theories of the firm

• According to traditional theories, the firm is

controlled by its owners and thus wishes to
maximise short run profits. The more
contemporary managerial theories of the
firm examine the possibility that the firm is
controlled not by its owners, but by its
managers, and therefore does not aim to
maximise profits. 
 Managerial theories of the firm

• owners, but by its managers, and therefore

does not aim to maximise profits. Although
profit plays an important role in these
theories as well, it is no longer seen as the
sole or dominating goal of the firm. The
other possible aims might be sales revenue
maximisation or growth
Developed and Presented by the

Narasimha
M.B.A DEPARTMENT

THANK YOU