Operations Research or Qualitative Approach MCQ Questions and Solutions with Explanations | Management

Inventory Planning aims at optimizing inventory levels. The aim of inventory optimization is to reduce the holding and maintenance costs, without neglecting the customer satisfaction level. In other words, inventory optimization helps to reduce inventory while improving service level.

Inventory can be defined as a useful idle resource which has economic value eg; raw materials, spareparts, finished items, etc. Inventory is an idle stock of physical goods that contain economic value, and are held in various forms by an organization in its custody awaiting packing, processing, transformation, use or sale in a future point of time.

Decision Theory concerns making sound decisions under conditions of certainity, risk and uncertainty. Decision theory is an interdisciplinary approach to arrive at the decisions that are the most advantageous given an uncertain environment. Decision theory brings together psychology, statistics, philosophy, and mathematics to analyze the decision-making process.

Key concept under Network Analysis are network of events and activities , resource allocation, time and cost considerations, network paths and critical paths. Network analysis is any structured technique used to mathematically analyze a circuit (a “network” of interconnected components).

Simulation technique is used to imitate an operation prior to actual performance. A simulation technique uses a probability experiment to mimic a real-life situation. Instead of studying the actual situation, which might be too costly, too dangerous, or too time-consuming, scientists and researchers create a similar situation but one that is less expensive, less dangerous, or less time-consuming.

Theory of replacement is concerned with the prediction of replacement costs and determination of the most economic replacement policy. The Replacement Theory in Operations Research is used in the decision making process of replacing a used equipment with a substitute; mostly a new equipment of better usage. The replacement might be necessary due to the deteriorating property or failure or breakdown of particular equipment.

Probabilistic Programming and Stochastic Programming refers to Linear Programming that includes an evaluation of relative risks and uncertainties in various alternatives of choice for management decisions. Probabilistic programming is a programming paradigm in which probabilistic models are specified and inference for these models is performed automatically. Stochastic Programming. Stochastic programs are mathematical programs where some of the data incorporated into the objective or constraints is uncertain.

Programme Evaluation and Review Technique (PERT) enables us to determine the earliest and the latest times for each of the events and activities and thereby helps in the identification of the critical path. Program evaluation is a systematic method for collecting, analyzing, and using information to answer questions about projects, policies and programs, particularly about their effectiveness and efficiency. Review Technique or PERT is used to identify the time it takes to finish a particular task or activity.

Linear Programming technique is used to allocate scarce resources in an optimum manner in problems of Schedule and Product Mix. Linear programming is a mathematical technique for allocating limited resources is optimum manner. In the words of William M. Fox, “Linear programming is a planning technique that permits some objective function to be minimized or maximized within the framework of given situational restrictions.”

Operations Research techniques helps the directing authority in optimum allocation of various limited resources, such as Men and Machine, Money and Material and Time.