chapter 1 M.E

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Operations Research


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Optimisation = Efficiency + Savings

A uniquely powerful approach to

decision making


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Decision Support

Decision Support Tool

Interface

Information Systems


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A Team Effort

Interface

Information Systems

Users

Comp SciOps Res Decision Support Tool

Info SysBiz Analyst


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Operational research, also knownas operations research, is an

interdisciplinary mathematical

science that focuses on the

effective use of technology by

organizations.


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By using techniques such as

mathematical modeling to analyzecomplex situations, operations

research gives executives the power tomake more effective decisions and

build more productive systems based

on:


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More complete data

Consideration of all available optionsCareful predictions of outcomes and

estimates of riskThe latest decision tools and

techniques


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The role of managerial economist


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The role of managerial economistHe studies theeconomic patterns at macro-level and analysis its

significance to the specific firm he is working in.

He has to consistently examine the probabilities of transforming

an ever-changing economicenvironment into profitable

business avenues.

He assists the business planning process of a firm.


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He also carries cost-benefit analysis

In addition, a managerial economist has to

analyzechanges in macro- economic indicators such as

national income, population, business cycles, and their

possibleeffect on the firms functioning.


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He is also involved in advising the management on public

relations, foreign exchange, and trade. He guides the firm on the

likely impact ofchanges in monetary and fiscal policy on thefirms functioning.

He also makes an economic analysis of the firms in

competition. He has to collect economic data and examine all

crucial information about theenvironment in which the firm

operates.


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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 theseroles, a

managerial economist has to conduct an

elaborate statistical analysis.

He must bevigilant and must have ability to

cope up with the pressures.


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He also provides management with economic

information such as taxrates, competitors price

and product, etc. They give theirvaluable advice togovernment authorities as well.

At times, a managerial economist has to prepare

speec

hes fo

rtop manag

ement


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Objectives of the firm Objectives are targets or goals that a

business sets itself

The theory of the firm is based on theassumption that all businesses will operateto make a profit

Businesses face upward sloping total costand revenue curves as more is producedcosts increase and as more is sold revenueincreases


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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


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Managerial theories of the firm

Managerial theories of the firm place

emphasis on various incentive mechanisms

in explaining the behaviourof managers

and the implications of this conduct for their

companies and the widereconomy.


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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 longerseen as the

sole ordominating goal of the firm. The

otherpossible aims might be sales revenuemaximisation orgrowth

Managerial theories of the firm


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THANK YOU

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Developed and Presented by the

NarasimhaM.B.A DEPARTMENT

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chapter 1 M.E