Page 15 - DCOM303_DMGT504_OPERATION_RESEARCH

Operations Research

Notes help in useful analysis. Moreover, they help in easy observation, description and prediction.
However, they over rule any manipulation.

There are two types of Physical Models:
(i) Iconic Models: An image or likeness of an object or process is Icon. These models
represent the system as it is by scaling it up or down. Even though use of these
models in the area of management appears to be narrow, their usefulness is seen in
the field of engineering and science. For example,

(a) In the field of R&D, prototype of the product is developed and tested to know
the workability of the new product development.

(b) Photographs, portraits, drawings are the good example of iconic types. These
models help in testifying the samples thus avoiding fullscale designing and
probable loss.
(ii) Analogue Models: These models are closely associated with iconic models. However,
they are not the replicas of system or process. The analogue, in constructing these
models, help in analyzing the issues and forces which are in the system or process.
Because, these models use ‘one set of properties’ which is ‘analogous to another set
of properties.’ For example, kids, toys, rail-road models, etc.
(2) Symbolic Models: Symbolic Models use letters, numbers, figures to represent decision
variables of the system. There are two types of Symbolic Models—Verbal Models and
Mathematical Models.

(a) Verbal Models: These models describe a situation in written or spoken language.
Written sentences, books, etc., are examples of a verbal model.

(b) Mathematical Models: Mathematical symbols are used to represent a problem or a
system under these types of models. Rules of mathematics enable the builder to
make the models more abstract and precise. There are two types of Mathematical
Models—Deterministic Models and Probabilistic Models.
(i) Deterministic Models: The exact statement of variables and their relationships
are made under these models. The coefficients used for the mathematical
formulation are known and are constant with certainty. So, to say, with a
given set of data the answer will always be the same. For instance,
determination of the break-even sales volume (BEP), the volume where the
total cost equals the total sales revenue earned pertaining to a product.
The sales revenue line is determined by using an equation.

TSR = (SV) (PU)
where, TSR = Total Sales revenue

SV = Sales Volume
PU = Price per Unit
The total cost line is represented as:

TC = TFC + SV (VC)
TC = Total Cost
TFC = Total Fixed Cost

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