THE RELEVANCE AND APPLICATION OF OPERATIONS RESEARCH IN MANAGERIAL IN MANAGERIAL DECISION MAKING (A CASE STUDY OF NIGERIA MANUFACTURING ORGANIZATION)

ABSTRACT

Operations research is one of the most comprehensive research and analysis approaches to decision making.  It is a product of World War II.  Although its antecedents in scientific method, higher mathematics, and such tools as probability theory go back far beyond that period.  There is extensive empirical evidence on its successful application in solving problems in American industries and across Europe.  But not much has been heard of its usefulness in Nigeria.  This research study is therefore a move toward this direction.  The study is focused at findings out the relevance and the extent of application of Operations Research techniques in the decision-making process of managers in manufacturing firms across the South Eastern zone of Nigeria. To realize the objective of this study, the quasi-experimental design was employed, likewise, the descriptive research was used because it allows the researcher to look for fresh ideas and insight which helps to explain what was seen and how the identified variables inter-relate.  Employing the simple random sampling technique, a sample size of 133 (determined through Saunders formula) out of the 1,482 workers in the six (6) manufacturing firms selected from Abia, Anambra and Imo States was used for this study.  Primary data was collected through the administration of structured questionnaire validated by experts to ascertain the appropriateness of the items. Oral interviews were conducted as appropriate simple percentages were also used for data analyses.  The Chi-square formula was to test the research hypothesis. The findings of the study showed that Basic statistics, inventory control techniques forecasting technique, Break-even analysis and decision analyses are the most frequently applied operations Research techniques in decision-making process of Nigerian managers in manufacturing firms.  Only very few (23% or 31%) managers are familiar with the use of transportation technique, linear programming, computer simulation and PERT/CPM.  It was further revealed that these techniques have been successfully applied by Nigerian managers in decision concerning the selection of building sites of plants, pricing, advertising and bidding procedures, development of quantity discount schedules, compatibility analysis for new products, and in locating points of distribution and warehousing. We  strongly recommend the formation of Operations Research associations among Nigeria managers in public and private sectors and practitioners for there is none existing for now.  This, we feel will encourage the floating of more operations Research journals, and regular mounting of seminars and workshops, thereby improving on the awareness level of the existence and relevance of Operations Research in Nigeria.

CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The necessity for business enterprises to make effective decision has never been more apparent than it is now.  Pressures, primary of an economic nature dictate that business must be run effectively and this can only be done by rational decision making based on the best available approaches and techniques.

Manufacturing industries exist to create products and services that are satisfying to customers at a profit.  Thus, the ultimate goal of any concern is to maximize profit by satisfying customer’s want.  This however, carries with it a lot of cost implications.  According to Ackoff and Arnoff (1980:21) “It will therefore, be proper if the main objective of business as given above is re-stated as to maximize cost and maximize profit effectively and efficiently by satisfying consumer’s want”.  This objective cannot be achieved without adequate information, facts and figures upon which decision is based.  The provision of the necessary facts, information’s and figures are often seen to be provided by the tool, and technique called Operations Research or Management Science.

Operations Research is one of the most comprehensive research and analysis approaches to decision making.  It is a world War II, although its antecedents in scientific method, higher mathematics and such tools as probability theory go back far beyond has followed the whole trend of applying the methods of the physical scientist and the engineer to economic and political problems.  It has also been made possible by the development of rapid computing machines.

Fundamentally, decision-making involves the choice between alternative actions.  In many cases, alternatives will involve the determination of special numerical values.  While in other cases, alternatives may appear to strictly a qualitative nature.  Often however, one or more of these alternatives involves taking decisions, which are definitely quantitative.  For the mathematically minded manager with an extensive academic background, according to Anderson, et al (1991:40) the use of analytical techniques such as Operation Research present little in the form of problems, but for his more practitioners contemporary whose time and efforts have been more directed towards doing job than researching it, it is totally different matter.

Operations research has been extensively applied in solving completely managerial problems in industries in America and Europe.  But not much has been heard of any successful application of this tool in Nigeria.  The research study is therefore, an attempt to investigate the relevance and the extent of the application of Operations Research techniques in managerial decisions, using so (6) manufacturing firms selected from Abia, Enugu, Anambra and Imo State as case study.