Name: Abhishek Kasurde

PRN: 120B1G174
Roll no: BTMEC174
Date: 02/10/2023
Title: Decision-Making
Under Certainty in
Operations Research
Definition of Decision-Making Under Certainty
Decision-Making Under Certainty in Operations Research refers to a decision-making scenario
where the decision-maker possesses complete and precise information about all relevant
parameters, constraints, and outcomes of a given problem. In this context, there is no
uncertainty, risk, or variability associated with the decision-making process

Importance in Operations Research

Decision-making under certainty in operations research is a foundational concept that
represents a scenario where all parameters, constraints, and outcomes are precisely known,
devoid of uncertainty or risk. It serves as a fundamental educational tool, allowing students and
practitioners to grasp the basics of optimization and mathematical programming in a structured
manner. This concept provides a benchmark for comparison and highlights the importance of
sensitivity analysis in decision-making. It offers a logical framework for decision processes,
guiding resource allocation, budgeting, and strategic planning.
Characteristics of Certainty

Known Parameters
Deterministic Models
Objective Function
No Risk or Uncertainty
Optimality
Applications in Operations Research

Linear Programming
Transportation and Assignment Problems
Project Scheduling
Linear Programming Example
Objective: Maximize Profit
Decision Variables:
x1​: Number of units of Product A to produce
x2​: Number of units of Product B to produce
Objective Function: The company makes a profit of $10 for each unit of Product A and $15 for each unit of Product B.
Z=10x1​+15x2​
Resource Constraints:
1. Labor: The production of each unit of Product A requires 2 hours of labor, and Product B requires 3 hours of labor.
The total labor available is 80 hours. 2x1​+3x2​≤80
2. Materials: Product A uses 5 pounds of material, and Product B uses 4 pounds of material. The total material
available is 120 pounds. 5x1​+4x2​≤120
3. Machine Capacity: The company's machines can produce a maximum of 25 units of Product A and 30 units of
Product B per day. x1​≤25 x2​≤30
Non-Negativity Constraints: x1​≥0, x2​≥0
Real-World Implications
1. Rarely Realistic: Real-world situations often involve varying degrees of uncertainty and
risk. Decision-making under certainty assumes that all parameters, constraints, and
outcomes are precisely known, which is rarely the case in practice.
2. Static Assumptions: The approach assumes that the parameters do not change over
time, which is unrealistic for many decision problems. In dynamic environments,
parameters such as demand, costs, and resource availability can fluctuate.
3. Limited Applicability: Decision-making under certainty is best suited for well-structured
problems with straightforward, stable, and unchanging conditions. It may not be
suitable for problems in dynamic industries or unpredictable markets.
4. Overlooking Risk: This approach does not account for risk management or risk
mitigation strategies. In reality, businesses and organizations must consider potential
risks and their impact on decision outcomes.
5. Oversimplified Models: The simplicity of decision-making under certainty can lead to
oversimplified models that do not adequately capture the nuances of a problem. Real-
world problems may involve intricate interdependencies and uncertainties.
Conclusion
1. Definition: Decision-making under certainty involves making decisions based on complete and exact
information, leaving no room for uncertainty or variability in the decision process.
2. Characteristics: It is characterized by known parameters, deterministic models, a well-defined
objective function, no risk or uncertainty, and the pursuit of optimality.
3. Foundation: This concept serves as a fundamental building block for understanding optimization
models, linear programming, and decision analysis in operations research.
4. Educational Tool: It is valuable for educating students and practitioners about the principles of
operations research and linear programming, offering a structured starting point for learning.
5. Benchmark for Comparison: Decision-making under certainty provides a benchmark for comparing
decision scenarios that involve uncertainty, highlighting the role of sensitivity analysis.
6. Model Development: It often serves as the starting point for developing more complex decision
models that account for uncertainty, offering a logical framework for decision processes.
7. Real-World Implications: While useful for learning, it is an idealized concept that may not fully reflect
real-world scenarios, where uncertainty and risk are common factors
Thank You