INTRODUCTION TO INTRODUCTION TO MANAGEMENT MANAGEMENT

SCIENCESCIENCELecture Note oneLecture Note one

Fahmy RadhiFahmy Radhi

Management ScienceManagement Science

Management Science is a scientific Management Science is a scientific approaches to problem solving and approaches to problem solving and decision makingdecision making

Management Science encompass a Management Science encompass a logical approach to problem solvinglogical approach to problem solving

Management Science can be used in Management Science can be used in a variety of organization to solve a variety of organization to solve many different types of problemsmany different types of problems

Problem SolvingProblem Solving

Problem Solving is defined as the process Problem Solving is defined as the process of identifying a difference between the of identifying a difference between the actual and desired state of affairsactual and desired state of affairs

The problem Solving process:The problem Solving process: Identify and define the problemIdentify and define the problem Determine the set of alternative solutionsDetermine the set of alternative solutions Determine the criterion used to evaluate the Determine the criterion used to evaluate the

alternativesalternatives Evaluate AlternativesEvaluate Alternatives Choose an alternativeChoose an alternative Implement the selective alternativeImplement the selective alternative Evaluate the resultEvaluate the result

Decision MakingDecision Making

Decision Making is the term Decision Making is the term generally associated with the first generally associated with the first five steps of the problem solving five steps of the problem solving processprocess

The first step of decision making is to The first step of decision making is to identify and defines the problemidentify and defines the problem

Decision making ends with the Decision making ends with the choosing of the an alternative, which choosing of the an alternative, which is the act of making the decisionis the act of making the decision

Problem Solving And Decision Problem Solving And Decision MakingMaking

Structuring and Analyzing the Structuring and Analyzing the ProblemProblem

Quantitative AnalysisQuantitative Analysis

Model DevelopmentModel DevelopmentData PreparationData PreparationModel SolutionModel SolutionImplementation and Implementation and

ReportReport

Model DevelopmentModel Development Models are representation of real object or Models are representation of real object or

situation that can be presented in various situation that can be presented in various formsforms

Model Classification:Model Classification: Iconic models are physical replicas of real objects. Iconic models are physical replicas of real objects.

E.g. The model airplane and toy truckE.g. The model airplane and toy truck Analog models are physical in form but do not have Analog models are physical in form but do not have

the same physical appearance as the object being the same physical appearance as the object being modeled. E.g. The speedometer represent the modeled. E.g. The speedometer represent the speed of automobile speed of automobile

Mathematical Models are representations of Mathematical Models are representations of problem by a system of symbol and mathematical problem by a system of symbol and mathematical relationship or expression. E.g. P = 10xrelationship or expression. E.g. P = 10x

Data PreparationData PreparationThe preparation of the date required The preparation of the date required

by the modelby the modelData refer to the values of Data refer to the values of

uncontrollable input to modelsuncontrollable input to models If data required are few, the analysis If data required are few, the analysis

will combine model development and will combine model development and data preparation into one step by data preparation into one step by inserted as the equationinserted as the equation

Model SolutionModel SolutionModel Solution attempt to identify Model Solution attempt to identify

the values of the decision variables the values of the decision variables that provide the best output as the that provide the best output as the optimal solution for the model optimal solution for the model

One procedure that might be used in One procedure that might be used in the model solution step involves a the model solution step involves a trial-and-error approach trial-and-error approach

Conclusion and ReportConclusion and Report

Making concluding remarks based on Making concluding remarks based on model solutionmodel solution

Preparing the managerial report Preparing the managerial report based on the conclusionbased on the conclusion

The report is one of the inputs for the The report is one of the inputs for the manager considering before making manager considering before making a final decisiona final decision

Models of Cost, Revenue and Models of Cost, Revenue and ProfitProfit

Cost and Volume Models: Cx = 300 + 2xCost and Volume Models: Cx = 300 + 2xX = production volume in unitsX = production volume in unitsCx= total cost of producing x unitsCx= total cost of producing x units

Revenue and Volume Models: Rx = 5xRevenue and Volume Models: Rx = 5xX = sales volume in unitsX = sales volume in unitsRx = total revenue associated with selling x unitsRx = total revenue associated with selling x units

Profit and Volume ModelsProfit and Volume ModelsPx = Rx – CxPx = Rx – Cx = 5x- (300 + 2x)= 5x- (300 + 2x)Px = 3x - 300Px = 3x - 300

Breakeven AnalysisBreakeven Analysis

The decision to produce and sell 500 unitsThe decision to produce and sell 500 unitsP(500) = 3(500) – 3000 = -1500P(500) = 3(500) – 3000 = -1500

P(1000) = 3(1000) – 3000 = 0P(1000) = 3(1000) – 3000 = 0

P(1500) = 3(1500) – 3000 = 1500 P(1500) = 3(1500) – 3000 = 1500

Management Science Management Science TechniquesTechniques

Linier ProgrammingLinier Programming Transportation and Assignment modelsTransportation and Assignment models Project Scheduling: PERT/CPMProject Scheduling: PERT/CPM Inventory ModelsInventory Models Waiting line or Queuing ModelsWaiting line or Queuing Models Decision AnalysisDecision Analysis Goal ProgrammingGoal Programming Analytic Hierarchy ProcessAnalytic Hierarchy Process SimulationSimulation ForecastingForecasting Markov Process ModelsMarkov Process Models Dynamic ProgrammingDynamic Programming

Management Science Management Science SoftwareSoftware