mansci

• management science is the application of a scientific approach to solving management problems in order to help managers make better decisions
• management science have been frequently credited with increasing the efficiency and productivity of business firms
• management science/operations research/quantitative method/quantitative analysis/decision sciences is part of the fundamental curriculum of most programs in business
• Management science can be used in a variety of organizations to solve many different types of problems
• businesses represent the main users of management science
• The steps of the scientific method are (1) observation, (2) problem definition, (3) model construction, (4) model solution, and (5) implementation.
• the first step in management science process is the identification of a problem that exists in the system
• problems are not always the result of a crisis that must be reacted to but, instead, frequently involve an anticipatory or planning situation
• the person who normally identifies a problem is the manager
• management scientist is a person skilled in the techniques of management science and trained to identify problems
• one problem has been determined, it must be clearly and concisely define
• limits of production and the degree to which it pervades other units of the organization must be included in the problem definition
• A model is an abstract mathematical representation of a problem situation
• management science can be in the form of graph or chart, but most consist of a set of mathematical relationships
• A variable is a symbol used to represent an item that can take on any value.
• x represents number of units of the product sold and Z represent total profit from the sale of the product
• profit is a dependent variable while units sold is independent
• Parameters are known, constant values that are often coefficients of variables in equation
• parameters are derived from data
• A model is a functional relationship that includes variables, parameters, and equations.
• Z, is a function of the number of units sold, x, and the equation relates profit to units sold
• , the objective of the firm is to achieve as much profit, Z, as possible, but the firm is constrained from achieving an infinite profit by the limited amount of steel available
• x is also known as a decision variable
• the model type and solution method are both part of the management science technique
• A management science solution can be either a recommended decision or information that helps a manager make a decision.
• the value of the decision variable does not constitute an actual decision; rather, it is information that serves as a recommendation or guideline, helping the manager make a decision
• descriptive results: results that describe the system being modeled.
• Implementation is the actual use of a model once it has been developed.
• The final step in the management science process for problem solving is implementation
• If the management science model and solution are not implemented, then the effort and resources used in their development have been wasted
• Break-even analysis is a modeling technique to determine the number of units to sell or produce that will result in zero profit.
• The purpose of break-even analysis or profit analysis is to determine the number of units of a product (i.e., the volume) to sell or produce that will equate total revenue with total cost.
• The point where total revenue equals total cost is called the break-even point, and at this point profit is zero.
• break-even point gives a manager a point of reference in determining how many units will be needed to ensure a profit
• The three components of break-even analysis are volume, cost, and profit
• Volume is the level of sales or production by a company. It can be expressed as the number of units (i.e., quantity) produced and sold, as the dollar volume of sales, or as a percentage of total capacity available.
• Fixed costs are independent of volume and remain constant.
• Fixed costs can include such items as rent on plant and equipment, taxes, staff and management salaries, insurance, advertising, depreciation, heat and light, and plant maintenance
• Variable costs are determined on a per-unit basis. Thus, total variable costs depend on the number of units produced
• Variable costs include such items as raw materials and resources, direct labor, packaging, material handling, and freight