Chapter 1

• Management science is a discipline that attempts to aid managerial decision making by applying a scientific approach to managerial problems that involve quantitative factors
• management science is a whole body of knowledge and techniques that are based on a scientific foundation
• began in the 1940s and 1950s. Scientists were called upon to apply a scientific approach to the management of the war effort for the allies
• Management Science sometimes called business analytics when dealing with business problems
• Analytics attempts to aid managerial decision-making but with particular emphasis on three types of analysis: (1) descriptive analytics (2) predictive analytics (3) prescriptive analytics
• Prescriptive analytics is the use of data to prescribe the best course of action
• Descriptive analytics is the use of data (sometimes massive amounts of data) to analyze trends
• Predictive analytics is the use of data to predict what will happen in the future
• Models are invaluable for abstracting the essence of the subject of inquiry, showing interrelationships, and facilitating analysis
• Mathematical models are approximate representations, but they are expressed in terms of mathematical symbols and expressions
• mathematical model of a business problem is the system of equations and related mathematical expressions that describes the essence of the problem
• spreadsheet models to analyze managerial problems; lays out the relevant data, measures of performance, interrelationships, and so forth, on a spreadsheet in an organized way that facilitates fruitful analysis of the problem; incorporates an underlying mathematical model to assist in the analysis, but the mathematics is kept in the background so the user can concentrate on the analysis
• Break-even analysis is used to determine the break-even point: the number of units of a product to sell or produce (i.e. volume) that will equate total revenue with total cost
• Mathematical modeling is the art of translating problems from an application area into tractable mathematical formulations whose theoretical and numerical analysis provides insight, answers, and guidance useful for the originating application
• Decision variables represent the quantifiable decisions to be made
• Objective function expresses the appropriate measure of performance in terms of these decision variables
• Constraints express the restrictions on the values that can be assigned to the decision variables
• The parameters of the model are the constants that appear in the objective function and the contraints
• Decision support system is an interactive computer-based system that aids managerial decision making
• Operations research is the traditional name for management science that still is widely used outside of business schools.
• Range name is a descriptive name given to a cell or range of cells that immediately identifies what is there
• What-if analysis is the analysis of how the recommendations of a model might change if any of the estimates providing the numbers in the model eventually need to be corrected.
• General Motors (GM) is one of the largest and most successful companies in the world.
• Q is referred to as a decision variable
• The formula of break-even analysis is simple:

  Total Revenue = Fixed Costs + Total Variable Costs