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Chapter 1
Introduction
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1.1 What Is Management Science?
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Management Science is the discipline that adapts the
scientific approach for problem solving to help managers
make informed decisions.
The goal of management science is to recommend the
course of action that is expected to yield the best
outcome with what is available.
1.1 What Is Management Science?
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The basic steps in the management science problem
solving process involves
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Analyzing business situations and building mathematical
models to describe them;
Solving the mathematical models;
Communicating/implementing recommendations based on the
models and their solutions.
Management Science Applications
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Linear Programming was used by Burger King to find how
to best blend cuts of meat to minimize costs.
Integer Linear Programming model was used by American Air
Lines to determine an optimal flight schedule.
The Shortest Route Algorithm was implemented by the Sony
Corporation to developed an onboard car navigation
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Management Science Applications
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Project Scheduling Techniques were used by a contractor to
rebuild Interstate 10 damaged in the 1994 earthquake in the Los
Angeles area.
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Decision Analysis approach was the basis for the development of
a comprehensive framework for planning environmental policy in
Finland.
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Queuing models are incorporated into the overall design plans for
Disneyland and Disney World, which lead to the development of
‘waiting line entertainment’ in order to improve customer
satisfaction.
1.3 Mathematical Modeling
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Many managerial decision situations lend themselves to
quantitative analyses.
A constrained mathematical model consists of
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An objective
One or more constraints
1.3 Mathematical Modeling
Example
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NewOffice Furniture produces three products
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$50 per desk
$30 per chair
$6 per pound of molded steel
sold
Raw material required
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Net profit is
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Desks (D)
Chairs (C)
Molded steel (M)
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7 pounds of per desk
3 pounds of per chair
1.5 pounds per one pound of
molded steel produced.
Raw material available
2000 pounds
1.3 Mathematical Modeling
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Objective: Determine production mix that maximizes the
profit under the raw material constraint and other
production requirements (detailed next).
Maximize 50D + 30C + 6 M
Subject to 7D + 3C + 1.5M 2000 (raw steel)
D
100 (contract )
C
500 (cushions available)
D, C, M 0
(Non-negativity)
D and C are integers
Classification of Mathematical Models
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Classification by the model purpose
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Classification by the degree of certainty of the data in the
model
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Optimization models
Prediction models
Deterministic models
Probabilistic (stochastic) models
The Management Science Process
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The four-step management science process
Problem definition
Mathematical modeling
Solution of the model
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Communication/implementation
of results
1.6 Using Spreadsheets in Management
Science Models
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Spreadsheets have become a powerful tool in
management science modeling.
Several reasons for the popularity of spreadsheets:
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Data are submitted to the modeler in spreadsheets
Data can be analyzed easily using statistical and mathematical
tools readily available in the spreadsheet.
Data and information can easily be displayed using graphical
tools.