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Chapter 1 Introduction to MANSCI

Management science involves the use of quantitative methods and analytics to enhance decision-making in business. It encompasses techniques such as decision analysis and operational research, focusing on optimizing processes and outcomes. The document outlines the steps in applying management science tools, the advantages of mathematical modeling, and potential challenges in quantitative analysis.

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13 views

Chapter 1 Introduction to MANSCI

Management science involves the use of quantitative methods and analytics to enhance decision-making in business. It encompasses techniques such as decision analysis and operational research, focusing on optimizing processes and outcomes. The document outlines the steps in applying management science tools, the advantages of mathematical modeling, and potential challenges in quantitative analysis.

Uploaded by

pinedaluke68
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Management Science

1. I N T R O D U C T I O N
OF MANAGEMENT
SCIENCE

P R E S E N T E D B Y:

RICHPHER G. GAGALAC
Management
Management science is the
science adoption of quantitative
methods and analytics in
decision-making process.
Management Science is also
termed as quantitative
techniques in decision
making, decision analysis,
and operational research.
Quantitative Techniques in
Management Decision Making – Methods that
science use numbers and statistics for
better decision-making.
Decision Analysis – The analysis of
different options or alternatives
before making a decision.

Operational Research – The


study and optimization of business
processes to improve outcomes.
Quantitative Qualitative
In decision Factors Factors
making we can Are data that Are more difficult
classify data can be to quantify but
accurately affect the decision
unto two calculated like process like
interest rates, weather, political
inventory will, technological
levels, labor advancement.
cost, cost of
electricity and
demand
Rationale in using quantitative
techniques
• Variables associated with business decision
• The factors that are relevant to the problem
they face
• The various alternative that are available to
them
• The logical consequences of the possible
alternatives
• The best alternative in terms of profits and
realization of objectives
In applying
management
science tools, a
decision-maker
commonly use the
following steps:
Key decision: How many units of X, Y, and Z are to be
STEP 2 produced

Y is symbol use for another


Variables:
product (e.g., fruitea), and
X is notation for a
product, (e.g., taro Z is symbol use for another
milktea), product (e.g., coffee
milktea)

Constraint: Limited working hours

Objective: Maximize profit


Maximum Profit = 2X + 3Y + 4Z

Step 3: Is the
Assuming that each X have 2pesos contribution margin,
creation or 3pesos for each product Y, and 4 pesos in product Z.
developing a
suitable model
–a Subject to (The constraint)
mathematical Working hours = 0.2X + 0.1Y and 0.3Z
model or a Working hours should not be more than 8 hours.
mathematical
representation Assuming that it would require 0.20 hours to make
of the problem. product X, 0.1 hours to make product Y, and 0.3 hours to
make the product Z
The decision maker must
Step 4: identify, select, and
Acquiring gather data that
the Input represent the variables
Data. properly. It is
noteworthy, that
misinformation and
wrong data can lead to a
bad decision.
Step 5: Is the checking the
correctness of the equation
Solving the used and of the model. The
Model decision maker should take
consideration that
processes, or model is
properly done.
Step 6. refers to determining how
Validating the good and realistic the solution
is. While validating, the
Model
decision maker identifies the
fitness of the model used, its
inaccuracies and should take
corrective actions to properly
solve the issue.
This is the actions and
Step 7
the decisions made by
Implementing the
Results or the decision-maker.
deployment of
the solution.
Advantages of The approach is realistic
Mathematical
Models can help the decision maker
Modelling formulate and expound the problem

Models can provide meaningful insights


and information

The method can save resources, time,


money, effort and more.
The model can communicate the
problems and solutions to decision-
makers and others.
Possible Problems in the
Quantitative Analysis
Approach
1. Defining the problem
o Problems may not be easily identified.
o There may be conflicting viewpoints
o There may be an impact on other
departments.
o Beginning assumptions may lead to a
particular conclusion.
o The solution may be outdated.
2. Developing a model

o Manager’s perception
may not fit a textbook
model.
o There is a trade-off
between complexity and
ease of understanding.
3. Acquiring accurate input data

o Accounting data may not be


collected for quantitative
problems.
o The validity of the data may
be suspect.
4. Developing an appropriate solution

o The mathematics may


be hard to understand.
o Having only one answer
may be limiting.
5. Testing Analyzing the results in terms of the
whole organization There may be an
the institutional lack of commitment and
resistance to change.
solution
for Management may fear the use of formal
validity analysis processes will reduce their
decision-making power.

Action-oriented managers may want


“quick and dirty” techniques
6. Management support and user involvement are
important.

o There may be a lack of commitment by


quantitative analysts.
o Analysts should be involved with the
problem and care about the solution.
o Analysts should work with users and
take their feelings into account.
Summary •The objective of the management
science is to make available
scientific basis to the decision
maker in order to have a greater
degree of control over the outcome
of the decision. Several
quantitative techniques are
available and each of the
technique will best fit to solve the
problem or attain the objectives of
the decision maker.
Activities:
Essay Question:

1. Discuss the significance and scope of Quantitative Techniques in modern


business management.
2. Give the differences between quantitative and qualitative data, cite other
examples.
3. List some sources of input data.
4. What is implementation and why is it important?
5. Enumerate the steps generally used in decision-making and give example to
each step.
Problem solving:
Juan Fox’ has started her own company, Foxy Jeans, which manufactures
imprinted jeans. Since he just begun this operation, he rents the
equipment from a local printing shop when necessary. The cost of
using the equipment is P3,000. The materials used in one jean cost
P200, and he can sell it at 350.

Requirements:

1. Provide for a mathematical model that will show how to maximize the
profit.
2. IF Juan sells 100 jeans, what will his total revenues, total costs, and
profit?
references

• https://en.wikipedia.org/wiki/

• https://www.researchgate.net/publication/366849970_The_Role_of_Quantitative_T
echniques_in_Business_and_Management
• https://online.mason.wm.edu/blog/quantitative-methods-for-business-analytics

• https://www.linkedin.com/pulse/quantitative-techniques-understand-importance-
business-ram-m

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