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13 views4 pages

Agency

Uploaded by

Angeli Canuzo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO MANAGEMENT Step 1: Observation

SCIENCE ⎯ The first step in the management


science process is the identification of
Management Science a problem that exists in the system
⎯ is the application of a scientific (organization).
approach to solving management ⎯ The system must be continuously and
problems in order to help managers closely observed so that problems can
make better decisions. be identified as soon as they occur or
⎯ also referred to as operations research, are anticipated.
quantitative methods, quantitative ⎯ Problems are not always the result of a
analysis, decision sciences, and crisis that must be reacted to but,
business analytics instead, frequently involve an
anticipatory or planning situation.
Management Science in Real Life
• Finance and Investment As Future Management Scientists:
⎯ Management science is applied in You should be skilled in the techniques of
portfolio optimization, risk management, management science and trained to identify
and investment strategies to maximize problems. Specifically you need to solve
returns and minimize risks. problems using management science
techniques.
• Marketing and Pricing Strategies
⎯ Management science aids in optimizing Step 2: Definition of the Problem
pricing strategies, market segmentation, ⎯ Once the problem is identified, it should
and resource allocation in marketing be clearly and concisely defined.
campaigns. ⎯ The limits of the problem and the degree
to which it pervades other units of the
• Human Resources organization must be included in the
⎯ Techniques like linear programming can problem definition.
be applied to optimize workforce ⎯ A stated objective helps to focus
planning, employee scheduling, and attention on what the problem actually
resource allocation in human resource is.
management.
Step 3: Model Construction
Project Management ⎯ A management science model is an
⎯ Critical Path Analysis and other abstract representation of an existing
scheduling techniques are employed to problem situation.
optimize project timelines, allocate ⎯ It can be in the form of a graph or chart,
resources efficiently, and manage risks. but most frequently a management
science model consists of a set of
Management science encompasses a logical mathematical relationships.
approach to problem solving. ⎯ These mathematical relationships are
made up of numbers and symbols.
The Management Science Approach to
Problem Solving REMEMBER :
The steps of the scientific method are: • Data are pieces of information from the
(1) observation, problem environment.
(2) problem definition, • A model is a functional relationship
(3) model construction, that includes variables, parameters, and
(4) model solution, and equations.
(5) implementation
• The equation as a whole is known as a
functional relationship (also called
function and relationship).
• The term is derived from the fact that
profit, Z, is a function of the number of
units sold, x, and the equation relates
profit to units sold.

Step 4: Model Solution


⎯ A management science solution can be
either a recommended decision or
information that helps a manager make
a decision.

Step 5: Implementation
⎯ Implementation is the actual use of the
model once it has been developed or
the solution to the problem the model
was developed to solve.
⎯ This is a critical but often overlooked
step in the process. It is not always a
given that once a model is developed or
a solution found, it is automatically used.
⎯ If the management science model and
solution are not implemented, then the
effort and resources used in their
development have been wasted.
Linear Programming: Parameters
Model Formulation and Graphical Solution ⎯ Definition: The fixed numbers you use
in your problem.
Introduction ⎯ Example: In the bakery, the profit per
• Many major decisions faced by a cookie ($5) and per cake ($8) are
manager of a business focus on the best parameters.
way to achieve the objectives of the ⎯ They don't change during the
firm, subject to the restrictions placed problem; they're constant.
on the manager by the operating
environment. Introduction 2.0:
• One of the most frequent objectives of ⎯ Following the formulation of mathematical
business firms is to gain the most profit model, the next stage in the application of
possible or, in other words, to maximize linear programming to a decision-making
profit. problem is to find the solution of the
model
• When a manager attempts to solve a
⎯ A common solution is to solve
general type of problem by seeking an algebraically the set of mathematical
objective that is subject to restrictions, relationships that form the model either
the management science technique manually or using a computer program,
called linear programming is frequently thus determining the values of the decision
used. variables.
⎯ However, because the relationships are
What is Linear Programming? linear, some models and solutions can be
⎯ Linear programming is a model that illustrated graphically
consists of linear relationships
representing a firm’s decision(s), given Graphical Solutions
⎯ The graphical method is realistically limited
an objective and resource
to models with only two decision
constraints. variables, which can be represented on a
graph of two dimensions. Models with three
Decision Variables decision variables can be graphed in three
⎯ Definition: These are the things you dimensions, but the process is quite
decide or choose in a problem. cumbersome, and models of four or more
⎯ Example: In a bakery, the decision decision variables cannot be graphed at all
variables could be how many cookies (x)
and how many cakes (y) to bake.

Objective Function
⎯ Definition: This is what you're trying to
make as big or as small as possible.
⎯ Example: In the bakery, the objective
function is the total profit (Z=5x+8y) —
you want to maximize this.

Model Constraints
⎯ Definition: These are the rules or limits
How do you plot the points? We use
you have to follow. coordinates!
⎯ Example: Constraints in the bakery ⎯ Coordinates are a pair of numbers which
might be the hours available (x+2y≤40) are used to determine the position of a point
or the amount of flour (2x+3y≤20). or a shape in a 2- dimensional plane. We
define the position of a point on a 2D plane
using two numbers, called the x-
coordinate and the y-coordinate
HOW DO WE START?
⎯ The first step in drawing the graph of the
model is to plot the constraints on the
graph. This is done by treating both
constraints as equations (or straight lines)
and plotting each line on the graph

Let’s consider the labor constraint line first:


⎯ Convert this constraint expression x + 2y ≤
40 into a straight line equation
⎯ x +2y = 40
⎯ Simply change ≤ to =
⎯ Then, perform substitution. Letting one
variable = 0

In the graphical solution method for


maximization model problem, the Optimal
Solution Point is the point in the feasible solution
area (area common to both constraints) that will
result in the greatest total profit.

It is also commonly found in the point of


intersection between the two constraint lines

NOTE IN USING GRAPHICAL SOLUTION


METHOD
⎯ It should be noted that unless an absolutely
accurate graph is drawn, it is frequently
difficult to determine the correct solution
directly from the graph. A more exact
approach is to determine the solution
values mathematically once the optimal
point on the graph has been determined

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