INTRODUCTION TO • establishing the information need and

MANAGEMENT SCIENCE appropriate systems within the health

service, and

HISTORICAL BACKGROUND
• identifying and understanding the
strategies adopted by companies for their
information systems.
The roots of management science extend to
the work of Frederick Winslow Taylor, CHARACTERISTICS OF
the father of Scientific Management. MANAGEMENT SCIENCE
Taylor is known for his systematic
development of management techniques
which he started at the Midvale Steel Four Major Characteristics of
Company in Philadelphia around 1880. Management Science are as follows:

The concept of Management Science in ● Examine Functional Relationship

the 1940s to 1960s, was focused on the from a System
development of quantitative techniques to ○ A systems overview examines the
solve operations problems. entire area under the manager’s
control. This approach provides a
WHAT IS MANAGEMENT SCIENCE? basis for initiating inquiries into
problems that seem to be affecting
● is an interdisciplinary branch of applied performance at all levels.
science including mathematical ● Use the Interdisciplinary Approach
modeling, engineering and statistics ○ Management science makes a good
● It is aimed to improve an organization's use of a simple principle, it looks at
ability to enact rational and meaningful the problem from different angles and
management decisions. approaches. For example, a
● The discipline is typically concerned with mathematician might look at the
maximizing profit, assembly line inventory problem and formulate
performance, crop yield, bandwidth, etc. some type of mathematical
or minimizing expenses, loss, risk, etc. relationship between the
manufacturing departments and
WHERE IS MANAGEMENT SCIENCE customer demand. A chemical
APPLIED? engineer might look at the same
problem and formulate it in terms of
Applications of management science are flow theory. A cost accountant might
abundant in industry such as airlines,
conceive the inventory problem in
manufacturing companies, service
organizations, military branches, and in terms of component costs (e.g., direct
government. The range of problems and material cost, direct labor cost,
issues to which management science has overheads etc.) and how such costs
contributed insights and solutions are can be controlled and reduced, etc.
vast. ○ Therefore, management science
emphasizes over the interdisciplinary
• It includes scheduling airlines, both approach because each of the
individual aspects of a problem can be
planes and crew
best understood and solved by those,
• deciding the appropriate place to place experts in different fields such as
new facilities such as a warehouse or accounting, biological, economic,
factory engineering, mathematics, physical,
• managing the flow of water from
psychological, sociological, statistical
etc.
reservoirs,
• identifying possible future development
paths for parts of the
telecommunications industry
● Uncover New Problems for Study LEARNING CURVE THEORY
○ The third characteristic of
management science, which is often
overlooked, is that the solution of an INTRODUCTION
MS problem brings new problems to
light. All interrelated problems
uncovered by the MS approach do not Learning is the process by which an
have to be solved at the same time. individual acquires skill, knowledge and
However, each must be solved with ability. When a new product or process is
consideration for other problems if started, the performance of the worker is
maximum benefits are to be obtained. not at its best and learning phenomenon
● Use a Modeling-Process Approach to takes place. As the experience is gained,
Problem Solving the performance of the worker improves,
○ Management science takes a time taken per unit reduces and thus his
systematic approach to problem productivity goes up. This improvement in
solving. It may use a modeling process
approach taking the help of productivity of workers is due to the
mathematical models. learning effect.

Cost predictions especially those relating

to direct labor must allow for the effect of
the learning process. This technique is a
mathematical technique. It is a graphical
technique used widely to predict cost.

LEARNING CURVE

● Learning curve is a geometrical

progression, which reveals that there is
steadily decreasing cost for the
accomplishment of a given repetitive
operation, as the identical operation is
increasingly repeated.
● The amount of decrease will be less and
less with each successive unit produced.
The slope of the decision curve is
expressed as a percentage.
● The other names given to the learning
curve are Experience curve,
Improvement curve and Progress curve.
● As more units are produced, people
involved in production become more
efficient than before. Each additional
unit takes less time to produce. The
amount of improvement or experience
gained is reflected in a decrease in man-
hours or cost. The application of the
learning curve can be extended to
commercial and industrial activities as
well as defense production.
 features of manufacturing environment:

• Better tooling methods are developed

and used.

• More productive equipment is designed

and used to make the product.

USES OF LEARNING CURVES

• Designed bugs are detected and
corrected.

Internal: labor forecasting, scheduling,

establishing costs and budgets
• Engineering changes over time.
Designed engineering is prompted to
External: supply chain negotiations achieve better design for reducing
Strategic: evaluation of company and material and labor cost.

•
industry performance, including costs and
pricing
Earlier teething problems are overcome.
LEARNING EFFECT As the product involves monthly, the
management is prompted to strive for
● Exists during a worker’s start up or better planning and better management.
familiarization period on a particular job.
After the limits of experimental learning
are reached, productivity tends to
stabilize and no further improvement is
• Rejections and rework tend to diminish
over time.
possible.
● The rate at which learning occurs is
influenced by many factors including the There happens a significant influence of all
relative unfamiliarity of workers with
these features on labor as the quantity
the task, the relative novelty and
uniqueness of the job, the complexity of produced increases and the cost per unit
the process, the impact of incentive drops. The reasons for this are that each
plans, supervision, etc. unit will entail: (a) less labor; (b) less
material; (c) more units produced from the
LEARNING CURVE THEORY IN same equipment; (d) cost of fewer delays
MANUFACTURING ENVIRONMENT and less loss time. Every Time Study
engineer or industrial engineer
The Theory of learning curve was first experienced in work measurement has
introduced by Theodore Paul Wright of seen this phenomenon happening.
Curtiss—Wright, Buffalo, U.S.A. engaged Learning curve applications are fast
in production of airframes. As the growing with time in the manufacturing
production quantity of a given item environment. A company should never
blindly adopt another company's learning
doubled, the cost of that item decreased at
curve. The product approach for a company
a fixed rate. This phenomenon is the basic
should be to develop knowledge of its own
premise on which the theory of learning learning preference in its plant
curve has been formulated.
The concept of the Learning Curve
The key words, ‘doubled’ and ‘rate’ are basically states that there is less and less
important as the quantity produced learning as more repetitive steps are
doubles, the absolute amount of cost taken. The Boston Consulting Group
increase will be successively smaller but conducted some empirical studies and
the rate of decrease will remain fixed. This below are the conclusions from that study:
is the essence of the learning curve theory
and it occurs due to following distinctive
• The time required to perform a task LIMITATIONS OF LEARNING CURVE
decreases as the task is repeated.
Before using learning curves, some
• The amount of improvement decreases cautions are in order:
as more units are produced.
• Because learning curves differ from
• The rate of improvement has sufficient company to company, as well as industry
consistency to allow its use as a to industry, estimates for each
prediction tool. organization should be developed rather
than applying someone else’s.
REASONS OF UNDERSTANDING
THE LEARNING CURVE • Learning curves are often based on the
time necessary to complete the early
1. Labor Efficiency units; therefore, those times must be
- Workers become more mentally more accurate. As current information
confident and spend less time becomes available, reevaluation is
hesitating, learning, experimenting, appropriate.
or making mistakes.
- Over time, they learn shortcuts and
• Any changes in personnel, design, or
procedure can be expected to alter the
improvements. This applies to all
learning curve, causing the curve to
employees and managers, not just
spike up for a short time, even if it is
those directly involved in production.
going to drop in the long run.
2. Standardization, Specialization, • While workers and process may improve,
and Methods Improvements the same learning curves do not always
- As processes, parts, and products apply to indirect labor and material.
become more standardized, efficiency
tends to increase. • The culture of the workplace, as well as
- When employees specialize in a resource availability and changes in the
limited set of tasks, they gain more process, may alter the learning curve.
experience with these tasks and For instance, as a project nears its end,
operate at a faster rate. worker interest and effort may drop,
3. Technology Driven Learning curtailing progress down the curve.
- Automated production technology
and information technology can
introduce efficiencies as they are APPLICATION OF LEARNING CURVE
implemented and people learn how
to use them efficiently and Experience Curve
effectively. - It is a concept that states that there is a
4. Better Use of Equipment consistent relationship between the
- As total production increases, cumulative production quantity of a
manufacturing equipment will be company and the cost of production. The
fully exploited, lowering fully concept implies that the more
accounted unit costs. In addition, experienced a company is in
purchase of more productive manufacturing a specific product, the
equipment can be justifiable. lower its cost of production.
5. Product Redesign
- As the manufacturers and consumers
have more experience with the
product, they can usually find
improvements. This filters through
to the manufacturing process.
6. Shared Experience Effects
- Experience curve effects are
reinforced when two or more
products share a common activity or
resource. Any efficiency learned from
one product can be applied to the
other products.
Cost Curve LEARNING CURVE EQUATION
- It is a graph of the costs of production
as a function of total quantity produced.
It composes the Total Cost (TC), Total
Variable Cost (TVC) and Total Fixed
Cost (TFC).

Arithmetic Approach

• The simplest approach.

• Labor cost declines at a constant rate,
the learning rate, as the production
Productivity or Efficiency Curve doubles.
It is a graph that shows Real GDP/Labor Logarithmic Approach
Hour and Capital Per Hour of Labor.
•When physical capital (factories,
equipment, etc.) increases, it moves
upward along the productivity curve.
•Technology advances shifts the
productivity curve upward.

Coefficient Approach