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Management Science is an interdisciplinary field that utilizes mathematical models and analytical methods to aid decision-making in organizations, aiming to optimize resources and improve efficiency. It involves a scientific approach to problem-solving, requiring collaboration among experts from various disciplines, and is a continuous process. The document also illustrates a practical application of Management Science through a case study of a rice retailing venture, demonstrating how to calculate pricing for profitability.

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7 views3 pages

Material 1 MS

Management Science is an interdisciplinary field that utilizes mathematical models and analytical methods to aid decision-making in organizations, aiming to optimize resources and improve efficiency. It involves a scientific approach to problem-solving, requiring collaboration among experts from various disciplines, and is a continuous process. The document also illustrates a practical application of Management Science through a case study of a rice retailing venture, demonstrating how to calculate pricing for profitability.

Uploaded by

celinetolentino061606
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Management Science is an interdisciplinary field that applies mathematical models,

statistics, and analytical methods to solve complex decision-making problems in


organizations. The goal is to help managers make informed, data-driven decisions that
optimize resources, improve efficiency, and achieve organizational objectives.
Characteristic of Management Science
 It has decision making approach- the main objectives of management science is to
find optimal solution to the problem under consideration
 It has scientific approach it uses various of scientific methods, models and tools to
solve complex organization problems
 It has interdisciplinary Team approach - An OR team consists of expert from
science, mathematics, engineering, and they are from different discipline.
 It is a continuing process - It cannot stop from the application to one problem,
because the application of a model may create new problems in other sector.
How does Management Science relate to accounting?
Management science it is discipline whose application to resolving business problems is
of great significance and accounting provides financial information that are useful in
decision making.

Tools and techniques in Management science


 Breakeven analysis
 Linear programming
 Forecasting
 Queuing theory
Scientific approach

Observation Understanding the situation

Define the problem Pinpointing the problem and setting of objectives

Model construction Abstract mathematical representation of a problem

Solution Logical resolve to a problem

Implementation Execution of the solution


Illustration 1
David decided to start a business called "David’s Rice," a rice retailing venture in his
hometown. He canvassed local farmers and suppliers and secured an affordable deal of
P1800 per 50-kilogram sack of rice. In addition to the purchase cost, David has to cover
the freight cost of P5 per sack to deliver the rice to his store. However, David is
frustrated with calculating the price per sack and per kilo, as he wants to earn a net
profit of P1100 per sack. He also wants to run a simulation of any possible scenarios.

Observe:
 What is situation all about?
Define the problem
 What is David’s problem?
 What do we want to achieve?
Model construction
 What equation can be designed?
 What are the variables?
 What are the given data?
Price per sack –Cost per sack= Profit
Thus, we can expand this further into:
Price per sack- (Cost per sack+ Freight charge) = Profit
We can let:
a = Price
b= Cost per sack
c= Freight charge
d= Profit
Substituting
We will have: a-(b + c) = d
a-(P 1,800+5.00) = P 1,100
a-(P 1,805) = P 1,100
a=P 1,100+ P 1,805
a=P 2,905 per sack
If a sack of rice contains 50 kilograms, then:
a= P 2,905.00 per sack
50 kilograms
a= P 58.10 per kilos

Solutions:
 Is the equation designed credible?
 Can it be used in other scenarios?
 How do we know if it is correct?

Implement
 Apply the equation.

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