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Lecture 1: Introduction To Management Science

This document provides an introduction to management science. It discusses how management science uses mathematical models and algorithms to help managers make data-driven decisions. It outlines the management science process of defining a problem, formulating a model, finding solutions, testing and refining the model, and implementing recommendations. The document gives examples of how management science is used in areas like logistics, supply chain management, and scheduling. It concludes with an advertising optimization example to illustrate how management science can be applied.

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Sachin Shah
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66 views18 pages

Lecture 1: Introduction To Management Science

This document provides an introduction to management science. It discusses how management science uses mathematical models and algorithms to help managers make data-driven decisions. It outlines the management science process of defining a problem, formulating a model, finding solutions, testing and refining the model, and implementing recommendations. The document gives examples of how management science is used in areas like logistics, supply chain management, and scheduling. It concludes with an advertising optimization example to illustrate how management science can be applied.

Uploaded by

Sachin Shah
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Lecture 1: Introduction to

Management Science
identifying bottlenecks
process analysis statistical analysis

queueing theory
inventory control
optimization

What is “Management Science”?


project planning capacity management
simulation

transportation planning
revenue management
Management Science Applications

logistics
chip design
supply chain management

network design
scheduling
portfolio optimization

air traffic routing

timetabling marketing campaign design production planning


Management Science Is…
• A discipline that attempts to aid managerial decision
making by applying a scientific approach to managerial
problems that involve quantitative factors.

• Management science uses mathematical models and


computer algorithms to solve complex business
problems.
Who Uses Management Science?

Netherlands Railways
What can YOU do with
Management Science?
The Management Science Process
1. Define the problem and gather data
2. Formulate a model to represent the problem
3. Develop a computer-based procedure for deriving
solutions to the problem from the model

Solution
Problem Model Method
The Management Science Process
4. Test the model and refine it as needed
5. Apply the model to analyze the problem and develop
recommendations for management
6. Help to implement the team’s recommendations that
are adopted by management

Solution
Problem Model Method

Apply &
Implement Test
Analyze
The Management Science Process

Problem definition

Mathematical modeling

Solution of the model

Communication/implementation
of results
The Management Science Process

Problem definition

Algebra, Excel Mathematical modeling

Excel Solver Solution of the model

Communication/implementation
of results
Goals for this Course
• Learn what management science can do
• Learn the vocabulary of management science
• Learn how to formulate and model business problems
• Learn how to optimize business problems using Excel
• Have fun!

Hopefully this course will:


• Change the way you think about problem solving
• Encourage you to employ management science as a key
component of building competitive advantage
Mental Map of the Course
Textbook Assignments
Week Lecture Dates Lecture Topics Chapters (approx. due dates)
1 Jan-04, Jan-06 Introduction / Linear Programming 1, 2
2 Jan-11, Jan-13 Linear Programming 2, 3, 4
3 Jan-18, Jan-20 Linear Programming 2, 3, 4, 6 HW#1 Due Thurs, Jan 20
4 Jan-25, Jan-27 What-If Analysis / Midterm Review 5 HW#2 Due Thurs, Jan 27

Midterm Exam: Tues, Feb 1 in-class

5 Feb-03 Integer Programming 7


6 Feb-08, Feb-10 Integer Programming / Quadratic Programming 7, 8
7 Feb-15, Feb-17 Goal Programming 17 (CD) HW#3 Due Thurs, Feb 17
8 Feb-22, Feb-24 Simulation 12
9 Mar-01, Mar-03 Decision Analysis 9 HW#4 Due Thurs, Mar 3
10 Mar-08, Mar-10 Other Topics / Final Exam Review

Final Exam: Section A on Tues, March 15, 10:30am-12:30pm; Section B on Fri, March 18, 10:30am-12:30pm
Example – Advertising Mix
• Profit & Gambit Co. (p. 42 text) produces cleaning
products:
1. spray prewash stain remover
2. liquid laundry detergent
3. powder laundry detergent
Example – Advertising Mix
• Management has decided to undertake a major
advertising campaign
• The campaign will use both television and print media
• The general goal is to increase sales of these three
cleaning products.
Example – Advertising Mix
• Management has set the following goals for the
campaign:
– Sales of the stain remover should increase by at least 3%.
– Sales of the liquid detergent should increase by at least 18%.
– Sales of the powder detergent should increase by at least 4%.

Question: how much should they advertise in each


medium to meet the sales goals at a minimum total
cost?
Example – Advertising Mix

Increase in Sales per


Unit of Advertising
Minimum
Required
Product Television Print Media Increase

Stain remover 0% 1% 3%
Liquid detergent 3% 2% 18%
Powder detergent -1% 4% 4%

Unit Cost $1 million $2 million


Recap
• Introduction
• Examples of Management Science
• The Management Science Process
• Course Goals
• Syllabus
• Example: Optimizing Advertising Mix
Next Day
• Formulating Problems
– Translating from English to “Management
Science”

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