MANAGEMENT SCIENCE

Management science
is a scientific
approach to solving
management
Problems

Management science
can be used in a
variety of
organizations to solve
many different types
of problems
Management science
encompasses a logical
approach to problem
solving
The steps of the
scientific method are
(1) observation,
(2) problem
definition,
(3) model
construction,
(4) model
solution, and
(5) implementation
Management science is the application of a scientific approach to
solving management problems
in order to help managers make better decisions. As implied by this
definition, management
science encompasses a number of mathematically oriented techniques
that have either
been developed within the field of management science or been
adapted from other disciplines,
such as the natural sciences, mathematics, statistics, and engineering.
This text provides an introduction
to the techniques that make up management science and
demonstrates their applications
to management problems.
Management science is a recognized and established discipline in
business. The applications
of management science techniques are widespread, and they have been
frequently credited
with increasing the efficiency and productivity of business firms. In
various surveys of businesses,
many indicate that they use management science techniques, and most
rate the results to
be very good. Management science (also referred to as operations
research, quantitative methods,
quantitative analysis, and decision sciences) is part of the fundamental
curriculum of most
programs in business.
The Management Science Approach to Problem Solving
As indicated in the previous section, management science encompasses a
logical, systematic approach
to problem solving, which closely parallels what is known as the scientific
method for
attacking problems. This approach, as shown in Figure 1.1, follows a
generally recognized and
ordered series of steps: (1) observation, (2) definition of the problem, (3)
model construction,
(4) model solution, and (5) implementation of solution results. We will
analyze each of these
steps individually.
Observation
The first step in the management science process is the identification of a
problem that exists in
the system (organization). The system must be continuously and closely
observed so that problems
can be identified as soon as they occur or are anticipated. Problems are
not always the result
of a crisis that must be reacted to but, instead, frequently involve an
anticipatory or planning
situation. The person who normally identifies a problem is the manager
because managers
work in places where problems might occur. However, problems can
often be identified by a
management scientist, a person skilled in the techniques of
management science and trained to
identify problems, who has been hired specifically to solve problems
using management science
techniques.
Definition of the Problem
Once it has been determined that a problem exists, the problem must be clearly and
concisely
defined. Improperly defining a problem can easily result in no solution or an inappropriate
solution.
Therefore, the limits of the problem and the degree to which it pervades other units of the
organization must be included in the problem definition. Because the existence of a
problem implies
that the objectives of the firm are not being met in some way, the goals (or objectives) of
the organization must also be clearly defined. A stated objective helps to focus attention
on what
the problem actually is.
Model Construction
A management science model is an abstract representation of an
existing problem situation. It
can be in the form of a graph or chart, but most frequently a
management science model consists
of a set of mathematical relationships. These mathematical
relationships are made up of
numbers and symbols.
 As an example, consider a business firm that sells a product. The product costs $5 to produce
and sells for $20. A model that computes the total profit that will accrue from the items
sold is
Z = +20x - 5x
In this equation, x represents the number of units of the product that are sold, and Z represents
the total profit that results from the sale of the product. The symbols x and Z are variables. The
term variable is used because no set numeric value has been specified for these items. The number
of units sold, x, and the profit, Z, can be any amount (within limits); they can vary. These two variables
can be further distinguished. Z is a dependent variable because its value is dependent on the
number of units sold; x is an independent variable because the number of units sold is not dependent
on anything else (in this equation).
The numbers $20 and $5 in the equation are referred to as parameters. Parameters are constant
values that are generally coefficients of the variables (symbols) in an equation.
Parameter usually remain constant during the process of solving a
specific problem. The parameter values
are derived from data (i.e., pieces of information) from the problem
environment. Sometimes
the data are readily available and quite accurate
• A model is an
abstract mathematical
representation of a
problem situation

• A variable is a symbol
used to represent an
item that can take on
any value
• Parameters are known,
constant values that
are often coefficients of
variables in equations
• Data are pieces of
information from the
problem environment.
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.
Model Solution
Once models have been constructed in management science, they are
solved using the management
science techniques presented in this text. A management science
solution technique
usually applies to a specific type of model. Thus, the model type and
solution method are both
part of the management science technique. We are able to say that a
model is solved because
the model represents a problem. When we refer to model solution, we
also mean problem
solution.
Thus, if the manager decides to produce 25 units of the product and all 25
units sell, the
business firm will receive $375 in profit. Note, however, that the value of the
decision variable
does not constitute an actual decision; rather, it is information that serves as a
recommendation
or guideline, helping the manager make a decision.
Some management science techniques do not generate an answer or a
recommended decision.
Instead, they provide descriptive results: results that describe the system being
modeled.
Implementation
The final step in the management science process for problem solving described in Figure 1.1 is
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. Frequently the person responsible for putting the model or solution
to use is not the same person who developed the model, and thus the user may not fully understand
how the model works or exactly what it is supposed to do. Individuals are also
sometimes hesitant to change the normal way they do things or to try new things. In this situation
the model and solution may get pushed to the side or ignored altogether if they are not
carefully explained and their benefit fully demonstrated. If the management science model
and solution are not implemented, then the effort and resources used in their development have
been wasted.