Download Management Science: Terms and Concepts and more Quizzes Introduction to Business Management in PDF only on Docsity! TERM 1 "Management Science" DEFINITION 1 -Scientific approach using math techniques to solve management problems (increase efficiency, productivity, profit, etc) -real life problems -> math equations -> solutions -history: began around WWII when resources needed to be used most efficiently and many lives were at stake TERM 2 Management Science Process DEFINITION 2 1. Observation: Identify problem ->2. Problem Definition: Clear & concise, includes objective ->3. Model: Consists of math relationships (#s and variables) ->4. Solution: Numbers you find using the model ->5. Implementation: Using the model and its solution ->6+. Feedback (loop): If it works, reap the benefits; if it does not, check over all steps in process to make it work TERM 3 "Objective Function" DEFINITION 3 Quantifies solution to a problem according to a specific objective Example: You want to maximize profits. Profit is represented by the symbol "z" so the objective function will be in a form like z=30x-5x TERM 4 "Decision Variable" DEFINITION 4 Value is set by the decision maker Example: You want to know how many widgets to make in order to maximize profits. The decision variable can be represented by "x" which is how many widgets to produce in order to max profit (note: "x" is also an independent variable) TERM 5 "Constraints" DEFINITION 5 Conditions that the solution to a model must satisfy Example: You want to know how many widgets to produce in order to maximize profits. However, each one requires 4 blocks of wood to produce and you have 100 blocks in your possession. The constraint is 4x is less than or equal* to 100 which simplifies to x is equal to 25 *the simplicity of this problem allows us to change "less than or equal" to simply "equal" TERM 6 "Solution" DEFINITION 6 Based on math model Example: 4x=100 -> x=25 is the solution* *You can plug this into the objective function to see your max profit, but that number IS NOT the solution. TERM 7 "Break Even Analysis" DEFINITION 7 Used to determine the amount of production (volume) that results in total revenue = total costs (profit =0) z = (p*v)- (Cf*v)-Cf = 0 v = volume p = unit price Cf = fixed costs Cv = variable costs z = profit TERM 8 "Sensitivity Analysis" DEFINITION 8 Shows how sensitive your model is to variable changes -price changes -variable or fixed cost changes Example: v = Cf/(p- Cv) If unit price rises (widget costs $5 for consumers instead of $3) then the volume you need to produce decreases. P is in the denominator and makes it larger, so the amount as a whole decreases TERM 9 Applications of Management Science DEFINITION 9 Project Planning Capital Budgeting Inventory Analysis Marketing Planning Production Planning Quality Control Scheduling TERM 10 What is Interfaces? DEFINITION 10 Applications journal published by Institute for Operations Research and Management Science (INFORMS)
