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Lecture 1: Introduction toManagement Science

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What is Management Science?

process analysis

identifying bottlenecks

inventory control

queueing theory

statistical analysis

optimization

simulationproject planning

capacity management

revenue managementtransportation planning

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Management Science Applications

logisticschip design

timetabling production planning

air traffic routing

scheduling

supply chain management

portfolio optimization

marketing campaign design

network design

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Management Science Is

A discipline that attempts to aid managerial decisionmakingby applying a scientific approach to managerialproblems that involve quantitative factors.

Management science uses mathematical models andcomputer algorithms to solve complex business

problems.

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Who Uses Management Science?

Netherlands Railways

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What can YOUdo with

Management Science?

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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

Problem ModelSolution

Method

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The Management Science Process

4. Test the model and refine it as needed

5. Apply the model to analyze the problem and developrecommendations for management

6. Help to implement the teams recommendations thatare adopted by management

Problem ModelSolutionMethod

TestApply &Analyze

Implement

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The Management Science Process

Problem definition

Mathematical modeling

Solution of the model

Communication/implementation

of results

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The Management Science Process

Problem definition

Mathematical modeling

Solution of the model

Communication/implementation

of results

Algebra, Excel

Excel Solver

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Goals for this Course

Learn what management science can do

Learn the vocabularyof management science

Learn how to formulate and modelbusiness 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 keycomponent of building competitive advantage

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Mental Map of the Course

Week Lecture Dates Lecture Topics

Textbook

Chapters

Assignments

(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

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 310 Mar-08, Mar-10 Other Topics / Final Exam Review

Midterm Exam: Tues, Feb 1 in-class

Final Exam: Section A on Tues, March 15, 10:30am-12:30pm; Section B on Fri, March 18, 10:30am-12:30pm

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Example Advertising Mix

Profit & Gambit Co. (p. 42 text) produces cleaningproducts:1. spray prewash stain remover

2. liquid laundry detergent

3. powder laundry detergent

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Example Advertising Mix

Management has decided to undertake a majoradvertising campaign

The campaign will use both television and print media

The general goal is to increase sales of these threecleaning products.

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Example Advertising Mix

Increase in Sales perUnit of Advertising

Product Television Print Media

MinimumRequiredIncrease

Stain remover 0% 1% 3%

Liquid detergent 3% 2% 18%

Powder detergent -1% 4% 4%

Unit Cost $1 million $2 million

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Recap

Introduction

Examples of Management Science

The Management Science Process Course Goals

Syllabus

Example: Optimizing Advertising Mix

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Next Day

Formulating Problems

Translating from English to ManagementScience