The Management Science Approach

1
TheManagement Science Approach

• Problem Definition

2
What is Management Science?

• Scientific approach applied to decision making
• Mess management-- Early developer of MS
• The use of logic and mathematics in such a way
  as to not to interfere with common sense
• The results should look, feel and taste like
  common sense -- Prominent MS Consultant
• The use of mathematical and statistical
  techniques, mathematical programming, modeling,
  and computer science to solve complex
  operational and strategic issues. -- US Army

3
Definition ofManagement Science

• Art of mathematical modeling
• Science of the solution techniques for solving
  mathematical models
• Ability to communicate results

4
Management Science Objective

• Given a limited amount of personnel, resources
  and material, how do we use them most effectively
  to
• Maximize -- Profit, Efficiency
• Minimize -- Cost, Time
• Management Science is about doing the best you
  can with what youve got -- OPTIMIZATION

5
Management Science Applications

• Linear Programming Models
• Using of scare resources to achieve maximum
  profits when there are constant returns to scale.
• Steelcase scheduling monthly production desks,
  cabinets, and other office furniture to maximize
  profit by assigning workers and utilizing the
  steel, wood, and other resources that are
  available.
• Texaco blending various grades of raw crudes to
  maximize profits while meeting production
  targets.
• Integer Linear Programming Models
• Determining integer quantities (such as people,
  machines, airplanes, etc.) that maximize profits.
• American Airlines assigning planes, crews, and
  support personnel on a daily basis.
• McDonalds assigning workers throughout the day.

6
Management Science Applications

• Network Models
• Using specialized linear models to determine
  routes of shortest distance, connections that tie
  points together of minimum length or finding a
  maximum flow (through a series of pipes)
• UPS scheduling deliveries in a fleet of trucks.
• United Van Lines determining the least costly
  route between a pickup and delivery point.
• Project Scheduling Models
• Scheduling of the various tasks that make up a
  project in order to minimize the time or cost it
  takes to complete the entire project.
• William Lyon Homes scheduling the construction of
  a new tract of homes in Orange County.
• CalTrans supervising the reconstruction of the
  Golden State Freeway after the devastating
  earthquake in the 1990s.

7
Management Science Applications

• Decision Models
• Making decisions about the best course of action
  when the future is not known with certainty.
• Fidelity Investments making mutual fund decisions
  given the uncertainty of the company performance,
  and the markets.
• The International Olympic Committee making site
  decisions given uncertain weather patterns and
  changing international conditions.
• Inventory Models
• Determining how much of a product to order and
  when to place the order to minimize overall total
  costs.
• Macys making merchandising decisions for the
  season.
• Sees Candies producing goods for their own
  stores.

8
Management Science Applications

• Queuing Models
• Analyzing the behavior of customer waiting lines
  to determine optimal staffing policies.
• Disneyland designing waiting lines and policies
  for rides at the amusement park.
• United States Postal Service determining staffing
  levels and type of waiting line at different
  branch offices.
• Simulation Models
• Analyzing a variety models whose forms do not
  meet the assumptions or are too complex to be
  solved by other specialized techniques.
• United States Army evaluating tactical combat
  situations.
• Conagra Foods evaluating what-if situations in
  their food production processes.

9
Management Science Team Approach

• Most management science models, particularly in
  larger companies are developed by teams of
  professionals.
• Expertise from various specialists is integrated
  into building a good mathematical model
• Engineers, accountants, economists, marketing
  analysts, production personnel, etc. are just
  some of the specialists that can be utilized in
  the model building process.

10
Parts of a Management Science Study

• Problem Definition
• Building Mathematical Models
• Solving/Refining Mathematical Models
• Communication of Results

11
Types of Management Science Problem Definitions

• How Do We Get Started?
• Evaluation of new operations and/or procedures
• Can We Do Better?
• Ongoing operations may be performing well, but
  perhaps they could improve
• Help!
• Situations where the company is clearly in
  trouble mess management

12
Problem Definition Approach

• Observe Operations
• Try to view problem from various points of view
  within the organization.
• Ease into complexity
• Do a lot of listening ask simple questions
  initially build a simple, common sense model that
  can be made more complex later.
• Recognize political realities
• Managers will not usually supply evidence showing
  his/her failures there can be a blame game
  for failures.
• Decide what is really wanted -- the
  goal/objective
• Managers can have a fuzzy or a definitive idea as
  to the objective this can be at odds with the
  global objective.
• Identify constraints
• With input from various sources seek the factors
  that will limit the firms ultimate objective
  include only relevant factors.
• Seek continuous feedback
• The management science team must solve the
  right problem seek, share and document
  frequent input with decision makers.

13
Updating The Problem Definition

• Once the problem has been defined it is time for
  the modeling/solution phase.
• But results from this phase may result in a
  re-evaluation of the problem definition.
• The model may be infeasible
• The model may not provide good enough results
• The model may highlight heretofore unobserved or
  unanticipated constraints
• The model may result in a set of optimal or at
  least good possible courses of action allowing
  the decision maker to look at secondary
  objectives.

14
Review

• Management science seeks to do the best you can
  with what youve got.
• It involves modeling, solution approaches, and
  communication.
• The process consists of
• Problem definition
• Mathematical modeling
• Solving the mathematical model
• Communication/implementation of results.
• Approaches/pitfalls associated with the problem
  definition step.