MANAGEMENT SCIENCE
DEFINE MANAGEMENT
- Emphasizes that we are interested in helping to 4. IDENTIFY ALTERNATIVE SOLUTIONS
manage the organization better - that - Finding the best solution to the problem
Management is very much focused on the based on the given problem and data.
practical, real-world aspects. Science means
that we are interested in rigorous, analytical, and 5. SOLUTION
systematic ways of managing an organization
more effectively. 6. IMPLEMENTATION
- Execution of the solution.
MANAGEMENT SCIENCE
- This application helps organizations make better EXAMPLE:
decisions, solve problems, and create decisions David decided to put up a business, to be called "David's
relating to effectiveness and efficiency. Rice" — a rice retailing business in his hometown. He
How? canvassed from local farmers and suppliers and got a very
a. Through scientific concepts and quantitative affordable bargain of P1,800 per sack of 50-kilogram rice.
Apart from the cost of purchase, David has to shoulder the
techniques.
freight of P5 per sack to deliver the purchase into his store.
b. The use of Data, Mathematical equations, and
David is, however, frustrated in calculating how much
analysis. should be the price per sack and per kilo given that he
wants to cam a net of P1,100 per sack. He also wants to
OBJECTIVE OF MANAGEMENT make a simulation of any possible scenario.
• Efficiency - Getting the most output for the
least input → Resource usage ANSWERS
• Effectiveness - Attaining organizational
goals → Goal Attainment A. OBSERVE
- What is the situation all about?
IMPORTANCE OF MANAGEMENT SCIENCE
Answer: David is new to the business, and he is
• Effective utilization of resources.
frustrated in calculating the price per sack and per
• Development of resources
kilo.
• Continuity in the organization (Strategic
planning)
• Stability in the society > Innovation B. DEFINE THE PROBLEM
Answer: David wants to find the formula on how to
SCIENTIFIC APPROACH (Problem Solving) compute the price per sack and per kilo.
• Define the problem
• Gather data C. MODEL CONSTRUCTION
• Find the root cause/s of the problem - Identify what are the variables?
• Find alternative solutions - What equation can be designed?
• Test the solution/s Identified - What are the given data?
• Evaluate
Answer:
Cost of rice per sack - ₱1,800
1. OBSERVATION
- Understand the situation. Freight charge per sack - ₱5.00
Target profit per sack - ₱1,100
2. DEFINE THE PROBLEM
Price Per Sack - (Cost Per Sack + Freight) = Profit
- Identify the problem clearly. What is the
We let:
problem all about?
- Make a list of objectives a. price
b. cost per sack
3. MODEL CONSTRUCTION c. freight charge
- Abstract representation of the problem. d. profit
- Know what are the variables involved.
MANAGEMENT SCIENCE
Price Per Sack - (Cost Per Sack + Freight) = Profit
Equation:
A – (B+C) = D
A – (1,800+5) = 1,100
A – 1,805 = 1,100
A = ₱2,905/Sack
Price/KG = ₱58.10 Price/KG
D. SOLUTION
Price Per Sack - (Cost Per Sack + Freight) = Profit
2,905 – (1,800+5) = 1,100
2,905 – 1805 = 1,100
1,100 = 1,100
QUANTITATIVE APPROACH
A. Linear Programming
- A mathematical method for determining the
best outcome (such as maximum profit or
lowest cost) in a model with linear
relationships and constraints.
B. Forecasting
- The process of predicting future events or
trends based on historical data and statistical
methods.
C. Simulation
- A technique for imitating real-world
processes or systems to analyze their
behavior under different scenarios.
D. Decision Analysis
- A structured approach to making decisions
under uncertainty, using tools like decision
trees and payoff tables.