Management Science in Business Decisions
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kyllmicabalonavarroManagement Science in Business Decisions
Uploaded by
kyllmicabalonavarroClass Orientation
(ACC 421)
Jaycel P. Bayron
Instructor
Introduction to
Management Science
(Acc 421)
Jaycel P. Bayron, CPA
Instructor
Objectives:
• Get acquainted with Management Science and its
application to business management.
• Relate Management Science to the accounting course.
• Understand the basics of the scientific approach.
• Apply the scientific approach to business situations.
Definition:
- An approach to decision-making based on
the scientific method.
- Making decisions that use a logical and
evidence-based process.
Scientific Method Approach:
Observation Understand the situation.
Pinpointing the problem &
Problem Definition setting objectives.
Abstract mathematical
Model Construction representation of a problem
Solution Logically resolve the problem.
Implementation Execution of the Solution.
Let’s try this
John decided to put up his business, to be called “John’s Rice”- a
rice retailing business in his hometown. He canvassed from local
farmers and suppliers and got a very affordable bargain of P 1,800
per sack of 50-kilogram rice. Apart from the cost of purchase, John
has to shoulder the freight of P 5 per sack to deliver the purchase
into his store.
John is, however, frustrated in calculating how much should be the
price per sack and per kilo given that he wants to earn a net profit
of P 1,100 per sack.
“Can we help John resolve this problem? How?”.
Scientific Method Approach:
John is new to business, and
What is the situation all
Observation about?
he is frustrated in calculating
the price per sack and per kilo.
David is frustrated and wanted
What is John’s problem?
Problem Definition What do we want to achieve?
a formula to compute the
price per sack and per kilo.
Model What equation can be Profit= Price per sack – (Cost Price per sack= 2,905
designed? per sack + Freight Charge) Price per kg= 58.10
Construction
Is the equation designed 2,905- (1800+5)= 1,100
Solution credible? How do we know if 2905-1805=1,100
it is correct? 1,100=1,100
Implementation Apply the equation.
Why is there a need to follow
logical decision-making?
• Avoid guesswork.
• Makes sense of complexity.
• Improves accuracy.
• Better solutions.
How does Management Science
relate to Accounting?
Accounting provides
An application of science
financial information
in solving management
useful in making
problems.
economic decisions.
Management
Science Accounting
Tools and Techniques in
Management Science
Break-even Analysis
Linear Programming
Forecasting
Queuing Theory
Tools and Techniques in
Management Science
Break-even Analysis