# Chapter 1- Introduction to Management Science

Management Science

is a scientific approach to solving management problems and can be used in a variety of organizations to solve many different types of problems

Steps of the Scientific Method

1)observation 2)problem definition 3) model construction 4)model solution and 5)implementation

A Management Scientist

is a person skilled in the application of management science techniques

model

abstract mathematical representation of an existing problem situation

variable

symbol used to represent an item that can take on any value

parameters

known constant values that are often coefficients of variables in equations

Data

pieces if information from the problem environment

functional relationship

the equation as a whole is known as a functional relationship that includes variables, parameters, and equations (also called function and relationship)

Implementation

is the actual use of a model once it has been developed or the solution to the problem the model was developed to solve. This is the final step in the management science process for problem solving.

Business analytics

uses large amounts of data with management science techniques and modeling to help managers make decisions

break-even analysis

modeling technique to determine the number if units to sell or produce that will result in zero profit

Fixed Costs

are independent of volume and remain constant

variable costs

depend on the number of items produced

Total Cost (TC) equals

the fixed cost + variable cost per unit multiplied by volume

profit

is the difference between total revenue (volume multiplied by price) and total cost

break even point

is the volume (v) that equates total revenue with total cost where profit is zero

A deterministic technique

assumes certainty in the solution

decision support system (DSS)

a computer-based information system that a manager can use to assist in and support decision making

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