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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
abstract mathematical representation of an existing problem situation
symbol used to represent an item that can take on any value
known constant values that are often coefficients of variables in equations
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)
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
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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