MS Approach On Management - Definition of Problems

The Management Science Approach

1. TheThe
Management Science ApproachManagement Science Approach
Problem Definition

2. What is Management Science?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 ofDefinition of
Management ScienceManagement Science
•ArtArt of mathematical modeling
•ScienceScience of the solution techniques
for solving mathematical models
•Ability to communicatecommunicate results

4. Management Science ObjectiveManagement 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 you’ve got --
OPTIMIZATION

5. Management Science Management Science
ApplicationsApplications
•Linear Programming ModelsLinear 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 ModelsInteger 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.
•McDonald’s assigning workers throughout the day.

6. Management Science Management Science
ApplicationsApplications
•Network ModelsNetwork 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 ModelsProject 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 1990’s.

7. Management Science Management Science
ApplicationsApplications
•Decision ModelsDecision 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 ModelsInventory Models
Determining how much of a product to order and when
to place the order to minimize overall total costs.
•Macy’s making merchandising decisions for the season.
•See’s Candies producing goods for their own stores.

8. Management Science Management Science
ApplicationsApplications
•Queuing ModelsQueuing 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 ModelsSimulation 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 Management Science
Team ApproachTeam 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 Parts of a Management Science
StudyStudy
•Problem Definition
•Building Mathematical Models
•Solving/Refining Mathematical Models
•Communication of Results

11. Types of Management Science Types of Management Science
Problem Definitions 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 ApproachProblem Definition Approach
1.Observe Operations
•Try to view problem from various points of view within the
organization.
2.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.
3.Recognize political realities
•Managers will not usually supply evidence showing his/her
failures – there can be a “blame game” for failures.
4.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.
5.Identify constraints
•With input from various sources seek the factors that will limit
the firm’s ultimate objective; include only relevant factors.
6.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 DefinitionUpdating 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. ReviewReview
•Management science seeks to do the best
you can with what you’ve 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.