Chapter 1 : Introduction to Management Science

An Insight to Solving Management Problems for Decision-Making

What is Management Science?

❏ Management Science is the application of the scientific method to address problems and decisions
that arise in the business community and other organizations such as government, private entities and
military institutions.
❏ This field is commonly known as Operations Research (OR) and Quantitative Analysis (QA).
❏ Management Science can also be defined as a problem-solving process used by interdisciplinary
teams to develop mathematical models that represent simple to complex functional relationships .
❏ It operates on the understanding that business managers can make informed decisions only when they
have access to scientifically acquired knowledge.
❏ Practitioners of Management Science undertake the major steps of scientific inquiry to gain
knowledge/insights about problems/issues.

Major Steps of Scientific Inquiry

1. Identify the issue or problem
2. Formulate a hypothesis (theory) about possible solutions to the problem
3. Construct appropriate models to test the hypothesis
4. Collect and analyze the results of the tests, and
5. Determine the best way to resolve the issue or address the problem based on the final results.

Historical Development of Management Science

➢ The roots of management Science extend to the work of F.W. Taylor, the father of Scientific
Management. Taylor is known for his systematic development of management techniques which he
started at the Midvale Steel Company in Philadelphia around 1880.
➢ Management Science describes an integrated approach to operational control based on the
application of scientific research methods to business problems. A systematic approach to problem
solving received early impetus from Taylor’s scientific management movement and is continued today
by industrial engineers and mathematical business analysts. This approach is characterized by a
methodology of sequential investigation steps.

Characteristics of Management Science

The four major characteristics of Management Science:

1. Examine Functional Relationships from a Systems Overview

● The activity of any one function of a company will have some effect the activity of each of the
other functions.

2. Use the Interdisciplinary Approach

● Management Science makes good use of a simple principle, it looks at the problem from
different angles and approaches.

❏ Mathematician: might look at the inventory problem and formulate some type of mathematical
 relationships between the manufacturing departments and customer demand.
❏ Chemical Engineer: might look at the same problem and formulate it in terms of flow theory.
❏ Cost Accountant: might conceive the inventory problem in terms of component costs (e.g. direct
material cost, direct labor cost, overhead, etc.) and how such costs can be controlled and
reduced.

3. Uncover New Problems for Study

● The 3rd characteristic of MS , which is often overlooked, is that solutions to an MS problem
bring new problems to light.
● All interrelated problems uncovered by the MS Approach do not have to be solved at the same
time. However, each must be solved with the consideration for other problems if maximum
benefits are to be obtained.

4. Use a Modelling-Process Approach to Problem Solving

● Management Science takes a systematic approach to problem solving.
● It may use a modelling process approach taking the help of mathematical models.

Other Characteristics of Management Science

5. A primary focus on managerial decision-making.
6. The application of science to decision-making.
7. A dependence on electronic computers.
8. An appraisal resting on criteria of economic effectiveness.

Effectiveness may be defined as the extent to which goals are achieved. Effectiveness is
evaluated by measures of effectiveness, also known as measures of performance.