Introduction to

MANAGEMENT
SCIENCE
MANAGEMENT
SCIENCE
T h e s c i e n t i f i c a p p ro a c h
used to determine
m a n a g e m e n t p ro b l e m s
a n d m a ke economic
decisions using
quantitative tools to
a c h i ev e t h e o p t i m u m
solution
Nature of • It is primarily intended to solve
management problems.
MANAGEMENT • It uses quantitative tools or mathematical

SCIENCE models in finding solutions to management

problems.
• It observes the assumptions inherent in
particular quantitative tool or
mathematical model.
• It does not violate the constraints or
limitations of a particular quantitative
model.
• It adopts a decision based entirely on
quantitative information and analysis
• It employs the quantitative analysis
approach in finding optimal solution.
QUANTITATIVE Quantitative analysis is a process
of solving management problems
ANALYSIS with the
approach
use of a scientific

APPROACH
• Defining the management problem
• Developing a mathematical problem
• Gathering quantitative data
• Finding optimal solution
• Checking the results
• Analyzing and evaluating the
findings
• Implementing the findings
 DEFINING THE
MANAGEMENT
PROBLEM
A B U I N E S S M AY B E
CO N F R O N T E D W I T H
SEVERAL PRESSING
P R O B L E M S I N VO LV I N G
B OT H Q UA N T I TAT I V E A N D
Q UA L I TAT I V E DATA .
 DEVELOPING A
MATHEMATICAL
MODEL
A m o d e l i s a re p re s e n t a t i o n
o f a n ev e n t , s i t u a t i o n ,
re l a t i o n s h i p , o r re a l i t y

• PHYSICAL MODEL
• SCALE MODEL
• S C H E M AT I C MODEL
• M AT H E M AT I C A L MODEL
 GATHERING
QUANTITATIVE
DATA
The two important factors
t h a t m u s t b e c o n s i d e re d
in the collection of
q u a n t i t a t i v e d a t a a re t h e
a c c u ra c y o f t h e d a t a a n d
the re l i a b i l i t y of the
s o u rc e .
FINDING THE
OPTIMAL
SOLUTION
• ALGORITHM
• COMPLETE
ENUMERATION
 CHECKING THE
RESULTS
S t a t i s t i c a l m e a s u re s m a y
be adopted to check the
a p p ro p r i a t e n e s s o f t h e
m o d e l , t h e re s u l t s , a n d
t h e re l i a b i l i t y o f t h e
re s u l t s
 ANALYZING AND
EVALUATING THE
FINDINGS
• Analysis involves the
breaking of the entire
quantitative approach into
several parts to identify the
proper information needed
in drawing a managerial
decision
• Evaluating the results refers
to making judgements, based
on a particular criterion or
standard, whether or not to
proceed with the findings
 IMPLEMENTING
THE FINDINGS
• This happens when the
management has
understood the underlying
concepts of the approach
conducted and is fully
convince of the likelihood
that the quantitative
findings will provide
financial benefits to the
business organization.
 LIMITATIONS OF
MANAGEMENT SCIENCE
1. The members of management may have
contradicting perspective regarding a
problem, which could lead to resistance.
2. The model that is developed under
assumptions could work reliably if the
assumptions are fully observed.
3. The data collected, either by the
accounting department or either offices,
may not be sufficient for quantitative
analysis.
4. The quantitative approach employs only
quantitative data and suggests a solution
based on a mathematical representation.
 Management
Science Tools
Linear Cost- Economic Decision Regression Queuing PERT/ Probability
Programming Volume- order Theory Analysis Theory CPM Concept
a. Graphical Profit quantity
(CVP) (EOQ)
Method
Analysis model
b. Simplex
Method
c. Transportation
Problem
d. Assignment
Problem
Assumptions in
Management
Science
Techniques
Every quantitative
tools has assumptions
as well. A particular
quantitative technique
cannot be applied
when the assumptions
a re v i o l a t e d
THANK YOU!