Management Science Reviewer
CHAPTER 1
Classical Management Theory
- A theory that focused on finding the “one
best way” to perform and manage tasks
and included
 Classical Scientific management
o Frederick Winslow Taylor
 Classical Administrative Management
o Henri Fayol
 Classical Bureaucratic management
o Max Weber
Classical Scientific School
- Focused on the manufacturing
environment and individual’s work
productivity and efficiency
- improving labor productivity. maximum
improvement of workers.
Classical Administrative School
- Emphasized the flow of information and
how organizations should
operate/functions of management.
- focuses on improving the efficiency of
management so that lower-level employees
can recognize appropriately and the tasks
can be done consistently.
Classical Bureaucratic School
- Identified organization system and
management as a study of this system.
- Overall organization system.
2
Lessons from Classical Scientific Thinkers
a. Analyze everything
b. Teach effective methods to other
c. Constantly monitor workers
d. Plan responsibly
e. Control the work and the workers
HENRI FAYOL
- Father of Administrative Management
- was born in 1841 at Istanbul Turkey.
- was a French management theorist.
- one of the most influential contributors to
modern concepts of management.
- has been described as the father of modern
operational management theory
- nineteen-year-old engineer started at the
mining company ultimately acting as its
managing director
- Based largely on his own management
experience.
DIFFERENCE BETWEEN VIEWS OF
TAYLOR AND FAYOL
- A primary difference between Fayol and
Taylor was that Taylor viewed
management processes from the bottom up
- Fayol viewed it from the top down.
- In the classic General and Industrial
Management Fayol wrote that "Taylor's
approach differs from the one we have
outlined in that he examines the firm from
the "bottom up.
- Fayol suggested that it is important to have
unity of command: a concept that
suggests there should be only one
supervisor for each person in an
organization.
- The most marked outward characteristics
of functional management lies in the fact
that each workman, instead of coming in
direct contact with the management at one
point only, receives his daily orders and
help from eight different bosses.
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- those eight, were (1) route clerks, (2)
instruction card men, (3) cost and time
clerks, (4) gang bosses, (5) speed bosses,
(6) inspectors, (7) repair bosses, and the
(8) shop disciplinarian.
Major Contributions of Henri Fayol
Recognized that successful managers had to
understand the basic managerial functions and
believed specific management skills could be
learned and taught.
Six activities of an enterprise:
o Technical (production, manufacture,
adaptation)
o Commercial (buying, selling,
exchange)
o Financial (search for an optimum use
of capital)
o Security (protection of property and
persons)
o Accounting (Stock taking, balance
sheets, cost statistics)
o Managerial
 Fayol’s universal management
functions:
 Planning
 Organizing
 Commanding
 Coordinating
 Controlling
Developed a set of 14 general principles of
management.
Provided 16 managerial duties that a manager
has to perform
Fayol’s 14 General Principles of Management
1. Division of work
- Specializing encourages continuous
improvement in skills and the development
of improvements in methods.
2. Authority
- The right to give orders and the power to
exact obedience
3. Discipline
- No slacking, bending of rules. The workers
should be obedient and respectful of the
organization.
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4. Unity of command
- Each employee has one and only one
boss.
5. Unity of direction
- A single mind generates a single plan and
all play their part in that plan.
6. Subordination of Individual Interests
- When at work, only work things should be
pursued or thought about.
7. Remuneration
- Employees receive fair payment for
services, not what the company can get
away with.
8. Centralization
- Consolidation of management functions.
Decisions are made from the top.
9. Scaler Chain (line of authority)
- Formal chain of command running from
top to bottom of the organization, like
military.
10. Order
- All materials and personnel have a
prescribed place, and they must remain
there.
11. Equity
- Equality of treatment (but not necessarily
identical treatment)
12. Personnel Tenure
- Limited turnover of personnel. Lifetime
employment for good workers.
13. Initiative
- Thinking out a plan and do what it takes to
make it happen.
14. Esprit de corps
- Harmony, cohesion among personnel. It's a
great source of strength in the
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organization. Fayol stated that for

promoting esprit de corps, the principle of
unity of command should be observed and
the dangers of divide and rule and the
abuse of written communication should be
avoided.
Bureaucratic Management
3. Rational-legal authority
- Subordinate obedience based upon the
position held by superiors within the
organization (e.g., police officers,
executives, supervisors).

Focuses on the overall organizational system

Bureaucratic management is based upon:
o Firm rules
o Policies and procedures
o A fixed hierarchy
o A clear division of labor

MAX WEBER
- 1864 – 1920
- German sociologist and historian who
envisioned a system of management that
would be based upon impersonal and CHAPTER 1.2 Management
rational behavior—the approach to Science
management now referred to as
Henri Fayol (1916)
“bureaucracy.”
o To manage is to forecast and plan to
o Division of labor
organize, to command, to coordinate
o Hierarchy of authority
and control.
o Rules and procedures
Peter. F. Drucker (1955)
o Impersonality
o Management is concerned with the
o Employee selection and promotion
systematic organization of economic
Resources and its task is to make these
Weber’s Forms of Authority/Three Types of resources productive.
Authorities
Nature and Features
1. Traditional authority
1. Management is a social process
- Subordinate obedience based upon custom
or tradition (e.g., kings, queens, chiefs). 2. It also denotes a ‘a body of people’
involved in decision making
2. Charismatic authority
- Subordinates voluntarily comply with a 3. It is inexact science
leader because of his or her special 4. It is an art and also science
personal qualities or abilities (e.g., Martin 5. It is profession
Luther King, Gandhi).
- Subordinate obedience based upon special 6. It is inter-disciplinary
personal qualities associated with certain 7. It is complex
social reformers, political leaders, religious
leaders, or organizational leaders. IMPORTANCE

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 It facilitates the achievements of goals through 3. Affiliation, Love or belonging

limited resources 4. Esteem needs
 It ensures smooth sailing in case of difficulties 5. Self-actualization needs
 It ensures continuing in the organization
 It ensures economy and efficiency
 It focuses on group efforts
 It is the key to the economic growth
Taylor’s Scientific Management Theory
 F.W.Taylor
- Father of Scientific Management

 Taylor demonstrated the benefits of increased

productivity and earnings through an
experiment at “Bethlehem Steel Works”
FUNCTIONS OF MANAGEMENT
Douglas McGregor’s Theory X and
- According to LUTHER GULLICK Theory Y
(POSDCoRB)
Theory X: Assumptions
P------Planning
1. Employees are lazy
O------Organizing 2. They require constant guidance and
S------Staffing support
3. Sometimes they require even coercion and
D------Directing control
Co-----Coordinating 4. Given an opportunity they would like to
avoid responsibility
R-------Reporting 5. They do not show any ambition but always
B-------Budgeting seek security
Theory Y: Assumptions
Mayo’s Hawthorne Experiments
1. Some employees consider work as natural
 Mayo known for his famous experiment at as play as rest
Hawthorne plant of the western electric 2. These employees are capable of directing
company, Chicago, USA, for evaluating the and controlling performance on their own.
attitudes and psychological reaction of They are much committed to objectives of
workers on the job situations. the organization.
Maslow’s theory of Human Needs (1954) 3. Higher rewards make these employees
more committed to organization.
Abraham Maslow 4. Most of them are highly imaginative,
- A psychologist who studied positive creative, and display ingenuity in handling
human qualities and the lives of exemplary organizational issues.
people. 5. Give an opportunity, they not only accept
- Motivation and Personality (book) responsibility but also look for
1. Physiological needs opportunities to outperform others
2. Safety needs
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7. ENUMERATION: Three types of legitimate

CHAPTER 1 *From Reporters*
QUIZ – GROUP A (CLASSICAL
MANAGEMENT THEORY)
1. TRUE OR FALSE. Henri Fayol conclude that
management is an activity which is not
different from other business activities, and it
has the quality of being universal.
Answer: FALSE
authority according to Weber.
Answer: Traditional Authority, Charismatic
Authority, Rational-Legal Authority
8. FILL IN THE BLANKS: Taylor's principles
indicate that replace working by ________, or
simple habit and common sense, and instead
use the ________ to study work and determine
the most efficient way to perform specific
tasks.
Answer: rule of thumb, scientific method

2. IDENTIFICATION. He has keen insight lay 9. FILL IN THE BLANKS. The chief
in distinguishing different types of legitimate characteristics of the __________ are Clear
authority that characterize different types of Hierarchy of Authority; ________ Relations
societies, especially as they evolve from between People; Proper Division of Work;
simple to more complex societies. Promotion Based on Competence; and System
Answer: Max Weber of Rules
Answer: bureaucratic management,
3. TRUE OR FALSE. Frederick Winslow Taylor impersonal
is the father of scientific management.
Answer: True 10. IDENTIFICATION. It should be used to
determine the most efficient way to do a job.
4. IDENTIFICATION. This is one of out of Answer: scientific management
fourteen Henri Fayol's principles that for any
action whatsoever, an employee should
receive orders from one superior only. Should
it be violated, authority is undermined,
discipline is in jeopardy, order disturbed, and
stability threatened.
Answer: Unity of command

5. FILL IN THE BLANKS. ___________, a

German social scientist, believed that
bureaucratic organization is an ideal
organization to utilize all the resources
effectively. Bureaucratic organization is the
__________ of carrying out proper control
over human beings.
Answer: Max Weber, most rational means

6. TRUE OR FALSE: Centralized structure of

leadership satisfies social needs and physical
needs.
Answer: False

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o Prepare to alter the definition if

evidence suggests a different
statement would be more effective.
CHAPTER 2: MODELING IN A
PROBLEM-SOLVING FRAMEWORK
Characteristics of Well-Structured Problems
End user
– Identifies problems, develops model, • The objectives of the analysis are clear.
uses model, and implements results • The assumptions that must be made are
– Often the modeler
obvious.
Team member
– Communication skills critical • All the necessary data are readily
– Whole team must understand model available.
and assumptions
Independent consultant • The logical structure behind the analysis is
– Model is for a client well understood.
– Model must be consistent with client’s
• Example: Algebra problems are typically
goals
well- structured problems.
“Problem” Versus a “Mess” Ill-Structured Problems
Problem • Objectives, assumptions, data, and
- is a well-defined situation that is capable
structure of the problem are all unclear.
of resolution.
Mess • Require exploration more than solutions
- is a morass of unsettling symptoms, Exploration
causes, data, pressures, shortfalls, - With an inquiring mind and a spirit of
opportunities, etc.
discovery, exploration involves:
formulating hypotheses
***Identifying a problem in the mess is the first
making assumptions
step in the creative problem-solving process. ***
building simple models
deriving tentative conclusions
Problem Statements - It often reveals aspects of the problem that
 A statement in the form “In what ways are not obvious at first glance.
might…?”
o Focuses on defining the problem to Divergent and Convergent Thinking
be solved
o Example: “In what ways might we Divergent thinking
increase revenues to keep pace with - Thinking in different directions
costs?” - Searching for a variety of answers to
 Solutions will differ based on the problem questions that may have many right
statement, so: answers
o Pay close attention to the problem - Brainstorming
definition. Convergent thinking
o Take any problem definition as
- Directed toward achieving a goal or single
tentative.
solution
- Involves trying to find the one best answer
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- Emphasis shifts from idea generation to
evaluation
Decision makers need to be clear as to which
they use at a given time, and balance the two.
The Six-Stage Problem-Solving Process
1. Exploring the mess
 Divergent phase
o Search the mess for problems and
opportunities.
 Convergent phase
o Accept a challenge and undertake
systematic efforts to respond to it.
2. Searching for information
 Divergent phase
o Gather data, impressions, feelings,
observations; examine the situation
from many different viewpoints.
 Convergent phase
o Identify the most important
information.
3. Identifying a problem
 Divergent phase
o Generate many different potential
problem statements.
 Convergent phase
o Choose a working problem
statement.
4. Searching for solutions
 Divergent phase
o Develop many different alternatives
and possibilities for solutions.
 Convergent phase
o Select one or a few ideas that seem
most promising.
5. Evaluating solutions
 Divergent phase
o Formulate criteria for reviewing and
evaluating ideas.
 Convergent phase
o Select the most important criteria;
use them to evaluate, strengthen,
and refine ideas.
6. Implementing a solution
 Divergent phase
2
o Consider possible sources of
assistance and resistance to
proposed solution. Identify
implementation steps and required
resources.
 Convergent phase
o Prepare the most promising solution
for implementation.
1. Exploring the Mess
 What problems or opportunities do we
face?
 Where is there a gap between the current
situation and the desired one?
 What are the stated and unstated goals?
 This stage is complete when we have:
A description of the situation
Identified (not gathered) key
facts and data
2. Searching for Information
 What are the symptoms and causes?
 What measures of effectiveness seem
appropriate?
 What actions are available?
 This stage is complete when we have:
Found and organized relevant
data
Made initial hypotheses about
problem causes and solutions
3. Identifying a Problem
 Which is the most important problem?
 Is this problem like others we have dealt
with?
 What are the consequences of a broad
versus narrow problem statement?
 This stage is complete when we have
produced a working problem statement
4. Searching for Solutions
 What decisions are open to us?
 What solutions have been tried in similar
situations?
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 How are the various candidate solutions
linked to outcomes of interest?
 This stage is complete when we have
produced a list of potential solutions.
Perhaps also a list of advantages and
disadvantages
5. Evaluating Solutions
 How does this solution impact each of the
criteria?
 What factors within our control could
improve the outcomes?
 What factors outside our control could
alter the outcomes?
 This stage is complete when we have
produced a recommended course of
action along with justification.
6. Implementing a Solution
 What are the barriers to successful
implementation?
 Where will there be support and
motivation, or resistance and conflict?
 Are the resources available for successful
implementation?
 This stage is complete when we have
produced an implementation plan and
begun execution.
Mental Models (Informal Modeling)
 Help us to relate cause and effect
o But often in a simplified,
incomplete way
 Help us determine what is feasible
o But may be limited by personal
experiences
 Are influenced by our preferences for
certain outcomes
 Are useful but can be limiting
 Problem solvers construct quick, informal
mental models at many different points in
the process.
 Provide the same kind of information as
mental models
o Link causes to effects, aid in
evaluating solutions
 Require a set of potential solutions and
criteria to compare solutions to be
identified
 More costly and time consuming to build
than mental models
 Make assumptions, logic, and preferences
explicit and open to debate
Influence Charts
 A simple diagram to show outputs and
how they are calculated from inputs
 Tool of choice for complex, unstructured
problems
 Identifies main elements of a model
 Delineates the boundaries of a model
 Recommended for early stages of any
problem formulation task
 Flexible, support frequent revision
Building an Influence Chart
• Built from right to left
• Conventions on types of variables
– Outputs – hexagons
– Decisions – boxes
– Inputs – triangles
– Other variables – circles
– Random variables – double circles

Formal Models
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Influence Chart Principles
• Start with outcome measure
• Decompose outcome measure into
independent variables that directly
determine it
• Repeat decomposition for each variable in
turn
• Identify input data and decisions as they
arise
• Ensure each variable appears only once
• Highlight special types of elements with
consistent symbols
CHAPTER 2 *From Reporters*
1. We refer to the decision-making process
generically as
a __________________ process, although
specific instances could involve making
forecasts, evaluating business
opportunities, or allocating resources.
Answer: problem-solving
2. Give the 3 Modelers’ Roles in the
Problem-Solving Process
Answer:
- End User,
- Team Member
- Independent Consultant
3. ___________________are those in which
the initial state, goal state, and constraints
are clearly defined.
Answer: Well-structured problems
4. This stage will be complete when we have
produced a satisfactory description of the
2
situation and when we have identified
(although not necessarily gathered) the key
facts and data.
Answer: Stage 1: Exploring the Mess 
5. This stage will be complete when we have
found and organized relevant information
for the situation at hand and when we have
made some initial hypotheses about the
source of the problem and potential
solutions.
Answer: Stage 2: Searching for Information 
6. This stage will be complete when we have
produced an implementation plan and
executed enough of it to begin evaluating
how well it is succeeding.
Answer: Stage 6: Implementing a Solution 
7. This model is also known as the informal
model.
Answer: Mental Model
8. This model uses a chart, diagram, and
other graphical representation.
Answer: Influence Chart
9. This model has a great advantage of
making our assumptions, logic, and
preferences explicit and open to debate.
Answer: Formal Model
10. This model is often specified based on
mathematics and formal logic to rigorously
reason about their properties of techniques
and tools.
Answer: Formal Model
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 Can be used in a variety of

organization to solve many
different types of problems.
Problem Solving
 Defined as the process of
CHAPTER 3: MANAGEMENT
identifying the difference between
SCIENCE APPROACHES
the actual and desired state of
Management Science affairs.
- Approach to decision-making based
The Problem-Solving Process
on scientific method.
- The application of scientific 1. Identify and define the problem
approach to solving management 2. Determine the set of alternative
problems in order to help managers solutions
make better decisions. 3. Determine the criterion used to
The terms interchangeably evaluate the alternatives
- Management Science 4. Evaluate the alternatives
- Operations research 5. Choose an alternative
- Quantitative methods 6. Implement the selective alternative
- Quantitative analysis 7. Evaluate the results
- Decision science
o Frederick W. Taylor Decision Making
 Quantitative methods in  Term generally associated with the
management (1900s) first five steps of the problem-
o WWII period solving process
 Deal with strategic and  The first step of decision making is
tactical problems faced to identify and define the problem
by military  Decision making ends with the
o Post WWII choosing of an alternative, which is
 Methodological the act of making decision.
developments and
computing power Quantitative Analysis and Decision
Management science can be used in Making
variety of organizations to solve many
*Reason why a quantitative approach
different types of problems
might be used in decision-making process:
Management Science
 Scientific approaches to problem a. The problem is complex, and the
solving and decision making manager cannot develop a good solution
 Encompass a logical approach to without the aid of quantitative analysis.
problem solving

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b. The problem is especially important, and  Choose an alternative

the manager desires a thorough analysis
before attempting to make a decision.
c. The problem is new, and the manager
has no previous experiences from which to
draw.
d. The problem is repetitive, and the
manager saves time and effort by relying
on quantitative procedures to make routine
decision recommendations/
Structuring the problem
 Define the problem
 Identify the alternatives
 Determine the criteria
Analyzing the Problem
 Qualitative analysis
 Quantitative analysis
 Summary and Evaluation
 Make the decision
Problem Solving and Decision Making: An
Alternative Classification of Decision
Process
Structuring the problem
 Define the problem
 Identify the alternatives
 Determine the criteria
Analyzing the Problem
 Evaluate the alternatives
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Quantitative Analysis
 Model development
 Data Preparation
 Model Solution
 Implementation and Report
Model Development
- Model is the representation of real objects
or situations and can be presented in
various forms.
o Iconic Model
 Physical replicas of real
objects (child’s toy truck)
o Analog Model
 Physical inform but do not
have the same physical
appearance as the object
being modeled.
o Mathematical Models
 Representation of a
problem by a system of
symbol and mathematical
relationships or
expressions.
- The purpose or value of any model is that
it enables us to make inferences about real
situation by studying and analyzing the
model.
- Experimenting with models requires less
time and less expensive than
experimenting with real object/situation.
- Models also have the advantage of
reducing the risk associated with
experimenting with real situation.
- The value of model-based conclusions and
decision is dependent on how well the
model represents the real situation.
- Objective Function
o The problem’s objective
- Constraints
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o Possibly a set of restrictions Profit and Volume Models

- Deterministic model - Px = Rx – Cx
o If all uncontrollable inputs to a - 5x – (300 + 2x)
model are known and cannot vary - Px = 3x – 300
- Stochastic model
o Probabilistic model
o Uncontrollable inputs are uncertain
and subject to variation
Data Preparation Break-even Analysis
- The preparation of the date required by the
model
- Data refers to the values of uncontrollable Management Science Techniques
input to the models  Linier Programming
- If the data are few, the analysis will  Transportation and Assignment models
combine model development and data  Project scheduling: PERT/CPM
preparation into one step by inserted as the  Inventory Models
equation.  Waiting line or Queuing models
Model Solution  Decision Analysis
- Attempt to identify the values of the  Goal Programming
decision variables that provide the best  Analytic Hierarchy Process
output as the optimal solution for the  Simulation
model  Forecasting
- One procedure that might be used in the
 Markov Process Models
model solution step involves trial-and-
 Dynamic Programming
error approach.
PERT / CPM
Conclusion and Report
- Making concluding remarks based on
PERT
model solution
- Program (Project) Evaluation and Review
- Preparing the managerial report based on
Technique
the conclusion
- A technique used for the management pf
- The report is one of the inputs for the
large scale projects
manager considering before making a final
decision
CPM
- Critical Path Method
MODELS OF COST, REVENUE &
- A network analysis technique used in
PROFIT
planning, scheduling, and controlling of
complex but routine activities.
Cost and Volume Models
- Cx = 300 + 2x
- X = production volume in units Particulars PERT CPM
- Cx = Total cost of producing units Meaning A technique Used in
Revenue and Volume Models used for the planning,
- Rx = 5x management pf scheduling,
- X = sales volume in units large scale and
projects controlling of
- Rx = Total revenue associated with selling
complex but
x units
routine
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activities.
Activity- Answer: The problem is complex, very
Orientation Event-oriented
oriented important, new, or repetitive
Activities Probabilistic Deterministic
Time and 7. An approach to decision making based on
Focus Time scientific method.
Cost trade-off
Three-time One time
Estimates Answer: Management Science
estimate estimate
Nature of Non-repetitive Repetitive
job activities activities 8. T/F: Management Science can be used in
High Precision Reasonable variety of organizations to solve many different
Suitable for
time estimate time estimate types of problems.
Research and
Construction
Usage development Answer: True
projects
projects
9. Physical replicas (scalar representations) of real
CHAPTER 3 *From Reporters* objects

answer: iconic models

1. Choose an alternative is the seventh step of 7
process of problem solving 10. If any uncontrollable inputs are uncertain to
the decision maker
Answer: FALSE
answer: stochastic model
2. It is the term generally associated with the first
six steps of the problem-solving process

Answer: FALSE

3. It is the value of all sales of goods and services

recognized by a company in a period.

Answer: Revenue

4. The Revenue and Volume Models formula is

Rx= 300 + 2x

Answer: False

5. What type of model has a physical replication

of real objects?

Answer:
Iconic models

6. Why do we use quantitative analysis approach

in decision making?
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