Management Science Theory

(Operations Management)

Instructor: Dr. Warren B. Batac, MAE, LPT

2.1 Management Science Theory

The Management Science theory is one of the theories of management

that attributes management effectiveness to the application of
scientific methods. It goes a step beyond the famous scientific
management theory by applying operations research tools and 2

techniques to solving practical problems. Its origin can be traced to the

Second World War in Britain.

The government formed a team consisting mathematicians, scientists

and physicians. Then, the team was called operation research team.
Operation research team got success in solving the problem of
planning, resource allocation, material supplies, etc.

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 2.1 Management Science Theory (cont.)

The Management Science theory is one of these theories that apply

operations research and other quantitative analysis tools to maximize the
utilization of the organization’s resources in the production of goods and
services. 3

Basically, management science theory focused on development of

mathematical model. A mathematical model is a simplified representation
of a system, process and relationship. Basically, management science
theory focuses on model equation and representation of similar reality.
This approach believes that most of the organizational and business
problems can be better solved using different mathematical and statistical
techniques.

2.1 Management Science Theory (cont.)

Some of the earliest tools that are utilized in the Management Science
approach (e.g. linear programming) can be traced to William Cooper and
Abraham Charnes.
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William Cooper was an American operations researcher and a professor of

accounting from Harvard University. He was nicknamed ‘Mr. Linear
programming’ with his work on optimal blending of aviation gasoline using
shadow prices in Gulf Oil Corporation (Charnes and Cooper, 1959). William
Cooper was the founding president of the Institute of Management Sciences.
As years went by, more techniques and models were included in the
Management Science approach (Banker, 2006).

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2.2 Branches of the Management
Science Theory
Over the years, four main branches of
Management Science approach have gained
ground. Each branch of the Management
Science approach addresses a specific set of
problems. The branches include the following:

1. Operations Management
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This branch of the Management Science
approach provides managers with a set of
techniques (e.g. stepping stone, economic order
quantity) that can be used to analyze different
aspects of an organization’s production system
with the aim of increasing efficiency (Jones and
George, 2016).

2.2 Branches of the Management

Science Theory (cont.)

Operation management is concerned with

helping the organization more efficiently
produce its product and service and can be
applied on wide range of problems.

Operation management or operation

research provides managers with a set of
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technique that can be used to utilize

organizational production system to increase
efficiency.

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2.2 Branches of the Management
Science Theory (cont.)
2. Quantitative Management

This branch of the Management Science

school makes use of mathematical tools
(such as linear programming, financial
modeling, simulation, queuing theory,
etc.) to help managers make the
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strategic or tactical decisions

(MeroSpark, 2014). For instance,
financial modelling can help a manager
decide how to invest his capital in the
most rewarding way.

2.2 Branches of the Management

Science Theory (cont.)
3. Total Quality Management (TQM)

This branch of Management Science focuses

on analyzing an organization’s value chain
(input, conversion and output process) to
increase the overall quality of the product or
service (Lawrence and Steck, 1991). Once
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again, sophisticated computer-controlled

processes like machine vision and three-
dimensional printing help to enhance
precision in production process and overall
quality (Deming, 1986).

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 2.2 Branches of the Management
Science Theory (cont.)
4. Management Information System

Management Information system is a comprehensive

and systematic system which obtains stores and
provides different information with regards to the
business and management. It is a computerized system
which provides timely and accurate information.

This branch of Management Science helps design

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information systems (e.g. Transaction Processing

Systems, Decision Support Systems, Office Automation
Systems, etc.) that provide managers with both internal
and external information to make quality decision. IT
offers managers new and improved ways of handling
information to help them make more accurate
assessments of the situation and informed decisions.

2.3 Operations Management

Consider the ingredients of your breakfast this morning. Unless

you live on a farm and produced them yourself, they
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passed
through a number of different processing steps between the
farmer and your table and were handled by several different
organizations.

Similarly, your morning newspaper was created and delivered to

you through the interactions of a number of different
organizations.

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 2.3 Operations Management (cont.)

Every day, you use a multitude of physical objects and a

variety of services. Most of the physical objects have been
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manufactured and most of the services have been

provided by people in organizations.

The study of operations deals with how the goods and

services that you buy and consume every day are
produced.

2.3 Operations Management (cont.)

Operations management refers to the activities,

decisions, and responsibilities of managing the
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resources which are dedicated to the production and

delivery of products and services. The part of an
organization that is responsible for this activity is
called the operations function and every organization
has one as, delivery of a product and/or service is the
reason for existence.

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 2.3 Operations Management (cont.)

Operations managers are the people who are

responsible for overseeing and managing the 13

resources that make up the operations function.

Operations management can significantly contribute

to the success of an organization using the available
resources effectively to produce products and services
in a way that satisfies customers.

2.4 Responsibilities in Operations

Management
Operations management is a field of business that involves managing the
operations of a business to ensure efficiency in the execution of projects.

It means that the individual in charge of the department will be required

to perform various strategic functions. Some of the functions include:

1. Product Design
Product design involves
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creating a product that will be sold to the end
consumer. It involves generating new ideas or expanding on current
ideas in a process that will lead to the production of new products. The
operations manager’s responsibility is to ensure that the products sold to
consumers meet their needs, as well as match current market trends.

Consumers are more interested in the quality of the product more than
the quantity, and the organization should create systems that ensure the
products produced meet the needs of the consumer.

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 2.4 Responsibilities in Operations Management (cont.)

2. Forecasting

Forecasting involving making predictions of events that will

occur in the future based on past data. One of the events
that the operations manager is required to predict is the
consumer demand for the company’s products.
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The manager relies on past and present data on the uptake

of the company’s products to determine future trends in
consumption. The forecasts help the company know the
volume of products needed to meet the market demand.

2.4 Responsibilities in Operations Management (cont.)

3. Supply Chain Management

Supply chain management involves managing the production

process from raw materials to the finished product. It controls
everything from production, shipping, distribution, to delivery
of products.
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The operations manager manages the supply chain process by
maintaining control of inventory management, the production
process, distribution, sales, and sourcing of suppliers to supply
required goods at reasonable prices. A properly managed
supply chain process will result in an efficient production
process, low overhead costs, and timely delivery of products to
consumers.

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 2.4 Responsibilities in Operations Management (cont.)

4. Delivery Management

The operations manager is in charge of delivery management.

The manager ensures that the goods are delivered to the
consumer in a timely manner. They must follow up with
consumers to ensure that the goods delivered are what the
consumers ordered and that they meet their functionality
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needs.

If the customer is unsatisfied with the product or is

complaining about certain features of the product, the
operations manager receives the feedback and forwards it to
the relevant departments.

2.5 Ideal Skills of an Operations

Manager

Unlike the marketing or finance departments,

where managers are responsible for their
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departments, operations management is a cross-
department role where the manager assumes an
array of responsibilities across multiple disciplines.

To be successful, an operations manager must

possess the following skills:

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 2.5 Ideal Skills of an Operations Manager (cont.)

1. Organizational Abilities

Organizational abilities refer to the ability of the operations manager

to focus on different projects without getting distracted by the many
processes. The operations manager should be able to plan, execute,
and monitor each project to the end without losing focus.
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If a manager is not organized, uncompleted tasks will pile up,

important documents will get lost in the process, and a majority of
the time will be spent finding lost documents that could be easily
accessible had the manager been organized. Good organization skills
can increase production efficiency and help the manager save time.

2.5 Ideal Skills of an Operations Manager (cont.)

2. Coordination

An operations manager needs to have good coordination by

knowing how to integrate resources, activities, and time to
ensure proper use of the resources toward the achievement
of the organization’s goals. 20

Coordination involves carrying out specific activities

simultaneously and switching between the activities with
ease. It also involves dealing with interruptions, obstacles,
and crises, and efficiently going back to the normal routine
functions to prevent further interruptions.

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 2.5 Ideal Skills of an Operations Manager (cont.)

3. People Skills

Most of the responsibilities of an operations manager involve dealing

with people. This means that they must know how to relate with the
employees, outside stakeholders, and other members of senior
management. An operations manager should know how to manage the
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fine lines with other colleagues by knowing how to communicate, listen,

and relate to them on professional and personal levels.

Since workplaces are made up of people from diverse cultures, the

operations manager needs to show tolerance and understanding to
other people. Also, the manager should be able to resolve conflicts and
mediate disputes between employees and members of the senior staff.

2.5 Ideal Skills of an Operations Manager (cont.)

4. Tech-savvy

In this age of rapidly advancing technologies, an operations manager

needs to have an affinity for technology in order to be in a position to
design processes that are both efficient and tech-compliant. Modern
organizations are becoming increasingly tech-dependent
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in order to
gain a competitive advantage in the market.

This means that most of the processes conducted manually, such as

procurement, must transition to more efficient automated processes.
When an operations manager is familiar with the latest innovations in
the tech industry, they can use the innovations to improve internal
processes.

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 2.6 The Transformation Model

This model represents the three components of operations: inputs,

transformation processes and outputs.

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2.6 The Transformation Model (cont.)

Operations management involves the systematic direction

and control of the processes that transform resources
(inputs) into finished goods or services for customers or
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clients (outputs).

This basic transformation model applies equally in

manufacturing and service organizations and in both the
private and not-for-profit sectors.

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 2.6 The Transformation Model (cont.)
Inputs
Some inputs are used up in the process of creating goods or services; others play a part in the creation process but are not used
up. To distinguish between these, input resources are usually classified as:

• transformed resources – those that are transformed in some way by the operation to produce the goods or services that are its
outputs
• transforming resources – those that are used to perform the transformation process.

Inputs include different types of both transformed and transforming resources.

Three types of resource that may be transformed in operations25 are:

 materials – the physical inputs to the process

 information that is being processed or used in the process
 customers – the people who are transformed in some way

Sample:
The transformed resources of a restaurant include food and drink, and its transforming resources include equipment such as
cookers, refrigerators, tables and chairs, and the chefs and waiters.
In a university, the transformed resources include students and knowledge and the transforming resources include lecturers,
tutors and support staff, as well as classrooms, books and instructional materials.

2.6 The Transformation Model (cont.)

Outputs

The principal outputs of a doctor's surgery are cured patients; the outputs of a nuclear
reprocessing plant include reprocessed fuel and nuclear waste.
Many transformation processes produce both goods and services. For example, a
restaurant provides a service, but also produces goods such as food and drinks.

Transformation processes may result in some undesirable outputs (such as nuclear

waste in the example above) as well as the26
goods and services they are designed to deliver.
An important aspect of operations management in some organizations is minimizing the
environmental impact of waste over the entire life cycle of their products, up to the point of
final disposal. Protecting the health and safety of employees and of the local community is
thus also the responsibility of operations management.

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 2.6 The Transformation Model (cont.)

Transformation processes

A transformation process is any activity or group of activities that takes one or more inputs, transforms and adds value to
them, and provides outputs for customers or clients.

Where the inputs are raw materials, it is relatively easy to identify the transformation involved, as when milk is transformed
into cheese and butter. Where the inputs are information or people, the nature of the transformation may be less obvious.
For example, a hospital transforms ill patients (the input) into healthy patients (the output).

Transformation processes include:

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 changes in the physical characteristics of materials or customers

 changes in the location of materials, information or customers
 changes in the ownership of materials or information
 storage or accommodation of materials, information or customers
 changes in the purpose or form of information
 changes in the physiological or psychological state of customers

2.6 The Transformation Model (cont.)

Feedback

A further component of the transformation model is the feedback loop. Feedback information
is used to control the operations system, by adjusting the inputs and transformation processes
that are used to achieve desired outputs.

For example, a chef relies on a flow of information from the customer, through the waiter,
about the quality of the food. Adverse feedback might lead the chef to change the inputs (for
example by buying better quality potatoes) or the transformation process (for example by
changing the recipe or the cooking method). 28

Feedback is essential for operations managers. It can come from both internal and external
sources. Internal sources include testing, evaluation and continuously improving goods and
services; external sources include those who supply products or services to end-customers as
well as feedback from customers themselves.

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 Transformation Model Sample:
In airline management:

 Inputs (aircraft, staff, fuels & oils, airports and their

crew etc.)
 Transformations (passengers processed timely and
moved to destinations)
 Outputs (Aircrafts maintained, Passengers home and
happy, Crew paid, Shareholders earnings soar)
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In manufacturing:

 Inputs (Raw materials, people, machines,

management)
 Transformations (machine operations, HR, financing)
 Outputs (products, salaries and wages, profits).

Thank you for Good luck!

listening!
Banker RD (2006). IFORS' Operational Research Hall of Fame William W. Cooper.
International Transactions in Operational Research 13(4):379-383.

Jones GR, George JM (2014). Essentials of contemporary management (8th ed.). New York:
McGraw-Hill Education.
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Jones GR, George JM (2016). Contemporary management (9th ed.). New York: McGraw-
Hill Education.

MeroSpark (2014). Management Science Theory-Explanation, Contribution and Limitations.

Available at: https://www.merospark.com/content/389/ca1/

Schutts K (2011). Management Science Theory. Available at: https://prezi.com/q4_oz-

oqbgnk/management-science-theory/

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