Introduction to Management Science 472.21 1 Fall 2011 Bruce Duggan Providence University College

Introduction to Management Science

472.211

Fall 2011Bruce Duggan

Providence University College

Management Science

1. What is it?

2. What’s it good for?

3. The textbook!?!?!?!?

4. What are we going to do?

What is it?

Management Science in 6 words: tackle business problems using models

not a single technique a collection of tools

words

math graphs

1. What is it?

Niverville Young People’s Lemonade Stand• Sale price 23¢/glass

• Our cost 8¢/glass

• Stand & flyers $100

• Expect to sell400 glasses

• We’ll make: ?words

math graphs

1. What is it?

Niverville Young People’s Lemonade Stand• Price 23¢/glass

• Variable costs 8¢/glass

• Fixed costs $100

• Volume 400 glasses

• Profit ?words

math graphs

1. What is it?

Niverville Young People’s Lemonade Stand• p = 0.23

• cv = 0.08

• cf = 100

• v = 400

• Z = ? words

math graphs

1. What is it?

Math model: NYP Lemonade Stand

profit = volumeprice

– fixed costs

– volumevariable costs

Z = vp - cf - vcv words

math graphs

1. What is it?

Math model: NYP Lemonade Stand

Z = vp - cf - vcv

breakeven:

words

math

graphs

v =cf

p-cv

v =100.00

0.23-0.08

1. What is it?

Math model: any selling activity

Z = vp - cf - vcv

breakeven:

words

math

graphs

v =cf

p-cv

Graph model:

1. What is it?

v (volume)

0 200 400 600 800 1000 1200 1400 1600

cf (fixed cost)

revenue

100

200

300

400

$ expenses

cv (variable cost)

words

math

graphs

price: 25 cents?

Graph model:

1. What is it?

v (volume)

0 200 400 600 800 1000 1200 1400 1600

100

200

300

400

cf (fixed cost)

revenue

$ expenses

cv (variable cost)

price: 25 cents?

variable cost: 6 cents?

Graph model:

1. What is it?

v (volume)

0 200 400 600 800 1000 1200 1400 1600

100

200

300

400

cf (fixed cost)

revenue

$ expenses

cv (variable cost)

price: 25 cents?

capital cost: $50?

variable cost: 6 cents?

Graph model:

1. What is it?

v (volume)

0 200 400 600 800 1000 1200 1400 1600

100

200

300

400

cf (fixed cost)

revenue

$ expenses

cv (variable cost)

price: 25 cents?

capital cost: $50?

variable cost: 6 cents?

1. What is it?

Management Science focuses on

theoretical

general

deductive

applied

specific

inductive

2. Uses

mixing products actions

scheduling carriers people projects

choosing between projects methods priorities

predicting lines inventory outcomes

2. Uses

guessing certainty

superstition &

absolute confusion

Spock-like clarity

3. The textbook!?!?!?!?

How to get through it we’re not going to do it all don’t read too far ahead

• Applications & Cases OK

open book• answer book on reserve

don’t fall behind

4. What are we going to do?

Syllabus Take it one week at a time

• 4.5 hrs / week 1 hr - read chapter 1.5 hr - scheduled study group 2 hr - work through problems yourself

We’re in this together• talk to each other

• come see me

For Tue

Read ch 1 1 hr

• don’t worry about QM pg 14-15

• focus on Excel pg 13

Do either case 1 or 2 pg 27-28

• 1½ hr then stop