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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