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Module 1 Part 1 - Management Science and Its History - Qunatitative Analysis - Decision Making

Management science uses quantitative approaches to help managers make better decisions. It began developing during World War II to help solve complex problems. There are 7 steps to problem solving: define the problem, identify alternatives, determine criteria, evaluate alternatives, choose a solution, implement it, and evaluate results. Quantitative analysis uses mathematical models while qualitative analysis relies more on judgment. Quantitative methods are useful for complex, important, new, or repetitive problems.

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61 views

Module 1 Part 1 - Management Science and Its History - Qunatitative Analysis - Decision Making

Management science uses quantitative approaches to help managers make better decisions. It began developing during World War II to help solve complex problems. There are 7 steps to problem solving: define the problem, identify alternatives, determine criteria, evaluate alternatives, choose a solution, implement it, and evaluate results. Quantitative analysis uses mathematical models while qualitative analysis relies more on judgment. Quantitative methods are useful for complex, important, new, or repetitive problems.

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Introduction to

Management Science
(Module 1 Part 1)
Learning Objectives:
1. Describe management science and its historical development.
2. Explain the different steps in problem solving and decision
making.
3. Relate quantitative analysis and decision making.
Management Science (MS)

• a body of knowledge that uses


quantitative approaches to decision
making (Anderson et al., 2019)

• also known as Operations Research,


Decision Science, Quantitative
Methods, Quantitative Analysis,
Business Analytics (Taylor, 2006)
Frederick W. Taylor
1856 - 1915

Founder of Management
Science
Historical Development of Management Science

• started during World War II period

• is flourishing in business and industry due to:


➢ numerous methodological
developments (e.g. simplex method for
solving linear programming problems)
Historical Development of Management Science
➢ a virtual explosion in computing power
Problem Solving
7 Steps of Problem Solving
(First 5 steps are the process of decision making)
1. Define the problem.
2. Determine the set of alternative solutions.
3. Determine the criteria for evaluating alternatives.
4. Evaluate the alternatives.
5. Choose an alternative (make a decision).
---------------------------------------------------------------------
6. Implement the decision.
7. Evaluate the results.
An example of problem solving
*Step 1. How to have a satisfying career position?

*Step 2. There are different offers from companies in Taguig,


Makati, QC and Manila.
• option 1: accept the position in Taguig
• option 2: accept the position in Makati
• option 3: accept the position in QC
• option 4: accept the position in Manila
*Step 3. The four options are evaluated in terms of:
• starting salary
• potential for advancement
• job location

*Step 4. Rate each criteria (e.g. poor, fair, average, good and
excellent).
Table 1. DATA FOR THE CAREER EVALUATION DECISION-MAKING
PROBLEM
Option Starting Salary Potential for Job Location
Advancement
Taguig P38,500 Average Average
Makati P36,000 Excellent Good
QC P36,000 Good Excellent
Manila P37,000 Average Good

*Step 5. After careful evaluation of the data, option 3 is


selected.
Step 6. To have a satisfying a career position, take the offer in
Q.C. Now, think of ways of how to sustain it. (e.g.
engage in professional development, research and
training, participate in the Corporate Social
Responsibility (CSR), etc.

Step 7. Does option 3 (having a starting salary of P36,000; a


good potential for advancement and an excellent job
location) ensure a satisfying career position?

Note: steps 1 to 5 – Decision Making while steps 1 to 7 – Problem solving


An Alternate Classification of the
Decision-Making Process
Structuring the Problem Analyzing the Problem

Define Identify Determine Evaluate Choose


the the the the an
Problem Alternatives Criteria Alternatives Alternative

• Problems in which the objective is to find the best solution with respect to one
criterion are referred to as single-criterion decision problems.

• Problems that involve more than one criterion are referred


to as multicriteria decision problems.
Analysis Phase of Decision Making
Qualitative Analysis
• based largely on the manager’s judgment and experience
• includes the manager’s intuitive “feel” for the problem
• is more of an art than a science

Quantitative Analysis
• analyst will concentrate on the quantitative facts or data associated with the
problem
• analyst will develop mathematical expressions that describe the objectives,
constraints, and other relationships that exist in the problem
• analyst will use one or more quantitative methods to make a recommendation
THE ROLE OF QUALITATIVE AND QUANTITATIVE ANALYSIS
Analyzing the Problem

Qualitative
Analysis
Structuring the Problem

Define Identify Determine Evaluate Choose


the the the the an
Problem Alternatives Criteria Alternatives Alternative

Quantitative
Analysis
Quantitative Analysis and Decision Making
Potential Reasons for a Quantitative Analysis Approach to Decision
Making
• The problem is complex.
• The problem is very important.
• The problem is new.
• The problem is repetitive.
Assignment (Individual work):

1. Cite an example (a real-life experience) illustrating


the 7 steps in problem solving.
2. Identify the similarities and differences between
qualitative and quantitative analyses.
3. What are the advantages of analyzing and
experimenting with model as opposed to real
object or situation?
References
Anderson, D. R., Sweeney, DJ., Williams, T.A., Camm, J.D., Cochran, J.J., &
Ohlmann, J.W. (2019). An Introduction to Management Science: Quantitative
Approaches to Decision Making. Singapore: Cengage Learning Asia Pte Ltd.

Hillier, F. A. (2008). Introduction to Management Science: A Modeling and Case Studies


Approach with Spreadsheets. New York: McGraw-Hill Irwin.

Taylor, B. W. (2007). Introduction to Management Science, 9th Edition. Singapore:


Pearson Education South Asia.

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