26-12-2012, 04:44 PM
Introduction to Management Science, Modeling, and Excel Spreadsheets
Introduction to Management.ppt (Size: 1 MB / Downloads: 22)
Learning Objectives
Describe the importance of management science.
Describe the advantages of a quantitative approach to problem solving.
List some of the applications and use of management science models.
Discuss the types of models most useful in management science.
Demonstrate the basic building blocks and components of Excel.
Describe the basic nature and usefulness of break-even analysis.
List and briefly explain each of the components of break-even analysis.
Solve typical break-even problems manually and with Excel.
The Importance of Management Science
Management science
The discipline of applying advanced analytical methods to help make better decisions.
Devoted to solving managerial-type problems using quantitative models
Applications of management science
Forecasting, capital budgeting, portfolio analysis, capacity planning, scheduling, marketing, inventory management, project management, and production planning.
Advantages of the Quantitative Approach
Directs attention to the essence of an analysis: to solve a specific problem.
Improves planning which helps prevent future problems
Results in more objective decisions than purely qualitative analysis.
Incorporates advances in computational technologies to managerial problem-solving.
Models
A Model
An abstraction of reality. It is a simplified, and often idealized, representation of reality.
Examples : an equation, an outline, a diagram, and a map
By its very nature a model is incomplete.
Provides an alternative to working with reality
Symbolic models
Use numbers and algebraic symbols
Mathematical models
Decision variables
Uncontrollable variables
Deterministic versus Probabilistic Models
Deterministic models
Used for problems in which information is known with a high degree of certainty.
Used to determine an optimal solution to the problem.
Probabilistic models
Used when it cannot be determined precisely what values (requiring probabilities) will occur (usually in the future).
Assumptions of Break-Even Analysis
The revenue per unit is the same for all volumes.
The variable cost per unit is the same for all volumes.
Fixed cost is the same for all levels of volume.
Only one product is involved.
All output is sold.
All relevant costs are accounted for, and correctly assigned to either the fixed cost category or the variable cost category.