Chapter One Summary

Chapter one of this book begins by describing management science. It describes the key to virtually every management science application is a mathematical model, which is defined as a quantitative representation, or approximation, of a real problem. The purpose of a mathematical model is to represent the essence of a problem in a concise form. The model allows for several advantages:

The chapter continues by providing an example of a waiting line. This type of model is described as a descriptive model, which is used to describe a situation. The example is a queuing line at a 7-11 convinces store. The model tries to explain the how and in what number customers arrive at the store. By knowing how customers arrive and when, the model will use an optimization solver to determine the cost of losing customers. By implementing the model correctly, the company can reduce the loss of sales by being understaffed.

After explaining the model, the chapter explains the seven-step process to create a successful model.

  1. Define the problem - defining the problem includes specifying the organization's objectives and the parts of the organization that must be studied before the problem can be solved.
  2. Observe the System and Collect Data - the analyst collects the data to estimate the value of parameters that affect the organization's problem.
  3. Formulate a Model - the analyst develops a model of the problem, better known as a simulation model, which tries to approximate the behavior of the actual system.
  4. Verify the Model and Use the Model for Predication - the analyst must now determine whether the model developed is an accurate representation of reality.
  5. Select a Suitable alternative - given a model and a set of alternatives, the analyst must now choose the alternative that best meets the organization's objectives.
  6. Present the Results of the Study to the Organization - the analyst presents the model and the recommendations to the organization.
  7. Implement and Evaluate Recommendations - the system is then implemented and continually monitored and updated as the environment changes to ensure the model is accurate.

The chapter continues by providing a few successful management science applications.

  1. Citgo Petroleum - optimize refinery operations and the supply distribution marketing system.
  2. San Francisco Police - Used to schedule the officers to maximize efficiencies.
  3. GE Capital - developed a system to reduce delinquent accounts and the cost of collecting from delinquent accounts.

The chapter ends with the questions of, Why study management science? The study is required to solve large and complex problems.

  1. Learn to think about problems in general and forces you to think logically.
  2. Studying will increase a students quantitative skills
  3. Students will gain new skills in the use of spreadsheets, especially Excel.
  4. Students will learn to develop intuition