Management Science last Exam
Chapter 1 - Ans>>- Management Science Approach to Problem Solving
- Model Building: Break-Even Analysis
- Computer Solution
- Management Science Modeling Techniques
- Business Usage of Management Science Techniques
Management science is used in a _______ __ _____________ to solve many
different types of ________. - Ans>>variety of organizations; problems
Management science is a __________ ________ to solving management
problems. - Ans>>scientific approach
Management science is also known as what? - Ans>>Operations research or
Quantitative methods
Management science involves a __________ of problem solving in a _______
______. - Ans>>philosophy; logical manner
Steps of Management Science Process - Ans>>1. Observation
2. Definition of the Problem
3. Model Construction
4. Model Solution
5. Model Implementation
Observation is... - Ans>>the identification of a problem that exists in a
system or organization.
Definition of the problem is... - Ans>>that a problem must be clearly and
consistently defined, showing its boundaries and interactions with the
objectives of the organization.
Model Construction is... - Ans>>the development of the functional
mathematical relationships that describe the decision variables, objective
function, and constraints of the problem.
Model solution is... - Ans>>when models are solved using management
science techniques.
,Model implementation is... - Ans>>the actual use of the model or its
solution.
Model Construction:
Information and Data:
Business firm makes and sells a steel product
Product costs $5 to product
Product sells for $20
Product requires 4 pounds of steel to make
Firm has 100 pounds of steel
Business Problem:
Determine the number of units to produce to make the most profit, given the
limited amount of steel available. - Ans>>Variables:
x = # units to produce (decision variable)
Z = total profit (in $)
Model:
Z = $20x - $5x (objective function)
4x = 100 lb of steel (resource constraint)
Parameters:
$20, $5, 4 lbs, 100 lbs (known values)
Formal Specification of Model:
maximize Z = $20x - $5x
Model Solution:
Solve the constraint equation:
, 4x = 100
(4x)/4 = (100)/4
x = 25 units - Ans>>Substitute this value into the profit function:
Z = $20x - $5x
= (20)(25) - (5)(25)
= $375
(Produce 25 units, to yield a profit of $375)
Break-even analysis is... - Ans>>used to determine the number of units a
product to sell or produce that will equate total revenue with total cost.
The break even point is... - Ans>>the volume at which total revenue equals
total cost.
Profit at break-even point is ____. - Ans>>zero
Fixed Cost (Cf) - Ans>>Costs that remain constant regardless of the number
of units produced.
Variable Cost (Cv) - Ans>>The unit production cost of product.
Volume (v) - Ans>>The number of units produced or sold.
Total Variable Cost (VCv) - Ans>>Function of volume (V) and unit variable
cost.
Total Cost (TC) - Ans>>Total fixed cost plus total variable cost.
TC=Cf+VCv
Profit (Z) - Ans>>Difference between total revenue vp (p=unit price) and
total cost.
Z=vp-Cf-VCv
Break-Even Point Formula - Ans>>v=(Cf)/(p-Cv)
Example-Western Clothing Company:
Fixed Costs: cf = $10000
Variable Costs: cv = $8 per pair
Price : p = $23 per pair
Chapter 1 - Ans>>- Management Science Approach to Problem Solving
- Model Building: Break-Even Analysis
- Computer Solution
- Management Science Modeling Techniques
- Business Usage of Management Science Techniques
Management science is used in a _______ __ _____________ to solve many
different types of ________. - Ans>>variety of organizations; problems
Management science is a __________ ________ to solving management
problems. - Ans>>scientific approach
Management science is also known as what? - Ans>>Operations research or
Quantitative methods
Management science involves a __________ of problem solving in a _______
______. - Ans>>philosophy; logical manner
Steps of Management Science Process - Ans>>1. Observation
2. Definition of the Problem
3. Model Construction
4. Model Solution
5. Model Implementation
Observation is... - Ans>>the identification of a problem that exists in a
system or organization.
Definition of the problem is... - Ans>>that a problem must be clearly and
consistently defined, showing its boundaries and interactions with the
objectives of the organization.
Model Construction is... - Ans>>the development of the functional
mathematical relationships that describe the decision variables, objective
function, and constraints of the problem.
Model solution is... - Ans>>when models are solved using management
science techniques.
,Model implementation is... - Ans>>the actual use of the model or its
solution.
Model Construction:
Information and Data:
Business firm makes and sells a steel product
Product costs $5 to product
Product sells for $20
Product requires 4 pounds of steel to make
Firm has 100 pounds of steel
Business Problem:
Determine the number of units to produce to make the most profit, given the
limited amount of steel available. - Ans>>Variables:
x = # units to produce (decision variable)
Z = total profit (in $)
Model:
Z = $20x - $5x (objective function)
4x = 100 lb of steel (resource constraint)
Parameters:
$20, $5, 4 lbs, 100 lbs (known values)
Formal Specification of Model:
maximize Z = $20x - $5x
Model Solution:
Solve the constraint equation:
, 4x = 100
(4x)/4 = (100)/4
x = 25 units - Ans>>Substitute this value into the profit function:
Z = $20x - $5x
= (20)(25) - (5)(25)
= $375
(Produce 25 units, to yield a profit of $375)
Break-even analysis is... - Ans>>used to determine the number of units a
product to sell or produce that will equate total revenue with total cost.
The break even point is... - Ans>>the volume at which total revenue equals
total cost.
Profit at break-even point is ____. - Ans>>zero
Fixed Cost (Cf) - Ans>>Costs that remain constant regardless of the number
of units produced.
Variable Cost (Cv) - Ans>>The unit production cost of product.
Volume (v) - Ans>>The number of units produced or sold.
Total Variable Cost (VCv) - Ans>>Function of volume (V) and unit variable
cost.
Total Cost (TC) - Ans>>Total fixed cost plus total variable cost.
TC=Cf+VCv
Profit (Z) - Ans>>Difference between total revenue vp (p=unit price) and
total cost.
Z=vp-Cf-VCv
Break-Even Point Formula - Ans>>v=(Cf)/(p-Cv)
Example-Western Clothing Company:
Fixed Costs: cf = $10000
Variable Costs: cv = $8 per pair
Price : p = $23 per pair
