Management Science Chapter 1 and 2 notes.docx

Step 6 help to implement the teams recommendations

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Step 6: Help to implement the team’s recommendations that are adopted by management. Once management makes its decisions, the management science team normally is asked to help oversee the implementation of the new procedures. This includes providing some information to the operating management and personnel involved on the rationale for the changes that are being made. The team also makes sure that the new operating system is consistent with its recommendations as they have been modified and approved by management. If successful, the new system may be used for years to come. With this in mind, the team monitors the initial experience with the system and seeks to identify any modifications that should be made in the future. Management Science Considers Quantitative Factors Many managerial problems revolve around such quantitative factors as production quantities, revenues, costs, the amounts available of needed resources, and so on. By incorporating these quantitative factors into a mathematical model and then applying mathematical procedures to solve the model, management science provides a uniquely powerful way of analyzing such managerial problems. Although management science is concerned with the practical management of organizations, including taking into account relevant qualitative factors, its special contribution lies in this unique ability to deal with the quantitative factors. page 6 The Special Products Company example discussed next will illustrate how management science considers quantitative factors. 1.2 AN ILLUSTRATION OF THE MANAGEMENT SCIENCE APPROACH: BREAK-EVEN ANALYSIS The Special Products Company produces expensive and unusual gifts to be sold in stores that cater to affluent customers who already have everything. The latest new-product proposal to management from the company’s Research Department is a first-of-its-kind iWatch. This iWatch would combine the features of a top-of-the-line atomic wristwatch and a next-generation smartphone, including the ability to respond to voice commands or questions with voice responses. It also would connect to the Internet wirelessly to provide weather, sports scores, stock quotes, and more. An extensive research-and-development project would be needed to develop the iWatch. The proposal is to provide a generous budget of $10 million for this project in order to provide as many desirable features as possible within this budget. It is clear that the production costs for the iWatch would be very large because of the extreme miniaturization that would be required, so the selling price would need to be far beyond the reach of middle-class customers. Therefore, the marketing of the iWatch would be aimed at wealthy customers who want the most advanced products regardless of cost.
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