Management Science Chapter 1 and 2 notes.docx

The above mathematical model is based on four numbers

This preview shows page 5 - 6 out of 44 pages.

the numbers in the model inevitably are only estimates of quantities that cannot be determined precisely at this time. The above mathematical model is based on four numbers that are only estimates—the fixed cost of $10 million, the marginal cost of $1,000, the unit revenue of $2,000, and the final sales forecast (after it is obtained). A management science study usually devotes considerable time to investigating what happens to the recommendations of the model if any of the estimates turn out to considerably miss their targets. This is referred to as what-if analysis . what-if analysis Since estimates can be wrong, what-if analysis is used to check the effect on the recommendations of a model if the estimates turn out to be wrong. Incorporating the Break-Even Point into the Spreadsheet Model A key finding of the above mathematical model is its formula for the break-even point, 1.3 THE RELATIONSHIP BETWEEN ANALYTICS AND MANAGEMENT SCIENCE There has been great buzz throughout the business world in recent years about something called analytics (or business analytics) and the importance of incorporating analytics into managerial decision making. The primary impetus for this buzz was a series of articles and books by Thomas H. Davenport, a renowned thought-leader who has helped hundreds of companies worldwide to revitalize their business practices. He initially introduced the concept of analytics in the January 2006 issue of the Harvard Business Review with an article, “Competing on Analytics,” that now has been named as one of the ten must-read articles in that magazine’s 90-year history. This article soon was followed by two best-selling books entitled Competing on Analytics: The New Science of Winning and Analytics at Work: Smarter Decisions, Better Results. Analytics is a broad term that includes both management science and all the other quantitative decision sciences, such as mathematics, statistics, computer science, data science, industrial engineering, etc. By drawing on any of these tools to analyze the available data, analytics can be defined as the scientific process of transforming data into insight for making better decisions.
Image of page 5

Subscribe to view the full document.

So what is analytics? In contrast to management science, analytics is not a single discipline with its own well- defined body of techniques. Analytics instead includes many disciplines, namely, all the quantitative decision sciences. Analytics encompasses all of the quantitative decision sciences. Thus, any application of analytics draws on any of the quantitative decision sciences that can be most helpful in analyzing a given problem. Therefore, a company’s analytics group might include members with titles such as mathematician, statistician, computer scientist, data scientist, information technologist, business analyst, industrial engineer, management scientist, and operations research analyst. At this point, the members of a management science group might object, saying that their management science studies often draw upon these other quantitative decision sciences as well. This frequently is true, but it also is true that some applications of analytics draw mainly
Image of page 6
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern