Lecture Day 1

Introduction to Management Science

Linear Programming

Introduction to
Management Science

Management Science is . . .
. . . the discipline devoted to studying and developing
procedures to help in the process of making
decisions.

. . . the use of the scientific method for decision

making.
. . . an interdisciplinary field comprising elements of
mathematics, economics, computer science, and
engineering.
. . . an experimental and applied science devoted to
observing, understanding, and predicting the
behavior of purposeful human/machine systems.
- Operations Research Society of America

Historical Overview
Venetian shipbuilders of the fifteenth century are
known to have used an assembly line in outfitting
ships
Adam Smith and his study on the merits of
division of labor in 1776

Charles Babbage wrote On Economy of

Machines and Manufactures (1832) which
discussed issues relevant to management science
such as skill differential in wages

Historical Overview
Frederick W. Taylor is known as the father of scientific
management

he formally advocated a scientific approach

to the problems of manufacturing which led

to the development of industrial engineering
as a profession

he worked under the philosophy that there was

one best way or most efficient way to

accomplish a given task

Henry L. Gantt refined the content of early scientific

management by bringing into consideration the
human aspect of managements attitude toward labor

Historical Overview
Frederick W. Lanchester attempted in 1914 to
predict the outcome of military battles based on
the numerical strength of personnel and weaponry,
which represented the first attempt to model an
organizational decision problem mathematically.

Horace C. Levinson was one of the first to apply

sophisticated mathematical models to business
problems. In the 1930s, he studied the relationship
between advertising and sales as well as the effect
of income and residential location on customer
purchases.

Historical Overview
World War II developments:
Investigation on the effective use of radar,

anti-submarine warfare, civilian defense, and

the optimal deployment of convoy vessels
to accompany supply ships
British P.M.S. Blackett and his Blackett Circus
which exemplify the multidiscipline team
approach in using MS/OR models
John von Neumann developed game theory and
utility theory
George Dantzig developed the simplex method
of linear programming which uses linear algebra
to determine the optimal allocation of scarce
resources

Management Science
follows the
Scientific Method
Observation

Definition of the problem

Formulation of a hypothesis
Experimentation
Verification

Management Science
follows the
Systems Approach
Consider an organization as a human/machine
system comprising components such as
machinery, departments, and individual people.
Viewing the organization as a system permits
the management scientist to consider
the individual components in relation to
the entire organization.

Characteristics of the
Management Science Approach
Viewing the problem within a systems
perspective

Applying the scientific method to develop

the solution methodology
Using a team, or interdisciplinary, approach

Using a mathematical model

Using a high-speed electronic computer

Models in Management Science

A model is a representation or an abstraction
of an object or a particular real-world
phenomenon.
The purpose of the model is to gain specific
information about, and general insight into,
the phenomenon that it represents.
A good model accurately displays the key
properties of the entity it represents.

Types of Models
Iconic model - a physical representation that
actually looks like the object it represents
Analog model - substitutes one property for
another; it can represent dynamic situations
statically
Symbolic or Mathematical model - attempts
to represent non-mathematical reality by
means of equations and other mathematical
statements

 A mathematical model must be detailed enough

to represent the essential realities of the
problem and yet manageable in terms of
computation and implementation.
No mathematical model can capture all the
characteristics, properties, and uncertainties
of a real situation.

Most models created for Management Science

applications consist of the following system of
equations:
Objective Function - a single equation used
to measure the effectiveness of proposed
solutions
Constraints - equations which ensure that
the solution satisfies certain requirements
dictated by the nature of the problem

Consider the following knapsack

or cargo-loading problem:
Item

Weight (lbs.)

Value

1. Water

3.00

60

2. Tent
3. Food

5.00

60

4.00

40

4. Matches

0.01

10

5. Fishing Tackle
6. Sleeping Bag

4.00

20

3.00

10

7. Snake Bite Kit

0.50

Maximum capacity of knapsack = 10 lbs.

Steps in Applying Management Science Techniques

Facts

Available
quantitative
models

Data
preparation

2
Choose
a
model

3
Solve the
proposed
model

1
Formulate
the
problem
Problem
definition
(a verbal
model)

Proposed
model

4
Test
the
solution

Proposed
solution

Unsatisfactory solution

Possible
future
changes

Education,
publicity,
etc.

5
Establish
controls

6
Generate

Satisfactory
solution

acceptance
& implement

Satisfactory
technique
for further
solutions

Report
generation

Useful
technique

MS / OR Applications
Public Sector:
Urban-Social

Health

City planning
Courtroom congestion
Air-water pollution control

Health care delivery

system evaluation
Hospital admissions

Solid waste disposal

Disease control

Air & highway traffic

patterns

Blood inventory policy

Mass transit systems

Population planning
Municipal zoning
Political campaign strategies

Dietary planning

MS / OR Applications
Private Sector:
Service

Industrial

Portfolio management

Production scheduling

Location of retail facility

Optimal inventory
policies

Insurance and risk

management
Actuarial science
Advertising media mix
Airplane scheduling
Telephone switching
Transportation scheduling

Distribution of
products
Working capital
management

Plant layouts
Quality control
Queuing analysis of
facilities

Linear Programming

Linear Programming (LP) is . . .

. . . primarily concerned with the determination of
the best allocation of scarce resources.

. . . a component of the more general field of

mathematical programming that is concerned
with the development of modeling and solution
procedures for the purpose of maximizing
the extent to which the goals and objectives
of the decision maker are realized.

 Despite the implication of its name, LP has little

to do with computer programming. In LP, the
word programming is related to planning.
Specifically, it refers to modeling a problem and
subsequently solving it by mathematical
techniques.

General Problem Situations To Which

Linear Programming Can Be Applied :
Blending. In such problems, several raw ingredients
are mixed into a final product that must fulfill certain
specifications. The objective is to determine the blend
of ingredients that does not exceed available supply,
meets all technical specifications, and minimizes costs.
Determining Product Mix. In these problems, it is
necessary to determine the kinds and quantities
of products to be manufactured to maximize profits.
The final product mix must take into consideration
the limited resources, expected demand for each
product, and various management policies.

General Problem Situations To Which

Linear Programming Can Be Applied :
Purchasing. LP can be used to help confront the kind
of purchasing decisions in which products are
available at different quantities, qualities, and prices.
The purchase decision must take into consideration
the output requirements and specifications as well as
budget limitations. LP can also be used in make-orbuy situations.

General Problem Situations To Which

Linear Programming Can Be Applied :
Physical Distribution and Assignment. In these
problems, it is necessary to ship/transfer goods from
supply points or production facilities to warehouses
or centers of customer demand. The problem is to
determine the shipping pattern that minimizes
shipping costs, meets all demand, and does not
exceed available supply. In assignment problems,
the objective is to assign facilities or people to
specified jobs to maximize performance or minimize
costs or time.

Canonical Form of a
Linear Programming Model
Maximize:

c1x1 + c2x2 + . . . + cnxn

Subject to:

a11x1 + a12x2 + . . . + a1nxn < b1

a21x1 + a22x2 + . . . + a2nxn < b2
.
.
.
am1x1 + am2x2 + . . . + amnxn < bm

and

x1 > 0, x2 > 0, . . ., xn > 0

where: xj - decision variables

- they are the variables whose value is

determined when the LP model is solved
aij, cj, bi - parameters
- input data

Product Mix Example

The Cordoba Company is a manufacturer of power
amplifiers and preamplifiers. It has the facilities to produce only
power amplifiers, only preamplifiers, or a combination of both.
Production resources are limited, and it is critical that the firm
produce the appropriate number of power amplifiers and/or
preamplifiers to maximize profit. Currently, the power amplifier
is selling for P799.95 and is contributing P200 toward profit.
The preamplifier sells for P1,000 and contributes P500 profit.
The production process is limited by scarcity of highquality transistors for the preamplifiers, assembly worker hours,
as well as testing and inspection working hours. Because of a
shortage of high-quality transistors, at most 40 preamplifiers
can be manufactured on a daily basis; all other electronic
components are in adequate supply. There are only 240 hrs. of
assembly worker time available each day with each power
amplifier requiring 1.2 hrs. and 4 hrs. for each preamplifier.
There are 81 worker hours available for inspection and testing
each day, and the two components require 0.5 and 1 hour,
respectively.

Let: X1 = number of power

amplifiers
X2 = number of
preamplifiers
Max. Z = 200X1 + 500X2
Subject to:
X2 < 40
1.2X1 + 4X2 < 240
0.5X1 + X2 < 81
Xi > 0

End of Lecture Day 1

Diet Problem Example

The objective is to determine the type and amount of foods
to include in a daily diet to meet certain nutritional requirements
at minimum cost. The foods included are tuna fish, milk, spinach,
and whole-wheat bread; the only nutrients being considered are
vitamins A, C, and D, as well as iron. Following are the nutritional
and cost data for this problem:

Nutrient

Gallon
of
milk

Pound
of
tuna

Vit. A

6,400

237

Vit. C

40

Vit. D

Loaf
of
bread

Pound
of
spinach

RDA

34,000

5,000 IU

71

75 mg

540

400 IU

Iron

28

13

12 mg

Cost

P1.95

P1.80

P0.75

P0.80

Let: X1 = gallons of milk

X2 = pounds of tuna
X3 = loaves of bread
X4 = pounds of spinach
Min. Z = 1.95X1 + 1.80X2
+ 0.75X3 + 0.80X4
Subject to:
6,400X1 + 237X2 +34,000X4 > 5,000
40X1 + 71X4 >

75

540X1 > 400

28X1 + 7X2 + 13X3 + 8X4 >
Xi > 0

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