Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets 5th Editi

Chapter 1
Introduction  
Review Questions   
1.1-1     The rapid development of the discipline began in the 1940’s and 1950’s.
1.1-2     The traditional name given to the discipline is operations research.
1.1-3     A management science study provides an analysis and recommendations, based on the quantitative factors involved in the problem, as input to the managers.
1.1-4     Management science is based strongly on some scientific fields, including mathematics and computer science.  It also draws upon the social sciences, especially economics.
1.1-5     A decision support system is an interactive computer-based system that aids managerial decision-making.  The system draws current data from databases or management information systems and then solves the various versions of the model specified by the manager.
1.1-6     Many managerial problems revolve around such quantitative factors as production quantities, revenues, costs, the amounts available of needed resources, etc.
1.2-1     The production and sales volume needs to exceed the break-even point to make it worthwhile to introduce a product.
1.2-2     The number of watches produced cannot be less than 0, nor should it exceed the number that can be sold. Also, the objective is to make the decision that maximizes the company’s profit.
1.2-3     The purpose of what-if analysis is to check the effect on the recommendations of a model if the estimates turn out to be wrong.
1.2-4     Simply enter a variety of new values and see what happens.
1.2-5     The MIN(a, b) function gives the minimum of a and b.
1.2-6     The IF(a, b, c) function returns b if a is true, otherwise it returns c.


Problems
1.1         If Q units are produced per month, then
              Monthly Profit = $0 {if Q = 0} and –$20,000 + ($20 – $10)Q {if Q > 0}.
Break-even point = $20,000 / ($20 – $10) = 2000, so it will be profitable to produce if Q > 2000.
1.2         a)    $40,000
              b)    $15.
              c)    $15.
1.3         a)    Let Q be the number of units produced and sold. Then
           Monthly Profit = $0 {if Q = 0} and –$500,000 + ($35 – $15)Q {if Q > 0}.
       Break-even point = $500,000 / ($35 – $15) = 25,000.
              b)    Let Q be the number produced and s the number that can be sold. Then
           Profit = [0 if Q = 0] and [-$500,000 + $35 * MIN(Q, s) – $15Q if Q > 0].
              c)   
             
              d)    Q ≤ s.
1.4         a)    $30,000,000
              b)    $1,666.67