MANAGEMENT

SCIENCE
Jisryl H. Raz, CPA, MSAIA
Management Concept

• a set of principles relating the functions of planning,

organizing, directing, controlling, and the application of these
principles in harnessing physical, financial, human and
informational resources efficiently and effectively to achieve
organizational goals
What is Management Science?
• a scientific approach to solving management problems
• encompasses a logical approach to problem solving
• can be used in a variety of organizations to solve many different types
of problems
Scientific Method Approach
Observation Understanding the situation How is
it done?
Pinpointing the problem and
Problem Definition setting of objectives

Model Abstract mathematical

construction representation of a problem
Feedback

Solution Logical resolve to of a problem

Implementation Execution of the solution

Let’s try this 
David decided to put up a business, to be called “David’s Rice” – a rice
retailing business in his hometown. He canvassed from local farmers
and suppliers, and got a very affordable bargain of P 1,800 per sack of
50-kilogram rice. Apart from the cost of purchase, David has to
shoulder the freight of P 5 per sack to deliver the purchase into his store.
David is, however, frustrated in calculating how much should be the
price per sack and per kilo given that he wants to earn a net of P 1,100
per sack. He also wants to make a simulation of any possible scenario.

Can we help David resolve his problem?

How?
Ask yourself:
• OBSERVE: What is situation all about?
• DEFINE THE PROBLEM: What is David’s problem? What do we want
to achieve?
• MODEL CONSTRUCTION: What mathematical equation can be
designed? What are the variables and parameters? What are the
given data?
• SOLUTION: Manipulate. Is the equation designed credible? Can it be
used in other scenarios? How do we know if it is correct?
• IMPLEMENT: Apply the equation.
Reinforcement:
Carl is running his newly established business – a coffee shop. During
the first month of operation, he observed that each cup of coffee
requires:
1. 150 millilitre of water
2. A table spoon of coffee
3. One-half cup of milk
4. A paper cup
5. A stirrer straw
Reinforcement:
Carl determined that:
a. One liter of water costs him P 40 plus P 5.00 for the delivery charge
b. A pack of 1-kilogram coffee from Baguio would make 150 table
spoons, and each pack costs P 2,250.
c. A can of special milk, which costs P 110, would make 2.5 cups.
d. A pack of paper cups, which contains 40 cups, costs P 85.
e. A pack of stirrer straws costs P 50 with 80 straws per pack.
Guide Questions:
1. How much is the total costs per cup of coffee?
2. If Carl expects a profit of 30% of the cost per cup:
1. What equation can be designed?
2. How much should be the selling price per cup?
3. How much would he profit if he sells 100 cups?
3. If Carl expects a profit of 30% of the price per cup:
1. What equation can be designed?
2. How much should be the selling price per cup?
3. How much would he profit if he sells 100 cups?
Guide Questions:
3. If Carl plans to sell each cup of coffee at 150% above cost:
1. What equation can be designed?
2. How much should be the selling price per cup?
3. How much would he profit if he sells 50 cups?