MODELS

AND
MODELING
 MODELS
Model is a generalized reflection of the natural world, and
only significant and appropriate objects or properties can be
included in the model, whereas modeling is the method of
treating and explaining real-life problems in mathematical
terms.
 Management science follows a rational, structured approach to problem
solving that strongly resembles what is known as the analytical process of
problem-solving. This approach, as illustrated in a generally recognized
and ordered series of steps follows:

Observation Model Solution

Problem Definition Solution Implementation

Model Construction
 OBSERVATION
The first phase in the cycle of handling management
science process is to recognize a problem that occurs
within the organization. The system must be monitored
continuously and closely so as to identify problems as
soon as they arise.
 OBSERVATION
What is the situation all
Mr. Jake Sim owns a Fuji Apple
about? Store and he is new to the
business industry. He is having
difficulty calculating the price
of his product per box and per
kilo.
 DEFINITION OF THE
PROBLEM
When a problem has been established, the problem must be described
explicitly and in a clear manner. Defining a problem incorrectly can easily
lead to either no solution or inappropriate solution. Hence the limitations of
the problem and the extent to which it pervades other units of the
organization should be included in the definition of the problem. It's evident
that we need to know the production process details and all the appropriate
information.
 DEFINITION OF THE
PROBLEM
• What is Mr. Jake's
problem?
2. What do we want to He is having difficulty
achieve? computing the price of his
product per box and per kilo
that's why, he needs a formula to
calculate it.
MODEL CONSTRUCTION
A concept in management science is a theoretical representation of an actual
issue scenario. It can be in the form of a graph or diagram, but most
commonly a model in management science consists of a series of
mathematical links. The numbers and symbols form these mathematical
relationships. Two types of models exist: determinist and probabilistic.
MODEL CONSTRUCTION
All aspects are known with certainty in deterministic models. There is no
question that deterministic models are ideal, however they can give a fairly
decent estimation of truth. There is a particular degree of ambiguity in the
probabilistic models. This is tempting to neglect the small degree of
ambiguity and to use deterministic models instead of probabilistic models.
In case of high uncertainty, we should consider random variables rather than
constants.
MODEL CONSTRUCTION
A linear equation with following
1. What Equation can be variables:
designed?
2. What are the variables? Cost of Fuji Apple per box
3. What are the given P1750.00
Freight charge per box P5.00
data?
Target profit per box
P 980.00
MODEL CONSTRUCTION
This is the basic formula in computing the profit:

Price per box – Cost per box = Profit

We can expand the equation further into:

Price per box – (Cost per box + Freight Charge) = Profit

MODEL CONSTRUCTION

a = price
b = cost per box
c = freight charge
d = profit
a – (b + c) = d
MODEL CONSTRUCTION
a – (b + c) = d
a – (P1750 + P5) = P980
a – (P1755) = P980
a= P980 + P1755
a= P2735 per box
MODEL CONSTRUCTION
If a box of Fuji Apple contains 20 kilograms,
then:

a= P2735 per box / 20 kilograms

a= P136. 75 per kilos
 MODEL SOLUTION
When models have been developed in management science, the methods
described in this text are used to solve them. A technique for a management
science solution usually applies to a particular type of model. Therefore, the
form of concept and the process of solution are also part of the scientific
management research. We also mean problem solution when we refer to
model solution. The typical goal of the most problems is to find an optimal
solution, that is, the best of all feasible solutions (solutions that meet all the
constraints).
 MODEL SOLUTION
Price per box – Cost per box =
• Is the equation designed
Profit
credible?
2. Can it be used in other
P2735 – (P1750 – 5) = P980
scenarios?
P2735 – P1755 = P980
3. How do we know if its
P 980 = P980
correct?
 IMPLEMENTATION OF
SOLUTION RESULT
It is the actual use of the model once it has been developed or the solution to the
problem the model was developed to solve. This is actually the main goal of
management and the original purpose of the whole process - not the model itself, but
adjustment of reality according to the recommendations ensuing from the results of
the modeling process. In case we do not use the results in the real production
process, all our effort was absolutely vain. On the contrary, if we constructed the
model in a wrong way and we did not validate it, the applied results could seriously
harm the real system.
 IMPLEMENTATION OF
SOLUTION RESULT
After we have checked and verified that our
solution is correct, now the last step of the
scientific approach is to implement. So, we
have to apply the equation to Mr. Jake's
problem.
MANAGEMEN
T SCIENCE
TECHNIQUES
 LINEAR PROGRAMMING
• This is one of management science's best-known tools. This
strategy describes the problem as maximizing a linear function
(minimizing) with reference to the set of linear constraints.

• Linear programming problems are an important class of

optimization problems that helps to find the feasible region and
optimize the solution in order to have the highest or lowest
value of the function.

• The main aim of the linear programming problem is to find the

optimal solution.
 INTEGER LINEAR
PROGRAMMING
Additional variable values criteria are applied to the initial linear
process ( i.e., process of linear function and linear constraints). All or any of
the values must be an integer. The particular type of these variables is the
binary variable (0-1 variable) with a value of 0 or 1. We think about binary
integer linear programming in such a situation. When only those variables
are described as integer (binary) in the model, then we are thinking about
mixed integer linear programming.
 INTEGER LINEAR
Applications of IntegerPROGRAMMING
Linear Programming:

• Fixed Charge
• Capital Budgeting
• Distribution System Design Problems
• production planning, transportation and routing,
and various types of scheduling
 GOAL PROGRAMMING
• When several conflicting priorities need to be addressed
concurrently, it needs more effective resource. Goal
programming is a specific methodology for coping with
such situations, usually in linear programming
 GOAL PROGRAMMING
Goal programming is an approach used
for solving a multi-objective
optimization problem that balances a
trade-off in conflicting objectives. It is
an approach of deriving a best possible
'satisfactory' level of goal attainment.
 DISTRIBUTION MODELS
• A distribution problem is a specific
category of problem in linear
programming.
• There are two major categories of
distribution problems:

1.) The problem of transportation - deals

with shipping from a variety of suppliers to
a
number of destinations
 DISTRIBUTION MODELS
2.) The problem of assignment
- deals with determining the
right one-to-one option for any
of a number of prospective
"candidates" to a number of
possible "positions."
 NONLINEAR
PROGRAMMING
• Nonlinear models include nonlinear objective
function and/or other nonlinear constraints.
• Techniques employed in this field of management
science to solve problems are somewhat distinct from
linear programming approaches.
 NONLINEAR
PROGRAMMING
• When problems fit the general
linear programming format but
include nonlinear functions, they
are referred to as non-linear
programming problems
NETWORK MODELS
• Many problems can be defined as a network in
graphic terms
• Describes patterns of flow in a connected system
where the flow might involve material, people or
funds
 NETWORK MODELS
• Many problems can be defined as
a network in graphic terms
• Describes patterns of flow in a
connected system where the flow
might involve material, people or
funds
 NETWORK MODELS
• Typical circumstance is a network of transports:
cities (nodes) are linked by roads (arcs) to each
other
• The most critical factor of several problems,
addressed by the help of network models, is unit
cost and the aim is to find the lowest overall cost.
 PROJECT MANAGEMENT
• Managers are responsible for
organizing, managing and
overseeing projects in certain cases
that consist of several different jobs
or activities undertaken by a number
of teams or persons.
 PROJECT MANAGEMENT
• The main objective of project management is to
complete a project within the established goals of time,
budget, and quality.
• These problems are overcome by two simple methods:
CPM (Critical Path Method) and PERT (Program
Analysis Review Technique)
 INVENTORY MODELS
• Inventory control is one of the most common strategies,
helping managers decide what to buy and how much to
buy.
• The primary purpose is generally to strike an accurate
balance between the expense of keeping inventory and
the cost of implementing an order.
 INVENTORY MODELS
• We are considering
two distinct groups of
models: deterministic
and probabilistic.
WAITING LINE
MODELS
• This field of management science approaches deals with the
circumstances in which a variety of networks (vendors) ought
to represent units (customers).
• Thus, the alternative name for the models of the waiting line is
“Queuing Models”.
WAITING LINE
MODELS
Waiting line models have been designed as
quantitative methods to analyze the operating
characteristics and costs of waiting line systems. It
involves a population source, an arrival process, a
waiting area, and a service area or channel.
SIMULATION
As management challenges are more complicated, it
is always difficult to address them using traditional
methods (or not successful because of the time and
expense spent). Simulation solution is useful for this
reason and is in many situations the best way to
handle the issue.
 SIMULATION
Simulation is a programming experience with a simulation model
intended to explain and measure the actions of the real system-the
machine software simulates the actual system.
Simulation is normally used to assess the current, or predict the
future, performance of a business process.
DECISION ANALYSIS
Such methods may be used to choose appropriate approaches from
a variety of alternatives to decisions. According to the knowledge
received by the manager, management challenges and relevant
methods are classified into three types: decisions under certainty
(deterministic), decisions under risk (probabilistic) and decisions
under uncertainty.
DECISION ANALYSIS
Decision analysis involves identifying and
assessing all aspects of a decision, and
taking actions based on the decision that
produces the most favorable outcome.
Theory of Games
This field is an expansion of the decision making of two or more
decision-makers to the circumstances. All managers take
simultaneous decisions (selected strategies) to execute an act that
influences all decision-makers (players). For certain disputes, two
or three decision-makers will collaborate, while battling with the
others.
Theory of Games
Game theory is the science of decision making in situations of
competition and conflict. In management science, the game
theory is a useful tool to help managers to predict, analyze, and
perform actions necessary for the business to succeed.
Theory of Games
It is said to be the science of strategies which comes under the
probability distribution. It determines logical as well as
mathematical actions that should be taken by the players in order
to obtain the best possible outcomes for themselves in the games.
 FORECASTING
• Methods of forecasting support the manager
predicting future elements of the business
operation.
• Forecasting is a technique that uses
historical data as inputs to make informed
estimates that are predictive in determining
the direction of future trends
 FORECASTING
• THE TWO BASIC METHODS OF FORCASTING

• QUALITATIVE METHOD
Also known as judgment method

• QUANTITATIVE METHOD
It is mathematical process making it consist of and objective
oriented
 FORECASTING
4 STEP THAT FORECASTERS NEED TO FOLLOW

• STEP 1: Develop the basic of forecasting

• STEP 2: Estimate the future operation of the business
• STEP 3: Regulate the forecast
• STEP 4: Review the process
 FORECASTING
BENEFITS OF FORECASTING
• Help to predict the future
• Good for customers
• Keeps a company up to date
• Learn from past experiences
 MULTICRITERIA
DECISION MAKING
• The decision maker needs to consider multiple criteria for many
managerial problems. If we find a solution which improves one
criterion, it mostly aggravates some other criteria. It's practically
difficult to modify all the criteria at the same time.
• Select best from a set of alternatives each of which is evaluated
gains multiple criteria
 MULTICRITERIA
DECISION MAKING

BEN FRANKLINE
 MULTICRITERIA
DECISION MAKING
STEP IN MCDM (DUCKSTE ET AL 1989)
• Defining the problem and fixing the criteria
• Data collection
• Establishment of Feasible alternatives
• Selection of appropriate methods
• Incorporation of Decision makers preference
• Choosing one or more best alternatives for further
analysis
MARKOV ANALYSIS
• This approach can be used for explaining a system 's actions
in a complex scenario (system progression over time). If-at a
given time point-the device is in one of the potential states,
the device may remain in the current state or switch into some
other state at the following time point
• Markov Analysis is a really strong management science
method with a number of practical applications.
MARKOV ANALYSIS
POTENTIAL STUDIES

• Predict market share at specific future point in time

• Assess rates of change in market shares over time
• Predict market share equilibriums (if they exist)
• Evaluate the process for introducing new product
 Dynamic Programming
• Richard Bellman in 1995
• Management also needs to recognize a series of
decisions where each judgment impacts potential
decisions in a major way. Dynamic programming lets
administrators overcome certain forms of challenges with
this complex decision making. There is no common
paradigm to solve dynamic programming problems and,
thus, the problems are divided into several classes.
 2 DIFFICULTIES MAY ARISE ANY APPLICATION OF
DYNAMIC PROGRAMMING

• If may not always be possible to combine the solution of smaller

problem to form the solution of a longer one.
• The number of small problems to solve may be an acceptable
large
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