Management Science Ch 1

Front 1

Management

Back 1

1. Getting things done through people
2. A dynamic living system which integrates human, financial, technological, and physical resources in such an effective way that the output becomes greater than the sum of its inputs

Front 2

Decision-making

Back 2

the most fundamental function of management

Front 3

Steps in Management Decision-Making

Back 3

1. Define the Decision Problem
2. Search for Data and Information
3. Generate Alternative Courses of Action
4. Analyze Feasible Alternatives
5. Select the Best Course of Action
6. Implement the Decision and Evaluate Results

Front 4

Economic Person

Back 4

the economic man or "homo oeconomicus" is an allegory that is supposed to represent a rational person who takes his economic decisions by making correct analyses and maximizing his self-interests.

This allegory expresses the "rational choice" theory (see that phrase).

Such a rational economic person is supposed to combine two traits.

* He is perfectly informed and he makes correct analyses of the economic situations and prospects, and of the behaviors of the other economic players.

* His decisions and actions always maximize the satisfaction of his economic interests

(or at least, if we expand the concept somewhat outside the economic world - as the boundary between economy and life in general is fuzzy - those decisions fit strictly his hierarchy of "preferences": see that word)

As research in behavioral economics (see that phrase) has shown, those assumptions do not fully match how economic decisions are taken in real life. Those assumed traits can only be used as approximations to make simplified economic models. Elements of adaptations and flexibilities have to be added to the parameters to reflect reality better.

Front 5

Normative Decision-Making Theory (prescriptive)

Back 5

it is concerned with identifying the best decision to take, assuming an ideal decision maker who is fully informed, able to compute with perfect accuracy, and fully rational. The practical application of this prescriptive approach (how people should make decisions) is called decision analysis

Front 6

Descriptive Decision-Making Theory

Back 6

attempting to describe what people will actually do. Since the normative, optimal decision often creates hypotheses for testing against actual behaviour, the two fields are closely linked.

Front 7

Global Optimization

Back 7

the decision-maker seeks a solution that would result in the best overall organizational measure, such as finding the maximum profit or the least cost.
The concept of an economic person presents a rational individual who always employs the scientific method to obtain the optimal solution for the organization (aka always seeks global optimization)

Front 8

Two basic Approaches to rationality in decision-making

Back 8

1. Scientific Method
2. The concept of the economic person

Front 9

Management Science

Back 9

Concerned with the application of scientific approaches to generate concrete information that is relevent to the problem sloving of the decision-maker. Special emphasis is placed on the analysis of the nature of the problem, the decision environment, the objectives of the organization, the judgment of the decision-maker, and the economic as well as noneconomic ramifications of the decision environment.

Front 10

Feasible Solution

Back 10

Feasible implies that the best solution we seek must be workable or implementable.
Management science is dedicated to finding the best feasible solution.

Front 11

Systems Approach

Back 11

A system is a whole comprised of a set of components, their attributes, and certain relationships among components that perform a function. ie a manufactoring firm is a person-machine system. A stereo set, however, is a mechanical system; it is made up of components such as transistors, electronic converters, and speakers that transmit sound.
Management Science is a systematic and comprehensive approach to decision-making, it inevitably involves what is called the system approach.

Front 12

Suboptimization

Back 12

The process of finding a solution that is best for one or more parts of the organization is usually called suboptimization.
Management Science attempts to find a solution that is close to the global optimum by analyzing interrelationships among the system componenets that are involved in the problem.

Front 13

Operations Research

Back 13

Often used interchangeably with management science

Front 14

Bounded Rationality

Back 14

The concept of a person striving to be as efficient as possible in achieving organizational objectives, given limits on the person's ability to process information

Front 15

Satisficing

Back 15

This approach attempts to obtain a good solution that is sufficiently satisfactory for a complex decision problem.

Front 16

Management Science plays the following roles

Back 16

1. Purpose-oriented Decision-making
2. Information- and Analysis-based Decision-making
3. Decision-making for Multiple Objectives
4. Increased Emphasis on Speed
5. Increased Attention to Group Projects
6. Increased Attention to Knowledge Management
7. More Systematic Contingency Management

Front 17

MIS

Back 17

Management Information Science

Front 18

Three Laws which have brought the global age

Back 18

1. Coase's Law
2. Moore's Law
3. Metcalfe's Law

Front 19

Coase's Law

Back 19

To minimize the transaction cost of doing business, a firm would continue growing vertically until functions can be performed more cheaply outside the firm. Now Coase's Law works in reverse: firms downsize their operations until doing them externally becomes more expensive than doing them internally.

Front 20

Moore's Law

Back 20

The computing power would roughly double every 18 months while the cost would be reduced by about half.

Front 21

Metcalfe's Law

Back 21

The value of a network increases with the square of the number of nodes (users).

Front 22

Five important shifts driven by the new global economy are

Back 22

1. Business Unit
2. Business Mission
3. e-Customers
4. Deintermediation
5. e-Engineering

Front 23

Business Unit

Back 23

The business unit used to be the whole organization but is now more often the business-web or value network has become the new business unit. The company organization does not contains all the parts of a company instead the company brings a few parts that they do well and network with other companies for the parts those companies do well.

Front 24

Business Mission

Back 24

used to be production but is now often the fullfillment of customer's requirements.

Front 25

e-Customers

Back 25

those who are well-informed and intelligent customers who have the most current knowledge about products and services. These customers are not easily fooled by promotional gimmicks.

Front 26

Deintermediation

Back 26

Internet based businesses have allowed customers to do business with the manufacturers or service firms directly. This bypasses the wholesalers and retailers.

Front 27

e-Engineering

Back 27

organizations today attempt to reinvent themselves by taking advantage of the Internet technology. involves three levels: interpersonal working relationships (ie virtual R&D teams), interfunctional processes, and interorganizational relationships (alliances, partnerships)