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2 CHAPTER 1 INTRODUCTION

1.1 Introduction to Management Science

Air New Zealand; Amazon; American Airlines; AT&T; Boeing; BMW; British Airways;
Citibank; Dell; Delta Airlines; Eastman Kodak; Federal Express; Ford; GE Capital;
Hanshin Expressway, Japan; an Indian tea producer; IBM; Kellogg; NASA; National
Car Rental; Nokia; Procter & Gamble; Renault; UPS; Vancouver Airport.
At first sight it’s not obvious what connects these organizations together. They’re
from different countries; some are private sector, some public sector; some operate
internationally, some domestically; they’re in different industrial and commercial
sectors; they’re of different sizes. However, they do have one thing in common – they
all successfully use management science to help run their organization.
Management science (MS) has been defined as helping people make better deci-
sions. Clearly, decision-making is at the heart of a manager’s role in any organiza-
tion. Some of these decisions will be strategic and long-term: which new products
and services to develop; which markets to expand into and which to withdraw from.
Some will be short-term and operational: how many checkouts to open at the
supermarket over the weekend; which members of staff to allocate to a new project.
Get the decisions right and the organization continues to succeed. Get the decisions
wrong and the organization may fail and disappear. Managers in just about any
organization round the world will almost certainly tell you that life has never been
tougher. There’s increasingly fierce competition – in the public sector as well as
private sector; customers require more and more but want to pay less; technological
changes continue to gather speed; financial pressures mean that costs and produc-
tivity are constantly under scrutiny. Organizations are under pressure to do things
better, do them faster and do them for less in terms of costs. Making the right
decisions under such pressures isn’t easy and it’s no surprise that many organizations
have turned to management science to help.
In today’s harsh business environment organizations and managers are looking
for structured, logical and evidence-based ways of making decisions rather than
relying solely on intuition, personal experience and gut-feel. Management Science
(also known as Operational Research) applies advanced analytical methods to busi-
ness decision problems. Management emphasizes that we’re interested in helping
manage the organization better – that MS is very much focussed on the practical,
real world. Science means that we’re interested in rigorous, analytical and systematic
ways of managing the organization better.

Does it Work?
Well, lots of organizations – like those above – think so. And there’s plenty of
evidence to show that MS really makes a difference. Some examples:
l The UK telecoms company BT used MS in the way it planned the work of
its repair engineers, saving around £125 million a year.
l British Airways used MS to review its spare parts policies for its aircraft
fleet and identified £21 million of savings.
l Motorola applied MS to its procurement strategy. During the first 18 months of
implementation, Motorola saved US$600 million, or approximately 4 per cent,
on US$16 billion of parts purchases
l Ford used MS to optimize the way it designs and tests new vehicle prototypes,
saving over £150 million
l A leading UK bank, LloydsTSB, used MS to design the seating configuration
in its call centres eliminating the need to build, and pay for, additional capacity

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