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18 CHAPTER 1 INTRODUCTION

Figure 1.3 Graph of the Breakeven Analysis for Nowlin Plastics

Total Revenue
Revenue and Cost (€) 8000 Fixed Cost Total Cost
10 000
R(x ) = 5 x
Profit
6000
4000
C( x ) = 3000 + 2 x
2000 Loss Breakeven Point = 1000 Units

x
0 400 800 1200 1600 2000
Production Volume

MANAGEMENT SCIENCE IN ACTION

A Spreadsheet Tool for Catholic Relief Services*

atholic Relief Services (CRS) is a not-for-profit time there was little in the way of analysis that was
C organization that supports development activ- used to help managers and CRS decide that it needed
ities and humanitarian relief efforts across the world a simple-to-use tool that would help managers make
operating with around 4000 field staff in almost 100 more effective budget allocation decisions. A budget
different countries. Its work is both short-term – allocation model was developed with a spreadsheet
responding with emergency programmes to natural tool. The spreadsheet model allocates available
and man-made disasters – and longer-term – sup- funds in order to have maximum impact but at the
porting development programmes in agriculture, same time to be consistent with CRS mission objec-
education and health. Its annual budget is around tives and priorities. Managers are able to influence
US$500 million with around half of this going on the allocation, for example by setting limits to what
emergency aid and support. Each year managers each country could practically cope with. Manage-
in CRS have to decide how best to allocate the ment have responded positively to the current
available funding to different projects in different model and spreadsheet tool partly because it is
countries. Some of these projects are already in simple to use and partly because they were involved
place and need continuing funding and support in shaping the model so have an understanding as
and yet each year requests for new projects have to how the spreadsheet tool works and can have
to be considered. Not only do managers have to trust and confidence in its results.
take into account the available funding but also try
*Based on Investment Analysis and Budget Allocation at Catholic Relief
to ensure this funding is being used to best effect in the Services, I. Gamvros, R. Nidel and S. Raghavan, Interfaces Vol. 36,
context of the CRS mission and objectives. At the No. 5, September-October 2006, pp 400–406

1.7 The Modelling Process

As we have discussed, one of the features that distinguishes management science
from other management disciplines is the extensive use of models – both qualitative
and quantitative. Throughout the text we shall be introducing a number of the more

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