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MANAGEMENT SCIENCE MODELS AND TECHNIQUES 21

Inventory Models
Having the right levels of inventory, or stock, is critical for many organizations. Too
much inventory makes costs escalate. Too little inventory and sales and production
may suffer. Inventory models are used by managers faced with the dual problems of
maintaining sufficient inventories, or stock, to meet demand for goods and, at the
same time, incurring the lowest possible inventory costs.

Queuing Models
Waiting-line or queuing models have been developed to help managers understand and
make better decisions concerning the operation of situations involving queues. Using
mathematical models we shall see how queuing situations can be analyzed to predict
factors such as the time a customer may have to wait in a queue before service, the likely
size of queues that may build up and the effect on queues of changing the service process.

Simulation
Simulation is a computer-based technique used to model the operation of a system
or process so that experimentation can be conducted to evaluate the consequences
of alternative decisions. This technique employs computer programs to model the
operation and perform simulation computations.
Decision Analysis

Decision analysis is a formal approach to decision making and can be used to
determine optimal strategies in situations where there are several decision alter-
natives and where the outcomes or consequences of these decisions are uncertain.

Multicriteria analysis
We then have a chapter that introduces a variety of multicriteria methods. Such
methods are used where we are making a decision where we must somehow take a
variety of criteria into account when deciding what best to do. For example, you may be
considering buying a new laptop. In trying to decide which make and model to buy
you’ll take a variety of conflicting criteria into account: price, reputation, reliability and
so on. Goal programming is one technique for solving multicriteria decision problems,
usually within the framework of linear programming. Analytic Hierarchy Process is
another multicriteria decision-making technique which permits the inclusion of sub-
jective factors in arriving at a recommended decision.

The following four chapters are located on the associated premium online platform
that is autopackaged with the text. For more information on access, see the ‘Digital
Resources’ page at the front of the book.

Integer Linear Programming
Integer linear programming is an approach used for problems that can be set up as
linear programmes with the additional requirement that some or all of the decision
variables take integer values. For example, a car manufacturer may be looking to
optimize the number of dealer outlets to supply to, where, clearly, the number of
outlets must sensibly be an integer value.

Forecasting
We then look at a variety of forecasting techniques that can be used to predict
future aspects of a business operation. We look at time series models which
analyze the movement of a business variable over time; we look at methods of

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