Page 44 -

24 CHAPTER 1 INTRODUCTION

l The car park will need a minimum of 500 breakeven if some aspects of the problem are
parking spaces. assumed to change.
And recollecting that we’ve been asked to get
We’ve had to make a number of assumptions to
involved in this project at the Modelling and Analysis
get to this stage and, in practice, it would be worth-
while checking with the client that these were appro- stage, we might suggest to the President that it may
priate and realistic. Amongst the assumptions we’ve be worth going back a stage and spending some
time structuring and defining the problem. After all,
had to make are:
we’re starting from a position that it’s already been
l The annual repayment amount of E250 000 is decided that a new car park is the solution to the
fixed over the next 20 years. problem. Well, maybe it is and maybe it isn’t. Have
l The annual operating cost is E150 000 is also other factors been considered? Have other possible
fixed over the next 20 years. options been considered and evaluated? For exam-
ple, are we sure the problem is one of too many
l The car park charges and the carbon offset
cars? Or is too few people in most cars? Then
charge will remain the same over the next 20
perhaps promoting a car-sharing scheme might be
years.
more cost-effective? Is it poor public transport links
l The carbon offset contribution of E0.25 only
to the College? If so, discussions with local transport
applies to those cars paying for car parking
companies might prove productive. And if it is a
during semester.
problem with too many cars, maybe we should look
Clearly, if the President felt that some, or all, of for other solution options. How about reducing the
these assumptions were unrealistic then we could need for students to be on campus so often perhaps
change the model accordingly. For example, we making library material available online could cut
could build year-on-year increases into the operating down on traffic volume. Perhaps for some classes
costs figure and the car park charge to build in likely running them as virtual classes through the Internet
inflation. In practice, we’d probably want to build a rather than face-to-face classes may also cut down
simple spreadsheet model so the President could on traffic and may even increase student numbers!
do some what-if analysis – analyzing the impact on That’s good MS!

Problems

1 List and discuss the different stages of the management science approach.

2 Discuss the different roles played by the qualitative and quantitative approaches to
managerial decision making. Why is it important for a manager or decision maker to have a
good understanding of both of these approaches to decision making?

3 A firm has just completed a new plant that will produce more than 500 different
products, using more than 50 different production lines and machines. The production
scheduling decisions are critical in that sales will be lost if customer demands are not met
on time. If no individual in the firm has experience with this production operation, and if new
production schedules must be generated each week, why should the firm consider a
quantitative approach to the production scheduling problem? Why will qualitative analysis
also be necessary?
4 What are the advantages of analyzing and experimenting with a model as opposed to a
real object or situation?

5 Suppose that a manager has a choice between the following two mathematical models
of a given situation: (a) a relatively simple model that is a reasonable approximation

Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.