Business Usage of Management Science Techniques | Introduction to Management Science (10th Edition)

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Not all management science techniques are equally useful or equally used by business firms and other organizations. Some techniques are used quite frequently by business practitioners and managers; others are used less often. The most frequently used techniques are linear and integer programming, simulation, network analysis (including critical path method/project evaluation and review technique [CPM/PERT]), inventory control, decision analysis, and queuing theory, as well as probability and statistics. An attempt has been made in this text to provide a comprehensive treatment of all the topics generally considered within the field of management science, regardless of how frequently they are used. Although some topics may have limited direct applicability, their study can reveal informative and unique means of approaching a problem and can often enhance one's understanding of the decision-making process.

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Management Science Application: Management Science at FedEx

In 1973 Frederick W. Smith started Federal Express Corporation to provide overnight delivery of small, high-value items, such as pharmaceuticals , aerospace components , and computer parts . The company began operation on March 12, 1973, in 11 cities in the south with a fleet of 22 twin-engine executive jets , each with a payload of about 3 tons. That first day the company delivered only 6 packages, and three days later FedEx discontinued air delivery service because of a lack of business. At that point FedEx took stock of its situation and began using management science techniques and models to help solve its problems and redefine its operation. Since that time, management science has been an integral part of the company's spectacular success. Initially FedEx used quantitative techniques to analyze its original choice of cities, and a month after it shut down service, a rejuvenated FedEx began servicing a new 26-city system based on quantitative analysis of markets and cities. FedEx is now an $8 billion plus corporation and the world's largest express transportation company, delivering more than 2 million items to over 200 countries each day. Its transportation system includes more than 500 aircraft and 35,000 vehicles. The management science applications the company has conducted over the years include simulation models to develop economical flight schedules and determine resource requirements at its hub terminals; planning models to evaluate alternative routes and evaluate expansion plans; forecasting models to forecast aircraft maintenance requirements and develop maintenance schedules and to forecast when new terminal hubs would be needed to increase capacity for an expanding business; Markov models to plan for pilot requirements in the future and to show pilots their expected career path with the company; queuing analysis to develop and analyze the company's computerized call centers for customer orders and dispatching; and integer linear programming to help the company develop its SuperHub system instead of a less economical series of smaller hubs. All these techniques, plus others, are presented in this text. From its beginning, management science applications and models have been used in many of FedEx's crucial business-shaping decisions.

Source: R. O. Maxon, J. L. McKenney, W. Carlson, and D. Copeland, "Absolutely, Positively Operations Research: The Federal Express Story," Interfaces 27, no. 2 (MarchApril 1997): 1736.

The variety and breadth of management science applications and of the potential for applying management science, not only in business and industry but also in government, health care, and service organizations, are extensive . Areas of application include project planning, capital budgeting, production planning, inventory analysis, scheduling, marketing planning, quality control, plant location, maintenance policy, personnel management, and product demand forecasting, among others. In this text the applicability of management science to a variety of problem areas is demonstrated via individual chapter examples and the problems that accompany each chapter.

A small portion of the thousands of applications of management science that occur each year are recorded in various academic and professional journals. Frequently, these journal articles are as complex as the applications themselves and are very difficult to read. However, one particular journal, Interfaces , is devoted specifically to the application of management science and is written not just for college professors but for businesspeople, practitioners, and students as well. Interfaces is published by INFORMS (Institute for Operations Research and Management Sciences), an international professional organization whose members include college professors, businesspeople, scientists, students, and a variety of professional people interested in the practice and application of management science and operations research.

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Interfaces regularly publishes articles that report on the application of management science to a wide variety of problems. The chapters that follow present examples of applications of management science from Interfaces and other professional journals. These examples, as presented here, do not detail the actual models and the model components. Instead, they briefly indicate the type of problem the company or organization faced, the objective of the solution approach developed to solve the problem, and the benefits derived from the model or technique (i.e., what was accomplished). The interested reader who desires more detailed information about these and other management science applications is encouraged to go to the library and peruse Interfaces and the many other journals that contain articles on the application of management science.