Strategic Management: Formulation and Implementation

Tools For Planning And Problem Solving - Management Science Aids

To help managers improve their planning and problems solving, a variety of techniques and tools have been developed. The most important of these tools are management science research techniques. The term management science (MS) and operations research (OR) are, in general, used interchangeably. Management science is defined as "a set of quantitatively based decision models used to assist management decisions makers" (Richard L. Daft). There are three key components in this definition:

- management science is a set of quantitative tools;
- management science uses decision models;
- quantitative models assist decision makers; they cannot substitute for or replace a manager.

Management science research techniques help managers improve the quality of their problem solving. These techniques seek to describe, understand, and predict the behaviour of complex system of human being and equipment.

Types of Models and Science Techniques

There are the variety of management science models and techniques that are designed to supplement managerial planning and decision making. Some writers consider forecasting to be management science (although others do not). Forecasting is the process of using past and current information to predict future events. It involves identifying opportunities and threats in the firm 's external environment. Forecasts are an important aspect of planning and decisions making process.

A management science also includes many quantitative techniques, and other management science aids. Some of these are:

* The Program Evaluation and Review Technique (PERT). PERT is planning and control technique that allows managers to decompose a project into specific activities and to plan far in advance when its is to be completed. The main function PERT is to determine the time required to complete a project.

* Breakeven Analysis. Breakeven analysis helps managers determine how many units must be sold before a product is profitable.

* Linear Programming. Linear programming are used to determine the best way to allocate resources to achieve some desired objectives.

* Game Theory. Game theory attempts to predict how rational people will behave in competitive situation. For example, game theories attempt to describe how competitors will respond to a price increase, the introduction of a new product, or a new advertising campaign.

* Simulation Models. Simulation models are mathematical representations of the relationships among variables in real-life organizational situations. The try to replicate a part of an organization's operations in order to see what will happen to that part over time, or to experiment with that part by changing certain variables. For example, simulations are popular for the risky business of new-product innovations.