CHAPTER 1: INTRODUCTION TO MANAGEMENT SCIENCE

Management Science involves the philosophy of approaching a problem in a scientific manner.

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A variable is a value that is usually a coefficient of a parameter in an equation.

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Parameters are unknown values that are usually coefficients of variables in equations.

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Data are pieces of information from the problem environment.

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A model is a mathematical representation of a problem situation including variables, parameters, and equation.

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The first step of management science process is to develop a mathematical problem.

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Fixed costs do not depend on the number of items produced.

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Variable costs do not depend on the number of items produced.

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Fixed cost is the difference between total cost and total variable cost.

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If variable costs increase, but price and fixed costs are held constant, the breakeven point will increase.

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