Management science methods help organizations to solve problems and make decisions. But, if you’re using the wrong tools, you could end up needlessly losing a lot of time, money, resources, and in some cases, your sanity! And, no one wants that! So, keep reading to discover 3 management science tools Analysts and Spreadsheet Modelers can take advantage of!
What is Management Science?
Management science is an incredibly useful tool. It uses an interdisciplinary approach, which relies on multiple disciplines, including engineering, game theory, psychology, project management, data science, statistics, economics, and more.
Using management science within your business or organization can have some tremendously positive effects and make a big impact on how the business plans, organizes, and controls current and future activity.
This helps businesses identify problems, streamline planning and management, use resources more effectively, and develop blueprints for achieving goals.
3 Common Management Science Tools
Whilst management science is an incredibly complex subject, there are a few aspects you can takeaway and implement into your own roles. Here are 3 you absolutely need to try out for yourself…
Tool #1: Decision Matrices
Being in a managerial position comes with its challenges. More than likely, you’re being paid for not only your expertise but also your ability to make quick and effective decisions under pressure. What if I could show you a way that you could use a management science tool to make more efficient and comprehensive decisions?
Decision Matrices are just that tool. The matrix is useful for examining big groups of decision factors and determining each factor’s relative value by weighting them according to importance. It’s especially effective when you have many good options to choose from and a lot of different variables to consider. It’s an excellent technique for almost any crucial decision with no obvious answer.
Implementing a Decision Matrix
One of our favorite management science tools is the decision matrix! I want to show you exactly how to set up your own Decision Matrix, using SheetRocks.
Follow these steps and use the image as a guide to creating your own.
- Download the free template here: https://zapier.com/blog/decision-matrix-template/ (no email needed)
- Upload the file into SheetRocks
- Add in the decision that you want to evaluate (A)
- Add in considerable factors (B)
- Rank these factors from 0-3 (C)
- Add what options you’re considering (D)
- Rank these options based on each factor from 0-3 (E)
Source: https://zapier.com/blog/decision-matrix-template/
After you’ve filled out all the cells, the spreadsheet will assign a score to each option.
The one with the highest number wins, meaning you’ve just made your decision!
Tool #2: Mathematical Programming
Another one of the best management science tools is mathematical programming. Mathematical programming or mathematical optimization is the selection of the best element from a group of available alternatives based on a set of criteria. It is used as a hypothetical tool in which management operations are defined by mathematical equations that can be manipulated for a variety of purposes. The technique is known as linear programming if the basic descriptions involved take the form of linear algebraic equations.
MIT offers a perfect description of the relationship between mathematical programming and decision-making in sectors of finance, technology, marketing, and more:
“Mathematical programming, and especially linear programming, is one of the best developed and most used branches of management science. It concerns the optimum allocation of limited resources among competing activities, under a set of constraints imposed by the nature of the problem being studied. These constraints could reflect financial, technological, marketing, organizational, or many other considerations.”
“Mathematical programming, and especially linear programming, is one of the best developed and most used branches of management science. It concerns the optimum allocation of limited resources among competing activities, under a set of constraints imposed by the nature of the problem being studied. These constraints could reflect financial, technological, marketing, organizational, or many other considerations.”
A real-life example is detailed in A Study in Three Practical Management Science Problems where three problems are presented. One such problem was in a sports analytics context where Integer Programming was used. Integer programming describes the optimization of a linear function subject to a set of linear restrictions over integer variables.
So, how can you start using mathematical programming? The good news is it can easily be implemented in a SheetRocks spreadsheet, whereas you may run into some problems with using Excel or Google Sheets.
Excel and Google Sheet Limitations
Other spreadsheet tools, such as Excel Solvers can carry out mathematical programming such as linear programming. However, you are going to come up against some limitations, if your requirements outgrow its capabilities.
The standard Excel Solver has a limit of 200 decision variables, for both linear and nonlinear problems. Furthermore, the Solver “upper limits on the number of decision variables (or changing cells), and the number of constraints in a Solver model. The limit on decision variables is straightforward (200), but the limit on constraints depends on the type of model (linear or nonlinear) and the form of the constraints.”
So, what are you meant to do, mess around and chop and change your spreadsheet to try to adhere to these limitations?
I don’t think so. If you join SheetRocks today for free, you’ll get 4x the processing power for your spreadsheet-based mathematical programming needs.
Tool #3: Game Theory
“Game Theory says that the true source of uncertainty lies in the intentions of others” Peter L Bernstein, Economic Historian.
Simply put, Game Theory is the study of interactive decision-making in which the outcome for each participant is determined by the actions of everyone else. Each participant must consider the choices of others when determining their course of action or “strategy.”
One of the most famous examples of Game Theory is the “Prisoner’s Dilemma” which describes a situation in which two people, kept separate and incapable of interacting, must each decide whether or not to cooperate with the other. When both parties choose to cooperate, they receive the greatest reward.
So, how can Game Theory generate results for management science?
Let’s take a look at some sectors that use Game Theory as an effective management science tool.
Economists & Financial Experts can use Game Theory to analyze and predict what companies are going to do. By making such predictions, decisions can be made about what to do next and what is in store for that company’s future.
Businesses of All Sizes can use Game Theory to understand competitor habits, which will give valuable insight into their space within the market and what actions need to be taken.
Investors/ Stock Market Professionals use Game Theory, stock market decisions about buying and selling shares can be made wisely. Investors make various stock market decisions by employing various investment strategies and taking into account various players or investors.
Excel and Google Sheet Limitations
Just like linear programming, Excel Solver can carry out some Game Theory calculations. However, you’re going to run into the same issues when it comes to performance limitations. Don’t give yourself a headache and undue stress. Create your FREE SheetRocks account today and start implementing some of these common management science tools!
