FAITH’s VISION-MISSION

TRANSFORMING OURSELVES
TRANSFORMING THE WORLD
WE ARE AN ACADEMIC COMMUNITY
WITH A STRONG PASSION FOR ACADEMIC EXCELLENCE IN EDUCATION
 RM Alecha
SY 2019, 2nd Semester
BSA 1B, Rm 310
BSA 1A. Rm 311
Mon and Thurs

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 4

Values:
This course helps students develop their:

1. critical and creative thinking thru problem solving techniques employed in the course;
2. self-esteem and confidence in solving problems as needed by any individual to survive
emotionally from the difficulties of life that lie ahead;
3. attitude of truthfulness, honesty, equality and teamwork, which are just one of the values
needed in upholding Christianity in the highly-tempting business arena.
Course outline
• Overview of Management Science
• Systems of Linear Equations and Inequalities
• Linear Programming: Graphical Method
• Linear Programming: Simplex Method, Transportation Problem,
Assignment Problem
• Decision Theory

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 6

What is meant by management
science?
• Management science (MS), is the broad interdisciplinary study of
problem solving and decision making in human organizations, with
strong links to economics, business, engineering, and
other sciences. ...
• In short, management sciences help businesses to achieve goals using
various scientific methods.

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 7

Course description
• This is the course on the use of Management Science in solving
management decision problems and is meant to assist students in
acquiring a special competence in the scientific management
approach to problem solving. It aims to provide students with an
awareness of standard tools in Management Science/Operation
Research (MS/OR), and an appreciation of relevant techniques in
mathematical model building, mathematical programming, and
decision analysis. The course also seeks to develop within the student
the ability to recognize potential application areas in their future jobs

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 8

as well as the meaningful utilization of the Management Science tools
and techniques in the government, the local industry, and in business,
particularly in the areas of finance, marketing, production, and human
resource management.

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 9

Course objectives:
1. Identify how decision making models impact competitive
performance.
2. Use operation models in making economic decisions that offer the
potential to change the competitive balance in a wide range of
industries.
3. Perform the necessary quantitative analyses, understand the
usefulness and limitations of the methods.
4. And recognize situations where the methods can be applied
beneficially and issues involved when utilizing the results of
analyses.
Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 10
What is Modeling?
• Creating a simplified version of reality
• Maps, an outline or diagram
• Working with this version to understand or control some aspect of the
world

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Types of Models
• Mental
• Visual
• Physical
• Mathematical
• Algebra
• Calculus
• Spreadsheets

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Why Study Modeling?
• Models generate insight which leads to better decisions.
• Modeling improves thinking skills:
• Break problems down into components
• Make assumptions explicit
• Modeling improves quantitative skills:
• Ballpark estimation, number sense, sensitivity analysis
• Modeling is widely used by business analysts:
• Finance, marketing, operations

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Benefits of Business Models
• Modeling allows us to make inexpensive errors.
• Allows exploration of the impossible
• Improves business intuition
• Provides timely information
• Reduces costs

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 REAL WORLD MODEL WORLD

The Real World ASSUMPTIONS

and The Model PROBLEM

STATEMENT
FORMULATION and
MODEL
STRUCTURES

World

ANALYSIS

RESULTS
INTERPRETATION and
SOLUTION
— translation CONCLUSIONS
— communication

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Model Formulation
• Decisions
• Possible choices or actions to take
• Outcomes
• Consequences of the decisions
• Structure
• Logic that links elements of the model together
• Data
• Numerical assumptions in model

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Summary of Text Philosophy
• Modeling is a necessary skill for every business analyst.
• Spreadsheets are the modeling platform of choice.
• Basic spreadsheet modeling skills are an essential foundation.
• End-user modeling is cost-effective.
• Craft skills are essential to the effective modeler.
• Analysts can learn the required modeling skills.
• Management science/statistics are important advanced tools.

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 17

Systems of Linear Equations and
Inequalities

Chapter 1 Copyright © 2013 John Wiley & Sons, Inc. 18

SECTION 1 Systems of Linear
Equations

Copyright © Cengage Learning. All rights reserved.

Learning Objectives
1 Determine the solution to a system of equations
algebraically, graphically, and using technology and interpret the
real-world meaning of the results

2 Use the substitution and elimination methods to solve

linear systems that model real-world scenarios

3 Determine if systems of linear equations are

dependent or inconsistent and explain the real-world
meaning of the results
Systems of Linear Equations
Systems of Linear Equations
A system of equations is a group of two or more equations. To solve a
system of equations means to find values for the variables that satisfy
all of the equations in the system.

Systems of equations can involve any number of equations and

variables; however, we will limit ourselves to situations containing two
variables in this section.
 Systems of Linear Equations
A solution of a pair of linear equations is an ordered
pair of numbers that satisfies both equations. The
ordered pair (5, 3) is a solution of the linear
equations below.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 23
 Systems of Linear Equations
Although (7, 2) makes the first equation true in the
system…
(2)(7) + (4)(2) = 22

…it does not make the second equation true.

7 – (6)(2)  5

Therefore, it is not a solution for the system.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 24
 Systems of Linear Equations
Graphing a system of two linear equations in two
unknowns gives one of three possible situations:

Case 1: Lines intersecting in a

single point. The ordered pair
that represents this point is the
unique solution for the system.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 25
 Systems of Linear Equations

Case 2: Lines that are distinct parallel

lines and therefore don’t intersect at
all. Because the lines have no common
points, this means that the system has
no solutions.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 26
 Systems of Linear Equations

Case 3: Two lines that are the

same line. The lines have an infinite
number of points in common, so the
system will have an infinite number
of solutions.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 27
 Solving Systems Using the
Elimination Method
• Example: Solve the system.

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 28
 • Example: Solve the system.

• Solution:
Multiply the top equation by 3 and the bottom
equation by 2 to get opposite coefficients for y.

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 29
 Next add corresponding sides of both equations and
the y drops out.

Solve for x.

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 30
 To find y, substitute 2 for x in either equation of the
original system.

Thus, the solution for this system is (2, 1) (Case 1).

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 31
 • Example: Solve the system

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 32
 Solving Systems Using the
Elimination Method
• Example: Solve the system

• Solution:
Multiply both sides of the top equation by 4 to clear
the fractions.

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 33
 Multiply the bottom equation by 2 and add the
equations to eliminate x from the system:

There are no points common to both lines (Case 2).

A system that has no solutions is said to be
inconsistent.

© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 34
 • Example: Solve the system

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 35
 • Example: Solve the system

•Solution:
Multiply the top equation by 10 and the bottom
equation by 100 to get rid of the decimals.

(continued on next
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 36
 Multiply the top equation by –5, and add the two
equations to eliminate x from the system.

The two lines must be the same (Case 3).

A system that has an infinite number of solutions

is said to be dependent.
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 37
© 2010 Pearson Education, Inc. All rights reserved. Section 8.1, Slide 38
Solving a System Using the Elimination Method
The method of eliminating one of the variables to get
an equation, which is easier to solve is known as
elimination method.
Solving a System Using the Substitution Method
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

Suppose we hired a taxi in New York City and in Baltimore.

Table 2.12
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

(a) Write a system of equations to represent the total costs of hiring a taxi in New York City and
Baltimore as functions of the number of additional miles traveled beyond the flag drop. (Let m
represent the number of miles traveled beyond the flag drop. Let N(m) represent the total costs of
hiring a taxi in New York and B(m) represent the total costs of hiring a taxi in Baltimore.) Assume
each encounters 5 minutes of wait time during their rides.
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

Solution:

N(m) = 2.00m + 4.50 B(m) = 2.20m + 3.80

Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

(b) Solve the system of equations using algebra. Verify your

solution by graphing the system or by substituting your
solution back into the original equations. (If an answer does
not exist, enter DNE.)
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

Solution:
2.0m + 4.5 = 2.2m +3.8
-2.0m 2.0m
4.5 = .2m + 3.8
-3.8 - 3.8
.7 = .2m
.2 .2
m = 3.5
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

Solution:
N(m) = 2.00m + 4.50 B(m) = 2.20m + 3.80

Plug (3.5) in for m into either equation to solve for your output.

N(3.5) = 2.00(3.5) + 4.50

N(3.5) = 11.50
(3.5, 11.50)
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

(c) Explain what your answer in part (b) means. (3.5, 11.50)
Example 1 – Exploring a System of Equations Using a Table of Values and
Substitution.

(c) Solution: The taxi fare in both New York and Baltimore is
$11.50 for a trip 3.5 miles beyond the flag drop (assuming five
minutes of waiting time).
Solving a System Using Graphs

One common approach to solving a system

of equations is to graph all of the equations
simultaneously and find the point of
intersection. We do this in next Example.
Example 2 – Solution cont’d

Figure 2.16
Example 2 – Solution cont’d

The graphs have been restricted to domains of x  0 because the

number of miles traveled must be nonnegative to make sense.

The two lines appear to intersect at (2.5, 10).

We estimate this to be the solution of the system; however, we can use

algebra to verify if this is an exact solution.
Substitution Method: Breakeven Point

Business Applications of Linear Systems

Business analysts are often interested in profit, revenue, and costs of a

company.

In evaluating a business plan, it is important to know at what sales level

revenue and costs are expected to be equal. This sales level is referred
to as the break-even point and is the point at which the company
begins to turn a profit.
Any business has two types of costs: fixed costs and variable costs.
Solving a System Using the Substitution Method

Fixed costs are those that remain constant regardless of

production levels. For example, building rent, product
research and development, and advertising are usually fixed
costs.
Variable costs are those that vary with the level of production.
For example, raw materials and production-line worker wages
are variable costs.
Example 5 – Determining a Break-Even Point

An artisan wants to sell her handmade craft angels online. She

estimates her material cost for each angel to be $3.50. As of January
2007, the online merchant craft mall. com charged a $14.95 per month
fee for a Premier account featuring up to 25 products.

Comparing her craft to similar crafts on the market, the artisan

estimates she can sell the craft angel for $9.95. How many angels will
she have to sell each month to break even? At that production level,
what will be her production cost, revenue, and profit?
Example 5 – Solution
The cost equation for the craft angels is the sum of the variable cost, $3.50 per
angel, and the fixed cost, $14.95. Let a be the number of angels sold in a month.

The cost equation is

The revenue equation is

We want to determine when her revenue will equal her cost.

Example 5 – Solution cont’d

In other words, we want to find the value of a such that R(a) = C(a).
Graphing the two functions simultaneously results in the graphs shown
in Figure 2.18.

Figure 2.18
Example 5 – Solution cont’d

It appears the graphs intersect near (2.3, 23) at the intersection point,
R(a) = C(a). We can find the exact point of intersection by using the
substitution method.
Example 5 – Solution cont’d

We evaluate R(a) at a = 2.318 and determine that

Thus the break-even point is roughly (2.318, 23.06).

In the context of the problem, though, it does not make sense to talk about
2.318 angels. So we conclude she must sell 3 angels per month to cover her
costs.
Example 5 – Solution cont’d

The cost to produce and advertise 3 angels is

The revenue from the sale of 3 angels is

She will profit $4.40 if she sells 3 angels

Solving a System of Three or More Equations

For a system of three or more linear equations to have

a solution, all of the lines must intersect at the same
point.
The fact that two lines intersect at a point (a, b) does
not ensure that the third line will intersect the first two
lines at the same point.
Example 11 – Solving a System of Three Equations

Solve the following system of equations.

Solution:
We will find the point of intersection of the first two equations and then check to
see if the point is a solution to the third equation.
Example 11 – Solution cont’d

The first equation may be written as y = 2x – 5. Substituting this value in

for y in the second equation and solving for x yields
Example 11 – Solution cont’d

We substitute this value of x into y = 2x – 5 and solve.

The point of intersection of the first two lines is (3, 1). We will check to
see if this point satisfies the third equation.
Example 11 – Solution cont’d

Since the resultant statement is true, the solution to the system of

equations is x = 3 and y = 1. (A false statement would have shown that
the system was inconsistent.) We confirm the result in Figure 2.21.

Figure 2.21