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MB0047 : a. Explain Management Science models in detail. b. Estimate the completion time of each activity whose optimistic time estimate is 5 seconds and the pessimistic time estimate are 20 seconds. The most likely time estimate is 9 seconds.

Posted on: October 19, 2011

MB0047 : a. Explain Management Science models in detail.

 b. Estimate the completion time of each activity whose optimistic time

 estimate is 5 seconds and the pessimistic time estimate are 20 seconds. The

 most likely time estimate is 9 seconds.

Answer :- Management Science Models

These models are developed on the principles of business management, accounting and econometrics. In many areas of management, the proven methods of management control are available which can be used for the management decision. There are also several management systems, which can be converted into the Decision Support System models.

Some of these models can be used straight away in the design of the Decision Support System. While some others require the use of management principles and practices, most of the procedure based decision-making models belong to this category. One can develop a model for selection of vendor for procurement of an item, based on the complex logical information scrutiny. Such models take away the personal bias of the decision-maker.

Budgeting Models

Controlling the business performance through the budget system is an accepted management prac­tice. In this approach, various budgets are prepared, viz., the Sales Budget, the Production Budget, the Capacity Budget, the Manpower Budget, the Expense Budget, and the Inventory Budget, etc. Using these budgets the profits are estimated.

Break-even Analysis Model

This model is simple but very useful for determining the volume of business activity at which there is no loss or profit. The model is used to decide the alternatives based on the cost, volume and price.This model can be built for the company, for the product groups or for any activity, where you can identify the fixed cost, the variable cost and the revenue at each activity level in terms of the units demanded. The advantage of this model is that it tells you as to what the break-even point for the given level of costs and revenue is. If there are possibilities of altering the costs, it would tell its impact on the break-even point, i.e., if the price is reduced, the revenue will come down and the break-even point will further go up.

Return on Investment Analysis

The investment decisions are very common in the business organisations and they are of two types. First, one has to invest in one among the several alternatives which are competing with each other. The second decision the management has to take is how to allocate the total funds to the various investment projects.

Corporate Model of Return on Investment

This model is popularly known as DuPont Model where the composition and the analysis of the Return on Investment is shown. This model is better than the above discussed individual ratio model and its analysis as this model provides an insight into the relationships of the various factors affecting the return on investment.

Model for Cash Budgeting

Cash budgeting is a continuous process. With careful cash planning, a company should be able to maintain sufficient cash balance for its needs, yet not be in a position where it is holding excessive cash. This kind of planning will help raise the short-term loans and simultaneously focus on the issues which are affecting the financial management.

Estimate the completion time of each activity

to = The optimistic time estimate. tm = The most likely time estimate.
tp = The pessimistic time estimate.

The activity time estimate te

The activity time estimate te = 5+4(9) +20 / 6   = 10.1667


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1 Response to "MB0047 : a. Explain Management Science models in detail. b. Estimate the completion time of each activity whose optimistic time estimate is 5 seconds and the pessimistic time estimate are 20 seconds. The most likely time estimate is 9 seconds."

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