Mathematical Modeling with Multidisciplinary Applications

CHAPTER 10

DECISION MODELING IN SUPPLY CHAIN MANAGEMENT

HUAJUN TANG

Faculty of Management and Administration, Macau University of Science and Technology, Macau

10.1 INTRODUCTION TO DECISION MODELING

10.1.1 The Origin of Decision Modeling

Decision modeling has been widely used since Fredrick W. Taylor, in the early 1900’s, applied the principles of the scientific approach to management. During World War II, numerous novel quantitative and scientific methods were developed to support the military. These new developments became so successful that many companies started to apply similar methods in managerial decision making and planning after World War II. Recently, more and more companies recruit staffs in the field of operations research or management science to use the principles of scientific management to solve real business problems.

10.1.2 Definition of Decision Modeling

There are varying definitions for decision modeling. Here it is defined as a scientific approach to managerial decision making. Decision modeling is also usually referred to as operations research, management science or quantitative analysis. In this chapter, we adopt the term decision modeling since we will discuss some modeling techniques in a managerial decision making context.

10.1.3 Data in Decision Modeling

Any decision modeling process begins with data. Like raw materials for a manufacturer, these data are processed into information, which is important to the decision making. The processing of raw data ...