OR/MS Today - August 2002 - Cyberspace

<BODY bgcolor="#ffffff" link="cc0000" vlink="cc0000" text="#000000"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br>   <table border=0 cellspacing=0 cellpadding=0 width=480><tr valign=top> <td width=10><img src="../cleardot.gif" width=1 height=1 hspace=4 border=0></td> <td width=470> <FONT face="verdana, arial, helvetica" SIZE=2><B><I><A HREF="../../ORMS.shtml" TARGET="_top">OR/MS Today</A> - August 2002</I></B></font><BR> <hr size="1"> <img src="cleardot.gif" width=1 height=1 vspace=4 border=0><br> <font face="times new roman, times"> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>Cyberspace</B></FONT><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <FONT SIZE="+2"><B>An Open Letter to Business Students</B></FONT><BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><B>By ManMohan S. Sodhi</B></FONT><br> <hr size="1"> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br>    <B>Dear Future Business Executive,</B><BR> By choosing to study business, you have made a decision to lead the company that hires you into the future. You will be asked to envision or even create that future for your company, irrespective of business function or verticals. To further your goals, you should consider taking management science courses.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> What does management science mean? For many business students, it amounts to a required course one has to take in order to figure out  using a toy software package or a spreadsheet  how many widgets to make. There is also some stuff about linear programming, the simplex method and dual costs. It all sounds like a lot of mathematical mumbo-jumbo with contrived examples thrown in to make the subject even more unappealing.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> In reality, management science is a mathematical approach to solving business problems. It aims to guide decision-making. More than mathematical techniques, management science is a way of thinking systematically about business problems. You could use management science to guide the decision on a global merger or to help build an automated system that deploys inventory to fulfill customer orders. When you study finance, you have to deal with mathematics ... and with toy problems of one stock and one bond: A lot of walking is needed before you can run. Like finance, management science is really a way of thinking through business problems and quantifying where applicable. Like finance, management science will help you regardless of your career track or industry.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>What Have You Done For Me Lately</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> Management science has provided many benefits to different functions in diverse verticals such as high-tech, consumer-packaged goods, chemicals and travel:<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <LI> <B><I>Finance:</I></B> Management science has many financial applications including maximizing of asset portfolio value. Finance theory sets the rules of asset evaluation while management science takes those rules further to practical portfolio management systems, recommending the best possible portfolios by selecting from thousands of securities subject to investment guidelines or cash requirements over time.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <LI> <B><I>Marketing:</I></B> Management science contributes with models for database marketing to maximize profits. Similar models go into analytics for customer relationship management (CRM) to predict sales or profitability at customer level. Optimizing the allocation of budgeted advertising dollars to maximize sales is another application. Optimal pricing or revenue management, long used by the airlines and hotels, is spreading to other industries.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <LI> <B><I>Operations:</I></B> Lately, supply chain management has gained visibility in the boardroom, a major reason being the potential benefits gained from advanced planning and scheduling (APS) technology such as that from i2, Manugistics and SAP. Similar ideas can be applied to services as well.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <LI> <B><I>Strategy:</I></B> If a global merger were to take place, which plants should we close and where should we build new ones to balance distribution costs against different production costs and tariffs? Sure, one can do it with a spreadsheet and a silver tongue, but you cannot possibly figure out the best possible combination under all the scenarios you envision. Even envisioning scenarios requires systematic effort that is part of management science.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=6 border=0><br> <LI> <B><I>Human Resources:</I></B> Every firm has to match the skills of their people with the perceived needs for a project, division or even the company as a whole. This matching can be done with management science models for the short-, medium- and long-terms to minimize costs or maximize effectiveness.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>The Future is Upon Us</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> Despite the bursting of the tech stock bubble, the Internet is laying the foundations of completely different ways of doing things like the sharing information between companies through business-to-business integration. Management science helps with new business models such as Akamai's distribution of content. As we collect more accurate and real-time information, there are tremendous opportunities to leverage management science to extract value. Analytical CRM attempts to predict sales not only at the segment level, but also at an individual customer level to guide customer interaction. An e-commerce site like Amazon.com may be interested in sophisticated target marketing given they have both clickstream data and purchase history; management science can help leverage the clickstream data that a regular store does not have.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>Look Before You Leap<BR> (Into Technology) </B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> Do you need to study management science to get its benefits? Don't we use refrigerators without studying thermal engineering? Management science is critical to the business. You can use management science to shape your business, expand it and get an edge on the competition just like American Airlines did over the years by seeking to maximize revenues with yield management and reducing costs by squeezing out inefficiency in crew scheduling and assigning aircraft to routes. Or, you can be like Nike and buy supply chain planning software, let consultants implement it, and then be really surprised when the software gives bad recommendations and eventually damages the company's capitalization.<BR> <img src="../cleardot.gif" width=1 height=1 vspace=12 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=3><B>Diversify Your Own (Skill) Portfolio</B></FONT><BR> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> The courses you will take during your studies are part of the portfolio of skills that you will translate into future cash streams. Given an increasingly unpredictable world, surely you would agree that your portfolio must be diversified. And shouldn't this diversity include a "stock" such as management science that has not only produced high returns for many companies in the past, but is already being built into many business models and technologies for the future? So read up on management science, for tomorrow you lead.<br> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <IMG SRC="../barbluehook.gif" WIDTH="468" HEIGHT="4"><br> <img src="../cleardot.gif" width=1 height=1 vspace=2 border=0><br> <FONT face="verdana, arial, helvetica" SIZE=2><I>ManMohan Sodhi recently joined the faculty at Cass Business School in London. Earlier, he was vice president at Gandiva Inc., director of enterprise e-business strategy at Scient, and manager in the supply chain practice at Accenture. He has a Ph.D. in management science from the Anderson School of Management at UCLA and has taught at the University of Michigan Business School. He teaches an executive seminar at the University of Chicago. He welcomes your comments at <A HREF="mailto:MohanSodhi@AOL.com">MohanSodhi@AOL.com</A>.</I><BR>  <img src="../cleardot.gif" width=1 height=1 vspace=5 border=0><br>  <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <font face="verdana, arial, helvetica" size="1"> <CENTER><script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script></CENTER><br> <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <LI> <A HREF="tocfr.html" Target="_top"><I>Table of Contents</I></A><br> <img src="../cleardot.gif" width=1 height=1 vspace=4 border=0><br> <LI> <A HREF="../../ORMS.shtml" TARGET="_top"><I>OR/MS Today</I> Home Page</A><br>  <img src="../cleardot.gif" width=1 height=1 vspace=8 border=0><br> <img src="../barblue.gif" width=468 height=1 border=0 alt=" "><br> <b><i>OR/MS Today</i></b> copyright © 2002 by <A HREF="http://www.informs.org/" target="_new">the Institute for Operations Research and the Management Sciences</a>. 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