The document summarizes 4 situations faced by the Delta branch of Menatel, an Egyptian telecommunications company. It discusses using management science tools to 1) determine breakeven points to decide which underperforming payphones to relocate, 2) use PERT/CPM to schedule and control branch activities, 3) quantitatively analyze staff effectiveness to assign tasks, and 4) determine optimal routes for vehicles to improve service quality. Excel's goal seek tool and PERT/CPM were demonstrated to support decision making in the first two situations described.

1. Rennes International School of Business
ESC RENNES
Executive Master of Business Administration
EMBA
COHORT 1 (2003 - 2004)
Management Science
Conducted by:
Dr. Sabry Shaabana
Decision-Making Processes & Tools
By
Magdy A. Sattar
October, 2003
Cairo, Egypt
1

2. TABLE OF CONTENTS
Executive Summary II
Introduction & Objective 1
Part 1- Menatel Presentation 1
1-1-What Is Menatel 1
1-2-Business Nature 1
1-3-Structure & Organization 1
1-4-Delta Branch 2
1-4-1- Environment 2
1-4-2- Objectives 2
1-4-3- Organization 2
1-4-4- Identified Situations 2
Part 2- First Situation 3
Part 3- Second Situation 5
Part 4- Third Situation 9
Part 5- Fourth Situation 10
5-1- Shortest Route 10
5-2- Minimal Spanning Tree 12
Part 6- Conclusions & Recommendations 14
Reference 15
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3. EXECUTEVE SUMMARY
This report is about how management science is enhancing managers – me included-
abilities to make better decisions. First I will present my company Menatel and in
addition my business unit. Second, through some of the situations I faced as examples
of problems from my business unit, in which using management science tools
enhanced my decision-making process skills.
First situation is relocation bad revenue payphones decision in which I used Excel’s
Goal Seek Tool to determine the breakeven points through which I can decide which
payphone is to be relocated.
Second situation is planning, scheduling, and controlling the branch activities
decisions in which I used (PERT/CPM) Tool to have the optimal solution for the use
of the available recourses.
The third situation is assignment situation in which I enhanced my professional
experience with my technical staff with the quantitative analysis of their effectiveness
in the assigned tasks in order to decide, who is most effective and where.
Situation number four I am to obtain and maintain high service quality through use of
resources available, I used management science quantitative analysis to decide the
most economical routes for branch vehicles through which we can save time, money,
and achieve target.
In these situations tools of management science proved to be strong support to my
decision making process.
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4. INTRODUCTION & OBJECTIVE
The purpose of this report is to identify situations for Delta Branch, in which
management science methods or models are used , in addition to analyze one of these
situations deep enough to make suggestions for improvement. The focus of this report
is on the decision- making process and the role of management science in this
process.
1. MENATEL PRESENTATION
1.1 WHAT IS MENATEL
Menatel is a joint stock company under investment low number 8/1997 registered in
1998 under number 314030. Menatel is granted a ten years; renewable license, to
install, operate, and manage a telecommunication network of at least 30,000 public
payphone. Menatel is determined to achieve this target by the end of 2004. Egyptian
shares are 51% and foreign shares are 49%. France Telecom (FCR) “providing
Menatel with the know-how technology and management” holds the main foreign
shares, which is 44 %. The main Egyptian company with 18% share is the National
Bank of Egypt (NBE).
1.2 BUSINESS NATURE
Menatel is in the prepaid cards business, Menatel products are calls (minutes), local
calls, national calls, mobile calls, and international calls. Menatel is selling its
products through a payphone network that covers all Egypt and managed by a
payphone management system. These calls category are Menatel profit contribution.
1.3 STRUCTURE AND ORGANIZATION
With a centralized management style Menatel structured into five main divisions
headed by corresponding Director and five Branches allocated all over Egypt, to form
simple flat functional organizational structure. Technical division activities are
managing all technical issues related to Menatel payphones (installations,
maintenance, and the payphones management system), coordination with all
subcontractors, and managing the Branches. Commercial division activities are
advertising, cards direct and indirect distribution, customer hot line, payphone
locations determination, and sites owner management. Financial and administrative
division activities are preparing financial statements, business plan, budgets, and
payroll sheets, recruitment, training, and cash and contracts management. Business
development division activities are handling assignments and projects to improve
Menatel performance, and to define and build major business indicators. Logistic
division activities are managing security, premises, vehicles, transportation, and
warehouse, in addition to manage purchases and custom clearance. For the five
branches there, activities are the same as all Menatel division activities through the
matrix and centralize Menatel organization as per the branch assigned area.
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5. 1.4 DELTA BRANCH
1.4.1 ENVIROMENT
The green triangle occupying the north of Egypt’s map we call Nile Delta, as it
occupies the landscape in which the two branches of the Nile (Damiatte and Rasheed)
flows with all their sub-branches. This landscape occupies 16411Km.*, divided into 6
governorates, 31 Cities, 45 Towns and 3000 Villages and small villages, shaping a
percentage of 30% urban and 70%rural. Delta population is 20 Million their main
source of income is agriculture and some small industries related to it. There is a high
percentage of illiteracy among Delta population especially females, which is
considered a great obstacle on the way of social and economical development.
1.4.2 OBJECTIVES
Delta branch objective is to install, operate, and manage a telecommunication network
of 4200 public payphones by the end of 2004 all over the assigned area, most of this
area is rural inhibited by more than 20,000,000 people, 33 % of them inhibit urban,
and the remaining inhibits rural.
1.4.3 ORGANISATION
In a centralized management environment, the branch manager in the matrix heads the
branch organization with functional managers in the head office. The branch manager
is responsible to manage the branch team to meet the objectives planned by Menatel
Managing Director in accordance with company strategy and guidelines given by the
functional directors. The branch team is organized in a simple flat structure
corresponding to the nature of the activities, which are technical activities
(production, maintenance, and Payphone Management System “PMS”), commercial
and customer service activities, financial and administrative activities, and finally
public relations and logistic activities. As for the sales team, they are supervised by a
local sales supervisor who is reporting technically to Menatel cards distribution
manager and administratively to the branch manager in matrix organization.
1.4.4 IDENTIFIED SITUATIONS
Identified situations for Delta Branch are:
1- Monitoring the daily revenue of the payphones installed in Delta.
2- Planning, scheduling, and controlling the branch activities.
3- Choosing the right people for the right activities.
4- Improving the payphones quality service.
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6. 2. FIREST SITUATION
One of the obstacles facing the business community in Egypt these days is shading its
climate with uncertainty and its decisions with caution. The devaluation of the
Egyptian pound came at a time when people were already feeling the squeeze of a
depressed economy. That is why it is important in this environment to monitor closely
payphones revenue. In delta, I faced the problem of low revenue payphones and I
have to decide why this payphone is low revenue? How to identify low revenue
payphone? When to move or close low revenue payphone? Moreover, where to move
this low revenue payphone? The calls type being the contribution to Menatel profit
equation are the core of the revenue monitoring process, knowing the breakeven point
for each can help me taking the most profitable decisions in terms of where, when,
how, and why installing or removing a low revenue payphone. Management science
tools help me answering all these questions.
Determining the Breakeven Point Using Excel’s Goal Seek Tool
Local National 1
Fixed cost 2500 Fixed cost 2500
Variable Cost Per Unit 0.036 Variable Cost Per Unit 0.054
Selling Price Per Unit 0.12 Selling Price Per Unit 0.18
Models Models
Production Volume 29761.9 Production Volume 19841.27
Total Cost 3571.429 Total Cost 3571.429
Total Revenue 3571.429 Total Re 3571.429
Total Profit ( loss) 0 Total Profit ( loss) 0
41.22% 27.48%
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7. National 2 Mobile
Fixed cost 2500 Fixed cost 2500
Variable Cost Per Unit 0.117 Variable Cost Per Unit 0.3
Selling Price Per Unit 0.39 Selling Price Per Unit 0.6
Models Models
Production Volume 9157.509 Production Volume 8333.333
Total Cost 3571.429 Total Cost 5000
Total Revenue 3571.429 Total Revenue 5000
Total Profit ( loss) 0 Total Profit ( loss) 0
12.68% 11.54%
International 1 International 2
Fixed cost 2500 Fixed cost 2500
Variable Cost Per Unit 2.9 Variable Cost Per Unit 3.36
Selling Price Per Unit 4.13 Selling Price Per Unit 4.8
Models Models
Production Volume 2032.52 Production Volume 1736.111
Total Cost 8394.309 Total Cost 8333.333
Total Revenue 8394.309 Total Revenue 8333.333
Total Profit ( loss) 0 Total Profit ( loss) 0
2.81% 2.40%
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8. International 3
Fixed cost 2500
Variable Cost Per Unit 4.34
Selling Price Per Unit 6.2
Models
Production Volume 1344.086
Total Cost 8333.333
Total Revenue 8333.333
Total Profit ( loss) 0
1.86%
For payphones with bad revenue having the same commercial and economical
environments, using the calculated breakeven points for all kinds of calls helps me to
decide which payphone to remove. For example if I have to decide to remove one of
two payphones with the same average revenue, knowing the profitability of each is
the base of my choice. The results were improving the average revenue of a total 150
relocated payphones by 13 LE. Per day.
3. SECOND SITUATION
DELTA BRANCH ACTIVITIES SCHEDULING
PERT/CPM
The most important or practical situation I am facing in the branch is how I manage to
plane, schedule, and control the branch activities and resources, using management
science methods (PERT/CPM for this situation) assist me as Branch Manager to have
answers for, what is the time required for completing my target? What start and finish
dates should be scheduled or set for each activity? Which are the critical activities? In
addition, how long can non-critical activities be delayed before they become critical?
The tables below show how I manage to answer these questions with simple
mathematical calculations.
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9. Delta Branch Activities
Immediate Op. M.Pr Pes. T Expected
Activity Description Variance
Predecessor T (a) T (m) (b) Time (t)
A Location Survey - 1 3 5 3 0.4
B Prepare Drawings A 1 1 1 1 Zero
C Digging permit B 6 22 32 21 18.7
D Lines Request A 1 1 1 1 Zero
E Lines Retain D 10 15 20 15 2.7
F Lines Creation E 1 1 1 1 Zero
G Lines Received F 1 2 3 2 0.1
H Civil Work C 1 2 3 2 0.1
I Booth installation E, H 1 1 1 1 Zero
J Payphone and cabling I, G 1 2 3 2 0.1
K Payphone In Operation J 1 1 1 1 Zero
Total 25 51 71 50 22.1
Delta Branch Project Network
Prepare
Drawing
PP Pay
Location Digging Civil Booth Installation phone
Survey Permit Work Installation and Cabling IO
Lines Lines Lines
Request Return Received
Delta Branch Project Critical Path Lines
Creation
Slack Critical
Activity ES LS EF LF
(LS-ES) Path?
A 0 0 3 3 0 Yes
B 3 3 4 4 0 Yes
C 4 4 25 25 0 Yes
D 3 10 4 11 7 NO
E 4 11 19 26 7 NO
F 19 25 20 26 7 NO
G 20 26 22 28 6 NO
H 25 25 27 27 0 Yes
I 27 27 28 28 0 Yes
J 28 28 30 30 0 Yes
K 30 30 31 31 0 Yes
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10. Where:
ES; Earliest start time for an activity.
LS; Latest start time for an activity.
EF; Earliest finish time for an activity.
LF; Latest finish time for an activity.
B 3 4
1 3 4
A 0 3 C 4 25 H 25 27 I 27 28 J 28 30 k 30 31
3 0 3 21 4 25 2 25 27 1 27 28 2 28 30 1 30 31
D 3 4 E 4 19 G 20 22
1 10 11 1 11 26 2 26 28
F 19 20
1 25 26
Delta Branch Critical Path is: A, B, C, H, I, J, K.
Solving the problem using management science software we obtain the following
results.
PROJECT SCHEDULING WITH PERT/CPM
********************************
*** PROJECT ACTIVITY LIST ***
IMMEDIATE OPTIMISTIC MOST PROBABLE PESSIMISTIC
ACTIVITY PREDECESSORS TIME TIME TIME
-------------------------------------------------------------------------
A - 1 3 5
B A 1 1 1
C B 6 22 32
D A 1 1 1
E D 10 15 20
F E 1 1 1
G F 1 2 3
H C 1 2 3
I E, H 1 1 1
J G, I 1 2 3
K J 1 1 1
-----------------------------------------------------------------------------
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11. EXPECTED TIMES AND VARIANCES FOR ACTIVITIES
ACTIVITY EXPECTED TIME VARIANCE
-------------------------------------------
A 3 0.44
B 1 0.00
C 21 18.78
D 1 0.00
E 15 2.78
F 1 0.00
G 2 0.11
H 2 0.11
I 1 0.00
J 2 0.11
K 1 0.00
-------------------------------------------
*** ACTIVITY SCHEDULE ***
EARLIEST LATEST EARLIEST LATEST CRITICAL
ACTIVITY START START FINISH FINISH SLACK ACTIVITY
-----------------------------------------------------------------------------
A 0 0 3 3 0 YES
B 3 3 4 4 0 YES
C 4 4 25 25 0 YES
D 3 9 4 10 6
E 4 10 19 25 6
F 19 25 20 26 6
G 20 26 22 28 6
H 25 25 27 27 0 YES
I 27 27 28 28 0 YES
J 28 28 30 30 0 YES
K 30 30 31 31 0 YES
----------------------------------------------------------------------------
CRITICAL PATH: A-C-H-I-J-K
EXPECTED PROJECT COMPLETION TIME = 31
VARIANCE OF PROJECT COMPLETION TIME = 19.44
Now it is obvious that with the resource I have I am facing a problem of not achieving
my monthly target on time (Menatel is losing the opportunity of earlier revenue).
PERT assist me identifying the weakness of the project. First, the critical path is
mainly controlled by Menatel sub-contractor; second the big variance of time for
activities C, and E. To solve this problem, I decided to recruit a public relation officer
to be dedicated to follow the digging permit procedures with the contractor. Unlike
other branches, I dedicated one of the three engineers in the branch to supervise
production activities and to monitor the daily production progress. In addition, I
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12. decided to add another contractor to the available one. The result was reducing the
expected time of activity C to 15 days, which affects the expected project completion
time to be 25 days instead of 31. This cost Menatel the salary of the new recruitment
(1000 LE) per month, but the benefits is 100 unit of payphones/month to be in
operation six days earlier with average revenue 20 LE per payphone, that is to say
2000 LE per month earlier.
4. THIRD SITUATION
ASSIGNMENT PROBLEM
I faced the problem of assigning three supervisor engineers (Ahmad, Sherif, and
Khaled) each for one of the three tasks (Payphone management system activities,
Maintenance activities, and Production activities). I realized that the efficiency of
each activity, consequently the branch performance, and the efficiency to achieve the
assigned objectives of the branch, depends on the experience, ability, and
performance of each engineer. Since the three activities have the same priority, I
decided to maximize the total tasks efficiency by assigning one engineer to supervise
one and only one activity. After five years of experience managing the branch, I know
now which one of the engineers to be assigned to supervise which activity. Using
management science to prove my decision through quantitative analysis (Assignment
model) is to guaranty the maximum benefits to the branch and hence the company.
The alternative and the estimated engineers’ qualifications are summarized in the
table below as ranked on the base of ten.
Engineer Production activities Maintenance activities PMS activities
SHEREIF 9 7 8
AHMAD 8 9 8
KHALED 7 8 8
Solving the problem using management science software we obtain the following
results.
ASSIGNMENT PROBLEM
******************
OBJECTIVE: MAXIMIZATION
SUMMARY OF UNIT COST OR REVENUE DATA
************************************
TASK
AGENT 1 2 3
------ ------ ------ ------
1 9 7 8
2 8 9 8
3 7 8 8
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13. OPTIMAL ASSIGNMENTS COST/REVENUE
******************* ************
ASSIGN AGENT 1 TO TASK 1 9
ASSIGN AGENT 2 TO TASK 2 9
ASSIGN AGENT 3 TO TASK 3 8
----------
TOTAL COST/REVENUE 26
5. FOURTH SITUATION
5. 1 SHORTEST ROUTE
One of the branch manager objectives is to obtain high quality of service of the
payphones in operation in his region. To achieve this objective:
First, I faced the challenge of determining the shortest routes and the most economical
ones for the maintenance vehicles through Delta road network; I faced a vehicle
routing problem. Management science quantitative analysis solves this and helps me
take the proper decision to determine each vehicle route. Each one of the vehicle is
assigned to cover eight different cities or more and as an example, I will show how
management science software helps in determining the right figures. The table below
describes the travel alternatives to and from eight cities covered by one of the two
cars assigned to Kalubia Governorate, in which we see that we have seven nodes and
nine arcs
Cities Connected Distance in Km.
Banha-Beltan 5
Banha-kafer Shoker 20
Banha-Tokh 15
Beltan-Tokh 5
Tokh-kaha 10
Tokh-Shebeen El Kanater 10
Shebeen El Kanater-Mashtool 10
Mashtool-Kafer Shoker 35
Solving the problem using management science software we obtain the following
results for the shortest rout from node 1 to nodes 4, 5, or 6.
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14. SHORTEST ROUTE
**************
**** NETWORK DESCRIPTION ****
7 NODES AND 8 ARCS
ARC START NODE END NODE DISTANCE
--- ---------- -------- --------
1 1 3 15
2 1 2 5
3 1 7 20
4 2 3 5
5 3 4 10
6 3 5 10
7 5 6 10
8 6 7 35
THE SHORTEST ROUTE FROM NODE 1 TO NODE 6
****************************************
START NODE END NODE DISTANCE
---------- -------- --------
1 2 5
2 3 5
3 5 10
5 6 10
TOTAL DISTANCE 30
THE SHORTEST ROUTE FROM NODE 1 TO NODE 5
****************************************
START NODE END NODE DISTANCE
---------- -------- --------
1 2 5
2 3 5
3 5 10
TOTAL DISTANCE 20
THE SHORTEST ROUTE FROM NODE 1 TO NODE 4
****************************************
START NODE END NODE DISTANCE
---------- -------- --------
1 2 5
2 3 5
3 4 10
TOTAL DISTANCE 20
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15. As easy as it is to have the needed results as important it is to use this kind of
quantitative analysis to obtain the most effective and proper solutions.
5. 2 MINIMAL SPANNING TREE
Second, I have to minimize the average consumed time by the technicians in repairing
the faulty payphones, and for that, I use the minimal spanning tree module of the
management scientist to find the optimal solution for problem of how a technician
should cover five cities through nine arcs. The table below describes the travels
alternatives for the technician to cover his assigned area.
Cities Connected Distance in Km.
Tanta-Samanoud 20
Tanta-Kotour 30
Tanta- Kafe El Zayat 25
Kotour-Mahala 25
Kotour-Samanoud 20
Samanoud-Mahala 5
Ssmsnoud-Mahalet Zeyad 15
Mahalet Zeyad-Mahala 10
Kafer El Zayat-Mahala 35
Solving the problem using management science software we obtain the following
result
MINIMAL SPANNING TREE
*********************
**** NETWORK DESCRIPTION ****
6 NODES AND 9 ARCS
ARC START NODE END NODE DISTANCE
--- ---------- -------- --------
1 1 2 20
2 1 3 30
3 1 4 25
4 3 4 20
5 3 5 25
6 2 5 40
7 4 5 5
8 4 6 15
9 5 6 15
MINIMAL SPANNING TREE
*********************
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16. START NODE END NODE DISTANCE
---------- -------- --------
1 2 20
1 4 25
4 5 5
4 6 15
4 3 20
TOTAL LENGTH 85
The results were good improvement by 2 % in branch total service quality.
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17. 6. CONCLUSIONS & RECOMMENDATIONS
Looking at previous situations and result, we shall notice the following points:
For the first situation, it is obvious that the decision-making process is based on the
best-expected monitory value. This provides individual improvement per payphone,
but it does not insure the improvement of the global revenue or what is the effect of
relocating payphone or moving this payphone to a new location on both the old and
the new location. In addition, I think that this way of analysis will lead to relocate the
payphones in a way that will negatively affect Menatel competitive advantage, which
is the availability of payphones everywhere. For that, my recommendation is to have
some constrains for relocation decision, and my decision strategy is as follows:
First, we have to start by analyzing the revenue in a global form and not per
payphone, to determine first why the revenue is not good, this is on monthly basis.
Second, to eliminate first all the causes that negatively affect the revenue, if possible,
such as maintenance, cleaning, availability of Menatel cards, and if the booth is easy
to be noticed and usable or not.
Third, to start to redistribute the concentration of payphones per area and not to cancel
a location, that is to say, we can convert a PD2 to PD1 or remove one or two wall
mount booth but not to cancel the location. This should be on monthly target and the
effect of this step should be monitored monthly.
Finally, if the revenue is not improved for this location, a decision of removing or
canceling this location can then be taken.
For the second situation, it is obvious that management science effectively help to
plan, schedule, and control the branch activities in a way that optimizes the branch
resources, both qualitative and quantitative analysis are fruitful for this situation.
Finally, for the third and fourth situations, the problems I am facing are relatively
simple. As I have experience with similar problems, but even so using management
science tools for more quantitative analysis increased my decision-making
effectiveness and put me in a much better position to make the best possible
decisions.
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18. References
 Annual Report, Menatel, 1999.
 The Statistical Year Book 1994 - 2001, Central Agency
for Public. Mobilization & Statistics – June 2002.
 http://www.managementhelp.org
 Introduction to Management Science, Anderson, Sweeney, and
Williams- Tenth Edition, West, 2003
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