Practical Management Science, Revised

Front Cover......Page 1
Title Page......Page 5
Copyright......Page 6
Brief Contents......Page 9
Contents......Page 11
Preface......Page 15
CHAPTER 1 Introduction to Modeling......Page 21
1.1 Introduction......Page 23
1.2 A Waiting-Line Example 4 Models......Page 24
1.3 Modeling Versus Models......Page 27
1.4 The Seven-Step Modeling Process......Page 28
1.5 A Successful Management Science Application......Page 34
1.6 Why Study Management Science?......Page 37
1.7 Software Included in This Book......Page 38
1.8 Conclusion......Page 40
CHAPTER 2 Introduction to Spreadsheet Modeling......Page 43
2.2 Basic Spreadsheet Modeling: Concepts and Best Practices 24......Page 44
2.3 Cost Projections......Page 49
2.4 Breakeven Analysis......Page 53
2.5 Ordering with Quantity Discounts and Demand Uncertainty......Page 62
2.6 Estimating the Relationship Between Price and Demand......Page 67
2.7 Decisions Involving the Time Value of Money......Page 77
2.8 Conclusion......Page 83
Appendix: Tips for Editing and Documenting Spreadsheets......Page 87
CHAPTER 3 Introduction to Optimization Modeling......Page 91
3.1 Introduction......Page 92
3.2 Introduction to Optimization......Page 93
3.3 A Two-Variable Model......Page 94
3.4 Sensitivity Analysis......Page 105
3.5 Properties of Linear Models......Page 113
3.6 Infeasibility and Unboundedness......Page 116
3.7 A Product Mix Model......Page 118
3.8 A Multiperiod Production Model......Page 128
3.10 A Decision Support System......Page 138
3.11 Conclusion......Page 140
Appendix: Information on Solvers......Page 146
CASE 3.1 Shelby Shelving......Page 147
CASE 3.2 Sonoma Valley Wines......Page 149
CHAPTER 4 Linear Programming Models......Page 151
4.1 Introduction......Page 152
4.2 Advertising Models......Page 153
4.3 Workforce Scheduling Models......Page 162
4.4 Aggregate Planning Models......Page 170
4.5 Blending Models......Page 180
4.6 Production Process Models......Page 187
4.7 Financial Models......Page 193
4.8 Data Envelopment Analysis (DEA)......Page 204
4.9 Conclusion......Page 211
CASE 4.1 Amarco, Inc.......Page 227
CASE 4.2 American Office Systems, Inc.......Page 230
CASE 4.3 Lakefield Corporation’s Oil Trading Desk......Page 235
CASE 4.4 Foreign Currency Trading......Page 240
CHAPTER 5 Network Models......Page 241
5.1 Introduction......Page 242
5.2 Transportation Models......Page 243
5.3 Assignment Models......Page 255
5.4 Minimum Cost Network Flow Models......Page 261
5.5 Shortest Path Models......Page 270
5.6 Other Network Models......Page 280
5.7 Conclusion......Page 293
CASE 5.1 International Textile Company, Ltd.......Page 300
CASE 5.2 Optimized Motor Carrier Selection at Westvaco......Page 302
CHAPTER 6 Optimization Models with Integer Variables......Page 305
6.1 Introduction......Page 306
6.2 Overview of Optimization with Integer Variables......Page 307
6.3 Capital Budgeting Models......Page 310
6.4 Fixed-Cost Models......Page 317
6.5 Set-Covering and Location-Assignment Models......Page 329
6.6 Cutting Stock Models......Page 347
6.7 Conclusion......Page 351
CASE 6.1 Giant Motor Company......Page 361
CASE 6.2 Selecting Telecommunication Carriers to Obtain Volume Discounts......Page 363
CHAPTER 7 Nonlinear Optimization Models......Page 365
7.1 Introduction......Page 366
7.2 Basic Ideas of Nonlinear Optimization......Page 367
7.3 Pricing Models......Page 371
7.4 Advertising Response and Selection Models......Page 388
7.5 Facility Location Models......Page 398
7.6 Models for Rating Sports Teams......Page 402
7.7 Portfolio Optimization Models......Page 407
7.8 Estimating the Beta of a Stock......Page 416
7.9 Conclusion......Page 421
CASE 7.1 GMS Stock Hedging......Page 427
CASE 7.2 Durham Asset Management......Page 429
CHAPTER 8 Evolutionary Solver: An Alternative Optimization Procedure......Page 431
8.1 Introduction......Page 432
8.2 Introduction to Genetic Algorithms......Page 435
8.3 Introduction to Evolutionary Solver......Page 436
8.4 Nonlinear Pricing Models......Page 442
8.5 Combinatorial Models......Page 448
8.6 Fitting an S-Shaped Curve......Page 457
8.7 Portfolio Optimization......Page 462
8.8 Cluster Analysis......Page 464
8.9 Discriminant Analysis......Page 470
8.10 The Traveling Salesperson Problem......Page 474
8.11 Conclusion......Page 478
CASE 8.1 Assigning MBA Students to Teams......Page 482
CHAPTER 9 Multiobjective Decision Making......Page 483
9.1 Introduction......Page 484
9.2 Goal Programming......Page 485
9.3 Pareto Optimality and Trade-Off Curves......Page 495
9.4 The Analytic Hierarchy Process (AHP)......Page 504
9.5 Conclusion......Page 514
CASE 9.1 Play Time Toy Company......Page 519
CHAPTER 10 Decision Making Under Uncertainty......Page 523
10.1 Introduction......Page 525
10.2 Elements of a Decision Analysis......Page 526
10.3 The PrecisionTree Add-In......Page 542
10.4 Bayes’ Rule......Page 554
10.5 Multistage Decision Problems......Page 558
10.6 Incorporating Attitudes Toward Risk......Page 574
10.7 Conclusion......Page 581
CASE 10.1 Jogger Shoe Company......Page 594
CASE 10.2 Westhouser Paper Company......Page 595
CASE 10.3 Biotechnical Engineering......Page 596
CHAPTER 11 Introduction to Simulation Modeling......Page 599
11.1 Introduction......Page 601
11.2 Real Applications of Simulation......Page 602
11.3 Probability Distributions for Input Variables......Page 603
11.4 Simulation with Built-In Excel Tools......Page 623
11.5 Introduction to @RISK......Page 635
11.6 The Effects of Input Distributions on Results......Page 652
11.7 Conclusion......Page 660
Appendix: Creating Histograms with Excel Tools......Page 666
CASE 11.1 Ski Jacket Production......Page 669
CASE 11.2 Ebony Bath Soap......Page 670
CHAPTER 12 Simulation Models......Page 671
12.2 Operations Models......Page 673
12.3 Financial Models......Page 692
12.4 Marketing Models......Page 715
12.5 Simulating Games of Chance......Page 728
12.6 Using TopRank with @RISK for Powerful Modeling......Page 734
12.7 Conclusion......Page 742
CASE 12.1 College Fund Investment......Page 752
CASE 12.2 Bond Investment Strategy......Page 753
CASE 12.3 Financials at Carco......Page 754
CHAPTER 13 Inventory Models......Page 757
13.1 Introduction......Page 759
13.2 Categories of Inventory Models......Page 760
13.3 Types of Costs in Inventory Models......Page 761
13.4 Economic Order Quantity (EOQ) Models......Page 763
13.5 Probabilistic Inventory Models......Page 779
13.6 Ordering Simulation Models......Page 793
13.7 Supply Chain Models......Page 798
13.8 Conclusion......Page 804
CASE 13.1 Subway Token Hoarding......Page 812
CHAPTER 14 Queueing Models......Page 813
14.1 Introduction......Page 815
14.2 Elements of Queueing Models......Page 816
14.3 The Exponential Distribution......Page 819
14.4 Important Queueing Relationships......Page 824
14.5 Analytical Steady-State Queueing Models......Page 827
14.6 Approximating Short-Run Behavior Analytically......Page 850
14.7 Queueing Simulation Models......Page 855
14.8 Conclusion......Page 872
CASE 14.1 Catalog Company Phone Orders......Page 877
CASE 14.2 Pacific National Bank......Page 879
CHAPTER 15 Project Management......Page 881
15.1 Introduction......Page 883
15.2 The Basic CPM Model......Page 885
15.3 Modeling Allocation of Resources......Page 894
15.4 Models with Uncertain Activity Times......Page 910
15.5 A Brief Look at Microsoft Project......Page 916
15.6 Conclusion......Page 918
CHAPTER 16 Regression and Forecasting Models......Page 923
16.1 Introduction......Page 924
16.2 Overview of Regression Models......Page 925
16.3 Simple Regression Models......Page 929
16.4 Multiple Regression Models......Page 941
16.5 Overview of Time Series Models......Page 952
16.6 Moving Averages Models......Page 957
16.7 Exponential Smoothing Models......Page 962
16.8 Conclusion......Page 978
CASE 16.2 Forecasting Overhead at Wagner Printers......Page 984
CASE 16.3 Arrivals at the Credit Union......Page 985
References......Page 986
Index......Page 989