MGMT 650 – Management Science and Decision Analysis



MGMT 650 – Management Science and Decision Analysis

Final Preparation Guide

1. Key concepts of chapter 3

a. Sensitivity Analysis; Interpreting Management Scientist output reports

i. Range of optimality

ii. 100% rule

iii. Range of feasibility

iv. Dual price – what it means? How it can be used?

2. Key concepts of chapter 7

a. Transshipment problem and its Linear Programming formulation

b. Assignment problem and its Linear Programming formulation

3. Key concepts of chapter 8

a. Formulation of integer programs

b. Multiple choice constraints

c. K out of N alternatives constraints

d. Conditional and co-requisite constraints

4. Key concepts of chapter 9

a. Understanding of the shortest route problem

i. How can it be used for optimizing replacement policies (in-class example) and scheduling purposes (HW #4 problem)

5. Key concepts of chapter 10

a. Understanding of activity slacks, critical activities, critical path, how much activities can be delayed?

b. How is slack calculated?

c. Ability to interpret to Management Scientist outputs for project networks

d. Ability to set up project network diagrams with precedence relationships between activities

e. Expected project duration with certain and uncertain activity times

6. Key concepts of chapter 14

a. Distinguishing between certainty, uncertainty, risk

b. Analysis of payoff tables

c. Decision trees: construction and interpretation

d. Calculating expected payoffs from decision tress and making decisions

e. Understanding of EVPI – what it means and how to calculate it

7. Key concepts of chapter 16

a. Moving averages, Weighted Moving Averages, Exponential smoothing – how do they work?

b. Forecasting with linear trend time series

i. Interpretation of the trend equation

ii. How to use trend equation to forecast for a given time period

c. Forecasting for time series with trend and seasonality

i. Interpretation of seasonal indices: what do they mean?

d. Forecasting accuracy measure - MSE

e. Ability to interpret to Management Scientist outputs

f. Ability to recognize different types of time series data

Please review all HW questions and solutions carefully.

Sample Questions

1. (Chapter 3 – Sensitivity Analysis) Use the following Management Scientist output to answer the questions.

LINEAR PROGRAMMING PROBLEM

MAX 31X1+35X2+32X3

S.T.

1) 3X1+5X2+2X3>90

2) 6X1+7X2+8X3 ................
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