ISQS 5242Decision Theory and Management Science

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ISQS 5242Decision Theory and Management Science

• Instructor Dr. Burns
• Telephone [phone]
• Email jimburns_at_ttu.edu
• Off hrs 115-325 MW
• Website burns.ba.ttu.edu

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Chapter 1
Introduction
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and sometimes one can find them very
challenging...
Decisions can be made by a...
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A Systematic Approach to Decision Making was
Developed called -
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MANAGEMENT SCIENCE
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Management Science Success Stories

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• Burger King uses Linear Programming to find how
  
• to best blend cuts of meat to minimize
  costs.
• American Air Lines used an Integer Linear
• Programming model to determine an optimal
  flight
• schedule.
• Sony Corp. developed an onboard navigation
• system (giving directions to car drivers)
  using the
• Shortest Route Algorithm.

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Book objectives

• From studying this text the student
  should...
• Gain familiarity with management science
  concept.
• Gain skills in quantitative decision making.
• Improve overall knowledge of business.
• Improve communication skills.
• Gain better familiarity with the computer.

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ISQS 5242

• Prerequisites
• Requirements (for completion)
• Syllabus
• Homework
• Exams
• Term Projects?
• Final Grade

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Prerequisites

• Completion of Tool Core Courses in MBA Program
• ISQS 5237 ISQS 5345
• Economics Accounting
• Be able to solve systems of linear algebraic
  equations
• Understand probability basics--conditional
  probabilities, joint probabilities, probability
  trees
• DROP THE COURSE if you dont have the
  prerequisites

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Text

• APPLIED MANAGEMENT SCIENCE
• Lawrence and Pasternack
• will cover chs 1-6, 8 and first third of 16 (on
  CD-ROM) and 13 in that order
• Some material from former texts co-authored by me
• will be furnished as handouts

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Software

• WINQSB (for math programming, decision trees and
  Markov homework)
• VENSIM (free--shareware)
• PROMODEL, MEDMODEL OR SERVICE MODEL
• you must purchase this from Promodel Corporation
• cost is 30.00
• call 1-801-223-4600
• use a portion of your video game budget to pay

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Requirements (for completion)

• Homework is worth 10 of total
• Three installments each worth .0333 or 3.33
• Three exams (including FINAL), each worth 30

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Homework

• Will be assigned every day (two problems)
• Will be turned in the day before we do our review
• We will do reviews just prior to each exam

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Ten reasons for not turning in homework on time

• My little sister ate it
• My dog did his duty on it
• We ran out of toilet paper
• Our furnace broke down and we had to burn my
  homework
• I had to use it to fill a hole in my shoe

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Top Ten Reasons, contd

• I gave it to a friend and his house burned down
• My mother threw it away by mistake
• I got hungry
• I did it, I swear, but I left it at my parents
  house
• Because I didnt feel like itvery often the last
  works spoken by a registered student

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Syllabus

• DECISION MAKING under Certainty
• Exam I
• DECISION MAKING under Uncertainty and Risk
• Exam 2
• DECISION MAKING under Change and Complexity
• Final

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Exams

• Multiple choice and some discussion problems
• Bring your own orange scantron sheets
• May use other formats as well

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GRADING

• 90-100 -- A
• 80-89.9999 -- B
• 70-79.9999 -- C

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My Expectations

• Attend class
• Perform reading assignments before coming to
  class
• Tech policy for academic honesty enforced
• Assistance for Disabled students

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How to study for exams

• Read chapters before coming to class
• After each class day, go over your notes
• As soon as possible after class
• Preferably with someone else
• Make sure you understand everything discussed
• As soon as possible do homework

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Term Projects?

• Any 3-hour 5342 students?
• Any BA-7000 students?

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Final Grade

• Once your course grade is in, University Policy
  forbids changing a grade for any reason other
  than professorial mistake
• It is impossible to do extra work to improve your
  final or course grades

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Main Thesis of Course

• Management science models can make us better
  decision makers and problem solvers
• Do we have to use models to solve problems and
  make decisions!!!???
• What is a model?
• A paradigm, a description and an explanation of
  the relationship of the parts of the problem to
  each other
• Can be self-fulfilling--a caveat

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Just how do you make decisions?

• Emotional direction
• Intuition
• Analytic thinking
• Are you an intuit, an analytic, what???

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Problems

• Arise whenever there is a perceived difference
  between what is desired and what is in
  actuality.
• Problems serve as motivators for doing something
• Problems lead to decisions

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Problem
Problem
MS Model
Mental Model
Mental Model
Decision
Decision
Action
Action
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Model Classification Criteria

• Purpose
• Perspective
• Degree of Abstraction
• Content and Form
• Decision Environment

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Purpose

• Planning
• Forecasting
• Training
• Behavioral research

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Perspective

• Descriptive
• Telling it like it is
• Most simulation models are of this type
• Prescriptive
• Telling it like it should be
• Most optimization models are of this type

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Degree of Abstraction

• Isomorphic
• One-to-one
• Homomorphic
• One-to-many

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Content and Form

• verbal descriptions
• mathematical constructs
• simulations
• mental models
• physical prototypes

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Decision Environment

• Decision Making Under Certainty
• all of mathematical programming
• Decision Making under Risk and Uncertainty
• Decision analysis--tables, trees, Bayesian
  revision
• Decision Making Under Change and Complexity
• Structural models, simulation models

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Mathematical Programming

• Linear programming
• Integer linear programming
• some or all of the variables are integers
• Network programming (produce all integer
  solutions)
• Nonlinear programming
• Dynamic programming
• Goal programming
• The list goes on and on
• Geometric Programming

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A Model of this class

• What would we include in it?

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Management Science Models

• A QUANTITATIVE REPRESENTATION OF A PROCESS THAT
  CONSISTS OF THOSE COMPONENTS THAT ARE SIGNIFICANT
  FOR THE PURPOSE BEING CONSIDERED

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Summary

• This course models for improved decision making
• 3 parts DM under certainty
• DM under risk and uncertainty
• DM under change and complexity
• 3 exams, each worth 30
• Types of models planning, execution, control
• Models can help us substantially improve the
  bottom line

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