Introduction to Management Science

by Lee, Sang M.; Olson, David L.

• ISBN13: 9780873935890
• ISBN10: 0873935896
• Format: Paperback
• Copyright: 1999-04-30
• Publisher: Dame Publishing

Table of Contents

The Role of Management Science
What's it all About?	1	(1)
Management and Decision Making	2	(2)
Rationality in Decision Making	4	(4)
The Scientific Method	5	(2)
The Concept of Economic Person	7	(1)
Management Science and the Systems Approach	8	(2)
How Managers Actually Make Decisions	10	(1)
The Role of Management Science	11	(3)
Practical Application of Management Science	14	(1)
New Paradigm and Management Science	15	(2)
Building a Better Perspective	17	(1)
Summary	18	(5)
Modeling in Management Science
Introduction to Modeling	23	(2)
Management Science Modeling	25	(5)
The Model Structure	26	(1)
The Model Components	26	(3)
Relationships within the Model	29	(1)
Decision-Making Environment	30	(7)
Decision Making under Certainty	30	(1)
Automated Scheduling System	31	(1)
Decision Making under Risk	32	(1)
Telephone System Analysis	33	(1)
Decision Making under Uncertainty	34	(1)
Real Treasure Hunting	35	(1)
Decision Making under Conflict	36	(1)
Finnish Agricultural Inc.ome Policy	36	(1)
The Process of Management Science Modeling	37	(4)
Formulation of the Problem	38	(2)
Development of the Model	40	(1)
Model Validation and Data Collection	40	(1)
Solution of the Model	41	(1)
Implementation of the Solution	41	(1)
Keeping a Proper Perspective about Models	41	(2)
Summary	43	(4)
Introduction to Linear Programming
Basic Concepts of Linear Programming	47	(5)
A Brief History	48	(1)
Basic Requirements	48	(2)
Application Areas	50	(2)
Model Formulation	52	(37)
Galaxy Electronics, Inc.	53	(3)
The Orientation Program for First-Year Students	56	(2)
UR# 1 Limousine Service Company	58	(3)
Leon's Groceries	61	(5)
Graphical Solution Method	66	(1)
A Simple Maximization Problem	66	(12)
Analysis of Slack Variables	78	(2)
A Simple Minimization Problem	80	(4)
Analysis of Surplus Variables	84	(1)
A Problem with an Equality Constraint	85	(2)
Some Complications	87	(2)
Real-World Applications of Linear Programming	89	(4)
Credit Card Debt Collection	90	(1)
Diet Management	91	(1)
Scheduling Transportation Systems	92	(1)
Summary	93	(12)
Simplex Method of Linear Programming
The Simplex Method	105	(2)
The Simplex Solution Procedure	107	(22)
Candex Camere Works Ltd.	107	(1)
Develop the Simplex Model	108	(1)
Determine the Initial Solution	109	(5)
Test Optimality	114	(1)
Identify the Entering Variable	114	(2)
Determine the Leaving Variable	116	(3)
Develop a New Solution	119	(4)
Test Optimality and Repeat the Procedure	123	(2)
Interpret the Optimal Solution	125	(3)
Summary of the Simplex Solution Procedure	128	(1)
Simplex Solution of a Problem with Mixed Constraints	129	(10)
A Maximization Problem with Mixed Constraints	129	(10)
Simplex Solution of a Minimization Problem	139	(3)
The Orientation Program for First-Year Students	139	(3)
Some Problem Situations	142	(6)
Tie in Selecting the Entering Variable	142	(1)
Tie in Selecting the Leaving Variable (Degeneracy)	143	(1)
Multiple Optimal Solutions	144	(3)
An Infeasible Problem	147	(1)
An Unbounded Problem	148	(1)
Summary	148	(11)
Duality, Sensitivity Analysis, and Computer Solutions of Linear Programming
Duality in Linear Programming	159	(8)
The Primal-Dual Relationship	160	(1)
Candex Camera Works, Ltd.	160	(2)
Interpretation of the Dual Model	162	(3)
The Dual of a Problem with Mixed Constraints	165	(1)
Example 5.2	165	(2)
Sensitivity Analysis	167	(24)
Simple Graphical Sensitivity	167	(1)
Example 5.3 Ecologically Correct Fuel Production	168	(6)
Simplex-Based Sensitivity Analysis	174	(1)
Ecologically Correct Fuel cont	175	(16)
Computer Solutions in Linear Programming	191	(1)
Summary	192	(13)
Integer and Zero-One Programming
Integer Programming	205	(10)
The Rounding Approach	206	(1)
The Graphical Approach	207	(1)
Creative Designer Jeans, Inc.	208	(1)
The Branch-and-Bound Method	209	(6)
Zero-One Programming	215	(7)
A Capital-Budgeting Problem	216	(2)
An Inventory Management Problem	218	(2)
Project Selection	220	(2)
Computer Solution of Integer and Zero-One Programming Problems	222	(1)
Real-World Applications of Integer Programming	222	(4)
Black Fly Control	223	(1)
Research and Development Project Selection	224	(1)
Fiber-Optic Network Expansion	225	(1)
Summary	226	(3)
Goal Programming
Goal Programming	229	(3)
Application Areas	231	(1)
Model Formulation	232	(18)
Century Electronics Inc.	232	(7)
Big Sound Music Lac	239	(7)
Bleeker College Foundation	246	(4)
The Graphical Method of Goal Programming	250	(5)
An Electronics Manufacturing Firm	250	(5)
The Modified Simplex Method of-Goal Programming	255	(10)
Some Goal Programming Complications	265	(2)
Computer Solution of Goal Programming Models	267	(2)
Applications of Goal Programming	269	(2)
Road Project Selection	269	(1)
Bank Asset Management	270	(1)
Summary	271	(16)
The Transportation Problem
The Nature of the Transportation Method	287	(4)
Gulf Coast Oil Company Inc.	288	(3)
The Balanced Transportation Problem	291	(17)
Developing an Initial Solution	292	(8)
Determining the Optimal Solution - The Modified Distribution Method	300	(8)
The Unbalanced Transportation Problem	308	(4)
Demand Exceeds Supply	308	(3)
Supply Exceeds Demand	311	(1)
Some Unique Situations	312	(8)
Degeneracy	312	(3)
Prohibited or Impossible Transportation Routes	315	(1)
Multiple-Optimal Solutions	316	(1)
The Transshipment Problem	317	(2)
Gulf Coast Oil - Transshipment	319	(1)
The Transportation Problem with Multiple Objectives	320	(1)
Computer Solutions for Transportation Problems	321	(3)
Real-World Applications of the Transportation Method	324	(3)
Electrical Pricing	325	(1)
Nuclear Waste Disposal	326	(1)
Summary	327	(18)
The Assignment Problem
The Nature of the Assignment Problem	345	(2)
Martha Weinstein Cosmetics Inc.	346	(1)
The Complete Enumeration Method	347	(1)
Linear Programming Model for the Assignment Problem	348	(1)
The Hungarian Method of Assignment	349	(7)
The Opportunity Cost Table	350	(2)
Analysis of Optimal Assignment Feasibility	352	(1)
The Revised Opportunity Cost Table	353	(3)
A Maximization Assignment Problem	356	(4)
The Neighborhood Team-Policing Assignment	357	(3)
Some Unique Assignment Problems	360	(3)
Unequal Rows and Columns	360	(1)
Mississippi Barge Transportation Inc.	360	(2)
Impossible (or Prohibited) Assignments	362	(1)
Multiple Optimal Solutions	363	(1)
Multiple Objectives	363	(1)
The Branch-and-Bound Approach	363	(8)
Computer Solution for Assignment Method Problems	371	(1)
Real-World Applications	372	(2)
Assigning Medical Residents	373	(1)
Summary	374	(13)
Network Models
Characteristics of a Network	387	(2)
Shortest-Route Problem	389	(6)
Peak Season Travel Inc.	390	(5)
Minimum Spanning Tree Problem	395	(3)
National Local Area Network	396	(2)
Maximum Flow Problem	398	(6)
Picturesque Caves Tour	399	(5)
Computer Solutions of Network Problems	404	(3)
Real-World Applications	407	(3)
Yellow Freight System Routing Optimization	407	(1)
Airline Network Design	408	(1)
Telephone Network Planning	409	(1)
Summary	410	(15)
Nonlinear Programming
Nonlinear Optimization Problems	425	(16)
Optimization of a Single Variable Unconstrained Nonlinear Function	425	(1)
The Money Pump	425	(3)
Optimization of Multivariate Unconstrained Nonlinear Functions	428	(4)
Product Expansion	432	(2)
Lagrange Multipliers	434	(2)
The Chase investment Planning Agency	436	(5)
Computer Support to Nonlinear Programming	441	(1)
Real-World Applications	441	(2)
Gasoline Blending	441	(1)
Feed Blending	442	(1)
Summary	443	(4)
Project Planning with CPM and PERT
Characteristics of the Project-Planning Problem	447	(3)
The Gantt Chart	448	(2)
History of CPM and PERT	450	(1)
Developing Project Networks	450	(3)
Transforming a Gantt Chart into a Network	451	(2)
Dummy Activities	453	(1)
Identifying the Critical Path	453	(13)
A Simple Network	454	(1)
The Earliest Expected Time (ET)	454	(2)
The Latest Allowable Time (LT)	456	(2)
The Critical Path	458	(2)
Activity Scheduling and Slack	460	(3)
Schmidt Construction Inc.	463	(3)
CPM Time and Cost Trade-Offs	466	(9)
Project Crashing	469	(6)
Estimating Activity Times in Pert	475	(6)
Fresh Yogurt Inc.	476	(5)
Computer Solution of Project-Planning Problems	481	(2)
Real-World Applications	483	(4)
Social Service Project Management	484	(1)
CPM Used to Support Contractor Claim	485	(1)
Scheduling Maintenance Projects in a Chinese Copper Mine	485	(2)
Summary	487	(10)
Decision Theory
Decision-Making with Probability	497	(2)
Decision Making Under Risk	499	(7)
The Expected Payoff Criterion	502	(1)
Friendly Investment Club	502	(2)
The Expected Loss Criterion	504	(1)
The State fair Concession	504	(2)
Simple Inventory Problems Under Risk	506	(10)
New England Fish Market	506	(2)
Conditional Profits	508	(1)
Expected Profits	509	(2)
Expected Profit under Certainty	511	(2)
Conditional Loss	513	(2)
Value of Perfect Information	515	(1)
Incremental Analysis	516	(10)
Analysis of Salvage Value	520	(3)
Analysis of Goodwill Cost	523	(2)
Computer Solution of Decision Problems under Risk	525	(1)
Decision Making Under Uncertainty	526	(12)
Sakura Motors Corporation ISMCJ USA	526	(1)
Decision Making with Partial Probabilities	527	(3)
The Equal Probabilities (Laplace) Criterion	530	(1)
The Maximin (Wald) Criterion	530	(1)
The Maximax Criterion	530	(1)
The Dominance Criterion	531	(1)
The Hurwicz Criterion	532	(3)
The Minimax (Regret) Criterion	535	(1)
Summary of Decision-Making Criteria	536	(1)
Computer Solution of Decision Problems under Uncertainty	537	(1)
Subjective Probabilities	538	(13)
Bayes' Decision Rule	538	(1)
Centennial Precision Works Inc.	539	(2)
Computer Solution of Bayes' Decision Rule Problems	541	(1)
Utility Analysis	541	(2)
Multiple Objectives	543	(1)
Decision Trees	544	(1)
Mostly Nuts of Georgia, Inc.	545	(5)
Computer Solution of Decision Tree Problems	550	(1)
Real-World Applications	551	(4)
Airline Yield Management	552	(1)
Managing Environmental Risk in Electric Utilities	553	(1)
Bank Risk Management	554	(1)
Summary	555	(12)
Game Theory
The Nature and Types of Games	567	(1)
The Two-Person, Zero-Sum Game	568	(12)
Fleet the Foot	568	(1)
Pure Strategy Games	569	(1)
Dominate Strategy Games	570	(1)
Mixed Strategy Games	571	(1)
K's Restaurant	571	(2)
Expected Outcome Approach	573	(3)
Linear Programming Approach	576	(4)
Computer Solution of Games	580	(1)
Summary	581	(2)
The Analytic Hierarchy Process
Description of AHP	583	(5)
Automobile Purchase	583	(1)
Hierarchy Development	584	(1)
Subjective Pairwise Comparisons	585	(3)
Obtaining Relative Values	588	(4)
Consistency Measure	589	(2)
Synthesis	591	(1)
Geometric Mean Solution	592	(3)
Premier Parking Inc.	593	(2)
Real-World Applications of AHP	595	(4)
Air Force Project Evaluation	596	(1)
Finnish Electrical Generation Policy	597	(2)
Computer Support for AHP	599	(1)
Summary	600	(6)
Appendix: Calculation of Maximum Eigen Value and Eigen Vector	606	(1)
Inventory Models
Characteristics of Inventory Systems	607	(2)
Basic Inventory Decisions	609	(2)
Holding Costs	610	(1)
Ordering Costs	610	(1)
Shortage Costs	611	(1)
Economic Order Quantity (EOQ) Model	611	(14)
EOQ Model Assumptions	611	(1)
EOQ Model Symbols	612	(1)
EOQ Model Formulation	613	(3)
Television Technology Inc.	616	(9)
Modifications of the EOQ Model	625	(4)
Holding Cost as a Proportion of Value	625	(1)
Time Horizon as a Model Variable	626	(1)
Reorder Point	627	(2)
Extensions of the EOQ Model	629	(20)
Noninstantaneous Receipt Model	629	(3)
Economic Lot-Size (ELS) Model	632	(3)
Synergy Products Inc.	635	(3)
Quantity Discount Model	638	(2)
Smith Autoparts Company	640	(1)
Inventory Model with Planned Shortages	641	(5)
American Rubber Products Inc.	646	(3)
The Inventory Model Under Uncertainty	649	(20)
Inventory Model with Safety Stocks	649	(4)
Bold Bodybuilders Inc.	653	(3)
Inventory Model with Uncertain Demand and Lead Time	656	(3)
Modern Office Equipment Inc.	659	(10)
Analytical Inventory Models Versus Simulation	669	(1)
Material Requirements Planning and Just-In-Time Systems	669	(1)
Computer Solution of Inventory Problems	670	(2)
Real-World Applications	672	(2)
Classical EOQ Model Applied to Pharmaceuticals	673	(1)
Analysis of Distribution Systems	674	(1)
Summary	674	(12)
Waiting Line (Queuing) Models
The Waiting Line Process	686	(7)
Components of a Waiting Line System	688	(2)
Basic Structures of Waiting Line Systems	690	(2)
Student Union Hairstyling Salon	692	(1)
Waiting Line Decision Problems	693	(4)
Service Costs	695	(1)
Waiting Costs	695	(1)
Total System Costs	695	(1)
A Port Unloading Problem	696	(1)
Assumptions for Waiting Line Models	697	(1)
Waiting Line Models	698	(8)
The Single Server, Constant Service Time Model (M/D/1):(FCFS/∞/∞)	699	(1)
Fast-Food Diner	700	(1)
The Single Server, Random Service Time Model (M/M/1):(FCFS/∞/∞)	701	(1)
Corner Bookshop	702	(1)
The Multiple Servers, Random Service Time Model (M/M/s):(FCFS/∞/∞)	703	(1)
County Department of Revenue	703	(3)
Other Models	706	(1)
Simulation of Waiting Line Systems	707	(1)
Computer Solution of Queuing Models	707	(1)
Real-World Applications	708	(3)
New Haven Fire Fighting	709	(1)
New York City Justice System	710	(1)
Summary	711	(8)
Supplementary Section on Waiting Line Models
Model Parameters: Distributions	719	(8)
Arrival Distribution	719	(3)
Service Time Distribution	722	(3)
Number of Servers	725	(1)
Queue Discipline	725	(1)
Infinite versus Finite Waiting Line Length	726	(1)
Maximum Population in the System	726	(1)
Eight Waiting Line Models	727	(18)
The Titanic Queue	727	(1)
(D/D/1):(FCFS/∞/∞)	728	(1)
Operation Thule	729	(1)
(M/M/1):(FCFS/∞/∞)	730	(2)
(M/GI/1):(FCFS/∞/∞)	732	(1)
Operation Thule - Pump X	732	(2)
(M/D/1):(FCFS/∞/∞)	734	(1)
Operation Thule - Pump Y	734	(1)
(M/Ek/1):(FCFS/∞/∞)	735	(1)
Operation Thule - Pump Z	735	(2)
(M/M/1):(FCFS/∞/∞)	737	(1)
The Iceland Connection	737	(2)
(M/M/1):(FCFS/∞/m)	739	(1)
End of the Open-Sea Season at Thule	739	(2)
(M/M/s):(FCFS/∞/∞)	741	(1)
Planning for a New Season at Thule	741	(4)
Dynamic Programming
The Basic Nature of Dynamic Programming	745	(8)
Segmentation and Sequential Decisions	746	(1)
The Backward Approach	746	(1)
The Washington, D.C. Conference	747	(1)
The Basic Features of Dynamic Programming	747	(3)
The Complete Enumeration Approach	750	(1)
Solution by Dynamic Programming	751	(2)
The Structure of Dynamic Programming	753	(16)
Downjohn Pharmaceutical Corporation	756	(6)
Ace Manufacturing Company	762	(7)
Probabilistic Dynamic Programming	769	(1)
Computer Solution of Dynamic Programming Problems	769	(2)
Real-World Application	771	(1)
Desert Storm Airlift Scheduling	771	(1)
Summary	772	(13)
Simulation
The Nature of Simulation	785	(7)
What is Simulation?	787	(2)
Why Simulate?	789	(2)
Characteristics of Simulation Models	791	(1)
The Process of Simulation	792	(4)
Simulation of Stochastic Models	796	(14)
The Monte Carlo Process	796	(4)
The Milwaukee Construction Company	800	(10)
Generating Random Numbers	810	(8)
Table of Random Numbers	810	(1)
Mid-Square Method	811	(1)
Mid-Product Method	811	(1)
Multiplicative Congruential Method	812	(1)
Random Number Transformation	812	(1)
Peach Computers Inc.	812	(6)
Optimization in Simulation	818	(1)
Simulation Languages	819	(1)
Applications of Simulation	820	(2)
Real-World Applications	822	(2)
Warehouse Management	822	(1)
Health Insurance Plan Evaluation	823	(1)
Blood Drive Organization	823	(1)
Summary	824	(9)
Forecasting
Forecasting Methods	833	(3)
Time Series Methods	836	(11)
Elements of Time Series	836	(1)
The Moving Average	837	(1)
Centennial Corporation	837	(4)
Weighted Moving Average	841	(1)
Exponential Smoothing	841	(2)
Trend Projections	843	(3)
Forecast Reliability	846	(1)
Regression Forecasting Methods	847	(4)
The Executive MBA Program	848	(3)
Coefficient of Determination	851	(1)
Multiple Regression	852	(1)
Qualitative Forecasting Methods	852	(2)
Computer Solution of Forecasting Models	854	(3)
Real-World Applications	857	(5)
Forecasting to Help Improve Customer Service	857	(1)
Texas Legislative Budget Ceiling Imposed by Forecast	858	(1)
Predicting Product Sales Response to Price	859	(2)
Delphi Forecast of Alaska's Future	861	(1)
Summary	862	(11)
Markov Analysis
Markov Processes and their Properties	873	(3)
State Historical	874	(2)
Predicting Future States	876	(7)
Matrix Approach	878	(5)
Steady-State Probabilities	883	(3)
Super-Saver Market Inc.	884	(2)
Special Cases of Markov Analysis	886	(5)
St. Elizabeth s Community Hospital	887	(4)
Computer Solution of Markov Problems	891	(4)
Real-World Applications of Markov Analysis	895	(2)
Markov Chains Used to Analyze Commercial Credit	895	(1)
Markov Chain Analysis of Mortgage-Backed Securities	896	(1)
Summary	897	(11)
Management Science Implementation and Decision Support Systems
Management Science Implementation	908	(3)
What is Implementation?	908	(1)
Typical Implementation Problems	909	(2)
Perspectives on Implementation	911	(1)
Computer Support to Business	912	(3)
Management Information Systems	912	(1)
Decision Support Systems	913	(1)
Expert Systems	914	(1)
The Relationship of Systems to Levels of Decision Making	915	(1)
The Systems Approach	916	(2)
Real-World Applications of Decision Support Systems	918	(8)
Designing an Integrated Distribution System	919	(2)
Airline Spare Part Inventory Management System	921	(2)
Police Officer Scheduling	923	(3)
Summary	926	(5)
Appendix 1 Poisson Probability Values	931	(8)
Appendix 2 Values of ex and e-x	939	(1)
Appendix 3 Values of P0 for Various Combinations of λ/sμ	940	(3)
Appendix 4 Area Under the Standard Normal Curve	943	(2)
Appendix 5 Table of Random Numbers	945