ISQS 5242Decision Theory and Management Science Instructor Dr

ISQS 5242—Decision Theory and Management Science • • • Instructor: Dr. Burns Telephone: 742 -1547 Email: jimburns@ttu. edu Off hrs: 1: 15 -3: 25 MW Website: burns. ba. ttu. edu

Chapter 1 Introducti on

…and Decisions sometimes one can be made by can find them a. . . very challenging. . .

A Systematic Approach to Decision Making was Developed called -

MANAGEMENT SCIENCE

Management Science provides a scientific, systematic approach to executive decision making. Management Science is also called Operations Research

Management Science Success Stories

• 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.

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.

ISQS 5242 • • Prerequisites Requirements (for completion) Syllabus Homework Exams Term Projects? Final Grade

Prerequisites • Completion of Tool Core Courses in MBA Program – ISQS 5237 – Economics ISQS 5345 Accounting • Be able to solve systems of linear algebraic equations • Understand probability basics--conditional probabilities, joint probabilities, probability trees • DROP THE COURSE if you don’t have the prerequisites

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

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

Requirements (for completion) • Homework is worth 10% of total – Three installments each worth. 0333 or 3. 33% • Three exams (including FINAL), each worth 30%

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

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

Top Ten Reasons, cont’d • 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 didn’t feel like it—very often the last works spoken by a registered student

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

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

GRADING • 90 -100 -A • 80 -89. 9999 -- B • 70 -79. 9999 -- C

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

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

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

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

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

Just how do you make decisions? • • Emotional direction Intuition Analytic thinking Are you an intuit, an analytic, what? ? ?

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 42

Model Classification Criteria • • • Purpose Perspective Degree of Abstraction Content and Form Decision Environment

Purpose • • Planning Forecasting Training Behavioral research

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

Degree of Abstraction • Isomorphic – One-to-one • Homomorphic – One-to-many

Content and Form • • • verbal descriptions mathematical constructs simulations mental models physical prototypes

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

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

A Model of this class • What would we include in it?

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

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

IF INTERESTED IN IT CAREER, JOIN AITP • Application forms are in BA 604, the ISQS Office and ON-LINE – aitp. ba. ttu. edu • Its important to affiliate yourself with a professional organization • Dues for the first few years are cheap if you join as a student • Discounts on airlines and hotels • Low interest credit card • It’s the way MIS (and other) majors market themselves to recruiters.