This Study Resource Was

Chapter 1:
Vocabulary:
Constraint: A mathematical relationship that represents limited resources of minimum levels of activity
Data: pieces of information from the problem environment
Decision variable: a variable whose value represents a potential decision (EX: max z=$20x-5x (the x))
Fixed costs: independent of the volume of units produced and sold and remain constant
Functional relationship: the equation as a whole.
Model: functional relationship that includes variables, parameters, and equations.
Objective function: a mathematical relationship that represent the object of a problem solutions (model)
m
er as
Parameters: known, constant values that are often coefficients of variables in equations (numbers $20 &
$5) Usually remain constant
co
eH w
Variable costs: are determined on a per-unit basis
o.
rs e
Volume: level of sales or production of a company (number of units, dollar amount, % of total capacity)
ou urc
Symbols:
v- volume
o
aC s
Cv – variable cost
vi y re
Cf – fixed cost
Management science is the application of a scientific approach to solving management problems in order
ed d
to help manager make better decisions. (Operations research, quantitative methods, quantitative analysis,
ar stu
and decision sciences)
Scientific method(management process):

is
1)Observation-Identification of a problem
Th
2)Problem definition-defines the limits and the degree to which it pervades other units of the
organization. Also defines goals or objectives of the firm.
3)Model Construction- a model is an abstract representation of the problem (graph, chart, equation)
sh
4)Solution- The solution to a problem is not a decision but rather just information. Can be either a
recommended decision or information that helps a manager make a decision.
5)Implementation-Actual use of the model once it has been develop
This study source was downloaded by 100000836604071 from CourseHero.com on 11-11-2021 00:54:02 GMT -06:00
https://www.coursehero.com/file/6380526/Notes-Chapters-1-4/
Operations research began in WWII
Break even analysis (profit analysis)- where total revenue equals total cost and profit is 0
The three components of Break even analysis include volume, cost, and profit.
Total variable cost is a function of volume and the variable cost per unit (total variable cost= vcv
Total cost= total fixed cost + total variable cost (TC= Cf + VCv )
Profit is the difference between total revenue and total costs
Total revenue= V*P (p=price per unit)
Total profit= total revenue – total cost
Total profit= VP – Cf – VCv
m
er as
Break even volume= fixed cost/ (price – variable cost)
co
eH w
An increase in price lowers the break-even point, all other things constant
o.
An increase in variable costs will decrease the break-even point, all others constant
rs e
ou urc
An increase in fixed costs will increase the break-even point
Mathematical programming techniques (linear programming, graphical analysis, sensitivity,

o
transportation, integer linear programming, and goal programming)

aC s
Goal programming- addressing problems with more than one goal

vi y re
Results are known with certainty (also called: deterministic)
Probabilistic Techniques : results are probabilities (might occur)

ed d
ar stu
Do contain uncertainty
Decide to build?
is
Queuing analysis: waiting lines that might occur

Th
Networks – models as diagrams
Constraint optimization problems- trying to optimize one or more objectives subject to various constraints
sh
DSS(decision support system) is a computer based system that helps decision makers address complex
problems that cut across different parts of an organization and operations. OLAP-online analytical
processing system. ERP-enterprise resource planning: can connect the components and functions of an
entire company.
Chapter 2
Linear programming- is a model that consist of linear relationship representing a firms decision given an
objective and resource constraints
3 steps of linear programming: 1)problem must be identified as being solvable by linear programming 2)
the unstructured problem must be formulated as a mathematical model 3) the model must be solved by
using established mathematical techniques.
Linear programming consists of decision variables, objective function, and model constraints which
consist of decision variables and parameters.
Objective function always consists of either maximizing or minimizing some value
The actual number value of the constraints are called parameters
Geroge B. Dantzig created linear programming
Product mix- how many of each product to make
m
er as
Linear programming model formulation steps: 1) define the decision variables 2) define the objective
co
function 3)define the constraints
eH w
Nonnegativity constraints- restrict the decision variables to zero or positive values
o.
rs e
After your formulate a mathematical model the next step is to find the solution to the model
ou urc
The first step in drawling the graph is to plot the constraints on the graph. The second step is to locate the
point in the feasible solution area that will result in the greatest total profit. The third is to solve for x1
o
and x2 once the optimal solution point has been found.

aC s
vi y re
Profit increases as the objective function line moves away from the origin. Therefore, the maximum profit
will be attained the point where the objective function line is farthest from the origin and is still touching
a point in the feasible solution area.
ed d
The solution point will be on the boundary of the feasible solution area and at one of the corners of the
ar stu
boundary where two constraint lines intersect. (These corners are protrusions or extremes) Optimal
solution will always occur at an extreme point.
Slope- y=ax+b (y-dependent variable, a-y intercept, b-slope, x-independent)

is
The optimal extreme point is determined by the objective function, and an extreme point on one axis of
Th
the graph is as likely to be the optimal solution as is an extreme point on a different axis. The solution is
sensitive to the value of the coefficients in the objective function.
sh
If objective function coefficients are changed, the solution may change. If the constraint coefficients are
changed, the solution space and solution points may change also.
Sensitivity analysis- is the use of linear programming to evaluate the effects of changes in model
parameters
Multiple optimal solutions can occur when the objective function is parallel to a constraint line
The solution occurs at an extreme point where constraint equation lines intersect with each other or with
the axis.
A slack variable is added to a <= constraint to convert it to an =
Slack variable represent the amount of unused resources
The ultimate instance of unused resources occurs at the origin, x1=0 and x2=0
Slack variable can only have non-negative values because you can not use negative resources
Summary of graphical solution steps page 47
Minimization problem
Contain >= sign
The optimal solution point in a minimization problem contain the point CLOSEST to the origin (w/ zero
m
er as
being lowest possible cost)
co
eH w
Greater-than-or equal constraints cannot be converted to equations using slack variables; instead you
subtract a surplus variable
o.
rs e
Surplus variable: represents a surplus above a constraint requirement level.
ou urc
Alternate optimal solutions: are at the endpoints of the constraint line segment that the objective function
parallels.
o
Infeasible problems usually result from errors in defining the problem or in formulating the linear
aC s
vi y re
programming model.
Linear does not only mean that the functions in the models are graphed as a straight line; it also means
that the relationships exhibit proportionality. In other words, the rate of change, or slope, of the function
ed d
is constant; therefore changes of a given size in the value of a decision variable will result in exactly the
ar stu
same relative changes in the functional value.
The objective function terms and the constraint terms must be additive; everything must add up
is
In linear programming models the values of all the model parameters are assumed to be constant and
known with certainty
Th
Another property is that solution values cannot be restricted to integer values; they can be fractions. Thus
the values are continous or divisible. NOT INTEGER OR DISCRETE!
sh
Linear programming has following properties
1)linearity
2)proportionality
3)additivity
4)divisibility
5)certainty
m
er as
co
eH w
o.
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh
Powered by TCPDF (www.tcpdf.org)

This Study Resource Was

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

This Study Resource Was

Uploaded by

Copyright:

Available Formats

Chapter 1:

Data: pieces of information from the problem environment

Functional relationship: the equation as a whole.

Model: functional relationship that includes variables, parameters, and equations.

and decision sciences)

Scientific method(management process):

5)Implementation-Actual use of the model once it has been develop

Profit is the difference between total revenue and total costs

Total revenue= V*P (p=price per unit)

Total profit= total revenue – total cost

Total profit= VP – Cf – VCv

Mathematical programming techniques (linear programming, graphical analysis, sensitivity,

transportation, integer linear programming, and goal programming)

Goal programming- addressing problems with more than one goal

Results are known with certainty (also called: deterministic)

Probabilistic Techniques : results are probabilities (might occur)

Queuing analysis: waiting lines that might occur

Networks – models as diagrams

Objective function always consists of either maximizing or minimizing some value

The actual number value of the constraints are called parameters

Geroge B. Dantzig created linear programming

Product mix- how many of each product to make

and x2 once the optimal solution point has been found.

Slope- y=ax+b (y-dependent variable, a-y intercept, b-slope, x-independent)

A slack variable is added to a <= constraint to convert it to an =

Slack variable represent the amount of unused resources

Summary of graphical solution steps page 47

Contain >= sign

same relative changes in the functional value.

Linear programming has following properties

You might also like