Modeling and Analysis

Azizi Ab Aziz
Department of Computer Science
Faculty of Information Technology
Universiti Utara Malaysia
E-mail: aziziaziz@uum.edu.my
URL: http://staf.uum.edu.my/aziziaziz

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 Outlines
• Understand basic concepts of MSS modeling.
• Describe MSS models interaction.
• Understand different model classes.
• Structure decision making of alternatives.
• Understand the concepts of optimization, simulation, and
heuristics.

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 Modeling
• Key element in DSS
• Many classes of models
• Specialized techniques for each model
• Allows for rapid examination of alternative solutions
• Multiple models often included in a DSS
• Trend toward transparency
– Multidimensional modeling exhibits as spreadsheet,
database, …more and more and more ….

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 Why Modeling?
• To understand the nature of process, problems, or its
environment.
• Generic aspect: environmental scanning and analysis.
• It is clearly important to understand the scope of
domains, the forces, and dynamics of the environment.
• In business ~ the culture and environmental factors
have created a great problem.
• Main step: identifying the model’s variables (decision,
results, relationship) is critical.

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 Typical Types of Models
• Model  “an abstraction /approximation to represent
reality”
• Types of models
– Narrative model – verbally, written, words
– Physical model – tangible, prototype
– Schematic model – graphics
– Mathematical model – series of equations

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 Views of Model
• Either static or dynamic model.
• Single model: photograph of situation / single interval
• Time can be rolled forward, a photo at a time
• Usually repeatable
• Steady state
– Optimal operating parameters
– Continuous
– Unvarying
– Primary tool for process design

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 Views of Model
• Dynamic model: represent changing
situations
• Time dependent
• Varying conditions
• Generate and use trends
• Occurrence may not repeat
• Heart beat, waterfalls, stock exchange,
• Governs by chaos theory.

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 Certainty, Uncertainty, and Risk
• Decision situations are often classified on the basis of
what the decision maker knows (believes) about the
suggested results.
• Typical categories of decision making:
– Decision making under certainty
– Decision making under uncertainty
– Decision making under risk

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Certainty, Uncertainty, and Risk

Complete knowledge, certainty

Increasing RISK Decreasing

knowledge knowledge

Ignorance, uncertainty

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Decision Making Under Certainty
• Assume complete knowledge
• Called as deterministic problem
• All potential outcomes known (assumptions)
• Easy to develop (yield optimal solution)
• Resolution determined easily
• Can be very complex

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Decision Making Under Uncertainty
• Several outcomes for each decision
• Probability of occurrence of each outcome
unknown
• Insufficient information
• Assess risk and willingness to take it
• Pessimistic/optimistic approaches

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Decision Making Under Risk
• Probabilistic Decision-Making
• Decision under risk
• Probability of each of several possible outcomes
occurring
• Risk analysis
• Calculate value of each alternative
• Select best expected value

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 Modeling Decision
• Using influence diagram.
• Graphical representation of model
• Provides relationship framework
• Examines dependencies of variables
• Any level of detail
• Shows impact of change
• Shows what-if analysis

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 Modeling Decision
Variables:
Intermediate Result or outcome
Decision or (intermediate or
uncontrollable final)

• Arrows indicate type of relationship and

direction of influence

Certainty Amount Interest

in CDs earned

Sales
Uncertainty Price

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 Influence Diagram
Random (risk) ~
Place tilde above Demand
Sales
variable’s name
Sleep all
day
Graduate Get job
Preference University

(double line arrow) eat all

day

• Arrows can be one-way or bidirectional, based

upon the direction of influence

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 Example: Influence Diagram
• Consider the following profit model:
– Profit = income – expense
– Income = units sold * unit price
– Units sold = 0.5 * amount used in advertisement
– Expenses = unit cost * units sold + fixed cost

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Example: Influence Diagram

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 Try this!
• Consider this problem:
“I would like to increase my pointer this semester. I have
only three elective papers left. My friend told me, DSS is
the best subject to score, however it is depends to the
lecturer. If you’re having Mr A as your lecturer, you’re in a
grieve danger. The virtual reality subject is okay, but you
need to know great graphics (which I like most). Well,
another subject is mobile web programming. I presume it
will be great, but wasn’t sure either I’m capable to cope
with programming or not since nobody knows this
course.

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 Mathematical Models
• Link decision variables, uncontrollable variables,
parameters, and result variables together
– Decision variables describe alternative choices.
– Uncontrollable variables are outside decision-
maker’s control.
– Fixed factors are parameters.
– Intermediate outcomes produce intermediate result
variables.
– Result variables are dependent on chosen solution
and uncontrollable variables.

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 Mathematical Model
External parameters Uncontrollable
Variables

Decision Mathematical Results

variables relationships Variables

Important parameters Reflect the

(input) effectiveness of the
system (towards goal)

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Mathematical Models

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Mathematical Models

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Mathematical Models

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Mathematical Models

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 Mathematical Models: Linear
Regression
• Regression analysis: is used primarily for prediction
among bivariate relationship.
• Main components:
– Dependent variables  response variable.
– Independent variables  explanatory variables.
– Correlation analysis  to measure the strength of
measured variable.
– Visualization  using scatter diagram
– Basis  Least – Square method

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 Mathematical Models: Linear
Regression
• Least square method ~ to derive the equation line of
Y = a + Bx; where
– Y is a value of variable (dependent)
– B is a regression coefficient
– X is a independent variable
• Formulation:

b
 XY  n X Y
a  Y  bX
 X  nX2 2

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 Linear Regression (example)
• The following data show monthly advertising
expenditure (RM000s) and sales (RM000s) over a
period of 6 months. Estimate the relationship
between sales (Y) and advertising expenditure.
• Sales: Y = 3, 15, 6, 20, 9, 25
• Advertising expenditure: X = 1, 2, 3, 4, 5, 6

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Linear Regression (example)
X Y X i2 XY Yi 2
1 3 1 3 9
2 15 4 30 225
3 6 9 18 36
4 20 16 80 400
5 9 25 45 81
6 25 36 150 625
 X =21  Y=78  X i2 = 91  XY=326 Yi 2 =1376

21 78
X   3.5, Y   13
9 6

b
 XY  n X Y

326  6(3.5)(13)
 3.03
 X  nX 91  6(3.5)
2 2 2

a  Y  b X  13  3.03(3.5)  2.40 28
 Mathematical Models: Linear
Regression
SALES, Y

2.40

ADVERSTISEMENT
EXPENDITURE, X

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 Sensitivity, What-If, Goal Seeking
• Sensitivity
– Assesses impact of change in inputs or parameters
on solutions
– Allows for adaptability and flexibility
– Eliminates or reduces variables
– Can be automatic or trial and error
• What-if
– Assesses solutions based on changes in variables
or assumptions
• Goal seeking
– Backwards approach, starts with goal
– Determines values of inputs needed to achieve goal
– Example is break-even point determination

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 Searching Approach
• Analytical techniques (algorithms) for structured
problems
– General, step-by-step search
– Obtains an optimal solution
• Blind search
– Complete enumeration
• All alternatives explored
– Incomplete
• Partial search
– Achieves particular goal
– May obtain optimal goal

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 Searching Approach
• Heurisitic
– Repeated, step-by-step searches
– Rule-based, so used for specific situations
– “Good enough” solution, but, eventually, will
obtain optimal goal
– Examples of heuristics
• Tabu search
– Remembers and directs toward higher
quality choices
• Genetic algorithms
– Randomly examines pairs of solutions
and mutations

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 Simulation
• Imitation of reality
• Allows for experimentation and time compression
• Can include complexities, but requires special skills
• Handles unstructured problems
• Optimal solution not guaranteed
• Methodology
– Problem definition
– Construction of model
– Testing and validation
– Design of experiment
– Experimentation
– Evaluation
– Implementation
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 Simulation
• Probabilistic independent variables
– Discrete or continuous distributions
• Time-dependent or time-independent
• Visual interactive modeling
– Graphical
– Decision-makers interact with simulated model
– may be used with artificial intelligence
• Can be objected oriented

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 Simulation
Problem Definition
Real
world Construct model
problem
Testing and validation

Design experiments

Conduct experiments

Possible Evaluate the results

solution
Implement the results
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Simulation

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Simulation

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