Final Exam Review

73-220

Lecture 23

1
Agenda
● Review of last class.
– Economic order quantity (EOQ) model with
quantity discount.
● University policies re final exam.
● Review for final exam.
– Format and coverage of final exam.
– Weight of final exam
– Review of topics after midterm
● Next Class

2
 Place and Time
● Date: Mon, December 11
● Time: 12:00-15:00
● Place: SD, Center 29-44
● Similar seating plan will be adopted for
final exam. As some students dropped the
course after the midterm, please verify
with the website for your new seat number.
● You are required to sign in during the
exam and sign out after the exam.

3
 Policies Re Final Exam
The following regulations will be strictly enforced at all final
examination sessions:
● A valid student photo ID card is required. Students who do not
present a valid photo ID card will be asked to leave the
examination centre.
● No students will be permitted to leave the examination hall within
the first 30 minutes.
● No student will be allowed to enter the examination hall after the
first 30 minutes.
● Students are asked to arrive 15 to 20 minutes prior to the scheduled
examination time. Doors of the St. Denis Centre examination hall will
be opened approximately 10 minutes prior to the scheduled
examination start time.
● Students having to go to the washroom after the first 30 minutes
must raise their hand and be escorted by an invigilator.
● All regulations ensuring a high level of academic integrity at
examinations will be strictly enforced. For more information,
consult the university's Rules for Conduct of examinations.

4
Format and Coverage
● One page single-sided-letter-sized aid sheet is
allowed. Please do not write on the other side at any
time during the exam, otherwise, it will be
confiscated.
● Formulation (LP and IP), problem solving (LP
sensitivity, PERT/CPM, inventory management).
● 6 to 8 questions in total.
● Cumulative, including both pre- and post-midterm
materials. Lecture notes and assignments are a good
starting point for final review.
● Excluding: graphical solution for two-variable LP
models.
● Post- vs. Pre-midterm weights:
– Roughly 60-70% vs 30-40%.

5
Integer Programming

● LP relaxation
– Drop integer constraints, relax the IP model,
solution tends to be better
– For max: Z(LP) > Z(IP)
– For min: Z(LP) < Z(IP)
● IP formulation
– Similar to LP formulation, remember the integer
requirement re DVs.
– May have to introduce binary DVs.

6
IP -- Binary Variables
● Review the questions we discussed in class.
– Understand some typical ways to use binary DVs, e.g., fixed
vs. variable cost; two-step decisions (set up or not and, then,
how many units to produce or ship, etc).
● Typical binary constraints.
– At least k out of n.
– At most k out of n.
– Exactly k out of n.
– If A then B, or equivalently, B if A (A<B).
– B only if A (B<A).
– Mutually exclusive (A+B< 1).
– One and only one (implies mutually exclusive) (A+B=1).
– Understand how to restrict capacity to be either a fixed
amount (if set up) or zero (if no setup).

7
PERT/CPM

● PERT/CPM with known activity times.

– Project network to describe the
interrelationships among activities
(immediate predecessors).
– Know how to calculate ES and EF (move
forward), LS and LF (move backward).
– Develop activity schedule, and determine
critical activities and critical path.

8
PERT/CPM
● PERT/CPM with uncertain activity times.
– Know how to calculate mean and variance of
activity times (β distribution).
– Use mean activity times to determine critical path.
– Calculate the mean and standard deviation of the
project completion time. Understand that the
project completion time follows normal
distribution.
– Look up normal table to find probability of certain
given project completion time.
– Look up normal table to determine project
completion time given a certain service level
(probability that a deadline can be honoured).

9
PERT/CPM: Time-Cost Trade-off
● Use LP models to determine which activities
should be crashed to minimize crashing cost.
– Determine crashing cost per unit time for each
activity.
– Compute max possible reduction time.
– Three groups of constraints:
» Activity completion time (cannot start until its
immediate predecessor(s) is (are) completed).
» The overall project completion time should meet a
shortened deadline (one vs multiple activities directly
linked to the finish node).
» Max reduction time.

10
Inventory Management
● Basic EOQ model
– Record the EOQ model on your information sheet.
– Note that the demand in the EOQ model is annual
demand.
– Understand cycle time, reorder point (in terms of
inventory position or inventory on hand).
– Aware of EOQ model’s important properties:
robust, two costs considered, two costs are the
same at EOQ.

11
EOQ Model with Discount
● Difference from the basic EOQ model.
● Three costs are considered here (ordering, holding,
and purchase costs).
● Understand the procedures to determining optimal
order quantity and minimal total cost.
– Basis is the EOQ model, but we have to determine if a
quantity is feasible or not.
– Note also that the total cost is different from basic EOQ
model as the purchase (or material) cost has to be
considered.
– Please go through the example given in class.
– You may wish to work on Questions 20-22 in the textbook to
practice how to solve EOQ model with quantity discounts.

12
 Next Class
● Good luck for your final exam.

● Review some questions based on input from

the class. You are more than welcome to
contribute questions to our class discussions. If
you have any specific questions for me to go
through, please send me your questions by
posting a message on the discussion board, by
email or by phone at 3456.

YOU LEARN DECISION ANALYSIS BY DOING

DECISION ANALYSIS!!

13