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Unformatted text preview: 1 Table of Contents Table of Contents Chapter 1 (Introduction) Chapter 1 (Introduction) Special Products BreakEven Analysis (Section 1.2) Special Products BreakEven Analysis (Section 1.2) 1.2 1.6 1.2 1.6 Advertising Problem (UW Lecture) Advertising Problem (UW Lecture) 1.8 1.21 1.8 1.21 An illustration of the management science approach to a problem. At the University of An illustration of the management science approach to a problem. At the University of Washington, this is the very first lecture in the core MBA class on management science. While it Washington, this is the very first lecture in the core MBA class on management science. While it includes some advanced topics (Solver, nonlinear objectives, etc.) it can be taught entirely on includes some advanced topics (Solver, nonlinear objectives, etc.) it can be taught entirely on the spreadsheet in a very intuitive way, and has proven to be a good introduction to the power the spreadsheet in a very intuitive way, and has proven to be a good introduction to the power of Solver. The next several lectures then would need to back up and cover more of the of Solver. The next several lectures then would need to back up and cover more of the fundamentals of linear programming, modeling, the Solver, etc. fundamentals of linear programming, modeling, the Solver, etc. 2 Special Products BreakEven Analysis Special Products BreakEven Analysis The Special Products Company produces expensive and unusual gifts. The Special Products Company produces expensive and unusual gifts. The latest newproduct proposal is a limited edition grandfather clock. The latest newproduct proposal is a limited edition grandfather clock. Data: Data: If they go ahead with this product, a If they go ahead with this product, a fixed cost fixed cost of $50,000 is incurred. of $50,000 is incurred. The The variable cost variable cost is $400 per clock produced. is $400 per clock produced. Each clock sold would generate $900 in revenue. Each clock sold would generate $900 in revenue. A sales forecast will be obtained. A sales forecast will be obtained. Question: Should they produce the clocks, and if so, how many? Question: Should they produce the clocks, and if so, how many? 3 Expressing the Problem Mathematically Expressing the Problem Mathematically Decision variable: Decision variable: Q = Number of grandfather clocks to produce = Number of grandfather clocks to produce Costs: Costs: Fixed Cost = $50,000 (if Fixed Cost = $50,000 (if Q > 0) > 0) Variable Cost = $400 Variable Cost = $400...
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 Winter '09
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 Business, Management

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