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101_Session_Two_inclassnotes

# 101_Session_Two_inclassnotes - MGMT 101 Management Science...

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MGMT 101: Management Science Professor Shuya Yin Session Two

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KARMA computer example revisit § Decision variables: How many Standard and Deluxe computers to produce? § Parameters: - Profit per unit for each product - Per unit requirement for each product - Inventory on hand for each component § Formulae (Objective function and Constraints): - Profit - Resource utilization Max 300S + 400D Subject to: 1S + 2D ≤ 120 (disk drive) 1S + ≤ 60 (std chassis) 1D ≤ 50 (deluxe chassis) 1S ≥ 0 (non-negativity) 1D ≥ 0 (non-negativity)
A graphical presentation 0 20 40 60 80 100 120 140 0 Standard Models (S) Deluxe Models (D) Deluxe Chassis Inventory (D  50) Std Chassis Inventory (S  60) Disk Drives Inventory (S + 2 D  120) Feasible Region Optimal Solution 20 40 60 80 100 120

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Excel model – Solver: Construction in a spreadsheet § Associate names where appropriate (see file KARMA Computer.xls) - Associate a cell with each of the decision variables B5:C5 Product mix - Associate a cell with each of the parameters B7:C7 Unit profit B14:C16 Per unit component requirements F14:F16 Inventory on hold - Associate a cell with each formula D14:D16 Resource utilization D6 Total Profit

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Finding the optimal solution: step 1 § Select Solver from the Tools menu, and enter the model parameters - Min / max - Objective function cell (or target cell) - Decision variables (changing cells) - Constraints
Adding constraints § Click on Add button in Parameters window Formula cell on left Number cell on right § Left-hand-side (LHS): Usually a function § Right-hand-side (RHS): Usually a number (i.e., a parameter) § Three types of constraints - LHS <= RHS (Capacities or ceilings) - LHS >= RHS (Commitments or thresholds) - LHS = RHS (Material balance)

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Finding the optimal solution: step 2 § Select OK and Solve to find the optimal solution - The Solver should report that it found the optimal solution - Select OK to see the result - Keep both Answer and Sensitivity reports
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101_Session_Two_inclassnotes - MGMT 101 Management Science...

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