MANAGEMENT DECISION ANALYSIS

ITOM 6202 - Section 714

Spring 2012 - Module A

Instructor : Office Hours : Contact Info : Course Website : Objectives

Dr. Aydn Alptekinolu [http://aalp.cox.smu.edu/] Tuesdays & Thursdays 4-6pm or by appointment (via email) 392 Crow Hall, 214-768-3324, aalp@cox.smu.edu http://courses.smu.edu/ (use SMU Access credentials to login)

Perfection of means and confusion of goals seem, in my opinion, to characterize our age. - Albert Einstein ITOM 6202 offers a spreadsheet-based introduction to a potpourri of Management Science / Operations Research (MS/OR) methods. The larger objective is to enhance your understanding and appreciation of the role of quantitative models in business planning and decision making. The subject matter of this course can be summed as mathematics for business decision making implemented in spreadsheet models, which may possibly sound uncool to many of you because of the math part. But then, there is the spreadsheet part, which seems somewhat friendly (I hope) and needs no justification in todays business world. Without the conceptual clarity mathematics provides, however, spreadsheets are just number crunchers or fancy calculators. We want to turn them into decision aids. In this course, I will demonstrate the usefulness of spreadsheet analysis in business decision making, by introducing you to four mathematical modeling concepts/techniques, and by solving many small-size but realistic problems on spreadsheets in light of those four concepts/techniques. I will count myself successful if I can convince you that this math is really cool, i.e., potentially useful for business decisions you will face in the future. ITOM 6202 is neatly divided into four parts built around four mathematical modeling concepts/techniques: Decision Analysis, Linear Programming, Integer Programming, and Monte Carlo Simulation. In each part, you will be exposed to quantitative analysis tools with which you can sharpen your intuition in the face of decision-making situations under an uncertain future (a scenario that has randomness embedded into it) or a deterministic future (a presumed scenario with known input data).

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Prerequisites I will assume some basic spreadsheet modeling skills in Microsoft Excel. Please see the Excel Tutorial and a short-list of Excel Features posted on the course website to gauge your level. The primary emphasis of this course will be on model building and interpretation, but you will still pick up some very useful spreadsheet skills along the way. You do not need to be an Excel wizard to succeed in this class. Resources Textbook: Ragsdale, Cliff T., 2008, Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Management Science, Revised Fifth Edition, Thomson South-Western. [Note: The Fifth Edition 2007 and the Fourth Edition 2003 are also acceptable; make sure you buy the Crystal Ball version of the text; the Sixth Edition 2010 has the same conceptual coverage but uses Risk Solver.] Software: Beyond Microsoft Excel 2007, Add-Ins called TreePlan, Solver, and Crystal Ball are required. Solver comes with Excel; I will provide the other two. You are responsible for keeping these pieces of software in running condition on your laptops prior to class discussions and exams. Excel 2003 is acceptable to use in assignments, but will not be supported in class presentations. So is Excel 2008 (on Mac) as long as I can open your file with a PC. Readings (outside of the textbook) describe actual industrial applications of the quantitative analysis techniques we will cover. Some will be directly linked to the problems discussed in class. They will all be posted on the course website. Homework problems are for practice, practice and practice! Most will NOT even be collected or graded, but some will be (see the Course Plan and stay tuned with the course website). All homework problems whether to be graded or not should be an essential part of your learning strategy. Analytical skills covered in this course can only be gained by practice. For you to have immediate feedback on your progress, solutions to all homework problems will be posted on the course website. The graded homework will be individual work; you may discuss these with your group members if youd like, but you will be individually responsible to submit an answer on your own. (Any communication with sentient beings outside of your group or any material help by people within your group will be considered cheating.) Group Projects There will be three take-home, open-book/notes, non-cumulative (in terms of subject coverage) projects, involving problems larger in scope but otherwise similar to the homework and in-class exercises. These projects will be group work (any

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communication with or help from sentient beings outside of your group will be considered cheating). I may pose customized questions to individual group members as part of a project; you may discuss these only with your group members, but will be individually responsible to submit an answer on your own. The main purpose of group projects is to serve as a diagnostic tool for you to keep abreast of the material and benchmark your progress with that of your classmates. They will be posted on the course website with sufficient advance notice. No makeup projects will be offered. The Final The final exam will be in-class, open-book/notes, and cumulative (in terms of subject coverage). It will require purely individual work. A laptop computer with all the necessary software in running condition will be necessary. No makeup final will be offered. Grading Your numerical grade will be based on the sum of points obtained in three graded homework (5% each), three group projects (15% each), and the final exam (40%), making a total of 320% + 40% = 100%. Letter grades will then be assigned by curve, depending on baseline expectations and how your numerical grade compares to the rest of the class. Grading of assignments will usually be done in a week. You may appeal your grades within a week of their announcement; beyond a week, requests for re-grading may not be honored. Classroom Policies You are expected to attend all classes, keep laptop computers closed unless I instruct you otherwise, and perform only course related activities with them when using inclass. Generally, keeping internet access at a bare minimum (i.e., for downloading class materials from the website) is highly recommended. I will try to facilitate class participation by friendly cold calls, with a sincere hope that we can collectively create an open, collegial and professional communication environment where your learning goals are best served.

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Tips for Succeeding in ITOM 6202 This course is hands-on by nature. Solving problems on your own is the best way to learn the material. Class discussions, homework exercises, group projects and ultimately the final exam are all geared toward providing you with a regular dose of practice. It is much like physical exercise: fitness comes from sustained effort. You are advised to work as many homework problems as possible. Please keep in mind that looking at the answer before making a decent attempt at solving a problem reduces the value of that learning opportunity. When studying the text, do not just read, without Excel open in front of you. The CD that comes with the book has all the spreadsheets shown in figures; follow the exercises both from the book and from these files. You would be doing yourself a disservice if group work is not treated as such. I intend to spend most of the classroom time with solving problems (introducing and discussing the concepts along the way). Especially in the introductory phases of each part, my presentation will have a feel of the Food Network channel. I will cook spreadsheet models from scratch so that you see the process of problem solving and not just the end-product. Never let the small size of the problems fool you; these techniques ARE being used in industry in larger and realistic scales. For descriptions of real-world applications, see the readings posted on the course website, and The World of Management Science feature of the textbook. I hope we can enjoy the beauty of analytics together!

Academic Honesty The principles and articles of the SMU Honor Code are in force. As an SMU student, one is expected to neither commit nor assist another in committing an Honor Code violation. Also, it is the student's duty to report observed Honor Code violations. In addition, the following principles apply to this class: 1) Discussion with others (except other group members for group projects) about written submissions to be graded (including, without limitation, exams) is a violation of the Honor Code. Please note that passing course materials to students who have yet to take the course, or taking materials from students who took the class in a previous semester, or who are enrolled in other sections is also a violation of the Honor Code.

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2) Group projects should reflect the work only of group members. Each and every member of a group should contribute to group projects in an equitable manner. 3) All graded work should reflect your own effort only, except the ones specifically designated as group work. Revealing the content of any graded item to a student who has not yet taken the assignment is strictly prohibited. 4) Plagiarizing misrepresentation of work done by others as ones own work is a violation of the Honor Code. Remember to cite all sources of information and ideas to prevent problems. 5) You may not submit the same paper (or substantially similar papers) to meet the requirements of more than one course without the written consent of all instructors concerned. Disability Accommodations Students who need academic accommodations for a disability must first register with Disability Accommodations & Success Strategies (DASS) to verify the disability and to establish eligibility for accommodations. Students may call 214-768-1470 or visit http://www.smu.edu/alec/dass.asp to begin the process. Once registered, students should then schedule an appointment with the professor to make appropriate arrangements. (See University Policy No. 2.4; an attachment describes the DASS procedures and relocated office.) Religious Observance Religiously observant students wishing to be absent on holidays that require missing class should notify their professors in writing at the beginning of the semester, and should discuss with them, in advance, acceptable ways of making up any work missed because of the absence. (See University Policy No. 1.9.)

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The Course Plan [Last updated on 12/23/2011] Topic Introduction Date Time & Location 1/12 6:30pm-9:20pm Thr Crow 190 Readings Syllabus, Competing on Analytics, Business by Numbers, Of Greed and Ants Chapter 15: Sections 0-3, and 9-11 1/19 6:30pm-9:20pm Thr Crow 190 1/26 6:30pm-9:20pm Thr Crow 190 2/2 6:30pm-9:20pm Thr Crow 190 Integer Programming (IP) Monte Carlo Simulation (MC) 2/9 6:30pm-9:20pm Thr Crow 190 2/16 6:30pm-9:20pm Thr Crow 190 Chapter 12: Sections 0, 1, 4-9 2/23 6:30pm-9:20pm Thr Crow 190 2/29 6:30pm-9:20pm Wed Crow 175
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Deliverables*

Decision Analysis (DA) Linear Programming (LP)

Chapter 15: Sections 8, 12.2, 13, and 14 Chapter 2: Sections 0-8 Chapter 3: Sections 0-12 Chapter 4: Sections 0-7 Chapter 6: Sections 0, 1, and 7-14 LP Project LP Homework DA Project DA Homework

Chapter 12: Sections 11, and 14

IP Project IP Homework Final Exam

Group projects and homework will be announced on the course website.

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