MME3271 Lecture02 IntroductionToTheQuantitativeAnalysis

International Islamic University Malaysia
Lecture #2 Introduction to the Quantitative Analysis

Manufacturing and Materials Engineering
1
International Islamic University Malaysia Introduction to the Quantitative Analysis

Problem Solving & Decision Making Quantitative Analysis & Decision Making Quantitative Analysis Process 1. Model Development Mathematical Model Example #1 2. Data Preparation 3. Model Solution 4. Report Generation Example #2 Example #3 Group Assignment #2

International Islamic University Malaysia Problem Solving & Decision Making (1)
7 Steps of Problem Solving
1
Define the problem
Identify the alternative

Determine the criteria for evaluating Evaluate the alternative Choose an alternative Implement selected alternative Evaluate the result
Structuring the problem
7 steps of problem solving
Decision Making Process
Analyzing the problem
Types of analysis for decision making
based largely on the managers judgment and experience includes the managers intuitive feel for the problem is more of an art than a science
Qualitative Analysis
Quantitative Analysis
analyst will concentrate on the quantitative facts or data associated with the problem analyst will develop mathematical expressions that describe the objectives, constraints, and other relationships that exist in the problem analyst will use one or more quantitative methods to make a recommendation
Our focus in this course would be;
based largely on the managers judgment and experience includes the managers intuitive feel for the problem is more of an art than a science
Qualitative Analysis
Quantitative Analysis
analyst will concentrate on the quantitative facts or data associated with the problem analyst will develop mathematical expressions that describe the objectives, constraints, and other relationships that exist in the problem analyst will use one or more quantitative methods to make a recommendation

International Islamic University Malaysia Qualitative Analysis & Decision Making (1)
Potential reasons for a quantitative analysis approach to decision making Complex
Repetitive
Reasons: When the problem;
Important
New
International Islamic University Malaysia Qualitative Analysis & Decision Making (2)
Quantitative Analysis Process
1
Model Development Data Preparation Model Solution Report Generation

9
International Islamic University Malaysia Model Development (1)

1
Model Model Development Development Data Preparation Model Solution Report Generation
10

Models are representation of real of real objects or real situations. Three form of models are: Iconic Model
physical replicas (scalar representations) of real objects
Analog Model
physical in form, but do not physically resemble the object being modeled
represent real world problems through a system of mathematical formulas and expressions based on key assumptions, estimates, or statistical analyses
Mathematical Model
11

Advantages of experimenting with models compares to real situation
Less time
Advantages
Less expensive Less risk
* The more closely the model represents the real situation, the accurate the conclusions and predictions will be.
12

Our focus in this course would be;
Iconic Model
physical replicas (scalar representations) of real objects
Analog Model
physical in form, but do not physically resemble the object being modeled
represent real world problems through a system of mathematical formulas and expressions based on key assumptions, estimates, or statistical analyses
Mathematical Model Model Mathematical
13
International Islamic University Malaysia Mathematical Model (1)

Elements of Mathematical Model Objective Function Constraints Uncontrollable Inputs
a mathematical expression that describes the problems objective, such as maximizing profit or minimizing cost a set of restrictions or limitations, such as production capacities environmental factors that are not under the control of the decision maker controllable inputs; decision alternatives specified by the decision maker, such as the number of units of Product X to produce 14
Decision Variables

Type of Mathematical Model
Deterministic Model
if all uncontrollable inputs to the model are known and cannot vary
Stochastic *
(or probabilistic)
if any uncontrollable are uncertain and subject to variation
* Stochastic models are often more difficult to analyze
15

Selecting an appropriate model for a problem Cost/benefit consideration must be made in selecting an appropriate mathematical model
Selecting an appropriate model
Frequently a less complicated (and perhaps less precise) model is more appropriate than a more complex and accurate one due to cost and ease of solution considerations
16

Transforming Model Input into Output
Controllable Input (Decision Variables)
Mathematical Model
Output (Projected Result)

17
International Islamic University Malaysia Example 1: Project Scheduling (1)

Consider the construction of a 250-unit apartment complex. The project consists of hundreds of activities involving excavating, framing, wiring, plastering, painting, landscaping, and more. Some of the activities must be done sequentially and others can be done at the same time. Also, some of the activities can be completed faster than normal by purchasing additional resources (workers, equipment, etc.).
18

What is the best schedule for the activities and for which activities should additional resources be purchased? How could management science be used to solve this problem?
Question
Answer
Management science can provide a structured, quantitative approach for determining the minimum project completion time based on the activities' normal times and then based on the activities' expedited (reduced) times.
19
Question
What would be the uncontrollable inputs?
Answer
Normal and expedited activity completion times Activity expediting costs Funds available for expediting Precedence relationships of the activities
20
Question
What would be the decision variables of the mathematical model? The objective function? The constraints?
Answer
Decision variables: which activities to expedite and by how much, and when to start each activity Objective function: minimize project completion time Constraints: do not violate any activity precedence relationships and do not expedite in excess of the funds available
21
Question
Is the model deterministic or stochastic?
Answer
Stochastic. Activity completion times, both normal and expedited, are uncertain and subject to variation. Activity expediting costs are uncertain. The number of activities and their precedence relationships might change before the project is completed due to a project design change
22
Question
Suggest assumptions that could be made to simplify the model
Answer
Make the model deterministic by assuming normal and expedited activity times are known with certainty and are constant. The same assumption might be made about the other stochastic, uncontrollable inputs
23
International Islamic University Malaysia Data Preparation (1)

1
Model Development
Data Data Preparation Preparation

Model Solution Report Generation
24
International Islamic University Malaysia Data Preparation (2) Data Preparation

Careful with time constraint & data collection error A model with 50 decision variables and 25 constraints could have over 1300 data elements! Often, large database is needed System specialist might be needed
25
International Islamic University Malaysia Model Solution (1)

1
Model Development Data Preparation Model Model Solution Solution Report Generation
26

= Solutions
OPTIMAL SOLUTION (The best solution)
FEASIBLE (Satisfied all constraints)
INFEASIBLE (Do not satisfied all constraints)

27

Approaches to Solution
Might not provide the best solution Inefficient (numerous calculation required)
Trial & Error
Special Solution Procedure

(Math. Model)
Some small models/problems can be solved by hand calculations Most practical applications require using a computer
28

A variety of software packages are available for solving mathematical models.
Microsoft Excel
The Management Scientist
LINGO
29

Model Testing and Validation:
Asses goodness/accuracy Generate Solution (Math. Model) (Test on part of the model which solution is known or expected )
Use the model on full-scale problem
Corrective Actions (collect more accurate data, modify the model)
30
International Islamic University Malaysia Report Generation (1)

1
Model Development Data Preparation Model Solution
Report Report Generation Generation

31
International Islamic University Malaysia Report Generation (2)

Result of the model Managerial Report Implementation & Follow-up
Easily understood Should includes Recommended decision Other pertinent information such as sensitivity of the assumption on the model
Successful implementation is critical Maximize user involvement in modeling process Continuous monitoring on model contribution Refine or expand the model if needed
32

33
International Islamic University Malaysia Example 2: Austin Auto Auction (1)

An auctioneer has developed a simple mathematical model for deciding the starting bid he will require when auctioning a used automobile. Essentially, he sets the starting bid at seventy percent of what he predicts the final winning bid will (or should) be. He predicts the winning bid by starting with the car's original selling price and making two deductions, one based on the car's age and the other based on the car's mileage. The age deduction is $800 per year and the mileage deduction is $.025 per mile.
34

Question: Develop the mathematical model that will give the starting bid (B ) for a car in terms of the car's original price (P ), current age (A) and mileage (M ). Answer: The expected winning bid can be expressed as: P - 800(A) - .025(M) The entire model is: B = .7 x (expected winning bid) B = .7 x ( P - 800(A) - .025(M) ) B = .7P - 560A - .0175M
35

Question: Suppose a four-year old car with 60,000 miles on the odometer is being auctioned. If its original price was $12,500, what starting bid should the auctioneer require? Answer: B = .7P - 560A - .0175M = .7(12,500) - 560(4) - .0175(60,000) = $5,460
36

Question: The model is based on what assumptions? Answer: The model assumes that the only factors influencing the value of a used car are the original price, age, and mileage (not condition, rarity, or other factors).
Also, it is assumed that age and mileage devalue a car in a linear manner and without limit. (Note, the starting bid for a very old car might be negative!)
37

38
International Islamic University Malaysia Example 3: Iron Works, Inc. (1)

Iron Works, Inc. manufactures two products made from steel and just received this month's allocation of b pounds of steel. It takes 1 pounds of steel to make a unit of product 1 and 2 pounds of steel to make a unit of product 2.
Let 1 and 2 denote this month's production level of product 1 and product 2, respectively. Denote by 1 and 2 the unit profits for products 1 and 2, respectively. Iron Works, Inc. has a contract calling for at least m units of product 1 this month. The firm's facilities are such that at most n units of product 2 may be produced monthly.
39

Information for the Iron Works problem (Always make this table to formulate your model)
Resource Product 1 1 Product 2 2 Available
Steel
Production
x1 > m
1
x2 < n
2 -
Unit Profit
40

The total monthly profit = (profit per unit of product 1) x (monthly production of product 1) + (profit per unit of product 2) x (monthly production of product 2) = p1x1 + p2x2 We want to maximize total monthly profit: Max p1x1 + p2x2 The total amount of steel used during monthly production equals = (steel required per unit of product 1)x (monthly production of product 1) + (steel required per unit of product 2) x (monthly production of product 2) = a1x1 + a2x2 This quantity must be less than or equal to the allocated b pounds of steel: a1x1 + a2x2 < b
41

Other Constraints: The monthly production level of product 1 must be greater than or equal to m : x1 > m The monthly production level of product 2 must be less than or equal to n : x2 < n However, the production level for product 2 cannot be negative: x2 > 0
42

Mathematical Model Summary Max 1 1 + 2 2
Objective Function : To maximize the profit
s.t.
1 1 + 2 2 b 1 m 2 n 2 0
Subject to: Several constraints
43

Question: Suppose b = 2000, a1 = 2, a2 = 3, m = 60, n = 720, p1 = 100, p2 = 200. Rewrite the model with these specific values for the uncontrollable inputs. Answer: Substituting, the model is: Max 100x1 + 200x2 s.t. 2x1 + 3x2 x1 x2 x2
< > < >
2000 60 720 0
44

Question: The optimal solution to the current model is x1 = 60 and x2 = 626 . If the 3 product were engines, explain why this is not a true optimal solution for the "real-life" problem.
2
Answer:
One cannot produce and sell of an engine. Thus, the problem is further 3 restricted by the fact that both x1 and x2 must be integers. (They could remain fractions if it is assumed these fractions are work in progress to be completed the next month.)
2
45
Controllable Input (Decision Variables)
Mathematical Model
Output (Projected Result)

46
Max 100x1 + 200x2 60 units Prod. 1 s.t. 2x1 + 3x2 < 2000 x1 > 60 x2 < 720 Profit = $131,333.33 Steel Used = 2000)
626.67 units Prod. 2
x2 > 0
47
International Islamic University Malaysia Group Assignment #2 (1)

Due on Monday 30/9/2013 Question 4 [20] Your mother owns a Cake House shop. Every Friday, she produces three special items red velvet cupcake, french macaroon, and cream puffs. Design a problem (your own, be creative and creates your own reasonable values), and formulate a mathematical model to help your mother maximize her profit. Your model must contain three decision variables and seven constraints.
48

Recall: Information for the Iron Works problem
Resource Product 1 Product 2 Available
Steel
Production
x1 > m
1
x2 < n
2 -
Unit Profit
49

Information for the Cake House problem
Resource Decision Variable 1 Decision Variable 2 Decision Variable 3 Unit Profit Cupcake Macaroon Cream-Puff Available
50

Recall: Mathematical Model Summary for Iron Works problem Max 1 1 + 2 2
s.t.
1 1 + 2 2 b 1 m 2 n 2 0
Subject to: Several constraints
51

Mathematical Model Summary for Cake House problem Max . s.t. . . . .
Subject to: 7 constraints
52
International Islamic University Malaysia Next Lecture

Decision Analysis
Problem formulation
Influence Diagram Payoff Table Decision Tree
Decision Making without Probabilities

Optimistic Approach Conservative Approach Minimax Regret Approach
53

MME3271 Lecture02 IntroductionToTheQuantitativeAnalysis

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

MME3271 Lecture02 IntroductionToTheQuantitativeAnalysis

Hochgeladen von

Copyright:

Verfügbare Formate

International Islamic University Malaysia

Lecture #2 Introduction to the Quantitative Analysis

International Islamic University Malaysia Introduction to the Quantitative Analysis

Manufacturing and Materials Engineering

International Islamic University Malaysia Introduction to the Quantitative Analysis

Manufacturing and Materials Engineering

Define the problem

Identify the alternative

Structuring the problem

7 steps of problem solving

Decision Making Process

Analyzing the problem

Manufacturing and Materials Engineering

Manufacturing and Materials Engineering

Manufacturing and Materials Engineering

International Islamic University Malaysia Introduction to the Quantitative Analysis

Manufacturing and Materials Engineering

Reasons: When the problem;

Manufacturing and Materials Engineering

Model Development Data Preparation Model Solution Report Generation

Manufacturing and Materials Engineering

International Islamic University Malaysia Model Development (1)

Manufacturing and Materials Engineering

International Islamic University Malaysia Model Development (2)

Manufacturing and Materials Engineering

International Islamic University Malaysia Model Development (3)

Manufacturing and Materials Engineering

International Islamic University Malaysia Model Development (4)

physical replicas (scalar representations) of real objects

Mathematical Model Model Mathematical

Manufacturing and Materials Engineering

International Islamic University Malaysia Mathematical Model (1)

Manufacturing and Materials Engineering

International Islamic University Malaysia Mathematical Model (2)

if any uncontrollable are uncertain and subject to variation

* Stochastic models are often more difficult to analyze

Manufacturing and Materials Engineering

International Islamic University Malaysia Mathematical Model (3)

Selecting an appropriate model

Manufacturing and Materials Engineering

International Islamic University Malaysia Mathematical Model (4)

Controllable Input (Decision Variables)

Output (Projected Result)

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (1)

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (2)

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (3)

What would be the uncontrollable inputs?

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (4)

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (5)

Is the model deterministic or stochastic?

Manufacturing and Materials Engineering

International Islamic University Malaysia Example 1: Project Scheduling (6)

Suggest assumptions that could be made to simplify the model

Manufacturing and Materials Engineering

International Islamic University Malaysia Data Preparation (1)

Data Data Preparation Preparation

Manufacturing and Materials Engineering

International Islamic University Malaysia Data Preparation (2) Data Preparation