Management Science And Spreadsheet Modeling: A Practical Approach

1 (6)

DISC 334: MANAGEMENT SCIENCE AND SPREADSHEET MODELING: A PRACTICAL APPROACH Course Instructor Name: Dr. Kamran Ali Chatha Contact Details: Operations Wing, SDSB Email: kamranali@lums.edu.pk Course Description Course Code: Quarter: DISC 334 Spring-2011 Total No. of Sessions: 28 (100 minutes each) Suitability: Undergraduate 3rd, 4th Year

Tel. 35608094 Office Hours: Mon/Wed 3pm to 5pm

Major objectives of this course are: (1) To impart skills in students to decide when to use quantitative techniques for analyzing and solving real world managerial problems which are faced daily in finance, operations, engineering, and marketing functions of organizations and disciplines such as economics, law, social and behavioral sciences etc; (2) To understand some of the concepts, methods and techniques of management science (decision science) especially those that include quantitative aspects; (3) To learn the art and science of using spreadsheet for modeling and analyzing decisions and as a tool to implement quantitative techniques; Management Science (especially Decision Science) is a branch of science that focuses on utilizing quantitative techniques for the purpose for making sound managerial decisions under various forms of constraints (economic, temporal and behavioral) in real world problems. These problems may arise in organizations functional settings that include but are not limited to finance, operations, engineering, and marketing functions. These problems may also appear in various other disciplines such as economics, social and behavioral sciences. These problems may even be interdisciplinary in nature in which case function or discipline specific techniques when applied to solving such problems may not result into practical solutions. In such scenarios the techniques developed within the discipline of management science provide such frameworks and concepts that render practical solutions to such problems. There are numerous examples in various disciplines where decision science concepts are needed. For example in software engineering (e.g. decision about choosing one technology or process over the other), legal decisions (e.g., understanding the effects of economic pressures on attributions of responsibility), risk assessments (e.g., assessing risks of nuclear power or missile tests), marketing (e.g. launching specific product in a market) and managerial decision making (e.g., correcting biases in the assessment of risk). There are hundreds of examples in many other disciplines where decision science concepts and frameworks could equally be applicable. Management science (especially decision science) rely heavily on decision theory which is concerned with identifying the values of different alternatives, uncertainties involved, their utilities, and other issues relevant to a given decision, its rationality, and the resulting optimal decision. In order to exercise these concepts decision theory borrows some of the concepts from probability theory. In order to achieve aforementioned objectives two major steps have been taken while designing the course: (1) a number of real world case studies in order to better comprehend applicability of quantitative techniques in real world problems. Extended class room discussions on case study analyses will be instrumental in understanding key issues pertaining to application, managerial concerns, and assumptions around the technique while focusing on the real world problem, (2) a number of lab sessions have been included in order to develop practical skills of configuring and using spreadsheets for decision analysis.

1/5/2012, 10:57:46 AM

Management Science And Spreadsheet Modeling: A Practical Approach

2 (6)

Pre-Requisite It is expected that participants possess basic knowledge of Probability and/or Statistics in order to be able to develop better understanding of the course.

Grading Class Participation Quizzes Assignments Group Project Final Exam : : : : : 20% 10% 20% 20% 30%

Students will be assessed as per these criteria, however, the instructor has the right of 5% re-assigning of the criteria. Recommended Books Following books are recommended for this course however, students are strongly encouraged to consult any other resources such as: books, journals, magazines, sharing personal experiences to enhance their learning. Books [AWZ]: Albright, S.C., Winston, W.L., and Zappe, C., 2006, Data Analysis & Decision Making With Microsoft Excel, 3e, Thomson, South-Western, ISBN: 0-324-40083-7. [Clemen]: Clemen, R. T., 1996, Making Hard Decisions: An Introduction to Decision Analysis, Duxbury Press, ITP Company, ISBN: 0-534-26034-9. [PB]: Powell, S.G., and Baker, K.R., 2009, Management Science The Art of Modeling with Spreadsheets, John Wiley & Sons Inc., ISBN-13: 978-0-470-39376-5. [ASW] Anderson, Sweeney & Williams, Statistics for Business and Economics.

Group Project Students will engage in a group project. The group size will be decided based on course enrollment. Students will identify a decision situation in an organization and apply course concepts thus formulating and analyzing the problem. Following this they will synthesize and suggest an appropriate solution to the problem. They will share their solution with the case study organization, and understand from company personnel the likely problems in implementing their solutions. The feedback will be incorporated in the final project report.

1/5/2012, 10:57:46 AM

Management Science And Spreadsheet Modeling: A Practical Approach

3 (6)

Detailed Course Outline

S.

No.

Session Type

Topics & Texts INTRODUCTION

1.

Class

Topic: Introduction Read: PB-Chapter-2: Modeling in a Problem Solving Framework (Sections 2.1, 2.2, 2.3, 2.4) Topic: Modeling with Spreadsheet Read: PB-Chapter-5: Spreadsheet Engineering Topic: Using Spreadsheet for Probability & Probability Distributions Read (SKIM) & Practice Solved Examples: (1) AWZ-Chapter-5: Probability and Probability Distribution (Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6) (2) AWZ-Chapter-6: Normal, Binomial, Poisson, and Exponential Distributions (Sections 6.1, 6.2, 6.3, 6.7) Assignment: TBA in the Lab MODELING DECISIONS

2.

Lab

3.

Lab

4.

Class

Topic: Decision Analysis Case: Athens Glass Works Read: Clemen-Chapter-3: Structuring Decisions pp41-63 Topic: Decision Trees Case: Freemark Abbey Read: (1) Decision Trees for Decision Making (2) Clemen-Chapter-3: Structuring Decisions pp67-82 Topic: Sensitivity Analysis Case: Dhahran Roads (A) Read: (1) Clemen-Chapter-5: Sensitivity Analysis pp155-169 (2) Cash Flow and Time Value of Money Topic: Using Spreadsheet for Decision Trees Read & Solve Problems: AWZ-Chapter-7: Decision Making under Uncertainty, Section-7.3, (Solve Problems 36 and 37 given at the end of the chapter)

5.

Class

6.

Class

7.

Lab

1/5/2012, 10:57:46 AM

Management Science And Spreadsheet Modeling: A Practical Approach

4 (6)

Assignment: TBA in the Lab MODELING UNCERTAINTY 8. Class Topic: Decision Making under Uncertainty Case: Georges T-Shirts Read: Clemen-Chapter-4: Making Choices pp101-135 Topic: Conditional Decisions & Bayesians Updating Case: Integrated Siting Systems, Inc. Read: None Topic: Spreadsheet Modeling for Decision Making under Uncertainty Read & Practice Solved Examples: AWZ-Chapter-7: Decision Making under Uncertainty, Section-7.4, 7.5 (Examples 7.2, 7.3, 7.4) Assignment: TBA in the Lab Topic: Simulation Modeling with Spreadsheets Read: AWZ-Chapter-16: Introduction to Simulation Modeling Topic: Simulation Modeling with Spreadsheets Read: AWZ-Chapter-17: Simulation Models, Sections 17.2, 17.3, 17.5 and accompanying Examples) Practice Examples: TBA in the Lab Topic: Monte Carlo Simulations Case: (1) Calambra Olive Oil (A) (2) Calambra Olive Oil (B) Read: Clemen-Chapter-11: Monte Carlo Simulation pp 410-426 Topic: Risk Analysis in Monte Carlo Simulations Case: Sprigg Lane (A) Read: None Topic: Stochastic Processes Case: C-Energy's Red Hill Plant; Meeting the SO2 Challenge Read: None REGRESSION & FORECASTING 16. Lab Topic: Using Spreadsheets for Regression (I)

9.

Class

10.

Lab

11.

Lab

12.

Lab

13.

Class

14.

Class

15.

Class

1/5/2012, 10:57:46 AM

Management Science And Spreadsheet Modeling: A Practical Approach

5 (6)

Read & Practice Solved Examples: AWZ-Chapter-11: Regression Analysis: Estimating Relationships, (Sections 11.1, 11.2, 11.3, 11.4, 11.5, 11.6 up till page-607, and accompanying Examples) Assignment: TBA in the Lab 17. Lab Topic: Using Spreadsheets for Regression (II) Read & Practice Solved Examples: AWZ-Chapter-12: Regression Analysis: Statistical Inference, (Sections 12.1, 12.2, 12.3, 12.4, 12.5, 12.8 and accompanying Examples) Assignment: TBA in the Lab Topic: Forecasting with Time Series Case: Marriot Room Forecasting Read: Time Series Forecasting Topic: Forecasting with Time Series Case: Ian Steele Read: None Topic: Forecasting with Time Series Case: (1) Wachovia Bank and Trust Company N.A. (B) (2) Wachovia Bank and Trust Company N.A. (B) Supplement Read: None MODELING PREFERENCES 21. Class Topic: Risk Attitude Case: Risk Preference Utility Caselets Read: Clemen-Chapter-13: Risk Attitude pp 461-487 Topic: Risk Attitude Case: Risk Analysis for Merck & Company: Product KL-798 Read: Clemen-Chapter-13: Risk Attitude pp 461-487 Topic: Spreadsheet Modeling for Risk Attitude Read: To Be Decided Topic: Structuring Multi-Objective Decisions Case: William Taylor and Associates (A) Read: Clemen-Chapter-15: Conflicting Objectives I: Fundamental Objectives and the Additive Utility Function pp530-553

18.

Class

19.

Class

20.

Lab

22.

Class

23.

Lab

24.

Class

1/5/2012, 10:57:46 AM

Management Science And Spreadsheet Modeling: A Practical Approach

6 (6)

25.

Class

Topic: Additive Utility Function Case: Sleepmore Mattress Manufacturing; Plant Consolidation Read: Clemen-Chapter-15: Conflicting Objectives I: Fundamental Objectives and the Additive Utility Function pp530-553 Topic: Modeling Multi-objective Decisions with Spreadsheet Read: To Be Decided Topic: Multi-attribute Utility Models Case: To be decided later Read: Clemen-Chapter-16: Conflicting Objectives II: Multi-attribute Utility Models with Interactions pp576-592 Project Presentations FINAL EXAM

26.

Lab

27.

Class

28.

Class

1/5/2012, 10:57:46 AM