Systems Engineering 468 Ivan G. Guardiola Ph.D.

Contact Information Office: Eng. Mgmt. 204 600 W. 14th St Rolla, MO 65409 Phone: 573-341-6153 Email: guardiolai@mst.edu Office Hours: 1-3pm (CST) Mon, Tue, Thur, and Fri In addition I will be holding a bi-weekly additional WebEx meeting to cover questions.

Your Fellow Classmates I suggest you being by forming teams: teams of 3 or less please. One person must submit a team sheet listing your members and their respective email addresses to a question that will be posted on Piazza.com You will work on the case studies in this course with your team. Each team assignment will require that each member submit a team member assessment, which will be used for proper grading and assure all team members are contributing.

The Book: Spreadsheet Modeling & Decision Analysis A Practical Introduction to Management Science 6th edition Cliff T. Ragsdale

Check you Missouri S&T Email I will be using Missouri S&T as a primary basis for communication. Please check it! Piazza.com is a Q&A platform that allows discussions to be formed: Students can ask a question Students can answer each others questions I can approve responses It organizes the questions by date and subject matter. It keeps me from answering 100s of emails on the same question. Blackboard will be used as the grade book and to submit homework assignments. It will also house all of the documents in the course such as lectures and supplements, excel sheets and so on.

Grading Homework (individual) 49% These will be short assignments assigned from the textbook, which will help assure that you are gaining the skills associated with modeling and solving these models using spreadsheets. These assignments are individual but you are welcome to discuss them with your classmates. This will require that you keep up with lecture content and read the textbook. All questions should be submitted to Piazza. (7 assignments at 7% each.) Project Cases (group) 40% Four cases will be given throughout the semester that relate to the RT-19 project. They will make usage of the tools and methods in the class. These will be group based and will require a group member assessment be submitted by all group members that grade their group members on their contribution to the case. (4 cases at 10% each)

Tests The final 11% The test will be take home and will be based on the homework assignments. You are welcome to use all resources available to reference during the test. It will be issued and submitted via Blackboard on time. They are automated.

Assignments Please submit only ONE file with the filename having some sort of identification. Name the file with your name Preferred format is pdf Excel sheets must be annotated they must be easy to follow and answer be evident. No notations will make giving partial credit difficult.

The Risk Solver Platform software featured in this book is provided by Frontline Systems. http://www.solver.com

Getting the software Posted on piazza.com and syllabus 1.  Go to http://www.solver.com/student   2.  Fill out the form, using RSMDA6 for the Textbook Code and SEA468 for the Course Code.  Be sure to include a first and last name in the Name field.   3.  Click the button Download Now.  The download should start within 30 seconds. 4.  You should see a dialog "Do you want to run or save this file?"  Click Save to save the file, and   run it later by double-clicking the filename Solversetup.exe. 5.  The Solversetup.exe Setup program may prompt for a password and license activation code, which will be emailed to you.  Just enter this password in the dialog.

Remote Computer Access Getting access to the remote user computers: Please go to this page: http://vcc.mst.edu/stus/itinfo.html follow the instructions. This will give you access to the remote computers on campus. I have sent the user names of the students to VCC hopefully they have started the process prior to class starting.

Tentative Schedule

Cases To retain the usage of the information from the RT-19 project. Data has been collected on various small experiments that were carried out last semester. The cases will ask you to apply the methods of this course to reveal insight regarding the current design. Each case has been developed to make use of a specific tool with a specific purpose.

Introduction to Modeling & Problem Solving

Introduction We face numerous decisions in life, business, and engineering design. We can use computers to analyze the potential outcomes of decision alternatives.

What is Management Science? A field of study that uses computers, statistics, and mathematics to solve business problems. Also known as: Operations research Decision science

Home Runs in Management Science Xerox Developed “Lean Document Production” solutions for the printing industry Provides productivity and cost improvements for print shops Benefits: $200 million in incremental profit for customers 20% - 40% productivity increase

Home Runs in Management Science StatoilHydro Primary supplier of natural gas in Norway Developed GassOpt tool for optimizing operation of world’s largest offshore pipeline Benefits: Accumulated savings of US $2 billion through 2008

Home Runs in Management Science US Federal Aviation Administration (FAA) Responsible for air traffic management Large-scale weather systems reduce available air space Developed Airspace Flow Programs to optimize ground delays for each individual flight when weather compromises flight routes Benefits: Saved airlines $190 million in first 2-years of use

Home Runs in Management Science Netherland Railways Developed system to optimize 5,500 daily trains routes Creates efficient crew & rolling stock schedules Benefits: Increased profit by 40 million Euros Improved on-time arrivals

What is a “Computer Model”? A set of mathematical relationships and logical assumptions implemented in a computer as an abstract representation of a real-world object of phenomenon. Spreadsheets provide the most convenient way for business people to build computer models.

The Modeling Approach to Decision Making Everyone uses models to make decisions. Types of models: Mental (arranging furniture) Visual (blueprints, road maps) Physical/Scale (aerodynamics, buildings) Mathematical (what we’ll be studying)

Characteristics of Models Models are usually simplified versions of the things they represent A valid model accurately represents the relevant characteristics of the object or decision being studied

Benefits of Modeling Economy - It is often less costly to analyze decision problems using models. Timeliness - Models often deliver needed information more quickly than their real-world counterparts. Feasibility - Models can be used to do things that would be impossible. Models give us insight & understanding that improves decision making.

Example of a Mathematical Model Profit = Revenue - Expenses or Profit = f(Revenue, Expenses) Y = f(X1, X2)

A Generic Mathematical Model Y = f(X1, X2, …, Xn) Where: Y = dependent variable (aka bottom-line performance measure) Xi = independent variables (inputs having an impact on Y) f(.) = function defining the relationship between the Xi & Y

Mathematical Models & Spreadsheets Most spreadsheet models are very similar to our generic mathematical model: Y = f(X1, X2, …, Xn) Most spreadsheets have input cells (representing Xi) to which mathematical functions ( f(.)) are applied to compute a bottom-line performance measure (or Y).

Categories of Mathematical Models Model Independent OR/MS Category Form of f(.) Variables Techniques Prescriptive known, known or under LP, Networks, IP, well-defined decision maker’s CPM, EOQ, NLP, control GP, MOLP Predictive unknown, known or under Regression Analysis, ill-defined decision maker’s Time Series Analysis, control Discriminant Analysis Descriptive known, unknown or Simulation, PERT, well-defined uncertain Queueing, Inventory Models

The Problem Solving Process Formulate & Implement Model Identify Problem Analyze Model Test Results Implement Solution unsatisfactory results

The Psychology of Decision Making Models can be used for structurable aspects of decision problems. Other aspects cannot be structured easily, requiring intuition and judgment. Caution: Human judgment and intuition is not always rational!

Anchoring Effects Arise when trivial factors influence initial thinking about a problem. Decision-makers usually under-adjust from their initial “anchor”. Example: What is 1x2x3x4x5x6x7x8 ? What is 8x7x6x5x4x3x2x1 ?

Framing Effects Refers to how decision-makers view a problem from a win-loss perspective. The way a problem is framed often influences choices in irrational ways… Suppose you’ve been given $1000 and must choose between: A. Receive $500 more immediately B. Flip a coin and receive $1000 more if heads occurs or $0 more if tails occurs

Framing Effects (Example) Now suppose you’ve been given $2000 and must choose between: A. Give back $500 immediately B. Flip a coin and give back $0 if heads occurs or give back $1000 if tails occurs

A Decision Tree for Both Examples Initial state $1,500 Heads (50%) Tails (50%) $2,000 $1,000 Alternative A Alternative B (Flip coin) Payoffs

Good Decisions vs. Good Outcomes Good decisions do not always lead to good outcomes... A structured, modeling approach to decision making helps us make good decisions, but can’t guarantee good outcomes.

Decisions & Outcomes Outcome Quality Good Bad Decision Quality Deserved Success Bad Luck Dumb Luck Poetic Justice

The Rt-19 Project We will be posting a video. Please make time to watch this video after this lecture is over and familiarize yourself with the system. Various documents and video demonstration should help you understand the current system. The link is provided via piazza.com

Video Links Please watch these videos: July 2011 video: http://youtu.be/Sr39eyChJC0 December 2011: http://youtu.be/zyPnsdEAjkk June 2012: https://docs.google.com/a/mst.edu/file/d/0B64F6zMwQd_wSzZ6V1pfZ2h4d3c/edit?pli=1

Welcome Class is over, but please use this time to view the videos regarding the RT-19 Systems and familiarize your self with the actual system and how it works. QUESTIONS????