Session 1a Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Overview Web Site Tour  Course Introduction Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran 2 Modules Module I: Optimization Module II: Spreadsheet Simulation Decision Models -- Prof. Juran Decision Models -- Prof. Juran

What is Decision Modeling? Decision Modeling Process Formulation Real world System Decision Model Deduction Implementation Real World Conclusions Interpretation Model Conclusions Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran What is Analytics? … besides bad English? Data Inferences Decisions Business Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Seven-step Process Definition Data Collection Formulation Model Verification Selection of an Alternative Presentation of Results Implementation Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Revised Process for This Course 0. Conclusions and Recommendations 1. Managerial Definition 2. Formulation 3. Solution Methodology 4. Discussion? Appendices? Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Software Microsoft Excel Data Table Goal Seek Solver Premium Solver, SolverTable Analysis Toolpack Charts and Graphs Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Software The Decision Tools Suite @Risk PrecisionTree TopRank BestFit RiskView StatPro Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Software Other Software Crystal Ball Extend Sigma Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Descriptive Model Approximates how a real system works (or would work) given certain assumptions Does not give us the “right answer” Focus for Module 2 Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Prescriptive Model Identifies the “right answer” Focus of Module 1 Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran What is Optimization? A model with a “best” solution Strict mathematical definition of “optimal” Usually unrealistic assumptions Useful for managerial intuition  Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Elements of an Optimization Model Formulation Decision Variables Objective Constraints Solution Algorithm or Heuristic Interpretation Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Toomer Sporting Goods Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Managerial Problem Definition Ishani Mukherjee must decide how many to produce of two products. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Managerial Problem Definition 2-piece Yellow Jacket 4-piece Sachin Special Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Formulation Define the choices to be made by the manager (called decision variables). Find a mathematical expression for the manager's goal (called the objective function). Find expressions for the things that restrict the manager's range of choices (called constraints). Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Decision Variables Decision Models -- Prof. Juran Decision Models -- Prof. Juran

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Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Objective Function A mathematical expression of the manager’s goal in terms of the decision variables. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran What is the objective? Maximize or minimize? Decision Models -- Prof. Juran Decision Models -- Prof. Juran

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Decision Models -- Prof. Juran Constraints Find expressions for the things that restrict the manager's range of choices, in terms of the decision variables. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Leather Constraint Each Yellow Jacket uses 4 ounces of leather and each Sachin Special uses 5 ounces. There are 6,000 ounces available. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Leather Constraint Decision Models -- Prof. Juran Decision Models -- Prof. Juran

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Decision Models -- Prof. Juran Nylon Constraint Each Yellow Jacket uses 3 meters of nylon and each Sachin Special uses 6 meters. There are 5,400 meters available. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Nylon Constraint Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Cork Constraint Each Yellow Jacket uses 2 ounces of cork and each Sachin Special uses 4 ounces. There are 4,000 ounces available. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Cork Constraint Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Labor Constraint Each Yellow Jacket uses 2 minutes of general labor and each Sachin Special takes 2.5 minutes. There are 3,500 minutes available. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Labor Constraint Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Stitching Constraint Each Yellow Jacket takes 1 minute of stitching time and each Sachin Special takes 1.6 minutes. There are 2,000 minutes available. Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Stitching Constraint Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran

Nonegativity Constraints Decision Models -- Prof. Juran Decision Models -- Prof. Juran

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Decision Models -- Prof. Juran

Decision Models -- Prof. Juran Solution Methodology Use algebra to find the best solution. (Simplex algorithm) Decision Models -- Prof. Juran Decision Models -- Prof. Juran

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Decision Models -- Prof. Juran The Optimal Solution Make 1,000 Yellow Jackets and 400 Sachin Specials Earn ₹179,400 Decision Models -- Prof. Juran Decision Models -- Prof. Juran

Decision Models -- Prof. Juran

Decision Models -- Prof. Juran