1. Session 1a
Decision Models Prof. Juran

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

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

4. 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

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

6. 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

7. 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

8. 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

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

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

11. 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

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

13. 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

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

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

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

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

18. 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

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

20. Decision Models -- Prof. Juran

21. Decision Models -- Prof. Juran

22. 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

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

24. Decision Models -- Prof. Juran

25. Decision Models -- Prof. Juran

26. Decision Models -- Prof. Juran

27. Decision Models -- Prof. Juran

28. 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

29. 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

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

31. Decision Models -- Prof. Juran

32. 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

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

34. Decision Models -- Prof. Juran

35. 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

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

37. Decision Models -- Prof. Juran

38. 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

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

40. Decision Models -- Prof. Juran

41. 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

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

43. Decision Models -- Prof. Juran

44. Nonegativity Constraints
Decision Models Prof. Juran
Decision Models Prof. Juran

45. Decision Models -- Prof. Juran

46. Decision Models -- Prof. Juran

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

48. Decision Models -- Prof. Juran

49. Decision Models -- Prof. Juran

50. Decision Models -- Prof. Juran

51. Decision Models -- Prof. Juran

52. 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

53. Decision Models -- Prof. Juran

54. Decision Models -- Prof. Juran