OPR 601: Managerial Decision Models and Simulation

(Operations Research / Management Science)

Instructor: Dr. Christopher T. Gaffney

Office: 736 GHall
Office Hours: By appointment
Telephone: (215) 571-4615
E-mail: [email protected]
Textbook: Bernard Taylor, Introduction to Management Science, 13th Edition
Software: Microsoft Excel with Solver Add-in
___________________________________________

Course Description

In this course, we will focus on building models which will be simplified representations
of the decision making environment. Such models will allow us to generate various
scenarios, perform what-if analysis, find optimal business solutions, and, in general, learn
more about the problem at hand. They can involve multiple business functions, including
operations, finance, and marketing.

This is the introductory course on Prescriptive Analytics, where we will focus on the
basics of models for data-based decision making and do so in a familiar spreadsheet
environment. During this quarter, you will learn how decision models work, along with
their strengths and weaknesses in order to be an intelligent consumer. Therefore, the
objectives of this course are:
1. To give you a comprehensive understanding of some basic decision making tools,
how they may be used, and their limitations;
2. To familiarize you with the art and science of model building to provide you with
skills to dissect and find structure in complex managerial problems;
3. To enable you to interpret mathematical solutions of models and transform
numerical results into business decisions;
4. To enable you to communicate meaningfully with modeling specialists, such that
your inputs are identified and fully utilized in situations that warrant such
teamwork.

Course Policy

The only good way to learn quantitative concepts is through hands-on problem solving.
Thus, this course will require extensive student participation in discussions,
demonstrations, and computational exercises. The course Blackboard site will be your
sole source for the PowerPoint lecture notes, lecture recordings, relevant data sets, and
assignments. The student is responsible for reading the material and watching the
recorded class lectures.

There will be four homework assignments and three case study exams in this course.
Each case study exam is worth 20% of your course grade and the homework assignments
will count for the remaining 40%. All assignments will be submitted through
Blackboard.

Homework assignments are designed to ensure that you have understood the basic
concepts and can solve small problems before attempting the case studies, which will
include questions that may require the use of multiple aspects of the course, and may not
be as concisely defined as the homework problems.

All assignments will be available at least one week in advance of the due date. I suggest
that you start early so as to avoid timing problems. Assignments are due by 11:59 pm on
the following (tentative) dates:

Due
Assignment Date Material
HW1 11-Jul Week 1-2
HW2 25-Jul Week 3-4
Case Study 1 1-Aug Week 1,2,3,4
HW3 8-Aug Week 5-6
HW4 22-Aug Week 7-8
Case Study 2 29-Aug Week 5,6,7,8
Case Study 3 3-Sep See below

Case study 3 will focus on the material from weeks 9 and 10 (simulation), but material
from earlier course topics will also be included.

Course grades will be assigned according to the following scale:

A 92.5 – 100% C 72.5 – 76.49%

A- 89.5 – 92.49% C- 69.5 – 72.49%
B+ 86.5 – 89.49% D+ 66.5 – 69.49%
B 82.5 – 86.49% D 59.5 – 66.49%
B- 79.5 – 82.49% F 0 – 59.49%
C+ 76.5 – 79.49%
 Course Schedule
Topic
Week 1 Introduction to Management Science and Optimization
Applications of Optimization in Operations Management
Week 2 Applications of Optimization in Marketing
Sensitivity Analysis
• What-if Analysis for strategic decisions
• Shadow prices
• Duality and competition
• Optimal decision-making under uncertainty
Week 3 Sensitivity Analysis – continued
Data Envelopment Analysis
• Measuring productivity and efficiency of programs, firms, and
individuals
• Defining appropriate input and output measures of efficiency
• Comparative evaluation and ranking of operating units
Week 4 Applications of Optimization in Finance
• Portfolio optimization models
• Risk management through diversification
• Pareto analysis
Week 5 Multiperiod Optimization
• Asset-liability models and cash-flow analysis
• Multiperiod portfolio optimization models
Week 6 Optimization with Integer Variables
• Modeling discrete decisions
• Incorporating fixed costs into operations and financial decisions
Week 7 and 8 Decision Analysis and Decision Trees
• Strategic operations decisions under uncertainty
• Value of additional information in decision-making
• Utility and risk management
Weeks 9 and 10 Building and Using Simulation Models in Decision Making
• Developing computer models to replicate real-world systems
• Characterizing uncertainty and generating scenarios
• Design of experiments on simulation systems
• Using predictive modeling for strategic decision making
• Validation and robustness of results
Drexel University Policies

Drexel university policies on a variety of topics may be found at the following links. You
should read, remember and understand these policies, since they will be applied to you
whether you understand them or not.

Academic Dishonesty:
• http://www.drexel.edu/provost/policies/academic_dishonesty.asp
• http://www.drexel.edu/studentlife/community_standards/studentHandbook/genera
l_information/code_of_conduct/
Students with Disabilities:
• http://www.drexel.edu/~/media/Files/oed/PDF/Non-Discrimination-
Reasonable%20Accomodation%20of%20Individuals%20with%20Disabilities%2
0Policy.ashx
Course Add/Drop/Withdrawal:
• http://www.drexel.edu/provost/policies/course_add.asp
• http://www.drexel.edu/provost/policies/course_drop.asp
• http://www.drexel.edu/provost/policies/pdf/course_withdrawal.pdf
Plagiarism and Cheating

Plagiarism and cheating are grounds for failure in the course. While all required work in
this course is of the take-home variety, the students are required to follow these
guidelines:
• Material copied from an Internet source, a solutions manual, or any other source
and pasted into a submission is considered plagiarism. The students are
encouraged to use existing material for help, but such sources should be
appropriately identified and all models turned in by the student must be originally
constructed and solved by that student.
• The students are allowed and encouraged to work together on homework
assignments. It is acceptable to help each other out, but it is not acceptable for
multiple students to turn in the same homework assignment (including formatting
changes). Even if you work with others, you are expected to still construct and
solve your own models.
• The students are not allowed to communicate with anyone other than your
instructor about the exam.
Failure to follow the above rules will be considered plagiarism or cheating (per context).
The student will receive a grade of zero on the homework assignment or exam. The case
will be documented and reported according to the Academic Dishonesty Procedures
available at the link above (immediately for exams and after one warning for homework
assignments.)