Chapter 1: Introduction.

1. Introduction: Course learning objectives/ LMS

2. Syllabus: Grading/ Textbook/etc

- All of them have been enclosed in a documentary on LMS and please
do a research on the detailed schedule for each lesson.

3.Installation:
- Solver (On excel software) and QM for windows

+ To install Solver on excel, please follow the steps below:

Step 1: Opening a new excel file.
Step 2: Chose File => Options => Add - ins => Solver Add - in

Step 3: Click GO => Chose all the items

Step 4: Click OK
When you have finished all these steps above, chose “Data” item and you could
see Solver in the analyze group

+ To install QM for window, please follow the steps below:

Step 1: You have to use the window system, this software is programmed by
Havard Student. Then Click Here to download.

Step 2: Having downloaded this software, you extract it and use it. The screen
would be like this

https://drive.google.com/file/d/12BL_IJ0oQCgoXzmosX93M5PoRhCLtott/vi
ew?usp=sharing
 Chapter 2: LINEAR PROGRAMMING: BASIC CONCEPT

I. Linear programming concepts

- The management of any organization regularly must make decisions about how to
allocate its resources to various activities to best meet organizational objectives.
- Linear programming is a powerful problem-solving tool that aids management in
making such decisions.
- The resources being allocated to activities can be, for example, money, different
kinds of personnel, and different kinds of machinery and equipment.
- The activities needing these resources might be production, marketing, financial,
or some other activities. They are competing for the same resources.
- The basic approach for linear programming is to formulate a mathematical model
called the linear programming model to represent the problem and then to analyze
this model.
- Linear programming model includes:
+ Decision variables to represent the decisions to be made
+ Constraints to represent the restrictions on the feasible values of these
decision variables,
+ Objective function that expresses the overall measure of performance for
the problem

II. Case study: WYNDOR GLASS CO.

- The Wyndor Glass Co. produces high-quality glass products, including windows
and glass doors
- The company has three plants that simultaneously produce the components of its
products:
+ Plant 1 produces aluminum frames and hardware
+ Plant 2 produces wood frames
+ Plant 3 produces the glass and assembles the windows and doors.

- Top management has decided to discontinue unprofitable products and releasing

production capacity to launch the two new products:
 + Door : requires production capacity in Plants 1 and 3
+ Window: requires production capacity in Plants 2 and 3

- Management now needs to address two issues:

+ Should the company launch these two new products?
+ If so, what should be the product mix —the number of units of each
produced per week— for the two new products?

III. Identify the problem

- The company wanted to know: Which combination of production rates (the
number of units produced per week) for the two new products would maximize
the total profit?
- Three questions need to be answered to begin the process of using the
spreadsheet to formulate a mathematical model:

oWhat are the decisions to be made?

oWhat are the constraints on these decisions?
oWhat is the overall measure of performance for these decisions?
- Base on the three question, identifies the information it needs to gather to
conduct this study:

oAvailable production capacity in each of the plants.

oHow much of the production capacity in each plant would be needed by
each product
oProfitability of each product
Table 2.1: Summary of the information obtained as follows (p.25):
- Based on the information obtained, formulating linear programming model to
represent the problem and solve the model, it will give answers to the company
in which combination of production rates for the two new products would
maximize the total profit.
- Spreadsheets provide a powerful and intuitive tool for displaying and analyzing
the problems. Therefore it will be applied in the process of formulating and
solving the linear programming model for Wyndor Glass Co.

Transfer data in figure 2.1 to the excel spreadsheet as follows:

IV. Formulate linear programming model:

Based on the three key questions needed to be answer to begin the process of using
the spreadsheet to formulate a mathematical model.:

- What are the decisions to be made?

= > The decisions to be made are the production rates (number of units
produced per week) for the two new products.

- What are the constraints on these decisions?

=> The constraints on these decisions are that the number of hours of
production time used per week by the two products in the respective plants
cannot exceed the number of hours available.

- What is the overall measure of performance for these decisions?

=> The overall measure of performance for these decisions is the total profit
per week from the two products.

- The SUMPRODUCT function is used extensively in linear programming

spreadsheet models.
- SUMPRODUCT function will sum up the product of each of the individual
terms in two different ranges of cells when the two ranges have the same
number of rows and the same number of columns.

For example, consider the two ranges, C7:D7 and C12:D12, so that each range has
one row and two columns. In this case, SUMPRODUCT (C7:D7, C12:D12) takes
each of the individual terms in the range C7:D7, multiplies them by the
corresponding term in the range C12:D12, and then sums up these individual
products
V. Practicing Excel Solver

- Choose the “Solver” from the Data tab.

- Select the cell you wish to optimize in the “Set Objective” window.
- Choose “Max” or “Min” depending on whether you want to maximize or
minimize the objective cell.
- Enter all the changing cells in the “By Changing Variable Cells” window.

Add Constraint: Window allows enter constraint

Choose left column “Cell Reference”: E7 <= choose right column “Constraint”:
G7
Choose left column “Cell Reference”: E8 <= choose right column “Constraint”:
G8
Choose left column “Cell Reference”: E9 <= choose right column “Constraint”:
G9
Click OK
—Solver has solved the problem

—Choose Keep Solver Solution.

—Click OK.

VI. Practicing QM for windows:

Module: => Linear Programming (nếu không cần biến là số nguyên

OR: Integer…programming: nếu cần biến là số nguyên

File => New

Chapter 3: LINEAR PROGRAMING FORMULATION & APPLICATION
Three types of constraints:

1 Benefit constraint

2. Resource constraint: case hôm nay học

3. Fixed – requirement constraint

Four components for Analyzing:

1.The data => Data cells

2.The decisions => changing cells

3.The constraints => output cells

4.The measure of performance => objective cells

Problems

1.Advertising-Mix Problem:
2.Resource Allocation Problems
3.Cost-Benefit-Trade-Off Problems
4.Mixed Problems
5.Transportation Problems
6.Assignment Problems

1. Advertising-Mix Problem
Background

– New product: Crunchy Start

– How to break into an already overcrowded breakfast cereal market?

– Past campaign: Fail

Objective: maximize the exposures

Decisions: TV, M, SS

Constraint:
 Number of exposure: (1300xTV)+(60xM)+(500xSS)

Ad: (300xTV)+(150xM)+(100xSS)<=4000

Planning (90xTV)+(30xM)+(40xSS)<=1000

TV <= 5

Let TV = Number of commercials for separate spots on television

M = Number of advertisements in magazines.
SS = Number of advertisements in Sunday supplements.
Maximize Exposure = 1,300TV + 600M + 500SS
subject to
Ad Spending: 300TV + 150M + 100SS ≤ 4,000 ($thousand)
Planning Cost: 90TV + 30M + 30SS ≤ 1,000 ($thousand)
Number of TV Spots: TV ≤ 5
and
TV ≥ 0, M ≥ 0, SS ≥ 0.

2. Resource-allocation problems

1.Resource constraint
Amount of resource used ≤ Amount of resource available

2.Characteristics of Resource-Allocation Problems

● Decisions to be made: levels of activities
● Measure of performance: total profit from the activities
1.Data are needed:

•The amount available of each resource

•The amount of each resource needed by each activity/ amount of resource used
per unit of the activity

•The contribution per unit of each activity to the overall measure of performance –
objective coefficient

Lưu ý: Tuỳ vào yêu cầu đầu ra của bài toán để set kết quả thuộc integer hay
decimal
QM for window:
- Module => Integer & Mixed integer programming

Excel Solver:
Chọn solver => add => Int
3. Big M Transportation
Dùng QM For windows:
Modules => Transportation

Cách mở sensitivity report

=> Click OK

Reduced cost:

Objective coefficient ( hệ số hàm mục tiêu)

Allowable Increase/Decrease: biên độ giao động cho phép để các optimal solution không
thay đổi => chỉ apply for single change
QM:
Window => Ranging
Solutions => Ranging

When we talk about simultaneous changes,

Khi thay đổi về điều kiện

What happens if a change is made in the number of hours of production time per
week being made available to Wyndor’s new products in one of the plants? (Section
5.5)

shadow price cho ta biết nếu ta thay đổi một đơn vị của constraints thì total profit sẽ thay
đổi như thế nào
Nếu ta tăng 1 giờ của nhà xưởng 2, total profit tăng $150

Trong trường hợp thay đổi chúng ta phải áp dụng The 100 percent Rule
 Chapter 9: DECISION ANALYSIS

For each decision alternative, calculate the weighted average of its payoffs by multiplying each
payoff by the prior probability of the corresponding state of nature and then summing these
products. Using statistical terminology, refer to this weighted average as the expected payoff
(EP) for this decision alternative.

The expected payoff for a particular decision alternative can be interpreted as what the average
payoff would become if the same situation were to be repeated numerous times.

1. Checking whether obtaining more information

- the true state of nature is referred to as perfect information.

EP (without perfect information): max (payoff) của từng alternative

EP (with perfect information) tổng payoff của EP (with perfect info) is therefore the weighted
average of the maximum payoff for each state, multiplying
each maximum payoff by the prior probability of the corresponding state of nature. Thus,
EP (with perfect info)

Solving the

Chapter 10: FORECASTING TECHNIQUES