Mathematical

Modeling for
Information system

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Lesson Plan
Week(s) Topic
1+2 Chapter 1:Introduction.
3 Chapter 2: Linear and Integer Programming Models
4+5 Chapter 3_1: Applications of Linear and Integer Programming Models – 1.
6+7 Chapter 3_2: Applications of Linear and Integer Programming Models - 2
8th week Midterm I exam
9 + 10 Chapter 4: Network Models.
11 Chapter 5: Project.
12 Chapter 9: Queuing.
13 Chapter 10: Simulation.
14thweek Midterm II exam
15 Chapter 13: Nonlinear Models: Dynamic, Goal and Nonlinear Programming
16 Midterm I and Midterm II I-Exams

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 Evaluation
 Mid I 25%
 Home Works (5) 15%
 Participating 5%
 Project 5%
 Qizzes 10%
 Final Exam 40%
 Total 100

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 Chapter 1

Introduction

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 1.1 What Is Management Science?

Management science is the discipline that adapts the

scientific approach for problem solving to executive decision
making in order to accomplish the goal of “doing the best
you can with what you’ve got.” It involves:
Analyzing and building mathematical models of complex business situations.
Solving and refining the mathematical models typically using spreadsheets and/or
other software programs to gain insight into the business situation.
Communicating/implementing the resulting insights and recommendations based
on these models.

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 The Goal of management Science

 The goal of management science is to recommend the

course of action that is expected to yield the best
outcome with what is available.

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 The Management Science Approach
 A scientific method of providing executive departments with a
quantitative basis for decisions regarding operations (Philip McCord
Morse).
 Logic and common sense are basic components in supporting the
decision making process.
 The use of techniques such as:
– Statistical inference
– Mathematical programming
– Probabilistic models
– Network and computer science

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 Management Science Applications
 Linear Programming was used by Burger King to find how
to best blend cuts of meat to minimize costs.

 Integer Linear Programming model was used by American Air

Lines to determine an optimal flight schedule.

 The Shortest Route Algorithm was implemented by the Sony

Corporation to developed an onboard car navigation system.

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 Management Science Applications
 Project Scheduling Techniques were used by a contractor to
rebuild Interstate 10 damaged in the 1994 earthquake in the Los
Angeles area.

 Decision Analysis approach was the basis for the development of a

comprehensive framework for planning environmental policy in
Finland.

 Queuing models are incorporated into the overall design plans for
Disneyland and Disney World, which lead to the development of
‘waiting line entertainment’ in order to improve customer
satisfaction.
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 A Brief History of Management Science

Much of the early research done in management science

focused on developing the tools necessary to solve complex
decision problems, lately the primary focus of the field has been
on developing models and systems for such diverse areas as:
E-commerce
Healthcare services
Supply chain management
Banking
Transportation systems

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 1.3 Mathematical Modeling

 Many managerial decision situations lend themselves to

quantitative analyses.
 A constrained mathematical model consists of
– Decision variables
– An objective
– One or more constraints

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 1.3 Mathematical Modeling

Example
 NewOffice Furniture produces three products
 Desks (D)
 Chairs (C)
– Raw material required
 Molded steel (M)
 7 pounds of per desk
– Net profit is  3 pounds of per chair
 $50 per desk  1.5 pounds per one pound of
 $30 per chair molded steel produced.
 $6 per pound of molded steel – Raw material available
sold
2000 pounds

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 1.3 Mathematical Modeling

 Objective: Determine production mix that maximizes the

profit under the raw material constraint and other
production requirements (detailed next).
 Maximize 50D + 30C + 6 M
Subject to 7D + 3C + 1.5M 2000 (raw steel)
D 100 (contract )
C500 (cushions available)
D, C, M 0 (Non-negativity)
D and C are integers
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 Classification of Mathematical Models

 Classification by the model purpose

– Optimization models
– Prediction models
 Classification by the degree of certainty of the data in the
model
– Deterministic models
– Probabilistic (stochastic) models

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 The Management Science Process

 The four-step management science process

Problem definition

Mathematical modeling

Solution of the model

Communication/implementation
of results
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 1.6 Using Spreadsheets in Management
Science Models

 Spreadsheets have become a powerful tool in

management science modeling.
 Several reasons for the popularity of spreadsheets:
– Data are submitted to the modeler in spreadsheets
– Data can be analyzed easily using statistical and mathematical
tools readily available in the spreadsheet.
– Data and information can easily be displayed using graphical
tools.

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 Basic Excel functions and operators

 Arithmetic Operations
– Addition of cells A1and B1: = A1 + B1
– Subtracting cell B1 from A1: = A1 - B1
– Multiplication of cell A1 by B1: = A1 * B1
– Division of cell A1 by B1: = A1 / B1
– Cell A1xraised to the power in cell B1: = A1^ B1

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 Basic Excel functions and operators

 Arithmetic functions
– Sum =SUM(A1:A3)
 Returns the sum A1+A2+A3
– Average =Average(A1:A3)
 Returns the arithmetic average of cells A1, A2, A3
– SUMPRODUCT =SUMPRODUCT(A1:A3,B1:B3)
 Returns the sum of products A1B1+A2B2+A3B3
– ABS =ABS(A3)
 Returns the absolute value of the entry in cell A3.

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 Basic Excel functions and operators

 Arithmetic functions – continued

– SQRT =SQRT(A3)
 Returns A3
– MAX =MAX(A1:A9)
 Returns the Maximum of the entries in cells A1 through A9.
– MIN =MIN(A1:A9)
 Returns the Minimum of the entries in cells A1 through A9.

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 Basic Excel functions and operators
 Statistical functions
– RAND() =RAND()
 Generate a random number between 0 and 1 from a uniform distribution.
– Probabilities and variable values under the normal distribution
 NORMDIST NORMINV
=NORMDIST(25,20,3,TRUE) =NORMINV(.55,20,3)
Returns P(X<25) when  = 20 Returns x0,, such that P(X<x0)=.55
and  = 3 when  = 20 and  = 3
 NORMSDIST NORMSMINV
=NORMSDIST(1.78) =NORMSINV(.55)
Returns P(Z<1.78) Returns z0, such that P(Z<z0)=.55

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 Basic Excel functions and operators
 Statistical functions
– Probabilities and variable values under the t- distribution
 TDIST TINV
=TDIST(1.5,12,1) =TINV(.05,15)
Returns P(t>1.5) when =12 Returns t0,, such that
P(t<-t0)=.025 and
P(t>t0)=.025
when =15.
Note:
=TDIST(1.5,12,2)
returns P(t<-1.5) + P(t>1.5)
when =12.

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 Basic Excel functions and operators

 Statistical functions – Other probability distributions

– Poisson =POISSON(7,5,TRUE)
 Returns P(X<7) for Poisson with  = 5.
Note: false returns the probability density P(X = 7)
– EXPONDIST =EXPONDIST(40,1/20,TRUE)
 Returns P(X<40) for the exponential distribution with 1/=20
Note: false returns the probability density f(40)=20exp(-20(40))

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 Basic Excel functions and operators

 Conditional functions:
– IF =IF(A4>4,B1+B2, B1 – B2)
 Returns B1+B2 if A4>4, and B1 – B2 if A4

– SUMIF =SUMIF(F1:F12, “>60”,G1:G12)

 Returns G1+G2+…+G12 only if F1+F2+…+F12>60

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 Basic Excel functions and operators

– VLOOKUP =VLOOKUP(6.6,A1:E6,4)
 If the values in column A of a given table [A1:E6] are sorted (in an
ascending order), VLOOKUP finds the largest value in column A that is
less than or equal to 6.6, identifies the row it belongs to, and returns the
value in the fourth column that correspond to this row.

Note: If the values in column A are not sorted,

=VLOOKUP(6.6,A1:E6,4,FALSE) finds the value 6.6 in column A,
identifies the row it belongs to, and returns the value in the fourth
column that corresponds to this row.

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25
 Basic Excel functions and operators

 Statistical/Optimization
– Data Analysis [Selected from the Tools menu]. Useful entries:
 Descriptive Statistics (VAR, SD, Mean, Average, …)
 Regression
 Exponential Smoothing
 Anova

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