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INFO3010-Midterm Study Guide

by: Rebecca Evans

INFO3010-Midterm Study Guide Info3010

Marketplace > Tulane University > Business > Info3010 > INFO3010 Midterm Study Guide
Rebecca Evans
GPA 4.0

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These notes cover -Step-by-step help on how to set up conceptual formulations -Review of excel functions -Explanation of the parts of a Sensitivity Report and how to interpret it -General defi...
Business Modeling
Srinivas Krishnamoorthy
Study Guide
50 ?




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This 3 page Study Guide was uploaded by Rebecca Evans on Tuesday February 16, 2016. The Study Guide belongs to Info3010 at Tulane University taught by Srinivas Krishnamoorthy in Spring 2016. Since its upload, it has received 206 views. For similar materials see Business Modeling in Business at Tulane University.


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Date Created: 02/16/16
INFO3010 Midterm Study Guide How to Set up a Conceptual Formulation 1. Identify you decision a. Find the variables that you will change to achieve you objective-those will be your decision variables b. Write out your decision objectively: “How much do I need to change x (decision variables) to do y (objective)” or something along those lines c. Use multiple subscripts to identify your decision variables when you have multiple factors i. Ex. X =1 1f units shipped from plant 1 to region 1 ii. X 3 4 of units shipped from plant 3 to region 4 iii. X plant number, region number 2. Identify your objective a. This is the goal that the problem is asking you to reach b. Think along the lines of maximizing sales, maximize NPV, or minimize costs 3. Constraints a. Examples include: b. Material/product constraints-only have so much to produce with c. Budget constraints-can only spend certain amount of money d. Technical constraints i. Non-negativity constraints: x (decisions) ≥ 0 because logically can’t have negative amount of sales, units, etc ii. Binary constraint: X 1 X ,2 X ar5 binary 1. If have binary constraint do NOT need non-negativity constraint as well because binary constraint means the decision can only equal 0 or 1 and therefore it cannot be negative iii. “Both or neither”: problem says if you have one then you must have the other 1. When binary (yes/no choice) set them equal so choose both (1=1) or choose neither (0=0) a. Ex. X = X or X – X = 0 3 4 3 4 iv. “If, then” constraint: ex. “Project 1 must be accepted if project 5 is accepted” 1. Because it is binary set constraint as: X 1 X 5 2. Because if X i5 0 then X can1be anything, but if X is 15then X must 1 be 1 as well Excel Tools/Functions  “If statement” in excel o Formula: =if(decision cell=1,total seat capacity cell-contract quantity cell, total seat capacity cell) o Formula: =if(condition ,then this result, result of not-condition) o OR formula: total seat capacity – (binary decision*contract quantity) o Ex. Number of seats sold at passenger fare=if(demand>capacity, then number of seats available, if not then number of seats demanded)  Sum formula o =cell1+cell2 o =sum(cell1, cell2)  Sum-product =SUMPRODUCT (x1:x2, y1:y2) and multiples (x1*y1) + (x2*y2) (takes product of matching cell entries and sums them) o Useful when trying to take the sum of products w/ lots of data o Often sumproduct will be used for calculating “total cost” or “total NPV” so use the decision cells and the variable cells  Ex. Total money spent=sumproduct(decision cells, cost cells) or total NPV=(decision cells, property NPV cells) o ALWAYS use a comma between your cell blocks for sum product (cells ,cells) Sensitivity Report Analysis  Constraint table: o “constraint r.h. side” column represents the total amount available o “final value” amount of total availability that is used o “shadow price” represents how much your optimal profit would increase by $x amount for 1 extra unit of increase of the total availability  Ex. If hops availability increases by 10 units (from 160 to 170) and has a $2 shadow price then the optimal value of the objective increases by ($2)(10 units) = $20  Shadow price of $0 for malt because we have not used the entire available resource; if positive shadow price then you have used total available resources o “allowable increase” shows the maximum that the total availability can increase  If your optimal decision changes: you cannot get new decision numbers from report, but have to resolve with the new numbers using solver and a new model table  Variable cells table: o Objective coefficient: coefficients in maximization equation (ex. price per ale and price per lager) o Final value: optimal values for x1 and x2 o Ignore reduced cost (no useful info for us) o Allowable increase: amount of $ can increase the cost per barrel by and produce the same number of barrels total  Allowable increase/decrease range is the range that the objective coefficient can change until the optimal decision changes o Overall table is for the objective functions  Note: sensitivity reports are NOT available for problems with binary decisions because it is an analysis of how different changes effect optimal decision, but binary is a yes/no decision Some Definitions Binary variables= yes/no decisions and yes=1 and no=0 Parameter=cell reference Sensitivity=Try different parameter values and see impact on output


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