MS&E 107 Lecture Notes - Lecture 2: Risk Aversion, Shark Bait, Dot Product

• School: Stanford University
• Department: MS&E - Mgmt Science & Engineering
• Course: MS&E 107
• Professor: Sam Savage

Document Summary

Interactive environment - spreadsheets, simulations: excel example: Build simulation to estimate cost of operations - strike probability encoded as 1 or 0 (yes or no) When strike is present, there is a spike in the labor cost. Simulation runs ten thousand times, each time the strike event is randomly selected (monte carlo results tracked in separate sheet: optimization. Documentation (sometimes things are hard to fix, hard-coded formulas) Scalability (adding too many things, not suitable for large scale problems, like incorporating product information for all different locations, all fiscal quarters, adding new products) Absolute reference: ($) shortcut keys are f4 and clover t; lock cells. Auditing tools: formulas tab -> trace precedence or trace dependence. Range name: you can name a range of cells. Scalable: adding a different model in excel example. Sumproduct: like a dot product, multiply rows, add across columns. Calculating uncertainty - theme of course: 3d graph & data table in excel.