BU275 Study Guide - Midterm Guide: Integer Programming, Decision Analysis
Document Summary
Observation: identify the problem that exists in the system or organization. Definition of the problem: problem must be clearly and consistently defined. Model construction: development of the functional mathematical relationships. Model solution: models solved using management science techniques. Model implementation: actual use of the model or its solution. Type iii error: solving the wrong problem. Build a model of a real world system. A model is a simplified representation or abstraction of reality. Reality is generally too complex to copy exactly. Use the model to improve system design and operation. Modeling is both an art and a science. Management science tools and techniques (ranked in order of usage) Provides a framework for making important decisions. Helps us make a decision from a set of possible decision alternatives when uncertainty regarding the future exists. Goal of decision analysis is to make the optimal decision. A decision problem is characterized by decision alternatives, states of nature, and resulting payoffs.
