ECON 3300 Study Guide - Midterm Guide: Sensitivity Analysis, Integer Programming, Simplex Algorithm
Document Summary
Fixed, variable, break even, total cost, total rev, profit. Know three steps for sensitivity: find slope, find upper and lower limits. Management science is used to solve management problems such as finding the number of units to be produced. Management science is a logical approach to solving problems. Uses the scientific method: observation, problem definition, model construction, model solution, and implementation. Model: abstract representation of a problem situation z=10x+40y. Parameters: known, constant values that are often coefficients of variables in equations. Functional relationship: the model as a whole that includes variables, parameters, and equations. Management science can either be a recommended decision or information that helps a manager make a decision. Implementation: actual use of a model once it has been developed. Break-even analysis: modeling technique to determine the number of units to sell or produce that will result in zero profit. Fixed costs: independent of volume and remain constant. Variable costs: depend on the number of items produced.
