33:136:386 Chapter Notes - Chapter 1-3: Simplex Algorithm, Sensitivity Analysis, Fixed Cost

• School: Rutgers University
• Department: Business Analytics and Information Technology
• Course: 33:136:386
• Professor: Ely, Romulo

Document Summary

Management science encompasses a logical and systematic approach to problem solving. Break-even analysis: modeling technique to find the number of units to sell or produce that equals zero profit: 3 components: volume, cost, and profit. Profit = total revenue total cost. Breakeven point: the volume that makes total revenue equal total cost where profit equals zero. Sensitivity analysis: how sensitive a management model is to changes: in general: Increase in variable costs increases breakeven point. Increase in fixed cost increases breakeven point. Deterministic technique: assumes certainty in the solution. Objective function: linear relationship showing objective of an operation. Model constraint: linear relationship that represents a restriction on decision making. Nonnegativity constraings: restrict the decision variables to zero or positive values. A(cid:374) (cid:862)opti(cid:373)al(cid:863) solutio(cid:374) is the best feasible solutio(cid:374). Simplex method: procedure with a set of math steps to solve a linear programming problem.