Faculty
Professors Stephen G. Powell, Robert A. Shumsky
Objectives
This course provides an introduction to the concepts and methods of Decision Science, which involves the application of mathematical modeling and analysis to management problems. It also provides a foundation in modeling with spreadsheets. The primary goal of the course is to help you become a more skilled builder and consumer of models and model-based analyses.
Another important goal is to encourage a more disciplined thinking process in the way you approach management situations. As a result of this course you will become more confident in understanding and using models, both in other courses and on the job.
More specifically, the course will:
Show you how to use Excel spreadsheets effectively for business analysis. You will learn a comprehensive set of spreadsheet skills and tools, including how to design, build, test, and use a spreadsheet.
Introduce you to the basic principles and techniques of applied mathematical modeling for managerial decision-making. You will learn to use some of the more important analytic methods, to recognize their assumptions and limitations, and to employ them in decision-making. These methods will be applied to problems arising in a variety of functional areas of business, including economics, accounting, marketing, operations, and capital markets.
Sharpen your ability to structure problems and to perform logical analyses. You will practice translating descriptions of business situations into formal models, and you will investigate those models in an organized fashion.
Expose you to settings in which models can be used effectively. You will apply modeling concepts in practical situations. You will learn to extract insight from models, and to use those insights to communicate, persuade and motivate change.
Requirements
Homework
Homework exercises provide you with opportunities to practice the skills of modeling and analysis introduced in the course. Homework emphasizes the quantitative aspects of the course material and provides you with feedback on how well you are mastering analytic techniques. There are two types of assignments, individual and team. Solutions to both types of homework should be submitted in-class, before the beginning of class, on the assigned due-dates. Late homework will not be accepted.
Individual Assignments
You should attempt each exercise on your own before discussing it with your team. Each individual will submit a hardcopy solution in class and save a spreadsheet file in their personal folder in the Individual Homework Drop Folder. Please format your work according to the format guide distributed in class. All work handed in for grading must be your own. You may use ideas suggested by members of your group, but the organization, analysis, and presentation of the work must be your own.
Team Assignments
Team assignments should be collaborative work among the students on the team. Every team member is expected to contribute substantially to every team assignment. Do not put your name on a team assignment to which you have not contributed substantially. Each team will submit a single hardcopy of their Power Point presentation in class and save both Power Point and spreadsheet files in the team’s folder in the Team Assignment Drop Folder. Both your Power Point slides and your spreadsheet should list the names of group members who contributed substantially to the assignment. Team assignments are based on cases that provide descriptions of practical situations where modeling and analysis can play an important role. The cases provide you with opportunities to practice translating situations into problem structures and to consider the implications of your analysis for a particular situation. For many of the cases you will also be expected to present your ideas to an audience interested in the implications of your analysis. Note that every member of your team should be prepared to present the case.
If you have any questions about the policies and procedures governing homework, you should feel free to talk with Professor Powell or Shumsky.
Question and Answer Sessions
Optional Q&A sessions will be held each evening before class. Teaching assistants will be available to answer general questions about the material. No new material will be introduced, and you are not obliged to attend if you do not feel the need. The sessions will be held each evening before class, from 7:00 - 8:00 pm, in the Whittemore Computer Lab (third floor of Murdough). There is one exception: on October 26, the Q&A Session will be held from 7:00 - 8:00 pm in Barclay.
Materials
The text for this course is Management Science: The Art of Modeling with Spreadsheets, (Custom Edition, ISBN 9780470593509, available only at Wheelock Bookstore) by Powell and Baker. When reading the book in preparation for class it is essential that you take an active approach. This means that you open the spreadsheets that are being discussed in the book and work through them as you read. (Note: These spreadsheets are available in the course folder under Spreadsheets from Text.) When a new method is presented, first repeat the example in the book and then try two or three new examples on your own. In class, we will often discuss new applications of the methods presented in the book, and we will assume you are familiar with the material in the reading. The best prepared student is often the one who comes to class with questions about how the concepts and methods can be applied. Finally, you should expect to return to the book after class or while reviewing, in order to refine and consolidate your knowledge. In addition to the text, some required readings have been selected from other sources and will be distributed separately. There are many textbooks in the library that contain alternative readings, examples and exercises for practice. Five of these have been placed on reserve:
Francis J. Clauss, Applied Management Science and Spreadsheet Modeling, Duxbury.
Jeffrey D. Camm and James R. Evans, Management Science: Modeling, Analysis, and Interpretation, South-Western.
Cliff Ragsdale, Spreadsheet Modeling and Decision Analysis, South-Western.
Wayne L. Winston and S. Christian Albright, Practical Management Science: Spreadsheet Modeling and Applications, Duxbury.
Jeffrey Moore et al., Introductory Management Science, Prentice-Hall.
Software
The software for the course is Risk Solver Platform for Education.
If you have any trouble finding or starting this software, please get help from Information Technology Support. Do not use the CD in the textbook to reinstall any of this software.
Honor Principle
The Tuck Honor Principle represents a contract among students and instructors about behaviors that are appropriate in the learning process. This course is structured to promote learning by a combination of individual and team efforts. This structure encourages certain group interactions because they enable you to use time efficiently or because they improve your understanding of the material.
Collaboration on daily preparation for class is always encouraged. On a number of days during the course, team preparation will be essential, because a team member will be expected to present the team's analysis in class. Class discussion should be based on individual and team preparation, but not on the information produced by other sections of the course earlier in the day.
Attendance
The general policies of the Tuck School apply. In part, this means that all students are expected to prepare for and attend class each day, in their assigned sections, except for optional sessions as designated by the instructors. Personal illness or family emergency, but not placement activities, are considered grounds for excused absences. Penalties for unexcused absences will be reflected in the course grade.
Class participation
Class participation will be evaluated subjectively. As instructors, we value attendance, punctuality, familiarity with the required readings, and classroom questions or comments that are relevant and insightful. Differences in technical background or skill are not a criterion. In general, we evaluate classroom participation on the basis of the extent to which you contribute to a positive and effective learning environment (for yourself and others). Demonstrating mastery of advanced topics at inappropriate times does not contribute to a positive learning environment. Correcting us when we make a mistake, however, or asking what may appear to be a naive question, quite often does contribute positively. ("Dumb" questions, which rarely are that, are usually shared by many students, and asking one can keep the class on track.)
Grading
First Quiz 20%
Second Quiz 20%
Final Exam 45%
Homework 15%
Class participation may be used to determine grades for students at the borderlines (for example, between S+ and H). All exams are open notes/open book exams. Computers are used on all exams.
Schedule
October 14
Introduction to spreadsheet modeling and problem solving
Chapter 1, pp. 1-16; Chapter 2, pp. 17-27.
Prepare San Fernando Airport. (You will find this problem in your course packet.)
Hand in this problem at the start of class.
Individual assignment.
October 15
Spreadsheet engineering
Read Chapter 5, pp. 95-121.
Note: Spreadsheets used in the textbook are available on the course folder under Spreadsheets
from Text.
Prepare Exercise 5.3, page 122. (The description of the case is in the "Modeling Cases" Section at the end of the book)
For this and all future individual assignments please use the Format Guide based on San Fernando Airport that was distributed on the first day of class.
Individual assignment.
October 21
Spreadsheet analysis
Read all of Chapter 6.
Prepare Exercise 6.3.
Individual assignment.
October 22
Problem Structuring
Chapter 2, pp. 27-34.
Prepare Exercise 2.1, page 51 (Boeing).
Individual assignment.
Also complete the Pivot Table Tutorial at:
http://ochanomizu.dartmouth.edu/tutorial/pivottable
October 27
Prototyping
Note: Q&A Session on 10/26 is in Barclay instead of Whittemore Lab.
Read Chapter 2, pp. 34-49.
Prepare Superchem, Inc.
Individual assignment.
October 28
Modeling in Practice
Prepare The ERP Decision.
Before preparing your presentation, read carefully the document Guidelines for Decision Science Presentations that was included in your course packet.
Team assignment.
October 29
Quiz 1
Available at 1:00pm on 10/29; due at 5:00pm on 10/30
November 4
Introduction to Optimization and Solver
Read Chapter 10, Sections 10.1 - 10.6.
Exercise 10.5 for practice (not to be handed in).
Hand in Exercise 10.3 (for part a, you may use SPSS if you prefer.)
Individual assignment.
November 5
Creating optimization models
Read Chapter 11, Sections 11.1 - 11.4.
Exercise 11.4 for practice.
Hand in Exercise 11.7. Note that the “qualitative pattern” in an optimal solution is a description in words of which decision variables are positive and which are zero, as well as which constraints are binding and which are slack.
Individual assignment.
November 11
Optimization models and sensitivity analysis
Read Chapter 11, Section 11.5.
Hand in Exercise 11.8. Before starting the exercise read Preparation for Exercise 11.8 from the course packet.
Individual assignment.
November 12
Production planning
Preparation: Cox Cable Company. Review Preparation for Cox Cable.
Team assignment.
November 18
Revenue management
Prepare SkyJet (A): Network Revenue Management.
Team assignment.
November 19
Regressions and Optimization
Prepare Plastics!
Team assignment.
November 19
Quiz 2
Available at 8:00am on 11/19; due at 5:00pm on 11/20
November 23
Introduction to simulation
Read Chapter 15, Sections 15.1 - 15.3.
Exercise 15.1 for practice.
Hand in Exercise 15.12.
Individual assignment.
December 1
Simulation techniques and examples
Read Chapter 15, Sections 15.4 - 15.5 and 15.7.
Exercise 15.2 for practice.
Hand in Exercise 15.13.
Individual assignment.
December 2
Simulation modeling and analysis
Read Chapter 15, Sections 15.6, 15.8 - 15.9.
Hand in Exercise 15.17. For part (a), verify your result by using the Black–Scholes formula to evaluate the price of the European call option.
Individual assignment.
December 4
Managing risk with insurance
Prepare Sigma Risk Management.
Team assignment.
December 9
Assessing acquisition value with simulation
Prepare Genzyme/Geltex Pharmaceuticals Joint Venture.
Review Preparation for Genzyme/Geltex Pharmaceuticals Joint Venture.
Team assignment.
December 10
Simulation and competitive bidding
Read
Pindyck and Rubinfeld, Microeconomics, 7th Edition
Sections 13.1-13.3, pp. 479-489
Section 13.8, pp. 509-516.
Prepare Bidding for Tract 570. Enter your team's bid level online the night before (the evening of December 9) by 5:00 pm.
Team assignment.
Friday 12/11
10:20 to 11:50 a.m. in Cook
December 17
Final Exam
9:00 a.m. to 12:00 noon
