Introduction p. 1
Introduction to Quantitative Methods p. 2
Continuing Stories of Success with Quantitative Methods p. 3
Management Science and Operations Research p. 5
Organization and Purpose of This Book p. 6
Models and Decision Making p. 7
Computer Solutions p. 9
The Importance of Studying Quantitative Methods p. 10
Introduction to Spreadsheets with Excel p. 12
The First Excel Window p. 13
Entering Formulas, Copying, Editing, and Formatting p. 15
Spreadsheet Arithmetic p. 19
Displaying Excel Results p. 19
Graphing Using Excel's Chart Wizard p. 22
Using Excel with This Text p. 25
Decision Making and Planning with Uncertainty p. 31
Probability Concepts: Quantifying Uncertainty p. 32
The Language of Probability: Basic Concepts p. 33
Probabilities for Composite Events p. 35
Joint Probability and the Multiplication Law p. 38
Finding Probabilities Using the Addition Law p. 42
Statistical Independence p. 45
Conditional Probability and the General Multiplication Law p. 48
Probability Trees p. 52
Revising Probabilities Using Bayes' Theorem p. 56
Subjective Probability p. 62
Probability Distributions and Expected Value p. 75
Random Variables and Probability Distributions p. 76
Expected Value p. 77
Finding the Probability Distribution p. 81
The Binomial Distribution p. 86
The Normal Distribution p. 93
Poisson and Exponential Distributions p. 98
(Optional) Judgmental Assessment of the Probability Distribution p. 105
Decision-Making Concepts p. 122
Certainty and Uncertainty in Decision Making p. 123
Elements of Decisions p. 124
Ranking the Alternatives and the Payoff Table p. 125
Maximizing Expected Payoff: The Bayes Decision Rule p. 128
Other Decision Criteria p. 131
Opportunity Loss and the Expected Value of Perfect Information p. 135
Decision Tree Analysis p. 140
Decision-Making and Risk: Certainty Equivalents and Utility p. 164
Decision Making Using Certainty Equivalents p. 165
Decision Making with Utility p. 173
The Utility for Money p. 180
(Optional) Attitudes Toward Risk and Valuation in Decision Making p. 191
Forecasting p. 203
Forecasting Using Past Data: Time-Series Analysis p. 204
Exponential Smoothing p. 206
Forecasting Trend Using Regression p. 223
Forecasting Using Causal Models: Regression Analysis p. 230
Forecasting Using Seasonal Indexes p. 238
Further Forecasting Procedures and the Role of Judgment p. 244
(Optional) Statistical Fundamentals of Regression Analysis p. 246
Resource Allocation p. 261
Linear Programming p. 262
The Redwood Furniture Problem p. 263
Formulating the Linear Program p. 264
Solving Linear Programs Graphically p. 266
Special Problems in Constructing Lines p. 272
Problems with More Than Two Constraints p. 274
Cost Minimization: A Feed-Mix Problem p. 276
Steps and Rationale for Graphical Solution p. 278
Mixture and Equality Constraints p. 282
Multiple Optimal Solutions p. 285
Infeasible Problems p. 287
Unbounded Problems p. 288
Linear Programming Applications and Solution Procedures p. 289
Graphing Using a Spreadsheet p. 290
Linear Programming Applications and Computer Solutions p. 300
Linear Programming in Manufacturing: Product-Mix Selection p. 302
Formulating Constraints and the Standardized Format p. 304
Slack and Surplus Variables p. 307
Solving Problems Using the Computer p. 308
Linear Programming in Finance: Portfolio Selection p. 318
Linear Programming in Transportation: Shipment Scheduling p. 319
Linear Programming in Marketing: Budgeting Advertising Expenditures p. 322
Linear Programming in Human Resources: Assigning Personnel p. 324
Linear Programming in Refining: Liquid Blending p. 325
Linear Programming in Food Processing: The Diet Problem p. 329
(Optional) The Simplex Method p. 332
(Optional) Saving Problem Data and Exhanging Data Files p. 346
Sensitivity Analysis and Duality in Linear Programming p. 363
Shadow Prices and Opportunity Costs p. 365
The Dual Linear Program p. 367
Evaluating New Products Using the Dual p. 374
Sensitivity Analysis in Linear Programming p. 376
Post-Optimality Analysis p. 381
(Optional) Dual for a Generalized Linear Program p. 390
(Optional) The Dual for a Cost-Minimization Primal Linear Program p. 392
Integer and Goal Programming p. 407
Integer Programming p. 407
Computer Applications with Integer Programming p. 416
Integer Programming Applications p. 420
Multi-Objective Evaluations Using Goal Programming p. 422
Solving Goal Programs on the Computer p. 428
Distribution, Routing, and Scheduling p. 441
Transportation and Assignment Problems p. 442
A Ski Shipment Scheduling Illustration p. 444
Getting Started: The Northwest Corner Method p. 446
Solving the Problem: The Transportation Method p. 448
Computer Solution to Transportation Problems p. 456
Imbalanced Capacity and Demand: Dummy Rows and Columns p. 461
The Transshipment Problem p. 462
The Assignment Problem p. 465
(Optional) Starting Procedures Based on Cost p. 471
(Optional) Other Applications of the Transportation Problem p. 476
Network Models p. 490
The Structure of Network Problems p. 491
The Shortest Route Problem p. 492
Minimal Spanning Tree Problem p. 501
The Maximum Flow Problem p. 506
The Minimum Cost Maximum Flow Problem p. 515
Further Network Considerations p. 525
(Optional) The Out-of-Kilter Algorithm p. 525
Project Management with PERT and CPM p. 535
The Importance of Time in Planning p. 535
The Basic Concepts of PERT p. 537
An Analysis of the PERT Network p. 541
Planning and Control Using the PERT Network p. 548
Computer Applications with PERT/CPM p. 551
Time--Cost Trade-Off Evaluations with PERT p. 555
Probabilistic PERT Analysis with Three Time Estimates p. 563
Implementing PERT and Further Considerations p. 568
(Optional) Alternative Network Graph: The CPM Network p. 569
(Optional) PERT Network Evaluations Using Spreadsheets p. 570
Inventory Management p. 581
Inventory Decisions with Certain Factors p. 582
Factors Influencing Inventory Policy p. 584
The Economic Order Quantity (EOQ) Model p. 585
Optimal Inventory Policy with Backordering p. 595
Establishing Inventory Policies Based on Service Level p. 600
Inventory Policy for Lost Sales p. 601
Economic Production Quantity Model p. 602
Additional Remarks p. 604
Inventory Decisions with Uncertain Factors p. 615
Making an Inventory Decision: Maximizing Expected Payoff p. 616
Single-Period Inventory Decision: The Newsvendor Problem p. 619
Continuous Probability Distribution for Demand: The Christmas Tree Problem p. 628
Multiperiod Inventory Policies p. 633
The EOQ Models for Normally Distributed Demand p. 644
Analytic and Numerical Solution Methods p. 651
Development of the Inventory Model Spreadsheets p. 652
Simulation and Waiting Lines p. 665
Waiting Lines (Queues) p. 666
Basic Queuing Situations p. 668
The Single-Server Queuing Model with Exponential Service Times p. 669
Interpreting Queuing Formulas and Alternative Expressions p. 676
The Multiple-Server Queuing Model p. 677
Sensitivity Analysis with Spreadsheets p. 683
A Model for Nonexponential Service Times p. 685
Further Queuing Probability Topics p. 687
Additional Remarks p. 691
(Optional) Some Further Queuing Models p. 692
(Optional) Testing for Goodness of Fit p. 695
Spreadsheet Development p. 712
Simulation p. 716
Concepts and Procedures: A Waiting-Line Simulation p. 717
Simulation and the Computer p. 726
Simulation and PERT p. 731
Simulating Inventory Policies p. 736
Simulation and Forecasting p. 742
Further Spreadsheet Applications p. 744
Simulation in Finance: Risk Analysis p. 747
Simulation Versus the Analytic Solution p. 750
The Statistical Aspects of Simulation p. 751
Bibliography p. 773
Appendix Tables p. 777
Cumulative Values for the Binomial Probability Distribution p. 778
Areas Under the Standard Normal Curve p. 783
Loss Fuction for Decision Making with the Normal Curve p. 784
Exponential Functions p. 785
Cumulative Probability Values for the Poisson Distribution p. 786
Random Numbers p. 788
Critical Values of D for Kilmogorov-Smirnov Goodness-of-Fit Test p. 789
Answers to Selected Problems p. 791
Index p. 801