IE 3 FINAL EXAM REVIEWER

PART I
1. Decision Theory and Money & Time Relationship
a) Decision Tree schematic model of alternatives available to a decision maker as
well as their corresponding risks and benefits; constructed left to right but solved
right to left
Decision nodes decision points, pick alternative with best expected payof
Branches alternatives
Event nodes probabilistic events, multiply payof of each event to
probability, then add all to get expected payof
b) Three criteria of solving decisions under uncertainty
Minimax minimize the maximum; for the conservative decision maker
Regret minimize the regret if you dont want to regret decision
Laplace average; averaging out decision
c) Be able to explain how and why to use the Present Worth Method
Convert all annuities and future values into present time
2. Operations Research
a) Three basic components of an Operations Research model
Decision variable
Objective function
Constraint
b) Game Theory study of strategic decision making, fully know what the others may
do
3. Queuing Theory and Simulation
a) Six parameters of the Kendall-Lee notation: M/M/1/FCFS//
Input/arrival process the probable distribution of arrival times of customers
Output/service process - the probable distribution of service times of servers
Servers number of servers
Queuing discipline prioritization of customers in queuing system
System capacity max number of customers allowed inside system
Calling population max number of customers that may enter system
b) Simulation imitation of real world system; creation of artificial model in order to
generate inferences about system
4. Operations Management
a) Choose most accurate forecasting technique with the least mean absolute
deviation
b) Strategies of aggregate planning:
Level capacity strategy maintaining steady level of workforce and steady
rate of production through fluctuating demand
Chase demand strategy adjusting workforce to follow fluctuating demand
5. Facilities Planning
a) Layout types of facilities planning:
Product layout for continuous process / mass production of similar products

Process layout for job shop processes / low-volume, high-variety projects

6. Project Management and Systems Design

a) Analyses done in a feasibility study:
Market analysis
Financial analysis
Technical analysis
Social profitability analysis
b) Five phases of project management
Initiation feasibility study
Project planning Project execution start of day 0
Project control compare project status and progress to actual plan
Project closure goals are achieved and stakeholders approve outcome
c) Goal of Systems Design to integrate everything at the whole system works
efficiently and efectively without compromising each subsystem
PART II
1. Inventory Management
a) Assumptions for basic EOQ model
Inventory instantly replenished upon order
Inventory consumed consistently over time
b) Computing for EOQ
Given

D, S and H

Orders per year/

Average inventory
Total order/holding
cost
Total Inventory Cost

Ordering
D
Q
D
S( )
Q
D
Q
S
+H ( )
Q
2

2 DS
H
Holding
Q
2
Q
H( )
2
Q=

( )

2. Facilities Planning
a) Importance of facilities planning
Involves high capital, incurs high expenses
Irreversible; consumes time and money to relocate or recreate
Afects whole organization
b) Center-of-Gravity method get (x,y) where x = population(x)/population

3. Project Management