BA341 3rd Edition Exam 3 Study guide Lectures 13 18 Lecture 13 October 15 Chapter 7 S Break even Analysis a method of choosing among alternative layouts and process choices that relies on an analysis of cost volume trade offs Seeks to find the production volume required to make a profit on a certain process or piece of equipment The point where Revenue Cost Go over all example problems in this lecture Single Product BEP in units and dollars o Break even demand Fixed Costs Unit Sale Price Unit Variable Cost o Break even in dollars Fixed Costs 1 Unit Variable Cost Unit Sale Price Go over the example of the single product BEP approach to choose between alternatives given a certain level of customer demand Multi product BEP in dollars be able to find the sales volume for a given product at BE o Lecture 14 October 20 QM A Decision Making Tools Decision Trees DT a graphical display of the decision process indicating decision alternatives states of nature and their probabilities and outcomes payoffs Alternatives and States of Nature o Symbols used in DT Square decision node from which different alternatives can be selected decision point Circle state of nature chance or uncertain node o Example of how to read a DT A company seeks to introduce a new product family This requires the construction of either a large or a small manufacturing plant The market for the product can be either favorable or unfavorable Decision making under Uncertainty Assume a decision environment characterized by complete uncertainty cannot assess probabilities of uncertain outcomes e g introduction of a new innovative product o Identifying the best decision based on the following methods MaxiMax Optimistic maximizes the maximum outcome for every alternative MaxiMin Pessimistic maximizes the minimum outcome for every alternative Equally likely assumes that each state of nature is equally likely to occur maximizes the average outcome for every alternative From the previous example of a DT we construct a payoff table For Maximax approach 200 000 For Maximin approach 0 For Equally Likely approach 40 000 Decision making under Risk assume that information on the probabilities of uncertain outcomes is available Decisional alternatives can be assessed based on the expected monetary value EMV o How to compute the EMV EMV alternative i payoff for 1st state of nature x probability 1st state of nature payoff for last state of nature x probability last state of nature o Identifying the best decision Alternative with Max EMV is the best o Then all of the Decision Making tools are put together Lecture 15 October 22 Conducted a DT example and went over the beginning of Managing Process Variability The world is filled with uncertainty Lecture 16 October 27 Module D Waiting Line Analysis queueing M M 1 Queueing System Arrival Characteristics o Population Infinite o Pattern of Arrivals Poisson distributed independent arrivals with ARRIVAL RATE Queue Discipline o Rule that determines the order in which arrivals are serviced First in first out FIFO First in First served FIFS o Customer Behavior Wait until served Service Characteristics o Single channel queueing system with one server o Independent service time with negative exponential distribution SERVICE RATE Note M M 1 single server Queueing Systems Inputs arrival and service rates o Measured as jobs time unit Outputs o Server utilization p arrival rate service rate probability that the server is idle 1 Lecture 17 October 29 M M 1 single server Queueing Systems o average time in system Ws in queue Wq and in service ts all these are measured in time units Ws Ls Or Ws 1 Wq Ws ts Ws 1 ts 1 o average number in system Ls in queue Lq and receiving service i e all these are measures in units e g customers jobs parts etc Ls 1 Or Ls Lq 2 Ls Lq o Probability of the server being busy or idle o Probability that an arriving customer finds the system empty 1 p There will be no questions on the test about multiple servers