Introduction to Management Science and Business Analytics: A Modeling and Case Studies Approach with Spreadsheets, Seventh Edition
By Frederick S. Hillier and Mark S. Hillier
Contents:
PART 1 The Essence of Management Science and
Business Analytics
Chapter 1
Introduction 1
1.1 The Nature of Management Science 4
1.2 What is Business Analytics? 6
1.3 The Relationship Between Management Science and
Business Analytics 10
1.4 A Case Study: The VRX Company Advertising Budget
Problem 13
1.5 The Impact of Management Science and Business Analytics 26
1.6 Some Special Features of This Book 29
1.7 Summary 31
Glossary 32
Learning Aids for This Chapter 33
Solved Problem 33
Problems 34
Case 1-1 VRX Revisited: Updating the Model with New Data
Over Time 35
Chapter 2
Overview of the Analysis Process 36
2.1 A Case Study: First Bank Evaluates Applications for
Unsecured Loans 37
2.2 Define the Problem 37
2.3 Performing Descriptive Analytics 40
2.4 Performing Predictive Analytics 58
2.5 Performing Prescriptive Analytics 71
2.6 Summary 80
Glossary 80
Learning Aids for This Chapter 82
Solved Problems 82
Problems 82
Case 2-1 Vacations at Vegas Villas 85
PART 2 Models for Predictive Analytics
Chapter 3
Classification and Prediction Models for Predictive
Analytics 87
3.1 A Case Study: The Evergreen Solar Predictive Analytics
Problem 89
3.2 Models Based on The k-Nearest-Neighbors (KNN) Algorithm 92
3.3 Models Based on Classification Tree and Regression Tree
Algorithms 104
3.4 Other Models Based on Algorithms for Classification and
Prediction 117
3.5 Revisiting the Case Study: Refining and Testing the Models 126
3.6 Affinity Analysis and Recommendation Systems 130
3.7 Summary 131
Glossary 132
Learning Aids for This Chapter 133
Solved Problems 133
Problems 134
Case 3-1 Evergreen Solar Decides to Use Naïve Bayes 137
Case 3-2 Revisiting Vacations at Vegas Villas 138
Chapter 4
Predictive Analytics Based on Traditional Forecasting
Methods 139
4.1 An Overview of the Techniques of Time Series Forecasting 140
4.2 A Case Study: The Computer Club Warehouse (CCW)
Problem 142
4.3 Applying Time Series Forecasting Methods To the Case Study 146
4.4 The Time Series Forecasting Methods In Perspective 165
4.5 Causal Forecasting with Linear Regression 168
4.6 Judgmental Forecasting Methods 173
4.7 Summary 174
Glossary 175
Summary of Key Formulas 176
Learning Aids for This Chapter 176
Solved Problems 176
Problems 176
Case 4-1 Finagling the Forecasts 184
PART 3 Using Linear Programming to Perform
Prescriptive Analytics
Chapter 5
Linear Programming: Basic Concepts 187
5.1 A Case Study: The Wyndor Glass Co. Product-Mix Problem 189
5.2 Formulating the Wyndor Problem on a Spreadsheet 192
5.3 The Mathematical Model in the Spreadsheet 198
5.4 The Graphical Method for Solving Two-Variable Problems 200
5.5 Using Excel’s Solver to Solve Linear Programming Problems 205
5.6 Analytic Solver 209
5.7 A Minimization Example—The Profit & Gambit Co. Advertising-
Mix Problem 213
5.8 Linear Programming From a Broader Perspective 218
5.9 Summary 219
Glossary 219
Learning Aids for This Chapter 220
Solved Problems 220
Problems 221
Case 5-1 Auto Assembly 226
Case 5-2 Cutting Cafeteria Costs 227
Case 5-3 Staffing a Call Center 228
Chapter 6
Linear Programming: Formulation and Applications 230
6.1 A Case Study: The Super Grain Corp. Advertising-Mix
Problem 231
6.2 Resource-Allocation Problems 237
6.3 Cost–Benefit–Trade-Off Problems 247
6.4 Mixed Problems 253
6.5 Transportation Problems 261
6.6 Assignment Problems 265
6.7 Model Formulation From a Broader Perspective 268
6.8 Summary 270
Glossary 270
Learning Aids for This Chapter 271
Solved Problems 271
Problems 272
Case 6-1 Shipping Wood to Market 280
Case 6-2 Capacity Concerns 281
Case 6-3 Fabrics and Fall Fashions 282
Case 6-4 New Frontiers 284
Case 6-5 Assigning Students to Schools 285
Case 6-6 Reclaiming Solid Wastes 286
Case 6-7 Project Pickings 287
Chapter 7
The Art of Modeling with Spreadsheets 289
7.1 A Case Study: The Everglade Golden Years Company Cash
Flow Problem 290
7.2 Overview of the Process of Modeling with Spreadsheets 291
7.3 Some Guidelines for Building “Good” Spreadsheet Models 302
7.4 Debugging a Spreadsheet Model 308
7.5 Summary 311
Glossary 312
Learning Aids for This Chapter 312
Solved Problem 312
Problems 313
Case 7-1 Prudent Provisions for Pensions 316
Chapter 8
What-If Analysis for Linear Programming 317
8.1 The Importance of What-if Analysis to Managers 318
8.2 Continuing the Wyndor Case Study 320
8.3 The Effect of Changes in One Objective Function Coefficient 322
8.4 The Effect of Simultaneous Changes in Objective Function
Coefficients 328
8.5 The Effect of Single Changes In a Constraint 335
8.6 The Effect of Simultaneous Changes in the Constraints 341
8.7 Robust Optimization 345
8.8 Chance Constraints with Analytic Solver 348
8.9 Summary 352
Glossary 352
Learning Aids for This Chapter 353
Solved Problem 353
Problems 354
Case 8-1 Selling Soap 363
Case 8-2 Controlling Air Pollution 364
Case 8-3 Farm Management 366
Case 8-4 Assigning Students to Schools (Revisited) 368
Chapter 9
Network Optimization Problems 369
9.1 Minimum-Cost Flow Problems 370
9.2 A Case Study: The BMZ Co. Maximum Flow Problem 379
9.3 Maximum Flow Problems 382
9.4 Shortest Path Problems 386
9.5 Summary 395
Glossary 396
Learning Aids for This Chapter 396
Solved Problems 397
Problems 397
Case 9-1 Aiding Allies 402
Case 9-2 Money in Motion 405
Case 9-3 Airline Scheduling 406
Case 9-4 Broadcasting the Olympic Games 407
PART 4 Using Integer or Nonlinear Programming to
Perform Prescriptive Analytics
Chapter 10
Integer Programming 409
10.1 The Nature of Integer Programming 410
10.2 A Case Study: The California Manufacturing Co. Problem 412
10.3 Using BIP for Project Selection: The Tazer Corp. Problem 419
10.4 Using BIP for the Selection of Sites for Emergency Services
Facilities: The Caliente City Problem 421
10.5 Using BIP for Crew Scheduling: The Southwestern Airways
Problem 425
10.6 Using Mixed BIP to Deal with Setup Costs for Initiating
Production: The Revised Wyndor Problem 429
10.7 Summary 434
Glossary 434
Learning Aids for This Chapter 435
Solved Problems 435
Problems 436
Case 10-1 Assigning Art 441
Case 10-2 Stocking Sets 442
Case 10-3 Assigning Students to Schools (Revisited) 446
Case 10-4 Broadcasting the Olympic Games (Revisited) 446
Chapter 11
Nonlinear Programming 447
11.1 The Challenges of Nonlinear Programming 449
11.2 Continuing the Wyndor Case Study to Deal with Decreasing
Marginal Returns 457
11.3 Applying Nonlinear Programming to Portfolio Selection 463
11.4 Separable Programming 467
11.5 Difficult Nonlinear Programming Problems 477
11.6 Evolutionary Solver and Genetic Algorithms 478
11.7 Using Analytic Solver to Analyze a Model and Choose a
Solving Method 486
11.8 Summary 490
Glossary 491
Learning Aids for This Chapter 491
Solved Problem 492
Problems 492
Case 11-1 Continuation of the Super Grain Case Study 497
Case 11-2 Savvy Stock Selection 498
Case 11-3 International Investments 499
PART 5 Traditional Uncertainty Models for Performing
Predictive or Prescriptive Analytics
Chapter 12
Decision Analysis 501
12.1 A Case Study: The Goferbroke Company Problem 503
12.2 Decision Criteria 506
12.3 Decision Trees 511
12.4 Sensitivity Analysis with Decision Trees 514
12.5 Checking Whether to Obtain More Information 519
12.6 Using New Information to Update the Probabilities 521
12.7 Using a Decision Tree to Analyze the Problem with a
Sequence of Decisions 525
12.8 Performing Sensitivity Analysis on the Problem with a
Sequence of Decisions 532
12.9 Using Utilities to Better Reflect the Values of Payoffs 535
12.10 The Practical Application of Decision Analysis 546
12.11 Summary 547
Glossary 548
Learning Aids for This Chapter 549
Solved Problems 549
Problems 550
Case 12-1 Who Wants to Be a Millionaire? 559
Case 12-2 University Toys and the Business Professor Action
Figures 560
Case 12-3 Brainy Business 560
Case 12-4 Smart Steering Support 562
Chapter 13
Queueing Models 564
13.1 Elements of a Queueing Model 565
13.2 Some Examples of Queueing Systems 571
13.3 Measures of Performance for Queueing Systems 573
13.4 A Case Study: the Dupit Corp. Problem 576
13.5 Some Single-Server Queueing Models 579
13.6 Some Multiple-Server Queueing Models 587
13.7 Priority Queueing Models 592
13.8 Some Insights About Designing Queueing Systems 597
13.9 Economic Analysis of the Number of Servers to Provide 603
13.10 Behavioral Queueing Theory 606
13.11 Summary 608
Glossary 608
Key Symbols 609
Learning Aids for This Chapter 609
Solved Problem 610
Problems 610
Case 13-1 Queueing Quandary 616
Case 13-2 Reducing In-Process Inventory 617
Chapter 14
Computer Simulation: Basic Concepts 619
14.1 The Essence of Computer Simulation 620
14.2 A Case Study: Herr Cutter’s Barber Shop (Revisited) 633
14.3 Analysis of the Case Study 640
14.4 Outline of a Major Computer Simulation Study 647
14.5 Summary 650
Glossary 650
Learning Aids for This Chapter 651
Solved Problem 651
Problems 651
Case 14-1 Planning Planers 655
Case 14-2 Reducing In-Process Inventory (Revisited) 656
Chapter 15
Computer Simulation with Analytic Solver 657
15.1 A Case Study: Freddie the Newsboy’s Problem 658
15.2 Bidding for a Construction Project: A Prelude to the Reliable
Construction Co. Case Study 668
15.3 Project Management: Revisiting the Reliable Construction
Co. Case Study 672
15.4 Financial Risk Analysis: Revisiting the Think-Big
Development Co. Problem 678
15.5 Revenue Management In the Travel Industry 683
15.6 Choosing the Right Distribution 688
15.7 Decision Making with Parameter Analysis Reports and Trend
Charts 699
15.8 Optimizing with Computer Simulation Using the Solver in
Analytic Solver 707
15.9 Summary 715
Glossary 716
Learning Aids for This Chapter 716
Solved Problem 716
Problems 717
Case 15-1 Action Adventures 721
Case 15-2 Pricing under Pressure 722
Case 15-3 Financial Planning for Retirement 724
Appendix A: Tips for Using Microsoft Excel for Modeling 725
Appendix B: Partial Answers to Selected Problems 731
Index 736