Mathematical Programming

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 Attendance/Introduction
• Introduction about Mathematical Programming
 Polling/Pop-Question
Mathematical model of Linear Programming is important because
A) It helps in converting the verbal description and numerical data into
mathematical expression
B) decision makers prefer to work with formal models.
C) it captures the relevant relationship among decision factors.
D) it enables the use of algebraic techniques.
• Management science is characterized by a scientific approach to
managerial decision making.
• Management science has been known by a variety of other names
• operations research in US
• operational research in Great Britan

To identify the scientific approach to managerial problem solving under such

other names as systems analysis, cost–benefit analysis, and cost-effectiveness
analysis

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 Management science
• Management science is characterized by the use of mathematical
models in providing guidelines to managers for making effective
decisions within the state of the current information, or in seeking
further information if current knowledge is insufficient to reach a
proper decision

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• There are several elements of this statement that are deserving of
emphasis
• First, the essence of management science is the model-building
approach— that is, an attempt to capture the most significant
features of the decision under consideration by means of a
mathematical abstraction.
• Second, through this model-design effort, management science tries
to provide guidelines to managers or, in other words, to increase
managers’ understanding of the consequences of their actions. The
aim is to support the managers.

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• Finally, it is the complexity of the decision under study, and not the
tool being used to investigate the decision-making process, that
should determine the amount of information needed to handle that
decision effectively.

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MODEL
CLASSIFICATION

• The management-science
literature includes several
approaches to classifying
models.

Types of model representation

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 This approach to operate successfully, it
The first model type is an is mandatory to
operational exercise

design experiments to be conducted

carefully

To evaluate the experimental results in

light of errors that can be introduced by
measurement inaccuracies,

To draw inferences about the decisions

reached, based upon the limited
number of observations performed
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 Gaming
• The second type of model in this classification is gaming
• In this case, a model is constructed that is an abstract and simplified
representation of the real environment.
• This model provides a responsive mechanism to evaluate the
effectiveness of proposed alternatives, which the decision-maker
must supply in an organized and sequential fashion.

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 Gaming
• The model is simply a device that allows the decision-maker to test
the performance of the various alternatives that seem worthwhile to
pursue.
• In addition, in a gaming situation, all the human interactions that
affect the decision environment are allowed to participate actively by
providing the inputs they usually are responsible for in the actual
realization of their activities.
• The model should reflect, with an acceptable degree of accuracy, the
relationships between the inputs and outputs of the refinery process.
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• Subsequently, all the personnel who participate in structuring the
decision process in the management of the refinery would be allowed
to interact with the model.
• The production manager would establish production plans
• The marketing manager would secure contracts and develop
marketing strategies
• The purchasing manager would identify prices and sources of crude
oil and develop acquisition programs, and so forth.

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• The cost of processing each alternative has been reduced, and the
speed of measuring the performance of each alternative has been
increased.
• Gaming is used mostly as a learning device for developing some
appreciation for those complexities inherent in a decision-making
process.
• Several management games have been designed to illustrate how
marketing, production, and financial decisions interact in a
competitive economy.

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 Simulation
• Simulation models are similar to gaming models except that all
human decision-makers are removed from the modeling process.
• The model provides the means to evaluate the performance of a
number of alternatives, supplied externally to the model by the
decision-maker, without allowing for human interactions at
intermediate stages of the model computation.

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• Like operational exercises and gaming, simulation models neither
generate alternatives nor produce an optimum answer to the decision
under study.
• These types of models are inductive and empirical in nature; they are
useful only to assess the performance of alternatives identified
previously by the decision-maker.
• Many simulation models take the form of computer programs, where
logical arithmetic operations are performed in a prearranged
sequence.
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 Analytical Model
• Finally, the fourth model category proposed in this framework is the
analytical model
• In this type of model, the problem is represented completely in
mathematical terms
• Normally by means of a criterion or objective, which we seek to
maximize or minimize
• Subject to a set of mathematical constraints that portray the
conditions under which the decisions have to be made.

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• The model computes an optimal solution, that is, one that satisfies all
the constraints and gives the best possible value of the objective
function.
• Most of the work undertaken by management scientists has been
oriented toward the development and implementation of analytical
models.

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 The classification
presented in Table
is not rigid, since
strategy evaluation
models are used for
improving
decisions by trying
different
alternatives until
one is determined
that appears‘‘best.’

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