Part 1: Dream Company Description
a) Describe your dream company (your service or product, your customers, your mission and vision, etc.)
b) What are some managerial decisions that should be made within your company?
c) How optimization can help you improve the decision making process within your company?
Part 2: Linear Programming Model
Consider one of the managerial decisions in Part 1 above.
d) Describe the problem in words (objective, parameters, constraints, etc.)
e) Define the decision variables.
f) Formulate the problem as a linear programming (LP) model.
g) Use Excel Solver to solve the associated LP model and find the optimal solution. Ask Excel to generate the Answer and Sensitivity reports.
Part 3: Decision Analysis Under Uncertainty and Risk
h) Consider possible outcomes that might happen in the future (e.g., demand level) and different alternatives. Create the payoff table.
i) Decision Analysis Under Uncertainty: Analyze different alternatives you have assuming you have no information about the probability of each outcome. Identify the best alternative using the following decision models:
1. Maximax
2. Maximin
3. Criterion of realism
4. Equally likely
5. Minimax regret
j) Decision Analysis Under Risk: Assume a probability for each of the outcomes. Identify the best alternative using the following decision models:
1. Expected monetary value
2. Expected opportunity loss
k) Calculate the following based on the outcome probabilities in section (l) above:
1. Expected Value with Perfect Information (EVwPI)
2. Expected Value of Perfect Information (EVPI)