Preface i
1Management Science1
The Management Science Approach to Problem Solving2
Time Out： for Pioneers in Management Science5
Management Science Application：
Room Pricing with Management Science at Marriott6
Management Science and Business Analytics7 Model Building： Break-Even Analysis8 Computer Solution12
Management Science Modeling Techniques15
Management Science Application： The Application of Management Science with Spreadsheets16
Business Usage of Management Science Techniques18
Management Science Application：
Management Science in Health Care19
Management Science Application：
Allocating Seat Capacity on Indian Railways Using Linear Programming32
Graphical Solutions of Linear Programming Models32
Management Science Application：
Renewable Energy Investment Decisions at GE Energy44
A Minimization Model Example44
Management Science Application：
Determining Optimal Fertilizer Mixes at Soquimich (South America)48
Irregular Types of Linear Programming Problems50
Characteristics of Linear Programming Problems53
Summary 54 ? Example Problem Solutions 54 ? Problems 58 ? Case Problems 60
3Linear Programming： Computer Solution and Sensitivity Analysis63
Management Science Models in Decision Support
Systems20
Summary 21 ? Problems 22 ? Case Problems 24
2Linear Programming： Model Formulation and Graphical Solution27
Model Formulation28
A Maximization Model Example28
Time Out： for George B． Dantzig29
Computer Solution64
Management Science Application：
Scheduling Air Ambulance Service in Ontario (Canada)69
Management Science Application：
Improving Profitability at Norske Skog with Linear Programming70
Sensitivity Analysis71
Summary 82 ? Example Problem Solution 82 ? Problems 85 ? Case Problems 89
i
iiCONTENTS
4Linear Programming： Modeling Examples92
A Product Mix Example93
Time Out： for George B． Dantzig98
A Diet Example98
An Investment Example101
Management Science Application： A Linear Programming Model for Optimal Portfolio Selection at GE Asset Management106
A Marketing Example107
A Transportation Example111 A Blend Example114
A Multiperiod Scheduling Example118
Management Science Application： Linear Programming Blending Applications in the Petroleum Industry119
Management Science Application： Employee Scheduling with Management Science121
A Data Envelopment Analysis Example123
Management Science Application：
Evaluating American Red Cross Chapters Using DEA125
Summary 127 ? Example Problem Solution 128 ? Problems 130 ? Case Problems 141
5Integer Programming146
Integer Programming Models147
Management Science Application： Selecting Volunteer Teams at Eli Lilly to Serve
in Impoverished Communities150
Integer Programming Graphical Solution150 Computer Solution of Integer Programming Problems
with Excel and QM for Windows152
Time Out： for Ralph E． Gomory153
Management Science Application：
Scheduling Appeals Court Sessions in Virginia with Integer Programming156
Management Science Application： Forming Business Case Student Teams at Indiana University161
0?1 Integer Programming Modeling Examples161
Management Science Application： A Set Covering Model for Determining Fire Station Locations in Istanbul170
Summary 170 ? Example Problem Solution 171? Problems 171 ? Case Problems 175
6Transportaion， Transshipment， and Assignment Problems185
The Transportation Model186
Time Out： for Frank L． Hitchcock and Tjalling
C． Koopmans188
Management Science Application： Reducing Transportation Costs in the California Cut Flower Industry189
Computer Solution of a Transportation Problem189
Management Science Application： Analyzing Container Traffic Potential at the Port of Davisville (RI)195
Management Science Application：
Transporting Mail at the U．S． Postal Service199
The Assignment Model199 Computer Solution of an Assignment
Problem200
Management Science Application：
Supplying Empty Freight Cars at Union Pacific Railroad203
Management Science Application：
Assigning Umpire Crews at Professional Tennis Tournaments204
Summary 205 ? Example Problem Solution 205 ? Problems 206 ? Case Problems 213
7Network Flow Models222
Network Components223
The Shortest Route Problem224
The Minimal Spanning Tree Problem232
Management Science Application：
Determining Optimal Milk Collection Routes in Italy235
The Maximal Flow Problem236
Time Out： for E． W． Dijkstra， L． R． Ford， Jr．， and D． R． Fulkerson237
Management Science Application：
Distributing Railway Cars to Customers at CSX238
Summary 243 ? Example Problem Solution 243 ? Problems 245 ? Case Problems 251
8Project Management258
The Elements of Project Management259
Management Science Application： Google， Facebook， and Apple “Cloud” Projects261
Time Out： for Henry Gantt265
Management Science Application： An Interstate Highway Construction Project in Virginia267
CPM/PERT268
Time Out： for Morgan R． Walker， James
E． Kelley， Jr．， and D． G． Malcolm270
Probabilistic Activity Times277
Management Science Application： Global Construction Mega-Projects283
Microsoft Project284
Project Crashing and Time?Cost Trade-Off288
Management Science Application：
Reconstructing the Pentagon After 9/11292
Formulating the CPM/PERT Network as a Linear Programming Model293
Summary 300 ? Example Problem Solution 301 ? Problems 303 ? Case Problems 308
9Multicriteria Decision Making312
Goal Programming313
Graphical Interpretation of Goal Programming317 Computer Solution of Goal Programming Problems
with QM for Windows and Excel320
Management Science Application：
Developing Television Advertising Sales Plans at NBC320
CONTENTSiii
Time Out： for Abraham Charnes and William W． Cooper324
The Analytical Hierarchy Process327
Management Science Application： Selecting Sustainable Transportation Routes Across the Pyrenees Using AHP327
Management Science Application： Ranking Twentieth-Century Army Generals Using AHP 334
Scoring Models337
Management Science Application： A Scoring Model for Determining U．S． Army Installation Regions339
Summary 339 ? Example Problem Solutions 340 ? Problems 343 ? Case Problems353
10Nonlinear
Programming357
Nonlinear Profit Analysis358
Constrained Optimization361
Solution of Nonlinear Programming Problems with Excel363
A Nonlinear Programming Model with Multiple Constraints367
Management Science Application： Making Solar Power Decisions at Lockheed Martin with Nonlinear Programming368
Nonlinear Model Examples369
Summary 374 ? Example Problem Solution 375 ? Problems 375 ? Case Problems377
11Decision Analysis379
Components of Decision Making380
Decision Making without Probabilities381
Management Science Application： Planning for Terrorist Attacks and Epidemics in Los Angeles County with Decision Analysis388
Decision Making with Probabilities388
Decision Analysis With Additional Information402
Management Science Application：
Scheduling Refueling at the Indian Point 3 Nuclear Power Plant408
ivCONTENTS
Utility409
Summary 410 ? Example Problem Solution 411 ? Problems 414 ? Case Problems 420
12Queuing Analysis425
Elements of Waiting Line Analysis426
The Single-Server Waiting Line System427
Time Out： for Agner Krarup Erlang428
Management Science Application： Using Queuing Analysis to Design Health Centers in Abu Dhabi435
Undefined and Constant Service Times436 Finite Queue Length439
Management Science Application： Providing Telephone Order Service in the Retail Catalog Business442
Finite Calling Population442
The Multiple-Server Waiting Line445
Management Science Application： Making Sure 911 Calls Get Through at AT&T448
Additional Types of Queuing Systems450
Summary 451 ? Example Problem Solution 451 ? Problems 453 ? Case Problems 456
13Simulation459
The Monte Carlo Process460
Time Out： for John Von Neumann465
Computer Simulation with Excel Spreadsheets465
Simulation of a Queuing System470
Management Science Application： Planning for Catastrophic Disease Outbreaks Using Simulation473
Continuous Probability Distributions474 Statistical Analysis of Simulation Results479
Management Science Application： Predicting Somalian Pirate Attacks Using Simulation480
Crystal Ball481
Verification of the Simulation Model488 Areas of Simulation Application488
Summary 489 ? Example Problem Solution 490 ? Problems 493 ? Case Problems 496
14Forecasting500
Forecasting Components501
Management Science Application：
Forecasting Advertising Demand at NBC503
Time Series Methods504
Management Science Application：
Forecasting Empty Shipping Containers at CSAV (Chile)508
Management Science Application：
Forecasting at Heineken USA513
Forecast Accuracy516
Time Series Forecasting Using Excel520
Management Science Application： Demand Forecasting at Zara521
Regression Methods524
Management Science Application： An Airline Passenger Forecasting Model528
Data Mining533
Summary 534 ? Example Problem Solutions 534 ? Problems 537 ? Case Problems 544
15Inventory Management548
Elements of Inventory Management549
Management Science Application： Inventory Optimization at Procter & Gamble551
Inventory Control Systems552
Time Out： for Ford Harris553 Economic Order Quantity Models553 The Basic EOQ Model554
The EOQ Model with Noninstantaneous Receipt559
The EOQ Model with Shortages562
Management Science Application：
Determining Inventory Ordering Policy at Dell565
EOQ Analysis with QM for Windows565 EOQ Analysis with Excel and Excel QM566 Quantity Discounts567
Management Science Application： Quantity Discount Orders at Mars570
Reorder Point571
Determining Safety Stock by Using Service Levels573
CONTENTSv
Order Quantity for a Periodic Inventory
Appendix A
Normal and Chi-Square Tables 584
Appendix B
Setting Up and Editing a Spreadsheet 586
Appendix C
The Poisson and Exponential Distributions 590
Glossary 592
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