by doh115


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Problem Solving
The process of identifyng a difference between the actual and the desired state of affairs and then taking action to resolve the difference
Decision Making
The process of defining the problem, identifying the alternatives, determining the criteria, evaluating the alternatives, and choosing an alternative
Single-criterion desision problem
A problem in which the objective is to find the "best" solution with respect to just one criterion.
Multi-criterion decision problem
A problem that involves more than one criterion; the  objective is to find the "best" solution, taking into account all the criteria.
Decision
The alternative selected
Model
A representation of a real object or situation.
Iconic Model
A physical replica, or representation, of a real object.
Analog model
Although in physical form, an analog mofel does not have a physical appearance similar to the real object or situation it represents.
Mathematical Problem
Mathematical symbols and expressions used to represent a real situation.
Constraint
A restriction or limitation imposed on a problem
Objective function
The mathematical expression that defines the quantity to be maximized or minimized.
Uncontrollable input
The environmental factors or inputs that cannot be controlled by the decision maker.
Controllable input
the decision alternatives or inputs that can be specified by the decision maker
Decision variable
Another term for controllable input
Determined model
A model in which all uncontrollable inputs are known and cannot vary.
Stochastic model
A model in which at least one uncontrollable input is uncertain and subject to variation; stochastic models are also referred to as probablilistic models.
Optimal solution
The specific dicision variable value or values that provide the "best" output for the model.
Infeasible solution
A decision alternative or solution that violates one or more constraints.
Fixed cost
The portion of the total cost that does not depend on the volume; this cost remains the same no matter how much is produced.
Variable cost
the portion of the total cost that is dependent on and varies with the volume.
Marginal cost
The rate of change of total cost with respect to volume.
Marginal revenue
The rate of change of total revenue with respect to volume.
Breakeven Point
The volume at whch total revenue equals total cost.
What are models?
Are representations of real objects and can be represented in various forms
Model Development

In mathematical models, what is the objective function?
The mathematical expression that defines the quantity to be maximized or minimized
Model Development

In mathematical models, what are the constraints?
an example of a restriction or constraint is production capacity.
Model Development

What are uncontrollable inputs?
Factors that can affect both the objective function and the constraints. Ex: environmental factors
Model Development

What are controllable inputs?
Inputs that are controlled or determined by the decision makers Ex: the production quantity x
Model Development

What is the other name assigned to the controllable inputs?
Decision variables
Model Development

What is a deterministic model?
Uncontrollable inputs to a model that are known and cannot vary.
Model Development

What is a stochastic or probabilistic model?
Any uncontrollable inputs that are uncertain and subject to variation. Ex: in production planning models is the demand for the product.
Model Development

What is a mathematical model?
Are a critical part of any quantitative approach decision making. Example: a profit model.
Model Development

What is the optimal solution of a problem?
The specific decision-variable value or values providing the "best" output.
Model Development

When is a decision alternative feasible?
When all constraints are satisifed.
1.4  Cost and Volume Models.

What is a fixed cost?
The portion of the total cost that does not depend on production volume; this cost remains the same no matter how much is produced.
1.4  Cost and Volume Models.

What is a Variable Cost?
The portion of the total cost that depends on and varies with the production volume.
Ex: C(x)= 3000+2x
x= Production volume in units
C(x)= Total cost of producing x units
1.4  Cost and Volume Models.

What are Marginal Costs?
The rate of change of the total cost with respect to production volume, that is, the cost increase associated with a one-unit increase in the production volume.
1.4 Revenue and Volume Models.

What is marginal revenue?
The rate of change of total revenue with respect to sales volume, that is, the increase in total revenue resulting from a one-unit increase in sales volume.
1.4 Profit and Volume Models.

What are profits equal to?
Total profit is Revenue minus total costs.

P(x)= R(x) - C(x)
1.4 Breakeven Analysis

What is the breakeven point? How is it defined?
The volume that results in total revenues equaling total cost (providing $0 Profit)
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