MSIS 3223 (FINAL)
What elements does an Optimization Model have?
1. Decision Variables 2. An objective to maximize or minimize 3. Constraints
What is a Feasible Solution?
A set of values for the decision variables that satisfy ALL of the constraints.
What is the Formula for Operating Expenses?
Administrative Expenses + Selling Expenses + Depreciation Expenses
What does the Data Validation Feature do?
Allows you to define acceptable input values in a spreadsheet and provides an error alert if an invalid entry is made. (This can help you avoid inadvertent user errors)
What does the Solver Answer Report provide?
Basic Information about the solution, including the values of the original and optimal objective function and decision variables
What are Nonlinear problems notoriously known for?
Being difficult to solve
What are Simple Bounds?
Constrain the value of a single variable
What formula do you use to find Net Income using only data values?
Earnings Before Taxes - Taxes
What is the Formula for Net Income?
Earnings Before Taxes - Taxes
What are Balance Constraints?
Essentially state that Input = Output and ensure that the flow of material or money is accounted for at locations or between time periods.
*T/F: In Predictive Modeling , verification refers to how well a model represents reality.
FALSE
*T/F: The Feasible Region is the set of points that satisfy at least one constraint.
FALSE
*T/F: To find the guaranteed Optimal Integer Solution, Integer Tolerance must be set to 1.
FALSE
What is a set of Feasible Solutions often called?
Feasible Region
What are Decision Variables that are forced to be Integers called?
General Integer Variables
What is the absolute best solution that Solver can come up with called?
Global Optimal Solution
What is the Formula for Net Operating Income?
Gross Profit - Operating Expenses
What are Requirements?
Involve the specification of minimum levels of performance
What are Constraints?
Limitations, requirements, or other restrictions that are imposed on any solution, either from practical or technological considerations or by management policy.
What is the Formula for Earning Before Taxes?
Net Operating Income - Interest Expense
A poorly scaled model is one that computes values of the objective, constraints, or intermediate results that differ by several orders of magnitude. As a result, Solver may detect or suffer from...?
Numerical Instability
What are Proportional Relationships?
Often found in problems involving mixtures or blends of materials or strategies
What is a Local Optimum Solution?
One for which all points close are no better than the solution (An analogy is being at the top of a mountain when the highest peak is on another mountain
Two-Way data tables can evaluate ONLY what?
One output variable
Multiple outputs may be evaluated using what?
One-Way data tables
What is the most important tool in Prescriptive Analytics?
Optimization
*Problem Statement such as production must be sufficient to meet promised customer orders would be categorized as a ______________ constraint.
Requirements
What is the Formula for Gross Profit?
Sales - COGS
What is a Feasible Region?
Set of points that satisfy ALL constraints simultaneously.
If a problem is Infeasible, Solver will report...?
Solver could not find a feasible solution.
What is Building Spreadsheet Models often called?
Spreadsheet Engineering
*T/F: Requirements involve the specifications of minimum levels of performance.
TRUE
T/F: Predictive models focus on understanding the future.
TRUE
T/F: Quantity produced is a decision option typically based on demand.
TRUE
What does it mean when a model has a unique Optimal Solution?
That there is exactly ONE solution that will result in the maximum (or minimum) objective.
What is a Blinding Constraint?
The cell value is equal to the Right-Hand side of the value of the constraint
What is a Constraint Function?
The left-hand side of a constraint
What does the Cash Budget show you?
The monthly cash balances and any short-term borrowing used over cash shortfalls. (6-12 months)
What are Nonlinear Optimization Models?
The objective Function and/or atleast one constraint is Nonlinear.
What does it mean when a model has Alternative Optimal Solutions?
The objective is maximized (or minimized) by more than one combination of decision variables, all of which have the same objective function value
What is Integer Tolerance?
The parameter that specifies when the Solver algorithm will terminate an optimization process with integer constraints
What is Verification?
The process of ensuring that a model is inaccurate and free from logical errors.
What is Objective Function?
The quantity that is to be minimized or maximized.
What is an Unbounded Solution?
The value of the objective can be increased or decreased without bound.
What is an Infeasible Problem?
There are NO feasible solutions that exist
What do Predictive Models incorporate?
They Incorporate the uncertainty element
What are Sales Levels often used for?
To plan inventory levels.
What is the Variable Cost Formula?
Unit Variable Cost x Quantity Produced
In the Solver options, you can check the box ____ ________ ________ and Solver will rescale the values of the objective and constraint functions internally to minimize the effects of poor scaling.
Use Automatic Scaling
What are Limitations?
Usually involve the allocation of scarce resources
What are Binary Variables restricted by?
Variables that are restricted to being either 0 or 1.
What are Decision Variables?
Variables you're trying to define
When do Alternate Optimal Solutions exist?
When any of the allowable increase or allowable decrease values for changing cells are zero.
In an Integer Optimization Model, some or all of the variables are restricted to being what?
Whole Numbers
What should the Value of Integer Tolerance be?
ZERO
What is Slack?
the DIFFERENCE between the left-hand and right-hand sides of the constraints for the optimal solution
What are Corner Points?
the points at which the constraint lines intersect along the feasible region.
