week 4-6

Which of the following is the best use of simulation analysis for modeling a problem with uncertainty?

To find distribution information for the output variable(s)

The two types of nodes in a decision tree are

Event and Decision

What is the goal in optimization?

Find the decision variable values that result in the best objective function and satisfy all constraints

Which of the following is the defining feature of the newsvendor problem?

Uncertainty in demand

Assume you have 4 possible projects to invest in (represented by binary variables X1,X2,X3,X4). You know that if project 2 is selected, then project 3 cannot be selected. Create a constraint that permits all allowed scenarios but does not permit all non-allowed scenarios

X2 + X3 <= 1

Completing more replications/trials of a simulation analysis will do which of the following?

increase your confidence in output distributions

When a decision variable is not allowed to have fractional values it is called

integer decision variable

Which of the following best defines a binary variable

integer variable that is restricted to being between 0 and 1

Which of the following parts of an optimization model are defined as "the quantity that the model seeks to maximize or minimize"

objective function

The ______ indicates how much the value of the objective function will change as the right-hand side of the constraint is increased by 1 unit

shadow price

When analyzing a spreadsheet model with random/uncertain inputs, which of the following is the weaknesses of performing manual what-if analysis?

Biased values for your outcome of interest based on the scenarios you performed, It is hard to do many what-if scenarios, It does not provide distribution information for your output of interest

If a company was trying to find the best production strategy which maximized their total profits using an optimization model, the amount of time used in the Fabrication department is an example of

Constraint

Berry Bloom Co is getting ready for Mother's Day and needs to purchase bouquets of flowers which will be sold prior to the holiday. Due to the high demand leading up to Mother's Day, the bouquets of flowers are sold at $20/bouquet. However, after the holiday, the bouquets can only be sold at $10/bouquet. The bouquets of flowers are purchased at $15/bouquet. Berry Bloom Co wants to perform an analysis to determine how many bouquets should be procured in preparation for Mother's Day. This type of problem is called the

Newsvendor problem

A decision tree contains which of the following elements:

Nodes and Branches

A branch emanating from an event node represents a

One of a set of possible uncontrolled outcomes at that point in time

The output variable of interest from a simulation model will be a _______ variable.

Random

Which of the following describes a possible sensitivity analysis for a decision tree?

Systematically change the outcome values or event probabilities to identify changes to the expected monetary values or any decisions which are made

In a decision tree analysis, an event node is used when

The decision maker does not have control over the outcome

In a decision tree analysis, a decision node is used when

The decision maker has control over the outcome

If the goal of the decision tree analysis was to determine the decisions which resulted in the highest expected monetary value, the expected monetary value at each decision node is equal to

The maximum value of all of the branches emanating from the node

Assume you have 3 possible projects to invest in (represented by binary variables X1, X2 and X3). You know that if project 1 is selected, then project 2 must also be selected. Create a constraint that permits all allowed scenarios but does not permit all non-allowed scenarios (Hint: start by creating a "truth table")

X2-X1 >= 0

Which of the following is always required in an optimization model where the goal is to select which projects to invest in

binary decision variables

Decision Trees are made up of the following structures

branches, decision nodes (squares), event nodes (circles)

Rounding up a non-integer solution from a Linear Program will ensure optimality of an integer solution.

false

if one of the objectives coefficients changes within of its allowable increase or decrease (same as within of maximum and minimum objective coefficients), then

the final objective function value will change by the size of the change times the final value of the decision variable related to this objective coefficient

If one of the right-hand sides of a constraint changes within its allowable increase or decrease then,

the final objective function value will change by the size of the change times the shadow

If one of the objective coefficients changes outside of its allowable increase or allowable decrease, then

the model must be resolved to know the full effects of change

if one of the objectives coefficients changes outside of its allowable increase or allowable decrease (same as outside of maximum and minimum objective coefficients), then

the model must be resolved to know the full effects of the change

A feasible region is the space where none of the constraints are violated and the best solution within the feasible region is the optimal solution.

true

A sensitivity analysis in a decision trees allows you to automatically change various parameter in a model and determine the corresponding impact on the result.

true

If one or more of the decision variables needs to take on an integer value, we need to use Integer programming.

true

In linear programming, linearity is a requirement in both the objective function and the constraints

true

Sensitivity analysis of the decision tree allows you to observe how EMVs and decision change when you change some of the values or probabilities

true

Which of the following is the defining feature of the news vendor problem?

uncertainty in demand