## Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets, Sixth Edition

By Frederick S. Hillier, Mark S. Hillier, Karl Schmedders and Molly Stephens

**Contents:**

Chapter One

Introduction 1

1.1 The Nature of Management Science 2

1.2 An Illustration of the Management Science Approach: Break-Even Analysis 6

1.3 The Relationship Between Analytics and Management Science 12

1.4 The Impact of Management Science 14

1.5 Some Special Features of this Book 18

1.6 Summary 19

Glossary 20

Learning Aids for This Chapter 20

Solved Problem 21

Problems 21

Case 1-1 Keeping Time 23

Chapter Two

Linear Programming: Basic Concepts 24

2.1 A Case Study: The Wyndor Glass Co. Product-Mix Problem 25

2.2 Formulating the Wyndor Problem on a Spreadsheet 27

2.3 The Mathematical Model in the Spreadsheet 33

2.4 The Graphical Method for Solving Two-Variable Problems 35

2.5 Using Excel’s Solver to Solve Linear Programming Problems 39

2.6 Analytic Solver 43

2.7 A Minimization Example—The Profit & Gambit Co. Advertising-Mix Problem 47

2.8 Linear Programming from a Broader Perspective 52

2.9 Summary 54

Glossary 54

Learning Aids for This Chapter 55

Solved Problems 55

Problems 55

Case 2-1 Auto Assembly 60

Case 2-2 Cutting Cafeteria Costs 61

Case 2-3 Staffing a Call Center 62

Supplement to Chapter 2: More about the Graphical Method for Linear Programming (This supplement

is available at www.mhhe.com/Hillier6e).

Chapter Three

Linear Programming: Formulation and Applications 64

3.1 A Case Study: The Super Grain Corp. Advertising-Mix Problem 65

3.2 Resource-Allocation Problems 71

3.3 Cost–Benefit–Trade-Off Problems 81

3.4 Mixed Problems 87

3.5 Transportation Problems 95

3.6 Assignment Problems 99

3.7 Model Formulation from a Broader Perspective 102

3.8 Summary 104

Glossary 104

Learning Aids for This Chapter 104

Solved Problems 105

Problems 106

Case 3-1 Shipping Wood to Market 114

Case 3-2 Capacity Concerns 115

Case 3-3 Fabrics and Fall Fashions 117

Case 3-4 **New Frontiers** 118

Case 3-5 Assigning Students to Schools 119

Case 3-6 Reclaiming Solid Wastes 120

Case 3-7 Project Pickings 121

Chapter Four

The Art of Modeling with Spreadsheets 124

4.1 A Case Study: The Everglade Golden Years Company Cash Flow Problem 125

4.2 Overview of the Process of Modeling with Spreadsheets 126

4.3 Some Guidelines for Building “Good” Spreadsheet Models 136

4.4 Debugging a Spreadsheet Model 142

4.5 Summary 146

Glossary 146

Learning Aids for This Chapter 146

Solved Problems 146

Problems 147

Case 4-1 Prudent Provisions for Pensions 150

Chapter Five

What-If Analysis for Linear Programming 151

5.1 The Importance of What-If Analysis to Managers 152

5.2 Continuing the Wyndor Case Study 154

5.3 The Effect of Changes in One Objective Function Coefficient 156

5.4 The Effect of Simultaneous Changes in Objective Function Coefficients 162

5.5 The Effect of Single Changes in a Constraint 169

5.6 The Effect of Simultaneous Changes in the Constraints 175

5.7 Robust Optimization 179

5.8 Chance Constraints with Analytic Solver 182

5.9 Summary 186

Glossary 186

Learning Aids for This Chapter 187

Solved Problem 187

Problems 188

Case 5-1 Selling Soap 197

Case 5-2 Controlling Air Pollution 198

Case 5-3 Farm Management 200

Case 5-4 Assigning Students to Schools (Revisited) 202

Supplement to Chapter 5: Reduced Costs (This supplement is available at www.mhhe.com/Hillier6e).

Chapter Six

Network Optimization Problems 203

6.1 Minimum-Cost Flow Problems 204

6.2 A Case Study: The BMZ Co. Maximum Flow Problem 212

6.3 Maximum Flow Problems 215

6.4 Shortest Path Problems 219

6.5 Summary 229

Glossary 229

Learning Aids for This Chapter 230

Solved Problems 230

Problems 231

Case 6-1 Aiding Allies 235

Case 6-2 Money in Motion 238

Case 6-3 Airline Scheduling 240

Case 6-4 Broadcasting the Olympic Games 241

Supplement to Chapter 6: Minimum Spanning-Tree Problems (This supplement is available at

www.mhhe.com/Hillier6e).

Chapter Seven

Using Binary Integer Programming to Deal with Yes-or-No Decisions 243

7.1 A Case Study: The California Manufacturing Co. Problem 244

7.2 Using BIP for Project Selection: The Tazer Corp. Problem 251

7.3 Using BIP for The Selection of Sites for Emergency Services Facilities: The Caliente City Problem 253

7.4 Using BIP for Crew Scheduling: The Southwestern Airways Problem 257

7.5 Using Mixed BIP to Deal with Setup Costs for Initiating Production: The Revised Wyndor Problem 261

7.6 Summary 266

Glossary 266

Learning Aids for This Chapter 266

Solved Problems 266

Problems 268

Case 7-1 Assigning Art 273

Case 7-2 Stocking Sets 275

Case 7-3 Assigning Students to Schools (Revisited) 278

Case 7-4 Broadcasting the Olympic Games (Revisited) 278

Supplement 1 to Chapter 7: Advanced Formulation Techniques for Binary Integer Programming

Supplement 2 to Chapter 7: Some Perspectives on Solving Binary Integer Programming Problems (These

Supplements are available at www.mhhe.com/Hillier6e.)

Chapter Eight

Nonlinear Programming 279

8.1 The Challenges of Nonlinear Programming 281

8.2 Nonlinear Programming with Decreasing Marginal Returns 289

8.3 Separable Programming 299

8.4 Difficult Nonlinear Programming Problems 309

8.5 Evolutionary Solver and Genetic Algorithms 310

8.6 Using Analytic Solver to Analyze a Model and Choose a Solving Method 318

8.7 Summary 322

Glossary 323

Learning Aids for This Chapter 323

Solved Problem 324

Problems 324

Case 8-1 Continuation of the Super Grain Case Study 329

Case 8-2 Savvy Stock Selection 330

Case 8-3 International Investments 331

Chapter Nine

Decision Analysis 334

9.1 A Case Study: The Goferbroke Company Problem 335

9.2 Decision Criteria 337

9.3 Decision Trees 342

9.4 Sensitivity Analysis with Decision Trees 346

9.5 Checking Whether to Obtain More Information 350

9.6 Using New Information to Update the Probabilities 353

9.7 Using a Decision Tree to Analyze the Problem with a Sequence of Decisions 357

9.8 Performing Sensitivity Analysis on the Problem with a Sequence of Decisions 364

9.9 Using Utilities to Better Reflect the Values of Payoffs 367

9.10 The Practical Application of Decision Analysis 378

9.11 Summary 379

Glossary 379

Learning Aids for This Chapter 380

Solved Problems 381

Problems 381

Case 9-1 Who Wants to Be a Millionaire? 391

Case 9-2 University Toys and the Business Professor Action Figures 392

Case 9-3 Brainy Business 393

Case 9-4 Smart Steering Support 394

Supplement 1 to Chapter 9: Decision Criteria

Supplement 2 to Chapter 9: Using TreePlan Software for

Decision Trees (These supplements are available at www.mhhe.com/Hillier6e.)

Chapter Ten

Forecasting 397

10.1 An Overview of Forecasting Techniques 398

10.2 A Case Study: The Computer Club Warehouse (CCW) Problem 400

10.3 Applying Time-Series Forecasting Methods to the Case Study 404

10.4 The Time-Series Forecasting Methods in Perspective 423

10.5 Causal Forecasting with Linear Regression 426

10.6 Judgmental Forecasting Methods 431

10.7 Summary 433

Glossary 433

Summary of Key Formulas 434

Learning Aids for This Chapter 435

Solved Problem 435

Problems 435

Case 10-1 Finagling the Forecasts 442

Chapter Eleven

Queueing Models 446

11.1 Elements of a Queueing Model 447

11.2 Some Examples of Queueing Systems 453

11.3 Measures of Performance for Queueing Systems 455

11.4 A Case Study: The Dupit Corp. Problem 458

11.5 Some Single-Server Queueing Models 461

11.6 Some Multiple-Server Queueing Models 469

11.7 Priority Queueing Models 474

11.8 Some Insights about Designing Queueing Systems 480

11.9 Economic Analysis of the Number of Servers to Provide 485

11.10 Summary 488

Glossary 489

Key Symbols 490

Learning Aids for This Chapter 490

Solved Problem 490

Problems 491

Case 11-1 Queueing Quandary 497

Case 11-2 Reducing In-Process Inventory 498

Supplement to Chapter 11: Additional Queueing Models

(This supplement is available at www.mhhe.com/Hillier6e.)

Chapter Twelve

Computer Simulation: Basic Concepts 499

12.1 The Essence of Computer Simulation 500

12.2 A Case Study: Herr Cutter’s Barber Shop (Revisited) 512

12.3 Analysis of the Case Study 519

12.4 Outline of a Major Computer Simulation Study 526

12.5 Summary 529

Glossary 529

Learning Aids for This Chapter 530

Solved Problem 530

Problems 530

Case 12-1 Planning Planers 534

Case 12-2 Reducing In-Process Inventory (Revisited) 535

Supplement to Chapter 12: The Inverse Transformation Method for Generating Random Observations

(This supplement is available at www.mhhe.com/Hillier6e.)

Chapter Thirteen

Computer Simulation with Analytic Solver 536

13.1 A Case Study: Freddie the Newsboy’s Problem 537

13.2 Bidding for a Construction Project: A Prelude to the Reliable Construction Co. Case Study 547

13.3 Project Management: Revisiting the Reliable Construction Co. Case Study 551

13.4 Financial Risk Analysis: Revisiting the Think-Big Development Co. Problem 557

13.5 Revenue Management in the Travel Industry 562

13.6 Choosing the Right Distribution 568

13.7 Decision Making with Parameter Analysis Reports and Trend Charts 579

13.8 Optimizing with Computer Simulation Using the Solver in Analytic Solver 587

13.9 Summary 595

Glossary 596

Learning Aids for This Chapter 596

Solved Problem 596

Problems 597

Case 13-1 Action Adventures 602

Case 13-2 Pricing under Pressure 603

Case 13-3 Financial Planning for Retirement 604

Appendix A: Tips for Using Microsoft Excel for Modeling 606

Appendix B: Partial Answers to Selected Problems 612

Index 616

CHAPTERS available at www.mhhe.com/Hillier6e

Chapter Fourteen

Solution Concepts for Linear Programming

14.1 Some Key Facts about Optimal Solutions

14.2 The Role of Corner Points in Searching for an Optimal Solution

14.3 Solution Concepts for the Simplex Method

14.4 The Simplex Method with Two Decision Variables

14.5 The Simplex Method with Three Decision Variables

14.6 The Role of Supplementary Variables

14.7 Some Algebraic Details for the **Simplex Method**

14.8 Computer Implementation of the Simplex Method

14.9 The Interior-Point Approach to Solving Linear Programming Problems

14.10 Summary

Glossary

Learning Aids for This Chapter

Problems

Chapter Fifteen

Transportation and Assignment Problems

15.1 A Case Study: The P & T Company Distribution Problem

15.2 Characteristics of Transportation Problems

15.3 Modeling Variants of Transportation Problems

15.4 Some Other Applications of Variants of Transportation Problems

15.5 A Case Study: The Texago Corp. Site Selection Problem

15.6 Characteristics of Assignment Problems

15.7 Modeling Variants of Assignment Problems

15.8 Summary

Glossary

Learning Aids for This Chapter

Problems

Case 15-1 Continuation of the Texago Case Study

Chapter Sixteen

PERT/CPM Models for Project Management

16.1 A Case Study: The Reliable Construction Co. Project

16.2 Using a Network to Visually Display a Project

16.3 Scheduling a Project with PERT/CPM

16.4 Dealing with Uncertain Activity Durations

16.5 Considering Time–Cost Trade-Offs

16.6 Scheduling and Controlling Project Costs

16.7 An Evaluation of PERT/CPM from a Managerial Perspective

16.8 Summary

Glossary

Learning Aids for This Chapter

Problems

Case 16-1 Steps to Success

Case 16-2 “School’s Out Forever . . .”

Chapter Seventeen

Goal Programming

17.1 A Case Study: The Dewright Co. Goal-Programming Problem

17.2 Weighted Goal Programming

17.3 Preemptive Goal Programming

17.4 Summary

Glossary

Learning Aids for This Chapter

Problems

Case 17-1 A Cure for Cuba

Case 17-2 Remembering September 11

Chapter Eighteen

Inventory Management with Known Demand

18.1 A Case Study: The Atlantic Coast Tire Corp. (ACT) Problem

18.2 Cost Components of Inventory Models

18.3 The Basic Economic Order Quantity (EOQ) Model

18.4 The Optimal Inventory Policy for the Basic EOQ Model

18.5 The EOQ Model with Planned Shortages

18.6 The EOQ Model with Quantity Discounts

18.7 The EOQ Model with Gradual Replenishment

18.8 Summary

Glossary

Learning Aids for This Chapter

Problems

Case 18-1 Brushing Up on Inventory Control

Chapter Ninteen

Inventory Management with Uncertain Demand

19.1 A Case Study for Perishable Products: Freddie the Newsboy’s Problem

19.2 An Inventory Model for Perishable Products

19.3 A Case Study for Stable Products: The Niko Camera Corp. Problem

19.4 The Management Science Team’s Analysis of the Case Study

19.5 A Continuous-Review Inventory Model for Stable Products

19.6 Larger Inventory Systems in Practice

19.7 Summary

Glossary

Learning Aids for This Chapter

Problems

Case 19-1 TNT: Tackling Newsboy’s Teachings

Case 19-2 Jettisoning Surplus Stock

Chapter Twenty

Computer Simulation with Crystal Ball

20.1 A Case Study: Freddie the Newsboy’s Problem

20.2 Bidding for a Construction Project: A Prelude to the Reliable Construction Co. Case Study

20.3 Project Management: Revisiting the Reliable Construction Co. Case Study

20.4 Cash Flow Management: Revisiting the Everglade Golden Years Company Case Study

20.5 Financial Risk Analysis: Revisiting the Think-Big Development Co. Problem

20.6 Revenue Management in the Travel Industry

20.7 Choosing the Right Distribution

20.8 Decision Making with Decision Tables

20.9 Optimizing with OptQuest

20.10 Summary

Glossary

Learning Aids for This Chapter

Solved Problem

Problems

Case 20-1 Action Adventures

Case 20-2 Pricing under Pressure