Introduction to Management Science, Twelfth Edition
By Bernard W. Taylor III
Contents:
Preface 13
1 Management Science 21
The Management Science Approach to Problem
Solving 22
Time Out: for Pioneers in Management
Science 25
Management Science Application:
Room Pricing with Management Science at
Marriott 26
Management Science and Business Analytics 27
Model Building: Break-Even Analysis 28
Computer Solution 32
Management Science Modeling Techniques 35
Management Science Application: The
Application of Management Science with
Spreadsheets 36
Business Usage of Management Science
Techniques 38
Management Science Application:
Management Science in Health Care 39
Management Science Models in Decision Support
Systems 40
Summary 41 • Problems 42 • Case Problems 48
2 Linear Programming:
Model Formulation and
Graphical Solution 51
Model Formulation 52
A Maximization Model Example 52
Time Out: for George B. Dantzig 53
Management Science Application:
Allocating Seat Capacity on Indian Railways
Using Linear Programming 56
Graphical Solutions of Linear Programming
Models 56
Management Science Application:
Renewable Energy Investment Decisions
at GE Energy 68
A Minimization Model Example 68
Management Science Application:
Determining Optimal Fertilizer Mixes at
Soquimich (South America) 72
Irregular Types of Linear Programming
Problems 74
Characteristics of Linear Programming
Problems 77
Summary 78 • Example Problem Solutions 78 •
Problems 82 • Case Problems 91
3 Linear Programming:
Computer Solution and
Sensitivity Analysis 94
Computer Solution 95
Management Science Application:
Scheduling Air Ambulance Service in Ontario
(Canada) 100
Management Science Application:
Improving Profitability at Norske Skog with
Linear Programming 101
Sensitivity Analysis 102
Summary 113 • Example Problem Solutions 113 •
Problems 116 • Case Problems 130
4 Linear Programming:
Modeling Examples 133
A Product Mix Example 134
Time Out: for George B. Dantzig 139
A Diet Example 139
An Investment Example 142
Management Science Application: A Linear
Programming Model for Optimal Portfolio
Selection at GE Asset Management 147
A Marketing Example 148
A Transportation Example 152
A Blend Example 155
A Multiperiod Scheduling Example 159
Management Science Application: Linear
Programming Blending Applications in the
Petroleum Industry 160
Management Science Application: Employee
Scheduling with Management Science 162
A Data Envelopment Analysis Example 164
Management Science Application:
Measuring Asian Ports’ Efficiency Using
Dea 166
Summary 168 • Example Problem Solution 169 •
Problems 171 • Case Problems 200
5 Integer Programming 205
Integer Programming Models 206
Management Science Application: Selecting
Volunteer Teams at Eli Lilly to Serve in
Impoversihed Communities 209
Integer Programming Graphical Solution 209
Computer Solution of Integer Programming Problems
with Excel and QM for Windows 211
Time Out: for Ralph E. Gomory 212
Management Science Application:
Scheduling Appeals Court Sessions in Virginia
with Integer Programming 215
Management Science Application:
Planes Get a Lift from Integrated
Solutions 220
0–1 Integer Programming Modeling
Examples 220
Management Science Application: A Set
Covering Model for Determining Fire Station
Locations in Istanbul 229
Summary 229 • Example Problem Solution 230 •
Problems 230 • Case Problems 247
6 Transportation,
Transshipment, and
Assignment Problems 257
The Transportation Model 258
Time Out: for Frank L. Hitchcock and Tjalling
Koopmans 260
Management Science Application: Reducing
Transportation Costs in the California Cut
Flower Industry 261
Computer Solution of a Transportation Problem 261
Management Science Application: Analyzing
Container Traffic Potential at the Port of
Davisville (RI) 267
Management Science Application:
The Silk Road Once Again Unites East
and West 271
The Assignment Model 271
Computer Solution of an Assignment
Problem 272
Management Science Application:
Improving Financial Reporting with
Management Science at Nestlé 275
Management Science Application:
Assigning Umpire Crews at Professional Tennis
Tournaments 276
Summary 277 • Example Problem Solution 277 •
Problems 278 • Case Problems 306
7 Network Flow Models 315
Network Components 316
The Shortest Route Problem 317
The Minimal Spanning Tree Problem 325
Management Science Application:
Determining Optimal Milk Collection Routes in
Italy 328
The Maximal Flow Problem 329
Time Out: for E. W. Dijkstra, L. R. Ford, Jr.,
and D. R. Fulkerson 330
Management Science Application:
Distributing Railway Cars to Customers at
CSX 331
Summary 336 • Example Problem Solution 336 •
Problems 338 • Case Problems 358
8 Project Management 366
The Elements of Project Management 367
Management Science Application: Google,
Facebook, and Apple “Cloud” Projects 369
Time Out: for Henry Gantt 373
Management Science Application: An
Interstate Highway Construction Project in
Virginia 375
CPM/PERT 376
Time Out: for Morgan R. Walker, James
Kelley, Jr., and D. G. Malcolm 378
Probabilistic Activity Times 385
Management Science Application: Global
Construction Mega-Projects 391
Microsoft Project 392
Project Crashing and Time–Cost
Trade-Off 396
Management Science Application:
Reconstructing the Pentagon
After 9/11 400
Formulating the CPM/PERT Network as a Linear
Programming Model 401
Summary 408 • Example Problem Solution 409 •
Problems 411 • Case Problems 432
9 Multicriteria Decision
Making 435
Goal Programming 436
Graphical Interpretation of Goal Programming 440
Computer Solution of Goal Programming Problems
with QM for Windows and Excel 443
Management Science Application:
Developing Television Advertising Sales Plans
at NBC 443
Time Out: for Abraham Charnes and William W.
Cooper 447
The Analytical Hierarchy Process 450
Management Science Application: Selecting
Sustainable Transportation Routes Across the
Pyrenees Using AHP 450
Management Science Application: Ranking
Twentieth-Century Army Generals Using
AHP 457
Scoring Models 460
Management Science Application:
U.K. Immigration Points System 462
Summary 462 • Example Problem Solutions 463 •
Problems 466 • Case Problems 501
10 Nonlinear
Programming 506
Nonlinear Profit Analysis 507
Constrained Optimization 510
Solution of Nonlinear Programming Problems with
Excel 512
A Nonlinear Programming Model with Multiple
Constraints 516
Management Science Application: Making
Solar Power Decisions at Lockheed Martin with
Nonlinear Programming 517
Nonlinear Model Examples 518
Summary 523 • Example Problem Solution 524 •
Problems 524 • Case Problems 529
11 Probability and
Statistics 531
Types of Probability 532
Fundamentals of Probability 534
Management Science Application: Treasure
Hunting with Probability and Statistics 536
Statistical Independence and Dependence 537
Expected Value 544
Management Science Application:
A Probability Model for Predicting Earthquakes
in China 545
The Normal Distribution 546
Summary 556 • Example Problem Solution 556 •
Problems 558 • Case Problem 564
12 Decision Analysis 566
Components of Decision Making 567
Decision Making without Probabilities 568
Management Science Application: Planning
for Terrorist Attacks and Epidemics in Los
Angeles County with Decision Analysis 575
Decision Making with Probabilities 575
Decision Analysis With Additional
Information 589
Management Science Application: The Use of
Decision Analysis to Determine the Optimal Size
of the South African National Defense Force 595
Utility 596
Summary 597 • Example Problem Solution 598 •
Problems 601 • Case Problems 622
13 Queuing Analysis 627
Elements of Waiting Line Analysis 628
The Single-Server Waiting Line System 629
Time Out: for Agner Krarup Erlang 630
Management Science Application: Using
Queuing Analysis to Design Health Centers in
Abu Dhabi 637
Undefined and Constant Service Times 638
Finite Queue Length 641
Management Science Application: Providing
Telephone Order Service in the Retail Catalog
Business 644
Finite Calling Population 644
The Multiple-Server Waiting Line 647
Management Science Application: Making
Sure 911 Calls Get Through at AT&T 650
Additional Types of Queuing Systems 652
Summary 653 • Example Problem Solutions 653 •
Problems 655 • Case Problems 664
14 Simulation 667
The Monte Carlo Process 668
Time Out: for John Von Neumann 673
Computer Simulation with Excel
Spreadsheets 673
Simulation of a Queuing System 678
Management Science Application: Planning
for Catastrophic Disease Outbreaks Using
Simulation 681
Continuous Probability Distributions 682
Statistical Analysis of Simulation Results 687
Management Science Application: Predicting
Somalian Pirate Attacks Using Simulation 688
Crystal Ball 689
Verification of the Simulation Model 696
Areas of Simulation Application 696
Summary 697 • Example Problem Solutions 698 •
Problems 701 • Case Problems 715
15 Forecasting 719
Forecasting Components 720
Management Science Application:
Forecasting Advertising Demand at NBC 722
Time Series Methods 723
Management Science Application:
Forecasting Empty Shipping Containers at
CSAV (Chile) 727
Management Science Application:
Forecasting at Heineken USA 732
Forecast Accuracy 735
Time Series Forecasting Using Excel 739
Management Science Application: Demand
Forecasting at Zara 740
Regression Methods 743
Management Science Application: An Airline
Passenger Forecasting Model 747
Data Mining 752
Summary 753 • Example Problem Solutions 753 •
Problems 756 • Case Problems 781
16 Inventory Management 785
Elements of Inventory Management 786
Management Science Application: Inventory
Optimization at Procter & Gamble 788
Inventory Control Systems 789
Time Out: for Ford Harris 790
Economic Order Quantity Models 790
The Basic EOQ Model 791
The EOQ Model with Noninstantaneous
Receipt 796
The EOQ Model with Shortages 799
Management Science Application:
Determining Inventory Ordering Policy
at Dell 802
EOQ Analysis with QM for Windows 802
EOQ Analysis with Excel and Excel QM 803
Quantity Discounts 804
Management Science Application: Quantity
Discount Orders at Mars 807
Reorder Point 808
Determining Safety Stock by Using Service
Levels 810
Order Quantity for a Periodic Inventory
System 812
Summary 814 • Example Problem Solution 814 •
Problems 816 • Case Problems 824
Appendix A
Normal and Chi-Square Tables 827
Appendix B
Setting Up and Editing a Spreadsheet 829
Appendix C
The Poisson and Exponential Distributions 833
Solutions to Selected Odd-Numbered Problems 835
Glossary 845
Index 850
The following items can be found on the Companion Web
site that accompanies this text:
Web Site Modules
Module A: The Simplex Solution Method A-1
Module B: Transportation and Assignment Solution
Methods B-1
Module C: Integer Programming: The Branch and Bound
Method C-1
Module D: Nonlinear Programming Solution
Techniques D-1
Module E: Game Theory E-1
Module F: Markov Analysis F-1