Systems Engineering 468

Ivan G. Guardiola Ph.D.

Contact Information
Office: Eng. Mgmt. 204
600 W. 14th St
Rolla, MO 65409
Phone: 573-341-6153
Email: guardiolai@mst.edu
Office Hours: 1-3pm (CST) Mon, Tue,
Thur, and Fri
In addition I will be holding a bi-weekly
additional WebEx meeting to cover
questions.

Your Fellow Classmates

I suggest you being by forming teams: teams of 3 or less
please.
One person must submit a team sheet listing your
members and their respective email addresses to a
question that will be posted on Piazza.com
You will work on the case studies in this course with your
team.
Each team assignment will require that each member
submit a team member assessment, which will be used
for proper grading and assure all team members are
contributing.

The Book:
Spreadsheet Modeling
& Decision Analysis
A Practical Introduction to
Management Science
6th edition

Cliff T. Ragsdale

Check you Missouri S&T Email

I will be using Missouri S&T as a primary basis for
communication. Please check it!
Piazza.com is a Q&A platform that allows discussions to
be formed:
Students can ask a question
Students can answer each others questions
I can approve responses
It organizes the questions by date and subject matter.
It keeps me from answering 100s of emails on the same
question.
Blackboard will be used as the grade book and to submit homework
assignments. It will also house all of the documents in the course
such as lectures and supplements, excel sheets and so on.

Grading

Homework (individual) 49%

These will be short assignments assigned from the textbook, which will help assure
that you are gaining the skills associated with modeling and solving these models
using spreadsheets. These assignments are individual but you are welcome to
discuss them with your classmates. This will require that you keep up with lecture
content and read the textbook. All questions should be submitted to Piazza. (7
assignments at 7% each.)

Project Cases (group) 40%

Four cases will be given throughout the semester that relate to the RT-19 project.
They will make usage of the tools and methods in the class. These will be group
based and will require a group member assessment be submitted by all group
members that grade their group members on their contribution to the case. (4 cases
at 10% each)

Tests
Two tests: mid-term and final each will be
15%
The tests will be take home and will be
based on the homework assignments.
You are welcome to use all resources
available to reference during the test.
It will be issued and submitted via
Blackboard on time.

Assignments
Please submit only ONE file with the
filename having some sort of
identification.
Name the file with your name
Preferred format is pdf

Excel sheets must be annotated they

must be easy to follow and answer be
evident. No notations will make giving
partial credit difficult.

The Risk Solver Platform software

featured in this book is provided
by Frontline Systems.
http://www.solver.com

Getting the software

Posted on piazza.com and syllabus
1. Go to http://www.solver.com/student
2. Fill out the form, using RSMDA6 for the Textbook Code and
SEA468 for the Course Code. Be sure to include a first and last
name in the Name field.
3. Click the button Download Now. The download should start
within 30 seconds.
4. You should see a dialog "Do you want to run or save this file?"
Click Save to save the file, and run it later by double-clicking the
filename Solversetup.exe.
5. The Solversetup.exe Setup program may prompt for a password
and license activation code, which will be emailed to you. Just enter
this password in the dialog.

Remote Computer Access

Getting access to the remote user
computers: Please go to this page:
http://vcc.mst.edu/stus/itinfo.html follow
the instructions. This will give you access
to the remote computers on campus. I
have sent the user names of the students
to VCC hopefully they have started the
process prior to class starting.

Tentative Schedule

Cases
To retain the usage of the information from
the RT-19 project. Data has been
collected on various small experiments
that were carried out last semester. The
cases will ask you to apply the methods of
this course to reveal insight regarding the
current design.
Each case has been developed to make
use of a specific tool with a specific
purpose.

Introduction to Modeling
& Problem Solving

Introduction
We face numerous decisions in life,
business, and engineering design.
We can use computers to analyze the
potential outcomes of decision
alternatives.

What is Management Science?

A field of study that uses computers,
statistics, and mathematics to solve
business problems.
Also known as:
Operations research
Decision science

Home Runs
in Management Science
Xerox
Developed Lean Document Production
solutions for the printing industry
Provides productivity and cost
improvements for print shops
Benefits:
$200 million in incremental profit for customers
20% - 40% productivity increase

Home Runs
in Management Science
StatoilHydro
Primary supplier of natural gas in Norway
Developed GassOpt tool for optimizing
operation of worlds largest offshore pipeline
Benefits:
Accumulated savings of US $2 billion through 2008

Home Runs
in Management Science
US Federal Aviation Administration (FAA)
Responsible for air traffic management
Large-scale weather systems reduce
available air space
Developed Airspace Flow Programs to
optimize ground delays for each individual
flight when weather compromises flight
routes
Benefits:
Saved airlines $190 million in first 2-years of use

Home Runs in
Management Science
Netherland Railways
Developed system to optimize 5,500 daily
trains routes
Creates efficient crew & rolling stock
schedules
Benefits:
Increased profit by 40 million Euros
Improved on-time arrivals

What is a Computer Model?

A set of mathematical relationships and
logical assumptions implemented in a
computer as an abstract representation of
a real-world object of phenomenon.
Spreadsheets provide the most
convenient way for business people to
build computer models.

The Modeling Approach

to Decision Making
Everyone uses models to make
decisions.
Types of models:

Mental (arranging furniture)

Visual (blueprints, road maps)
Physical/Scale (aerodynamics, buildings)
Mathematical (what well be studying)

Characteristics of Models
Models are usually simplified versions of
the things they represent
A valid model accurately represents the
relevant characteristics of the object or
decision being studied

Benefits of Modeling
Economy - It is often less costly to
analyze decision problems using
models.
Timeliness - Models often deliver
needed information more quickly than
their real-world counterparts.
Feasibility - Models can be used to do
things that would be impossible.
Models give us insight & understanding
that improves decision making.

Example of a Mathematical Model

Profit = Revenue - Expenses
or
Profit = f(Revenue, Expenses)
or
Y = f(X1, X2)

A Generic Mathematical Model

Y = f(X1, X2, , Xn)
Where:

Y = dependent variable
(aka bottom-line performance measure)
Xi = independent variables (inputs having an impact
on Y)
f(.) = function defining the relationship between the Xi
&Y

Mathematical Models & Spreadsheets

Most spreadsheet models are very similar
to our generic mathematical model:
Y = f(X1, X2, , Xn)
Most spreadsheets have input cells
(representing Xi) to which
mathematical functions ( f(.)) are
applied to compute a bottom-line
performance measure (or Y).

Categories of Mathematical Models

Model
Category

Form of f(.)

Independent
Variables

OR/MS
Techniques

Prescriptive known, known or under LP, Networks, IP,

well-defineddecision makers
CPM, EOQ, NLP,
control GP, MOLP
Predictive unknown, known or under Regression Analysis,
ill-defined decision makers
Time Series Analysis,
control Discriminant Analysis
Descriptive known, unknown or Simulation, PERT,
uncertain Queueing,
Inventory Models

well-defined

The Problem Solving Process

Identify
Problem

Formulate &
Implement
Model

Analyze
Model

unsatisfactory
results

Test
Results

Implement
Solution

The Psychology of Decision Making

Models can be used for structurable
aspects of decision problems.
Other aspects cannot be structured
easily, requiring intuition and judgment.
Caution: Human judgment and intuition
is not always rational!

Anchoring Effects
Arise when trivial factors influence initial
thinking about a problem.
Decision-makers usually under-adjust
from their initial anchor.
Example:
What is 1x2x3x4x5x6x7x8 ?
What is 8x7x6x5x4x3x2x1 ?

Framing Effects
Refers to how decision-makers view a
problem from a win-loss perspective.
The way a problem is framed often
influences choices in irrational ways
Suppose youve been given $1000 and
must choose between:
A. Receive $500 more immediately
B. Flip a coin and receive $1000 more if heads
occurs or $0 more if tails occurs

Framing Effects (Example)

Now suppose youve been given $2000
and must choose between:
A. Give back $500 immediately
B. Flip a coin and give back $0 if heads occurs
or give back $1000 if tails occurs

A Decision Tree for Both Examples

Payoffs
$1,500

Alternative A
Initial state
Heads (50%)
Alternative B
(Flip coin)

Tails (50%)

$2,000
$1,000

Good Decisions vs. Good Outcomes

Good decisions do not always lead to good
outcomes...

A structured, modeling approach to

decision making helps us make good
decisions, but cant guarantee good
outcomes.

Decisions & Outcomes

Outcome Quality
Decision
Quality

Good
Bad

Good

Bad

Deserved Success
Dumb Luck

Bad Luck
Poetic Justice

The Rt-19 Project

We will be posting a video. Please make
time to watch this video after this lecture is
over and familiarize yourself with the
system.
Various documents and video
demonstration should help you
understand the current system.
The link is provided via piazza.com

Video Links
Please watch these videos:
July 2011 video:
http://youtu.be/Sr39eyChJC0
December 2011: http://youtu.be
/zyPnsdEAjkk

Welcome
Class is over, but please use this time to
view the videos regarding the RT-19
Systems and familiarize your self with the
actual system and how it works.
QUESTIONS????