Transcript Document

MGS 3100 - Business Analysis
Chapter 1
Introduction to Modeling
Copyright 2001
Prentice Hall
Model Definition
CLASSIFICATIONS OF MODELS
Decision making models are classified by the business function
they address or by the discipline or industry involved.
Classification
Examples
Business Function
Finance, Marketing, Cost Accounting, Operations
Discipline
Science, Engineering, Economics
Industry
Military, Transportation, Telecommunications, Non-Profit
Time Frame
One Time Period, Multiple Time Periods
Organizational Level Strategic, Tactical, Operational
Mathematics
Linear Equations, Non-Linear Equations
Representation
Spreadsheet, Custom Software, Paper and Pencil
Uncertainty
Deterministic, Probabilistic
TYPES OF MODELS
Type
The model is
What is being
modeled
Examples
Physical
Tangible
Tangible
Model
airplane,
building, etc.
Analog
Tangible
Abstract
Speedometer
Thermometer
Painting
Symbolic
Abstract
Either tangible
or Abstract
Language
Mathematics
Models in Decision Making
Real
World
Management
Situation
Results
Interpretation
Symbolic
World
Abstraction
Model
Analysis
Intuition
Decisions
The Modeling Process
Objective
Hierarchies
Variables
and Attributes
• Describe Problem / opportunity
• Identify Overall Objective
• Organize Sub-Objectives into a hierarchy
• Identify Model’s Objective
• Determine all variables and their attributes
• Decide on Measurement / Data Collection
Influence
Diagrams
Mathematical
Representation
Testing and
Validation
Implementation
and use
• Graphically depict relationships among variables
• Distinguish between Decision and outcome variables
• Determine mathematical relationships among variables
• Develop mathematical model(s)
• Evaluate reliability and validity
• Understand limitations
• Implement models in DSSs
• Clarify assumptions, inputs, and outputs
Decision Making
Simon’s Model of Decision Making
 Intelligence
 Design
 Choice
Course Outline

Introduction to Decision Support Models
–

Forecasting
–

Basic Profit models, Simulation
Estimation of values that go into the profit models
Decision Analysis, Process Control
–
–
Choosing the right alternative after modeling
Monitoring a process after implementing decision