Copy Entry Down ColumnThe Copy Down command is used to copy an entry from one cell to all cells below it in the column.

This is not often useful, but it can save a great deal of work when it is. Right clicking on any table will bring up Copy options and if the table is the data table it will also bring up the insert and delete options.

Note: ViewView has several options that enable you to customize the appearance of the screen. In addition, the labels on the toolbars can be displayed or hidden.

Autosize Columns will set all column widths to their minimum possible widths to display the information, just as Excel does when you double-click the column separator.

There is an option under Help, User Information that will automatically autosize the columns of all windowsdata and solution windows.

TextbookThis menu will display the modules in the order in which they appear in your textbook. Note that if you are using a custom textbook the chapters may not be the same since this menu is based on the non-custom version of the textbook.

ModuleA drop-down list with all of the modules in alphabetical order will appear. At the bottom of the list are options for indicating whether you want to display only the POM modules as displayed , only the QM modules, or all of the modules as the following display shows. FormatFormat has several options for the display of data and solution tables, as can be seen in the following illustration. In addition, there are some additional format options available in the format toolbar.

The font type, style, and size for all tables can be set using the Font Dialog menu option. The Comma option displays numbers greater than with a comma. The Increase and Decrease Number of decimals controls the maximum number of decimals displayed. If you have it set to “00,” then. If you turn on the Fixed decimal option, then all numbers would have 2 decimals.

Thus 1. The Leading Zero option displays numbers less than one with a leading 0 such as 0. Zeros can be set to display as blanks rather than zeros in tables.

The problem title that appears in the data table, and which was created at the creation screen, also can be changed. Note: All tables can have their column widths changed by clicking on the line separating the columns and dragging the column divider left or right. Double clicking on this line will not automatically adjust the column width as it does in Excel.

The input can be checked by the software or not using the Verify Input option. It is a good idea to always check the input, but not checking allows you to put entries into cells that otherwise could not be put there. Background ColorsThe background colors can be set to their default colors for Version5 or gray as in Version 4 or any other custom color.

TitleThe problem title is set when the problem is created but can be modified using this title option. Double-clicking on the problem title will also bring up the title editor. ToolsThe software should find the Windows calculator if you select the Calculator option. If not, a calculator is available for simple calculations, including square root.

Numbers may be copied from the calculator and pasted into an individual cell in the data table. A Normal Distribution Calculator is available for performing calculations related to the Normal distribution.

This is particularly useful for forecasting and project management. An example of the Normal Calculator appears in Chapter 6 in the section on project management. The same computations can be done in the Statistics module but the calculator is a little more intuitive to use. The Calendar tool brings up a calendar. This can be useful for Aggregate Planning problems or simply if you want to see a calendar.

There is an area available to Comment problems. If you want to write a note to yourself about the problem, select Comment. The note will be saved with the file if you save the file. An example of annotation appears in Chapter 1. In order to eliminate the annotation completely, the box must be blank by deleting and then the file must be resaved. When you print, you have an option to print the note or not.

The Snipping tool brings up the Windows snipping tool. The Options tool brings up user preferences as can also be done using Help, User Preferences and will be displayed under the Help explanation. SolutionsA sample of the Solutions options appears in the next illustration. This menu option is enabled only at the solution screen. Notice that in this example there are six different output screens that can be viewed.

The number of windows depends on the specific module and problem. Following is a display of the screen after using the Tile option from the Solutions menu when the screen resolution was set to 1, by 1, With this resolution it may be very useful to tile in order to see all of the available solution windows. In fact, using Help, User Information, you could set all solution windows to open up for every problem.

Obviously, the value of this option depends on your screen resolution. HelpThe Help options are displayed next. The third option is the topic; it gives a description of the module, the data required for input, the output results, and the options available in the module. It is worthwhile to look at this screen at least one time in order to be certain that there are no unsuspected differences between your assumptions and the assumptions of the program. If there is anything to be warned about regarding the option, it will appear on the help screen as well as in Chapter 6 of this manual.

E-mail support uses your e-mail to set up a message to be sent to Pearson. Program Update points you to www. Updates are on the download page. User Information Options The user information form is shown as follows. The first tab can be used to change the name of the course, instructor, or school. The student name is set at the time of installation of the software and cannot be changed.

The second tab is used to set several of the options that have been discussed to this point. The third tab is used to set the textbook. There are differences among displays, models available, and computations for different textbooks. Notice the build number after the version number.

If you send e-mail requesting help, please be sure to include this build number. This site contains updates! There are several options on this screen. Information to PrintThe options in the frame depend on whether Print was selected from the data screen or from the solution screen. From the data screen, the only option that will appear is to print the data.

However, from the solution screen there will be one option for each screen of solution values. For example, in the preceding linear programming example, there are six different output displays as well as an available graph and annotation because this file had a note attached.

You can select which of these will be printed other than the graph which must be printed separately. In general, the data is printed when printing the output, and, therefore, it is seldom necessary to print the data, meaning that all printing can be performed after the problem is solved. Printing GraphsIt is possible to do your graph printing from the graph screen described in the next chapter rather than from the results screen.

Paper OrientationThe paper can be printed in upright fashion portrait or it can be printed sideways landscape if you need more space for columns.

ColorDo not opt for color if you do not have a color printer. This usually is not the desired characteristic. MarginsThe left and right margins can be set as. Chapter 5 Graphs IntroductionMany of the modules have the capability to display graphs or charts as one of the output options.

Some of the modules have more than one graph associated with them. For example, as shown in the following figure, four different project management graphs are available.

The graph to be displayed is chosen using the tab. There are several options that you have when a graph appears, and those options are explained in this chapter.

When a graph is opened it will be displayed covering the entire area below the extra data. Graph optionsGraph options are present when you right-click on the graph. The Save option will save the graph as a BMP file.

The Copy option can be used to copy the graph in order to paste it into another Windows document. The Print image will send the graph to your printer and print on one page. The Windows Snipping Tool can be opened with the last option.

Chapter 6 ModulesOverview Aggregate Production PlanningProduction planning is the means by which production quantities are prepared for the medium term generally 1 year. Aggregate planning refers to the fact that the production planning is usually carried out across product lines. The terms aggregate planning and production planning are used interchangeably. The main planning difficulty is that demands vary from month to month.

Production should remain as stable as possible, yet it should maintain minimum inventory and experience minimum shortages. The costs of production, overtime, subcontracting, inventory, shortages, and changes in production levels must be balanced.

In some cases, aggregate planning problems might require the use of the transportation or linear programming modules. The second submodel in the aggregate planning module creates and solves a transportation model of aggregate planning for cases where all of the costs are identical.

The transportation model is also available as one of the methods for the first submodel. The Aggregate Planning ModelProduction planning problems are characterized by a demand schedule, a set of capacities, various costs, and a method for handling shortages. Consider the following example. Example 1: Smooth ProductionConsider a situation where demands in the next four periods are for , , , and units. Current inventory is 0 units. Suppose that regular time capacity is units per month and that overtime and subcontracting are not considerations.

The screen for this example follows. In addition to the data, there are two considerationsshortage handling and the method to use for performing the planning. These appear in the area above the data.

Shortage handling. In production planning there are two models for handling shortages. In one model, shortages are backordered. That is, demands can accumulate and be met in later periods. In another model, the shortages become lost sales. That is, if you cannot satisfy the demand in the period in which it is requested, the demand disappears.

This option is above the data table. Six methods are available, which will be demonstrated. Please note that smooth production accounts for two methods. Smooth production will have equal production in every period. This yields two methods because the production can be set according to the gross demand or the net demand gross demand minus initial inventory. Produce to demand will create a production schedule that is identical to the demand schedule.

Constant regular time production, followed by overtime and subcontracting if necessary. The lesser cost method will be selected first. Any production schedule is available in which case the user must enter the amounts to be produced in each period. The transportation model. The demands are the driving force of aggregate planning and these are given in the second column.

Capacitiesregular time, overtime, and subcontracting. The program allows for three types of productionregular time, overtime, and subcontracting,and capacities for these are given in the next three columns.

If the method selected is the user-defined method, these are not viewed as capacities but rather as production quantities. When deciding whether to use overtime or subcontracting, the program will always first select the one that is less expensive.

CostsThe costs for the problem are all placed in the far right column of the data screen. Production costsregular time, overtime, and subcontracting. These are the perunit production costs depending on when and how the unit is made.

Inventory holding cost. This is the amount charged for holding 1 unit for 1 period. The total holding cost is charged against the ending inventory. Be careful; although most textbooks charge against the ending inventory, some textbooks charge against average inventory during the period. Shortage cost. This is the amount charged for each unit that is short in a given period. Whether it is assumed that the shortages are backlogged and satisfied as soon as stock becomes available in a future period or are lost sales is indicated by the option box above the data table.

Shortage costs are charged against end-ofmonth levels. Cost to increase production. This is the cost that results from having changes in the production schedule. It is given on a per-unit basis. The cost for increasing production entails hiring costs. It is charged against the changes in the amount of regular time production but not charged against any overtime or subcontracting production volume changes. If the units produced last period see other considerations below is zero, there will be no charge for increasing production in the first period.

Cost to decrease production. This is similar to the cost of increasing production and is also given on a per-unit basis. However, this is the cost for reducing production. It is charged only against regular time production volume changes.

Other ConsiderationsInitial inventory. Oftentimes we have a starting inventory from the end of the previous period. The starting inventory is placed in the far right column towards the bottom.

Units last period. Because some of the costs are for changes in production quantities from period to period, it is necessary to include the production in the period prior to the start of the problem. These units appear in the far right column at the bottom.

The SolutionIn the first example, shown in the following screen, the smooth production method and backorders have been chosen.

The demands are , , , and , and the regular time capacity of exceeds this demand. There is no initial inventory. The numbers represent the production quantities. The costs can be seen toward the bottom of the columns. The screen contains information on both a period-by-period basis and on a summary basis.

Notice the color coding of the data black , intermediate computations magenta and results blue. Regular time production. The amount to be produced in regular time is listed in the “Regular time production” column. This amount is determined by the program for all options except User Defined.

In this example, because the gross or net demand is , there are units produced in regular time in each of the 4 periods. If the total demand is not an even multiple of the number of periods, extra units will be produced in as many periods as necessary in order to meet the demand. For example, had the total demand been , the production schedule would have been in the first and second periods and in the other two periods.

The ending inventory is represented by one of two columns -either “Inventory” or “Shortage. The accumulated inventory appears in this column if it is positive. In the example, there is a positive inventory of units in both Periods 1 and 2, no inventory actually a shortage in Period 3, and neither any inventory nor shortage at the end of Period 4. If there is a shortage, the amount of the shortage appears in this column.

In the example, the in the shortage column for Period 3 means that units of demand have not been met. Because the backlog option has been chosen, the demands are met as soon as possible, which is in the last period. In this example, no increase or decrease from month to month occurs, so these columns do not appear in this display. The total numbers of units demanded, produced, in inventory, short, or in increased and decreased production are computed.

In the example, units were demanded and units were produced, and there were a total of unitmonths of inventory, unit-months of shortage, and 0 increased or decreased production unit-months.

The totals of the columns are multiplied by the appropriate costs, yielding the total cost for each of the cost components. Total cost. The overall total cost is computed and displayed. GraphTwo graphs are available in this module.

It is possible to display a bar graph of production in each period not shown , and it is also possible to display a graph of the cumulative production versus the cumulative demand shown.

Example 2: Starting inventory and previous productionTwo modifications to the previous example have been made. These modifications can be seen in the following screen.

In the “Initial Inventory” location, is used. In addition, the method has been changed to use the net demand. Examining the “Regular time production” column in the output that follows indicates that the total production is units rather than the units from the previous example since there is an initial inventory of units. Thus only units per month need to be produced. Example 3: Using overtime and subcontractingIn the next example shown in the following screen, the original example without starting inventory has had the capacity reduced to for regular time.

This can be seen as follows. Because there is not enough regular time capacity, the program looks to overtime and subcontracting. It first chooses the one that is less expensive. Example 4: When subcontracting is less expensive than overtimeThe following screen shows a case where subcontracting is less expensive than overtime.

This time, the program first chooses subcontracting and, because there is sufficient capacity, overtime is not used at all. Example 5: Lost salescase 1From the previous example, backorders have been changed to lost sales, as can be seen in the following screen. The output shows a shortage of units at the end of Period 3. In the next period, we produce units even though we need only units. These extra units are not used to satisfy the Period 3 shortage, because these have become lost sales.

The units go into inventory, as can be seen from the inventory column in Period 4. It does not make sense to use the smooth production model and have lost sales. In the end, the total demand is not actually , because of the sales were lost. Example 6: The produce to demand no inventory strategyFrom the first example the method has been toggled to produce to demand or chase strategy.

Notice that the program has set the “Regular time production” column equal to the demand column. The inventory is not displayed because it is always 0 under this option. With production equal to demand and no starting inventory, there will be neither changes in inventory nor shortages. In this example, production in Period 1 was and production in Period 2 was Therefore, the increase column has a in it for Period 2. The program will not list any increase in Period 1 if no initial production is given.

The total increases have been ; decreases The change in production from the previous period to this period occurs in this column if the change represents an increase. Notice that the program assumes that no change takes place in the first period in this example because the initial data not displayed indicated that 0 units were produced last month. In this example, there is no change in other periods because production is constant under the smooth production option.

If production decreases, the decrease appears in this column. Example 7: Increase and decrease chargingThe previous example had increases and decreases in production. These increases and decreases are accounted for by regular time production. In the following screen, the regular time capacity is reduced in order to force production through regular time and overtime. Notice that the increase column only has a value in it in the second period when regular time production went from to units.

The regular time production remains at ; even though overtime increases, this does not show up in the increase columns. There are no charges against overtime or subcontracting increases. The Transportation Model of Aggregate PlanningThe transportation model of aggregate planning contains data that is nearly identical to the models previously examined.

The only difference is that the transportation model does not consider changes in production levels, so there is no data entry allowed for increase and decrease costs or for units last period. The creation screen will ask for the number of periods and whether shortages are allowed.

The similarity to the previous input screens can be seen as follows. Notice that there is only one entry for each of the costs. Thus, this model can not be used for situations where the costs change from period to period. You must formulate these problems yourself using the transportation model from the Module menu rather than this transportation submodel of aggregate planning.

Note: The transportation model that is the second submodel in the New menu can also be accessed as the last method in the first submodel,The solution screen is displayed next. The window on the left contains the production quantities as expressed in transportation form.

The window on the right summarizes the production quantities, unit-months of holding and shortage if applicable , and the costs. It is even more obvious that this is a transportation problem if the second window of output which is the transportation model itself is examined. The large numbers 9, have been entered in order to preclude the program from backordering.

Five heuristic rules can be used for performing the balance. The cycle time can be given explicitly or the production rate can be given and the program will compute the cycle time. This model will not split tasks. Task splitting is discussed in more detail in a later section. The ModelThe general framework for assembly-line balancing is dictated by the number of tasks that are to be balanced. These tasks are partially ordered, as shown, for example in the precedence diagram that follows.

The five heuristic rules that can be chosen are as follows Longest operation time 2. Most following tasks 3.

Ranked positional weight 4. Shortest operation time 5. Least number of following tasks Note: Ties are broken in an arbitrary fashion if two tasks have the same priority based on the rule given. Note that tie breaking can affect the final results. The remaining parameters are as follows:Cycle time computation. The cycle time can be given in one of two ways. One way involves giving the cycle time directly as shown in the preceding screen. Although this is the easiest method, it is more common to determine the cycle time from the demand rate.

The cycle time is converted into the same units as the times for the tasks. See Example 2. Task time unit. The time unit for the tasks is given by this drop-down box.

You must choose seconds, hours, or minutes. Notice that the column heading for the task times will change as you select different time units. Task names. The task names are essential for assembly-line balancing because they determine the precedences. Case does not matter. Task times. The task times are given. Enter the precedences, one per cell.

If there are two precedences they must be entered in two cells. Do not enter “a, b”. In fact, a comma will not be accepted. Notice that in the precedence list in the previous screen both a and A have been typed. As mentioned previously, the case of the letters is irrelevant. Example 1In this example there are six tasks, a through f. The precedence diagram for this problem appears previously. The time to perform each task is above the task.

Also, note that the tasks that are ready at the beginning of the balance are tasks a and b. Finally, in this first example, we use a cycle time of SolutionThe following screen contains the solution to the first example. The solution screen consists of two windows as shown in the following screen.

The window on the left gives the complete results for the method chosen whereas the window on the right gives the number of stations required not the theoretical number when using each balancing rule. The solution screen will always have the same appearance and contain the same information regardless of the rule that is chosen for the balance.

Also, as shown in the summary window on the right, in this case each rule leads to 3 stations. This is not always the case as is demonstrated later in this section. Station numbers. The station numbers appear in the far left column. They are displayed only for the first task that is loaded into each station. In this example, three stations are required.

The tasks that are loaded into the station are listed in the second column. In this example, Tasks b, e, and a are in Station 1; Tasks d and c are in Station 2; and Task f is in station 3.

The length of time for each task appears in the third column. Time left. The length of time that remains at the station is listed in the fourth column. The last number at each station is, of course, the idle time at that station. The idle times are colored in red. For example, there is 1 second of idle time at Station 1, 1 second of idle time at Station 2, and 2 seconds of idle time at Station 3, for a total of 4 seconds of idle time per cycle.

Ready tasks. The tasks that are ready appear here. A ready task is any task that has had its precedences met. This is emphasized because some books do not list a task as ready if its time exceeds the time remaining at the station. Also, if the number of characters in the ready task list is very long, you might want to widen that column. Cycle time. The cycle time that was used appears below the balance. This cycle time was either given directly or computed.

In this example, the cycle time was given directly as 10 seconds. Time allocated. The total time allocated for making each unit is displayed. This time is the product of the number of stations and the cycle time at each station.

In this example there are three stations, each with a cycle time of 10 seconds, for a total work time of 30 station-seconds. The time needed to make one unit. This is simply the sum of the task times. Idle time. This is the time needed subtracted from the time allocated. Efficiency is defined as the time needed divided by the time allocated. Balance delay.

The balance delay is the percentage of wasted time or percent minus the efficiency. Minimum theoretical number of stations. This is the total time to make 1 unit divided by the cycle time and rounded up to the nearest integer. In this example, 26 seconds are required to make 1 unit divided by a second cycle time for an answer of 2. In addition, a second window opens that displays the number of stations required using each of the different balancing rules.

In this particular case, each rule led to the same number of stations, 3. This is not always the case as shown in Example 4. The precedence graph can be displayed see the end of this section , as well as a bar graph indicating how much time was used at each station.

These are shown at the end of this section. In addition, if there is idle time at every station, a note will appear at the top indicating that the balance can be improved by reducing the cycle time. For example, because there are idle times of 1, 1, and 2 seconds at the three stations, we could reduce the cycle time by 1 second.

Example 2: Computing the cycle timeSuppose that for the same data a production rate of units in 7. We assume full minutes and hours and compute the cycle time as follows: 7.

Other RulesOther rules that may be used are mentioned although the results are not displayed. Please note that this is one of the modules where if you change the method using the drop-down box from the solution screen, the problem will immediately be resolved. That is, you do not need to use the EDIT button and return to the data. Most Following TasksA common way to choose tasks is by using the task with the most following tasks. Notice from the diagram at the beginning of the section that a has three tasks following it, and b also has two tasks following it.

Therefore, there is a tie for the first task. If Task a is chosen then the next task chosen will be Task b because Task b has 3 following tasks whereas Task c has only one. The results display indicates the number of following tasks in the column named “Ready tasks. Ranked Positional Weight MethodThe ranked positional weight computes the sum of the task and all tasks that follow. The task with the largest weight is scheduled first if it will fit in the remaining time. Notice that e has a higher ranked positional weight than c.

The results display indicates the ranked positional weight in the column named “Ready tasks. Least Number of FollowersThe last rule that is available is the least number of followers. Example 3: What to do if longest operation time will not fitSome books and some software do not apply the longest operation time rule properly. If the task with the longest time will not fit into the station, the task with the second longest time should be placed in the station if it will fit.

In the following screen data is presented for eight tasks. Notice that Tasks b, c, e, and f immediately follow Task a.

The balance appears in the following screen for a cycle time of 5 seconds. After Task a is completed, tasks b, c, d, and e are ready. Task b is longest but will not fit in the 4 seconds that remain at Station 1. Therefore, Task c is inserted into the balance. If the answer in your book differs from the program, you should check if the book has neglected to put in the task with the longest operation time that will fit. Example 4: Splitting tasksIf the cycle time is less than the amount of time to perform a specific task, there is a problem.

We perform what is termed task splitting but which in reality is actually duplication. For example, suppose that the cycle time is 2 minutes and some task takes 5 minutes. The task is performed 3 times by three people at three machines independent of one another.

The effect is that 3 units will be done every 5 minutes, which is equivalent to 1 unit every 1. Now, the actual way that the three people work may vary. Although other programs will split tasks, the assumptions vary from program to program. Rather than making assumptions, you should split the tasks by dividing the task time appropriately. Suppose that in Example 1 a cycle time of 5 seconds was used.

Then it is necessary to replicate both Tasks d and f because they will not fit in the cycle time. The approach to use is to solve the problem by dividing the task times by 2, because this replication is needed. The results are presented in the following screen. Notice that different rules lead to different minimum numbers of stations!

GraphsTwo different graphs are available. The first is a precedence graph, as shown in the following figure. Please note that there may be several different ways to draw a precedence graph.

The second graph not displayed here is of time used at each station. In a perfect world these would all be the same a perfect balance. The Assignment ModelThe assignment model is used to solve the traditional one-to-one assignment problem of assigning employees to jobs, employees to machines, machines to jobs, and so on.

The model is a special case of the transportation method. In order to generate an assignment problem, it is necessary to provide the number of jobs and machines and to indicate whether the problem is a minimization or maximization problem.

The number of jobs and number of machines do not have to be equal but usually they are. Objective function. The objective can be to minimize or to maximize. This is set at the creation screen but can be changed in the data screen. Example 1The following table shows data for a 7-by-7 assignment problem. The goal is to assign each salesperson to a territory at minimum total cost.

There must be exactly one salesperson per territory and exactly one territory per salesperson. The data structure is nearly identical to the structure for the transportation model. The basic difference is that the assignment model does not display supplies and demands because they are all equal to one. Note:To try to preclude an assignment from being made, such as Bruce to Pennsylvania in this example, enter a very large cost. If you type ‘x’, the program will place a cost of 9, for minimization problems or a profit of -9, for maximization problems in that cell.

The SolutionAssignments. The “Assigns” in the main body of the table are the assignments that are to be made. The assignments can also be given in list form, as shown in the following screen. The marginal costs can be displayed also. Cost-volume analysis is used to find the point of indifference between two options based on fixed and variable costs. A breakeven point is computed in terms of units or dollars.

Breakeven analysis is simply a special case of cost-volume analysis where there is one fixed cost, one variable cost, and revenue-per-unit. Cost-Volume AnalysisIn cost-volume analysis, two or more options are compared to determine what option is least costly at any volume. The costs consist of two types -fixed costs and variable costs, but there may be several individual costs that comprise the fixed costs or the variable costs. In the example that follows, there are five different individual costs and two options.

DataCost type. Each type of cost must be identified as either a fixed cost or a variable cost. The default is that the first cost in the list is fixed and that all other costs are variable. These values can be changed by using the drop-down box in that cell. The specific costs for each option are listed in the two right columns in the table.

If a volume analysis is desired, enter the volume at which this analysis should be performed. The volume analysis will compute the total cost revenue at the chosen volume. If the volume is 0, no volume analysis will be performed other than for the breakeven point. Volume analysis is at units. SolutionThe solution screen is very straightforward.

In the preceding screen there are five costs with some fixed and some variable. The program displays the following results:Total fixed costs. For each of the two options, the program takes the fixed costs, sums them, and lists them in the table. Total variable costs.

The program identifies the variable costs, sums them, and lists them. Breakeven point in units. The breakeven point is the difference between the fixed costs divided by the difference between the variable costs, and this is displayed in units. In the example, it is units. Breakeven point in dollars. The breakeven point can also be expressed in dollars. A volume analysis has been performed for a volume of units. The total fixed costs and total variable costs have been computed for each option and these have been summed to yield the total cost for each option.

A graph is available, as follows. Example 2: Breakeven analysisOne standard type of breakeven analysis involves revenue versus costs. Data entry for this option is slightly different in that the program creates a column for costs and a column for revenues. The fixed and variable costs get entered in the cost column and the revenue per unit is placed in the revenue column. This model requires exactly three inputs.

This example could also have been solved using the cost-volume submodel. Select two options and let one be the costs and one be the revenues. Place the fixed costs and variable costs in their obvious cells; use no fixed cost for the revenue and use the revenue per unit as a variable cost, displayed as follows.

Example 3: Breakeven point with more than two optionsThe breakeven module can perform a breakeven analysis for up to five options. The following screen demonstrates the output for a three-option breakeven. The screen indicates that there are three breakeven points as it makes comparisons for Computer 1 versus Computer 2, Computer 1 versus Computer 3, and Computer 2 versus Computer 3.

Of course, even though there are three breakeven points, only two of them are relevant. This is seen a little more easily by looking at the following breakeven graph. The breakeven point at 40, units does not matter because at 40, units the two computers that break even have higher costs than the Computer 2 option. The data for this example consist of a stream of inflows and a stream of outflows. In addition, for finding the net present value an interest rate must be given.

Net Present ValueConsider the following example. The company would like to know the net present value using an interest rate of 10 percent. The data screen follows. The screen has two columns for data. One column is labeled Inflow and the other column is labeled Outflow. At the time of problem creation a six-period problem was created and the data table includes the six periods plus the current period 0.

The six savings in the second column are inflows, and they are placed in the inflow column for Periods 1 through 6. The salvage value could be handled two ways, and we have chosen the way that we think gives a better display. Instead, it is represented as a negative outflow. This keeps the meaning of the numbers clearer.

The last item to be entered is the interest rate in the text box above the data. The results appear as follows:A column has been created that gives the present value factors for single payments. To the right of this, the inflows and outflows are multiplied by these present value factors, and the far right column contains the present values for the net inflow inflow minus outflow on a period-by-period basis.

Internal Rate of ReturnThe computation of the internal rate of return is very simple. The data is set up the same way but the method box is changed from net present value to internal rate of return. The results appear as follows. You can see that the internal rate of return for the same data is Decision AnalysisThere are two very basic models used for decision analysisdecision tables and decision trees. The Decision Table ModelThe decision table can be used to find the expected value, the maximin minimax , or the maximax minimin when several decision options are available and there are several scenarios that might occur.

Also, the expected value under certainty, the expected value of perfect information, and the regret opportunity cost can be computed. The general framework for decision tables is given by the number of options or alternatives that are available to the decision maker and the number of scenarios or states of nature that might occur.

In addition, the objective can be set to either maximize profits or to minimize costs. Scenario probabilities. For each scenario it is possible but not required to enter a probability. The expected value measures expected monetary value, expected value under certainty, and expected value of perfect information require probabilities, whereas the maximin minimax and maximax minimin do not.

Profits or costs. The profit cost for each combination of options and scenarios is to be given. Hurwicz alpha. The Hurwicz value is used to give a weighted average of the best and worst outcomes for each strategy row. Please note that the Hurwicz value is not in every textbook.

Example 1: A decision tableThe following example presents three decision options: 1 subcontract, 2 use overtime, or 3 use part-time help. The possible scenarios states of nature are that demand will be low, normal, or high; or that there will be a strike or a work slowdown.

The table contains profits as indicated. The first row in the table represents the probability that each of these states will occur. The remaining three rows represent the profit that we accrue if we make that decision and the state of nature occurs. For example, if we select to use overtime and there is high demand, the profit will be SolutionThe results screen that follows contains both the data and the results for this example.

Expected values. The expected values for the options have been computed and appear in a column labeled “EMV” expected monetary value , which has been appended to the right-hand side of the data table. Row minimum. For each row, the minimum element has been found and listed. This element is used to find the maximin or minimin. Row maximum. For each row, the maximum element in the row has been found and listed. This number is used for determining the maximax or minimax.

These represent 40 percent multiplied by the best outcome plus 60 percent multiplied by the worst outcome for each row. For example, for subcontracting the Hurwicz is. Maximum expected value. Because this is a profit problem finding the maximum values is of importance.

The maximum expected value is the largest number in the expected value column, which in this example is In this example, the maximin is The maximax is the largest value in the table or the largest value in the maximum column. In this example, it is Perfect InformationA second screen of results presents the computations for the expected value of perfect information as follows.

Perfect information. An extra row labeled “Perfect Information” has been added below the original data. In this row, the best outcome for each column is listed. For example, for the low demand scenario the best outcome is the given by using overtime.

The expected value under certainty is computed as the sum of the products of the probabilities multiplied by the best outcomes. Expected value of perfect information. The expected value of perfect information EVPI is the difference between the best expected value The two columns on the right yield two sets of results. In the column labeled “Maximum regret”, the worst highest regret for each decision is determined and then minimax regret 50 is found by looking at the best lowest of these regrets.

In the column labeled “Expected Regret,” simply multiply the regrets in each row by the probabilities. There also is a window not displayed in this manual that yields Hurwicz values for alpha ranging from 0 to 1 by. Decision TreesDecision trees are used when sequences of decisions are to be made. The trees consist of branches that connect either decision points, points representing chance, or final outcomes. The probabilities and profits or costs are entered, and the decisions that should be made and the values of each node are computed.

All decision tables can be put in the form of a decision tree. The converse is not true. Note: Version 4 of the software includes two different input styles for decision trees.

The first model has tabular data entry whereas the second model is easier to use because it has graphical data entry. The first model has been maintained in the software for consistency with previous versions. Example 2: A decision tree -Graphical user interfaceOne of the models allows for decision trees to be entered graphically rather than in the table as given previously. This model can be used to examine the same example just completed.

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POM-QM for Windows is developed by Prentice-Hall and is used by 73 users of Software Informer. The most popular version of this product. POM-QM for Windows, version by Pearson Education Inc. Versions: , and File name: replace.me POM for Windows (Version 3) (replace.me). QM for Windows provides mathematical analysis for Operations Management, Quantitative methods.